7/30/2019 Property Dg Ests 1

1/15

[G.R. No. 129644. September 7, 2001]

CHINA BANKING CORPORATION,petitioner, vs. HON. COURT OF APPEALS,

PAULINO ROXAS CHUA and KIANG MING CHU CHUA, respondents.

R E S O L U T I O N

YNARES-SANTIAGO, J.:

Private respondents Paulino Roxas Chua and Kiang Ming Chu Chua

have filed before this Court a Motion for Reconsideration of the Decision

dated March 7, 2000, the dispositive portion of which reads:

WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals

in CA-G.R. CV No. 46735 is REVERSED and SET ASIDE. The permanent

injunction enjoining petitioner, the Sheriff of Manila, the Register of Deeds of

San Juan, their officers, representatives, agents and persons acting on their

behalf from causing the transfer of possession, ownership and title of the

property covered by TCT No. 410603 in favor of petitioner is LIFTED. The

Assignment of Rights to Redeem dated November 21, 1988 executed by

Alfonso Roxas Chua in favor of Paulino Roxas Chua is

ordered RESCINDED. The levy on execution dated February 4, 1991 and the

Certificate of Sale dated April 30, 1992 in favor of petitioner

are DECLARED VALID against the one-half portion of the subject property.

SO ORDERED.

Briefly, the facts are restated as follows:

By virtue of the adverse decision of the Regional Trial Court of Manila,

Branch 46, in Civil Case No. 82-14134, entitled Metropolitan Bank and Trust

Company v. Pacific Multi Commercial Corporation and Alfonso Roxas

Chua,the residential land covered by Transfer Certificate of Title No.

410603 in the name of spouses Alfonso Roxas Chua and Kiang Ming Chu Chua

was levied on execution. Kiang Ming Chu Chua filed an action questioning

the levy on the ground that the land was conjugal partnership property. This

resulted in a compromise agreement to the effect that the levy shall be valid

only to the extent of the share pertaining to Alfonso Roxas

Chua. Accordingly, an alias notice of levy was issued affecting the said

undivided portion of the property. After the execution sale, a certificate of

sale was executed in favor of Metrobank, the judgment creditor, and the

same was annotated on TCT No. 410603 on December 22, 1987.

Meanwhile, China Banking Corporation filed a complaint for sum of

money against Pacific Multi Agro-Industrial Corporation and Alfonso Roxas

Chua, docketed as Civil Case No. 85-31257 of the Regional Trial Court of

Manila, Branch 29. On November 7, 1985, judgment was rendered ordering

defendants to pay Chinabank the aggregate amount of P2,500,000.00 plus

interests, penalties and attorneys fees. Defendants appealed to the Court of

Appeals but the same was dismissed for failure to file appellants brief. Thus,

notice of levy on execution was issued on February 4, 1991 against the right

and interest of Alfonso Roxas Chua in TCT No. 410603. The same was later

sold at public auction and a certificate of sale was executed in favor of

Chinabank, and inscribed on TCT 410603 on May 4, 1992.

Previously, however, on November 21, 1988, Alfonso Roxas Chua

executed in favor of his son, Paulino Roxas Chua, an Assignment of Right to

Redeem, pertaining to his right to redeem the undivided portion of the

land sold to Metrobank. On January 11, 1989, Paulino redeemed the

property from Metrobank. On March 14, 1989, the Assignment of Right to

Redeem and the redemption by Paulino Roxas Chua of the property from

Metrobank were annotated on TCT No. 410603.

Private respondents Paulino Roxas Chua and Kiang Ming Chu Chua

filed Civil Case No. 63199 before the Regional Trial Court of Pasig, Branch

163, alleging that Paulino has a prior and better right over Chinabank

inasmuch as the assignment to him of the right to redeem and his

redemption of Alfonsos share in the property were inscribed on the title on

an earlier date than the annotation of the notice of levy and certificate of

sale in favor of Chinabank. Both the trial court and the Court of Appeals

ruled in favor of private respondents and enjoined Chinabank, the Sheriff of

Manila and the Register of Deeds of San Juan from causing the transfer of

possession, ownership and certificate of title, or otherwise disposing of the

property covered by TCT No. 410603 in favor of Chinabank or any other

person.

On March 7, 2000, we rendered the now assailed Decision reversing

the judgment of the Court of Appeals and rescinding the Assignment of Right

to Redeem executed by Alfonso in favor of Paulino Roxas Chua, for having

been entered into in fraud of creditors.

In their Motion for Reconsideration, private respondents raise the

following grounds:

2.1. The Decision, with due respect, failed to consider vital facts

showing that the assignment was indubitably:

[a] for valuable consideration; and

[b] In good faith;

which if considered, would result in a complete reversal.

2.2. The dispositive portion of the decision rescinding the assignment

of the right to redeem and validating the levy on execution dated April 30,

1992 in favor of petitioner, with due respect, cannot be enforced because:

[a] rescission is late; and

[b] levy on execution was on the wrong property.

2.3. The Petition was invalid and failed to vest the Honorable Court

with the jurisdiction to review the decision by the Court of Appeals.[1]

Petitioner filed its Comment,[2]

and private respondents filed theirReply with leave of Court.

[3]

Under their first ground, private respondents argue that there was

sufficient evidence to overthrow the presumption that the assignment of the

right to redeem was in fraud of creditors. After a re-examination of the

evidence, we agree with private respondents.

Indeed, Article 1387 of the Civil Code provides that alienations made

by a debtor by gratuitous title are presumed fraudulent when the donor did

not reserve sufficient property to pay his outstanding debts. Likewise,

alienations by onerous title are presumed fraudulent when made by persons

against whom some judgment has been rendered or some writ of

attachment has been issued. These, however, are mere presumptions which

are in no way conclusive. The presumption of fraud can be overthrown by

evidence showing that the conveyance was made in good faith and for a

sufficient and valuable consideration.

[4]

In the case at bar, private respondents sufficiently established that the

conveyance was made in good faith and for valuable consideration. Paulino

maintains that he had no knowledge of his father Alfonsos financial problem

with petitioner Chinabank until he was about to cause the cancellation of TCT

No. 410603.[5]

Furthermore, he paid the sum of P100,000.00 to Alfonso for

the right to redeem,[6]

and paid the redemption amount of P1,463,375.39 to

Metrobank.[7]

Expectedly, petitioner refutes these, saying that the amounts paid by

Paulino were grossly disproportionate to the right to redeem the property,

which is a residential house and lot located in North Greenhills, San Juan,

Metro Manila. But as correctly pointed out by private respondents, the

amount of P100,000.00 paid by Paulino to Alfonso was not for the property

itself, but merely for the right to redeem the same. As a matter of fact,

Paulino still had to pay Metrobank the redemption price of

P1,463,375.39. Whether or not the latter amount was adequate is beyond

the scope of this inquiry. Suffice it to state that Metrobank accepted the

same and reconveyed the property to Paulino. Moreover, only Alfonsos

conjugal share in the property was affected, and the determination of its

value was still subject to liquidation of debts and charges against the

conjugal partnership.

It must be emphasized that the reconsideration of our earlier Decision

on this score does not depart from well-settled doctrines and

jurisprudence. Rather, it entailed merely a re-evaluation of the evidence on

record.

Going now to the second ground, private respondent points out that

the dispositive portion of our Decision can not be executed without affecting

the rights of Metrobank inasmuch as Alfonsos right of redemption, which he

assigned to Paulino, only had a lifetime of twelve months from the date of

registration of the certificate of sale in favor of Metrobank. The rescission of

the assignment of the right to redeem would have had the effect of allowing

the twelve-month period of redemption to lapse, and thus confer on

Metrobank the right to consolidate ownership over the property and to the

execution of the sheriffs final deed of sale.

The certificate of sale in favor of Metrobank was registered on

December 22, 1987. Under the 1964 Rules of Court which were in effect at

that time, the judgment debtor or redemptioner had the right to redeem the

property from Metrobank within twelve months[8]

from the date of

registration of the certificate of sale.[9]

Chinabank was a redemptioner, being

then a creditor with a lien by judgment on the property sold, subsequent to

the judgment under which the property was sold.[10]

http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn1http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn1http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn1http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn2http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn2http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn2http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn3http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn3http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn3http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn4http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn4http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn4http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn5http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn5http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn5http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn6http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn6http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn6http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn7http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn7http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn7http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn8http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn8http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn8http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn9http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn9http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn9http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn10http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn10http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn10http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn10http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn9http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn8http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn7http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn6http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn5http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn4http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn3http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn2http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn1

7/30/2019 Property Dg Ests 1

2/15

Upon the expiration of the twelve-month period of redemption and no

such redemption is made, the purchaser shall be entitled to the final deed of

sale over the property sold on execution.

Deed and possession to be given at expiration of redemption period. By

whom executed or given. --- If no redemption be made within twelve (12)

months after the sale, the purchaser, or his assignee, is entitled to a

conveyance and possession of the property; or, if so redeemed, whenever

sixty (60) days have elapsed and no other redemption has been made, and

notice thereof given, and the time for redemption has expired, the last

redemptioner, or his assignee, is entitled to the conveyance and possession;

but in all cases the judgment debtor shall have the entire period of twelve(12) months from the date of the sale to redeem the property. The deed

shall be executed by the officer making the sale or by his successor in office,

and in the latter case shall have the same validity, as though the officer

making the sale had continued in office and executed it.

Upon the execution and delivery of said deed, the purchaser, or

redemptioner, or his assignee, shall be substituted to and acquire all the

right, title, interest and claim of the judgment debtor to the property as of

the time of the levy, except as against the judgment debtor in possession, in

which case the substitution shall be effective as of the date of the deed. The

possession of the property shall be given to the purchaser or last

redemptioner by the same officer unless a third party is actually holding the

property adversely to the judgment debtor.[11]

Hence, at the time Chinabank levied on Alfonso Roxas Chuas share inTCT No. 410603 on February 4, 1991, the said property was no longer

his. The same had already been acquired by Metrobank and, later,

redeemed by Paulino Roxas Chua. Even without the assignment of the right

to redeem to Paulino, the subject share in the property would pertain to

Metrobank. Either way, Chinabank would not stand to acquire the same. It

is an established doctrine that a judgment creditor only acquires at an

execution sale the identical interest possessed by the judgment debtor in the

property which is the subject of the sale. It follows that if, at the time of the

execution sale, the judgment debtor had no more right to or interest in the

property because he had already sold it to another, then the purchaser

acquires nothing.[12]

Otherwise stated, the rescission of the assignment of the right to

redeem would have nullified Paulinos redemption of the property. Thus,

Metrobanks inchoate right to the property would have become complete as

of December 1988, when the twelve-month redemption period expired

without the right of redemption having been exercised.

As stated above, Chinabank was a redemptioner that could redeem

the property from Metrobank. It was a judgment creditor with a lien on the

property sold subsequent to the judgment under which the property was

sold. Hence, what Chinabank could have done was to redeem the property

ahead of Paulino. In the alternative, it could have moved for the rescission of

the assignment to Paulino of the right to redeem, but within the twelve-

month period of redemption. Beyond that, there would be no more right of

redemption and, thus, no more assignment to rescind.

Assuming that there was no valid assignment of the right to redeem,

Paulino, as the son and compulsory heir of Alfonso, could still redeem his

fathers share in the property from Metrobank. Under Rule 39, Section 29

(a) of the 1964 Rules of Court, the judgment debtor or his successor in

interest may redeem real property sold on execution. Paulino is includedwithin the term successor in interest.

The successor-in-interest contemplated by the above provisions

includes a person to whom the judgment debtor has transferred his right of

redemption, or one to whom he has conveyed his interests in the property

for purposes of redemption, or one who succeeds to his property by

operation of law, or a person with a joint interest in the property, or his

spouse or heirs. A compulsory heir to the judgment debtor qualifies as a

successor-in-interest who can redeem property sold on execution.[13]

In Director of Lands v. Lagniton,[14]

we held that the right of a son,

with respect to the property of a father or mother, is an inchoate or

contingent interest, because upon the death of the father or the mother or

both, he will have a right to inherit said conjugal property. If any holder of an

inchoate interest is a successor in interest with right to redeem a property

sold on execution, then the son is such a successor in interest, as he has aninchoate right to the property of his father.

Thus, Paulinos redemption on January 11, 1989 from Metrobank of

the share of Alfonso Roxas Chua in the property covered by TCT No.

410603, with or without the execution of the Assignment of Right to

Redeem, was valid. Necessarily, therefore, the said property no longer

belonged to Alfonso Roxas Chua on February 4, 1991, when notice of levy

was made against him pursuant to the judgment in Civil Case No. 85-31257 in

favor of Chinabank. Petitioner should have levied on other properties of

Alfonso Roxas Chua.

Finally, it is not disputed that the property covered by TCT No. 410603

is a family home occupied by Kiang Ming Chu Chua and her children. The

levy and execution sale in favor of Metrobank affected the undivided share

thereof. In the instant petition, Chinabank prays that the assignment to

Paulino of Alfonsos right to redeem be declared null and void and that the

levy in its favor on the undivided portion of the property be declared

valid. Ultimately, petitioner Chinabanks objective is to acquire ownership of

the undivided portion of the property. However, the acquisition by

Chinabank, or Metrobank for that matter, of the said portion will create an

absurd co-ownership between a bank, on the one hand, and a family, on the

other hand, of the latters family home.

The rigid and technical application of the Rules may be relaxed in

order to avoid an absurd result. After all, the Rules of Court mandates that a

liberal construction of the Rules be adopted in order to promote their object

and to assist the parties in obtaining just, speedy and inexpensive

determination of every action and proceeding. This rule of construction is

especially useful in the present case where adherence to the letter of the law

would result in absurdity and manifest injustice.[15]

Therefore, we affirm the decision of the Court of Appeals in CA-G.R.

CV No. 46735, except the awards of moral and exemplary damages, which

are deleted. There is no proof of private respondents physical or mental

suffering as a result of petitioners acts. Likewise, petitioner does not appear

to have acted in a malevolent or oppressive manner towards private

respondents. However, petitioner should be liable for the attorneys fees

incurred by private respondents, since its act of resisting private

respondents causes of action compelled private respondents to litigate.

WHEREFORE, in view of the foregoing, our Decision dated March 7,

2000 is RECONSIDERED AND SET ASIDE. The decision of the Court of Appeals

in CA-G.R. CV No. 46735 is AFFIRMED with MODIFICATION. Petitioner isordered to pay private respondents the sum of P100,000.00 as attorneys

fees and to pay the costs. Petitioner China Banking Corporation, the Sheriff

of Manila, and the Register of Deeds of San Juan, Metro Manila, their

officers, representatives, agents or persons acting on their behalf, are

PERMANENTLY ENJOINED from causing the transfer of possession, ownership

and title, or from otherwise disposing, of the property covered by Transfer

Certificate of Title No. 410603 in favor of petitioner China Banking

Corporation or to any other person acting on its behalf. The Register of

Deeds of San Juan, Metro Manila is ordered to CANCEL all annotations on

TCT No. 410603 in favor of China Banking Corporation pursuant to Civil Case

No. 85-31257.

Villarico v. Sarmiento

Facts:Villarico here is an owner of a lot that is separated from the Ninoy

Aquino Avenue highway by astrip of land belonging to

thegovernment.Vivencio Sarmiento had a building constructed on a portion

of the saidgovernment land and a part thereof was occupied by Andoks

LitsonCorp.In 1993, by means of a Deed of Exchange of Real

Property,Villaricoacquired a portion of the same area owned by

thegovernment.He then filed an accion publiciana alleging that

respondents(Vivencio) on the government land closed his right of way tothe

Ninoy Aquino Avenue and encroached on a portion of hislot.

Issue:Whether or not VIllarico has a right of way to the NAA.

Ratio:No. It is not disputed in this case that the alleged right of way to the lot

belongs to the state or property of public dominion.It is intended for public

use meaning that it is not confined toprivileged individuals but is open to the

indefinite public.Records show that the lot on which the stairways were built

isfor the use of the people as passageway hence, it is a property for public

dominion.Public dominion property is outside the commerce of man and

hence, it cannot be: Alienated or leased or otherwise be the subject matterof

contracts.Acquired by prescription against the state.Cannot be the subject of

attachment and execution.Be burdened by any voluntary easement. It

cannot be burdened by a voluntary easement of right of way in favorof the

petitioner and petitioner cannot appropriate it for himself andhe cannot

claim any right of possession over it.

http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn11http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn11http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn11http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn12http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn12http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn12http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn13http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn13http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn13http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn14http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn14http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn14http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn15http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn15http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn15http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn15http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn14http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn13http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn12http://sc.judiciary.gov.ph/jurisprudence/2001/sep2001/129644.htm#_edn11

7/30/2019 Property Dg Ests 1

3/15

Sergs Products, Inc. vs. PCI Leasing G.R. No. 137705. August 22, 2000

FACTS: PCI Leasing and Finance filed a complaint for sum of money, with an

application for a writ of replevin. Judge issued a writ of replevin directing its

sheriff to seize and deliver the machineries and equipment to PCI Leasing

after 5 days and upon the payment of the necessary expenses. The sheriff

proceeded to petitioner's factory, seized one machinery, with word that he

would return for other machineries. Petitioner (Sergs Products) filed a

motion for special protective order to defer enforcement of the writ of

replevin. PCI Leasing opposed the motion on the ground that the properties

were still personal and therefore can still be subjected to seizure and writ ofreplevin. Petitioner asserted that properties sought to be seized were

immovable as defined in Article 415 of the Civil Code. Sheriff was still able to

take possession of two more machineries .In its decision on the original

action for certiorari filed by the Petitioner, the appellate court, Citing the

Agreement of the parties, held that the subject machines were personal

property, and that they had only been leased, not owned, by petitioners; and

ruled that the "words of the contract are clear and leave no doubt upon the

true intention of the contracting parties."

ISSUE: Whether or not the machineries became real property by virtue of

immobilization.

Ruling: Petitioners contend that the subject machines used in their factory

were not proper subjects of the Writ issued by the RTC, because they were in

fact real property. Writ of Replevin: Rule 60 of the Rules of Court provides

that writs of replevin are issued for the recovery of personal property only.

Article 415 (5) of the Civil Code provides that machinery, receptacles,

instruments or implements intended by the owner of the tenement for an

industry or works which may be carried on in a building or on a piece of land,

and which tend directly to meet the needs of the said industry or works In

the present case, the machines that were the subjects of the Writ of Seizure

were placed by petitioners in the factory built on their own land.They were

essential and principal elements of their chocolate-making industry.Hence,

although each of them was movable or personal property on its own, all of

them have become immobilized by destination because they are essential

and principal elements in the industry. However, contracting parties may

validly stipulate that a real property be considered as personal. After

agreeing to such stipulation, they are consequently estopped from claiming

otherwise.Under the principle of estoppel, a party to a contract is ordinarily

precluded from denying the truth of any material fact found therein. Section

12.1 of the Agreement between the parties provides The PROPERT Y is, and

shall at all times be and remain, personal property notwithstanding that the

PROPERTY or any part thereof may now be, or hereafter become, in any

manner affixed or attached to or embedded in, or permanently resting upon,

real property or any building thereon, or attached in any manner to what is

permanent. The machines are personal property and they are proper

subjects of the Writ of Replevin.

Navarro vs Pineda

Facts:Pineda and his mother obtained a loan secured by real estate mortgageover a lot and a chattel mortgage over a house owned by a third person and

a truck. They failed to pay despite several extensions. Thus, Navarro moved

to foreclose the mortgages. Pineda et al now claims that the mortgage over

the house cannot give rise to an action for foreclosure considering that only

movable property can be the subject of a chattel mortgage, thus, the house,

being an immovable, cannot be the subject of a chattel mortgage, the same

being a nullity.

Issue:WON a movable property (in this case, the house) can be the subject of

a chattel mortgage.

Held:Yes.A property may have a character different from that imputed to it

in said articles. It is undeniable that the parties to a contract may by

agreement, treat as personal property that which by nature would be realpropertyBut although in some instances, a house of mixed materials has

been considered as a chattel between them, has been recognized, it has

been a constant criterion nevertheless that, with respect to third persons,

who are not parties to the contract, and specially in execution proceedings,

the house is considered as an immovable property (Art. 1431, New Civil

Code).In the case at bar, the house in question was treated as personal or

movable property, by the parties to the contract themselves. In the deed of

chattel mortgage, appellant Rufino G. Pineda conveyed by way of Chattel

Mortgage my personal properties, a residential house and a truck. The

mortgagor himself grouped the house with the truck, which is, inherently a

movable property. The house which was not even declared for taxation

purposes was small and made of light construction materials: G.I. sheets

roofing, sawali and wooden walls and wooden posts; built on land belonging

to another.

ASSOCIATED INS. & SURETY CO., INC. v. IYA, et al.

A building is an immovable property irrespective of where or not said

structure and the land on which it is adhered to belong to the same owner.

FACTS:Adriano Valino and Lucia A. Valino owns a house of strong materials.

Filed a bond fr 11k subscribed by the Associated Insurance and Surety Co.,Inc. and as counter-guaranty therefr, the spouses Valino executed an alleged

chattel mortgage on the aforementioned house in favor of the surety

company.

The parcel of land on which the house is erected was still registered in the

name of the Philippine Realty Corporation but was able to obtained the same

from them after full payment of the purchase price. Valinos acquired another

loan from Iya for 12k, executing an REM over the lot and house. However

they werent able to pay off their other loan so the chattel mortgage was

foreclosed. The surety company was awarded the land as the highest bidder

in the auction. The surety company later on discovered that the land was

subject to a REM. The surety company then requested that the house and lot

be excluded from the REM. Iya, in her answer, said that she had a real right

over the property and that the chattel mortgage on which the foreclosurewas based should be declared null and void for non-compliance with the

form required by law. CA ed only the foreclosure of the REM only up to the

land and they awarded the structure to the surety company saying that the

house is a personal property and may be subject to chattel mortgage.

ISSUE:Which of the mortgages should have preference?

RULING:Lopez v Orosa was used as a precedent here saying that the buildings

an immovable itself, separate and distinct from the land. A building is an

immovable property irrespective of where or not said structure and the land

on which it is adhered to belong to the same owner.Only personal property is

subject to a chattel mortgage and since the structure in this case is an

immovable, it cannot subject to a chattel mortgage. Therefore the chattel

mortgage and the sale on which it was based should be declared null and

void.Iya was given the superior right not only to the land but also to the

structure to foreclose them in an auction.

LOPEZ v OROSA, JR., PLAZA THEATRE, INC.

The Building is an immovable by itself, separate and distinct from the land

from which it is attached.

FACTS:Orosa invited Lopez to invest with him in building a theatre. Lopez

supplied wood for the construction of the said theatre. The materials totaled

62k but Orosa was only able to pay 20k thus leaving a balance of almost 42k.

Later on respondents acquired a bank loan of 30k, wherein Luzon Surety

Company as their surety and the land and buildings as mortgages. Petitioner

sued to collect the unpaid materials and was able to get a judgment against

the respondents making them jointly liable to pay the remaining amount.

Also, he was able to obtain a materialmans lien on the building of the

theatre. The stocks amounting to 42k shall be sold in public auction in case

the respondents default. Petitioner wasnt happy because he also wanted a

lien on the land, urging that the judgment lien should include it since the

building and the land are inseparable.

ISSUE:Whether or not the building and the land are inseperable and W/N

petitioner can obtain a lien on the land as well?

RULING:NO to both! The contention that the lien executed in favor of the

furnisher of the materials used for the construction, repair or refection of a

building is also extended to land on which the construction was made is

without merit, because while it is true that generally, real estate connotes

the land and the building constructed thereon, it is obvious that the inclusion

of the building, separate and distinct from the land in the enumeration (in

the CC) of what may constitute real properties could mean only one thing-

that a building is by itself an immovable property.The preference to

unregistered lien is only with respect to the real estate upon which the

refection or work was made. The materialmans lien could be charged only to

the building for which the credit was made or which received the benefit of

refection.

TUMALAD V. VICENCIO

7/30/2019 Property Dg Ests 1

4/15

Although a building is an immovable; the parties to a contract may by

agreement treat as personal property that which by nature is a real property

however they are estopped from subsequently claiming otherwise.

FACTS:Alberta Vicencio and Emiliano Simeon received a loan of P4, 800 from

Gavino and Generosa Tumalad. To guaranty said loan, Vicencio executed a

chattel mortgage in favor of Tumalad over their house of strong materials

which stood on a land which was rented from the Madrigal & Company, Inc.

When Vicencio defaulted in paying, the house was extrajudicially foreclosed,

pursuant to their contract. It was sold to Tumalad and they instituted a Civil

case in the Municipal Court of Manila to have Vicencio vacate the house andpay rent.The MTC decided in favor of Tumalad ordering Vicencio to vacate

the house and pay rent until they have completely vacated the house.

Vicencio is questioning the legality of the chattel mortgage on the ground

that 1) the signature on it was obtained thru fraud and 2) the mortgage is a

house of strong materials which is an immovable therefore can only be the

subject of a REM. On appeal, the CFI found in favor of Tumalad, and since the

Vicencio failed to deposit the rent ordered, it issued a writ of execution,

however the house was already demolished pursuant to an order of the

court in an ejectment suit against Vicencio for non-payment of rentals. Thus

the case at bar.

ISSUE:Whether or not the chattel mortgage is void since its subject is an

immovable

HELD:NO.Although a building is by itself an immovable property, parties to a

contract may treat as personal property that which by nature would be real

property and it would be valid and good only insofar as the contracting

parties are concerned. By principle of estoppel, the owner declaring his

house to be a chattel may no longer subsequently claim otherwise.When

Vicencio executed the Chattel Mortgage, it specifically provides that the

mortgagor cedes, sells and transfers by way of Chattel mortgage. They

intended to treat it as chattel therefore are now estopped from claiming

otherwise. Also the house stood on rented land which was held in previous

jurisprudence to be personalty since it was placed on the land by one who

had only temporary right over the property thus it does not become

immobilized by attachment.

[Vicencio though was not made to pay rent since the action was instituted

during the period of redemption therefore Vicencio still had a right to remain

in possession of the property]

Ago v. Court of Appeals 6 SCRA 360 (1962)

In this case, Ago bought sawmill machineries and equipments from Grace

Park Engineering, Inc., executing a chattel mortgage over said machineries

and equipments to secure the balance of the purchase price, which Ago

agreed to pay on installments. When Ago defaulted, Grace Park instituted

foreclosure proceedings of the mortgage. To enjoin the foreclosure, Ago

instituted a special civil action. The parties, however, arrived at a

compromise agreement. Ago sold the machineries to Golden Pacifi c Sawmill,

Inc., which installed the same in a building and permanently attached the

same to the ground. In the meantime, as Ago continued to default in his

payments as provided in the judgment by compromise, Grace Park fi led with

the trial court a motion for execution, which was granted. Thereafter, the

sheriff levied upon and sold the sawmill machineries and equipments in

question without prior publication of the notice of sale. Ago questioned the

legality of the sale contending that the machineries were real properties.

When the case eventually reached the Supreme Court, the Court declared

the sale to be void for lack of the necessary advertisement of sale by

publication in a newspaper as required by the rules on the execution sale of a

real property. The Court explained that the installation of the sawmill

machineries in the building of the Golden Pacifi c Sawmill, Inc., for use in the

sawing of logs carried on in said building, the same became a necessaryand

permanent part of the building or real estate on which the same was

constructed, converting the said machineries and equipments into real estatewithin the meaning of Article 415(5) of the Civil Code of the Philippines.

Mindanao Bus Co. v. City Assessor DigestG.R. NO. L-17870 29 SEPTEMBER

1962

Facts: Petitioner is a public utility company engaged in the transport of

passengers and cargo by motor vehicles in Mindanao with main offices in

Cagayan de Oro (CDO). Petitioner likewise owned a land where it maintains a

garage, a repair shop and blacksmith or carpentry shops. The machineries are

placed thereon in wooden and cement platforms. The City Assessor of CDO

then assessed a P4,400 realty tax on said machineries and repair equipment.

Petitioner appealed to the Board of Tax Appeals but it sustained the City

Assessor's decision, while the Court of Tax Appeals (CTA) sustained the same.

Issue: Whether or not the machineries and equipments are considered

immobilized and thus subject to a realty tax

Held: The Supreme Court decided otherwise and held that said machineries

and equipments are not subject to the assessment of real estate tax.Said

equipments are not considered immobilized as they are merely incidental,

not esential and principal to the business of the petitioner. The

transportation business could be carried on without repair or service shopsof its rolling equipment as they can be repaired or services in another shop

belonging to another

Davao Sawmill Co. v. Castillo 61 Phil. 709

FACTS: Plaintiff operated a sawmill. The land upon which the business was

conducted was leased from another person. On the land, the sawmill

company erected a building which housed the machinery used by it. Some of

the machines were mounted and placed on foundations of cement. In the

contract of lease, plaintiff agreed to turn over free of charge all

improvements and buildings erected by it on the premises with the

exception of machineries, which shall remain with the plain tiff. In an action

brought by the defendant herein, judgment was rendered against plaintiff. A

writ of execution was issued and the machineries placed on the sawmill werelevied upon as personalty by the sheriff. The question raised in this case

involves the determination of the nature of the machineries, for plaintiff

claimed that they were immobilized and they belonged to the owner of the

land. In holding that the machinery is not immobilized, the Court explained

that machinery which is movable in its nature only becomes immobilized

when placed in a plant by the owner of the property or plant, but not when

so placed by a tenant, usufructuary, or any person having only a temporary

right, unless such person acted as the agent of the owner.

Meralco vs CBAA

Facts: Meralco installed two oil storage tanks on a lot it leased from Caltex

which are within the Caltex refinery compound and are used in storing fuel

oil for Meralcos power plants. The Central Board of Assessment Appeals

ruled that the tanks, together with the foundation, walls, dikes, steps,

pipelines and other appurtenances constitute taxable improvements.

Meralco contends that the said oil storage tanks do not fall within any of the

kinds of real property enumerated in Article 415 of the Civil Code and,

therefore, they cannot be categorized as realty by nature, by incorporation,

by destination nor by analogy. Stress is laid on the fact that the tanks are not

attached to the land and that they were placed on leased land, not on the

land owned by Meralco.

Issue: Are the tanks in question realty, and, therefore, subject to realty tax?

Held: Yes. (1) Tanks installed with some degree of permanence. Resolving

the issue primarily under the provisions of the Assessment Law and the Real

Property Code: While the two storage tanks are not embedded in the land,

they may, nevertheless, be considered as improvements on the land,

enhancing its utility and rendering it useful to the oil industry. It is

undeniable that the two tanks have been installed with some degree of

permanence as receptacles for the considerable quantities of oil needed by

Meralco for its operation. For purposes of taxation, the term real property

may include things which should generally be regarded as personal property.

Burgos, Sr. vs. Chief of Staff G.R. L-64261. December 26, 1984

Doctrine: A machinery which is movable by nature becomes immobilized

when placed by the owner of the tenement, property or plant, but not so

when placed by a tenant, usufructuary, or any other person having only

temporary right, unless such person acted as the agent of the owner.

Facts: Armed with a search warrant issued by the Court of First Instance of

Rizal, law enforcement officers searched the offices of the We forum and

Metropolitan Mail newspapers. During the course of the search, the law

enforcement officers seized office and printing machines, equipment,

paraphernalia and several other materials used in the distribution of

newspapers. Petitioner avers, among others, that the seizure of the

properties mentioned above amounts to seizure of real properties, which

cannot be validly conducted under the strength of a search warrant. It must

be noted that real properties are not susceptible of confiscation under a

search warrant. Hence this appeal which assails the validity of the search and

the seizure of the properties of the petitioner.

7/30/2019 Property Dg Ests 1

5/15

Issue: Whether there is merit in the petitioners assertion that real property

were invalidly seized under the disputed warrants.

Held: No. The petitioners assertion does not hold water. Under Article

415(5) of the civil code, machinery, receptacles, instruments or implements

intended by the owner of the tenement for an industry or works which may

be carried on in a building or on a piece of land and which tend directly to

meet the needs of the said industry or works are considered immovable

property. In another case decided by the Court, in which the

abovementioned legal provision was invoked, it was ruled that machinery

which is movable by nature becomes immobilized when placed by the ownerof the tenement, property or plant, but not so when placed by a tenant,

usufructuary, or any other person having only temporary right, unless such

person acted as the agent of the owner. In the case at bar, petitioners do not

claim to be the owners of the land and/or building on which the machineries

were placed. This being the case, the machineries in question, while in fact

bolted to the ground remains movable property susceptible to seizure under

a search warrant.

LAUREL vs. ABROGAR Facts:On or about September 10-19, 1999, or prior

thereto in Makati City, the accused, conspiring andconfederating together

and all of them mutually helping and aiding one another, with intent togain

and without the knowledge and consent of the Philippine Long Distance

Telephone (PLDT),did then and there willfully, unlawfully and feloniously

take, steal and use the international longdistance calls belonging to PLDT by

conducting International Simple Resale (ISR), which is amethod of routing

and completing international long distance calls using lines, cables,

antenae,and/or air wave frequency which connect directly to the local or

domestic exchange facilities of the country where the call is destined,

effectively stealing this business from PLDT while using itsfacilities in the

estimated amount of P20,370,651.92 to the damage and prejudice of PLDT,

inthe said amount.

Issue:Whether international long distance calls and the business of providing

telecommunication ortelephone services are considered as personal

properties subjected to theft.

HELD:The SC also clarified the meaning of taking in the crime of theft. Any

personal property, tangible or intangible, corporeal or incorporeal, capable

of appropriation can be the object of theft. The law only speaks of

appropriation. Taking does not mean the physical act of transporting a

thing from one place to another. Taking means depriving the lawful owner or

possessor of the property. It does not always mean that the property must

be carried from one place to another. It could be done with the use of the

offenders own hands or by controlling its destination by means of some

device or equipment, just like what happened in this case. The act of Baynet

was like tampering the water meter or using a jumper to steal water and

electricity.

Laurel is guilty of theft of PLDTs business and service, committed by means

of the unlawful use of the latters facilities. However, the Amended

Information accused Laurel of stealing international long distance telephonecalls, rather than theft of PLDTs business. So, the Supreme Court decided to

remand the case to the lower court and the prosecution was directed to

amend the Information.

Makati Leasing and Finance Corporation v. Wearever Textile Mills, Inc., 122

SCRA 296 (1983)

FACTS:-Wearever Textile Mills, Inc., discounted and assigned several

receivables with the former under a ReceivablePurchase Agreement in favor

of Makati Leasing and Finance Corporation in order to obtain

financialaccommodations.- To secure the collection of the receivables

assigned, Wearever executed a Chattel Mortgage over certain rawmaterials

inventory as well as a machinery described as an Artos Aero Dryer Stentering

Range.-Upon Wearevers default, Makati Leasing filed a petition forextrajudicial foreclosure of the properties mortgage toit. However, the

Deputy Sheriff assigned to implement the foreclosure failed to gain entry

into premisesof Wearever and was not able to effect the seizure of the

aforedescribed machinery. Makati Leasing thereafter filed a complaintfor

judicial foreclosure.-Acting on Makati Leasing's application for replevin, the

lower court issued a writ of seizure, the enforcement of which was however

subsequently restrained upon Wearevers filing of a motion for

reconsideration. After severalincidents, the lower court finally issued an

order lifting the restraining order for the enforcement of the writ of

seizureand an order to break open the premises of Wearevers to enforce

said writ. The lower court reaffirmed its standupon Wearevers filing of a

further motion for reconsideration.-The sheriff enforcing the seizure order,

repaired to the premises Wearevers and removed the main drive motor of

the subject machinery.CA:-Set aside orders of the Lower Court and ordered

the return of the main drive motor of the machinery. It held thatthe subject

machinery cannot be subject of replevin because it is a real property

pursuant to Article 415 of the CivilCode. Therefore Chattel Mortgage

constituted upon it is null and void.

ISSUE:-Whether or not the subject machinery is a real property or a personal

property to subject it to chattel mortgage.

HELD:-Where a chattel mortgage is constituted on machinery attached to the

ground the machinery is to be considered asa personal property and the

chattel mortgage constituted thereon is not null and void regardless of who

owns theland.- A property attached to the ground like a house of strong

materials, may be considered as personal property for purposes of executing

a chattel mortgage thereon as long as the parties to the contract so agree

and no innocentthird party will be prejudiced thereby, there is absolutely no

reason why a machinery, which is movable in its natureand becomes

immobilized only by destination or purpose, may not be likewise treated as

such. This is reallybecause one who has so agreed is estopped from denying

the existence of the chattel mortgage.

Caltex vs CBAA114 SCRA 296

Facts:This case is about the realty tax on machineryand equipment installed

by Caltex (Philippines)Inc. in its gas stations located on leased land. The

machines and equipment consists of underground tanks, elevated tank,

elevatedwater tanks, water tanks, gasoline pumps,computing pumps, water

pumps, car washer,car hoists, truck hoists, air compressors andtireflators.

The building or shed, the elevated water tank,the car hoist under a separate

shed, the aircompressor, the underground gasoline tank,neon lights

signboard, concrete fence andpavement and the lot where they are all

placedor erected, all of them used in the pursuance of the gasoline service

station business formedthe entire gasoline service-station. The lessor of the

land, where the gas station islocated, does not become the owner of

themachines and equipment installed therein.Caltex retains the ownership

thereof during theterm of the lease.

Issue:Whether or not the pieces of gas stationequipment and machinery

enumerated aresubject to realty tax.

Held:The Assessment Law provides that the realtytax is due "on real

property, including land,buildings, machinery, and otherimprovements".SC

hold that the said equipment andmachinery, as appurtenances to the gas

stationbuilding or shed owned by Caltex (as to which itis subject to realty tax)

and which fixtures arenecessary to the operation of the gas station,for

without them the gas station would beuseless, and which have been

attached or affixed permanently to the gas station site orembedded therein,

are taxable improvementsand machinery within the meaning of

theAssessment Law and the Real Property TaxCode.

RICARDO PRESBITERO vs, FERNANDEZ

Facts:1) ESPERIDION Presbitero failed to furnish Nava the value of the

properties under litigation.2) Presbitero was ordered by the lower court to

pay Nava to settle his debts.3) Nava's counsel still tried to settle this case

with Presbitero, out of court. But to no avail.4) Thereafter, the sheriff levied

upon and garnished the sugar quotas allotted to the plantationand adhered

to the Ma-ao Mill District and registered in the name of Presbitero as the

originalplantation owner.5) The sheriff was not able to present for

registration thererof to the Registry of Deeds.6) The court then ordered

Presbitero to segregate the portion of Lot 608 pertaining to Nava fromthe

mass of properties belonging to the defendant within a period to expire on

August 1960.7) Bottomline, Presbitero did not meet his obligations, and the

auction sale was scheduled.8) Presbitero died after.9) RICARDO Presbitero,the estate administrator, then petitioned that the sheriff desist in holdingthe

auction sale on the ground that the levy on the sugar quotas was invalid

because the noticethereof was not registered with the Registry of Deeds.

Issue: W/N the sugar quotas are real (immovable) or personal

properties.Held:1) They are real properties.2) Legal bases:a) The Sugar

Limitation Lawxxx attaching to the land xxx (p 631)b) RA 1825xxx to be an

improvement attaching to the land xxx (p 631)c) EO # 873"plantation" xxx to

which is attached an allotment of centrifugal sugar.3) Under the express

provisions of law, the sugar quota allocations are accessories to the land,and

cannot have independent existence away from a plantation.4) Since the levy

is invalid for non-compliance with law, xxx the levy amount to no levy at all.

7/30/2019 Property Dg Ests 1

6/15

Board of Assessment vs Meralco10 SCRA 68

Facts:The Philippine Commission enacted Act No. 484which authorized the

Municipal Board of Manilato grant a franchise to construct, maintain

andoperate an electric street railway and electriclight, heat and power

system in the City of Manila.Meralco's electric power is generated by

itshydro-electric plant located at Botocan Falls,Laguna and is transmitted to

the City of Manilaby means of electric transmission wires,running from the

province of Laguna to the saidCity. These electric transmission wires

whichcarry high voltage current, are fastened toinsulators attached on steel

towers constructedby respondent at intervals, from its hydro-electric plant inthe province of Laguna to theCity of Manila. The respondent Meralco

hasconstructed 40 of these steel towers withinQuezon City, on land

belonging to it. The City Assessor of Quezon City declared theaforesaid steel

towers for real property taxunder Tax.Respondent paid the amount under

protest, andfiled a petition for review in the Court of TaxAppeals

Issue:Whether or not the Meralco poles constitutereal properties so as they

can be subjected to areal property tax.

Held:The SC ruled that Meralco's steel towers wereconsidered poles within

the meaning of paragraph 9 of its franchise which exempts itspoles from

taxation. The steel towers wereconsidered personalty because they

wereremovable and merely attached to squaremetal frames by means of

bolts and could bemoved from place to place when unscrewedand

dismantled. Furthermore, they are notattached to an immovable in a fixed

manner,and they can be separated without breaking thematerial or causing

deterioration upon theobject to which they are attached.

Note:Pole- was used to denote the steel towers of an electric company

engaged in thegeneration of hydro-electric powergenerated from its plant.

In Civil Case No. 604-B, entitled "Margarita D. Vda. de Imperio, et al.vs. Municipal Government of San Miguel, Bulacan, et al.", the thenCourt of First Instance of Bulacan, on April 28, 1978, rendered

judgment holding herein petitioner municipality liable to privaterespondents, as follows:

WHEREFORE, premises considered, judgment ishereby rendered in favor of the plaintiffs andagainst the defendant Municipal Government ofSan Miguel Bulacan, represented by Mayor MarMarcelo G. Aure and its Municipal Treasurer:

1. ordering the partial revocation of the Deed ofDonation signed by the deceased Carlos Imperioin favor of the Municipality of San Miguel Bulacan,dated October 27, 1947 insofar as Lots Nos. 1, 2,3, 4 and 5, Block 11 of Subdivision Plan Psd-20831 are concerned, with an aggregate total areaof 4,646 square meters, which lots are amongthose covered and described under TCT No. T-1831 of the Register of Deeds of Bulacan in thename of the Municipal Government of San Miguel

Bulacan,

2. ordering the defendant to execute thecorresponding Deed of Reconveyance over theaforementioned five lots in favor of the plaintiffs inthe proportion of the undivided one-half () sharein the name of plaintiffs Margarita D. Vda. deImperio, Adoracion, Rodolfo, Conrado, Ernesto,

Alfredo, Carlos, Jr. and Juan, all surnamedImperio, and the remaining undivided one-half ()share in favor of plaintiffs uses Marcelo E. Pinedaand Lucila Pongco;

3. ordering the defendant municipality to pay to theplaintiffs in the proportion mentioned in theimmediately preceding paragraph the sum of

P64,440.00 corresponding to the rentals it hascollected from the occupants for their use andoccupation of the premises from 1970 up to andincluding 1975, plus interest thereon at the legalrate from January 1970 until fully paid;

4. ordering the restoration of ownership andpossession over the five lots in question in favor ofthe plaintiffs in the same proportionaforementioned;

5. ordering the defendant to pay the plaintiffs thesum of P3,000.00 for attomey's fees; and to paythe cost of suit.

The counterclaim of the defendant is herebyordered dismissed for lack of evidence presentedto substantiate the same.

SO ORDERED. (pp. 11-12, Rollo)

The foregoing judgment became final when herein petitioner's appealwas dismissed due to its failure to file the record on appeal on time.The dismissal was affirmed by the then Court of Appeals in CA-G.R.No. SP-12118 and by this Court in G.R. No. 59938. Thereafter, hereinprivate respondents moved for issuance of a writ of execution for thesatisfaction of the judgment. Respondent judge, on July 27, 1982,issued an order, to wit:

Considering that an entry of judgment had alreadybeen made on June 14, 1982 in G. R. No. L-59938and;

Considering further that there is no opposition toplaintiffs' motion for execution dated July 23, 1983;

Let a writ of execution be so issued, as prayed forin the aforestated motion. (p. 10, Rollo)

Petitioner, on July 30, 1982, filed a Motion to Quash the writ ofexecution on the ground that the municipality's property or funds are allpublic funds exempt from execution. The said motion to quash was,however, denied by the respondent judge in an order dated August 23,1982 and the alias writ of execution stands in full force and effect.

On September 13, 1982, respondent judge issued an order which inpart, states:

It is clear and evident from the foregoing thatdefendant has more than enough funds to meet its

judgment obligation. Municipal Treasurer MiguelC, Roura of San Miguel, Bulacan and Provincial

Treasurer of Bulacan Agustin O. Talavera aretherefor hereby ordered to comply with the money

judgment rendered by Judge Agustin C. Bagasaoagainst said municipality. In like manner, themunicipal authorities of San Miguel, Bulacan arelikewise ordered to desist from plaintiffs' legalpossession of the property already returned toplaintiffs by virtue of the alias writ of execution.

Finally, defendants are hereby given aninextendible period of ten (10) days from receipt ofa copy of this order by the Office of the ProvincialFiscal of Bulacan within which to submit theirwritten compliance, (p. 24, Rollo)

When the treasurers (provincial and municipal) failed to comply withthe order of September 13, 1982, respondent judge issued an order fortheir arrest and that they will be release only upon compliance thereof.

Hence, the present petition on the issue whether the funds of theMunicipality of San Miguel, Bulacan, in the hands of the provincial andmunicipal treasurers of Bulacan and San Miguel, respectively, arepublic funds which are exempt from execution for the satisfaction of themoney judgment in Civil Case No. 604-B.

Well settled is the rule that public funds are not subject to levy andexecution. The reason for this was explained in the case ofMunicipality ofPaoay vs. Manaois, 86 Phil. 629 "that they are held intrust for the people, intended and used for the accomplishment of thepurposes for which municipal corporations are created, and that tosubject said properties and public funds to execution would materially

impede, even defeat and in some instances destroy said purpose."And, in Tantoco vs. Municipal Council of Iloilo, 49 Phil. 52, it was heldthat "it is the settled doctrine of the law that not only the public propertybut also the taxes and public revenues of such corporations Cannot beseized under execution against them, either in the treasury or when intransit to it. Judgments rendered for taxes, and the proceeds of such

judgments in the hands of officers of the law, are not subject toexecution unless so declared by statute." Thus, it is clear that all thefunds of petitioner municipality in the possession of the MunicipalTreasurer of San Miguel, as well as those in the possession of theProvincial Treasurer of Bulacan, are also public funds and as suchthey are exempt from execution.

7/30/2019 Property Dg Ests 1

7/15

Besides, Presidential Decree No. 477, known as "The Decree on LocalFiscal Administration", Section 2 (a), provides:

SEC. 2. Fundamental Principles. Localgovernment financial affairs, transactions, andoperations shall be governed by the fundamentalprinciples set forth hereunder:

(a) No money shall be paid out of the treasuryexcept in pursuance of a lawful appropriation orother specific statutory authority.

xxx xxx xxx

Otherwise stated, there must be a corresponding appropriation in theform of an ordinance duly passed by the Sangguniang Bayan beforeany money of the municipality may be paid out. In the case at bar, ithas not been shown that the Sangguniang Bayan has passed anordinance to this effect.

Furthermore, Section 15, Rule 39 of the New Rules of Court, outlinesthe procedure for the enforcement of money judgment:

(a) By levying on all the property of the debtor,whether real or personal, not otherwise exemptfrom execution, or only on such part of theproperty as is sufficient to satisfy the judgment andaccruing cost, if he has more than sufficientproperty for the purpose;

(b) By selling the property levied upon;

(c) By paying the judgment-creditor so much of theproceeds as will satisfy the judgment and accruingcosts; and

(d) By delivering to the judgment-debtor theexcess, if any, unless otherwise, directed by

judgment or order of the court.

The foregoing has not been followed in the case at bar.

ACCORDINGLY, the petition is granted and the order of respondentjudge, dated July 27, 1982, granting issuance of a writ of execution;the alias writ of execution, dated July 27, 1982; and the order ofrespondent judge, dated September 13, 1982, directing the ProvincialTreasurer of Bulacan and the Municipal Treasurer of San Miguel,Bulacan to comply with the money judgments, are SET ASIDE; andrespondents are hereby enjoined from implementing the writ ofexecution.

Republic of the Phils. v. Lat Vda. De Castillo, et al.GR 69002, June 30, 1988

Facts: In 1951, the late Modesto Castillo applied for the registration of two

parcels of land, Lots 1 and 2, located in Banadero, Tanauan, Batangas, as the

true and absolute owner of the land with the improvements thereon, whichwas issued to him by the Register of Deeds of Batangas. He was married to

Amanda Lat. By virtue of an instrument dated in March 1960, the two parcels

of land with Original Certificate of Title (OCT) were consolidated and divided

into Lots 1 to 9 which was covered by Transfer Certificate of Title (TCT). After

the death of Modesto Castillo on August 31, 1960, Amanda Lat Vda. de

Castillo, et al., executed a deed of partition and assumption of mortgage in

favor of Florencio L. Castillo, et al., as a result of which Original Certificate of

Title was cancelled, and in lieu thereof, new transfer certificates of title (TCT)

were issued to the following appellants-defendants. The Republic of the

Philippines filed Civil Case No. 2044 with the lower court for the annulment

of the certificates of title issued to defendants Amanda Lat Vda. de Castillo,

et al., as heirs/successors of Modesto Castillo, and for the reversion of the

lands covered thereby (Lots 1 and 2, Psu-119166) to the State. It was alleged

that said lands had always formed part of the Taal Lake and being of public

ownership, it could not be the subject of registration as private property.

They alleged in their answer that the Government's action was already

barred by the decision of the registration court; that the action has

prescribed; and that the government was estopped from questioning the

ownership and possession of appellants. The then Court of First Instance of

Batangas, Branch VI, decided that the Register of Deeds of Batangas to order

the cancellation of the OCT in the name of Modesto Castillo and the

subsequent TCT issued over the property in the names of the defendants.

Lots Nos. 1 and 2 of Plan Psu-19166 are hereby declared public lands

belonging to the state. Without pronouncement as to costs. Defendants

appealed their case. The Court of Appeals, in a decision promulgated on April

26,1984, reversed and set aside the appealed decision, and dismissed the

complaint.

Issue: The sole issue raised in this case is whether or not the decision of the

Land Registration Court involving shore lands constitutes res adjudicata.

HELD: No. Shores are properties of the public domain intended for public use

(Art. 420, Civil Code), and therefore not registerable. Thus, it has long been

settled that portion of the foreshore or of the territorial waters and beaches

cannot be registered. Their inclusion in a certifi cate of title does not convertthe same into properties of private ownership or confer title upon the

registrant. A lot which always formed part of a lake, washed and inundated

by the waters thereof are not subject to registration, being outside the

commerce of men. If the lots in litigation are of public domain (Art. 502, par.

4, Civil Code), the registration court does not have jurisdiction to adjudicate

the lands as private property. Hence, res judicata does not apply.

G.R. No. 81961 April 18, 1989

DIRECTOR OF LAND MANAGEMENT and DIRECTOR OFFOREST DEVELOPMENT, petitioners,vs.

COURT OF APPEALS and MINO HILARIO, respondents.

The Solicitor General for petitioners.

R.M. Molintas Law Office for private respondents.

GUTIERREZ, JR., J.:

This is a petition for review on certiorariof the Court ofAppeals' decision which affirmed the trial court's decisionordering the issuance of a certificate of title in the name of

Mino Hilario over a parcel of land particularly described insurvey plan PSU-221769.

The facts of the case as stated in the Court of Appeals'decision are as follows:

The land subject matter of the applicationfor registration is situated in the sitio ofCosaran, Bo. Baloy, Itogon, Benguet,Philippines. It is within the "CentralCordillera Forest Reserve", establishedunder Proclamation No. 217 datedFebruary 16, 1929, the Ambuklao-Binga

Watershed covered by ExecutiveProclamation No. 548, dated April 19,1969, and the Upper Agno River BasinMultiple Use of Forest ManagementDistrict created under ForestryAdministrative Order No. 518, datedMarch 9, 1971.

In his application for land registration filedon March 10, 1975 with the Court of FirstInstance of Baguio-Benguet (now RTC),applicant-appellee Mino Hilario claimedownership in fee simple over said land bypurchase from his father Hilario Molang on

April 17, 1972. The subject land,consisting of one (1) parcel, with an areaof 5.3213 hectares, is situated, boundedand described as shown in plan PSU-221769, the technical description of whichis attached to the application and made apart thereof.

The applicant seeks to register the title tothe subject land under the LandRegistration Act (Act 496). However, as analternative, the applicant invokes the

7/30/2019 Property Dg Ests 1

8/15

benefits of Chapter VIII of Act No. 2874 assuperseded by Commonwealth Act 141,as well as the provisions of Republic Act1942 and Republic Act 3872 because theapplicant is a member of the culturalminorities.

On December 3, 1975, the Director ofBureau of Lands filed his opposition datedJuly 14, 1975, alleging that neither the

applicant nor his predecessors-in-interestpossess sufficient title to acquireownership in fee simple of the land appliedfor, the same not having been acquired byany of the various types of title issued bythe Spanish Government, or have been inopen, continuous, exclusive and notoriouspossession and occupation of the land inquestion for at least thirty (30) yearsimmediately preceding the filing of thepresent application, and that the aforesaidproperty is a portion of the public domainbelonging to the Republic of thePhilippines and is not subject to private

appropriation.

On March 8, 1976, the Director of theBureau of Forest Development filed hisopposition dated March 1, 1976, to theregistration of whatever title of theapplicant on the ground that the areaapplied for is within the "Central CordilleraForest Reserve" under LC Map No. 1435,aside from the fact that it is a part of theAmbuklao-Binga Watershed covered byExecutive Proclamation No. 548 datedApril 19, 1969 as evidenced by the letter-report of Forest Ranger Antonio Chagyo,and Engineer Carlito Banac; that the areasought to be registered is not in the entirepossession of applicant Mino Hilario in theconcept of an owner considering that thereare several houses built by differentindividuals within the area in question; thatthe applicant does not have anyregistrable title either in law or in fact overthe property; and that the area is notclassified as alienable or disposable land.

After due trial, the lower court rendered itsdecision dated May 16, 1985, which

decreed the confirmation and registrationof the subject land in the name ofapplicant Mino Hilario, married to SofinaHilario.

The decision is based on the facts foundby the trial court, to wit:

The evidence for the applicant consists ofhis testimony and those of his witnesses,namely, Dionisio Capsula, 54 years old,farmer and a neighbor in the place; HilarioMolang, 55 years old, the applicant'sfather; and Eustaquio Cabson, 80 years

old, and another neighbor; anddocumentary exhibits, Exhibits "A" to "U".Also, an ocular inspection was conductedon the premises. From these, the Courtgathers that the applicant acquired theland subject hereof by purchase from hisfather, Hilario Molang on April 17, 1972;that his said father, in turn acquired theproperty from the latter's father, and theapplicant's grandfather Shawidi; that theapplicant and his predecessorssuccessively, continuously, publicly and

adversely occupied, possessed andworked on the land in the concept ofabsolute owners since before the FirstWorld War, building supporting walls, ricepaddies where they planted rice, andplanting fruit-bearing trees; that as seenduring the ocular inspection there areabout 100 mango trees, three of which aremore than 100 years old, about 50matured avocado trees, about 200 banana

trees, about 30 maguey, about 40 chezatrees, about 30 coffee trees, about 8jackfruit trees, cassava, two bamboogroves more than 100 years old, 70orange trees, camote patches, three ricepaddies for planting rice, about 50pineapple plants, stone walls, fence ofGerman cables, around 30 scatteredKaingins, 22 young coconut trees, andabout two old coconut trees; that the landis suitable to agriculture; and that thereare seven old houses made of galvanizediron inside the area being registered. Theproperty had been declared for taxation

purposes in the name of Hilario Molang,and land tax therefor had been paid byhim since 1945. Since 1972 the propertyhas been declared in the name of theapplicant and land tax has been paid byhim.

The evidence for the Governmentoppositors consists of the testimonies ofAntonio Chaggyo, a Forest Manager of theBureau of Forest Development, andAlfredo A. Ramirez, a Land Investigator ofthe Bureau of Lands, and their respectivereports (Exhibits "1" and "2") and the first

indorsement of the District Land Officethat the land in question "appears to bewithin the Central Cordillera ForestReservation which is outside thejurisdiction of this office." (Exhibit "3"). Thetestimonies of these witnesses on theirrespective observations when theyseparately investigated the land inquestion and their respective reports donot refute the evidence of the applicant asto the length, nature and manner ofpossession of the land subject of this caseby the applicant and his predecessors-in-interest. On the contrary, their testimonies,

viewed in their entirety, would tend tocorroborate the evidence adduced by theapplicant. The report of the LandInvestigator even states that the otherhouses found within the land at issue are"owned by his (applicant's) relatives ...who swore that they are not claiming anyportion of the land they occupy.

The preponderance of evidence clearlyshows that the applicant, and hispredecessors-in-interest before him, all ofwhom are members of the national culturalminorities, have been in actual, open,public, peaceful, continuous, exclusiveand notorious possession and occupationof the land subject hereof which is suitableto agriculture, under a bona fide claim ofownership since before the First WorldWar up to the present or at least morethan sixty (60) years.

On appeal, the Court of Appeals affirmed the lower court'sdecision.

7/30/2019 Property Dg Ests 1

9/15

Hence, this present petition.

The Director of Land Management and the Director ofForest Development raise the following assignments oferrors in this petition, to wit:

1. The Court of Appeals gravely erred inholding that the land in question,notwithstanding that it is within the CentralCordillera Forest Reserve, is registrableon the basis of Republic Act No. 3872;which said court misconstrued andmisapplied.

2. The Court of Appeals gravely erred inholding that private respondent MinoHilario had acquired a private right to theland in question prior to the issuance ofProclamation No. 217 on February 17,1929 establishing the Central CordilleraForest Reserve and ExecutiveProclamation No. 548 on April 19, 1969establishing the Ambuklao-Binga

Watershed, and therefore, said land isexempted from the force and effect ofthose executive issuances.

3. The Court of Appeals gravely erred inaffirming the lower Court's Decision whichgranted the application for registration ofthe land in question of respondent MinoHilario. (Rollo, pp. 12-13).

The petition is impressed with merit.

There can be no imperfect title to be confirmed over lands

not yet classified as disposable or alienable.Declassification of forest land is an express and positive actof Government. It cannot be presumed. Neither should it beignored nor deemed waived.

As held in the case ofRepublic v. Court of Appeals, [154SCRA 476 (1987)]:

... It is already a settled rule that forestlands or forest reserves are not capable ofprivate appropriation and possessionthereof, however long, cannot convertthem into private property, (Vano v.Government of Philippine Islands, 41 Phil.

161; Adorable v. Director of Forestry, 107Phil. 401; Director of Forestry v. Muoz 23SCRA 1183; Republic v. De la Cruz, 67SCRA 221; Director of Lands v. Reyes &Alinsunurin v. Director of Lands, 68 SCRA177; Republic v. Court of Appeals, 89SCRA 648; and Director of Lands v. Courtof Appeals, 133 SCRA 701) unless suchlands are reclassified and considereddisposable and alienable by the Director ofForestry, but even then, possession of theland prior to the reclassification of the landas disposable and alienable cannot becredited as part of the thirty-year

requirement under Section 48 (b) of thePublic Land Act (Director of Lands v.Court of Appeals, supra). In this case,there is no showing that the land inquestion is disposable or alienable. This isa matter which cannot be assumed. It callsfor proof.

In the instant case, the subject land is within the CentralCordillera Forest Reserve. Private respondent Hilariosubmits that even assuming that this is so, still he may ownthe land situated within the forest reserve as he is a

member of the cultural minorities. His basis for this isCommonwealth Act No. 141 as amended (Public Land Act),sec. 48 (c) which provides:

... The following-described citizens of thePhilippines, occupying lands of the publicdomain or claiming to own any such landsor an interest therein, but whose titleshave not been perfected, may apply to theCourt of First Instance of the province

where the land is located for confirmationof their claims and the issuance of acertificate of title therefor, under the LandRegistration Act, to wit:

xxx xxx xxx

(b) Those who by themselves or throughtheir predecessors in interest have been inopen, continuous, exclusive, and notoriouspossession and occupation of agriculturallands of the public domain, under a bonafide claim of acquisition or ownership, for

at least thirty years immediately precedingthe filing of the application for confirmationof title except when prevented by war orforce majeure. These shall be conclusivelypresumed to have performed all theconditions essential to a Governmentgrant and shall be entitled to a certificateof title under the provisions of this chapter.

(c) Members of the national culturalminorities who by themselves or throughtheir predecessors-in-interest have beenin open, continuous, exclusive andnotorious possession and occupation of

lands of the public domain suitable toagriculture, whether disposable or not,under a bona fide claim of ownership for atleast 30 years shall be entitled to therights granted in subsection (b) hereof. (asamended by RA. No. 3872, section 1,approved June 18, 1964).

Respondent Hilario contends that the phrase "whetherdisposable or not" should be construed to mean that aparcel of land situated in an inalienable land may beprivately-owned by a member of the cultural minorities.

We agree with the Solicitor General's observations, to wit:

1. Republic Act No. 3872 is onlyamendatory to Commonwealth Act No.141, otherwise known as the Public LandAct. The Public Land Act applies toagricultural public lands and to no othertype of land borne out by the explicit termsof Section 2, Chapter I and Section 2,Chapter II, both under Title I of the PublicLand Act. Chapter I is subtitled "Short titleof the Act, lands to which it applies, andofficers charged with its execution."Section 2 clearly states that the

"provisions of this Act apply to the lands ofthe public domain; but timber and minerallands shall be governed by special laws ...Section 10 provides that the words"alienation", "disposition", or "concession"as used in this Act, shall mean any of themethods authorized by this Act for theacquisition, lease, use, or benefit of thelands of the public domain other thantimber or mineral lands. (Emphasissupplied).

7/30/2019 Property Dg Ests 1

10/15

2. The new sub-section (c) of Section 48of the Public Land Act should be readtogether with the provision of thepreceding subsection (b) which expresslyrefers to "agricultural lands of the publicdomain." Perforce, the term "lands of thepublic domain suitable to agriculture" asused in the said new subsection of Sec.48 should mean the same thing as theterm "agricultural lands of public domain."

It does not appear that two differentclasses of lands were intended to be thesubject matter of one section of the samePublic Land Act. And both termsmanifestly do not refer to either timber orforest land including forest reserves.

3. The construction given by respondentCourt of Appeals to the particular provisionof law involved, as to include even forestreserves as susceptible to privateappropriation, is to unconstitutionally applysuch provision. For, both the 1973 andpresent Constitution petitions do not

include timber or forest lands as alienable.Thus, Section 8, Article XIV of 1973Constitution states that 'with the exceptionof agricultural, industrial or commercial,residential and resettlement lands of thepublic domain, natural resources shall notbe alienated." The new Constitution, in itsArticle XII, Section 2, also expressly statesthat "with the exception of agriculturallands, all other natural resources shall notbe alienated."

What the law contemplates are lands thatare agricultural although not disposable,such as agricultural lands within areservation for fruit experiments (as theone in Baguio City administered by theBureau of Plant Industry, or agriculturallands reserved for the Camarines SurAgricultural School in Pili, Camarines Sur),or those reserved for a specific purpose,but certainly not a forest reserve, a timberland, which the Constitution, the PublicLand Act itself, and jurisprudence haveexcluded from alienation. (Rollo, pp. 16-18).

As to the lower court's ruling that "applicant's predecessor,Shawidi, had been occupying and working on the land atthe outbreak of the First World War in 1914" long beforeProclamation No. 217 declaring the Central CordilleraForest Reserve was issued, this Court has had theopportunity to rule on this issue earlier.

As held in the case ofRepublic v. Court of Appeals, supra:

There is an erroneous assumption implicitin the challenged decision of the Court ofAppeals, which the government oppositorsalso appear to have overlooked. This isthe reliance on Proclamation No. 217 of

Governor General Henry L. Stimson asthe operative act which converted thelands covered by the Central CordilleraForest Reserve into forest lands. This iswrong. The land was not non-forest oragricultural land prior to the 1929proclamation. It did not earn aclassification from non-forest into forestland because of the proclamation. Theproclamation merely declared a specialforest reserve out of already existing forestlands. The land was already forest or

timber land even before the proclamation.The alleged entry in 1915 of SalmingPiraso and the cultivation of 15 hectaresout of a 219.7879 hectares claimed areahas no legal significance. A person cannotenter into forest land and by the simple actof cultivating a portion of that land, earncredits towards an eventual confirmationof imperfect title. The Government mustfirst declare the forest land to be alienable

and disposable agricultural land before theyear of entry, cultivation, and exclusiveand adverse possession can be countedfor purposes of an imperfect title.

WHEREFORE, the petition is hereby GRANTED. Thedecision of the Court of Appeals affirming the decision ofthe trial court which granted the private respondent'sapplication for registration of the land in question isreversed and set aside. The application for land registrationis dismissed.

Standard Oil Co. v. Jaranillo 44 Phil. 631

FACTS: De la Rosa, who was renting a parcel ofland in Manila, constructed a

building of strong materials thereon, which she conveyed to plaintiff by way

of chattel mortgage. When the mortgagee was presenting the deed to the

Register of Deeds of Manila for registration in the Chattel Mortgage Registry,

the Registrar refused to allow the registration on the ground that the

building was areal property, not personal property, and therefore could not

be the subject of a valid chattel mortgage. Issue: May the deed be registered

in the chattel mortgage registry?HELD: Yes, because the Registrars duty is

MINISTERIALin character. There is no legal provision con-ferring upon him

any judicial or quasi-judicial power to determine the nature of the document

presented beforehim. He should therefore accept the legal fees being

tendered,and place the document on record.

Leung Yee v. Strong Machinery Co. 37 Phil. 644

FACTS: The Compania Agricola Filipina purchasedfrom Strong Machinery

Co. rice-cleaning machines which the former installed in one of its buildings.

As securityfor the purchase price, the buyer executed a CHATTELMORTGAGE

on the machines and the building on which they had been installed. Upon

buyers failure to pay, the registered mortgage was foreclosed, and the

building was purchased by the seller, the Strong Machinery Co. This sale

was annotated in the Chattel Mortgage Registry. Later, the Agricola also

sold to Strong Machinery thelot on which the building had been

constructed. This salewas not registered in the Registry of Property BUT

theMachinery Co. took possession of the building and the lot.Previously

however, the same building had been purchasedat a sheriffs sale by LeungYee, a creditor of Agricola, although Leung Yee knew all the time of the

prior sale in favor of Strong Machinery. This sale in favor of Leung Yee was

recorded in the Registry. Leung Yee now sues to recover the property from

Strong Machinery. Issue: who has a better right to the property?

HELD: The building is real property, therefore, itssale as annotated in the Chattel Mortgage Registry cannotbe given the legal effect of registration in the Registryof Real Property. The mere fact that the parties decidedto deal with the building as personal property does notchange its character as real property. Thus, neither theoriginal registry in the chattel mortgage registry, nor theannotation in said registry of the sale of the mortgaged

property had any effect on the building. However, sincethe land and the building had fi rst been purchased byStrong Machinery (ahead of Leung Yee), and this factwas known to Leung Yee, it follows that Leung Yee wasnota purchaser in good faith, and should therefore notbe entitled to the property. Strong Machinery thus hasa better right to the property.

Valdez v. Central Altagracia, Inc.

225 U.S. 58

FACTS: Suppose in the fi rst case, the tenant hadpromised to give the machinery later to the owner of the

7/30/2019 Property Dg Ests 1

11/15

land; or suppose the tenant acted only as the agentof theowner of the land, would the machinery be considered realor personal?HELD: The machinery would be considered as realproperty in both instances. Machinery placed on propertyby a tenant does not become immobilized: when however,a tenant places it there pursuant to a contract that it shallbelong to the owner, it becomes immobilized as to thattenant and his assigns having notice, although it does notbecome so as to the creditors not having legal notice of thelease. Machinery which is movable in its nature becomesimmobilized when placed in a plant by the owner of theproperty or plant, but not when so placed by a tenant, ausufructuary, or a person having only a temporary right,unless such person acted as the agent of the owner.

Bicerra, et al. v. Teneza, et al.

L-16218, Nov. 29, 1962

FACTS: A complaint was fi led in