PUNSALAN, JR. V. VDA. DE LACSAMANA G.R. No.

L-55729 March 28, 1983

PUNSALAN, JR. V. VDA. DE LACSAMANA
G.R. No. L-55729 March 28, 1983

FACTS:
Punsalan was the owner of a piece of land, which he mortgaged in favor of PNB. Due to his failure to
pay, the mortgage was foreclosed and the land was sold in a public auction to which PNB was the
highest bidder.

On a relevant date, while Punsalan was still the possessor of the land, it secured a permit for the
construction of a warehouse.

A deed of sale was executed between PNB and Punsalan. This contract was amended to include the
warehouse and the improvement thereon. By virtue of these instruments, respondent Lacsamana
secured title over the property in her name.

Petitioner then sought for the annulment of the deed of sale. Among his allegations was that the bank
did not own the building and thus, it should not be included in the said deed.

Petitioner’s complaint was dismissed for improper venue. The trial court held that the action being filed
in actuality by petitioner is a real action involving his right over a real property.

ISSUE:

W/N the trial court erred in dismissing the case on the ground of improper venue.
W/N the warehouse is an immovable and must be tried in the province where the property lies.

HELD:
Warehouse claimed to be owned by petitioner is an immovable or real property. Buildings are always
immovable under the Code. A building treated separately from the land on which it is stood is
immovable property and the mere fact that the parties to a contract seem to have dealt with it separate
and apart from the land on which it stood in no wise changed its character as immovable property.

Standard Oil Co. of New York vs Jaramillo

44 Phil 630

FACTS:
Gervasia dela Rosa executed a document in the form of a Chattel Mortgage purporting to convey to
Standard Oil Co. by way of mortgage both the leasehold interest of the land she leases in Manila and the
building which stands thereon.

The clauses in said document describe the property as personal including the right, title and interest of
the mortgagor in and to the contract of lease and also the building of the said premises therein.

After said document had been duly acknowledge and delivered, the petitioner presented it to Joaquin
Jaramillo, as register of deeds of the City of Manila, for the purpose of having the same recorded. The
respondent opined that it was not a chattel mortgage for the interests mortgaged did not appear to be
personal property within the meaning of the Chattel Mortgage Law and registration was refused on this
ground only.

ISSUE:
1. Whether or not Registry of Deeds can determine the nature of property to be registered.
2. Whether the Registry of Deeds has powers beyond Ministerial discretion.

RULING:
1.Jaramillo, register of deeds, does not have judicial or quasi-judicial power to determine nature of
document registered as chattel mortgage Section 198 of the Administrative Code, originally of Section
15 of the Chattel Mortgage Law (Act 1508 as amended by Act 2496), does not confer upon the register
of deeds any authority whatever in respect to the "qualification," as the term is used in Spanish law, of
chattel mortgages. His duties in respect to such instruments are ministerial only. The efficacy of the act
of recording a chattel mortgage consists in the fact that it operates as constructive notice of the
existence of the contract, and the legal effects of the contract must be discovered in the instrument
itself in relation with the fact of notice.

2.Article 334 and 335 of the Civil Code does not supply absolute criterion on distinction between real
and personal property for purpose of the application of the Chattel Mortgage Law Article 334 and 335 of
the Civil Code supply no absolute criterion for discriminating between real property and personal
property for purposes of the application of the Chattel Mortgage Law. Those articles state rules which,
considered as a general doctrine, are law in this jurisdiction; but it must not be forgotten that under
given conditions property may have character different from that imputed to it in said articles. It is
undeniable that the parties to a contract may be agreement treat as personal property that which by
nature would be real property; and it is a familiar phenomenon to see things classed as real property for
purposes of taxation which on general principle might be considered personal property. Other situations
are constantly arising, and from time to time are presented to the Supreme Court, in which the proper
classification of one thing or another as real or personal property may be said to be doubtful.]

Davao Sawmill v. Castillo

DAVAO SAW MILL vs. APRONIANO G. CASTILLO and DAVAO LIGHT & POWER CO., INC. G.R. No. L-
40411 August 7, 1935 : 61 SCRA 709

Facts:
Davao Saw Mill Co., Inc., is the holder of a lumber concession from the Government of the Philippine
Islands. However, the land upon which the business was conducted belonged to another person. On the
land the sawmill company erected a building which housed the machinery used by it. Some of the
implements thus used were clearly personal property, the conflict concerning machines which were
placed and mounted on foundations of cement. In the contract of lease between the sawmill company
and the owner of the land there appeared the following provision: That on the expiration of the period
agreed upon, all the improvements and buildings introduced and erected by the party of the second
part shall pass to the exclusive ownership of the lessor without any obligation on its part to pay any
amount for said improvements and buildings; which do not include the machineries and accessories in
the improvements.

In another action wherein the Davao Light & Power Co., Inc., was the plaintiff and the Davao, Saw, Mill
Co., Inc., was the defendant, a judgment was rendered in favor of the plaintiff in that action against the
defendant; a writ of execution issued thereon, and the properties now in question were levied upon as
personalty by the sheriff. No third party claim was filed for such properties at the time of the sales
thereof as is borne out by the record made by the plaintiff herein

It must be noted also that on number of occasion, Davao Sawmill treated the machinery as personal
property by executing chattel mortgages in favor of third persons. One of such is the appellee by
assignment from the original mortgages.

The lower court rendered decision in favor of the defendants herein. Hence, this instant appeal.

Issue:
whether or not the machineries and equipments were personal in nature.

Ruling/ Rationale:
Yes. The Supreme Court affirmed the decision of the lower court.

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, a usufructuary, or any person
having only a temporary right, unless such person acted as the agent of the owner.

Board of Assessment Appeals, Q.C. vs Meralco

10 SCRA 68
GR No. L-15334
January 31, 1964

FACTS
On November 15, 1955, the QC City Assessor declared the MERALCO's steel towers subject to real
property tax. After the denial of MERALCO's petition to cancel these declarations, an appeal was taken
to the QC Board of Assessment Appeals, which required respondent to pay P11,651.86 as real property
tax on the said steel towers for the years 1952 to 1956.
MERALCO paid the amount under protest, and filed a petition for review in the Court of Tax Appeals
(CTA) which rendered a decision ordering the cancellation of the said tax declarations and the refunding
to MERALCO by the QC City Treasurer of P11,651.86.

ISSUE
Are the steel towers or poles of the MERALCO considered real or personal properties?

HELD
Pole – long, comparatively slender, usually cylindrical piece of wood, timber, object of metal or the like;
an upright standard to the top of which something is affixed or by which something is supported.

MERALCO's steel supports consists of a framework of 4 steel bars/strips which are bound by steel cross-
arms atop of which are cross-arms supporting 5 high-voltage transmission wires, and their sole function
is to support/carry such wires. The exemption granted to poles as quoted from Part II, Par.9 of
respondent's franchise is determined by the use to which such poles are dedicated.

It is evident that the word “poles”, as used in Act No. 484 and incorporated in the petitioner's franchise,
should not be given a restrictive and narrow interpretation, as to defeat the very object for which the
franchise was granted. The poles should be taken and understood as part of MERALCO's electric power
system for the conveyance of electric current to its consumers.

Art. 415 of the NCC classifies the following as immovable property:

(1) Lands, buildings, roads and constructions of all kinds adhered to the soil;
xxx
(3) Everything attached to an immovable in a fixed manner, in such a way that it cannot be separated
therefrom without breaking the material or deterioration of the object;
xxx
(5) Machinery, receptacles, instruments or implements intended by the owner pf the tenement for an
industry ot 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;
Following these classifications, MERALCO's steel towers should be considered personal property. It
should be noted that the steel towers:
(a) are neither buildings or constructions adhered to the soil;
(b) are not attached to an immovable in a fixed manner – they can be separated without breaking the
material or deterioration of the object;
© are not machineries, receptacles or instruments, and even if they are, they are not intended for an
industry to be carried on in the premises.

Makati Leasing and Finance Corp., vs Wearever Textile Mills, Inc.,

122 SCRA 296
GR No. L-58469
May 16, 1983

FACTS
Wearever Textile Mills, Inc. executed a chattel mortgage contract in favor of Makati Leasing and Finance
Corporation covering certain raw materials and machinery. Upon default, Makati Leasing fi led a petition
for judicial foreclosure of the properties mortgaged. Acting on Makati Leasing’s application for replevin,
the lower court issued a writ of seizure. Pursuant thereto, the sheriff enforcing the seizure order seized
the machinery subject matter of the mortgage. In a petition for certiorari and prohibition, the Court of
Appeals ordered the return of the machinery on the ground that the same can-not be the subject of
replevin because it is a real property pursuant to Article415 of the new Civil Code, the same being
attached to the ground by means of bolts and the only way to remove it from Wearever textile’s plant
would be to drill out or destroy the concrete fl oor. When the motion for reconsideration of Makati
Leasing was denied by the Court of Appeals, Makati Leasing elevated the matter to the Supreme Court.

ISSUE
Whether the machinery in suit is real or personal property from the point of view of the parties.

HELD
There is no logical justification to exclude the rule out the present case from the application of the
pronouncement in Tumalad v Vicencio, 41 SCRA 143. If a house of strong materials, like what was
involved in the Tumalad case, 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 innocent third party will
be prejudiced thereby, there is absolutely no reason why a machinery, which is movable in its nature
and becomes immobilized only by destination or purpose, may not be likewise treated as such. This is
really because one who has so agreed is estopped from the denying the existence of the chattel
mortgage.

In rejecting petitioner’s assertion on the applicability of the Tumalad doctrine, the CA lays stress on the
fact that the house involved therein was built on a land that did not belong to the owner of such house.
But the law makes no distinction with respect to the ownership of the land on which the house is built
and We should not lay down distinctions not contemplated by law.

It must be pointed out that the characterization by the private respondent is indicative of the intention
and impresses upon the property the character determined by the parties. As stated in Standard Oil Co.
of New York v. Jaramillo, 44 Phil. 630, it is undeniable that the parties to a contract may, by agreement,
treat as personal property that which by nature would be a real property as long as no interest of third
parties would be prejudiced thereby.

The status of the subject matter as movable or immovable property was not raised as an issue before
the lower court and the CA, except in a supplemental memorandum in support of the petition filed in
the appellate court. There is no record showing that the mortgage has been annulled, or that steps were
taken to nullify the same. On the other hand, respondent has benefited from the said contract.

Equity dictates that one should not benefit at the expense of another.

As such, private respondent could no longer be allowed to impugn the efficacy of the chattel mortgage
after it has benefited therefrom.

Therefore, the questioned machinery should be considered as personal property.