G.R. No.

L-11658, February 15, 1918 further that the machinery company's claim of
ownership was well founded, he cannot be said to
Leung Yee vs Frank L. Strong Machinery have been an innocent purchaser for value.
Company and J.G/ Williamson
He took the risk and must stand by the
Ponente: Carson consequences; and it is in this sense that we find
that he was not a purchaser in good faith. One who
purchases real estate with knowledge of a defect or
Facts: lack of title in his vendor cannot claim that he has
acquired title thereto in good faith as against the
The “Compania Agricola Filipina” purchased from true owner of the land or of an interest therein; and
“Strong Machinery Co.” rice-cleaning machines the same rule must be applied to one who has
which the former installed in one of its buildings. As knowledge of facts which should have put him
security for the purchase price, the buyer executed upon such inquiry and investigation as might be
a CHATTEL MORTGAGE on the machines and the necessary to acquaint him with the defects in the
building on which they had been installed. Upon title of his vendor.
buyer’s failure to pay, the registered mortgage was
foreclosed, and the building was purchased by the Art. 1473 of the New Civil Code provides the
seller, the “Strong Machinery Co.” This sale was following rules on determining ownership of
annotated in the Chattel Mortgage Registry. property which has been sold to different vendees:

Later, the “Agricola” also sold to “Strong If Personal Property – grant ownership to person
Machinery” the lot on which the building had been who 1st possessed it in good faith
constructed. This sale was not registered in the If Real Property – grant ownership to person who
Registry of Property BUT the Machinery Co. took 1st recorded it in the Registry
possession of the building and the lot. Previously
however, the same building had been purchased at If no entry – grant to person who 1st possessed in
a sheriff’s sale by Leung Yee, a creditor of good faith
“Agricola,” although Leung Yee knew all the time of
the prior sale in favor of “Strong Machinery.” This If no proof of possession – grant to person who
sale in favor of Leung Yee was recorded in the presents oldest title.
Registry. Leung Yee now sues to recover the
property from “Strong Machinery.”

Issue:

Whether or not the building can be classified as a

real property, so as to subject it to a real estate
mortgage

Held:

The disputed building was considered by the court

as Real property.

The mere fact that the parties seem to have dealt

with it separately and apart from the land would
change its character as real property. Hence, such
mortgage would still be a real estate mortgage for
the building that served as a security and the
executed chattel mortgage and its consequences
cannot be said to have any legal effect.

But it appearing that Yee had full knowledge of the

machinery company's claim of ownership when he
executed the indemnity bond and bought in the
property at the sheriff's sale, and it appearing
G.R. No. L-40411, August 7, 1935 Machinery which is movable in its nature only
becomes immobilized when placed in a plant by
Davao Saw Mill Co., Inc. vs Aproniano Castillo the owner of the property or plant, but not when so
and Davao Light and Power Co., Inc. placed by a tenant, a usufructuary, or any person
having only a temporary right, unless such person
Ponente: Malcolm acted as the agent of the owner.

Facts:

Petitioner Davao Saw Mill Co., Inc., operates a

sawmill. 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 machines were placed and mounted
on foundations of cement. Part of the lease
agreement was a stipulation in which after the
lease agreement, all buildings and improvements
would pass to the ownership of the lessor, which
would not include machineries and accessories.
the Davao Saw Mill Co., Inc., has on a number of
occasions treated the machinery as personal
property by executing chattel mortgages in favor of
third persons. One of such persons is the appellee
by assignment from the original mortgages. The
trial judge found that those properties were
personal in nature, and as a consequence
absolved the defendants from the complaint, with
costs against the plaintiff.

ISSUE:

Whether or not the machinery in dispute is a

personal property.

Held:

Affirmative. The machinery must be classified as

personal property.

The characterization of the property as chattels by

the appellant is indicative of intention and
impresses upon the property the character
determined by the parties.

The lessee placed the machinery in the building

erected on land belonging to another, with the
understanding that the machinery was not included
in the improvements which would pass to the
lessor on the expiration of the lease agreement.
The lessee also treated the machinery as
personal property in executing chattel mortgages
in favor of third persons. The machinery was
levied upon by the sheriff as personalty pursuant to
a writ of execution obtained without any protest
being registered.
 the wooden frames attached to them but Roco
insisted in dismantling the same on his own
Machinery & Engineering Supplies, Inc. v. CA responsibility and alleged that the bond was posted
for such eventuality. Thus, the deputy sheriffs
G.R. No. L-7057 directed that some of the machine’s supports be
cut.

DOCTRINE: When the machinery and equipment On 20 March 1953, the Respondent Company filed
in question appeared to be attached to the land, an urgent motion, with a counter-bond in the
particularly to the concrete foundation of said amount of P15,769 for the return of the properties
premises, in a fixed manner, in such a way that the seized by the sheriffs. On the same day, the trial
former could not be separated from the latter court issued an order, directing the Provincial
"without breaking the material or deterioration of Sheriff of Bulacan to return the machinery and
the object or that in order to remove said outfit, it equipment to the place where they were installed at
became necessary, not only to unbolt the same, the time of seizure.
but , also, to cut some of its wooden supports and On 2 March 1953, the deputy sheriffs returned the
when, said machinery and equipment were said properties by depositing them along the road
"intended by the owner of the tenement for an near the quarry of the Respondent Company,
industry" carried on said immovable and tended, it without inventory and re-installation in its former
becomes immovable property pursuant to position and replacing the destroyed posts, which
paragraphs 3 and 5 of Article 415 of Civil Code of rendered its use impracticable.
the Philippines.
On 23 March 1953, Respondents’ counsel asked
FACTS: the provincial sheriff if the machinery and
On 13 March 1953, Machinery & Engineering equipment dumped on the road would be re-
Supplies, Inc. (the “Petitioner”) filed a complaint for installed to their former position and condition. The
replevin in the Court of First Instance (“CFI”) of next day, the provincial sheriff filed an urgent
Manila for the recovery of the machinery and motion in court manifesting the Roco had been
equipment sold and delivered to Ipo Limestone asked to furnish the sheriff’s office with the
Co., Inc and Dr. Antonio Villarama (the expenses, laborers, technical men and equipment
“Respondents”) at their factory in Barrio Bigti, to carry into effect the courts order, among other
Norzagaray, Bulacan. things but that Roco absolutely refused and asking
the Court that Respondent Company be ordered to
Upon application ex-parte of the Petitioner and provide the required aid or relieve the sheriff of the
upon approval of its bond sum of P15,769.00, duty of complying to the said order.
herein Respondent Judge issued an order directing
the Provincial Sheriff of Bulacan to seize and take On 30 March 1953, the trial court ordered the
immediate possession of the properties specified in provincial sheriff and the Petitioner Company to
the said order. reinstate the machinery and equipment removed by
them in their original condition. An urgent motion
On 19 March 1953, two deputy sheriffs of Bulacan, of the provincial sheriff dated 15 April 1953
Ramon S. Roco and a crew of technician and requesting for an extension was denied and on 4
laborers proceeded to Bigti to carry out the CFI’s May 1953, the trial court ordered the Petitioner
order. Company to furnish the provincial sheriff with the
necessary funds and technical crew and laborers to
Leonardo Contreras, herein Respondent reinstate the machinery and equipment.
Company’s Manager met the sheriffs and handed
the latter a letter addressed to Atty. Leopoldo C. The case was appealed before the Court of
Paled, ex-officio Provincial Sheriff of Bulacan, Appeals but the latter dismissed the same for lack
signed by the Respondent Company’s counsel, of merit.
protesting against the seizure of the properties on
the ground that the same are not personal Hence this petition filed before the Supreme Court
properties. (the “SC”). The Petitioner argued that the
respondent judge had completely disregarded his
manifestation that the machinery and equipment
seized were and still are the Petitioner's property
Roco and the deputy sheriffs contended that their until fully paid for and such never became
duty is ministerial and went ahead to the factory. immovable. The question of ownership and the
At the factory, Rocco’s attention was called to the applicability of Art. 415 of the new Civil Code are
fact that the equipment could not possibly be immaterial in the determination of the only issue
dismantled without causing damages or injuries to involved in this case.
ISSUE:

Whether the machineries and equipments can be

considered as personal properties subject to
replevin. -- NO

HELD:

The SC held that the special civil action known as

replevin, governed by Rule 62 of Court, is
applicable only to "personal property". When the
sheriff repaired to the premises of respondent
company, the machinery and equipment in
question appeared to be attached to the land,
particularly to the concrete foundation of said
premises, in a fixed manner, in such a way that the
former could not be separated from the latter
"without breaking the material or deterioration of
the object." Hence, in order to remove said outfit, it
became necessary, not only to unbolt the same,
but, also, to cut some of its wooden supports.
Moreover, said machinery and equipment were
"intended by the owner of the tenement for an
industry" carried on said immovable and tended."
For these reasons, they were already immovable
property pursuant to paragraphs 3 and 5 of Article
415 of Civil Code of the Philippines, which are
substantially identical to paragraphs 3 and 5 of
Article 334 of the Civil Code of Spain. As such
immovable property, they were not subject to
replevin
 an immovable itself, separate and distinct from the
land. A building is an immovable property
irrespective of whether or not said structure and the
land on which it is adhered to belong to the same
owner.
Associated Insurance and Surety Company v.
Iya 103 SCRA 972
Only personal properties can be the subject of a
chattel mortgage and since the structure in this
DOCTRINE: A building is an immovable property case is an immovable, it cannot subject to a chattel
irrespective of where or not said structure and the mortgage. Therefore the chattel mortgage and the
land on which it is adhered to belong to the same sale on which it was based should be declared null
owner. and void. Also, while it is true that said document
was registered in the Chattel Mortgage Register of
Rizal, this act produced no effect whatsoever for
where the interest conveyed is in the nature of a
FACTS: real property, the registration of the document in
the registry of chattels is merely a futile act which
Spouses Adriano Valino and Lucia A. Valino own a would produce no legal effect insofar as the
house of strong materials. They filed a bond of P building is concerned.
11,000.00 subscribed by the Associated Insurance
and Surety Co., Inc. and as a counter-guaranty, 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 obtain the same
from them after full payment of the purchase price.
The Valinos acquired another loan from Isabel Iya
for P12,000.00, executing a real estate mortgage
over the house and lot. However, they were unable
to pay off their other loan which caused the
foreclosure of the chattel mortgage. The surety
company was awarded the land as the highest
bidder in the auction but later on discovered that
the land was subject to a real estate mortgage. The
surety company then requested that the house and
lot be excluded from the real estate mortgage. Iya,
in her answer, said that she had a real right over
the property and that the chattel mortgage on
which the foreclosure was based should be
declared null and void for non-compliance with the
form required by law. The CA ruled that the
foreclosure of the real estate mortgage is limited to
the land alone 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?

HELD:

It was held in Lopez vs. Orosa that the building is

 city assessor's ruling.

ISSUE:

Whether or not the machineries and the

equipments are considered immobilized and thus
subject to a realty tax. -- NO
Mindanao Bus Co. v. City Assessor and
Treasurer
HELD:
G.R. No. L-17870
The Supreme Court held a decision for the petition
for review to be set aside and the equipments in
question declared not subject to assessment as
DOCTRINE: Movable equipment, to be real estate for the purposes of the real estate tax.
immobilized in contemplation of Article 415 of the
Civil Code, must be the essential and principal So that movable equipments to be immobilized in
elements of an industry or works which are carried contemplation of the law must first be "essential
on in a building or on a piece of land. Thus, where and principal elements" of an industry or works
the business is one of transportation, which is without which such industry or works would be
carried on without a repair or service shop, and its "unable to function or carry on the industrial
rolling equipment is repaired or serviced in a shop purpose for which it was established."
belonging to another, the tools and equipment in its
repair shop which appear movable are merely The law that governs the determination of the
incidentals and may not be considered question at issue is as follows:
immovables, and, hence, not subject to
assessment as real estate for purposes of the real Art. 415. The following are immovable property:
estate tax.
xxx xxx xxx
FACTS:
(5) Machinery, receptacles, instruments or
Petitioner is a public utility solely engaged in implements intended by the owner of the tenement
transporting passengers and cargoes by motor for an industry or works which may be carried on in
trucks, over its authorized lines in the Island of a building or on a piece of land, and which tend
Mindanao, collecting rates approved by the Public directly to meet the needs of the said industry or
Service Commission. works; (Civil Code of the Phil.)

The machineries sought to be assessed by the Aside from the element of essentiality the above-
respondent are sitting on cement or wooden quoted provision also requires that the industry or
platforms works be carried on in a building or on a piece of
land. Thus in the case of Berkenkotter vs. Cu
The petitioner is the owner of the land where it Unjieng, supra, the "machinery, liquid containers,
maintains and operates a garage for its TPU motor and instruments or implements" are found in a
trucks; a repair shop; blacksmith and carpentry building constructed on the land. A sawmill would
shops, and with these machineries which are also be installed in a building on land more or less
placed therein, its TPU trucks are made; body permanently, and the sawing is conducted in the
constructed; and same are repaired in a condition land or building.
to be serviceable in the TPU land transportation
business it operates. But in the case at bar the equipments in question
are destined only to repair or service the
These machineries have never been or were never transportation business, which is not carried on in a
used as industrial equipments to produce finished building or permanently on a piece of land, as
products for sale, nor to repair machineries, parts demanded by the law. Said equipments may not,
and the like offered to the general public therefore, be deemed real property.
indiscriminately for business or commercial
purposes for which petitioner has never engaged
in,
Resuming what we have set forth above, we hold
The City Assessor of CDO then assessed a P4,400 that the equipments in question are not absolutely
realty tax on said machineries and repair essential to the petitioner's transportation business,
equipment. This was then appealed to the Court of and petitioner's business is not carried on in a
Tax Appeals (CTA) who sustained the respondent building, tenement or on a specified land, so said
equipment may not be considered real estate HELD:
within the meaning of Article 415 (c) of the Civil
Code. The Supreme Court held in the negative. The Court
said that the steel towers are personal properties.
Said equipments are not considered immobilized The Court based their ruling on the enumeration of
as they are merely incidental, not essential and immovable properties in Art. 415 of the Civil Code.
principal to the business of the petitioner. The
transportation business could be carried on without First, the steel towers do not come within the
repair or service shops of its rolling equipment as objects mentioned in par. 1, because they do not
they can be repaired or services in another shop constitute buildings or constructions adhered to the
belonging to another. soil.Moreover, they are not construction analogous
to buildings nor adhering to the soil because as per
Board of Assessment Appeals v. MERALCO description, they are removable and merely
attached to a square metal frame by means of
10 SCRA 68 bolts, which when unscrewed could easily be
dismantled and moved from place to place.

Second, they can not be included under paragraph

DOCTRINE: The steel towers or poles of 3 since they are not attached to an immovable in a
MERALCO are not real properties because 1) they fixed manner; they can be separated without
are not adhered to the soil, 2) they are not attached breaking the material or causing deterioration upon
to an immovable property and can be dismantled the object to which they are attached. In fact, each
without breaking or deteriorating the material and of these steel towers or supports consists of steel
3) they are not machineries nor instruments or bars joined together by means of bolts, which can
implements intended for the industry or works on be disassembled by unscrewing the bolts and
the land reassembled by screwing the same.

Lastly, they do not fall under paragraph 5, as they

FACTS: are not machineries, receptacles, instruments or
implements. SC said that even if they were
Generated by its hydroelectric plant, MERALCO’s machineries, receptacles, instruments or
electric power is transmitted from Laguna to Manila implements, they are not intended for industry or
through electric transmission wires. These electric works on the land. MERALCO is not engaged in an
transmission wires which carry high voltage industry or works in the land in which the steel
current, are fastened to insulators attached on steel supports or towers are constructed.
towers. MERALCO has constructed 40 of these
steel towers within Quezon City, on land belonging
to it.

Three steel towers were the subject of this dispute.

When inspected, the findings disclose that there
was no concrete foundation but there was adobe
stone underneath. Further, it could not be
ascertained whether said adobe stone was placed
purposely or not.

From this, the City Assessor of Quezon City

declared the steel towers subject to real property
tax. MERALCO, however, protested the
assessment saying that the steel towers are
considered poles and according to their franchise,
it is exempt from taxation

ISSUE:

Whether or not the steel towers or poles of the

MERALCO are considered real properties, hence
subject to real property tax?
 Defendants, in their answers in both the municipal
court and court a quo impugned the legality of the
chattel mortgage, claiming that they are still the
owners of the house. During the pendency of the
appeal to the Court of First Instance, defendants
failed to deposit the rent as ordered in the decision
of the municipal court. As a result, the court
granted plaintiffs motion for execution. However,
the judgment regarding the surrender of
possession to plaintiffs could not be executed
because the subject house had been already
demolished pursuant to the order of the court in a
separate civil case for ejectment against the
Tumalad v. Vicencio
present defendants for non-payment of rentals on
41 SCRA 143 the land on which the house was constructed.

DOCTRINE: The view that parties to a deed of ISSUE:

chattel mortgage may agree to consider a house as
W/N the house may be a subject of a Chattel
personal property for the purposes of said contract,
Mortgage. – YES, it may be the subject of a chattel
"is good only insofar as the contracting parties are
mortgage.
concerned. It is based, partly, upon the principle of
estoppel.”

HELD:
FACTS: Defendants predicate their theory of nullity of the
chattel mortgage on the ground that the subject
On 1 September 1955 defendants executed a
matter of the mortgage is a house of strong
chattel mortgage in favor of plaintiffs over their
materials, and, being an immovable, it can only be
house located at Quiapo, Manila, which were being
the subject of a real estate mortgage and not a
rented from Madrigal & Company, Inc. The
chattel mortgage.
mortgage was registered in the Registry of Deeds
of Manila on 2 September 1955. The mortgage was The rule about the status of buildings as
executed to guarantee a loan of P4,800.00 immovable property is that it is obvious that the
received from plaintiffs. It was also agreed that inclusion of the building, separate and distinct from
default in the payment of any of the amortizations, the land, in the enumeration of what may constitute
would cause the remaining unpaid balance to real properties could only mean one thing — that a
become immediately due and Payable and the building is by itself an immovable property
Chattel Mortgage will be enforceable in accordance irrespective of whether or not said structure and the
with the provisions of Special Act No. 3135, and for land on which it is adhered to belong to the same
this purpose, the Sheriff of the City of Manila or any owner.
of his deputies is hereby empowered and
authorized to sell all the Mortgagor's property after It is undeniable that the parties to a contract may
the necessary publication in order to settle the by agreement treat as personal property that which
financial debts of P4,800.00, plus 12% yearly by nature would be real property. The view that
interest, and attorney's fees. parties to a deed of chattel mortgage may agree to
consider a house as personal property for the
When defendants defaulted in paying, the purposes of said contract, "is good only insofar as
mortgage was extrajudicially foreclosed, and the the contracting parties are concerned. It is based,
house was sold at public auction pursuant to the partly, upon the principle of estoppel.”
said contract. As highest bidder, plaintiffs were
issued the corresponding certificate of sale. In a case, a mortgaged house built on a rented
Thereafter, plaintiffs commenced Civil Case No. land was held to be a personal property, not only
43073 in the municipal court of Manila, praying, because the deed of mortgage considered it as
among other things, that the house be vacated and such, but also because it did not form part of the
its possession surrendered to them, and for land for it is now settled that an object placed on
defendants to pay rent of P200.00 monthly from 27 land by one who had only a temporary right to the
March 1956 up to the time the possession is same, such as the lessee or usufructuary, does not
surrendered. MTC granted petition. become immobilized by attachment. Hence, if a
house belonging to a person stands on a rented
land belonging to another person, it may be
mortgaged as a personal property as so stipulated
in the document of mortgage. It should be noted,
however that the principle is predicated on
statements by the owner declaring his house to be
a chattel, a conduct that may conceivably estop
him from subsequently claiming otherwise.

Although there is no specific statement referring to

the subject house as personal property, yet by
ceding, selling or transferring a property by way of
chattel mortgage defendants could only have
meant to convey the house as chattel, or at least,
intended to treat the same as such, so that they
should not now be allowed to make an inconsistent
stand by claiming otherwise.

Moreover, the subject house stood on a rented lot

to which defendants merely had a temporary right
as lessee, and although this can not in itself alone
determine the status of the property, it does so
when combined with other factors to sustain the
interpretation that the parties, particularly the
mortgagors, intended to treat the house as
personalty. Finally, because it is the defendants
themselves, as debtors-mortgagors, who are
attacking the validity of the chattel mortgage in this
case, the doctrine of estoppel therefore applies to
the defendants, having treated the subject house
as personalty.
 ISSUE:

Whether or not 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 Civil Code. A building
Punsalan, Jr. v. Vda. De Lacsamana treated separately from the land on which it is
stood is immovable property and the mere fact that
121 SCRA 331 the parties to a contract seem to have dealt with it
separate and apart from the land on which it stood
did not change its character as immovable
property. Petitioner does not directly seek for the
DOCTRINE: Buildings are always immovable recovery of title or possession of the property, his
under the Civil Code. Separate treatment by the question for annulment of sale and his claim for
parties of building from the land in which it stood damages are closely intertwined with the issue of
does not change the immovable character of the ownership of the building, which under the law is
building. considered as immovable property.

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 on December
16, 1970 and the land was sold in a public auction
to which PNB was the highest bidder. However, the
bank secured title only on December 14, 1977.

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 respondent

PNB and Lacsaman. This contract was amended to
include the building 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. On the other
hand, respondent filed a motion to dismiss on the
ground that venue was improperly laid since the
building is a real property.

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.
 restrained upon private respondent's filing of a
motion for reconsideration. After several incidents,
the lower court finally issued an order lifting the
restraining order for the enforcement of the writ of
seizure and an order to break open the premises of
private respondent to enforce said writ. The lower
court reaffirmed its stand upon private respondent's
filing of a further motion for reconsideration.

The Court of Appeals, in certiorari and prohibition

proceedings subsequently filed by herein private
respondent, set aside the Orders of the lower court
and ordered the return of the drive motor seized by
the sheriff pursuant to said Orders, after ruling that
the machinery in suit cannot be the subject of
Makati Leasing and Financial Corporation v.
replevin, much less of a chattel mortgage, because
Wearever Textile Mills, Inc.
it is a real property pursuant to Article 415 of the
G.R. No. L-58469 new Civil Code, the same being attached to the
ground by means of bolts and the only way to
remove it from respondent's plant would be to drill
out or destroy the concrete floor, the reason why all
DOCTRINE: If a house of strong materials, like that the sheriff could do to enfore the writ was to
what was involved in the above Tumalad case, take the main drive motor of said machinery. The
may be considered as personal property for appellate court rejected petitioner's argument that
purposes of executing a chattel mortgage thereon private respondent is estopped from claiming that
as long as the parties to the contract so agree and the machine is real property by constituting a
no innocent third party will be prejudiced thereby, chattel mortgage thereon.
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 ISSUE:
because one who has so agreed is estopped from
Whether or not the property in suit is real property
denying the existence of the chattel mortgage.
– NO. It is a personal property

FACTS:
HELD:
The private respondent Wearever Textile Mills,
Examining the records of the instant case, We find
Inc., discounted and assigned several receivables
no logical justification to exclude the rule out, as
with the former under a Receivable Purchase
the appellate court did, the present case from the
Agreement in order to obtain financial
application of the abovequoted pronouncement. If a
accommodations from herein petitioner Makati
house of strong materials, like what was involved in
Leasing and Finance Corporation. To secure the
the above Tumalad case, may be considered as
collection of the receivables assigned, private
personal property for purposes of executing a
respondent executed a Chattel Mortgage over
chattel mortgage thereon as long as the parties to
certain raw materials inventory as well as a
the contract so agree and no innocent third party
machinery described as an Artos Aero Dryer
will be prejudiced thereby, there is absolutely no
Stentering Range.
reason why a machinery, which is movable in its
Upon default, petitioner filed a petition for nature and becomes immobilized only by
extrajudicial foreclosure of the properties mortgage destination or purpose, may not be likewise treated
to it. The Deputy Sheriff assigned to implement the as such. This is really because one who has so
foreclosure failed to gain entry into private agreed is estopped from denying the existence of
respondent's premises and was not able to effect the chattel mortgage.
the seizure of the aforedescribed machinery.
In rejecting petitioner's assertion on the applicability
Petitioner thereafter filed a complaint for judicial
of the Tumalad doctrine, the Court of Appeals lays
foreclosure with the Court of First Instance of Rizal.
stress on the fact that the house involved therein
Acting on petitioner's application for replevin, the was built on a land that did not belong to the owner
lower court issued a writ of seizure, the of such house. But the law makes no distinction
enforcement of which was however subsequently with respect to the ownership of the land on which
the house is built and We should not lay down category of property exempt from realty tax under
distinctions not contemplated by law. those laws; that Articles 415 & 416 of the Civil
Code, defining real and personal property have no
It must be pointed out that the characterization of applications to this case because these pipes are
the subject machinery as chattel by the private constructions adhered to soil and things attached
respondent is indicative of intention and impresses to the land in a fixed manner, and that Meralco
upon the property the character determined by the Securities is not exempt from realty tax under
parties. As stated in Standard Oil Co. of New York petroleum law.
v. Jaramillo, 44 Phil. 630, it is undeniable that the
parties to a contract may by agreement treat as Meralco insists that its pipeline is not subject to
personal property that which by nature would be realty tax because it is not real property within the
real property, as long as no interest of third parties meaning of Art. 415.
would be prejudiced thereby.

MERALCO SECURITIES INDUSTRIAL

CORPORATION, petitioner, vs. CENTRAL Issue:
BOARD OF ASSESSMENT APPEALS, BOARD
OF ASSESSMENT APPEALS OF LAGUNA and Whether the aforementioned pipelines are subject
PROVINCIAL ASSESSOR OF LAGUNA, to realty tax.
respondents.

Held:
Facts: Yes, the pipelines are subject to realty tax.
Pursuant to a pipeline concession issued under the
Petroleum Act of 1949, Republic Act No. 387,
Meralco Securities installed from Batangas to Section 2 of the Assessment Law provides that the
Manila a pipeline system consisting of cylindrical realty tax is due “on real property, including land,
steel pipes joined together and buried not less than buildings, machinery, and other improvements.”
one meter below the surface along the shoulder of This provision is reproduced with some
the public highway. The pipes are embedded in the modification in Section 38, Real Property Tax
soil and are firmly and solidly welded together so Code, which provides that “there shall be levied,
as to preclude breakage or damage thereto and assessed, and collected xxx annual ad valorem tax
prevent leakage or seepage of the oil. The valves on real property such as land, buildings,
are welded to the pipes so as to make the pipeline machinery, and other improvements affixed or
system one single piece of property from end to attached to real property xxx.”
end.
It is incontestable that the pipeline of Meralco
In order to repair, replace, remove or transfer Securities does not fall within any of the classes of
segments of the pipeline, the pipes have to be exempt real property enumerated in section 3 of
cold-cut by means of a rotary hard-metal pipe- the Assessment Law and section 40 of the Real
cutter after digging or excavating them out of the Property Tax Code.
ground where they are buried. In points where the
pipeline traversed rivers or creeks, the pipes were Pipeline means a line of pipe connected to pumps,
laid beneath the bed thereof. Hence, the pipes are valves and control devices for conveying liquids,
permanently attached to the land. gases or finely divided solids. It is a line of pipe
running upon or in the earth, carrying with it the
Pursuant to the Assessment Law, Commonwealth right to the use of the soil in which it is placed.
Act No. 470, the provincial assessor of Laguna
treated the pipeline as real property and issued tax Article 415[l] and [3] provides that real property
declarations, containing the assessed values of may consist of constructions of all kinds adhered to
portions of the pipeline. the soil and everything attached to an immovable in
a fixed manner, in such a way that it cannot be
Meralco appealed the assessments to the separated therefrom without breaking the material
defendants, but the latter ruled that pipeline is or deterioration of the object.
subject to realty tax. The defendants argued that
the pipeline is subject to realty tax because they The pipeline system in question is indubitably a
are contemplated in Assessment Law and Real construction adhering to the soil. It is attached to
Property Tax Code; that they do not fall within the the land in such a way that it cannot be separated
therefrom without dismantling the steel pipes which WHEREFORE, the questioned decision and
were welded to form the pipeline. resolution are affirmed. The petition is dismissed.
No costs.

Manila Electric Co., v. Central Board of enumerated in article 415 of the Civil Code and,
Assessment Appeals 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
DOCTRINE: Oil storage tanks were held to be on leased land, not on the land owned by Meralco.
taxable realty. For purposes of taxation, the term
"real property" may include things which should The issue raised by Meralco has to be resolved in
generally be regarded as personal property. the light of the provisions of the Assessment Law,
Commonwealth Act No. 470, and the Real Property
Tax Code, Presidential Decree No. 464 which took
FACTS: effect on June 1, 1974.

The case is about the imposition of the realty tax Section 2 of the Assessment Law provides that the
on two oil storage tanks installed in 1969 by Manila realty tax is due "on real property, including land,
Electric Company in Batangas which it leased in buildings, machinery, and other improvements" not
1968 from Caltex (Phil.), Inc. The tanks are within specifically exempted in section 3 thereof. This
the Caltex refinery compound, and are used for provision is reproduced with some modification in
storing fuel oil for Meralco's power plants. the Real Property Tax Code which provides:

According to Meralco, the storage tanks are made Sec. 38. Incidence of Real Property Tax. —
of steel plates welded and assembled on the spot. They shall be levied, assessed and
Their bottoms rest on a foundation consisting of collected in all provinces, cities and
compacted earth as the outermost layer, a sand municipalities an annual ad valorem tax on
pad as the intermediate layer and a two-inch thick real property, such as land, buildings,
bituminous asphalt stratum as the top layer. The machinery and other improvements affixed
bottom of each tank is in contact with the asphalt or attached to real property not hereinafter
layer. Hence, it is not attached to its foundation. specifically exempted.

On the other hand, according to the hearing The Code contains the following definition in its
commissioners of the Central Board of Assessment section 3:
Appeals (CBAA) states that while the tanks rest or k) Improvements — is a valuable addition
sit on their foundation, the foundation itself and the made to property or an amelioration in its
walls, dikes and steps, which are integral parts of condition, amounting to more than mere
the tanks, are affixed to the land while the pipelines repairs or replacement of waste, costing
are attached to the tanks. labor or capital and intended to enhance its
The CBAA ruled that the tanks together with the value, beauty or utility or to adapt it for new
foundation, walls, dikes, steps, pipelines and other or further purposes.
appurtenances constitute taxable improvements. The SC holds that while the two storage tanks are
Meralco filed a motion for reconsideration which not embedded in the land, they may, nevertheless,
the Board denied. They elevated the case to the be considered as improvements on the land,
SC. 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
ISSUE: needed by Meralco for its operations.

WON the storage tanks are considered Oil storage tanks were held to be taxable realty in
“improvements” on real property such that it is Standard Oil Co. of New Jersey vs. Atlantic City, 15
subject to real property tax. -- YES Atl. 2nd 271.

For purposes of taxation, the term "real property"

may include things which should generally be
HELD: regarded as personal property. It is a familiar
phenomenon to see things classed as real property
Meralco contends that the said oil storage tanks do
for purposes of taxation which on general principle
not fall within any of the kinds of real property
might be considered personal property (Standard HELD:
Oil Co. of New York vs. Jaramillo, 44 Phil. 630,
633). The Supreme Court held that gasoline station
equipment and machineries are permanent fixtures
for purposes of realty taxation. Thus, they are
subject to the real property tax. The said equipment
and machinery, as appurtenances to the gas
station building or shed owned by Caltex (as to
which it is subject to realty tax) and which fixtures
are necessary to the operation of the gas station,
for without them the gas station would be useless,
Caltex Philippines v. Central Board of and which have been attached or affixed
Assessment Appeals permanently to the gas station site or embedded
therein, are taxable improvements and machinery
within the meaning of the Assessment Law and the
Real Property Tax Code.
DOCTRINE: Gasoline station equipment and
machineries are permanent fixtures for purposes of The Central Board of Assessment Appeals did not
realty taxation. commit a grave abuse of discretion in upholding
the city assessor's is imposition of the realty tax on
Caltex's gas station and equipment.
FACTS: WHEREFORE, the questioned decision and
resolution of the Central Board of Assessment
Machines and equipment are loaned by Caltex to
Appeals are affirmed. The petition for certiorari is
gas station operators under an appropriate lease
dismissed for lack of merit.
agreement or receipt. It is stipulated in the lease
contract that the operators, upon demand, shall
return to Caltex the machines and equipment in
good condition as when received, ordinary wear
and tear excepted.

The city assessor of Pasay City characterized the

said items of gas station equipment and machinery
as taxable realty. The city board of tax appeals
ruled that they are personalty. The assessor
appealed to the Central Board of Assessment
Appeals.

The Board said machines and equipment are real

property within the meaning of sections 3(k) & (m)
and 38 of the Real Property Tax Code, Presidential
Decree No. 464, which took effect on June 1, 1974,
and that the definitions of real property and
personal property in articles 415 and 416 of the
Civil Code are not applicable to this case.

Caltex filed this certiorari petition wherein it prayed

for the setting aside of the Board's decision and for
a declaration that t he said machines and
equipment are personal property not subject to
realty tax.

ISSUE:

Whether or not Gasoline station equipment and

machineries are permanent fixtures for purposes of
realty taxation. -- YES
 in itself may be mortgaged by itself apart from the
land on which it is built. Such a mortgage would
still be considered as a REM for the building would
still be considered as immovable property even if
dealt with separately and apart from the land.

The original mortgage on the building and right to

occupancy of the land was executed before the
issuance of the sales patent and before the
government was divested of title to the land.
Under the foregoing, it is evident that the
mortgage executed by private respondent on
his own building was a valid mortgage.
PRUDENTIAL BANK V. PANIS
As to the second mortgage, it was done after the
153 SCRA 390 sales patent was issued and thus prohibits
pertinent provisions of the Public Land Act.

FACTS:

Spouses Magcale secured a loan from

Prudential Bank. To secure payment, they
executed a real estate mortgage over a residential
building. The mortgage included also the right to
occupy the lot and the information about the sales
patent applied for by the spouses for the lot to
which the building stood. After securing the first
loan, the spouses secured another from the same
bank. To secure payment, another real estate
mortgage was executed over the same properties.

The Secretary of Agriculture then issued a

Miscellaneous Sales Patent over the land which
was later on mortgaged to the bank.

The spouses then failed to pay for the loan and the
REM was extrajudicially foreclosed and sold in
public auction despite opposition from the spouses.
The respondent court held that the REM was null
and void.

Issue:

Whether or not a real estate mortgage can be

instituted on the building of a land belonging to
another

HELD:

A real estate mortgage can be constituted on the

building erected on the land belonging to another.

The inclusion of building distinct and separate

from the land in the Civil Code can only mean
that the building itself is an immovable property.

While it is true that a mortgage of land necessarily

includes in the absence of stipulation of the
improvements thereon, buildings, still a building
 Whether or not the machineries purchased and
imported by SERG’S became real property by
virtue of immobilization.

HELD:

The machineries herein are real properties but are

considered personal by the parties’ agreement.

The Court will resolve whether the said machines

Serg’s Products and Goquiola v. PCI Leasing are personal, not immovable, property which may
and Finance be a proper subject of a writ of replevin. Rule 60 of
the Rules of Court provides that writs of replevin
are issued for the recovery of personal property
DOCTRINE: After agreeing to a contract stipulating only. Section 3 thereof reads:
that a real or immovable property be considered as
personal or movable, a party is estopped from “SEC. 3. Order. -- Upon the filing of
subsequently claiming otherwise. Hence, such such affidavit and approval of the
property is a proper subject of a writ of replevin bond, the court shall issue an order
obtained by the other contracting party. and the corresponding writ of
replevin describing the personal
property alleged to be wrongfully
detained and requiring the sheriff
FACTS: forthwith to take such property into
his custody.”
PCI Leasing and Finance, Inc. filed a complaint
with the RTC for a sum of money with an On the other hand, Article 415 of the Civil Code
application for a writ of replevin. Upon an ex-parte enumerates immovable or real property as follows:
application of PCI Leasing, respondent judge
issued a writ of replevin directing its sheriff to seize “ART. 415. The following are
and deliver the machineries and equipment to PCI immovable property:
Leasing after 5 days and upon the payment of the
necessary expenses. x x x....................................x x
x....................................x x x
Serg’s filed a motion for special protective order.
This motion was opposed by PCI Leasing on the (5) Machinery, receptacles,
ground that the properties [were] still personal and instruments or implements intended
therefore still subject to seizure and a writ of by the owner of the tenement for an
replevin. industry or works which may be
carried on in a building or on a piece
In their Reply, petitioners asserted that the of land, and which tend directly to
properties sought to be seized were immovable as meet the needs of the said industry
defined in Article 415 of the Civil Code, the parties’ or works;
agreement to the contrary notwithstanding. They
argued that to give effect to the agreement would x x x....................................x x
be prejudicial to innocent third parties. They further x....................................x x x”
stated that PCI Leasing was estopped from treating
these machineries as personal because the
contracts in which the alleged agreement were In the present case, the machines that were the
embodied were totally sham and farcical. subjects of the Writ of Seizure were placed by
petitioners in the factory built on their own land.
Citing the Agreement of the parties, the appellate Indisputably, they were essential and principal
court held that the subject machines were personal elements of their chocolate-making industry.
property, and that they had only been leased, not Hence, although each of them was movable or
owned, by petitioners. It also ruled that the “words personal property on its own, all of them have
of the contract are clear and leave no doubt upon become “immobilized by destination because they
the true intention of the contracting parties.” are essential and principal elements in the
industry.” In that sense, petitioners are correct in
arguing that the said machines are real, not
ISSUE: personal, property pursuant to Article 415 (5) of the
Civil Code.

Be that as it may, we disagree with the submission

of the petitioners that the said machines are not
proper subjects of the Writ of Seizure.

The Court has held that 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.

Hence, in Tumalad v. Vicencio, the Court upheld

the intention of the parties to treat a house as a
personal property because it had been made the
subject of a chattel mortgage.

It should be stressed, however, that our holding --

that the machines should be deemed personal
property pursuant to the Lease Agreement – is
good only insofar as the contracting parties are
concerned. Hence, while the parties are bound by
the Agreement, third persons acting in good faith
are not affected by its stipulation characterizing the
subject machinery as personal. In any event, there
is no showing that any specific third party would be
adversely affected.
 HELD:

1) Nature of the Properties and Intent of the

Parties

The nature of the disputed machineries, i.e., that

they were heavy, bolted or cemented on the real
property mortgaged does not make them ipso facto
immovable under Article 415 (3) and (5) of the New
Tsai v. CA Civil Code. While it is true that the properties
appear to be immobile, a perusal of the contract of
FACTS: Real and Chattel Mortgage executed by the parties
herein reveal their intent, that is - to treat
Ever Textile Mills, Inc. (EVERTEX) obtained loan machinery and equipment as chattels.
from Philippine Bank of Communications (PBCom),
secured by a deed of Real and Chattel Mortgage In the first mortgage contract, reflective of the true
over the lot where its factory stands, and the intention of PBCOM and EVERTEX was the typing
chattels located therein as enumerated in a in capital letters, immediately following the printed
schedule attached to the mortgage contract. caption of mortgage, of the phrase "real and
PBCom again granted a second loan to EVERTEX chattel." So also, the "machineries and equipment"
which was secured by a Chattel Mortgage over in the printed form of the bank had to be inserted in
personal properties enumerated in a list attached the blank space of the printed contract and
thereto. These listed properties were similar to connected with the word "building" by typewritten
those listed in the first mortgage deed. After the slash marks. Now, then, if the machineries in
date of the execution of the second mortgage question were contemplated to be included in the
mentioned above, EVERTEX purchased various real estate mortgage, there would have been no
machines and equipments. Upon EVERTEX's necessity to ink a chattel mortgage specifically
failure to meet its obligation to PBCom, the latter mentioning as part III of Schedule A a listing of the
commenced extrajudicial foreclosure proceedings machineries covered thereby. It would have
against EVERTEX under Act 3135 and Act 1506 or sufficed to list them as immovables in the Deed of
"The Chattel Mortgage Law". PBCom then Real Estate Mortgage of the land and building
consolidated its ownership over the lot and all the involved. As regards the second contract, the
properties in it. It leased the entire factory intention of the parties is clear and beyond
premises to Ruby Tsai and sold to the same the question. It refers solely to chattels. The inventory
factory, lock, stock and barrel including the list of the mortgaged properties is an itemization of
contested machineries. 63 individually described machineries while the
schedule listed only machines and 2,996,880.50
EVERTEX filed a complaint for annulment of sale, worth of finished cotton fabrics and natural cotton
reconveyance, and damages against PBCom, fabrics.
alleging inter alia that the extrajudicial foreclosure
of subject mortgage was not valid, and that
PBCom, without any legal or factual basis,
appropriated the contested properties which were UNDER PRINCIPLE OF STOPPEL
not included in the Real and Chattel Mortgage of Assuming arguendo that the properties in question
the first mortgage contract nor in the second are immovable by nature, nothing detracts the
contract which is a Chattel Mortgage, and neither parties from treating it as chattels to secure an
were those properties included in the Notice of obligation under the principle of estoppel. As far
Sheriff's Sale. back as Navarro v. Pineda, an immovable may be
considered a personal property if there is a
stipulation as when it is used as security in the
ISSUES: payment of an obligation where a chattel mortgage
is executed over it.
1) W/N the contested properties are personal or
movable properties 2) Sale of the Properties Not Included in the
Subject of Chattel Mortgage is Not Valid
2) W/N the sale of these properties to a third
person (Tsai) by the bank through an irregular The auction sale of the subject properties to
foreclosure sale is valid. PBCom is void. Inasmuch as the subject
mortgages were intended by the parties to involve
chattels, insofar as equipment and machinery were
concerned, the Chattel Mortgage Law applies.
Section 7 provides thereof that: "a chattel mortgage
shall be deemed to cover only the property
described therein and not like or substituted
property thereafter acquired by the mortgagor and
placed in the same depository as the property
originally mortgaged, anything in the mortgage to
the contrary notwithstanding." Since the disputed
machineries were acquired later after the two
mortgage contracts were executed, it was
consequently an error on the part of the Sheriff to
include subject machineries with the properties
enumerated in said chattel mortgages.

As the lease and sale of said personal properties

were irregular and illegal because they were not
duly foreclosed nor sold at the auction, no valid title
passed in its favor. Consequently, the sale thereof
to Ruby Tsai is also a nullity under the elementary
principle of nemo dat quod non habet, one cannot
give what one does not have.
 to sell the reparations properties starting with the
Roppongi lot. The property has twice been set for
bidding at a minimum floor price of $225 million.

ISSUE:
W/N the Roppongi property and others of its kind be
alienated by the Philippine Government. -- NO

HELD:
NO, the subject property cannot be alienated by the
government, even if the property has not been in use for
a long time.

Vice President Laurel asserts that the lands were

acquired as part of the reparations for diplomatic and
consular use by the Philippine government. Laurel
states that the Roppongi property is classified as one of
Laurel v. Garcia public dominion, and not of private ownership under
187 SCRA 797 Article 420 of the Civil Code.

DOCTRINE: An abandonment of the intention to use the The petitioner submits that the Roppongi property
property for public service and to make it patrimonial comes under "property intended for public service" in
property under Article 422 of the Civil Code must be paragraph 2 of the above provision. He states that being
definite Abandonment and it cannot be inferred from the one of public dominion, no ownership by anyone can
non-use alone specially if the non-use was attributable attach to it, not even by the State. The Roppongi and
not to the government's own deliberate and indubitable related properties were acquired for "sites for chancery,
will but to a lack of financial support to repair and diplomatic, and consular quarters, buildings and other
improve the property Abandonment must be a certain improvements. The petitioner states that they continue
and positive act based on correct legal premises. to be intended for a necessary service. They are held by
the State in anticipation of an opportune use. (Citing 3
FACTS: Manresa 65-66). Hence, it cannot be appropriated, is
These are two petitions for prohibition seeking to enjoin outside the commerce of man, or to put it in more simple
respondents, their representatives and agents from terms, it cannot be alienated nor be the subject matter of
proceeding with the bidding for the sale of the 3,179 contracts (Citing Municipality of Cavite v. Rojas, 30 Phil.
square meters of land at Tokyo, Japan scheduled on 20 [1915]). Noting the non-use of the Roppongi property
February 21, 1990. at the moment, the petitioner avers that the same
remains property of public dominion so long as the
The subject property in this case is 1 of the 4 properties government has not used it for other purposes nor
in Japan acquired by the Philippine government under adopted any measure constituting a removal of its
the Reparations Agreement entered into with Japan on original purpose or use.
May 9, 1956. The properties and the capital goods and
services procured from the Japanese government for As property of public dominion, the Roppongi lot is
national development projects are part of the outside the commerce of man. It cannot be alienated. Its
indemnification to the Filipino people for their losses in ownership is a special collective ownership for general
life and property and their suffering during World War II. use and enjoyment, an application to the satisfaction of
collective needs, and resides in the social group. The
A proposal was presented to President Corazon C. purpose is not to serve the State as a juridical person,
Aquino by former Philippine Ambassador to Japan, but the citizens; it is intended for the common and public
Carlos J. Valdez, to make the property the subject of a welfare and cannot be the object of appropration
lease agreement with a Japanese firm. No change of
ownership or title shall occur. The Philippine government The applicable provisions of the Civil Code are:
retains the title all throughout the lease period and ART. 419. Property is either of public dominion or of
thereafter. However, the government has not acted private ownership.
favorably. ART. 420. The following things are property of public
dominion
On July 25, 1987, the President issued Executive Order (1) Those intended for public use, such as roads,
No. 296 entitling non-Filipino citizens or entities to avail canals, rivers, torrents, ports and bridges constructed by
of separations' capital goods and services in the event of the State, banks shores roadsteads, and others of
sale, lease or disposition. The four properties in Japan similar character;
including the Roppongi were specifically mentioned in (2) Those which belong to the State, without being for
the first "Whereas" clause. public use, and are intended for some public service or
for the development of the national wealth.
Amidst opposition by various sectors, the Executive
branch of the government has been pushing its decision
ART. 421. All other property of the State, which is not
of the character stated in the preceding article, is
patrimonial property.

The Roppongi property is correctly classified under

paragraph 2 of Article 420 of the Civil Code as property
belonging to the State and intended for some public
service.

The fact that the Roppongi site has not been used for a
long time for actual Embassy service does not
automatically convert it to patrimonial property. Any such
conversion happens only if the property is withdrawn
from public use. A property continues to be part of the
public domain, not available for private appropriation or
ownership until there is a formal declaration on the part
of the government to withdraw it from being such.
An abandonment of the intention to use the Roppongi
property for public service and to make it patrimonial
property under Article 422 of the Civil Code must be
definite Abandonment cannot be inferred from the non-
use alone specially if the non-use was attributable not to
the government's own deliberate and indubitable will but
to a lack of financial support to repair and improve the
property Abandonment must be a certain and positive
act based on correct legal premises.

A mere transfer of the Philippine Embassy to Nampeidai

in 1976 is not relinquishment of the Roppongi property's
original purpose.

Moreover, President Aquino’s approval of the

recommendation by the investigating committee to sell
the Roppongi property was premature or, at the very
least, conditioned on a valid change in the public
character of the Roppongi property. It does not have the
force and effect of law since the President already lost
her legislative powers. The Congress had already
convened for more than a year. Assuming that the
Roppongi property is no longer of public dominion, there
is another obstacle to its sale by the respondents. There
is no law authorizing its conveyance, and thus, the Court
sees no compelling reason to tackle the constitutional
issue raised by petitioner Ojeda.
 streets with the obligation to remit dues to the treasury
of the municipal government of Paranaque.
Consequently, market stalls were put up by respondent
Palanyag on the said streets. On September 13, 1990,
petitioner Brig. Gen. Macasiano, PNP Superintendent of
the Metropolitan Traffic Command, ordered the
destruction and confiscation of stalls along G.G. Cruz
and J. Gabriel St. in Baclaran. These stalls were later
returned to respondent Palanyag. October 16, 1990,
petitioner Brig. General Macasiano wrote a letter to
respondent Palanyag giving the latter ten (10) days to
discontinue the flea market; otherwise, the market stalls
shall be dismantled. Hence, on October 23, 1990,
respondents municipality and Palanyag filed with the
trial court a joint petition for prohibition and mandamus
with damages and prayer for preliminary injunction, to
which the petitioner filed his memorandum/opposition to
the issuance of the writ of preliminary injunction.
October 24, 1990, the trial court issued a temporary
Macasiano v. Diokno restraining order to enjoin petitioner from enforcing his
letter-order of October 16, 1990 pending the hearing on
G.R. No. 97764 the motion for writ of preliminary injunction. On
December 17, 1990, the trial court issued an order
DOCTRINE: "Verily, the powers of a local government upholding the validity of Ordinance No. 86 s. 1990 of the
unit are not absolute. They are subject to limitations laid Municipality of Paranaque and enjoining petitioner Brig.
down by the Constitution and the laws such as our Civil Gen. Macasiano from enforcing his letter-order against
Code. Moreover, the exercise of such powers should be respondent Palanyag.
subservient to paramount considerations of health and
well-being of the members of the community." ISSUE:
W/N an ordinance or resolution issued by the municipal
FACTS: council of Paranaque authorizing the lease and use of
On June 13, 1990, the respondent municipality passed public streets or thoroughfares as sites for flea markets
Ordinance No. 86, Series of 1990 which authorized the is valid. -- NO
closure of J. Gabriel, G.G. Cruz, Bayanihan, Lt. Garcia
Extension and Opena Streets located at Baclaran, HELD:
Paranaque, Metro Manila and the establishment of a The Executive Order issued by acting Mayor Robles
flea market thereon. July 20, 1990, the Metropolitan authorizing the use of Heroes del '96 Street as a
Manila Authority approved Ordinance No. 86, s. 1990 of vending area for stallholders who were granted licenses
the municipal council of respondent municipality subject by the city government contravenes the general law that
to the following conditions: reserves city streets and roads for public use. Mayor
1. That the aforenamed streets are not used for Robles' Executive Order may not infringe upon the
vehicular traffic, and that the majority of the residents do vested right of the public to use city streets for the
not oppose the establishment of the flea market/vending purpose they were intended to serve: i.e., as arteries of
areas thereon; travel for vehicles and pedestrians. The Solicitor
2. That the 2-meter middle road to be used as flea General furthers the matter with his observation, "Verily,
market/vending area shall be marked distinctly, and that the powers of a local government unit are not absolute.
the 2 meters on both sides of the road shall be used by They are subject to limitations laid down by the
pedestrians; Constitution and the laws such as our Civil Code.
3. That the time during which the vending area is to be Moreover, the exercise of such powers should be
used shall be clearly designated; subservient to paramount considerations of health and
4. That the use of the vending areas shall be well-being of the members of the community. Every local
temporary and shall be closed once the reclaimed areas government unit has the sworn obligation to enact
are developed and donated by the Public Estate measures that will enhance the public health, safety and
Authority. convenience, maintain peace and order, and promote
the general prosperity of the inhabitants of the local
June 20, 1990, Mayor Walfrido N. Ferrer to enter into units. Based on this objective, the local government
contract with any service cooperative for the should refrain from acting towards that which might
establishment, operation, maintenance and prejudice or adversely affect the general welfare."
management of flea markets and/or vending areas. On Moreover, the municipality did not even comply with the
August 8, 1990, respondent municipality and respondent guidelines set forth by the Metropolitan Manila Authority.
Palanyag, a service cooperative, entered into an Even if we were to argue for purposes of debate, the city
agreement whereby the latter shall operate, maintain of Paranaque's claim would still be bereft and lacking in
and manage the flea market in the aforementioned reason.
ACCORDINGLY, the petition is GRANTED and the w/n: the transfer to AMARI lands reclaimed or to be
decision of the respondent Regional Trial Court dated reclaimed as part of the stipulations in the (Amended)
December 17, 1990 which granted the writ of preliminary JVA between AMARI and PEA violate Sec. 3 Art. XII of
injunction enjoining petitioner as PNP Superintendent, the 1987 Constitution
Metropolitan Traffic Command from enforcing the w/n: the court is the proper forum for raising the issue of
demolition of market stalls along whether the amended joint venture agreement is grossly
disadvantageous to the government.

Held:
On the issue of Amended JVA as violating the
constitution:
1. The 157.84 hectares of reclaimed lands comprising
the Freedom Islands, now covered by certificates of title
in the name of PEA, are alienable lands of the public
domain. PEA may lease these lands to private
corporations but may not sell or transfer ownership of
these lands to private corporations. PEA may only sell
these lands to Philippine citizens, subject to the
ownership limitations in the 1987 Constitution and
existing laws.

2. The 592.15 hectares of submerged areas of Manila

Chavez v. Pea and Amari Bay remain inalienable natural resources of the public
domain until classified as alienable or disposable lands
Fact: open to disposition and declared no longer needed for
In 1973, the Comissioner on Public Highways entered public service. The government can make such
into a contract to reclaim areas of Manila Bay with the classification and declaration only after PEA has
Construction and Development Corportion of the reclaimed these submerged areas. Only then can these
Philippines (CDCP). lands qualify as agricultural lands of the public domain,
which are the only natural resources the government
PEA (Public Estates Authority) was created by President can alienate. In their present state, the 592.15 hectares
Marcos under P.D. 1084, tasked with developing and of submerged areas are inalienable and outside the
leasing reclaimed lands. These lands were transferred commerce of man.
to the care of PEA under P.D. 1085 as part of the Manila
Cavite Road and Reclamation Project (MCRRP). CDCP 3. Since the Amended JVA seeks to transfer to AMARI,
and PEA entered into an agreement that all future a private corporation, ownership of 77.34 hectares of the
projects under the MCRRP would be funded and owned Freedom Islands, such transfer is void for being contrary
by PEA. to Section 3, Article XII of the 1987 Constitution which
prohibits private corporations from acquiring any kind of
By 1988, President Aquino issued Special Patent No. alienable land of the public domain.
3517 transferring lands to PEA. It was followed by the
transfer of three Titles (7309, 7311 and 7312) by the 4. Since the Amended JVA also seeks to transfer to
Register of Deeds of Paranaque to PEA covering the AMARI ownership of 290.156 hectare of still submerged
three reclaimed islands known as the FREEDOM areas of Manila Bay, such transfer is void for being
ISLANDS. contrary to Section 2, Article XII of the 1987 Constitution
which prohibits the alienation of natural resources other
Subsquently, PEA entered into a joint venture than agricultural lands of the public domain.
agreement (JVA) with AMARI, a Thai-Philippine
corporation to develop the Freedom Islands. Along with PEA may reclaim these submerged areas. Thereafter,
another 250 hectares, PEA and AMARI entered the JVA the government can classify the reclaimed lands as
which would later transfer said lands to AMARI. This alienable or disposable, and further declare them no
caused a stir especially when Sen. Maceda assailed the longer needed for public service. Still, the transfer of
agreement, claiming that such lands were part of public such reclaimed alienable lands of the public domain to
domain (famously known as the “mother of all scams”). AMARI will be void in view of Section 3, Article XII of the
1987Constitution which prohibits private corporations
Peitioner Frank J. Chavez filed case as a taxpayer from acquiring any kind of alienable land of the public
praying for mandamus, a writ of preliminary injunction domain.
and a TRO against the sale of reclaimed lands by PEA
to AMARI and from implementing the JVA. Following
these events, under President Estrada’s admin, PEA
and AMARI entered into an Amended JVA and Mr.
Chaves claim that the contract is null and void.

Issue:
 ISSUE:
Whether properties of the MIAA are subject to real
estate taxes. -- NO

HELD:
In the first place, MIAA is not a GOCC, it is an
instrumentality of the government. MIAA is a
government instrumentality vested with corporate
powers to perform efficiently its governmental functions.
MIAA is like any other government instrumentality, the
only difference is that MIAA is vested with corporate
powers. As operator of the international airport, MIAA
administers the land, improvements and equipment
within the NAIA Complex. The MIAA Charter transferred
to MIAA approximately 600 hectares of land, including
the runways and buildings (“Airport Lands and
Buildings”) then under the Bureau of Air Transportation.
The MIAA Charter further provides that no portion of the
land transferred to MIAA shall be disposed of through
sale or any other mode unless specifically approved by
MIAA v. Court of Appeals the President of the Philippines.
G.R. No. 155650
Furthermore, Airport Lands and Buildings of MIAA are
DOCTRINE: The term “ports” includes seaports and property of public dominion and therefore owned by the
airports. The MIAA Airport Lands and Buildings State or the Republic of the Philippines. Article 419 of
constitute a “port” constructed by the State. Under the Civil Code provides, The Airport Lands and Buildings
Article 420 of the Civil Code, the MIAA Airport Lands of MIAA are property of public dominion and therefore
and Buildings are properties of public dominion and thus owned by the State or the Republic of the Philippines.
owned by the State or the Republic of the Philippines.
The Civil Code provides:
FACTS: ARTICLE 419. Property is either of public dominion or of
Manila International Airport Authority (MIAA) operates private ownership.
the Ninoy Aquino International Airport Complex in
Parañaque City. As operator of the international airport, ARTICLE 420. The following things are property of
MIAA administers the land, improvements and public dominion:
equipment within the NAIA Complex. (1) Those intended for public use, such as roads,
canals, rivers, torrents, ports and bridges constructed by
The MIAA Charter transferred to MIAA approximately the State, banks, shores, roadsteads, and others of
600 hectares of land including the runways and similar character;
buildings (“Airport Lands and Buildings”) then under the (2) Those which belong to the State, without being for
Bureau of Air Transportation. The MIAA Charter further public use, and are intended for some public service or
provides that no portion of the land transferred to MIAA for the development of the national wealth. (Emphasis
shall be disposed of through sale or any other mode supplied)
unless specifically approved by the President of the
Philippines. ARTICLE 421. All other property of the State, which is
not of the character stated in the preceding article, is
OGCC (Office of the Government Corporate Counsel) patrimonial property.
issued Opinion No. 061, in which it said that the Local
Government Code of 1991 withdrew the exemption for ARTICLE 422. Property of public dominion, when no
real estate tax granted to MIAA under Section 21 of the longer intended for public use or for public service, shall
MIAA charter. form part of the patrimonial property of the State.

Therefore, MIAA was held to be delinquent in paying its No one can dispute that properties of public dominion
taxes. The City of Parañaque Levied upon the properties mentioned in Article 420 of the Civil Code, like “roads,
of MIAA, and posted invitations for public biddings of canals, rivers, torrents, ports and bridges constructed by
MIAA’s properties. MIAA filed with CA an action for the State,” are owned by the State. The term “ports”
prohibition / injunction. The City of Parañaque averred includes seaports and airports. The MIAA Airport Lands
that Section 193 of the Local Government code and Buildings constitute a “port” constructed by the
expressly withdrew tax exemptions from government State. Under Article 420 of the Civil Code, the MIAA
owned and controlled corporations (GOCCs). Airport Lands and Buildings are properties of public
dominion and thus owned by the State or the Republic
CA dismissed the petition for filing beyond the 60 day of the Philippines.
reglementary period
The Airport Lands and Buildings are devoted to public
use because they are used by the public for international
and domestic travel and transportation. The fact that the
MIAA collects terminal fees and other charges from the
public does not remove the character of the Airport
Lands and Buildings as properties for public use. The
operation by the government of a tollway does not
change the character of the road as one for public use.
Someone must pay for the maintenance of the road,
either the public indirectly through the taxes they pay the
government, or only those among the public who
actually use the road through the toll fees they pay upon
using the road. The tollway system is even a more
efficient and equitable manner of taxing the public for
the maintenance of public roads.

The charging of fees to the public does not determine

the character of the property whether it is of public
dominion or not. Article 420 of the Civil Code defines
property of public dominion as one “intended for public
use.” Even if the government collects toll fees, the road
is still “intended for public use” if anyone can use the
road under the same terms and conditions as the rest of
the public. The charging of fees, the limitation on the
kind of vehicles that can use the road, the speed
restrictions and other conditions for the use of the road
do not affect the public character of the road.

The terminal fees MIAA charges to passengers, as well

as the landing fees MIAA charges to airlines, constitute
the bulk of the income that maintains the operations of
MIAA. The collection of such fees does not change the
character of MIAA as an airport for public use. Such fees
are often termed user’s tax. This means taxing those
among the public who actually use a public facility
instead of taxing all the public including those who never
use the particular public facility. A user’s tax is more
equitable — a principle of taxation mandated in the 1987
Constitution.

The Airport Lands and Buildings of MIAA, which its

Charter calls the “principal airport of the Philippines for
both international and domestic air traffic,” are properties
of public dominion because they are intended for public
use. As properties of public dominion, they indisputably
belong to the State or the Republic of the Philippines.

Being a property of public dominion, the properties of

MIAA are beyond the commerce of man.
Perez vs. Mendoza case. The trial court dismissed the complaint and
G.R. No. L-22006. July 28, 1975. declared respondents with a better right over the
property in litigation. The Court of Appeals affirmed the
Facts: decision of the trial court in toto.
In 1922, Felisa Montalbo-Ortega exchanged the land
she inherited from her father with the land of her aunt,
Andrea Montalbo, because the latter wanted to donate a Issue:
piece of land to the municipality of Taysan, Batangas, to Whether or not the trial court erred in its decision.
be used as a school site and the municipality preferred
the land belonging to Felisa as it was adjacent to the Held:
other properties of the municipality. After the exchange, NO. Finding no reversible error, Supreme Court affirmed
Andrea donated almost one-half of the land to the the judgment under review with costs against
municipality and gave the other to her daughter petitioners. The claim of private respondents that they
Margarita when the latter married Nicolas Mendoza in are the owners of the land in dispute must be upheld on
1972. Since then, Margarita and Nicolas possessed and the ground that they were in actual and continuous
occupied the land continuously, in the concept of possession of the land, openly, adversely, and in the
owners. When Nicolas sought the transfer of the concept of owners thereof since 1927 thereby acquiring
property in their names he submitted the deed of ownership of the land through acquisitive prescription.
exchange of property executed by Felisa and Andrea in Possession is an indicium of ownership of the thing
the presence of, and witnessed by the Municipal possessed and to the possessor goes the presumption
Secretary, Rafael Manahan. When Basilio Perez came that he holds the thing under a claim of ownership.
to know of the alleged deed of exchange, he had it Article 433 of the
investigated and found that the signature of the Civil Code provides that "(A)ctual possession under
municipal secretary was forged. Accused of falsification claim of ownership raises a disputable presumption of
of private document, Mendoza was convicted; but the ownership. The true owner must resort to judicial
Court of Appeals acquitted him for insufficiency of process for the recovery of the property."
evidence.
Article 538 of the Civil Code provides that
On March 20, 1959, petitioner Basilio and his wife Petra possession as a fact cannot be recognized at the
brought an action against respondent spouses Margarita same time in two different personalities except in
and Nicolas for quieting of title, alleging that the land in the cases of co-possession. Should a question
dispute was inherited by Petra and Felisa from arise regarding the fact of possession, the present
Estanislao Montalbo who died in 1918; that the heirs possessor shall be preferred; if there are two
partitioned said land in 1934 and the share of Felisa, the possessors, the one longer in possession; if the
land in question, was sold by her husband, Jose Ortega,
dates of possession are the same, the one who
and her children to petitioners; that they leased the said
presents a title; and if all these conditions are
parcel of land to respondents in 1946, but that when the
lease expired in 1951, the latter refused to return the
equal, the thing shall be placed in judicial deposit
land prompting the former to file an unlawful detainer pending determination of its possession or
action which was still pending during the trial of this ownership through proper proceedings.

FLOREZA v EVANGELISTA
CA ruled that Art. 448 was inapplicable and that Floreza
FACTS: was not entiled to the reimbursement of his house and
The Evangelistas were the owner of a residential lot in could remove the same at his own expense.
Rizal with an area of 204.08 sq. m. assessed at P410.
They borrowed P100 from Floreza. Floreza occupied the ISSUE:
residential lot and built a house of light material (barong- 1. WON Floreza was entitled to reimbursement of the
barong) with the consent of the Evangelistas. Additional cost of his house.
Loans were made by the Evangelistas. Floreza 2. WON he (his heirs who replaced him) should pay
demolished the house of light material and constructed rental of the land.
one of strong material assessed. Floreza has not been
paying any rentals since the beginning of their HELD:
transactions. Eventually, Evangelistas sold, with a right 1. NO. Issue of reimbursement is not moot because if
to repurchase within 6 years, their land to Floreza. Floreza has no right of retention, then he must pay
Seven months before the expiry of the repurchase damages in the form of rentals. Agree with CA that Art.
period, the Evangelistas were able to pay in full. Floreza 448 is inapplicable because it applies only when the
refused to vacate the lot unless he was first reimbursed builder is in good faith (he believed he had a right to
for the value of the house he built Evangelistas filed a build). Art. 453 is also not applicable because it requires
complaint. both of the parties to be in bad faith. Neither is Art. 1616
applicable because Floreza is not a vendee a retro. The
CFI ruled based on Art, 448 of the Civil Code saying that house was already constructed in 1945 (light materials)
Evangelistas have the choice between purchasing the even before the pacto de retro was entered into in 1949.
house or selling the land to Floreza. Floreza cannot be classified as a builder in good faith
nor a vendee a retro, who made useful improvements
during the pacto de retro, he has no right to
reimbursement of the value of the house, much less to
the retention of the premises until he is paid. His rights
are more akin to a usufructury under Art. 579, who may
make on the property useful improvements but with no
right to be indemnified thereof, He may, however,
remove such improvements should it be possible to do
so without damage to the property.

2. YES. From the time the redemption price was paid in

January 3, 1955, Floreza’s right to use the residential lot
without rent ceased. He should be held liable for
damages in the form of rentals for the continued use of
the lot for P10 monthly from January 3, 1955 until the
house was removed and the property vacated by
Floreza or his heirs. Judgment affirmed with
modification.
COMMUNITIES CAGAYAN, INC., vs. SPOUSES spouses being presumed builders in good faith, we now
ARSENIO (Deceased) and ANGELES NANOL AND rule on the applicability of Article 448 of the Civil Code.
ANYBODY CLAIMING RIGHTS UNDER THEM Article 448 on builders in good faith does not apply
where there is a contractual relation between the
Sometime in 1994, respondent-spouses Arsenio parties, such as in the instant case. We went over the
and Angeles Nanol entered into a Contract to Sell with records of this case and we note that the parties failed to
petitioner Communities Cagayan, Inc., (CCI) whereby attach a copy of the Contract to Sell. As such, we are
the latter agreed to sell to respondent-spouses a house constrained to apply Article 448 of the Civil Code, which
and Lots 17 and 19 located at Block 16, Camella Homes provides viz:
Subdivision, Cagayan de Oro City, for the price of
P368,000.00 (P368T). They obtained a loan from ART. 448. The owner of the land on which anything has
Capitol Development Bank (CDB), using the property as been built, sown or planted in good faith, shall have the
collateral. To facilitate the loan, a simulated sale over right to appropriate as his own the works, sowing or
the property was executed by petitioner in favor of planting, after payment of the indemnity provided for in
respondent-spouses. Accordingly, titles (TCT Nos. Articles 546 and 548, or to oblige the one who built or
105202 and 105203) were transferred in the names of planted to pay the price of the land, and the one who
respondent-spouses and submitted to CDB for loan sowed, the proper rent. However, the builder or planter
processing. The bank collapsed and closed before it cannot be obliged to buy the land if its value is
could release the loan. considerably more than that of the building or trees. In
such case, he shall pay reasonable rent, if the owner of
On November 30, 1997, respondent-spouses the land does not choose to appropriate the building or
entered into another Contract to Sell with petitioner over trees after proper indemnity. The parties shall agree
the same property for the same price. This time, they upon the terms of the lease and in case of
availed of petitioner’s in-house financing thus, disagreement, the court shall fix the terms thereof.
undertaking to pay the loan over four years, from 1997
to 2001. The rule that the choice under Article 448 of the
Respondent Arsenio demolished the original Civil Code belongs to the owner of the land is in accord
house and constructed a three-story house allegedly with the principle of accession, i.e., that the accessory
valued at P3.5 million, more or less. (Respondent follows the principal and not the other way around. Even
Arsenio died, leaving his wife, herein respondent as the option lies with the landowner, the grant to him,
Angeles, to pay for the monthly amortizations.) nevertheless, is preclusive. The landowner cannot
refuse to exercise either option and compel instead the
On September 10, 2003, petitioner sent owner of the building to remove it from the land. The
respondent-spouses a notarized Notice of Delinquency raison d’etre for this provision has been enunciated thus:
and Cancellation of Contract to Sell due to the latter’s Where the builder, planter or sower has acted in good
failure to pay the monthly amortizations. Petitioner filed faith, a conflict of rights arises between the owners, and
before the Municipal Trial Court in Cities, an action for it becomes necessary to protect the owner of the
unlawful detainer against respondent-spouses. improvements without causing injustice to the owner of
the land. In view of the impracticability of creating a state
In her Answer, respondent Angeles averred that of forced co-ownership, the law has provided a just
the Deed of Absolute Sale is valid. solution by giving the owner of the land the option to
acquire the improvements after payment of the proper
Sale is valid. indemnity, or to oblige the builder or planter to pay for
Issues the land and the sower the proper rent. He cannot
1) Whether petitioner is obliged to refund to respondent- refuse to exercise either option. It is the owner of the
spouses all the monthly installments paid; and land who is authorized to exercise the option, because
his right is older, and because, by the principle of
2) Whether petitioner is obliged to reimburse accession, he is entitled to the ownership of the
respondent-spouses the value of the new house minus accessory thing.
the cost of the original house.
In conformity with the foregoing pronouncement,
Ruling we hold that petitioner, as landowner, has two options. It
The petition is partly meritorious. may appropriate the new house by reimbursing
Respondent-spouses are entitled to the cash surrender respondent Angeles the current market value thereof
value of the payments on the property equivalent to minus the cost of the old house. Under this option,
50% of the total payments made under the Maceda Law. respondent Angeles would have "a right of retention
which negates the obligation to pay rent." In the
Respondent-spouses are entitled to reimbursement of alternative, petitioner may sell the lots to respondent
the improvements made on the property. Angeles at a price equivalent to the current fair value
thereof. However, if the value of the lots is considerably
In view of the special circumstances obtaining in more than the value of the improvement, respondent
this case, we are constrained to rely on the presumption Angeles cannot be compelled to purchase the lots. She
of good faith on the part of the respondent-spouses can only be obliged to pay petitioner reasonable rent.
which the petitioner failed to rebut. Thus, respondent-
 - ---

Article 448 of the Civil Code applies when the builder

believes that he is the owner of the land or that by
some title he has the right to build thereon, or that,
at least, he has a claim of title thereto. Concededly,
this is not present in the instant case. The subject
property is covered by a Contract to Sell hence
ownership still remains with petitioner being the
seller. Nevertheless, there were already instances
where this Court applied Article 448 even if the
builders do not have a claim of title over the
property. Thus:

This Court has ruled that this provision covers only

cases in which the builders, sowers or planters
believe themselves to be owners of the land or, at
least, to have a claim of title thereto. It does not
apply when the interest is merely that of a holder,
such as a mere tenant, agent or usufructuary. From
these pronouncements, good faith is identified by the
belief that the land is owned; or that – by some title
– one has the right to build, plant, or sow thereon.

However, in some special cases, this Court has

used Article 448 by recognizing good faith beyond
this limited definition. Thus, in Del Campo v. Abesia,
this provision was applied to one whose house –
despite having been built at the time he was still co-
owner – overlapped with the land of another. This
article was also applied to cases wherein a builder
had constructed improvements with the consent of
the owner. The Court ruled that the law deemed the
builder to be in good faith. In Sarmiento v. Agana,
the builders were found to be in good faith despite
their reliance on the consent of another, whom they
had mistakenly believed to be the owner of the
land.

In fine, the Court applied Article 448 by construing

good faith beyond its limited definition. We find no
reason not to apply the Court’s ruling in Spouses
Macasaet v. Spouses Macasaet in this case. We
thus hold that Article 448 is also applicable to the
instant case. First, good faith is presumed on the
part of the respondent-spouses. Second, petitioner
failed to rebut this presumption. Third, no evidence
was presented to show that petitioner opposed or
objected to the improvements introduced by the
respondent-spouses. Consequently, we can validly
presume that petitioner consented to the
improvements being constructed. This presumption
is bolstered by the fact that as the subdivision
developer, petitioner must have given the respondent-
spouses permits to commence and undertake the
construction. Under Article 453 of the Civil Code,
“it is understood that there is bad faith on the part
of the landowner whenever the act was done with his
knowledge and without opposition on his part.”