PUNZALAN V. LACSAMANABuildings are always treated as immovable or real property under the Code even if it was dealt with separately from the land upon which it stood

FACTS:Some land belonging to Antonio Punzalan was foreclosed by the Philippine National Bank Tarlac, Branch in failure of the former to pay the mortgaged fee amounting to P10 grand Since PNB was the highest bidder, the land went to PNB.

Sometime 1974, while the property was still in the possession of Punzalan, Punzalan constructed a warehouse on the said land by virtue of the permit secured from the Municipal Mayor of Bamban, Tarlac. Subsequently, in 1978, a contract of sale was entered into by PNB and Remedios Vda. De Lacsamana, whom in lieu of the said sale secured a title over the property involving the warehouse allegedly owned and constructed by the plaintiff.

Punzalan filed a suit for annulment of the Deed of Sale with damages against PNB and Lacsamana before the Court of First Instance of Rizal, Branch 31, impugning the validity of the sale of the building, requesting the same to be declared null and void and that damages in the total sum of P23, 200 more or less be awarded to him.

Respondent Lacsamana in his answer averred the affirmative defense of lack of cause of action contending that she was a purchaser for value, while, PNB filed a Motion to Dismiss on the ground of improper venue, invoking that the building was a real property under Article 415 of the Civil Code, and therefore, Section 4 (a) of the Rules of Court should apply.

Punzalan filed a Motion for Reconsideration asserting that the action he filed is limited to the annulment of sale and that, it does not involved ownership of or title to property but denied by the court for lack of merit. A motion for pre-trial was also set by Punzalan but was also denied by the court invoking that the case was already dismissed.

Hence, a petition for certiorari was filed by the petitioner.

ISSUE:Whether or not the judgment rendered by the court is proper.

HELD:While it is true that the petitioner does not directly seek the recovery of the title or possession of the property in question, his action for annulment of sale and his claim for damages are closely intertwined with the issue of ownership of the building, which, under the law, is considered immovable property, the recovery of which is petitioners primary objective. The prevalent doctrine is that an action for the annulment or rescission of a sale of real property does not operate to efface the objective and nature of the case, which is to recover said property. It is a real action. Respondent Court did not err in dismissing the case on the ground of improper venue under Section 12 Rule 4 which was timely raised under Section 1 Rule 16 of the Rules of Court.

Personal Observation: The venue was improperly laid by the petitioner in the case at bar. Such ground was sufficient to render dismissal of the case, as the same is one of the grounds provided for under Rule 16 (c) of the Rules of Court.

The Denial of Motion to Dismiss rendered by the court in the instant case is appealable. If such denial constitute grave abuse of discretion on the part of the court , Punzalan may file either Prohibition or Certiorari under Rule 65 of the Rules of Court

Leung Yee vs Strong MachineryCoPosted onJune 22, 2013Leung Yee vs Strong Machinery Co.37 PHIL 644GR No. L-11658February 15, 1918FACTSTheCompania Agricola Filipina(CAF) purchased fromStrong Machinery Co.ricecleaning machines which CAF installed in one of its buildings.As security for the purchase price, CAF executed achattel mortgageon themachinesand thebuildingon which they had been installed.When CEF failed to pay, the registered mortgage was foreclosed andStrong Machinery Co.purchased the building. This sale was annotated in the Chattel Mortgage Registry.Later,Strong Machinery Co.also purchased fromAgricolathe lot on which the building was constructed. The sale wasn't registered in the Registry of Property BUTStrong Machinery Co.took possession of the building and the lot.However, the same building had been previously purchased by Leung Yee, a creditor ofAgricola, at a sheriff's sale despite his knowledge of the prior sale in favor ofStrong Machinery Co.. The sale to Leung Yee was registered in the Registry of Property.ISSUES1. Was the property's nature changed by its registration in the Chattel Mortgage Registry?2. Who has a better right to the property?HELD1. Where the interest conveyed is of the nature of real property, the placing of the document on record in the Chattel Mortgage Registry is a futile act.Chattel Mortgagerefers to themortgage ofPersonal Propertyexecuted in the manner and form prescribed in the statute.Since the building isREAL PROPERTY, its sale as annotated in the Chattel Mortgage Registrycannotbe given the legal effect of registration in the Registry of Real Property.The mere fact that the parties decided to deal with the building as personal property does not change its character as real property.Neither the original registry in the chattel mortgage registry, nor the annotation in said registry of the sale of the mortgaged property had any effect on the building.Art. 1473of the New Civil Code provides the following rules on determining ownership of property which has been sold to different vendees:If Personal Property grant ownership to person who1st possessedit in good faithIf Real Property grant ownership to person who1st recordedit in the RegistryIf no entry grant to person who1st possessedin good faithIf no proof of possession grant to person whopresentsoldest titleSince Leung Yee purchased the property despite knowledge of the previous purchase of the same byStrong Machinery Co., it follows that Leung Yee wasnota purchaser in good faith.One who purchases real estate with knowledge of a defect or lack of title in his vendor cannot claim that he has acquired title thereto in good faith as against the true owner of the land or of an interest therein. The same rule must be applied to one who has knowledge of facts which should have put him upon such inquiry and investigation as might be necessary to acquaint him with the defects in the title of his vendor.Good Faith, or the want of it, is astate or condition of mind which can only be judged of by actual or fancied tokens or signs.(Wilder vs. Gilman, 55Vt., 504, 505; Cf. Cardenas Lumber Co. vs. Shadel, 52 La. Ann., 2094-2098; Pinkerton Bros. Co. vs. Bromley, 119Mich., 8, 10, 17.)Honesty Of Intentionis thehonest lawful intent constituting good faith. It implies afreedom from knowledge and circumstances which ought to put a person on inquiry.As such, proof of such knowledge overcomes the presumption of good faith.Following the rule on possessory rights provided inArt. 1473,Strong Machinery Co.has a better right to the property since it first purchased the same ahead of Leung Yee, the latter not being a purchaser in good faith.

Standard Oil Co. vsJaranilloPosted onJune 21, 2013

44 PHIL 631GR No. L-20329March 16, 1923FACTSGervasia de la Rosa, Vda. de Vera, who was renting a parcel of land in Manila, constructed a building of strong materials thereon, which she conveyed to Standard Oil Company of New York by way ofchattel mortgage.When the mortgagee presented the deed to the Register of Deeds of Manila for registration in the Chattel Mortgage Registry, Joaquin Jaranillo, the Registrar refused to allow the registration on the ground that the building was a real property, and therefore could not be the subject of a valid chattel mortgage.ISSUES1. May the deed be registered in the chattel mortgage registry?2. Whether the interests conveyed in the instrument are real or personal.HELD1. Yes.The Registrar's duty is MINISTERIAL in character.There is no legal provision conferring upon him any judicial or quasi-judicial power to determine or qualify the nature of the document presented before him.The determination of the nature of the property lies with the courts of justice, and not by the Register of Deeds.Moreover, the act of recording a chattel mortgage operates as constructive notice of the existence of the contract, and the legal effects of the contract must be discovered in the instrument itself in relation with the fact of notice. Registration adds nothing to the instrument and affects nobody's rights except as a speciefies of notice.As such, the Registrar should therefore accept the legal fees being tendered, and place the document on record.2.Art.334and335of the Civil Code do not supply anabsolute criterionfor discriminating between real and personal property for the purpose of applying the Chattel Mortgage Law.It should also be noted that under given conditionsproperty may have character different from that imputed in said articles.Parties to a contract may, by agreement,treat as personal property that which by nature would be real property.It is undeniable that the parties to a contract may by agreement treat aspersonal property that which by nature would be a real property, as long as no interest of third parties would be prejudiced thereby.However, it should be reiterated that the determination of the nature of the property, with reference to the placing of the document on record, is neither a function or an authority granted to the Registrar of the Registry of Deeds.

NAVARRO V. PINEDA9 SCRA 631

FACTS:Pineda and his mother executed real estate and chattel mortgages in favor of Navarro, to secure a loan they got from the latter. The REM covered a parcel of land owned by the mother while the chattel mortgage covered a residential house. Due to the failure to pay the loan, they asked forextensions to pay for the loan. On the second extension, Pineda executed a PROMISE wherein in case of default in payment, he wouldnt ask for any additional extension and there would be no need for any formal demand. In spite of this, they still failed to pay.Navarro then filed for the foreclosure of the mortgages. The court decided in his favor.HELD:Where a house stands on a rented land belonging to another person, it may be the subject matter of a chattel mortgage as personal property if so stipulated in the document of mortgage, and in an action by the mortgagee for the foreclosure, the validity of the chattel mortgage cannot be assailedby one of the parties to the contract of mortgage.Furthermore, although in some instances, a house of mixed materials has been considered as a chattel between the parties and that the validity of the contract between them, has been recognized, it has been a constant criterion that with respect to third persons, who are not parties to thecontract, and specially in execution proceedings, the house is considered as immovable property.

Lopez v. OrosaLOPEZ V. OROSA AND PLAZA THEATREG.R. Nos. L-10817-18 February 28, 1958

FACTS:

-Petitioner Lopez was engaged in doing business under the trade name Lopez-Castelo Sawmill.

Orosa, a resident of the same province as Lopez, invited the latter to make an investment in the theatre business. Lopez declined to invest but agreed to supply the lumber necessary for the construction of the proposed theatre. They had an oral agreement that Orosa would be personally liable for any account that the said construction might incur and that payment would be on demand and not cash on delivery basis.

Lopez delivered the which was used for construction amounting to P62,255.85. He was paid only P20,848.50, leaving a balance of P41,771.35.

The land on which the building was erected previously owned by Orosa, was later on acquired by the corporation.

. As Lopez was pressing Orosa for payment, the latter and president of the corporation promised to obtain a bank loan by mortgaging the properties of the Plaza Theatre., out of which the unpaid balance would be satisfied. But unknown to Lopez, the corporation already obtained a loan with Luzon Surety Company as surety, and the corporation in turn executed a mortgage on the land and building in favor of the said company as counter-security.

Due to the persistent demands of Lopez, Orosa executed a deed of assignment over his shares of stock in the corporation.

As it remained unsettled, Lopez filed a case against Orosa and Plaza theatre praying that they be sentenced to pay him jointly and severally of the unpaid balance; and in case defendants fail to pay, the land and building owned by the corporation be sold in public auction with the proceeds be applied to the balance; or the shares of stock be sold in public auction.

The lower court held that defendants were jointly liable for the unpaid balance and Lopez thus acquired the material mans lien over the construction. The lien was merely confined to the building and did not extend to the on which the construction was made.

Lopez tried to secure a modification of the decision, but was denied.

ISSUES:

Whether the material mans lien for the value of the materials used in the construction of the building attaches to said structure alone and doesnt extend to the land on which the building is adhered to.

Whether the lower court and CA erred in not providing that the material mans liens is superior to the mortgage executed in favor of surety company not only on the building but also on the land.

HELD:

-The material mans lien could be charged only to the building for which the credit was made or which received the benefit of refection, the lower court was right in, holding at the interest of the mortgagee over the land is superior and cannot be made subject to the material man's lien.

-Generally, real estate connotes the land and the building constructed thereon, it is obvious that the inclusion of the building in the enumeration of what may constitute real properties could only mean one thingthat a building is by itself an immovable property.

-In the absence of any specific provision to the contrary, 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.

-The law gives preference to unregistered refectionary credits only with respect to the real estate upon which the refectionary or work was made.

- The lien so created attaches merely to the immovable property for the construction or repair of which the obligation was incurred. Therefore, the lien in favor of appellant for the unpaid value of the lumber used in the construction of the building attaches only to said structure and to no other property of the obligors.

SIBAL v. VALDEZJuly 5, 2013Leave a commentSIBAL v. VALDEZFACTS: The deputy sheriff of Tarlac attached and sold to Valdez the sugarcane planted by the plaintiff. The plaintiff asked for the redemption of the sugarcane. Valdez said that it cannot be subject to redemption because it is a personal property.ISSUE: WON the sugarcane in question is a personal or real property.

HELD:Sugarcane is under real property as ungathered products. The Supreme Court of Louisiana provided that standing crops are considered as part of the land to which they are attached but the immovability provided for is only one in abstract. The existence of a right on the growing crop is mobilization by anticipation, a gathering as it were in advance, rendering the crop movable quoad the right acquired therein.-A crop raised on leased premises in no sense forms part of the immovable. It belongs to the lessee and may be sold by him.-Act 1508 (Chattel Mortgage Law) recognize growing crops as personal property. Crops whether growing or ready to be harvested, when produced by annual cultivation, is not part of realty. Paragraph 2 of Art. 334 of the Civil Code has been modified by Sec. 450 of Code of Civil Procedure and Act no. 1508 in the sense that for purposes of attachment and execution and Chattel Mortgage Law, ungathered products have the nature of personal property.Mindanao Bus Company vs CityAssessorPosted onJune 24, 2013Mindanao Bus Company vs City Assessor116 PHIL 501GR No. L-17870September 29, 1962FACTSThe City Assessor of Cagayan de Oro City assessed a realty tax on several equipment and machineries of Mindanao Bus Co. These equipment were placed on wooden or cement platforms and can be moved around in the bus companys repair shop. The bus company appealed the assessment to the Board of Tax Appeals on the ground that the same are not realty. The Board of Tax Appeals of the City, however, sustained the city assessor. Thus, the bus company appealed to the Court of Tax Appeals, which likewise sustained the city assessor.HELDArt. 415of the NCC classifies the following as immovable property:xxx(5) Machinery, receptacles, instruments or implements intended by the owner pf the tenement for an industry or works which may be carried on in a building or on a piece of land, and which tend directly to meet the needs of the said industry or works;Note that the stipulation expressly states that the equipment are placed on wooden or cement platforms. They can be moved around and about in petitioner's repair shop.Before movables may be deemed immobilized in contemplation of Article 415 (5), it is necessary that they must first be essential and principal elements of an industry or workswithout which such industry or works would be unable to function or carry on the industrial purpose for which it was established.In this case, the tools and equipment in question are by their nature, not essential and principal elements of Mindanao Bus Co.s business of transporting passengers and cargoes by motor trucks. They are merely incidentals acquired as movables and used only for expediency to facilitate and/or improve its service. Even without such tools and equipments, its business may be carried on.Aside from the element of essentiality theArt.415(5) also requires that the industry or works be carried on in a building or on a piece of land. A sawmill would also be installed in a building on land more or less permanently, and the sawing is conducted in the land/building.However, in the instant case, the equipments in question are destined only to repair or service the transportation business, which is not carried on in a building or permanently on a piece of land, as demanded by law. The equipments in question are not absolutely essential to the petitioner's transportation business, and petitioner's business is not carried on in a building, tenement or on a specified land.As such, the equipments in question are not deemed real property because the transportation businessis not carried on in a building or permanently on a piece of land,as demanded by law.The transportation business could be carried on without the repair or service shop, if its rolling equipment is repaired or serviced in another shop belonging to another.Therefore, the imposition of realty tax on the maintenance and repair equipment was not proper because the properties involved were not real property under Article 415 (5).Davao Sawmill Co. vsCastilloPosted onJune 21, 2013Davao Sawmill Co. vs Castillo61 PHIL 709GR No. L-40411August 7, 1935A tenant placed machines for use in a sawmill on the landlord's land.FACTSDavao Sawmill Co., operated a sawmill. The land upon which the business was conducted was leased from another person. On the land, Davao Sawmill erected a building which housed the machinery it used. Some of the machines were mounted and placed on foundations of cement. In the contract of lease, Davo Sawmill agreed to turn over free of charge all improvements and buildings erected by it on the premises with the exception of machineries, which shall remain with the Davao Sawmill. In an action brought by the Davao Light and Power Co., judgment was rendered against Davao Sawmill. A writ of execution was issued and the machineries placed on the sawmill were levied upon as personalty by the sheriff. Davao Light and Power Co., proceeded to purchase the machinery and other properties auctioned by the sheriff.ISSUEAre the machineries real or personal property?HELDArt.415of the New Civil Code provides that Real Property consists of:(1) Lands, buildings, roads and constructions of all kinds adhered to the soil;xxx(5) Machinery, receptacles, instruments or implements intended by the owner pf the tenement for an industry ot works which may be carried on in a building or on a piece of land, and which tend directly to meet the needs of the said industry or works;Appellant should have registered its protest before or at the time of the sale of the property. While not conclusive, the appellant's characterization of the property as chattels is indicative of intention and impresses upon the property the character determined by the parties.Machinery is naturally movable. However, machinery may beimmobilized by destination or purposeunder the following conditions:General Rule: The machinery only becomes immobilized if placed in a plant by the owner of the property or plant.Immobilization cannot be made by atenant, ausufructuary, or any person having only atemporary right.Exception: Thetenant,usufructuary, ortemporary possessoracted as agent of the owner of the premises; or he intended to permanently give away the property in favor of the owner.As a rule, therefore, the machinery should be considered as Personal Property, since it was not placed on the land by the owner of the said land.US vs CarlosG.R. No. 6295, 21 Phil 543September 1, 1911FACTS:Ignacio Carlos has been a consumer of electricity furnished by the Manila Electric Railroad and Light Company for a building containing theresidence of the accused and 3 other residences. Believing that more light is consumed than what is shown in the meter installed, the company installedan additional meter on the pole outside Carloss house to compare the actual consumption. They found out that Carlos used a jumper. Further, a jumperwas found ina drawer ofa small cabinetin the roomof the defendantshouse where themeter was installed.In the absenceof any explanationfor hispossession of saiddevice, thepresumption raised was that Carlos wasthe owner ofthe device whose only usewas todeflect theflow of electricity,causing loss to the Meralco of over 2000 kilowatts of current.Accused of theft, Carloss defense was that electricity was an unknown force, not a fluid, and being intangible, could not be the object of theft.ISSUE:Whether the court erred in declaring that electricity can be the object of theft.HELD:While electric current is not a fluid, still, its manifestationsand effects like those of gas may be seenand felt. The true test of what may bestolenis not whether it is corporeal or incorporeal, but whether, beingpossessed of value, a person other than the ownermay appropriate the same. Electricity,like gas, is a valuable merchandise and may thus be stolen. (See also U.S. v. Tambunting, 41 Phil. 364).The court further ruled that electricity, the same as gas, is a valuable article of merchandise, bought and sold like other personal property and is capableof appropriation by another. It is alsosusceptible of being severed from a massor larger quantity and of being transported fromplace to place. Hence, noerror was committed by the trial court in holding that electricity is a subject of larceny.