1. CALTEX VS.

CBAA (GR L-50466)

2. NAVARRO VS PINEDA (GR L-18456)

3. TUMALAD VS VICENCIO (GR L-30173)

4. ASSOCIATED INSURANCE AND SURETY CO. INC. V IYA (GR L-10837)

5. LEUNG YEE VS. STRONG MACHINERY GR NO. L-11658

6. SORIANO VS. GALIT GR NO. 156295. SEPTEMBER 23, 2003

7. MACHINERY ENGINEERING SUPPLY V CA

8. DAVAO SAW MILL VS CASTILLO

9. MINDANAO BUS CO VS. CITY ASSESSOR

10. BERKENKOTTER VS CU UNJIENG

11. PRC VS. JARQUE GR NO. L-41506. MARCH 25, 1935

12. BENGUET CORP. VS. CBAA GR NO. 106041. JANUARY 29, 1993

13. SERG’S PRODUCTS VS. PCI GR NO. 137705. AUGUST 22, 2000

14. SIBAL VS VALDEZ GR NO. 26278, AUGUST 4, 1927

15. REPUBLIC VS GONZALES

16. CITY OF MANILA VS. GARCIA GR NO. L-26053. FEBRUARY 21, 1967

17. REPUBLIC VS. VDA. DEL CASTILLO GR NO. L-69002. JUNE 30, 1988

18. REPUBLIC VS. CA GR NO. 100709. NOVEMBER 14, 1997

19. CHAVEZ VS. PEAGR NO. 133250. JULY 9, 2002

20. VILLARICO VS. SARMIENTO GR NO. 136438. NOVEMBER 11, 2004

21. CEBU OXYGEN VS. BERCILLES GR NO. L-40474. AUGUST 29, 1975

22. LAUREL VS. GARCIA GR NO. 29013. JULY 25, 1990. 187 SCRA 797

23. INTERNATIONAL HARDWOOD VS. UP GR NO. L-52518. AUGUST 1991

24. LAUREL VS. GARCIA

1. CALTEX v BD OF ASSESSMENT APPEALS

G.R. L-50466, May 31, 1982

Recit-Ready Case Summary: This case is about the realty tax on machinery and equipment installed by
Caltex in it gas stations on leased land. Caltex contends that said M&E are personal property not subject
to realty tax. The court ruled that they are permanent fixtures for the purposed of realty taxation and
subject to real property tax.

General Rule of Law/Doctrine:

 The Central Board of Assessment Appeals, and not the Court of Tax Appeals has appellate
jurisdiction over decisions of the provincial or city boards of assessment appeals.
 The Real Property Tax Code does not provide for Supreme Court review of decisions of the
Central Board of Assessment Appeals. The only remedy for Supreme Court review of the Central
Board’s decision is by Special Civil Action of Certiorari.
 Gasoline station equipments and machineries are subject to the real property tax.
 Gasoline station equipments and machineries are permanent fixtures for purposes of realty
taxation.

FACTS: This case is about the realty tax on machinery and equipment installed by Caltex on leased land.
The machines and equipment consists of underground tanks, elevated water tanks, water tanks, gasoline
pumps, computing pumps, water pumps, car washer, car hoist, air compressors and tireflators. The said
M&E are loaned by Caltex to gas station operators under appropriate lease agreement or receipt with the
stipulation that they must be returned to Caltex in good condition as when received, ordinary wear and
tear excepted. Caltex retains ownership of the machines and equipment installed (not the lessor of the
land) during the term of the lease. The city assessor of Pasay characterized the said items as taxable
realty (P4,541.10 annually)

 City board of tax appeals – personalty

 Assessor – appealed to the Central Board of Assessment Appeals
 Board – real property (based on PD 464 1 and Art 4152 & 4163 of the Civil Code are not
applicable)

2
Article 414. All things which are or may be the object of appropriation are considered either:

(1) Immovable or real property; or (2) Movable or personal property. (333)

3
Article 415. The following are immovable property:

(1) Land, buildings, roads and constructions of all kinds adhered to the soil; ;

(3) Everything attached to an immovable in a fixed manner, in such a way that it cannot be separated therefrom
without breaking the material or deterioration of the object;
  Caltex – certiorari petition to declare it personal property not subject to realty tax

ISSUE: WON the machinery and equipment are real property subject to realty tax

HELD: YES. The court held that 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, and which have
been attached or affixed 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. Here, the question is whether the gas station equipment and machinery permanently affixed by
Caltex to its gas station and pavement (which are indubitably taxable realty) should be subject to the
realty tax. This question is different from the issue raised in the Davao Saw Mill case. Improvements on
land are commonly taxed as realty even though for some purposes they might be considered personalty
(84 C.J.S. 181-2, Notes 40 and 41). “It is a familiar phenomenon to see things classed as real property for
purposes of taxation which on general principle might be considered personal property” (Standard Oil Co.
of New York vs. Jaramillo, 44 Phil. 630, 633).

2. Navarro vs. Pineda, 9 SCRA 631, No L-18456 November 30, 1963

Chattel Mortgage; Subject-matter; House on land belonging to another treated as
movable property between the parties.— Where a house stands on a rented land
belonging to another person, it may be the subject-matter of a chattel mortgage as
personal or movable property if so stipulated in the document of mortgage, and in
an action by the mortgagee for foreclosure, the validity of the chattel mortgage
cannot be assailed by one of the parties to the contract of mortgage.
Property; Immovable Property; House on land belonging to another; General rule
and exceptions.—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 the contract, and specially in
execution proceedings, the house is considered as immovable property.
Topic: Chattel Mortgage; Immovable Property
Facts:
Defendants borrowed from plaintiff Conrado P. Navarro, the sum of P2,550.00,
payable 6 months after said date or on June 14, 1959. To secure the indebtedness,
Rufino executed a document captioned “DEED OF REAL ESTATE and CHATTEL
MORTGAGES”, whereby Juana Gonzales, by way of Real Estate Mortgage
hypothecated a parcel of land, belonging to her, registered with the Register of
Deeds of Tarlac, under Transfer Certificate of Title No. 25776, and Rufino G. Pineda,
by way of Chattel Mortgage, mort-gaged his two-story residential house, having a
floor area of 912 square meters, erected on a lot belonging to Atty. Vicente Castro,
located at Bo. San Roque, Tarlac, Tarlac; and one motor truck, registered in his
name, under Motor Vehicle Registration Certificate No. A-171806. Both mortgages

(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or
works which may be carried on in a building or on a piece of land, and which tend directly to meet the needs of the
said industry or works;

(10) Contracts for public works, and servitudes and other real rights over immovable property. (334a)
were contained in one instrument, which was registered in both the Office of the
Register of Deeds and the Motor Vehicles Office of Tarlac.
When the mortgage debt became due and payable, the defendants, after demands
made on them, failed to pay. They, however, asked and were granted an extension
up to June 30, 1960, within which to pay. Came June 30, defendants again failed to
pay and, for the second time, asked for another extension, which was given, up to
July 30, 1960. In the second extension, defendant Pineda in a document entitled
“Promise”, categorically stated that in the remote event he should fail to make good
the obligation on such date (July 30, 1960), the defendant would no longer ask for
further extension and there would be no need for any formal demand, and plaintiff
could proceed to take whatever action he might desire to enforce his rights, under
the said mortgage contract. In spite of said promise, defendants, failed and. refused
to pay the obligation.
Plaintiff filed a complaint for foreclosure of the mortgage and for damages, which
consisted of liquidated damages in the sum of P500.00 and 12% per annum interest
on the principal, effective on the date of maturity, until fully paid.
Issue: Whether deed of real estate and chattel mortgages appended to the
complaint is valid, notwithstanding the fact that the house of the defendant Rufino
G. Pineda was made the subject of the chattel mortgage, for the reason that it is
erected on a land that belongs to a third person.”
Held:
In the case at bar, the house in question was treated as personal or movable
property, by the parties to the contract themselves. In the deed of chattel mortgage,
appellant Rufino G. Pineda conveyed by way of “Chattel Mortgage” “my personal
properties”, a residential house and a truck. The mortgagor himself grouped the
house with the truck, which is, inherently a movable property. The house which was
not even declared for taxation purposes was small and made of light construction
materials: G.I. sheets roofing, sawali and wooden walls and wooden posts; built on
land belonging to another.
The cases cited by appellants are not applicable to the present case. The Iya cases
(L-10837-38, supra), refer to a building or a house of strong materials, permanently
adhered to the land, belonging to the owner of the house himself. In the case of
Lopez v. Orosa, (L-10817-18), the subject building was a theatre, built of materials
worth more than P62,000, attached permanently to the soil. In these two cases and
in the Leung Yee case, supra, third persons assailed the validity of the deed of
chattel mortgages; in the present case, it was one of the parties to the contract of
mortgages who assailed its validity.
Where a house stands on a rented land belonging to another person, it may be the
subject-matter of a chattel mortgage as personal or movable property if so
stipulated in the document of mortgage, and in an action by the mortgagee for
foreclosure, the validity of the chattel mortgage cannot be assailed by one of the
parties to the contract of mortgage.
In Manarang vs. Ofilada Case:
“There can not be any question that a building of mixed materials may be the
subject of a chattel mortgage, in which case, it is considered as between the parties
as personal property. x x x The matter depends on the circumstances and the
intention of the par-ties”. “Personal property may retain its character as such where
it is so agreed by the parties interested even though annexed to the realty x x x”.
The view that parties to a deed of chattel mortgage may agree to consider a house
as personal property for the purposes of said contract, “is good only insofar as the
contracting parties are concerned. It is based partly, upon the principles of estoppel
x x x” (Evangelista v. Alto Surety, No. L-11139, Apr. 23, 1958).
In Davao Sawmill vs. Castillo Case:
In a case, a mortgage house built on a rented land, was held to be a personal
property, not only because the deed of mortgage considered it as such, but also
because it did not form part of the land (Evangelista v. Abad [CA]; 36 O.G. 2913),
for it is now well-settled that an object placed on land by one who has only a
temporary right to the same, such as a lessee or usufructuary, does not 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 is so stipulated in the document of mortgage. (Evangelista v. Abad, supra.)
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 (Ladera, et al. v. C. N. Hodges, et al., [CA]; 48
O.G. 5374). The doctrine, therefore, gathered from these cases is that although in
some instances, a house of mixed materials has been considered as a chattel
between the parties and the validity of the contract between them, has been
recognized, it has been a constant criterion nevertheless that, with respect to third
persons, who are not parties to the contract, and specially in execution proceedings,
the house is considered as an immovable property (Art. 1431, New Civil Code). With respect to the
principle restated in the Navarro case, supra, that “the parties to
a contract may by agreement, treat as personal property that which by nature would
be real property”, the ruling in Piansay, et al. v. David, et al., L-19468, Oct. 30,
1964, seems to disagree. In this latter case, it was held: “x x x the registration of the
chattel mortgage of the building produced no effect as far as the building is
concerned. Thus Mrs. Uy Kim had no right to foreclose the alleged chattel mortgage
constituted in her favor because it was in reality a mere contract of an unsecured
loan. It follows that the Sheriff was not authorized to sell the house as a result of the
foreclosure of such chattel mortgage. And as Mrs. Uy Kim could not have acquired
the house when the Sheriff sold it at public auction, she could not, in the same
token, have sold it validly to Piansay.” As to when machineries are considered part of
immovable property and need not be the subject of a separate chattel mortgage in
order to be deemed duly encumbered. (GSIS v. Calsons, Inc., L-19867, May 29,
1968, 23 SCRA 891)

3. Tumalad vs. Vicencio, 41 SCRA 143, No. L-30173 September 30, 1971
Property; Status of buildings as immovable property.—It is obvious that the inclusion
of the building, separate and distinct from the land, in the enumeration of what may
constitute real properties (art. 415, New Civil Code) could only mean one thing—that
a building is by itself an immovable property irrespective of whether or not said
structure and the land on which it is adhered to belong to the same owner.
Same; Same; Same; Deviations from rule.—Certain deviations, however, have been
allowed for various reasons. In the case of Manarang vs. Ofilada, No. L-8133, 18
May 1956, 99 Phil. 109, this Court stated that ‘‘it is undeniable that the parties to a
contract may by agreement treat as personal property that which by nature would
be real property.’’ Again, in the case of Luna vs. Encarnacion, No. L-4637, 30 June
1952, 91 Phil. 531, the subject of the contract designated as Chattel Mortgage was a
house of mixed materials, and this Court held therein that it was a valid Chattel mortgage because it was
so expressly designated and specifically that the property
given as security ‘‘is a house of mixed materials, which by its very nature is
considered personal property.”
Same; Same; Same; Same; Reason; Owner is estopped.—The view that parties to a
deed of chattel mortgage may agree to consider a house as personal property for
the purposes of said contract, is good only insofar as the contracting parties are
concerned. It is based, partly, upon the principle of estoppel. 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.
Same; Contracts; By ceding, selling or transferring house by way of chattel
mortgage, house is treated as chattel.—In the contract, the house on rented land is
not only expressly designated as Chattel Mortgage; it specifically provides that “the
mortgagor . . . voluntarily CEDES, SELLS and TRANSFERS by way of Chattel
Mortgage the property together with its leasehold rights over the lot on which it is
constructed and participation. . .” 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-appellants could not 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 defendantsappellants
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.
Chattel Mortgage Law; Foreclosure of the mortgaged property.—Chattel mortgages
are covered and regulated by the Chattel Mortgage Law, Act No. 1508. Section 14 of
this Act allows the mortgagee to have the property mortgaged sold at public auction
through a public officer in almost the same manner as that allowed by Act No. 3135, as amended by Act
No. 4118, provided that the requirements of the law relative to
notice and registration are complied with.
Same; Redemption of foreclosed property.—Section 6 of Act No. 3135, as amended
provides that the debtor-mortgagor may, at any time within one year from and after
the date of the auction sale, redeem the property sold at the extrajudicial
foreclosure sale.
Same; Petition to obtain possession during period of redemption; Requirements.—
Section 7 of Act 3135, as amended allows the purchaser of the property to obtain
from the court the possession during the period of redemption; but the same
provision expressly requires the filing of a petition with the proper Court of First
Instance and the furnishing of a bond. It is only upon filing of the proper motion and
the approval of the corresponding bond that the order for a writ of possession issues
as a matter of course. No discretion is left to the court. In the absence of such a
compliance, the purchaser can not claim possession during the period of redemption
as a matter of right. In such a case, the governing provision is Section 34, Rule 39,
of the Revised Rules of Court, which also applies to properties purchased in
extrajudicial foreclosure proceedings.
Same; To whom rentals receivable during redemption period belong.—While it is
true that the Rules of Court allow the purchaser to receive the rentals if the
purchased property is occupied by tenants, he is, nevertheless, accountable to the
judgmentdebtor or mortgagor as the case may be, for the amount so received and
the same will be duly credited against the redemption price when the said debtor or
mortgagor effects the redemption. Differently stated, the rentals receivable from
tenants, although they may be collected by the purchaser during the redemption
period, do not belong to the latter but still pertain to the debtor or mortgagor. The
rationale for the Rule, it seems, is to secure for the benefit of the debtor or
mortgagor, the payment of the redemption amount and the consequent return to
him of his properties sold at public auction.
Same; Mortgagor is entitled to remain in possession during period of redemption and
to collect rents.—Since the defendants-appellants were occupying the house at the time of the auction
sale, they are entitled to remain in possession during the period
of redemption or within one year from and after 27 March 1956, the date of the
auction sale, and to collect the rents or profits during the said period.
FACTS:
On 1 September 1955 Vicencio and Simeon executed a chattel mortgage in favor of
the Tumalads over their house of strong materials located at Quiapo, Manila, which
were being rented from Madrigal & Company, Inc. The mortgage was registered in
the Registry of Deeds of Manila on 2 September 1955. The mortgage was executed
to guarantee a loan of P4,800.00 received from the Tumalads, payable within one
year at 12% yearly. Monthly payments are to be made starting September 1955 to
July 1956, and the lump sum of P3,150 was payable on or before August 1956. It
was also agreed that default in the payment of any of the amortizations would cause
the remaining unpaid balance to become immediately due and payable, the Chattel
Mortgage enforceable, and the Sheriff of Manila authorized the to sell the property in
a public auction for payment of debt. When Vicencio and Simeon defaulted in
paying, the mortgage was extrajudicially foreclosed, and on 27 March 1956, the
house was sold at public auction pursuant to the said contract. As highest bidder,
the Tumalads were issued the corresponding certificate of sale.
On 18 April 1956, the Tumalads commenced civil case in the MTC of Manila, praying
that the house be vacated and its possession surrendered to them, and for Vicencio
and Simeon to pay rent of P200.00 monthly from 27 March 1956 up to the time the
possession is surrendered. On 21 September 1956, the municipal court rendered its
decision in favor of the Tumalads. Vicencios appealed to the court a quo which also
rendered a decision against them. On appeal, the case was elevated to the Supreme
Court by the Court of Appeals for the reason that only questions of law are involved.
Tumalads failed to file a brief and this appeal was submitted for decision without it.
Nearly a year after the foreclosure sale the mortgaged house had been demolished
on January 1957 by virtue of a decision obtained by the lessor of the land on which
the house stood.
ISSUE:
Whether or not the chattel mortgage was null and void ab initio because only
personal properties can be subject of a chattel mortgage?
HELD:
The inclusion of the building, separate and distinct from the land, in the enumeration
of what may constitute real properties (art. 415, New Civil Code) could only mean
one thing — that a building is by itself an immovable property irrespective of
whether or not said structure and the land on which it is adhered to belong to the
same owner. Certain deviations, however, have been allowed for various reasons; if
parties to a contract by agreement treat as personal property that which by nature
would be real property.
In the contract now before Us, the house on rented land is not only expressly
designated as Chattel Mortgage; it specifically provides that "the mortgagor ...
voluntarily CEDES, SELLS and TRANSFERS by way of Chattel Mortgage the property
together with its leasehold rights over the lot on which it is constructed and
participation ..."
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
Vicencios 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
Vicencios 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 unlike other jurisprudence wherein third persons assailed the validity of the
chattel mortgage, it is the Vicencios themselves, as debtors-mortgagors, who are
attacking the validity of the chattel mortgage in this case. The doctrine of estoppel
therefore applies to the herein defendants-appellants, having treated the subject
house as personalty.

4. Associated Insurance and Surety Company vs. Iya, et al, 103 SCRA 972
FACTS:

Spouses Valino were the owners of a house, payable on installments from Philippine Realty Corporation.
To be able to purchase on credit rice from NARIC, they filed a surety bond subscribed by petitioner and
therefor, they executed an alleged chattel mortgage on the house in favor of the surety company. The
spouses didn’t own yet the land on which the house was constructed on at the time of the
undertaking. After being able to purchase the land, to be able to secure payment for
indebtedness, the spouses executed a real estate mortgage in favor of Iya.
The spouses were not able to satisfy obligation with NARIC, petitioner was compelled to pay.
The spouses weren’t able to pay the surety company despite demands and thus, the company foreclosed
the chattel mortgage. It later learned of the real estate mortgage over the house and lot secured by the
spouses. This prompted the company to file an action against the spouses. Also, Iya filed another civil
action against the spouses, asserting that she has a better right over the property. The trial court heard
the two cases jointly and it held that the surety company had a preferred right over the building as since
when the chattel mortgage was secured, the land wasn’t owned yet by the spouses making the
building then a chattel and not a real property.

ISSUE: Whether or not the building can be considered personal property?

HELD:

No. A building is an immovable property irrespective of where or not said structure and the land on which
it is adhered to belong to the same owner. A building certainly cannot be divested of its character of realty
by the fact that the land on which it is constructed belongs to another. To hold it the other way, the
possibility is not remote that it would result in confusion, for to cloak the building with an
uncertain status made dependent on ownership of the land, would create a situation where a
permanent fixture changes its nature or character as the ownership of the land changes hands. In the
case at bar, as personal properties may be the only subjects of a chattel mortgage, the execution of the
chattel mortgage covering said building is null and void.

5. LEUNG YEE V. STRONG MACHINERY GR NO. L-11658 Feb 15, 1918

Facts: The “Compañia Agricola Filipina” bought rice-cleaning machinery from Strong Machinery Company
and executed a chattel mortgage over the building and the machinery where it was installed to secure
payment of the purchase price, without reference to the land where the building stood. The mortgage was
foreclosed and the property was sold by the sheriff to Strongman machinery. Days after, Compañia
Agricola Filipina executed a deed of sale over the land where the building stood to the machinery
company, but the deed of sale which had no reference to the building, was not registered, although the
deed was made a public document. On or about the date to which the chattel mortgage was executed,
Compania executed a real estate mortgage over the building in favor of Leung Yee, distinct and separate
from the land. This real estate mortgage is to secure payment for its indebtedness for the construction of
the building. Upon failure to pay, the mortgage was foreclosed. Strong machinery company then filed a
complaint, demanding that it be declared the rightful owner of the building. The trial court held that it was
the machinery company which was the rightful owner as it had its title before the building was registered
prior to the date of registry of Leung Yee’s certificate.

ISSUE: 1. A.) Whether or not the building can be classified as a real property, so as to subject it to a real
estate mortgage. B.) Who has better right over the building.
Held: A. The building of strong materials in which the rice-cleaning machinery was installed by the
“Compañia Agricola Filipina” was real property, and the mere fact that the parties seem to have dealt with
it separate and apart from the land on which it stood in no wise changed its character as real property. It
follows that neither the original registry in the chattel mortgage of the building and the machinery installed
therein, not the annotation in that registry of the sale of the mortgaged property, had any effect whatever
so far as the building was concerned. B. t appears 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. He took the risk and must stand by the consequences; and it is in this sense that Yee was
not a 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; and 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.

6. MARCELO R. SORIANO, petitioner, vs. SPOUSES RICARDO and ROSALINA

GALIT,respondents.
G.R. No. 156295. September 23, 2003

Principle: while it is true that a mortgage of land necessarily includes, in the absence of
stipulation of the improvements thereon, buildings, still a building by itself may be mortgaged apart from
the land on which it has been built. Such mortgage would be still a real estate mortgage for the
building would still be considered immovable property even if dealt with separately and apart from the
land.

Facts: Respondent Ricardo Galit contracted a loan from petitioner Marcelo Soriano,evidenced
by four promissory notes. This loan was secured by a real estate mortgage over a parcel of
land. After he failed to pay his obligation, Soriano filed a complaint for sum of money against him with the
RTC of Balanga City. Respondents, the Spouses Ricardo and Rosalina Galit, failed to file their answer.
Hence, upon motion of Marcelo Soriano, the trial court declared the spouses in default and proceeded to
receive evidence for petitioner Soriano ex parte. RTC: decided in favor of petitioner Soriano, ordering the
latter to pay. Consequently, the trial court issued a writ of execution in due course, by virtue of which,
Deputy Sheriff Renato E. Robles levied on the following real properties of the Galit spouses

1. A parcel of land covered by Original Certificate of Title

2. STORE/HOUSE CONSTRUCTED

3. BODEGA

At the sale of the above-enumerated properties at public auction held on, petitionerwas the
highest and only bidder. Accordingly, Deputy Sheriff Robles issued a Certificate of Sale of
Execution of Real Property

Petitioner caused the registration of the Certificate of Sale on Execution of RealProperty with the
Registry of Deeds, which includes at the dorsal portion, the entry,not found in the Certificate of Sale on
file with Deputy Sheriff

The Regional Trial Court granted the motion for issuance of writ of possession. Subsequently, a
writ of possession was issued
 Respondents filed a petition for certiorari with the Court of Appeals, assailing the inclusion of the
parcel of land was not among the list of real properties in the writof possession as reflected in the
Certificate of Sale on Execution of Real Property.

CA: granted the petition, accordingly, the writ of possession issued by the RegionalTrial Court is
NULL and VOID

Aggrieved, petitioner now comes to this Court

Issue:

1.) THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DECLARING

THECERTIFICATE OF SALE ON EXECUTION OF REAL PROPERTY AS NULL AND VOIDAND
SUBSEQUENTLY THE WRIT OF POSSESSION.

Ruling:

There are actually 2 copies of the Certificate of Sale on Execution of Real Propertiesinvolved, namely: (a)
copy which is on file with the deputy sheriff; and (b) copyregistered with the Registry of Deeds.
The object of scrutiny, is the copysubsequently registered by petitioner with the Registry of Deeds
which included anentry on the dorsal portion of the first page describing a parcel of land not found inthe
Certificate of Sale of Real Properties on file with the sheriff.

Public documents by themselves may be adequate to establish the presumption oftheir validity. However,
their probative weight must be evaluated not in isolationbut in conjunction with other evidence adduced by
the parties in the controversy,much more so in this case where the contents of a copy thereof
subsequentlyregistered for documentation purposes is being contested.

The certificate of sale is an accurate record of what properties were actually sold tosatisfy the debt. The
strictness in the observance of accuracy and correctness in thedescription of the properties renders the
enumeration in the certificate exclusive.Thus, subsequently including properties which have not been
explicitly mentionedtherein for registration purposes under suspicious circumstances smacks of fraud.The
explanation that the land on which the properties sold is necessarily includedand, hence, was belatedly
typed on the dorsal portion of the copy of the certificatesubsequently registered is at best a lame excuse
unworthy of belief

ART. 415. Of the Civil Code enumerated the list of immovable properties.

The provision of the Civil Code enumerates land and buildings separately. This canonly mean that a
building is, by itself, considered immovable.

Thus, it has been held that In this case, considering that what was sold by virtue of the writ of
executionissued by the trial court was merely the storehouse and bodega constructed on theparcel of
land which by themselves are real properties of respondents spouses, thesame should be regarded as
separate and distinct from the conveyance of the lot onwhich they stand.

Declared the writ of possession issued by the Regional Trial Court null and void, is AFFIRMED in toto

7. MACHINERY & ENGINEERING SUPPLIES VS. CA (96 PHIL. 70)

Facts:

 Petitioner filed a case of replevin. Replevin is a legal remedy, which enables a person to
recover personal property taken wrongfully or unlawfully, and to obtain compensation for resulting
losses.
  Roco's attention was called to the fact that the equipments could not possibly be dismantled
without causing damages or injuries to the wooden frames attached to them.

 The trial court issued an order, directing the Provincial Sheriff of Bulacan to return the
machineries and equipments to the place where they were installed at the time of the seizure. On
March 21, 1953, the deputy sheriffs returned the properties seized, without the benefit of
inventory and without re-installing them in their former position and replacing the destroyed posts,
which rendered their use impracticable.

 The trial court ordered the Provincial Sheriff and the Plaintiff to reinstate the machineries and
equipments removed by them in their original condition in which they were found before their
removal at the expense of the Plaintiff  CA decided: "While the seizure of the equipments and
personal properties was ordered by the respondent Court, it is, however, logical to presume that
said court did not authorize the petitioner or its agents to destroy, as they did, said machineries
and equipments, by dismantling and unbolting the same from their concrete basements, and
cutting and sawing their wooden supports, thereby rendering them unserviceable and beyond
repair, unless those parts removed, cut and sawed be replaced.
 "Ordinarily replevin may be brought to recover any specific personal property unlawfully taken or
detained from the owner thereof, provided such property is capable of identification and delivery;
but replevin will not lie for the recovery of real property or incorporeal personal property".

Issue: Whether or not the equipment are real property or movable subject to replevin?

Held:

Denied. 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 "directly to meet the needs of the said industry." For
these reasons, they were already immovable property pursuant to paragraphs 3 and 5 of Article 415 of
Civil Code of the Philippines and not subject of replevin.

8. DAVAO SAW MILL CO. VS. CASTILLO, 61 PHIL., 709, NO. 40411 AUGUST 7, 1935

A lessee placed machinery in a 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 or abandonment of the land leased. The
lessee also treated the machinery as personal property by executing chattel
mortgages in f 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. Held: That the machinery must be classified as personal property.
Machinery which is movable in its nature only becomes immobilized when placed in a
plant by the owner of the property or plant, but not when so placed by a tenant, a
usufructuary, or any person having only a temporary right, unless such person acted
as the agent of the owner.
Facts:

Davao Saw Mill Co., Inc., a holder of a lumber concession, has operated sawmill in
aland which it does not own. The company erected a building therein which housed
the machinery used by it. In the lease contract between the sawmill company and
the owner of the land,it has been agreed that after the lease period or in case the
company should leave or abandon the land leased before the said period, ownership
of all the improvements and buildings except machineries and accessories,made by
the company shall pass to the owner of the land without any obligation on its part to
pay any amount for said improvements and buildings. In another action, A writ of
execution was issued against the company and the properties in question were
levied upon. The company assailed the said writ contending that the machineries
and accessories were personal in nature, hence, not subject to writ of execution.
The trial judge ruled in favour of the company.
Issue: Whether or not the subject properties are personal in nature.

Held: The subject properties are personal in nature. Article 334, paragraph 5, of the
[Old] Civil Code provides that real property consists of (5) Machinery, liquid containers, instruments or
implements intended by the owner of any building or land
for use in connection with any industry or trade being carried on therein and which
are expressly adapted to meet the requirements of such trade of industry. Machinery
which is movable in nature only becomes immovable when placed in a land by the
owner of the property or land but not when so placed by a tenant or any person
having only a temporary right, unless such person acted as the agent of the owner.
In the case at bar, the machinery is intended not by the owner of the land but by
the saw mill company for use in connection with its trade. In this sense, the
machinery is not a real property.

9. MINDANAO BUS CO. V. CITY ASSESSOR DIGEST

G.R. No. L-17870 29 September 1962

FACTS:
Petitioner is a public utility company engaged in the transport of passengers and cargo by motor
vehicles. Petitioner likewise owned a land where it maintains a garage, a repair shop and blacksmith or
carpentry shops. The machineries are placed thereon in wooden and cement platforms. The City
Assessor of CDO then assessed a P4,400 realty tax on said machineries and repair equipment. Petitioner
appealed on the ground that the same are not real properties.

ISSUE: Whether or not the machineries and equipment are considered immobilized and thus subject to a
realty tax

HELD:

NO. The Supreme Court held that said machineries and equipment are not subject to the assessment of
real estate tax. Art. 415 of the NCC classifies the following as immovable property xxx (5) Machinery,
receptacles, instruments or implements intended by the owner of the tenement for an industry or works
which may be carried on in a building or on a piece of land, and which tend directly to meet the needs of
the said industry or works;

Said equipment are not considered immobilized as they are merely incidental, not essential and principal
to the business of the petitioner. The transportation business could be carried on without repair or service
shops of its rolling equipment as they can be repaired or services in another shop belonging to another
Aside from the element of essentiality the Art.415 (5) also requires that the industry or works be carried
on in a building or on a piece of land. As such, the equipment in question are not deemed real property
and not subject to realty tax, because the transportation business is not carried on in a building or
permanently on a piece of land, as demanded by law.
10. Berkenkotter vs. Cu Unjieng e Hijos, 61 Phil., 663, No. 41643 July 31, 1935
MORTGAGE; IMPROVEMENT ON THE MORTGAGED PROPERTY, INCLUDED IN THE
MORTGAGE.—The installation of a machinery and equipment in a mortgaged sugar
central, in lieu of another of less capacity, for the purpose of carrying out the
industrial functions of the latter and increasing production, constitutes a permanent
improvement on said sugar central and subjects said machinery and equipment to
the mortgage constituted thereon. (Article 1877, Civil Code.)
PERMANENT CHARACTER OF THE IMPROVEMENT.—The fact that the purchaser of
the new machinery and equipment has bound himself to the person supplying him
the purchase money to hold them as security for the payment of the latter’s credit,
and to refrain from mortgaging or otherwise encumbering them does not alter the
permanent character of the incorporation of said machinery and equipment with the
central.
OWNERSHIP OF THE IMPROVEMENT.—The sale of the machinery and equipment in
question by the purchaser who was supplied the purchase money, as a loan, to the
person who supplied the money, after the incorporation thereof with the mortgaged sugar central, does
not vest the creditor with ownership of said machinery and
equipment but simply with the right of redemption.

Facts:
On 26 April 1926, the Mabalacat Sugar Company obtained from Cu Unjieng e Hijos,
a loan secured by a first mortgage constituted on 2 parcels of land "with all its
buildings, improvements, sugar-cane mill, steel railway, telephone line, apparatus,
utensils and whatever forms part or is a necessary complement of said sugar-cane
mill, steel railway, telephone line, now existing or that may in the future exist in said
lots.”
On 5 October 1926, the Mabalacat Sugar Company decided to increase the capacity
of its sugar central by buying additional machinery and equipment, so that instead of
milling 150 tons daily, it could produce 250. Green proposed to the Berkenkotter, to
advance the necessary amount for the purchase of said machinery and equipment,
promising to reimburse him as soon as he could obtain an additional loan from the
mortgagees, Cu Unjieng e Hijos, and that in case Green should fail to obtain an
additional loan from Cu Unjieng e Hijos, said machinery and equipment would
become security therefore, said Green binding himself not to mortgage nor
encumber them to anybody until Berkenkotter be fully reimbursed for the
corporation’s indebtedness to him.
Having agreed to said proposition made in a letter dated 5 October 1926,
Berkenkotter, on 9 October 1926, delivered the sum of P1,710 to Green, the total
amount supplied by him to Green having been P25,750. Furthermore, Berkenkotter
had a credit of P22,000 against said corporation for unpaid salary. With the loan of
P25,750 and said credit of P22,000, the Mabalacat Sugar Co., Inc., purchased the
additional machinery and equipment.

On 10 June 1927, Green applied to Cu Unjieng e Hijos for an additional loan of

P75,000 offering as security the additional machinery and equipment acquired by
said Green and installed in the sugar central after the execution of the original
mortgage deed, on 27 April 1927, together with whatever additional equipment
acquired with said loan. Green failed to obtain said loan. Hence, above mentioned
mortgage was in effect.
Issue: Are the additional machines also considered mortgaged?
Held:
Article 1877 of the Civil Code provides that mortgage includes all natural accessions,
improvements, growing fruits, and rents not collected when the obligation falls due,
and the amount of any indemnities paid or due the owner by the insurers of the
mortgaged property or by virtue of the exercise of the power of eminent domain,
with the declarations, amplifications, and limitations established by law, whether the
state continues in the possession of the person who mortgaged it or whether it
passes into the hands of a third person. It is a rule, that in a mortgage of real
estate, the improvements on the same are included; therefore, all objects
permanently attached to a mortgaged building or land, although they may have
been placed there after the mortgage was constituted, are also included.
Article 334, paragraph 5, of the Civil Code gives the character of real property to
machinery, liquid containers, instruments or implements intended by the owner of
any building or land for use in connection with any industry or trade being carried on
therein and which are expressly adapted to meet the requirements of such trade or
industry. The installation of a machinery and equipment in a mortgaged sugar
central, in lieu of another of less capacity, for the purpose of carrying out the
industrial functions of the latter and increasing production, constitutes a permanent improvement on said
sugar central and subjects said machinery and equipment to
the mortgage constituted thereon.

11. PHIL. REFINING CO. VS. JARQUE, 61 PHIL 229

FACTS:

On varying dates the Philippine Refining Co., Inc., and Francisco Jarque executed three mortgages,
denominated as “chattel mortgage” on the motor vessels Pandan and Zaragoza. The first two mortgages
do not have an appended affidavit of good faith, while the third contains such. The third mortgage was
subscribed by Jarque and MN Brink (in what capacity the latter signed is not disclosed) and was not
registered in the customs house until 17 May 1932, or within the period of 30 prior to the commencement
of insolvency proceedings against Jarque. A fourth mortgage was executed by Jarque and Ramon Aboitiz
on the motorship Zaragoza and was entered in the chattel mortgage registry of the register of deeds on
12 May 1932, or again within the 30-day period before the institution of insolvency proceedings.

A petition was filed with the CFI Cebu on 2 June 1932 in which it was prayed that Francisco Jarque be
declared an insolvent debtor, with the result that an assignment of all the properties of the insolvent
debtor, was executed in favor of Jose Corominas. The petition on the matter of Jarque’s insolvency was
granted. However, the judge declined to order the foreclosure of the mortgages, but on the contrary
sustained the special defenses of fatal defectiveness of the mortgages.

The Supreme Court affirmed the judgment, with costs against appellant

ISSUE:

1. Whether or not the vessel is a personal property

2. Whether or not an affidavit of good faith is needed to enforce a chattel mortgage on a vessel

HELD:

1. Vessels are considered personal property under the civil law. (Code of Commerce, article 585.)
Similarly under the common law, vessels are personal property. Under the common law, vessels are
personal property although occasionally referred to as a peculiar kind of personal property. Since the term
“personal property” includes vessels, they are subject to mortgage agreeably to the provisions of the
Chattel Mortgage Law. (Act 1508, section 2.) Indeed, it has heretofore been accepted without discussion
that a mortgage on a vessel is in nature a chattel mortgage. The only difference between a chattel
mortgage of a vessel and a chattel mortgage of other personality is that it is not now necessary for a
chattel mortgage of a vessel to be noted in the registry of the register of deeds, but it is essential that a
record of documents affecting the title to a vessel be entered in the record of the Collector of Customs at
the port of entry. Otherwise a mortgage on a vessel is generally like other chattel mortgages as to its
requisites and validity.

2. Section 5 of the Chattel Mortgage Law deemed it a requirement to have an affidavit of good faith
appended to the mortgage and recorded therewith. The absence of the affidavit vitiates a mortgage as
against creditors and subsequent encumbrancers. As a consequence a chattel mortgage of a vessel
wherein the affidavit of good faith required by the Chattel Mortgage Law is lacking, is unenforceable
against third persons.

12. Benguet Corp. vs. Central Board of Assessment Appeals, 218 SCRA 271,
G.R. No. 106041 January 29, 1993

Civil Law; Taxation; Property; The Real Property Tax Code does not carry a definition
of "real property".—The Real Property Tax Code does not carry a definition of "real
property" and simply says that the realty tax is imposed on "real property, such as
lands, buildings, machinery and other improvements affixed or attached to real
property." In the absence of such a definition, we apply Article 415 of the Civil Code.
Same; Same; Same; The tailings dam of the petitioner does not fall under any of the
classes of exempt real properties enumerated under Section 2 of C.A. No. 470.—
Section 2 of C.A. No. 470, otherwise known as the Assessment Law, provides that
the realty tax is due "on the real property, including land, buildings, machinery and
other improvements" not specifically exempted in Section 3 thereof. A reading of
that section shows that the tailings dam of the petitioner does not fall under any of
the classes of exempt real property therein enumerated.
Same; Same; Same; Court is convinced that the subject dam falls within the
definition of an improvement because it is permanent in character and it enhances
both the value and utility of petitioner’s mine.—The Court is convinced that the
subject dam falls within the definition of an "improvement" because it is permanent in character and it
enhances both the value and utility of petitioner’s mine.
Moreover, the immovable nature of the dam defines its character as real property
under Article 415 of the Civil Code and thus makes it taxable under Section 38 of the
Real Property Tax Code.
Topic: Immovables; Improvements; Taxable
Facts:
The controversy arose in 1985 when the Provincial Assessor of Zambales assessed
the said properties as taxable improvements. The assessment was appealed to the
Board of Assessment Appeals of the Province of Zambales. On August 24, 1988, the
appeal was dismissed mainly on the ground of the petitioner’s "failure to pay the
realty taxes that fell due during the pendency of the appeal."
The petitioner seasonably elevated the matter to the Central Board of Assessment
Appeals,1 one of the herein respondents. In its decision dated March 22, 1990, the
Board reversed the dismissal of the appeal but, on the merits, agreed that "the
tailings dam and the lands submerged thereunder (were) subject to realty tax."
The petitioner does not dispute that the tailings dam may be considered realty within
the meaning of Article 415. It insists, however, that the dam cannot be subjected to
realty tax as a separate and independent property because it does not constitute an
"assessable improvement" on the mine although a considerable sum may have been
spent in constructing and maintaining it. To support its theory, the petitioner cites
several cases.
Issue: Whether or not it be considered as immovable property?
Held:
Yes. The Court is convinced that the subject dam falls within the definition of an
"improvement" because it is permanent in character and it enhances both the value
and utility of petitioner’s mine. Moreover, the immovable nature of the dam defines
its character as real property under Article 415 of the Civil Code and thus makes it
taxable under Section 38 of the Real Property Tax Code.
Is the tailings dam an improvement on the mine? Section 3(k) of the Real Property
Tax Code defines improvement as follows:
(k) Improvements—is a valuable addition made to property or an amelioration in its
condition, amounting to a more than mere repairs or replacement of waste, costing
labor or capital and intended to enhance its value, beauty or utility or to adopt it for
new or further purposes.
The term has also been interpreted as "artificial alterations of the physical condition
of the ground that are reasonably permanent in character."
From the definitions and the cases cited above, it would appear that whether a
structure constitutes an improvement so as to partake of the status of realty would
depend upon the degree of permanence intended in its construction and use. The
expression "permanent" as applied to an improvement does not imply that the
improvement must be used perpetually but only until the purpose to which the
principal realty is devoted has been accomplished. It is sufficient that the
improvement is intended to remain as long as the land to which it is annexed is still
used for the said purpose.
The Court is convinced that the subject dam falls within the definition of an
"improvement" because it is permanent in character and it enhances both the value
and utility of petitioner’s mine. Moreover, the immovable nature of the dam defines
its character as real property under Article 415 of the Civil Code and thus makes it
taxable under Section 38 of the Real Property Tax Code.

13. Serg’s Products v. PCI Leasing [G.R. No. 137705. August 22, 2000]
The machines although each of them was movable or personal property on its own,
all of them have become immobilized by destination because they are essential and
principal elements of petitioners chocolate-making industry.—In the present case,
the machines that were the subjects of the Writ of Seizure were placed by
petitioners in the factory built on their own land. Indisputably, they were essential
and principal elements of their chocolate-making industry. Hence, although each of
them was movable or personal property on its own, all of them have become
immobilized by destination because they are essential and principal elements in the
industry. In that sense, petitioners are correct in arguing that the said machines are
real, not personal, property pursuant to Article 415 (5) of the Civil Code.
Contracting parties may validly stipulate that a real property be considered as
personal.—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.
The Lease Agreement clearly provides that the machinesin question are to be
considered as personal property; Under the circumstances they are proper subjects
of the writ of seizure.—In the present case, the Lease Agreement clearly provides
that the machines in question are to be considered as personal property. x x x
Clearly then, petitioners are estopped from denying the characterization of the
subject machines as personal property. Under the circumstances, they are proper
subjects of the Writ of Seizure.
That the machines should be deemed personal property pursuant to the Lease
Agreement is good only insofar as the contracting parties are concerned.—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.
Facts:
On 13 February 1998, PCI Leasing and Finance, Inc. filed a complaint for sum of
money, with an application for a writ of replevin. On 6 March 1998, upon an exparte
application of PCI Leasing, judge issued a writ of replevin directing its sheriff
to seize and deliver the machineries and equipment to PCI Leasing after 5 days and
upon the payment of the necessary expenses. On 24 March 1998, the sheriff
proceeded to petitioner’s factory, seized one machinery with word that the return for
the other machineries.
Citing the Agreement of the parties, the appellate court held that the subject
machines were personal property, and that they had only been leased, not owned,
by petitioners; and ruled that the "words of the contract are clear and leave no
doubt upon the true intention of the contracting parties." It thus affirmed the 18
February 1998 Order, and the 31 March 1998 Resolution of the lower court, and
lifted the preliminary injunction issued on 15 June 1998. A subsequent motion for
reconsideration was denied on 26 February 1999. Hence, the petition for review on
certiorari.
Issue: Whether the machines are personal or real property?
Held: The machinery were essential and principal elements of their chocolatemaking
industry. Hence, although each of them was movable or personal property on its own, all of them have
become "immobilized by destination because they are
essential and principal elements in the industry." The machines are thus, real, not
personal, property pursuant to Article 415 (5) of the Civil Code.
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. Thus, said
machines are proper subjects of the Writ of Seizure (compare Tumalad v. Vicencio).
The 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 the present case, however, there is no showing that any specific third
party would be adversely affected.

24. SIBAL VS. VALDEZ, 50 PHIL 512

FACTS: As a first cause of action the plaintiff alleged that the defendant Vitaliano Mamawal, deputy
sheriff of the Province of Tarlac, by virtue of a writ of execution issued by the Court of First Instance of
Pampanga, attached and sold to the defendant Emiliano J. Valdez the sugar cane planted by the plaintiff
and his tenants on seven parcels of land. Within one year from the date of the attachment and sale the
plaintiff offered to redeem said sugar cane and tendered to the defendant Valdez the amount sufficient to
cover the price paid by the latter, the interest thereon and any assessments or taxes which he may have
paid thereon after the purchase, and the interest corresponding thereto. But Valdez refused to accept the
money and to return the sugar cane to the plaintiff.

As a second cause of action, the plaintiff alleged that the defendant Emiliano J. Valdez was attempting to
harvest the palay planted in four of the seven parcels and that he had harvested and taken possession of
the palay in one of said seven parcels and in another parcel, amounting to 300 cavans; and that all of said
palay belonged to the plaintiff.
After hearing and on 28 April 1926, the judge (Lukban) rendered judgment in favor of the defendant
holding that the sugar cane in question was personal property and, as such, was not subject to
redemption; among others. Hence, the appeal

ISSUE:

Whether the sugar cane in question is personal or real property

HELD:

Manresa, the eminent commentator of the Spanish Civil Code, in discussing section 334 of the Civil
Code, in view of the recent decisions of the supreme Court of Spain, admits that growing crops are
sometimes considered and treated as personal property. Moreover, from an examination of the reports
and codes of the State of California and other states we find that the settle doctrine followed in said states
in connection with the attachment of property and execution of judgment is, that growing crops raised by
yearly labor and cultivation are considered personal property.

On the other hand, Act No. 1508, the Chattel Mortgage Law, fully recognized that growing crops are
personal property. Section 2 of said Act provides: "All personal property shall be subject to mortgage,
agreeably to the provisions of this Act, and a mortgage executed in pursuance thereof shall be termed a
chattel mortgage." Section 7 in part provides: "If growing crops be mortgaged the mortgage may contain
an agreement stipulating that the mortgagor binds himself properly to tend, care for and protect the crop
while growing.

It is clear from the foregoing provisions that Act No. 1508 was enacted on the assumption that "growing
crops" are personal property. This consideration tends to support the conclusion hereinbefore stated, that
paragraph 2 of article 334 of the Civil Code has been modified by section 450 of Act No. 190 and by Act
No. 1508 in the sense that "ungathered products" as mentioned in said article of the Civil Code have the
nature of personal property. In other words, the phrase "personal property" should be understood to
include "ungathered products."

15. REPUBLIC V. GONZALES GR NO. 45338 Jul 31, 1991

Facts:

Then President Ramon Magsaysay issued Proclamation No. 144, entitled "Reserving for Street Widening
and Parking Space Purposes Certain Parcels of the Public Domain Situated in the Municipality of
Malabon, Province of Rizal, Island of Luzon."1 Lots 1 and 2 were specifically withdrawn from sale or
settlement and reserved for the purposes mentioned in the Proclamation. The Municipal Council of
Malabon then passed Resolutions2 authorizing the filing of ejectment cases against appellants so that
Proclamation No, 144 could be implemented. On 23 June 1955, the Assistant Provincial Fiscal of Pasig,
Rizal filed separate complaints against appellants for the recovery of the portions of Lot 2 they were
occupying. Appellants disputed the light of the Government to recover the land occupied by them. In his
answer, Policarpio Gonzales claimed (1) that Lot 2 was covered by a lease application, and later a
miscellaneous sales application, filed before the Bureau of Lands; (2) that he had a municipal permit to
construct a building as well as a business license duly issued by the Office of the Mayor of Malabon; and
(3) that the lot occupied by him was not needed by the Municipality of Malabon in the widening of F.
Sevilla Boulevard. The defenses interposed by Augusto Josue were substantially similar to those raised
by Policarpio Gonzales..
Issue: Whether or not the Proclamation No. 144. long-term benefits which the proposed street widening
and parking areas make available to the public in the form of enhanced, safe and orderly transportation
on land.

Ruling: Yes, In the first place, Section 83 above speaks not only of use by a local government but also of
"quasi-public uses or purposes." To constitute public use, the public in general should have equal or
common rights to use the land or facility involved on the same terms, however limited in number the
people who can actually avail themselves of it at a given time. There is nothing in Proclamation No. 144
which excludes non-car-owners from using a widened street or a parking area should they in fact happen
to be driving cars; the opportunity to avail of the use thereof remains open for the public in general.

16. CITY OF MANILA V. GARCIA

G.R. No. L-26053. February 21, 1967

Facts: Plaintiff City of Manila is owner of parcels of land forming one compact area, bordering Kansas,
Vermont and Singalong streets in Malate, Manila, and covered by Torrens Titles Nos. 49763, 37082 and
37558.

Shortly after liberation, from 1945 to 1947, defendants entered upon these premises without plaintiff’s
knowledge and consent. They built houses of secondclass materials, again without plaintiff’s knowledge
and consent, and without the necessary building permits from the city. There they lived thru the years to
the present.

In November, 1947, the presence of defendants having previously been discovered, 11 of the defendants
(predecessor of defendant Carandang) were given by Mayor Valeriano E. Fugoso written permits—each
labeled “lease contract”—to occupy specific areas in the property upon conditions therein set forth.
Meanwhile, two of the defendants received their permits from Mayor Manuel de la Fuente on January 29
and March 18, respectively, both of 1948. The rest of the 23 defendants exhibited none

On September 14, 1961, plaintiff s City Engineer, pursuant to the Mayor’s directive to clear squatters’
houses on city property, gave each of defendants thirty (30) days to vacate and remove his construction
or improvement on the premises. This was followed by the City Treasurer’s demand on each defendant,
made in February and March, 1962, for the payment of the amount due by reason of the occupancy and
to vacate in fifteen (15) days. Defendants refused. Hence, the petitioner filed suit to recover possession.

Issue: Can permits granted by City Mayor legalize entry into public property

Ruling: No. Squatting on public property cannot be legalized by means of permits or “leases". The
property of a municipal corporation, which is for public use or service, cannot be leased or acquired by
private persons as decided by the Supreme Court in the cases Municipality of Cavite vs. Rojas, 30 Phil.
602; Espiritu vs. Municipal Council of Pozurrubio,102 Phil. 867.

Squatting is unlawful and no amount of acquiescence on the part of the City officials will elevate it into a
lawful act. Thus such permits are null and void.

Thus such permits are null and void. Moreover, the houses and constructions of squatters on the land
belonging to the City of Manila constitute a public nuisance per se because they hinder and impair the
use of the land for a badly needed school building. As such, they could have been summarily abated
without the need of judicial action.
17. REPUBLIC VS. LAT VDA. DEL CASTILLO
G.R. No. L-69002 June 30, 1988

FACTS: In 1951, the late Modesto Castillo (Castilo) applied for the registration of two parcels of land,
Lots 1 and 2. The Land Registration Court rendered a decision and declared Castillo as the true and
absolute owner of the land with the improvements thereon, for which Original Certificate of Title was
issued to him.
After the death of Castillo, defendants Amanda Lat Vda. de Castillo, et al., executed a deed of partition
and assumption of mortgage in favor of Florencio L. Castillo, et al., as a result, new transfer certificates of
title were issued to Florencio Castillo, et al.,

The Republic of the Philippines filed a case for the annulment of the certificates of title issued to
defendants Amanda Lat Vda. de Castillo, on the grounds that said lands had always formed part of the
Taal Lake, washed and inundated by the waters thereof, and being of public ownership, it could not be
the subject of registration as private property

Defendants argued Lots 1 and 2 have always been in the possession of the Castillo family for more than
76 years and that their possession was public, peaceful, continuous, and adverse against the whole
world. It also argued that The Republic of the Philippines is already barred by res judicata.

ISSUE: WON Lots 1 and 2 are properties of the public domain

RULING: Yes, Lots 1 and 2 are properties of the public domain.

Citing the case of Ramos v. Pablo, 146 SCRA 24 [1986]; that shores are properties of the public domain
intended for public use (Article 420, Civil Code) and, therefore, not registrable. Thus, it has long been
settled that portions of the foreshore or of the territorial waters and beaches cannot be registered. Their
inclusion in a certificate of title does not convert the same into properties of private ownership or confer
title upon the registrant (Republic v. Ayala y Cia, 14 SCRA, 259 [1965], citing the cases of Dizon, et al. v.
Bayona, et al., 98 Phil. 943; and Dizon, et al. v. Rodriguez, et al., 13 SCRA 704).

In this case, it has been satisfactorily established as found by the trial court, that the properties in
question were the shorelands of Taal Lake during the cadastral survey of 1923. Such fact was further
verified in the Verification-Relocation Survey of 1948 by Engineer Arcenas who conducted said survey
himself.

18. REPUBLIC OF THE PHILIPPINES, represented by the DIRECTOR OF LANDS, petitioner, vs.
COURT OF APPEALS, JOSEFINA L. MORATO, SPOUSES NENITA CO and ANTONIO QUILATAN
AND THE REGISTER OF DEEDS OF QUEZON PROVINCE,
G.R. No. 100709 November 14, 1997
Facts:
Morato filed a Free Patent Application on a parcel of land and the patent was approved and the Register
of Deeds with OCT. Both the free patent and the title specifically mandate that the land shall not be
alienated nor encumbered within five years from the date of the issuance of the patent. District Land
Officer in Lucena City conducted an investigation and it was established that the subject land is a portion
of the Calauag Bay and not suitable to vegetation. Morato mortgaged the property to respondents
Quilatan and Advincula. Petitioner filed an amended complaint against respondents and the Register of
Deeds of Quezon for the cancellation of title and reversion of a parcel of land to the public domain,
subject of a free patent in favor of respondent Morato, on the grounds that the land is a foreshore land
and was mortgaged and leased within the five-year prohibitory period. After trial, the lower court rendered
a decision dismissing petitioner's complaint. In finding for private respondents, the lower court ruled that
there was no violation of the 5-year period ban against alienating or encumbering the land, because the
land was merely leased and not alienated. It also found that the mortgage to Quilatan covered only the
improvement and not the land itself. the Court of Appeals affirmed the decision of the trial court

Issue/s:

WON the lease and/or mortgage of a portion of a realty acquired through free patent constitute sufficient
ground for the nullification of such land grant.

Ruling: Respondent Morato cannot fully use or enjoy the land during the duration of the lease contract.
This restriction on the enjoyment of her property sufficiently meets the definition of an encumbrance under
Section 118 of the Public Land Act, because such contract "impairs the use of the property" by the
grantee. In a contract of lease which is consensual, bilateral, onerous and commutative, the owner
temporarily grants the use of his or her property to another who undertakes to pay rent therefor. During
the term of the lease, the grantee of the patent cannot enjoy the beneficial use of the land leased. As
already observed, the Public Land Act does not permit a grantee of a free patent from encumbering any
portion of such land. Such encumbrance is a ground for the nullification of the award. Even if only part of
the property has been sold or alienated within the prohibited period of five years from the issuance of the
patent, such alienation is a sufficient cause for the reversion of the whole estate to the State. As a
condition for the grant of a free patent to an applicant, the law requires that the land should not be
encumbered, sold or alienated within five years from the issuance of the patent. The sale or the alienation
of part of the homestead violates that condition.

The application for a free patent was made in 1972. From the undisputed factual findings of the Court of
Appeals, however, the land has since become foreshore. Accordingly, it can no longer be subject of a free
patent under the Public Land Act. When the sea moved towards the estate and the tide invaded it, the
invaded property became foreshore land and passed to the realm of the public domain. The subject land
in this case, being foreshore land, should therefore be returned to the public domain.

19. Chavez vs PEA and Amari Coastal Bay Development Corporation

G.R. No. 133250. July 9, 2002

Facts: Public Estates Authority (PEA) is a wholly government-owned and –controlled corporation which is
the primary implementing agency of the National Government to reclaim foreshore and submerged lands
of the public domain. By virtue of a Special Patent issued by President Corazon Aquino, the Register of
Deeds of the Paranaque, in April 1988, issued certificates of title, in the name of PEA, covering three
reclaimed islands known as the Freedom Islands located at the southern portion of the Manila-Cavite
Coastal Road, Paranaque City. The Freedom Islands have a total land area of 157.841 hectares.

In April 1995, PEA entered into a Joint Venture Agreement (JVA) with AMARI, a private corporation, to
develop the Freedom Islands. The JVA also required the reclamation of an additional 250 hectares of
submerged areas surrounding these islands to complete the configuration in the Master Development
Plan of the Southern Reclamation Project-Manila Cavite Coastal Road Reclamation Project. The JVA was
later amended giving AMARI an option to reclaim an additional 350 hectares of submerged area. Part of
the consideration for AMARI’s work is the conveyance of 70% of the total net usable reclaimed area –
equivalent to 367.5 hectares, title of which will be in AMARI’s name.

Issue: Whether or not AMARI, a private corporation, can acquire and own under the Amended JVA 367.5
hectares of reclaimed foreshore and submerged areas in Manila Bay
Held: No. AMARI as a private corporation cannot acquire the reclaimed Freedom Islands, though
alienable lands of the public domain, except by lease, as provided under Section 3, Article XII of the
Constitution. The still submerged areas (i.e., the more or less additional 250 and 350 hectares of
submerged areas) in Manila Bay are inalienable lands of the public domain; as such, they are beyond the
commerce of man, as provided under Section 2, Article XII of the Constitution.

The reclaimed Freedom Islands: The assignment to PEA of the ownership and administration of the
reclaimed areas in Manila Bay, coupled with President Aquino’s actual issuance of a special patent
covering the Freedom Islands, is equivalent to an official proclamation classifying the Freedom Islands as
alienable or disposable lands of the public domain. They also constitute a declaration that the Freedom
Islands are no longer needed for public service. The Freedom Islands are thus alienable or disposable
lands of the public domain, open to disposition or concession to qualified parties.

The submerged areas: The mere reclamation of foreshore and submerged areas by PEA does not
convert these inalienable natural resources of the State into alienable or disposable lands of the public
domain. There must be a law or presidential proclamation officially classifying these reclaimed lands as
alienable or disposable and open to disposition or concession. Moreover, these reclaimed lands cannot
be classified as alienable or disposable if the law has reserved them for some public or quasi-public use.

PEA’s authority to sell: In order for PEA to sell its reclaimed foreshore and submerged alienable lands of
the public domain, there must be legislative authority empowering PEA to sell these lands, in view of the
requirement under CA No. 141. Without such legislative authority, PEA could not sell but only lease its
reclaimed foreshore and submerged alienable lands of the public domain. PEA’s Charter grants it such
express legislative authority to sell its lands, whether patrimonial or alienable lands of the public domain.
Nevertheless, any legislative authority granted to PEA to sell its reclaimed alienable lands of the public
domain would be subject to the constitutional ban on private corporations from acquiring alienable lands
of the public domain. Hence, such legislative authority could only benefit private individuals.

Registration of alienable lands of the public domain: Registration of land under Act No. 496 or PD No.
1529 does not vest in the registrant private or public ownership of the land. Registration is not a mode of
acquiring ownership but is merely evidence of ownership previously conferred by any of the recognized
modes of acquiring ownership. Registration does not give the registrant a better right than what the
registrant had prior to the registration. The registration of lands of the public domain under the Torrens
system, by itself, cannot convert public lands into private lands. Jurisprudence holding that upon the
grant of the patent or issuance of the certificate of title the alienable land of the public domain
automatically becomes private land cannot apply to government units and entities like PEA.

Lands registered under Act No. 496 or PD No. 1529 are not exclusively private or patrimonial
lands. Lands of the public domain may also be registered pursuant to existing laws. Several laws
authorize lands of the public domain to be registered under the Torrens System or Act No. 496, now PD
No. 1529, without losing their character as public lands. For instance,

- Under the Revised Administrative Code of 1987, private property purchased by the National
Government for expansion of an airport may be titled in the name of the government agency
tasked to administer the airport. Private property donated to a municipality for use as a town
plaza or public school site may likewise be titled in the name of the municipality. All these
properties become properties of the public domain, and if already registered under Act No.
496 or PD No. 1529, remain registered land. There is no requirement or provision in any
existing law for the de-registration of land from the Torrens System.

- Private lands taken by the Government for public use under its power of eminent domain
become unquestionably part of the public domain. Nevertheless, Section 85 of PD No. 1529
authorizes the Register of Deeds to issue in the name of the National Government new
certificates of title covering such expropriated lands.
20. Villarico v. Sarmiento
442 SCRA 110, 115 2004

FACTS

Teofilo C. Villarico is the owner of a lot in La Huerta, Parañaque City, Metro Manila with an area
of 66 square meters and covered by Transfer Certificate of Title (T.C.T.) No. 95453 issued by the Registry
of Deeds, same city.

Villarico’s lot is separated from the Ninoy Aquino Avenue (highway) by a strip of land belonging to
the government. As this highway was elevated by 4 meters and therefore higher than the adjoining areas,
the DPWH constructed stairways at several portions of this strip of public land to enable the people to
have access to the highway.

Sometime in 1991, Vivencio Sarmiento, his daughter Bessie Sarmiento and her husband Beth
Del Mundo had a building constructed on a portion of said government land. In November that same year,
a part thereof was occupied by Andok's Litson Corporation and Marites' Carinderia.

In 1993, by means of a Deed of Exchange of Real Property, Villarico acquired a 74.30 square
meter portion of the same area owned by the government. The property was registered in his name as
T.C.T. No. 74430 in the Registry of Deeds of Parañaque City.

In 1995, Villarico filed with the RTC a complaint for accion publiciana against respondents. He
alleged inter alia that respondents' structures on the government land closed his "right of way" to the
Ninoy Aquino Avenue; and encroached on a portion of his lot covered by T.C.T. No. 74430.

ISSUE

Whether or not Villarico has a right of way to the NAA

HELD

It is not disputed that the lot on which petitioner's alleged "right of way" exists belongs to the state
or property of public dominion. Property of public dominion is defined by Article 420 of the Civil Code as
follows:

"ART. 420. The following things are property of public dominion:

(1) Those intended for public use such as roads, canals, rivers, torrents, ports and bridges
constructed by the State, banks, shores, roadsteads, and other of similar character.

(2) Those which belong to the State, without being for public use, and are intended for some
public service or for the development of the national wealth."

Public use is "use that is not confined to privileged individuals, but is open to the indefinite
public."6 Records show that the lot on which the stairways were built is for the use of the people as
passageway to the highway. Consequently, it is a property of public dominion.

Property of public dominion is outside the commerce of man and hence it: (1) cannot be alienated
or leased or otherwise be the subject matter of contracts; (2) cannot be acquired by prescription against
the State; (3) is not subject to attachment and execution; and (4) cannot be burdened by any voluntary
easement.

Considering that the lot on which the stairways were constructed is a property of public dominion,
it can not be burdened by a voluntary easement of right of way in favor of Villarico. In fact, its use by the
public is by mere tolerance of the government through the DPWH. Villarico cannot appropriate it for
himself. Verily, he can not claim any right of possession over it. This is clear from Article 530 of the Civil
Code which provides:

"ART. 530. Only things and rights which are susceptible of being appropriated may be the object
of possession."

21. Cebu Oxygen & Acetylene Co. vs. Bercilles

66 SCRA 481
FACTS:

The City Council of Cebu, through Resolution No. 2193, declared the terminal portion of a street in Cebu
as an abandoned road for the same is not included in the City Development Plan. Subsequently, the City
Council of Cebu Passed Resolution NO. 2755 which authorizes the Acting City Mayor to sell the land
through public bidding. The lot was awarded to Cebu Acetylene (petitioner) being the highest bidder. The
Acting Mayor executed a deed of absolute sale to Cebu Acetylene. By virtue of the deed of absolute sale
the latter filed an application with the CFI to have its title to the land registered. However, the Assistant
Provincial Fiscal of Cebu filed a motion to dismiss the application.

ISSUE: Whether or not the property sought to be registered is a patrimonial property that can be the
object of an ordinary contract

ARGUMENTS:

CEBU ACETYLENE BERCILLES

 Does the City Charter of Cebu City  The property sought to be registered
(Republic Act No. 3857) under Section being a public road intended for public
31, paragraph 34, give the City of Cebu use is considered part of the public
the valid right to declare a road as domain and therefore outside the
abandoned? commerce of man.

 Does the declaration of the road, as  It cannot be subject to registration by any

abandoned, make it the patrimonial private individual.
property of the City of Cebu which may be
the object of a common contract?

RULING:

(1) The pertinent portions of the Revised Charter of Cebu City provides:

“Section 31. Legislative Powers. Any provision of law and executive order to the contrary
notwithstanding, the City Council shall have the following legislative powers:
xxx xxx xxx xxx

(34) x x x; to close any city road, street or alley, boulevard, avenue, park or square. Property thus
withdrawn from public servitude may be used or conveyed for any purpose for which other real
property belonging to the City may be lawfully used or conveyed.”
From the foregoing, it is undoubtedly clear that the City of Cebu is empowered to close a city road or
street.

(2) Since that portion of the city street subject of petitioner’s application for registration of title was
withdrawn from public use, it follows that such withdrawn portion becomes patrimonial property which can
be the object of an ordinary contract. Article 422 of the Civil Code expressly provides that “Property of
public dominion, when no longer intended for public use or for public service, shall form part of the
patrimonial property of the State.”

The withdrawal of the property in question from public use and its subsequent sale to the
petitioner is valid.

22. Laurel v. Garcia- COLLECTIVE USE

Facts:

The subject property in this case is one of the four (4) properties in Japan acquired by the Philippine
government under the Reparations Agreement entered into with Japan on May 9, 1956. The properties
and the capital goods and services procured from the Japanese government for national development
projects are part of the indemnification to the Filipino people for their losses in life and property and their
suffering during World War II.

The Roppongi property was acquired from the Japanese government and as intended, it became the site
of the Philippine Embassy until the latter was transferred to Nampeidai as the Roppongi building needed
major repairs. Due to the failure of our government to provide necessary funds, the Roppongi property
has remained undeveloped since that time. A proposal was presented to President Corazon C. Aquino by
former Philippine Ambassador to Japan, Carlos J. Valdez, to make the property the subject of a lease
agreement with a Japanese firm - Kajima Corporation. However, the government has not acted favorably
on this proposal until President Aquino created a committee to study the disposition/utilization of these
Philippine government properties in Japan .

Petitioner argues that under Philippine Law, the subject property is property of public dominion. As such,
it is outside the commerce of men. Therefore, it cannot be alienated.

Respondents aver that Japanese Law, and not Philippine Law, shall apply to the case because the
property is located in Japan. They posit that the principle of lex situs applies.

Issues :

1. WON respondent officials have the authority to validly dispose of property belonging to the State.

2. WON Philippine Law applies to the case at bar and not the doctrine of Lex situs.

Ruling:

1. No. Under Philippine Law, there can be no doubt that it is of public dominion unless it is convincingly
shown that the property has become patrimonial. This, the respondents have failed to do. As property of
public dominion, the Roppongi lot is outside the commerce of man. It cannot be alienated. There is no law
authorizing its conveyance. It is not for the President to convey valuable real property of the government
on his or her own sole will. Any such conveyance must be authorized and approved by a law enacted by
the Congress. It requires executive and legislative concurrence.
2. Yes. We see no reason why a conflict of law rule should apply when no conflict of law situation exists.
A conflict of law situation arises only when: (1) There is a dispute over the title or ownership of an
immovable, such that the capacity to take and transfer immovables, the formalities of conveyance, the
essential validity and effect of the transfer, or the interpretation and effect of a conveyance, are to be
determined; and (2) A foreign law on land ownership and its conveyance is asserted to conflict with a
domestic law on the same matters. Hence, the need to determine which law should apply.

In the instant case, none of the above elements exists.

The issues are not concerned with validity of ownership or title. There is no question that the property
belongs to the Philippines. The issue is the authority of the respondent officials to validly dispose of
property belonging to the State. And the validity of the procedures adopted to effect its sale. This is
governed by Philippine Law. The rule of lex situs does not apply.

The assertion that the opinion of the Secretary of Justice sheds light on the relevance of the lex situs rule
is misplaced. The opinion does not tackle the alienability of the real properties procured through
reparations nor the existence in what body of the authority to sell them. In discussing who are capable of
acquiring the lots, the Secretary merely explains that it is the foreign law which should determine who can
acquire the properties so that the constitutional limitation on acquisition of lands of the public domain to
Filipino citizens and entities wholly owned by Filipinos is inapplicable.

23. INTERNATIONAL HARDWOOD v UP

G.R. No L-52518 August 13, 1991

FACTS:
International Hardwood is, among others, is engaged in the manufacturing, processing and
exporting of plywood and was, for said purpose, granted by the Government an exclusive license for 25
years, expiring on February 1, 1985, to cut, collect and remove timber from that portion of the subject
timber land. Since the grant of the license, the plaintiff has been in peaceful possession of the said
timber concession and had been felling cutting and removing timber therefrom, and had constructed
improvements worth more than P7,000,000.00.

In 1961, during the effectivity of the License agreement. Then President Carlos P. Garcia issued
Executive Proclamation No. 791. Under this proclamation, subject to the private rights if there’s any, a
certain parcel of land of the public domain in Quezon City and Laguna were withdrawn from sale or
settlement and were reserved for University of the Philippines (UP) College of Agriculture, as experiment
station for the proposed dairy research institute and for agricultural research and production studies.

In June 1964, still during the effectivity of the license agreement, the Congress of the Philippines
enacted Republic Act (RA) 3990, establishing a central experiment station for the use of UP college of
agriculture, College of Veterinary Medicine and College of Arts and Sciences. Under RA 3990, the land
describes in Proclamation 791 was fully ceded and transferred in full ownership to the UP, subject to any
existing concessions, if any.

On the strength of RA 3990m UP demanded from Hardwood:

 1. Payment of forest charges due and payable under the license agreement be paid to UP
instead of the Bureau of Internal Revenue (BIR); and
2. That the sale of any timber felled or cut by International Hardwood within the boundaries of
the Central Experiment Station as defined in RA 3990 be performed by UP personnel.

However, despite the demand by UP, International Hardwood refused to comply.

International Hardwood filed before the Court of First Instance (CFI) a Petition for Declaratory
Relief with Injunction against UP. The CFI rendered judgment in favor of the International Hardwood,
declaring that RA 3990 does not empower the UP, in lieu of the BIR, to scale, measure and seal the
timber cut by the petitioner, and to collect the corresponding forest charges as prescribed by the National
Internal Revenue Code.

The respondent appealed the decision to the Court of Appeals, but the court of appeals elevated
the case to the Supreme Court as the case involves purely question of law, or the interpretation and
construction of RA 3990.

ISSUEs:
1. Whether or not UP, as the owner of the property, has the right to collect from International
Hardwood forest charges due and payable under the license agreement which was used to
be collected by the BIR.
2. Whether or not UP is entitled to supervise the logging, felling and removing of timber within
the Central Experiment Station area as described in RA 3990.

HELD by SC:
Under proclamation no. 791, the parcel of land of the public domain was withdrawn from sale or
settlement and was reserved for the College of Agriculture of the UP as the experiment station, subject to
private rights, if any. Under RA 3990, the reserved area was now ceded and transferred in full ownership
to the University of the Philippines subject to any existing concession, if any.

When the government ceded and transferred the property to UP, the Republic of the Philippines
completely removed it from the public domain, and more specifically, in respect to the areas covered by
the timber license of the petitioner, removed and segregated it from a public forest; it divested itself of its
rights and title thereto and relinquished and conveyed the same to UP; and made UP the absolute owner
thereof, subject only to the existing concession. That the law intended to transfer the absolute and full
ownership, Full means entire, complete, or possessing all particulars, or not wanting in any essential
quality. However, the right of the timber licensee must not be affected, impaired or diminished; it must be
respected.

An owner has the right to enjoy and dispose of a thing without other limitation other than those
estanlished by law. The right to enjoy includes the jus utendi or the right to receive from the thing what it
produces, and jus abutendi or the right to consume the thing by its use. As provided for in Article 441o of
the Civil Code, to the owner belongs the natural, the industrial and the civil fruits. However, the exception
to these rules, as where the property is subject of usufruct, in which case the usufructuary gets the fruits.
In the case at hand, the exception is made for International Hardwood as licensee or grantee of the
concession, which has been given the license to cut, collect, and remove timber from the area ceded and
transferred to UP until February 1, 1985. However, it has the correlative duty and obligation to pay the
forest charges, or royalties, to the new owner, the UP, at the same rate as provided for in the Agreement.
The charges should not be paid anymore to the Republic of the Philippines through the BIR.
Consequently, the BIR automatically lost its authority and jurisdiction to measure the timber cut from the
subject area and to collect forestry charges and other fees dues.
 The judgment of the trial court therefore was reversed, and the Court declared thar forest charges
due from and payable by the petitioner for timber cut pursuant to its license agreement should be paid to
the UP; declaring the the UP is entitled to supervise, though its duly appointed personnel, the logging,
felling and removal of timber within the aforesaid area covered by RA 3990.