1.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-40411 August 7, 1935

DAVAO SAW MILL CO., INC., plaintiff-appellant,

vs.
APRONIANO G. CASTILLO and DAVAO LIGHT & POWER CO., INC., defendants-appellees.

Arsenio Suazo and Jose L. Palma Gil and Pablo Lorenzo and Delfin Joven for appellant.
J.W. Ferrier for appellees.

MALCOLM, J.:

The issue in this case, as announced in the opening sentence of the decision in the trial court and as set forth by counsel for the parties on
appeal, involves the determination of the nature of the properties described in the complaint. The trial judge found that those properties were personal in
nature, and as a consequence absolved the defendants from the complaint, with costs against the plaintiff.

The Davao Saw Mill Co., Inc., is the holder of a lumber concession from the Government of the Philippine Islands. It has operated a sawmill in
the sitio of Maa, barrio of Tigatu, municipality of Davao, Province of Davao. However, the land upon which the business was conducted belonged to
another person. On the land the sawmill company erected a building which housed the machinery used by it. Some of the implements thus used were
clearly personal property, the conflict concerning machines which were placed and mounted on foundations of cement. In the contract of lease between
the sawmill company and the owner of the land there appeared the following provision:

That on the expiration of the period agreed upon, all the improvements and buildings introduced and erected by the party of the
second part shall pass to the exclusive ownership of the party of the first part without any obligation on its part to pay any amount for said
improvements and buildings; also, in the event the party of the second part should leave or abandon the land leased before the time herein
stipulated, the improvements and buildings shall likewise pass to the ownership of the party of the first part as though the time agreed upon
had expired: Provided, however, That the machineries and accessories are not included in the improvements which will pass to the party of
the first part on the expiration or abandonment of the land leased.

In another action, wherein the Davao Light & Power Co., Inc., was the plaintiff and the Davao, Saw, Mill Co., Inc., was the defendant, a
judgment was rendered in favor of the plaintiff in that action against the defendant in that action; a writ of execution issued thereon, and the properties
now in question were levied upon as personalty by the sheriff. No third party claim was filed for such properties at the time of the sales thereof as is
borne out by the record made by the plaintiff herein. Indeed the bidder, which was the plaintiff in that action, and the defendant herein having
consummated the sale, proceeded to take possession of the machinery and other properties described in the corresponding certificates of sale executed
in its favor by the sheriff of Davao.

As connecting up with the facts, it should further be explained that the Davao Saw Mill Co., Inc., has on a number of occasions treated the
machinery as personal property by executing chattel mortgages in favor of third persons. One of such persons is the appellee by assignment from the
original mortgages.

Article 334, paragraphs 1 and 5, of the Civil Code, is in point. According to the Code, real property consists of

1. Land, buildings, roads and constructions of all kinds adhering to the soil;

xxx xxx xxx

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.

Appellant emphasizes the first paragraph, and appellees the last mentioned paragraph. We entertain no doubt that the trial judge and
appellees are right in their appreciation of the legal doctrines flowing from the facts.

In the first place, it must again be pointed out that the appellant should have registered its protest before or at the time of the sale of this
property. It must further be pointed out that while not conclusive, the characterization of the property as chattels by the appellant is indicative of intention
and impresses upon the property the character determined by the parties. In this connection the decision of this court in the case of Standard Oil Co. of
New York vs. Jaramillo ( [1923], 44 Phil., 630), whether obiter dicta or not, furnishes the key to such a situation.

1
 It is, however not necessary to spend overly must time in the resolution of this appeal on side issues. It is machinery which is involved;
moreover, machinery not intended by the owner of any building or land for use in connection therewith, but intended by a lessee for use in a building
erected on the land by the latter to be returned to the lessee on the expiration or abandonment of the lease.

A similar question arose in Puerto Rico, and on appeal being taken to the United States Supreme Court, it was held that machinery which is
movable in its nature only becomes immobilized when placed in a plant by the owner of the property or plant, but not when so placed by a tenant, a
usufructuary, or any person having only a temporary right, unless such person acted as the agent of the owner. In the opinion written by Chief Justice
White, whose knowledge of the Civil Law is well known, it was in part said:

To determine this question involves fixing the nature and character of the property from the point of view of the rights of Valdes and
its nature and character from the point of view of Nevers & Callaghan as a judgment creditor of the Altagracia Company and the rights derived
by them from the execution levied on the machinery placed by the corporation in the plant. Following the Code Napoleon, the Porto Rican
Code treats as immovable (real) property, not only land and buildings, but also attributes immovability in some cases to property of a movable
nature, that is, personal property, because of the destination to which it is applied. "Things," says section 334 of the Porto Rican Code, "may
be immovable either by their own nature or by their destination or the object to which they are applicable." Numerous illustrations are given in
the fifth subdivision of section 335, which is as follows: "Machinery, vessels, instruments or implements intended by the owner of the
tenements for the industrial or works that they may carry on in any building or upon any land and which tend directly to meet the needs of the
said industry or works." (See also Code Nap., articles 516, 518 et seq. to and inclusive of article 534, recapitulating the things which, though in
themselves movable, may be immobilized.) So far as the subject-matter with which we are dealing machinery placed in the plant it is
plain, both under the provisions of the Porto Rican Law and of the Code Napoleon, that machinery which is movable in its nature only
becomes immobilized when placed in a plant by the owner of the property or plant. Such result would not be accomplished, therefore, by the
placing of machinery in a plant by a tenant or a usufructuary or any person having only a temporary right. (Demolombe, Tit. 9, No. 203; Aubry
et Rau, Tit. 2, p. 12, Section 164; Laurent, Tit. 5, No. 447; and decisions quoted in Fuzier-Herman ed. Code Napoleon under articles 522 et
seq.) The distinction rests, as pointed out by Demolombe, upon the fact that one only having a temporary right to the possession or enjoyment
of property is not presumed by the law to have applied movable property belonging to him so as to deprive him of it by causing it by an act of
immobilization to become the property of another. It follows that abstractly speaking the machinery put by the Altagracia Company in the plant
belonging to Sanchez did not lose its character of movable property and become immovable by destination. But in the concrete immobilization
took place because of the express provisions of the lease under which the Altagracia held, since the lease in substance required the putting in
of improved machinery, deprived the tenant of any right to charge against the lessor the cost such machinery, and it was expressly stipulated
that the machinery so put in should become a part of the plant belonging to the owner without compensation to the lessee. Under such
conditions the tenant in putting in the machinery was acting but as the agent of the owner in compliance with the obligations resting upon him,
and the immobilization of the machinery which resulted arose in legal effect from the act of the owner in giving by contract a permanent
destination to the machinery.

xxx xxx xxx

The machinery levied upon by Nevers & Callaghan, that is, that which was placed in the plant by the Altagracia Company, being, as
regards Nevers & Callaghan, movable property, it follows that they had the right to levy on it under the execution upon the judgment in their
favor, and the exercise of that right did not in a legal sense conflict with the claim of Valdes, since as to him the property was a part of the
realty which, as the result of his obligations under the lease, he could not, for the purpose of collecting his debt, proceed separately against.
(Valdes vs. Central Altagracia [192], 225 U.S., 58.)

Finding no reversible error in the record, the judgment appealed from will be affirmed, the costs of this instance to be paid by the appellant.

Villa-Real, Imperial, Butte, and Goddard, JJ., concur.

Davao Sawmill v. Castillo (CASE DIGEST)

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

Facts:

Davao Saw Mill Co., Inc., is the holder of a lumber concession from the Government of the Philippine
Islands. However, the land upon which the business was conducted belonged to another person. On the land
the sawmill company erected a building which housed the machinery used by it. Some of the implements thus
used were clearly personal property, the conflict concerning machines which were placed and mounted on
foundations of cement. In the contract of lease between the sawmill company and the owner of the land there
appeared the following provision: That on the expiration of the period agreed upon, all the improvements and
buildings introduced and erected by the party of the second part shall pass to the exclusive ownership of the
2
lessor without any obligation on its part to pay any amount for said improvements and buildings; which do not
include the machineries and accessories in the improvements.

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

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

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

Issue:

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

Ruling/ Rationale:

Yes. The Supreme Court affirmed the decision of the lower court.

Machinery which is movable in its nature only becomes immobilized when placed in a plant by the
owner of the property or plant, but not when so placed by a tenant, a usufructuary, or any person having only a
temporary right, unless such person acted as the agent of the owner.

Or

1. Davao Sawmill Co. v. Castillo 61 Phil. 709 Digest

Facts: The Davao Saw Mill Co., Inc., is the holder of a lumber concession from the Government of the
PhilippineIslands. It has operated a sawmill in thesi tio of Maa, barrio of Tigatu, municipality of Davao, Province ofDavao.
However, the land upon which the business was conducted belonged to another person. On theland the sawmill
company erected a building which housed the machinery used by it. Some of theimplements thus used were clearly
personal property, the conflict concerning machines which were placedand mounted on foundations of cement. In the
contract of lease between the sawmill company and theowner of the land there appeared the following provision: That
on the expiration of the period agreed upon, all the improvements and buildings introduced and erected by the party of
the second part shall pass to the exclusive ownership of the party of the first partwithout any obligation on its part to
pay any amount for said improvements and buildings; also, in the event the party of the second part should leave or
abandon the land leased before the time hereinstipulated, the improvements and buildings shall likewise pass to the
ownership of the party of the firstpart as though the time agreed upon had expired: Provided, however, That the
machineries andaccessories are not included in the improvements which will pass to the party of the first part on the
expiration or abandonment of the land leased. The trial judge found that those properties were personal in nature and
as a consequence absolved the defendants from the complaint.

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 Issue: Whether or not the trial judge erred in finding that the subject properties are personal in nature.

Held:

As connecting up with the facts, it should further be explained that the Davao Saw Mill Co., Inc., has on
anumber of occasions treated the machinery as personal property by executing chattel mortgages in favorof third
persons. One of such persons is the appellee by assignment from the original mortgages. Article 334, paragraphs 1 and
5, of the [Old]Civil Code, is in point. According to the Code, real property consists of 1. Land, buildings, roads and
constructions of all kinds adhering to the soil; 5. Machinery, liquid containers, instruments or implements intended by
the owner of any building or landfor use in connection with any industry or trade being carried on therein and which are
expressly adaptedto meet the requirements of such trade of industry. Appellant emphasizes the first paragraph, and
appellees the last mentioned paragraph. We entertain nodoubt that the trial judge and appellees are right in their
appreciation of the legal doctrines flowing fromthe facts. As a rule, the machinery should be considered as personal,
since it was not placed on the land by theowner of the land immobilization by destination on purpose cannot generally
be made by a person, whosepossession of the property is only temporary, otherwise was will be forced to presume that
be intended togive the property permanently to the owner of the land. In this case, they had stipulated that the land
inthe end thereby be acted as an agent for the owner of the land. In this sense the property (machines foruse in the
sawmill) became real property. The judgment appealed from is hereby affirmed.

3.

STAR TWO (SPV-AMC), INC., V PAPER CITY CORPORATION OF THE PHILIPPINES

FACTS
For review is a Petition for Review on Certiorari filed by Rizal Commercial Banking Corporation now substituted by
Star Two (SPV-AMC), Inc.
Respondent Paper City is a domestic corporation engaged in the manufacture of paper products. Paper City
applied for and was granted loans and credit accommodations in peso and dollar denominations by RCBC secured
by 4 Deeds of Continuing Chattel Mortgages on its machineries and equipments found inside its paper plants.
However, a unilateral Cancellation of Deed of Continuing Chattel Mortgage on Inventory of
Merchandise/Stocks-in-Trade was executed by RCBC over the merchandise and stocks-in-trade covered by the
continuing chattel mortgages.
RCBC, Metrobank and Union Bank (creditor banks with RCBC instituted as the trustee bank) entered into a
Mortgage Trust Indenture (MTI) with Paper City. In the said MTI, Paper City acquired an additional P170,
000,000.00 from the creditor banks in addition to the previous loan from RCBC amounting to P110, 000,000.00.
The old loan of P110,000,000.00 was partly secured by various parcels of land situated in Valenzuela City.
The new loan obligation of P170,000,000.00 would be secured by the same five (5) Deeds of Real Estate Mortgage and additional real and personal properties
described in an annex to MTI, Annex "B" which covered the machineries and equipments of Paper City.

Annex "A"
A. Office Building
Building 1, 2, 3, 4, and 5
Boiler House
Workers Quarter/Restroom
Canteen
Guardhouse, Parking Shed, Elevated Guard
Post and other amenities
B. Pollution Tank Nos. 1 and 2.
Reserve Water Tank and Swimming Pool

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 Waste Water Treatment Tank
Elevated Concrete Water Tank
And other Improvements listed in Annex "A"
C. Power Plants Nos. 1 and 2
Fabrication Building
Various Fuel, Water Tanks and Pumps
Transformers
Annex "B"
D. D. Material Handling Equipment
Paper Plant No. 3
The MTI was later amended to increase the contributions of the RCBC and Union Bank. As a consequence,
they executed a Deed of Amendment to MTI but still included as part of the mortgaged properties by way of a first
mortgage the various machineries and equipments located in and bolted to and/or forming part of buildings.
A Second Supplemental Indenture to the MTI was executed to increase the amount of the loan secured
against the existing properties composed of land, building, machineries and equipments and inventories described
in Annexes "A" and "B."
Finally, a Third Supplemental Indenture to the MTI was executed to increase the existing loan obligation with
an additional security composed of a newly constructed two-storey building and other improvements, machineries
and equipments located in the existing plant site.
Paper City was able to comply with its loan obligations but economic crisis ensued which made it difficult for
Paper City to meet the terms of its obligations leading to payment defaults. Consequently, RCBC filed a Petition for
Extrajudicial Foreclosure.
The petition was for the extra-judicial foreclosure of eight parcels of land including all improvements thereon
which were sold in favor of the creditor banks RCBC, Union Bank and Metrobank as the highest bidders.
This foreclosure sale prompted Paper City to file a Complaint against the creditor banks alleging that the extra-
judicial sale of the properties and plants was null and void due to lack of prior notice and attendance of gross and
evident bad faith on the part of the creditor banks.

Acting on the said motion, the trial court issued an Order denying the prayer and ruled that the machineries and
equipments were included in the annexes and form part of the MTI.

Paper City filed its Motion for Reconsideration which was favorably granted by the trial court with justification that
the disputed machineries and equipments are chattels by agreement of the parties through their inclusion in the four
Deeds of Chattel Mortgage and the deed of cancellation executed by RCBC was not valid because it was done
unilaterally and without the consent of Paper City.
The CA affirmed the Order.
ISSUE
Whether the subject machineries and equipments were included in the mortgage, extrajudicial foreclosure and in the
consequent sale.
RULING
Yes. By contracts, all uncontested in this case, machineries and equipments are included in the mortgage in favor of
RCBC, in the foreclosure of the mortgage and in the consequent sale on foreclosure also in favor of petitioner.
Repeatedly, the parties stipulated that the properties mortgaged by Paper City to RCBC are various parcels of land
including the buildings and existing improvements thereon as well as the machineries and equipments, which as
stated in the granting clause of the original mortgage, are "more particularly described and listed that is to say, the
real and personal properties listed in Annexes A and B.
The plain language and literal interpretation of the MTIs must be applied. The petitioner, other creditor banks and
Paper City intended from the very first execution of the indentures that the machineries and equipments enumerated

5
in Annexes "A" and "B" are included. Obviously, with the continued increase in the amount of the loan, totaling
hundreds of millions of pesos, Paper City had to offer all valuable properties acceptable to the creditor banks.
The MTIs did not describe the equipments and machineries as personal property. Notably, while "personal"
appeared in the granting clause of the original MTI, the subsequent Deed of Amendment specifically stated that:
x x x The machineries and equipment listed in Annexes "A" and "B" form part of the improvements listed above and
located on the parcels of land subject of the Mortgage Trust Indenture and the Real Estate Mortgage.
Considering that the Indenture which is the instrument of the mortgage that was foreclosed exactly states through
the Deed of Amendment that the machineries and equipments listed in Annexes "A" and "B" form part of the
improvements listed and located on the parcels of land subject of the mortgage, such machineries and equipments
are surely part of the foreclosure of the "real estate properties, including all improvements thereon" as prayed for in
the petition.

The real estate mortgage over the machineries and equipments is even in full accord with the classification of such
properties by the Civil Code of the Philippines as immovable property. Thus:
Article 415. The following are immovable property:
(1) Land, buildings, roads and constructions of all kinds adhered to the soil;
xxxx
(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;
CONCLUSION
The petition is GRANTED.

4.

Luis Marcos Laurel vs Hon. Zeus Abrogar

GR No. 155076

January 13, 2009

FACTS

Laurel was charged with Theft under Art. 308 of the RPC for allegedly taking, stealing, and using PLDT's
international long distance calls by conducting International Simple Resale (ISR) a method of outing and completing
international long-distance calls using lines, cables, antennae, and/or air wave frequency which connect directly to the
local/domestic exchange facilities of the country where the call is destined. PLDT alleged that this service was stolen
from them using their own equipment and caused damage to them amounting to P20,370,651.92.

PLDT alleges that the international calls and business of providing telecommunication or telephone service are
personal properties capable of appropriation and can be objects of theft.
6
 ISSUE

WON Laurel's act constitutes Theft

HELD

Art.308, RPC: Theft is committed by any person who, with intent to gain but without violence against, or
intimidation of persons nor force upon things, shall take personal property of another without the latters consent.

Elements of Theft under Art.308, RPC:

There be taking of Personal Property;

Said Personal Property belongs to another;

Taking be done with Intent to Gain;

Taking be done without the owners consent;

No violence against, or intimidation of, persons or force upon things

Personal Property anything susceptible of appropriation and not included in Real Property

Thus, the term personal property as used in Art.308, RPC should be interpreted in the context of the Civil
Code's definition of real and personal property. Consequently, any personal property, tangible or intangible, corporeal
or incorporeal, capable of appropriation may be the subject of theft (*US v Carlos; US v Tambunting; US v Genato*), so
long as the same is not included in the enumeration of Real Properties under the Civil Code.

The only requirement for personal property to capable of theft, is that it be subject to appropriation.

Art. 416 (3) of the Civil Code deems Forces of Nature which are brought under the control of science, as
Personal Property.

7
 The appropriation of forces of nature which are brought under control by science can be achieved by tampering
with any apparatus used for generating or measuring such forces of nature, wrongfully redirecting such forces of nature
from such apparatus, or using any device to fraudulently obtain such forces of nature.

In the instant case, the act of conducting ISR operations by illegally connecting various equipment or apparatus
to PLDTs telephone system, through which petitioner is able to resell or re-route international long distance calls using
PLDTs facilities constitute Subtraction.

Moreover, interest in business should be classified as personal property since it is capable of appropriation, and
not included in the enumeration of real properties.

Therefore, the business of providing telecommunication or telephone service are personal property which can
be the object of theft under Art. 308 of the RPC. The act of engaging in ISR is an act of subtraction penalized under the
said article.

While international long-distance calls take the form of electrical energy and may be considered as personal
property, the said long-distance calls do not belong to PLDT since it could not have acquired ownership over such calls.
PLDT merely encodes, augments, enhances, decodes and transmits said calls using its complex communications
infrastructure and facilities.

Since PLDT does not own the said telephone calls, then it could not validly claim that such telephone calls were
taken without its consent.

What constitutes Theft is the use of the PLDT's communications facilities without PLDT's consent. The theft lies
in the unlawful taking of the telephone services & businesses.

The Amended Information should be amended to show that the property subject of the theft were services and
business of the offended party.

5. case

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION
8
 G.R. No. 184109 February 1, 2012

CELERINO E. MERCADO, Petitioner,

vs.
BELEN* ESPINOCILLA** AND FERDINAND ESPINOCILLA, Respondents.

DECISION

VILLARAMA, JR., J.:

The Case

Petitioner Celerino E. Mercado appeals the Decision dated April 28, 2008 and Resolution dated July 22, 2008 of the Court of Appeals (CA) in
1 2

CA-G.R. CV No. 87480. The CA dismissed petitioners complaint for recovery of possession, quieting of title, partial declaration of nullity of deeds and
3

documents, and damages, on the ground of prescription.

The Antecedent Facts

Doroteo Espinocilla owned a parcel of land, Lot No. 552, with an area of 570 sq. m., located at Magsaysay Avenue, Zone 5, Bulan, Sorsogon.
After he died, his five children, Salvacion, Aspren, Isabel, Macario, and Dionisia divided Lot No. 552 equally among themselves. Later, Dionisia died
without issue ahead of her four siblings, and Macario took possession of Dionisias share. In an affidavit of transfer of real property dated November 1,
4

1948, Macario claimed that Dionisia had donated her share to him in May 1945.

Thereafter, on August 9, 1977, Macario and his daughters Betty Gullaba and Saida Gabelo sold 225 sq. m. to his son Roger Espinocilla,
5

husband of respondent Belen Espinocilla and father of respondent Ferdinand Espinocilla. On March 8, 1985, Roger Espinocilla sold 114 sq. m. to6

Caridad Atienza. Per actual survey of Lot No. 552, respondent Belen Espinocilla occupies 109 sq. m., Caridad Atienza occupies 120 sq. m., Caroline Yu
occupies 209 sq. m., and petitioner, Salvacion's son, occupies 132 sq. m. 7

The Case For Petitioner

Petitioner sued the respondents to recover two portions: an area of 28.5 sq. m. which he bought from Aspren and another 28.5 sq. m. which
8

allegedly belonged to him but was occupied by Macarios house. His claim has since been modified to an alleged encroachment of only 39 sq. m. that
9

he claims must be returned to him. He avers that he is entitled to own and possess 171 sq. m. of Lot No. 552, having inherited 142.5 sq. m. from his
mother Salvacion and bought 28.5 sq. m. from his aunt Aspren. According to him, his mothers inheritance is 142.5 sq. m., that is, 114 sq. m. from
Doroteo plus 28.5 sq. m. from Dionisia. Since the area he occupies is only 132 sq. m., he claims that respondents encroach on his share by 39 sq. m.
10 11

The Case For Respondents

Respondents agree that Doroteos five children each inherited 114 sq. m. of Lot No. 552. However, Macarios share increased when he
received Dionisias share. Macarios increased share was then sold to his son Roger, respondents husband and father. Respondents claim that they
rightfully possess the land they occupy by virtue of acquisitive prescription and that there is no basis for petitioners claim of encroachment. 12

The Trial Courts Decision

On May 15, 2006, the Regional Trial Court (RTC) ruled in favor of petitioner and held that he is entitled to 171 sq. m. The RTC found that
petitioner inherited 142.5 sq. m. from his mother Salvacion and bought 28.5 sq. m. from his aunt Aspren. The RTC computed that Salvacion, Aspren,
Isabel and Macario each inherited 142.5 sq. m. of Lot No. 552. Each inherited 114 sq. m. from Doroteo and 28.5 sq. m. from Dionisia. The RTC further
ruled that Macario was not entitled to 228 sq. m. Thus, respondents must return 39 sq. m. to petitioner who occupies only 132 sq. m. 13

There being no public document to prove Dionisias donation, the RTC also held that Macarios 1948 affidavit is void and is an invalid
repudiation of the shares of his sisters Salvacion, Aspren, and Isabel in Dionisias share. Accordingly, Macario cannot acquire said shares by
prescription. The RTC further held that the oral partition of Lot No. 552 by Doroteos heirs did not include Dionisias share and that partition should have
been the main action. Thus, the RTC ordered partition and deferred the transfer of possession of the 39 sq. m. pending partition. The dispositive portion
14

of the RTC decision reads:

WHEREFORE, in view of the foregoing premises, the court issues the following ORDER, thus -

a) Partially declaring the nullity of the Deed of Absolute Sale of Property dated August 9, 1977 x x x executed by Macario
Espinocilla, Betty E. Gullaba and Saida E. Gabelo in favor of Roger Espinocilla, insofar as it affects the portion or the share belonging to
Salvacion Espinocilla, mother of [petitioner,] relative to the property left by Dionisia Espinocilla, including [Tax Declaration] No. 13667 and
other documents of the same nature and character which emanated from the said sale;

9
 b) To leave as is the Deeds of Absolute Sale of May 11, 1983 and March 8, 1985, it having been determined that they did not
involve the portion belonging to [petitioner] x x x.

c) To effect an effective and real partition among the heirs for purposes of determining the exact location of the share (114 sq. m.) of
the late Dionisia Espinocilla together with the 28.5 sq. m. belonging to [petitioners] mother Salvacion, as well as, the exact location of the 39
sq. m. portion belonging to the [petitioner] being encroached by the [respondents], with the assistance of the Commissioner (Engr. Fundano)
appointed by this court.

d) To hold in abeyance the transfer of possession of the 39 sq. m. portion to the [petitioner] pending the completion of the real
partition above-mentioned. 15

The CA Decision

On appeal, the CA reversed the RTC decision and dismissed petitioners complaint on the ground that extraordinary acquisitive prescription
has already set in in favor of respondents. The CA found that Doroteos four remaining children made an oral partition of Lot No. 552 after Dionisias
death in 1945 and occupied specific portions. The oral partition terminated the co-ownership of Lot No. 552 in 1945. Said partition also included
Dionisias share because the lot was divided into four parts only. And since petitioners complaint was filed only on July 13, 2000, the CA concluded that
prescription has set in. The CA disposed the appeal as follows:
16

WHEREFORE, the appeal is GRANTED. The assailed May 15, 2006 Decision of the Regional Trial Court (RTC) of Bulan, Sorsogon is hereby
REVERSED and SET ASIDE. The Complaint of the [petitioner] is hereby DISMISSED. No costs. 17

The Instant Petition

The core issue to be resolved is whether petitioners action to recover the subject portion is barred by prescription.

Petitioner confirms oral partition of Lot No. 552 by Doroteo's heirs, but claims that his share increased from 114 sq. m. to 171 sq. m. and that
respondents encroached on his share by 39 sq. m. Since an oral partition is valid, the corresponding survey ordered by the RTC to identify the 39 sq. m.
that must be returned to him could be made. Petitioner also alleges that Macario committed fraud in acquiring his share; hence, any evidence adduced
18

by him to justify such acquisition is inadmissible. Petitioner concludes that if a person obtains legal title to property by fraud or concealment, courts of
equity will impress upon the title a so-called constructive trust in favor of the defrauded party. 19

The Courts Ruling

We affirm the CA ruling dismissing petitioners complaint on the ground of prescription. 1wphi1

Prescription, as a mode of acquiring ownership and other real rights over immovable property, is concerned with lapse of time in the manner
and under conditions laid down by law, namely, that the possession should be in the concept of an owner, public, peaceful, uninterrupted, and adverse.
Acquisitive prescription of real rights may be ordinary or extraordinary. Ordinary acquisitive prescription requires possession in good faith and with just
title for 10 years. In extraordinary prescription, ownership and other real rights over immovable property are acquired through uninterrupted adverse
possession for 30 years without need of title or of good faith. 20

Here, petitioner himself admits the adverse nature of respondents possession with his assertion that Macarios fraudulent acquisition of
Dionisias share created a constructive trust. In a constructive trust, there is neither a promise nor any fiduciary relation to speak of and the so-called
trustee (Macario) neither accepts any trust nor intends holding the property for the beneficiary (Salvacion, Aspren, Isabel). The relation of trustee
and cestui que trust does not in fact exist, and the holding of a constructive trust is for the trustee himself, and therefore, at all times
adverse. Prescription may supervene even if the trustee does not repudiate the relationship.
21 22

Then, too, respondents uninterrupted adverse possession for 55 years of 109 sq. m. of Lot No. 552 was established. Macario occupied
Dionisias share in 1945 although his claim that Dionisia donated it to him in 1945 was only made in a 1948 affidavit. We also agree with the CA that
Macarios possession of Dionisias share was public and adverse since his other co-owners, his three other sisters, also occupied portions of Lot No.
552. Indeed, the 1977 sale made by Macario and his two daughters in favor of his son Roger confirms the adverse nature of Macarios possession
because said sale of 225 sq. m. was an act of ownership over Macarios original share and Dionisias share. In 1985, Roger also exercised an act of
23

ownership when he sold 114 sq. m. to Caridad Atienza. It was only in the year 2000, upon receipt of the summons to answer petitioners complaint, that
respondents peaceful possession of the remaining portion (109 sq. m.) was interrupted. By then, however, extraordinary acquisitive prescription has
already set in in favor of respondents. That the RTC found Macarios 1948 affidavit void is of no moment. Extraordinary prescription is unconcerned with
Macarios title or good faith. Accordingly, the RTC erred in ruling that Macario cannot acquire by prescription the shares of Salvacion, Aspren, and
Isabel, in Dionisias 114-sq. m. share from Lot No. 552.

Moreover, the CA correctly dismissed petitioners complaint as an action for reconveyance based on an implied or constructive trust
prescribes in 10 years from the time the right of action accrues. This is the other kind of prescription under the Civil Code, called extinctive prescription,
24

where rights and actions are lost by the lapse of time. Petitioners action for recovery of possession having been filed 55 years after Macario occupied
25

Dionisias share, it is also barred by extinctive prescription. The CA while condemning Macarios fraudulent act of depriving his three sisters of their
shares in Dionisias share, equally emphasized the fact that Macarios sisters wasted their opportunity to question his acts.

10
 WHEREFORE, we DENY the petition for review on certiorari for lack of merit and AFFIRM the assailed Decision dated April 28, 2008 and
Resolution dated July 22, 2008 of the Court of Appeals in CA-G.R. CV No. 87480.

No pronouncement as to costs.

8.. Board of Assessment vs Meralco

FACTS:

The City Assessor of Quezon City assessed Meralco for real property taxes on its steel towers.
The steel towers hold the insulators wherein the electric transmission wires which carry high voltage current are
fastened. These steel towers are attached to a square metal frame by bolts

ISSUE:

Are the steel towers real properties based on paragraphs 1, 3 or 5 of Article 415 of the Civil Code?

HELD:

No.

The steel towers or supports in question, do not come within the objects mentioned in paragraph 1, because they
do not constitute buildings or constructions adhered to the soil. They are not construction analogous to buildings nor
adhering to the soil. As per description, given by the lower court, they are removable and merely attached to a square
metal frame by means of bolts, which when unscrewed could easily be dismantled and moved from place to place.

They cannot be included under paragraph 3, as they are not attached to an immovable in a fixed manner, and they
can be separated without breaking the material or causing deterioration upon the object to which they are attached. Each
of these steel towers or supports consists of steel bars or metal strips, joined together by means of bolts, which can be
disassembled by unscrewing the bolts and reassembled by screwing the same.

These steel towers or supports do not also fall under paragraph 5, for they are not machineries, receptacles,
instruments or implements, and even if they were, they are not intended for industry or works on the land. Petitioner is not
engaged in an industry or works in the land in which the steel supports or towers are constructed.

11
 7. CALTEX PHILS. V. CENTRAL BOARD OF ASSESSMENT APPEALS

114 SCRA 296

FACTS:

The City Assessor characterized the items in gas stations of petitioner as taxable realty. These items
included underground tanks, elevated tank, elevated water tanks, water tanks, gasoline pumps,computing
pumps, etc. These items are not owned by the lessor of the land wherein the equipment are installed. Upon
expiration of the lease agreement, the equipment should be returned in good condition.

NO ISSUE

HELD:

The equipment and machinery as appurtenances to the gas station building or shed owned by Caltex 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 and fixed 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.

Or

7.

Caltex vs CBAA
114 SCRA 296
Facts:
This case is about the realty tax on machinery
and equipment installed by Caltex (Philippines)
Inc. in its gas stations located on leased land.
The machines and equipment consists of
underground tanks, elevated tank, elevated
water tanks, water tanks, gasoline pumps,
computing pumps, water pumps, car washer,
car hoists, truck hoists, air compressors and
tireflators.
The building or shed, the elevated water tank,
the car hoist under a separate shed, the air
compressor, the underground gasoline tank,
neon lights signboard, concrete fence and
pavement and the lot where they are all placed
or erected, all of them used in the pursuance of
the gasoline service station business formed
the entire gasoline service-station.
The lessor of the land, where the gas station is
located, does not become the owner of the
machines and equipment installed therein.
Caltex retains the ownership thereof during the
term of the lease.
Issue:
Whether or not the pieces of gas station
equipment and machinery enumerated are
12
subject to realty tax.
Held:
The Assessment Law provides that the realty
tax is due "on real property, including land,
buildings, machinery, and other
improvements".
SC hold 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

8.

Board of Assessment vs Meralco

FACTS:

The City Assessor of Quezon City assessed Meralco for real property taxes on its steel towers.

The steel towers hold the insulators wherein the electric transmission wires which carry high
voltage current are fastened. These steel towers are attached to a square metal frame by bolts

ISSUE:

Are the steel towers real properties based on paragraphs 1, 3 or 5 of Article 415 of the Civil Code?

HELD:

No.

The steel towers or supports in question, do not come within the objects mentioned in paragraph 1,
because they do not constitute buildings or constructions adhered to the soil. They are not construction
analogous to buildings nor adhering to the soil. As per description, given by the lower court, they are removable
and merely attached to a square metal frame by means of bolts, which when unscrewed could easily be
dismantled and moved from place to place.

They cannot be included under paragraph 3, as they are not attached to an immovable in a fixed manner,
and they can be separated without breaking the material or causing deterioration upon the object to which they
are attached. Each of these steel towers or supports consists of steel bars or metal strips, joined together by
means of bolts, which can be disassembled by unscrewing the bolts and reassembled by screwing the same.
13
 These steel towers or supports do not also fall under paragraph 5, for they are not machineries,
receptacles, instruments or implements, and even if they were, they are not intended for industry or works on
the land. Petitioner is not engaged in an industry or works in the land in which the steel supports or towers are
constructed.

Or

8.

Board of Assessment vs Meralco

10 SCRA 68

Facts:

The Philippine Commission enacted Act No. 484

which authorized the Municipal Board of Manila

to grant a franchise to construct, maintain and

operate an electric street railway and electric

light, heat and power system in the City of

Manila.

Meralco's electric power is generated by its

hydro-electric plant located at Botocan Falls,

Laguna and is transmitted to the City of Manila

by means of electric transmission wires,

running from the province of Laguna to the said

City. These electric transmission wires which

carry high voltage current, are fastened to

insulators attached on steel towers constructed

by respondent at intervals, from its hydroelectric

plant in the province of Laguna to the

City of Manila. The respondent Meralco has

constructed 40 of these steel towers within

Quezon City, on land belonging to it.

The City Assessor of Quezon City declared the

14
aforesaid steel towers for real property tax

under Tax.

Respondent paid the amount under protest, and

filed a petition for review in the Court of Tax

Appeals

Issue:

Whether or not the Meralco poles constitute

real properties so as they can be subjected to a

real property tax.

Held:

The SC ruled that Meralco's steel towers were

considered poles within the meaning of

paragraph 9 of its franchise which exempts its

poles from taxation. The steel towers were

considered personalty because they were

removable and merely attached to square

metal frames by means of bolts and could be

moved from place to place when unscrewed

and dismantled. Furthermore, they are not

attached to an immovable in a fixed manner,

and they can be separated without breaking the

material or causing deterioration upon the

object to which they are attached.

Note:

Poles - was used to denote the steel towers of

an electric company engaged in the

generation of hydro-electric power

generated from its plant.

9.
15
 Makati Leasing vs. Wearever Textile

Facts:

Wearever Textile in order to obtain a financial accommodation from Makati Leasing, discounted and assigned
several receivables with the former under a Receivable Purchase Agreement. To secure the collection of the receivables
assigned, Waerever executed a Chattel Mortgage over certain raw materials inventory as well as a machinery described
as an Artos Aero Dryer Stentering Range. Upon Wearever's default, Makati Leasing filed a petition for extrajudicial
foreclosure of the properties mortgage to it. However, the Deputy Sheriff assigned to implement the foreclosure failed
to gain entryinto Wearever's premises and was not able to effect the seizure of the machinery. Makati Leasing
thereafter filed a complaint for judicial foreclosure with the CFI Rizal. RTC then issued a writ of seizure, the enforcement
of which was restrained upon Wearever's filing ofa motion for reconsideration. finally issued on 11 February 1981, an
order to break open the premisesof Wearever to enforce said writ. The sheriff enforcing the seizure order, repaired to
the premises of Wearever and removed the main drive motor of the subject machinery. CA set aside the orders of the
RTC and ordered the return of the drive motor seized by the sheriffafter ruling that the machinery in suit cannot be the
subject of replevin, much less of a chattelmortgage, because it is a real property pursuant to Article 415 of the new Civil
Code. CA also rejectedthe argument that Wearever is estopped from claiming that the machine is real property
byconstituting a chattel mortgage thereon. A motion for reconsideration was filed by Makati Leasing, butit was denied.
Hence this petition.

Issue:

Whether the machinery in suit is real or personal property?

Held:

If a house of strong materials, like what was involved in the above Tumalad case, may be consideredas personal
property for purposes of executing a chattel mortgage thereon as long as the parties tothe contract so agree and no
innocent third party will be prejudiced thereby, there is absolutely noreason why a machinery, which is movable in its
nature and becomes immobilized only by destinationor purpose, may not be likewise treated as such. This is really
because one who has so agreed isestopped from denying the existence of the chattel mortgage. It must be pointed out
that the characterization of the subject machinery as chattel by the privaterespondent is indicative of intention and
impresses upon the property the character determined by theparties. As stated in Standard Oil Co. of New York vs.
Jaramillo, 44 Phil. 630, it is undeniable that theparties to a contract may by agreement treat as personal property that
which by nature would be realproperty, as long as no interest of third parties would be prejudiced thereby.

Or

9.

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

G.R. No. L-58469, May 16, 1983, 122 SCRA 29

De Castro, J.

FACTS: To obtain financial accommodations from the Makati Leasing and Finance

16
 Corporation, the Wearever Textile discounted and assigned several receivables with

them under a receivable purchase agreement. To secure the collection of receivables

assigned, Wearever Textile executed a chattel mortgage over certain raw materials

inventory, as well as machinery described as an aero dryer stentering range. Upon

default of Wearever Textile, the Makati Leasing petitioned for extrajudicial foreclosure of

the properties mortgaged to it. When the sheriff failed to enter Wearever Textiles

premises to seize the machinery, Makati Leasing applied for a replevin. Wearever

Textile contended that it cannot be a subject of replevin or a chattel mortgage because it is a real property as it
is attached to the ground by means of bolts and that the only way to remove it is to destroy the concrete floor.

ISSUE:

Whether or not the machinery is real or personal property.

HELD:

The machinery is a personal property. The Supreme Court explained that if a

house of strong materials may be considered as personal property for purposes of

executing a chattel mortgage, there is absolutely no reason why a machinery, which is

movable in its nature and becomes immobilized only by destination or purpose, may not

be likewise treated as such.

10. Leung Yee vs. Strong Machinery Digest

FACTS:

1. Compania Agricola Filipina (CAF) bought rice-cleaning machinery from Frank L. Strong Machinery.

2. CAF executed, in favor of F.L. Strong Machinery, a chattel mortgage upon the machinery including the
building of strong material in which the machinery was installed.

3. About that same time, CAF executed another mortgage upon the building, this time in favor of Leung
Yee.
17
 4. CAF sold to F.L. Strong Machinery the land wherein the building stood but the Deed did not make any
reference to the building. Since then, the Machinery Company has always been in the possession of the building.

5. Upon failure of CAF to pay the indebtedness secured by the mortgage, Leung Yee secured judgment and
levied execution upon the building which was in the possession of F.L. Strong.

6. F.L. Strong Machinery set up its claim upon the building and demanded its release from the levy.

7. The sheriff sold the property at public auction to the Leung Yee, who was the highest bidder at the
sheriff's sale.

8. Action was instituted by Leung Yee to recover the possession of the building from F.L. Strong.

9. The trial judge, relying upon the terms of article 1473 of the Civil Code, gave judgment in favor of the
machinery company, on the ground that the company had its title to the building registered prior to the date of registry
of the plaintiff's certificate.

ISSUE:

Whether the trial court is correct in ruling in favor of F.L. Strong Machinery on the ground that it had its title to
the building registered prior to the date of Leung Yees certificate.

HELD:

No. The case was correctly decided in favor of F.L. Strong Machinery but not because of paragraphs 1 or 2 of Art.
1473.

Paragraph 1 of said Article applies to personal property which the disputed building is not. The mere fact that
the parties to the mortgage executed a chattel mortgage upon it does not change its character as a real property.

Paragraph 2 applies to real property and states that the real property shall belong to the person acquiring it who
first recorded it in the registry. The registry here referred to is, of course, the registry of real property, thus, the
annotation or inscription of a deed of sale of real property in a chattel mortgage registry cannot be given the legal effect
of an inscription in the registry of real property. Hence, it cannot be said the paragraph 2 of Art. 1473 applies in this
case.

The applicable provision in this case is paragraph 3 of Article 1473 which applies to real properties when there is
no entry made.

8.

Board of Assessment vs Meralco Digest

FACTS:

The City Assessor of Quezon City assessed Meralco for real property taxes on its steel towers.

18
 The steel towers hold the insulators wherein the electric transmission wires which carry high voltage current are
fastened. These steel towers are attached to a square metal frame by bolts

ISSUE:

Are the steel towers real properties based on paragraphs 1, 3 or 5 of Article 415 of the Civil Code?

HELD:

No.

The steel towers or supports in question, do not come within the objects mentioned in paragraph 1, because
they do not constitute buildings or constructions adhered to the soil. They are not construction analogous to buildings
nor adhering to the soil. As per description, given by the lower court, they are removable and merely attached to a
square metal frame by means of bolts, which when unscrewed could easily be dismantled and moved from place to
place.

They cannot be included under paragraph 3, as they are not attached to an immovable in a fixed manner, and
they can be separated without breaking the material or causing deterioration upon the object to which they are
attached. Each of these steel towers or supports consists of steel bars or metal strips, joined together by means of bolts,
which can be disassembled by unscrewing the bolts and reassembled by screwing the same.

These steel towers or supports do not also fall under paragraph 5, for they are not machineries, receptacles,
instruments or implements, and even if they were, they are not intended for industry or works on the land. Petitioner is
not engaged in an industry or works in the land in which the steel supports or towers are constructed.

10.

Leung Yee vs. Strong Machinery

FACTS:

Compania Agricola Filipina (CAF) bought rice-cleaning machinery from Frank L. Strong Machinery.

CAF executed, in favor of F.L. Strong Machinery, a chattel mortgage upon the machinery including the
building of strong material in which the machinery was installed.

About that same time, CAF executed another mortgage upon the building, this time in favor of Leung
Yee.

CAF sold to F.L. Strong Machinery the land wherein the building stood but the Deed did not make any
reference to the building. Since then, the Machinery Company has always been in the possession of the building.

19
 Upon failure of CAF to pay the indebtedness secured by the mortgage, Leung Yee secured judgment and
levied execution upon the building which was in the possession of F.L. Strong.

F.L. Strong Machinery set up its claim upon the building and demanded its release from the levy.

The sheriff sold the property at public auction to the Leung Yee, who was the highest bidder at the
sheriff's sale.

Action was instituted by Leung Yee to recover the possession of the building from F.L. Strong.

The trial judge, relying upon the terms of article 1473 of the Civil Code, gave judgment in favor of the
machinery company, on the ground that the company had its title to the building registered prior to the date of registry
of the plaintiff's certificate.

ISSUE:

Whether the trial court is correct in ruling in favor of F.L. Strong Machinery on the ground that it had its title to
the building registered prior to the date of Leung Yees certificate.

HELD:

No. The case was correctly decided in favor of F.L. Strong Machinery but not because of paragraphs 1 or 2 of Art.
1473.

Paragraph 1 of said Article applies to personal property which the disputed building is not. The mere fact that
the parties to the mortgage executed a chattel mortgage upon it does not change its character as a real property.

Paragraph 2 applies to real property and states that the real property shall belong to the person acquiring it who
first recorded it in the registry. The registry here referred to is, of course, the registry of real property, thus, the
annotation or inscription of a deed of sale of real property in a chattel mortgage registry cannot be given the legal effect
of an inscription in the registry of real property. Hence, it cannot be said the paragraph 2 of Art. 1473 applies in this
case.

The applicable provision in this case is paragraph 3 of Article 1473 which applies to real properties when there is
no entry made.

11.

Standard Oil Co. vs Jaranillo

20
 FACTS:

1. Gervasia de la Rosa, Vda. de Vera executed a chattel mortgage over both her leasehold interest and the building erected on
the leased land in favor of Standard Oil Co.
2. Standard Oil presented the mortgage document to Jaramillo, the register of deeds, for the purpose of having it recorded in
the book of record of chattel mortgage.
3. However, Jaramillo was of the opinion that the interests appearing in the mortgage are not personal.
4. Standard Oil filed a petition for mandamus to compel the register of deeds to record the chattel mortgage.

ISSUE:

Whether or not the register of deeds may be compelled to register as chattel mortgage properties appearing to be
real?

HELD:

Yes. Although the registration of real properties as chattel mortgages would be ineffective against third parties
and would not change the character of the properties, it is for the courts to make such determination and not the register
of deeds. It is the duty of deeds to accept the estimate placed upon the document by the petitioner and to register it, upon
payment of the proper fee.

21