ENRIQUE LOPEZ vs. VICENTE OROSA, JR., and PLAZA THEATRE, INC.

Facts: Enrique Lopez is a businessman under the trade name of Lopez Castelo Sawmill. In May, 1946,
Vicente Orosa, Jr., invited Lopez to make an investment in the theatre business. Although Lopez
expressed his unwillingness to invest of the same, he agreed to supply the lumber necessary for the
construction of the proposed theatre, and at Orosa's behest and assurance that the latter would be
personally liable for any account that the said construction might incur. Lopez further agreed that
payment therefor would be on demand and not cash on delivery basis. Pursuant to said verbal agreement,
Lopez delivered the lumber which was used for the construction of the Plaza Theatre. But of the total cost
of the materials amounting to P62,255.85, Lopez was paid only P20,848.50, thus leaving a balance of
P41,771.35.

Lopez filed a complaint praying that defendants be sentenced to pay him jointly and severally the sum of
P41,771.35, with legal interest from the filing of the action; that in case defendants fail to pay the same,
that the building and the land covered owned by the corporation be sold at public auction and the
proceeds thereof be applied to said indebtedness.

The lower Court held that defendants Vicente Orosa, Jr., and the Plaza Theatre, Inc., were jointly liable
for the unpaid balance of the cost of lumber used in the construction of the building and the plaintiff thus
acquired the materialman's lien over the same. Plaintiff tried to secure a modification of the decision in so
far as it declared that the obligation of therein defendants was joint instead of solidary, and that the lien
did not extend to the land, but same was denied by order the court.

Issue: Whether or not a materialman's lien for the value of the materials used in the construction of a
building attaches to said structure alone and does not extend to the land on which the building is adhered

Held: Yes. Generally, real estate connotes the land and the building constructed thereon. It is obvious that
the inclusion of the building, separate and distinct from the land, in the enumeration of what may
constitute real properties could mean only one thing, that a building is by itself an immovable property. In
view of the absence of any specific provision of law to the contrary, a building is an immovable property,
irrespective of whether or not said structure and the land on which it is adhered to belong to the same
owner.

The law gives preference to unregistered refectionary credits only with respect to the real estate upon
which the refection or work was made. This being so, the inevitable conclusion must be that the lien so
created attaches merely to the immovable property for the construction or repair of which the obligation
was incurred. Evidently, therefore, the lien in favor of appellant for the unpaid value of the lumber used in
the construction of the building attaches only to said structure and to no other property of the obligors.

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

Facts: Paper City applied for and was granted the loans and credit accommodations in peso and dollar
denominations by RCBC. The loans were secured by 4 Deeds of Continuing Chattel Mortgages on its
machineries and equipment found inside its paper plants. In 1992, RCBC, Metrobank and Union Bank
entered into a Mortgage Trust Indenture (MTI) with Paper City. In the said MTI, Paper City acquired an
additional loan of P170,000,000.00 from the creditor banks in addition to the previous loan from RCBC.
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 equipment located in and bolted to
and/or forming part of buildings. Paper City was able to comply with its loan obligations until July 1997.
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 Against
the Real Estate Mortgage executed by Paper City.

A Certificate of Sale was executed certifying that the 8 parcels of land with improvements thereon were
sold in favor of the creditor banks RCBC, Union Bank and Metrobank as the highest bidders. The
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. They also filed with the trial court a
Manifestation with Motion to Remove and/or Dispose Machinery reasoning that the machineries located
inside the foreclosed land and building were deteriorating. It posited that since the machineries were not
included in the foreclosure of the real estate mortgage, it is appropriate that it be removed from the
building and sold to a third party

Issue: Whether or not the machineries should be included in the foreclosed property

Held: Yes. Machineries and equipment 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. It was clearly
stipulated in the contract 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 equipment. AS
stated in Art. 415 of the Civil Code, 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 are considered as immovable
property. Hence, machineries and equipment should be included in the foreclosed property.

Burgos v. Chief of Staff

Facts: Two search warrants were issued against "Metropolitan Mail" and "We Forum" newspapers. The
two publications were then searched, and office and printing machines, equipment, paraphernalia, motor
vehicles and other articles used in the printing, publication and distribution of the said newspapers, as
well as numerous papers, documents, books and other written literature alleged to be in the possession
and control of petitioner Jose Burgos, Jr. publisher-editor of the "We Forum" newspaper, were seized.
Petitioners now pray that a writ of preliminary mandatory and prohibitory injunction be issued for the
return of the seized articles and for the prosecution be enjoined from using the articles thus seized as
evidence against petitioner Jose Burgos, Jr. and the other accused. Petitioner now claims that the warrant
should be annulled and raise as one of its arguments that although the warrant was issued for search and
seizure of personal property only, some real properties were also seized such as the machineries used by
the publication.

Issue: Whether or not machineries can be considered as personal property

Held: NO. Under Article 415[5] of the Civil Code of the Philippines, "machinery, receptables,
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" are considered immovable property. In a previous case, the Court ruled that machinery
which is movable by nature becomes immobilized when placed by the owner of the tenement, property or
plant, but not so when placed by a tenant, usufructuary, or any other person having only a temporary
right, unless such person acted as the agent of the owner.

In the case at bar, petitioners do not claim to be the owners of the land and/or building on which the
machineries were placed. This being the case, the machineries in question, while in fact bolted to the
ground remain movable property susceptible to seizure under a search warrant.