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A chattel mortgage was executed by
petitioner Jose Luna covering his
house with mixed materials to
respondent Trinidad Reyes to secure
payment for a promissory note.

Luna failed to pay the promissory note
and as such, Trinidad requested the
sheriff to sell the property through an
extra judicial foreclosure to satisfy the

Luna contends that the foreclosure is
invalid because the property is under
chattel mortgage and as such, it is not
covered by RA3135 that only speaks
of real estate mortgage.

WON the mortgaged property can be
covered by chattel mortgage even
though it is a real property.

Even though the property is a real
property, it may be covered by a
chattel mortgage for as long as it was
agreed upon by the parties. Hence, the
foreclosure is invalid because it is only
applicable for real properties. The
remedy of the respondent is to file an
action for recovery of possession and
not a writ of possession.


Compania Agricola Filipina bought
rice-cleaning machinery from the
machinery company and this was
secured by a chattel mortgage on the
machinery and the building to which it
was installed. Upon failure to pay, the
chattel mortgage was foreclosed, the
building and machinery sold in public
auction and bought by the machinery

Days after, the Compania Agricola
Filipina executed a deed of sale over
the land to which the building stood in
favor of the machinery company.

On or about the date to which the
chattel mortgage was excecuted,
Compania executed a real estate
mortgage over the building in favor
of Leung Yee, distinct and
separate from the land.

The building in which the machinery
was installed 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 the character as real

The ruling should be in favor of the
machine company because the plaintiff
is not a buyer in good faith and the
former is first in possession of the
property. (1544)


On 14 December 1924, action was
commenced in the CFI of the Province
of Tarlac. The plaintiff alleged that the
deputy sheriff of Tarlac Province
attached and sold to Valdez the sugar
cane planted by the plaintiff and his
tenants on 7 parcels of land, and that
within 1 year from the date of the
attachment and sale the plaintiff
ordered to redeem said sugar cane
and tendered to Valdez the amount
sufficient to cover the price paid by the
latter, with taxes and interests, and
that Valdez refused to accept the
money and return the sugar cane 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.

For the purpose of attachment and
execution, and for the purposes of the
Chattel Mortgage Law, ungathered
products have the nature of personal
property. The lower court, therefore,
committed no error in holding that the
sugar cane in question was personal
property and, as such, was not subject
to redemption.


Mindanao Bus Company is a public
utility engaged in transporting
passengers and cargoes by motor
trucks in Mindanao; having its main
offices in Cagayan de Oro. The
company is also owner to the land
where it maintains and operates a
garafe, a repair shop, blacksmith and
carpentry shops; the machineries are
place therein on wooden and cement
platforms. The City Assessor of
Cagayan de Oro City assessed at
P4,400 said maintenance and repair
equipment. The company appealed
the assessment to the Board of Tax
Appeals on the ground that the same
are not realty.

WON the machineries of the bus
company can be considered as a real
property for purposes of taxation.

The equipments in question are not
absolutely essential to the petitioners
transportation business, and
petitioners business is not carried on
in a building, tenement or on a
specified land, so said equipment may
not be considered real estate within
the meaning of Article 415 (c) of the
Civil Code.


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.

For the foregoing considerations, we
are of the opinion and so hold: (1) That
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); (2) that 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; and (3)
that 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.

October 31, 1962

Pastor D. Ago bought sawmill
machineries and equipments from
Grace Park Engineering, Inc.,
executing a chattel mortgage over said
machineries and equipments to secure
the payment of a balance of the price
remaining unpaid of P32,000.00, which
Ago agreed to pay on installment
basis. Ago defaulted in his payments
and so, in 1958, Grace Park
Engineering, Inc. instituted
extrajudicial foreclosure proceedings
of the mortgage.
The Provincial Sheriff of Surigao,
acting upon the writ of execution,
levied upon and ordered the sale of
the sawmill machineries and
equipments in question.

By reason of installment in a building,
the said sawmill machineries and
equipments became real estate
properties in accordance with the
provision of Art. 415(5) of the Civil
Code. It is interpreted similarly to the
case of Berkenkotter vs. Cu Unjieng e
Hijos, where the Court held that the
installation of the machinery and
equipment in the central of the
Mabalacat Sugar Company for use in
connection with the industry carried by
that company, converted the said
machinery and equipment into real
estate by reason of their purpose. In
the present case, the installation of the
sawmill machineries in the building of
the Golden Pacific Sawmill, Inc., for
use in the sawing of logs carried on in
said building, the same became a
necessary and permanent part of the
building or real estate on which the
same was constructed, converting the
said machineries and equipments into
real estate within the meaning of
Article 415(5) of the Civil Code of the


This case is about the imposition of the
realty tax on two oil storage tanks
installed in 1969 by Manila Electric
Company on a lot in San Pascual,
Batangas which it leased in 1968 from
Caltex (Phil.), Inc. The tanks are within
the Caltex refinery compound.
It is not anchored or welded to the
concrete circular wall. Its bottom plate
is not attached to any part of the
foundation by bolts, screws or similar
The municipal treasurer required
Meralco to pay realty taxes on both

WON the tanks should be considered
as real property.

The two storage tanks are not
embedded in the land, they may,
nevertheless, be considered as
improvements on the land, enhancing
its utility and rendering it useful to the
oil industry. It is undeniable that the
two tanks have been installed with
some degree of permanence as
receptacles for the considerable
quantities of oil needed by Meralco for
its operations.


The case of Board of Assessment
Appeals vs. Manila Electric Company,
119 Phil. 328, wherein Meralcos steel
towers were held not to be subject to
realty tax, is not in point because in
that case the steel towers were
regarded as poles and under its
franchise Meralcos poles are exempt
from taxation. Moreover, the steel
towers were not attached to any land
or building. They were removable from
their metal frames.


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.

The owner of the land claims that the
machineries should be transferred to
their ownership because of the
provision in the contract that buildings
and improvements will belong to the
land owner at the end of the contract.

The law is clear that the machineries
are personal properties and not part of
the building because they were not
placed by the owner.


Petitioner was issued a writ of
possession in Civil Case No. 6643[1]
for Sum of Money by the Regional
Trial Court of Balanga, Bataan, Branch
1. The writ of possession was,
however, nullified by the Court of
Appeals in CA-G.R. SP No. 65891[2]
because it included a parcel of land
which was not among those explicitly
enumerated in the Certificate of Sale
issued by the Deputy Sheriff, but on
which stand the immovables covered
by the said Certificate. Petitioner
contends that the sale of these
immovables necessarily encompasses
the land on which they stand.

The foregoing provision of the Civil
Code enumerates land and buildings
separately. This can only mean that a

building is, by itself, considered
immovable.[39] Thus, it has been held

. . . 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.

In this case, considering that what was
sold by virtue of the writ of execution
issued by the trial court was merely the
storehouse and bodega constructed
on the parcel of land covered by
Transfer Certificate of Title No. T-
40785, which by themselves are real
properties of respondents spouses, the
same should be regarded as separate
and distinct from the conveyance of
the lot on which they stand.



In this special civil action of certiorari,
Meralco Securities Industrial
Corporation assails the decision of the
Central Board of Assessment Appeals
(composed of the Secretary of Finance
as chairman and the Secretaries of
Justice and Local Government and
Community Development as
members) dated May 6, 1976, holding
that Meralco Securities' oil pipeline is
subject to realty tax.

Meralco Securities insists that its
pipeline is not subject to realty tax
because it is not real property within
the meaning of article 415. This
contention is not sustainable under the
provisions of the Assessment Law, the
Real Property Tax Code and the Civil

Article 415[l] and [3] provides that real
property may consist of constructions
of all kinds adhered to the soil and
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.

The pipeline system in question is
indubitably a construction adhering to
the soil. It is attached to the land in
such a way that it cannot be separated
therefrom without dismantling the steel
pipes which were welded to form the
pipeline. Insofar as the pipeline uses
valves, pumps and control devices to
maintain the flow of oil, it is in a sense
machinery within the meaning of the
Real Property Tax Code.

It should be borne in mind that what
are being characterized as real
property are not the steel pipes but the
pipeline system as a whole. Meralco
Securities has apparently two pipeline
Fels Energy vs Province of
Batangas February 16, 2007

Facts: On January 18, 1993, NPC
entered into a lease contract with Polar
Energy, Inc. over 3x30 MW diesel
engine power barges moored at
Balayan Bay in Calaca, Batangas. The
contract, denominated as an Energy
Conversion Agreement, was for a
period of five years. Article 10 states
that NPC shall be responsible for the
payment of taxes. Polar Energy then
assigned its rights under the
Agreement to Fels despite NPCs
initial opposition. FELS received an
assessment of real property taxes on
the power barges from Provincial
Assessor Andaya of Batangas City.
FELS referred the matter to NPC,
reminding it of its obligation under the
Agreement to pay all real estate taxes.
The LBAA (Local Board Of
Assessment Appeals Of Batangas)
Fels to pay the real estate taxes. The
LBAA ruled that the power plant
facilities, while they may be classified
as movable or personal property, are
nevertheless considered real property
for taxation purposes because they are
installed at a specific location with a
character of permanency. The LBAA
also pointed out that the owner of the
bargesFELS, a private corporationis
the one being taxed, not NPC. A mere
agreement making NPC responsible
for the payment of all real estate taxes
and assessments will not justify the
exemption of FELS.
Issue: WON the petitioner may be
assessed real property taxes
Held: Yes
Ratio: The CBAA and LBAA power
barges are real property and are thus
subject to real property tax. Tax
assessments by tax examiners are
presumed correct and made in good
faith, with the taxpayer having the
burden of proving otherwise.

Moreover, Article 415 (9) of the New
Civil Code provides that [d]ocks and
structures which, though floating, are
intended by their nature and object to
remain at a fixed place on a river, lake,
or coast are considered immovable
property. Thus, power barges are
categorized as immovable property by
destination, being in the nature of
machinery and other implements
intended by the owner for an industry
or work which may be carried on in a
building or on a piece of land and
which tend directly to meet the needs
of said industry or work.


Petitioner possessed and occupied
the land after it had been declared
by the government as part of the forest
reserve. In fact, the land remained as
part of the forest reserve until such
time it was reclassified into alienable
or disposable land at the behest of the
Ramoses. A positive act of the
government is needed to declassify
land which is classified as forest, and
to convert it into alienable and
disposable land for other purposes.
Until such lands have been properly
declared to be available for other
purposes, there is no disposable
land to speak of. Absent the fact
of reclassification prior to the
possession and cultivation in good
faith by petitioner, the property
occupied by him remained classified
as forest or timberland, which he
could not have acquired by

BEnguet Corporation vs Central
Board of Assesment Appeals

HELD: A reading of that section shows
that the tailings dam of the petitioner
does not fall under any of the classes
of exempt real properties therein

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 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.

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.


FACTS: Accused was charged with
larceny or the unlawful use of electric
current. ISANG napakahabang
discussion sa electricity

HELD: From the foregoing it is plain
that property to be personal property
must not only be susceptible of
appropriation, which the court in the
quoted paragraph claims is the only
requirement, but it must also be
capable of being of itself manually
seized and transported from one place
to another. (Electricity is a property)


FACTS: Three mortgages were
seeking preference in the lower court.
The one of Fidelity and Surety Co.
alleged that it should be given
preference as the mortgage in favor of
Ramirez was not valid as the subject
of the mortgage cannot be a proper
subject thereof. The subject involved in
the 1st mortgage is an interest in
business of a drug store.
HELD: agricultural lands of the public
domain, natural resources cannot be
alienated. The Amended JVA covers a
reclamation area of 750 hectares. Only
157.84 hectares of the 750 hectare
reclamation project have been
reclaimed, and the rest of the area are
still submerged areas forming part of
Manila Bay. Further, it is provided that
AMARI will reimburse the actual costs
in reclaiming the areas of land and it
will shoulder the other reclamation
costs to be incurred. The foreshore
and submerged areas of Manila Bay
are part of the lands of the public
domain, waters and other natural
resources and consequently owned by
the State. As such, foreshore and
submerged areas shall not be
alienable unless they are classified as
agricultural lands of the public domain.
The mere reclamation of these areas
by the PEA doesnt convert these
inalienable natural resources of the
State into alienable and disposable
lands of the public domain. There must
be a law or presidential proclamation
officially classifying these reclaimed
lands as alienable and disposable if
the law has reserved them for some
public or quasi-public use.

USERO V. CA January 5, 2005
FACTS: Respondents build a concrete
fence between their property and the
property of the petitioners. Petitioners
assailed the building of the said fence
on the ground that the property was
ISSUE: WON the space between the
two properties is a private property or
a public domain.
HELD: The mere fact that there are
water lilies on the space filled with
water proves that there is a permanent
stream of water or a creek there. The
petitioners also failed to prove their
claim of ownership. Art.420 The
phrase "others of similar character"
includes a creek which is a recess or
an arm of a river. It is property
belonging to the public domain which
is not susceptible to private ownership.
Being public water, a creek cannot be
registered under the Torrens System
in the name of any individual.
Accordingly, the petitioners may utilize
the rip-rapped portion of the creek to
prevent the erosion of their property.

MIAA v. Court of Appeals 2006

FACTS: The Paraaque City treasurer
issued a notice of levy and the
warrants of levy on the buildings and
lands by the Manila International
Airport Authority for non payment of
real estate taxes from 1992-2001.
ISSUE: WON the properties of MIAA
are owned by the state.
HELD: MIAA is not a GOCC, but an
instrumentality of the government. The
Republic remains the beneficial owner
of the properties. MIAA itself is owned
solely by the Republic. At any time, the
President can transfer back to the
Republic title to the airport lands and
buildings without the Republic paying
MIAA any consideration. As long as
the airport lands and buildings are
reserved for public use, their
ownership remains with the State.
Unless the President issues a
proclamation withdrawing these
properties from public use, they remain
properties of public dominion. As such,
they are inalienable, hence, they are
not subject to levy on execution or
foreclosure sale, and they are exempt
from real estate tax. However, portions
of the airport lands and buildings that
MIAA leases to private entities are not
exempt from real estate tax. In such a
case, MIAA has granted the beneficial
use of such portions for a
consideration to a taxable person.

FACTS: The land sought to be
registered in this case was formerly a
part of a street. Through a resolution, it
was declared to be an abandoned
road and not part of the City
development plan. Thereafter, it was
sold through a public bidding and
petitioner was the highest bidder. He
then sought to register said land but
his application was dismissed.
HELD: The portion of the city street
subject to petitioners application for
registration of title was withdrawn from
public use. Then it follows that such
withdrawn portion becomes
patrimonial property of the State. It is
also very clear from the Charter that
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

Register of Deeds G.R. No. 171304
October 10, 2007

In the case at bar, a school, a public
market, and a cemetery were built
upon the subject property. Unlike a

public square as that in Nicolas or a
playground as that in the Province of
Zamboanga del Norte, schools, public
markets and cemeteries are not for the
free and indiscriminate use of
everyone. The determination of the
persons allowed to study in such
schools, or put up stalls in the public
market, or bury their dead in public
cemeteries are regulated by the
government. As such, the subject
property is, under the Civil Code
classification, patrimonial property, and
the Municipality may have the same
registered in its name.