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June 30, 1952



August 4, 1927

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.

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

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.

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.

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.

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

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.

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.

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)

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.


September 29, 1962

July 31, 1935


October 31, 1962

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.

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.

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.

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 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.

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

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.

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 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.[40]
(emphasis and italics supplied)
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. T40785, 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 (Exh. B, p. 39, Rollo). 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
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

January 25, 2010

MIAA v. Court of Appeals

July 20, 2006

Respondents build a concrete fence
between their property and the
property of the petitioners.

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.

Petitioners assailed the building of the

said fence on the ground that the
property was theirs.
WON the space between the two
properties is a private property or a
public domain.
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.
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
Accordingly, the petitioners may utilize
the rip-rapped portion of the creek to
prevent the erosion of their property.

WON the properties of MIAA are
owned by the state.
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.

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