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June 30, 1952 MACHINERY COMPANY August 4, 1927


A chattel mortgage was executed by FACTS: On 14 December 1924, action was
petitioner Jose Luna covering his Compania Agricola Filipina bought commenced in the CFI of the Province
house with mixed materials to rice-cleaning machinery from the of Tarlac. The plaintiff alleged that the
respondent Trinidad Reyes to secure machinery company and this was deputy sheriff of Tarlac Province
payment for a promissory note. secured by a chattel mortgage on the attached and sold to Valdez the sugar
machinery and the building to which it cane planted by the plaintiff and his
Luna failed to pay the promissory note was installed. Upon failure to pay, the tenants on 7 parcels of land, and that
and as such, Trinidad requested the chattel mortgage was foreclosed, the within 1 year from the date of the
sheriff to sell the property through an building and machinery sold in public attachment and sale the plaintiff
extra judicial foreclosure to satisfy the auction and bought by the machinery ordered to redeem said sugar cane
obligation. company. and tendered to Valdez the amount
sufficient to cover the price paid by the
Luna contends that the foreclosure is Days after, the Compania Agricola latter, with taxes and interests, and
invalid because the property is under Filipina executed a deed of sale over that Valdez refused to accept the
chattel mortgage and as such, it is not the land to which the building stood in money and return the sugar cane to
covered by RA3135 that only speaks favor of the machinery company. the plaintiff. After hearing and on 28
of real estate mortgage. April 1926, the judge (Lukban)
On or about the date to which the rendered judgment in favor of the
ISSUE: chattel mortgage was excecuted, defendant holding that the sugar cane
WON the mortgaged property can be Compania executed a real estate in question was personal property and,
covered by chattel mortgage even mortgage over the building in favor as such, was not subject to
though it is a real property. of Leung Yee, distinct and redemption; among others.
separate from the land.
Even though the property is a real HELD: For the purpose of attachment and
property, it may be covered by a The building in which the machinery execution, and for the purposes of the
chattel mortgage for as long as it was was installed was real property, and Chattel Mortgage Law, “ungathered
agreed upon by the parties. Hence, the the mere fact that the parties seem products” have the nature of personal
foreclosure is invalid because it is only to have dealt with it separate and property. The lower court, therefore,
applicable for real properties. The apart from the land on which it stood in committed no error in holding that the
remedy of the respondent is to file an no wise changed the character as real sugar cane in question was personal
action for recovery of possession and property. property and, as such, was not subject
not a writ of possession. to redemption.
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)
September 29, 1962 July 31, 1935 October 31, 1962


Mindanao Bus Company is a public On 26 April 1926, the Mabalacat Sugar Pastor D. Ago bought sawmill
utility engaged in transporting Company obtained from Cu Unjieng e machineries and equipments from
passengers and cargoes by motor Hijos, a loan secured by a first Grace Park Engineering, Inc.,
trucks in Mindanao; having its main mortgage constituted on 2 parcels of executing a chattel mortgage over said
offices in Cagayan de Oro. The land "with all its buildings, machineries and equipments to secure
company is also owner to the land improvements, sugar-cane mill, steel the payment of a balance of the price
where it maintains and operates a railway, telephone line, apparatus, remaining unpaid of P32,000.00, which
garafe, a repair shop, blacksmith and utensils and whatever forms part or is Ago agreed to pay on installment
carpentry shops; the machineries are a necessary complement of said basis. Ago defaulted in his payments
place therein on wooden and cement sugar-cane mill, steel railway, and so, in 1958, Grace Park
platforms. The City Assessor of telephone line, now existing or that Engineering, Inc. instituted
Cagayan de Oro City assessed at may in the future exist in said lots.” extrajudicial foreclosure proceedings
P4,400 said maintenance and repair of the mortgage.
equipment. The company appealed On 5 October 1926, the Mabalacat The Provincial Sheriff of Surigao,
the assessment to the Board of Tax Sugar Company decided to increase acting upon the writ of execution,
Appeals on the ground that the same the capacity of its sugar central by levied upon and ordered the sale of
are not realty. buying additional machinery and the sawmill machineries and
equipment, so that instead of milling equipments in question.
ISSUE: 150 tons daily, it could produce 250.
WON the machineries of the bus HELD:
company can be considered as a real HELD: By reason of installment in a building,
property for purposes of taxation. For the foregoing considerations, we the said sawmill machineries and
are of the opinion and so hold: (1) That equipments became real estate
HELD: the installation of a machinery and properties in accordance with the
The equipments in question are not equipment in a mortgaged sugar provision of Art. 415(5) of the Civil
absolutely essential to the petitioner’s central, in lieu of another of less Code. It is interpreted similarly to the
transportation business, and capacity, for the purpose of carrying case of Berkenkotter vs. Cu Unjieng e
petitioner’s business is not carried on out the industrial functions of the latter Hijos, where the Court held that the
in a building, tenement or on a and increasing production, constitutes installation of the machinery and
specified land, so said equipment may a permanent improvement on said equipment in the central of the
not be considered real estate within sugar central and subjects said Mabalacat Sugar Company for use in
the meaning of Article 415 (c) of the machinery and equipment to the connection with the industry carried by
Civil Code. mortgage constituted thereon (article that company, converted the said
1877, Civil Code); (2) that the fact that machinery and equipment into real
the purchaser of the new machinery estate by reason of their purpose. In
and equipment has bound himself to the present case, the installation of the
the person supplying him the purchase sawmill machineries in the building of
money to hold them as security for the the Golden Pacific Sawmill, Inc., for
payment of the latter's credit, and to use in the sawing of logs carried on in
refrain from mortgaging or otherwise said building, the same became a
encumbering them does not alter the necessary and permanent part of the
permanent character of the building or real estate on which the
incorporation of said machinery and same was constructed, converting the
equipment with the central; and (3) said machineries and equipments into
that the sale of the machinery and real estate within the meaning of
equipment in question by the Article 415(5) of the Civil Code of the
purchaser who was supplied the Philippines.
purchase money, as a loan, to the
person who supplied the money, after
the incorporation thereof with the
mortgaged sugar central, does not
vest the creditor with ownership of said
machinery and equipment but simply
with the right of redemption.
FACTS: FACTS: The Davao Saw Mill Co., Inc., is the
This case is about the imposition of the The case of Board of Assessment holder of a lumber concession from the
realty tax on two oil storage tanks Appeals vs. Manila Electric Company, Government of the Philippine Islands.
installed in 1969 by Manila Electric 119 Phil. 328, wherein Meralco’s steel It has operated a sawmill in the sitio of
Company on a lot in San Pascual, towers were held not to be subject to Maa, barrio of Tigatu, municipality of
Batangas which it leased in 1968 from realty tax, is not in point because in Davao, Province of Davao. However,
Caltex (Phil.), Inc. The tanks are within that case the steel towers were the land upon which the business was
the Caltex refinery compound. regarded as poles and under its conducted belonged to another
It is not anchored or welded to the franchise Meralco’s poles are exempt person. On the land the sawmill
concrete circular wall. Its bottom plate from taxation. Moreover, the steel company erected a building which
is not attached to any part of the towers were not attached to any land housed the machinery used by it.
foundation by bolts, screws or similar or building. They were removable from
devices. their metal frames. The owner of the land claims that the
The municipal treasurer required machineries should be transferred to
Meralco to pay realty taxes on both their ownership because of the
tanks. provision in the contract that buildings
and improvements will belong to the
ISSUE: land owner at the end of the contract.
WON the tanks should be considered
as real property. HELD:
The law is clear that the machineries
HELD: are personal properties and not part of
The two storage tanks are not the building because they were not
embedded in the land, they may, placed by the owner.
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.
Petitioner was issued a writ of FACTS:
possession in Civil Case No. 6643[1]
for Sum of Money by the Regional In this special civil action of certiorari,
Trial Court of Balanga, Bataan, Branch Meralco Securities Industrial
1. The writ of possession was, Corporation assails the decision of the
however, nullified by the Court of Central Board of Assessment Appeals
Appeals in CA-G.R. SP No. 65891[2] (composed of the Secretary of Finance
because it included a parcel of land as chairman and the Secretaries of
which was not among those explicitly Justice and Local Government and
enumerated in the Certificate of Sale Community Development as
issued by the Deputy Sheriff, but on members) dated May 6, 1976, holding
which stand the immovables covered that Meralco Securities' oil pipeline is
by the said Certificate. Petitioner subject to realty tax.
contends that the sale of these
immovables necessarily encompasses HELD:
the land on which they stand. Meralco Securities insists that its
pipeline is not subject to realty tax
HELD: because it is not real property within
The foregoing provision of the Civil the meaning of article 415. This
Code enumerates land and buildings contention is not sustainable under the
separately. This can only mean that a provisions of the Assessment Law, the
building is, by itself, considered Real Property Tax Code and the Civil
immovable.[39] Thus, it has been held Code.
that –
Article 415[l] and [3] provides that real
. . . while it is true that a mortgage of property may consist of constructions
land necessarily includes, in the of all kinds adhered to the soil and
absence of stipulation of the everything attached to an immovable
improvements thereon, buildings, still a in a fixed manner, in such a way that it
building by itself may be mortgaged cannot be separated therefrom without
apart from the land on which it has breaking the material or deterioration
been built. Such mortgage would be of the object.
still a real estate mortgage for the
building would still be considered The pipeline system in question is
immovable property even if dealt with indubitably a construction adhering to
separately and apart from the land.[40] the soil (Exh. B, p. 39, Rollo). It is
(emphasis and italics supplied) attached to the land in such a way that
it cannot be separated therefrom
In this case, considering that what was without dismantling the steel pipes
sold by virtue of the writ of execution which were welded to form the
issued by the trial court was merely the pipeline.
storehouse and bodega constructed
on the parcel of land covered by Insofar as the pipeline uses valves,
Transfer Certificate of Title No. T- pumps and control devices to maintain
40785, which by themselves are real the flow of oil, it is in a sense
properties of respondents spouses, the machinery within the meaning of the
same should be regarded as separate Real Property Tax Code.
and distinct from the conveyance of
the lot on which they stand. 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
USERO V. CA MIAA v. Court of Appeals
January 25, 2010 July 20, 2006
FACTS: FACTS: Petitioner possessed and occupied
Respondents build a concrete fence The Parañaque City treasurer issued the land after it had been declared
between their property and the a notice of levy and the warrants of by the government as part of the forest
property of the petitioners. levy on the buildings and lands by the reserve. In fact, the land remained as
Manila International Airport Authority part of the forest reserve until such
Petitioners assailed the building of the for non payment of real estate taxes time it was reclassified into alienable
said fence on the ground that the from 1992-2001. or disposable land at the behest of the
property was theirs. Ramoses. A positive act of the
ISSUE: government is needed to declassify
ISSUE: WON the properties of MIAA are land which is classified as forest, and
WON the space between the two owned by the state. to convert it into alienable and
properties is a private property or a disposable land for other purposes.
public domain. HELD: Until such lands have been properly
MIAA is not a GOCC, but an declared to be available for other
HELD: instrumentality of the government. purposes, there is no disposable
The mere fact that there are water land to speak of. Absent the fact
lilies on the space filled with water The Republic remains the beneficial of reclassification prior to the
proves that there is a permanent owner of the properties. MIAA itself is possession and cultivation in good
stream of water or a creek there. owned solely by the Republic. At any faith by petitioner, the property
time, the President can transfer back occupied by him remained classified
The petitioners also failed to prove to the Republic title to the airport lands as forest or timberland, which he
their claim of ownership. and buildings without the Republic could not have acquired by
paying MIAA any consideration. As prescription.
Art.420 long as the airport lands and buildings
The phrase "others of similar are reserved for public use, their
character" includes a creek which is a ownership remains with the State.
recess or an arm of a river. It is Unless the President issues a
property belonging to the public proclamation withdrawing these
domain which is not susceptible to properties from public use, they remain
private ownership. Being public water, properties of public dominion. As such,
a creek cannot be registered under the they are inalienable, hence, they are
Torrens System in the name of any not subject to levy on execution or
individual. foreclosure sale, and they are exempt
from real estate tax.
Accordingly, the petitioners may utilize
the rip-rapped portion of the creek to However, portions of the airport lands
prevent the erosion of their property. 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.