PROPERTY
deed of sale over the land to which the building stood
Memorize ART. 415
Art. 415. The following are immovable property:
(1) Land, buildings, roads and constructions of all
kinds
adhered to the soil;
(2) Trees, plants, and growing fruits, while they are
attached to the land or form an integral part of an
immovable;
(3) Everything attached to an immovable in a fi xed
manner, in such a way that it cannot be separated
therefrom
without breaking the material or deterioration of the
object;
(4) Statues, reliefs, paintings, or other objects for use
or ornamentation, placed in buildings or on lands by
the
owner of the immovable in such a manner that it
reveals the
intention to attach them permanently to the
tenements;
(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;
(6) Animal houses, pigeon-houses, beehives, fi sh
ponds
or breeding places of similar nature, in case their
owner has
placed them or preserves them with the intention to
have them
permanently attached to the land, and forming a
permanent
part of it; the animals in these places are included;
(7) Fertilizer actually used on a piece of land;
(8) Mines, quarries, and slag dumps, while the matter
thereof forms part of the bed, and waters either
running or
stagnant;
(9) Docks and structures which, though fl oating, are
intended by their nature and object to remain at a fi
xed place
on a river, lake, or coast;
(10) Contracts for public works, and servitudes and
other real rights over immovable property.
8 Cases.
1. LEUNG YEE V. STRONG MACHINERY
COMPANY
FACTS:
FACTS:
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 company.
Days after, the Compania Agricola Filipina executed a
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.
ISSUE: Who has a better right to the property?
HELD:
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 property.
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)
2. Standard Oil Co. v. Jaranillo
44 Phil. 631
FACTS:
De la Rosa, who was renting a parcel of land in
Manila, constructed a building of strong materials
thereon, which she conveyed to plaintiff Standard Oil
Co. by way of chattel mortgage. When the mortgagee
was presenting the deed to the Register of Deeds of
Manila for registration in the Chattel Mortgage
Registry, the Registrar refused to allow the
registration on the ground that the building was a real
property, not personal property, and therefore could
not be the subject of a valid chattel mortgage.
ISSUE:
May the deed be registered in the chattel mortgage
registry?
HELD:
Yes, because the Registrar's duty is MINISTERIAL in
character.There is no legal provision conferring upon
him any judicial or quasi-judicial power to determine
the nature of the document presented before him. He
should therefore accept the legal fees being tendered,
and place the document on record.
3. PRUDENTIAL BANK V. PANIS
153 SCRA 390
FACTS:
Spouses Magcale secured a loan from Prudential
Bank. To secure payment, they executed a real estate
mortgage over a residential building. The mortgage
included also the right to occupy the lot and the
information about the sales patent applied for by the
spouses for the lot to which the building stood. After
securing the first loan, the spouses secured another
from the same bank. To secure payment, another real
estate mortgage was executed over the same
properties.
The Secretary of Agriculture then issued a
Miscellaneous Sales Patent over the land which was
later on mortgaged to the bank.
The spouses then failed to pay for the loan and the
REM was extrajudicially foreclosed and sold in public
auction despite opposition from the spouses. The
respondent court held that the REM was null and
void.

ISSUE:
Whether or not a valid RE mortgage can be
constituted on the building erected on the belonging
to another.
HELD:
A real estate mortgage can be constituted on the
building erected on the land belonging to another.
The inclusion of building distinct and separate from
the land in the Civil Code can only mean that the
building itself is an immovable property.
While it is true that a mortgage of land necessarily
includes in the absence of stipulation of the
improvements thereon, buildings, still a building in
itself may be mortgaged by itself apart from the land
on which it is built. Such a mortgage would still be
considered as a REM for the building would still be
considered as immovable property even if dealt with
separately and apart from the land.
The original mortgage on the building and right to
occupancy of the land was executed before the
issuance of the sales patent and before the
government was divested of title to the land. Under
the foregoing, it is evident that the mortgage executed
by private respondent on his own building was a valid
mortgage.
As to the second mortgage, it was done after
the sales patent was issued and thus prohibits
pertinent provisions of the Public Land Act.
4. DAVAO SAWMILL V. CASTILLO
FACTS:
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.
HELD:
The law is clear that the machineries are personal
properties and not part of the building because they
were not placed by the owner.
5. B.H. BERKENKOTTER vs. CU UNJIENG E
HIJOS
G.R. No. L-41643 July 31, 1935
FACTS:
This is an appeal taken by the plaintiff, B. H.
Berkenkotter, from the judgment of the Court of First
Instance of Manila, dismissing said plaintiffs
complaint against Cu Unjieng e Hijos et al
Mabalacat Sugar Co., Inc., owner of the sugar central
situated in Mabalacat, Pampanga, obtained from the
defendants, Cu Unjieng e Hijos, a loan secured by a
first mortgage constituted on two parcels and land
with all its buildings, improvements, sugar-cane mill,
steel railway, telephone line, apparatus, utensils and
whatever forms part or is necessary complement of
said sugar-cane mill, steel railway, telephone line,
now existing or that may in the future exist is said
lots.
Shortly after said mortgage had been constituted, the
Mabalacat Sugar Co., Inc., 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. The estimated
cost of said additional machinery and equipment was
approximately P100,000. B.A. Green, president of
said corporation, proposed to the plaintiff, B.H.
Berkenkotter, to advance the necessary amount for
the purchase of said machinery and equipment,
promising to reimburse him as soon as he could
obtain an additional loan from the mortgagees, the
herein defendants Cu Unjieng e Hijos. Berkenkotter
agreed to the said proposition and delivered to him a
total sum of P25,750. Berkenkotter had a credit of
P22,000 against said corporation for unpaid salary.
With the loan of P25,750 and said credit of P22,000,
the Mabalacat Sugar Co., Inc., purchased the
additional machinery and equipment now in litigation.
B.A. Green, president of the Mabalacat Sugar Co.,
Inc., applied to Cu Unjieng e Hijos for an additional
loan of P75,000 offering as security the additional
machinery and equipment acquired by said B.A.
Green and installed in the sugar central after the
execution of the original mortgage deed, together with
whatever additional equipment acquired with said
loan. B.A. Green failed to obtain said loan.
Appellants contention: the installation of the
machinery and equipment claimed by him in the sugar
central of the Mabalacat Sugar Company, Inc., was
not permanent in character inasmuch as B. A. Green,
in proposing to him to advance the money for the
purchase thereof, that in case B. A. Green should fail
to obtain an additional loan from the defendants Cu
Unjieng e Hijos, said machinery and equipment would
become security therefor.
ISSUE: Whether or not the lower court erred in
declaring that the additional machinery and
equipment, as improvement incorporated with the
central are subject to the mortgage deed executed in
favor of the defendants Cu Unjieng e Hijos.
HELD: No error was committed by trial court. The
additional machinery and equipment are included in
the first mortgage.
Article 334, paragraph 5, of the Civil Code gives the
character of real property to 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 or industry.
If the installation of the machinery and equipment in
question in the central of the Mabalacat Sugar Co.,
Inc., in lieu of the other of less capacity existing
therein, for its sugar industry, converted them into real
property by reason of their purpose, it cannot be said
that their incorporation therewith was not permanent
in character because, as essential and principal
elements of a sugar central, without them the sugar
central would be unable to function or carry on the
industrial purpose for which it was established.
Inasmuch as the central is permanent in character,
the necessary machinery and equipment installed for
carrying on the sugar industry for which it has been
established must necessary be permanent.
Furthermore, the fact that B. A. Green bound himself
to the plaintiff B. H. Berkenkotter to hold said
machinery and equipment as security, as nothing
could prevent B. A. Green from giving them as
security at least under a second mortgage.
As to the alleged sale of said machinery and
equipment to the plaintiff and appellant after they had
been permanently incorporated with the sugar central
of the Mabalacat Sugar Co., Inc., and while the
mortgage constituted on said sugar central to Cu
Unjieng e Hijos remained in force, only the right of
redemption of the vendor Mabalacat Sugar Co., Inc.,
in he sugar central with which said machinery and
equipment had been incorporated, was transferred
thereby, subject to the right of the defendants Cu
Unjieng e Hijos under the first mortgage.
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 latters 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 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.
6. Board of Assessment Appeals,
Q.C. vs Meralco
Facts: Respondent MERALCO was authorized to
construct, maintain and operate an electric street
railway and electric light, heat and power system in
the City of Manila and its suburbs. It obtained such
right as a transferee of the franchise.
To comply with the franchise, MERALCO had to build
steel towers traversing Laguna, Quezon City and
Manila, since its electric power is located in Botocan
Falls, Laguna.
Petitioner City Assessor of Quezon City declared the
aforesaid steel towers to be real properties and
subjected it to real property tax. MERALCO disputed
the assessment and appealed it to the CBAA. The
appeal was denied, thus MERALCO paid the assesed
real property tax under protest in the CTA.
The CTA held that: (1) the steel towers come within
the term "poles" which are declared exempt from
taxes under part II paragraph 9 of respondent's
franchise; (2) the steel towers are personal properties
and are not subject to real property tax; and (3) the
City Treasurer of Quezon City is held responsible for
the refund of the amount paid. These are assigned as
errors by the petitioner in the brief.
Issue: Whether or not the steel towers are considered
real property, hence subject to real property tax?
Held: No
As a rule, real property tax is imposed only on real
properties. Real properties as contemplated by law is
those properties that are mentioned and defined in
Article 415 of the Civil Code.
Article 415 of the Civil Code does, by stating the
following are immovable property:
(1) Land, buildings, roads, and constructions of all
kinds adhered to the soil;
xxx xxx xxx
(3) 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;
xxx xxx xxx
(5) Machinery, receptacles, instruments or
implements intended by the owner of the tenement for
an industry or works which may be carried in a
building or on a piece of land, and which tends
directly to meet the needs of the said industry or
works;
xxx xxx xxx
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.
thus, the steel towers are considered personalty and
cannot be subject to a real property tax.
7. Caltex vs Central Board of Assessment
Appeals & City Assessor of Pasay
GR No. L-50466
May 31, 1982
This case is about the realty tax on machinery and
equipment installed by Caltex (Philippines) Inc., in its
gas stations located on leased land.
exempted from taxation. The steel towers were
considered personalty because they were attached to
square metal frames by means of bolts and could be
moved from place to place when unscrewed and
dismantled.

FACTS:

Caltex loaned machines and equipment to gas station
operators under an appropriate lease agreement or
receipt. The lease contract stipulated that upon
demand, the operators shall return to Caltex the
machines and equipment in good condition as when
received, ordinary wear and tear excepted.
Nor are Caltex's gas station equipment and
machinery the same as the tools and equipment in
the repair shop of a bus company which were held to
be personal property not subject to realty tax
(Mindanao Bus Co. vs. City Assessor, 116 Phil. 501).

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.
The City Assessor of Pasay City characterized the
said items of gas station equipment and machinery as
taxable realty. However, the City Board of Tax
Appeals ruled that they are personalty. The Assessor
appealed to the Central Board of Assessment
Appeals.
8. MERALCO V. BOARD OF ASSESSMENT
APPEALS
FACTS:
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.

The Board held on June 3, 1977 that the said
machines are real property within the meaning of Ses.
3(k) & (m) and 38 of the Real Property Tax Code, PD
464, and that the Civil Code definitions of real and
personal property in Articles 415 and 416 are not
applicable in this case.
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 devices.
The municipal treasurer required Meralco to pay
realty taxes on both tanks.

ISSUE: ISSUE:

WON the pieces of gas station equipment and
machinery permanently affixed by Caltex to its gas
station and pavement should be subject to realty tax.
HELD:
Sec.2 of the Assessment Law provides that the realty
tax is due on real property, including land, buildings,
machinery, and other improvements not specifically
exempted in Sec.3 thereof.
Sec.3 of the Real Property Tax Code provides the
following definitions:
WON the tanks should be considered as real
property.
HELD:
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.

k) Improvements a valuable addition made

to property or an amelioration in its conditionmore
than mere repairs or replacement of wasteintended
to enhance its value, beauty, or utility

m) Machinery machines, mechanical

contrivances, instruments, appliances, and apparatus
attached to the real estateincludes the physical
facilities available for productioninstallation and
appurtenant service facilities.

The subject machines and equipment are taxable

improvement and machinery within the meaning of
the Assessment Law and the Real Property Tax
Code, because the same are necessary to the
operation of the gas station and have been
attached/affixed/embedded permanently to the gas
station site.

Improvements on land are commonly taxed as realty

even though they might be considered personalty. It
is a familiar phenomenon to see things classified as
real property for purposes of taxation which on
general principle might be considered personal
property (Standard Oil Co., vs Jaramillo, 44 PHIL
630).

This case is also easily distinguishable from Board of

Assessment Appeals vs. Manila Electric Co., (119
Phil. 328) where Meralco's steel towers were