Doctrinal Notes – Immovable Properties

01. Associated Insurance v. Iya 103 Phil. 9725

A building certainly cannot be divested of its character of a realty by the fact that the
land on which it is constructed belongs to another. To hold it the other way, the possibility
is not remote that it would result in confusion, for to cloak the building with an uncertain
status made dependent on the ownership of the land, would create a situation where a
permanent fixture changes its nature or character as the ownership of the land changes
hands. In the case at bar, as personal properties could only be the subject of a chattel
mortgage (Section 1, Act 3952) and as obviously the structure in question is not one, the
execution of the chattel mortgage covering said building is clearly invalid and a nullity.
While it is true that said document was correspondingly registered in the Chattel
Mortgage Register of Rizal, this act produced no effect whatsoever for where the interest
conveyed is in the nature of a real property, the registration of the document in the
registry of chattels is merely a futile act. Thus, the registration of the chattel mortgage of
a building of strong materials produce no effect as far as the building is concerned
(Leung Yee vs. Strong Machinery Co., 37 Phil., 644).

A mortgage creditor who purchases real properties at an extrajudicial foreclosure sale

thereof by virtue of a chattel mortgage constituted in his favor, which mortgage has
been declared null and void with respect to said real properties, acquires no right
thereto by virtue of said sale (De la Riva vs. Ah Keo, 60 Phil., 899).

02. Lopez vs. Oroso Feb. 28, 1958

It is argued that in view of the employment of the phrase real estate, or immovable
property, and inasmuch as said provision does not contain any specification delimiting
the lien to the building, said article must be construed as to embrace both the land and
the building or structure adhering thereto. We cannot subscribe to this view, for while it is
true that 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 properties1 could mean only one thing — that
a building is by itself an immovable property, a doctrine already pronounced by this
Court in the case of Leung Yee vs. Strong Machinery Co., 37 Phil., 644. Moreover, and 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.

03. Tumalad v. Vicencio 122 SCRA 296

In the later case of Navarro vs. Pineda,21 this Court stated that — The view that parties to
a deed of chattel mortgage may agree to consider a house as personal property for the
purposes of said contract, "is good only insofar as the contracting parties are concerned.
It is based, partly, upon the principle of estoppel" (Evangelista vs. Alto Surety, No. L-11139,
23 April 1958). In a case, a mortgaged house built on a rented land was held to be a
personal property, not only because the deed of mortgage considered it as such, but
also because it did not form part of the land (Evangelists vs. Abad, [CA]; 36 O.G. 2913),
for it is now settled that an object placed on land by one who had only a temporary
right to the same, such as the lessee or usufructuary, does not become immobilized by
attachment (Valdez vs. Central Altagracia, 222 U.S. 58, cited in Davao Sawmill Co., Inc.
vs. Castillo, et al., 61 Phil. 709). Hence, if a house belonging to a person stands on a
rented land belonging to another person, it may be mortgaged as a personal property
as so stipulated in the document of mortgage. (Evangelista vs. Abad, Supra.) It should be
noted, however that the principle is predicated on statements by the owner declaring
his house to be a chattel, a conduct that may conceivably estopped him from
subsequently claiming otherwise.
 Doctrinal Notes – Immovable Properties

04. Standard Oil Company v. Jaramillo, 44Phil. 631

The duties of a register of deeds in respect to the registration of chattel mortgage are of
a purely ministerial character; and no provision of law can be cited which confers upon
him any judicial or quasi-judicial power to determine the nature of any document of
which registration is sought as a chattel mortgage. The original provisions touching this
matter are contained in section 15 of the Chattel Mortgage Law (Act No. 1508), as
amended by Act No. 2496; but these have been transferred to section 198 of the
Administrative Code, where they are now found. There is nothing in any of these
provisions conferring upon the register of deeds any authority whatever in respect to the
"qualification," as the term is used in Spanish law, of chattel mortgage. His duties in
respect to such instruments are ministerial only. The efficacy of the act of recording a
chattel mortgage consists in the fact that it operates as constructive notice of the
existence of the contract, and the legal effects of the contract must be discovered in
the instrument itself in relation with the fact of notice. Registration adds nothing to the
instrument, considered as a source of title, and affects nobody's rights except as a
specifies of notice.

It is unnecessary here to determine whether or not the property described in the

document in question is real or personal; the discussion may be confined to the point as
to whether a register of deeds has authority to deny the registration of a document
purporting to be a chattel mortgage and executed in the manner and form prescribed
by the Chattel Mortgage Law.

05. Prudential Bank v. Judge Panis, GR 50008, Aug. 31, 1988)

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 a
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 (Leung Yee
vs. Strong Machinery Co., 37 Phil. 644). In the same manner, this Court has also
established that possessory rights over said properties before title is vested on the
grantee, may be validly transferred or conveyed as in a deed of mortgage.

06. M i n d a n a o B u s . C o . v s . C i t y A s s e s s o r ( G . R N o . L - 1 7 8 7 0 S e p t e m b e r 2 9 ,
1962);
Two requisites before movables may be deemed to have immobilized; Tools and
equipments merely incidental to business not subject to real estate tax.—Movable
equipments, to be immobilized in contemplation of Article 415 of the Civil Code, must be
the essential and principal elements of an industry or works which are carried on in a
building or on a piece of land. Thus, where the business is one of transportation, which is
carried on without a repair or service shop, and its rolling equipment is repaired or
serviced in a shop belonging to another, the tools and equipments in its repair shop
which appear movable are merely incidentals and may not be considered immovables,
and, hence, not subject to assessment as real estate for purposes of the real estate tax.

07. Sibal v. Valdez, 50 Phil. 512

Under the facts of the record, notwithstanding the provisions of paragraph 2 of article
334 of the Civil Code, that growing sugar cane is considered personal property and not
real property and is subject to attachment and sale. Act No. 1508, the Chattel Mortgage
Law, provides that all personal property shall be subject to mortgage. At common law all
annual crops which are raised by yearly manurance and labor and essentially owe their
existence to cultivation may be levied on as personal property. Paragraph 2 of article
 Doctrinal Notes – Immovable Properties

334 of the Civil Code has been modified by section 450 of the Code of Civil Procedure
and by Act No. 1508 in the sense that, for the purpose of attachment and execution and
for the purposes of the Chattel Mortgage Law, "ungathered products" have the nature of
personal property.

08. Davao Sawmill Co. vs. Castillo GR No. 40411, August 7, 1935
A lessee placed machinery in a building erected on land belonging to another, with the
understanding that the machinery was not included in the improvements which would
pass to the lessor on the expiration or abandonment of the land leased. The lessee also
treated the machinery as personal property by executing chattel mortgages in f favor of
third persons. The machinery was levied upon by the sheriff as personalty pursuant to a
writ of execution obtained without any protest being registered. Held: That the
machinery must be classified as personal property.

Machinery which is movable in its nature only becomes immobilized when placed in a
plant by the owner of the property or plant, but not when so placed by a tenant, a
usufructuary, or any person having only a temporary right, unless such person acted as
the agent of the owner.

09. Manila Electric Co. vs. Central Board of assessment Appeals G.R. No. L-47943 May 31,
1982.
We hold that while 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. Oil storage tanks were held to be
taxable realty in Standard Oil Co. of New Jersey vs. Atlantic City, 15 Atl. 2nd 271. For
purposes of taxation, the term "real property" may include things which should generally
be regarded as personal property(84 C.J.S. 171, Note 8). It is a familiar phenomenon to
see things classed as real property for purposes of taxation which on general principle
might be considered personal property (Standard Oil Co. of New York vs. Jaramillo, 44
Phil. 630, 633).

10. Caltex Phils. Inc., v. Board of Assessment Appeals GR-L-50466 May 31, 1982
Gasoline station equipments and machineries are subject to the real property tax.—We
hold that the said equipment and machinery, as appurtenances to the gas station
building or shed owned by Caltex (as to which it is subject to realty tax) and which
fixtures are necessary to the operation of the gas station, for without them the gas station
would be useless, and which have been attached or affixed permanently to the gas
station site or embedded therein, are taxable improvements and machinery within the
meaning of the Assessment Law and the Real Property Tax Code.

Gasoline station equipments and machineries are permanent fixtures for purposes of
realty taxation.—Here, the question is whether the gas station equipment and machinery
permanently affixed by Caltex to its gas station and pavement (which are indubitably
taxable realty) should be subject to the realty tax. This question is different from the issue
raised in the Davao Saw Mill case. Improvements on land are commonly taxed as realty
even though for some purposes they might be considered personalty (84 C.J.S. 181-2,
Notes 40 and 41). “It is a familiar phenomenon to see things classed as real property for
 Doctrinal Notes – Immovable Properties

purposes of taxation which on general principle might be considered personal property”

(Standard Oil Co. of New York vs. Jaramillo, 44 Phil. 630, 633).

11. Board of Assessment Appeals vs. Meralco 10 SCRA 68

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 can not 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.

12. Serg’s Products, Inc., et al vs. PCI Leasing AND Finance Inc., 338 SCRA 499
After agreeing to a contract stipulating that a real or immovable property be considered
as personal or movable, a party is estopped from subsequently claiming otherwise.
Hence, such property is a proper subject of a writ of replevin obtained by the other
contracting party.

The machines although each of them was movable or personal property on its own, all of
them have become immobilized by destination because they are essential and principal
elements of petitioners chocolate-making industry.—In the present case, the machines
that were the subjects of the Writ of Seizure were placed by petitioners in the factory built
on their own land. Indisputably, they were essential and principal elements of their
chocolate-making industry. Hence, although each of them was movable or personal
property on its own, all of them have become immobilized by destination because they
are essential and principal elements in the industry. In that sense, petitioners are correct
in arguing that the said machines are real, not personal, property pursuant to Article 415
(5) of the Civil Code.

The Court has held that contracting parties may validly stipulate that a real property be
considered as personal. After agreeing to such stipulation, they are consequently
estopped from claiming otherwise. Under the principle of estoppel, a party to a contract
is ordinarily precluded from denying the truth of any material fact found therein.

In the present case, the Lease Agreement clearly provides that the machines in question
are to be considered as personal property. x x x Clearly then, petitioners are estopped
from denying the characterization of the subject machines as personal property. Under
the circumstances, they are proper subjects of the Writ of Seizure.

That the machines should be deemed personal property pursuant to the Lease
Agreement is good only insofar as the contracting parties are concerned.—It should be
stressed, however, that our holding—that the machines should be deemed personal
property pursuant to the Lease Agreement—is good only insofar as the contracting
parties are concerned. Hence, while the parties are bound by the Agreement, third
 Doctrinal Notes – Immovable Properties

persons acting in good faith are not affected by its stipulation characterizing the subject
machinery as personal. In any event, there is no showing that any specific third party
would be adversely affected.

13. Tsai vs. CA, GR No. 120098 October 2, 2001

The nature of the disputed machineries, i.e., that they were heavy, bolted or cemented
on the real property mortgaged, does not make them ipso facto immovable under
Article 415 (3) and (5) of the New Civil Code, as the parties’ intent has to be looked
into.—Petitioners contend that the nature of the disputed machineries, i.e., that they
were heavy, bolted or cemented on the real property mortgaged by EVERTEX to PBCom,
make them ipso facto immovable under Article 415 (3) and (5) of the New Civil Code.
This assertion, however, does not settle the issue. Mere nuts and bolts do not foreclose the
controversy. We have to look at the parties’ intent. While it is true that the controverted
properties appear to be immobile, a perusal of the contract of Real and Chattel
Mortgage executed by the parties herein gives us a contrary indication. In the case at
bar, both the trial and the appellate courts reached the same finding that the true
intention of PBCom and the owner, EVERTEX, is to treat machinery and equipment as
chattels.

Even if the properties are immovable by nature, nothing detracts the parties from
treating them as chattels to secure an obligation under the principle of estoppel.—Too,
assuming arguendo that the properties in question are immovable by nature, nothing
detracts the parties from treating it as chattels to secure an obligation under the
principle of estoppel. As far back as Navarro v. Pineda, 9 SCRA 631 (1963), an immovable
may be considered a personal property if there is a stipulation as when it is used as
security in the payment of an obligation where a chattel mortgage is executed over it,
as in the case at bar.
Where the facts, taken together, evince the conclusion that the parties’ intention is to
treat the units of machinery as chattels, a fortiori, the after-acquired properties, which
are of the same description as the units referred to earlier, must also be treated as
chattels.—In the instant case, the parties herein: (1) executed a contract styled as “Real
Estate Mortgage and Chattel Mortgage,” instead of just “Real Estate Mortgage” if
indeed their intention is to treat all properties included therein as immovable, and (2)
attached to the said contract a separate “LIST OF MACHINERIES & EQUIPMENT.” These
facts, taken together, evince the conclusion that the parties’ intention is to treat these
units of machinery as chattels. A fortiori, the contested after-acquired properties, which
are of the same description as the units enumerated under the title “LIST OF MACHINERIES
& EQUIPMENT,” must also be treated as chattels.

A chattel mortgage shall be deemed to cover only the property described therein and
not like or substituted property thereafter acquired by the mortgagor and placed in the
same depository as the property originally mortgaged, anything in the mortgage to the
contrary notwithstanding.—Accordingly, we find no reversible error in the respondent
appellate court’s ruling that inasmuch as the subject mortgages were intended by the
parties to involve chattels, insofar as equipment and machinery were concerned, the
Chattel Mortgage Law applies, which provides in Section 7 thereof that: “a chattel
mortgage shall be deemed to cover only the property described therein and not like or
substituted property thereafter acquired by the mortgagor and placed in the same
depository as the property originally mortgaged, anything in the mortgage to the
contrary notwithstanding.” And, since the disputed machineries were acquired in 1981
and could not have been involved in the 1975 or 1979 chattel mortgages, it was
 Doctrinal Notes – Immovable Properties

consequently an error on the part of the Sheriff to include subject machineries with the
properties enumerated in said chattel mortgages.

14. Manila Electric Co., v. The City Assessor & Treasurer of Lucena GR No. 166102 (August 4,
2015)
Article 415, paragraph (1) of the Civil Code declares as immovables or real properties
"[l]and, buildings, roads and constructions of all kinds adhered to the soil." The land,
buildings, and roads are immovables by nature "which cannot be moved from place to
place," whereas the constructions adhered to the soil are immovables by incorporation
"which are essentially movables, but are attached to an immovable in such manner as to
be an integral part thereof."57 Article 415, paragraph (3) of the Civil Code, referring to
"[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," are
likewise immovables by incorporation. In contrast, the Local Government Code considers
as real property machinery which "may or may not be attached, permanently or
temporarily to the real property," and even those which are "mobile."

Article 415, paragraph (5) of the Civil Code considers as immovables or real properties
"[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." The Civil
Code, however, does not define "machinery."

The properties under Article 415, paragraph (5) of the Civil Code are immovables by
destination, or "those which are essentially movables, but by the purpose for which they
have been placed in an immovable, partake of the nature of the latter because of the
added utility derived therefrom."58 These properties, including machinery, become
immobilized if the following requisites concur: (a) they are placed in the tenement by the
owner of such tenement; (b) they are destined for use in the industry or work in the
tenement; and (c) they tend to directly meet the needs of said industry or works.59 The
first two requisites are not found anywhere in the Local Government Code.

Furthermore, in Caltex (Philippines), Inc. v. Central Board of Assessment Appeals,62 the

Court acknowledged that "[i]t is a familiar phenomenon to see things classed as real
property for purposes of taxation which on general principle might be considered
personal property[.]" Therefore, for determining whether machinery is real property
subject to real property tax, the definition and requirements under the Local
Government Code are controlling.

15. Manila International Airport Authority v. CA (2006)

Under the civil code, property may either be under public dominion or private ownership.
Those under public dominion are owned by the State and are utilized for public use,
public service and for the development of national wealth. The ports included in the
public dominion pertain either to seaports or airports. When properties under public
dominion cease to be for public use and service, they form part of the patrimonial
property of the State.
 Doctrinal Notes – Immovable Properties

The court held that the land and buildings of MIAA are part of the public dominion. Since
the airport is devoted for public use, for the domestic and international travel and
transportation. Even if MIAA charge fees, this is for support of its operation and for
regulation and does not change the character of the land and buildings of MIAA as part
of the public dominion. As part of the public dominion the land and buildings of MIAA
are outside the commerce of man. To subject them to levy and public auction is
contrary to public policy. Unless the President issues a proclamation withdrawing the
airport land and buildings from public use, these properties remain to be of public
dominion and are inalienable. As long as the land and buildings are for public use the
ownership is with the Republic of the Philippines.

16. Hi-Lon Manufacturing, Inc. v. COA GR No.210669 August 1, 2017