Cases:

US vs Tambunting 41 Phil 364

Berkenkotter vs Cu Unjieng 61 Phil 663
Philippine Refining Co. vs Jarque 61 Phil 229
Mindanao Bus Co. vs. City Assessor 6 SCRA 197
Davao Sawmill vs. Castillo 61 SCRA 709
Prudential Bank vs Panis 153 SCRA 390
Caltex vs Central Board of Assessment Appeals114 SCRA 273
Benguet Corp. vs CBAA 218 SCRA 271
Tumalad vs Vicencio et al 41 SCRA 143
Serg's Products vs PCI Leasing 338 SCRA 499

Case Digests:
US vs Tambunting 41 Phil 364
Facts:
Manuel Tambunting and his wife were occupants of the upper floor of a house that had
previously been installed by the Manila Gas Corporation with apparatus for the delivery of gas.
It was found out that gas was being used, without the knowledge and consent of the gas
company, for cooking in the quarters occupied by the defendants.
Issue:
whether gas can be the subject to larceny.
(Larceny: The unauthorized taking and removal of the Personal Property of another by an
individual who intends to permanently deprive the owner of it.)
Held: Yes.
There is nothing in the nature of gas used for illuminating purposes which renders it incapable of
being feloniously taken and carried away. It is a valuable article of merchandise, bought and
sold like other personal property, susceptible of being severed from a mass or larger quantity
and of being transported from place to place. Likewise water which is confined in pipes and
electricity which is conveyed by wires are subjects of larceny. (Quoted from "Larceny," at page
34, Vol. 17, of Ruling Case Law)
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Berkenkotter vs Cu Unjieng 61 Phil 663
Berkenkotter - plaintiff-appellant
CU UNJIENG E HIJOS - defendants-appellees.
Facts:
The Mabalacat Sugar Co., Inc., owner of the sugar central, obtained from the defendants, Cu
Unjieng e Hijos, a loan secured two parcels and land "with all its buildings, improvements, etc.
and whatever forms part or is necessary complement of said sugar-cane mill ... now existing or
that may in the future exist is said lots."

Shortly after said mortgage had been constituted, the Mabalacat Sugar Co., Inc., bought
additional machinery and equipment. Plaintiff, B.H. Berkenkotter, was asked by the company
president, B.A. Green, to advance the necessary amount for the purchase of said machinery
and equipment. Plaintiff was promised to get reimbursement when an additional loan from the
mortgagees is obtained. Green failed to obtain said loan.
Appellant's Contention:
Installation of the machinery and equipment claimed by him in the sugar central was not
permanent in character ... in case Green should fail to obtain an additional loan said machinery
and equipment would become security for the company's debt to him.
Issue:
Whether or not the additional machinery and equipment is considered an improvement subject
to the mortgage executed in favor of Mabalacat Sugar Co., Inc. by Cu Unjieng e Hijos.
Held:
Yes.
The installation of the machinery and equipment in question in the central converted them into
real property by reason of their purpose. 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 necessarily be permanent.
Case Cited: Bischoff vs. Pomar and Compania General de Tabacos (cited with approval in the
case of Cea vs. Villanueva)
(1) in a mortgage of real estate, the improvements on the same are included; therefore, all
objects permanently attached to a mortgaged building or land, although they may have been
placed there after the mortgage was constituted, are also included.
(2) when it was stated in the mortgage that the improvements, buildings, and machinery that
existed thereon were also comprehended, it is indispensable that the exclusion thereof be
stipulated between the contracting parties.
***********************************
Philippine Refining Co. vs Jarque 61 Phil 229
Facts:
The Philippine Refining Co., Inc., and Francisco Jarque executed three mortgages on the motor
vessels Pandan and Zaragoza. A fourth mortgage was executed by Francisco Jarque and
Ramon Aboitiz on the motorship Zaragoza.
Thereafter, a petition was filed with the CFI of Cebu praying that Francisco Jarque be declared
an insolvent debtor, said petition was granted and an assignment of all the properties of the
insolvent was executed in favor of Jose Corominas.
Neither of the first two mortgages had appended an affidavit of good faith. The third mortgage
contained such an affidavit, but this mortgage was not registered until within thirty days prior to
the commencement of insolvency proceedings against Jarque while the fourth mortgage was

entered in the chattel mortgage registry within the thirty-day period before the institution of
insolvency proceedings.
Judge Jose M. Hontiveros declined to order the foreclosure of the mortgages and sustained the
special defenses of fatal defectiveness of the mortgages.
Issue:
Whether or not the mortgages of the vessels are governed by the Chattel Mortgage Law.
(Chattel: Moveable items of property which are neither land nor permanently attached to land or
a building, either directly or vicariously through attachment to real property.)
Held:
Yes. Vessels are considered personal property under the civil law. Since the term "personal
property" includes vessels, they are subject to mortgage agreeably to the provisions of the
Chattel Mortgage Law.
A mortgage on a vessel is in the nature a chattel mortgage. The only difference between a
chattel mortgage of a vessel and a chattel mortgage of other personalty is that it is not now
necessary for a chattel mortgage of a vessel to be noted n the registry of the register of deeds,
but it is essential that a record of documents affecting the title to a vessel be entered in the
record of the Collector of Customs at the port of entry.
An affidavit of good faith appended to the mortgage and recorded therewith is required (Sec. 5
of the CM Law). The absence of the affidavit vitiates a mortgage as against creditors and
subsequent encumbrancers. A chattel mortgage of a vessel lacking an affidavit of good faith, is
unenforceable against third persons.
Note:
If the mortgage is constituted over a vehicle, it must also be made with the LTO (if a private
vehicle) or LTFRB (if its a public vehicle.) If its a ship, its made with the MARINA.
********************
Mindanao Bus Co. vs. City Assessor
6 SCRA 197
MINDANAO BUS COMPANY - petitioner
CITY ASSESSOR, et al - respondents
Facts:
Petitioner is engaged in a public utility business, solely engaged in transporting
passengers and cargoes by motor trucks, over its authorized lines in Mindanao. It owns a main
office and branch offices. To be found in their offices are machinery and equipment, which were
assessed by the City Assessor as real properties.
The Court of Tax Appeals held that the petitioner Mindanao Bus Company is liable to the
payment of the realty tax on its maintenance and repair equipment.
Petitioner appealed the assessment, contending that said equipment are not realty.
On the other hand, respondents contend that said equipments, though movable, are
immobilized by destination, citing Art. 415 (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.
Issue:
Whether or not the equipment may be deemed immovable within the meaning of Art. 415 of the
NCC.
Held:
No.
Movable equipment to be immobilized in contemplation of law must first be essential and
principal elements of an industry or works without which such industry or works would be
unable to function or carry on the industrial purpose for which it was established.
The tools and equipment in question in this instant case are, by their nature, not essential and
principle municipal elements of petitioner's business of transporting passengers and cargoes by
motor trucks. They are merely incidentals acquired as movables and used only for
expediency to facilitate and/or improve its service. Even without such tools and equipment, its
business may be carried on as when if its rolling equipment is repaired or serviced in another
shop belonging to another.
Aside from the element of essentiality Art. 415 (5) also requires that the industry or works be
carried on in a building or on a piece of land. In the case at bar the equipments in question are
destined only to repair or service the transportation business, which is not carried on in a
building or permanently on a piece of land, as demanded by the law.
Hence, the equipments in question are not absolutely essential to the petitioner's transportation
business, and petitioner's business is not carried on in a building, tenement or on a specified
land, so said equipment may not be considered real estate.
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Davao Sawmill vs. Castillo 61 SCRA 709
Davao Sawmill - plaintiff-appellant
Castillo et al - defendants-appellees
Facts:
The Davao Saw Mill Co., Inc., is the holder of a lumber concession from the government. 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. Some machines
placed in the building are mounted on foundations of cement.
Part of the lease agreement between Davao Sawmill (lessee), and the lessor was a stipulation
in which after the lease all buildings and improvements would pass to the ownership of the
lessor, which would not include machineries and accessories.
Issue:
whether or not the sawmill machineries is classified as real property (immovable).
Held:
No. The machinery must be classified as personal property.

The lessee placed the machinery in the 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 of the lease agreement.
The lessee also treated the machinery as personal property in executing chattel
mortgages in favor of third persons. As consequence of the judgment rendered in favor of
the Davao Light and Power Co. against Davao Sawmill, the machineries in question were levied
upon by the sheriff as personalty (as opposed to a realty) pursuant to a writ of execution
obtained without any protest being registered.
Furthermore, machineries only becomes immobilized when placed in a plant by the owner of the
property or plant, but not when so placed by a tenant, usufructuary, or any person having
temporary right, unless such person acted as the agent of the owner. (Citing US SC decision
in Valdes vs. Central Altagracia)
*****************
Prudential Bank vs Panis 153 SCRA 390
Facts:
Spouses Magcale secured a loan with Prudential Bank. To further secure said loan, the spouses
executed a Real Estate Mortgage over the residential building, with a right to occupy the lot. The
Real Estate Mortgage also included information about the Sales Patent applied for by the
spouses for the lot to which the building stood. The spouses obtained a second loan, which was
secured by another Real Estate Mortgage over the same properties. The Sec. of Agriculture
issued a Miscellaneous Sales Patent over the lot which was then mortgaged to the bank in favor
of the Macales.
The spouses defaulted on both loans. Thus, the property was extrajudicially foreclosed, and
sold in a public auction.
(Miscellaneous Sales Patent: RA 730 is an act permitting sale without public auction of alienable
and disposable lands of the public domain for residential purpose. The application to purchase
the land is called the Miscellaneous Sales Application and the corresponding patent is called the
Miscellaneous Sales Patent.)
The RTC held that the Real Estate Mortgage was null and void.
Issue:
Whether or not a valid real estate mortgage can be constituted on the building erected on the
land belonging to another.
Held:
Yes.
The inclusion of "building" distinct and separate from the land In the enumeration of
properties under Article 415 of the NCC can only mean that the building itself is an immovable
property.
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. Furthermore, the fact
that the spouses executed the Real Estate Mortgage over the building before executing the
second Real Estate Mortgage over the land proved that the spouses intended for the building to
be an immovable separate and distinct from the land on which it is built.
****************
Caltex vs Central Board of Assessment Appeals
114 SCRA 273
Facts:
This case is about the realty tax on machinery and equipment installed by Caltex (Philippines)
Inc. in its gas stations located on leased land.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. But The city board of tax appeals ruled that they are personalty.
Issue:
Whether or not the subject machinery and equipment installed by Caltex in its gas stations
should be considered realty.
Held:
Yes.
Improvements on land are commonly taxed as realty. The equipment and machinery as
appurtenances to the gas station building or shed owned by Caltex 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 and fixed 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.
(appurtenance: an object that is used with or for something)
********************
Benguet Corp. vs CBAA 218 SCRA 271
Facts:
In 1985, the Provincial Assessor of Zambales assessed the petitioner's tailings dam as taxable
improvements.
Petitioner contended that the the dam cannot be subjected to realty tax as a separate and
independent property because it does not constitute an "assessable improvement" on the mine
because it is an integral part of the mine.
To supporty its contention, petitioner cited the following cases:
(1) Municipality of Cotabato v. Santos
dikes and gates constructed in connection with a fishpond operation as integral parts of the
fishpond.
(2) Bislig Bay Lumber Co. v. Provincial
Government of Surigao the realty tax was not imposed on a road constructed by the timber
concessionaire because the government had the right to use the road to promote its varied

activities.
(3) Kendrick v. Twin Lakes Reservoir Co. (American Case)
A reservoir dam went with and formed part of the reservoir
(4) Ontario Silver Mining Co. v. Hixon (Canada)
Involved drain tunnels constructed when mining operations were expanded... it was held that
"whatever value they have is connected with and in fact is an integral part of the mine itself."
On the other hand, Solicitor General's argues that the dam is an assessable improvement
because it enhances the value and utility of the mine.
Issue: Whether or not the tailings dam in question is an "improvement" upon the land within the
meaning of the Real Property Tax Code.
Held:
Yes.
The court ruled 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. The
immovable nature of the dam defines its character as real property under Article 415 of the Civil
Code and thus makes it taxable under Section 38 of the Real Property Tax Code.
**************
Tumalad vs Vicencio et al 41 SCRA 143
Tumalad - plaintiffs-appellees
Vicencio et al - defendants-appellants.
Facts:
Vicencio and Simeon executed a chattel mortgage in favor of plaintiffs Tumalad over
their house, which was being rented by Madrigal and company. This was executed to
guarantee a loan, payable in one year with an interest of 12% pa.
When defendants-appellants defaulted in paying, the mortgage was extrajudicially foreclosed.
The house was sold at a public auction and the plaintiffs were the highest bidder. Thereafter,
the plaintiffs filed an action for ejectment against the defendants, praying that the latter vacate
the house as they were the proper owners.
Defendants-appellants, questioned the legality of the chattel mortgage. They maintained the
nullity of the chattel mortgage based on two grounds:
(a) that, their signatures on the chattel mortgage were obtained through fraud, deceit, or
trickery; and
(b) that the subject matter of the mortgage is a house of strong materials, and, being an
immovable, it can only be the subject of a real estate mortgage and not a chattel mortgage.
Issue: Whether or not the property in question can be the subject matter of a chattel mortgage.
Held:
Yes.
Certain deviations have been allowed from the general doctrine that buildings are
immovable property such as when through stipulation, parties may agree to treat as personal
property those by their nature would be real property. This is partly based on the principle of

estoppel wherein the principle is predicated on statements by the owner declaring his house as
chattel, a conduct that may conceivably estop him from subsequently claiming otherwise.
In the case at bar, though there be no specific statement referring to the subject house as
personal property, yet by ceding, selling or transferring a property through chattel mortgage
could only have meant that defendant conveys or intends to treat the house as chattel, so
that they should not now be allowed to make an inconsistent stand by claiming otherwise.
Moreover, the subject house stood on a rented lot to which defendats-appellants merely had a
temporary right as lessee, and although this can not in itself alone determine the status of the
property, it does so when combined with other factors to sustain the interpretation that the
parties, particularly the mortgagors, intended to treat the house as personalty.
Furthermore, unlike the cases of Lopez vs. Orosa and Leung Yee vs. F. L. Strong Machinery,
wherein third persons assailed the validity of the chattel mortgage, it is the defendantsappellants themselves, as debtors-mortgagors, who are attacking the validity of the chattel
mortgage in this case. The doctrine of estoppel therefore applies to the herein defendantsappellants, having treated the subject house as personalty.
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Serg's Products vs PCI Leasing 338 SCRA 499
Facts:
PCI filed a case for collection of a sum of money as well as a writ of replevin for the
seizure of machinery, subject of a chattel mortgage executed by petitioner in favor of PCI.
Machinery of petitioner were seized and petitioner filed a motion for special protective
order. It asserts that the machinery were real property and could not be subject of a chattel
mortgage.
Issue: Whether or not the machinery purchased and imported by SERGS became real property
by virtue of immobilization.
Held:
The machinery in question have become immobilized by destination because they are
essential and principal elements in the industry, and thus have become immovable in nature.
Nonetheless, they are still proper subjects for a chattel mortgage. Contracting parties may
validly stipulate that a real property be considered as personal. After agreement, they are
consequently estopped from claiming otherwise.
Note:
*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.
*Writ of Replevin: an action or a writ issued to recover an item of personal property wrongfully
taken; a legal remedy in which a court requires a defendant to return specific goods to the
plaintiff at the beginning of the action.

Summary:
US vs Tambunting
Under Art. 416 (3) of the NCC, forces of nature which are brought under the control of science
such as gas, electricity, water, etc. are considered to be (personal) property. Therefore, these
can be the subjest of larceny (or theft).
Berkenkotter vs Cu Unjieng
Machinery and equipment deemed as essential and principal elements of an industry or work is
classified as immovable under Art. 415 (5) of the NCC.
Philippine Refining Co. vs Jarque
Vessels (as well as land vehicles) are considered personal property under the civil law. A
mortgage on a vessel is in the nature a chattel mortgage.
Mindanao Bus Co. vs. City Assessor
For movable equipment to be immobilized in contemplation of law, (1) it must be absolutely
essential to the business (industry or work); amd (2) it must be in the place where said business
id carried on.
Davao Sawmill vs. Castillo
Machineries only becomes immobilized when placed in a building by the owner of the property
or building, but not when so placed by a tenant, usufructuary, or any person having
temporary right over the property, unless such person acted as the agent of the owner.
Prudential Bank vs Panis
A valid 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 enumeration
of properties under Article 415 (1) of the NCC can only mean that the building itself is an
immovable property.
Caltex vs Central Board of Assessment Appeals
Improvements on land are commonly taxed as realty moreso when the fixtures are necessary
to the operation of the industry or work and have been attached and fixed (or embedded)
permanently to the site where the business is carried on.
Art. 415 (3) and (5) of the NCC applies.
Benguet Corp. vs CBAA
an "improvement" on a property is permanent in character and enhances both the value and
utility of said property. Its immovable nature efines its character as real property.
Tumalad vs Vicencio
Certain deviations have been allowed from the general doctrine that buildings are
immovable property such as when through stipulation, parties may agree to treat as personal
property those by their nature would be real property.
Principle of estoppel: by declaring his house as chattel, the owner is etopped from
subsequently claiming otherwise.
Serg's Products vs PCI Leasing
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.