TUMALAD V.

VICENCIO
41 SCRA 143
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 a 12% per annum interest. The mortgage was
extrajudicially foreclosed upon failure to pay the loan. The house was sold at a public auction
and the plaintiffs were the highest bidder. A corresponding certificate of sale was issued.
Thereafter, the plaintiffs filed an action for ejectment against the defendants, praying that the
latter vacate the house as they were the proper owners.
ISSUE: WHETHER OR NOT THE SUBJECT MATTER OF THE MORTGAGE, A HOUSE OF
STRONG MATERIALS, BE THE OBKECT OF A CHATTEL MORTGAGE?
HELD: 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 stop 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 the house as chattel, or at least, intended to
treat the same as
such, so that they should not now be allowed to make an inconsistent stand by claiming
otherwise.
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.
ISSUES: 1. WHETHER OR NOT THE DEEDS OF REAL ESTATE MORTGAGE ARE VALID;
AND
2. WHETHER OR NOT THE SUPERVENING ISSUANCE IN FAVOR OF PRIVATE
RESPONDENTS OF MISCELLANEOUS SALES PATENT NO. 4776 ON APRIL 24, 1972 UNDER
ACT NO. 730 AND THE COVERING ORIGINAL CERTIFICATE OF TITLE NO. P-2554 ON MAY
15,1972 HAVE THE EFFECT OF INVALIDATING THE DEEDS OF REAL ESTATE
MORTGAGE.
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.
SERGS PRODUCTS AND GOQUIOLAY V. PCI LEASING AND FINANCE
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 machineries, subject of a chattel mortgage executed by petitioner in favor
of PCI.
Machineries of petitioner were seized and petitioner filed a motion for special protective
order. It asserts that the machineries were real property and could not be subject of a chattel
mortgage.
The Issue
A. Whether or not the machineries purchased and imported by SERGS became real property
by virtue of immobilization.
HELD:
The machineries 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.
agreement, they are consequently estopped from claiming otherwise.

After

TSAI V. COURT OF APPEALS

336 SCRA 324
FACTS: EVERTEX secured a loan from PBC, guaranteed by a real estate and chattel mortgage
over a parcel of land where the factory stands, and the chattels located therein, as included in
a schedule attached to the mortgage contract. Another loan was obtained secured by a
chattel mortgage over properties with similar descriptions listed in the first schedule. During
the date of execution of the second mortgage, EVERTEX purchased machineries and
equipment.

Due to business reverses, EVERTEX filed for insolvency proceedings. It failed to pay its
obligation and thus, PBC initiated extrajudicial foreclosure of the mortgages. PBC was the
highest bidder in the public auctions, making it the owner of the properties. It then leased
the factory premises
to Tsai. Afterwards, EVERTEX sought the annulment of the sale and conveyance of the
properties to PBC as it was allegedly a violation of the INSOLVENCY LAW.
The RTC held that the lease and sale were irregular as it involved properties not included
in the schedule of the mortgage contract.
HELD:
While it is true that the controverted properties appear to be immobile, a perusal of the
contract of REM and CM executed by the parties gives a contrary indication. In the case at
bar, both the trial and appellate courts show that the intention was to treat the machineries
as movables or
personal property.
Assuming that the properties were considered immovables, nothing detracts the parties
from treating it as chattels to secure an obligation under the principle of estoppel.
Sec. of DENR vs. yap g.r. no. 167707
Facts: Respondents-claimants contended that there is no need for a proclamation reclassifying
Boracay into agricultural land. Being classified as neither mineral nor timber land, the island is
deemed agricultural pursuant to the Philippine Bill of 1902 and Act No. 926, known as the first
Public Land Act.[32] Thus, their possession in the concept of owner for the required period
entitled them to judicial confirmation of imperfect title.
Opposing the petition, the OSG argued that petitioners-claimants do not have a vested right over
their occupied portions in the island. Boracay is an unclassified public forest land pursuant to
Section 3(a) of PD No. 705. Being public forest, the claimed portions of the island are
inalienable and cannot be the subject of judicial confirmation of imperfect title. It is only the
executive department, not the courts, which has authority to reclassify lands of the public
domain into alienable and disposable lands. There is a need for a positive government act in
order to release the lots for disposition.
Issue: Is PGMA's presidential proclaimation no. 1064 classifying boracay island into 400
hectares of reserved and forest land and 628 hectares of agricultural land (alienable and
disposable) valid and constitutional?
Ruling: In issuing Proclamation No. 1064, President Gloria Macapagal-Arroyo merely exercised
the authority granted to her to classify lands of the public domain, presumably subject to
existing vested rights. Classification of public lands is the exclusive prerogative of the Executive
Department, through the Office of the President. Proclamation No. 1064 classifies Boracay into
400 hectares of reserved forest land and 628.96 hectares of agricultural land. The Proclamation
likewise provides for a 15-meter buffer zone on each side of the center line of roads and trails,
which are reserved for right of way and which shall form part of the area reserved for forest land
protection purposes.
Contrary to private claimants argument, there was nothing invalid or irregular, much less
unconstitutional, about the classification of Boracay Island made by the President through
Proclamation No. 1064. It was within her authority to make such classification, subject to
existing vested rights.