B.H. Berkenkotter v. Cu Unjieng 61 Phil.

663

Facts:

Mabalacat Sugar Co., Inc., owner of the sugar central in Mabalacat,

Pampanga, obtained from 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., bought additional machinery and equipment to
increase the capacity

B.A. Green, its president, proposed to 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 Cu Unjieng e Hijos. B.A. Green applied to Cu Unjieng e Hijos for an
additional loan of P75,000 offering as security the additional machinery and
equipment acquired.

BH Berkenkotter claims the machinery and equipment was not

permanent in character, and that it would become security in case B.A. Green
fails to obtain an additional loan from Cu Unjieng e Hijos. That B.A. Green
bound himself not to mortgage nor encumber them to anybody.

Issue: Are the additional machines also included in the first mortgage?

Held:

Yes. The mortgage of a parcel of land generally includes all future

improvements that may be found on said parcel. These improvements include
real properties, like the additional machines and sugar mill purchased. Said
additional machinery are real properties because they are essential and
principal elements of the sugar central. Without them, the sugar central would
be unable to carry out its industrial purpose.

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. 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.

Moreover, that BA Green bound himself to BH Berkenkotter to hold them

as security for the payment of the latter's credit, and to refrain from mortgaging
or otherwise encumbering them does not alter the permanent character of the
said machinery and equipment with the central. The sale of the machinery and
equipment does not vest BH Berkenkotter with ownership of said machinery
and equipment but simply with the right of redemption.