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Booram and Mahoney for appellant. Williams, Ferrier and SyCip for appellees. CARSON, J.: The "Compañia Agricola Filipina" bought a considerable quantity of rice‐ cleaning machinery company from the defendant machinery company, and executed a chattel mortgage thereon to secure payment of the purchase price. It included in the mortgage deed the building of strong materials in which the machinery was installed, without any reference to the land on which it stood. The indebtedness secured by this instrument not having been paid when it fell due, the mortgaged property was sold by the sheriff, in pursuance of the terms of the mortgage instrument, and was bought in by the machinery company. The mortgage was registered in the chattel mortgage registry, and the sale of the property to the machinery company in satisfaction of the mortgage was annotated in the same registry on December 29, 1913. A few weeks thereafter, on or about the 14th of January, 1914, the "Compañia Agricola Filipina" executed a deed of sale of the land upon which the building stood to the machinery company, but this deed of sale, although executed in a public document, was not registered. This deed makes no reference to the building erected on the land and would appear to have been executed for the purpose of curing any defects which might be found to exist in the machinery company's title to the building under the sheriff's certificate of sale. The machinery company went into possession of the building at or about the time when this sale took place, that is to say, the month of December, 1913, and it has continued in possession ever since. At or about the time when the chattel mortgage was executed in favor of the machinery company, the mortgagor, the "Compañia Agricola Filipina" executed another mortgage to the plaintiff upon the building, separate and apart from the land on which it stood, to secure payment of the balance of its indebtedness to the plaintiff under a contract for the construction of the building. Upon the failure of the mortgagor to pay the amount of the indebtedness secured by the mortgage, the plaintiff secured
judgment for that amount, levied execution upon the building, bought it in at the sheriff's sale on or about the 18th of December, 1914, and had the sheriff's certificate of the sale duly registered in the land registry of the Province of Cavite. At the time when the execution was levied upon the building, the defendant machinery company, which was in possession, filed with the sheriff a sworn statement setting up its claim of title and demanding the release of the property from the levy. Thereafter, upon demand of the sheriff, the plaintiff executed an indemnity bond in favor of the sheriff in the sum of P12,000, in reliance upon which the sheriff sold the property at public auction to the plaintiff, who was the highest bidder at the sheriff's sale. This action was instituted by the plaintiff to recover possession of the building from the machinery company. The trial judge, relying upon the terms of article 1473 of the Civil Code, gave judgment in favor of the machinery company, on the ground that the company had its title to the building registered prior to the date of registry of the plaintiff's certificate. Article 1473 of the Civil Code is as follows: If the same thing should have been sold to different vendees, the ownership shall be transfer to the person who may have the first taken possession thereof in good faith, if it should be personal property. Should it be real property, it shall belong to the person acquiring it who first recorded it in the registry. Should there be no entry, the property shall belong to the person who first took possession of it in good faith, and, in the absence thereof, to the person who presents the oldest title, provided there is good faith. The registry her referred to is of course the registry of real property, and it must be apparent that the annotation or inscription of a deed of sale of real property in a chattel mortgage registry cannot be given the legal effect of an inscription in the registry of real property. By its express terms, the Chattel Mortgage Law contemplates and makes provision for mortgages of personal property; and the sole purpose and object of the chattel mortgage registry is to provide for the registry of "Chattel mortgages," that is to say, mortgages of personal property executed in the manner and form
prescribed in the statute. The building of strong materials in which the rice‐cleaning machinery was installed by the "Compañia Agricola Filipina" 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 its character as real property. It follows that neither the original registry in the chattel mortgage of the building and the machinery installed therein, not the annotation in that registry of the sale of the mortgaged property, had any effect whatever so far as the building was concerned. We conclude that the ruling in favor of the machinery company cannot be sustained on the ground assigned by the trial judge. We are of opinion, however, that the judgment must be sustained on the ground that the agreed statement of facts in the court below discloses that neither the purchase of the building by the plaintiff nor his inscription of the sheriff's certificate of sale in his favor was made in good faith, and that the machinery company must be held to be the owner of the property under the third paragraph of the above cited article of the code, it appearing that the company first took possession of the property; and further, that the building and the land were sold to the machinery company long prior to the date of the sheriff's sale to the plaintiff. It has been suggested that since the provisions of article 1473 of the Civil Code require "good faith," in express terms, in relation to "possession" and "title," but contain no express requirement as to "good faith" in relation to the "inscription" of the property on the registry, it must be presumed that good faith is not an essential requisite of registration in order that it may have the effect contemplated in this article. We cannot agree with this contention. It could not have been the intention of the legislator to base the preferential right secured under this article of the code upon an inscription of title in bad faith. Such an interpretation placed upon the language of this section would open wide the door to fraud and collusion. The public records cannot be converted into instruments of fraud and oppression by one who secures an inscription therein in bad faith. The force and effect given by law to an inscription in a public record presupposes the good faith of him who enters such inscription; and rights created by statute, which are predicated upon an inscription in a public registry, do not and cannot accrue under an inscription "in bad faith," to the benefit of the person who thus makes the inscription. Construing the second paragraph of this article of the code, the supreme
court of Spain held in its sentencia of the 13th of May, 1908, that: This rule is always to be understood on the basis of the good faith mentioned in the first paragraph; therefore, it having been found that the second purchasers who record their purchase had knowledge of the previous sale, the question is to be decided in accordance with the following paragraph. (Note 2, art. 1473, Civ. Code, Medina and Maranon  edition.) Although article 1473, in its second paragraph, provides that the title of conveyance of ownership of the real property that is first recorded in the registry shall have preference, this provision must always be understood on the basis of the good faith mentioned in the first paragraph; the legislator could not have wished to strike it out and to sanction bad faith, just to comply with a mere formality which, in given cases, does not obtain even in real disputes between third persons. (Note 2, art. 1473, Civ. Code, issued by the publishers of the La Revista de los Tribunales, 13th edition.) The agreed statement of facts clearly discloses that the plaintiff, when he bought the building at the sheriff's sale and inscribed his title in the land registry, was duly notified that the machinery company had bought the building from plaintiff's judgment debtor; that it had gone into possession long prior to the sheriff's sale; and that it was in possession at the time when the sheriff executed his levy. The execution of an indemnity bond by the plaintiff in favor of the sheriff, after the machinery company had filed its sworn claim of ownership, leaves no room for doubt in this regard. Having bought in the building at the sheriff's sale with full knowledge that at the time of the levy and sale the building had already been sold to the machinery company by the judgment debtor, the plaintiff cannot be said to have been a purchaser in good faith; and of course, the subsequent inscription of the sheriff's certificate of title must be held to have been tainted with the same defect. Perhaps we should make it clear that in holding that the inscription of the sheriff's certificate of sale to the plaintiff was not made in good faith, we should not be understood as questioning, in any way, the good faith and genuineness of the plaintiff's claim against the "Compañia Agricola Filipina." The truth is that both the plaintiff and the defendant company appear to have had just and righteous claims against their common debtor. No criticism can properly be made of the exercise of the utmost diligence by the plaintiff in asserting and exercising his right to recover the amount
of his claim from the estate of the common debtor. We are strongly inclined to believe that in procuring the levy of execution upon the factory building and in buying it at the sheriff's sale, he considered that he was doing no more than he had a right to do under all the circumstances, and it is highly possible and even probable that he thought at that time that he would be able to maintain his position in a contest with the machinery company. There was no collusion on his part with the common debtor, and no thought of the perpetration of a fraud upon the rights of another, in the ordinary sense of the word. He may have hoped, and doubtless he did hope, that the title of the machinery company would not stand the test of an action in a court of law; and if later developments had confirmed his unfounded hopes, no one could question the legality of the propriety of the course he adopted. But it appearing that he had full knowledge of the machinery company's claim of ownership when he executed the indemnity bond and bought in the property at the sheriff's sale, and it appearing further that the machinery company's claim of ownership was well founded, he cannot be said to have been an innocent purchaser for value. He took the risk and must stand by the consequences; and it is in this sense that we find that he was not a purchaser in good faith. One who purchases real estate with knowledge of a defect or lack of title in his vendor cannot claim that he has acquired title thereto in good faith as against the true owner of the land or of an interest therein; and the same rule must be applied to one who has knowledge of facts which should have put him upon such inquiry and investigation as might be necessary to acquaint him with the defects in the title of his vendor. A purchaser cannot close his eyes to facts which should put a reasonable man upon his guard, and then claim that he acted in good faith under the belief that there was no defect in the title of the vendor. His mere refusal to believe that such defect exists, or his willful closing of his eyes to the possibility of the existence of a defect in his vendor's title, will not make him an innocent purchaser for value, if afterwards develops that the title was in fact defective, and it appears that he had such notice of the defects as would have led to its discovery had he acted with that measure of precaution which may reasonably be acquired of a prudent man in a like situation. Good faith, or lack of it, is in its analysis a question of intention; but in ascertaining the intention by which one is actuated on a given occasion, we are necessarily controlled by the evidence as to the conduct
and outward acts by which alone the inward motive may, with safety, be determined. So it is that "the honesty of intention," "the honest lawful intent," which constitutes good faith implies a "freedom from knowledge and circumstances which ought to put a person on inquiry," and so it is that proof of such knowledge overcomes the presumption of good faith in which the courts always indulge in the absence of proof to the contrary. "Good faith, or the want of it, is not a visible, tangible fact that can be seen or touched, but rather a state or condition of mind which can only be judged of by actual or fancied tokens or signs." (Wilder vs. Gilman, 55 Vt., 504, 505; Cf. Cardenas Lumber Co. vs. Shadel, 52 La. Ann., 2094‐2098; Pinkerton Bros. Co. vs. Bromley, 119 Mich., 8, 10, 17.) We conclude that upon the grounds herein set forth the disposing part of the decision and judgment entered in the court below should be affirmed with costs of this instance against the appellant. So ordered. Arellano, C.J., Johnson, Araullo, Street and Malcolm, JJ., concur. Torres, Avanceña and Fisher, JJ., took no part.
G.R. No. L‐55729 March 28, 1983 ANTONIO PUNSALAN, JR., petitioner, vs. REMEDIOS VDA. DE LACSAMANA and THE HONORABLE JUDGE RODOLFO A. ORTIZ, respondents. Benjamin S. Benito & Associates for petitioner. Expedito Yummul for private respondent. MELENCIO‐HERRERA, J.: The sole issue presented by petitioner for resolution is whether or not respondent Court erred in denying the Motion to Set Case for Pre‐trial with respect to respondent Remedios Vda. de Lacsamana as the case had been dismissed on the ground of improper venue upon motion of co‐respondent Philippine National Bank (PNB). It appears that petitioner, Antonio Punsalan, Jr., was the former registered owner of a parcel of land consisting of 340 square meters situated in Bamban, Tarlac. In 1963, petitioner mortgaged said land to respondent PNB (Tarlac Branch) in the amount of P10,000.00, but for failure to pay said amount, the property was foreclosed on December 16, 1970. Respondent PNB (Tarlac Branch) was the highest bidder in said foreclosure proceedings. However, the bank secured title thereto only on December 14, 1977. In the meantime, in 1974, while the properly was still in the alleged possession of petitioner and with the alleged acquiescence of respondent PNB (Tarlac Branch), and upon securing a permit from the Municipal Mayor, petitioner constructed a warehouse on said property. Petitioner declared said warehouse for tax purposes for which he was issued Tax Declaration No. 5619. Petitioner then leased the warehouse to one Hermogenes Sibal for a period of 10 years starting January 1975. On July 26, 1978, a Deed of Sale was executed between respondent PNB (Tarlac Branch) and respondent Lacsamana over the property. This contract was amended on July 31, 1978, particularly to include in the sale, the building and improvement thereon. By virtue of said instruments,
respondent ‐ Lacsamana secured title over the property in her name (TCT No. 173744) as well as separate tax declarations for the land and building. 1 On November 22, 1979, petitioner commenced suit for "Annulment of Deed of Sale with Damages" against herein respondents PNB and Lacsamana before respondent Court of First Instance of Rizal, Branch XXXI, Quezon City, essentially impugning the validity of the sale of the building as embodied in the Amended Deed of Sale. In this connection, petitioner alleged: xxx xxx xxx 22. That defendant, Philippine National Bank, through its Branch Manager ... by virtue of the request of defendant ... executed a document dated July 31, 1978, entitled Amendment to Deed of Absolute Sale ... wherein said defendant bank as Vendor sold to defendant Lacsamana the building owned by the plaintiff under Tax Declaration No. 5619, notwithstanding the fact that said building is not owned by the bank either by virtue of the public auction sale conducted by the Sheriff and sold to the Philippine National Bank or by virtue of the Deed of Sale executed by the bank itself in its favor on September 21, 1977 ...; 23. That said defendant bank fraudulently mentioned ... that the sale in its favor should likewise have included the building, notwithstanding no legal basis for the same and despite full knowledge that the Certificate of Sale executed by the sheriff in its favor ... only limited the sale to the land, hence, by selling the building which never became the property of defendant, they have violated the principle against 'pactum commisorium'. Petitioner prayed that the Deed of Sale of the building in favor of respondent Lacsamana be declared null and void and that damages in the total sum of P230,000.00, more or less, be awarded to him. 2 In her Answer filed on March 4, 1980,‐respondent Lacsamana averred the affirmative defense of lack of cause of action in that she was a purchaser for value and invoked the principle in Civil Law that the "accessory follows the principal". 3 On March 14, 1980, respondent PNB filed a Motion to Dismiss on the ground that venue was improperly laid considering that the building was real property under article 415 (1) of the New Civil Code and therefore section 2(a) of Rule 4 should apply. 4
Opposing said Motion to Dismiss, petitioner contended that the action for annulment of deed of sale with damages is in the nature of a personal action, which seeks to recover not the title nor possession of the property but to compel payment of damages, which is not an action affecting title to real property. On April 25, 1980, respondent Court granted respondent PNB's Motion to Dismiss as follows: Acting upon the 'Motion to Dismiss' of the defendant Philippine National Bank dated March 13, 1980, considered against the plaintiff's opposition thereto dated April 1, 1980, including the reply therewith of said defendant, this Court resolves to DISMISS the plaintiff's complaint for improper venue considering that the plaintiff's complaint which seeks for the declaration as null and void, the amendment to Deed of Absolute Sale executed by the defendant Philippine National Bank in favor of the defendant Remedios T. Vda. de Lacsamana, on July 31, 1978, involves a warehouse allegedly owned and constructed by the plaintiff on the land of the defendant Philippine National Bank situated in the Municipality of Bamban, Province of Tarlac, which warehouse is an immovable property pursuant to Article 415, No. 1 of the New Civil Code; and, as such the action of the plaintiff is a real action affecting title to real property which, under Section 2, Rule 4 of the New Rules of Court, must be tried in the province where the property or any part thereof lies. 5 In his Motion for Reconsideration of the aforestated Order, petitioner reiterated the argument that the action to annul does not involve ownership or title to property but is limited to the validity of the deed of sale and emphasized that the case should proceed with or without respondent PNB as respondent Lacsamana had already filed her Answer to the Complaint and no issue on venue had been raised by the latter. On September 1, 1980,.respondent Court denied reconsideration for lack of merit. Petitioner then filed a Motion to Set Case for Pre‐trial, in so far as respondent Lacsamana was concerned, as the issues had already been joined with the filing of respondent Lacsamana's Answer. In the Order of November 10, 1980 respondent Court denied said Motion to Set Case for Pre‐trial as the case was already dismissed in the previous Orders of April 25, 1980 and September 1, 1980.
Hence, this Petition for Certiorari, to which we gave due course. We affirm respondent Court's Order denying the setting for pre‐trial. The warehouse claimed to be owned by petitioner is an immovable or real property as provided in article 415(l) of the Civil Code. 6 Buildings are always immovable under the Code. 7 A building treated separately from the land on which it stood is immovable property and the mere fact that the parties to a contract seem to have dealt with it separate and apart from the land on which it stood in no wise changed its character as immovable property. 8 While it is true that petitioner does not directly seek the recovery of title or possession of the property in question, his action for annulment of sale and his claim for damages are closely intertwined with the issue of ownership of the building which, under the law, is considered immovable property, the recovery of which is petitioner's primary objective. The prevalent doctrine is that an action for the annulment or rescission of a sale of real property does not operate to efface the fundamental and prime objective and nature of the case, which is to recover said real property. It is a real action. 9 Respondent Court, therefore, did not err in dismissing the case on the ground of improper venue (Section 2, Rule 4) 10, which was timely raised (Section 1, Rule 16) 11. Petitioner's other contention that the case should proceed in so far as respondent Lacsamana is concerned as she had already filed an Answer, which did not allege improper venue and, therefore, issues had already been joined, is likewise untenable. Respondent PNB is an indispensable party as the validity of the Amended Contract of Sale between the former and respondent Lacsamana is in issue. It would, indeed, be futile to proceed with the case against respondent Lacsamana alone. WHEREFORE, the petition is hereby denied without prejudice to the refiling of the case by petitioner Antonio Punsalan, Jr. in the proper forum. Costs against petitioner. SO ORDERED. Teehankee (Chairman), Plana, Vasquez, Relova and Gutierrez, Jr., JJ., concur.
This 6 . 720. A 2‐STOREY. THE PROPERTY hereby conveyed by way of MORTGAGE includes the right of occupancy on the lot where the above property is erected. HONORABLE DOMINGO D. L‐50008 August 31. Magcale and Teodula Baluyut‐Magcale vs. Exhibit "A" (Real Estate Mortgage) was registered under the Provisions of Act 3344 with the Registry of Deeds of Zambales on November 23. m. and more particularly described and bounded." (Exhibit "B. on November 19. g. declared and assessed in the name of FERNANDO MAGCALE under Tax Declaration No. J. Olongapo City.860. petitioner. 1978 Decision * of the then Court of First Instance of Zambales and Olongapo City in Civil Case No. plaintiffs executed in favor of defendant on the aforesaid date a deed of Real Estate Mortgage over the following described properties: l. plaintiffs secured an additional loan from defendant Prudential Bank in the sum of P20. Olongapo Townsite Subdivision) Ardoin Street. more or less. generally constructed of mixed hard wood and concrete materials. which title with annotation. as follows: AND IT IS FURTHER AGREED that in the event the Sales Patent on the lot applied for by the Mortgagors as herein stated is released or issued by the Bureau of Lands. To secure payment of this additional loan. From the aforequoted stipulation. 21109. meters.. No. Apart from the stipulations in the printed portion of the aforestated deed of mortgage. were mortgaged to it. there appears a rider typed at the bottom of the reverse side of the document under the lists of the properties mortgaged which reads. 19595 issued by the Assessor of Olongapo City with an assessed value of P1.290. as follows: A first class residential land Identffied as Lot No. it is obvious that the mortgagee (defendant Prudential Bank) was at the outset aware of the fact that the mortgagors (plaintiffs) have already filed a Miscellaneous Sales Application over the lot. more or less. and WEST: By Ardoin Street. Ardoin Street SOUTH: By No. vs. 2443‐0 entitled "Spouses Fernando A. East Bajac‐Bajac. G. Hon. 6.00. FERNANDO MAGCALE & TEODULA BALUYUT‐MAGCALE.00. 2." also Exhibit "2" for defendant). i. 2. bounded on the NORTH: By No.00. shall be released in favor of the herein Mortgage. 1971. or to annotate this encumbrance on the Title upon authority from the Secretary of Agriculture and Natural Resources. containing an area of 465 sq. Ardoin Street EAST: By 37 Canda Street. Magcale and Teodula Baluyut Magcale secured a loan in the sum of P70. ( Exhibit "A. cylindrical monuments of the Bureau of Lands as visible limits. SEMI‐CONCRETE. plaintiffs executed in favor of the said defendant another deed of Real Estate Mortgage over the same properties previously mortgaged in Exhibit "A. possessory rights over which.000. sheets.: This is a petition for review on certiorari of the November 13.000. Presiding Judge of Branch III. This building is the only improvement of the lot. All corners of the lot marked by conc. 1973. PANIS.R. The undisputed facts of this case by stipulation of the parties are as follows: . the Mortgagors hereby authorize the Register of Deeds to hold the Registration of same until this Mortgage is cancelled.00 from the defendant Prudential Bank. " also Exhibit "1" for defendant). under a roofing of cor.. plaintiffs‐spouses Fernando A. respondents. 1987 PRUDENTIAL BANK. Court of First Instance of Zambales and Olongapo City. To secure payment of this loan. On May 2. residential building with warehouse spaces containing a total floor area of 263 sq. Pardo and Prudential Bank" declaring that the deeds of real estate mortgage executed by respondent spouses in favor of petitioner bank are null and void. PARAS. 1971. declared and assessed in the name of FERNANDO MAGCALE under Tax Duration No. issued by the Assessor of Olongapo City with an assessed value of P35. (Ts‐308. Ramon Y.
WHETHER OR NOT THE SUPERVENING ISSUANCE IN FAVOR OF PRIVATE RESPONDENTS OF MISCELLANEOUS SALES PATENT NO.. 116‐144). in favor of plaintiffs. Iya. petitioner filed its Memorandum (Ibid. 1979 (Ibid.. 1978.. The auction sale aforesaid was held despite written request from plaintiffs through counsel dated March 29. in the absence of stipulation of the improvements thereon. on May 2. and upon its transcription in the Registration Book of the Province of Zambales. In a Resolution dated August 10. Respondent Court. 1979 (Ibid. 1958. 63). in a Resolution dated March 9.." (Decision.. 146‐155). P. (Ibid. 1979. while private respondents filed their Memorandum on August 1.. 114).1972 HAVE THE EFFECT OF INVALIDATING THE DEEDS OF REAL ESTATE MORTGAGE. 54‐62). On July 18. this time in Olongapo City. pp. still a building by itself may be mortgaged apart from the land on which it has been built. the records show.1973.1979. Inc. p.. WHETHER OR NOT THE DEEDS OF REAL ESTATE MORTGAGE ARE VALID. and in an Order dated January 10. petitioner filed its Reply on June 2. On April 24. buildings." (Lopez vs. 1979. On the basis of the aforesaid Patent. Consequent to the foreclosure was the sale of the properties therein mortgaged to defendant as the highest bidder in a public auction sale conducted by the defendant City Sheriff on April 12. Marcos.. 1979.. while it is true that a mortgage of land necessarily includes. this Court ruled that. this Court has also established that possessory rights over said properties before title is vested on the grantee. The answer is in the affirmative. by the Ex‐Oficio Register of Deeds of Zambales. pp. opposed by private respondents on January 5. 3 SCRA 438 ). Rollo. 644). in a Decision dated November 3. L‐10837‐38. on May 15.. p. 28. "it is obvious that the inclusion of "building" separate and distinct from the land. AND 2. et al.. Strong Machinery Co. possessory rights over which were mortgaged to defendant Prudential Bank. 5‐28). Hence. 29‐31).. In its Memorandum. this case was considered submitted for decision (Ibid. 1978 (Exhibit "E"). 1979. pp. et al. For failure of plaintiffs to pay their obligation to defendant Bank after it became due. 2443‐0. (Memorandum for Petitioner. 41‐53). vs. Jr. p. in said provision of law can only mean that a building is by itself an immovable property. which order was complied with the Resolution dated May 18.. pp. The pivotal issue in this case is whether or not a valid real estate mortgage can be constituted on the building erected on the land belonging to another. 1978 declared the deeds of Real Estate Mortgage as null and void (Ibid. 1979 (Ibid.. Orosa. pp. Rollo. 101‐112). On December 14. may be validly transferred or conveyed as in a deed of mortgage (Vda. Civil Case No. Thereafter. P‐2554 ON MAY 15.1979 (Ibid. the instant petition (Ibid. 1972 UNDER ACT NO. the deeds of Real Estate Mortgage (Exhibits "A" and "B") were extrajudicially foreclosed. This petition is impressed with merit. Feb. resolved to require the respondents to comment (Ibid.second deed of Real Estate Mortgage was likewise registered with the Registry of Deeds. Original Certificate of Title No. de Bautista vs. for the defendant City Sheriff to desist from going with the scheduled public auction sale (Exhibit "D"). in the Resolution dated June 13.. 122). 100). Associated Inc.. the Motion for Reconsideration was denied for lack of merit. and Surety Co. pp. and upon application of said defendant. 65). the petition was given due course and the parties were required to submit simultaneously their respective memoranda. In the same manner. 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. Thus. 1978.. L‐10817‐18. 4776 over the parcel of land. (Ibid. p. pp. 35). 730 AND THE COVERING ORIGINAL CERTIFICATE OF TITLE NO.1958). petitioner filed a Motion for Reconsideration (Ibid. 4776 ON APRIL 24. petitioner raised the following issues: 1. the Secretary of Agriculture issued Miscellaneous Sales Patent No. The first Division of this Court. 158). In the enumeration of properties under Article 415 of the Civil Code of the Philippines. 37 Phil. 1973. May 30. 1972. Coming back to the case at bar. p. as aforestated that the original mortgage deed on the 2‐storey semi‐concrete residential building with warehouse and on the right of occupancy on the lot where the 7 . p. P‐2554 was issued in the name of Plaintiff Fernando Magcale.
. thereby implicitly authorizing Prudential Bank to cause the annotation of said mortgage on their title. 1971. or any improvement thereon and therefore have no application to the assailed mortgage in the case at bar which was executed before such eventuality. C. also a restriction appearing on the face of private respondent's title has likewise no application in the instant case. Jurado. it is evident that the mortgage executed by private respondent on his own building which was erected on the land belonging to the government is to all intents and purposes a valid mortgage. 730. p. an event which takes effect only on the issuance of the sales patent and its subsequent registration in the Office of the Register of Deeds (Visayan Realty Inc.000. the Court. It should not preclude new contracts that may be entered into between petitioner bank and private respondents that are in accordance with the requirements of the law. as in the case at bar.00 is valid but ruling that the Deed of Real Estate Mortgage for an additional loan of P20. private respondents themselves declare that they are not denying the legitimacy of their debts and appear to be open to new negotiations under the law (Comment. without prejudice to any appropriate action the Government may take against private respondents. L‐14702. PREMISES CONSIDERED. concur. SO ORDERED. Indeed. it is evident that such mortgage executed after the issuance of the sales patent and of the Original Certificate of Title. It is therefore without question that the original mortgage was executed before the issuance of the final patent and before the government was divested of its title to the land. without requiring the bank to get the prior approval of the Ministry of Natural Resources beforehand.00 is null and void. we apply our earlier rulings because we believe that as in pari delicto may not be invoked to defeat the policy of the State neither may the doctrine of estoppel give a validating effect to a void contract. Nonetheless. 8 . Rollo. Director of Lands vs. 1972. declaring that the Deed of Real Estate Mortgage for P70. 122 and 124 of the Public Land Act. But it is a different matter. Section 2 of Republic Act No.. Likewise. 122 and 123 of Commonwealth Act 141. As to restrictions expressly mentioned on the face of respondents' OCT No. was executed on November 19. 4776 on the land was issued on April 24. Petitioner points out that private respondents. 1961. despite its reference to encumbrance or alienation before the patent is issued because it refers specifically to encumbrance or alienation on the land itself and does not mention anything regarding the improvements existing thereon. 96 Phil. May 23. vs. has held: . 2554 was issued in the name of private respondent Fernando Magcale on May 15.. in recently ruling on violations of Section 124 which refers to Sections 118. It is not within the competence of any citizen to barter away what public policy by law was to preserve (Gonzalo Puyat & Sons. 143 SCRA 54 ). validity cannot be given to it by estoppel if it is prohibited by law or is against public policy (19 Am. after physically possessing the title for five years. 120. This pronouncement covers only the previous transaction already alluded to and does not pass upon any new contract between the parties (Ibid). 1973 for an additional loan of P20. it will be noted that Sections 121. De los Amas and Alino supra). Director of Lands vs. voluntarily surrendered the same to the bank in 1977 in order that the mortgaged may be annotated.building was erected. Cruz and Gancayco. it is generally considered that as between parties to a contract. falls squarely under the prohibitions stated in Sections 121.. Pena "Law on Natural Resources". Narvasa. Teehankee. on the basis of which OCT No. Relative thereto. 122 and 124 of the Public Land Act and Section 2 of Republic Act 730. Jur. refer to land already acquired under the Public Land Act. P‐2554. Inc. and is therefore null and void. Meer. 49). 1971 and registered under the provisions of Act 3344 with the Register of Deeds of Zambales on November 23. IAC. however. Miscellaneous Sales Patent No. (Arsenal vs. JJ. 110 Phil. would be subject to whatever steps the Government may take for the reversion of the land in its favor. 1972.00 which was registered with the Registry of Deeds of Olongapo City on the same date. pp. 515. the decision of the Court of First Instance of Zambales & Olongapo City is hereby MODIFIED. 28. 95‐96). . However. Any new transaction.000. De Leon. Under the foregoing considerations. After all.. 802).000. as regards the second mortgage executed over the same properties on May 2. vs..J.
the accused seasonably appealed. yielding to this request. BENGZON. their children and a 14‐year old godson Francisco Lopez. Saludo was then wearing rubber shoes. reported to the police chief of Tiaong what he knew about Vidal Saludo's killing. Diego Martija. defendant‐appellant. Martija responded by asking a neighbor. but refrained from revealing their findings to the authority for fear of the Huks.R. (c) the testimonies of the State witnesses are evidently fabricated. Leoncio Manimtim to accompany him to search for Vidal. he proceeded to the place whence the sounds had come. the two found a newly dug grave covered with coconut leaves.: This case began with an information against Vivencio Catli charging that sometime in May 1948. inside the grave. cautiously peered through some bushes and espied appellant beating Vidal Saludo with a rice pestle. 1955. she begged his help to locate Vidal. At about 2:00 p. because he surmised that appellant and his men were Huks. in the presence of armed companions. Office of the Solicitor General for plaintiff‐appellee. 1955. Diego Martija was appointed Barrio Lieutenant of Bucal but he was not provided with firearms. in a house located in said barrio. Martija and Manimtim discovered some drops of blood. he was named chief of the civilian commando unit of the same barrio and was given a gun. he inflicted mortal injuries upon Vidal Saludo. Crisostomo.000. Verano left the place but refrained from disclosing to others what he had observed. sans subsidiary imprisonment. and following such examination. As they approached the river. met Maria Saludo who sobbingly told him that her brother Vidal had been taken by the Huks led by appellant. Insisting on his innocence. The pair followed the trail Vidal was last seen to have taken.m. heard someone groaning. Saludo joined the appellant's band which proceeded westward. Dr. C. they found bones of a human skeleton and a pair of soles of rubber shoes. and after some hesitation. The People's evidence discloses that on May 6. After trial. who was pasturing his carabao in the north part of barrio Bucal. vs. he is already dead". was living with his wife. At about 7:00 a. medico‐legal officer submitted 9 . then a member of the rural council of Bucal. then on March 22. Martija sometime in December. 1962 THE PEOPLE OF THE PHILIPPINES. out of curiosity. No. At around 11:00 o'clock of that same morning. Vidal Saludo. and to defray the costs. plaintiff‐appellee. Aggravating circumstances of treachery. VIVENCIO CATLI.00. in Tiaong. to indemnify Saludo's heirs in the sum of P6. en route. and upon being informed that the latter was upstairs. De Mesa and De Mesa for defendant‐appellant. G. raising here these material points: (a) substantial variance between the allegations and the proof. Replacing the coconut leaves. (b) delay of seven years in the prosecution of the crime. superior strength and means to weaken the defense were cited. Fausta Mercado. And that was the last time his family saw him. the court of first instance of Quezon adjudged him guilty of murder. assisted by two others still at large. the two. L‐11641 November 29. Emboldened by the possession of such weapon and encouraged by the government campaign against the dissidents. seized fear. the prosecution's evidence showed there were more. Years after or in 1951. Tiaong.m. several armed men headed by appellant Vivencio Catli inquired from Fausta Mercado the whereabouts of her husband. Quezon Province. shipped to the NBI in Manila for medico‐legal examination. 1955. and sentenced him to suffer life imprisonment with the accessories. On December 5. they brushed the leaves only to find acastorillo hat which they recognized as one Vidal Saludo was wont to wear. of the same day. of said day. Marcelo Verano. which he pointed out. the two left for their respective homes.J. The bones were gathered in an army sack. white polo shirt and fatigue pants. Catli went up and requested Vidal Saludo to accompany him to look for Benito Tenorio who had strayed from the appellant's group. because while the information indicated three persons as authors of the crime. Jesus D. then barrio lieutenant of Bucal. making inquiries from people who may have seen Saludo's group the search ended near the Capanglao river. the police chief with some PC soldiers exhumed the remains of Vidal Saludo. 1948. one of whom remarked: "That is enough Babing.
he perforce had to be dressed and leave the house once in a while. five men lured him from his house at night and after leading him some five meters away. Hilarion Gutierrez. 1955. before Jose B. 2. object of his affections. as the submitted and assorted bones as a set does not show any sign of antemortem injury. that on April 11. That the set of bones belongs to a male individual. it is hard to believe that an able‐bodied laborer such as appellant would stay confined in only one place for a prolonged and continuous period. Elena even once during the five months of his stay thereat. that following an old native custom. Tomas.an Osteological report with the conclusion that: 1. Withal. 5. that on July 1. the girl he was courting. the probable length of time that may have already elapsed after burial may be placed between five (5) and ten (10) years. That considering the moderately advanced postmortem disintegration of the bones submitted assorted and non‐assorted. 1955.00 and an appointment as a caminero. He testified that in 1946. Eusebio Orense and another person whom he failed to recognize and especially pointing to Mayor Punzalan of Tiaong as the instigator of the crime. Pedro Mangubat. because precisely he was locked out. 1948. he executed another affidavit before the same NBI Agent No. he moved to barrio Sta Clara. Tiaong. that appellant spurned the offer and instead. he lived in the house of Arcadio Exconde in barrio Quipot. Tanauan. He recounts that on April 6. a complaint for frustrated murder filed by appellant before the assistant fiscal of Quezon was investigated. and since he was purportedly rendering manual chores. Those bony remains are human in origin. That the probable age of the time of death of this individual may lie between 35 and 45 years. Appellant also averred that while his complaint was pending investigation. Avelino by name. that on December 5. Tuason. requesting him (appellant) to withdraw his complaint in exchange for P3. on September 1. But this situation does not rule out appellant's chance to slip out of the premises unnoticed by Elena. Batangas and took her to Tiaong where she subscribed to statement naming the appellant as the murderer of her husband Vidal Saludo. having ostensibly won the girl's favor. besides being inherently weak. Sto. Vidal Saludo was murdered. Although she tried hard to corroborate appellants alibi by insisting that the latter did not leave barrio Sta. her testimony does not ring true. he stayed in Sta. he executed an affidavit before Agent No. 4. That no cause of death can be assigned or given in this particular individual. Tiaong on May 6. the same officer fetched Fausta Mercado from barrio Bangcalat.812 cms. sounds unconvincing and ineffectual. 6. he and his bride‐to‐be departed for barrio Quipot. They belong to only one individual. Quezon for fear his of assailants. Mayor Punzalan sent an emissary. he recovered from his wounds at the government hospital of San Pablo City and then he moved to Unisan. Clara until July 1948 when. where they resided in peace and contentment. Elena Jaurigue herself declared that the distance between the two barrios was short and could be negotiated by bus in half an hour. deputy clerk of the CFI of Quezon and on the basis of the two affidavits. That this individual has a stature of approximately 165. the police chief of Tiaong directed the exhumation of Saludo's remains that on December 13. and that the complaint against him was trumped up at the instigation of Mayor Punzalan because of his refusal to withdraw his complaint against the mayor and the latter's henchmen. they stabbed him repeatedly and then left him for dead. Clara performing such chores as drawing water and clearing the coffee farm in the service of the woman. 43 elaborating on his first affidavit. residing in the house of Elena Jaurigue. His claim that he resided in his sister‐in‐law's (Elena Jaurigue) house at barrio Sta. 7. the key to which she always kept. there is the positive identification made of him by Marcelo Verano who peered through the bushes and saw him clubbing Vidal Saludo with a rice pestle. he executed another affidavit concerning the same incident. Batangas. Elena. and the testimony of the victim's wife 10 . sister of Gorgonia. 1951. that he never left Sta. by no means erases the possibility that he was in barrio Bucal. when the victim. naming his assailants Tomas Magwari. Appellant's defense revolves around an alibi. Tiaong that in March 1948. She said it was impossible for appellant to leave her house without her knowledge because her home was a one‐room affair where appellant kept his clothes and that this room was under lock. 43 of the National Bureau of Investigation regarding the attempt on his life. As against appellant's alibi. 1955. 1955.000. Appellant's alibi. Batangas between March and July 1948. that fifteen days after. 3. (5 feet inches) plus or minus. Sto. 1955. Tomas.
And it is the rule in this jurisdiction that a "variance between the allegations of the information and the evidence offered by the prosecution in support thereof. appellant executed an affidavit before Agent No. it is enough to state that such variance is not material. Barrera. Appellant lastly asserts that the charge against him was trumped up and the witness' testimonies fabricated. appellant stated that one Brigido Balmes aided him shortly after he was wounded. All these render appellant's alibi unavailing. does not of itself entitle the accused to an acquittal. JJ. He claims that he was stabbed on April 6. So ordered. 178179. reveals that he failed to recognize his assailants. Appellant's claim lacks merit. he named Hilarion Gutierrez. the mayor caused the instant case to be filed against him."2 More.. and there being no question as to the penalty imposed upon this appellant.pointing to appellant as the leader of the band that took her husband away. testifying as a rebuttal witness for the State. Record) of April 7. WHEREFORE. concur. he also claimed having overheard Gutierrez mutter "Ang sabi ni Mayor (PUNZALAN) ay huag ng barilin at saksakin na lamang" (Exh. pp. however. His written statement (Exh. before these witness disclosed the facts to the authorities. but in the trial. Subsequently. the judgment of conviction must be upheld. Appellant was properly identified both in the information and in the testimonial evidence of the witnesses. such persons will not be relieved of penal liability. J. 1951. Pedro Mangubat and Eustaquio Orense as his attackers. Record). particularly of Martija. 190. however. 1951 when he refused to give his firearm to persons. In fine. 1951 upon orders of Mayor Punzalan. the appealed decision is affirmed in toto with costs. and he failed to object seasonably in the trial to the testimonial allegation that there were some other persons involved in the crime. Paredes. In the same statement. nor will the accused who have been charged with the offense. and if for lack of knowledge or mistake or any other reason.1 In connection with the variance between the number of persons alleged in the information and the number of persons cited by the witnesses as having participated in the crime. 6.L. Simon Jaurigue. and for his refusal to withdraw the charge.3 Appellant ascribes unreasonableness in the delay between the supposed commission of the offense in 1948 its prosecution in 1956.B. when he still had no opportunity to contrive. that as a consequence. It appears.. H. he was fully aware of the nature and cause of the accusation. Concepcion. The security of the life in the barrio is illustrated by appellant's claim that he was stabbed and left for dead April 6. be permitted to escape punishment merely because it develops in the course of trial that there were other guilty participants in the crime. it is within the prosecuting officer's discretion to determine what persons appear to be responsible for the commission of an offense. This statement entitled "Ante Mortem" bears the appellant's thumbmark and is witnessed by his own brother‐in‐law. declared that appellant had told him that five persons had attacked and stabbed him near a mango tree but that he (appellant) was unable to recognize his attackers. Padilla. Indeed. Vera and Fausta Mercado was satisfactorily explained: they feared Huk reprisals. dissident bands asking for "binalut" or wrappers with food had been foraged in the barrios and intimidating the residents. Labrador. we feel that the evidence on hand sufficiently establishes appellant's guilt beyond reasonable doubt. 11 . 1955. he filed a complaint for frustrated murder against the Mayor a his five henchmen. five days after he was stabbed. Reyes. Balmes. 43 of the NBI and this time. p. on April 11. Regala and Makalintal. Tomas Magwari. Bautista Angelo. he fails to include the names of one or more criminal signals in an information. that the silence of these witnesses. Dizon.
the court.with interest and costs. that within one year from the date of the attachment and sale the plaintiff offered to redeem said sugar cane and tendered to the defendant Valdez the amount sufficient to cover the price paid by the latter. and that all of said palay belonged to the plaintiff. representing the value of the sugar cane and palay in 12 . deputy sheriff of the Province of Tarlac. therefore.. E. As a first cause of action the plaintiff alleged that the defendant Vitaliano Mamawal. in the trial causes. EMILIANO J. The defendant Emiliano J. in addition thereto.833. defendants.56. Bautista and Santos and Benitez for appellee.458. (b) That he was the owner of parcels 1. On December 27. he suffered damages amounting to P3. and (d) That he never attempted to harvest the palay in parcels 4 and 5. Valdez the sugar cane planted by the plaintiff and his tenants on seven parcels of land described in the complaint in the third paragraph of the first cause of action. Valdez by way of counterclaim. 1927 LEON SIBAL .76. amounting to 300 cavans. appellee. 1924. and (3) ordering the plaintiff to pay to him the sum of P11. Valdez his attorneys and agents.20 and that.375.: The action was commenced in the Court of First Instance of the Province of Tarlac on the 14th day of December 1924. VALDEZ ET AL. G. the plaintiff alleged that the defendant Emiliano J. vs. alleged that by reason of the preliminary injunction he was unable to gather the sugar cane. subject to redemption. issued the writ of preliminary injunction prayed for in the complaint. J. in his amended answer. that he had harvested and taken possession of the palay in one of said seven parcels and in another parcel described in the second cause of action. Plaintiff prayed that a writ of preliminary injunction be issued against the defendant Emiliano J. the interest thereon and any assessments or taxes which he may have paid thereon after the purchase. and the interest corresponding thereto and that Valdez refused to accept the money and to return the sugar cane to the plaintiff. 2 and 7. The facts are about as conflicting as it is possible for facts to be. (2) from taking possession of. and that the defendant Valdez be condemned to pay to the plaintiff the sum of P1. and (3) from taking possession.056 the value of palay harvested by him in the two parcels above‐mentioned . restraining them (1) from distributing him in the possession of the parcels of land described in the complaint. sugar‐cane shoots (puntas de cana dulce) palay in said parcels of land.000 filed by the plaintiff. 2 and 7. Valdez. J. Plaintiff also prayed that a judgment be rendered in his favor and against the defendants ordering them to consent to the redemption of the sugar cane in question. attached and sold to the defendant Emiliano J. Felix B. As a second cause of action. (c) That he was the owner of the palay in parcels 1. or harvesting the sugar cane in question. JOHNSON. plaintiff‐appellant. 2 and 7 described in the first cause of action of the complaint. (2) declaring him to be the absolute owner of the sugar cane in question and of the palay in parcels 1. The defendant Emiliano J. VALDEZ. representing a loss to him of P8. EMILIANO J.R. by virtue of a writ of execution issued by the Court of First Instance of Pampanga. or harvesting the palay in said parcels of land. He prayed. for a judgment (1) absolving him from all liability under the complaint. No. Blanco for appellant. Valdez was attempting to harvest the palay planted in four of the seven parcels mentioned in the first cause of action. denied generally and specifically each and every allegation of the complaint and step up the following defenses: (a) That the sugar cane in question had the nature of personal property and was not. after hearing both parties and upon approval of the bond for P6. L‐26278 August 4.
............ the deputy sheriff of the Province of Tarlac.000.. and that the palay therein was planted by Valdez. at P4 cavan.....757...93 (3) That within one year from the sale of said parcel of land. paid P2.... 4... 2 . the value of palay harvested by plaintiff............. 5.. 1923...... 1923.93.........439..68 from sugar‐cane shoots (puntas de cana dulce).. It appears from the record: (1) That on May 11. was not subject to redemption....... Macondray & Co......... the Honorable Cayetano Lukban. therefore....................68..... designated in the second of attachment as parcels 1....... for the sum to P4...00 120. situated in the Province of Tarlac.............. (2) That on July 30...........08 as follows: (a) P6....... 2.... vs...... at the auction held by the sheriff of the Province of Tarlac....000..... the defendant was unable to raise palay on the land.. 1.00 ========== 4. (b) 1.............00 2......question..08 From that judgment the plaintiff appealed and in his assignments of error contends that the lower court erred: (1) In holding that the sugar cane in question was personal property and.. having paid for the said parcels separately as follows (Exhibit C.....00..... the judgment debtor. the value of 150 cavans of palay which the defendant was not able to raise by reason of the injunction... as such... 1926............ Upon the issues thus presented by the pleadings the cause was brought on for trial.. (2) Absolving the defendants from all liability under the complaint..435...40..........579........... 1923............ and on the 24th day of September...00 1...00 150.......00...... Inc. 9...................439... not subject to redemption......93 1........... which would have netted him the sum of P600...08.. (2) In holding that parcels 1 and 2 of the complaint belonged to Valdez....273..... Leon Sibal)....... bought said eight parcels of land.... without specifying the particular parcels to which said amount was to applied........ and....... 20203 of the Court of First Instance of Manila (Macondray & Co..... 3... 7 and 8 (Exhibit B...........00 1......... (5) In condemning the plaintiff and his sureties to pay to the defendant the sum of P9. judge.. (4) In holding that.439.......... (d) 600..... including damages..... P1...... and 2‐A): Parcel 1 ... Inc.............. for the account of the redemption price of said parcels of land...... rendered a judgment against the plaintiff and in favor of the defendants — (1) Holding that the sugar cane in question was personal property and....... the value of the sugar‐cane shoots.. 6 ....... to P2.............. 5 .40 from the sugar cane and P1......... by virtue of writ of execution in civil case No.. (c) 646..... by reason of the preliminary injunction failed to realized P6... Leon Sibal........ 7 with the house thereon ..... as well as parcels 7 and 8.435. Exhibit 2‐A)... the value of the sugar cane... 4 .........273...... Valdez the sum of P9. Inc... 3 ..... After hearing the evidence.......757....... for failure of plaintiff to gather the sugar cane on time. 6.... by virtue of said transaction....... (3) In holding that Valdez.......... The redemption price said eight parcels was reduced...000 to Macondray & Co... Juan Sangalang and Marcos Sibal to jointly and severally pay to the defendant Emiliano J..97 including interest 13 ..00 8 .levied an attachment on eight parcels of land belonging to said Leon Sibal.... and (3) Condemning the plaintiff and his sureties Cenon de la Cruz.............000........... and on April 28....
sin embargo. (3) That on April 29. Valdez bought the sugar cane in question. Valdez vs. Valdez became the absolute owner of said eight parcels of land. Said eight parcels were designated in the certificate of sale as parcels 1. 1924. including all of his rights. Civil Jurisprudence of Spain. which holds that. said deputy sheriff sold at public auction said personal properties of Leon Sibal. 1301 of the Province of Pampanga (Emiliano J. (Decision of March 18. 6. El Tribunal Supremo. also attached the real property of said Leon Sibal in Tarlac. (4) That on June 25. while they are annexed to the land or form an integral part of any immovable property.97 all of its rights and interest in the eight parcels of land acquired by it at public auction held by the deputy sheriff of Tarlac in connection with civil case No. y a la de lenas. Valdez. The house and camarin were situated on parcel 7 (Exhibit A). the eminent commentator of the Spanish Civil Code. Macondray & Co. The foregoing statement of facts shows: (1) The Emilio J.579. as stated above. (Exhibit C and 2).200. who paid therefor the sum of P1. It is contended that sugar cane comes under the classification of real property as "ungathered products" in paragraph 2 of article 334 of the Civil Code. for P600. growing crops may be considered as personal property. en sentencia de 18 de marzo de 1904. after payment by Leon Sibal of P2. and ungathered products. all of its rights and interest in the said eight parcels of land. Valdez for P2. Valdez at the auction held by the sheriff for the sum of P12. He says: No creemos.(Exhibit C and 2).) Manresa. by virtue of said writ of execution. among which was included the sugar cane now in question in the seven parcels of land described in the complaint (Exhibit A). the defendant Vitaliano Mamawal. deputy sheriff of the Province of Tarlac. has received in recent years an interpretation by the Tribunal Supremo de España. 4. (6) That on the same date. sold and conveyed to Emilio J. (2) That on May 9 and 10. under certain conditions. 1923. were released from the attachment by virtue of claims presented by Agustin Cuyugan and Domiciano Tizon (Exhibit A). Leon Sibal 1. 10 and 11. plants. 5. in view of the recent decisions of the supreme Court of Spain.º — the same parties in the present case). 12. of which P600 was for the sugar cane (Exhibit A). 97. fro the account of the redemption price. al entender sobre un contrato de 14 . Leon Sibal paid to Macondray & Co. (4) That on June 25.1924. including the sugar cane in question to Emilio J. which real property consisted of eleven parcels of land and a house and camarin situated in one of said parcels (Exhibit A). Valdez acquired from Macondray & Co. in discussing section 334 of the Civil Code. 20203 of the Court of First Instance of Manila. 1924. Said amount represented the unpaid balance of the redemption price of said eight parcels. 1923. 1904. admits that growing crops are sometimes considered and treated as personal property. by virtue of a writ of execution in civil case No. June 25. Emilio J. The record further shows: (1) That on April 29. Macondray & Co. became the owner of eight parcels of land situated in the Province of Tarlac belonging to Leon Sibal and that on September 24. however.000 paid by the latter to Macondray.000 on September 24. considerando ambas como muebles. were bought by Emilio J. located in the seven parcels of land described in the first cause of action of the complaint at public auction on May 9 and 10. 7. P2. Valdez also acquired all of the rights and interest which Leon Sibal had or might have had on said eight parcels by virtue of the P2. 1924. The first question raised by the appeal is. eight of said eleven parcels. (5) That Emilio J. 3. Emilio J.000 for the account of the redemption price of said parcels. and 13. (3) That on June 25. (2) That on July 30. 1923. Said paragraph 2 of article 334 enumerates as real property the following: Trees. indicated in the certificate of the sheriff as parcels 2. 1924. said deputy sheriff. as stated above. (5) That the remaining three parcels. attached the personal property of said Leon Sibal located in Tarlac. 1924. whether the sugar cane in question is personal or real property. including the house and the camarin. vol. que esto excluya la excepcionque muchos autores hacen tocante a la venta de toda cosecha o de parte de ella cuando aun no esta cogida (cosa frecuente con la uvay y la naranja). 1924. interest and participation therein." That article. 1924.550.
761. held that in some cases "standing crops" may be considered and dealt with as personal property. An examination of the decisions of the Supreme Court of Louisiana may give us some light on the question which we are discussing. as amended. edicion. In the case of Citizen's Bank vs. and trees before they are cut down. and incurred to the benefit of the person making the seizure. 244. Lewis vs. it would be destructive of the very objects of the act. it would render the pledge of the crop objects of the act. In the case of Lumber Co. Ann. 28 La. publicada en 16 de diciembre de 1909. pags. provides: "Standing crops and the fruits of trees not gathered. which corresponds to paragraph 2 of article 334 of our Civil Code. Article 465 of the Civil Code of Louisiana. but the immovability provided for is only one in abstracto and without reference to rights on or to the crop acquired by others than the owners of the property to which the crop is attached. The existence of a right on the growing crop is a mobilization by anticipation." (Citizens' Bank vs. 418) the Supreme Court said: "True. If it necessarily forms part of the leased premises the result would be that it could not be sold under execution separate and apart from the land. cuando el arrendor ha percibido a su vez el importe de la renta integra correspondiente. It belongs to the lessee. A crop raised on leased premises in no sense forms part of the immovable. resuelve que su terminacion por desahucio no extingue los derechos del arrendario. Sheriff and Tax Collector (106 La. rendering the crop movable quoad the right acquired therein. for if the crop was an inseparable part of the realty possession of the latter would be necessary to that of the former. is where the crops belong to the owner of the plantation they form part of the immovable. x x x x x x x x x Mas actualmente y por virtud de la nueva edicion de la Ley Hipotecaria. but such 15 . salvo pacto expreso que disponga lo contrario.. 27 La. (2) that the Supreme Court of Spain.. the factor's lien would not attach to the crop as a separate thing belonging to his debtor. 267. Ann. .) From the foregoing it appears (1) that..arrendamiento de un predio rustico. Porche vs. it would render the pledge of the crop impossible. and (3) that under the Spanish Mortgage Law of 1909. unless the contract expressly provides otherwise. in a case of ejectment of a lessee of an agricultural land. pending fruits and ungathered products may be sold and transferred as personal property. Douglass. 244)the court said: If the crop quoad the pledge thereof under the act of 1874 was an immovable. . Wiltz. 629. Klotz. (3 Manresa. Wiltz (31 La. and may be sold by him.. . la hipoteca. 31 La. and are considered as part of the land to which they are attached.) "It is true. held that the lessee was entitled to gather the products corresponding to the agricultural year. But the evident meaning of these articles. 22. para recolectar o percibir los frutos correspondientes al año agricola. 761) that "article 465 of the Revised Code says that standing crops are considered as immovable and as part of the land to which they are attached. no les priva del caracter de productos pertenecientes. and where it is seized. are likewise immovable. and article 466 declares that the fruits of an immovable gathered or produced while it is under seizure are considered as making part thereof. no solo en que de otra suerte se daria al desahucio un alcance que no tiene. no comprende los frutos cualquiera que sea la situacion en que se encuentre. . Ann. under Spanish authorities. the mortgage of a piece of land does not include the fruits and products existing thereon. y cualquiera que sea la naturaleza y forma de la obligacion que garantice. a gathering as it were in advance. . vs. Our jurisprudence recognizes the possible mobilization of the growing crop. y esto es lo interesante a nuestro proposito. Sandel vs. 39 La. dentro del que nacieron aquellos derechos." as the Supreme Court of Louisiana said in the case of Porche vs. con las reformas introducidas por la de 21 de abril anterior. are considered as part of the land to which they are attached.. a quienes a ellos tenga derecho. whether it be gathered or not. If a lessee obtain supplies to make his crop. the fruits gathered or produced inure to the benefit of the seizing creditor. An. but the land belonging to the lessor would be affected with the recorded privilege." The Supreme Court of Louisiana having occasion to interpret that provision. sino en que. 23... Bodin (28 La. and it may be sold by his judgment creditors. because said fruits did not go with the land but belonged separately to the lessee.. The law cannot be construed so as to result in such absurd consequences. Ann. aun cuando lo haya sido por precepto legal durante el curso del juicio. Ann. la consideracion de inmuebles que el articulo 334 del Codigo Civil atribuge a los frutos pendientes. Bodin. como tales. by article 465 of the Civil Code it is provided that 'standing crops and the fruits of trees not gathered and trees before they are cut down . fundandose para ello. 5. Ilegado el momento de su recoleccion.
249. p. Section 2 of said Act provides: "All personal property shall be subject to mortgage..." but the immovability provided for is only one in abstracto and without reference to rights on or to the crop acquired by other than the owners of the property to which the crop was attached. 63. Truax. . or what may be taken at the next cast of a fisherman's net. which though not yet actually in existence. or the wool that shall thereafter grow upon sheep. A man may sell property of which he is potentially and not actually possessed. is followed in practically every state of the Union. St. Said section 450 enumerates the property of a judgment debtor which may be subjected to execution. 21 Am. care for and protect the crop while growing.is not the case. Said section 450 and most of the other sections of the Code of Civil Procedure relating to the execution of judgment were taken from the Code of Civil Procedure of California. from an immovable to a movable. 197. or the good will of a trade and the like.) Mr. 528. Ryan. the Chattel Mortgage Law.. and we may therefore obtain light by an examination of the jurisprudence of France. Mechem says that a valid sale may be made of a thing." At common law. and other property. the phrase "personal property" should be understood to include "ungathered products. The rule above announced. 526. 200 and 763. 31 Ala. 161. 27 Minn. The immovability of a growing crop is in the order of things temporary. It is clear from the foregoing provisions that Act No. sec. This consideration tends to support the conclusion hereinbefore stated. 165]. (6 Corpuz Juris. Green. Gillitt vs. Watson. 190 and by Act No. is reasonably certain to come into existence as the natural increment or usual incident of something already in existence." 16 .. Rep.. Crine vs." Section 7 in part provides: "If growing crops be mortgaged the mortgage may contain an agreement stipulating that the mortgagor binds himself properly to tend. p.) Things of this nature are said to have a potential existence. Foot. (Hull vs. 23 Corpus Juris. 48 Conn. 1 Benjamin on Sales. 438. vol. without variation. and a mortgage executed in pursuance thereof shall be termed a chattel mortgage. or the milk a cow may yield during the coming year. 1508. Hull. European Railway Co.. p. may be levied on as personal property. sec. Act No. They must be also owned at the time by the vendor. 329: Raventas vs. or young animals not yet in existence. (Emerson vs. Lampley. 45 Mich.. Drake on Attachment. Norris vs. moneys. 254. and then belonging to the vendor.. Dec. 379. 174. 387. all annual crops which are raised by yearly manurance and labor. that paragraph 2 of article 334 of the Civil Code has been modified by section 450 of Act No. must be specific and identified. not only by the Tribunal Supremo de España but by the Supreme Court of Louisiana. Preston vs. 17 Corpus Juris.) It is contended on the part of the appellee that paragraph 2 of article 334 of the Civil Code has been modified by section 450 of the Code of Civil Procedure as well as by Act No. The Supreme Court of California. Cutting vs. 3 Am. 1. He may make a valid sale of the wine that a vineyard is expected to produce. sec. Dec. 250 [40 Am. and essentially owe their annual existence to cultivation by man.. The existence of a right on the growing crop is a mobilization by anticipation. Freeman on Execution. Tifts and Co. or the gain a field may grow in a given time. 424) has held. and generally in the United States.. Packers Exchange.. 57 Cal. From an examination of the reports and codes of the State of California and other states we find that the settle doctrine followed in said states in connection with the attachment of property and execution of judgment is. that growing crops were personal property and subject to execution. or fruits to grow. 442. both real and personal.. Rep. under section 688 of the Code of Civil Procedure of that state (Pomeroy. Mechem on Sales. True. however. 126. The pertinent portion of said section reads as follows: "All goods. * * * shall be liable to execution. agreeably to the provisions of this Act. the Chattel Mortgage Law. p. it is provided that "standing crops and the fruits of trees not gathered and trees before they are cut down are likewise immovable and are considered as part of the land to which they are attached. Whipple vs. McKenzie vs. 67 Me.. The provision of our Code is identical with the Napoleon Code 520. a gathering as it were in advance. for the crop passes from the state of a growing to that of a gathered one. p. fully recognized that growing crops are personal property. 1508 in the sense that "ungathered products" as mentioned in said article of the Civil Code have the nature of personal property. by article 465 C. C. that growing crops raised by yearly labor and cultivation are considered personal property. The thing sold. 644. 1508 was enacted on the assumption that "growing crops" are personal property. 1508. 65 Ga. rendering the crop movable quoad the right acquired thereon. In other words. and then title will vest in the buyer the moment the thing comes into existence. chattels. 55 Am.
inasmuch as the plaintiff did not care to appear at the trial when the defendant offered his evidence. situada en Dalayap. J. al S. La caña dulce sembrada por el inquilino del ejecutado Leon Sibal 1. ubicado en el barrio de Culubasa. 1924. Tarlac. en una parcela de terreno de la pertenencia del ejecutado. therefore. Culubasa. As will be noticed. p. Bamban.40 a cavan. We. y al O. con Alejandro Dayrit and Paulino Vergara. al E. On the other hand the evidence for the defendant purported to show that parcels 1 and 2 of the complaint were included among the parcels bought by Valdez from Macondray on June 25. was not subject to redemption. su valor amillarado asciende a la suma de P2. de 177. The description of the parcels in the complaint is as follows: 1. says: "Crops. liable to voluntary transfer as chattels.) On this question Freeman.) We may. for the purpose of attachment and execution. 1508. vador amillarado P4. situada en Libutad. The description of parcel 4 (Exhibit 2) and parcel 3 (Exhibit A) is as follows: Parcels No.090 metros cuadrados de superficie. we deem it opportune to take special notice of the failure of the plaintiff to appear at the trial during the presentation of evidence by the defendant. Tarlac.º. having acquired the same from Macondray & Co. "ungathered products" have the nature of personal property. The lower court. no part of the realty. relate to questions of fact only. there is hardly any relation between parcels 1 and 2 of the complaint and parcel 4 (Exhibit 2 and B) and parcel 3 (Exhibit A). or 95 cavans. when produced by annual cultivation. F. It appears. Felipe Mañu and others. the plaintiff made a futile attempt to show that said two parcels belonged to Agustin Cuyugan and were the identical parcel 2 which was excluded from the attachment and sale of real property of Sibal to Valdez on June 25. therefore. Ilamado Alejandro Policarpio.200 pesos. as above stated. as such. 2856. and corresponded to parcel 4 in the deed of sale (Exhibit B and 2). on June 25. committed no error in holding that the sugar cane in question was personal property and.(23 C. and not for the total of 190 cavans as held by the lower court. There being no evidence of bad faith on his part. 17 . con Canuto Sibal. I. as stated above. and corresponded to parcel 3 in the certificate of sale made by the sheriff (Exhibit A). in his treatise on the Law of Executions. Isidro Santos and Melecio Mañu. vol. with respect to the ownership of parcels 1 and 2 of the compliant. con Alejandro Dayrit. (Freeman on Executions. Tarlac de unas dos hectareas de superficie poco mas o menos. and were also included among the parcels bought by Valdez at the auction of the real property of Leon Sibal on June 25. It is equally well settled that they may be seized and sold under execution. 4. A comparison of the description of parcel 2 in the certificate of sale by the sheriff (Exhibit A) and the description of parcels 1 and 2 of the complaint will readily show that they are not the same.990. de 145. we are inclined to give more weight to the evidence adduced by him that to the evidence adduced by the plaintiff. therefore. are. conclude that paragraph 2 of article 334 of the Civil Code has been modified by section 450 of the Code of Civil Procedure and by Act No. that the plaintiff planted the palay in said parcels and harvested therefrom 190 cavans. 2854. de unas dos hectareas poco mas o menos de superficie. at P3. His absence from the trial and his failure to cross‐examine the defendant have lent considerable weight to the evidence then presented for the defense. 438. or the sum of P323. He should therefore be condemned to pay to the defendant for 95 cavans only. 1924.Bamban. Before entering upon a discussion of said assignments of error. and from the plaintiff Leon Sibal on the same date. 1924.. 329." The description of parcel 2 given in the certificate of sale (Exhibit A) is as follows: 2a. con Francisco Dizon. But. Tarlac. Tax No.º en una parcela de terreno de la pertenencia del citado ejecutado. conclude that parcels 1 and 2 of the complaint belong to the defendant. They are. Tax No. Esteban Lazatin and Alejandro Dayrit. however. Bamban. linda al N. Culubasa. in the sense that. 2. therefore. — Terreno palayero. al Este con Juan Dizon. Coming not to the ownership of parcels 1 and 2 described in the first cause of action of the complaint. lindante al Norte con Road of the barrio of Culubasa that goes to Concepcion. Terreno palayero situado en Culubasa. p. he is therefore entitled to one‐half of the crop. whether growing or standing in the field ready to be harvested. 1924.000 metros cuadrados de superficie. and for the purposes of the Chattel Mortgage Law. La caña dulce sembrada por los inquilinos del ejecutado Leon Sibal 1. All the other assignments of error made by the appellant. al Sur con Lucio Maño y Canuto Sibal y al Oeste con Esteban Lazatin. Bamban.
concur. to Valdez. Said parcels of land were sold to Macondray & Co. Rice paid P4. As to the loss of the defendant in sugar cane by reason of the injunction. May 11. The lower court has wisely reduced his share to 150 cavans only.40 from sugar‐cane shoots and not P1. as stated above. the palay would have netted him P600. 8‐b and 8‐c). with costs. 1923. At P4 a cavan. at P3. the judgment appealed from is hereby modified.40 a cavan. one‐half of said quantity should belong to the plaintiff. described in paragraph 3 of the second cause of action. Malcolm. Tarlac.900.000 sugar‐cane shoots (puntas de cana) and not 1. to Valdez (Exhibit B and 2). would have netted P 6. the judgment appealed from is hereby affirmed.. Street. amounting to 190 cavans. P2.757.435. 1924. He expected to have raised about 600 cavans of palay. With reference to the parcel of land in Pacalcal. On September 24.68 as allowed by the lower court. said real property was sold and purchased by Valdez (Exhibit A). and to parcel 4 in the certificate of sale to Valdez of real property belonging to Sibal. on the 30th day of July.80 ============ In all other respects.439.000 as computed by the lower court. As to the palay harvested by the plaintiff in parcels 1 and 2 of the complaint. 18 . the evidence shows that said parcel corresponds to parcel 1 of the deed of sale of Macondray & Co. for the sugar cane. and the other half to the defendant. (Exhibit A) The said personal property so attached. for the sugar cane shoots.220. Attachment. June 25. having acquired the interest of both Macondray and Sibal therein. The court erred in awarding the whole crop to the defendant.017. 1924. as owner. 1924. executed by the sheriff as above stated (Exhibit A). as follows: P6. that one‐half of the quantity.As to the ownership of parcel 7 of the complaint. Juan Sangalang and Marcos Sibal are hereby ordered to pay to the defendant jointly and severally the sum of P8.00 8. (See Exhibits B and C ). including the sugar cane in question.08 allowed by the lower court. having acquired the interest of both Macondray and Sibal in said parcel. 1923. it appears from the testimony of the plaintiff himself that said parcel corresponds to parcel 8 of the deed of sale of Macondray to Valdez (Exhibit B and 2) and to parcel 10 in the deed of sale executed by the sheriff in favor of Valdez (Exhibit A). 1923. the real property was attached under the execution in favor of Valdez (Exhibit A). So ordered. that said area would have yielded an average crop of 1039 picos and 60 cates.93. for the palay harvested by plaintiff in parcels 1 and 2. instead of P9. as owner. Therefore.40 1. Romualdez and Villa‐Real. or 519 picos and 80 cates would have corresponded to the defendant. April 29. The plaintiff and his sureties Cenon de la Cruz. April 29. Villamor. JJ. sold at public auction May 9 and 10. The plaintiff should therefore pay the defendant for 95 cavans only.273. Macondray & Co. Personal property of Sibal was attached. for the palay which defendant could have raised.80. in favor of Valdez. 1923. 300 cavans of which would have corresponded to him as owner.170. Valdez is therefore the absolute owner of said parcel. In this connection the following facts are worthy of mention: Execution in favor of Macondray & Co. The defendant therefore would have netted P1. Eight parcels of land were attached under said execution.. 1924.000 on the redemption of said parcels of land..20 a thousand (Exhibits 6 and 7). The evidence also shows that the defendant was prevented by the acts of the plaintiff from cultivating about 10 hectares of the land involved in the litigation.40 323. or P323 instead of P646 as allowed by the lower court.40 from the sugar cane in question. 1924. Valdez is therefore the absolute owner of said parcel. sold all of the land which they had purchased at public auction on the 30th day of July.00 600.220. The evidence also shows that the defendant could have taken from the sugar cane 1. In view of the foregoing.757. that during the season the sugar was selling at P13 a pico (Exhibit 5 and 5‐A). the defendant. During the season the shoots were selling at P1. June 25.900. Leon Sibal paid to Macondray & Co. the evidence shows that the sugar cane in question covered an area of 22 hectares and 60 ares (Exhibits 8.
The respondent Meralco has constructed 40 of these steel towers within Quezon City. As in the first tower. These electric transmission wires which carry high voltage current. 1903. Charles M. The second tower inspected was located in Kamuning Road. on land belonging to it. vs. No. Meralco's electric power is generated by its hydro‐electric plant located at Botocan Falls. Ross. with an opening of about one (1) meter in diameter. and the tower carried five high voltage wires without cover or any insulating materials. 484 which authorized the Municipal Board of Manila to grant a franchise to construct. the following appear: On October 20. The findings were as follows: the ground around one of the four posts was excavated to a depth of about eight (8) feet. it could not be determined with certainty to whether said adobe stone was placed purposely or not. A photograph of one of these steel towers is attached to the petition for review. PAREDES. Quezon City. There being very little water at the bottom. but there soft adobe beneath. 44 approved on March 24. The third tower examined is located along Kamias Road. running from the province of Laguna to the said City. with two cross metals to prevent mobility. from its hydro‐electric plant in the province of Laguna to the City of Manila. as the bottom of the excavation was covered with water about three inches high. there was no concrete foundation but there was adobe stone underneath. the tower proper was attached to the leg three bolts. marked Annex A. so that by unscrewing the bolts. The leg was likewise provided with two parallel steel bars bolted to a square metal frame also bolted to each corner.: From the stipulation of facts and evidence adduced during the hearing. 1902. on land owned by the petitioner approximate more than one kilometer from the first tower. Like the first one. As in 19 . maintain and operate an electric street railway and electric light. Assistant City Attorney Jaime R. Selph and Carrascoso for respondent. the terms and conditions of which were embodied in Ordinance No. 1964 BOARD OF ASSESSMENT APPEALS. MANILA ELECTRIC COMPANY. the second tower is made up of metal rods joined together by means of bolts. CITY ASSESSOR and CITY TREASURER OF QUEZON CITY. heat and power system in the City of Manila and its suburbs to the person or persons making the most favorable bid. G. Laguna and is transmitted to the City of Manila by means of electric transmission wires. Respondent Manila Electric Co. the Philippine Commission enacted Act No. España Extension. L‐15334 January 31. the tower could be dismantled and reassembled.R. it was seen that there was no concrete foundation. respondent. as the place abounds with this kind of stone. Quezon City. decreased to about a quarter of a meter as it we deeper until it reached the bottom of the post. the ground around one of the four legs was excavate from seven to eight (8) feet deep and one and a half (1‐½) meters wide. at the bottom of the post were two parallel steel bars attached to the leg means of bolts. K‐F. are fastened to insulators attached on steel towers constructed by respondent at intervals. Quezon City. Agloro for petitioners. Swift was awarded the said franchise on March 1903. (Meralco for short). petitioners. became the transferee and owner of the franchise. J. Three steel towers were inspected by the lower court and parties and the following were the descriptions given there of by said court: The first steel tower is located in South Tatalon.
and filed a petition for review in the Court of Tax Appeals (CTA for short) which rendered a decision on December 29. 1958. It was found that there was no concrete foundation.86.. 484 Respondent's Franchise. and insulators). franchise. the statute was 20 . and insulators of the grantee from which taxes and assessments the grantee is hereby expressly exempted. Part Two. In accordance with the definitions. wires. earnings. as typically the stem of a small tree stripped of its branches. emphasis supplied. an appeal was taken by respondent to the Board of Assessment Appeals of Quezon City. Several courts of last resort in the United States have called these steel supports "steel towers". specifically a vessel's master (Webster's New International Dictionary 2nd Ed. also by extension. petitioner City Assessor of Quezon City declared the aforesaid steel towers for real property tax under Tax declaration Nos. The tax exemption privilege of the petitioner is quoted hereunder: PAR 9. The conclusion of the CTA that the steel supports in question are embraced in the term "poles" is not a novelty. may be seen cylindrical metal poles. The term also refers to "an upright standard to the top of which something is affixed or by which something is supported. Like the two previous ones. In their decisions the words "towers" and "poles" were used interchangeably. a tent pole.. 31992 and 15549. above quoted. is not determined by their place or location. The grantee shall be liable to pay the same taxes upon its real estate. and (3) the City Treasurer of Quezon City is held responsible for the refund of the amount paid. nor the material or form of which it is made. in which the law provided that wires shall be constructed upon suitable poles.. Said percentage shall be due and payable at the time stated in paragraph nineteen of Part One hereof. and the necessary carrying of numerous wires and the distance between poles. looks like mud or clay. and they denominated these supports or towers. 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. sometimes. nor by the character of the electric current it carries. the bottom arrangement of the legs thereof were found to be resting on soft adobe. which. which are made of two steel bars joined together by an interlacing metal rod. Respondent paid the amount under protest. comparatively slender usually cylindrical piece of wood or timber. buildings. (2) the steel towers are personal properties and are not subject to real property tax. as electric poles. but includes "upright standards to the top of which something is affixed or by which something is supported. In upholding the cause of respondents.) Along the streets. . It must be noted from paragraph 9. and shall be in lieu of all taxes and assessments of whatsoever nature and by whatsoever authority upon the privileges. on April 22. telegraph poles. The motion for reconsideration having been denied. On November 15. and poles of the PLDT Co. transformers. 1959.86 as real property tax on the said steel towers for the years 1952 to 1956. In a proceeding to condemn land for the use of electric power wires. Act No.) The word "pole" means "a long.the first two towers given above. and it is well understood in that jurisdiction that a transmission tower or pole means the same thing. in the City of Manila. and poles.651. ordering the cancellation of the said tax declarations and the petitioner City Treasurer of Quezon City to refund to the respondent the sum of P11. cubical concrete poles. the ground around the two legs of the third tower was excavated to a depth about two or three inches beyond the outside level of the steel bar foundation. It was also found that the square metal frame supporting the legs were not attached to any material or foundation. These are assigned as errors by the petitioner in the brief. income. machinery and personal property as other persons are or may be hereafter required by law to pay . the instant petition for review was filed. wires. As heretofore described. 1955. (Par. that the concept of the "poles" for which exemption is granted.651. p. but the use to which they are dedicated. a similar typically cylindrical piece or object of metal or the like". transformers. 1907. 9. respondent's steel supports consists of a framework of four steel bars or strips which are bound by steel cross‐arms atop of which are cross‐arms supporting five high voltage transmission wires (See Annex A) and their sole function is to support or carry such wires. After denying respondent's petition to cancel these declarations. probably due to high humidity. this term was construed to mean either wood or metal poles and in view of the land being subject to overflow. They are called "poles" notwithstanding the fact that they are no made of wood. as a dovecote set on a pole. pole is not restricted to a long cylindrical piece of wood or metal.. plant (not including poles. which required respondent to pay the amount of P11..
In form and structure. receptacles. 224. 484 and incorporated in the petitioner's franchise. the said two metal pieces being connected with criss‐cross iron running from the bottom to the top. and which tends directly to meet the needs of the said industry or works. Granting for the purpose of argument that the steel supports or towers in question are not embraced within the term poles. therefore. in such a way that it cannot be separated therefrom without breaking the material or deterioration of the object. 383. because they do not constitute buildings or constructions adhered to the soil. but was considering the danger from any elevated wire carrying electric current. as used in Act No.) The term "poles" was used to denote the steel towers of an electric company engaged in the generation of hydro‐electric power generated from its plant to the Tower of Oxford and City of Waterbury. The steel supports or towers were made of iron or other metals consisting of two pieces running from the ground up some thirty feet high. the top of which extends above the surface of the soil in the tower of Oxford. but Article 415 of the Civil Code does. 222. 1). 365. the defendant admitted that the structure on which a certain person met his death was built for the purpose of supporting a transmission wire used for carrying high‐tension electric power. one should not be governed by the wire or material of the support used. do not come within the objects mentioned in paragraph 1. The poles as contemplated thereon. v. then one should admit that the Philippines is one century behind the age of space. like the ones in question. It is evident. and that regardless of the size or material wire of its individual members. 8 P. so that they can be subject to a real property tax. 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. Compton. If the respondent would be required to employ "wooden poles". for obvious reasons. constructed like ladders and loaded with high voltage electricity. and to the towers are attached insulators. any continuous series of structures intended and used solely or primarily for the purpose of supporting wires carrying electric currents is a pole line (Inspiration Consolidation Cooper Co. for the conveyance of electric current from the source thereof to its consumers. arms. In a case. x x x x x x x x x (5) Machinery. as to defeat the very object for which the franchise was granted. They are not construction analogous to buildings nor adhering to the soil. they are removable and merely attached to a square metal frame by means of bolts. As per description. Oxford. Bryan 252 P. constructed for the purpose of fastening high voltage and dangerous electric wires alongside public highways. (Stemmons and Dallas Light Co. 249‐250. p. buildings. and are embedded in the cement foundations sunk in the earth. given by the lower court. It should also be conceded by now that steel towers. or "rounded poles" as it used to do fifty years back.) The term "poles" was also used to denominate the steel supports or towers used by an association used to convey its electric power furnished to subscribers and members. should not be given a restrictive and narrow interpretation. but claimed that the steel towers on which it is carried were so large that their wire took their structure out of the definition of a pole line. roads. x x x x x x x x x (3) Everything attached to an immovable in a fixed manner. 21 . (Salt River Valley Users' Ass'n v. p. The tax law does not provide for a definition of real property. that the word "poles". 1016). v. These steel towers are about 15 feet square at the base and extended to a height of about 35 feet to a point. and constructions of all kinds adhered to the soil.W.interpreted to include towers or poles. They can not be included under paragraph 3. 101 Conn. can better effectuate the purpose for which the respondent's franchise was granted. 2nd. It was held that in defining the word pole. being wider at the bottom than at the top. and other equipment capable of carrying wires for the transmission of electric power (Connecticut Light and Power Co. which when unscrewed could easily be dismantled and moved from place to place. 32‐A Words and Phrases. (Tex) 212 S. x x x x x x x x x The steel towers or supports in question. the logical question posited is whether they constitute real properties. 126 Atl. they are like the steel towers in question. by stating the following are immovable property: (1) Land. should be understood and taken as a part of the electric power system of the respondent Meralco.
. Each of these steel towers or supports consists of steel bars or metal strips. HON.B. ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ G. and they can be separated without breaking the material or causing deterioration upon the object to which they are attached. Branch 7. The pertinent portions of the Real and Chattel Mortgage are quoted below: MORTGAGE (REAL AND CHATTEL) xxx xxx xxx The MORTGAGOR(S) hereby transfer(s) and convey(s).R. where its factory stands. despite the fact that Quezon City is not a party to the case.. Makalintal. for factually. EVER TEXTILE MILLS. Dizon. for they are not machineries. situated in . INC. EVERTEX executed in favor of PBCom. which was not a party to the suit. he would surely know what to do. 1975. It is argued that as the City Treasurer is not the real party in interest. Bengzon.. with costs against the petitioners. respondents. vs. certain parcel(s) of land.. and the chattels located therein as enumerated in a schedule attached to the mortgage contract. which respondent paid under protest. concurs in the result.86. Concepcion. 32986. and MAMERTO R VILLALUZ. . . by way of First Mortgage. and. October 2. joined together by means of bolts. petitioner. together with all the buildings and improvements now existing or which may hereafter exist thereon. J. vs. On November 26. . "Annex A" (Real and Chattel Mortgage executed by Ever Textile Mills in favor of PBCommunications — continued) LIST OF MACHINERIES & EQUIPMENT A. to the MORTGAGEE. the decision appealed from is hereby affirmed.L.] PHILIPPINE BANK OF COMMUNICATIONS. 89‐48265. but Quezon City. a deed of Real and Chattel Mortgage over the lot under TCT No. J.R.as they are not attached to an immovable in a fixed manner.J. J. in Civil Case No. therefore. C. TSAI. JJ. Having acted in his official capacity as City Treasurer of Quezon City. Forty Eight (48) units of Vayrow Knitting Machines‐Tompkins made in Hongkong: 22 . Padilla. concur.. COURT OF APPEALS. EVER TEXTILE MILLS and MAMERTO R VILLALUZ. No. instruments or implements. 2001 RUBY L. Petitioner is not engaged in an industry or works in the land in which the steel supports or towers are constructed. respondent Ever Textile Mills. It is finally contended that the CTA erred in ordering the City Treasurer of Quezon City to refund the sum of P11. HON. No. J. (EVERTEX) obtained a three million peso (P3. notwithstanding its capacity to sue and be sued. CV No. affirming the decision2 of the Regional Trial Court of Manila. 120098 October 2. they are not intended for industry or works on the land.000. petitioner. which can be disassembled by unscrewing the bolts and reassembled by screwing the same. 120109. As security for the loan. COURT OF APPEALS. This question has not been raised in the court below. he should not be ordered to effect the refund. 2001. The herein petitioner is indulging in legal technicalities and niceties which do not help him any. These steel towers or supports do not also fall under paragraph 5.000. ..R. took no part. receptacles. 372097. Bautista Angelo. respondents. under the circumstances.00) loan from petitioner Philippine Bank of Communications (PBCom). it cannot be properly raised for the first time on appeal.651. Reyes. Inc. Also assailed is respondent court's resolution denying petitioners' motion for reconsideration. QUISUMBING. it was he (City Treasurer) whom had insisted that respondent herein pay the real estate taxes. Barrera and Regala. Labrador. and even if they were.: These consolidated cases assail the decision1 of the Court of Appeals in CA‐ G. x‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐x [G. IN VIEW HEREOF.
000. All its assets were taken into the custody of the Insolvency Court. (c) Two (2) Circular Knitting Machines . . EVERTEX filed insolvency proceedings docketed as SP Proc.000.00 to EVERTEX. the date of the execution of the second mortgage mentioned above. otherwise known as "An Act to Regulate the Sale of Property under Special Powers Inserted in or Annexed to Real Estate Mortgages" and Act 1506 or "The Chattel Mortgage Law". 1979. . These listed properties were similar to those listed in Annex A of the first mortgage deed. which were not included in the Real and Chattel Mortgage of November 26. Two (2) Circular Knitting Machines made in West Germany. reconveyance. . . xxx xxx xxx3 On April 23. (e) Two (2) Winding Machines . lock. . 1982. PBCom consolidated its ownership over the lot and all the properties in it. xxx xxx xxx C. 1979. . 1982. stock and barrel to Tsai for P9. EVERTEX averred that PBCom. therefore Tsai acquired no rights over such assets sold to her. EVERTEX purchased various machines and equipments. EVERTEX claimed that no rights having been transmitted to PBCom over the assets of insolvent EVERTEX. 1979. .00. LP‐3091‐P before the defunct Court of First Instance of Pasay City. On March 7. 1982 declaring the corporation insolvent. appropriated the contested properties. real and personal. Tsai for P50. securing the two mortgages as abovementioned. In November 1986.000. 1982. Sixteen (16) sets of Vayrow Knitting Machines made in Taiwan. 1982. the latter commenced extrajudicial foreclosure proceedings against EVERTEX under Act 3135. PBCom granted a second loan of P3.000. Four (4) Winding Machines. TCT # 372097 ‐ RIZAL xxx xxx xxx II. and damages with the Regional Trial Court against PBCom. . additions. . dated December 15. On November 19. 1989. the first public auction was held where petitioner PBCom emerged as the highest bidder and a Certificate of Sale was issued in its favor on the same date. including the collateral. On December 23. EVERTEX filed a complaint for annulment of sale. 1982 and Certificate of Sale .00. alleging inter alia that the extrajudicial foreclosure of subject mortgage was in violation of the Insolvency Law. and neither were those properties included in the Notice of Sheriff's Sale dated December 1. including the contested machineries. III. 1984. (b) Sixteen sets (16) Vayrow Knitting Machines . located and/or installed on the above‐mentioned lot located at . which were valued at P4. . Further. another public auction was held and again. A Notice of Sheriff's Sale was issued on December 1. PBCom was the highest bidder. In the meantime. .Serial Numbers Size of Machines xxx xxx xxx B. On May 3. 1988. Branch XXVIII. . 1982. xxx xxx xxx D.000. (d) Two (2) Winding Machines . The CFI issued an order on November 24. substitutions. 1975 nor in the Chattel Mortgage of April 23. (a) Forty eight sets (48) Vayrow Knitting Machines . . On March 16. Any and all buildings and improvements now existing or hereafter to exist on the above‐mentioned lot. The sheriff issued a Certificate of Sale on the same day. The loan was secured by a Chattel Mortgage over personal properties enumerated in a list attached thereto.000. The disputed properties. xxx xxx xxx SCHEDULE "A" I.00 a month. it leased the entire factory premises to petitioner Ruby L. IV. and should reconvey the assets. After April 23. Any and all replacements. without any legal or factual basis. . are: 14 23 . MACHINERIES & EQUIPMENT situated. increases and accretions to above properties. No.356. On December 15. upon EVERTEX's failure to meet its obligation to PBCom. due to business reverses. PBCom sold the factory.
1 Raisin Equipment and 1 Heatset Equipment. ATTORNEY'S FEES AND EXPENSES OF LITIGATION — FOR WANT OF VALID FACTUAL AND LEGAL BASIS. 1994. to be done within ten (10) days from finality of this decision.00 every month thereafter. 1 Dryer Equipment. for disposition by the Insolvency Court.00 as and for attorney's fees and expenses of litigation.4 Dissatisfied. except for the deletion therefrom of the award.R. The RTC found that the lease and sale of said personal properties were irregular and illegal because they were not duly foreclosed nor sold at the December 15. II THE HONORABLE COURT OF APPEALS (SECOND DIVISION) ERRED IN HOLDING THAT THE DISPUTED 1981 MACHINERIES ARE NOT REAL PROPERTIES DEEMED PART OF THE MORTGAGE — DESPITE THE CLEAR IMPORT OF THE EVIDENCE AND APPLICABLE RULINGS OF THE SUPREME COURT.000. plaintiff Mamerto R.00 by way of exemplary damages. 1988 insofar as it affects the personal properties listed in par.000.00 per month. from November 1986 until subject personal properties are restored to appellees. for exemplary damages. PBCom raised the following issues: 24 . SO ORDERED. III THE HONORABLE COURT OF APPEALS (SECOND DIVISION) ERRED IN DEEMING PETITIONER A PURCHASER IN BAD FAITH. judgment is hereby rendered in favor of plaintiff corporation and against the defendants: 1. 1 Jet Drying Equipment.R No. and their return to the plaintiff corporation through its assignee. 9 of the complaint. IV THE HONORABLE COURT OF APPEALS (SECOND DIVISION) ERRED IN ASSESSING PETITIONER ACTUAL DAMAGES. No pronouncement as to costs. Ordering the defendants to pay jointly and severally the plaintiff corporation the sum of P200. both PBCom and Tsai appealed to the Court of Appeals. 4. Ordering the dismissal of the counterclaim of the defendants.Interlock Circular Knitting Machines. Ordering the defendants to pay jointly and severally the plaintiff corporation the sum of P50. and 6.00 as compensation for the use and possession of the properties in question from November 1986 to February 1991 and P100. with interest thereon at the legal rate per annum until full payment. 5.00 to P20. 1982 auction sale since these were not included in the schedules attached to the mortgage contracts. 3.000.000. Tsai on May 3. Ordering the annulment of the sale executed by defendant Philippine Bank of Communications in favor of defendant Ruby L. 1995. Ordering the defendants to proportionately pay the costs of suit. the dispositive portion of which reads: WHEREFORE. No.5 Motion for reconsideration of the above decision having been denied in the resolution of April 28. which issued its decision dated August 31. in all other respects.6 In G. V THE HONORABLE COURT OF APPEALS (SECOND DIVISION) ERRED IN HOLDING AGAINST PETITIONER'S ARGUMENTS ON PRESCRIPTION AND LACHES. Villaluz. 2. 120098.000. the judgment appealed from is hereby AFFIRMED. The trial court decreed: WHEREFORE. and reduction of the actual damages. PBCom and Tsai filed their separate petitions for review with this Court. 120098. petitioner Tsai ascribed the following errors to the respondent court: I THE HONORABLE COURT OF APPEALS (SECOND DIVISION) ERRED IN EFFECT MAKING A CONTRACT FOR THE PARTIES BY TREATING THE 1981 ACQUIRED MACHINERIES AS CHATTELS INSTEAD OF REAL PROPERTIES WITHIN THEIR EARLIER 1975 DEED OF REAL AND CHATTEL MORTGAGE OR 1979 DEED OF CHATTEL MORTGAGE.200. Ordering the defendants to pay jointly and severally the plaintiff corporation the sum of P5.000. from P100. In G.
Tsai argues that respondent court erred in holding that the disputed 1981 machineries are not real properties. BOLTED OR CEMENTED ON THE REAL PROPERTY MORTGAGED BY EVER TEXTILE MILLS TO PBCOM.8 Additionally. and neither were they included in the Sheriff's Notice of Sale of the foreclosed properties.9 Finally. in our view. either of the two mortgages.. It further argued that the Court of Appeals' pronouncement that the pieces of machinery in question were personal properties have no factual and legal basis. they were not part of the foreclosed real properties.14 The following are the facts as found by the RTC and affirmed by the Court of Appeals that are decisive of the issues: (1) the "controverted machineries" are not covered by. WHO HAD SPENT FOR MAINTENANCE AND SECURITY ON THE DISPUTED MACHINERIES AND HAD TO PAY ALL THE BACK TAXES OF EVER TEXTILE MILLS BE LEGALLY COMPELLED TO RETURN TO EVER THE SAID MACHINERIES OR IN LIEU THEREOF BE ASSESSED DAMAGES. The pertinent portion of respondent appellate 25 . AND WERE ASSESSED FOR REAL ESTATE TAX PURPOSES? II CAN PBCOM. that they were heavy. however. both the trial and the appellate courts reached the same finding that the true intention of PBCOM and the owner. In opposition. unless the factual findings complained of are devoid of support by the evidence on record or the assailed judgment is based on misapprehension of facts. WHO TOOK POSSESSION OF THE MACHINERIES IN QUESTION IN GOOD FAITH. Mere nuts and bolts do not foreclose the controversy. it asserts that the Court of Appeals erred in assessing damages and attorney's fees against PBCom. and the pure Chattel Mortgage. i.095. In the case at bar. The secondary issue is whether or not the sale of these properties to petitioner Ruby Tsai is valid.I. We have to look at the parties' intent. make them ipso facto immovable under Article 415 (3) and (5) of the New Civil Code.11 Essentially.13 This rule is applied more stringently when the findings of fact of the RTC is affirmed by the Court of Appeals. Tsai avers that the Court of Appeals in effect made a contract for the parties by treating the 1981 acquired units of machinery as chattels instead of real properties within their earlier 1975 deed of Real and Chattel Mortgage or 1979 deed of Chattel Mortgage.e. For her part.15 Petitioners contend that the nature of the disputed machineries. is whether or not the inclusion of the questioned properties in the foreclosed properties is proper. Well settled is the rule that the jurisdiction of the Supreme Court in a petition for review on certiorari under Rule 45 of the Revised Rules of Court is limited to reviewing only errors of law. EXTENDED CREDIT FACILITIES TO EVER TEXTILE MILLS WHICH AS OF 1982 TOTALLED P9. While it is true that the controverted properties appear to be immobile. we find the petitions devoid of merit and ought to be denied. DID THE COURT OF APPEALS VALIDLY DECREE THE MACHINERIES LISTED UNDER PARAGRAPH 9 OF THE COMPLAINT BELOW AS PERSONAL PROPERTY OUTSIDE OF THE 1975 DEED OF REAL ESTATE MORTGAGE AND EXCLUDED THEM FROM THE REAL PROPERTY EXTRAJUDICIALLY FORECLOSED BY PBCOM DESPITE THE PROVISION IN THE 1975 DEED THAT ALL AFTER‐ACQUIRED PROPERTIES DURING THE LIFETIME OF THE MORTGAGE SHALL FORM PART THEREOF. EVERTEX. bolted or cemented on the real property mortgaged by EVERTEX to PBCom. IS THAT SITUATION TANTAMOUNT TO A CASE OF UNJUST ENRICHMENT?7 The principal issue. or included in. and.12 Considering the assigned errors and the arguments of the parties. rendering the lease and the subsequent sale thereof to Tsai a nullity. Finally. does not settle the issue. therefore. PBCom contends that respondent court erred in affirming the lower court's judgment decreeing that the pieces of machinery in dispute were not duly foreclosed and could not be legally leased nor sold to Ruby Tsai.547. is to treat machinery and equipment as chattels. attorney's fees and expenses of litigation. (2) the said machineries were not included in the list of properties appended to the Notice of Sale.28. This assertion. not of fact. she contends that the Court of Appeals erred in holding against petitioner's arguments on prescription and laches10 and in assessing petitioner actual damages. a perusal of the contract of Real and Chattel Mortgage executed by the parties herein gives us a contrary indication. for want of valid factual and legal basis. private respondents argue that the controverted units of machinery are not "real properties" but chattels. AND DESPITE THE UNDISPUTED FACT THAT SAID MACHINERIES ARE BIG AND HEAVY. the Real Estate and Chattel Mortgage.
of the phrase "real and chattel. the intention of the parties is clear and beyond question. nothing detracts the parties from treating it as chattels to secure an obligation under the principle of estoppel. But reflective of the true intention of appellant PBCOM and appellee EVERTEX was the typing in capital letters.court's ruling is quoted below: As stressed upon by appellees. militates against appellants' posture. 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. the parties herein: (1) executed a contract styled as "Real Estate Mortgage and Chattel Mortgage. if the machineries in question were contemplated to be included in the real estate mortgage.17 Petitioner Tsai also argued that assuming that PBCom's title over the contested properties is a nullity. assuming arguendo that the properties in question are immovable by nature. As regards the 1979 contract. she knew of respondent's claim thereon. Pineda." And.996. that when Tsai purchased the controverted properties. the 1975 mortgage contract. the Chattel Mortgage Law applies. no valid title passed in its favor. and (2) attached to the said contract a separate "LIST OF MACHINERIES & EQUIPMENT".16 In the absence of any showing that this conclusion is baseless. erroneous or uncorroborated by the evidence on record. she received the letter of 26 . Well‐settled is the rule that the person who asserts the status of a purchaser in good faith and for value has the burden of proving such assertion. Accordingly. at the time of purchase. As borne out by the records. appellant bank treated the machineries as chattels. there would have been no necessity to ink a chattel mortgage specifically mentioning as part III of Schedule A a listing of the machineries covered thereby. Consequently. which are of the same description as the units enumerated under the title "LIST OF MACHINERIES & EQUIPMENT. 9 SCRA 631 (1963). are the factual findings and conclusions of the trial court that she is not a purchaser in good faith. It would have sufficed to list them as immovables in the Deed of Real Estate Mortgage of the land and building involved.50 worth of finished cotton fabrics and natural cotton fabrics. These facts.18 Petitioner Tsai failed to discharge this burden persuasively. insofar as equipment and machinery were concerned. A fortiori." instead of just "Real Estate Mortgage" if indeed their intention is to treat all properties included therein as immovable. however. however." must also be treated as chattels. one cannot give what one does not have. Now.19 Records reveal. we find no compelling reason to depart therefrom. the sale thereof to Tsai is also a nullity under the elementary principle of nemo dat quod non habet. Moreover. which was actually real and chattel mortgage. To the contrary. evince the conclusion that the parties' intention is to treat these units of machinery as chattels. Too. anything in the mortgage to the contrary notwithstanding. or before he has notice of the claims or interest of some other person in the property. since the disputed machineries were acquired in 1981 and could not have been involved in the 1975 or 1979 chattel mortgages. never as real properties. Indeed. it was consequently an error on the part of the Sheriff to include subject machineries with the properties enumerated in said chattel mortgages. then.880. the contested after‐acquired properties. 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. As far back as Navarro v. It should be noted that the printed form used by appellant bank was mainly for real estate mortgages. she is nevertheless a purchaser in good faith and for value who now has a better right than EVERTEX. In the instant case. the "machineries and equipment" in the printed form of the bank had to be inserted in the blank space of the printed contract and connected with the word "building" by typewritten slash marks. as in the case at bar. It refers solely to chattels. taken together. The inventory list of the mortgaged properties is an itemization of sixty‐three (63) individually described machineries while the schedule listed only machines and 2. As the auction sale of the subject properties to PBCom is void." So also. 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. a purchaser in good faith and for value is one who buys the property of another without notice that some other person has a right to or interest in such property and pays a full and fair price for the same. immediately following the printed caption of mortgage.
petitioners' defense of prescription and laches is less than convincing. in our view. We find no cogent reason to disturb the consistent findings of both courts below that the case for the reconveyance of the disputed properties was filed within the reglementary period. We believe that a net unrealized rental income of P20. representing monthly rental income of P100. As regards said actual compensation. there is nothing on record warranting the said award of P5. Note that upon petitioners' adamant refusal to heed EVERTEX's claim. 1987. Likewise. the contested damages are the actual compensation. Finally. especially in view of EVERTEX's letter to Tsai enunciating its claim.20 She replied thereto on March 9. the testimonial evidence. the machineries in dispute would have been idle due to absence of a lessee or while being repaired. There is no evidence showing any failure or neglect on its part. by exercising due diligence. .200.00 from November 1986 to February 1991.24 However.000. the amount of loss must not only be capable of proof but must actually be proven with reasonable degree of certainty.000. Petitioner Tsai's defense of indefeasibility of Torrens Title of the lot where the disputed properties are located is equally unavailing. too. respondent company immediately filed an action to recover possession and ownership of the disputed properties. Therefrom should be deducted or removed. business and investments that the rental price must take into account the cost of money used to buy them.000. there is no showing that had appellant Tsai not taken possession of the machineries and equipments in question. 1988. and the additional award of P100. dated February 27. expenses for maintenance and repairs . The testimony of John Cua (sic) is nothing but an opinion or projection based on what is claimed to be a practice in business and industry. the mere fact that the lot where the factory and the disputed properties stand is in PBCom's name does not automatically make PBCom the owner of everything found therein. But such a testimony cannot serve as the sole basis for assessing the actual damages complained of.000. since November 27 .000. it would be inequitable to allow a party to enforce his legal rights.00.21 Despite her knowledge of respondent's claim. In determining actual damages.00. apprising her of respondent's claim. and attorney's fees. to do that which. by way of unrealized rental income of subject machineries and equipments. even assuming arguendo that the said machineries and equipments could have generated a rental income of P30. The Court of Appeals did not give full credence to Chua's projection and reduced the award to P20. somebody was willing and ready to rent the same for P100. as projected by witness Mamerto Villaluz. is shy of what is necessary to substantiate the actual damages allegedly sustained by appellees. consisting of the testimonies of Jonh (sic) Chua and Mamerto Villaluz. In the light of the foregoing rationalization and computation.00 a month. there is a good basis to calculate that at least four months in a year.00 a month. who testified that the P100.22 As to the award of damages. the RTC awarded P100.respondent's counsel. we are not prepared to disregard the following dispositions of the respondent appellate court: . 1987. . This defense refers to sale of lands and not to sale of properties situated therein. this Court is not disposed to apply the doctrine of laches to prejudice or defeat the rights of an owner.00 corresponding to the unpaid rentals of the contested properties based on the testimony of John Chua. the allegations of respondent company as to the amount of unrealized rentals due them as actual damages remain mere assertions unsupported by documents and other competent evidence. representing rentals for the contested units of machinery. What is more. speculations. Thus. Basic is the rule that to recover actual damages. premised upon competent proof or best evidence obtainable of the actual amount thereof. the RTC did not err in finding that she was not a purchaser in good faith. xxx xxx xxx Then. Here. . Therefore. Moreover. the doctrine of laches does not apply.23 However. As pointed out by appellants.00 was based on the accepted practice in banking and finance.000. could or should have been done earlier.000. except for very strong reasons. for an unreasonable and unexplained length of time. in the determination of the actual damages or unrealized rental income sued upon. The doctrine of stale demands would apply only where by reason of the lapse of time.000.00 a month. . the same would have been a gross income.00 per month thereafter. the exemplary damages. the court cannot rely on mere assertions.000. In the award of actual damages under scrutiny. she proceeded to buy the contested units of machinery on May 3. conjectures or guesswork but must depend on competent proof and on the best evidence obtainable regarding the actual amount of loss.
R. concur.000. (2) P100. The amount of P200. JJ.25 As to exemplary damages. plaintiff‐appellant. L‐41643 July 31. is more realistic and fair.000. petitioner Tsai's act of purchasing the controverted properties despite her knowledge of EVERTEX's claim was oppressive and subjected the already insolvent respondent to gross disadvantage. equity calls for its reduction. excessive. Zaragoza and Araneta for appellees Cu Unjieng e Hijos. however. 585. Bellosillo. In Inhelder Corporation v. the following: (1) P20.R.000. Mendoza. 1935 B. and (3) P50.. But according to the CA. Court of Appeals. defendants‐ appellees. No. vs. RTC's award of P50. oppressive. attorney's fees and other expenses of litigation may be recovered when exemplary damages are awarded. PBCom's act of taking all the properties found in the factory of the financially handicapped respondent.00. the RTC awarded P200. given the circumstances in these cases. Jr.R.00 as attorney's fees and litigation expenses. wantonly and oppressively. however.1986. Tsai are hereby ordered to pay jointly and severally Ever Textile Mills. VILLA‐REAL. No. The assailed decision and resolution of the Court of Appeals in CA‐G. MABALACAT SUGAR COMPANY and THE PROVINCE SHERIFF OF PAMPANGA.00 for exemplary damages is. L‐52358. reckless or malevolent manner.26 and the guilty acted in a wanton. (May 30. WHEREFORE. Araneta.H.000.27 As previously stressed. Article 2216 of the Civil Code provides that no proof of pecuniary loss is necessary for the adjudication of exemplary damages. is equally oppressive and tainted with bad faith. G. Villaluz.000. Thus. here the award of exemplary damages by way of example for the public good should be reduced to P100. the petitions are DENIED. Petitioners Philippine Bank of Communications and Ruby L.00 by way of exemplary damages. BERKENKOTTER. By the same token. The evidence. Buena and De Leon.29 While the imposition of exemplary damages is justified in this case..00 per month. there was no clear showing that petitioners acted malevolently. J. their assessment being left to the discretion of the court in accordance with the circumstances of each case. we are in agreement with the RTC that an award of exemplary damages is proper. Thus. fraudulent. Inc.00 to EVERTEX which the Court of Appeals deleted.000. No appearance for the other appellees.00 as attorney's fees and expenses of litigation is reasonable.28 Thus.30 In our view. responding thereto on March 24. Petitioner PBCom also received the same letters of Atty. YEK TONG LIN FIRE AND MARINE INSURANCE COMPANY. including those properties not covered by or included in the mortgages. 122 SCRA 576. as compensation for the use and possession of the properties in question from November 198631 until subject personal properties are restored to respondent corporation. G. 32986 are AFFIRMED WITH MODIFICATIONS.000. we laid down the rule that judicial discretion granted to the courts in the assessment of damages must always be exercised with balanced restraint and measured objectivity. 1983). Costs against petitioners. CV No.: 28 . SO ORDERED. 1987. CU UNJIENG E HIJOS. Briones and Martinez for appellant. shows otherwise.It is a requisite to award exemplary damages that the wrongful act must be accompanied by bad faith.
B. With the loan of P25. R. Berkenkotter.. the Mabalacat Sugar Co. so that instead of milling 150 tons daily. Pomar and Compañia General de Tabacos (12 Phil.. ID. — It is a rule. 1877. and Amadeo [26 Sup. B. ETC. B. ID. A mortgage includes all natural accessions. promising to reimburse him as soon as he could obtain an additional loan from the mortgagees.A. Green failed to obtain said loan. as improvement incorporated with the central are subject to the mortgage deed executed in favor of the defendants Cu Unjieng e Hijos.A. Berkenkotter. the appellant assigns six alleged errors as committed by the trial court in its decision in question which will be discussed in the course of this decision. it is indispensable that the exclusion thereof be stipulated between the contracting parties. whether the estate continues in the possession of the person who mortgaged it or whether it passes into the hands of a third person. Inc. and rents not collected when the obligation falls due. proposed to the plaintiff. the herein defendants Cu Unjieng e Hijos. on October 9th of the same year. apparatus. Having agreed to said proposition made in a letter dated October 5.H.. Article 1877 of the Civil Code provides as follows. In support of his appeal.000.S. It is admitted by the parties that on April 26.A. the Mabalacat Sugar Co. Green. ART. and limitations established by law. 199 U. which is raised in the first assignment of alleged error. dismissing said plaintiff's complaint against Cu Unjiengs e Hijos et al.000 against said corporation for unpaid salary. 690). are also included. shortly after said mortgage had been constituted. therefore. delivered the sum of P1.. B. growing fruits. The appellant contends that the installation of the machinery and 29 . Inc. on April 27.This is an appeal taken by the plaintiff. vs. sugar‐cane mill. Green. decided to increase the capacity of its sugar central by buying additional machinery and equipment. Miller. and machinery that existed thereon were also comprehended. Green and installed in the sugar central after the execution of the original mortgage deed. and 1877 of the Civil Code. the improvements on the same are included. 1926. steel railway. improvements. 1926.. MORTGAGE OF REAL ESTATE INCLUDES IMPROVEMENTS AND FIXTURES.. steel railway. telephone line. liquidator. Berkenkotter had a credit of P22. Supreme Court in the matter of Royal Insurance Co.. Pampanga.750. is whether or not the lower court erred in declaring that the additional machinery and equipment.. B. — In order that it may be understood that the machinery and other objects placed upon and used in connection with a mortgaged estate are excluded from the mortgage. cited with approval in the case of Cea vs. telephone line. The first question to be decided in this appeal.) 2. this court laid shown the following doctrine: 1. president of said corporation. now existing or that may in the future exist is said lots. amplifications. 1926 (Exhibit E). 538). with which the decisions of the courts of the United States are in accord. 110 and 111 of the Mortgage Law.750 and said credit of P22. applied to Cu Unjieng e Hijos for an additional loan of P75. Inc.A. and the amount of any indemnities paid or due the owner by the insurers of the mortgaged property or by virtue of the exercise of the power of eminent domain. (Arts. Green having been P25.H. utensils and whatever forms part or is necessary complement of said sugar‐cane mill.. Ct." On October 5. 46.H.H. the Mabalacat Sugar Co.. B. to advance the necessary amount for the purchase of said machinery and equipment.710 to B. B. Cu Unjieng e Hijos. with the declarations. buildings. Berkenkotter. Green. The estimated cost of said additional machinery and equipment was approximately P100. Inc. 1927. from the judgment of the Court of First Instance of Manila. REALTY. Villanueva (18 Phil. Inc. it could produce 250. all objects permanently attached to a mortgaged building or land..S. the total amount supplied by him to said B. when it was stated in the mortgage that the improvements. owner of the sugar central situated in Mabalacat. although they may have been placed there after the mortgage was constituted.. In the case of Bischoff vs. established by the Civil Code and also by the Mortgage Law. improvements. 353]. together with whatever additional equipment acquired with said loan.. with costs.. Furthermore. purchased the additional machinery and equipment now in litigation.. a loan secured by a first mortgage constituted on two parcels and land "with all its buildings.. 1927. that in a mortgage of real estate. On June 10.000 offering as security the additional machinery and equipment acquired by said B.A.A. Rep. president of the Mabalacat Sugar Co. In order to carry out this plan. obtained from the defendants. INCLUSION OR EXCLUSION OF MACHINERY.. president of the Mabalacat Sugar Co. decision of U.000.
converted them into real property by reason of their purpose. Berkenkotter to hold said machinery and equipment as security for the payment of the latter's credit and to refrain from mortgaging or otherwise encumbering them until Berkenkotter has been fully reimbursed therefor.A. So ordered.A. August 22. Butte. of the Civil Code gives the character of real property to "machinery. Inc. PCI LEASING AND FINANCE. Civil Code). for its sugar industry. and Goddard. Green bound himself to the plaintiff B. respondent.R. petitioners... Inc. as a loan. the fact that B.. was not permanent in character inasmuch as B. with costs to the appellant. 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. Green from giving them as security at least under a second mortgage. JJ.A.A. that in case B. Green binding himself not to mortgage nor encumber them to anybody until said plaintiff be fully reimbursed for the corporation's indebtedness to him. 137705. does not vest the creditor with ownership of said machinery and equipment but simply with the right of redemption. it is affirmed in all its parts. finding no error in the appealed judgment.. it cannot be said that their incorporation therewith was not permanent in character because.. as such president. 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. as president of the Mabalacat Sugar Co. Inc..: 30 . is not incompatible with the permanent character of the incorporation of said machinery and equipment with the sugar central of the Mabalacat Sugar Co. Exhibit E.equipment claimed by him in the sugar central of the Mabalacat Sugar Company. and SERGIO T. GOQUIOLAY. Inc. the necessary machinery and equipment installed for carrying on the sugar industry for which it has been established must necessarily be permanent. was transferred thereby. J. Furthermore. in the sugar central with which said machinery and equipment had been incorporated.. said machinery and equipment would become security therefor. paragraph 5. D E C I S I O N PANGANIBAN.. subject to the right of the defendants Cu Unjieng e Hijos under the first mortgage. made it appear in the letter.A. [G. (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 latter's credit.. Malcolm. could not have offered them to the plaintiff as security for the payment of his credit. Inc. INC. and while the mortgage constituted on said sugar central to Cu Unjieng e Hijos remained in force. As to the alleged sale of said machinery and equipment to the plaintiff and appellant after they had been permanently incorporated with sugar central of the Mabalacat Sugar Co. and (3) that the sale of the machinery and equipment in question by the purchaser who was supplied the purchase money. Upon acquiring the machinery and equipment in question with money obtained as loan from the plaintiff‐appellant by B. Green.. Green. 2000] SERG’S PRODUCTS. Green should fail to obtain an additional loan from the defendants Cu Unjieng e Hijos. as nothing could prevent B. the latter became owner of said machinery and equipment. in lieu of another of less capacity. Imperial. Article 334. If the installation of the machinery and equipment in question in the central of the Mabalacat Sugar Co.. vs. Inasmuch as the central is permanent in character. after the incorporation thereof with the mortgaged sugar central. Wherefore. Green. Inc. as essential and principal elements of a sugar central. constitutes a permanent improvement on said sugar central and subjects said machinery and equipment to the mortgage constituted thereon (article 1877. we are of the opinion and so hold: (1) That the installation of a machinery and equipment in a mortgaged sugar central.A... in proposing to him to advance the money for the purchase thereof.A. No. concur.. in lieu of the other of less capacity existing therein. For the foregoing considerations. for the purpose of carrying out the industrial functions of the latter and increasing production.H. otherwise B. only the right of redemption of the vendor Mabalacat Sugar Co. to the person who supplied the money. INC. said B. without them the sugar central would be unable to function or carry on the industrial purpose for which it was established.
such property is a proper subject of a writ of replevin obtained by the other contracting party.” The Facts The undisputed facts are summarized by the Court of Appeals as follows: “On February 13. by petitioners. seized one machinery with [the] word that he [would] return for the other machineries.” Observing that Petitioner Goquiolay was an experienced businessman who was “not unfamiliar with the ways of the trade. 1998 Resolution denied petitioners’ Motion for Special Protective Order. respondent PCI Leasing and Finance. since the merits of the whole matter are laid down before us via a petition whose sole purpose is to inquire upon the existence of a grave abuse of discretion on the part of the 31 . The Case Before us is a Petition for Review on Certiorari assailing the January 6. 47332 and its February 26. the parties’ agreement to the contrary notwithstanding. petitioners filed a motion for special protective order (Annex ‘C’). 1999 Decision of the Court of Appeals (CA) in CA‐GR SP No. (“PCI Leasing” for short) filed with the RTC‐QC a complaint for [a] sum of money (Annex ‘E’). 1998. 1998.After agreeing to a contract stipulating that a real or immovable property be considered as personal or movable. 1998. “In their Reply. the sheriff again sought to enforce the writ of seizure and take possession of the remaining properties. premises considered. Rizal and to return to their original place whatever immobilized machineries or equipments he may have removed. a party is estopped from subsequently claiming otherwise. The writ of preliminary injunction issued on June 15. 1999 Resolution denying reconsideration. the assailed Order dated February 18. Q‐98‐33500. to accord merit to this petition would be to preempt the trial court in ruling upon the case below. the sheriff proceeded to petitioner’s factory. “On March 6. in implementation of said writ. upon an ex‐parte application of PCI Leasing. the Regional Trial Court (RTC) of Quezon City (Branch 218) issued a Writ of Seizure. 1998. Hence. 1998 in Civil Case No. It also ruled that the “words of the contract are clear and leave no doubt upon the true intention of the contracting parties. 1998 Order. 1998. “This motion was opposed by PCI Leasing (Annex ‘F’). They further stated that PCI Leasing [was] estopped from treating these machineries as personal because the contracts in which the alleged agreement [were] embodied [were] totally sham and farcical. not owned. with an application for a writ of replevin docketed as Civil Case No. The decretal portion of the CA Decision reads as follows: “WHEREFORE. “On April 7. Inc. Q‐98‐33500 are hereby AFFIRMED.” Ruling of the Court of Appeals Citing the Agreement of the parties. “On March 24. praying that the deputy sheriff be enjoined “from seizing immobilized or other real properties in (petitioners’) factory in Cainta. the appellate court held that the subject machines were personal property.” The CA further held: “Furthermore. They argued that to give effect to the agreement would be prejudicial to innocent third parties. 1998.” In its February 18. respondent judge issued a writ of replevin (Annex ‘B’) directing its sheriff to seize and deliver the machineries and equipment to PCI Leasing after 5 days and upon the payment of the necessary expenses. 1998 is hereby LIFTED. petitioners asserted that the properties sought to be seized [were] immovable as defined in Article 415 of the Civil Code. they went to [the CA] via an original action for certiorari. invoking the power of the court to control the conduct of its officers and amend and control its processes. “On March 25. and that they had only been leased. He was able to take two more. The March 18. praying for a directive for the sheriff to defer enforcement of the writ of replevin. on the ground that the properties [were] still personal and therefore still subject to seizure and a writ of replevin.” it ruled that he “should have realized the import of the document he signed. “On April 6. 1998 and Resolution dated March 31. but was prevented by the workers from taking the rest.
.. x x x........ Whether or not the machineries purchased and imported by SERG’S became real property by virtue of immobilization.. In this light. necessitating presentation of evidence by both parties.. and [its] validity is attacked by the other – a matter x x x which respondent court is in the best position to determine.... It further alleges that the Petition erroneously impleaded Judge Hilario Laqui as respondent.. ‐‐ Upon the filing of such affidavit and approval of the bond. Section 3 thereof reads: “SEC. The issues raised herein are proper subjects of a full‐blown trial..... Rule 60 of the Rules of Court provides that writs of replevin are issued for the recovery of personal property only.... the name of Judge Laqui from the caption of the present case..... Serious policy considerations.... all of them have become “immobilized by destination because they are essential and principal elements in the industry... Order.. they argue... This conclusion finds support in the very title of the Petition. the machines that were the subjects of the Writ of Seizure were placed by petitioners in the factory built on their own land.” On the other hand.........[RTC] in issuing the assailed Order and Resolution.... The contract is being enforced by one.. militate against a contrary characterization. Preliminary Matter:Procedural Questions Respondent contends that the Petition failed to indicate expressly whether it was being filed under Rule 45 or Rule 65 of the Rules of Court. Hence. although each of them was movable or personal property on its own... There is no question that the present recourse is under Rule 45..x x x....... because they were in fact real property... and which tend directly to meet the needs of the said industry or works... 3. As a preliminary matter. not personal... motu proprio..... property pursuant to Article 415 (5) of the Civil Code....” In that sense. the Court will resolve whether the said machines are personal. the Court will also address briefly the procedural points raised by respondent..” While Judge Laqui should not have been impleaded as a respondent... Whether or not the contract between the parties is a loan or a lease.x x x” In the present case.......... they were essential and principal elements of their chocolate‐making industry.. 415.... The Court’s Ruling The Petition is not meritorious. The following are immovable property: x x x........x x x. Main Issue: Nature of the Subject Machinery Petitioners contend that the subject machines used in their factory were not proper subjects of the Writ issued by the RTC..... 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.... receptacles. The Issues In their Memorandum..... 32 .......... B. Indisputably.. property which may be a proper subject of a writ of replevin.. which is “Petition for Review on Certiorari... the Court deems it proper to remove..... substantial justice requires that such lapse by itself should not warrant the dismissal of the present Petition..... this Petition.. Article 415 of the Civil Code enumerates immovable or real property as follows: “ART..” In the main...... not immovable... the court shall issue an order and the corresponding writ of replevin describing the personal property alleged to be wrongfully detained and requiring the sheriff forthwith to take such property into his custody..x x x (5) Machinery. petitioners submit the following issues for our consideration: “A.” Hence..... petitioners are correct in arguing that the said machines are real....
third persons acting in good faith are not affected by its stipulation characterizing the subject machinery as personal. After agreeing to such stipulation. they further allege that the Agreement is invalid. These arguments are unconvincing. they are consequently estopped from claiming otherwise.” Applying Tumalad. is effectively a resolution of the merits of the case. Hence. The Court ruled: “x x x. Submitting documents supposedly showing that they own the subject machines. or hereafter become. It should be stressed. Vicencio. selling or transferring a property by way of chattel mortgage defendants‐appellants could only have meant to convey the house as chattel.” In their Reply to respondent’s Comment. Although there is no specific statement referring to the subject house as personal property. petitioners also argue in their Petition that the Agreement suffers from “intrinsic ambiguity which places in serious doubt the intention of the parties and the validity of the lease agreement itself. Specifically. so that they should not now be allowed to make an inconsistent stand by claiming otherwise.Be that as it may. however. Section 12. 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. the Court upheld the intention of the parties to treat a house as a personal property because it had been made the subject of a chattel mortgage. intended to treat the same as such. real property or any building thereon. This is really because one who has so agreed is estopped from denying the existence of the chattel mortgage. In any event. Wearever Textile Mills also held that the machinery used in a factory and essential to the industry. Validity of the Lease Agreement In their Memorandum. yet by ceding. Hence. there is absolutely no reason why a machinery.1 The PROPERTY is. petitioners are estopped from denying the characterization of the subject machines as personal property. or attached in any manner to what is permanent. or permanently resting upon. may not be likewise treated as such.” In the present case. which is movable in its nature and becomes immobilized only by destination or purpose. not in the proceedings involving the issuance of the Writ of Seizure. there is no showing that any specific third party would be adversely affected. or at least. v. Under the circumstances. was a proper subject of a writ of replevin because it was treated as personal property in a contract. in any manner affixed or attached to or embedded in. the Court in Makati Leasing and Finance Corp. Pertinent portions of the Court’s ruling are reproduced hereunder: “x x x. and shall at all times be and remain. The validity and the nature of the contract are the lis mota of the civil action pending before the RTC.” Clearly then. If a house of strong materials. the Lease Agreement clearly provides that the machines in question are to be considered as personal property. Hence. Under the principle of estoppel. therefore. while the parties are bound by the Agreement. they are proper subjects of the Writ of Seizure. personal property notwithstanding that the PROPERTY or any part thereof may now be. they should be threshed out in the trial. petitioners contend that the Agreement is a loan and not a lease. like what was involved in the above Tumalad case. may be considered as personal property for purposes of executing a chattel mortgage thereon as long as the parties to the contract so agree and no innocent third party will be prejudiced thereby. in Tumalad v. as in the present case. A resolution of these questions. The Court has held that contracting parties may validly stipulate that a real property be considered as personal. a party to a contract is ordinarily precluded from denying the truth of any material fact found therein.1 of the Agreement reads as follows: “12. we disagree with the submission of the petitioners that the said machines are not proper subjects of the Writ of Seizure. 33 .
” They also allege that the seizure would nullify all efforts to rehabilitate the corporation. these questions require a determination of facts and a presentation of evidence. They were not allowed. Vitug. the Petition is DENIED and the assailed Decision of the Court of Appeals AFFIRMED. require the return thereof. such fact alone does not render a contract void ab initio. the Court noted that the remedy of defendants under Rule 60 was either to post a counter‐bond or to question the sufficiency of the plaintiff’s bond. Costs against petitioners. As earlier discussed. it must be presumed valid and binding as the law between the parties. concur. then its workers would be out of work and thrown into the streets. which allows the filing of a counter‐bond. Return of property. if such delivery be adjudged. was also assailed because respondent had allegedly been required “to sign a printed form of chattel mortgage which was in a blank form at the time of signing. and for the payment of such sum to him as may be recovered against the adverse party. by filing with the court where the action is pending a bond executed to the applicant. ruling as follows: “x x x. the law does not allow the defendant to file a motion to dissolve or discharge the writ of seizure (or delivery) on ground of insufficiency of the complaint or of the grounds relied upon therefor. or annullable pursuant to Article 1390 of the new Civil Code. Purisima. 34 . but if he does not so object. the Court explained that the policy under Rule 60 was that questions involving title to the subject property – questions which petitioners are now raising ‐‐ should be determined in the trial. as in proceedings on preliminary attachment or injunction. the Deed of Chattel Mortgage. The Court ruled: “In other words. petitioners assailed it first only in the RTC proceedings. x x x” Alleged Injustice Committed on the Part of Petitioners Petitioners contend that “if the Court allows these machineries to be seized. the policy apparently being that said matter should be ventilated and determined only at the trial on the merits. JJ. law and jurisprudence support its propriety. should not be blamed on this Court. if they come true. which had ironically been instituted by respondent. and thereby put at issue the matter of the title or right of possession over the specific chattel being replevied. In that case.Indeed. which characterized the subject machinery as personal property. for nothing on record shows that it has been nullified or annulled. In fact. Reliance on the Lease Agreement It should be pointed out that the Court in this case may rely on the Lease Agreement. by a proper action in court. however. but on the petitioners for failing to avail themselves of the remedy under Section 5 of Rule 60.. Makati Leasing and Finance Corporation is also instructive on this point. at any time before the delivery of the property to the applicant. Moreover. both of which have no place in a petition for certiorari in the CA under Rule 65 or in a petition for review in this Court under Rule 45. the above‐ mentioned consequences. (Chairman). ‐‐ If the adverse party objects to the sufficiency of the applicant’s bond. Petitioners’ arguments do not preclude the implementation of the Writ. Neither is it disclosed that steps were taken to nullify the same.” The Court rejected the argument and relied on the Deed. and by serving a copy bond on the applicant. CA. Melo. to invoke the title to the subject property. SO ORDERED. and Gonzaga‐Reyes. In that case.” Besides. in La Tondeña Distillers v. even granting that the charge is true.” WHEREFORE. or of the surety or sureties thereon. There is nothing on record to show that the mortgage has been annulled. he cannot immediately require the return of the property. 5. Verily. but can only be a ground for rendering said contract voidable. The provision states: “SEC. he may. in double the value of the property as stated in the applicant’s affidavit for the delivery thereof to the applicant. Accordingly.
tried together. a like statement of facts was made applicable to both. held that a transfer of all the property of a corporation to one advancing money to enable it to continue its business was not a conditional sale of the property. machinery placed on property by a tenant does not become immobilized. Supreme Court Valdes v. ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ VALDES V. refuse to proceed with the trial on the ground that the time to plead has not expired. and when such refusal to proceed is inconsistent with his prior attitude in the case. CENTRAL ALTAGRACIA. and in view of the existence of an equity of redemption under prior transfers. S. These cases were consolidated below. 59 lease. On the eighteenth day of 35 . however.R. Stating only things deemed to be essential as shown by the pleadings and documents annexed to them and the finding of facts made below. 155 affirmed. held that the lien of the attachment of a creditor of the tenant on machinery placed by the tenant on a sugar Central in Porto Rico is superior to the claim of the transferee of an unrecorded Page 225 U. a tenant places it there pursuant to contract that it shall belong to the owner. 193. INC. 225 U. even though the lease required the tenant to place the machinery on the property. 58 (1912) U. the transferee stood merely as a secured creditor The mere form of an instrument transferring property of a debtor cannot exclude the power of creditors to inquire into the reality and substance of a contract unrecorded. The establishment was known as the Central Altagracia. the record shows that the refusal to continue on account of absence of witness was not an abuse. 5 P.. Central Altagracia. while not a cane grower. and Sanchez. 196 Submitted March 6.S. 58 (1912) Valdes v. We shall do likewise. on liquidation of the assets. of acquiring cane grown by others and manufacturing it into sugar at his factory. carried on the business of a central ‐‐ that is. it becomes immobilized as to that tenant and his assigns with notice. although it does not become so as to creditors not having legal notice of the lease. but a just exercise..S. but a contract creating security for the money advanced. Inc.S. 1912 Decided May 13. MR. Central Altagracia. In this case. A litigant cannot. Under the circumstances of this case. CHIEF JUSTICE WHITE delivered the opinion of the Court. 1912 225 U. The facts are stated in the opinion. when. 225 U. the case is this: Joaquin Sanchez owned in Porto Rico a tract of land of about 22 acres (cuerdas) on which was a sugar house containing a mill for crushing cane and an evaporating apparatus for manufacturing the juice of the cane into sugar. Incorporated Nos. although required by law to be recorded in order to be effective against third parties. and not subject to be reviewed on appeal except in cases of clear error and abuse. of discretion. Under the general law of Porto Rico. in this case. All of the machinery was antiquated and of a limited capacity. 58 APPEALS FROM THE DISTRICT COURT OF THE UNITED STATES FOR PORTO RICO Syllabus The record in this case shows that the court below did not err in bringing this case to a speedy conclusion and avoiding the loss occasioned by the litigation to all concerned. and. and the court disposed of them in one opinion. after all parties have acquiesced in the order setting the case for trial and the court has denied his request for continuance. S. The granting of a continuance is within the sound discretion of the trial court.
if the necessary improvements shall not have been begun by him (Castello)." Central factories in Porto Rico usually "make contracts with the people (colonos) growing cane. either for the whole or part thereof. by a supplementary contract. as required by the Porte Rican laws. provided that the corporation should issue to Castello a certain number of paid‐up shares of its capital stock and a further number of shares as the output of sugar from the plant increased as the result of its enlarged capacity consequent upon the improvement of the machinery by the corporation." It was stipulated. or July of the year following. no charge should be made for repairs of the existing machinery or for new machinery put in. the contract provided: "Upon the expiration of the term agreed on under this contract. Although executed under private signature. making the total term twenty years. and terminates in the months of May. to Frederick L. and it was provided that. June. Sanchez. that. according to the amount of cane to be ground. this lease. as above stated. Don Joaquin Sanchez. in fixing the profits. On the first day of July. S. The season for grinding cane and the manufacture of sugar in Porto Rico usually commences "about the month of December of each year. Sanchez. Salvador and Gerardo Castello transferred all their rights acquired under the lease.January. "upon the expiration of this term. Otherwise. his brother. for this reason. Sanchez leased his land and plant to Salvador Castello for a period of ten years. "and be a contracting party if he so desired. This transfer of the lease to the corporation was never put upon the public records. as the entire cost of these matters was to be borne by the lessee. in the event of the absence or death of his brother Salvador. the plantation. was produced before a notary and made authentic. of which he is the trustee. took charge of the plant. and in the case of the death of Castello. for a substitution of Gerardo Castello. in case of the death of Sanchez. the obligations of the contract should be binding on his heirs. moreover. and no cause of action shall accrue to any of the contracting parties by reason thereof. S. 60 of the years mentioned (the term of the lease) shall become the exclusive property" of the lessor. that. then this contract shall be null and void. and. shall immediately pass into the possession of its owner. The remaining seventy‐five percent (75%) shall belong to Don Salvador Castello. Page 225 U. The lease provided." The rental was thus provided for: "After each crop. however. should take his place." This transfer bound the corporation to all the obligations in favor of the original lessor. The lease further provided for the employment of Castello as superintendent at a salary. such profits as may be produced by the Central Altagracia shall be distributed. 61 1905. and in such form was duly registered on the public records. The corporation was organized under the laws of the State of Maine. it is to be assumed Gerardo made himself a party to the transfer of the lease. Gerardo Castello. The lease gave to the tenant (Castello) the right to install in the plant "such machinery as he may deem convenient. any improvement or machinery installed in the said central shall remain for the benefit of Don Joaquin Sanchez. which said machinery at the end Page 225 U. 1905. in such a condition at it may be at his death. Castello. The tenant was given one year in which to begin the work of repairing and improving the plant. and twenty‐five percent (25%) thereof shall be immediately paid to Don Joaquin Sanchez as equivalent for the rental of said central and of the twenty‐two (22) cuerdas of land surrounding the same. who may interest therein whomsoever he may wish. Cornwell for "the corporation to be organized under the name of Central Altagracia." Further agreeing on the subject of the improved machinery which was to be placed in the plant. so that growers 36 . conformably to the laws of Porto Rico. 1905." In June. under the transfer. and. the lease was extended without change of its terms and conditions for an additional period of ten years. and Don Salvador Castello shall have no right to claim anything for the improvements made.
conformably to the original lease. The contract transferring the lease to the Central Altagracia. since there was a provision in the contract binding Valdes to lease the property to the corporation pending the period of redemption. This sale was declared to be for a consideration of sixty‐five thousand ($65. Valdes sold to the company all the rights which he had acquired 37 .000) dollars which "the company has received afterwards in cash from Valdes. and all its title to the machinery which the corporation had put into the plant. the corporation borrowed from the commercial firm of Nevers & Callaghan in New York City the sum of twenty‐five thousand dollars ($25.000) to enable the corporation to pay for new and enlarged machinery which it had ordered. in the months of June or July. of the grinding season of that year. and thirty thousand ($30. We say this because it is certain that. under the authority of its board of directors.000) received by the corporation.000) dollars which the company acknowledged to have received from Valdes. 1906. there was a very considerable sum unpaid on the debt of Nevers & Callaghan. the corporation. at the end. which began in December. 1905. This transfer expressly included all the machinery previously placed by the corporation in the sugar house. 64 ($35. if it was not insolvent. the corporation. At the time it was made. in the City of New York.000) dollars cash. as the purpose of the previous contract of sale. all tend to establish that. twenty‐five thousand four hundred dollars Page 225 U. A short while before the commencement of the grinding season of 1907‐1908 in October. sold to one Ramon Valdes all its rights acquired under the lease transferred by Castello. on April 11. through its president. 1907. the affairs of the corporation were embarrassed. Incorporated. S. sanctioned by a vote of the stockholders. 1907. While such grinding season was progressing. likewise in the City of New York (on November 2. on the termination of one grinding season. and such contracts Page 225 U. which began in December. through its president. and to its entire satisfaction. either because insufficient capital had been put into the venture or because the business had been carried on at a loss. To what extent the corporation contracted for cane to be delivered to it for grinding during the season of 1905‐06. the previous sale was declared to be no longer operative. declaring himself to be authorized by the board of directors. July. by the payment of the thirty‐five Page 225 U. as we have said. 63 ($25.of cane will deliver the same to be ground. commences in December." In other words. apparently made an absolute sale of all the rights of the corporation under the lease. was accomplished by the new sale. joined with the period when the sale with the right to redeem was made ‐‐ that is. which had been made subject to the equity of redemption. "shall be a part of said factory for the manufacture of sugar." There was a provision in the contract to the effect that." This sale was made subject to a right to redeem the property within a year on paying Valdes the entire amount of his debt. and the balance of nine thousand six hundred dollars ($9. it is usual in the ensuing August to make new contracts for the cane to be delivered in the following grinding season. and which was placed in the factory in time to be used in the grinding season of 1906‐07. This fact. S. There was a stipulation that Valdes assumed all the obligations of the lease transferred by Castello to the company. at that time. it was declared.600) shall be turned over to the vendor corporation by Senor Valdes immediately upon being required to do so by the former. 62 are usually made and entered into in the months of June. in the fall of 1906 (October). which. S. 1907).400) whereof had been paid prior to this act [of sale]. that the corporation began the work of installing new machinery to give the plant a larger capacity within the year stipulated in the lease from Sanchez to Castello. first. the approaching end of the sugar‐making season of 1906 and 1907 ‐‐ coupled with other facts to which we shall hereafter make reference. however. was made in July. This sale was passed in Porto Rico before a notary public." The consideration for the sale was stated in the contract to be "thirty‐five thousand dollars ($35. A few days afterwards. as well as machinery which might be thereafter installed during the term of redemption hereafter to be referred to. therefore. but was never put upon the public records. and which. 1905. as stated in the previous sale made subject to the equity of redemption. The undoubted purpose was not to interfere with the operation of the plant by the corporation. and August. does not appear. It is inferable.
and that firm sued in the court below the corporation to recover the debt. and in May. and upon the stipulation that any default by the corporation entitled Valdes ipso facto to take possession of the property. 1909. failed to carry out his agreement to advance the money. 1907. and 1911. Previous to. The bill then alleged that Valdes. and that the only sum he had advanced at that time was the $35. The nature of the suit and the relief sought is not disclosed. The bill alleged the default of the corporation. presumably upon the theory that there had been a default in the obligations assumed in their favor by the corporation at the time it took the transfer of the lease. etc. or not long subsequent to. by the default in paying one of the installments of the price stated in the conditional sale. payable in installments falling due in the years 1908.000. The grinding season of 1907‐1908 commenced in December. respectively. mismanaged the affairs of the property in many alleged particulars. and did various acts to the prejudice of the company and to his own wrongful enrichment. brought a suit in the court below against the corporation. It would seem also. and a suit growing out of that state of things was brought in the lower court. etc. and upon the condition that the papers be executed embodying the so‐called sale of the company to Valdes and the practically simultaneous conditional sale by Valdes to the company. or about that time. Prior to the making of the sales just stated. the bringing of the suit at law. That.000) dollars. This transfer was put in the form of a conditional sale which reserved the title in Valdes until the payment of the deferred price. the time Nevers & Callaghan Page 225 U. to pay off the sum due Nevers & Callaghan. having thus become the president of the company. for the debt of Nevers & Callaghan was not paid. with interest. The bill then stated that. the right to the relief prayed had arisen. and the threat to sell the machinery under such execution. It was charged that the price stated to have been paid by Valdes as a consideration of the conditional sale was fictitious. S. 1908. the heirs of Sanchez. failed to provide for the debt of Nevers & Callaghan. S. at that time. but it is inferable from the facts stated that the suit either sought to recover the property on the ground that there was no power in Castello to transfer the lease or upon the ground of default in the conditions as to payment of profits as rental which the lease stipulated. the waste and destruction of the value of the property which would result if there was no one representing the corporation having power to contract for cane to be delivered during the next grinding season. the precise date not being stated in the record. discord arose between its stockholders. Neither this act of sale from Valdes to the corporation nor the one made by the corporation to Valdes were ever put upon the public records. and was obviously not a successful one. 65 commenced their suit. 66 to carry on the same. at about the same time. Valdes exacted as a consideration for his loan that he be made a director and vice‐president of the company. Valdes agreed to advance the money if he were made president of the company at a stipulated salary. make the necessary contracts for cane for the future. 1910. and in the same month execution was issued and levied upon the machinery in the sugar house. given a bonus in the stock of the company. the refusal of the corporation to deliver possession of the property. The prayer was for the appointment of a receiver to take charge of the property.000 which it was the purpose to secure by means of the sale with the equity of redemption. probably as the result of the want of success of the corporation. the original lessor. This litigation was commenced in June. either one or both of the Castellos brought a suit against the company. 1908.. a judgment was recovered by them against the corporation for about $17. and for the operation of the plant. the price being sixty‐five thousand ($65. the confusion in the affairs of the corporation. it being prayed that the receiver should be empowered to issue receiver's certificates to the extent necessary to the accomplishment of the purposes which the bill had in view. with authority Page 225 U. In the meanwhile also.from it by the previous sale. the judgment and levy of the execution by Nevers and Callaghan. it having become evident in the following autumn that the corporation would require more money to increase its plant. On the same day. a bill was filed on behalf of the corporation against Valdes. which it is unnecessary to recapitulate. On the same day. The necessity of 38 . by the bringing by Valdes of an action at law in the court below to recover the plant on the ground that. Valdes commenced a suit in equity against the corporation in aid of the suit at law. This bill attacked the sale made to Valdes and by him to the corporation. the corporation defaulted in the payment of a note held by Nevers & Callaghan for a portion of the money which they had loaned the corporation under the circumstances which we have previously stated.
Despite this. interference in the meanwhile with the custodian being enjoined. The prayer was for the appointment of a receiver and with power to carry on the business of the central. to secure contracts for cane for the coming crop season. and not even then unless the attorneys for both parties should be in Porto Rico. and the defendants were required to answer on or before Monday. and thus prevent further controversies. The only difference which seems to have arisen concerning the appointment of the receiver grew out of the fact that a prayer of the Central Altagracia. and to cause "immediate issue to be raised on the pleadings for that purpose.contracting for cane during the contract season in order that the plant might continue during the next operating season to be a going concern. It directed that demurrers which had been filed in the consolidated cause of Valdes against the corporation and of the corporation against Valdes be overruled. those rights would be subordinate to the ultimate determination of the suit brought by 39 . that the demurrer in the suit at law of Valdes would remain in abeyance to await the final action of the court on the trial of all the issues in the equity causes. however. with authority to issue receiver's certificates for the purpose of borrowing the money which might be required. the fair inference is that the ultimate action of the court was not objected to by anyone. in order that. The judge. 1909. etc. was denied. being about to leave Porto Rico for a brief period. the 27th of July. the solicitors of the Altagracia Company and Valdes put a stipulation of record that. asking the court to appoint as receiver Mr. the issues raised might be tried before the court without the intervention of a master. 1909. We say this not only because of the conduct of the parties prior to the order appointing the receiver. but because. This order was followed by a memorandum opinion filed on July the 21st stating very fully the position of the respective suits. S. it was declared that nothing would be done in the suit of the heirs of Sanchez against Castello and the Altagracia. It was provided in the order. indicating its purpose to bring the litigation. and that a demurrer filed to the suit of Castello against the Central would be overruled. on July 12. The execution of the Nevers & Callaghan judgment was stayed pending an appeal which had been taken to this Court. the counsel representing the heirs of Sanchez and of Nevers & Callaghan stated their opposition to a continuance of the receivership. a member of the bar and one of the counsel of the corporation. Shortly thereafter. if necessary. Pettingill. July 26. that nothing in this direction should prevent the parties from filing such additional pleadings as it is deemed necessary for the protection of their rights by way of cross bill or amendment. the necessity for action in order to preserve the property from waste. The hope of a beneficial result from the operation of the plant by the receiver proved delusive. To make the order efficacious. 67 be occasioned. In July. receivership. and reiterating the view that. On July 17. and who was also its treasurer. As a result of such operation. a receiver was appointed and authority given him to continue the property as a going concern and to borrow a limited amount of money on receiver's certificates. and the waste and loss which would otherwise Page 225 U. the two suits were by order consolidated. Valdes and the firm of Nevers & Callaghan and the individual members of that firm were made defendants. and. were fully alleged. declined to appoint a permanent receiver. 68 after that order.. upon the following day." This memorandum was entitled in all the pending causes concerning the property. It appears that. 69 which was pending on appeal. to an end. because of the hope that the result of a successful operation of the plant during the coming crop season might ameliorate the affairs of the corporation. Page 225 U. there was a considerable loss represented by outstanding receiver's certificates. the record contains a statement that. creditors of the corporation intervened and joined in the prayer made by both of the complainants for the appointment of a receiver. with no means of paying except out of the property. but named a temporary one to keep the property together until a further hearing could be had. the court placed a memorandum on the files. S. no steps whatever should be taken in the proceedings. a conference was had between the court and all parties concerned to determine what steps should be taken to meet the situation. Page 225 U. S. etc. at that conference. whatever might be the rights of the Central Altagracia or of Valdes under the lease. for that purpose. to contract for cane for the coming season. until the following October. after a hearing. with power. Obviously for this reason. and that a stay of the Nevers & Callaghan execution would be also disposed of when the equity cases came to be decided.
make so many allegations and admissions as that the real issue between the parties can be plainly seen. or plead or answer to the cross‐bill therein save and except within the time which they contended the rules governing this Court of equity gave them. and would stand upon what they considered their rights in that regard. and proceed with the cause and file them at any convenient time thereafter. the request was communicated by the court to the other counsel in the cause. and on July 26 its answer in the suit of Valdes. and the application was denied. When the consolidated cause was called for trial on the morning of July 27. if it so desired. Later in the day of July 27.the heirs of Sanchez. and the court granted until the morning of July 28 for such purpose. stated that he objected to proceeding to take any evidence in any of the causes at that time. 565. an amended bill of complaint in its suit against Valdes. treat them as filed. S. On the contrary." Thereupon the record again recites: "Messrs. B. on July 22. between the time of that order and the period fixed for the commencement of a hearing. Valdes. Pettingill & Page 225 U. file exceptions to the answer in suit 565 and an answer to the cross‐complaint ‐‐ indeed. because the same was not at issue or in condition for the taking of evidence. and Nevers & Callaghan manifested their acquiescence by obtaining leave to make themselves parties and asserting their rights by cross‐bill and answers which it is unnecessary to detail. that the corporation might. and Nevers & Callaghan modified their pleadings to the extent deemed by them necessary to present for trial the issues upon which they relied. 71 Cornwell. 565. an answer was immediately filed to it and a cross‐bill also filed. in the opinion of the court. attorneys for the Central Altagracia. To the action of the court as above stated no objection appears to have been made. on the morning of the 28th. The acceptance by Valdes of the terms of the order was shown by an answer filed to the bill in the suit of the company and the cross‐bill in the same cause. the record states: "Said counsel for the Central Altagracia stated that he desired time to file exceptions to the answer and an answer to the cross‐bill in suit No. The record states that the request for continuance was opposed by all the other counsel. 564 ‐‐ Altagracia v. the court stated: "That the matter has been pending for more than a year. S. and that. whereupon the record recites: "N. if it wished. Thereupon. 565. In doing so. in response to the same. enough proof is available here in Porto Rico. and that counsel had full notice of the court's intention to press the matters to issue and trial. and the amended complaint already on file in suit No." The court thereupon declared that the Altagracia Company might by the next day. the counsel of the corporation." When the court assembled the next day. or the testimony of any witnesses. and desired to be understood that they would not except to the answer in suit No. and objected to the taking of such evidence until the issues of said causes are made up in accordance with the rules of practice applicable to equity causes. was read by the court in the presence of all the counsel." The record further recites: "Which objection was overruled by the court on the ground that the action called for thereby is not necessary. In the case of the Central Altagracia. 70 as to the wrongdoing of Valdes in administering the affairs of the corporation. the Central Altagracia. when the admissions of the pleadings are so broad that the proofs available here in Porto Rico are probably sufficient. Valdes ‐‐ as well as the cross‐bill also recently filed in suit No. Pettingill. Pettingill. 465. one of the counsel for Valdes having requested the court to postpone the hearing of the cause until the morning of the 29th because of an unexpected professional engagement elsewhere. Central Altagracia ‐‐ and the answer thereto and the answer recently filed in suit No. the 40 . stated that they withdrew any statement they have hitherto made in the cause in that regard. ‐‐ Valdes v. this was done by filing. etc. a statement concerning the occurrence of the previous day as to the continuance.. counsel for the Central Altagracia. This application was supported by the affidavit of Mr. just reviewed. and that it is not disposed to delay matters at this time. That the bill was amended within three days. the counsel for the Central Altagracia moved a continuance in order to take the testimony of certain witnesses in Philadelphia and New York for the purpose of proving some of the allegations of the complaint Page 225 U.
we think the statement makes it perfectly clear that the steps taken by the court for the purpose of bringing the case to a speedy conclusion. Instead of coming within this latter category. or at least acquiescence in it. S. by virtue of its execution and levy upon the machinery. to pay enough cash to discharge the costs. the refusal of the court to grant a continuance upon the affidavit as to the absence of material witnesses. 563 at law. by all concerned. (b) the judgment of Nevers & Callaghan. and (c) the debt of Valdes. and that that firm. but a just exercise. We shall endeavor as briefly as may be to dispose of the contentions relied upon to secure a reversal. We think all the contentions on this subject are demonstrated to be devoid of merit by the statement of the case which we have made. that the judgment in favor of Nevers & Callaghan was valid. . were also acquiesced in by all the parties in interest who complied with the terms of that order and took advantage of the rights which it conferred. Second. Page 225 U. I." This ruling of the court having been excepted to. and that. and thus avoiding the further loss which would result to all interests concerned. We think also the statement makes it apparent that the refusal on the part of the corporation to proceed with the trial. Third. . anyway. that as the result of the contracts between Valdes and the Central Altagracia. taxes. the issue could be tried on the bill and answer in both suits. 72 had been placed in the sugar house by the Altagracia Company. S. Considering the assignments of error insofar as they relate alone to overruling of the application for continuance. . upon the theory that the time to plead allowed by the equity rules had not elapsed. or of the other assets of the corporation. (d) debts due the other creditors. and with the rights of all the other parties to the cause which had arisen from that order and from the virtual approval of it. The Central Altagracia appeal. As to the Appeal of Valdes. the counsel for the Central Altagracia taking no part in the same and virtually treating the proceedings as though they did not concern that corporation. had a prior right to Valdes. The sum of the secured debt was fixed after making allowances for some not very material credits which the corporation was held to be entitled to.said cross‐bill making only the same claims as were made in suit No. or of the machinery which Page 225 U. the sums due to various creditors of the corporation were fixed and the equities or priorities were classified as follows: (a) taxes due by the corporation and the sum of the receiver's certificates and certain costs. it is manifest Page 225 U. but that he was merely a secured creditor. and the claim of Nevers & Callaghan. 73 from that statement that the proceeding leading up to the appointment of a receiver and the power given to administer the property was largely the result of the assent of the corporation. based upon the absence of witnesses. for the purpose of enforcing these conclusions. ‐‐ The alleged errors insisted on in behalf of that company relate to the asserted arbitrary action of the court in forcing the cause to trial without affording the time which it is insisted the corporation was entitled to under the equity rules applicable to the subject. etc. the court decided: first. In substance. it suffices to say that. we think the facts as to the refusal to continue and the conduct of the parties make it clear that there was not only no abuse. of discretion. and imposed the duty upon Valdes. it suffices to say that the elementary rule is that the granting of a continuance of the cause was peculiarly within the sound discretion of the court below ‐‐ a discretion not subject to be reviewed on appeal except in case of such clear error as to amount to a plain abuse springing from an arbitrary exercise of power. machinery. Without going into details. These appeals were then prosecuted. 74 II. receiver's certificates. he was not the owner of the rights of that corporation under the lease. the one by the Central Altagracia and the other by Valdes. In the first place. 41 .. the decree directed a sale of all the rights of the Central Altagracia in and to the lease. when the unsuccessful financial issue of the receivership had become manifest. In the second place. if he became the purchaser. was the result of a change of view because of the action of the court in refusing the continuance on account of the absent witnesses ‐‐ a change of front which was inconsistent with the rights which the corporation had exercised in accord with the order setting the cause for trial. contract. and second. ‐‐ Two propositions are relied upon: first. S. the trial proceeded from day to day.
et seq. but a mere contract was entered into which the parties intended to be a mere security to Valdes for money advanced and to be advanced by him. and the relation of Valdes to the corporation at the time the contracts were made. Demolombe. 203. Second. Following the Code Napoleon. personal property ‐‐ because of the destination to which it is applied. 9. if made. the Porto Rican Code treats as immovable (real) property not only land and buildings. may be immobilized. that the ruling of the court below denied that right under the Spanish law to make a conditional sale. but the effect and operation of the contract upon third parties. S. p.. because the argument rests upon an imaginary premise ‐‐ that is.. to and inclusive of article 534. upon the hypothesis that Valdes was but a secured creditor. 447. in substance and effect. Tit. but. 76 implements intended by the owner of the tenements for the industry or works that they may carry on in any building or upon any land. that. under the Porto Rican law. and the authorities cited to sustain it are inapposite to the case to be here decided. So far as the subject matter with which we are dealing ‐‐ machinery placed in the plant ‐‐ it is plain. the failure to register any of the contracts. as pointed out by 42 . S.that error was committed in treating Valdes merely as a secured creditor. when the ruling which the court made proceeded upon the conclusion that there was no conditional sale. This being the case. Tit. Page 225 U. error was committed in awarding to Nevers & Callaghan priority over Valdes. The first proposition is supported by a reference to the Porto Rican Code and decisions of the Supreme Court of Spain and the opinions of Spanish law writers. and the immediate transfer of the same rights by him to the corporation in the form of a conditional sale. by the placing of machinery in a plant by a tenant or a usufructuary or any person having only a temporary right. That its character was such as to require inscription we shall in a few moments demonstrate in coming to consider the second proposition ‐‐ that is. 5. or held that such a sale. 75 The contention that. viz. therefore. it resulted that whatever might be the mere form. it is manifest that it is wholly irrelevant to argue that error was committed in not applying the assumed principles of the Porto Rican and Spanish law governing in the case of a conditional sale. and its nature and character from the point of view of Nevers & Callaghan as a judgment creditor of the Altagracia Company. under article 522 et seq. no conditional sale was made. if it had been.. that. is obviously without merit. Tit. which is as follows: "Machinery. would not have the effect which the argument insists it was entitled to." says § 334 of the Porto Rican Code. No. 12. But the contention is not relevant. in any event. 2. instruments. though in themselves movable. This is true because the action of the court was solely based upon a premise of fact. The contention is additionally without merit since it assumes that the mere form of the contract excluded the power of creditors to inquire into its reality and substance. "Things. as the case as presented involved not a controversy alone between the parties to the contract. and which tend directly to meet the needs of the said industry or works. was error committed in subordinating his claim to the prior claim of Nevers & Callaghan under their judgment and execution? To determine this question involves fixing the nature and character of the property from the point of view of the rights of Valdes. under the circumstances of the case and in view of the prior sale with the equity of redemption. Laurent. and decisions quoted in Fuzier‐Herman ed. Code Napoleon. vessels. recapitulating the things which. but also attributes immovability in some cases to property of a movable nature ‐‐ that is.. The distinction rests. that machinery which is movable in its nature only becomes immobilized when placed in a plant by the owner of the property or plant." See also Code Nap. Aubry et Rau. and in not holding him to be the absolute owner of the rights and property alleged to have been transferred by the so‐called conditional sale. the form was controlling because proof of the substance was not admissible seems not to have been raised below. No. articles 516. the cancellation of that sale. "may be immovable either by their own nature or by their destination. and the transfer made by the corporation to Valdes. both under the provisions of the Porto Rican law and of the Code Napoleon. 518. even although the contract was never inscribed upon the public records so as to bind third parties. Such result would not be accomplished." Numerous illustrations are given in the fifth subdivision of section 335. § 164. and the rights derived by them from the execution levied on the machinery placed by the corporation in the plant. or Page 225 U. the creditors of the corporation. or the object to which they are applicable.
Demolombe. See also numerous authorities collected under the heading above stated in paragraph 21. but for the transfer of a contract of that character. 1. under articles 516. lost its character as a movable. says Aubry and Rau. But such a transfer was clearly a contract concerning real rights to immovable property within the purview of article 613 of the Civil Code. 78 to immovables which are not properly inscribed or annotated in the registry of property shall not be prejudicial to third parties. and who had expressly assumed the obligations of the lease. Page 225 U. in compliance with the obligations resting upon him. the objects which are dedicated to the use of a piece of land or a building by a lessee cannot be considered as having become immovable by destination except in the case where they have been applied for account of the proprietor. and 518 of the Code Napoleon. as 43 . in the concrete. as regards Nevers & Callaghan. or in execution of an obligation imposed by the lease. They were not parties to nor had they legal notice of the lease and its conditions from which alone it arose that machinery put in the premises by the Altagracia became immovable property. par. p. abstractly speaking. just previously quoted. being. who claimed under the lease. Especially is this the case in view of the stipulations of the lease as to the immobilization of movable property placed in the plant. that "the immobilization with which the article is concerned can only arise from an act of the owner himself or his representative. as to Valdes. as stated in paragraphs 1. "The sale which a lessee makes to a third person to whom he transfers his right of lease is the sale of an immovable right. for all the purposes of the exercise of his rights. the tenant. 2. movable property. It follows that. Hence. § 164. 517. deprived the tenant of any right to charge against the lessor the cost of such machinery. . and it was expressly stipulated that the machinery so put in should become a part of the plant belonging to the owner without compensation to the lessee. and explicitly also arose from the express requirement of paragraph 6. in putting in the machinery." It is not disputable that the duty to inscribe the lease by necessary implication resulted from the general provisions of article 2 of the mortgage law of Porto Rico." It is true that. S. by an act of immobilization. was but a part of the real estate ‐‐ a conclusion which cannot be avoided without saying that Valdes could at one and the same time assert the existence in himself of rights and yet repudiate the obligations resulting from the rights thus asserted. to become the property of another. But. 77 Under such conditions. since the lease in substance required the putting in of improved machinery. 12. and not simply a sale of a movable one. The machinery levied upon by Nevers & Callaghan ‐‐ that is. 643." See numerous decisions of the courts of France. by the fact of its being so placed. 171). beginning with the decision on February 2. . p. S. and the other obligations imposed upon the lessee. in a strict sense. Nevers & Callaghan were creditors of the corporation. and became united with and a part of the plant as an immovable by destination. or from the Altagracia to Valdes. 1842. of that Code. the contracts between Castello and the Altagracia Company and with Valdes were not contracts of lease. and the immobilization of the machinery which resulted arose in legal effect from the Act of the owner in giving by contract a permanent destination to the machinery." It follows that the machinery placed by the corporation in the plant. immobilization took place because of the express provisions of the lease under which the Altagracia held. It is true. 2. relating to the registry of "contracts for the lease of real property for a period exceeding six years. vol. 2. It also follows that. providing. it follows that they had the right to levy on it under the execution upon the judgment in their favor. Fuzier‐Herman ed. The want of notice arose from the failure to record the transfer from Castello to the Altagracia. that which was placed in the plant by the Altagracia Company. and 3 thereof. of the Court of Cassation (Journal du Palais  vol. and from Valdes apparently conditionally back to the corporation ‐‐ a clear result of § 613 of the Civil Code of Porto Rico. "The titles of ownership or of other real rights relating Page 225 U. since. . the machinery. and the exercise of that right did not in a legal sense conflict with the claim of Valdes. upon the fact that one only having a temporary right to the possession or enjoyment of property is not presumed by the law to have applied movable property belonging to him so as to deprive him of it by causing it. was acting but as the agent of the owner. the machinery put by the Altagracia Company in the plant belonging to Sanchez did not lose its character of movable property and become immovable by destination.
of the heirs of Sanchez. we say that nothing we have said affects the rights. 2. L‐17870 September 29. appearing in the attached photograph.400 petitioner's above‐mentioned equipment. Binamira. he could not. marked Annex "B". 5. for the purpose of collecting his debt. Respondent City Assessor of Cagayan de Oro City assessed at P4. marked Annex "D". Pagadian. 4. whatever they may be. That these machineries are sitting on cement or wooden platforms as may be seen in the attached photographs which form part of this agreed stipulation of facts. thru their respective counsels agreed to the following stipulation of facts: 1. Zamboanga del Sur. so petitioner herein filed with the Court of Tax Appeals a petition for the review of the assessment. That petitioner has its main office and shop at Cagayan de Oro City. J. 3. (b) Storm Boring Machine. 710 holding that the petitioner Mindanao Bus Company is liable to the payment of the realty tax on its maintenance and repair equipment hereunder referred to. marked Annex "G". S. appearing in the attached photograph. As a matter of precaution.to him. THE CITY ASSESSOR & TREASURER and the BOARD OF TAX APPEALS of Cagayan de Oro City.: This is a petition for the review of the decision of the Court of Tax Appeals in C. That the machineries sought to be assessed by the respondent as real properties are the following: (a) Hobart Electric Welder Machine. G. marked Annex "C". Bukidnon Province. a repair shop. and same are repaired in a condition to be serviceable in the TPU land transportation business it operates. body constructed. Affirmed. Sabellina for respondents. (d) Black and Decker Grinder. LABRADOR. appearing in the attached photograph. (c) Lathe machine with motor. That petitioner is a public utility solely engaged in transporting passengers and cargoes by motor trucks. Lanao. and (g) D‐Engine Waukesha‐M‐Fuel. In the Court of Tax Appeals the parties submitted the following stipulation of facts: Petitioner and respondents. Petitioner appealed the assessment to the respondent Board of Tax Appeals on the ground that the same are not realty. and with these machineries which are placed therein. (f) Battery charger (Tungar charge machine) appearing in the attached photograph. marked Annex "E". 44 . marked Annex "A". Davao City and Kibawe. petitioner. appearing in the attached photograph. Case No. marked Annex "F". vs. respondents. appearing in the attached photograph. 79 of his obligations under the lease. the property was a part of the realty. which as the result Page 225 U. Vicente E. 1962 MINDANAO BUS COMPANY. collecting rates approved by the Public Service Commission. The Board of Tax Appeals of the City sustained the city assessor. blacksmith and carpentry shops. (e) PEMCO Hydraulic Press.R. over its authorized lines in the Island of Mindanao.T. Barria and Irabagon for petitioner. the original lessor. It maintains Branch Offices and/or stations at Iligan City.A. That petitioner is the owner of the land where it maintains and operates a garage for its TPU motor trucks. its TPU trucks are made. proceed separately against. No. appearing in the attached photograph.
gives the character of real property to "machinery. Inasmuch as the central is permanent in character.nèt The Court of Tax Appeals having sustained the respondent city assessor's ruling. and having denied a motion for reconsideration. by reason of their being intended or destined for use in an industry. nor to repair machineries. paragraph (c) of Republic Act No. it cannot be said that their incorporation therewith was not permanent in character because. IBM machines. etc. and which tend directly to meet the needs of the said industry or works. 521. The Honorable Court of Tax Appeals erred in upholding respondents' contention that the questioned assessments are valid. H. machineries of breweries used in the manufacture of liquor and soft drinks. to date. theaters. The Court of Tax Appeals erred in denying petitioner's contention that the respondent City Assessor's power to assess and levy real estate taxes on machineries is further restricted by section 31. typewriters. petitioner brought the case to this Court assigning the following errors: 1. are immobilized by destination. Thus. 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. though movable in nature.1awphîl. Berkenkotter vs. and thus retain their movable nature. Airline companies use forklifts. but the delivery trucks and adding machines which they usually own and use and are found within their industrial compounds are merely incidental and retain their movable nature. which are incidentals. equipments or machineries are immovable taxable real properties. in lieu of the other of less capacity existing therein. usually found and used in hotels. 663. On the other hand. (Emphasis ours. are merely incidentals and are not and should not be considered immobilized by destination. etc. receptacles. 61 Phil. etc." We may here distinguish. and that said tools.6. The Tax Court erred in denying petitioner's motion for reconsideration. cash registers.. and 4. by their nature. 3. 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. tho movable. restaurants. Similarly. jeep‐wagons. parts and the like offered to the general public indiscriminately for business or commercial purposes for which petitioner has never engaged in. 415). not essential and principal. in accordance with paragraph 5 of Article 415 of the New Civil Code which provides: Art. converted them into real property by reason of their purpose. pressure pumps. not essentials.) Note that the stipulation expressly states that the equipment are placed on wooden or cement platforms. for its sugar and industry. In the case of B. those movable which become immobilized by destination because they are essential and principal elements in the industry for those which may not be so considered immobilized because they are merely incidental. liquid containers. Respondents contend that said equipments. and holding that pursuant thereto the movable equipments are taxable realties. 2. They can be moved around and about in petitioner's repair shop. not essential and principle municipal elements of 45 .. are immobilized because they are essential to said industries. paragraph (5) of the Civil Code. (Emphasis ours. The Tax Court erred in its interpretation of paragraph 5 of Article 415 of the New Civil Code.." If the installation of the machinery and equipment in question in the central of the Mabalacat Sugar Co.) So that movable equipments to be immobilized in contemplation of the 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. therefore. the tools and equipments in question in this instant case are. as essential and principle elements of a sugar central. That these machineries have never been or were never used as industrial equipments to produce finished products for sale. without them the sugar central would be unable to function or carry on the industrial purpose for which it was established. the Supreme Court said: Article 344 (Now Art. for these businesses can continue or carry on their functions without these equity comments. — The following are immovable properties: x x x x x x x x x (5) Machinery. Cu Unjieng. 415. Inc. the necessary machinery and equipment installed for carrying on the sugar industry for which it has been established must necessarily be permanent.
C. Raul Acampado. PANGANIBAN. and petitioner's business is not carried on in a building. assailing the March 25. and which tend directly to meet the needs of the said industry or works. The law that governs the determination of the question at issue is as follows: Art. No. represented by his Attorney‐in‐ Fact. FLORO T. Regala.) Aside from the element of essentiality the above‐quoted provision also requires that the industry or works be carried on in a building or on a piece of land.. JJ. Thus in the case of Berkenkotter vs. liquid containers. Even without such tools and equipments. J. as petitioner has carried on. et al. Alejo.. Presiding Judge of the Regional Trial Court. which states in full: "This resolves the petition for annulment of judgment based on ‘external (sic) fraud’ filed by petitioner Metropolitan Bank and Trust Company seeking to annul the Decision dated August 12. respondents. Without costs. 415. we hold that the equipments in question are not absolutely essential to the petitioner's transportation business. J. Said equipments may not. Hon. But in the case at bar the equipments in question are destined only to repair or service the transportation business. 2001 METROPOLITAN BANK. G. receptacles. because the non‐joinder of the mortgagee deprived the court of jurisdiction to pass upon the controversy. A sawmill would also be installed in a building on land more or less permanently. 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. its business may be carried on. & TRUST COMPANY. 141970 September 10. WHEREFORE.J. and instruments or implements" are found in a building constructed on the land. The transportation business could be carried on without the repair or service shop if its rolling equipment is repaired or serviced in another shop belonging to another.L.: In a suit to nullify an existing Torrens Certificate of Title (TCT) in which a real estate mortgage is annotated. Reyes.R. which is not carried on in a building or permanently on a piece of land. 1999 Resolution of the Court of Appeals (CA) in CA‐GR SP No. Resuming what we have set forth above. 50638. Branch 172. as demanded by the law. vs. Paredes. Bautista Angelo. SIAN SUAT NGO. Bengzon. and SY TAN SE. Concepcion and Barrera JJ.. in His Capacity as Presiding Judge of Branch 172 of the Regional Trial Court of Valenzuela. They are merely incidentals — acquired as movables and used only for expediency to facilitate and/or improve its service. petitioner. therefore. tenement or on a specified land. the decision subject of the petition for review is hereby set aside and the equipment in question declared not subject to assessment as real estate for the purposes of the real estate tax. 46 . 4930‐V‐96 entitled ‘Sy Tan Se. supra. the "machinery. and the sawing is conducted in the land or building. so said equipment may not be considered real estate within the meaning of Article 415 (c) of the Civil Code. in Civil Case No. ALEJO. Honorable Floro T. without such equipments. (Civil Code of the Phil. The Case Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court. 1998 rendered by respondent judge. a decision canceling the TCT and the mortgage annotation is subject to a petition for annulment of judgment. Valenzuela. So ordered. took no part. the mortgagee is an indispensable party. The following are immovable property: x x x x x x x x x (5) Machinery. be deemed real property. Padilla. Cu Unjieng. In such suit. concur.. represented by his attorney‐in‐fact Sian Suat Ngo v.petitioner's business of transporting passengers and cargoes by motor trucks. Dizon and Makalintal. before the war.B. Metro Manila.
1996. Hence.9 nor was she notified of its existence. the Acampados executed in favor of petitioner a Real Estate Mortgage5 and an Amendment of Real Estate Mortgage6 over a parcel of land registered in their names. where the contracts were also registered on November 20. a petition for relief from judgment or an action for quieting of title.000 and P2. 1998. 4930‐V‐96. SO ORDERED.11 This sale was entered in the Registry of Deeds of Valenzuela on July 28. 1996. Rule 47. 1999. Upon presentation to the Register of Deeds of the Affidavit of Consolidation of Ownership.000. a Complaint for Declaration of Nullity of TCT No. 1996. As security for the payment of these credit accommodations.000. 1997.8 the progenitor of the present controversy. Branch 172. V‐41319. petitioner executed an Affidavit of Consolidation of Ownership to enable the Registry of Deeds of Valenzuela to issue a new TCT in its name. When the redemption period lapsed exactly a year after. annulling TCT No. 3). respectively.7 On June 3.13 Issues In its Memorandum. this Petition. the petition for annulment of judgment is DENIED DUE COURSE and DISMISSED outright for being insufficient in form and substance (Section 2."This Court has observed that petitioner knew of the questioned Decision sometime [i]n October 1998 (Petition. judgment is hereby rendered declaring as null and void Transfer Certificate of Title No. In the Regional Trial Court (RTC) of Valenzuela. the Petition for Annulment was outrightly dismissed by the CA. V‐41319 was filed by Respondent Sy Tan Se against Spouses Acampado. Because the spouses defaulted in the payment of their loan. instead. On June 17. 1997 Rules of Civil Procedure). The Facts On November 21. 1998 RTC Decision in Civil Case No. it was docketed as Civil Case No. 19953 and January 30. p. Accordingly. during which petitioner submitted the highest and winning bid. petitioner was informed of the existence of the August 12.10 On July 15. With costs against the defendant.000." On January 27. petitioner was not made a party to Civil Case No. the sheriff of Valenzuela conducted an auction sale of the property. This being the case. 4930‐V‐96. petitioner should have first sought recourse by way of petition for relief from judgment under Rule 38 of the 1997 Rules of Civil Procedure. The land was covered by TCT No. 1995 and January 23. 1997. a Certificate of Sale was issued in its favor." Also challenged is the January 27. It ruled that petitioner ought to have filed. 2000 CA Resolution2 denying petitioner’s Motion for Reconsideration. Ruling of the Court of Appeals For being insufficient in form and substance. petitioner presents the following issues: "I x x x [W]hether or not a petition for annulment of judgment under Rule 47 47 . 1997. V‐41319 in the Registry of Deeds of Valenzuela City. respectively.4 Spouses Raul and Cristina Acampado obtained loans from petitioner in the amounts of P5. extrajudicial foreclosure proceedings over the mortgaged property were initiated on April 19. Rollo.V‐41319 in the name of defendant Raul Acampado for having proceeded from an illegitimate source. Despite being the registered mortgagee of the real property covered by the title sought to be annulled. 4930‐V‐96. The dispositive portion of the Decision12 stated: "WHEREFORE. 1997. on July 28. petitioner filed with the Court of Appeals a Petition for Annulment of the RTC Decision.
Section 1. First." Since petitioner was never a party to the case or even summoned to appear therein. Casimiro et al. V‐41319. Filing an action for quieting of title will not remedy what it perceived as a disregard of due process. a "cloud on title is a semblance of title which appears in some legal form but which is in fact unfounded. mistake.‐When a judgment or final order is entered. order or proceeding be set aside. was not available to petitioner.15 the Court held that ‐‐ relative to a motion for relief on the ground of fraud. 4930‐V‐96 which adversely affected it. the Court of Appeals reasoned that another remedy. which would have otherwise been alerted to the need to intervene therein. V‐41319. We do not agree. v.of the 1997 Rules of Civil Procedure is the proper remedy available to petitioner under the circumstances. states: "Petition for relief from judgment. Though presumed by private respondent. however. 4930‐V‐96 should be annulled. he may file a petition in such court and in the same case praying that the judgment. or other proceedings. because there were three different remedies available but they were not resorted to by petitioner. The availability of this remedy hinges on petitioner’s knowledge of the pendency of that case. order. mistake. any such knowledge prior to October 1998 is."16 In this case. an action for quieting of title." (Italics supplied) It must be emphasized that petitioner was never a party to Civil Case No. or any other proceeding is thereafter taken against a party in any court through fraud." "II x x x [W]hether or not the judgment of the trial court in Civil Case No.17 Clearly. Third. 4930‐V‐96. because to do so would require the court hearing the action to modify or interfere with the judgment or order of another co‐equal court. It would not be proper to consider the subject judgment as a cloud that would warrant the filing of an action for quieting of title. Petitioner focused on the judgment in Civil Case No. then the remedy of relief from judgment under Rule 38 of the Rules of Court was not proper. a petition for relief. Equally important. accident. as that action may lead to confusion and seriously hinder the administration of justice. private respondent cites a last remedy: the intervention by petitioner in Civil Case No. the remedy pointed to by the Court of Appeals. We are not persuaded.. 4930‐V‐96. In Lagula et al. Rule 38 of the Rules of Court. As defined. and which it therefore sought to annul. in denying petitioner’s Motion for Reconsideration of the Decision dismissing the Petition for Annulment of Judgment. it is therefore not an appropriate remedy. This is plainly provided in the italicized words of the present provision just quoted. was also available to petitioner. accident. an action for quieting of title is filed only when there is a cloud on title to real property or any interest therein. Well‐entrenched in our jurisdiction is the doctrine that a court has no power to do so. The Petition for Annulment before the Court of Appeals precisely alleged that private respondent purposely concealed the case by excluding 48 . emphatically denied by petitioner."14 The Court’s Ruling The Petition is meritorious. or excusable negligence ‐‐ Rule 38 of the Rules of Court "only applies when the one deprived of his right is a party to the case. Second. It should be stressed that this case was instituted to ask for relief from the peremptory declaration of nullity of TCT No. an action for quieting of title is not an appropriate remedy in this case. First Issue: Proper Remedy Respondents aver that a petition for annulment is not proper. the subject judgment cannot be considered as a cloud on petitioner’s title or interest over the real property covered by TCT No. or excusable negligence. which had been issued without first giving petitioner an opportunity to be heard. which does not even have a semblance of being a title.
V‐41319 adversely affected its property rights. if his interest in the controversy or subject matter is separable from the interest of the other parties. I. jurisprudence requires such joinder. a judgment of a Court cannot attain real finality. may be the basis for annulling a judgment. Indispensable parties are those with such an interest in the controversy that a final decree would necessarily affect their rights. even if the latter was an indispensable party. x x x. Without the precence of indispensable parties to a suit or proceeding. because its rights over the mortgaged property would no longer be known and respected by third parties. The allegation of extrinsic fraud.19 Evidently. in his absence. the latter concludes that annulment of judgment was the only effective remedy open to it. for the court cannot proceed without them. however. without injuring or affecting that interest[."22 "Whenever it appears to the court in the course of a proceeding that an indispensable party has not been joined. so that it will not necessarily be directly or injuriously affected by a decree which does complete justice between them. Hence. 4930‐V‐96 necessarily entailed its enforcement against petitioner. (The Revised Rules of Court. the nullification of TCT No. 4930‐V‐96. V‐41319 was mortgaged to petitioner. Annotated & Commented by Senator Vicente J.petitioner as a defendant in Civil Case No."20 The joinder of indispensable parties to an action is mandated by Section 7. Vol." Aside from the above provision. Francisco. Rule 3 of the Revised Rules of Civil Procedures. even though it was not a party to that case. therefore. the execution of the Decision in Civil Case No. but also has an interest of such nature that a final decree cannot be made without affecting his interest or leaving the controversy in such a condition that its final determination may be wholly inconsistent with equity and good conscience. 4930‐V‐96. complete."21 "x x x. It has also been considered that an indispensable party is a person in whose absence there cannot be a determination between the parties already before the court which is effective. it should have been impleaded as a defendant in Civil Case No.] a party who has not only an interest in the subject matter of the controversy. – Parties in interest without whom no final determination can be had of an action shall be joined either as plaintiffs or defendants. coupled with the unavailability of the other remedies pointed to by respondents. so that the courts cannot proceed without their presence. or equitable. The nullification and cancellation of TCT No. if fully substantiated by a preponderance of evidence. Without due process of law. as the following excerpts indicate: "Indispensable parties must always be joined either as plaintiffs or defendants. "A person is not an indispensable party. 4930‐V‐96. which we quote: "SEC 7. the cancellation of the TCT and the mortgage annotation exposed petitioner to real prejudice.18 The resort to annulment becomes proper because of such allegation. p. considering that a real mortgage is a real right and a real property by itself. Second Issue: Lack of Jurisdiction It is undisputed that the property covered by TCT No. petitioner is encompassed within the definition of an indispensable party. 49 . an indispensable party is one who must be included in an action before it may properly go forward. Indeed. and that the mortgage was annotated on TCT No. V‐41319 carried with it the nullification and cancellation of the mortgage annotation. Compulsory joinder of indispensable parties. the former intended to deprive petitioner of the latter’s duly registered property right. It is also undisputed that all subsequent proceedings pertaining to the foreclosure of the mortgage were entered in the Registry of Deeds. Necessarily. Although a mortgage affects the land itself and not merely the TCT covering it. it is the duty of the court to stop the trial and to order the inclusion of such party. "An indispensable party is a party who has such an interest in the controversy or subject matter that a final adjudication cannot be made. V‐41319 before the institution of Civil Case No. Further. thus.
Mangubat27 this Court held as follows: "The well‐known rule in this jurisdiction is that a person dealing with a registered land has a right to rely upon the face of the Torrens Certificate of Title and to dispense with the need of inquiring further. This was not done. not only between the parties themselves but also as regards to other persons who may be affected by the judgment. V‐ 41319). 345. Neither the court nor private respondents bothered to implead petitioner as a party to the case. which named the mortgagors. that at the time the mortgage was constituted. since the mortgage may not even be valid because of the possible absence of compliance with the requirement26 that the mortgagor be the absolute owner of the thing mortgaged. See also Cortez vs. however. Avila. In Seno v." The peremptory disregard of the annotations registered and entered in TCT No. It is argued that petitioner cannot possibly be an indispensable party. the Acampado spouses.) The absence of an indispensable party renders all subsequent actuations of the court null and void. it can never become final and any writ of execution based on it is void:"x x x it may be said to be a lawless thing which can be treated as an outlaw and slain at sight. 4930‐V‐96. It cannot be the source of any right nor the creator of any obligation. at p. Polistico. Court of Appeals28 and Arcelona v. Its judgment therein was null and void due to lack of jurisdiction over an indispensable party. Rodriguez. In the absence of petitioner. It should be emphasized."25 We stress that the absence of indispensable parties renders all subsequent actuations of the court null and void. not only as to the absent parties but even as to those present. V‐41319 constituted a deprivation of private property without due process of law and was therefore unquestionably unjust and iniquitous. Court of Appeals."23 (emphasis supplied) "The evident aim and intent of the Rules regarding the joinder of indispensable and necessary parties is a complete determination of all possible issues. it is clear that the presence of indispensable parties is necessary to vest the court with jurisdiction. it was the trial court’s duty to order petitioner’s inclusion as a party to Civil Case No.29 we held thus: "A void judgment for want of jurisdiction is no judgment at all. an indispensable party. 705." WHEREFORE. as the registered owners of the property.) It is precisely ‘when an indispensable party is not before the court (that) the action should be dismissed. In Leonor v. otherwise everyone dealing with property registered under the Torrens system would have to inquire in every instance as to whether the title ha[s] been regularly or irregularly issued by the court. acquire rights over the property. or ignored wherever and whenever it exhibits its head. and the joinder of all indispensable parties under any and all conditions. at p. the presence of those latter parties being a sine qua non of the exercise of judicial power. All acts performed pursuant to it and all claims emanating from it have no legal effect. 1973 ed.271. Indeed this is contrary to the evident purpose of the law. not only as to the absent parties but even as to those present. for the ‘general rule with reference to the making of parties in a civil action requires the joinder of all necessary parties wherever possible. except when the party concerned has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make such inquiry. A valid judgment cannot even be rendered where there is want of indispensable parties. 101 Phil. the Petition is GRANTED and the assailed Resolutions of the 50 . where innocent third persons relying on the correctness of the certificate of title issued. the right to act in a case.’ (People vs."24 From the above. 347. Hence. x x x x x x x x x "Thus. the court cannot disregard such rights and order the total cancellation of the certificate for that would impair public confidence in the certificate of title. because of that court’s want of authority to act.. the trial court had no authority to act on the case. 327. which is "the authority to hear and determine a cause. This. for want of authority to act.’ (Borlasa vs. there was an existing TCT (No. Clearly. we cannot countenance.) Such an order is unavoidable. 47 Phil. 106 Phil. 325.
Melo. Vitug. and Sandoval‐Gutierrez. SO ORDERED. JJ. Gonzaga‐Reyes.Court of Appeals are REVERSED. The Decision of the Regional Trial Court in Civil Case No. No costs.. concur. 51 . 4930‐V‐41319 is hereby NULLIFIED and SET ASIDE.
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