cases in property law
TRANSCRIPT
-
7/27/2019 Cases in Property Law
1/20
G.R. No. L-20329 Marc h 16, 1923
THE STANDARD OIL COMPANY OF NEW YORK, petitioner,
vs.
JOAQUIN JARAMILLO, as register of deeds of the City of
Manila, respondent.
Ross, Lawrence and Selph for petitioner.
City Fiscal Revilla and Assistant City Fiscal Rodas for respondent.
STREET, J.:
This cause is before us upon demurrer interposed by the respondent,
Joaquin Jaramillo, register of deeds of the City of Manila, to an original
petition of the Standard Oil Company of New York, seeking a
peremptory mandamusto compel the respondent to record in the
proper register a document purporting to be a chattel mortgage
executed in the City of Manila by Gervasia de la Rosa, Vda. de Vera, in
favor of the Standard Oil Company of New York.
It appears from the petition that on November 27, 1922, Gervasia de la
Rosa, Vda. de Vera, was the lessee of a parcel of land situated in the City
of Manila and owner of the house of strong materials built thereon,
upon which date she executed a document in the form of a chattel
mortgage, purporting to convey to the petitioner by way of mortgage
both the leasehold interest in said lot and the building which stands
thereon.
The clauses in said document describing the property intended to be
thus mortgage are expressed in the following words:
Now, therefore, the mortgagor hereby conveys and transfer
to the mortgage, by way of mortgage, the following described
personal property, situated in the City of Manila, and now in
possession of the mortgagor, to wit:
(1) All of the right, title, and interest of the mortgagor in and
to the contract of lease hereinabove referred to, and in and tothe premises the subject of the said lease;
(2) The building, property of the mortgagor, situated on the
aforesaid leased premises.
After said document had been duly acknowledge and delivered, the
petitioner caused the same to be presented to the respondent, Joaquin
Jaramillo, as register of deeds of the City of Manila, for the purpose of
having the same recorded in the book of record of chattel mortgages.
Upon examination of the instrument, the respondent was of the opinion
that it was not a chattel mortgage, for the reason that the interest
therein mortgaged did not appear to be personal property, within the
meaning of the Chattel Mortgage Law, and registration was refused on
this ground only.
We are of the opinion that the position taken by the respondent is
untenable; and it is his duty to accept the proper fee and place the
instrument on record. The duties of a register of deeds in respect to the
registration of chattel mortgage are of a purely ministerial character;
and no provision of law can be cited which confers upon him any judicial
or quasi-judicial power to determine the nature of any document of
which registration is sought as a chattel mortgage.
The original provisions touching this matter are contained in section 15
of the Chattel Mortgage Law (Act No. 1508), as amended by Act No.
2496; but these have been transferred to section 198 of the
Administrative Code, where they are now found. There is nothing in any
of these provisions conferring upon the register of deeds any authority
whatever in respect to the "qualification," as the term is used in Spanish
law, of chattel mortgage. His duties in respect to such instruments are
ministerial only. The efficacy of the act of recording a chattel mortgage
consists in the fact that it operates as constructive notice of the
existence of the contract, and the legal effects of the contract must be
discovered in the instrument itself in relation with the fact of notice
Registration adds nothing to the instrument, considered as a source o
title, and affects nobody's rights except as a specifies of notice.
Articles 334 and 335 of the Civil Code supply no absolute criterion fodiscriminating between real property and personal property for purpose
of the application of the Chattel Mortgage Law. Those articles state rule
which, considered as a general doctrine, are law in this jurisdiction; but
it must not be forgotten that under given conditions property may have
character different from that imputed to it in said articles. It is
undeniable that the parties to a contract may by agreement treat as
personal property that which by nature would be real property; and it is
a familiar phenomenon to see things classed as real property for
purposes of taxation which on general principle might be considered
personal property. Other situations are constantly arising, and from time
to time are presented to this court, in which the proper classification of
one thing or another as real or personal property may be said to be
doubtful.
The point submitted to us in this case was determined on September 81914, in an administrative ruling promulgated by the Honorable James
A. Ostrand, now a Justice of this Court, but acting at that time in the
capacity of Judge of the fourth branch of the Court of First Instance of
the Ninth Judicial District, in the City of Manila; and little of value can be
here added to the observations contained in said ruling. We accordingly
quote therefrom as follows:
It is unnecessary here to determine whether or not the
property described in the document in question is real o
personal; the discussion may be confined to the point as to
whether a register of deeds has authority to deny the
registration of a document purporting to be a chatte
mortgage and executed in the manner and form prescribed by
the Chattel Mortgage Law.
Then, after quoting section 5 of the Chattel Mortgage Law (Act No
1508), his Honor continued:
Based principally upon the provisions of section quoted the
Attorney-General of the Philippine Islands, in an opinion dated
August 11, 1909, held that a register of deeds has no authority
to pass upon the capacity of the parties to a chattel mortgage
which is presented to him for record. A fortioria register o
deeds can have no authority to pass upon the character of the
property sought to be encumbered by a chattel mortgage. Of
course, if the mortgaged property is real instead of persona
the chattel mortgage would no doubt be held ineffective as
against third parties, but this is a question to be determinedby the courts of justice and not by the register of deeds.
In Leung Yee vs. Frank L. Strong Machinery Co. and Williamson (37 Phil.
644), this court held that where the interest conveyed is of the nature o
real, property, the placing of the document on record in the chatte
mortgage register is a futile act; but that decision is not decisive of the
question now before us, which has reference to the function of the
register of deeds in placing the document on record.
In the light of what has been said it becomes unnecessary for us to pass
upon the point whether the interests conveyed in the instrument now in
question are real or personal; and we declare it to be the duty of the
-
7/27/2019 Cases in Property Law
2/20
register of deeds to accept the estimate placed upon the document by
the petitioner and to register it, upon payment of the proper fee.
The demurrer is overruled; and unless within the period of five days
from the date of the notification hereof, the respondent shall interpose
a sufficient answer to the petition, the writ ofmandamus will be issued,
as prayed, but without costs. So ordered.
G.R. No. L-50008 August 31, 1987
PRUDENTIAL BANK, petitioner,
vs.
HONORABLE DOMINGO D. PANIS, Presiding Judge of Branch III, Court
of First Instance of Zambales and Olongapo City; FERNANDO MAGCALE
& TEODULA BALUYUT-MAGCALE, respondents.
PARAS, J.:
This is a petition for review on certiorari of the November 13, 1978
Decision * of the then Court of First Instance of Zambales and Olongapo
City in Civil Case No. 2443-0 entitled "Spouses Fernando A. Magcale and
Teodula Baluyut-Magcale vs. Hon. Ramon Y. 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.
The undisputed facts of this case by stipulation of the parties are as
follows:
... on November 19, 1971, plaintiffs-spouses
Fernando A. Magcale and Teodula Baluyut Magcale
secured a loan in the sum of P70,000.00 from the
defendant Prudential Bank. To secure payment of
this loan, plaintiffs executed in favor of defendant
on the aforesaid date a deed of Real Estate
Mortgage over the following described properties:
l. A 2-STOREY, SEMI-CONCRETE, residential building
with warehouse spaces containing a total floor areaof 263 sq. meters, more or less, generally
constructed of mixed hard wood and concrete
materials, under a roofing of cor. g. i. sheets;
declared and assessed in the name of FERNANDO
MAGCALE under Tax Declaration No. 21109, issued
by the Assessor of Olongapo City with an assessed
value of P35,290.00. This building is the only
improvement of the lot.
2. THE PROPERTY hereby conveyed by way of
MORTGAGE includes the right of occupancy on the
lot where the above property is erected, and more
particularly described and bounded, as follows:
A first class residential land Identffied as
Lot No. 720, (Ts-308, Olongapo Townsite
Subdivision) Ardoin Street, East Bajac-
Bajac, Olongapo City, containing an area of
465 sq. m. more or less, declared and
assessed in the name of FERNANDO
MAGCALE under Tax Duration No. 19595
issued by the Assessor of Olongapo City
with an assessed value of P1,860.00;
bounded on the
NORTH: By No. 6,
Ardoin Street
SOUTH: By No. 2
Ardoin Street
EAST: By 37 Canda
Street, and
WEST: By Ardoin
Street.
All corners of the lot marked by
conc. cylindrical monuments of the
Bureau of Lands as visible limits.
Exhibit "A, " also Exhibit "1" fo
defendant).
Apart from the stipulations in the printed
portion of the aforestated deed o
mortgage, there appears a rider typed a
the bottom of the reverse side of the
document under the lists of the propertie
mortgaged which reads, 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 o
issued by the Bureau of Lands, the
Mortgagors hereby authorize the
Register of Deeds to hold the
Registration of same until this
Mortgage is cancelled, or to
annotate this encumbrance on the
Title upon authority from the
Secretary of Agriculture and
Natural Resources, which title with
annotation, shall be released in
favor of the herein Mortgage.
From the aforequoted stipulation, it isobvious that the mortgagee (defendan
Prudential Bank) was at the outset aware
of the fact that the mortgagors (plaintiffs
have already filed a Miscellaneous Sales
Application over the lot, possessory rights
over which, were mortgaged to it.
Exhibit "A" (Real Estate Mortgage) wa
registered under the Provisions of Ac
3344 with the Registry of Deeds o
Zambales on November 23, 1971.
On May 2, 1973, plaintiffs secured an
additional loan from defendant PrudentiaBank in the sum of P20,000.00. To secure
payment of this additional loan, plaintiff
executed in favor of the said defendan
another deed of Real Estate Mortgage
over the same properties previously
mortgaged in Exhibit "A." (Exhibit "B;" also
Exhibit "2" for defendant). This second
deed of Real Estate Mortgage was likewise
registered with the Registry of Deeds, this
time in Olongapo City, on May 2,1973.
On April 24, 1973, the Secretary of Agriculture
issued Miscellaneous Sales Patent No. 4776 ove
-
7/27/2019 Cases in Property Law
3/20
the parcel of land, possessory rights over which
were mortgaged to defendant Prudential Bank, in
favor of plaintiffs. On the basis of the aforesaid
Patent, and upon its transcription in the
Registration Book of the Province of Zambales,
Original Certificate of Title No. P-2554 was issued in
the name of Plaintiff Fernando Magcale, by the Ex-
Oficio Register of Deeds of Zambales, on May 15,
1972.
For failure of plaintiffs to pay their obligation todefendant Bank after it became due, and upon
application of said defendant, the deeds of Real
Estate Mortgage (Exhibits "A" and "B") were
extrajudicially foreclosed. 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, 1978 (Exhibit "E"). The auction
sale aforesaid was held despite written request
from plaintiffs through counsel dated March 29,
1978, for the defendant City Sheriff to desist from
going with the scheduled public auction sale
(Exhibit "D")." (Decision, Civil Case No. 2443-0,
Rollo, pp. 29-31).
Respondent Court, in a Decision dated November 3, 1978 declared the
deeds of Real Estate Mortgage as null and void (Ibid., p. 35).
On December 14, 1978, petitioner filed a Motion for Reconsideration
(Ibid., pp. 41-53), opposed by private respondents on January 5, 1979
(Ibid., pp. 54-62), and in an Order dated January 10, 1979 ( Ibid., p. 63),
the Motion for Reconsideration was denied for lack of merit. Hence, the
instant petition (Ibid., pp. 5-28).
The first Division of this Court, in a Resolution dated March 9, 1979,
resolved to require the respondents to comment (Ibid., p. 65), which
order was complied with the Resolution dated May 18,1979, ( Ibid., p.
100), petitioner filed its Reply on June 2,1979 (Ibid., pp. 101-112).
Thereafter, in the Resolution dated June 13, 1979, the petition was given
due course and the parties were required to submit simultaneously their
respective memoranda. (Ibid., p. 114).
On July 18, 1979, petitioner filed its Memorandum ( Ibid., pp. 116-144),
while private respondents filed their Memorandum on August 1, 1979
(Ibid., pp. 146-155).
In a Resolution dated August 10, 1979, this case was considered
submitted for decision (Ibid., P. 158).
In its Memorandum, petitioner raised the following issues:
1. WHETHER OR NOT THE DEEDS OF REAL ESTATE MORTGAGE ARE
VALID; AND
2. WHETHER OR NOT THE SUPERVENING ISSUANCE IN FAVOR OF
PRIVATE RESPONDENTS OF MISCELLANEOUS SALES PATENT NO. 4776
ON APRIL 24, 1972 UNDER ACT NO. 730 AND THE COVERING ORIGINAL
CERTIFICATE OF TITLE NO. P-2554 ON MAY 15,1972 HAVE THE EFFECT
OF INVALIDATING THE DEEDS OF REAL ESTATE MORTGAGE.
(Memorandum for Petitioner, Rollo, p. 122).
This petition is impressed with merit.
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.
The answer is in the affirmative.
In the enumeration of properties under Article 415 of the Civil Code of
the Philippines, this Court ruled that, "it is obvious that the inclusion of
"building" separate and distinct from the land, in said provision of law
can only mean that a building is by itself an immovable property." (Lope
vs. Orosa, Jr., et al., L-10817-18, Feb. 28, 1958; Associated Inc. andSurety Co., Inc. vs. Iya, et al., L-10837-38, May 30,1958).
Thus, while it is true that a mortgage of land necessarily includes, in the
absence of stipulation of the improvements thereon, buildings, still a
building by itself may be mortgaged apart from the land on which it has
been built. Such a mortgage would be still a real estate mortgage for the
building would still be considered immovable property even if dealt with
separately and apart from the land (Leung Yee vs. Strong Machinery Co.
37 Phil. 644). In the same manner, this Court has also established tha
possessory rights over said properties before title is vested on the
grantee, may be validly transferred or conveyed as in a deed o
mortgage (Vda. de Bautista vs. Marcos, 3 SCRA 438 [1961]).
Coming back to the case at bar, the records show, as aforestated thathe original mortgage deed on the 2-storey semi-concrete residentia
building with warehouse and on the right of occupancy on the lot where
the building was erected, was executed on November 19, 1971 and
registered under the provisions of Act 3344 with the Register of Deeds o
Zambales on November 23, 1971. Miscellaneous Sales Patent No. 4776
on the land was issued on April 24, 1972, on the basis of which OCT No
2554 was issued in the name of private respondent Fernando Magcale
on May 15, 1972. It is therefore without question that the origina
mortgage was executed before the issuance of the final patent and
before the government was divested of its title to the land, 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. vs. Meer, 96 Phil. 515; Director of Lands vs. De Leon, 110 Phil
28; Director of Lands vs. Jurado, L-14702, May 23, 1961; Pena "Law on
Natural Resources", p. 49). Under the foregoing considerations, it isevident 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.
As to restrictions expressly mentioned on the face of respondents' OCT
No. P-2554, it will be noted that Sections 121, 122 and 124 of the Public
Land Act, refer to land already acquired under the Public Land Act, or
any improvement thereon and therefore have no application to the
assailed mortgage in the case at bar which was executed before such
eventuality. Likewise, Section 2 of Republic Act No. 730, also a restriction
appearing on the face of private respondent's title has likewise no
application in the instant case, despite its reference to encumbrance o
alienation before the patent is issued because it refers specifically to
encumbrance or alienation on the land itself and does not mentionanything regarding the improvements existing thereon.
But it is a different matter, as regards the second mortgage executed
over the same properties on May 2, 1973 for an additional loan o
P20,000.00 which was registered with the Registry of Deeds of Olongapo
City on the same date. Relative thereto, it is evident that such mortgage
executed after the issuance of the sales patent and of the Origina
Certificate of Title, falls squarely under the prohibitions stated in
Sections 121, 122 and 124 of the Public Land Act and Section 2 of
Republic Act 730, and is therefore null and void.
-
7/27/2019 Cases in Property Law
4/20
Petitioner points out that private respondents, after physically
possessing the title for five years, voluntarily surrendered the same to
the bank in 1977 in order that the mortgaged may be annotated,
without requiring the bank to get the prior approval of the Ministry of
Natural Resources beforehand, thereby implicitly authorizing Prudential
Bank to cause the annotation of said mortgage on their title.
However, the Court, in recently ruling on violations of Section 124 which
refers to Sections 118, 120, 122 and 123 of Commonwealth Act 141, has
held:
... Nonetheless, we apply our earlier rulings because
we believe that as inpari 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. Indeed, it is generally considered
that as between parties to a contract, validity
cannot be given to it by estoppel if it is prohibited
by law or is against public policy (19 Am. Jur. 802).
It is not within the competence of any citizen to
barter away what public policy by law was to
preserve (Gonzalo Puyat & Sons, Inc. vs. De los
Amas and Alino supra). ... (Arsenal vs. IAC, 143
SCRA 54 [1986]).
This pronouncement covers only the previous transaction already
alluded to and does not pass upon any new contract between the
parties (Ibid), as in the case at bar. 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.
After all, 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; Rollo, pp. 95-96). Any new
transaction, however, would be subject to whatever steps the
Government may take for the reversion of the land in its favor.
PREMISES CONSIDERED, the decision of the Court of First Instance of
Zambales & Olongapo City is hereby MODIFIED, declaring that the Deed
of Real Estate Mortgage for P70,000.00 is valid but ruling that the Deed
of Real Estate Mortgage for an additional loan of P20,000.00 is null andvoid, without prejudice to any appropriate action the Government may
take against private respondents.
SO ORDERED.
G.R. No. L-40411 August 7, 1935
DAVAO SAW MILL CO., INC., plaintiff-appellant,
vs.
APRONIANO G. CASTILLO and DAVAO LIGHT & POWER CO.,
INC., defendants-appellees.
Arsenio Suazo and Jose L. Palma Gil and Pablo Lorenzo and Delfin Jovenfor appellant.
J.W. Ferrier for appellees.
MALCOLM, J.:
The issue in this case, as announced in the opening sentence of the
decision in the trial court and as set forth by counsel for the parties on
appeal, involves the determination of the nature of the properties
described in the complaint. The trial judge found that those properties
were personal in nature, and as a consequence absolved the defendants
from the complaint, with costs against the plaintiff.
The Davao Saw Mill Co., Inc., is the holder of a lumber concession from
the Government of the Philippine Islands. It has operated a sawmill in
the sitio of Maa, barrio of Tigatu, municipality of Davao, Province of
Davao. However, the land upon which the business was conducted
belonged to another person. On the land the sawmill company erected a
building which housed the machinery used by it. Some of the
implements thus used were clearly personal property, the conflict
concerning machines which were placed and mounted on foundations o
cement. In the contract of lease between the sawmill company and the
owner of the land there appeared the following provision:
That on the expiration of the period agreed upon, all the
improvements and buildings introduced and erected by the
party of the second part shall pass to the exclusive ownership
of the party of the first part without any obligation on its par
to pay any amount for said improvements and buildings; also
in the event the party of the second part should leave or
abandon the land leased before the time herein stipulated
the improvements and buildings shall likewise pass to the
ownership of the party of the first part as though the time
agreed upon had expired: Provided, however, That the
machineries and accessories are not included in the
improvements which will pass to the party of the first part on
the expiration or abandonment of the land leased.
In another action, wherein the Davao Light & Power Co., Inc., was theplaintiff and the Davao, Saw, Mill Co., Inc., was the defendant, a
judgment was rendered in favor of the plaintiff in that action against the
defendant in that action; a writ of execution issued thereon, and the
properties now in question were levied upon as personalty by the
sheriff. No third party claim was filed for such properties at the time of
the sales thereof as is borne out by the record made by the plaintif
herein. Indeed the bidder, which was the plaintiff in that action, and the
defendant herein having consummated the sale, proceeded to take
possession of the machinery and other properties described in the
corresponding certificates of sale executed in its favor by the sheriff of
Davao.
As connecting up with the facts, it should further be explained that the
Davao Saw Mill Co., Inc., has on a number of occasions treated themachinery as personal property by executing chattel mortgages in favo
of third persons. One of such persons is the appellee by assignment from
the original mortgages.
Article 334, paragraphs 1 and 5, of the Civil Code, is in point. According
to the Code, real property consists of
1. Land, buildings, roads and constructions of all kinds
adhering to the soil;
x x x x x x x x x
5. Machinery, 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 o
such trade of industry.
Appellant emphasizes the first paragraph, and appellees the last
mentioned paragraph. We entertain no doubt that the trial judge and
appellees are right in their appreciation of the legal doctrines flowing
from the facts.
In the first place, it must again be pointed out that the appellant should
have registered its protest before or at the time of the sale of this
property. It must further be pointed out that while not conclusive, the
-
7/27/2019 Cases in Property Law
5/20
characterization of the property as chattels by the appellant is indicative
of intention and impresses upon the property the character determined
by the parties. In this connection the decision of this court in the case of
Standard Oil Co. of New Yorkvs. Jaramillo ( [1923], 44 Phil., 630),
whether obiter dicta or not, furnishes the key to such a situation.
It is, however not necessary to spend overly must time in the resolution
of this appeal on side issues. It is machinery which is involved; moreover,
machinery not intended by the owner of any building or land for use in
connection therewith, but intended by a lessee for use in a building
erected on the land by the latter to be returned to the lessee on theexpiration or abandonment of the lease.
A similar question arose in Puerto Rico, and on appeal being taken to the
United States Supreme Court, it was held that machinery which is
movable in its nature only becomes immobilized when placed in a plant
by the owner of the property or plant, but not when so placed by a
tenant, a usufructuary, or any person having only a temporary right,
unless such person acted as the agent of the owner. In the opinion
written by Chief Justice White, whose knowledge of the Civil Law is well
known, it was in part said:
To determine this question involves fixing the nature and
character of the property from the point of view of the rights
of Valdes and its nature and character from the point of view
of Nevers & Callaghan as a judgment creditor of the Altagracia
Company and the rights derived by them from the execution
levied on the machinery placed by the corporation in the
plant. Following the Code Napoleon, the Porto Rican Code
treats as immovable (real) property, not only land and
buildings, but also attributes immovability in some cases to
property of a movable nature, that is, personal property,
because of the destination to which it is applied. "Things,"
says section 334 of the Porto Rican Code, "may be immovable
either by their own nature or by their destination or the
object to which they are applicable." Numerous illustrations
are given in the fifth subdivision of section 335, which is as
follows: "Machinery, vessels, instruments or implements
intended by the owner of the tenements for the industrial or
works that they may carry on in any building or upon any landand which tend directly to meet the needs of the said industry
or works." (See also Code Nap., articles 516, 518 et seq. to and
inclusive of article 534, recapitulating the things which,
though in themselves movable, may be immobilized.) So far as
the subject-matter with which we are dealing machinery
placed in the plant it is plain, both under the provisions of
the Porto Rican Law and of the Code Napoleon, that
machinery which is movable in its nature only becomes
immobilized when placed in a plant by the owner of the
property or plant. Such result would not be accomplished,
therefore, by the placing of machinery in a plant by a tenant
or a usufructuary or any person having only a temporary right.
(Demolombe, Tit. 9, No. 203; Aubry et Rau, Tit. 2, p. 12,
Section 164; Laurent, Tit. 5, No. 447; and decisions quoted in
Fuzier-Herman ed. Code Napoleon under articles 522 et seq.)The distinction rests, as pointed out by Demolombe, 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 by an act of immobilization to become
the property of another. It follows that abstractly speaking 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. But in the
concrete immobilization took place because of the express
provisions of the lease under which the Altagracia held, since
the lease in substance required the putting in of improved
machinery, deprived the tenant of any right to charge against
the lessor the cost 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. Under such conditions the tenant in putting in the
machinery was acting but as the agent of the owner in
compliance with the obligations resting upon him, and the
immobilization of the machinery which resulted arose in lega
effect from the act of the owner in giving by contract a
permanent destination to the machinery.
x x x x x x x x x
The machinery levied upon by Nevers & Callaghan, that is
that which was placed in the plant by the Altagracia Company
being, as regards Nevers & Callaghan, movable property, it
follows that they had the right to levy on it under the
execution upon the judgment in their favor, and the exercise
of that right did not in a legal sense conflict with the claim of
Valdes, since as to him the property was a part of the realty
which, as the result of his obligations under the lease, he
could not, for the purpose of collecting his debt, proceed
separately against. (Valdes vs. Central Altagracia [192], 225
U.S., 58.)
Finding no reversible error in the record, the judgment appealed from
will be affirmed, the costs of this instance to be paid by the appellant.
G.R. No. L-17870 September 29, 1962
MINDANAO BUS COMPANY, petitioner
vs.
THE CITY ASSESSOR & TREASURER and the BOARD OF TAX APPEALS of
Cagayan de Oro City,respondents.
Binamira, Barria and Irabagon for petitioner
Vicente E. Sabellina for respondents.
LABRADOR, J.:
This is a petition for the review of the decision of the Court of Tax
Appeals in C.T.A. Case No. 710 holding that the petitioner Mindanao Bu
Company is liable to the payment of the realty tax on its maintenance
and repair equipment hereunder referred to.
Respondent City Assessor of Cagayan de Oro City assessed at
P4,400 petitioner's above-mentioned equipment. Petitioner appealed
the assessment to the respondent Board of Tax Appeals on the ground
that the same are not realty. The Board of Tax Appeals of the City
sustained the city assessor, so petitioner herein filed with the Court o
Tax Appeals a petition for the review of the assessment.
In the Court of Tax Appeals the parties submitted the following
stipulation of facts:
Petitioner and respondents, thru their respective
counsels agreed to the following stipulation of facts:
1. That petitioner is a public utility solely engaged in
transporting passengers and cargoes by motor trucks, over its
authorized lines in the Island of Mindanao, collecting rates
approved by the Public Service Commission;
2. That petitioner has its main office and shop at Cagayan de
Oro City. It maintains Branch Offices and/or stations at Iligan
-
7/27/2019 Cases in Property Law
6/20
City, Lanao; Pagadian, Zamboanga del Sur; Davao City and
Kibawe, Bukidnon Province;
3. That the machineries sought to be assessed by the
respondent as real properties are the following:
(a) Hobart Electric Welder Machine, appearing in
the attached photograph, marked Annex "A";
(b) Storm Boring Machine, appearing in the
attached photograph, marked Annex "B";
(c) Lathe machine with motor, appearing in the
attached photograph, marked Annex "C";
(d) Black and Decker Grinder, appearing in the
attached photograph, marked Annex "D";
(e) PEMCO Hydraulic Press, appearing in the
attached photograph, marked Annex "E";
(f) Battery charger (Tungar charge machine)
appearing in the attached photograph, marked
Annex "F"; and
(g) D-Engine Waukesha-M-Fuel, appearing in the
attached photograph, marked Annex "G".
4. 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;
5. That petitioner is the owner of the land where it maintains
and operates a garage for its TPU motor trucks; a repair shop;
blacksmith and carpentry shops, and with these machineries
which are placed therein, its TPU trucks are made; body
constructed; and same are repaired in a condition to be
serviceable in the TPU land transportation business it
operates;
6. That these machineries have never been or were never
used as industrial equipments to produce finished products
for sale, nor to repair machineries, parts and the like offered
to the general public indiscriminately for business or
commercial purposes for which petitioner has never engaged
in, to date.1awphl.nt
The Court of Tax Appeals having sustained the respondent city
assessor's ruling, and having denied a motion for reconsideration,
petitioner brought the case to this Court assigning the following errors:
1. The Honorable Court of Tax Appeals erred in upholding
respondents' contention that the questioned assessments are
valid; and that said tools, equipments or machineries are
immovable taxable real properties.
2. The Tax Court erred in its interpretation of paragraph 5 of
Article 415 of the New Civil Code, and holding that pursuant
thereto the movable equipments are taxable realties, by
reason of their being intended or destined for use in an
industry.
3. 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 furthe
restricted by section 31, paragraph (c) of Republic Act No
521; and
4. The Tax Court erred in denying petitioner's motion for
reconsideration.
Respondents contend that said equipments, tho movable, are
immobilized by destination, in accordance with paragraph 5 of Article
415 of the New Civil Code which provides:
Art. 415. The following are immovable properties:
x x x x x x x x x
(5) Machinery, receptacles, instruments or implements
intended by the owner of the tenement for an industry or
works which may be carried on in a building or on a piece o
land, and which tend directly to meet the needs of the said
industry or works. (Emphasis ours.)
Note that the stipulation expressly states that the equipment are
placed on wooden or cement platforms. They can be moved around and
about in petitioner's repair shop. In the case ofB. H. Berkenkotter vs. CuUnjieng, 61 Phil. 663, the Supreme Court said:
Article 344 (Now Art. 415), paragraph (5) of the Civi
Code, gives the character of real property to "machinery
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."
If the installation of the machinery and equipment in
question in the central of the Mabalacat Sugar Co., Inc., in lieu
of the other of less capacity existing therein, for its sugar and
industry, converted them into real property by reason of theipurpose, it cannot be said that their incorporation therewith
was not permanent in character because, as essential and
principle elements of a sugar central, without them the suga
central would be unable to function or carry on the industria
purpose for which it was established. Inasmuch as the centra
is permanent in character, the necessary machinery and
equipment installed for carrying on the sugar industry fo
which it has been established must necessarily be permanent
(Emphasis ours.)
So that movable equipments to be immobilized in contemplation
of the law must f irst be "essential and principal elements" of an industr
or works without which such industry or works would be "unable to
function or carry on the industrial purpose for which it was established.
We may here distinguish, therefore, those movable which becomeimmobilized by destination because they are essential and principa
elements in the industry for those which may not be so considered
immobilized because they are merely incidental, not essential and
principal. Thus, cash registers, typewriters, etc., usually found and used
in hotels, restaurants, theaters, etc. are merely incidentals and are no
and should not be considered immobilized by destination, for these
businesses can continue or carry on their functions without these equity
comments. Airline companies use forklifts, jeep-wagons, pressure
pumps, IBM machines, etc. which are incidentals, not essentials, and
thus retain their movable nature. On the other hand, machineries o
breweries used in the manufacture of liquor and soft drinks, though
movable in nature, are immobilized because they are essential to said
industries; but the delivery trucks and adding machines which they
-
7/27/2019 Cases in Property Law
7/20
usually own and use and are found within their industrial compounds
are merely incidental and retain their movable nature.
Similarly, the tools and equipments in question in this instant case
are, by their nature, not essential and principle municipal elements of
petitioner's business of transporting passengers and cargoes by motor
trucks. They are merely incidentals acquired as movables and used
only for expediency to facilitate and/or improve its service. Even without
such tools and equipments, its business may be carried on, as petitioner
has carried on, without such equipments, before the war. The
transportation business could be carried on without the repair or serviceshop if its rolling equipment is repaired or serviced in another shop
belonging to another.
The law that governs the determination of the question at issue is
as follows:
Art. 415. The following are immovable property:
x x x x x x x x x
(5) Machinery, receptacles, instruments or implements
intended by the owner of the tenement for an industry or
works which may be carried on in a building or on a piece of
land, and which tend directly to meet the needs of the said
industry or works; (Civil Code of the Phil.)
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. Thus in the case ofBerkenkotter vs. Cu Unjieng, supra,
the "machinery, liquid containers, and instruments or implements" are
found in a building constructed on the land. A sawmill would also be
installed in a building on land more or less permanently, and the sawing
is conducted in the land or building.
But in the case at bar the equipments in question are destined only
to repair or service the transportation business, which is not carried on
in a building or permanently on a piece of land, as demanded by the law.
Said equipments may not, therefore, be deemed real property.
Resuming what we have set forth above, we hold that the
equipments in question are not absolutely essential to the petitioner's
transportation business, and petitioner's business is not carried on in a
building, tenement or on a specified land, so said equipment may not be
considered real estate within the meaning of Article 415 (c) of the Civil
Code.
WHEREFORE, 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.
Without costs.
So ordered.
G.R. No. L-19527 March 30, 1963
RICARDO PRESBITERO, in his capacity as Executor of the Testate Estate
of EPERIDION PRESBITERO,petitioner,
vs.
THE HON. JOSE F. FERNANDEZ, HELEN CARAM NAVA, and the
PROVINCIAL SHERIFF OF NEGROS OCCIDENTAL, respondents.
San Juan, Africa and Benedicto and Hilado and Hilado for petitioner
Paredes, Poblador, Cruz and Nazareno and Manuel Soriano fo
respondents.
REYES, J.B.L., J.:
Petition for a writ ofcertiorariagainst the Court of First Instance o
Negros Occidental.
It appears that during the lifetime of Esperidion Presbitero, judgment
was rendered against him by the Court of Appeals on October 14, 1959
in CA-G.R. No. 20879,
... to execute in favor of the plaintiff, within 30 days from the
time this judgment becomes final, a deed of reconveyance of
Lot No. 788 of the cadastral survey of Valladolid, free from al
liens and encumbrances, and another deed of reconveyance
of a 7-hectare portion of Lot No. 608 of the same cadastra
survey, also free from all liens and encumbrances, or, upon
failure to do so, to pay to the plaintiff the value of each of the
said properties, as may be determined by the Court a
quo upon evidence to be presented by the parties before it
The defendant is further adjudged to pay to the plaintiff the
value of the products received by him from the 5-hectare
portion equivalent to 20 cavans of palay per hectare everyyear, or 125 cavans yearly, at the rate of P10.00 per cavan
from 1951 until possession of the said 5-hectare portion is
finally delivered to the plaintiff with legal interest thereon
from the time the complaint was filed; and to pay to the
plaintiff the sum of P1,000.00 by way of attorney's fees, plus
costs.
This judgment, which became final, was a modification of a decision of
the Court of First Instance of Negros Occidental, in its Civil Case No
3492, entitled "Helen Caram Nava, plaintiff, versus Esperidion
Presbitero, defendant."
Thereafter, plaintiff's counsel, in a letter dated December 8, 1959
sought in vain to amicably settle the case through petitioner's sonRicardo Presbitero. When no response was forthcoming, said counse
asked for, and the court a quo ordered on June 9, 1960, the issuance of a
partial writ of execution for the sum of P12,250.00. On the following
day, June 10, 1960, said counsel, in another friendly letter, reiterated his
previous suggestion for an amicable settlement, but the same produced
no fruitful result. Thereupon, on June 21, 1960, the sheriff levied upon
and garnished the sugar quotas allotted to plantation audit Nos. 26-237
26-238, 26-239, 26-240 and 26-241 adhered to the Ma-ao Mill District
and "registered in the name of Esperidion Presbitero as the origina
plantation-owner", furnishing copies of the writ of execution and the
notice of garnishment to the manager of the Ma-ao Sugar Centra
Company, Bago, Negros Occidental, and the Sugar Quota Administration
at Bacolod City, but without presenting for registration copies thereof to
the Register of Deeds.
Plaintiff Helen Caram Nava (herein respondent) then moved the court
on June 22, 1960, to hear evidence on the market value of the lots; and
after some hearings, occasionally protracted by postponements, the tria
court, on manifestation of defendant's willingness to cede the propertie
in litigation, suspended the proceedings and ordered him to segregate
the portion of Lot 608 pertaining to the plaintiff from the mass of
properties belonging to the defendant within a period to expire on
August 24, 1960, and to effect the final conveyance of the said portion
of Lot 608 and the whole of Lot 788 free from any lien and encumbrance
whatsoever. Because of Presbitero's failure to comply with this order
within the time set forth by the court, the plaintiff again moved on
August 25, 1960 to declare the market value of the lots in question to be
-
7/27/2019 Cases in Property Law
8/20
P2,500.00 per hectare, based on uncontradicted evidence previously
adduced. But the court, acting on a prayer of defendant Presbitero, in an
order dated August 27, 1960, granted him twenty (20) days to finalize
the survey of Lot 608, and ordered him to execute a reconveyance of Lot
788 not later than August 31, 1960. Defendant again defaulted; and so
plaintiff, on September 21, 1960, moved the court for payment by the
defendant of the sum of P35,000.00 for the 14 hectares of land at
P2,500.00 to the hectare, and the court, in its order dated September
24, 1960, gave the defendant until October 15, 1960 either to pay the
value of the 14 hectares at the rate given or to deliver the clean titles of
the lots. On October 15, 1960, the defendant finally delivered Certificate
of Title No. T-28046 covering Lot 788, but not the title covering Lot 608because of an existing encumbrance in favor of the Philippine National
Bank. In view thereof, Helen Caram Nava moved for, and secured on
October 19, 1960, a writ of execution for P17,500.00, and on the day
following wrote the sheriff to proceed with the auction sale of the sugar
quotas previously scheduled for November 5, 1960. The sheriff issued
the notice of auction sale on October 20, 1960.
On October 22, 1960, death overtook the defendant Esperidion
Presbitero.
Proceedings for the settlement of his estate were commenced in Special
Proceedings No. 2936 of the Court of First Instance of Negros
Occidental; and on November 4, 1960, the special administrator, Ricardo
Presbitero, filed an urgent motion, in Case No. 3492, to set aside thewrits of execution, and to order the sheriff to desist from holding the
auction sale on the grounds that the levy on the sugar quotas was invalid
because the notice thereof was not registered with the Register of
Deeds, as for real property, and that the writs, being for sums of money,
are unenforceable since Esperidion Presbitero died on October 22, 1960,
and, therefore, could only be enforced as a money claim against his
estate.
This urgent motion was heard on November 5, 1960, but the auction
sale proceeded on the same date, ending in the plaintiff's putting up the
highest bid for P34,970.11; thus, the sheriff sold 21,640 piculs of sugar
quota to her.
On November 10, 1960, plaintiff Nava filed her opposition toPresbitero's urgent motion of November 4, 1960; the latter filed on May
4, 1961 a supplement to his urgent motion; and on May 8 and 23, 1961,
the court continued hearings on the motion, and ultimately denied it on
November 18, 1961.
On January 11, 1962, plaintiff Nava also filed an urgent motion to order
the Ma-ao Sugar Central to register the sugar quotas in her name and to
deliver the rentals of these quotas corresponding to the crop year 1960-
61 and succeeding years to her. The court granted this motion in its
order dated February 3, 1962. A motion for reconsideration by
Presbitero was denied in a subsequent order under date of March 5,
1962. Wherefore, Presbitero instituted the present proceedings
for certiorari.
A preliminary restraining writ was thereafter issued by the court against
the respondents from implementing the aforesaid orders of the
respondent Judge, dated February 3, 1960 and March 5, 1962,
respectively. The petition further seeks the setting aside of the sheriff's
certificate of sale of the sugar quotas made out in favor of Helen Caram
Nava, and that she be directed to file the judgment credit in her favor in
Civil Case No. 3492 as a money claim in the proceedings to settle the
Estate of Esperidion Presbitero.
The petitioner denies having been personally served with notice of the
garnishment of the sugar quotas, but this disclaimer cannot be seriously
considered since it appears that he was sent a copy of the notice
through the chief of police of Valladolid on June 21, 1960, as certified to
by the sheriff, and that he had actual knowledge of the garnishment, as
shown by his motion of November 4, 1960 to set aside the writs of
execution and to order the sheriff to desist from holding the auction
sale.
Squarely at issue in this case is whether sugar quotas are rea
(immovable) or personal properties. If they be realty, then the levy upon
them by the sheriff is null and void for lack of compliance with the
procedure prescribed in Section 14, Rule 39, in relation with Section 7
Rule 59, of the Rules of Court requiring "the filing with the register ofdeeds a copy of the orders together with a description of the property .
. ."
In contending that sugar quotas are personal property, the respondent
Helen Caram Nava, invoked the test formulated by Manresa (3 Manresa
6th Ed. 43), and opined that sugar quotas can be carried from place to
place without injury to the land to which they are attached, and are not
one of those included in Article 415 of the Civil Code; and not being thus
included, they fall under the category of personal properties:
ART. 416. The following are deemed to be personal property:
x x x x x x x x x
4. In general, all things which can be transported from place
to place without impairment of the real property to which
they are fixed.
Wherefore, the parties respectfully pray that the foregoing
stipulation of facts be admitted and approved by this
Honorable Court, without prejudice to the parties adducing
other evidence to prove their case not covered by this
stipulation of facts. 1wph1.t
Respondent likewise points to evidence she submitted that sugar quotas
are, in fact, transferred apart from the plantations to which they are
attached, without impairing, destroying, or diminishing the potentiality
of either quota or plantation. She was sustained by the lower courtwhen it stated that "it is a matter of public knowledge and it is universa
practice in this province, whose principal industry is sugar, to transfer by
sale, lease, or otherwise, sugar quota allocations from one plantation to
any other" and that it is "specious to insist that quotas are
improvements attaching to one plantation when in truth and in fact they
are no longer attached thereto for having been sold or leased away to
be used in another plantation". Respondent would add weight to he
argument by invoking the role that sugar quotas play in our modern
social and economic life, and cites that the Sugar Office does not require
any registration with the Register of Deeds for the validity of the sale of
these quotas; and, in fact, those here in question were not noted down
in the certificate of title of the land to which they pertain; and tha
Ricardo Presbitero had leased sugar quotas independently of the land
The respondent cites further that the U.S.-Philippine Trade Relations
Act, approved by the United States Congress in 1946, limiting the
production of unrefined sugar in the Philippines did not allocate the
quotas for said unrefined sugar among lands planted to sugarcane but
among "the sugar producing mills and plantation OWNERS", and for this
reason Section 3 of Executive Order No. 873, issued by Governo
General Murphy, authorizes the lifting of sugar allotments from one land
to another by means only of notarized deeds.
While respondent's arguments are thought-provoking, they cannot
stand against the positive mandate of the pertinent statute. The Sugar
Limitation Law (Act 4166, as amended) provides
-
7/27/2019 Cases in Property Law
9/20
SEC. 9. The allotment corresponding to each piece of land
under the provisions of this Act shall be deemed to be an
improvement attaching to the land entitled thereto ....
and Republic Act No. 1825 similarly provides
SEC. 4. The production allowance or quotas corresponding to each piece
of land under the provisions of this Act shall be deemed to be an
improvement attaching to the land entitled thereto ....
And Executive Order No. 873 defines "plantation" as follows:
(a) The term 'plantation' means any specific area of land
under sole or undivided ownership to which is attached an
allotment of centrifugal sugar.
Thus, under express provisions of law, the sugar quota allocations are
accessories to land, and can not have independent existence away from
a plantation, although the latter may vary. Indeed, this Court held in the
case ofAbelarde vs. Lopez, 74 Phil. 344, that even if a contract of sale
ofhaciendas omitted "the right, title, interest, participation, action (and)
rent" which the grantors had or might have in relation to the parcels of
land sold, the sale would include the quotas, it being provided in Section
9, Act 4166, that the allotment is deemed an improvement attached to
the land, and that at the time the contract of sale was signed the land
devoted to sugar were practically of no use without the sugar allotment.
As an improvement attached to land, by express provision of law,
though not physically so united, the sugar quotas are inseparable
therefrom, just like servitudes and other real rights over an immovable.
Article 415 of the Civil Code, in enumerating what are immovable
properties, names
10. Contracts for public works, and servitudes and other real
rights over immovable property. (Emphasis supplied)
It is by law, therefore, that these properties are immovable or real,
Article 416 of the Civil Code being made to apply only when the thing(res) sought to be classified is not included in Article 415.
The fact that the Philippine Trade Act of 1946 (U.S. Public Law 371-79th
Congress) allows transfers of sugar quotas does not militate against their
immovability. Neither does the fact that the Sugar Quota Office does not
require registration of sales of quotas with the Register of Deeds for
their validity, nor the fact that allocation of unrefined sugar quotas is not
made among lands planted to sugarcane but among "the sugar
producing mills and plantation OWNERS", since the lease or sale of
quotas are voluntarytransactions, the regime of which, is not necessarily
identical to involuntarytransfers or levies; and there cannot be a sugar
plantation owner without land to which the quota is attached; and there
can exist no quota without there being first a corresponding plantation.
Since the levy is invalid for non-compliance with law, it is impertinent to
discuss the survival or non-survival of claims after the death of the
judgment debtor, gauged from the moment of actual levy. Suffice it to
state that, as the case presently stands, the writs of execution are not in
question, but the levy on the quotas, and, because of its invalidity, the
levy amount to no levy at all. Neither is it necessary, or desirable, to pass
upon the conscionableness or unconscionableness of the amount
produced in the auction sale as compared with the actual value of the
quotas inasmuch as the sale must necessarily be also illegal.
As to the remedial issue that the respondents have presented: that
certiorari does not lie in this case because the petitioner had a remedy
in the lower court to "suspend" the auction sale, but did not avail
thereof, it may be stated that the latter's urgent motion of November 4
1960, a day before the scheduled sale (though unresolved by the court
on time), did ask for desistance from holding the sale.
WHEREFORE, the preliminary injunction heretofore granted is hereby
made permanent, and the sheriff's certificate of sale of the sugar quotas
in question declared null and void. Costs against respondent Nava.
G.R. No. L-26278 August 4, 1927
LEON SIBAL , plaintiff-appellant
vs.
EMILIANO J. VALDEZ ET AL., defendants
EMILIANO J. VALDEZ, appellee.
J. E. Blanco for appellant
Felix B. Bautista and Santos and Benitez for appellee.
JOHNSON, J.:
The action was commenced in the Court of First Instance of the Province
of Tarlac on the 14th day of December 1924. The facts are about a
conflicting as it is possible for facts to be, in the trial causes.
As a first cause of action the plaintiff alleged that the defendant
Vitaliano Mamawal, deputy sheriff of the Province of Tarlac, by virtue o
a writ of execution issued by the Court of First Instance of Pampanga,
attached and sold to the defendant Emiliano J. 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; 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, 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.
As a second cause of action, the plaintiff alleged that the defendant
Emiliano J. Valdez was attempting to harvest the palay planted in four of
the seven parcels mentioned in the first cause of action; 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
amounting to 300 cavans; and that all of said palay belonged to the
plaintiff.
Plaintiff prayed that a writ of preliminary injunction be issued against
the defendant Emiliano J. Valdez his attorneys and agents, restraining
them (1) from distributing him in the possession of the parcels of land
described in the complaint; (2) from taking possession of, or harvesting
the sugar cane in question; and (3) from taking possession, or harvesting
the palay in said parcels of land. Plaintiff also prayed that a judgment be
rendered in his favor and against the defendants ordering them toconsent to the redemption of the sugar cane in question, and that the
defendant Valdez be condemned to pay to the plaintiff the sum o
P1,056 the value of palay harvested by him in the two parcels above-
mentioned ,with interest and costs.
On December 27, 1924, the court, after hearing both parties and upon
approval of the bond for P6,000 filed by the plaintiff, issued the writ o
preliminary injunction prayed for in the complaint.
The defendant Emiliano J. Valdez, in his amended answer, denied
generally and specifically each and every allegation of the complaint and
step up the following defenses:
-
7/27/2019 Cases in Property Law
10/20
(a) That the sugar cane in question had the nature of personal
property and was not, therefore, subject to redemption;
(b) That he was the owner of parcels 1, 2 and 7 described in
the first cause of action of the complaint;
(c) That he was the owner of the palay in parcels 1, 2 and 7;
and
(d) That he never attempted to harvest the palay in parcels 4
and 5.
The defendant Emiliano J. Valdez by way of counterclaim, alleged that by
reason of the preliminary injunction he was unable to gather the sugar
cane, sugar-cane shoots (puntas de cana dulce) palay in said parcels of
land, representing a loss to him of P8,375.20 and that, in addition
thereto, he suffered damages amounting to P3,458.56. He prayed, for a
judgment (1) absolving him from all liability under the complaint; (2)
declaring him to be the absolute owner of the sugar cane in question
and of the palay in parcels 1, 2 and 7; and (3) ordering the plaintiff to
pay to him the sum of P11,833.76, representing the value of the sugar
cane and palay in question, including damages.
Upon the issues thus presented by the pleadings the cause was brought
on for trial. After hearing the evidence, and on April 28, 1926, the
Honorable Cayetano Lukban, judge, rendered a judgment against the
plaintiff and in favor of the defendants
(1) Holding that the sugar cane in question was personal
property and, as such, was not subject to redemption;
(2) Absolving the defendants from all liability under the
complaint; and
(3) Condemning the plaintiff and his sureties Cenon de la Cruz,
Juan Sangalang and Marcos Sibal to jointly and severally pay
to the defendant Emiliano J. Valdez the sum of P9,439.08 as
follows:
(a) P6,757.40, the value of the sugar cane;
(b) 1,435.68, the value of the sugar-cane shoots;
(c) 646.00, the value of palay harvested by plaintiff;
(d) 600.00, the value of 150 cavans of palay which
the defendant was not able to raise by reason of
the injunction, at P4 cavan. 9,439.08 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, therefore, not subject
to redemption;
(2) In holding that parcels 1 and 2 of the complaint belonged
to Valdez, as well as parcels 7 and 8, and that the palay
therein was planted by Valdez;
(3) In holding that Valdez, by reason of the preliminary
injunction failed to realized P6,757.40 from the sugar cane
and P1,435.68 from sugar-cane shoots (puntas de cana dulce);
(4) In holding that, for failure of plaintiff to gather the sugar
cane on time, the defendant was unable to raise palay on the
land, which would have netted him the sum of P600; and.
(5) In condemning the plaintiff and his sureties to pay to the
defendant the sum of P9,439.08.
It appears from the record:
(1) That on May 11, 1923, the deputy sheriff of the Province o
Tarlac, by virtue of writ of execution in civil case No. 20203 of
the Court of First Instance of Manila (Macondray & Co.
Inc. vs. Leon Sibal),levied an attachment on eight parcels of
land belonging to said Leon Sibal, situated in the Province o
Tarlac, designated in the second of attachment as parcels 1, 2
3, 4, 5, 6, 7 and 8 (Exhibit B, Exhibit 2-A).
(2) That on July 30, 1923, Macondray & Co., Inc., bought said
eight parcels of land, at the auction held by the sheriff of the
Province of Tarlac, for the sum to P4,273.93, having paid for
the said parcels separately as follows (Exhibit C, and 2-A):
Parcel
1
.............................................................
........
P1.00
2
.............................................................
........
2,000.00
3
.............................................................
........
120.93
4
.............................................................
........
1,000.00
5
.............................................................
........
1.00
6
.............................................................
........
1.00
7 with the house thereon
..........................150.00
8
.............................................................
........
1,000.00
========
==
4,273.93
(3) That within one year from the sale of said parcel of land
and on the 24th day of September, 1923, the judgmen
debtor, Leon Sibal, paid P2,000 to Macondray & Co., Inc., fo
the account of the redemption price of said parcels of land
without specifying the particular parcels to which said amoun
was to applied. The redemption price said eight parcels was
reduced, by virtue of said transaction, to P2,579.97 including
interest (Exhibit C and 2).
-
7/27/2019 Cases in Property Law
11/20
The record further shows:
(1) That on April 29, 1924, the defendant Vitaliano Mamawal,
deputy sheriff of the Province of Tarlac, by virtue of a writ of
execution in civil case No. 1301 of the Province of Pampanga
(Emiliano J. Valdez vs. Leon Sibal 1. the same parties in the
present case), attached the personal property of said Leon
Sibal located in Tarlac, among which was included the sugar
cane now in question in the seven parcels of land described in
the complaint (Exhibit A).
(2) That on May 9 and 10, 1924, said deputy sheriff sold at
public auction said personal properties of Leon Sibal, including
the sugar cane in question to Emilio J. Valdez, who paid
therefor the sum of P1,550, of which P600 was for the sugar
cane (Exhibit A).
(3) That on April 29,1924, said deputy sheriff, by virtue of said
writ of execution, also attached the real property of said Leon
Sibal in Tarlac, including all of his rights, interest and
participation therein, which real property consisted of eleven
parcels of land and a house and camarin situated in one of
said parcels (Exhibit A).
(4) That on June 25, 1924, eight of said eleven parcels,including the house and the camarin, were bought by Emilio J.
Valdez at the auction held by the sheriff for the sum of
P12,200. Said eight parcels were designated in the certificate
of sale as parcels 1, 3, 4, 5, 6, 7, 10 and 11. The house and
camarin were situated on parcel 7 (Exhibit A).
(5) That the remaining three parcels, indicated in the
certificate of the sheriff as parcels 2, 12, and 13, were
released from the attachment by virtue of claims presented
by Agustin Cuyugan and Domiciano Tizon (Exhibit A).
(6) That on the same date, June 25, 1924, Macondray & Co.
sold and conveyed to Emilio J. Valdez for P2,579.97 all of its
rights and interest in the eight parcels of land acquired by it atpublic auction held by the deputy sheriff of Tarlac in
connection with civil case No. 20203 of the Court of First
Instance of Manila, as stated above. Said amount represented
the unpaid balance of the redemption price of said eight
parcels, after payment by Leon Sibal of P2,000 on September
24, 1923, fro the account of the redemption price, as stated
above. (Exhibit C and 2).
The foregoing statement of facts shows:
(1) The Emilio J. Valdez bought the sugar cane in question,
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, 1924, for P600.
(2) That on July 30, 1923, 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, 1923, Leon
Sibal paid to Macondray & Co. P2,000 for the account of the
redemption price of said parcels.
(3) That on June 25, 1924, Emilio J. Valdez acquired from
Macondray & Co. all of its rights and interest in the said eight
parcels of land.
(4) That on June 25, 1924, Emilio J. 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 P2,000 paid by the latter
to Macondray.
(5) That Emilio J. Valdez became the absolute owner of said
eight parcels of land.
The first question raised by the appeal is, whether the sugar cane in
question is personal or real property. It is contended that sugar cane
comes under the classification of real property as "ungathered productsin paragraph 2 of article 334 of the Civil Code. Said paragraph 2 of article
334 enumerates as real property the following: Trees, plants, and
ungathered products, while they are annexed to the land or form an
integral part of any immovable property." That article, however, ha
received in recent years an interpretation by the Tribunal Supremo de
Espaa, which holds that, under certain conditions, growing crops may
be considered as personal property. (Decision of March 18, 1904, vol
97, Civil Jurisprudence of Spain.)
Manresa, the eminent commentator of the Spanish Civil Code, in
discussing section 334 of the Civil Code, in view of the recent decisions
of the supreme Court of Spain, admits that growing crops are sometime
considered and treated as personal property. He says:
No creemos, sin embargo, 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), y a la de lenas, considerando ambas
como muebles. El Tribunal Supremo, en sentencia de 18 de
marzo de 1904, al entender sobre un contrato de
arrendamiento de un predio rustico, resuelve que su
terminacion por desahucio no extingue los derechos de
arrendario, para recolectar o percibir los frutos
correspondientes al ao agricola, dentro del que nacieron
aquellos derechos, cuando el arrendor ha percibido a su vez e
importe de la renta integra correspondiente, aun cuando lo
haya sido por precepto legal durante el curso del juicio
fundandose para ello, no solo en que de otra suerte se daria a
desahucio un alcance que no tiene, sino en que, y esto es lointeresante a nuestro proposito, la consideracion de
inmuebles que el articulo 334 del Codigo Civil atribuge a los
frutos pendientes, no les priva del caracter de producto
pertenecientes, como tales, a quienes a ellos tenga derecho
Ilegado el momento de su recoleccion.
x x x x x x x x x
Mas actualmente y por virtud de la nueva edicion de la Ley
Hipotecaria, publicada en 16 de diciembre de 1909, con las
reformas introducidas por la de 21 de abril anterior, la
hipoteca, salvo pacto expreso que disponga lo contrario, y
cualquiera que sea la naturaleza y forma de la obligacion que
garantice, no comprende los frutos cualquiera que sea lasituacion en que se encuentre. (3 Manresa, 5. edicion, pags
22, 23.)
From the foregoing it appears (1) that, under Spanish authorities
pending fruits and ungathered products may be sold and transferred as
personal property; (2) that the Supreme Court of Spain, in a case of
ejectment of a lessee of an agricultural land, held that the lessee was
entitled to gather the products corresponding to the agricultural year
because said fruits did not go with the land but belonged separately to
the lessee; and (3) that under the Spanish Mortgage Law of 1909, as
amended, the mortgage of a piece of land does not include the fruits
-
7/27/2019 Cases in Property Law
12/20
and products existing thereon, unless the contract expressly provides
otherwise.
An examination of the decisions of the Supreme Court of Louisiana may
give us some light on the question which we are discussing. Article 465
of the Civil Code of Louisiana, which corresponds to paragraph 2 of
article 334 of our Civil Code, provides: "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."
The Supreme Court of Louisiana having occasion to interpret that
provision, held that in some cases "standing crops" may be considered
and dealt with as personal property. In the case ofLumber Co. vs. Sheriff
and Tax Collector(106 La., 418) the Supreme Court said: "True, 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 . . . are
considered as part of the land to which they are attached, 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, a gathering as it were
in advance, rendering the crop movable quoad the right acquired
therein. Our jurisprudence recognizes the possible mobilization of the
growing crop." (Citizens' Bank vs. Wiltz, 31 La. Ann., 244;
Porche vs. Bodin, 28 La., Ann., 761; Sandel vs. Douglass, 27 La. Ann., 629;Lewis vs. Klotz, 39 La. Ann., 267.)
"It is true," as the Supreme Court of Louisiana said in the case ofPorche
vs. Bodin (28 La. An., 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, and article 466 declares that the fruits of an
immovable gathered or produced while it is under seizure are
considered as making part thereof, and incurred to the benefit of the
person making the seizure. But the evident meaning of these articles, is
where the crops belong to the owner of the plantation they form part of
the immovable, and where it is seized, the fruits gathered or produced
inure to the benefit of the seizing creditor.
A crop raised on leased premises in no sense forms part of theimmovable. It belongs to the lessee, and may be sold by him,
whether it be gathered or not, and it may be sold by his
judgment creditors. 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. If a lessee obtain
supplies to make his crop, the factor's lien would not attach to
the crop as a separate thing belonging to his debtor, but the
land belonging to the lessor would be affected with the
recorded privilege. The law cannot be construed so as to
result in such absurd consequences.
In the case ofCitizen's Bank vs. Wiltz (31 La. Ann., 244)the court said:
If the crop quoadthe pledge thereof under the act of 1874was an immovable, it would be destructive of the very objects
of the act, it would render the pledge of the crop objects of
the act, it would render the pledge of the crop impossible, for
if the crop was an inseparable part of the realty possession of
the latter would be necessary to that of the former; but such
is not the case. True, by article 465 C. C. 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;"
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. The immovability of a growing crop is in the order of
things temporary, for the crop passes from the state of a
growing to that of a gathered one, from an immovable to a
movable. The existence of a right on the growing crop is a
mobilization by anticipation, a gathering as it were in advance
rendering the crop movable quoadthe right acquired thereon
The provision of our Code is identical with the Napoleon Code
520, and we may therefore obtain light by an examination of
the jurisprudence of France.
The rule above announced, not only by the Tribunal Supremo de
Espaa but by the Supreme Court of Louisiana, is followed in practicallyevery state of the Union.
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 o
judgment is, that growing crops raised by yearly labor and cultivation are
considered personal property. (6 Corpuz Juris, p. 197; 17 Corpus Juris, p
379; 23 Corpus Juris, p. 329: Raventas vs. Green, 57 Cal., 254
Norris vs. Watson, 55 Am. Dec., 161; Whipple vs. Foot, 3 Am. Dec., 442
1 Benjamin on Sales, sec. 126; McKenzie vs. Lampley, 31 Ala., 526
Crinevs. Tifts and Co., 65 Ga., 644; Gillitt vs. Truax, 27 Minn., 528
Preston vs. Ryan, 45 Mich., 174; Freeman on Execution, vol. 1, p. 438
Drake on Attachment, sec. 249; Mechem on Sales, sec. 200 and 763.)
Mr. Mechem says that a valid sale may be made of a thing, which though
not yet actually in existence, is reasonably certain to come into existence
as the natural increment or usual incident of something already in
existence, and then belonging to the vendor, and then title will vest in
the buyer the moment the thing comes into existence
(Emerson vs. European Railway Co., 67 Me., 387; Cutting vs. Packer
Exchange, 21 Am. St. Rep., 63.) Things of this nature are said to have a
potential existence. A man may sell property of which he is potentially
and not actually possessed. He may make a valid sale of the wine that a
vineyard is expected to produce; or the gain a field may grow in a given
time; or the milk a cow may yield during the coming year; or the woo
that shall thereafter grow upon sheep; or what may be taken at the nex
cast of a fisherman's net; or fruits to grow; or young animals not yet in
existence; or the good will of a trade and the like. The thing sold
however, must be specific and identified. They must be also owned atthe time by the vendor. (Hull vs. Hull, 48 Conn., 250 [40 Am. Rep., 165].)
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. 1508, the Chattel Mortgage Law
Said section 450 enumerates the property of a judgment debtor which
may be subjected to execution. The pertinent portion of said section
reads as follows: "All goods, chattels, moneys, and other property, both
real and personal, * * * shall be liable to execution. 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. The Supreme Court of California, under section 688 of the
Code of Civil Procedure of that state (Pomeroy, p. 424) has held, without
variation, that growing crops were personal property and subject to
execution.
Act No. 1508, the Chattel Mortgage Law, fully recognized that growing
crops are personal property. Section 2 of said Act provides: "All persona
property shall be subject to mortgage, agreeably to the provisions of this
Act, and a mortgage executed in pursuance thereof shall be termed a
chattel mortgage." 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, care for and protect the crop
while growing.
It is clear from the foregoing provisions that Act No. 1508 was enacted
on the assumption that "growing crops" are personal property. Thi
-
7/27/2019 Cases in Property Law
13/20
consideration tends to support the conclusion hereinbefore stated, that
paragraph 2 of article 334 of the Civil Code has been modified by section
450 of Act No. 190 and by Act No. 1508 in the sense that "ungathered
products" as mentioned in said article of the Civil Code have the nature
of personal property. In other words, the phrase "personal property"
should be understood to include "ungathered products."
At common law, and generally in the United States, all annual
crops which are raised by yearly manurance and labor, and
essentially owe their annual existence to cultivation by man, .
may be levied on as personal property." (23 C. J., p. 329.) Onthis question Freeman, in his treatise on the Law of
Executions, says: "Crops, whether growing or standing in the
field ready to be harvested, are, when produced by annual
cultivation, no part of the realty. They are, therefore, liable to
voluntary transfer as chattels. It is equally well settled that
they may be seized and sold under execution. (Freeman on
Executions, vol. p. 438.)
We may, therefore, 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. 1508, in the sense that, for the purpose of attachment
and execution, and for the purposes of the Chattel Mortgage Law,
"ungathered products" have the nature of personal property. The lower
court, therefore, committed no error in holding that the sugar cane in
question was personal property and, as such, was not subject toredemption.
All the other assignments of error made by the appellant, as above
stated, relate to questions of fact only. Before entering upon a
discussion of said assignments of error, 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. 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.
Coming not to the ownership of parcels 1 and 2 described in the first
cause of action of the complaint, 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 ofreal property of Sibal to Valdez on June 25, 1924, as stated above. 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.
The description of the parcels in the complaint is as follows:
1. La caa dulce sembrada por los inquilinos del ejecutado
Leon Sibal 1. en una parcela de terreno de la pertenencia del
citado ejecutado, situada en Libutad, Culubasa, Bamban,
Tarlac, de unas dos hectareas poco mas o menos de
superficie.
2. La caa dulce sembrada por el inquilino del ejecutado Leon
Sibal 1., Ilamado Alejandro Policarpio, en una parcela de
terreno de la pertenencia del ejecutado, situada en Dalayap,
Culubasa, Bamban, Tarlac de unas dos hectareas de superficie
poco mas o menos." The description of parcel 2 given in the
certificate of sale (Exhibit A) is as follows:
2a. Terreno palayero situado en Culubasa, Bamban, Tarlac, de
177,090 metros cuadrados de superficie, linda al N. con
Canuto Sibal, Esteban Lazatin and Alejandro Dayrit; al E. con
Francisco Dizon, Felipe Mau and others; al S. con Alejandro
Dayrit, Isidro Santos and Melecio Mau; y al O. con Alejandro
Dayrit and Paulino Vergara. Tax No. 2854, vador amillarado
P4,200 pesos.
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, 1924, and corresponded
to parcel 4 in the deed of sale (Exhibit B and 2), and were also included
among the parcels bought by Valdez at the auction of the real property
of Leon Sibal on June 25, 1924, and corresponded to parcel 3 in the
certificate of sale made by the sheriff (Exhibit A). The description of
parcel 4 (Exhibit 2) and parcel 3 (Exhibit A) is as follows:
Parcels No. 4. Terreno palayero, ubicado en el barrio de
Culubasa,Bamban, Tarlac, I. F. de 145,000 metros cuadrados
de superficie, lindante al Norte con Road of the barrio of
Culubasa that goes to Concepcion; al Este con Juan Dizon; a
Sur con Lucio Mao y Canuto Sibal y al Oeste con Esteban
Lazatin, su valor amillarado asciende a la suma de P2,990. Tax
No. 2856.
As will be noticed, 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)
But, inasmuch as the plaintiff did not care to appear at the trial when
the defendant offered his evidence, we are inclined to give more weigh
to the evidence adduced by him that to the evidence adduced by the
plaintiff, with respect to the ownership of pa