Cases in Property Law

7/27/2019 Cases in Property Law

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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


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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


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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.


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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


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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


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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


7/20

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


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


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:


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).


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


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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


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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

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