This document is a Supreme Court case from December 6, 1995 regarding a dispute over a residential house built by petitioners (Luis Castro Jr. and others) on land that was leased to them and later foreclosed on. The Supreme Court reversed the Court of Appeals decision, finding that the residential house owned by petitioners was improperly included in the writ of possession issued after foreclosure, as they owned the house and it was not part of what was mortgaged by the lessor. The Supreme Court explained that under Article 2127 of the Civil Code, improvements are only considered part of a mortgage if they are owned by the mortgagor of the property, not by third parties like the petitioners.
This document is a Supreme Court case from December 6, 1995 regarding a dispute over a residential house built by petitioners (Luis Castro Jr. and others) on land that was leased to them and later foreclosed on. The Supreme Court reversed the Court of Appeals decision, finding that the residential house owned by petitioners was improperly included in the writ of possession issued after foreclosure, as they owned the house and it was not part of what was mortgaged by the lessor. The Supreme Court explained that under Article 2127 of the Civil Code, improvements are only considered part of a mortgage if they are owned by the mortgagor of the property, not by third parties like the petitioners.
This document is a Supreme Court case from December 6, 1995 regarding a dispute over a residential house built by petitioners (Luis Castro Jr. and others) on land that was leased to them and later foreclosed on. The Supreme Court reversed the Court of Appeals decision, finding that the residential house owned by petitioners was improperly included in the writ of possession issued after foreclosure, as they owned the house and it was not part of what was mortgaged by the lessor. The Supreme Court explained that under Article 2127 of the Civil Code, improvements are only considered part of a mortgage if they are owned by the mortgagor of the property, not by third parties like the petitioners.
This document is a Supreme Court case from December 6, 1995 regarding a dispute over a residential house built by petitioners (Luis Castro Jr. and others) on land that was leased to them and later foreclosed on. The Supreme Court reversed the Court of Appeals decision, finding that the residential house owned by petitioners was improperly included in the writ of possession issued after foreclosure, as they owned the house and it was not part of what was mortgaged by the lessor. The Supreme Court explained that under Article 2127 of the Civil Code, improvements are only considered part of a mortgage if they are owned by the mortgagor of the property, not by third parties like the petitioners.
LUISCASTRO,JR.,MARISSACASTRO,RAMONCASTRO,MARYANNCASTRO,CATHERINECASTROand ANTONIOCASTRO,petitioners, vs. HON.COURTOFAPPEALSandUNIONBANKOFTHEPHILIPPINES,respondents.
VITUG,J.:
Theinstantpetitionforreviewoncertiorariofthedecision,1dated11October1990,oftheCourtofAppealsisfocused on the issue of whether or not a residential house, which was constructed by a lessee on a portion of the leased property theretoforeencumberedunderarealestatemortgagebythelessor,canberightlycoveredbyawritofpossessionfollowing theforeclosuresaleofthemortgagedland.
Thefactsarenotinanyseriousdispute.
On 15 August 1974, Cabanatuan City Colleges obtained a loan from the Bancom Development Corporation. In ordertosecuretheindebtedness,thecollegemortgagedtoBancomtwoparcelsoflandcoveredbyTCTNo.T 45816 and No. T45817 located in Cabanatuan City. The parcels were both within the school site. While the mortgage was subsisting, the college board of directors agreed to lease to petitioners a 1,000squaremeter portion of the encumbered property on which the latter, eventually, built a residential house. Bancom, the mortgagee,wasdulyadvisedofthematter.
On 10 October 1984, following the expiration of the redemption period without the college having exercised its rightofredemption,privaterespondentconsolidatedtitletotheproperty.
On 08 May 1985, private respondent filed with the Regional Trial Court of Nueva Ecija, Branch XXVIII in Cabanatuan City, an expartemotion for the issuance of a writ of possession not only over the land and schoolbuildingsbutalsotheresidentialhouseconstructedbypetitioners.2 On 10 May 1985, the lower court grantedthemotionanddirectedtheissuanceofthecorrespondingwrit.
The exofficio provincial sheriff, in implementing the writ, thereby also sought the vacation of the premises by petitioners.Whenthelatterrefused,privaterespondentfiledanexpartemotionforaspecialorderdirectingthe physicalousteroftheoccupants.
On23May1986,petitionersformallyenteredtheirappearanceintheproceedingstoopposetheexpartemotion. Petitioners averred that, being the owners of the residential house which they themselves had built on the foreclosedpropertywiththepriorknowledgeofthemortgagee,theycouldnotbeoustedsimplyonthebasisofa petitionforawritofpossessionunderActNo.3135.
On27May1986,thelowercourt,3 nevertheless, issued an order granting private respondent's motion, and it directed Atty. Luis T. Castro, in representation of petitioners, to deliver "all the keys to all the rooms and premises" found on the propertyforeclosedandauthorized,intheeventpetitionerswouldrefusetosurrenderthekeys,privaterespondent"toenter
http://www.lawphil.net/judjuris/juri1995/dec1995/gr_97401_1995.html 1/3 2/15/2017 G.R.No.97401 the premises in question and do what is best for the preservation of the properties belonging to the Cabanatuan City Colleges."4
Petitionerssoughtreconsiderationoftheorderbutthelowercourtdeniedthemotionon13June1986.5 It ruled that the residential building was included in the writ of possession pursuant to Article 2127 of the Civil Code. Private respondent still sought clarification of the Order, praying that the court issue another order specifically mentioning the residentialhousetobeamongthepropertywhichthesheriffshoulddelivertoit.6Althoughthecourtfoundnoneedtoclarify itspreviousruling,"intheinterestofjusticeandtoobviateanypossiblemisunderstandingbetweentheparties,however,it issueditsorderof18June1986stating:
WHEREFORE, the ExOfficio Provincial Sheriff, Atty. Numeriano Y. Galang should implement the orderofMay27,1986toincludethereintheresidentialhousebeingthesubjectofdisputebetween thepartiesheretotherebeingnocompellingreasonstoexcludeit.
SOORDERED.7
PetitionerselevatedthecasetotheCourtofAppeals,assailingtheordersofthecourtaquoof27May1986,13 June 1986 and 18 June 1986. On 11 October 1990, the appellate court rendered decision affirming the questionedorders.8
Art.2127.Themortgageextendstothenaturalaccessions,totheimprovements,growingfruits,and the rents or income not yet received when the obligation becomes due, and to the amount of the indemnitygrantedorowingtotheproprietorfromtheinsurersofthepropertymortgaged,orinvirtue ofexpropriationforpublicuse,withthedeclarations,amplificationsandlimitationsestablishedbylaw, whethertheestateremainsinthepossessionofthemortgagor,orpassesintothehandsofathird person.
This article extends the effects of the real estate mortgage to accessions and accessories found on the hypothecatedpropertywhenthesecuredobligationbecomesdue.Thelawispredicatedonanassumption thattheownershipofsuchaccessionsandaccessoriesalsobelongstothemortgagorastheownerofthe principal. 10 The provision 11 has thus been seen by the Court, in a long line of cases beginning in 1909 with Bischoff vs. Pomar, 12 to mean that all improvements subsequently introduced or owned by the mortgagor on the encumbered property are deemed to form part of the mortgage. That the improvements are to be considered so incorporated only if so owned by the mortgagor is a rule that can hardly be debated since a contract of security, whether, real or personal, needs as an indispensable element thereof the ownership by the pledgor or mortgagor of thepropertypledgedormortgaged. 13Therationaleshouldbeclearenoughintheeventofdefaultonthesecured obligation, the foreclosure sale of the property would naturally be the next step that can expectedly follow. A sale wouldresultinthetransmissionoftitletothebuyerwhichisfeasibleonlyifthesellercanbeinapositiontoconvey ownership of the thing sold (Article 1458, Civil Code). It is to say, in the instant case, that a foreclosure would be ineffectiveunlessthemortgagorhastitletothepropertytobeforeclosed.14
WHEREFORE, the decision of the Court of Appeals is REVERSED and SET ASIDE, and a new one is entered declaringtheresidentialhouseownedbypetitionerstohavebeenimproperlyincludedinthewritofpossession issuedbythecourtaquo.Nocosts.
G.R. No. 141297 October 8, 2001 DOMINGO R. MANALO, Petitioner, COURT OF APPEALS (Special Twelfth Division) and PAIC SAVINGS AND MORTGAGE BANK, Respondents. PUNO, J.
