Bicerra vs Teneza

G.R. No. L-16218 November 29, 1962

ANTONIA BICERRA, DOMINGO BICERRA, BERNARDO BICERRA, CAYETANO BICERRA,

LINDA BICERRA, PIO BICERRA and EUFRICINA BICERRA, plaintiffs-appellants,

vs.

TOMASA TENEZA and BENJAMIN BARBOSA, defendants-appellees.

Agripino Brillantes and Alberto B. Bravo for plaintiffs-appellants.

Ernesto Parol for defendants-appellees.

MAKALINTAL, J.:

This case is before us on appeal from the order of the Court of First Instance of Abra dismissing the
complaint filed by appellants, upon motion of defendants-appellate on the ground that the action was
within the exclude (original) jurisdiction of the Justice of the Peace Court of Lagangilang, of the same
province.

The complaint alleges in substance that appellants were the owners of the house, worth P200.00,
built on and owned by them and situated in the said municipality Lagangilang; that sometime in
January 1957 appealed forcibly demolished the house, claiming to be the owners thereof; that the
materials of the house, after it was dismantled, were placed in the custody of the barrio lieutenant of
the place; and that as a result of appellate's refusal to restore the house or to deliver the material
appellants the latter have suffered actual damages the amount of P200.00, plus moral and
consequential damages in the amount of P600.00. The relief prayed for is that "the plaintiffs be
declared the owners of the house in question and/or the materials that resulted in (sic) its
dismantling; (and) that the defendants be orders pay the sum of P200.00, plus P600.00 as damages,
the costs."

The issue posed by the parties in this appeal is whether the action involves title to real property, as
appellants contend, and therefore is cognizable by the Court of First Instance (Sec. 44, par. [b], R.A.
296, as amended), whether it pertains to the jurisdiction of the Justice of the Peace Court, as stated
in the order appealed from, since there is no real property litigated, the house having ceased to
1
exist, and the amount of the demand does exceed P2,000.00 (Sec. 88, id.)

The dismissal of the complaint was proper. A house is classified as immovable property by reason of
its adherence to the soil on which it is built (Art. 415, par. 1, Civil Code). This classification holds true
regardless of the fact that the house may be situated on land belonging to a different owner. But
once the house is demolished, as in this case, it ceases to exist as such and hence its character as
an immovable likewise ceases. It should be noted that the complaint here is for recovery of
damages. This is the only positive relief prayed for by appellants. To be sure, they also asked that
they be declared owners of the dismantled house and/or of the materials. However, such declaration
in no wise constitutes the relief itself which if granted by final judgment could be enforceable by
execution, but is only incidental to the real cause of action to recover damages.

The order appealed from is affirmed. The appeal having been admitted in forma pauperis, no costs
are adjudged.
Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera, Paredes,
Dizon and Regala, JJ., concur.

PRUDENTIAL BANK V. PANIS

153 SCRA 390

FACTS:
Spouses Magcale secured a loan from Prudential Bank. To secure payment, they executed a
real estate mortgage over a residential building. The mortgage included also the right to occupy the lot
and the information about the sales patent applied for by the spouses for the lot to which the building
stood. After securing the first loan, the spouses secured another from the same bank. To secure
payment, another real estate mortgage was executed over the same properties.

The Secretary of Agriculture then issued a Miscellaneous Sales Patent over the land which was later on
mortgaged to the bank.

The spouses then failed to pay for the loan and the REM was extrajudicially foreclosed and sold in public
auction despite opposition from the spouses. The respondent court held that the REM was null and void.

HELD:
A real estate mortgage can be constituted on the building erected on the land belonging to another.

The inclusion of building distinct and separate from the land in the Civil Code can only mean that
the building itself is an immovable property.

While it is true that a mortgage of land necessarily includes in the absence of stipulation of the
improvements thereon, buildings, still a building in itself may be mortgaged by itself apart from the
land on which it is built. Such a mortgage would still be considered as a REM for the building would
still be considered as immovable property even if dealt with separately and apart from the land.

The original mortgage on the building and right to occupancy of the land was executed before the
issuance of the sales patent and before the government was divested of title to the land. Under
the foregoing, it is evident that the mortgage executed by private respondent on his own
building was a valid mortgage.

As to the second mortgage, it was done after the sales patent was issued and thus prohibits pertinent
provisions of the Public Land Act.
LADERA VS. HODGES (G.R. NO. 8027-R, VOL. 48, NO. 12, O.G. 5374,
SEPTEMBER 23, 1952)
APRIL 23, 2015 | YUMMY

FACTS:

1. Hodges entered into a contract promising to sell a lot to Ladera

under certain terms and conditions. One of which is that the
contract may be rescinded and annulled in case Ladera failed to
make the monthly payment 60 days after it is due.
2. After the execution of the contract, Ladera built a house on the lot
assessed at 4,500 pesos. However, Ladera failed to pay the
agreed installments so Hodges rescinded the contract and filed an
action for ejectment.
3. The MTC ruled in favor of Hodges and issued an alias writ of
execution. Pursuant thereto, the sheriff levied upon all rights,
interests and participation over the house. Notices of sale were
posted, however, were not published in a newspaper of general
circulation.
4. An auction sale was then conducted but Ladera was not able to
attend as she had gone to Manila. The house was then sold to
one Avelina Magno as the highest bidder. Meanwhile, Ladera sold
the same lot to one Manuel Villa and on the same day purchased
the house from Magno for 200 pesos. This, however, was not
recorded.
5. Ladera then returned to Iloilo and learned what happened. She
went to see the sheriff and represented that the property can still
be redeemed and so she gave him 230 pesos. It does not appear,
however, that it was turned over to Hodges. Thereupon, Ladera
filed an action against Hodges, the sheriff, Magno and Villa to set
aside the sale and recover the house.
6. The lower court ruled in favor of Ladera on the ground of non-
compliance based on Rule 39 of the Rules of Court. On appeal,
Hodges contends that the house, built on a lot owned by another,
should be regarded as movable or personal property. The sale of
the land was also made without proper publication required by
law.
ISSUE: Was the house movable or immovable?

RULING: Immovable.

1. As enumerated in the Civil Code, immovable property includes

lands, buildings, roads and constructions of all kinds adhered to
the soil. The law does not make any distinction whether or not the
owner of the lot was the one who built the construction.
2. Also, Ladera did not declare his house to be a chattel mortgage.
The object of the levy or sale was real property and its publication
in a newspaper of general circulation was indespensible. Without
it, the execution sale was void.
3. In addition, Magno, the alleged purchaser at the auction sale, was
a mere employee of Hodges and the low bid made by her as well
as the fact that she sold the house to Villa on the same day
Hodges sold him the land, proves that she was merely acting for
and in behalf of Hodges.
4. In the sale of immovables, the lack of title of the vendor taints the
rights of the subsequent purchasers. Possession in good faith is
not equivalent to title.
5. The principles of accession regard buildings and constructions as
mere accessories to the land on which it is built, it is logical that
said accessories should partake the nature of the principal thing.

Navarro v. Pineda (Case

Digest)
H Civil Law August 8, 2018 2 Minutes

Navarro v. Pineda

GR No. L-18456
Property Law: Immovable Property

Facts:

Rufino Pineda and his mother, Juana Gonzales, borrowed from plaintiff Conrado
Navarro, the sum of P2550.00, and payable 6 months after date. Pineda executed
“Deed of Real Estate and Chattel Mortgages,” whereby his mother, by way of
Real Estate Mortgage hypothecated a parcel of land, belonging to her. Both
mortgages were contained in one instrument, which was registered in both the
Office of the Register of Deeds and the Motor Vehicles Office of Tarlac.

The defendants failed to pay when the mortgage became due and payable. The
plaintiff gave two extensions. They still failed to pay.

When the plaintiff filed a complaint for foreclosure of the mortgage,

defendant questioned the validity of the chattel mortgage over his house on
the ground that the house, being an immovable property, could not be the
subject of a chattel mortgage. Defendant cited cases to prove their point
(Lopez v. Ororsa; Associated Ins. & Surety Co. v. Iya; and Leung Yee v. Strong
Machinery Co.)

Additional note (for recit purposes):

– In the second extension, the defendants promised that should they fail to
pay the obligation on such date, they would no longer ask for further
extension and there would be no need for any formal demand, and plaintiff
could proceed to take whatever action he might desire to enforce his rights,
under the said mortgage contract.

Issue:

Whether or not the Deed of Real Estate and Chattel Mortgages is valid,
particularly on the questions of whether or not the residential house, subject
of the mortgage therein, can be considered a chattel and the propriety of the
attorney’s fees.

Held:

Yes. The Deed of Real Estate and Chattel Mortgage is valid. The parties to the
contract treated the house in question as personal or movable property. In the
deed of chattel mortgage, appellant Rufino G. Pineda conveyed by way of
“Chattel Mortgage” “my personal properties,” a residential house and a truck.
The mortgagor himself grouped the house with the truck, which is, inherently a
movable property. The house which was not even declared for taxation purposes
was small and made of light construction materials: G.I. sheets roofing,
sawali and wooden walls and wooden posts; built on land belonging to another.

The cases cited by appellants are not applicable to the present case. The Iya
cases refer to a building or a house of strong materials, permanently adhered
to the land, belonging to the owner of the house himself. In the case of Lopez
vs. Orosa the subject building was a theater, built of materials worth more
than P62,000.00 attached permanently to the soil. In these two cases and in
the Leung Yee Case, supra, third persons assailed the validity of the deed of
chattel mortgages; in the present case, it was one of the parties to the
contract of mortgages who assailed its validity.

Tumalad vs Vicencio

G.R. No. L-30173 September 30, 1971

GAVINO A. TUMALAD and GENEROSA R. TUMALAD, plaintiffs-appellees,

vs.

ALBERTA VICENCIO and EMILIANO SIMEON, defendants-appellants.

Castillo & Suck for plaintiffs-appellees.

Jose Q. Calingo for defendants-appellants.

REYES, J.B.L., J.:

Case certified to this Court by the Court of Appeals (CA-G.R. No. 27824-R) for the reason that only
questions of law are involved.

This case was originally commenced by defendants-appellants in the municipal court of Manila in
Civil Case No. 43073, for ejectment. Having lost therein, defendants-appellants appealed to the
court a quo (Civil Case No. 30993) which also rendered a decision against them, the dispositive
portion of which follows:

WHEREFORE, the court hereby renders judgment in favor of the plaintiffs and against the
defendants, ordering the latter to pay jointly and severally the former a monthly rent of P200.00 on
the house, subject-matter of this action, from March 27, 1956, to January 14, 1967, with interest at
the legal rate from April 18, 1956, the filing of the complaint, until fully paid, plus attorney's fees in
the sum of P300.00 and to pay the costs.

It appears on the records that on 1 September 1955 defendants-appellants executed a chattel

mortgage in favor of plaintiffs-appellees over their house of strong materials located at No. 550 Int.
3, Quezon Boulevard, Quiapo, Manila, over Lot Nos. 6-B and 7-B, Block No. 2554, which were being
rented from Madrigal & Company, Inc. The mortgage was registered in the Registry of Deeds of
Manila on 2 September 1955. The herein mortgage was executed to guarantee a loan of P4,800.00
received from plaintiffs-appellees, payable within one year at 12% per annum. The mode of payment
was P150.00 monthly, starting September, 1955, up to July 1956, and the lump sum of P3,150 was
payable on or before August, 1956. It was also agreed that default in the payment of any of the
amortizations, would cause the remaining unpaid balance to becomeimmediately due and Payable
and —

the Chattel Mortgage will be enforceable in accordance with the provisions of Special Act No. 3135,
and for this purpose, the Sheriff of the City of Manila or any of his deputies is hereby empowered
and authorized to sell all the Mortgagor's property after the necessary publication in order to settle
2
the financial debts of P4,800.00, plus 12% yearly interest, and attorney's fees...

When defendants-appellants defaulted in paying, the mortgage was extrajudicially foreclosed, and
on 27 March 1956, the house was sold at public auction pursuant to the said contract. As highest
3
bidder, plaintiffs-appellees were issued the corresponding certificate of sale. Thereafter, on 18 April
1956, plaintiffs-appellant commenced Civil Case No. 43073 in the municipal court of Manila, praying,
among other things, that the house be vacated and its possession surrendered to them, and for
defendants-appellants to pay rent of P200.00 monthly from 27 March 1956 up to the time the
4
possession is surrendered. On 21 September 1956, the municipal court rendered its decision —

... ordering the defendants to vacate the premises described in the complaint; ordering further to pay
monthly the amount of P200.00 from March 27, 1956, until such (time that) the premises is (sic)
5
completely vacated; plus attorney's fees of P100.00 and the costs of the suit.

Defendants-appellants, in their answers in both the municipal court and court a quo impugned the
legality of the chattel mortgage, claiming that they are still the owners of the house; but they waived
the right to introduce evidence, oral or documentary. Instead, they relied on their memoranda in
support of their motion to dismiss, predicated mainly on the grounds that: (a) the municipal court did
not have jurisdiction to try and decide the case because (1) the issue involved, is ownership, and (2)
there was no allegation of prior possession; and (b) failure to prove prior demand pursuant to
6
Section 2, Rule 72, of the Rules of Court.

During the pendency of the appeal to the Court of First Instance, defendants-appellants failed to
deposit the rent for November, 1956 within the first 10 days of December, 1956 as ordered in the
decision of the municipal court. As a result, the court granted plaintiffs-appellees' motion for
execution, and it was actually issued on 24 January 1957. However, the judgment regarding the
surrender of possession to plaintiffs-appellees could not be executed because the subject house had
been already demolished on 14 January 1957 pursuant to the order of the court in a separate civil
case (No. 25816) for ejectment against the present defendants for non-payment of rentals on the
land on which the house was constructed.

The motion of plaintiffs for dismissal of the appeal, execution of the supersedeas bond and
withdrawal of deposited rentals was denied for the reason that the liability therefor was disclaimed
and was still being litigated, and under Section 8, Rule 72, rentals deposited had to be held until final
7
disposition of the appeal.

On 7 October 1957, the appellate court of First Instance rendered its decision, the dispositive portion
of which is quoted earlier. The said decision was appealed by defendants to the Court of Appeals
which, in turn, certified the appeal to this Court. Plaintiffs-appellees failed to file a brief and this
appeal was submitted for decision without it.

Defendants-appellants submitted numerous assignments of error which can be condensed into two
questions, namely: .

(a) Whether the municipal court from which the case originated had jurisdiction to adjudicate the
same;
(b) Whether the defendants are, under the law, legally bound to pay rentals to the plaintiffs during
the period of one (1) year provided by law for the redemption of the extrajudicially foreclosed house.

We will consider these questions seriatim.

(a) Defendants-appellants mortgagors question the jurisdiction of the municipal court from which the
case originated, and consequently, the appellate jurisdiction of the Court of First Instance a quo, on
the theory that the chattel mortgage is void ab initio; whence it would follow that the extrajudicial
foreclosure, and necessarily the consequent auction sale, are also void. Thus, the ownership of the
house still remained with defendants-appellants who are entitled to possession and not plaintiffs-
appellees. Therefore, it is argued by defendants-appellants, the issue of ownership will have to be
adjudicated first in order to determine possession. lt is contended further that ownership being in
issue, it is the Court of First Instance which has jurisdiction and not the municipal court.

Defendants-appellants predicate their theory of nullity of the chattel mortgage on two grounds, which
are: (a) that, their signatures on the chattel mortgage were obtained through fraud, deceit, or
trickery; and (b) that the subject matter of the mortgage is a house of strong materials, and, being an
immovable, it can only be the subject of a real estate mortgage and not a chattel mortgage.

On the charge of fraud, deceit or trickery, the Court of First Instance found defendants-appellants'
8
contentions as not supported by evidence and accordingly dismissed the charge, confirming the
earlier finding of the municipal court that "the defense of ownership as well as the allegations of
9
fraud and deceit ... are mere allegations."

10
It has been held in Supia and Batiaco vs. Quintero and Ayala that "the answer is a mere
11
statement of the facts which the party filing it expects to prove, but it is not evidence; and further,
that when the question to be determined is one of title, the Court is given the authority to proceed
12
with the hearing of the cause until this fact is clearly established. In the case of Sy vs. Dalman,
wherein the defendant was also a successful bidder in an auction sale, it was likewise held by this
Court that in detainer cases the aim of ownership "is a matter of defense and raises an issue of fact
which should be determined from the evidence at the trial." What determines jurisdiction are the
13
allegations or averments in the complaint and the relief asked for.

Moreover, even granting that the charge is true, fraud or deceit does not render a contract void ab
initio, and can only be a ground for rendering the contract voidable or annullable pursuant to Article
14
1390 of the New Civil Code, by a proper action in court. There is nothing on record to show that
the mortgage has been annulled. Neither is it disclosed that steps were taken to nullify the same.
Hence, defendants-appellants' claim of ownership on the basis of a voidable contract which has not
been voided fails.

It is claimed in the alternative by defendants-appellants that even if there was no fraud, deceit or
trickery, the chattel mortgage was still null and void ab initio because only personal properties can
be subject of a chattel mortgage. The rule about the status of buildings as immovable property is
15
stated in Lopez vs. Orosa, Jr. and Plaza Theatre Inc., cited in Associated Insurance Surety Co.,
16
Inc. vs. Iya, et al. to the effect that —
... it is obvious that the inclusion of the building, separate and distinct from the land, in the
enumeration of what may constitute real properties (art. 415, New Civil Code) could only mean one
thing — that a building is by itself an immovable property irrespective of whether or not said structure
and the land on which it is adhered to belong to the same owner.

Certain deviations, however, have been allowed for various reasons. In the case of Manarang and
17
Manarang vs. Ofilada, this Court stated that "it is undeniable that the parties to a contract may by
agreement treat as personal property that which by nature would be real property", citing Standard
18
Oil Company of New York vs. Jaramillo. In the latter case, the mortgagor conveyed and
19
transferred to the mortgagee by way of mortgage "the following described personal property."
The "personal property" consisted of leasehold rights and a building. Again, in the case of Luna vs.
20
Encarnacion, the subject of the contract designated as Chattel Mortgage was a house of mixed
materials, and this Court hold therein that it was a valid Chattel mortgage because it was so
expressly designated and specifically that the property given as security "is a house of mixed
materials, which by its very nature is considered personal property." In the later case of Navarro vs.
21
Pineda, this Court stated that —

The view that parties to a deed of chattel mortgage may agree to consider a house as personal
property for the purposes of said contract, "is good only insofar as the contracting parties are
concerned. It is based, partly, upon the principle of estoppel" (Evangelista vs. Alto Surety, No. L-
11139, 23 April 1958). In a case, a mortgaged house built on a rented land was held to be a
personal property, not only because the deed of mortgage considered it as such, but also because it
did not form part of the land (Evangelists vs. Abad, [CA]; 36 O.G. 2913), for it is now settled that an
object placed on land by one who had only a temporary right to the same, such as the lessee or
usufructuary, does not become immobilized by attachment (Valdez vs. Central Altagracia, 222 U.S.
58, cited in Davao Sawmill Co., Inc. vs. Castillo, et al., 61 Phil. 709). Hence, if a house belonging to
a person stands on a rented land belonging to another person, it may be mortgaged as a personal
property as so stipulated in the document of mortgage. (Evangelista vs. Abad, Supra.) It should be
noted, however that the principle is predicated on statements by the owner declaring his house to be
a chattel, a conduct that may conceivably estop him from subsequently claiming otherwise. (Ladera
22
vs. C.N. Hodges, [CA] 48 O.G. 5374):

In the contract now before Us, the house on rented land is not only expressly designated as Chattel
Mortgage; it specifically provides that "the mortgagor ... voluntarily CEDES, SELLS and
23
TRANSFERS by way of Chattel Mortgage the property together with its leasehold rights over the
24
lot on which it is constructed and participation ..." Although there is no specific statement referring
to the subject house as personal property, yet by ceding, selling or transferring a property by way of
chattel mortgage defendants-appellants could only have meant to convey the house as chattel, or at
least, intended to treat the same as such, so that they should not now be allowed to make an
inconsistent stand by claiming otherwise. Moreover, the subject house stood on a rented lot to which
defendats-appellants merely had a temporary right as lessee, and although this can not in itself
alone determine the status of the property, it does so when combined with other factors to sustain
the interpretation that the parties, particularly the mortgagors, intended to treat the house as
25
personalty. Finally unlike in the Iya cases, Lopez vs. Orosa, Jr. and Plaza Theatre, Inc. and
 26
Leung Yee vs. F. L. Strong Machinery and Williamson, wherein third persons assailed the validity
27
of the chattel mortgage, it is the defendants-appellants themselves, as debtors-mortgagors, who
are attacking the validity of the chattel mortgage in this case. The doctrine of estoppel therefore
applies to the herein defendants-appellants, having treated the subject house as personalty.

(b) Turning to the question of possession and rentals of the premises in question. The Court of First
Instance noted in its decision that nearly a year after the foreclosure sale the mortgaged house had
been demolished on 14 and 15 January 1957 by virtue of a decision obtained by the lessor of the
land on which the house stood. For this reason, the said court limited itself to sentencing the
erstwhile mortgagors to pay plaintiffs a monthly rent of P200.00 from 27 March 1956 (when the
chattel mortgage was foreclosed and the house sold) until 14 January 1957 (when it was torn down
by the Sheriff), plus P300.00 attorney's fees.

Appellants mortgagors question this award, claiming that they were entitled to remain in possession
without any obligation to pay rent during the one year redemption period after the foreclosure sale,
i.e., until 27 March 1957. On this issue, We must rule for the appellants.

28
Chattel mortgages are covered and regulated by the Chattel Mortgage Law, Act No. 1508.
Section 14 of this Act allows the mortgagee to have the property mortgaged sold at public auction
through a public officer in almost the same manner as that allowed by Act No. 3135, as amended by
Act No. 4118, provided that the requirements of the law relative to notice and registration are
29
complied with. In the instant case, the parties specifically stipulated that "the chattel mortgage will
30
be enforceable in accordance with the provisions of Special Act No. 3135 ... ." (Emphasis
supplied).

In other words, before the expiration of the 1-year period within which the judgment-debtor or
mortgagor may redeem the property, the purchaser thereof is not entitled, as a matter of right, to
possession of the same. Thus, while it is true that the Rules of Court allow the purchaser to receive
the rentals if the purchased property is occupied by tenants, he is, nevertheless, accountable to the
judgment-debtor or mortgagor as the case may be, for the amount so received and the same will be
duly credited against the redemption price when the said debtor or mortgagor effects the
redemption. Differently stated, the rentals receivable from tenants, although they may be collected
by the purchaser during the redemption period, do not belong to the latter but still pertain to the
debtor of mortgagor. The rationale for the Rule, it seems, is to secure for the benefit of the debtor or
mortgagor, the payment of the redemption amount and the consequent return to him of his
properties sold at public auction. (Emphasis supplied)

36
The Hamada case reiterates the previous ruling in Chan vs. Espe.

Since the defendants-appellants were occupying the house at the time of the auction sale, they are
entitled to remain in possession during the period of redemption or within one year from and after 27
March 1956, the date of the auction sale, and to collect the rents or profits during the said period.

It will be noted further that in the case at bar the period of redemption had not yet expired when
action was instituted in the court of origin, and that plaintiffs-appellees did not choose to take
possession under Section 7, Act No. 3135, as amended, which is the law selected by the parties to
govern the extrajudicial foreclosure of the chattel mortgage. Neither was there an allegation to that
effect. Since plaintiffs-appellees' right to possess was not yet born at the filing of the complaint, there
could be no violation or breach thereof. Wherefore, the original complaint stated no cause of action
and was prematurely filed. For this reason, the same should be ordered dismissed, even if there was
no assignment of error to that effect. The Supreme Court is clothed with ample authority to review
palpable errors not assigned as such if it finds that their consideration is necessary in arriving at a
37
just decision of the cases.

It follows that the court below erred in requiring the mortgagors to pay rents for the year following the
foreclosure sale, as well as attorney's fees.

FOR THE FOREGOING REASONS, the decision appealed from is reversed and another one
entered, dismissing the complaint. With costs against plaintiffs-appellees.

Concepcion, C.J., Dizon, Makalintal, Zaldivar, Castro, Fernando, Teehankee, Barredo, Villamor and
Makasiar, JJ., concur.

31
Section 6 of the Act referred to provides that the debtor-mortgagor (defendants-appellants
herein) may, at any time within one year from and after the date of the auction sale, redeem the
32
property sold at the extra judicial foreclosure sale. Section 7 of the same Act allows the
purchaser of the property to obtain from the court the possession during the period of redemption:
but the same provision expressly requires the filing of a petition with the proper Court of First
Instance and the furnishing of a bond. It is only upon filing of the proper motion and the approval of
the corresponding bond that the order for a writ of possession issues as a matter of course. No
33
discretion is left to the court. In the absence of such a compliance, as in the instant case, the
purchaser can not claim possession during the period of redemption as a matter of right. In such a
34
case, the governing provision is Section 34, Rule 39, of the Revised Rules of Court which also
35
applies to properties purchased in extrajudicial foreclosure proceedings. Construing the said
section, this Court stated in the aforestated case of Reyes vs. Hamada.

Manarang vs Ofilada

[G.R. No. L-8133. May 18, 1956.]

MANUEL C. MANARANG and LUCIA D. MANARANG, Petitioners-Appellants, vs. MACARIO M. OFILADA,
Sheriff of the City of Manila and ERNESTO ESTEBAN, Respondents-Appellees.

DECISION
LABRADOR, J.:
On September 8, 1951, Petitioner Lucia D. Manarang obtained a loan of P200 from Ernesto Esteban, and
to secure its payment she executed a chattel mortgage over a house of mixed materials erected on a lot
on Alvarado Street, Manila. As Manarang did not pay the loan as agreed upon, Esteban brought an
action against her in the municipal court of Manila for its recovery, alleging that the loan was secured by
a chattel mortgage on her property. Judgment having been entered in Plaintiff’s favor, execution was
issued against the same property mortgaged.
Before the property could be sold Manarang offered to pay the sum of P277, which represented the
amount of the judgment of P250, the interest thereon, the costs, and the sheriff’s fees, but the sheriff
refused the tender unless the additional amount of P260 representing the publication of the notice of
sale in two newspapers be paid also. So Defendants therein brought this suit to compel the sheriff to
accept the amount of P277 as full payment of the judgment and to annul the published notice of sale.
It is to be noted that in the complaint filed in the municipal court, a copy of the chattel mortgage is
attached and mention made of its registration, and in the prayer request is made that the house
mortgaged be sold at public auction to satisfy the debt. It is also important to note that the house
mortgaged was levied upon at Plaintiff’s request (Exhibit “E”).
On the basis of the above facts counsel for Manarang contended in the court below that the house in
question should be considered as personal property and the publication of the notice of its sale at public
auction in execution considered unnecessary. The Court of First Instance held that although real
property may sometimes be considered as personal property, the sheriff was in duty bound to cause the
publication of the notice of its sale in order to make the sale valid or to prevent its being declared void
or voidable, and he did not, therefore, err in causing such publication of the notice. So it denied the
petition.
There cannot be any question that a building of mixed materials may be the subject of a chattel
mortgage, in which case it is considered as between the parties as personal property. We held so
expressly in the cases of Luna vs. Encarnacion, et al., * 48 Off. Gaz., No. 7, p. 2664; Standard Oil Co. of chan roblesvirtualawlibrary

New York vs. Jaranillo, 44 Phil., 630; and De Jesus vs. Guan Dee Co., Inc., 72 Phil., 464. The matter
chan roblesvirtualawlibrary

depends on the circumstances and the intention of the parties.

“ The general principle of law is that a building permanently fixed to the freehold becomes a part of it,
cralaw

that prima facie a house is real estate, belonging to the owner of the land on which it stands, even
though it was erected against the will of the landowner, or without his consent . The general rule is cralaw

otherwise, however, where the improvement is made with the consent of the landowner, and pursuant
to an understanding either expressed or implied that it shall remain personal property. Nor does the
general rule apply to a building which is wrongfully removed from the land and placed on the land of the
person removing it.” (42 Am. Jur. 199-200.)
“ Among the principal criteria for determining whether property remains personally or becomes realty
cralaw

are annexation to the soil, either actual or construction, and the intention of the parties cralaw

“Personal property may retain its character as such where it is so agreed by the parties interested even
though annexed to the realty, or where it is affixed in the soil to be used for a particular purpose for a
short period and then removed as soon as it has served its purpose .” (Ibid., 209-210.) cralaw

The question now before us, however, is: Does the fact that the parties entering into a contract
chanroblesvirtua llawlibrary

regarding a house gave said property the consideration of personal property in their contract, bind the
sheriff in advertising the property’s sale at public auction as personal property? It is to be remembered
that in the case at bar the action was to collect a loan secured by a chattel mortgage on the house. It is
also to be remembered that in practice it is the judgment creditor who points out to the sheriff the
properties that the sheriff is to levy upon in execution, and the judgment creditor in the case at bar is
the party in whose favor the owner of the house and conveyed it by way of chattel mortgage and,
therefore, knew its consideration as personal property.
These considerations notwithstanding, we hold that the rules on execution do not allow, and we should
not interpret them in such a way as to allow, the special consideration that parties to a contract may
have desired to impart to real estate, for example, as personal property, when they are not ordinarily so.
Sales on execution affect the public and third persons. The regulation governing sales on execution are
for public officials to follow. The form of proceedings prescribed for each kind of property is suited to its
character, not to the character which the parties have given to it or desire to give it. When the rules
speak of personal property, property which is ordinarily so considered is meant; and when real chan roblesvirtualawlibrary

property is spoken of, it means property which is generally known as real property. The regulations were
never intended to suit the consideration that parties, may have privately given to the property levied
upon. Enforcement of regulations would be difficult were the convenience or agreement of private
parties to determine or govern the nature of the proceedings. We, therefore, hold that the mere fact
that a house was the subject of a chattel mortgage and was considered as personal property by the
parties does not make said house personal property for purposes of the notice to be given for its sale at
public auction. This ruling is demanded by the need for a definite, orderly and well- defined regulation
for official and public guidance and which would prevent confusion and misunderstanding.
We, therefore, declare that the house of mixed materials levied upon on execution, although subject of
a contract of chattel mortgage between the owner and a third person, is real property within the
purview of Rule 39, section 16, of the Rules of Court as it has become a permanent fixture on the land,
which is real property. (42 Am. Jur. 199-200; Leung Yee vs. Strong Machinery Co., 37 Phil., 644;
chan roblesvirtualawlibrary chan

Republic vs. Ceniza, et al., 90 Phil., 544; Ladera, et al. vs. Hodges, et al., [C. A], 48 Off. Gaz., 5374.).
roblesvirtualawlibra ry chan roblesvirtualawlibrary

The judgment appealed from is hereby affirmed, with costs. SO ORDERED.

Paras, C.J., Bengzon, Padilla., Montemayor, Reyes, A., Jugo, Bautista Angelo, Concepcion, Reyes, J.B.L.
and Endencia, JJ., concur.

Evangelista vs Alto Surety

EN BANC

[G.R. No. L-11139. April 23, 1958.]

SANTOS EVANGELISTA, Petitioner, v. ALTO SURETY & INSURANCE CO., INC.,

Respondent.

Gonzalo D. David for Petitioner.

Raul A. Aristorenas and Benjamin Relova for Respondent.

SYNOPSIS

1. PROPERTY; HOUSE IS NOT PERSONAL BUT REAL PROPERTY FOR PURPOSES OF

ATTACHMENT. — A house is not personal property, much less a debt, credit or other
personal property capable of manual delivery, but immovable property "A true building
(not merely superimposed on the soil), is immovable or real property, whether it is
erected by the owner of the land or by a usufructuary or lessee" (Laddera v. Hodges,
48 Off. Gaz., 5374.) and the attachment of such building is subject to the provisions of
subsection (a) of section 7, Rule 59 of the Rules of Court.

DECISION

CONCEPCION, J.:

This is an appeal by certiorari from a decision of the Court of Appeals.

Briefly, the facts are: On June 4, 1949, petitioner herein, Santos Evangelista, instituted
Civil Case No. 8235 of the Court of First Instance of Manila, entitled "Santos Evangelista
v. Ricardo Rivera," for a sum of money. On the same date, he obtained a writ of
attachment, which was levied upon a house, built by Rivera on a land situated in Manila
and leased to him, by filing copy of said writ and the corresponding notice of
attachment with the Office of the Register of Deeds of Manila, on June 8, 1949. In due
course, judgment was rendered in favor of Evangelista, who, on October 8, 1951,
bought the house at public auction held in compliance with the writ of execution issued
in said case. The corresponding definite deed of sale was issued to him on October 22,
1952, upon expiration of the period of redemption. When Evangelista sought to take
possession of the house, Rivera refused to surrender it, upon the ground that he had
leased the property from the Alto Surety & Insurance Co., Inc. — respondent herein —
and that the latter is now the true owner of said property. It appears that on May 10,
1952, a definite deed of sale of the same house had been issued to respondent, as the
highest bidder at an auction sale held, on September 29, 1950, in compliance with a
writ of execution issued in Civil Case No. 6268 of the same court, entitled "Alto Surety
& Insurance Co., Inc. v. Maximo Quiambao, Rosario Guevara and Ricardo Rivera," in
which judgment, for the sum of money, had been rendered in favor of respondent
herein, as plaintiff therein. Hence, on June 13, 1953, Evangelista instituted the present
action against respondent and Ricardo Rivera, for the purpose of establishing his
(Evangelista) title over said house, and securing possession thereof, apart from
recovering damages.

In its answer, respondent alleged, in substance, that it has a better right to the house,
because the sale made, and the definite deed of sale executed, in its favor, on
September 29, 1950 and May 10, 1952, respectively, precede the sale to Evangelista
(October 8, 1951) and the definite deed of sale in his favor (October 22, 1952). It, also,
made some special defenses which are discussed hereafter. Rivera, in effect, joined
forces with Respondent. After due trial, the Court of First Instance of Manila rendered
judgment for Evangelista, sentencing Rivera and respondent to deliver the house in
question to petitioner herein and to pay him, jointly and severally, forty pesos (P40.00)
a month from October, 1952, until said delivery, plus costs.

On appeal taken by respondent, this decision was reversed by the Court of Appeals,
which absolved said respondent from the complaint, upon the ground that, although the
writ of attachment in favor of Evangelista had been filed with the Register of Deeds of
Manila prior to the sale in favor of respondent, Evangelista did not acquire thereby a
preferential lien, the attachment having been levied as if the house in question were
immovable property, although, in the opinion of the Court of Appeals, it is "ostensibly a
personal property." As such, the Court of Appeals held, "the order of attachment . . .
should have been served in the manner provided in subsection (e) of section 7 of Rule
59," of the Rules of Court, reading: jgc:chanrobles.com.ph

"The property of the defendant shall be attached by the officer executing the order in
the following manner: chanrob1es virtual 1aw library

...

"(e) Debts and credits, and other personal property not capable of manual delivery,
by leaving with the person owing such debts, or having in his possession or under his
control, such credits or other personal property, or with his agent, a copy of the order,
and a notice that the debts owing by him to the defendant, and the credits and other
personal property in his possession, or under his control, belonging to the defendant,
are attached in pursuance of such order." (Emphasis ours.)

However, the Court of Appeals seems to have been of the opinion, also, that the house
of Rivera should have been attached in accordance with subsection (c) of said section 7,
as "personal property capable of manual delivery, by taking and safely keeping in his
custody", for it declared that "Evangelista could not have . . . validly purchased Ricardo
Rivera’s house from the sheriff as the latter was not in possession thereof at the time
he sold it at a public auction." cralaw virtua1aw library

Evangelista now seeks a review, by certiorari, of this decision of the Court of Appeals.
In this connection, it is not disputed that although the sale to the respondent preceded
that made to Evangelista, the latter would have a better right if the writ of attachment,
issued in his favor before the sale to the respondent, had been properly executed or
enforced. This question, in turn, depends upon whether the house of Ricardo Rivera is
real property or not. In the affirmative case, the applicable provision would be
subsection (a) of section 7, Rule 59 of the Rules of Court, pursuant to which the
attachment should be made "by filing with the registrar of deeds a copy of the order,
together with a description of the property attached, and a notice that it is attached,
and by leaving a copy of such order, description, and notice with the occupant of the
property, if any there be.
Respondent maintains, however, and the Court of Appeals held, that Rivera’s house is
personal property, the levy upon which must be made in conformity with subsections
(c) and (e) of said section 7 of Rule 59. Hence, the main issue before us is whether a
house, constructed by the lessee of the land on which it is built, should be dealt with,
for purposes of attachment, as immovable property, or as personal property.

It is our considered opinion that said house is not personal property, much less a debt,
credit or other personal property not capable of manual delivery, but immovable
property. As explicitly held, in Laddera v. Hodges (48 Off. Gaz., 5374), "a true building
(not merely superimposed on the soil) is immovable or real property, whether it is
erected by the owner of the land or by a usufructuary or lessee. This is the doctrine of
our Supreme Court in Leung Yee v. Strong Machinery Company, 37 Phil., 644. And it is
amply supported by the rulings of the French Court . . . ."cralaw virtua1aw library

It is true that the parties to a deed of chattel mortgage may agree to consider a house
as personal property for purposes of said contract (Luna v. Encarnacion, * 48 Off. Gaz.,
2664; Standard Oil Co. of New York v. Jaramillo, 44 Phil., 630; De Jesus v. Juan Dee
Co., Inc., 72 Phil., 464). However, this view is good only insofar as the contracting
parties are concerned. It is based, partly, upon the principle of estoppel. Neither this
principle, nor said view, is applicable to strangers to said contract. Much less is it in
point where there has been no contract whatsoever, with respect to the status of the
house involved, as in the case at bar. Apart from this, in Manarang v. Ofilada (99 Phil.,
108; 52 Off. Gaz., 3954), we held: jgc:chanrobles.com.ph

"The question now before us, however, is: Does the fact that the parties entering into a
contract regarding a house gave said property the consideration of personal property in
their contract, bind the sheriff in advertising the property’s sale at public auction as
personal property? It is to be remembered that in the case at bar the action was to
collect a loan secured by a chattel mortgage on the house. It is also to be remembered
that in practice it is the judgment creditor who points out to the sheriff the properties
that the sheriff is to levy upon in execution, and the judgment creditor in the case at
bar is the party in whose favor the owner of the house had conveyed it by way of
chattel mortgage and, therefore, knew its consideration as personal property.

"These considerations notwithstanding, we hold that the rules on execution do not

allow, and we should not interpret them in such a way as to allow, the special
consideration that parties to a contract may have desired to impart to real estate, for
example, as personal property, when they are not ordinarily so. Sales on execution
affect the public and third persons. The regulation governing sales on execution are for
public officials to follow. The form of proceedings prescribed for each kind of property is
suited to its character, not to the character which the parties have given to it or desire
to give it. When the rules speak of personal property, property which is ordinarily so
considered is meant; and when real property is spoken of, it means property which is
generally known as real property. The regulations were never intended to suit the
consideration that parties may have privately given to the property levied upon.
Enforcement of regulations would be difficult were the convenience or agreement of
private parties to determine or govern the nature of the proceedings. We, therefore,
hold that the mere fact that a house was the subject of a chattel mortgage and was
considered as personal property by the parties does not make said house personal
property for purposes of the notice to be given for its sale at public auction. This ruling
is demanded by the need for a definite, orderly and well-defined regulation for official
and public guidance and which would prevent confusion and misunderstanding.

"We, therefore, declare that the house of mixed materials levied upon on execution,
although subject of a contract of chattel mortgage between the owner and a third
person, is real property within the purview of Rule 39, section 16, of the Rules of Court
as it has become a permanent fixture of the land, which is real property. (42 Am. Jur.
199-200; Leung Yee v. Strong Machinery Co., 37 Phil., 644; Republic v. Ceniza, Et Al.,
90 Phil., 544; Ladera, Et. Al. v. Hodges, Et Al., [C.A. ], 48 Off. Gaz., 5374.)" (Emphasis
ours.)

The foregoing considerations apply, with equal force, to the conditions for the levy of
attachment, for it similarly affects the public and third persons.

It is argued, however, that, even if the house in question were immovable property, its
attachment by Evangelista was void or ineffective, because, in the language of the
Court of Appeals, "after presenting a copy of the order of attachment in the Office of
the Register of Deeds, the person who might then be in possession of the house, the
sheriff took no pains to serve Ricardo Rivera, or other copies thereof ." This finding of
the Court of Appeals is neither conclusive upon us, nor accurate.

The Record on Appeal, annexed to the petition for certiorari, shows that petitioner
alleged, in paragraph 3 of the complaint, that he acquired the house in question "as a
consequence of the levy of an attachment and execution of the judgment in Civil Case
No. 8235" of the Court of First Instance of Manila. In his answer (paragraph 2), Ricardo
Rivera admitted said attachment and execution of judgment. He alleged, however, by
way of special defense, that the title of respondent "is superior to that of plaintiff
because it is based on a public instrument," whereas Evangelista relied upon a
"promissory note" which "is only a private instrument" ; that said public instrument in
favor of respondent "is superior also to the judgment in Civil Case No. 8235" ; and that
plaintiff’s claim against Rivera amounted only to P866, "which is much below the real
value" of said house, for which reason it would be "grossly unjust to allow plaintiff to
acquire the property for such an inadequate consideration." Thus, Rivera impliedly
admitted that his house had been attached, that the house had been sold to Evangelista
in accordance with the requisite formalities, and that said attachment was valid,
although allegedly inferior to the rights of respondent, and the consideration for the
sale to Evangelista was claimed to be inadequate.
Respondent, in turn, denied the allegation in said paragraph 3 of the complaint, but
only "for the reasons stated in its special defenses" namely: (1) that by virtue of the
sale at public auction, and the final deed executed by the sheriff in favor of respondent,
the same became the "legitimate owner of the house" in question; (2) that respondent
"is a buyer in good faith and for value" ; (3) that respondent "took possession and
control of said house" ; (4) that "there was no valid attachment by the plaintiff and/or
the Sheriff of Manila of the property in question as neither took actual or constructive
possession or control of the property at any time" ; and (5) "that the alleged
registration of plaintiff’s attachment, certificate of sale and final deed in the Office of
Register of Deeds, Manila, if there was any, is likewise, not valid as there is no registry
of transactions covering houses erected on land belonging to or leased from another."
In this manner, respondent claimed a better right, merely under the theory that, in
case of double sale of immovable property, the purchaser who first obtains possession
in good faith, acquires title, if the sale has not been "recorded . . . in the Registry of
Property" (Art. 1544, Civil Code of the Philippines), and that the writ of attachment and
the notice of attachment in favor of Evangelista should be considered unregistered, "as
there is no registry of transactions covering houses erected on land belonging to or
leased from another." In fact, said article 1544 of the Civil Code of the Philippines,
governing double sales, was quoted on page 15 of the brief for respondent in the Court
of Appeals, in support of its fourth assignment of error therein, to the effect that it "has
preference or priority over the sale of the same property" to Evangelista.

In other words, there was no issue on whether copy of the writ and notice of
attachment had been served on Rivera. No evidence whatsoever, to the effect that
Rivera had not been served with copies of said writ and notice, was introduced in the
Court of First Instance. In its brief in the Court of Appeals, respondent did not aver, or
even intimate, that no such copies were served by the sheriff upon Rivera. Service
thereof on Rivera had been impliedly admitted by the defendants, in their respective
answers, and by their behaviour throughout the proceedings in the Court of First
Instance, and, as regards respondent, in the Court of Appeals. In fact, petitioner
asserts in his brief herein (p. 26) that copies of said writ and notice were delivered to
Rivera, simultaneously with copy of the complaint, upon service of summons, prior to
the filing of copies of said writ and notice with the register of deeds, and the truth of
this assertion has not been directly and positively challenged or denied in the brief filed
before us by respondent herein. The latter did not dare therein to go beyond making a
statement — for the first time in the course of these proceedings, begun almost five (5)
years ago (June 18, 1953) — reproducing substantially the aforementioned finding of
the Court of Appeals and then quoting the same.

Considering, therefore, that neither the pleadings, nor the briefs in the Court of
Appeals, raised an issue on whether or not copies of the writ of attachment and notice
of attachment had been served upon Rivera; that the defendants had impliedly
admitted — in said pleadings and briefs, as well as by their conduct during the entire
proceedings, prior to the rendition of the decision of the Court of Appeals — that Rivera
had received copies of said documents; and that, for this reason, evidently, no proof
was introduced thereon, we are of the opinion, and so hold that the finding of the Court
of Appeals to the effect that said copies had not been served upon Rivera is based upon
a misapprehension of the specific issues involved therein and goes beyond the range of
such issues, apart from being contrary to the aforementioned admission by the parties,
and that, accordingly, a grave abuse of discretion was committed in making said
finding, which is, furthermore, inaccurate.

Wherefore, the decision of the Court of Appeals is hereby reversed, and another one
shall be entered affirming that of the Court of First Instance of Manila, with the costs of
this instance against respondent, the Alto Surety & Insurance Co., Inc. It is so ordered.

Paras, C.J., Bengzon, Montemayor, Reyes, A., Bautista Angelo, Labrador, Reyes, J. B.
L., Endencia, and Felix, JJ., concur.

ASSOCIATED INSURANCE AND SURETY COMPANY

V. IYA, ET. AL 103 SCRA 972 G.R. Nos. L-10837-38
May 30, 1958
ASSOCIATED INSURANCE AND SURETY COMPANY V. IYA, ET. AL

103 SCRA 972

G.R. Nos. L-10837-38 May 30, 1958

FACTS:

Spouses Valino were the owners of a house, payable on installments from Philippine Realty Corporation.
To be able to purchase on credit rice from NARIC, they filed a surety bond subscribed by petitioner and
therefor, they executed an alleged chattel mortgage on the house in favor of the surety company. The
spouses didn’t own yet the land on which the house was constructed on at the time of the undertaking.
After being able to purchase the land, to be able to secure payment for indebtedness, the spouses
executed a real estate mortgage in favor of Iya.

The spouses were not able to satisfy obligation with NARIC, petitioner was compelled to pay. The
spouses weren’t able to pay the surety company despite demands and thus, the company foreclosed the
chattel mortgage. It later learned of the real estate mortgage over the house and lot secured by the
spouses. This prompted the company to file an action against the spouses. Also, Iya filed another civil
action against the spouses, asserting that she has a better right over the property. The trial court heard
the two cases jointly and it held that the surety company had a preferred right over the building as since
when the chattel mortgage was secured, the land wasn’t owned yet by the spouses making the building
then a chattel and not a real property.
ISSUE:

WON the auction sale was null and void

WON the house can be considered as personal property.

HELD:

A building certainly cannot be divested of its character of a realty by the fact that the land on which it is
constructed belongs to another. To hold it the other way, the possibility is not remote that it would
result in confusion, for to cloak the building with an uncertain status made dependent on ownership of
the land, would create a situation where apermanent fixture changes its nature or character as the
ownership of the land changes hands. In the case at bar, as personal properties may be the only subjects
of a chattel mortgage,

PIANSAY V. DAVID, G.R. No. L-19468, October 30,

1964
PIANSAY V. DAVID
12 SCRA 227

FACTS:
David secured a loan from Vda. De Uy Kim, and to secure the payment, he executed a chattel mortgage
over a house in favor of Kim. Due to failure to pay, the CM was foreclosed and Kim was the highest
bidder in the public auction. Kim then sold the house to Mangubat. The latter then filed charges against
David for the collection of loan and praying that the deed of sale issued by Kim in favor of Piansay be
declared null and void. The trial court held David liable to Mangubat but dismissed the complaint with
regard Kim and Piansay.

Kim and Piansay then filed charges against David and Mangubat. Due to the civil case, David demanded
from Piansay the payment of rentals for the use of the house, which the latter claims to be his property.

ISSUE:
W/N the chattel mortgage constituted in favor of Mrs. Uy Kim is valid.

HELD:
Regardless of the validity of a contract constituting a chattel mortgage on a house, as between the parties
to the said contract, the same cannot and doesn’t bind third persons who aren’t parties to the
aforementioned contract or their privies. As a consequence, the sale of the house in question in the
proceedings for the sale of the house in question in the proceedings for the extrajudicial foreclosure of
said chattel mortgage, is null and void insofar as Mangubat is concerned and didn’t confer upon Kim as
buyer in said sale, any dominical right in and to said house.

G.R. No. L-20329 March 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 mandamus to 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 to the 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 of title, and affects nobody's rights except as a
specifies of notice.

Articles 334 and 335 of the Civil Code supply no absolute criterion for discriminating between real
property and personal property for purpose of the application of the Chattel Mortgage Law. Those
articles state rules 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 8, 1914, 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 or 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 chattel 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 fortiori
a register of 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 personal
the chattel mortgage would no doubt be held ineffective as against third parties, but this is a question
to be determined by 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 of real, property, the placing of the document on record
in the chattel 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 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 of mandamus will
be issued, as prayed, but without costs. So ordered.

Araullo, C.J., Malcolm, Avanceña, Ostrand, Johns, and Romualdez, JJ., concur.

G.R. No. L-15334 January 31, 1964

BOARD OF ASSESSMENT APPEALS, CITY ASSESSOR and CITY TREASURER OF QUEZON

CITY, petitioners,

vs.

MANILA ELECTRIC COMPANY, respondent.

Assistant City Attorney Jaime R. Agloro for petitioners.

Ross, Selph and Carrascoso for respondent.

PAREDES, J.:

From the stipulation of facts and evidence adduced during the hearing, the following appear:

On October 20, 1902, the Philippine Commission enacted Act No. 484 which authorized the
Municipal Board of Manila to grant a franchise to construct, maintain and operate an electric street
railway and electric light, heat and power system in the City of Manila and its suburbs to the person
or persons making the most favorable bid. Charles M. Swift was awarded the said franchise on
March 1903, the terms and conditions of which were embodied in Ordinance No. 44 approved on
March 24, 1903. Respondent Manila Electric Co. (Meralco for short), became the transferee and
owner of the franchise.

Meralco's electric power is generated by its hydro-electric plant located at Botocan Falls, Laguna
and is transmitted to the City of Manila by means of electric transmission wires, running from the
province of Laguna to the said City. These electric transmission wires which carry high voltage
current, are fastened to insulators attached on steel towers constructed by respondent at intervals,
from its hydro-electric plant in the province of Laguna to the City of Manila. The respondent Meralco
has constructed 40 of these steel towers within Quezon City, on land belonging to it. A photograph of
one of these steel towers is attached to the petition for review, marked Annex A. Three steel towers
were inspected by the lower court and parties and the following were the descriptions given there of
by said court:

The first steel tower is located in South Tatalon, España Extension, Quezon City. The findings were
as follows: the ground around one of the four posts was excavated to a depth of about eight (8) feet,
with an opening of about one (1) meter in diameter, decreased to about a quarter of a meter as it we
deeper until it reached the bottom of the post; at the bottom of the post were two parallel steel bars
attached to the leg means of bolts; the tower proper was attached to the leg three bolts; with two
cross metals to prevent mobility; there was no concrete foundation but there was adobe stone
underneath; as the bottom of the excavation was covered with water about three inches high, it
could not be determined with certainty to whether said adobe stone was placed purposely or not, as
the place abounds with this kind of stone; and the tower carried five high voltage wires without cover
or any insulating materials.

The second tower inspected was located in Kamuning Road, K-F, Quezon City, on land owned by
the petitioner approximate more than one kilometer from the first tower. As in the first tower, the
ground around one of the four legs was excavate from seven to eight (8) feet deep and one and a
half (1-½) meters wide. There being very little water at the bottom, it was seen that there was no
concrete foundation, but there soft adobe beneath. The leg was likewise provided with two parallel
steel bars bolted to a square metal frame also bolted to each corner. Like the first one, the second
tower is made up of metal rods joined together by means of bolts, so that by unscrewing the bolts,
the tower could be dismantled and reassembled.

The third tower examined is located along Kamias Road, Quezon City. As in the first two towers
given above, the ground around the two legs of the third tower was excavated to a depth about two
or three inches beyond the outside level of the steel bar foundation. It was found that there was no
concrete foundation. Like the two previous ones, the bottom arrangement of the legs thereof were
found to be resting on soft adobe, which, probably due to high humidity, looks like mud or clay. It
was also found that the square metal frame supporting the legs were not attached to any material or
foundation.

On November 15, 1955, petitioner City Assessor of Quezon City declared the aforesaid steel towers
for real property tax under Tax declaration Nos. 31992 and 15549. After denying respondent's
petition to cancel these declarations, an appeal was taken by respondent to the Board of
Assessment Appeals of Quezon City, which required respondent to pay the amount of P11,651.86
as real property tax on the said steel towers for the years 1952 to 1956. Respondent paid the
amount under protest, and filed a petition for review in the Court of Tax Appeals (CTA for short)
which rendered a decision on December 29, 1958, ordering the cancellation of the said tax
declarations and the petitioner City Treasurer of Quezon City to refund to the respondent the sum of
P11,651.86. The motion for reconsideration having been denied, on April 22, 1959, the instant
petition for review was filed.

In upholding the cause of respondents, the CTA held that: (1) the steel towers come within the term
"poles" which are declared exempt from taxes under part II paragraph 9 of respondent's franchise;
(2) the steel towers are personal properties and are not subject to real property tax; and (3) the City
Treasurer of Quezon City is held responsible for the refund of the amount paid. These are assigned
as errors by the petitioner in the brief.

The tax exemption privilege of the petitioner is quoted hereunder:

PAR 9. The grantee shall be liable to pay the same taxes upon its real estate, buildings, plant (not
including poles, wires, transformers, and insulators), machinery and personal property as other
persons are or may be hereafter required by law to pay ... Said percentage shall be due and payable
at the time stated in paragraph nineteen of Part One hereof, ... and shall be in lieu of all taxes and
assessments of whatsoever nature and by whatsoever authority upon the privileges, earnings,
income, franchise, and poles, wires, transformers, and insulators of the grantee from which taxes
and assessments the grantee is hereby expressly exempted. (Par. 9, Part Two, Act No. 484
Respondent's Franchise; emphasis supplied.)

The word "pole" means "a long, comparatively slender usually cylindrical piece of wood or timber, as
typically the stem of a small tree stripped of its branches; also by extension, a similar typically
cylindrical piece or object of metal or the like". The term also refers to "an upright standard to the top
of which something is affixed or by which something is supported; as a dovecote set on a pole;
telegraph poles; a tent pole; sometimes, specifically a vessel's master (Webster's New International
Dictionary 2nd Ed., p. 1907.) Along the streets, in the City of Manila, may be seen cylindrical metal
poles, cubical concrete poles, and poles of the PLDT Co. which are made of two steel bars joined
together by an interlacing metal rod. They are called "poles" notwithstanding the fact that they are no
made of wood. It must be noted from paragraph 9, above quoted, that the concept of the "poles" for
which exemption is granted, is not determined by their place or location, nor by the character of the
electric current it carries, nor the material or form of which it is made, but the use to which they are
dedicated. In accordance with the definitions, pole is not restricted to a long cylindrical piece of wood
or metal, but includes "upright standards to the top of which something is affixed or by which
something is supported. As heretofore described, respondent's steel supports consists of a
framework of four steel bars or strips which are bound by steel cross-arms atop of which are cross-
arms supporting five high voltage transmission wires (See Annex A) and their sole function is to
support or carry such wires.

The conclusion of the CTA that the steel supports in question are embraced in the term "poles" is not
a novelty. Several courts of last resort in the United States have called these steel supports "steel
towers", and they denominated these supports or towers, as electric poles. In their decisions the
words "towers" and "poles" were used interchangeably, and it is well understood in that jurisdiction
that a transmission tower or pole means the same thing.

In a proceeding to condemn land for the use of electric power wires, in which the law provided that
wires shall be constructed upon suitable poles, this term was construed to mean either wood or
metal poles and in view of the land being subject to overflow, and the necessary carrying of
numerous wires and the distance between poles, the statute was interpreted to include towers or
poles. (Stemmons and Dallas Light Co. (Tex) 212 S.W. 222, 224; 32-A Words and Phrases, p. 365.)

The term "poles" was also used to denominate the steel supports or towers used by an association
used to convey its electric power furnished to subscribers and members, constructed for the purpose
of fastening high voltage and dangerous electric wires alongside public highways. The steel supports
or towers were made of iron or other metals consisting of two pieces running from the ground up
some thirty feet high, being wider at the bottom than at the top, the said two metal pieces being
connected with criss-cross iron running from the bottom to the top, constructed like ladders and
loaded with high voltage electricity. In form and structure, they are like the steel towers in question.
(Salt River Valley Users' Ass'n v. Compton, 8 P. 2nd, 249-250.)

The term "poles" was used to denote the steel towers of an electric company engaged in the
generation of hydro-electric power generated from its plant to the Tower of Oxford and City of
Waterbury. These steel towers are about 15 feet square at the base and extended to a height of
about 35 feet to a point, and are embedded in the cement foundations sunk in the earth, the top of
which extends above the surface of the soil in the tower of Oxford, and to the towers are attached
insulators, arms, and other equipment capable of carrying wires for the transmission of electric
power (Connecticut Light and Power Co. v. Oxford, 101 Conn. 383, 126 Atl. p. 1).

In a case, the defendant admitted that the structure on which a certain person met his death was
built for the purpose of supporting a transmission wire used for carrying high-tension electric power,
but claimed that the steel towers on which it is carried were so large that their wire took their
structure out of the definition of a pole line. It was held that in defining the word pole, one should not
be governed by the wire or material of the support used, but was considering the danger from any
elevated wire carrying electric current, and that regardless of the size or material wire of its individual
members, any continuous series of structures intended and used solely or primarily for the purpose
of supporting wires carrying electric currents is a pole line (Inspiration Consolidation Cooper Co. v.
Bryan 252 P. 1016).
It is evident, therefore, that the word "poles", as used in Act No. 484 and incorporated in the
petitioner's franchise, should not be given a restrictive and narrow interpretation, as to defeat the
very object for which the franchise was granted. The poles as contemplated thereon, should be
understood and taken as a part of the electric power system of the respondent Meralco, for the
conveyance of electric current from the source thereof to its consumers. If the respondent would be
required to employ "wooden poles", or "rounded poles" as it used to do fifty years back, then one
should admit that the Philippines is one century behind the age of space. It should also be conceded
by now that steel towers, like the ones in question, for obvious reasons, can better effectuate the
purpose for which the respondent's franchise was granted.

Granting for the purpose of argument that the steel supports or towers in question are not embraced
within the termpoles, the logical question posited is whether they constitute real properties, so that
they can be subject to a real property tax. The tax law does not provide for a definition of real
property; but Article 415 of the Civil Code does, by stating the following are immovable property:

(1) Land, buildings, roads, and constructions of all kinds adhered to the soil;

xxx xxx xxx

(3) Everything attached to an immovable in a fixed manner, in such a way that it cannot be
separated therefrom without breaking the material or deterioration of the object;

xxx xxx xxx

(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an
industry or works which may be carried in a building or on a piece of land, and which tends directly
to meet the needs of the said industry or works;

xxx xxx xxx

The steel towers or supports in question, do not come within the objects mentioned in paragraph 1,
because they do not constitute buildings or constructions adhered to the soil. They are not
construction analogous to buildings nor adhering to the soil. As per description, given by the lower
court, they are removable and merely attached to a square metal frame by means of bolts, which
when unscrewed could easily be dismantled and moved from place to place. They can not be
included under paragraph 3, as they are not attached to an immovable in a fixed manner, and they
can be separated without breaking the material or causing deterioration upon the object to which
they are attached. Each of these steel towers or supports consists of steel bars or metal strips,
joined together by means of bolts, which can be disassembled by unscrewing the bolts and
reassembled by screwing the same. These steel towers or supports do not also fall under paragraph
5, for they are not machineries, receptacles, instruments or implements, and even if they were, they
are not intended for industry or works on the land. Petitioner is not engaged in an industry or works
in the land in which the steel supports or towers are constructed.

It is finally contended that the CTA erred in ordering the City Treasurer of Quezon City to refund the
sum of P11,651.86, despite the fact that Quezon City is not a party to the case. It is argued that as
the City Treasurer is not the real party in interest, but Quezon City, which was not a party to the suit,
notwithstanding its capacity to sue and be sued, he should not be ordered to effect the refund. This
question has not been raised in the court below, and, therefore, it cannot be properly raised for the
first time on appeal. The herein petitioner is indulging in legal technicalities and niceties which do not
help him any; for factually, it was he (City Treasurer) whom had insisted that respondent herein pay
the real estate taxes, which respondent paid under protest. Having acted in his official capacity as
City Treasurer of Quezon City, he would surely know what to do, under the circumstances.
IN VIEW HEREOF, the decision appealed from is hereby affirmed, with costs against the petitioners.

Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera and Regala,
JJ., concur.

Makalintal, J., concurs in the result.

Dizon, J., took no part.

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 as 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 of 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 to consent to the redemption of the sugar cane in question, and that the defendant Valdez be
condemned to pay to the plaintiff the sum of 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 of 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:

(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 of 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 of 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 judgment debtor, Leon Sibal, paid P2,000 to Macondray & Co., Inc., for the account of the
redemption price of said parcels of land, without specifying the particular parcels to which said
amount 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).

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.º — 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 at public 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 products" in 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, has
received in recent years an interpretation by the Tribunal Supremo de España, 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
sometimes 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 del arrendario, para recolectar
o percibir los frutos correspondientes al año agricola, dentro del que nacieron aquellos derechos,
cuando el arrendor ha percibido a su vez el 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 al desahucio un alcance que no tiene, sino en que, y esto es lo interesante 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 productos pertenecientes, como tales, a quienes a
ellos tenga derecho, Ilegado el momento de su recoleccion.

xxx xxx xxx

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 la situacion 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 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 of Lumber 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 of Porche 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 the immovable. 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 of Citizen's Bank vs. Wiltz (31 La. Ann., 244)the court said:

If the crop quoad the pledge thereof under the act of 1874 was 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 quoad the 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 España but by the Supreme Court
of Louisiana, is followed in practically every 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 of 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; Crine vs. 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. Packers 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 wool that shall
thereafter grow upon sheep; or what may be taken at the next 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 at the 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 personal 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. This 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.) On this 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 to redemption.

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 of real
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 caña dulce sembrada por los inquilinos del ejecutado Leon Sibal 1.º 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 caña dulce sembrada por el inquilino del ejecutado Leon Sibal 1.º, 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 Mañu and others; al S. con Alejandro Dayrit, Isidro Santos and Melecio Mañu; 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; al Sur con Lucio Maño 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 weight to the evidence
adduced by him that to the evidence adduced by the plaintiff, with respect to the ownership of
parcels 1 and 2 of the compliant. We, therefore, conclude that parcels 1 and 2 of the complaint
belong to the defendant, having acquired the same from Macondray & Co. on June 25, 1924, and
from the plaintiff Leon Sibal on the same date.

It appears, however, that the plaintiff planted the palay in said parcels and harvested therefrom 190
cavans. There being no evidence of bad faith on his part, he is therefore entitled to one-half of the
crop, or 95 cavans. He should therefore be condemned to pay to the defendant for 95 cavans only,
at P3.40 a cavan, or the sum of P323, and not for the total of 190 cavans as held by the lower court.

As to the ownership of parcel 7 of the complaint, the evidence shows that said parcel corresponds to
parcel 1 of the deed of sale of Macondray & Co, to Valdez (Exhibit B and 2), and to parcel 4 in the
certificate of sale to Valdez of real property belonging to Sibal, executed by the sheriff as above
stated (Exhibit A). Valdez is therefore the absolute owner of said parcel, having acquired the interest
of both Macondray and Sibal in said parcel.

With reference to the parcel of land in Pacalcal, Tarlac, described in paragraph 3 of the second
cause of action, it appears from the testimony of the plaintiff himself that said parcel corresponds to
parcel 8 of the deed of sale of Macondray to Valdez (Exhibit B and 2) and to parcel 10 in the deed of
sale executed by the sheriff in favor of Valdez (Exhibit A). Valdez is therefore the absolute owner of
said parcel, having acquired the interest of both Macondray and Sibal therein.

In this connection the following facts are worthy of mention:

Execution in favor of Macondray & Co., May 11, 1923. Eight parcels of land were attached under
said execution. Said parcels of land were sold to Macondray & Co. on the 30th day of July, 1923.
Rice paid P4,273.93. On September 24, 1923, Leon Sibal paid to Macondray & Co. P2,000 on the
redemption of said parcels of land. (See Exhibits B and C ).

Attachment, April 29, 1924, in favor of Valdez. Personal property of Sibal was attached, including
the sugar cane in question. (Exhibit A) The said personal property so attached, sold at public auction
May 9 and 10, 1924. April 29, 1924, the real property was attached under the execution in favor of
Valdez (Exhibit A). June 25, 1924, said real property was sold and purchased by Valdez (Exhibit A).

June 25, 1924, Macondray & Co. sold all of the land which they had purchased at public auction on
the 30th day of July, 1923, to Valdez.

As to the loss of the defendant in sugar cane by reason of the injunction, the evidence shows that
the sugar cane in question covered an area of 22 hectares and 60 ares (Exhibits 8, 8-b and 8-c);
that said area would have yielded an average crop of 1039 picos and 60 cates; that one-half of the
quantity, or 519 picos and 80 cates would have corresponded to the defendant, as owner; that
during the season the sugar was selling at P13 a pico (Exhibit 5 and 5-A). Therefore, the defendant,
as owner, would have netted P 6,757.40 from the sugar cane in question. The evidence also shows
that the defendant could have taken from the sugar cane 1,017,000 sugar-cane shoots (puntas de
cana) and not 1,170,000 as computed by the lower court. During the season the shoots were selling
at P1.20 a thousand (Exhibits 6 and 7). The defendant therefore would have netted P1,220.40 from
sugar-cane shoots and not P1,435.68 as allowed by the lower court.

As to the palay harvested by the plaintiff in parcels 1 and 2 of the complaint, amounting to 190
cavans, one-half of said quantity should belong to the plaintiff, as stated above, and the other half to
the defendant. The court erred in awarding the whole crop to the defendant. The plaintiff should
therefore pay the defendant for 95 cavans only, at P3.40 a cavan, or P323 instead of P646 as
allowed by the lower court.

The evidence also shows that the defendant was prevented by the acts of the plaintiff from
cultivating about 10 hectares of the land involved in the litigation. He expected to have raised about
600 cavans of palay, 300 cavans of which would have corresponded to him as owner. The lower
court has wisely reduced his share to 150 cavans only. At P4 a cavan, the palay would have netted
him P600.

In view of the foregoing, the judgment appealed from is hereby modified. The plaintiff and his
sureties Cenon de la Cruz, Juan Sangalang and Marcos Sibal are hereby ordered to pay to the
defendant jointly and severally the sum of P8,900.80, instead of P9,439.08 allowed by the lower
court, as follows:

for the sugar cane;

P6,757.40

1,220.40 for the sugar cane shoots;

323.00 for the palay harvested by plaintiff in parcels 1 and 2;

600.00 for the palay which defendant could have raised.

8,900.80
 ============

In all other respects, the judgment appealed from is hereby affirmed, with costs. So ordered.

Street, Malcolm, Villamor, Romualdez and Villa-Real., JJ., concur.

Tsai v. Court of Appeals G.R. No. 120098

October 2, 2001
MARCH 16, 2014LEAVE A COMMENT
A chattel mortgage shall be deemed to cover only the property described therein and
not like or substituted property thereafter acquired by the mortgagor and placed in
the same depository as the property originally mortgaged,

Facts: Ever Textile Mills, Inc. (EVERTEX) obtained a loan from petitioner Philippine Bank of
Communications (PBCom). As security for the loan, EVERTEX executed in favor of
PBCom, a deed of Real and Chattel Mortgage over the lot where its factory stands, and the
chattels located therein as enumerated in a schedule attached to the mortgage contract.
PBCom granted a second loan to EVERTEX. The loan was secured by a Chattel Mortgage
over personal properties enumerated in a list attached thereto. The listed properties were
similar to those listed in the first mortgage deed. Due to business reverses, EVERTEX filed
insolvency proceedings docketed. The CFI issued an order on declaring the corporation
insolvent. All its assets were taken into the custody of the Insolvency Court, including the
collateral, real and personal, securing the two mortgages as abovementioned.

Upon EVERTEX’s failure to meet its obligation to PBCom, the latter commenced
extrajudicial foreclosure proceedings against EVERTEX. PBCom was the highest bidder.
Thus, PBCom consolidated its ownership over the lot and all the properties in it and leased
the entire factory premises to petitioner Ruby L. Tsai. PBCom sold the factory, lock, stock
and barrel to Tsai, including the contested machineries. EVERTEX filed a complaint for
annulment of sale, reconveyance, and damages with the Regional Trial Court against
PBCom, alleging inter alia that the extrajudicial foreclosure of subject mortgage was in
violation of the Insolvency Law. EVERTEX claimed that no rights having been transmitted to
PBCom over the assets of insolvent EVERTEX, therefore Tsai acquired no rights over such
assets sold to her, and should reconvey the assets. EVERTEX averred that PBCom,
without any legal or factual basis, appropriated the contested properties, which were not
included in the Real and Chattel Mortgages.

Issue: Whether or not the foreclosure on after acquired properties of EVERTEX is valid.
Held: Inasmuch as the subject mortgages were intended by the parties to involve chattels,
insofar as equipment and machinery were concerned, the Chattel Mortgage Law applies,
which provides in Section 7 thereof that: “a chattel mortgage shall be deemed to cover only
the property described therein and not like or substituted property thereafter acquired by the
mortgagor and placed in the same depository as the property originally mortgaged, anything
in the mortgage to the contrary notwithstanding.” And, since the disputed machineries were
acquired in 1981 and could not have been involved in the 1975 or 1979 chattel mortgages,
it was consequently an error on the part of the Sheriff to include subject machineries with
the properties enumerated in said chattel mortgages. As the auction sale of the subject
properties to PBCom is void, no valid title passed in its favor. Consequently, the sale
thereof to Tsai is also a nullity under the elementary principle of nemo dat quod non habet,
one cannot give what one does not have

Assuming arguendo that the properties in question are immovable by nature, nothing
detracts the parties from treating it as chattels to secure an obligation under the principle of
estoppel. An immovable may be considered a personal property if there is a stipulation as
when it is used as security in the payment of an obligation where a chattel mortgage is
executed over it, as in the case at bar.