Documentos de Académico
Documentos de Profesional
Documentos de Cultura
G.R.
No.
L‐11658
February
15,
1918
at
the
sheriff's
sale
on
or
about
the
18th
of
December,
1914,
and
had
the
LEUNG
YEE,
plaintiff‐appellant,
vs.
FRANK
L.
STRONG
MACHINERY
sheriff's
certificate
of
the
sale
duly
registered
in
the
land
registry
of
the
COMPANY
and
J.
G.
WILLIAMSON,
defendants‐appellees.
Province
of
Cavite.
Booram
and
Mahoney
for
appellant.
Williams,
Ferrier
and
SyCip
for
At
the
time
when
the
execution
was
levied
upon
the
building,
the
appellees.
defendant
machinery
company,
which
was
in
possession,
filed
with
the
CARSON,
J.:
sheriff
a
sworn
statement
setting
up
its
claim
of
title
and
demanding
the
release
of
the
property
from
the
levy.
Thereafter,
upon
demand
of
the
The
"Compañia
Agricola
Filipina"
bought
a
considerable
quantity
of
rice‐ sheriff,
the
plaintiff
executed
an
indemnity
bond
in
favor
of
the
sheriff
in
cleaning
machinery
company
from
the
defendant
machinery
company,
and
the
sum
of
P12,000,
in
reliance
upon
which
the
sheriff
sold
the
property
at
executed
a
chattel
mortgage
thereon
to
secure
payment
of
the
purchase
public
auction
to
the
plaintiff,
who
was
the
highest
bidder
at
the
sheriff's
price.
It
included
in
the
mortgage
deed
the
building
of
strong
materials
in
sale.
which
the
machinery
was
installed,
without
any
reference
to
the
land
on
which
it
stood.
The
indebtedness
secured
by
this
instrument
not
having
This
action
was
instituted
by
the
plaintiff
to
recover
possession
of
the
been
paid
when
it
fell
due,
the
mortgaged
property
was
sold
by
the
sheriff,
building
from
the
machinery
company.
in
pursuance
of
the
terms
of
the
mortgage
instrument,
and
was
bought
in
The
trial
judge,
relying
upon
the
terms
of
article
1473
of
the
Civil
Code,
by
the
machinery
company.
The
mortgage
was
registered
in
the
chattel
gave
judgment
in
favor
of
the
machinery
company,
on
the
ground
that
the
mortgage
registry,
and
the
sale
of
the
property
to
the
machinery
company
company
had
its
title
to
the
building
registered
prior
to
the
date
of
registry
in
satisfaction
of
the
mortgage
was
annotated
in
the
same
registry
on
of
the
plaintiff's
certificate.
December
29,
1913.
Article
1473
of
the
Civil
Code
is
as
follows:
A
few
weeks
thereafter,
on
or
about
the
14th
of
January,
1914,
the
If
the
same
thing
should
have
been
sold
to
different
vendees,
the
"Compañia
Agricola
Filipina"
executed
a
deed
of
sale
of
the
land
upon
ownership
shall
be
transfer
to
the
person
who
may
have
the
first
taken
which
the
building
stood
to
the
machinery
company,
but
this
deed
of
sale,
possession
thereof
in
good
faith,
if
it
should
be
personal
property.
although
executed
in
a
public
document,
was
not
registered.
This
deed
makes
no
reference
to
the
building
erected
on
the
land
and
would
appear
Should
it
be
real
property,
it
shall
belong
to
the
person
acquiring
it
who
to
have
been
executed
for
the
purpose
of
curing
any
defects
which
might
first
recorded
it
in
the
registry.
be
found
to
exist
in
the
machinery
company's
title
to
the
building
under
Should
there
be
no
entry,
the
property
shall
belong
to
the
person
who
first
the
sheriff's
certificate
of
sale.
The
machinery
company
went
into
took
possession
of
it
in
good
faith,
and,
in
the
absence
thereof,
to
the
possession
of
the
building
at
or
about
the
time
when
this
sale
took
place,
person
who
presents
the
oldest
title,
provided
there
is
good
faith.
that
is
to
say,
the
month
of
December,
1913,
and
it
has
continued
in
possession
ever
since.
The
registry
her
referred
to
is
of
course
the
registry
of
real
property,
and
it
must
be
apparent
that
the
annotation
or
inscription
of
a
deed
of
sale
of
At
or
about
the
time
when
the
chattel
mortgage
was
executed
in
favor
of
real
property
in
a
chattel
mortgage
registry
cannot
be
given
the
legal
effect
the
machinery
company,
the
mortgagor,
the
"Compañia
Agricola
Filipina"
of
an
inscription
in
the
registry
of
real
property.
By
its
express
terms,
the
executed
another
mortgage
to
the
plaintiff
upon
the
building,
separate
Chattel
Mortgage
Law
contemplates
and
makes
provision
for
mortgages
of
and
apart
from
the
land
on
which
it
stood,
to
secure
payment
of
the
personal
property;
and
the
sole
purpose
and
object
of
the
chattel
balance
of
its
indebtedness
to
the
plaintiff
under
a
contract
for
the
mortgage
registry
is
to
provide
for
the
registry
of
"Chattel
mortgages,"
that
construction
of
the
building.
Upon
the
failure
of
the
mortgagor
to
pay
the
is
to
say,
mortgages
of
personal
property
executed
in
the
manner
and
form
amount
of
the
indebtedness
secured
by
the
mortgage,
the
plaintiff
secured
1
prescribed
in
the
statute.
The
building
of
strong
materials
in
which
the
court
of
Spain
held
in
its
sentencia
of
the
13th
of
May,
1908,
that:
rice‐cleaning
machinery
was
installed
by
the
"Compañia
Agricola
Filipina"
This
rule
is
always
to
be
understood
on
the
basis
of
the
good
faith
was
real
property,
and
the
mere
fact
that
the
parties
seem
to
have
dealt
mentioned
in
the
first
paragraph;
therefore,
it
having
been
found
that
the
with
it
separate
and
apart
from
the
land
on
which
it
stood
in
no
wise
second
purchasers
who
record
their
purchase
had
knowledge
of
the
changed
its
character
as
real
property.
It
follows
that
neither
the
original
previous
sale,
the
question
is
to
be
decided
in
accordance
with
the
registry
in
the
chattel
mortgage
of
the
building
and
the
machinery
installed
following
paragraph.
(Note
2,
art.
1473,
Civ.
Code,
Medina
and
Maranon
therein,
not
the
annotation
in
that
registry
of
the
sale
of
the
mortgaged
[1911]
edition.)
property,
had
any
effect
whatever
so
far
as
the
building
was
concerned.
Although
article
1473,
in
its
second
paragraph,
provides
that
the
title
of
We
conclude
that
the
ruling
in
favor
of
the
machinery
company
cannot
be
conveyance
of
ownership
of
the
real
property
that
is
first
recorded
in
the
sustained
on
the
ground
assigned
by
the
trial
judge.
We
are
of
opinion,
registry
shall
have
preference,
this
provision
must
always
be
understood
however,
that
the
judgment
must
be
sustained
on
the
ground
that
the
on
the
basis
of
the
good
faith
mentioned
in
the
first
paragraph;
the
agreed
statement
of
facts
in
the
court
below
discloses
that
neither
the
legislator
could
not
have
wished
to
strike
it
out
and
to
sanction
bad
faith,
purchase
of
the
building
by
the
plaintiff
nor
his
inscription
of
the
sheriff's
just
to
comply
with
a
mere
formality
which,
in
given
cases,
does
not
obtain
certificate
of
sale
in
his
favor
was
made
in
good
faith,
and
that
the
even
in
real
disputes
between
third
persons.
(Note
2,
art.
1473,
Civ.
Code,
machinery
company
must
be
held
to
be
the
owner
of
the
property
under
issued
by
the
publishers
of
the
La
Revista
de
los
Tribunales,
13th
edition.)
the
third
paragraph
of
the
above
cited
article
of
the
code,
it
appearing
that
the
company
first
took
possession
of
the
property;
and
further,
that
the
The
agreed
statement
of
facts
clearly
discloses
that
the
plaintiff,
when
he
building
and
the
land
were
sold
to
the
machinery
company
long
prior
to
bought
the
building
at
the
sheriff's
sale
and
inscribed
his
title
in
the
land
the
date
of
the
sheriff's
sale
to
the
plaintiff.
registry,
was
duly
notified
that
the
machinery
company
had
bought
the
building
from
plaintiff's
judgment
debtor;
that
it
had
gone
into
possession
It
has
been
suggested
that
since
the
provisions
of
article
1473
of
the
Civil
long
prior
to
the
sheriff's
sale;
and
that
it
was
in
possession
at
the
time
Code
require
"good
faith,"
in
express
terms,
in
relation
to
"possession"
and
when
the
sheriff
executed
his
levy.
The
execution
of
an
indemnity
bond
by
"title,"
but
contain
no
express
requirement
as
to
"good
faith"
in
relation
to
the
plaintiff
in
favor
of
the
sheriff,
after
the
machinery
company
had
filed
the
"inscription"
of
the
property
on
the
registry,
it
must
be
presumed
that
its
sworn
claim
of
ownership,
leaves
no
room
for
doubt
in
this
regard.
good
faith
is
not
an
essential
requisite
of
registration
in
order
that
it
may
Having
bought
in
the
building
at
the
sheriff's
sale
with
full
knowledge
that
have
the
effect
contemplated
in
this
article.
We
cannot
agree
with
this
at
the
time
of
the
levy
and
sale
the
building
had
already
been
sold
to
the
contention.
It
could
not
have
been
the
intention
of
the
legislator
to
base
machinery
company
by
the
judgment
debtor,
the
plaintiff
cannot
be
said
the
preferential
right
secured
under
this
article
of
the
code
upon
an
to
have
been
a
purchaser
in
good
faith;
and
of
course,
the
subsequent
inscription
of
title
in
bad
faith.
Such
an
interpretation
placed
upon
the
inscription
of
the
sheriff's
certificate
of
title
must
be
held
to
have
been
language
of
this
section
would
open
wide
the
door
to
fraud
and
collusion.
tainted
with
the
same
defect.
The
public
records
cannot
be
converted
into
instruments
of
fraud
and
oppression
by
one
who
secures
an
inscription
therein
in
bad
faith.
The
Perhaps
we
should
make
it
clear
that
in
holding
that
the
inscription
of
the
force
and
effect
given
by
law
to
an
inscription
in
a
public
record
sheriff's
certificate
of
sale
to
the
plaintiff
was
not
made
in
good
faith,
we
presupposes
the
good
faith
of
him
who
enters
such
inscription;
and
rights
should
not
be
understood
as
questioning,
in
any
way,
the
good
faith
and
created
by
statute,
which
are
predicated
upon
an
inscription
in
a
public
genuineness
of
the
plaintiff's
claim
against
the
"Compañia
Agricola
registry,
do
not
and
cannot
accrue
under
an
inscription
"in
bad
faith,"
to
Filipina."
The
truth
is
that
both
the
plaintiff
and
the
defendant
company
the
benefit
of
the
person
who
thus
makes
the
inscription.
appear
to
have
had
just
and
righteous
claims
against
their
common
debtor.
No
criticism
can
properly
be
made
of
the
exercise
of
the
utmost
diligence
Construing
the
second
paragraph
of
this
article
of
the
code,
the
supreme
by
the
plaintiff
in
asserting
and
exercising
his
right
to
recover
the
amount
2
of
his
claim
from
the
estate
of
the
common
debtor.
We
are
strongly
and
outward
acts
by
which
alone
the
inward
motive
may,
with
safety,
be
inclined
to
believe
that
in
procuring
the
levy
of
execution
upon
the
factory
determined.
So
it
is
that
"the
honesty
of
intention,"
"the
honest
lawful
building
and
in
buying
it
at
the
sheriff's
sale,
he
considered
that
he
was
intent,"
which
constitutes
good
faith
implies
a
"freedom
from
knowledge
doing
no
more
than
he
had
a
right
to
do
under
all
the
circumstances,
and
it
and
circumstances
which
ought
to
put
a
person
on
inquiry,"
and
so
it
is
is
highly
possible
and
even
probable
that
he
thought
at
that
time
that
he
that
proof
of
such
knowledge
overcomes
the
presumption
of
good
faith
in
would
be
able
to
maintain
his
position
in
a
contest
with
the
machinery
which
the
courts
always
indulge
in
the
absence
of
proof
to
the
contrary.
company.
There
was
no
collusion
on
his
part
with
the
common
debtor,
and
"Good
faith,
or
the
want
of
it,
is
not
a
visible,
tangible
fact
that
can
be
seen
no
thought
of
the
perpetration
of
a
fraud
upon
the
rights
of
another,
in
the
or
touched,
but
rather
a
state
or
condition
of
mind
which
can
only
be
ordinary
sense
of
the
word.
He
may
have
hoped,
and
doubtless
he
did
judged
of
by
actual
or
fancied
tokens
or
signs."
(Wilder
vs.
Gilman,
55
Vt.,
hope,
that
the
title
of
the
machinery
company
would
not
stand
the
test
of
504,
505;
Cf.
Cardenas
Lumber
Co.
vs.
Shadel,
52
La.
Ann.,
2094‐2098;
an
action
in
a
court
of
law;
and
if
later
developments
had
confirmed
his
Pinkerton
Bros.
Co.
vs.
Bromley,
119
Mich.,
8,
10,
17.)
unfounded
hopes,
no
one
could
question
the
legality
of
the
propriety
of
We
conclude
that
upon
the
grounds
herein
set
forth
the
disposing
part
of
the
course
he
adopted.
the
decision
and
judgment
entered
in
the
court
below
should
be
affirmed
But
it
appearing
that
he
had
full
knowledge
of
the
machinery
company's
with
costs
of
this
instance
against
the
appellant.
So
ordered.
claim
of
ownership
when
he
executed
the
indemnity
bond
and
bought
in
Arellano,
C.J.,
Johnson,
Araullo,
Street
and
Malcolm,
JJ.,
concur.
Torres,
the
property
at
the
sheriff's
sale,
and
it
appearing
further
that
the
Avanceña
and
Fisher,
JJ.,
took
no
part.
machinery
company's
claim
of
ownership
was
well
founded,
he
cannot
be
said
to
have
been
an
innocent
purchaser
for
value.
He
took
the
risk
and
must
stand
by
the
consequences;
and
it
is
in
this
sense
that
we
find
that
he
was
not
a
purchaser
in
good
faith.
One
who
purchases
real
estate
with
knowledge
of
a
defect
or
lack
of
title
in
his
vendor
cannot
claim
that
he
has
acquired
title
thereto
in
good
faith
as
against
the
true
owner
of
the
land
or
of
an
interest
therein;
and
the
same
rule
must
be
applied
to
one
who
has
knowledge
of
facts
which
should
have
put
him
upon
such
inquiry
and
investigation
as
might
be
necessary
to
acquaint
him
with
the
defects
in
the
title
of
his
vendor.
A
purchaser
cannot
close
his
eyes
to
facts
which
should
put
a
reasonable
man
upon
his
guard,
and
then
claim
that
he
acted
in
good
faith
under
the
belief
that
there
was
no
defect
in
the
title
of
the
vendor.
His
mere
refusal
to
believe
that
such
defect
exists,
or
his
willful
closing
of
his
eyes
to
the
possibility
of
the
existence
of
a
defect
in
his
vendor's
title,
will
not
make
him
an
innocent
purchaser
for
value,
if
afterwards
develops
that
the
title
was
in
fact
defective,
and
it
appears
that
he
had
such
notice
of
the
defects
as
would
have
led
to
its
discovery
had
he
acted
with
that
measure
of
precaution
which
may
reasonably
be
acquired
of
a
prudent
man
in
a
like
situation.
Good
faith,
or
lack
of
it,
is
in
its
analysis
a
question
of
intention;
but
in
ascertaining
the
intention
by
which
one
is
actuated
on
a
given
occasion,
we
are
necessarily
controlled
by
the
evidence
as
to
the
conduct
3
respondent
‐
Lacsamana
secured
title
over
the
property
in
her
name
(TCT
No.
173744)
as
well
as
separate
tax
declarations
for
the
land
and
building.
1
On
November
22,
1979,
petitioner
commenced
suit
for
"Annulment
of
G.R.
No.
L‐55729
March
28,
1983
Deed
of
Sale
with
Damages"
against
herein
respondents
PNB
and
ANTONIO
PUNSALAN,
JR.,
petitioner,
vs.
REMEDIOS
VDA.
DE
Lacsamana
before
respondent
Court
of
First
Instance
of
Rizal,
Branch
XXXI,
LACSAMANA
and
THE
HONORABLE
JUDGE
RODOLFO
A.
ORTIZ,
Quezon
City,
essentially
impugning
the
validity
of
the
sale
of
the
building
respondents.
as
embodied
in
the
Amended
Deed
of
Sale.
In
this
connection,
petitioner
Benjamin
S.
Benito
&
Associates
for
petitioner.
alleged:
Expedito Yummul for private respondent. xxx xxx xxx
22.
That
defendant,
Philippine
National
Bank,
through
its
Branch
Manager
...
by
virtue
of
the
request
of
defendant
...
executed
a
document
dated
July
MELENCIO‐HERRERA,
J.:
31,
1978,
entitled
Amendment
to
Deed
of
Absolute
Sale
...
wherein
said
The
sole
issue
presented
by
petitioner
for
resolution
is
whether
or
not
defendant
bank
as
Vendor
sold
to
defendant
Lacsamana
the
building
respondent
Court
erred
in
denying
the
Motion
to
Set
Case
for
Pre‐trial
with
owned
by
the
plaintiff
under
Tax
Declaration
No.
5619,
notwithstanding
respect
to
respondent
Remedios
Vda.
de
Lacsamana
as
the
case
had
been
the
fact
that
said
building
is
not
owned
by
the
bank
either
by
virtue
of
the
dismissed
on
the
ground
of
improper
venue
upon
motion
of
co‐respondent
public
auction
sale
conducted
by
the
Sheriff
and
sold
to
the
Philippine
Philippine
National
Bank
(PNB).
National
Bank
or
by
virtue
of
the
Deed
of
Sale
executed
by
the
bank
itself
in
its
favor
on
September
21,
1977
...;
It
appears
that
petitioner,
Antonio
Punsalan,
Jr.,
was
the
former
registered
owner
of
a
parcel
of
land
consisting
of
340
square
meters
situated
in
23.
That
said
defendant
bank
fraudulently
mentioned
...
that
the
sale
in
its
Bamban,
Tarlac.
In
1963,
petitioner
mortgaged
said
land
to
respondent
favor
should
likewise
have
included
the
building,
notwithstanding
no
legal
PNB
(Tarlac
Branch)
in
the
amount
of
P10,000.00,
but
for
failure
to
pay
basis
for
the
same
and
despite
full
knowledge
that
the
Certificate
of
Sale
said
amount,
the
property
was
foreclosed
on
December
16,
1970.
executed
by
the
sheriff
in
its
favor
...
only
limited
the
sale
to
the
land,
Respondent
PNB
(Tarlac
Branch)
was
the
highest
bidder
in
said
foreclosure
hence,
by
selling
the
building
which
never
became
the
property
of
proceedings.
However,
the
bank
secured
title
thereto
only
on
December
defendant,
they
have
violated
the
principle
against
'pactum
commisorium'.
14,
1977.
Petitioner
prayed
that
the
Deed
of
Sale
of
the
building
in
favor
of
In
the
meantime,
in
1974,
while
the
properly
was
still
in
the
alleged
respondent
Lacsamana
be
declared
null
and
void
and
that
damages
in
the
possession
of
petitioner
and
with
the
alleged
acquiescence
of
respondent
total
sum
of
P230,000.00,
more
or
less,
be
awarded
to
him.
2
PNB
(Tarlac
Branch),
and
upon
securing
a
permit
from
the
Municipal
In
her
Answer
filed
on
March
4,
1980,‐respondent
Lacsamana
averred
the
Mayor,
petitioner
constructed
a
warehouse
on
said
property.
Petitioner
affirmative
defense
of
lack
of
cause
of
action
in
that
she
was
a
purchaser
declared
said
warehouse
for
tax
purposes
for
which
he
was
issued
Tax
for
value
and
invoked
the
principle
in
Civil
Law
that
the
"accessory
follows
Declaration
No.
5619.
Petitioner
then
leased
the
warehouse
to
one
the
principal".
3
Hermogenes
Sibal
for
a
period
of
10
years
starting
January
1975.
On
March
14,
1980,
respondent
PNB
filed
a
Motion
to
Dismiss
on
the
On
July
26,
1978,
a
Deed
of
Sale
was
executed
between
respondent
PNB
ground
that
venue
was
improperly
laid
considering
that
the
building
was
(Tarlac
Branch)
and
respondent
Lacsamana
over
the
property.
This
real
property
under
article
415
(1)
of
the
New
Civil
Code
and
therefore
contract
was
amended
on
July
31,
1978,
particularly
to
include
in
the
sale,
section
2(a)
of
Rule
4
should
apply.
4
the
building
and
improvement
thereon.
By
virtue
of
said
instruments,
4
Opposing
said
Motion
to
Dismiss,
petitioner
contended
that
the
action
for
Hence,
this
Petition
for
Certiorari,
to
which
we
gave
due
course.
annulment
of
deed
of
sale
with
damages
is
in
the
nature
of
a
personal
We
affirm
respondent
Court's
Order
denying
the
setting
for
pre‐trial.
action,
which
seeks
to
recover
not
the
title
nor
possession
of
the
property
but
to
compel
payment
of
damages,
which
is
not
an
action
affecting
title
to
The
warehouse
claimed
to
be
owned
by
petitioner
is
an
immovable
or
real
real
property.
property
as
provided
in
article
415(l)
of
the
Civil
Code.
6
Buildings
are
always
immovable
under
the
Code.
7
A
building
treated
separately
from
On
April
25,
1980,
respondent
Court
granted
respondent
PNB's
Motion
to
the
land
on
which
it
stood
is
immovable
property
and
the
mere
fact
that
Dismiss
as
follows:
the
parties
to
a
contract
seem
to
have
dealt
with
it
separate
and
apart
Acting
upon
the
'Motion
to
Dismiss'
of
the
defendant
Philippine
National
from
the
land
on
which
it
stood
in
no
wise
changed
its
character
as
Bank
dated
March
13,
1980,
considered
against
the
plaintiff's
opposition
immovable
property.
8
thereto
dated
April
1,
1980,
including
the
reply
therewith
of
said
While
it
is
true
that
petitioner
does
not
directly
seek
the
recovery
of
title
defendant,
this
Court
resolves
to
DISMISS
the
plaintiff's
complaint
for
or
possession
of
the
property
in
question,
his
action
for
annulment
of
sale
improper
venue
considering
that
the
plaintiff's
complaint
which
seeks
for
and
his
claim
for
damages
are
closely
intertwined
with
the
issue
of
the
declaration
as
null
and
void,
the
amendment
to
Deed
of
Absolute
Sale
ownership
of
the
building
which,
under
the
law,
is
considered
immovable
executed
by
the
defendant
Philippine
National
Bank
in
favor
of
the
property,
the
recovery
of
which
is
petitioner's
primary
objective.
The
defendant
Remedios
T.
Vda.
de
Lacsamana,
on
July
31,
1978,
involves
a
prevalent
doctrine
is
that
an
action
for
the
annulment
or
rescission
of
a
warehouse
allegedly
owned
and
constructed
by
the
plaintiff
on
the
land
of
sale
of
real
property
does
not
operate
to
efface
the
fundamental
and
the
defendant
Philippine
National
Bank
situated
in
the
Municipality
of
prime
objective
and
nature
of
the
case,
which
is
to
recover
said
real
Bamban,
Province
of
Tarlac,
which
warehouse
is
an
immovable
property
property.
It
is
a
real
action.
9
pursuant
to
Article
415,
No.
1
of
the
New
Civil
Code;
and,
as
such
the
action
of
the
plaintiff
is
a
real
action
affecting
title
to
real
property
which,
Respondent
Court,
therefore,
did
not
err
in
dismissing
the
case
on
the
under
Section
2,
Rule
4
of
the
New
Rules
of
Court,
must
be
tried
in
the
ground
of
improper
venue
(Section
2,
Rule
4)
10,
which
was
timely
raised
province
where
the
property
or
any
part
thereof
lies.
5
(Section
1,
Rule
16)
11.
In
his
Motion
for
Reconsideration
of
the
aforestated
Order,
petitioner
Petitioner's
other
contention
that
the
case
should
proceed
in
so
far
as
reiterated
the
argument
that
the
action
to
annul
does
not
involve
respondent
Lacsamana
is
concerned
as
she
had
already
filed
an
Answer,
ownership
or
title
to
property
but
is
limited
to
the
validity
of
the
deed
of
which
did
not
allege
improper
venue
and,
therefore,
issues
had
already
sale
and
emphasized
that
the
case
should
proceed
with
or
without
been
joined,
is
likewise
untenable.
Respondent
PNB
is
an
indispensable
respondent
PNB
as
respondent
Lacsamana
had
already
filed
her
Answer
to
party
as
the
validity
of
the
Amended
Contract
of
Sale
between
the
former
the
Complaint
and
no
issue
on
venue
had
been
raised
by
the
latter.
and
respondent
Lacsamana
is
in
issue.
It
would,
indeed,
be
futile
to
proceed
with
the
case
against
respondent
Lacsamana
alone.
On
September
1,
1980,.respondent
Court
denied
reconsideration
for
lack
of
merit.
WHEREFORE,
the
petition
is
hereby
denied
without
prejudice
to
the
refiling
of
the
case
by
petitioner
Antonio
Punsalan,
Jr.
in
the
proper
forum.
Petitioner
then
filed
a
Motion
to
Set
Case
for
Pre‐trial,
in
so
far
as
respondent
Lacsamana
was
concerned,
as
the
issues
had
already
been
Costs
against
petitioner.
joined
with
the
filing
of
respondent
Lacsamana's
Answer.
SO
ORDERED.
In
the
Order
of
November
10,
1980
respondent
Court
denied
said
Motion
Teehankee
(Chairman),
Plana,
Vasquez,
Relova
and
Gutierrez,
Jr.,
JJ.,
to
Set
Case
for
Pre‐trial
as
the
case
was
already
dismissed
in
the
previous
concur.
Orders
of
April
25,
1980
and
September
1,
1980.
5
A
first
class
residential
land
Identffied
as
Lot
No.
720,
(Ts‐308,
Olongapo
Townsite
Subdivision)
Ardoin
Street,
East
Bajac‐Bajac,
Olongapo
City,
containing
an
area
of
465
sq.
m.
more
or
less,
declared
and
assessed
in
the
name
of
FERNANDO
MAGCALE
under
Tax
Duration
No.
19595
issued
by
G.R.
No.
L‐50008
August
31,
1987
the
Assessor
of
Olongapo
City
with
an
assessed
value
of
P1,860.00;
bounded
on
the
PRUDENTIAL
BANK,
petitioner,
vs.
HONORABLE
DOMINGO
D.
PANIS,
Presiding
Judge
of
Branch
III,
Court
of
First
Instance
of
Zambales
and
NORTH:
By
No.
6,
Ardoin
Street
Olongapo
City;
FERNANDO
MAGCALE
&
TEODULA
BALUYUT‐MAGCALE,
SOUTH:
By
No.
2,
Ardoin
Street
respondents.
EAST:
By
37
Canda
Street,
and
WEST:
By
Ardoin
Street.
PARAS,
J.:
All
corners
of
the
lot
marked
by
conc.
cylindrical
monuments
of
the
Bureau
This
is
a
petition
for
review
on
certiorari
of
the
November
13,
1978
of
Lands
as
visible
limits.
(
Exhibit
"A,
"
also
Exhibit
"1"
for
defendant).
Decision
*
of
the
then
Court
of
First
Instance
of
Zambales
and
Olongapo
Apart
from
the
stipulations
in
the
printed
portion
of
the
aforestated
deed
City
in
Civil
Case
No.
2443‐0
entitled
"Spouses
Fernando
A.
Magcale
and
of
mortgage,
there
appears
a
rider
typed
at
the
bottom
of
the
reverse
side
Teodula
Baluyut‐Magcale
vs.
Hon.
Ramon
Y.
Pardo
and
Prudential
Bank"
of
the
document
under
the
lists
of
the
properties
mortgaged
which
reads,
declaring
that
the
deeds
of
real
estate
mortgage
executed
by
respondent
as
follows:
spouses
in
favor
of
petitioner
bank
are
null
and
void.
AND
IT
IS
FURTHER
AGREED
that
in
the
event
the
Sales
Patent
on
the
lot
The
undisputed
facts
of
this
case
by
stipulation
of
the
parties
are
as
applied
for
by
the
Mortgagors
as
herein
stated
is
released
or
issued
by
the
follows:
Bureau
of
Lands,
the
Mortgagors
hereby
authorize
the
Register
of
Deeds
to
...
on
November
19,
1971,
plaintiffs‐spouses
Fernando
A.
Magcale
and
hold
the
Registration
of
same
until
this
Mortgage
is
cancelled,
or
to
Teodula
Baluyut
Magcale
secured
a
loan
in
the
sum
of
P70,000.00
from
the
annotate
this
encumbrance
on
the
Title
upon
authority
from
the
Secretary
defendant
Prudential
Bank.
To
secure
payment
of
this
loan,
plaintiffs
of
Agriculture
and
Natural
Resources,
which
title
with
annotation,
shall
be
executed
in
favor
of
defendant
on
the
aforesaid
date
a
deed
of
Real
Estate
released
in
favor
of
the
herein
Mortgage.
Mortgage
over
the
following
described
properties:
From
the
aforequoted
stipulation,
it
is
obvious
that
the
mortgagee
l.
A
2‐STOREY,
SEMI‐CONCRETE,
residential
building
with
warehouse
(defendant
Prudential
Bank)
was
at
the
outset
aware
of
the
fact
that
the
spaces
containing
a
total
floor
area
of
263
sq.
meters,
more
or
less,
mortgagors
(plaintiffs)
have
already
filed
a
Miscellaneous
Sales
Application
generally
constructed
of
mixed
hard
wood
and
concrete
materials,
under
a
over
the
lot,
possessory
rights
over
which,
were
mortgaged
to
it.
roofing
of
cor.
g.
i.
sheets;
declared
and
assessed
in
the
name
of
Exhibit
"A"
(Real
Estate
Mortgage)
was
registered
under
the
Provisions
of
FERNANDO
MAGCALE
under
Tax
Declaration
No.
21109,
issued
by
the
Act
3344
with
the
Registry
of
Deeds
of
Zambales
on
November
23,
1971.
Assessor
of
Olongapo
City
with
an
assessed
value
of
P35,290.00.
This
building
is
the
only
improvement
of
the
lot.
On
May
2,
1973,
plaintiffs
secured
an
additional
loan
from
defendant
Prudential
Bank
in
the
sum
of
P20,000.00.
To
secure
payment
of
this
2.
THE
PROPERTY
hereby
conveyed
by
way
of
MORTGAGE
includes
the
additional
loan,
plaintiffs
executed
in
favor
of
the
said
defendant
another
right
of
occupancy
on
the
lot
where
the
above
property
is
erected,
and
deed
of
Real
Estate
Mortgage
over
the
same
properties
previously
more
particularly
described
and
bounded,
as
follows:
mortgaged
in
Exhibit
"A."
(Exhibit
"B;"
also
Exhibit
"2"
for
defendant).
This
6
second
deed
of
Real
Estate
Mortgage
was
likewise
registered
with
the
In
a
Resolution
dated
August
10,
1979,
this
case
was
considered
submitted
Registry
of
Deeds,
this
time
in
Olongapo
City,
on
May
2,1973.
for
decision
(Ibid.,
P.
158).
On
April
24,
1973,
the
Secretary
of
Agriculture
issued
Miscellaneous
Sales
In
its
Memorandum,
petitioner
raised
the
following
issues:
Patent
No.
4776
over
the
parcel
of
land,
possessory
rights
over
which
were
1.
WHETHER
OR
NOT
THE
DEEDS
OF
REAL
ESTATE
MORTGAGE
ARE
VALID;
mortgaged
to
defendant
Prudential
Bank,
in
favor
of
plaintiffs.
On
the
basis
AND
of
the
aforesaid
Patent,
and
upon
its
transcription
in
the
Registration
Book
of
the
Province
of
Zambales,
Original
Certificate
of
Title
No.
P‐2554
was
2.
WHETHER
OR
NOT
THE
SUPERVENING
ISSUANCE
IN
FAVOR
OF
PRIVATE
issued
in
the
name
of
Plaintiff
Fernando
Magcale,
by
the
Ex‐Oficio
Register
RESPONDENTS
OF
MISCELLANEOUS
SALES
PATENT
NO.
4776
ON
APRIL
24,
of
Deeds
of
Zambales,
on
May
15,
1972.
1972
UNDER
ACT
NO.
730
AND
THE
COVERING
ORIGINAL
CERTIFICATE
OF
TITLE
NO.
P‐2554
ON
MAY
15,1972
HAVE
THE
EFFECT
OF
INVALIDATING
For
failure
of
plaintiffs
to
pay
their
obligation
to
defendant
Bank
after
it
THE
DEEDS
OF
REAL
ESTATE
MORTGAGE.
(Memorandum
for
Petitioner,
became
due,
and
upon
application
of
said
defendant,
the
deeds
of
Real
Rollo,
p.
122).
Estate
Mortgage
(Exhibits
"A"
and
"B")
were
extrajudicially
foreclosed.
Consequent
to
the
foreclosure
was
the
sale
of
the
properties
therein
This
petition
is
impressed
with
merit.
mortgaged
to
defendant
as
the
highest
bidder
in
a
public
auction
sale
The
pivotal
issue
in
this
case
is
whether
or
not
a
valid
real
estate
mortgage
conducted
by
the
defendant
City
Sheriff
on
April
12,
1978
(Exhibit
"E").
The
can
be
constituted
on
the
building
erected
on
the
land
belonging
to
auction
sale
aforesaid
was
held
despite
written
request
from
plaintiffs
another.
through
counsel
dated
March
29,
1978,
for
the
defendant
City
Sheriff
to
desist
from
going
with
the
scheduled
public
auction
sale
(Exhibit
"D")."
The
answer
is
in
the
affirmative.
(Decision,
Civil
Case
No.
2443‐0,
Rollo,
pp.
29‐31).
In
the
enumeration
of
properties
under
Article
415
of
the
Civil
Code
of
the
Respondent
Court,
in
a
Decision
dated
November
3,
1978
declared
the
Philippines,
this
Court
ruled
that,
"it
is
obvious
that
the
inclusion
of
deeds
of
Real
Estate
Mortgage
as
null
and
void
(Ibid.,
p.
35).
"building"
separate
and
distinct
from
the
land,
in
said
provision
of
law
can
only
mean
that
a
building
is
by
itself
an
immovable
property."
(Lopez
vs.
On
December
14,
1978,
petitioner
filed
a
Motion
for
Reconsideration
Orosa,
Jr.,
et
al.,
L‐10817‐18,
Feb.
28,
1958;
Associated
Inc.
and
Surety
Co.,
(Ibid.,
pp.
41‐53),
opposed
by
private
respondents
on
January
5,
1979
Inc.
vs.
Iya,
et
al.,
L‐10837‐38,
May
30,1958).
(Ibid.,
pp.
54‐62),
and
in
an
Order
dated
January
10,
1979
(Ibid.,
p.
63),
the
Motion
for
Reconsideration
was
denied
for
lack
of
merit.
Hence,
the
Thus,
while
it
is
true
that
a
mortgage
of
land
necessarily
includes,
in
the
instant
petition
(Ibid.,
pp.
5‐28).
absence
of
stipulation
of
the
improvements
thereon,
buildings,
still
a
building
by
itself
may
be
mortgaged
apart
from
the
land
on
which
it
has
The
first
Division
of
this
Court,
in
a
Resolution
dated
March
9,
1979,
been
built.
Such
a
mortgage
would
be
still
a
real
estate
mortgage
for
the
resolved
to
require
the
respondents
to
comment
(Ibid.,
p.
65),
which
order
building
would
still
be
considered
immovable
property
even
if
dealt
with
was
complied
with
the
Resolution
dated
May
18,1979,
(Ibid.,
p.
100),
separately
and
apart
from
the
land
(Leung
Yee
vs.
Strong
Machinery
Co.,
petitioner
filed
its
Reply
on
June
2,1979
(Ibid.,
pp.
101‐112).
37
Phil.
644).
In
the
same
manner,
this
Court
has
also
established
that
Thereafter,
in
the
Resolution
dated
June
13,
1979,
the
petition
was
given
possessory
rights
over
said
properties
before
title
is
vested
on
the
grantee,
due
course
and
the
parties
were
required
to
submit
simultaneously
their
may
be
validly
transferred
or
conveyed
as
in
a
deed
of
mortgage
(Vda.
de
respective
memoranda.
(Ibid.,
p.
114).
Bautista
vs.
Marcos,
3
SCRA
438
[1961]).
On
July
18,
1979,
petitioner
filed
its
Memorandum
(Ibid.,
pp.
116‐144),
Coming
back
to
the
case
at
bar,
the
records
show,
as
aforestated
that
the
while
private
respondents
filed
their
Memorandum
on
August
1,
1979
original
mortgage
deed
on
the
2‐storey
semi‐concrete
residential
building
(Ibid.,
pp.
146‐155).
with
warehouse
and
on
the
right
of
occupancy
on
the
lot
where
the
7
building
was
erected,
was
executed
on
November
19,
1971
and
registered
1977
in
order
that
the
mortgaged
may
be
annotated,
without
requiring
the
under
the
provisions
of
Act
3344
with
the
Register
of
Deeds
of
Zambales
bank
to
get
the
prior
approval
of
the
Ministry
of
Natural
Resources
on
November
23,
1971.
Miscellaneous
Sales
Patent
No.
4776
on
the
land
beforehand,
thereby
implicitly
authorizing
Prudential
Bank
to
cause
the
was
issued
on
April
24,
1972,
on
the
basis
of
which
OCT
No.
2554
was
annotation
of
said
mortgage
on
their
title.
issued
in
the
name
of
private
respondent
Fernando
Magcale
on
May
15,
However,
the
Court,
in
recently
ruling
on
violations
of
Section
124
which
1972.
It
is
therefore
without
question
that
the
original
mortgage
was
refers
to
Sections
118,
120,
122
and
123
of
Commonwealth
Act
141,
has
executed
before
the
issuance
of
the
final
patent
and
before
the
held:
government
was
divested
of
its
title
to
the
land,
an
event
which
takes
effect
only
on
the
issuance
of
the
sales
patent
and
its
subsequent
...
Nonetheless,
we
apply
our
earlier
rulings
because
we
believe
that
as
in
registration
in
the
Office
of
the
Register
of
Deeds
(Visayan
Realty
Inc.
vs.
pari
delicto
may
not
be
invoked
to
defeat
the
policy
of
the
State
neither
Meer,
96
Phil.
515;
Director
of
Lands
vs.
De
Leon,
110
Phil.
28;
Director
of
may
the
doctrine
of
estoppel
give
a
validating
effect
to
a
void
contract.
Lands
vs.
Jurado,
L‐14702,
May
23,
1961;
Pena
"Law
on
Natural
Indeed,
it
is
generally
considered
that
as
between
parties
to
a
contract,
Resources",
p.
49).
Under
the
foregoing
considerations,
it
is
evident
that
validity
cannot
be
given
to
it
by
estoppel
if
it
is
prohibited
by
law
or
is
the
mortgage
executed
by
private
respondent
on
his
own
building
which
against
public
policy
(19
Am.
Jur.
802).
It
is
not
within
the
competence
of
was
erected
on
the
land
belonging
to
the
government
is
to
all
intents
and
any
citizen
to
barter
away
what
public
policy
by
law
was
to
preserve
purposes
a
valid
mortgage.
(Gonzalo
Puyat
&
Sons,
Inc.
vs.
De
los
Amas
and
Alino
supra).
...
(Arsenal
vs.
IAC,
143
SCRA
54
[1986]).
As
to
restrictions
expressly
mentioned
on
the
face
of
respondents'
OCT
No.
P‐2554,
it
will
be
noted
that
Sections
121,
122
and
124
of
the
Public
Land
This
pronouncement
covers
only
the
previous
transaction
already
alluded
Act,
refer
to
land
already
acquired
under
the
Public
Land
Act,
or
any
to
and
does
not
pass
upon
any
new
contract
between
the
parties
(Ibid),
as
improvement
thereon
and
therefore
have
no
application
to
the
assailed
in
the
case
at
bar.
It
should
not
preclude
new
contracts
that
may
be
mortgage
in
the
case
at
bar
which
was
executed
before
such
eventuality.
entered
into
between
petitioner
bank
and
private
respondents
that
are
in
Likewise,
Section
2
of
Republic
Act
No.
730,
also
a
restriction
appearing
on
accordance
with
the
requirements
of
the
law.
After
all,
private
the
face
of
private
respondent's
title
has
likewise
no
application
in
the
respondents
themselves
declare
that
they
are
not
denying
the
legitimacy
instant
case,
despite
its
reference
to
encumbrance
or
alienation
before
the
of
their
debts
and
appear
to
be
open
to
new
negotiations
under
the
law
patent
is
issued
because
it
refers
specifically
to
encumbrance
or
alienation
(Comment;
Rollo,
pp.
95‐96).
Any
new
transaction,
however,
would
be
on
the
land
itself
and
does
not
mention
anything
regarding
the
subject
to
whatever
steps
the
Government
may
take
for
the
reversion
of
improvements
existing
thereon.
the
land
in
its
favor.
But
it
is
a
different
matter,
as
regards
the
second
mortgage
executed
over
PREMISES
CONSIDERED,
the
decision
of
the
Court
of
First
Instance
of
the
same
properties
on
May
2,
1973
for
an
additional
loan
of
P20,000.00
Zambales
&
Olongapo
City
is
hereby
MODIFIED,
declaring
that
the
Deed
of
which
was
registered
with
the
Registry
of
Deeds
of
Olongapo
City
on
the
Real
Estate
Mortgage
for
P70,000.00
is
valid
but
ruling
that
the
Deed
of
same
date.
Relative
thereto,
it
is
evident
that
such
mortgage
executed
Real
Estate
Mortgage
for
an
additional
loan
of
P20,000.00
is
null
and
void,
after
the
issuance
of
the
sales
patent
and
of
the
Original
Certificate
of
Title,
without
prejudice
to
any
appropriate
action
the
Government
may
take
falls
squarely
under
the
prohibitions
stated
in
Sections
121,
122
and
124
of
against
private
respondents.
the
Public
Land
Act
and
Section
2
of
Republic
Act
730,
and
is
therefore
null
SO
ORDERED.
and
void.
Teehankee,
C.J.,
Narvasa,
Cruz
and
Gancayco,
JJ.,
concur.
Petitioner
points
out
that
private
respondents,
after
physically
possessing
the
title
for
five
years,
voluntarily
surrendered
the
same
to
the
bank
in
8
proceeded
westward;
Saludo
was
then
wearing
rubber
shoes,
white
polo
shirt
and
fatigue
pants.
And
that
was
the
last
time
his
family
saw
him.
At
around
11:00
o'clock
of
that
same
morning,
Marcelo
Verano,
who
was
pasturing
his
carabao
in
the
north
part
of
barrio
Bucal,
heard
someone
groaning;
out
of
curiosity,
he
proceeded
to
the
place
whence
the
sounds
G.R.
No.
L‐11641
November
29,
1962
had
come,
cautiously
peered
through
some
bushes
and
espied
appellant
beating
Vidal
Saludo
with
a
rice
pestle,
in
the
presence
of
armed
THE
PEOPLE
OF
THE
PHILIPPINES,
plaintiff‐appellee,
vs.
VIVENCIO
CATLI,
companions,
one
of
whom
remarked:
"That
is
enough
Babing,
he
is
already
defendant‐appellant.
dead";
seized
fear,
Verano
left
the
place
but
refrained
from
disclosing
to
Office
of
the
Solicitor
General
for
plaintiff‐appellee.
De
Mesa
and
De
Mesa
others
what
he
had
observed,
because
he
surmised
that
appellant
and
his
for
defendant‐appellant.
men
were
Huks.
BENGZON,
C.J.:
At
about
2:00
p.m.
of
the
same
day,
Diego
Martija,
then
a
member
of
the
rural
council
of
Bucal,
met
Maria
Saludo
who
sobbingly
told
him
that
her
This
case
began
with
an
information
against
Vivencio
Catli
charging
that
brother
Vidal
had
been
taken
by
the
Huks
led
by
appellant;
she
begged
his
sometime
in
May
1948,
in
Tiaong,
Quezon
Province,
he
inflicted
mortal
help
to
locate
Vidal,
and
after
some
hesitation,
Martija
responded
by
injuries
upon
Vidal
Saludo,
assisted
by
two
others
still
at
large.
Aggravating
asking
a
neighbor,
Leoncio
Manimtim
to
accompany
him
to
search
for
circumstances
of
treachery,
superior
strength
and
means
to
weaken
the
Vidal.
The
pair
followed
the
trail
Vidal
was
last
seen
to
have
taken,
making
defense
were
cited.
inquiries
from
people
who
may
have
seen
Saludo's
group
the
search
ended
After
trial,
the
court
of
first
instance
of
Quezon
adjudged
him
guilty
of
near
the
Capanglao
river;
en
route,
the
two,
Martija
and
Manimtim
murder,
and
sentenced
him
to
suffer
life
imprisonment
with
the
discovered
some
drops
of
blood.
As
they
approached
the
river,
the
two
accessories,
to
indemnify
Saludo's
heirs
in
the
sum
of
P6,000.00,
sans
found
a
newly
dug
grave
covered
with
coconut
leaves;
they
brushed
the
subsidiary
imprisonment,
and
to
defray
the
costs.
leaves
only
to
find
acastorillo
hat
which
they
recognized
as
one
Vidal
Saludo
was
wont
to
wear.
Replacing
the
coconut
leaves,
the
two
left
for
Insisting
on
his
innocence,
the
accused
seasonably
appealed,
raising
here
their
respective
homes,
but
refrained
from
revealing
their
findings
to
the
these
material
points:
(a)
substantial
variance
between
the
allegations
and
authority
for
fear
of
the
Huks.
the
proof,
because
while
the
information
indicated
three
persons
as
authors
of
the
crime,
the
prosecution's
evidence
showed
there
were
more;
Years
after
or
in
1951,
Diego
Martija
was
appointed
Barrio
Lieutenant
of
(b)
delay
of
seven
years
in
the
prosecution
of
the
crime;
(c)
the
testimonies
Bucal
but
he
was
not
provided
with
firearms;
then
on
March
22,
1955,
he
of
the
State
witnesses
are
evidently
fabricated.
was
named
chief
of
the
civilian
commando
unit
of
the
same
barrio
and
was
given
a
gun.
Emboldened
by
the
possession
of
such
weapon
and
The
People's
evidence
discloses
that
on
May
6,
1948,
Vidal
Saludo,
then
encouraged
by
the
government
campaign
against
the
dissidents,
Martija
barrio
lieutenant
of
Bucal,
Tiaong,
was
living
with
his
wife,
Fausta
sometime
in
December,
1955,
reported
to
the
police
chief
of
Tiaong
what
Mercado,
their
children
and
a
14‐year
old
godson
Francisco
Lopez,
in
a
he
knew
about
Vidal
Saludo's
killing.
On
December
5,
1955,
the
police
chief
house
located
in
said
barrio.
At
about
7:00
a.m.
of
said
day,
several
armed
with
some
PC
soldiers
exhumed
the
remains
of
Vidal
Saludo;
inside
the
men
headed
by
appellant
Vivencio
Catli
inquired
from
Fausta
Mercado
the
grave,
which
he
pointed
out,
they
found
bones
of
a
human
skeleton
and
a
whereabouts
of
her
husband,
and
upon
being
informed
that
the
latter
was
pair
of
soles
of
rubber
shoes.
The
bones
were
gathered
in
an
army
sack,
upstairs,
Catli
went
up
and
requested
Vidal
Saludo
to
accompany
him
to
shipped
to
the
NBI
in
Manila
for
medico‐legal
examination,
and
following
look
for
Benito
Tenorio
who
had
strayed
from
the
appellant's
group;
such
examination,
Dr.
Jesus
D.
Crisostomo,
medico‐legal
officer
submitted
yielding
to
this
request,
Saludo
joined
the
appellant's
band
which
9
an
Osteological
report
with
the
conclusion
that:
same
incident,
before
Jose
B.
Tuason,
deputy
clerk
of
the
CFI
of
Quezon
and
on
the
basis
of
the
two
affidavits,
a
complaint
for
frustrated
murder
1.
Those
bony
remains
are
human
in
origin.
filed
by
appellant
before
the
assistant
fiscal
of
Quezon
was
investigated.
2.
They
belong
to
only
one
individual.
Appellant
also
averred
that
while
his
complaint
was
pending
investigation,
3.
That
the
set
of
bones
belongs
to
a
male
individual.
Mayor
Punzalan
sent
an
emissary,
Avelino
by
name,
requesting
him
(appellant)
to
withdraw
his
complaint
in
exchange
for
P3,000.00
and
an
4.
That
this
individual
has
a
stature
of
approximately
165.812
cms.
(5
feet
appointment
as
a
caminero;
that
appellant
spurned
the
offer
and
instead,
inches)
plus
or
minus.
on
September
1,
1955,
he
executed
another
affidavit
before
the
same
NBI
5.
That
the
probable
age
of
the
time
of
death
of
this
individual
may
lie
Agent
No.
43
elaborating
on
his
first
affidavit;
that
on
December
5,
1955,
between
35
and
45
years.
the
police
chief
of
Tiaong
directed
the
exhumation
of
Saludo's
remains
that
on
December
13,
1955,
the
same
officer
fetched
Fausta
Mercado
from
6.
That
no
cause
of
death
can
be
assigned
or
given
in
this
particular
barrio
Bangcalat,
Tanauan,
Batangas
and
took
her
to
Tiaong
where
she
individual,
as
the
submitted
and
assorted
bones
as
a
set
does
not
show
any
subscribed
to
statement
naming
the
appellant
as
the
murderer
of
her
sign
of
antemortem
injury.
husband
Vidal
Saludo;
and
that
the
complaint
against
him
was
trumped
up
7.
That
considering
the
moderately
advanced
postmortem
disintegration
at
the
instigation
of
Mayor
Punzalan
because
of
his
refusal
to
withdraw
his
of
the
bones
submitted
assorted
and
non‐assorted,
the
probable
length
of
complaint
against
the
mayor
and
the
latter's
henchmen.
time
that
may
have
already
elapsed
after
burial
may
be
placed
between
Appellant's
alibi,
besides
being
inherently
weak,
sounds
unconvincing
and
five
(5)
and
ten
(10)
years.
ineffectual.
His
claim
that
he
resided
in
his
sister‐in‐law's
(Elena
Jaurigue)
Appellant's
defense
revolves
around
an
alibi.
He
testified
that
in
1946,
he
house
at
barrio
Sta.
Elena,
Sto.
Tomas,
Batangas
between
March
and
July
lived
in
the
house
of
Arcadio
Exconde
in
barrio
Quipot,
Tiaong
that
in
1948,
by
no
means
erases
the
possibility
that
he
was
in
barrio
Bucal,
March
1948,
he
moved
to
barrio
Sta
Clara,
Sto.
Tomas,
Batangas,
residing
Tiaong
on
May
6,
1948,
when
the
victim,
Vidal
Saludo
was
murdered.
Elena
in
the
house
of
Elena
Jaurigue,
sister
of
Gorgonia,
the
girl
he
was
courting;
Jaurigue
herself
declared
that
the
distance
between
the
two
barrios
was
that
following
an
old
native
custom,
he
stayed
in
Sta.
Clara
performing
short
and
could
be
negotiated
by
bus
in
half
an
hour.
Although
she
tried
such
chores
as
drawing
water
and
clearing
the
coffee
farm
in
the
service
of
hard
to
corroborate
appellants
alibi
by
insisting
that
the
latter
did
not
the
woman,
object
of
his
affections;
that
he
never
left
Sta.
Clara
until
July
leave
barrio
Sta.
Elena
even
once
during
the
five
months
of
his
stay
1948
when,
having
ostensibly
won
the
girl's
favor,
he
and
his
bride‐to‐be
thereat,
her
testimony
does
not
ring
true.
She
said
it
was
impossible
for
departed
for
barrio
Quipot,
Tiaong,
where
they
resided
in
peace
and
appellant
to
leave
her
house
without
her
knowledge
because
her
home
contentment.
He
recounts
that
on
April
6,
1951,
five
men
lured
him
from
was
a
one‐room
affair
where
appellant
kept
his
clothes
and
that
this
room
his
house
at
night
and
after
leading
him
some
five
meters
away,
they
was
under
lock,
the
key
to
which
she
always
kept.
But
this
situation
does
stabbed
him
repeatedly
and
then
left
him
for
dead;
that
fifteen
days
after,
not
rule
out
appellant's
chance
to
slip
out
of
the
premises
unnoticed
by
he
recovered
from
his
wounds
at
the
government
hospital
of
San
Pablo
Elena,
because
precisely
he
was
locked
out;
and
since
he
was
purportedly
City
and
then
he
moved
to
Unisan,
Quezon
for
fear
his
of
assailants;
that
rendering
manual
chores,
he
perforce
had
to
be
dressed
and
leave
the
on
April
11,
1955,
he
executed
an
affidavit
before
Agent
No.
43
of
the
house
once
in
a
while.
Withal,
it
is
hard
to
believe
that
an
able‐bodied
National
Bureau
of
Investigation
regarding
the
attempt
on
his
life,
naming
laborer
such
as
appellant
would
stay
confined
in
only
one
place
for
a
his
assailants
Tomas
Magwari,
Hilarion
Gutierrez,
Pedro
Mangubat,
prolonged
and
continuous
period.
Eusebio
Orense
and
another
person
whom
he
failed
to
recognize
and
As
against
appellant's
alibi,
there
is
the
positive
identification
made
of
him
especially
pointing
to
Mayor
Punzalan
of
Tiaong
as
the
instigator
of
the
by
Marcelo
Verano
who
peered
through
the
bushes
and
saw
him
clubbing
crime;
that
on
July
1,
1955,
he
executed
another
affidavit
concerning
the
Vidal
Saludo
with
a
rice
pestle;
and
the
testimony
of
the
victim's
wife
10
pointing
to
appellant
as
the
leader
of
the
band
that
took
her
husband
Record)
of
April
7,
1951,
when
he
still
had
no
opportunity
to
contrive,
away.
All
these
render
appellant's
alibi
unavailing.1
reveals
that
he
failed
to
recognize
his
assailants.
This
statement
entitled
"Ante
Mortem"
bears
the
appellant's
thumbmark
and
is
witnessed
by
his
In
connection
with
the
variance
between
the
number
of
persons
alleged
in
own
brother‐in‐law,
Simon
Jaurigue.
Subsequently,
on
April
11,
1955,
five
the
information
and
the
number
of
persons
cited
by
the
witnesses
as
days
after
he
was
stabbed,
appellant
executed
an
affidavit
before
Agent
having
participated
in
the
crime,
it
is
enough
to
state
that
such
variance
is
No.
43
of
the
NBI
and
this
time,
he
named
Hilarion
Gutierrez,
Tomas
not
material.
Appellant
was
properly
identified
both
in
the
information
and
Magwari,
Pedro
Mangubat
and
Eustaquio
Orense
as
his
attackers;
he
also
in
the
testimonial
evidence
of
the
witnesses;
he
was
fully
aware
of
the
claimed
having
overheard
Gutierrez
mutter
"Ang
sabi
ni
Mayor
nature
and
cause
of
the
accusation;
and
he
failed
to
object
seasonably
in
(PUNZALAN)
ay
huag
ng
barilin
at
saksakin
na
lamang"
(Exh.
6,
pp.
178179,
the
trial
to
the
testimonial
allegation
that
there
were
some
other
persons
Record).
In
the
same
statement,
however,
appellant
stated
that
one
involved
in
the
crime.
And
it
is
the
rule
in
this
jurisdiction
that
a
"variance
Brigido
Balmes
aided
him
shortly
after
he
was
wounded;
but
in
the
trial,
between
the
allegations
of
the
information
and
the
evidence
offered
by
Balmes,
testifying
as
a
rebuttal
witness
for
the
State,
declared
that
the
prosecution
in
support
thereof,
does
not
of
itself
entitle
the
accused
to
appellant
had
told
him
that
five
persons
had
attacked
and
stabbed
him
an
acquittal."2
More,
it
is
within
the
prosecuting
officer's
discretion
to
near
a
mango
tree
but
that
he
(appellant)
was
unable
to
recognize
his
determine
what
persons
appear
to
be
responsible
for
the
commission
of
attackers.
an
offense;
and
if
for
lack
of
knowledge
or
mistake
or
any
other
reason,
he
fails
to
include
the
names
of
one
or
more
criminal
signals
in
an
In
fine,
we
feel
that
the
evidence
on
hand
sufficiently
establishes
information,
such
persons
will
not
be
relieved
of
penal
liability;
nor
will
the
appellant's
guilt
beyond
reasonable
doubt.
accused
who
have
been
charged
with
the
offense,
be
permitted
to
escape
WHEREFORE,
the
judgment
of
conviction
must
be
upheld;
and
there
being
punishment
merely
because
it
develops
in
the
course
of
trial
that
there
no
question
as
to
the
penalty
imposed
upon
this
appellant,
the
appealed
were
other
guilty
participants
in
the
crime.3
decision
is
affirmed
in
toto
with
costs.
So
ordered.
Appellant
ascribes
unreasonableness
in
the
delay
between
the
supposed
Padilla,
Bautista
Angelo,
Labrador,
Concepcion,
Reyes,
J.B.L.,
Barrera,
commission
of
the
offense
in
1948
its
prosecution
in
1956.
It
appears,
Paredes,
Dizon,
Regala
and
Makalintal,
JJ.,
concur.
however,
that
the
silence
of
these
witnesses,
particularly
of
Martija,
Vera
and
Fausta
Mercado
was
satisfactorily
explained:
they
feared
Huk
reprisals.
Indeed,
before
these
witness
disclosed
the
facts
to
the
authorities,
dissident
bands
asking
for
"binalut"
or
wrappers
with
food
had
been
foraged
in
the
barrios
and
intimidating
the
residents.
The
security
of
the
life
in
the
barrio
is
illustrated
by
appellant's
claim
that
he
was
stabbed
and
left
for
dead
April
6,
1951
when
he
refused
to
give
his
firearm
to
persons.
Appellant
lastly
asserts
that
the
charge
against
him
was
trumped
up
and
the
witness'
testimonies
fabricated.
He
claims
that
he
was
stabbed
on
April
6,
1951
upon
orders
of
Mayor
Punzalan;
that
as
a
consequence,
he
filed
a
complaint
for
frustrated
murder
against
the
Mayor
a
his
five
henchmen;
and
for
his
refusal
to
withdraw
the
charge,
the
mayor
caused
the
instant
case
to
be
filed
against
him.
Appellant's
claim
lacks
merit.
His
written
statement
(Exh.
H,
p.
190,
11
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
G.R.
No.
L‐26278
August
4,
1927
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
LEON
SIBAL
,
plaintiff‐appellant,
vs.
EMILIANO
J.
VALDEZ
ET
AL.,
costs.
defendants.
EMILIANO
J.
VALDEZ,
appellee.
On
December
27,
1924,
the
court,
after
hearing
both
parties
and
upon
J.
E.
Blanco
for
appellant.
Felix
B.
Bautista
and
Santos
and
Benitez
for
approval
of
the
bond
for
P6,000
filed
by
the
plaintiff,
issued
the
writ
of
appellee.
preliminary
injunction
prayed
for
in
the
complaint.
JOHNSON,
J.:
The
defendant
Emiliano
J.
Valdez,
in
his
amended
answer,
denied
generally
The
action
was
commenced
in
the
Court
of
First
Instance
of
the
Province
of
and
specifically
each
and
every
allegation
of
the
complaint
and
step
up
the
Tarlac
on
the
14th
day
of
December
1924.
The
facts
are
about
as
following
defenses:
conflicting
as
it
is
possible
for
facts
to
be,
in
the
trial
causes.
(a)
That
the
sugar
cane
in
question
had
the
nature
of
personal
property
As
a
first
cause
of
action
the
plaintiff
alleged
that
the
defendant
Vitaliano
and
was
not,
therefore,
subject
to
redemption;
Mamawal,
deputy
sheriff
of
the
Province
of
Tarlac,
by
virtue
of
a
writ
of
(b)
That
he
was
the
owner
of
parcels
1,
2
and
7
described
in
the
first
cause
execution
issued
by
the
Court
of
First
Instance
of
Pampanga,
attached
and
of
action
of
the
complaint;
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
(c)
That
he
was
the
owner
of
the
palay
in
parcels
1,
2
and
7;
and
complaint
in
the
third
paragraph
of
the
first
cause
of
action;
that
within
(d)
That
he
never
attempted
to
harvest
the
palay
in
parcels
4
and
5.
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
The
defendant
Emiliano
J.
Valdez
by
way
of
counterclaim,
alleged
that
by
sufficient
to
cover
the
price
paid
by
the
latter,
the
interest
thereon
and
any
reason
of
the
preliminary
injunction
he
was
unable
to
gather
the
sugar
assessments
or
taxes
which
he
may
have
paid
thereon
after
the
purchase,
cane,
sugar‐cane
shoots
(puntas
de
cana
dulce)
palay
in
said
parcels
of
and
the
interest
corresponding
thereto
and
that
Valdez
refused
to
accept
land,
representing
a
loss
to
him
of
P8,375.20
and
that,
in
addition
thereto,
the
money
and
to
return
the
sugar
cane
to
the
plaintiff.
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
As
a
second
cause
of
action,
the
plaintiff
alleged
that
the
defendant
be
the
absolute
owner
of
the
sugar
cane
in
question
and
of
the
palay
in
Emiliano
J.
Valdez
was
attempting
to
harvest
the
palay
planted
in
four
of
parcels
1,
2
and
7;
and
(3)
ordering
the
plaintiff
to
pay
to
him
the
sum
of
the
seven
parcels
mentioned
in
the
first
cause
of
action;
that
he
had
P11,833.76,
representing
the
value
of
the
sugar
cane
and
palay
in
12
question,
including
damages.
Instance
of
Manila
(Macondray
&
Co.,
Inc.
vs.
Leon
Sibal),levied
an
attachment
on
eight
parcels
of
land
belonging
to
said
Leon
Sibal,
situated
Upon
the
issues
thus
presented
by
the
pleadings
the
cause
was
brought
on
in
the
Province
of
Tarlac,
designated
in
the
second
of
attachment
as
for
trial.
After
hearing
the
evidence,
and
on
April
28,
1926,
the
Honorable
parcels
1,
2,
3,
4,
5,
6,
7
and
8
(Exhibit
B,
Exhibit
2‐A).
Cayetano
Lukban,
judge,
rendered
a
judgment
against
the
plaintiff
and
in
favor
of
the
defendants
—
(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
(1)
Holding
that
the
sugar
cane
in
question
was
personal
property
and,
as
sum
to
P4,273.93,
having
paid
for
the
said
parcels
separately
as
follows
such,
was
not
subject
to
redemption;
(Exhibit
C,
and
2‐A):
(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
Parcel
Emiliano
J.
Valdez
the
sum
of
P9,439.08
as
follows:
1
.....................................................................
P1.00
(a)
P6,757.40,
the
value
of
the
sugar
cane;
(b)
1,435.68,
the
value
of
the
sugar‐cane
shoots;
2
.....................................................................
2,000.00
(c)
646.00,
the
value
of
palay
harvested
by
plaintiff;
3
.....................................................................
120.93
(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
4
.....................................................................
1,000.00
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
5
.....................................................................
1.00
was
personal
property
and,
therefore,
not
subject
to
redemption;
6
.....................................................................
1.00
(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;
7
with
the
house
thereon
..........................
150.00
(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);
8
.....................................................................
1,000.00
(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.
4,273.93
(5)
In
condemning
the
plaintiff
and
his
sureties
to
pay
to
the
defendant
the
(3)
That
within
one
year
from
the
sale
of
said
parcel
of
land,
and
on
the
sum
of
P9,439.08.
24th
day
of
September,
1923,
the
judgment
debtor,
Leon
Sibal,
paid
It
appears
from
the
record:
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
(1)
That
on
May
11,
1923,
the
deputy
sheriff
of
the
Province
of
Tarlac,
by
said
amount
was
to
applied.
The
redemption
price
said
eight
parcels
was
virtue
of
writ
of
execution
in
civil
case
No.
20203
of
the
Court
of
First
reduced,
by
virtue
of
said
transaction,
to
P2,579.97
including
interest
13
(Exhibit
C
and
2).
The
foregoing
statement
of
facts
shows:
The
record
further
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
(1)
That
on
April
29,
1924,
the
defendant
Vitaliano
Mamawal,
deputy
at
public
auction
on
May
9
and
10,
1924,
for
P600.
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
(2)
That
on
July
30,
1923,
Macondray
&
Co.
became
the
owner
of
eight
—
the
same
parties
in
the
present
case),
attached
the
personal
property
of
parcels
of
land
situated
in
the
Province
of
Tarlac
belonging
to
Leon
Sibal
said
Leon
Sibal
located
in
Tarlac,
among
which
was
included
the
sugar
cane
and
that
on
September
24,
1923,
Leon
Sibal
paid
to
Macondray
&
Co.
now
in
question
in
the
seven
parcels
of
land
described
in
the
complaint
P2,000
for
the
account
of
the
redemption
price
of
said
parcels.
(Exhibit
A).
(3)
That
on
June
25,
1924,
Emilio
J.
Valdez
acquired
from
Macondray
&
Co.
(2)
That
on
May
9
and
10,
1924,
said
deputy
sheriff
sold
at
public
auction
all
of
its
rights
and
interest
in
the
said
eight
parcels
of
land.
said
personal
properties
of
Leon
Sibal,
including
the
sugar
cane
in
question
(4)
That
on
June
25,
1924,
Emilio
J.
Valdez
also
acquired
all
of
the
rights
to
Emilio
J.
Valdez,
who
paid
therefor
the
sum
of
P1,550,
of
which
P600
and
interest
which
Leon
Sibal
had
or
might
have
had
on
said
eight
parcels
was
for
the
sugar
cane
(Exhibit
A).
by
virtue
of
the
P2,000
paid
by
the
latter
to
Macondray.
(3)
That
on
April
29,1924,
said
deputy
sheriff,
by
virtue
of
said
writ
of
(5)
That
Emilio
J.
Valdez
became
the
absolute
owner
of
said
eight
parcels
execution,
also
attached
the
real
property
of
said
Leon
Sibal
in
Tarlac,
of
land.
including
all
of
his
rights,
interest
and
participation
therein,
which
real
property
consisted
of
eleven
parcels
of
land
and
a
house
and
camarin
The
first
question
raised
by
the
appeal
is,
whether
the
sugar
cane
in
situated
in
one
of
said
parcels
(Exhibit
A).
question
is
personal
or
real
property.
It
is
contended
that
sugar
cane
comes
under
the
classification
of
real
property
as
"ungathered
products"
(4)
That
on
June
25,
1924,
eight
of
said
eleven
parcels,
including
the
house
in
paragraph
2
of
article
334
of
the
Civil
Code.
Said
paragraph
2
of
article
and
the
camarin,
were
bought
by
Emilio
J.
Valdez
at
the
auction
held
by
334
enumerates
as
real
property
the
following:
Trees,
plants,
and
the
sheriff
for
the
sum
of
P12,200.
Said
eight
parcels
were
designated
in
ungathered
products,
while
they
are
annexed
to
the
land
or
form
an
the
certificate
of
sale
as
parcels
1,
3,
4,
5,
6,
7,
10
and
11.
The
house
and
integral
part
of
any
immovable
property."
That
article,
however,
has
camarin
were
situated
on
parcel
7
(Exhibit
A).
received
in
recent
years
an
interpretation
by
the
Tribunal
Supremo
de
(5)
That
the
remaining
three
parcels,
indicated
in
the
certificate
of
the
España,
which
holds
that,
under
certain
conditions,
growing
crops
may
be
sheriff
as
parcels
2,
12,
and
13,
were
released
from
the
attachment
by
considered
as
personal
property.
(Decision
of
March
18,
1904,
vol.
97,
Civil
virtue
of
claims
presented
by
Agustin
Cuyugan
and
Domiciano
Tizon
Jurisprudence
of
Spain.)
(Exhibit
A).
Manresa,
the
eminent
commentator
of
the
Spanish
Civil
Code,
in
(6)
That
on
the
same
date,
June
25,
1924,
Macondray
&
Co.
sold
and
discussing
section
334
of
the
Civil
Code,
in
view
of
the
recent
decisions
of
conveyed
to
Emilio
J.
Valdez
for
P2,579.97
all
of
its
rights
and
interest
in
the
supreme
Court
of
Spain,
admits
that
growing
crops
are
sometimes
the
eight
parcels
of
land
acquired
by
it
at
public
auction
held
by
the
deputy
considered
and
treated
as
personal
property.
He
says:
sheriff
of
Tarlac
in
connection
with
civil
case
No.
20203
of
the
Court
of
First
No
creemos,
sin
embargo,
que
esto
excluya
la
excepcionque
muchos
Instance
of
Manila,
as
stated
above.
Said
amount
represented
the
unpaid
autores
hacen
tocante
a
la
venta
de
toda
cosecha
o
de
parte
de
ella
balance
of
the
redemption
price
of
said
eight
parcels,
after
payment
by
cuando
aun
no
esta
cogida
(cosa
frecuente
con
la
uvay
y
la
naranja),
y
a
la
Leon
Sibal
of
P2,000
on
September
24,
1923,
fro
the
account
of
the
de
lenas,
considerando
ambas
como
muebles.
El
Tribunal
Supremo,
en
redemption
price,
as
stated
above.
(Exhibit
C
and
2).
sentencia
de
18
de
marzo
de
1904,
al
entender
sobre
un
contrato
de
14
arrendamiento
de
un
predio
rustico,
resuelve
que
su
terminacion
por
Tax
Collector
(106
La.,
418)
the
Supreme
Court
said:
"True,
by
article
465
of
desahucio
no
extingue
los
derechos
del
arrendario,
para
recolectar
o
the
Civil
Code
it
is
provided
that
'standing
crops
and
the
fruits
of
trees
not
percibir
los
frutos
correspondientes
al
año
agricola,
dentro
del
que
gathered
and
trees
before
they
are
cut
down
.
.
.
are
considered
as
part
of
nacieron
aquellos
derechos,
cuando
el
arrendor
ha
percibido
a
su
vez
el
the
land
to
which
they
are
attached,
but
the
immovability
provided
for
is
importe
de
la
renta
integra
correspondiente,
aun
cuando
lo
haya
sido
por
only
one
in
abstracto
and
without
reference
to
rights
on
or
to
the
crop
precepto
legal
durante
el
curso
del
juicio,
fundandose
para
ello,
no
solo
en
acquired
by
others
than
the
owners
of
the
property
to
which
the
crop
is
que
de
otra
suerte
se
daria
al
desahucio
un
alcance
que
no
tiene,
sino
en
attached.
.
.
.
The
existence
of
a
right
on
the
growing
crop
is
a
mobilization
que,
y
esto
es
lo
interesante
a
nuestro
proposito,
la
consideracion
de
by
anticipation,
a
gathering
as
it
were
in
advance,
rendering
the
crop
inmuebles
que
el
articulo
334
del
Codigo
Civil
atribuge
a
los
frutos
movable
quoad
the
right
acquired
therein.
Our
jurisprudence
recognizes
pendientes,
no
les
priva
del
caracter
de
productos
pertenecientes,
como
the
possible
mobilization
of
the
growing
crop."
(Citizens'
Bank
vs.
Wiltz,
31
tales,
a
quienes
a
ellos
tenga
derecho,
Ilegado
el
momento
de
su
La.
Ann.,
244;
Porche
vs.
Bodin,
28
La.,
Ann.,
761;
Sandel
vs.
Douglass,
27
recoleccion.
La.
Ann.,
629;
Lewis
vs.
Klotz,
39
La.
Ann.,
267.)
x
x
x
x
x
x
x
x
x
"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
Mas
actualmente
y
por
virtud
de
la
nueva
edicion
de
la
Ley
Hipotecaria,
standing
crops
are
considered
as
immovable
and
as
part
of
the
land
to
publicada
en
16
de
diciembre
de
1909,
con
las
reformas
introducidas
por
la
which
they
are
attached,
and
article
466
declares
that
the
fruits
of
an
de
21
de
abril
anterior,
la
hipoteca,
salvo
pacto
expreso
que
disponga
lo
immovable
gathered
or
produced
while
it
is
under
seizure
are
considered
contrario,
y
cualquiera
que
sea
la
naturaleza
y
forma
de
la
obligacion
que
as
making
part
thereof,
and
incurred
to
the
benefit
of
the
person
making
garantice,
no
comprende
los
frutos
cualquiera
que
sea
la
situacion
en
que
the
seizure.
But
the
evident
meaning
of
these
articles,
is
where
the
crops
se
encuentre.
(3
Manresa,
5.
edicion,
pags.
22,
23.)
belong
to
the
owner
of
the
plantation
they
form
part
of
the
immovable,
From
the
foregoing
it
appears
(1)
that,
under
Spanish
authorities,
pending
and
where
it
is
seized,
the
fruits
gathered
or
produced
inure
to
the
benefit
fruits
and
ungathered
products
may
be
sold
and
transferred
as
personal
of
the
seizing
creditor.
property;
(2)
that
the
Supreme
Court
of
Spain,
in
a
case
of
ejectment
of
a
A
crop
raised
on
leased
premises
in
no
sense
forms
part
of
the
immovable.
lessee
of
an
agricultural
land,
held
that
the
lessee
was
entitled
to
gather
It
belongs
to
the
lessee,
and
may
be
sold
by
him,
whether
it
be
gathered
or
the
products
corresponding
to
the
agricultural
year,
because
said
fruits
did
not,
and
it
may
be
sold
by
his
judgment
creditors.
If
it
necessarily
forms
not
go
with
the
land
but
belonged
separately
to
the
lessee;
and
(3)
that
part
of
the
leased
premises
the
result
would
be
that
it
could
not
be
sold
under
the
Spanish
Mortgage
Law
of
1909,
as
amended,
the
mortgage
of
a
under
execution
separate
and
apart
from
the
land.
If
a
lessee
obtain
piece
of
land
does
not
include
the
fruits
and
products
existing
thereon,
supplies
to
make
his
crop,
the
factor's
lien
would
not
attach
to
the
crop
as
unless
the
contract
expressly
provides
otherwise.
a
separate
thing
belonging
to
his
debtor,
but
the
land
belonging
to
the
An
examination
of
the
decisions
of
the
Supreme
Court
of
Louisiana
may
lessor
would
be
affected
with
the
recorded
privilege.
The
law
cannot
be
give
us
some
light
on
the
question
which
we
are
discussing.
Article
465
of
construed
so
as
to
result
in
such
absurd
consequences.
the
Civil
Code
of
Louisiana,
which
corresponds
to
paragraph
2
of
article
In
the
case
of
Citizen's
Bank
vs.
Wiltz
(31
La.
Ann.,
244)the
court
said:
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
If
the
crop
quoad
the
pledge
thereof
under
the
act
of
1874
was
an
are
considered
as
part
of
the
land
to
which
they
are
attached."
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
The
Supreme
Court
of
Louisiana
having
occasion
to
interpret
that
of
the
crop
impossible,
for
if
the
crop
was
an
inseparable
part
of
the
realty
provision,
held
that
in
some
cases
"standing
crops"
may
be
considered
and
possession
of
the
latter
would
be
necessary
to
that
of
the
former;
but
such
dealt
with
as
personal
property.
In
the
case
of
Lumber
Co.
vs.
Sheriff
and
15
is
not
the
case.
True,
by
article
465
C.
C.
it
is
provided
that
"standing
crops
the
coming
year;
or
the
wool
that
shall
thereafter
grow
upon
sheep;
or
and
the
fruits
of
trees
not
gathered
and
trees
before
they
are
cut
down
are
what
may
be
taken
at
the
next
cast
of
a
fisherman's
net;
or
fruits
to
grow;
likewise
immovable
and
are
considered
as
part
of
the
land
to
which
they
or
young
animals
not
yet
in
existence;
or
the
good
will
of
a
trade
and
the
are
attached;"
but
the
immovability
provided
for
is
only
one
in
abstracto
like.
The
thing
sold,
however,
must
be
specific
and
identified.
They
must
be
and
without
reference
to
rights
on
or
to
the
crop
acquired
by
other
than
also
owned
at
the
time
by
the
vendor.
(Hull
vs.
Hull,
48
Conn.,
250
[40
Am.
the
owners
of
the
property
to
which
the
crop
was
attached.
The
Rep.,
165].)
immovability
of
a
growing
crop
is
in
the
order
of
things
temporary,
for
the
It
is
contended
on
the
part
of
the
appellee
that
paragraph
2
of
article
334
crop
passes
from
the
state
of
a
growing
to
that
of
a
gathered
one,
from
an
of
the
Civil
Code
has
been
modified
by
section
450
of
the
Code
of
Civil
immovable
to
a
movable.
The
existence
of
a
right
on
the
growing
crop
is
a
Procedure
as
well
as
by
Act
No.
1508,
the
Chattel
Mortgage
Law.
Said
mobilization
by
anticipation,
a
gathering
as
it
were
in
advance,
rendering
section
450
enumerates
the
property
of
a
judgment
debtor
which
may
be
the
crop
movable
quoad
the
right
acquired
thereon.
The
provision
of
our
subjected
to
execution.
The
pertinent
portion
of
said
section
reads
as
Code
is
identical
with
the
Napoleon
Code
520,
and
we
may
therefore
follows:
"All
goods,
chattels,
moneys,
and
other
property,
both
real
and
obtain
light
by
an
examination
of
the
jurisprudence
of
France.
personal,
*
*
*
shall
be
liable
to
execution.
Said
section
450
and
most
of
The
rule
above
announced,
not
only
by
the
Tribunal
Supremo
de
España
the
other
sections
of
the
Code
of
Civil
Procedure
relating
to
the
execution
but
by
the
Supreme
Court
of
Louisiana,
is
followed
in
practically
every
of
judgment
were
taken
from
the
Code
of
Civil
Procedure
of
California.
The
state
of
the
Union.
Supreme
Court
of
California,
under
section
688
of
the
Code
of
Civil
Procedure
of
that
state
(Pomeroy,
p.
424)
has
held,
without
variation,
that
From
an
examination
of
the
reports
and
codes
of
the
State
of
California
growing
crops
were
personal
property
and
subject
to
execution.
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,
Act
No.
1508,
the
Chattel
Mortgage
Law,
fully
recognized
that
growing
that
growing
crops
raised
by
yearly
labor
and
cultivation
are
considered
crops
are
personal
property.
Section
2
of
said
Act
provides:
"All
personal
personal
property.
(6
Corpuz
Juris,
p.
197;
17
Corpus
Juris,
p.
379;
23
property
shall
be
subject
to
mortgage,
agreeably
to
the
provisions
of
this
Corpus
Juris,
p.
329:
Raventas
vs.
Green,
57
Cal.,
254;
Norris
vs.
Watson,
55
Act,
and
a
mortgage
executed
in
pursuance
thereof
shall
be
termed
a
Am.
Dec.,
161;
Whipple
vs.
Foot,
3
Am.
Dec.,
442;
1
Benjamin
on
Sales,
sec.
chattel
mortgage."
Section
7
in
part
provides:
"If
growing
crops
be
126;
McKenzie
vs.
Lampley,
31
Ala.,
526;
Crine
vs.
Tifts
and
Co.,
65
Ga.,
mortgaged
the
mortgage
may
contain
an
agreement
stipulating
that
the
644;
Gillitt
vs.
Truax,
27
Minn.,
528;
Preston
vs.
Ryan,
45
Mich.,
174;
mortgagor
binds
himself
properly
to
tend,
care
for
and
protect
the
crop
Freeman
on
Execution,
vol.
1,
p.
438;
Drake
on
Attachment,
sec.
249;
while
growing.
Mechem
on
Sales,
sec.
200
and
763.)
It
is
clear
from
the
foregoing
provisions
that
Act
No.
1508
was
enacted
on
Mr.
Mechem
says
that
a
valid
sale
may
be
made
of
a
thing,
which
though
the
assumption
that
"growing
crops"
are
personal
property.
This
not
yet
actually
in
existence,
is
reasonably
certain
to
come
into
existence
consideration
tends
to
support
the
conclusion
hereinbefore
stated,
that
as
the
natural
increment
or
usual
incident
of
something
already
in
paragraph
2
of
article
334
of
the
Civil
Code
has
been
modified
by
section
existence,
and
then
belonging
to
the
vendor,
and
then
title
will
vest
in
the
450
of
Act
No.
190
and
by
Act
No.
1508
in
the
sense
that
"ungathered
buyer
the
moment
the
thing
comes
into
existence.
(Emerson
vs.
European
products"
as
mentioned
in
said
article
of
the
Civil
Code
have
the
nature
of
Railway
Co.,
67
Me.,
387;
Cutting
vs.
Packers
Exchange,
21
Am.
St.
Rep.,
personal
property.
In
other
words,
the
phrase
"personal
property"
should
63.)
Things
of
this
nature
are
said
to
have
a
potential
existence.
A
man
may
be
understood
to
include
"ungathered
products."
sell
property
of
which
he
is
potentially
and
not
actually
possessed.
He
may
At
common
law,
and
generally
in
the
United
States,
all
annual
crops
which
make
a
valid
sale
of
the
wine
that
a
vineyard
is
expected
to
produce;
or
the
are
raised
by
yearly
manurance
and
labor,
and
essentially
owe
their
annual
gain
a
field
may
grow
in
a
given
time;
or
the
milk
a
cow
may
yield
during
existence
to
cultivation
by
man,
.
may
be
levied
on
as
personal
property."
16
(23
C.
J.,
p.
329.)
On
this
question
Freeman,
in
his
treatise
on
the
Law
of
hectareas
de
superficie
poco
mas
o
menos."
The
description
of
parcel
2
Executions,
says:
"Crops,
whether
growing
or
standing
in
the
field
ready
to
given
in
the
certificate
of
sale
(Exhibit
A)
is
as
follows:
be
harvested,
are,
when
produced
by
annual
cultivation,
no
part
of
the
2a.
Terreno
palayero
situado
en
Culubasa,
Bamban,
Tarlac,
de
177,090
realty.
They
are,
therefore,
liable
to
voluntary
transfer
as
chattels.
It
is
metros
cuadrados
de
superficie,
linda
al
N.
con
Canuto
Sibal,
Esteban
equally
well
settled
that
they
may
be
seized
and
sold
under
execution.
Lazatin
and
Alejandro
Dayrit;
al
E.
con
Francisco
Dizon,
Felipe
Mañu
and
(Freeman
on
Executions,
vol.
p.
438.)
others;
al
S.
con
Alejandro
Dayrit,
Isidro
Santos
and
Melecio
Mañu;
y
al
O.
We
may,
therefore,
conclude
that
paragraph
2
of
article
334
of
the
Civil
con
Alejandro
Dayrit
and
Paulino
Vergara.
Tax
No.
2854,
vador
amillarado
Code
has
been
modified
by
section
450
of
the
Code
of
Civil
Procedure
and
P4,200
pesos.
by
Act
No.
1508,
in
the
sense
that,
for
the
purpose
of
attachment
and
On
the
other
hand
the
evidence
for
the
defendant
purported
to
show
that
execution,
and
for
the
purposes
of
the
Chattel
Mortgage
Law,
"ungathered
parcels
1
and
2
of
the
complaint
were
included
among
the
parcels
bought
products"
have
the
nature
of
personal
property.
The
lower
court,
by
Valdez
from
Macondray
on
June
25,
1924,
and
corresponded
to
parcel
4
therefore,
committed
no
error
in
holding
that
the
sugar
cane
in
question
in
the
deed
of
sale
(Exhibit
B
and
2),
and
were
also
included
among
the
was
personal
property
and,
as
such,
was
not
subject
to
redemption.
parcels
bought
by
Valdez
at
the
auction
of
the
real
property
of
Leon
Sibal
All
the
other
assignments
of
error
made
by
the
appellant,
as
above
stated,
on
June
25,
1924,
and
corresponded
to
parcel
3
in
the
certificate
of
sale
relate
to
questions
of
fact
only.
Before
entering
upon
a
discussion
of
said
made
by
the
sheriff
(Exhibit
A).
The
description
of
parcel
4
(Exhibit
2)
and
assignments
of
error,
we
deem
it
opportune
to
take
special
notice
of
the
parcel
3
(Exhibit
A)
is
as
follows:
failure
of
the
plaintiff
to
appear
at
the
trial
during
the
presentation
of
Parcels
No.
4.
—
Terreno
palayero,
ubicado
en
el
barrio
de
evidence
by
the
defendant.
His
absence
from
the
trial
and
his
failure
to
Culubasa,Bamban,
Tarlac,
I.
F.
de
145,000
metros
cuadrados
de
superficie,
cross‐examine
the
defendant
have
lent
considerable
weight
to
the
lindante
al
Norte
con
Road
of
the
barrio
of
Culubasa
that
goes
to
evidence
then
presented
for
the
defense.
Concepcion;
al
Este
con
Juan
Dizon;
al
Sur
con
Lucio
Maño
y
Canuto
Sibal
y
Coming
not
to
the
ownership
of
parcels
1
and
2
described
in
the
first
cause
al
Oeste
con
Esteban
Lazatin,
su
valor
amillarado
asciende
a
la
suma
de
of
action
of
the
complaint,
the
plaintiff
made
a
futile
attempt
to
show
that
P2,990.
Tax
No.
2856.
said
two
parcels
belonged
to
Agustin
Cuyugan
and
were
the
identical
As
will
be
noticed,
there
is
hardly
any
relation
between
parcels
1
and
2
of
parcel
2
which
was
excluded
from
the
attachment
and
sale
of
real
property
the
complaint
and
parcel
4
(Exhibit
2
and
B)
and
parcel
3
(Exhibit
A).
But,
of
Sibal
to
Valdez
on
June
25,
1924,
as
stated
above.
A
comparison
of
the
inasmuch
as
the
plaintiff
did
not
care
to
appear
at
the
trial
when
the
description
of
parcel
2
in
the
certificate
of
sale
by
the
sheriff
(Exhibit
A)
defendant
offered
his
evidence,
we
are
inclined
to
give
more
weight
to
the
and
the
description
of
parcels
1
and
2
of
the
complaint
will
readily
show
evidence
adduced
by
him
that
to
the
evidence
adduced
by
the
plaintiff,
that
they
are
not
the
same.
with
respect
to
the
ownership
of
parcels
1
and
2
of
the
compliant.
We,
The
description
of
the
parcels
in
the
complaint
is
as
follows:
therefore,
conclude
that
parcels
1
and
2
of
the
complaint
belong
to
the
defendant,
having
acquired
the
same
from
Macondray
&
Co.
on
June
25,
1.
La
caña
dulce
sembrada
por
los
inquilinos
del
ejecutado
Leon
Sibal
1.º
1924,
and
from
the
plaintiff
Leon
Sibal
on
the
same
date.
en
una
parcela
de
terreno
de
la
pertenencia
del
citado
ejecutado,
situada
en
Libutad,
Culubasa,
Bamban,
Tarlac,
de
unas
dos
hectareas
poco
mas
o
It
appears,
however,
that
the
plaintiff
planted
the
palay
in
said
parcels
and
menos
de
superficie.
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
2.
La
caña
dulce
sembrada
por
el
inquilino
del
ejecutado
Leon
Sibal
1.º,
should
therefore
be
condemned
to
pay
to
the
defendant
for
95
cavans
Ilamado
Alejandro
Policarpio,
en
una
parcela
de
terreno
de
la
pertenencia
only,
at
P3.40
a
cavan,
or
the
sum
of
P323,
and
not
for
the
total
of
190
del
ejecutado,
situada
en
Dalayap,
Culubasa,
Bamban,
Tarlac
de
unas
dos
cavans
as
held
by
the
lower
court.
17
As
to
the
ownership
of
parcel
7
of
the
complaint,
the
evidence
shows
that
sugar‐cane
shoots
(puntas
de
cana)
and
not
1,170,000
as
computed
by
the
said
parcel
corresponds
to
parcel
1
of
the
deed
of
sale
of
Macondray
&
Co,
lower
court.
During
the
season
the
shoots
were
selling
at
P1.20
a
thousand
to
Valdez
(Exhibit
B
and
2),
and
to
parcel
4
in
the
certificate
of
sale
to
(Exhibits
6
and
7).
The
defendant
therefore
would
have
netted
P1,220.40
Valdez
of
real
property
belonging
to
Sibal,
executed
by
the
sheriff
as
above
from
sugar‐cane
shoots
and
not
P1,435.68
as
allowed
by
the
lower
court.
stated
(Exhibit
A).
Valdez
is
therefore
the
absolute
owner
of
said
parcel,
As
to
the
palay
harvested
by
the
plaintiff
in
parcels
1
and
2
of
the
having
acquired
the
interest
of
both
Macondray
and
Sibal
in
said
parcel.
complaint,
amounting
to
190
cavans,
one‐half
of
said
quantity
should
With
reference
to
the
parcel
of
land
in
Pacalcal,
Tarlac,
described
in
belong
to
the
plaintiff,
as
stated
above,
and
the
other
half
to
the
paragraph
3
of
the
second
cause
of
action,
it
appears
from
the
testimony
defendant.
The
court
erred
in
awarding
the
whole
crop
to
the
defendant.
of
the
plaintiff
himself
that
said
parcel
corresponds
to
parcel
8
of
the
deed
The
plaintiff
should
therefore
pay
the
defendant
for
95
cavans
only,
at
of
sale
of
Macondray
to
Valdez
(Exhibit
B
and
2)
and
to
parcel
10
in
the
P3.40
a
cavan,
or
P323
instead
of
P646
as
allowed
by
the
lower
court.
deed
of
sale
executed
by
the
sheriff
in
favor
of
Valdez
(Exhibit
A).
Valdez
is
The
evidence
also
shows
that
the
defendant
was
prevented
by
the
acts
of
therefore
the
absolute
owner
of
said
parcel,
having
acquired
the
interest
the
plaintiff
from
cultivating
about
10
hectares
of
the
land
involved
in
the
of
both
Macondray
and
Sibal
therein.
litigation.
He
expected
to
have
raised
about
600
cavans
of
palay,
300
In
this
connection
the
following
facts
are
worthy
of
mention:
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
Execution
in
favor
of
Macondray
&
Co.,
May
11,
1923.
Eight
parcels
of
land
palay
would
have
netted
him
P600.
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
In
view
of
the
foregoing,
the
judgment
appealed
from
is
hereby
modified.
September
24,
1923,
Leon
Sibal
paid
to
Macondray
&
Co.
P2,000
on
the
The
plaintiff
and
his
sureties
Cenon
de
la
Cruz,
Juan
Sangalang
and
Marcos
redemption
of
said
parcels
of
land.
(See
Exhibits
B
and
C
).
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
Attachment,
April
29,
1924,
in
favor
of
Valdez.
Personal
property
of
Sibal
follows:
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.
P6,757.40
for
the
sugar
cane;
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
1,220.40
for
the
sugar
cane
shoots;
purchased
by
Valdez
(Exhibit
A).
June
25,
1924,
Macondray
&
Co.
sold
all
of
the
land
which
they
had
323.00
for
the
palay
harvested
by
plaintiff
in
parcels
1
and
2;
purchased
at
public
auction
on
the
30th
day
of
July,
1923,
to
Valdez.
600.00
for
the
palay
which
defendant
could
have
raised.
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
8,900.80
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
In
all
other
respects,
the
judgment
appealed
from
is
hereby
affirmed,
with
netted
P
6,757.40
from
the
sugar
cane
in
question.
The
evidence
also
costs.
So
ordered.
shows
that
the
defendant
could
have
taken
from
the
sugar
cane
1,017,000
Street,
Malcolm,
Villamor,
Romualdez
and
Villa‐Real.,
JJ.,
concur.
18
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
G.R.
No.
L‐15334
January
31,
1964
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
BOARD
OF
ASSESSMENT
APPEALS,
CITY
ASSESSOR
and
CITY
TREASURER
stone
underneath;
as
the
bottom
of
the
excavation
was
covered
with
OF
QUEZON
CITY,
petitioners,
vs.
MANILA
ELECTRIC
COMPANY,
water
about
three
inches
high,
it
could
not
be
determined
with
certainty
to
respondent.
whether
said
adobe
stone
was
placed
purposely
or
not,
as
the
place
Assistant
City
Attorney
Jaime
R.
Agloro
for
petitioners.
Ross,
Selph
and
abounds
with
this
kind
of
stone;
and
the
tower
carried
five
high
voltage
Carrascoso
for
respondent.
wires
without
cover
or
any
insulating
materials.
PAREDES,
J.:
The
second
tower
inspected
was
located
in
Kamuning
Road,
K‐F,
Quezon
City,
on
land
owned
by
the
petitioner
approximate
more
than
one
From
the
stipulation
of
facts
and
evidence
adduced
during
the
hearing,
the
kilometer
from
the
first
tower.
As
in
the
first
tower,
the
ground
around
following
appear:
one
of
the
four
legs
was
excavate
from
seven
to
eight
(8)
feet
deep
and
On
October
20,
1902,
the
Philippine
Commission
enacted
Act
No.
484
one
and
a
half
(1‐½)
meters
wide.
There
being
very
little
water
at
the
which
authorized
the
Municipal
Board
of
Manila
to
grant
a
franchise
to
bottom,
it
was
seen
that
there
was
no
concrete
foundation,
but
there
soft
construct,
maintain
and
operate
an
electric
street
railway
and
electric
light,
adobe
beneath.
The
leg
was
likewise
provided
with
two
parallel
steel
bars
heat
and
power
system
in
the
City
of
Manila
and
its
suburbs
to
the
person
bolted
to
a
square
metal
frame
also
bolted
to
each
corner.
Like
the
first
or
persons
making
the
most
favorable
bid.
Charles
M.
Swift
was
awarded
one,
the
second
tower
is
made
up
of
metal
rods
joined
together
by
means
the
said
franchise
on
March
1903,
the
terms
and
conditions
of
which
were
of
bolts,
so
that
by
unscrewing
the
bolts,
the
tower
could
be
dismantled
embodied
in
Ordinance
No.
44
approved
on
March
24,
1903.
Respondent
and
reassembled.
Manila
Electric
Co.
(Meralco
for
short),
became
the
transferee
and
owner
The
third
tower
examined
is
located
along
Kamias
Road,
Quezon
City.
As
in
of
the
franchise.
19
the
first
two
towers
given
above,
the
ground
around
the
two
legs
of
the
taxes
and
assessments
the
grantee
is
hereby
expressly
exempted.
(Par.
9,
third
tower
was
excavated
to
a
depth
about
two
or
three
inches
beyond
Part
Two,
Act
No.
484
Respondent's
Franchise;
emphasis
supplied.)
the
outside
level
of
the
steel
bar
foundation.
It
was
found
that
there
was
The
word
"pole"
means
"a
long,
comparatively
slender
usually
cylindrical
no
concrete
foundation.
Like
the
two
previous
ones,
the
bottom
piece
of
wood
or
timber,
as
typically
the
stem
of
a
small
tree
stripped
of
its
arrangement
of
the
legs
thereof
were
found
to
be
resting
on
soft
adobe,
branches;
also
by
extension,
a
similar
typically
cylindrical
piece
or
object
of
which,
probably
due
to
high
humidity,
looks
like
mud
or
clay.
It
was
also
metal
or
the
like".
The
term
also
refers
to
"an
upright
standard
to
the
top
found
that
the
square
metal
frame
supporting
the
legs
were
not
attached
of
which
something
is
affixed
or
by
which
something
is
supported;
as
a
to
any
material
or
foundation.
dovecote
set
on
a
pole;
telegraph
poles;
a
tent
pole;
sometimes,
On
November
15,
1955,
petitioner
City
Assessor
of
Quezon
City
declared
specifically
a
vessel's
master
(Webster's
New
International
Dictionary
2nd
the
aforesaid
steel
towers
for
real
property
tax
under
Tax
declaration
Nos.
Ed.,
p.
1907.)
Along
the
streets,
in
the
City
of
Manila,
may
be
seen
31992
and
15549.
After
denying
respondent's
petition
to
cancel
these
cylindrical
metal
poles,
cubical
concrete
poles,
and
poles
of
the
PLDT
Co.
declarations,
an
appeal
was
taken
by
respondent
to
the
Board
of
which
are
made
of
two
steel
bars
joined
together
by
an
interlacing
metal
Assessment
Appeals
of
Quezon
City,
which
required
respondent
to
pay
the
rod.
They
are
called
"poles"
notwithstanding
the
fact
that
they
are
no
amount
of
P11,651.86
as
real
property
tax
on
the
said
steel
towers
for
the
made
of
wood.
It
must
be
noted
from
paragraph
9,
above
quoted,
that
the
years
1952
to
1956.
Respondent
paid
the
amount
under
protest,
and
filed
concept
of
the
"poles"
for
which
exemption
is
granted,
is
not
determined
a
petition
for
review
in
the
Court
of
Tax
Appeals
(CTA
for
short)
which
by
their
place
or
location,
nor
by
the
character
of
the
electric
current
it
rendered
a
decision
on
December
29,
1958,
ordering
the
cancellation
of
carries,
nor
the
material
or
form
of
which
it
is
made,
but
the
use
to
which
the
said
tax
declarations
and
the
petitioner
City
Treasurer
of
Quezon
City
they
are
dedicated.
In
accordance
with
the
definitions,
pole
is
not
to
refund
to
the
respondent
the
sum
of
P11,651.86.
The
motion
for
restricted
to
a
long
cylindrical
piece
of
wood
or
metal,
but
includes
reconsideration
having
been
denied,
on
April
22,
1959,
the
instant
petition
"upright
standards
to
the
top
of
which
something
is
affixed
or
by
which
for
review
was
filed.
something
is
supported.
As
heretofore
described,
respondent's
steel
supports
consists
of
a
framework
of
four
steel
bars
or
strips
which
are
In
upholding
the
cause
of
respondents,
the
CTA
held
that:
(1)
the
steel
bound
by
steel
cross‐arms
atop
of
which
are
cross‐arms
supporting
five
towers
come
within
the
term
"poles"
which
are
declared
exempt
from
high
voltage
transmission
wires
(See
Annex
A)
and
their
sole
function
is
to
taxes
under
part
II
paragraph
9
of
respondent's
franchise;
(2)
the
steel
support
or
carry
such
wires.
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
The
conclusion
of
the
CTA
that
the
steel
supports
in
question
are
of
the
amount
paid.
These
are
assigned
as
errors
by
the
petitioner
in
the
embraced
in
the
term
"poles"
is
not
a
novelty.
Several
courts
of
last
resort
brief.
in
the
United
States
have
called
these
steel
supports
"steel
towers",
and
they
denominated
these
supports
or
towers,
as
electric
poles.
In
their
The
tax
exemption
privilege
of
the
petitioner
is
quoted
hereunder:
decisions
the
words
"towers"
and
"poles"
were
used
interchangeably,
and
PAR
9.
The
grantee
shall
be
liable
to
pay
the
same
taxes
upon
its
real
it
is
well
understood
in
that
jurisdiction
that
a
transmission
tower
or
pole
estate,
buildings,
plant
(not
including
poles,
wires,
transformers,
and
means
the
same
thing.
insulators),
machinery
and
personal
property
as
other
persons
are
or
may
In
a
proceeding
to
condemn
land
for
the
use
of
electric
power
wires,
in
be
hereafter
required
by
law
to
pay
...
Said
percentage
shall
be
due
and
which
the
law
provided
that
wires
shall
be
constructed
upon
suitable
payable
at
the
time
stated
in
paragraph
nineteen
of
Part
One
hereof,
...
poles,
this
term
was
construed
to
mean
either
wood
or
metal
poles
and
in
and
shall
be
in
lieu
of
all
taxes
and
assessments
of
whatsoever
nature
and
view
of
the
land
being
subject
to
overflow,
and
the
necessary
carrying
of
by
whatsoever
authority
upon
the
privileges,
earnings,
income,
franchise,
numerous
wires
and
the
distance
between
poles,
the
statute
was
and
poles,
wires,
transformers,
and
insulators
of
the
grantee
from
which
20
interpreted
to
include
towers
or
poles.
(Stemmons
and
Dallas
Light
Co.
and
narrow
interpretation,
as
to
defeat
the
very
object
for
which
the
(Tex)
212
S.W.
222,
224;
32‐A
Words
and
Phrases,
p.
365.)
franchise
was
granted.
The
poles
as
contemplated
thereon,
should
be
understood
and
taken
as
a
part
of
the
electric
power
system
of
the
The
term
"poles"
was
also
used
to
denominate
the
steel
supports
or
respondent
Meralco,
for
the
conveyance
of
electric
current
from
the
towers
used
by
an
association
used
to
convey
its
electric
power
furnished
source
thereof
to
its
consumers.
If
the
respondent
would
be
required
to
to
subscribers
and
members,
constructed
for
the
purpose
of
fastening
high
employ
"wooden
poles",
or
"rounded
poles"
as
it
used
to
do
fifty
years
voltage
and
dangerous
electric
wires
alongside
public
highways.
The
steel
back,
then
one
should
admit
that
the
Philippines
is
one
century
behind
the
supports
or
towers
were
made
of
iron
or
other
metals
consisting
of
two
age
of
space.
It
should
also
be
conceded
by
now
that
steel
towers,
like
the
pieces
running
from
the
ground
up
some
thirty
feet
high,
being
wider
at
ones
in
question,
for
obvious
reasons,
can
better
effectuate
the
purpose
the
bottom
than
at
the
top,
the
said
two
metal
pieces
being
connected
for
which
the
respondent's
franchise
was
granted.
with
criss‐cross
iron
running
from
the
bottom
to
the
top,
constructed
like
ladders
and
loaded
with
high
voltage
electricity.
In
form
and
structure,
Granting
for
the
purpose
of
argument
that
the
steel
supports
or
towers
in
they
are
like
the
steel
towers
in
question.
(Salt
River
Valley
Users'
Ass'n
v.
question
are
not
embraced
within
the
term
poles,
the
logical
question
Compton,
8
P.
2nd,
249‐250.)
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
The
term
"poles"
was
used
to
denote
the
steel
towers
of
an
electric
of
real
property;
but
Article
415
of
the
Civil
Code
does,
by
stating
the
company
engaged
in
the
generation
of
hydro‐electric
power
generated
following
are
immovable
property:
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
(1)
Land,
buildings,
roads,
and
constructions
of
all
kinds
adhered
to
the
about
35
feet
to
a
point,
and
are
embedded
in
the
cement
foundations
soil;
sunk
in
the
earth,
the
top
of
which
extends
above
the
surface
of
the
soil
in
x
x
x
x
x
x
x
x
x
the
tower
of
Oxford,
and
to
the
towers
are
attached
insulators,
arms,
and
other
equipment
capable
of
carrying
wires
for
the
transmission
of
electric
(3)
Everything
attached
to
an
immovable
in
a
fixed
manner,
in
such
a
way
power
(Connecticut
Light
and
Power
Co.
v.
Oxford,
101
Conn.
383,
126
Atl.
that
it
cannot
be
separated
therefrom
without
breaking
the
material
or
p.
1).
deterioration
of
the
object;
In
a
case,
the
defendant
admitted
that
the
structure
on
which
a
certain
x
x
x
x
x
x
x
x
x
person
met
his
death
was
built
for
the
purpose
of
supporting
a
(5)
Machinery,
receptacles,
instruments
or
implements
intended
by
the
transmission
wire
used
for
carrying
high‐tension
electric
power,
but
owner
of
the
tenement
for
an
industry
or
works
which
may
be
carried
in
a
claimed
that
the
steel
towers
on
which
it
is
carried
were
so
large
that
their
building
or
on
a
piece
of
land,
and
which
tends
directly
to
meet
the
needs
wire
took
their
structure
out
of
the
definition
of
a
pole
line.
It
was
held
of
the
said
industry
or
works;
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
x
x
x
x
x
x
x
x
x
elevated
wire
carrying
electric
current,
and
that
regardless
of
the
size
or
The
steel
towers
or
supports
in
question,
do
not
come
within
the
objects
material
wire
of
its
individual
members,
any
continuous
series
of
mentioned
in
paragraph
1,
because
they
do
not
constitute
buildings
or
structures
intended
and
used
solely
or
primarily
for
the
purpose
of
constructions
adhered
to
the
soil.
They
are
not
construction
analogous
to
supporting
wires
carrying
electric
currents
is
a
pole
line
(Inspiration
buildings
nor
adhering
to
the
soil.
As
per
description,
given
by
the
lower
Consolidation
Cooper
Co.
v.
Bryan
252
P.
1016).
court,
they
are
removable
and
merely
attached
to
a
square
metal
frame
by
It
is
evident,
therefore,
that
the
word
"poles",
as
used
in
Act
No.
484
and
means
of
bolts,
which
when
unscrewed
could
easily
be
dismantled
and
incorporated
in
the
petitioner's
franchise,
should
not
be
given
a
restrictive
moved
from
place
to
place.
They
can
not
be
included
under
paragraph
3,
21
as
they
are
not
attached
to
an
immovable
in
a
fixed
manner,
and
they
can
RUBY
L.
TSAI,
petitioner,
vs.
HON.
COURT
OF
APPEALS,
EVER
TEXTILE
be
separated
without
breaking
the
material
or
causing
deterioration
upon
MILLS,
INC.
and
MAMERTO
R
VILLALUZ,
respondents.
the
object
to
which
they
are
attached.
Each
of
these
steel
towers
or
x‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐x
supports
consists
of
steel
bars
or
metal
strips,
joined
together
by
means
of
bolts,
which
can
be
disassembled
by
unscrewing
the
bolts
and
reassembled
[G.R.
No.
120109.
October
2,
2001.]
by
screwing
the
same.
These
steel
towers
or
supports
do
not
also
fall
PHILIPPINE
BANK
OF
COMMUNICATIONS,
petitioner,
vs.
HON.
COURT
OF
under
paragraph
5,
for
they
are
not
machineries,
receptacles,
instruments
APPEALS,
EVER
TEXTILE
MILLS
and
MAMERTO
R
VILLALUZ,
respondents.
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
QUISUMBING,
J.:
the
land
in
which
the
steel
supports
or
towers
are
constructed.
These
consolidated
cases
assail
the
decision1
of
the
Court
of
Appeals
in
CA‐
It
is
finally
contended
that
the
CTA
erred
in
ordering
the
City
Treasurer
of
G.R.
CV
No.
32986,
affirming
the
decision2
of
the
Regional
Trial
Court
of
Quezon
City
to
refund
the
sum
of
P11,651.86,
despite
the
fact
that
Quezon
Manila,
Branch
7,
in
Civil
Case
No.
89‐48265.
Also
assailed
is
respondent
City
is
not
a
party
to
the
case.
It
is
argued
that
as
the
City
Treasurer
is
not
court's
resolution
denying
petitioners'
motion
for
reconsideration.
the
real
party
in
interest,
but
Quezon
City,
which
was
not
a
party
to
the
On
November
26,
1975,
respondent
Ever
Textile
Mills,
Inc.
(EVERTEX)
suit,
notwithstanding
its
capacity
to
sue
and
be
sued,
he
should
not
be
obtained
a
three
million
peso
(P3,000,000.00)
loan
from
petitioner
ordered
to
effect
the
refund.
This
question
has
not
been
raised
in
the
court
Philippine
Bank
of
Communications
(PBCom).
As
security
for
the
loan,
below,
and,
therefore,
it
cannot
be
properly
raised
for
the
first
time
on
EVERTEX
executed
in
favor
of
PBCom,
a
deed
of
Real
and
Chattel
Mortgage
appeal.
The
herein
petitioner
is
indulging
in
legal
technicalities
and
niceties
over
the
lot
under
TCT
No.
372097,
where
its
factory
stands,
and
the
which
do
not
help
him
any;
for
factually,
it
was
he
(City
Treasurer)
whom
chattels
located
therein
as
enumerated
in
a
schedule
attached
to
the
had
insisted
that
respondent
herein
pay
the
real
estate
taxes,
which
mortgage
contract.
The
pertinent
portions
of
the
Real
and
Chattel
respondent
paid
under
protest.
Having
acted
in
his
official
capacity
as
City
Mortgage
are
quoted
below:
Treasurer
of
Quezon
City,
he
would
surely
know
what
to
do,
under
the
circumstances.
MORTGAGE
IN
VIEW
HEREOF,
the
decision
appealed
from
is
hereby
affirmed,
with
(REAL
AND
CHATTEL)
costs
against
the
petitioners.
xxx
xxx
xxx
Bengzon,
C.J.,
Padilla,
Bautista
Angelo,
Labrador,
Concepcion,
Reyes,
J.B.L.,
The
MORTGAGOR(S)
hereby
transfer(s)
and
convey(s),
by
way
of
First
Barrera
and
Regala,
JJ.,
concur.
Makalintal,
J.,
concurs
in
the
result.
Dizon,
Mortgage,
to
the
MORTGAGEE,
.
.
.
certain
parcel(s)
of
land,
together
with
J.,
took
no
part.
all
the
buildings
and
improvements
now
existing
or
which
may
hereafter
exist
thereon,
situated
in
.
.
.
"Annex A"
‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐
(Real
and
Chattel
Mortgage
executed
by
Ever
Textile
Mills
in
favor
of
PBCommunications
—
continued)
LIST
OF
MACHINERIES
&
EQUIPMENT
A.
Forty
Eight
(48)
units
of
Vayrow
Knitting
Machines‐Tompkins
made
in
G.R.
No.
120098
October
2,
2001
Hongkong:
22
Serial
Numbers
Size
of
Machines
On
November
19,
1982,
due
to
business
reverses,
EVERTEX
filed
insolvency
proceedings
docketed
as
SP
Proc.
No.
LP‐3091‐P
before
the
defunct
Court
xxx
xxx
xxx
of
First
Instance
of
Pasay
City,
Branch
XXVIII.
The
CFI
issued
an
order
on
B.
Sixteen
(16)
sets
of
Vayrow
Knitting
Machines
made
in
Taiwan.
November
24,
1982
declaring
the
corporation
insolvent.
All
its
assets
were
xxx
xxx
xxx
taken
into
the
custody
of
the
Insolvency
Court,
including
the
collateral,
real
and
personal,
securing
the
two
mortgages
as
abovementioned.
C.
Two
(2)
Circular
Knitting
Machines
made
in
West
Germany.
In
the
meantime,
upon
EVERTEX's
failure
to
meet
its
obligation
to
PBCom,
xxx
xxx
xxx
the
latter
commenced
extrajudicial
foreclosure
proceedings
against
D.
Four
(4)
Winding
Machines.
EVERTEX
under
Act
3135,
otherwise
known
as
"An
Act
to
Regulate
the
Sale
of
Property
under
Special
Powers
Inserted
in
or
Annexed
to
Real
Estate
xxx
xxx
xxx
Mortgages"
and
Act
1506
or
"The
Chattel
Mortgage
Law".
A
Notice
of
SCHEDULE
"A"
Sheriff's
Sale
was
issued
on
December
1,
1982.
I.
TCT
#
372097
‐
RIZAL
On
December
15,
1982,
the
first
public
auction
was
held
where
petitioner
PBCom
emerged
as
the
highest
bidder
and
a
Certificate
of
Sale
was
issued
xxx
xxx
xxx
in
its
favor
on
the
same
date.
On
December
23,
1982,
another
public
II.
Any
and
all
buildings
and
improvements
now
existing
or
hereafter
to
auction
was
held
and
again,
PBCom
was
the
highest
bidder.
The
sheriff
exist
on
the
above‐mentioned
lot.
issued
a
Certificate
of
Sale
on
the
same
day.
III.
MACHINERIES
&
EQUIPMENT
situated,
located
and/or
installed
on
the
On
March
7,
1984,
PBCom
consolidated
its
ownership
over
the
lot
and
all
above‐mentioned
lot
located
at
.
.
.
the
properties
in
it.
In
November
1986,
it
leased
the
entire
factory
premises
to
petitioner
Ruby
L.
Tsai
for
P50,000.00
a
month.
On
May
3,
(a)
Forty
eight
sets
(48)
Vayrow
Knitting
Machines
.
.
.
1988,
PBCom
sold
the
factory,
lock,
stock
and
barrel
to
Tsai
for
(b)
Sixteen
sets
(16)
Vayrow
Knitting
Machines
.
.
.
P9,000,000.00,
including
the
contested
machineries.
(c)
Two
(2)
Circular
Knitting
Machines
.
.
.
On
March
16,
1989,
EVERTEX
filed
a
complaint
for
annulment
of
sale,
(d)
Two
(2)
Winding
Machines
.
.
.
reconveyance,
and
damages
with
the
Regional
Trial
Court
against
PBCom,
alleging
inter
alia
that
the
extrajudicial
foreclosure
of
subject
mortgage
(e)
Two
(2)
Winding
Machines
.
.
.
was
in
violation
of
the
Insolvency
Law.
EVERTEX
claimed
that
no
rights
IV.
Any
and
all
replacements,
substitutions,
additions,
increases
and
having
been
transmitted
to
PBCom
over
the
assets
of
insolvent
EVERTEX,
accretions
to
above
properties.
therefore
Tsai
acquired
no
rights
over
such
assets
sold
to
her,
and
should
reconvey
the
assets.
xxx
xxx
xxx3
Further,
EVERTEX
averred
that
PBCom,
without
any
legal
or
factual
basis,
On
April
23,
1979,
PBCom
granted
a
second
loan
of
P3,356,000.00
to
appropriated
the
contested
properties,
which
were
not
included
in
the
EVERTEX.
The
loan
was
secured
by
a
Chattel
Mortgage
over
personal
Real
and
Chattel
Mortgage
of
November
26,
1975
nor
in
the
Chattel
properties
enumerated
in
a
list
attached
thereto.
These
listed
properties
Mortgage
of
April
23,
1979,
and
neither
were
those
properties
included
in
were
similar
to
those
listed
in
Annex
A
of
the
first
mortgage
deed.
the
Notice
of
Sheriff's
Sale
dated
December
1,
1982
and
Certificate
of
Sale
After
April
23,
1979,
the
date
of
the
execution
of
the
second
mortgage
.
.
.
dated
December
15,
1982.
mentioned
above,
EVERTEX
purchased
various
machines
and
equipments.
The
disputed
properties,
which
were
valued
at
P4,000,000.00,
are:
14
23
Interlock
Circular
Knitting
Machines,
1
Jet
Drying
Equipment,
1
Dryer
from
is
hereby
AFFIRMED,
in
all
other
respects.
No
pronouncement
as
to
Equipment,
1
Raisin
Equipment
and
1
Heatset
Equipment.
costs.5
The
RTC
found
that
the
lease
and
sale
of
said
personal
properties
were
Motion
for
reconsideration
of
the
above
decision
having
been
denied
in
irregular
and
illegal
because
they
were
not
duly
foreclosed
nor
sold
at
the
the
resolution
of
April
28,
1995,
PBCom
and
Tsai
filed
their
separate
December
15,
1982
auction
sale
since
these
were
not
included
in
the
petitions
for
review
with
this
Court.
schedules
attached
to
the
mortgage
contracts.
The
trial
court
decreed:
In
G.R
No.
120098,
petitioner
Tsai
ascribed
the
following
errors
to
the
WHEREFORE,
judgment
is
hereby
rendered
in
favor
of
plaintiff
corporation
respondent
court:
and
against
the
defendants:
I
1.
Ordering
the
annulment
of
the
sale
executed
by
defendant
Philippine
THE
HONORABLE
COURT
OF
APPEALS
(SECOND
DIVISION)
ERRED
IN
EFFECT
Bank
of
Communications
in
favor
of
defendant
Ruby
L.
Tsai
on
May
3,
1988
MAKING
A
CONTRACT
FOR
THE
PARTIES
BY
TREATING
THE
1981
ACQUIRED
insofar
as
it
affects
the
personal
properties
listed
in
par.
9
of
the
MACHINERIES
AS
CHATTELS
INSTEAD
OF
REAL
PROPERTIES
WITHIN
THEIR
complaint,
and
their
return
to
the
plaintiff
corporation
through
its
EARLIER
1975
DEED
OF
REAL
AND
CHATTEL
MORTGAGE
OR
1979
DEED
OF
assignee,
plaintiff
Mamerto
R.
Villaluz,
for
disposition
by
the
Insolvency
CHATTEL
MORTGAGE.
Court,
to
be
done
within
ten
(10)
days
from
finality
of
this
decision;
II
2.
Ordering
the
defendants
to
pay
jointly
and
severally
the
plaintiff
corporation
the
sum
of
P5,200,000.00
as
compensation
for
the
use
and
THE
HONORABLE
COURT
OF
APPEALS
(SECOND
DIVISION)
ERRED
IN
possession
of
the
properties
in
question
from
November
1986
to
February
HOLDING
THAT
THE
DISPUTED
1981
MACHINERIES
ARE
NOT
REAL
1991
and
P100,000.00
every
month
thereafter,
with
interest
thereon
at
PROPERTIES
DEEMED
PART
OF
THE
MORTGAGE
—
DESPITE
THE
CLEAR
the
legal
rate
per
annum
until
full
payment;
IMPORT
OF
THE
EVIDENCE
AND
APPLICABLE
RULINGS
OF
THE
SUPREME
COURT.
3.
Ordering
the
defendants
to
pay
jointly
and
severally
the
plaintiff
corporation
the
sum
of
P50,000.00
as
and
for
attorney's
fees
and
expenses
III
of
litigation;
THE
HONORABLE
COURT
OF
APPEALS
(SECOND
DIVISION)
ERRED
IN
4.
Ordering
the
defendants
to
pay
jointly
and
severally
the
plaintiff
DEEMING
PETITIONER
A
PURCHASER
IN
BAD
FAITH.
corporation
the
sum
of
P200,000.00
by
way
of
exemplary
damages;
IV
5.
Ordering
the
dismissal
of
the
counterclaim
of
the
defendants;
and
THE
HONORABLE
COURT
OF
APPEALS
(SECOND
DIVISION)
ERRED
IN
6.
Ordering
the
defendants
to
proportionately
pay
the
costs
of
suit.
ASSESSING
PETITIONER
ACTUAL
DAMAGES,
ATTORNEY'S
FEES
AND
EXPENSES
OF
LITIGATION
—
FOR
WANT
OF
VALID
FACTUAL
AND
LEGAL
SO
ORDERED.4
BASIS.
Dissatisfied,
both
PBCom
and
Tsai
appealed
to
the
Court
of
Appeals,
which
V
issued
its
decision
dated
August
31,
1994,
the
dispositive
portion
of
which
reads:
THE
HONORABLE
COURT
OF
APPEALS
(SECOND
DIVISION)
ERRED
IN
HOLDING
AGAINST
PETITIONER'S
ARGUMENTS
ON
PRESCRIPTION
AND
WHEREFORE,
except
for
the
deletion
therefrom
of
the
award;
for
LACHES.6
exemplary
damages,
and
reduction
of
the
actual
damages,
from
P100,000.00
to
P20,000.00
per
month,
from
November
1986
until
subject
In
G.R.
No.
120098,
PBCom
raised
the
following
issues:
personal
properties
are
restored
to
appellees,
the
judgment
appealed
24
I.
Tsai.
It
further
argued
that
the
Court
of
Appeals'
pronouncement
that
the
pieces
of
machinery
in
question
were
personal
properties
have
no
factual
DID
THE
COURT
OF
APPEALS
VALIDLY
DECREE
THE
MACHINERIES
LISTED
and
legal
basis.
Finally,
it
asserts
that
the
Court
of
Appeals
erred
in
UNDER
PARAGRAPH
9
OF
THE
COMPLAINT
BELOW
AS
PERSONAL
assessing
damages
and
attorney's
fees
against
PBCom.
PROPERTY
OUTSIDE
OF
THE
1975
DEED
OF
REAL
ESTATE
MORTGAGE
AND
EXCLUDED
THEM
FROM
THE
REAL
PROPERTY
EXTRAJUDICIALLY
In
opposition,
private
respondents
argue
that
the
controverted
units
of
FORECLOSED
BY
PBCOM
DESPITE
THE
PROVISION
IN
THE
1975
DEED
THAT
machinery
are
not
"real
properties"
but
chattels,
and,
therefore,
they
were
ALL
AFTER‐ACQUIRED
PROPERTIES
DURING
THE
LIFETIME
OF
THE
not
part
of
the
foreclosed
real
properties,
rendering
the
lease
and
the
MORTGAGE
SHALL
FORM
PART
THEREOF,
AND
DESPITE
THE
UNDISPUTED
subsequent
sale
thereof
to
Tsai
a
nullity.12
FACT
THAT
SAID
MACHINERIES
ARE
BIG
AND
HEAVY,
BOLTED
OR
Considering
the
assigned
errors
and
the
arguments
of
the
parties,
we
find
CEMENTED
ON
THE
REAL
PROPERTY
MORTGAGED
BY
EVER
TEXTILE
MILLS
the
petitions
devoid
of
merit
and
ought
to
be
denied.
TO
PBCOM,
AND
WERE
ASSESSED
FOR
REAL
ESTATE
TAX
PURPOSES?
Well
settled
is
the
rule
that
the
jurisdiction
of
the
Supreme
Court
in
a
II
petition
for
review
on
certiorari
under
Rule
45
of
the
Revised
Rules
of
CAN
PBCOM,
WHO
TOOK
POSSESSION
OF
THE
MACHINERIES
IN
QUESTION
Court
is
limited
to
reviewing
only
errors
of
law,
not
of
fact,
unless
the
IN
GOOD
FAITH,
EXTENDED
CREDIT
FACILITIES
TO
EVER
TEXTILE
MILLS
factual
findings
complained
of
are
devoid
of
support
by
the
evidence
on
WHICH
AS
OF
1982
TOTALLED
P9,547,095.28,
WHO
HAD
SPENT
FOR
record
or
the
assailed
judgment
is
based
on
misapprehension
of
facts.13
MAINTENANCE
AND
SECURITY
ON
THE
DISPUTED
MACHINERIES
AND
HAD
This
rule
is
applied
more
stringently
when
the
findings
of
fact
of
the
RTC
is
TO
PAY
ALL
THE
BACK
TAXES
OF
EVER
TEXTILE
MILLS
BE
LEGALLY
affirmed
by
the
Court
of
Appeals.14
COMPELLED
TO
RETURN
TO
EVER
THE
SAID
MACHINERIES
OR
IN
LIEU
The
following
are
the
facts
as
found
by
the
RTC
and
affirmed
by
the
Court
THEREOF
BE
ASSESSED
DAMAGES.
IS
THAT
SITUATION
TANTAMOUNT
TO
A
of
Appeals
that
are
decisive
of
the
issues:
(1)
the
"controverted
CASE
OF
UNJUST
ENRICHMENT?7
machineries"
are
not
covered
by,
or
included
in,
either
of
the
two
The
principal
issue,
in
our
view,
is
whether
or
not
the
inclusion
of
the
mortgages,
the
Real
Estate
and
Chattel
Mortgage,
and
the
pure
Chattel
questioned
properties
in
the
foreclosed
properties
is
proper.
The
Mortgage;
(2)
the
said
machineries
were
not
included
in
the
list
of
secondary
issue
is
whether
or
not
the
sale
of
these
properties
to
petitioner
properties
appended
to
the
Notice
of
Sale,
and
neither
were
they
included
Ruby
Tsai
is
valid.
in
the
Sheriff's
Notice
of
Sale
of
the
foreclosed
properties.15
For
her
part,
Tsai
avers
that
the
Court
of
Appeals
in
effect
made
a
contract
Petitioners
contend
that
the
nature
of
the
disputed
machineries,
i.e.,
that
for
the
parties
by
treating
the
1981
acquired
units
of
machinery
as
chattels
they
were
heavy,
bolted
or
cemented
on
the
real
property
mortgaged
by
instead
of
real
properties
within
their
earlier
1975
deed
of
Real
and
Chattel
EVERTEX
to
PBCom,
make
them
ipso
facto
immovable
under
Article
415
(3)
Mortgage
or
1979
deed
of
Chattel
Mortgage.8
Additionally,
Tsai
argues
and
(5)
of
the
New
Civil
Code.
This
assertion,
however,
does
not
settle
the
that
respondent
court
erred
in
holding
that
the
disputed
1981
machineries
issue.
Mere
nuts
and
bolts
do
not
foreclose
the
controversy.
We
have
to
are
not
real
properties.9
Finally,
she
contends
that
the
Court
of
Appeals
look
at
the
parties'
intent.
erred
in
holding
against
petitioner's
arguments
on
prescription
and
While
it
is
true
that
the
controverted
properties
appear
to
be
immobile,
a
laches10
and
in
assessing
petitioner
actual
damages,
attorney's
fees
and
perusal
of
the
contract
of
Real
and
Chattel
Mortgage
executed
by
the
expenses
of
litigation,
for
want
of
valid
factual
and
legal
basis.11
parties
herein
gives
us
a
contrary
indication.
In
the
case
at
bar,
both
the
Essentially,
PBCom
contends
that
respondent
court
erred
in
affirming
the
trial
and
the
appellate
courts
reached
the
same
finding
that
the
true
lower
court's
judgment
decreeing
that
the
pieces
of
machinery
in
dispute
intention
of
PBCOM
and
the
owner,
EVERTEX,
is
to
treat
machinery
and
were
not
duly
foreclosed
and
could
not
be
legally
leased
nor
sold
to
Ruby
equipment
as
chattels.
The
pertinent
portion
of
respondent
appellate
25
court's
ruling
is
quoted
below:
the
conclusion
that
the
parties'
intention
is
to
treat
these
units
of
machinery
as
chattels.
A
fortiori,
the
contested
after‐acquired
properties,
As
stressed
upon
by
appellees,
appellant
bank
treated
the
machineries
as
which
are
of
the
same
description
as
the
units
enumerated
under
the
title
chattels;
never
as
real
properties.
Indeed,
the
1975
mortgage
contract,
"LIST
OF
MACHINERIES
&
EQUIPMENT,"
must
also
be
treated
as
chattels.
which
was
actually
real
and
chattel
mortgage,
militates
against
appellants'
posture.
It
should
be
noted
that
the
printed
form
used
by
appellant
bank
Accordingly,
we
find
no
reversible
error
in
the
respondent
appellate
court's
was
mainly
for
real
estate
mortgages.
But
reflective
of
the
true
intention
of
ruling
that
inasmuch
as
the
subject
mortgages
were
intended
by
the
appellant
PBCOM
and
appellee
EVERTEX
was
the
typing
in
capital
letters,
parties
to
involve
chattels,
insofar
as
equipment
and
machinery
were
immediately
following
the
printed
caption
of
mortgage,
of
the
phrase
"real
concerned,
the
Chattel
Mortgage
Law
applies,
which
provides
in
Section
7
and
chattel."
So
also,
the
"machineries
and
equipment"
in
the
printed
form
thereof
that:
"a
chattel
mortgage
shall
be
deemed
to
cover
only
the
of
the
bank
had
to
be
inserted
in
the
blank
space
of
the
printed
contract
property
described
therein
and
not
like
or
substituted
property
thereafter
and
connected
with
the
word
"building"
by
typewritten
slash
marks.
Now,
acquired
by
the
mortgagor
and
placed
in
the
same
depository
as
the
then,
if
the
machineries
in
question
were
contemplated
to
be
included
in
property
originally
mortgaged,
anything
in
the
mortgage
to
the
contrary
the
real
estate
mortgage,
there
would
have
been
no
necessity
to
ink
a
notwithstanding."
chattel
mortgage
specifically
mentioning
as
part
III
of
Schedule
A
a
listing
And,
since
the
disputed
machineries
were
acquired
in
1981
and
could
not
of
the
machineries
covered
thereby.
It
would
have
sufficed
to
list
them
as
have
been
involved
in
the
1975
or
1979
chattel
mortgages,
it
was
immovables
in
the
Deed
of
Real
Estate
Mortgage
of
the
land
and
building
consequently
an
error
on
the
part
of
the
Sheriff
to
include
subject
involved.
machineries
with
the
properties
enumerated
in
said
chattel
mortgages.
As
regards
the
1979
contract,
the
intention
of
the
parties
is
clear
and
As
the
auction
sale
of
the
subject
properties
to
PBCom
is
void,
no
valid
title
beyond
question.
It
refers
solely
to
chattels.
The
inventory
list
of
the
passed
in
its
favor.
Consequently,
the
sale
thereof
to
Tsai
is
also
a
nullity
mortgaged
properties
is
an
itemization
of
sixty‐three
(63)
individually
under
the
elementary
principle
of
nemo
dat
quod
non
habet,
one
cannot
described
machineries
while
the
schedule
listed
only
machines
and
give
what
one
does
not
have.17
2,996,880.50
worth
of
finished
cotton
fabrics
and
natural
cotton
fabrics.16
Petitioner
Tsai
also
argued
that
assuming
that
PBCom's
title
over
the
In
the
absence
of
any
showing
that
this
conclusion
is
baseless,
erroneous
contested
properties
is
a
nullity,
she
is
nevertheless
a
purchaser
in
good
or
uncorroborated
by
the
evidence
on
record,
we
find
no
compelling
faith
and
for
value
who
now
has
a
better
right
than
EVERTEX.
reason
to
depart
therefrom.
To
the
contrary,
however,
are
the
factual
findings
and
conclusions
of
the
Too,
assuming
arguendo
that
the
properties
in
question
are
immovable
by
trial
court
that
she
is
not
a
purchaser
in
good
faith.
Well‐settled
is
the
rule
nature,
nothing
detracts
the
parties
from
treating
it
as
chattels
to
secure
that
the
person
who
asserts
the
status
of
a
purchaser
in
good
faith
and
for
an
obligation
under
the
principle
of
estoppel.
As
far
back
as
Navarro
v.
value
has
the
burden
of
proving
such
assertion.18
Petitioner
Tsai
failed
to
Pineda,
9
SCRA
631
(1963),
an
immovable
may
be
considered
a
personal
discharge
this
burden
persuasively.
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
Moreover,
a
purchaser
in
good
faith
and
for
value
is
one
who
buys
the
in
the
case
at
bar.
property
of
another
without
notice
that
some
other
person
has
a
right
to
or
interest
in
such
property
and
pays
a
full
and
fair
price
for
the
same,
at
In
the
instant
case,
the
parties
herein:
(1)
executed
a
contract
styled
as
the
time
of
purchase,
or
before
he
has
notice
of
the
claims
or
interest
of
"Real
Estate
Mortgage
and
Chattel
Mortgage,"
instead
of
just
"Real
Estate
some
other
person
in
the
property.19
Records
reveal,
however,
that
when
Mortgage"
if
indeed
their
intention
is
to
treat
all
properties
included
Tsai
purchased
the
controverted
properties,
she
knew
of
respondent's
therein
as
immovable,
and
(2)
attached
to
the
said
contract
a
separate
claim
thereon.
As
borne
out
by
the
records,
she
received
the
letter
of
"LIST
OF
MACHINERIES
&
EQUIPMENT".
These
facts,
taken
together,
evince
26
respondent's
counsel,
apprising
her
of
respondent's
claim,
dated
February
not
only
be
capable
of
proof
but
must
actually
be
proven
with
reasonable
27,
1987.20
She
replied
thereto
on
March
9,
1987.21
Despite
her
knowledge
degree
of
certainty,
premised
upon
competent
proof
or
best
evidence
of
respondent's
claim,
she
proceeded
to
buy
the
contested
units
of
obtainable
of
the
actual
amount
thereof.23
However,
the
allegations
of
machinery
on
May
3,
1988.
Thus,
the
RTC
did
not
err
in
finding
that
she
respondent
company
as
to
the
amount
of
unrealized
rentals
due
them
as
was
not
a
purchaser
in
good
faith.
actual
damages
remain
mere
assertions
unsupported
by
documents
and
other
competent
evidence.
In
determining
actual
damages,
the
court
Petitioner
Tsai's
defense
of
indefeasibility
of
Torrens
Title
of
the
lot
where
cannot
rely
on
mere
assertions,
speculations,
conjectures
or
guesswork
the
disputed
properties
are
located
is
equally
unavailing.
This
defense
but
must
depend
on
competent
proof
and
on
the
best
evidence
obtainable
refers
to
sale
of
lands
and
not
to
sale
of
properties
situated
therein.
regarding
the
actual
amount
of
loss.24
However,
we
are
not
prepared
to
Likewise,
the
mere
fact
that
the
lot
where
the
factory
and
the
disputed
disregard
the
following
dispositions
of
the
respondent
appellate
court:
properties
stand
is
in
PBCom's
name
does
not
automatically
make
PBCom
the
owner
of
everything
found
therein,
especially
in
view
of
EVERTEX's
.
.
.
In
the
award
of
actual
damages
under
scrutiny,
there
is
nothing
on
letter
to
Tsai
enunciating
its
claim.
record
warranting
the
said
award
of
P5,200,000.00,
representing
monthly
rental
income
of
P100,000.00
from
November
1986
to
February
1991,
and
Finally,
petitioners'
defense
of
prescription
and
laches
is
less
than
the
additional
award
of
P100,000.00
per
month
thereafter.
convincing.
We
find
no
cogent
reason
to
disturb
the
consistent
findings
of
both
courts
below
that
the
case
for
the
reconveyance
of
the
disputed
As
pointed
out
by
appellants,
the
testimonial
evidence,
consisting
of
the
properties
was
filed
within
the
reglementary
period.
Here,
in
our
view,
the
testimonies
of
Jonh
(sic)
Chua
and
Mamerto
Villaluz,
is
shy
of
what
is
doctrine
of
laches
does
not
apply.
Note
that
upon
petitioners'
adamant
necessary
to
substantiate
the
actual
damages
allegedly
sustained
by
refusal
to
heed
EVERTEX's
claim,
respondent
company
immediately
filed
appellees,
by
way
of
unrealized
rental
income
of
subject
machineries
and
an
action
to
recover
possession
and
ownership
of
the
disputed
properties.
equipments.
There
is
no
evidence
showing
any
failure
or
neglect
on
its
part,
for
an
The
testimony
of
John
Cua
(sic)
is
nothing
but
an
opinion
or
projection
unreasonable
and
unexplained
length
of
time,
to
do
that
which,
by
based
on
what
is
claimed
to
be
a
practice
in
business
and
industry.
But
exercising
due
diligence,
could
or
should
have
been
done
earlier.
The
such
a
testimony
cannot
serve
as
the
sole
basis
for
assessing
the
actual
doctrine
of
stale
demands
would
apply
only
where
by
reason
of
the
lapse
damages
complained
of.
What
is
more,
there
is
no
showing
that
had
of
time,
it
would
be
inequitable
to
allow
a
party
to
enforce
his
legal
rights.
appellant
Tsai
not
taken
possession
of
the
machineries
and
equipments
in
Moreover,
except
for
very
strong
reasons,
this
Court
is
not
disposed
to
question,
somebody
was
willing
and
ready
to
rent
the
same
for
apply
the
doctrine
of
laches
to
prejudice
or
defeat
the
rights
of
an
owner.22
P100,000.00
a
month.
As
to
the
award
of
damages,
the
contested
damages
are
the
actual
xxx
xxx
xxx
compensation,
representing
rentals
for
the
contested
units
of
machinery,
the
exemplary
damages,
and
attorney's
fees.
Then,
too,
even
assuming
arguendo
that
the
said
machineries
and
equipments
could
have
generated
a
rental
income
of
P30,000.00
a
month,
As
regards
said
actual
compensation,
the
RTC
awarded
P100,000.00
as
projected
by
witness
Mamerto
Villaluz,
the
same
would
have
been
a
corresponding
to
the
unpaid
rentals
of
the
contested
properties
based
on
gross
income.
Therefrom
should
be
deducted
or
removed,
expenses
for
the
testimony
of
John
Chua,
who
testified
that
the
P100,000.00
was
based
maintenance
and
repairs
.
.
.
Therefore,
in
the
determination
of
the
actual
on
the
accepted
practice
in
banking
and
finance,
business
and
investments
damages
or
unrealized
rental
income
sued
upon,
there
is
a
good
basis
to
that
the
rental
price
must
take
into
account
the
cost
of
money
used
to
buy
calculate
that
at
least
four
months
in
a
year,
the
machineries
in
dispute
them.
The
Court
of
Appeals
did
not
give
full
credence
to
Chua's
projection
would
have
been
idle
due
to
absence
of
a
lessee
or
while
being
repaired.
In
and
reduced
the
award
to
P20,000.00.
the
light
of
the
foregoing
rationalization
and
computation,
We
believe
that
Basic
is
the
rule
that
to
recover
actual
damages,
the
amount
of
loss
must
a
net
unrealized
rental
income
of
P20,000.00
a
month,
since
November
27
1986,
is
more
realistic
and
fair.25
the
use
and
possession
of
the
properties
in
question
from
November
198631
until
subject
personal
properties
are
restored
to
respondent
As
to
exemplary
damages,
the
RTC
awarded
P200,000.00
to
EVERTEX
corporation;
(2)
P100,000.00
by
way
of
exemplary
damages,
and
(3)
which
the
Court
of
Appeals
deleted.
But
according
to
the
CA,
there
was
no
P50,000.00
as
attorney's
fees
and
litigation
expenses.
Costs
against
clear
showing
that
petitioners
acted
malevolently,
wantonly
and
petitioners.
oppressively.
The
evidence,
however,
shows
otherwise.It
is
a
requisite
to
award
exemplary
damages
that
the
wrongful
act
must
be
accompanied
by
SO
ORDERED.
bad
faith,26
and
the
guilty
acted
in
a
wanton,
fraudulent,
oppressive,
Bellosillo,
Mendoza,
Buena
and
De
Leon,
Jr.,
JJ.,
concur.
reckless
or
malevolent
manner.27
As
previously
stressed,
petitioner
Tsai's
act
of
purchasing
the
controverted
properties
despite
her
knowledge
of
EVERTEX's
claim
was
oppressive
and
subjected
the
already
insolvent
respondent
to
gross
disadvantage.
Petitioner
PBCom
also
received
the
same
letters
of
Atty.
Villaluz,
responding
thereto
on
March
24,
1987.28
Thus,
PBCom's
act
of
taking
all
the
properties
found
in
the
factory
of
the
financially
handicapped
respondent,
including
those
properties
not
covered
by
or
included
in
the
mortgages,
is
equally
oppressive
and
tainted
with
bad
faith.
Thus,
we
are
in
agreement
with
the
RTC
that
an
award
of
exemplary
damages
is
proper.
The
amount
of
P200,000.00
for
exemplary
damages
is,
however,
excessive.
Article
2216
of
the
Civil
Code
provides
that
no
proof
of
pecuniary
loss
is
necessary
for
the
adjudication
of
exemplary
damages,
their
assessment
being
left
to
the
discretion
of
the
court
in
accordance
with
the
circumstances
of
each
case.29
While
the
imposition
of
exemplary
damages
is
justified
in
this
case,
equity
calls
for
its
reduction.
In
Inhelder
Corporation
v.
Court
of
Appeals,
G.R.
No.
L‐52358,
122
SCRA
576,
585,
(May
30,
1983),
we
laid
down
the
rule
that
judicial
discretion
granted
to
the
courts
in
the
assessment
of
damages
must
always
be
exercised
with
balanced
restraint
and
measured
objectivity.
Thus,
here
the
award
of
exemplary
damages
by
way
of
example
for
the
public
good
should
be
reduced
to
P100,000.00.
G.R.
No.
L‐41643
July
31,
1935
By
the
same
token,
attorney's
fees
and
other
expenses
of
litigation
may
be
recovered
when
exemplary
damages
are
awarded.30
In
our
view,
RTC's
B.H.
BERKENKOTTER,
plaintiff‐appellant,
vs.
CU
UNJIENG
E
HIJOS,
YEK
award
of
P50,000.00
as
attorney's
fees
and
expenses
of
litigation
is
TONG
LIN
FIRE
AND
MARINE
INSURANCE
COMPANY,
MABALACAT
SUGAR
reasonable,
given
the
circumstances
in
these
cases.
COMPANY
and
THE
PROVINCE
SHERIFF
OF
PAMPANGA,
defendants‐
appellees.
WHEREFORE,
the
petitions
are
DENIED.
The
assailed
decision
and
resolution
of
the
Court
of
Appeals
in
CA‐G.R.
CV
No.
32986
are
AFFIRMED
Briones
and
Martinez
for
appellant.
Araneta,
Zaragoza
and
Araneta
for
WITH
MODIFICATIONS.
Petitioners
Philippine
Bank
of
Communications
and
appellees
Cu
Unjieng
e
Hijos.
No
appearance
for
the
other
appellees.
Ruby
L.
Tsai
are
hereby
ordered
to
pay
jointly
and
severally
Ever
Textile
VILLA‐REAL,
J.:
Mills,
Inc.
the
following:
(1)
P20,000.00
per
month,
as
compensation
for
28
This
is
an
appeal
taken
by
the
plaintiff,
B.H.
Berkenkotter,
from
the
On
June
10,
1927,
B.A.
Green,
president
of
the
Mabalacat
Sugar
Co.,
Inc.,
judgment
of
the
Court
of
First
Instance
of
Manila,
dismissing
said
plaintiff's
applied
to
Cu
Unjieng
e
Hijos
for
an
additional
loan
of
P75,000
offering
as
complaint
against
Cu
Unjiengs
e
Hijos
et
al.,
with
costs.
security
the
additional
machinery
and
equipment
acquired
by
said
B.A.
Green
and
installed
in
the
sugar
central
after
the
execution
of
the
original
In
support
of
his
appeal,
the
appellant
assigns
six
alleged
errors
as
mortgage
deed,
on
April
27,
1927,
together
with
whatever
additional
committed
by
the
trial
court
in
its
decision
in
question
which
will
be
equipment
acquired
with
said
loan.
B.A.
Green
failed
to
obtain
said
loan.
discussed
in
the
course
of
this
decision.
Article
1877
of
the
Civil
Code
provides
as
follows.
The
first
question
to
be
decided
in
this
appeal,
which
is
raised
in
the
first
assignment
of
alleged
error,
is
whether
or
not
the
lower
court
erred
in
ART.
1877.
A
mortgage
includes
all
natural
accessions,
improvements,
declaring
that
the
additional
machinery
and
equipment,
as
improvement
growing
fruits,
and
rents
not
collected
when
the
obligation
falls
due,
and
incorporated
with
the
central
are
subject
to
the
mortgage
deed
executed
the
amount
of
any
indemnities
paid
or
due
the
owner
by
the
insurers
of
in
favor
of
the
defendants
Cu
Unjieng
e
Hijos.
the
mortgaged
property
or
by
virtue
of
the
exercise
of
the
power
of
eminent
domain,
with
the
declarations,
amplifications,
and
limitations
It
is
admitted
by
the
parties
that
on
April
26,
1926,
the
Mabalacat
Sugar
established
by
law,
whether
the
estate
continues
in
the
possession
of
the
Co.,
Inc.,
owner
of
the
sugar
central
situated
in
Mabalacat,
Pampanga,
person
who
mortgaged
it
or
whether
it
passes
into
the
hands
of
a
third
obtained
from
the
defendants,
Cu
Unjieng
e
Hijos,
a
loan
secured
by
a
first
person.
mortgage
constituted
on
two
parcels
and
land
"with
all
its
buildings,
improvements,
sugar‐cane
mill,
steel
railway,
telephone
line,
apparatus,
In
the
case
of
Bischoff
vs.
Pomar
and
Compañia
General
de
Tabacos
(12
utensils
and
whatever
forms
part
or
is
necessary
complement
of
said
Phil.,
690),
cited
with
approval
in
the
case
of
Cea
vs.
Villanueva
(18
Phil.,
sugar‐cane
mill,
steel
railway,
telephone
line,
now
existing
or
that
may
in
538),
this
court
laid
shown
the
following
doctrine:
the
future
exist
is
said
lots."
1.
REALTY;
MORTGAGE
OF
REAL
ESTATE
INCLUDES
IMPROVEMENTS
AND
On
October
5,
1926,
shortly
after
said
mortgage
had
been
constituted,
the
FIXTURES.
—
It
is
a
rule,
established
by
the
Civil
Code
and
also
by
the
Mabalacat
Sugar
Co.,
Inc.,
decided
to
increase
the
capacity
of
its
sugar
Mortgage
Law,
with
which
the
decisions
of
the
courts
of
the
United
States
central
by
buying
additional
machinery
and
equipment,
so
that
instead
of
are
in
accord,
that
in
a
mortgage
of
real
estate,
the
improvements
on
the
milling
150
tons
daily,
it
could
produce
250.
The
estimated
cost
of
said
same
are
included;
therefore,
all
objects
permanently
attached
to
a
additional
machinery
and
equipment
was
approximately
P100,000.
In
mortgaged
building
or
land,
although
they
may
have
been
placed
there
order
to
carry
out
this
plan,
B.A.
Green,
president
of
said
corporation,
after
the
mortgage
was
constituted,
are
also
included.
(Arts.
110
and
111
proposed
to
the
plaintiff,
B.H.
Berkenkotter,
to
advance
the
necessary
of
the
Mortgage
Law,
and
1877
of
the
Civil
Code;
decision
of
U.S.
Supreme
amount
for
the
purchase
of
said
machinery
and
equipment,
promising
to
Court
in
the
matter
of
Royal
Insurance
Co.
vs.
R.
Miller,
liquidator,
and
reimburse
him
as
soon
as
he
could
obtain
an
additional
loan
from
the
Amadeo
[26
Sup.
Ct.
Rep.,
46;
199
U.S.,
353].)
mortgagees,
the
herein
defendants
Cu
Unjieng
e
Hijos.
Having
agreed
to
2.
ID.;
ID.;
INCLUSION
OR
EXCLUSION
OF
MACHINERY,
ETC.
—
In
order
that
said
proposition
made
in
a
letter
dated
October
5,
1926
(Exhibit
E),
B.H.
it
may
be
understood
that
the
machinery
and
other
objects
placed
upon
Berkenkotter,
on
October
9th
of
the
same
year,
delivered
the
sum
of
and
used
in
connection
with
a
mortgaged
estate
are
excluded
from
the
P1,710
to
B.A.
Green,
president
of
the
Mabalacat
Sugar
Co.,
Inc.,
the
total
mortgage,
when
it
was
stated
in
the
mortgage
that
the
improvements,
amount
supplied
by
him
to
said
B.A.
Green
having
been
P25,750.
buildings,
and
machinery
that
existed
thereon
were
also
comprehended,
it
Furthermore,
B.H.
Berkenkotter
had
a
credit
of
P22,000
against
said
is
indispensable
that
the
exclusion
thereof
be
stipulated
between
the
corporation
for
unpaid
salary.
With
the
loan
of
P25,750
and
said
credit
of
contracting
parties.
P22,000,
the
Mabalacat
Sugar
Co.,
Inc.,
purchased
the
additional
machinery
and
equipment
now
in
litigation.
The
appellant
contends
that
the
installation
of
the
machinery
and
29
equipment
claimed
by
him
in
the
sugar
central
of
the
Mabalacat
Sugar
appellant
after
they
had
been
permanently
incorporated
with
sugar
central
Company,
Inc.,
was
not
permanent
in
character
inasmuch
as
B.A.
Green,
in
of
the
Mabalacat
Sugar
Co.,
Inc.,
and
while
the
mortgage
constituted
on
proposing
to
him
to
advance
the
money
for
the
purchase
thereof,
made
it
said
sugar
central
to
Cu
Unjieng
e
Hijos
remained
in
force,
only
the
right
of
appear
in
the
letter,
Exhibit
E,
that
in
case
B.A.
Green
should
fail
to
obtain
redemption
of
the
vendor
Mabalacat
Sugar
Co.,
Inc.,
in
the
sugar
central
an
additional
loan
from
the
defendants
Cu
Unjieng
e
Hijos,
said
machinery
with
which
said
machinery
and
equipment
had
been
incorporated,
was
and
equipment
would
become
security
therefor,
said
B.A.
Green
binding
transferred
thereby,
subject
to
the
right
of
the
defendants
Cu
Unjieng
e
himself
not
to
mortgage
nor
encumber
them
to
anybody
until
said
plaintiff
Hijos
under
the
first
mortgage.
be
fully
reimbursed
for
the
corporation's
indebtedness
to
him.
For
the
foregoing
considerations,
we
are
of
the
opinion
and
so
hold:
(1)
Upon
acquiring
the
machinery
and
equipment
in
question
with
money
That
the
installation
of
a
machinery
and
equipment
in
a
mortgaged
sugar
obtained
as
loan
from
the
plaintiff‐appellant
by
B.A.
Green,
as
president
of
central,
in
lieu
of
another
of
less
capacity,
for
the
purpose
of
carrying
out
the
Mabalacat
Sugar
Co.,
Inc.,
the
latter
became
owner
of
said
machinery
the
industrial
functions
of
the
latter
and
increasing
production,
constitutes
and
equipment,
otherwise
B.A.
Green,
as
such
president,
could
not
have
a
permanent
improvement
on
said
sugar
central
and
subjects
said
offered
them
to
the
plaintiff
as
security
for
the
payment
of
his
credit.
machinery
and
equipment
to
the
mortgage
constituted
thereon
(article
1877,
Civil
Code);
(2)
that
the
fact
that
the
purchaser
of
the
new
machinery
Article
334,
paragraph
5,
of
the
Civil
Code
gives
the
character
of
real
and
equipment
has
bound
himself
to
the
person
supplying
him
the
property
to
"machinery,
liquid
containers,
instruments
or
implements
purchase
money
to
hold
them
as
security
for
the
payment
of
the
latter's
intended
by
the
owner
of
any
building
or
land
for
use
in
connection
with
credit,
and
to
refrain
from
mortgaging
or
otherwise
encumbering
them
any
industry
or
trade
being
carried
on
therein
and
which
are
expressly
does
not
alter
the
permanent
character
of
the
incorporation
of
said
adapted
to
meet
the
requirements
of
such
trade
or
industry.
machinery
and
equipment
with
the
central;
and
(3)
that
the
sale
of
the
If
the
installation
of
the
machinery
and
equipment
in
question
in
the
machinery
and
equipment
in
question
by
the
purchaser
who
was
supplied
central
of
the
Mabalacat
Sugar
Co.,
Inc.,
in
lieu
of
the
other
of
less
capacity
the
purchase
money,
as
a
loan,
to
the
person
who
supplied
the
money,
existing
therein,
for
its
sugar
industry,
converted
them
into
real
property
after
the
incorporation
thereof
with
the
mortgaged
sugar
central,
does
not
by
reason
of
their
purpose,
it
cannot
be
said
that
their
incorporation
vest
the
creditor
with
ownership
of
said
machinery
and
equipment
but
therewith
was
not
permanent
in
character
because,
as
essential
and
simply
with
the
right
of
redemption.
principal
elements
of
a
sugar
central,
without
them
the
sugar
central
Wherefore,
finding
no
error
in
the
appealed
judgment,
it
is
affirmed
in
all
would
be
unable
to
function
or
carry
on
the
industrial
purpose
for
which
it
its
parts,
with
costs
to
the
appellant.
So
ordered.
was
established.
Inasmuch
as
the
central
is
permanent
in
character,
the
necessary
machinery
and
equipment
installed
for
carrying
on
the
sugar
Malcolm,
Imperial,
Butte,
and
Goddard,
JJ.,
concur.
industry
for
which
it
has
been
established
must
necessarily
be
permanent.
Furthermore,
the
fact
that
B.A.
Green
bound
himself
to
the
plaintiff
B.H.
Berkenkotter
to
hold
said
machinery
and
equipment
as
security
for
the
payment
of
the
latter's
credit
and
to
refrain
from
mortgaging
or
otherwise
[G.R.
No.
137705.
August
22,
2000]
encumbering
them
until
Berkenkotter
has
been
fully
reimbursed
therefor,
SERG’S
PRODUCTS,
INC.,
and
SERGIO
T.
GOQUIOLAY,
is
not
incompatible
with
the
permanent
character
of
the
incorporation
of
petitioners,
vs.
PCI
LEASING
AND
FINANCE,
INC.,
said
machinery
and
equipment
with
the
sugar
central
of
the
Mabalacat
respondent.
Sugar
Co.,
Inc.,
as
nothing
could
prevent
B.A.
Green
from
giving
them
as
security
at
least
under
a
second
mortgage.
D
E
C
I
S
I
O
N
As
to
the
alleged
sale
of
said
machinery
and
equipment
to
the
plaintiff
and
PANGANIBAN,
J.:
30
After
agreeing
to
a
contract
stipulating
that
a
real
or
to
petitioner’s
factory,
seized
one
machinery
with
[the]
word
that
he
immovable
property
be
considered
as
personal
or
movable,
a
[would]
return
for
the
other
machineries.
party
is
estopped
from
subsequently
claiming
otherwise.
“On
March
25,
1998,
petitioners
filed
a
motion
for
special
protective
order
Hence,
such
property
is
a
proper
subject
of
a
writ
of
replevin
(Annex
‘C’),
invoking
the
power
of
the
court
to
control
the
conduct
of
its
obtained
by
the
other
contracting
party.
officers
and
amend
and
control
its
processes,
praying
for
a
directive
for
the
The
Case
sheriff
to
defer
enforcement
of
the
writ
of
replevin.
Before
us
is
a
Petition
for
Review
on
Certiorari
assailing
“This
motion
was
opposed
by
PCI
Leasing
(Annex
‘F’),
on
the
ground
that
the
January
6,
1999
Decision[1]
of
the
Court
of
Appeals
(CA)[2]
the
properties
[were]
still
personal
and
therefore
still
subject
to
seizure
in
CA‐GR
SP
No.
47332
and
its
February
26,
1999
Resolution[3]
and
a
writ
of
replevin.
denying
reconsideration.
The
decretal
portion
of
the
CA
“In
their
Reply,
petitioners
asserted
that
the
properties
sought
to
be
Decision
reads
as
follows:
seized
[were]
immovable
as
defined
in
Article
415
of
the
Civil
Code,
the
“WHEREFORE,
premises
considered,
the
assailed
Order
dated
February
18,
parties’
agreement
to
the
contrary
notwithstanding.
They
argued
that
to
1998
and
Resolution
dated
March
31,
1998
in
Civil
Case
No.
Q‐98‐33500
give
effect
to
the
agreement
would
be
prejudicial
to
innocent
third
are
hereby
AFFIRMED.
The
writ
of
preliminary
injunction
issued
on
June
parties.
They
further
stated
that
PCI
Leasing
[was]
estopped
from
treating
15,
1998
is
hereby
LIFTED.”[4]
these
machineries
as
personal
because
the
contracts
in
which
the
alleged
agreement
[were]
embodied
[were]
totally
sham
and
farcical.
In
its
February
18,
1998
Order,[5]
the
Regional
Trial
Court
(RTC)
of
Quezon
City
(Branch
218)[6]
issued
a
Writ
of
“On
April
6,
1998,
the
sheriff
again
sought
to
enforce
the
writ
of
seizure
Seizure.[7]
The
March
18,
1998
Resolution[8]
denied
and
take
possession
of
the
remaining
properties.
He
was
able
to
take
two
petitioners’
Motion
for
Special
Protective
Order,
praying
that
more,
but
was
prevented
by
the
workers
from
taking
the
rest.
the
deputy
sheriff
be
enjoined
“from
seizing
immobilized
or
“On
April
7,
1998,
they
went
to
[the
CA]
via
an
original
action
for
other
real
properties
in
(petitioners’)
factory
in
Cainta,
Rizal
certiorari.”
and
to
return
to
their
original
place
whatever
immobilized
machineries
or
equipments
he
may
have
removed.”[9]
Ruling
of
the
Court
of
Appeals
The
Facts
Citing
the
Agreement
of
the
parties,
the
appellate
court
held
that
the
subject
machines
were
personal
property,
and
The
undisputed
facts
are
summarized
by
the
Court
of
that
they
had
only
been
leased,
not
owned,
by
petitioners.
It
Appeals
as
follows:[10]
also
ruled
that
the
“words
of
the
contract
are
clear
and
leave
“On
February
13,
1998,
respondent
PCI
Leasing
and
Finance,
Inc.
(“PCI
no
doubt
upon
the
true
intention
of
the
contracting
parties.”
Leasing”
for
short)
filed
with
the
RTC‐QC
a
complaint
for
[a]
sum
of
money
Observing
that
Petitioner
Goquiolay
was
an
experienced
(Annex
‘E’),
with
an
application
for
a
writ
of
replevin
docketed
as
Civil
Case
businessman
who
was
“not
unfamiliar
with
the
ways
of
the
No.
Q‐98‐33500.
trade,”
it
ruled
that
he
“should
have
realized
the
import
of
the
document
he
signed.”
The
CA
further
held:
“On
March
6,
1998,
upon
an
ex‐parte
application
of
PCI
Leasing,
respondent
judge
issued
a
writ
of
replevin
(Annex
‘B’)
directing
its
sheriff
“Furthermore,
to
accord
merit
to
this
petition
would
be
to
preempt
the
to
seize
and
deliver
the
machineries
and
equipment
to
PCI
Leasing
after
5
trial
court
in
ruling
upon
the
case
below,
since
the
merits
of
the
whole
days
and
upon
the
payment
of
the
necessary
expenses.
matter
are
laid
down
before
us
via
a
petition
whose
sole
purpose
is
to
inquire
upon
the
existence
of
a
grave
abuse
of
discretion
on
the
part
of
the
“On
March
24,
1998,
in
implementation
of
said
writ,
the
sheriff
proceeded
31
[RTC]
in
issuing
the
assailed
Order
and
Resolution.
The
issues
raised
herein
present
case.
are
proper
subjects
of
a
full‐blown
trial,
necessitating
presentation
of
Main
Issue:
Nature
of
the
Subject
Machinery
evidence
by
both
parties.
The
contract
is
being
enforced
by
one,
and
[its]
validity
is
attacked
by
the
other
–
a
matter
x
x
x
which
respondent
court
is
Petitioners
contend
that
the
subject
machines
used
in
in
the
best
position
to
determine.”
their
factory
were
not
proper
subjects
of
the
Writ
issued
by
the
RTC,
because
they
were
in
fact
real
property.
Serious
Hence,
this
Petition.[11]
policy
considerations,
they
argue,
militate
against
a
contrary
The
Issues
characterization.
In
their
Memorandum,
petitioners
submit
the
following
Rule
60
of
the
Rules
of
Court
provides
that
writs
of
issues
for
our
consideration:
replevin
are
issued
for
the
recovery
of
personal
property
only.[15]
Section
3
thereof
reads:
“A.
Whether
or
not
the
machineries
purchased
and
imported
by
SERG’S
became
real
property
by
virtue
of
immobilization.
“SEC.
3.
Order.
‐‐
Upon
the
filing
of
such
affidavit
and
approval
of
the
bond,
the
court
shall
issue
an
order
and
the
corresponding
writ
of
replevin
B.
Whether
or
not
the
contract
between
the
parties
is
a
loan
or
a
describing
the
personal
property
alleged
to
be
wrongfully
detained
and
lease.”[12]
requiring
the
sheriff
forthwith
to
take
such
property
into
his
custody.”
In
the
main,
the
Court
will
resolve
whether
the
said
On
the
other
hand,
Article
415
of
the
Civil
Code
machines
are
personal,
not
immovable,
property
which
may
enumerates
immovable
or
real
property
as
follows:
be
a
proper
subject
of
a
writ
of
replevin.
As
a
preliminary
matter,
the
Court
will
also
address
briefly
the
procedural
“ART.
415.
The
following
are
immovable
property:
points
raised
by
respondent.
x
x
x....................................x
x
x....................................x
x
x
The
Court’s
Ruling
(5)
Machinery,
receptacles,
instruments
or
implements
intended
by
the
The
Petition
is
not
meritorious.
owner
of
the
tenement
for
an
industry
or
works
which
may
be
carried
on
in
a
building
or
on
a
piece
of
land,
and
which
tend
directly
to
meet
the
Preliminary
Matter:Procedural
Questions
needs
of
the
said
industry
or
works;
Respondent
contends
that
the
Petition
failed
to
indicate
x
x
x....................................x
x
x....................................x
x
x”
expressly
whether
it
was
being
filed
under
Rule
45
or
Rule
65
of
the
Rules
of
Court.
It
further
alleges
that
the
Petition
In
the
present
case,
the
machines
that
were
the
erroneously
impleaded
Judge
Hilario
Laqui
as
respondent.
subjects
of
the
Writ
of
Seizure
were
placed
by
petitioners
in
the
factory
built
on
their
own
land.
Indisputably,
they
were
There
is
no
question
that
the
present
recourse
is
under
essential
and
principal
elements
of
their
chocolate‐making
Rule
45.
This
conclusion
finds
support
in
the
very
title
of
the
industry.
Hence,
although
each
of
them
was
movable
or
Petition,
which
is
“Petition
for
Review
on
Certiorari.”[13]
personal
property
on
its
own,
all
of
them
have
become
While
Judge
Laqui
should
not
have
been
impleaded
as
a
“immobilized
by
destination
because
they
are
essential
and
respondent,[14]
substantial
justice
requires
that
such
lapse
by
principal
elements
in
the
industry.”[16]
In
that
sense,
itself
should
not
warrant
the
dismissal
of
the
present
Petition.
petitioners
are
correct
in
arguing
that
the
said
machines
are
In
this
light,
the
Court
deems
it
proper
to
remove,
motu
real,
not
personal,
property
pursuant
to
Article
415
(5)
of
the
proprio,
the
name
of
Judge
Laqui
from
the
caption
of
the
Civil
Code.[17]
32
Be
that
as
it
may,
we
disagree
with
the
submission
of
as
personal
property.
Specifically,
Section
12.1
of
the
the
petitioners
that
the
said
machines
are
not
proper
subjects
Agreement
reads
as
follows:[21]
of
the
Writ
of
Seizure.
“12.1
The
PROPERTY
is,
and
shall
at
all
times
be
and
remain,
personal
The
Court
has
held
that
contracting
parties
may
validly
property
notwithstanding
that
the
PROPERTY
or
any
part
thereof
may
now
stipulate
that
a
real
property
be
considered
as
personal.[18]
be,
or
hereafter
become,
in
any
manner
affixed
or
attached
to
or
After
agreeing
to
such
stipulation,
they
are
consequently
embedded
in,
or
permanently
resting
upon,
real
property
or
any
building
estopped
from
claiming
otherwise.
Under
the
principle
of
thereon,
or
attached
in
any
manner
to
what
is
permanent.”
estoppel,
a
party
to
a
contract
is
ordinarily
precluded
from
Clearly
then,
petitioners
are
estopped
from
denying
the
denying
the
truth
of
any
material
fact
found
therein.
characterization
of
the
subject
machines
as
personal
Hence,
in
Tumalad
v.
Vicencio,[19]
the
Court
upheld
the
property.
Under
the
circumstances,
they
are
proper
subjects
intention
of
the
parties
to
treat
a
house
as
a
personal
of
the
Writ
of
Seizure.
property
because
it
had
been
made
the
subject
of
a
chattel
It
should
be
stressed,
however,
that
our
holding
‐‐
that
mortgage.
The
Court
ruled:
the
machines
should
be
deemed
personal
property
pursuant
“x
x
x.
Although
there
is
no
specific
statement
referring
to
the
subject
to
the
Lease
Agreement
–
is
good
only
insofar
as
the
house
as
personal
property,
yet
by
ceding,
selling
or
transferring
a
contracting
parties
are
concerned.[22]
Hence,
while
the
property
by
way
of
chattel
mortgage
defendants‐appellants
could
only
parties
are
bound
by
the
Agreement,
third
persons
acting
in
have
meant
to
convey
the
house
as
chattel,
or
at
least,
intended
to
treat
good
faith
are
not
affected
by
its
stipulation
characterizing
the
the
same
as
such,
so
that
they
should
not
now
be
allowed
to
make
an
subject
machinery
as
personal.[23]
In
any
event,
there
is
no
inconsistent
stand
by
claiming
otherwise.”
showing
that
any
specific
third
party
would
be
adversely
affected.
Applying
Tumalad,
the
Court
in
Makati
Leasing
and
Finance
Corp.
v.
Wearever
Textile
Mills[20]
also
held
that
the
Validity
of
the
Lease
Agreement
machinery
used
in
a
factory
and
essential
to
the
industry,
as
in
In
their
Memorandum,
petitioners
contend
that
the
the
present
case,
was
a
proper
subject
of
a
writ
of
replevin
Agreement
is
a
loan
and
not
a
lease.[24]
Submitting
because
it
was
treated
as
personal
property
in
a
contract.
documents
supposedly
showing
that
they
own
the
subject
Pertinent
portions
of
the
Court’s
ruling
are
reproduced
machines,
petitioners
also
argue
in
their
Petition
that
the
hereunder:
Agreement
suffers
from
“intrinsic
ambiguity
which
places
in
“x
x
x.
If
a
house
of
strong
materials,
like
what
was
involved
in
the
above
serious
doubt
the
intention
of
the
parties
and
the
validity
of
Tumalad
case,
may
be
considered
as
personal
property
for
purposes
of
the
lease
agreement
itself.”[25]
In
their
Reply
to
respondent’s
executing
a
chattel
mortgage
thereon
as
long
as
the
parties
to
the
contract
Comment,
they
further
allege
that
the
Agreement
is
so
agree
and
no
innocent
third
party
will
be
prejudiced
thereby,
there
is
invalid.[26]
absolutely
no
reason
why
a
machinery,
which
is
movable
in
its
nature
and
These
arguments
are
unconvincing.
The
validity
and
the
becomes
immobilized
only
by
destination
or
purpose,
may
not
be
likewise
nature
of
the
contract
are
the
lis
mota
of
the
civil
action
treated
as
such.
This
is
really
because
one
who
has
so
agreed
is
estopped
pending
before
the
RTC.
A
resolution
of
these
questions,
from
denying
the
existence
of
the
chattel
mortgage.”
therefore,
is
effectively
a
resolution
of
the
merits
of
the
case.
In
the
present
case,
the
Lease
Agreement
clearly
Hence,
they
should
be
threshed
out
in
the
trial,
not
in
the
provides
that
the
machines
in
question
are
to
be
considered
proceedings
involving
the
issuance
of
the
Writ
of
Seizure.
33
Indeed,
in
La
Tondeña
Distillers
v.
CA,[27]
the
Court
“x
x
x.
Moreover,
even
granting
that
the
charge
is
true,
such
fact
alone
explained
that
the
policy
under
Rule
60
was
that
questions
does
not
render
a
contract
void
ab
initio,
but
can
only
be
a
ground
for
involving
title
to
the
subject
property
–
questions
which
rendering
said
contract
voidable,
or
annullable
pursuant
to
Article
1390
of
petitioners
are
now
raising
‐‐
should
be
determined
in
the
the
new
Civil
Code,
by
a
proper
action
in
court.
There
is
nothing
on
record
trial.
In
that
case,
the
Court
noted
that
the
remedy
of
to
show
that
the
mortgage
has
been
annulled.
Neither
is
it
disclosed
that
defendants
under
Rule
60
was
either
to
post
a
counter‐bond
steps
were
taken
to
nullify
the
same.
x
x
x”
or
to
question
the
sufficiency
of
the
plaintiff’s
bond.
They
Alleged
Injustice
Committed
on
the
Part
of
Petitioners
were
not
allowed,
however,
to
invoke
the
title
to
the
subject
property.
The
Court
ruled:
Petitioners
contend
that
“if
the
Court
allows
these
machineries
to
be
seized,
then
its
workers
would
be
out
of
“In
other
words,
the
law
does
not
allow
the
defendant
to
file
a
motion
to
work
and
thrown
into
the
streets.”[31]
They
also
allege
that
dissolve
or
discharge
the
writ
of
seizure
(or
delivery)
on
ground
of
the
seizure
would
nullify
all
efforts
to
rehabilitate
the
insufficiency
of
the
complaint
or
of
the
grounds
relied
upon
therefor,
as
in
corporation.
proceedings
on
preliminary
attachment
or
injunction,
and
thereby
put
at
issue
the
matter
of
the
title
or
right
of
possession
over
the
specific
chattel
Petitioners’
arguments
do
not
preclude
the
being
replevied,
the
policy
apparently
being
that
said
matter
should
be
implementation
of
the
Writ.
As
earlier
discussed,
law
and
ventilated
and
determined
only
at
the
trial
on
the
merits.”[28]
jurisprudence
support
its
propriety.
Verily,
the
above‐
mentioned
consequences,
if
they
come
true,
should
not
be
Besides,
these
questions
require
a
determination
of
blamed
on
this
Court,
but
on
the
petitioners
for
failing
to
avail
facts
and
a
presentation
of
evidence,
both
of
which
have
no
themselves
of
the
remedy
under
Section
5
of
Rule
60,
which
place
in
a
petition
for
certiorari
in
the
CA
under
Rule
65
or
in
a
allows
the
filing
of
a
counter‐bond.
The
provision
states:
petition
for
review
in
this
Court
under
Rule
45.[29]
“SEC.
5.
Return
of
property.
‐‐
If
the
adverse
party
objects
to
the
Reliance
on
the
Lease
Agreement
sufficiency
of
the
applicant’s
bond,
or
of
the
surety
or
sureties
thereon,
he
It
should
be
pointed
out
that
the
Court
in
this
case
may
cannot
immediately
require
the
return
of
the
property,
but
if
he
does
not
rely
on
the
Lease
Agreement,
for
nothing
on
record
shows
so
object,
he
may,
at
any
time
before
the
delivery
of
the
property
to
the
that
it
has
been
nullified
or
annulled.
In
fact,
petitioners
applicant,
require
the
return
thereof,
by
filing
with
the
court
where
the
assailed
it
first
only
in
the
RTC
proceedings,
which
had
action
is
pending
a
bond
executed
to
the
applicant,
in
double
the
value
of
ironically
been
instituted
by
respondent.
Accordingly,
it
must
the
property
as
stated
in
the
applicant’s
affidavit
for
the
delivery
thereof
be
presumed
valid
and
binding
as
the
law
between
the
to
the
applicant,
if
such
delivery
be
adjudged,
and
for
the
payment
of
such
parties.
sum
to
him
as
may
be
recovered
against
the
adverse
party,
and
by
serving
a
copy
bond
on
the
applicant.”
Makati
Leasing
and
Finance
Corporation[30]
is
also
instructive
on
this
point.
In
that
case,
the
Deed
of
Chattel
WHEREFORE,
the
Petition
is
DENIED
and
the
assailed
Mortgage,
which
characterized
the
subject
machinery
as
Decision
of
the
Court
of
Appeals
AFFIRMED.
Costs
against
personal
property,
was
also
assailed
because
respondent
had
petitioners.
allegedly
been
required
“to
sign
a
printed
form
of
chattel
SO
ORDERED.
mortgage
which
was
in
a
blank
form
at
the
time
of
signing.”
The
Court
rejected
the
argument
and
relied
on
the
Deed,
Melo,
(Chairman),
Vitug,
Purisima,
and
Gonzaga‐Reyes,
JJ.,
ruling
as
follows:
concur.
34
equity
of
redemption
under
prior
transfers,
held
that
a
transfer
of
all
the
property
of
a
corporation
to
one
advancing
money
to
enable
it
to
continue
‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐
its
business
was
not
a
conditional
sale
of
the
property,
but
a
contract
creating
security
for
the
money
advanced,
and,
on
liquidation
of
the
VALDES
V.
CENTRAL
ALTAGRACIA,
INC.,
225
U.
S.
58
(1912)
assets,
the
transferee
stood
merely
as
a
secured
creditor
The
mere
form
of
an
instrument
transferring
property
of
a
debtor
cannot
exclude
the
power
of
creditors
to
inquire
into
the
reality
and
substance
of
U.S.
Supreme
Court
a
contract
unrecorded,
although
required
by
law
to
be
recorded
in
order
to
Valdes
v.
Central
Altagracia,
Inc.,
225
U.S.
58
(1912)
be
effective
against
third
parties.
Valdes
v.
Central
Altagracia,
Incorporated
Under
the
general
law
of
Porto
Rico,
machinery
placed
on
property
by
a
tenant
does
not
become
immobilized;
when,
however,
a
tenant
places
it
Nos.
193,
196
there
pursuant
to
contract
that
it
shall
belong
to
the
owner,
it
becomes
Submitted
March
6,
1912
immobilized
as
to
that
tenant
and
his
assigns
with
notice,
although
it
does
not
become
so
as
to
creditors
not
having
legal
notice
of
the
lease.
Decided
May
13,
1912
In
this
case,
held
that
the
lien
of
the
attachment
of
a
creditor
of
the
tenant
225
U.S.
58
on
machinery
placed
by
the
tenant
on
a
sugar
Central
in
Porto
Rico
is
superior
to
the
claim
of
the
transferee
of
an
unrecorded
APPEALS
FROM
THE
DISTRICT
COURT
OF
THE
Page
225
U.
S.
59
UNITED
STATES
FOR
PORTO
RICO
lease,
even
though
the
lease
required
the
tenant
to
place
the
machinery
on
the
property.
Syllabus
5
P.R.
155
affirmed.
The
record
in
this
case
shows
that
the
court
below
did
not
err
in
bringing
this
case
to
a
speedy
conclusion
and
avoiding
the
loss
occasioned
by
the
The
facts
are
stated
in
the
opinion.
litigation
to
all
concerned.
MR.
CHIEF
JUSTICE
WHITE
delivered
the
opinion
of
the
Court.
A
litigant
cannot,
after
all
parties
have
acquiesced
in
the
order
setting
the
These
cases
were
consolidated
below,
tried
together,
a
like
statement
of
case
for
trial
and
the
court
has
denied
his
request
for
continuance,
refuse
facts
was
made
applicable
to
both,
and
the
court
disposed
of
them
in
one
to
proceed
with
the
trial
on
the
ground
that
the
time
to
plead
has
not
opinion.
We
shall
do
likewise.
Stating
only
things
deemed
to
be
essential
as
expired,
and
when
such
refusal
to
proceed
is
inconsistent
with
his
prior
shown
by
the
pleadings
and
documents
annexed
to
them
and
the
finding
attitude
in
the
case.
of
facts
made
below,
the
case
is
this:
Joaquin
Sanchez
owned
in
Porto
Rico
The
granting
of
a
continuance
is
within
the
sound
discretion
of
the
trial
a
tract
of
land
of
about
22
acres
(cuerdas)
on
which
was
a
sugar
house
court,
and
not
subject
to
be
reviewed
on
appeal
except
in
cases
of
clear
containing
a
mill
for
crushing
cane
and
an
evaporating
apparatus
for
error
and
abuse;
in
this
case,
the
record
shows
that
the
refusal
to
continue
manufacturing
the
juice
of
the
cane
into
sugar.
All
of
the
machinery
was
on
account
of
absence
of
witness
was
not
an
abuse,
but
a
just
exercise,
of
antiquated
and
of
a
limited
capacity.
The
establishment
was
known
as
the
discretion.
Central
Altagracia,
and
Sanchez,
while
not
a
cane
grower,
carried
on
the
business
of
a
central
‐‐
that
is,
of
acquiring
cane
grown
by
others
and
Under
the
circumstances
of
this
case,
and
in
view
of
the
existence
of
an
manufacturing
it
into
sugar
at
his
factory.
On
the
eighteenth
day
of
35
January,
1905,
Sanchez
leased
his
land
and
plant
to
Salvador
Castello
for
a
place,
period
of
ten
years.
The
lease
gave
to
the
tenant
(Castello)
the
right
to
"and
be
a
contracting
party
if
he
so
desired.
Otherwise,
the
plantation,
in
install
in
the
plant
such
a
condition
at
it
may
be
at
his
death,
shall
immediately
pass
into
the
"such
machinery
as
he
may
deem
convenient,
which
said
machinery
at
the
possession
of
its
owner,
Don
Joaquin
Sanchez."
end
In
June,
Page
225
U.
S.
60
Page
225
U.
S.
61
of
the
years
mentioned
(the
term
of
the
lease)
shall
become
the
exclusive
1905,
by
a
supplementary
contract,
the
lease
was
extended
without
property"
change
of
its
terms
and
conditions
for
an
additional
period
of
ten
years,
of
the
lessor,
Sanchez.
The
tenant
was
given
one
year
in
which
to
begin
the
making
the
total
term
twenty
years.
Although
executed
under
private
work
of
repairing
and
improving
the
plant,
and
it
was
provided
that,
signature,
this
lease,
conformably
to
the
laws
of
Porto
Rico,
was
produced
before
a
notary
and
made
authentic,
and
in
such
form
was
duly
registered
"upon
the
expiration
of
this
term,
if
the
necessary
improvements
shall
not
on
the
public
records,
as
required
by
the
Porte
Rican
laws.
have
been
begun
by
him
(Castello),
then
this
contract
shall
be
null
and
void,
and
no
cause
of
action
shall
accrue
to
any
of
the
contracting
parties
On
the
first
day
of
July,
1905,
Salvador
and
Gerardo
Castello
transferred
all
by
reason
thereof."
their
rights
acquired
under
the
lease,
as
above
stated,
to
Frederick
L.
Cornwell
for
"the
corporation
to
be
organized
under
the
name
of
Central
Further
agreeing
on
the
subject
of
the
improved
machinery
which
was
to
Altagracia,
of
which
he
is
the
trustee."
This
transfer
bound
the
corporation
be
placed
in
the
plant,
the
contract
provided:
to
all
the
obligations
in
favor
of
the
original
lessor,
Sanchez,
provided
that
"Upon
the
expiration
of
the
term
agreed
on
under
this
contract,
any
the
corporation
should
issue
to
Castello
a
certain
number
of
paid‐up
improvement
or
machinery
installed
in
the
said
central
shall
remain
for
the
shares
of
its
capital
stock
and
a
further
number
of
shares
as
the
output
of
benefit
of
Don
Joaquin
Sanchez,
and
Don
Salvador
Castello
shall
have
no
sugar
from
the
plant
increased
as
the
result
of
its
enlarged
capacity
right
to
claim
anything
for
the
improvements
made."
consequent
upon
the
improvement
of
the
machinery
by
the
corporation.
The
rental
was
thus
provided
for:
The
lease
further
provided
for
the
employment
of
Castello
as
superintendent
at
a
salary,
for
a
substitution
of
Gerardo
Castello,
in
the
"After
each
crop,
such
profits
as
may
be
produced
by
the
Central
Altagracia
event
of
the
absence
or
death
of
his
brother
Salvador,
and,
for
this
reason,
shall
be
distributed,
and
twenty‐five
percent
(25%)
thereof
shall
be
it
is
to
be
assumed
Gerardo
made
himself
a
party
to
the
transfer
of
the
immediately
paid
to
Don
Joaquin
Sanchez
as
equivalent
for
the
rental
of
lease.
This
transfer
of
the
lease
to
the
corporation
was
never
put
upon
the
said
central
and
of
the
twenty‐two
(22)
cuerdas
of
land
surrounding
the
public
records.
The
corporation
was
organized
under
the
laws
of
the
State
same.
The
remaining
seventy‐five
percent
(75%)
shall
belong
to
Don
of
Maine,
and,
under
the
transfer,
took
charge
of
the
plant.
The
season
for
Salvador
Castello,
who
may
interest
therein
whomsoever
he
may
wish,
grinding
cane
and
the
manufacture
of
sugar
in
Porto
Rico
usually
either
for
the
whole
or
part
thereof."
commences
It
was
stipulated,
however,
that,
in
fixing
the
profits,
no
charge
should
be
"about
the
month
of
December
of
each
year,
and
terminates
in
the
made
for
repairs
of
the
existing
machinery
or
for
new
machinery
put
in,
as
months
of
May,
June,
or
July
of
the
year
following,
according
to
the
the
entire
cost
of
these
matters
was
to
be
borne
by
the
lessee,
Castello.
amount
of
cane
to
be
ground."
The
lease
provided,
moreover,
that,
in
case
of
the
death
of
Sanchez,
the
obligations
of
the
contract
should
be
binding
on
his
heirs,
and
in
the
case
Central
factories
in
Porto
Rico
usually
of
the
death
of
Castello,
his
brother,
Gerardo
Castello,
should
take
his
"make
contracts
with
the
people
(colonos)
growing
cane,
so
that
growers
36
of
cane
will
deliver
the
same
to
be
ground,
and
such
contracts
immediately
upon
being
required
to
do
so
by
the
former."
Page
225
U.
S.
62
This
sale
was
made
subject
to
a
right
to
redeem
the
property
within
a
year
on
paying
Valdes
the
entire
amount
of
his
debt.
There
was
a
stipulation
are
usually
made
and
entered
into
in
the
months
of
June,
July,
and
that
Valdes
assumed
all
the
obligations
of
the
lease
transferred
by
Castello
August."
to
the
company.
In
other
words,
on
the
termination
of
one
grinding
season,
in
the
months
The
undoubted
purpose
was
not
to
interfere
with
the
operation
of
the
of
June
or
July,
it
is
usual
in
the
ensuing
August
to
make
new
contracts
for
plant
by
the
corporation,
since
there
was
a
provision
in
the
contract
the
cane
to
be
delivered
in
the
following
grinding
season,
which,
as
we
binding
Valdes
to
lease
the
property
to
the
corporation
pending
the
period
have
said,
commences
in
December.
The
contract
transferring
the
lease
to
of
redemption.
This
sale
was
passed
in
Porto
Rico
before
a
notary
public,
the
Central
Altagracia,
Incorporated,
was
made
in
July,
1905,
at
the
end,
but
was
never
put
upon
the
public
records.
At
the
time
it
was
made,
there
therefore,
of
the
grinding
season
of
that
year.
To
what
extent
the
was
a
very
considerable
sum
unpaid
on
the
debt
of
Nevers
&
Callaghan.
corporation
contracted
for
cane
to
be
delivered
to
it
for
grinding
during
This
fact,
joined
with
the
period
when
the
sale
with
the
right
to
redeem
the
season
of
1905‐06,
which
began
in
December,
1905,
does
not
appear.
was
made
‐‐
that
is,
the
approaching
end
of
the
sugar‐making
season
of
It
is
inferable,
however,
that
the
corporation
began
the
work
of
installing
1906
and
1907
‐‐
coupled
with
other
facts
to
which
we
shall
hereafter
new
machinery
to
give
the
plant
a
larger
capacity
within
the
year
make
reference,
all
tend
to
establish
that,
at
that
time,
either
because
stipulated
in
the
lease
from
Sanchez
to
Castello.
We
say
this
because
it
is
insufficient
capital
had
been
put
into
the
venture
or
because
the
business
certain
that,
in
the
fall
of
1906
(October),
the
corporation
borrowed
from
had
been
carried
on
at
a
loss,
the
affairs
of
the
corporation
were
the
commercial
firm
of
Nevers
&
Callaghan
in
New
York
City
the
sum
of
embarrassed,
if
it
was
not
insolvent.
A
short
while
before
the
twenty‐five
thousand
dollars
($25,000)
to
enable
the
corporation
to
pay
commencement
of
the
grinding
season
of
1907‐1908
in
October,
1907,
in
for
new
and
enlarged
machinery
which
it
had
ordered,
and
which
was
the
City
of
New
York,
the
corporation,
through
its
president,
declaring
placed
in
the
factory
in
time
to
be
used
in
the
grinding
season
of
1906‐07,
himself
to
be
authorized
by
the
board
of
directors,
sanctioned
by
a
vote
of
which
began
in
December,
1906.
While
such
grinding
season
was
the
stockholders,
apparently
made
an
absolute
sale
of
all
the
rights
of
the
progressing,
on
April
11,
1907,
the
corporation,
through
its
president,
corporation
under
the
lease,
and
all
its
title
to
the
machinery
which
the
under
the
authority
of
its
board
of
directors,
sold
to
one
Ramon
Valdes
all
corporation
had
put
into
the
plant.
This
sale
was
declared
to
be
for
a
its
rights
acquired
under
the
lease
transferred
by
Castello.
This
transfer
consideration
of
sixty‐five
thousand
($65,000)
dollars
which
the
company
expressly
included
all
the
machinery
previously
placed
by
the
corporation
acknowledged
to
have
received
from
Valdes,
first,
by
the
payment
of
the
in
the
sugar
house,
as
well
as
machinery
which
might
be
thereafter
thirty‐five
installed
during
the
term
of
redemption
hereafter
to
be
referred
to,
and
which,
it
was
declared,
conformably
to
the
original
lease,
"shall
be
a
part
of
Page
225
U.
S.
64
said
factory
for
the
manufacture
of
sugar."
The
consideration
for
the
sale
($35,000)
dollars
cash,
as
stated
in
the
previous
sale
made
subject
to
the
was
stated
in
the
contract
to
be
equity
of
redemption,
and
thirty
thousand
($30,000)
dollars
which
"the
"thirty‐five
thousand
dollars
($35,000)
received
by
the
corporation,
company
has
received
afterwards
in
cash
from
Valdes."
There
was
a
twenty‐five
thousand
four
hundred
dollars
provision
in
the
contract
to
the
effect
that,
as
the
purpose
of
the
previous
contract
of
sale,
which
had
been
made
subject
to
the
equity
of
Page
225
U.
S.
63
redemption,
was
accomplished
by
the
new
sale,
the
previous
sale
was
($25,400)
whereof
had
been
paid
prior
to
this
act
[of
sale],
and
to
its
entire
declared
to
be
no
longer
operative.
satisfaction,
and
the
balance
of
nine
thousand
six
hundred
dollars
($9,600)
A
few
days
afterwards,
likewise
in
the
City
of
New
York
(on
November
2,
shall
be
turned
over
to
the
vendor
corporation
by
Senor
Valdes
1907),
Valdes
sold
to
the
company
all
the
rights
which
he
had
acquired
37
from
it
by
the
previous
sale,
the
price
being
sixty‐five
thousand
($65,000)
the
conditional
sale,
the
right
to
the
relief
prayed
had
arisen.
On
the
same
dollars,
payable
in
installments
falling
due
in
the
years
1908,
1909,
1910,
day,
Valdes
commenced
a
suit
in
equity
against
the
corporation
in
aid
of
and
1911,
respectively.
This
transfer
was
put
in
the
form
of
a
conditional
the
suit
at
law.
The
bill
alleged
the
default
of
the
corporation,
the
bringing
sale
which
reserved
the
title
in
Valdes
until
the
payment
of
the
deferred
of
the
suit
at
law,
the
confusion
in
the
affairs
of
the
corporation,
the
price,
and
upon
the
stipulation
that
any
default
by
the
corporation
entitled
judgment
and
levy
of
the
execution
by
Nevers
and
Callaghan,
and
the
Valdes
ipso
facto
to
take
possession
of
the
property.
Neither
this
act
of
threat
to
sell
the
machinery
under
such
execution,
the
refusal
of
the
sale
from
Valdes
to
the
corporation
nor
the
one
made
by
the
corporation
corporation
to
deliver
possession
of
the
property,
the
waste
and
to
Valdes
were
ever
put
upon
the
public
records.
destruction
of
the
value
of
the
property
which
would
result
if
there
was
no
one
representing
the
corporation
having
power
to
contract
for
cane
to
be
Prior
to
the
making
of
the
sales
just
stated,
or
about
that
time,
the
delivered
during
the
next
grinding
season,
etc.,
etc.
The
prayer
was
for
the
corporation
defaulted
in
the
payment
of
a
note
held
by
Nevers
&
Callaghan
appointment
of
a
receiver
to
take
charge
of
the
property,
with
authority
for
a
portion
of
the
money
which
they
had
loaned
the
corporation
under
the
circumstances
which
we
have
previously
stated,
and
that
firm
sued
in
Page
225
U.
S.
66
the
court
below
the
corporation
to
recover
the
debt.
to
carry
on
the
same,
make
the
necessary
contracts
for
cane
for
the
future,
The
grinding
season
of
1907‐1908
commenced
in
December,
1907,
and
it
being
prayed
that
the
receiver
should
be
empowered
to
issue
receiver's
was
obviously
not
a
successful
one,
for
the
debt
of
Nevers
&
Callaghan
was
certificates
to
the
extent
necessary
to
the
accomplishment
of
the
purposes
not
paid,
and
in
May,
1908,
a
judgment
was
recovered
by
them
against
the
which
the
bill
had
in
view.
corporation
for
about
$17,000,
with
interest,
and
in
the
same
month
On
the
same
day,
a
bill
was
filed
on
behalf
of
the
corporation
against
execution
was
issued
and
levied
upon
the
machinery
in
the
sugar
house.
Valdes.
This
bill
attacked
the
sale
made
to
Valdes
and
by
him
to
the
Previous
to,
or
not
long
subsequent
to,
the
time
Nevers
&
Callaghan
corporation.
It
was
charged
that
the
price
stated
to
have
been
paid
by
Page
225
U.
S.
65
Valdes
as
a
consideration
of
the
conditional
sale
was
fictitious,
and
that
the
only
sum
he
had
advanced
at
that
time
was
the
$35,000
which
it
was
commenced
their
suit,
the
precise
date
not
being
stated
in
the
record,
the
the
purpose
to
secure
by
means
of
the
sale
with
the
equity
of
redemption.
heirs
of
Sanchez,
the
original
lessor,
brought
a
suit
in
the
court
below
That,
at
that
time,
Valdes
exacted
as
a
consideration
for
his
loan
that
he
be
against
the
corporation.
The
nature
of
the
suit
and
the
relief
sought
is
not
made
a
director
and
vice‐president
of
the
company.
The
bill
then
stated
disclosed,
but
it
is
inferable
from
the
facts
stated
that
the
suit
either
that,
it
having
become
evident
in
the
following
autumn
that
the
sought
to
recover
the
property
on
the
ground
that
there
was
no
power
in
corporation
would
require
more
money
to
increase
its
plant,
to
pay
off
the
Castello
to
transfer
the
lease
or
upon
the
ground
of
default
in
the
sum
due
Nevers
&
Callaghan,
and
for
the
operation
of
the
plant,
Valdes
conditions
as
to
payment
of
profits
as
rental
which
the
lease
stipulated.
It
agreed
to
advance
the
money
if
he
were
made
president
of
the
company
would
seem
also,
at
about
the
same
time,
either
one
or
both
of
the
at
a
stipulated
salary,
given
a
bonus
in
the
stock
of
the
company,
and
upon
Castellos
brought
a
suit
against
the
company,
presumably
upon
the
theory
the
condition
that
the
papers
be
executed
embodying
the
so‐called
sale
of
that
there
had
been
a
default
in
the
obligations
assumed
in
their
favor
by
the
company
to
Valdes
and
the
practically
simultaneous
conditional
sale
by
the
corporation
at
the
time
it
took
the
transfer
of
the
lease.
In
the
Valdes
to
the
company.
The
bill
then
alleged
that
Valdes,
having
thus
meanwhile
also,
probably
as
the
result
of
the
want
of
success
of
the
become
the
president
of
the
company,
failed
to
carry
out
his
agreement
to
corporation,
discord
arose
between
its
stockholders,
and
a
suit
growing
advance
the
money,
failed
to
provide
for
the
debt
of
Nevers
&
Callaghan,
out
of
that
state
of
things
was
brought
in
the
lower
court.
mismanaged
the
affairs
of
the
property
in
many
alleged
particulars,
and
This
litigation
was
commenced
in
June,
1908,
by
the
bringing
by
Valdes
of
did
various
acts
to
the
prejudice
of
the
company
and
to
his
own
wrongful
an
action
at
law
in
the
court
below
to
recover
the
plant
on
the
ground
enrichment,
which
it
is
unnecessary
to
recapitulate.
The
necessity
of
that,
by
the
default
in
paying
one
of
the
installments
of
the
price
stated
in
38
contracting
for
cane
during
the
contract
season
in
order
that
the
plant
attorneys
for
both
parties
should
be
in
Porto
Rico.
might
continue
during
the
next
operating
season
to
be
a
going
concern,
The
hope
of
a
beneficial
result
from
the
operation
of
the
plant
by
the
and
the
waste
and
loss
which
would
otherwise
receiver
proved
delusive.
As
a
result
of
such
operation,
there
was
a
Page
225
U.
S.
67
considerable
loss
represented
by
outstanding
receiver's
certificates,
with
no
means
of
paying
except
out
of
the
property.
Obviously
for
this
reason,
be
occasioned,
were
fully
alleged.
Valdes
and
the
firm
of
Nevers
&
the
record
contains
a
statement
that,
on
July
12,
1909,
a
conference
was
Callaghan
and
the
individual
members
of
that
firm
were
made
defendants.
had
between
the
court
and
all
parties
concerned
to
determine
what
steps
The
prayer
was
for
the
appointment
of
a
receiver
and
with
power
to
carry
should
be
taken
to
meet
the
situation.
It
appears
that,
at
that
conference,
on
the
business
of
the
central,
with
power,
for
that
purpose,
to
contract
the
counsel
representing
the
heirs
of
Sanchez
and
of
Nevers
&
Callaghan
for
cane
for
the
coming
season,
with
authority
to
issue
receiver's
stated
their
opposition
to
a
continuance
of
the
receivership.
certificates
for
the
purpose
of
borrowing
the
money
which
might
be
required.
On
July
17,
1909,
the
court
placed
a
memorandum
on
the
files,
indicating
its
purpose
to
bring
the
litigation,
receivership,
etc.,
to
an
end,
and
to
The
judge,
being
about
to
leave
Porto
Rico
for
a
brief
period,
declined
to
cause
"immediate
issue
to
be
raised
on
the
pleadings
for
that
purpose."
appoint
a
permanent
receiver,
but
named
a
temporary
one
to
keep
the
This
memorandum
was
entitled
in
all
the
pending
causes
concerning
the
property
together
until
a
further
hearing
could
be
had,
interference
in
the
property.
It
directed
that
demurrers
which
had
been
filed
in
the
meanwhile
with
the
custodian
being
enjoined.
Shortly
thereafter,
creditors
consolidated
cause
of
Valdes
against
the
corporation
and
of
the
of
the
corporation
intervened
and
joined
in
the
prayer
made
by
both
of
corporation
against
Valdes
be
overruled,
and
the
defendants
were
the
complainants
for
the
appointment
of
a
receiver.
In
July,
the
two
suits
required
to
answer
on
or
before
Monday,
July
26,
in
order
that,
upon
the
were
by
order
consolidated,
and,
after
a
hearing,
a
receiver
was
appointed
following
day,
the
27th
of
July,
the
issues
raised
might
be
tried
before
the
and
authority
given
him
to
continue
the
property
as
a
going
concern
and
to
court
without
the
intervention
of
a
master.
It
was
provided
in
the
order,
borrow
a
limited
amount
of
money
on
receiver's
certificates,
if
necessary,
however,
that
nothing
in
this
direction
should
prevent
the
parties
from
to
secure
contracts
for
cane
for
the
coming
crop
season.
The
execution
of
filing
such
additional
pleadings
as
it
is
deemed
necessary
for
the
protection
the
Nevers
&
Callaghan
judgment
was
stayed
pending
an
appeal
which
had
of
their
rights
by
way
of
cross
bill
or
amendment,
etc.
To
make
the
order
been
taken
to
this
Court.
The
only
difference
which
seems
to
have
arisen
efficacious,
it
was
declared
that
nothing
would
be
done
in
the
suit
of
the
concerning
the
appointment
of
the
receiver
grew
out
of
the
fact
that
a
heirs
of
Sanchez
against
Castello
and
the
Altagracia,
prayer
of
the
Central
Altagracia,
asking
the
court
to
appoint
as
receiver
Mr.
Pettingill,
a
member
of
the
bar
and
one
of
the
counsel
of
the
corporation,
Page
225
U.
S.
69
and
who
was
also
its
treasurer,
was
denied.
Despite
this,
the
fair
inference
which
was
pending
on
appeal,
and
that
a
demurrer
filed
to
the
suit
of
is
that
the
ultimate
action
of
the
court
was
not
objected
to
by
anyone,
Castello
against
the
Central
would
be
overruled;
that
the
demurrer
in
the
because
of
the
hope
that
the
result
of
a
successful
operation
of
the
plant
suit
at
law
of
Valdes
would
remain
in
abeyance
to
await
the
final
action
of
during
the
coming
crop
season
might
ameliorate
the
affairs
of
the
the
court
on
the
trial
of
all
the
issues
in
the
equity
causes,
and
that
a
stay
corporation,
and
thus
prevent
further
controversies.
We
say
this
not
only
of
the
Nevers
&
Callaghan
execution
would
be
also
disposed
of
when
the
because
of
the
conduct
of
the
parties
prior
to
the
order
appointing
the
equity
cases
came
to
be
decided.
This
order
was
followed
by
a
receiver,
but
because,
memorandum
opinion
filed
on
July
the
21st
stating
very
fully
the
position
Page
225
U.
S.
68
of
the
respective
suits,
the
necessity
for
action
in
order
to
preserve
the
property
from
waste,
and
reiterating
the
view
that,
whatever
might
be
the
after
that
order,
the
solicitors
of
the
Altagracia
Company
and
Valdes
put
a
rights
of
the
Central
Altagracia
or
of
Valdes
under
the
lease,
those
rights
stipulation
of
record
that,
until
the
following
October,
no
steps
whatever
would
be
subordinate
to
the
ultimate
determination
of
the
suit
brought
by
should
be
taken
in
the
proceedings,
and
not
even
then
unless
the
39
the
heirs
of
Sanchez.
To
the
action
of
the
court
as
above
stated
no
wished,
treat
them
as
filed,
and
proceed
with
the
cause
and
file
them
at
objection
appears
to
have
been
made.
On
the
contrary,
between
the
time
any
convenient
time
thereafter.
Thereupon,
the
record
states:
of
that
order
and
the
period
fixed
for
the
commencement
of
a
hearing,
the
"Said
counsel
for
the
Central
Altagracia
stated
that
he
desired
time
to
file
Central
Altagracia,
Valdes,
and
Nevers
&
Callaghan
modified
their
exceptions
to
the
answer
and
an
answer
to
the
cross‐bill
in
suit
No.
565,
pleadings
to
the
extent
deemed
by
them
necessary
to
present
for
trial
the
and
the
court
granted
until
the
morning
of
July
28
for
such
purpose.
Later
issues
upon
which
they
relied.
In
the
case
of
the
Central
Altagracia,
this
in
the
day
of
July
27,
one
of
the
counsel
for
Valdes
having
requested
the
was
done
by
filing,
on
July
22,
an
amended
bill
of
complaint
in
its
suit
court
to
postpone
the
hearing
of
the
cause
until
the
morning
of
the
29th
against
Valdes,
and
on
July
26
its
answer
in
the
suit
of
Valdes.
The
because
of
an
unexpected
professional
engagement
elsewhere,
the
acceptance
by
Valdes
of
the
terms
of
the
order
was
shown
by
an
answer
request
was
communicated
by
the
court
to
the
other
counsel
in
the
filed
to
the
bill
in
the
suit
of
the
company
and
the
cross‐bill
in
the
same
cause."
cause,
and
Nevers
&
Callaghan
manifested
their
acquiescence
by
obtaining
leave
to
make
themselves
parties
and
asserting
their
rights
by
cross‐bill
Thereupon
the
record
again
recites:
and
answers
which
it
is
unnecessary
to
detail.
"Messrs.
Pettingill
&
When
the
consolidated
cause
was
called
for
trial
on
the
morning
of
July
27,
Page
225
U.
S.
71
the
counsel
for
the
Central
Altagracia
moved
a
continuance
in
order
to
take
the
testimony
of
certain
witnesses
in
Philadelphia
and
New
York
for
Cornwell,
attorneys
for
the
Central
Altagracia,
stated
that
they
withdrew
the
purpose
of
proving
some
of
the
allegations
of
the
complaint
any
statement
they
have
hitherto
made
in
the
cause
in
that
regard,
and
desired
to
be
understood
that
they
would
not
except
to
the
answer
in
suit
Page
225
U.
S.
70
No.
565,
or
plead
or
answer
to
the
cross‐bill
therein
save
and
except
within
as
to
the
wrongdoing
of
Valdes
in
administering
the
affairs
of
the
the
time
which
they
contended
the
rules
governing
this
Court
of
equity
corporation.
This
application
was
supported
by
the
affidavit
of
Mr.
gave
them,
and
would
stand
upon
what
they
considered
their
rights
in
that
Pettingill,
the
counsel
of
the
corporation.
The
record
states
that
the
regard."
request
for
continuance
was
opposed
by
all
the
other
counsel,
and
the
When
the
court
assembled
the
next
day,
on
the
morning
of
the
28th,
a
application
was
denied.
In
doing
so,
the
court
stated:
statement
concerning
the
occurrence
of
the
previous
day
as
to
the
"That
the
matter
has
been
pending
for
more
than
a
year,
and
that
counsel
continuance,
etc.,
just
reviewed,
was
read
by
the
court
in
the
presence
of
had
full
notice
of
the
court's
intention
to
press
the
matters
to
issue
and
all
the
counsel,
whereupon
the
record
recites:
trial,
and
that
it
is
not
disposed
to
delay
matters
at
this
time,
when
the
"N.
B.
Pettingill,
counsel
for
the
Central
Altagracia,
in
response
to
the
admissions
of
the
pleadings
are
so
broad
that
the
proofs
available
here
in
same,
stated
that
he
objected
to
proceeding
to
take
any
evidence
in
any
of
Porto
Rico
are
probably
sufficient,
and
the
amended
complaint
already
on
the
causes
at
that
time,
or
the
testimony
of
any
witnesses,
because
the
file
in
suit
No.
565,
‐‐
Valdes
v.
Central
Altagracia
‐‐
and
the
answer
thereto
same
was
not
at
issue
or
in
condition
for
the
taking
of
evidence,
and
and
the
answer
recently
filed
in
suit
No.
564
‐‐
Altagracia
v.
Valdes
‐‐
as
objected
to
the
taking
of
such
evidence
until
the
issues
of
said
causes
are
well
as
the
cross‐bill
also
recently
filed
in
suit
No.
465,
make
so
many
made
up
in
accordance
with
the
rules
of
practice
applicable
to
equity
allegations
and
admissions
as
that
the
real
issue
between
the
parties
can
causes."
be
plainly
seen,
and
that,
in
the
opinion
of
the
court,
enough
proof
is
available
here
in
Porto
Rico."
The
record
further
recites:
The
court
thereupon
declared
that
the
Altagracia
Company
might
by
the
"Which
objection
was
overruled
by
the
court
on
the
ground
that
the
action
next
day,
if
it
so
desired,
file
exceptions
to
the
answer
in
suit
565
and
an
called
for
thereby
is
not
necessary.
That
the
bill
was
amended
within
three
answer
to
the
cross‐complaint
‐‐
indeed,
that
the
corporation
might,
if
it
days;
an
answer
was
immediately
filed
to
it
and
a
cross‐bill
also
filed,
the
40
said
cross‐bill
making
only
the
same
claims
as
were
made
in
suit
No.
563
at
the
affidavit
as
to
the
absence
of
material
witnesses.
law,
and
that,
anyway,
the
issue
could
be
tried
on
the
bill
and
answer
in
We
think
all
the
contentions
on
this
subject
are
demonstrated
to
be
devoid
both
suits.
.
.
."
of
merit
by
the
statement
of
the
case
which
we
have
made.
In
the
first
This
ruling
of
the
court
having
been
excepted
to,
the
trial
proceeded
from
place,
it
is
manifest
day
to
day,
the
counsel
for
the
Central
Altagracia
taking
no
part
in
the
Page
225
U.
S.
73
same
and
virtually
treating
the
proceedings
as
though
they
did
not
concern
that
corporation.
from
that
statement
that
the
proceeding
leading
up
to
the
appointment
of
a
receiver
and
the
power
given
to
administer
the
property
was
largely
the
In
substance,
the
court
decided:
first,
that
as
the
result
of
the
contracts
result
of
the
assent
of
the
corporation.
In
the
second
place,
when
the
between
Valdes
and
the
Central
Altagracia,
he
was
not
the
owner
of
the
unsuccessful
financial
issue
of
the
receivership
had
become
manifest,
we
rights
of
that
corporation
under
the
lease,
or
of
the
machinery
which
think
the
statement
makes
it
perfectly
clear
that
the
steps
taken
by
the
Page
225
U.
S.
72
court
for
the
purpose
of
bringing
the
case
to
a
speedy
conclusion,
and
thus
avoiding
the
further
loss
which
would
result
to
all
interests
concerned,
had
been
placed
in
the
sugar
house
by
the
Altagracia
Company,
or
of
the
were
also
acquiesced
in
by
all
the
parties
in
interest
who
complied
with
the
other
assets
of
the
corporation,
but
that
he
was
merely
a
secured
creditor.
terms
of
that
order
and
took
advantage
of
the
rights
which
it
conferred.
The
sum
of
the
secured
debt
was
fixed
after
making
allowances
for
some
We
think
also
the
statement
makes
it
apparent
that
the
refusal
on
the
part
not
very
material
credits
which
the
corporation
was
held
to
be
entitled
to.
of
the
corporation
to
proceed
with
the
trial,
upon
the
theory
that
the
time
Second,
that
the
judgment
in
favor
of
Nevers
&
Callaghan
was
valid,
and
to
plead
allowed
by
the
equity
rules
had
not
elapsed,
was
the
result
of
a
that
that
firm,
by
virtue
of
its
execution
and
levy
upon
the
machinery,
had
change
of
view
because
of
the
action
of
the
court
in
refusing
the
a
prior
right
to
Valdes.
Third,
the
sums
due
to
various
creditors
of
the
continuance
on
account
of
the
absent
witnesses
‐‐
a
change
of
front
which
corporation
were
fixed
and
the
equities
or
priorities
were
classified
as
was
inconsistent
with
the
rights
which
the
corporation
had
exercised
in
follows:
(a)
taxes
due
by
the
corporation
and
the
sum
of
the
receiver's
accord
with
the
order
setting
the
cause
for
trial,
and
with
the
rights
of
all
certificates
and
certain
costs;
(b)
the
judgment
of
Nevers
&
Callaghan,
and
the
other
parties
to
the
cause
which
had
arisen
from
that
order
and
from
(c)
the
debt
of
Valdes;
(d)
debts
due
the
other
creditors.
Without
going
the
virtual
approval
of
it,
or
at
least
acquiescence
in
it,
by
all
concerned.
into
details,
it
suffices
to
say
that,
for
the
purpose
of
enforcing
these
conclusions,
the
decree
directed
a
sale
of
all
the
rights
of
the
Central
Considering
the
assignments
of
error
insofar
as
they
relate
alone
to
Altagracia
in
and
to
the
lease,
machinery,
contract,
etc.,
and
imposed
the
overruling
of
the
application
for
continuance,
based
upon
the
absence
of
duty
upon
Valdes,
if
he
became
the
purchaser,
to
pay
enough
cash
to
witnesses,
it
suffices
to
say
that
the
elementary
rule
is
that
the
granting
of
discharge
the
costs,
taxes,
receiver's
certificates,
and
the
claim
of
Nevers
&
a
continuance
of
the
cause
was
peculiarly
within
the
sound
discretion
of
Callaghan.
the
court
below
‐‐
a
discretion
not
subject
to
be
reviewed
on
appeal
except
in
case
of
such
clear
error
as
to
amount
to
a
plain
abuse
springing
from
an
These
appeals
were
then
prosecuted,
the
one
by
the
Central
Altagracia
and
arbitrary
exercise
of
power.
Instead
of
coming
within
this
latter
category,
the
other
by
Valdes.
We
shall
endeavor
as
briefly
as
may
be
to
dispose
of
we
think
the
facts
as
to
the
refusal
to
continue
and
the
conduct
of
the
the
contentions
relied
upon
to
secure
a
reversal.
parties
make
it
clear
that
there
was
not
only
no
abuse,
but
a
just
exercise,
I.
The
Central
Altagracia
appeal.
‐‐
The
alleged
errors
insisted
on
in
behalf
of
discretion.
of
that
company
relate
to
the
asserted
arbitrary
action
of
the
court
in
Page
225
U.
S.
74
forcing
the
cause
to
trial
without
affording
the
time
which
it
is
insisted
the
corporation
was
entitled
to
under
the
equity
rules
applicable
to
the
subject,
and
second,
the
refusal
of
the
court
to
grant
a
continuance
upon
II.
As
to
the
Appeal
of
Valdes.
‐‐
Two
propositions
are
relied
upon:
first,
41
that
error
was
committed
in
treating
Valdes
merely
as
a
secured
creditor,
excluded
the
power
of
creditors
to
inquire
into
its
reality
and
substance,
and
in
not
holding
him
to
be
the
absolute
owner
of
the
rights
and
property
even
although
the
contract
was
never
inscribed
upon
the
public
records
so
alleged
to
have
been
transferred
by
the
so‐called
conditional
sale.
Second,
as
to
bind
third
parties.
That
its
character
was
such
as
to
require
that,
in
any
event,
error
was
committed
in
awarding
to
Nevers
&
Callaghan
inscription
we
shall
in
a
few
moments
demonstrate
in
coming
to
consider
priority
over
Valdes.
the
second
proposition
‐‐
that
is,
upon
the
hypothesis
that
Valdes
was
but
a
secured
creditor,
was
error
committed
in
subordinating
his
claim
to
the
The
first
proposition
is
supported
by
a
reference
to
the
Porto
Rican
Code
prior
claim
of
Nevers
&
Callaghan
under
their
judgment
and
execution?
and
decisions
of
the
Supreme
Court
of
Spain
and
the
opinions
of
Spanish
law
writers.
But
the
contention
is
not
relevant,
and
the
authorities
cited
to
To
determine
this
question
involves
fixing
the
nature
and
character
of
the
sustain
it
are
inapposite
to
the
case
to
be
here
decided,
because
the
property
from
the
point
of
view
of
the
rights
of
Valdes,
and
its
nature
and
argument
rests
upon
an
imaginary
premise
‐‐
that
is,
that
the
ruling
of
the
character
from
the
point
of
view
of
Nevers
&
Callaghan
as
a
judgment
court
below
denied
that
right
under
the
Spanish
law
to
make
a
conditional
creditor
of
the
Altagracia
Company,
and
the
rights
derived
by
them
from
sale,
or
held
that
such
a
sale,
if
made,
would
not
have
the
effect
which
the
the
execution
levied
on
the
machinery
placed
by
the
corporation
in
the
argument
insists
it
was
entitled
to.
This
is
true
because
the
action
of
the
plant.
Following
the
Code
Napoleon,
the
Porto
Rican
Code
treats
as
court
was
solely
based
upon
a
premise
of
fact,
viz.,
that,
under
the
immovable
(real)
property
not
only
land
and
buildings,
but
also
attributes
circumstances
of
the
case
and
in
view
of
the
prior
sale
with
the
equity
of
immovability
in
some
cases
to
property
of
a
movable
nature
‐‐
that
is,
redemption,
the
cancellation
of
that
sale,
and
the
transfer
made
by
the
personal
property
‐‐
because
of
the
destination
to
which
it
is
applied.
corporation
to
Valdes,
and
the
immediate
transfer
of
the
same
rights
by
"Things,"
says
§
334
of
the
Porto
Rican
Code,
"may
be
immovable
either
by
him
to
the
corporation
in
the
form
of
a
conditional
sale,
the
failure
to
their
own
nature
or
by
their
destination,
or
the
object
to
which
they
are
register
any
of
the
contracts,
and
the
relation
of
Valdes
to
the
corporation
applicable."
Numerous
illustrations
are
given
in
the
fifth
subdivision
of
at
the
time
the
contracts
were
made,
it
resulted
that
whatever
might
be
section
335,
which
is
as
follows:
the
mere
form,
in
substance
and
effect,
no
conditional
sale
was
made,
but
"Machinery,
vessels,
instruments,
or
a
mere
contract
was
entered
into
which
the
parties
intended
to
be
a
mere
security
to
Valdes
for
money
advanced
and
to
be
advanced
by
him.
This
Page
225
U.
S.
76
being
the
case,
it
is
manifest
that
it
is
wholly
irrelevant
to
argue
that
error
implements
intended
by
the
owner
of
the
tenements
for
the
industry
or
was
committed
in
not
applying
the
assumed
principles
of
the
Porto
Rican
works
that
they
may
carry
on
in
any
building
or
upon
any
land,
and
which
and
Spanish
law
governing
in
the
case
of
a
conditional
sale,
when
the
tend
directly
to
meet
the
needs
of
the
said
industry
or
works."
ruling
which
the
court
made
proceeded
upon
the
conclusion
that
there
was
no
conditional
sale.
See
also
Code
Nap.,
articles
516,
518,
et
seq.,
to
and
inclusive
of
article
534,
recapitulating
the
things
which,
though
in
themselves
movable,
may
Page
225
U.
S.
75
be
immobilized.
So
far
as
the
subject
matter
with
which
we
are
dealing
‐‐
machinery
placed
in
the
plant
‐‐
it
is
plain,
both
under
the
provisions
of
the
Porto
Rican
law
and
of
the
Code
Napoleon,
that
machinery
which
is
The
contention
that,
under
the
Porto
Rican
law,
the
form
was
controlling
movable
in
its
nature
only
becomes
immobilized
when
placed
in
a
plant
by
because
proof
of
the
substance
was
not
admissible
seems
not
to
have
the
owner
of
the
property
or
plant.
Such
result
would
not
be
been
raised
below,
but,
if
it
had
been,
is
obviously
without
merit,
as
the
accomplished,
therefore,
by
the
placing
of
machinery
in
a
plant
by
a
tenant
case
as
presented
involved
not
a
controversy
alone
between
the
parties
to
or
a
usufructuary
or
any
person
having
only
a
temporary
right.
the
contract,
but
the
effect
and
operation
of
the
contract
upon
third
Demolombe,
Tit.
9,
No.
203;
Aubry
et
Rau,
Tit.
2,
p.
12,
§
164;
Laurent,
Tit.
parties,
the
creditors
of
the
corporation.
The
contention
is
additionally
5,
No.
447,
and
decisions
quoted
in
Fuzier‐Herman
ed.,
Code
Napoleon,
without
merit
since
it
assumes
that
the
mere
form
of
the
contract
under
article
522
et
seq.
The
distinction
rests,
as
pointed
out
by
42
Demolombe,
upon
the
fact
that
one
only
having
a
temporary
right
to
the
which
alone
it
arose
that
machinery
put
in
the
premises
by
the
Altagracia
possession
or
enjoyment
of
property
is
not
presumed
by
the
law
to
have
became
immovable
property.
The
want
of
notice
arose
from
the
failure
to
applied
movable
property
belonging
to
him
so
as
to
deprive
him
of
it
by
record
the
transfer
from
Castello
to
the
Altagracia,
or
from
the
Altagracia
causing
it,
by
an
act
of
immobilization,
to
become
the
property
of
another.
to
Valdes,
and
from
Valdes
apparently
conditionally
back
to
the
It
follows
that,
abstractly
speaking,
the
machinery
put
by
the
Altagracia
corporation
‐‐
a
clear
result
of
§
613
of
the
Civil
Code
of
Porto
Rico,
Company
in
the
plant
belonging
to
Sanchez
did
not
lose
its
character
of
providing,
movable
property
and
become
immovable
by
destination.
But,
in
the
"The
titles
of
ownership
or
of
other
real
rights
relating
concrete,
immobilization
took
place
because
of
the
express
provisions
of
the
lease
under
which
the
Altagracia
held,
since
the
lease
in
substance
Page
225
U.
S.
78
required
the
putting
in
of
improved
machinery,
deprived
the
tenant
of
any
to
immovables
which
are
not
properly
inscribed
or
annotated
in
the
right
to
charge
against
the
lessor
the
cost
of
such
machinery,
and
it
was
registry
of
property
shall
not
be
prejudicial
to
third
parties."
expressly
stipulated
that
the
machinery
so
put
in
should
become
a
part
of
the
plant
belonging
to
the
owner
without
compensation
to
the
lessee.
It
is
not
disputable
that
the
duty
to
inscribe
the
lease
by
necessary
implication
resulted
from
the
general
provisions
of
article
2
of
the
Page
225
U.
S.
77
mortgage
law
of
Porto
Rico,
as
stated
in
paragraphs
1,
2,
and
3
thereof,
Under
such
conditions,
the
tenant,
in
putting
in
the
machinery,
was
acting
and
explicitly
also
arose
from
the
express
requirement
of
paragraph
6,
but
as
the
agent
of
the
owner,
in
compliance
with
the
obligations
resting
relating
to
the
registry
of
"contracts
for
the
lease
of
real
property
for
a
upon
him,
and
the
immobilization
of
the
machinery
which
resulted
arose
period
exceeding
six
years.
.
.
."
It
is
true
that,
in
a
strict
sense,
the
in
legal
effect
from
the
Act
of
the
owner
in
giving
by
contract
a
permanent
contracts
between
Castello
and
the
Altagracia
Company
and
with
Valdes
destination
to
the
machinery.
It
is
true,
says
Aubry
and
Rau,
vol.
2,
§
164,
were
not
contracts
of
lease,
but
for
the
transfer
of
a
contract
of
that
par.
2,
p.
12,
that
character.
But
such
a
transfer
was
clearly
a
contract
concerning
real
rights
to
immovable
property
within
the
purview
of
article
613
of
the
Civil
Code,
"the
immobilization
with
which
the
article
is
concerned
can
only
arise
from
just
previously
quoted.
Especially
is
this
the
case
in
view
of
the
stipulations
an
act
of
the
owner
himself
or
his
representative.
Hence,
the
objects
which
of
the
lease
as
to
the
immobilization
of
movable
property
placed
in
the
are
dedicated
to
the
use
of
a
piece
of
land
or
a
building
by
a
lessee
cannot
plant,
and
the
other
obligations
imposed
upon
the
lessee.
be
considered
as
having
become
immovable
by
destination
except
in
the
case
where
they
have
been
applied
for
account
of
the
proprietor,
or
in
"The
sale
which
a
lessee
makes
to
a
third
person
to
whom
he
transfers
his
execution
of
an
obligation
imposed
by
the
lease."
right
of
lease
is
the
sale
of
an
immovable
right,
and
not
simply
a
sale
of
a
movable
one."
It
follows
that
the
machinery
placed
by
the
corporation
in
the
plant,
by
the
fact
of
its
being
so
placed,
lost
its
character
as
a
movable,
and
became
See
numerous
decisions
of
the
courts
of
France,
beginning
with
the
united
with
and
a
part
of
the
plant
as
an
immovable
by
destination.
It
also
decision
on
February
2,
1842,
of
the
Court
of
Cassation
(Journal
du
Palais
follows
that,
as
to
Valdes,
who
claimed
under
the
lease,
and
who
had
[1842]
vol.
1,
171).
See
also
numerous
authorities
collected
under
the
expressly
assumed
the
obligations
of
the
lease,
the
machinery,
for
all
the
heading
above
stated
in
paragraph
21,
under
articles
516,
517,
and
518
of
purposes
of
the
exercise
of
his
rights,
was
but
a
part
of
the
real
estate
‐‐
a
the
Code
Napoleon.
Fuzier‐Herman
ed.
of
that
Code,
p.
643.
conclusion
which
cannot
be
avoided
without
saying
that
Valdes
could
at
The
machinery
levied
upon
by
Nevers
&
Callaghan
‐‐
that
is,
that
which
was
one
and
the
same
time
assert
the
existence
in
himself
of
rights
and
yet
placed
in
the
plant
by
the
Altagracia
Company,
being,
as
regards
Nevers
&
repudiate
the
obligations
resulting
from
the
rights
thus
asserted.
Callaghan,
movable
property,
it
follows
that
they
had
the
right
to
levy
on
it
Nevers
&
Callaghan
were
creditors
of
the
corporation.
They
were
not
under
the
execution
upon
the
judgment
in
their
favor,
and
the
exercise
of
parties
to
nor
had
they
legal
notice
of
the
lease
and
its
conditions
from
that
right
did
not
in
a
legal
sense
conflict
with
the
claim
of
Valdes,
since,
as
43
to
him,
the
property
was
a
part
of
the
realty,
which
as
the
result
Petitioner
and
respondents,
thru
their
respective
counsels
agreed
to
the
following
stipulation
of
facts:
Page
225
U.
S.
79
1.
That
petitioner
is
a
public
utility
solely
engaged
in
transporting
of
his
obligations
under
the
lease,
he
could
not,
for
the
purpose
of
passengers
and
cargoes
by
motor
trucks,
over
its
authorized
lines
in
the
collecting
his
debt,
proceed
separately
against.
Island
of
Mindanao,
collecting
rates
approved
by
the
Public
Service
As
a
matter
of
precaution,
we
say
that
nothing
we
have
said
affects
the
Commission;
rights,
whatever
they
may
be,
of
the
heirs
of
Sanchez,
the
original
lessor.
2.
That
petitioner
has
its
main
office
and
shop
at
Cagayan
de
Oro
City.
It
Affirmed.
maintains
Branch
Offices
and/or
stations
at
Iligan
City,
Lanao;
Pagadian,
Zamboanga
del
Sur;
Davao
City
and
Kibawe,
Bukidnon
Province;
3.
That
the
machineries
sought
to
be
assessed
by
the
respondent
as
real
properties
are
the
following:
(a)
Hobart
Electric
Welder
Machine,
appearing
in
the
attached
photograph,
marked
Annex
"A";
G.R.
No.
L‐17870
September
29,
1962
(b)
Storm
Boring
Machine,
appearing
in
the
attached
photograph,
marked
MINDANAO
BUS
COMPANY,
petitioner,
vs.
THE
CITY
ASSESSOR
&
Annex
"B";
TREASURER
and
the
BOARD
OF
TAX
APPEALS
of
Cagayan
de
Oro
City,
(c)
Lathe
machine
with
motor,
appearing
in
the
attached
photograph,
respondents.
marked
Annex
"C";
Binamira,
Barria
and
Irabagon
for
petitioner.
Vicente
E.
Sabellina
for
(d)
Black
and
Decker
Grinder,
appearing
in
the
attached
photograph,
respondents.
marked
Annex
"D";
(e)
PEMCO
Hydraulic
Press,
appearing
in
the
attached
photograph,
marked
LABRADOR,
J.:
Annex
"E";
This
is
a
petition
for
the
review
of
the
decision
of
the
Court
of
Tax
(f)
Battery
charger
(Tungar
charge
machine)
appearing
in
the
attached
Appeals
in
C.T.A.
Case
No.
710
holding
that
the
petitioner
Mindanao
Bus
photograph,
marked
Annex
"F";
and
Company
is
liable
to
the
payment
of
the
realty
tax
on
its
maintenance
and
(g)
D‐Engine
Waukesha‐M‐Fuel,
appearing
in
the
attached
photograph,
repair
equipment
hereunder
referred
to.
marked
Annex
"G".
Respondent
City
Assessor
of
Cagayan
de
Oro
City
assessed
at
P4,400
4.
That
these
machineries
are
sitting
on
cement
or
wooden
platforms
as
petitioner's
above‐mentioned
equipment.
Petitioner
appealed
the
may
be
seen
in
the
attached
photographs
which
form
part
of
this
agreed
assessment
to
the
respondent
Board
of
Tax
Appeals
on
the
ground
that
stipulation
of
facts;
the
same
are
not
realty.
The
Board
of
Tax
Appeals
of
the
City
sustained
the
5.
That
petitioner
is
the
owner
of
the
land
where
it
maintains
and
operates
city
assessor,
so
petitioner
herein
filed
with
the
Court
of
Tax
Appeals
a
a
garage
for
its
TPU
motor
trucks;
a
repair
shop;
blacksmith
and
carpentry
petition
for
the
review
of
the
assessment.
shops,
and
with
these
machineries
which
are
placed
therein,
its
TPU
trucks
In
the
Court
of
Tax
Appeals
the
parties
submitted
the
following
are
made;
body
constructed;
and
same
are
repaired
in
a
condition
to
be
stipulation
of
facts:
serviceable
in
the
TPU
land
transportation
business
it
operates;
44
6.
That
these
machineries
have
never
been
or
were
never
used
as
character
of
real
property
to
"machinery,
liquid
containers,
instruments
or
industrial
equipments
to
produce
finished
products
for
sale,
nor
to
repair
implements
intended
by
the
owner
of
any
building
or
land
for
use
in
machineries,
parts
and
the
like
offered
to
the
general
public
connection
with
any
industry
or
trade
being
carried
on
therein
and
which
indiscriminately
for
business
or
commercial
purposes
for
which
petitioner
are
expressly
adapted
to
meet
the
requirements
of
such
trade
or
industry."
has
never
engaged
in,
to
date.1awphîl.nèt
If
the
installation
of
the
machinery
and
equipment
in
question
in
the
The
Court
of
Tax
Appeals
having
sustained
the
respondent
city
central
of
the
Mabalacat
Sugar
Co.,
Inc.,
in
lieu
of
the
other
of
less
capacity
assessor's
ruling,
and
having
denied
a
motion
for
reconsideration,
existing
therein,
for
its
sugar
and
industry,
converted
them
into
real
petitioner
brought
the
case
to
this
Court
assigning
the
following
errors:
property
by
reason
of
their
purpose,
it
cannot
be
said
that
their
incorporation
therewith
was
not
permanent
in
character
because,
as
1.
The
Honorable
Court
of
Tax
Appeals
erred
in
upholding
respondents'
essential
and
principle
elements
of
a
sugar
central,
without
them
the
sugar
contention
that
the
questioned
assessments
are
valid;
and
that
said
tools,
central
would
be
unable
to
function
or
carry
on
the
industrial
purpose
for
equipments
or
machineries
are
immovable
taxable
real
properties.
which
it
was
established.
Inasmuch
as
the
central
is
permanent
in
2.
The
Tax
Court
erred
in
its
interpretation
of
paragraph
5
of
Article
415
of
character,
the
necessary
machinery
and
equipment
installed
for
carrying
the
New
Civil
Code,
and
holding
that
pursuant
thereto
the
movable
on
the
sugar
industry
for
which
it
has
been
established
must
necessarily
be
equipments
are
taxable
realties,
by
reason
of
their
being
intended
or
permanent.
(Emphasis
ours.)
destined
for
use
in
an
industry.
So
that
movable
equipments
to
be
immobilized
in
contemplation
of
3.
The
Court
of
Tax
Appeals
erred
in
denying
petitioner's
contention
that
the
law
must
first
be
"essential
and
principal
elements"
of
an
industry
or
the
respondent
City
Assessor's
power
to
assess
and
levy
real
estate
taxes
works
without
which
such
industry
or
works
would
be
"unable
to
function
on
machineries
is
further
restricted
by
section
31,
paragraph
(c)
of
or
carry
on
the
industrial
purpose
for
which
it
was
established."
We
may
Republic
Act
No.
521;
and
here
distinguish,
therefore,
those
movable
which
become
immobilized
by
4.
The
Tax
Court
erred
in
denying
petitioner's
motion
for
reconsideration.
destination
because
they
are
essential
and
principal
elements
in
the
industry
for
those
which
may
not
be
so
considered
immobilized
because
Respondents
contend
that
said
equipments,
tho
movable,
are
they
are
merely
incidental,
not
essential
and
principal.
Thus,
cash
registers,
immobilized
by
destination,
in
accordance
with
paragraph
5
of
Article
415
typewriters,
etc.,
usually
found
and
used
in
hotels,
restaurants,
theaters,
of
the
New
Civil
Code
which
provides:
etc.
are
merely
incidentals
and
are
not
and
should
not
be
considered
Art.
415.
—
The
following
are
immovable
properties:
immobilized
by
destination,
for
these
businesses
can
continue
or
carry
on
their
functions
without
these
equity
comments.
Airline
companies
use
x
x
x
x
x
x
x
x
x
forklifts,
jeep‐wagons,
pressure
pumps,
IBM
machines,
etc.
which
are
(5)
Machinery,
receptacles,
instruments
or
implements
intended
by
the
incidentals,
not
essentials,
and
thus
retain
their
movable
nature.
On
the
owner
of
the
tenement
for
an
industry
or
works
which
may
be
carried
on
other
hand,
machineries
of
breweries
used
in
the
manufacture
of
liquor
in
a
building
or
on
a
piece
of
land,
and
which
tend
directly
to
meet
the
and
soft
drinks,
though
movable
in
nature,
are
immobilized
because
they
needs
of
the
said
industry
or
works.
(Emphasis
ours.)
are
essential
to
said
industries;
but
the
delivery
trucks
and
adding
machines
which
they
usually
own
and
use
and
are
found
within
their
Note
that
the
stipulation
expressly
states
that
the
equipment
are
industrial
compounds
are
merely
incidental
and
retain
their
movable
placed
on
wooden
or
cement
platforms.
They
can
be
moved
around
and
nature.
about
in
petitioner's
repair
shop.
In
the
case
of
B.
H.
Berkenkotter
vs.
Cu
Unjieng,
61
Phil.
663,
the
Supreme
Court
said:
Similarly,
the
tools
and
equipments
in
question
in
this
instant
case
are,
by
their
nature,
not
essential
and
principle
municipal
elements
of
Article
344
(Now
Art.
415),
paragraph
(5)
of
the
Civil
Code,
gives
the
45
petitioner's
business
of
transporting
passengers
and
cargoes
by
motor
costs.
trucks.
They
are
merely
incidentals
—
acquired
as
movables
and
used
only
So
ordered.
for
expediency
to
facilitate
and/or
improve
its
service.
Even
without
such
tools
and
equipments,
its
business
may
be
carried
on,
as
petitioner
has
Bengzon,
C.J.,
Padilla,
Bautista
Angelo,
Reyes,
J.B.L.,
Paredes,
Dizon
and
carried
on,
without
such
equipments,
before
the
war.
The
transportation
Makalintal,
JJ.,
concur.
Regala,
Concepcion
and
Barrera
JJ.,
took
no
part.
business
could
be
carried
on
without
the
repair
or
service
shop
if
its
rolling
equipment
is
repaired
or
serviced
in
another
shop
belonging
to
another.
The
law
that
governs
the
determination
of
the
question
at
issue
is
as
follows:
Art. 415. The following are immovable property: G.R. No. 141970 September 10, 2001
x
x
x
x
x
x
x
x
x
METROPOLITAN
BANK,
&
TRUST
COMPANY,
petitioner,
vs.
Hon.
FLORO
(5)
Machinery,
receptacles,
instruments
or
implements
intended
by
the
T.
ALEJO,
in
His
Capacity
as
Presiding
Judge
of
Branch
172
of
the
Regional
owner
of
the
tenement
for
an
industry
or
works
which
may
be
carried
on
Trial
Court
of
Valenzuela;
and
SY
TAN
SE,
represented
by
his
Attorney‐in‐
in
a
building
or
on
a
piece
of
land,
and
which
tend
directly
to
meet
the
Fact,
SIAN
SUAT
NGO,
respondents.
needs
of
the
said
industry
or
works;
(Civil
Code
of
the
Phil.)
PANGANIBAN,
J.:
Aside
from
the
element
of
essentiality
the
above‐quoted
provision
also
requires
that
the
industry
or
works
be
carried
on
in
a
building
or
on
a
In
a
suit
to
nullify
an
existing
Torrens
Certificate
of
Title
(TCT)
in
which
a
piece
of
land.
Thus
in
the
case
of
Berkenkotter
vs.
Cu
Unjieng,
supra,
the
real
estate
mortgage
is
annotated,
the
mortgagee
is
an
indispensable
"machinery,
liquid
containers,
and
instruments
or
implements"
are
found
party.
In
such
suit,
a
decision
canceling
the
TCT
and
the
mortgage
in
a
building
constructed
on
the
land.
A
sawmill
would
also
be
installed
in
a
annotation
is
subject
to
a
petition
for
annulment
of
judgment,
because
the
building
on
land
more
or
less
permanently,
and
the
sawing
is
conducted
in
non‐joinder
of
the
mortgagee
deprived
the
court
of
jurisdiction
to
pass
the
land
or
building.
upon
the
controversy.
But
in
the
case
at
bar
the
equipments
in
question
are
destined
only
to
repair
or
service
the
transportation
business,
which
is
not
carried
on
in
a
The
Case
building
or
permanently
on
a
piece
of
land,
as
demanded
by
the
law.
Said
equipments
may
not,
therefore,
be
deemed
real
property.
Before
this
Court
is
a
Petition
for
Review
on
Certiorari1
under
Rule
45
of
Resuming
what
we
have
set
forth
above,
we
hold
that
the
the
Rules
of
Court,
assailing
the
March
25,
1999
Resolution
of
the
Court
of
equipments
in
question
are
not
absolutely
essential
to
the
petitioner's
Appeals
(CA)
in
CA‐GR
SP
No.
50638,
which
states
in
full:
transportation
business,
and
petitioner's
business
is
not
carried
on
in
a
building,
tenement
or
on
a
specified
land,
so
said
equipment
may
not
be
"This
resolves
the
petition
for
annulment
of
judgment
based
on
‘external
considered
real
estate
within
the
meaning
of
Article
415
(c)
of
the
Civil
(sic)
fraud’
filed
by
petitioner
Metropolitan
Bank
and
Trust
Company
Code.
seeking
to
annul
the
Decision
dated
August
12,
1998
rendered
by
respondent
judge,
Honorable
Floro
T.
Alejo,
Presiding
Judge
of
the
WHEREFORE,
the
decision
subject
of
the
petition
for
review
is
hereby
Regional
Trial
Court,
Branch
172,
Valenzuela,
Metro
Manila,
in
Civil
Case
set
aside
and
the
equipment
in
question
declared
not
subject
to
No.
4930‐V‐96
entitled
‘Sy
Tan
Se,
represented
by
his
attorney‐in‐fact
Sian
assessment
as
real
estate
for
the
purposes
of
the
real
estate
tax.
Without
Suat
Ngo
v.
Raul
Acampado,
et
al.
46
"This
Court
has
observed
that
petitioner
knew
of
the
questioned
Decision
bid.10
On
July
15,
1997,
a
Certificate
of
Sale
was
issued
in
its
favor.11
This
sometime
[i]n
October
1998
(Petition,
Rollo,
p.
3).
This
being
the
case,
sale
was
entered
in
the
Registry
of
Deeds
of
Valenzuela
on
July
28,
1997.
petitioner
should
have
first
sought
recourse
by
way
of
petition
for
relief
from
judgment
under
Rule
38
of
the
1997
Rules
of
Civil
Procedure.
When
the
redemption
period
lapsed
exactly
a
year
after,
on
July
28,
1998,
Accordingly,
the
petition
for
annulment
of
judgment
is
DENIED
DUE
petitioner
executed
an
Affidavit
of
Consolidation
of
Ownership
to
enable
COURSE
and
DISMISSED
outright
for
being
insufficient
in
form
and
the
Registry
of
Deeds
of
Valenzuela
to
issue
a
new
TCT
in
its
name.
substance
(Section
2,
Rule
47,
1997
Rules
of
Civil
Procedure)."
Upon
presentation
to
the
Register
of
Deeds
of
the
Affidavit
of
Also
challenged
is
the
January
27,
2000
CA
Resolution2
denying
petitioner’s
Consolidation
of
Ownership,
petitioner
was
informed
of
the
existence
of
Motion
for
Reconsideration.
the
August
12,
1998
RTC
Decision
in
Civil
Case
No.
4930‐V‐96,
annulling
TCT
No.
V‐41319.
The
dispositive
portion
of
the
Decision12
stated:
The
Facts
"WHEREFORE,
judgment
is
hereby
rendered
declaring
as
null
and
void
On
November
21,
19953
and
January
30,
1996,4
Spouses
Raul
and
Cristina
Transfer
Certificate
of
Title
No.V‐41319
in
the
name
of
defendant
Raul
Acampado
obtained
loans
from
petitioner
in
the
amounts
of
P5,000,000
Acampado
for
having
proceeded
from
an
illegitimate
source.
With
costs
and
P2,000,000,
respectively.
As
security
for
the
payment
of
these
credit
against
the
defendant.
accommodations,
the
Acampados
executed
in
favor
of
petitioner
a
Real
Estate
Mortgage5
and
an
Amendment
of
Real
Estate
Mortgage6
over
a
SO
ORDERED."
parcel
of
land
registered
in
their
names.
The
land
was
covered
by
TCT
No.
V‐41319
in
the
Registry
of
Deeds
of
Valenzuela
City,
where
the
contracts
On
January
27,
1999,
petitioner
filed
with
the
Court
of
Appeals
a
Petition
were
also
registered
on
November
20,
1995
and
January
23,
1996,
for
Annulment
of
the
RTC
Decision.
respectively.7
Ruling
of
the
Court
of
Appeals
On
June
3,
1996,
a
Complaint
for
Declaration
of
Nullity
of
TCT
No.
V‐41319
was
filed
by
Respondent
Sy
Tan
Se
against
Spouses
Acampado.
In
the
For
being
insufficient
in
form
and
substance,
the
Petition
for
Annulment
Regional
Trial
Court
(RTC)
of
Valenzuela,
Branch
172,
it
was
docketed
as
was
outrightly
dismissed
by
the
CA.
It
ruled
that
petitioner
ought
to
have
Civil
Case
No.
4930‐V‐96,8
the
progenitor
of
the
present
controversy.
filed,
instead,
a
petition
for
relief
from
judgment
or
an
action
for
quieting
of
title.
Despite
being
the
registered
mortgagee
of
the
real
property
covered
by
the
title
sought
to
be
annulled,
petitioner
was
not
made
a
party
to
Civil
Hence,
this
Petition.13
Case
No.
4930‐V‐96,9
nor
was
she
notified
of
its
existence.
Issues
Because
the
spouses
defaulted
in
the
payment
of
their
loan,
extrajudicial
foreclosure
proceedings
over
the
mortgaged
property
were
initiated
on
In
its
Memorandum,
petitioner
presents
the
following
issues:
April
19,
1997.
"I
On
June
17,
1997,
the
sheriff
of
Valenzuela
conducted
an
auction
sale
of
the
property,
during
which
petitioner
submitted
the
highest
and
winning
x
x
x
[W]hether
or
not
a
petition
for
annulment
of
judgment
under
Rule
47
47
of
the
1997
Rules
of
Civil
Procedure
is
the
proper
remedy
available
to
Second,
in
denying
petitioner’s
Motion
for
Reconsideration
of
the
Decision
petitioner
under
the
circumstances."
dismissing
the
Petition
for
Annulment
of
Judgment,
the
Court
of
Appeals
reasoned
that
another
remedy,
an
action
for
quieting
of
title,
was
also
"II
available
to
petitioner.
x
x
x
[W]hether
or
not
the
judgment
of
the
trial
court
in
Civil
Case
No.
We
do
not
agree.
It
should
be
stressed
that
this
case
was
instituted
to
ask
4930‐V‐96
should
be
annulled."14
for
relief
from
the
peremptory
declaration
of
nullity
of
TCT
No.
V‐41319,
which
had
been
issued
without
first
giving
petitioner
an
opportunity
to
be
The
Court’s
Ruling
heard.
Petitioner
focused
on
the
judgment
in
Civil
Case
No.
4930‐V‐96
which
adversely
affected
it,
and
which
it
therefore
sought
to
annul.
Filing
The
Petition
is
meritorious.
an
action
for
quieting
of
title
will
not
remedy
what
it
perceived
as
a
disregard
of
due
process;
it
is
therefore
not
an
appropriate
remedy.
First
Issue:
Proper
Remedy
Equally
important,
an
action
for
quieting
of
title
is
filed
only
when
there
is
Respondents
aver
that
a
petition
for
annulment
is
not
proper,
because
a
cloud
on
title
to
real
property
or
any
interest
therein.
As
defined,
a
there
were
three
different
remedies
available
but
they
were
not
resorted
"cloud
on
title
is
a
semblance
of
title
which
appears
in
some
legal
form
but
to
by
petitioner.
which
is
in
fact
unfounded."16
In
this
case,
the
subject
judgment
cannot
be
considered
as
a
cloud
on
petitioner’s
title
or
interest
over
the
real
property
We
are
not
persuaded.
First,
a
petition
for
relief,
the
remedy
pointed
to
by
covered
by
TCT
No.
V‐41319,
which
does
not
even
have
a
semblance
of
the
Court
of
Appeals,
was
not
available
to
petitioner.
Section
1,
Rule
38
of
being
a
title.
the
Rules
of
Court,
states:
It
would
not
be
proper
to
consider
the
subject
judgment
as
a
cloud
that
"Petition
for
relief
from
judgment,
order,
or
other
proceedings.‐When
a
would
warrant
the
filing
of
an
action
for
quieting
of
title,
because
to
do
so
judgment
or
final
order
is
entered,
or
any
other
proceeding
is
thereafter
would
require
the
court
hearing
the
action
to
modify
or
interfere
with
the
taken
against
a
party
in
any
court
through
fraud,
accident,
mistake,
or
judgment
or
order
of
another
co‐equal
court.
Well‐entrenched
in
our
excusable
negligence,
he
may
file
a
petition
in
such
court
and
in
the
same
jurisdiction
is
the
doctrine
that
a
court
has
no
power
to
do
so,
as
that
case
praying
that
the
judgment,
order
or
proceeding
be
set
aside."
(Italics
action
may
lead
to
confusion
and
seriously
hinder
the
administration
of
supplied)
justice.17
Clearly,
an
action
for
quieting
of
title
is
not
an
appropriate
remedy
in
this
case.
It
must
be
emphasized
that
petitioner
was
never
a
party
to
Civil
Case
No.
4930‐V‐96.
In
Lagula
et
al.
v.
Casimiro
et
al.,15
the
Court
held
that
‐‐
Third,
private
respondent
cites
a
last
remedy:
the
intervention
by
relative
to
a
motion
for
relief
on
the
ground
of
fraud,
accident,
mistake,
or
petitioner
in
Civil
Case
No.
4930‐V‐96.
The
availability
of
this
remedy
excusable
negligence
‐‐
Rule
38
of
the
Rules
of
Court
"only
applies
when
hinges
on
petitioner’s
knowledge
of
the
pendency
of
that
case,
which
the
one
deprived
of
his
right
is
a
party
to
the
case."
Since
petitioner
was
would
have
otherwise
been
alerted
to
the
need
to
intervene
therein.
never
a
party
to
the
case
or
even
summoned
to
appear
therein,
then
the
Though
presumed
by
private
respondent,
any
such
knowledge
prior
to
remedy
of
relief
from
judgment
under
Rule
38
of
the
Rules
of
Court
was
October
1998
is,
however,
emphatically
denied
by
petitioner.
not
proper.
This
is
plainly
provided
in
the
italicized
words
of
the
present
provision
just
quoted.
The
Petition
for
Annulment
before
the
Court
of
Appeals
precisely
alleged
that
private
respondent
purposely
concealed
the
case
by
excluding
48
petitioner
as
a
defendant
in
Civil
Case
No.
4930‐V‐96,
even
if
the
latter
was
not
only
an
interest
in
the
subject
matter
of
the
controversy,
but
also
has
an
indispensable
party.
Without
due
process
of
law,
the
former
intended
an
interest
of
such
nature
that
a
final
decree
cannot
be
made
without
to
deprive
petitioner
of
the
latter’s
duly
registered
property
right.
Indeed,
affecting
his
interest
or
leaving
the
controversy
in
such
a
condition
that
its
the
execution
of
the
Decision
in
Civil
Case
No.
4930‐V‐96
necessarily
final
determination
may
be
wholly
inconsistent
with
equity
and
good
entailed
its
enforcement
against
petitioner,
even
though
it
was
not
a
party
conscience.
It
has
also
been
considered
that
an
indispensable
party
is
a
to
that
case.
Hence,
the
latter
concludes
that
annulment
of
judgment
was
person
in
whose
absence
there
cannot
be
a
determination
between
the
the
only
effective
remedy
open
to
it.
parties
already
before
the
court
which
is
effective,
complete,
or
equitable.
Further,
an
indispensable
party
is
one
who
must
be
included
in
an
action
The
allegation
of
extrinsic
fraud,
if
fully
substantiated
by
a
preponderance
before
it
may
properly
go
forward.
of
evidence,
may
be
the
basis
for
annulling
a
judgment.18
The
resort
to
annulment
becomes
proper
because
of
such
allegation,
coupled
with
the
"A
person
is
not
an
indispensable
party,
however,
if
his
interest
in
the
unavailability
of
the
other
remedies
pointed
to
by
respondents.
controversy
or
subject
matter
is
separable
from
the
interest
of
the
other
parties,
so
that
it
will
not
necessarily
be
directly
or
injuriously
affected
by
a
Second
Issue:
Lack
of
Jurisdiction
decree
which
does
complete
justice
between
them."20
It
is
undisputed
that
the
property
covered
by
TCT
No.
V‐41319
was
The
joinder
of
indispensable
parties
to
an
action
is
mandated
by
Section
7,
mortgaged
to
petitioner,
and
that
the
mortgage
was
annotated
on
TCT
No.
Rule
3
of
the
Revised
Rules
of
Civil
Procedures,
which
we
quote:
V‐41319
before
the
institution
of
Civil
Case
No.
4930‐V‐96.
It
is
also
undisputed
that
all
subsequent
proceedings
pertaining
to
the
foreclosure
"SEC
7.
Compulsory
joinder
of
indispensable
parties.
–
Parties
in
interest
of
the
mortgage
were
entered
in
the
Registry
of
Deeds.
The
nullification
without
whom
no
final
determination
can
be
had
of
an
action
shall
be
and
cancellation
of
TCT
No.
V‐41319
carried
with
it
the
nullification
and
joined
either
as
plaintiffs
or
defendants."
cancellation
of
the
mortgage
annotation.
Aside
from
the
above
provision,
jurisprudence
requires
such
joinder,
as
the
Although
a
mortgage
affects
the
land
itself
and
not
merely
the
TCT
following
excerpts
indicate:
covering
it,
the
cancellation
of
the
TCT
and
the
mortgage
annotation
exposed
petitioner
to
real
prejudice,
because
its
rights
over
the
mortgaged
"Indispensable
parties
must
always
be
joined
either
as
plaintiffs
or
property
would
no
longer
be
known
and
respected
by
third
parties.
defendants,
for
the
court
cannot
proceed
without
them.
x
x
x.
Necessarily,
therefore,
the
nullification
of
TCT
No.
V‐41319
adversely
Indispensable
parties
are
those
with
such
an
interest
in
the
controversy
affected
its
property
rights,
considering
that
a
real
mortgage
is
a
real
right
that
a
final
decree
would
necessarily
affect
their
rights,
so
that
the
courts
and
a
real
property
by
itself.19
cannot
proceed
without
their
presence."21
Evidently,
petitioner
is
encompassed
within
the
definition
of
an
"x
x
x.
Without
the
precence
of
indispensable
parties
to
a
suit
or
indispensable
party;
thus,
it
should
have
been
impleaded
as
a
defendant
in
proceeding,
a
judgment
of
a
Court
cannot
attain
real
finality."22
Civil
Case
No.
4930‐V‐96.
"Whenever
it
appears
to
the
court
in
the
course
of
a
proceeding
that
an
"An
indispensable
party
is
a
party
who
has
such
an
interest
in
the
indispensable
party
has
not
been
joined,
it
is
the
duty
of
the
court
to
stop
controversy
or
subject
matter
that
a
final
adjudication
cannot
be
made,
in
the
trial
and
to
order
the
inclusion
of
such
party.
(The
Revised
Rules
of
his
absence,
without
injuring
or
affecting
that
interest[;]
a
party
who
has
Court,
Annotated
&
Commented
by
Senator
Vicente
J.
Francisco,
Vol.
I,
p.
49
271,
1973
ed.,
See
also
Cortez
vs.
Avila,
101
Phil.
705.)
Such
an
order
is
the
party
concerned
has
actual
knowledge
of
facts
and
circumstances
that
unavoidable,
for
the
‘general
rule
with
reference
to
the
making
of
parties
would
impel
a
reasonably
cautious
man
to
make
such
inquiry.
in
a
civil
action
requires
the
joinder
of
all
necessary
parties
wherever
possible,
and
the
joinder
of
all
indispensable
parties
under
any
and
all
x
x
x
x
x
x
x
x
x
conditions,
the
presence
of
those
latter
parties
being
a
sine
qua
non
of
the
exercise
of
judicial
power.’
(Borlasa
vs.
Polistico,
47
Phil.
345,
at
p.
347.)
It
"Thus,
where
innocent
third
persons
relying
on
the
correctness
of
the
is
precisely
‘when
an
indispensable
party
is
not
before
the
court
(that)
the
certificate
of
title
issued,
acquire
rights
over
the
property,
the
court
cannot
action
should
be
dismissed.’
(People
vs.
Rodriguez,
106
Phil.
325.
at
p.
disregard
such
rights
and
order
the
total
cancellation
of
the
certificate
for
327.)
The
absence
of
an
indispensable
party
renders
all
subsequent
that
would
impair
public
confidence
in
the
certificate
of
title;
otherwise
actuations
of
the
court
null
and
void,
for
want
of
authority
to
act,
not
only
everyone
dealing
with
property
registered
under
the
Torrens
system
as
to
the
absent
parties
but
even
as
to
those
present."23
(emphasis
would
have
to
inquire
in
every
instance
as
to
whether
the
title
ha[s]
been
supplied)
regularly
or
irregularly
issued
by
the
court.
Indeed
this
is
contrary
to
the
evident
purpose
of
the
law."
"The
evident
aim
and
intent
of
the
Rules
regarding
the
joinder
of
indispensable
and
necessary
parties
is
a
complete
determination
of
all
The
peremptory
disregard
of
the
annotations
registered
and
entered
in
possible
issues,
not
only
between
the
parties
themselves
but
also
as
TCT
No.
V‐41319
constituted
a
deprivation
of
private
property
without
due
regards
to
other
persons
who
may
be
affected
by
the
judgment.
A
valid
process
of
law
and
was
therefore
unquestionably
unjust
and
iniquitous.
judgment
cannot
even
be
rendered
where
there
is
want
of
indispensable
This,
we
cannot
countenance.
parties."24
Clearly,
it
was
the
trial
court’s
duty
to
order
petitioner’s
inclusion
as
a
From
the
above,
it
is
clear
that
the
presence
of
indispensable
parties
is
party
to
Civil
Case
No.
4930‐V‐96.
This
was
not
done.
Neither
the
court
nor
necessary
to
vest
the
court
with
jurisdiction,
which
is
"the
authority
to
private
respondents
bothered
to
implead
petitioner
as
a
party
to
the
case.
hear
and
determine
a
cause,
the
right
to
act
in
a
case."25
We
stress
that
the
In
the
absence
of
petitioner,
an
indispensable
party,
the
trial
court
had
no
absence
of
indispensable
parties
renders
all
subsequent
actuations
of
the
authority
to
act
on
the
case.
Its
judgment
therein
was
null
and
void
due
to
court
null
and
void,
because
of
that
court’s
want
of
authority
to
act,
not
lack
of
jurisdiction
over
an
indispensable
party.
only
as
to
the
absent
parties
but
even
as
to
those
present.
In
Leonor
v.
Court
of
Appeals28
and
Arcelona
v.
Court
of
Appeals,29
we
held
It
is
argued
that
petitioner
cannot
possibly
be
an
indispensable
party,
since
thus:
the
mortgage
may
not
even
be
valid
because
of
the
possible
absence
of
compliance
with
the
requirement26
that
the
mortgagor
be
the
absolute
"A
void
judgment
for
want
of
jurisdiction
is
no
judgment
at
all.
It
cannot
be
owner
of
the
thing
mortgaged.
It
should
be
emphasized,
however,
that
at
the
source
of
any
right
nor
the
creator
of
any
obligation.
All
acts
the
time
the
mortgage
was
constituted,
there
was
an
existing
TCT
(No.
V‐ performed
pursuant
to
it
and
all
claims
emanating
from
it
have
no
legal
41319),
which
named
the
mortgagors,
the
Acampado
spouses,
as
the
effect.
Hence,
it
can
never
become
final
and
any
writ
of
execution
based
registered
owners
of
the
property.
In
Seno
v.
Mangubat27
this
Court
held
on
it
is
void:"x
x
x
it
may
be
said
to
be
a
lawless
thing
which
can
be
treated
as
follows:
as
an
outlaw
and
slain
at
sight,
or
ignored
wherever
and
whenever
it
exhibits
its
head."
"The
well‐known
rule
in
this
jurisdiction
is
that
a
person
dealing
with
a
registered
land
has
a
right
to
rely
upon
the
face
of
the
Torrens
Certificate
WHEREFORE,
the
Petition
is
GRANTED
and
the
assailed
Resolutions
of
the
of
Title
and
to
dispense
with
the
need
of
inquiring
further,
except
when
50
Court
of
Appeals
are
REVERSED.
The
Decision
of
the
Regional
Trial
Court
in
Civil
Case
No.
4930‐V‐41319
is
hereby
NULLIFIED
and
SET
ASIDE.
No
costs.
SO ORDERED.
Melo, Vitug, Gonzaga‐Reyes, and Sandoval‐Gutierrez, JJ., concur.
51