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Leung Yee vs. F. L. Strong Machinery Co. and Williamson.

[No. 11658. February 15, 1918.]


LEUNG YEE, plaintiff and appellant, vs. FRANK L. STRONG MACHINERY COMPANY and
J. G. WILLIAMSON, defendants and appellees.
1.CHATTEL MORTGAGE; REGISTRY OF MORTGAGE .COVERING REAL PROPERTY.The
sole purpose and object of the chattel mortgage registry is to provide for the
registry of "chattel mortgages," and transfers thereof, that is to say, mortgages of
personal property executed in the manner and form prescribed in the statute.
Neither the original registry in a chattel mortgage registry of an instrument
purporting to be a chattel mortgage of a building and the machinery installed
therein, nor the an notation in that registry of the sale of the mortgaged property,
had any effect whatever so far as the building is concerned.
2.ID.; ID.A factory building is real property, and the mere fact that it is
mortgaged and sold, separate and apart from the land on which it stands,
in no wise changes its character as real property.
3.VENDOR AND PURCHASER; REGISTRY OF TITLE; GOOD FAITH.The rights secured
under the provisions of article 1473 of the Civil Code to that one of two purchasers
of the same real estate, who has secured and inscribed his title thereto in the Land
Registry,. do not accrue unless such inscription is made in good faith.
4.ID.; SEPARATE PURCHASERS; DETERMINATION OF RIGHTS.The respective rights
of two or more separate purchasers of the same real estate from the same owner in
case none of them has secured an inscription of his title in the land registry in good
faith, are to be determined in accord with the third, and not the second paragraph
of that article.
5.ID.; 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.
6.ID.; ID.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.
7.ID.; ID.Good faith, or the lack of it, is in its last 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 and outward acts by
which alone the inward motive may, with safety, be determined.
8.ID.; ID."Good faith, or the want of it, is not a visible, tangible fact that can be
seen or touched but rather a state or condition of mind which can only be judged of
by actual or fancied tokens. or signs."

APPEAL from a judgment of the Court of First Instance of Cavite. Revilla, J.


CARSON, J.
Davao Saw Mill Co. vs. Castillo [No. 40411. August 7, 1935]
DAVAO SAW MILL Co., INC., plaintiff and appellant, vs. APRONIANO G. CASTILLO and
DAVAO LIGHT & POWER Co., INC., def endants and appellees.
APPEAL from a judgment of the Court of First Instance of Davao. Hilario, J.
MALCOLM, J.:

1.PROPERTY; MACHINERY AS PERSONAL PROPERTY; CIVIL CODE, ARTICLE


334, PARAGRAPHS 1 and 5, CONSTRUED.A lessee placed machinery in a
building erected on land belonging to another, with the understanding
that the machinery was not included in the improvements which would
pass to the lessor on the expiration or abandonment of the land leased.
The lessee also treated the machinery as personal property by executing
chattel mortgages in f favor of third persons. The machinery was levied
upon by the sheriff as personalty pursuant to a writ of execution obtained
without any protest being registered. Held: That the machinery must be
classified as personal property.
2.ID.; ID.; ID.Machinery which is movable in its nature only becomes
immobilized when placed in a plant by the owner of the property or plant,
but not when so placed by a tenant, a usufructuary, or any person having
only a temporary right, unless such person acted as the agent of the
owner.

Standard Oil Co. of New York vs. Jaramillo [No. 20329. March 16, 1923]
THE STANDARD OIL COMPANY OF NEW YORK, petitioner, vs. JOAQUIN JARAMILLO, as
register of deeds of the City of Manila, respondent.
1.CHATTEL MORTGAGE; REGISTRATION; NOTICE.The efficacy of the act of
recording a chattel mortgage consists in the fact that registration operates as
constructive notice of the existence of the contract, and the legal effects of the
instrument must be discovered in the document itself, in relation with the fact of
notice. Registration adds nothing to the instrument, considered as a source of title,
and affects nobody's rights except as a species of constructive notice.
2,ID. ; ID. ; FUNCTION OF REGISTER.The duties of a register of deeds in
respect to the registration of chattel mortgages are purely of a ministerial
character, and he is clothed with no judicial or quasi-judicial power to
determine the-nature of the property, whether real or personal, which is
the subject of the mortgage. Generally speaking, he should accept the
qualification of the property adopted by the person who presents the
instrument for registration and should place the instrument on record,
upon payment of the proper fee, leaving the effects of registration to be
determined by the court if such question should arise for legal
determination.
ORIGINAL ACTION in the Supreme Court. Mandamus.
STREET, J.:

Mindanao Bus Co. vs. City Assessor and Treasurer


No. L-17870. September 29, 1962.
MINDANAO BUS COMPANY, petitioner, vs. THE CITY ASSESSOR &TREASURER and the
BOARD OF TAX APPEALS of Cagayan de Oro City, respondents.
Property; Immovable Property by Destination; Two requisites before
movables may be deemed to have immobilized; Tools and equipments
merely incidental to business not subject to real estate tax.Movable
equipments, to be immobilized in contemplation of Article 415 of the Civil
Code, must be the essential and principal elements of an industry or
works which are carried on in a building or on a piece of land. Thus, where
the business is one of transportation, which is carried on without a repair
or service shop, and its rolling equipment is repaired or serviced in a shop
belonging to another, the tools and equipments in its repair shop which
appear movable are merely incidentals and may not be considered
immovables, and, hence, not subject to assessment as real estate for
purposes of the real estate tax.
PETITION for review of a decision of the Court of the Appeals.
LABRADOR, J.:

Berkenkotter vs. Cu Unjieng e Hijos


[No. 41643. July 31, 1935]
B. H. BERKENKOTTER, plaintiff and appellant, vs. CU UNJIENG E HIJOS, YEK TONG LIN
FIRE AND MARINE INSURANCE COMPANY, MABALACAT SUGAR COMPANY and THE
PROVINCIAL SHERIFF OF PAMPANGA, defendants and appellees.
1.MORTGAGE; IMPROVEMENT ON THE MORTGAGED PROPERTY, INCLUDED IN THE
MORTGAGE.The installation of a machinery and equipment in a mortgaged sugar
central, in lieu of another of less capacity, for the purpose of carrying out the
industrial functions of the latter and increasing production, constitutes a permanent
improvement on said sugar central and subjects said machinery and equipment to
the mortgage constituted thereon. (Article 1877, Civil Code.)
2.ID.; ID.; PERMANENT CHARACTER OF THE IMPROVEMENT.The fact that the
purchaser of the new machinery and equipment has bound himself to the person
supplying him the purchase money to hold them as security for the payment of the
latter's credit, and to refrain from mortgaging or otherwise encumbering them does
not alter the permanent character of the incorporation of said machinery and
equipment with the central.
3.ID.; ID.; OWNERSHIP OF THE IMPROVEMENT.The sale of the machinery and
equipment in question by the purchaser who was supplied the purchase money, as
a loan, to the person who supplied the money, after the incorporation thereof with
the mortgaged sugar central, does not vest the creditor with ownership of said
machinery and equipment but simply with the right of redemption.
APPEAL from a judgment of the Court of First Instance of Manila. Sison, J.
The facts are stated in the opinion of the court.
VILLA-REAL, J.:

Board of Assessment Appeals vs. Manila Electric Company


No. L-15334. January 31, 1964.
BOARD OF ASSESSMENT APPEALS, ClTY ASSESSOR and ClTY TREASURER OF
QUEZON CITY, petitioners, vs. MANILA ELECTRIC COMPANY, respondent.
Taxation; Real property tax; Steel towers of Meralco exempt under its franchise.
The tax exemption privilege of the Meralco on its poles, as granted by its franchise
(Act No. 484), is held to include its steel towers.
Same; Same; Term "pole" includes steel towers.The term "pole" refers to an
upright standard to the top of which something is affixed or by which something is
supported, and includes a steel tower of an electric power company, like the
Meralco.
Same; Same; Steel towers of electric company not real property.The steel towers
of an electric company do not constitute real property for the purpose of the real
property tax.
Same; Same; Refund; City Treasurer held responsible.The City Treasurer of Quezon
City is held responsible for the refund of real property taxes, despite his contention
that Quezon City, which was not made a party to the suit, is the real party in
interest, not only because this question was not raised in the lower court but also
because, factually, actually, it was he who had insisted that the taxpayer pay the
taxes now to be refunded.
PETITION for review of a decision of the Court of Tax Appeals.
PAREDES, J.:

[No. 41506. March 25, 1935]


PHILIPPINE REFINING Co., INC., plaintiff and appellant, vs. FRANCISCO JARQUE, JOSE
COROMINAS, and ABOITIZ & Co., defendants. JOSE COROMINAS, in his capacity as
assignee of the estate of the insolvent Francisco Jarque, appellee.
1.COURTS; JURISDICTION ; ADMIRALTY.The mere mortgage of a ship does not
confer admiralty jurisdiction.
2.SHIPS AND SHIPPING; PROPERTY; CHATTEL MORTGAGES; VESSELS, NATURE OF.
Vessels are considered personal property under the civil law and the common law.
3.ID.; ID.; ID. ; ID.Vessels are subject to mortgage agreeably to the provisions of
the Chattel Mortgage Law.
230

230
PHILIPPINE REPORTS ANNOTATED
Philippine Refining Co. vs, Jarque
4.ID.; ID.; ID.; ID.The only difference between a chattel mortgage of a vessel and a
chattel mortgage of other personalty is that it is not now necessary for a chattel
mortgage of a vessel to be noted in the registry of the register of deeds, but it is
essential that a record of documents affecting the title to a vessel be entered in the
record of the Collector of Customs at the port of entry. Otherwise a mortgage on a
vessel is generally like other chattel mortgages as to its requisites and validity.
5.ID. ; ID. ; ID. ; ID. ; EFFECT OF ABSENCE OF AFFIDAVIT OF GOOD FAITH.The
Chattel Mortgage Law, in its section 5, in describing what shall be deemed sufficient
to constitute a good chattel mortgage, includes the requirement of an affidavit of
good faith appended to the mortgage and recorded therewith. The absence of the
affidavit vitiates a mortgage as against creditors and subsequent encumbrancers.
As a consequence a chattel mortgage of a vessel wherein the affidavit of good faith
required by the Chattel Mortgage Law is lacking, is unenforceable against third
persons.
APPEAL from a judgment of the Court of First Instance of Cebu. Hontiveros, J.
The facts are stated in the opinion of the court.
Thos. G. Ingalls, Vicente Pelaez and DeWitt, Perkins & Brady for appellant.
D. G. McVean and Vicente L. Faelnar for appellee.
MALCOLM, J.;,

o. L-19527.March 30, 1963.


RICARDO PRESBITERO, in his capacity as Executor of the Testate Estate of
EPERIDION PRESBITERO, petitioner, vs. THE HON. JOSE F. FERNANDEZ, HELEN
CARAM NAVA, and the PROVINCIAL SHERIFF OF NEGROS OCCIDENTAL, respondents.
626

626
SUPREME COURT REPORTS ANNOTATED
Presbitero vs. Fernandez
Property; Sugar quotas deemed immovable property; Levy not valid if copy of order
and description of property is not filed with Register of Deeds.As an improvement
attached to land, by express provision of law (Section 9, Act 4166), though not
physically so united, sugar quotas are inseparable therefrom, just like servitudes
and other real rights over an immovable, and should be considered as immovable or
real property under Article 416 (10) of the Civil Code. The fact that the Philippine
Trade Act of 1946 (U.S. Public Law 371-79th Congress) allows transfers of sugar
quotas does not militate against their immovability. There cannot be a sugar
plantation owner without land to which the quota is attached; and there can exist no
quota without there being first a corresponding plantation. Hence, a levy made by
the sheriff upon a sugar quota is null and void if not in compliance with the
procedure prescribe in Section 14, Rule 39, in relation with Section 7, Rule 59, of the
Rules of Court, requiring the filing with the register of deeds of a copy of the orders
together with a description of the property.
PETITION for a writ of certiorari against the Court of First Instance of Negros
Occidental.
The facts are stated in the opinion of the Court.
San Juan, Africa & Benedicto and Hilado & Hilado for petitioner.
Paredes, Poblador, Cruz & Nazareno and Manuel Soriano for respondents.
REYES, J.B.L.,J.: Presbitero vs. Fernandez, 7 SCRA 625, No. L-19527 March 30, 1963

[No. 26278. August 4, 1927]


LEON SIBAL 1., plaintiff and appellant, vs. EMILIANO J. VALDEZ ET AL., defendants.
EMILIANO J. VALDEZ, appellee.
ATTACHMENT; GROWING CROPS, REAL OR PERSONAL PROPERTY.Held: Under the
facts of the record, notwithstanding the provisions of paragraph 2 of article 334 of
the Civil Code, that growing sugar cane is considered personal property and not real
property and is subject to attachment and sale. Act No. 1508, the Chattel Mortgage
Law, provides that all personal property shall be subject to mortgage. At common
law all annual crops which are raised by yearly manurance and labor and essentially
owe their existence to cultivation may be levied on as personal property. Paragraph
2 of article 334 of the Civil Code has been modified by section 450 of the Code of
Civil Procedure and by Act No. 1508 in the sense that, for the purpose of attachment
and execution and for the purposes of the Chattel Mortgage Law, "ungathered
products" have the nature of personal property.
APPEAL from a judgment of the Court of First Instance of Tarlac. Lukban, J.
The facts are stated in the opinion of the court.
J. E. Blanco for appellant.
Felix B. Bautista and Santos & Benitez for appellee.
513

VOL. 50, AUGUST 4, 1927


513
Sibal 1. vs. Valdez
JOHNSON, J.: Sibal 1. vs. Valdez, 50 Phil. 512, No. 26278 August 4, 1927

No. 42091. November 2, 1935]


GONZALO CHUA GUAN, plaintiff and appellant, vs. SAMAHANG MAGSASAKA, INC.,
and SIMPLICIO OCAMPO, ADRIANO G. SOTTO, and EMILIO VERGARA, as president,
secretary and treasurer respectively of the same, defendants and appellees.
1.CORPORATIONS; MORTGAGE OF SHARES OF STOCK.The registration of the
chattel mortgage in the office of the corporation was not necessary and had no
legal effect. (Monserrat vs. Ceron, 58 Phil., 469.) The long mooted question as to
whether or not shares of a corporation could be hypothecated by placing a chattel
mortgage on the certificate representing such shares we now regard as settled by
the case above cited of Monserrat vs. Ceron.
2.ID.; ID.; SITUS OF SHARES.It is a common but not accurate generalization that
the situs of shares of stock is at the domicile of the owner. The term situs is not one
of fixed or invariable meaning or usage. The situs of shares of stock for some
purposes may be at the domicile of the owner and for others at the domicile of the
corporation; and even elsewhere. (Cf. Vidal vs. South American Securities Co., 276
Fed., 855; Black Eagle Min. Co. vs. Conroy, 94 Okla., 199; 221 Pac., 425; Norrie vs.
Kansas City Southern Ry. Co., 7 Fed. [2d], 158.)
3.ID. ; ID. ; ID. ; DOMICILE.It is a general rule that for purposes of execution,
attachment and garnishment, it is not the domicile of the owner of a certificate but
the domicile of the corporation which is decisive. (Fletcher, Cyclopedia of the Law of
Private Corporations, vol. 11, paragraph 5106; Cf. sections 430 and 450, Code of
Civil Procedure.)
4.ID.; ID.; ID.; ACT No. 1508, SECTION 4, CONSTRUED.By analogy with the
foregoing and considering the ownership of shares in a corporation as property
distinct from the certificates which are merely the evidence of such ownership, it is
a reasonable construction of section 4 of Act No. 1508 to hold that the property in
the shares may be deemed to be situated in the province in which the corporation
has its principal office or place of business. If this province is also the province of
the owner's domicile, a single registration is sufficient. If not, the chattel mortgage
should be registered both at the owner's domicile and in the province where the
corporation has its
473

VOL. 62, NOVEMBER 2, 1935


473
Chua Guan vs. Samahang Magsasaka, Inc.
principal office or place of business. In these sense the property mortgaged is not
the certificate but the participation and share of the owner in the assets of the
corporation.

5.ID.; ID.; ASSIGNMENT AND DELIVERY OF CERTIFICATE.The only safe way to


accomplish the hypothecation of shares of stock of a Philippine corporation is for the
creditor to insist on the assignment and delivery of the certificate and to obtain the
transfer of the legal title to him on the books of the corporation by the cancellation
of the certificate and the issuance of a new one to him.
6.ID.; ID.; ACT No. 1459, SECTION 35, CONSTRUED.Section 35 of the Corporation
Law (Act No. 1459) enacts that shares of stock "may be transferred by delivery of
the certificate endorsed by the owner or his attorney in fact or other person legally
authorized to make the transfer." The use of the verb "may" does not exclude the
possibility that a transfer may be made in a different manner, thus leaving the
creditor in an insecure position even though he has the certificate in his possession.
The shares still standing in the name of the debtor on the books of the corporation
will be liable to seizure by attachment or levy on execution at the instance of other
creditors. (Cf. Uy Piaoco vs. McMicking, 10 Phil., 286, and Uson vs. Diosomito, 61
Phil., 535.) This unsatisfactory state of our law is well known to the bench and bar.
(Cf. Fisher, The Philippine Law of Stock Corporations, pages 163-168.)
APPEAL from a judgment of the Court of First Instance of Nueva Ecija. Platon, J.
The facts are stated in the opinion of the court.
Buenaventura C. Lopez for appellant.
Domingo L. Vergara for appellees.
BUTTE, J,: Chua Guan vs. Samahang Magsasaka, Inc., 62 Phil. 472, No. 42091
November 2, 1935

[No. 42462. August 31, 1937]


THE BACHRACH MOTOR Co., INC., plaintiff and appellant, vs. MARIANO LACSON
LEDESMA, TALISAY-SILAY MILLING Co., INC., and THE PHILIPPINE NATIONAL BANK,
defendants and appellees.
1.CHATTEL MORTGAGE; CONTRACTS OF PLEDGE; VALIDITY AGAINST THIRD
PERSONS.It is true, according to article 1865 of the Civil Code, that in order that a
pledge may be effective as against third persons, evidence of its date must appear
in a public instrument in addition to the delivery of the thing pledged to the creditor.
This provision has been interpreted in the sense that for the contract to affect third
persons, it must appear in a public instrument in addition to delivery of the thing
pledged (Ocejo, Perez & Co. vs. International Banking Corporation, 37 Phil., 631; Tec
Bi & Co. vs. Chartered Bank of India,
682

682
PHILIPPINE REPORTS ANNOTATED
Bachrach Motor Co. vs. Lacson Ledesma
Australia & China, 41 Phil., 596; Te Pate vs. Ingersoll, 43 Phil., 394). It cannot be
denied, however, that section 4 of Act No. 1508, otherwise known as the Chattel
Mortgage Law, implicitly modified article 1865 of the Civil Code in the sense that a
contract of pledge and that of chattel mortgage, to be effective as against third
persons, need not appear in public instruments provided the thing pledged or
mortgaged be delivered or placed in the possession of the creditor (Mahoney vs.
Tuason, 39 Phil., 952).
2.CORPORATIONS; STOCK CERTIFICATES; NEGOTIABLE CHARACTER THEREOF.
Certificates of stock or of stock dividends, under the Corporation Law, are quasi
negotiable instruments in the sense that they may be given in pledge or mortgage
to secure an obligation. The question is settled in this wise by the weight of
American authorities and it is the modern doctrine of general acceptance by the
courts. "In view, however, of the fact that certificates of stock, while not negotiable
in the sense of the law merchant, like bills and notes, are so framed and dealt with
as to be transferable, when properly indorsed, by mere delivery, and as they
frequently convey, by estoppel against the corporation or against prior holders, as
good a title to the transferee as if they were negotiable, and, inasmuch as a large
commercial use is made of such certificates as collateral security, and it is to the
public interest that such use should be simplified and facilitated by placing them as
nearly as possible on the plane of commercial paper, they are often spoken of and
treated as quasi negotiable, that is, as having some of the attributes and partaking
of the character of negotiable instruments, in passing from hand to hand, especially
where they are accompanied by an assignment and power of attorney, executed in
blank, to transfer them to anyone who may obtain possession as holders, even

though such assignment and power are under seal." (14 C. J., 665, sec. 1034; South
Bend First Nat Bank vs. Lanier, 20 Law. ed., 172; Weniger vs. Success Min. Co., 227
Fed., 548; Scott vs. Pequonnock Nat. Bank, 15 Fed., 494.)
APPEAL from a judgment of the Court of First Instance of Iloilo. Barrios, J.
The facts are stated in the opinion of the court.
William E. Greenbaum and Ohnick & Opisso f or appellant.
Nolan & Hernaez for appellee Talisay-Silay Milling Co., Inc.
683

VOL. 64, AUGUST 81, 1937


683
Bachrach Motor Co. vs. Lacson Ledesma
Roman J. Lacson and Francisco Fuentes for appellee Philippine National Bank.
No appearance f or appellee Lacson Ledesma,
IMPERIAL, J.; Bachrach Motor Co, vs. Lacson Ledesma, 64 Phil. 681, No. 42462
August 31, 1937

Tumalad vs. Vicencio


No. L-30173. September 30, 1971.
GAVINO A. TUMALAD and GENEROSA R. TUMALAD, plaintiffs-appellees, vs. ALBERTA
VICENCIO and EMILIANO SIMEON, defendants-appellants.
Remedial law; Answer; Nature of answer.The answer is a mere statement of the
facts which the party filing it expects to prove, but it is not evidence.
Same; In detainer cases; Claim of ownership is a matter of defense; Allegations in
complaint and the relief sought determine jurisdiction.When the question to be
determined is one of title, the Court is given the authority to proceed with the
hearing of the cause until this fact is clearly established. In the case of Sy vs.
Dalman, L-19200, 27 Feb. 1968, wherein the defendant was also a successful bidder
in an auction sale, it was likewise held by this Court that in detainer cases the claim
of ownership is a matter of defense and raises an issue of fact which should be
determined from the evidence at the trial. What determines jurisdiction are the
allegations or averments in the complaint and the relief asked for.
Civil law; Contracts; Fraud or deceit renders contract void-able.Fraud or deceit
does not render a contract void ab initio, and can only be a ground for rendering the
contract voidable or annullable pursuant to Article 1390 of the New Civil Code, by a
proper action in court.
144

144
SUPREME COURT REPORTS ANNOTATED
Tumalad vs. Vicencio
Same; Property; Status of buildings as immovable property.It is obvious that the
inclusion of the building, separate and distinct from the land, in the enumeration of
what may constitute real properties (art. 415, New Civil Code) could only mean one
thingthat a building is by itself an immovable property irrespective of whether or
not said structure and the land on which it is adhered to belong to the same owner.
Same; Same; Same; Deviations from rule.Certain deviations, however, have been
allowed for various reasons. In the case of Manarang vs. Ofilada, No. L-8133, 18 May
1956, 99 Phil. 109, this Court stated that it is undeniable that the parties to a
contract may by agreement treat as personal property that which by nature would
be real property. Again, in the case of Luna vs. Encarnacion, No. L-4637, 30 June
1952, 91 Phil. 531, the subject of the contract designated as Chattel Mortgage was
a house of mixed materials, and this Court held therein that it was a valid Chattel
mortgage because it was so expressly designated and specifically that the property
given as security is a house of mixed materials, which by its very nature is
considered personal property.

Same; Same; Same; Same; Reason; Owner is estopped.The view that parties to a
deed of chattel mortgage may agree to consider a house as personal property for
the purposes of said contract, is good only insofar as the contracting parties are
concerned. It is based, partly, upon the principle of estoppel. Hence, if a house
belonging to a person stands on a rented land belonging to another person, it may
be mortgaged as a personal property as so stipulated in the document of mortgage.
It should be noted, however, that the principle is predicated on statements by the
owner declaring his house to be a chattel, a conduct that may conceivably estop
him from subsequently claiming otherwise.
Same; Contracts; By ceding, selling or transferring house by way of chattel
mortgage, house is treated as chattel.In the contract, the house on rented land is
not only expressly designated as Chattel Mortgage; it specifically provides that the
mortgagor . . . voluntarily CEDES, SELLS and TRANSFERS by way of Chattel
Mortgage the property together with its leasehold rights over the lot on which it is
constructed and participation. . . Although there is no specific statement referring
to the subject house as personal property, yet by ceding, selling or transferring a
property by way of chattel mortgage defendants-appellants could not have meant
to convey the house as chattel, or at least, intended to treat the same as such, so
that they should not now be allowed to make an inconsistent stand by claiming
otherwise. Moreover, the subject house stood on a rented lot to which defendantsappel145

VOL. 41, SEPTEMBER 30, 1971


145
Tumalad vs. Vicencio
lants merely had a temporary right as lessee, and although this can not in itself
alone determine the status of the property, it does so when combined with other
factors to sustain the interpretation that the parties, particularly the mortgagors,
intended to treat the house as personalty.
Chattel Mortgage Law; Foreclosure of the mortgaged property.Chattel mortgages
are covered and regulated by the Chattel Mortgage Law, Act No. 1508. Section 14 of
this Act allows the mortgagee to have the property mortgaged sold at public auction
through a public officer in almost the same manner as that allowed by Act No. 3135,
as amended by Act No. 4118, provided that the requirements of the law relative to
notice and registration are complied with.
Same; Redemption of foreclosed property.Section 6 of Act No. 3135, as amended
provides that the debtor-mortgagor may, at any time within one year from and after
the date of the auction sale, redeem the property sold at the extrajudicial
foreclosure sale.

Same; Petition to obtain possession during period of redemption; Requirements.


Section 7 of Act 3135, as amended allows the purchaser of the property to obtain
from the court the possession during the period of redemption; but the same
provision expressly requires the filing of a petition with the proper Court of First
Instance and the furnishing of a bond. It is only upon filing of the proper motion and
the approval of the corresponding bond that the order for a writ of possession issues
as a matter of course. No discretion is left to the court. In the absence of such a
compliance, the purchaser can not claim possession during the period of
redemption as a matter of right. In such a case, the governing provision is Section
34, Rule 39, of the Revised Rules of Court, which also applies to properties
purchased in extrajudicial foreclosure proceedings.
Same; To whom rentals receivable during redemption period belong.While it is
true that the Rules of Court allow the purchaser to receive the rentals if the
purchased property is occupied by tenants, he is, nevertheless, accountable to the
judgmentdebtor or mortgagor as the case may be, for the amount so received and
the same will be duly credited against the redemption price when the said debtor or
mortgagor effects the redemption. Differently stated, the rentals receivable from
tenants, although they may be collected by the purchaser during the redemption
period, do not belong to the latter but still pertain to the debtor or mortgagor. The
rationale for the Rule, it seems, is to secure for the benefit of the debtor or
mortgagor, the payment of the redemption amount and the consequent return to
him of his properties sold at public auction.
146

146
SUPREME COURT REPORTS ANNOTATED
Tumalad vs. Vicencio
Same; Mortgagor is entitled to remain in possession during period of redemption
and to collect rents.Since the defendants-appellants were occupying the house at
the time of the auction sale, they are entitled to remain in possession during the
period of redemption or within one year from and after 27 March 1956, the date of
the auction sale, and to collect the rents or profits during the said period.
Remedial law; Review by Supreme Court of palpable errors even when not assigned.
It will be noted further that in the case at bar the period of redemption had not
yet expired when action was instituted in the court of origin, and that plaintiffs
appellees did not choose to take possession under Section 7, Act No. 3135, as
amended, which is the law selected by the parties to govern the extrajudicial
foreclosure of the chattel mortgage. Neither was there an allegation to that effect.
Since plaintiffs-appellees right to possess was not yet born at the filing of the
complaint, there could be no violation or breach thereof. Wherefore, the original
complaint stated no cause of action and was prematurely filed. For this reason, the
same should be ordered dismissed, even if there was no assignment of error to that

effect. The Supreme Court is clothed with ample authority to review palpable errors
not assigned as such if it finds that their consideration is necessary in arriving at a
just decision of the case.
APPEAL from a decision of the Court of First Instance of Manila. Lantin, J.

The facts are stated in the opinion of the Court.


Castillo & Suck for plaintiffs-appellees.
Jose Q. Calingo for defendants-appellants.
REYES, J.B.L., J.: Tumalad vs. Vicencio, 41 SCRA 143, No. L-30173 September 30,
1971

[No. L-10817-18. February 28, 1958]


ENRIQUE LOPEZ, petitioner, vs. VICENTE OROSA, JR., and PLAZA THEATRE, INC.,
respondents
1.PROPERTY; REAL ESTATE; MATERIALMAN'S LIEN; DOES NOT EXTEND TO THE LAND;
BUILDING SEPARATE AND DISTINCT FROM LAND.Appellant's contention that the
lien executed in favor of the furnisher of the materials used for the construction,
repair or refection of a building is also extended to land on which the construction
was made is without merit, because while it is true that generally, real estate
connotes the land and the building constructed thereon, it is obvious that the
inclusion of the building, separate and distinct from the land, in the enumeration of
what constitute real properties (Art. 415 of the New Civil Code [Art. 334 of the old])
could mean only one thing, that a building is by itself an immovable property.
(Leung Yee vs. Strong Machinery Co., 37 Phil., 644.)
2.ID.; ID.; ID.; BUILDING AS IMMOVABLE PROPERTY; IRRESPECTIVE OF OWNERSHIP
OF LAND AND BUILDING.A building is an immovable property irrespective of
whether or not said structure and the land on which it is adhered to belong to the
same owner.
3.PREFERENCE AND PRIORITIES; MATERIALMAN'S LIEN AND MORTGAGE CREDIT ON
LAND WHERE BUILDING CONSTRUCTED.Materialman's lien attaches merely to the
immovable property for the construction or repair of which the obligation was
incurred and in the case at bar, the lien in favor of appellant for the unpaid value of
the lumber used in the construction
99

VOL. 103, FEBRUARY 28, 1958


99
Lopez vs. Orosa, Jr., and Plaza Theatre, Inc.
of the building attaches only to said structure and to no other property of the
obligor. Thus, the interest of the mortgagee over the land is superior to and cannot
be made subject to the said materialman's lien.
PETITION for review by certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
Nicols Belmonte and Benjamin T. de Peralta for petitioner.
Tolentino & Garcia and D. R. Cruz for respondent Luzon Surety Co., Inc.
Jos B. Macatagay for respondent Plaza Theatre, Inc.
FELIX, J.: Lopez vs. Orosa, Jr., and Plaza Theatre, Inc., 103 Phil. 98, No. L-10817-18
February 28, 1958

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