Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-11658            February 15, 1918

LEUNG YEE, plaintiff-appellant, vs.FRANK L. STRONG MACHINERY COMPANY and J. G. WILLIAMSON, defendants-appellees.

Booram and Mahoney for appellant.Williams, Ferrier and SyCip for appellees.

CARSON, J.:

The "Compañia Agricola Filipina" bought a considerable quantity of rice-cleaning machinery company from the defendant machinery company, and executed a chattel mortgage thereon to secure payment of the purchase price. It included in the mortgage deed the building of strong materials in which the machinery was installed, without any reference to the land on which it stood. The indebtedness secured by this instrument not having been paid when it fell due, the mortgaged property was sold by the sheriff, in pursuance of the terms of the mortgage instrument, and was bought in by the machinery company. The mortgage was registered in the chattel mortgage registry, and the sale of the property to the machinery company in satisfaction of the mortgage was annotated in the same registry on December 29, 1913.

A few weeks thereafter, on or about the 14th of January, 1914, the "Compañia Agricola Filipina" executed a deed of sale of the land upon which the building stood to the machinery company, but this deed of sale, although executed in a public document, was not registered. This deed makes no reference to the building erected on the land and would appear to have been executed for the purpose of curing any defects which might be found to exist in the machinery company's title to the building under the sheriff's certificate of sale. The machinery company went into possession of the building at or about the time when this sale took place, that is to say, the month of December, 1913, and it has continued in possession ever since.

At or about the time when the chattel mortgage was executed in favor of the machinery company, the mortgagor, the "Compañia Agricola Filipina" executed another mortgage to the plaintiff upon the building, separate and apart from the land on which it stood, to secure payment of the balance of its indebtedness to the plaintiff under a contract for the construction of the building. Upon the failure of the mortgagor to pay the amount of the indebtedness secured by the mortgage, the plaintiff secured judgment for that amount, levied execution upon the building, bought it in at the sheriff's sale on or about the 18th of December, 1914, and had the sheriff's certificate of the sale duly registered in the land registry of the Province of Cavite.

At the time when the execution was levied upon the building, the defendant machinery company, which was in possession, filed with the 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 sheriff, the plaintiff executed an indemnity bond in favor of the sheriff in the sum of P12,000, in reliance upon which the sheriff sold the property at public auction to the plaintiff, who was the highest bidder at the sheriff's sale.

This action was instituted by the plaintiff to recover possession of the building from the machinery company.

The trial judge, relying upon the terms of article 1473 of the Civil Code, gave judgment in favor of the machinery company, on the ground that the company had its title to the building registered prior to the date of registry of the plaintiff's certificate.

Article 1473 of the Civil Code is as follows:

If the same thing should have been sold to different vendees, the ownership shall be transfer to the person who may have the first taken possession thereof in good faith, if it should be personal property.

Should it be real property, it shall belong to the person acquiring it who first recorded it in the registry.

Should there be no entry, the property shall belong to the person who first took possession of it in good faith, and, in the absence thereof, to the person who presents the oldest title, provided there is good faith.

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 real property in a chattel mortgage registry cannot be given the legal effect of an inscription in the registry of real property. By its express terms, the Chattel Mortgage Law contemplates and makes provision for mortgages of personal property; and the sole purpose and object of the chattel mortgage registry is to provide for the registry of "Chattel mortgages," that is to say, mortgages of personal property executed in the manner and form prescribed in the statute. The building of strong materials in which the rice-cleaning machinery was installed by the "Compañia Agricola Filipina" was real property, and the mere fact that the parties seem to have dealt with it separate and apart from the land on which it stood in no wise changed its character as real property. It follows that neither the original registry in the chattel mortgage of the building and the machinery installed therein, not the annotation in that registry of the sale of the mortgaged property, had any effect whatever so far as the building was concerned.

We conclude that the ruling in favor of the machinery company cannot be sustained on the ground assigned by the trial judge. We are of opinion, however, that the judgment must be sustained on the ground that the agreed statement of facts in the court below discloses that neither the purchase of the building by the plaintiff nor his inscription of the sheriff's certificate of sale in his favor was made in good faith, and that the machinery company must be held to be the owner of the property under 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 building and the land were sold to the machinery company long prior to the date of the sheriff's sale to the plaintiff.

It has been suggested that since the provisions of article 1473 of the Civil Code require "good faith," in express terms, in relation to "possession" and "title," but contain no express requirement as to "good faith" in relation to the "inscription" of the property on the registry, it must be presumed that good faith is not an essential requisite of registration in order that it may have the effect contemplated in this article. We cannot agree with this contention. It could not have been the intention of the legislator to base the preferential right secured under this article of the code upon an inscription of title in bad faith. Such an interpretation placed upon the language of this section would open wide the door to fraud and collusion. The public records cannot be converted into instruments of fraud and oppression by one who secures an inscription therein in bad faith. The force and effect given by law to an inscription in a public record presupposes the good faith of him who enters such inscription; and rights created by statute, which are predicated upon an inscription in a public registry, do not and cannot accrue under an inscription "in bad faith," to the benefit of the person who thus makes the inscription.

Construing the second paragraph of this article of the code, the supreme court of Spain held in its sentencia of the 13th of May, 1908, that:

This rule is always to be understood on the basis of the good faith mentioned in the first paragraph; therefore, it having been found that the second purchasers who record their purchase had knowledge of the previous sale, the question is to be decided in accordance with the following paragraph. (Note 2, art. 1473, Civ. Code, Medina and Maranon [1911] edition.)

Although article 1473, in its second paragraph, provides that the title of conveyance of ownership of the real property that is first recorded in the registry shall have preference, this provision must always be understood on the basis of the good faith mentioned in the first paragraph; the legislator could not have wished to strike it out and to sanction bad faith, just to comply with a mere formality which, in given cases, does not obtain even in real disputes between third persons. (Note 2, art. 1473, Civ. Code, issued by the publishers of the La Revista de los Tribunales, 13th edition.)

The agreed statement of facts clearly discloses that the plaintiff, when he bought the building at the sheriff's sale and inscribed his title in the land registry, was duly notified that the machinery company had bought the building from plaintiff's judgment debtor; that it had gone into possession long prior to the sheriff's sale; and that it was in possession at the time when the sheriff executed his levy. The execution of an indemnity bond by the plaintiff in favor of the sheriff, after the machinery company had filed its sworn claim of ownership, leaves no room for doubt in this regard. Having bought in the building at the sheriff's sale with full knowledge that at the time of the levy and sale the building had already been sold to the machinery company by the judgment debtor, the plaintiff cannot be said to have been a purchaser in good faith; and of course, the subsequent inscription of the sheriff's certificate of title must be held to have been tainted with the same defect.

Perhaps we should make it clear that in holding that the inscription of the sheriff's certificate of sale to the plaintiff was not made in good faith, we should not be understood as questioning, in any way, the good faith and genuineness of the plaintiff's claim against the "Compañia Agricola Filipina." The truth is that both the plaintiff and the defendant company 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 by the plaintiff in asserting and exercising his right to recover the amount of his claim from the estate of the common debtor. We are strongly inclined to believe that in procuring the levy of execution upon the factory building and in buying it at the sheriff's sale, he considered that he was doing no more than he had a right to do under all the circumstances, and it is highly possible and even probable that he thought at that time that he would be able to maintain his position in a contest with the machinery company. There was no collusion on his part with the common debtor, and no thought of the perpetration of a fraud upon the rights of another, in the ordinary sense of the word. He may have hoped, and doubtless he did hope, that the title of the machinery company would not stand the test of an action in a court of law; and if later developments had confirmed his unfounded hopes, no one could question the legality of the propriety of the course he adopted.

But it appearing that he had full knowledge of the machinery company's claim of ownership when he executed the indemnity bond and bought in the property at the sheriff's sale, and it appearing further that the 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 and outward acts by which alone the inward motive may, with safety, be determined. So it is that "the honesty of intention," "the honest lawful intent," which constitutes good faith implies a "freedom from knowledge and circumstances which ought to put a person on inquiry," and so it is that proof of such knowledge overcomes the presumption of good faith in which the courts always indulge in the absence of proof to the contrary. "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." (Wilder vs. Gilman, 55 Vt., 504, 505; Cf. Cardenas Lumber Co. vs. Shadel, 52 La. Ann., 2094-2098; Pinkerton Bros. Co. vs. Bromley, 119 Mich., 8, 10, 17.)

We conclude that upon the grounds herein set forth the disposing part of the decision and judgment entered in the court below should be affirmed with costs of this instance against the appellant. So ordered.

Arellano, C.J., Johnson, Araullo, Street and Malcolm, JJ., concur.Torres, Avanceña and Fisher, JJ., took no part.

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

G.R. No. L-50008 August 31, 1987

PRUDENTIAL BANK, petitioner, vs.HONORABLE DOMINGO D. PANIS, Presiding Judge of Branch III, Court of First Instance of Zambales and Olongapo City; FERNANDO MAGCALE & TEODULA BALUYUT-MAGCALE, respondents.

 

PARAS, J.:

This is a petition for review on certiorari of the November 13, 1978 Decision * of the then Court of First Instance of Zambales and Olongapo City in Civil Case No. 2443-0 entitled "Spouses Fernando A. Magcale and Teodula Baluyut-Magcale vs. Hon. Ramon Y. Pardo and Prudential Bank" declaring that the deeds of real estate mortgage executed by respondent spouses in favor of petitioner bank are null and void.

The undisputed facts of this case by stipulation of the parties are as follows:

... on November 19, 1971, plaintiffs-spouses Fernando A. Magcale and Teodula Baluyut Magcale secured a loan in the sum of P70,000.00 from the defendant Prudential Bank. To secure payment of this loan, plaintiffs executed in favor of defendant on the aforesaid date a deed of Real Estate Mortgage over the following described properties:

l. A 2-STOREY, SEMI-CONCRETE, residential building with warehouse spaces containing a total floor area of 263 sq. meters, more or less, generally constructed of mixed hard wood and concrete materials, under a roofing of cor. g. i. sheets; declared and assessed in the name of FERNANDO MAGCALE under Tax Declaration No. 21109, issued by the Assessor of Olongapo City with an assessed value of P35,290.00. This building is the only improvement of the lot.

2. THE PROPERTY hereby conveyed by way of MORTGAGE includes the right of occupancy on the lot where the above property is erected, and more particularly described and bounded, as follows:

A first class residential land Identffied as Lot No. 720, (Ts-308, Olongapo Townsite Subdivision) Ardoin Street, East Bajac-Bajac, Olongapo City, containing an area of 465 sq. m. more or less, declared and assessed in the name of FERNANDO MAGCALE under Tax Duration No. 19595 issued by the Assessor of Olongapo City with an assessed value of P1,860.00; bounded on the

NORTH: By No. 6, Ardoin Street

SOUTH: By No. 2, Ardoin Street

EAST: By 37 Canda Street, and

WEST: By Ardoin Street.

All corners of the lot marked by conc. cylindrical monuments of the Bureau of Lands as visible limits. ( Exhibit "A, " also Exhibit "1" for defendant).

Apart from the stipulations in the printed portion of the aforestated deed of mortgage, there appears a rider typed at the bottom of the reverse side of the document under the lists of the properties mortgaged which reads, as follows:

AND IT IS FURTHER AGREED that in the event the Sales Patent on the lot applied for by the Mortgagors as herein stated is released or issued by the Bureau of Lands, the Mortgagors hereby authorize the Register of Deeds to hold the Registration of same until this Mortgage is cancelled, or to annotate this encumbrance on the Title upon authority from the Secretary of Agriculture and Natural Resources, which title with annotation, shall be released in favor of the herein Mortgage.

From the aforequoted stipulation, it is obvious that the mortgagee (defendant Prudential Bank) was at the outset aware of the fact that the mortgagors (plaintiffs) have already filed a Miscellaneous Sales Application over the lot, possessory rights over which, were mortgaged to it.

Exhibit "A" (Real Estate Mortgage) was registered under the Provisions of Act 3344 with the Registry of Deeds of Zambales on November 23, 1971.

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 additional loan, plaintiffs executed in favor of the said defendant another deed of Real Estate Mortgage over the same properties previously mortgaged in Exhibit "A." (Exhibit "B;" also Exhibit "2" for defendant). This second deed of Real Estate Mortgage was likewise registered with the Registry of Deeds, this time in Olongapo City, on May 2,1973.

On April 24, 1973, the Secretary of Agriculture issued Miscellaneous Sales Patent No. 4776 over the parcel of land, possessory rights over which were mortgaged to defendant Prudential Bank, in favor of plaintiffs. On the basis of the aforesaid Patent, and upon its transcription in the Registration Book of the Province of Zambales, Original Certificate of Title No. P-2554 was issued in the name of Plaintiff Fernando Magcale, by the Ex-Oficio Register of Deeds of Zambales, on May 15, 1972.

For failure of plaintiffs to pay their obligation to defendant Bank after it became due, and upon application of said defendant, the deeds of Real Estate Mortgage (Exhibits "A" and "B") were extrajudicially foreclosed. Consequent to the foreclosure was the sale of the properties therein mortgaged to defendant as the highest bidder in a public auction sale conducted by the defendant City Sheriff on April 12, 1978 (Exhibit "E"). The auction sale aforesaid was held despite written request from plaintiffs through counsel dated March 29, 1978, for the defendant City Sheriff to desist from going with the scheduled public auction sale (Exhibit "D")." (Decision, Civil Case No. 2443-0, Rollo, pp. 29-31).

Respondent Court, in a Decision dated November 3, 1978 declared the deeds of Real Estate Mortgage as null and void (Ibid., p. 35).

On December 14, 1978, petitioner filed a Motion for Reconsideration (Ibid., pp. 41-53), opposed by private respondents on January 5, 1979 (Ibid., pp. 54-62), and in an Order dated January 10, 1979 (Ibid., p. 63), the Motion for Reconsideration was denied for lack of merit. Hence, the instant petition (Ibid., pp. 5-28).

The first Division of this Court, in a Resolution dated March 9, 1979, resolved to require the respondents to comment (Ibid., p. 65), which order was complied with the Resolution dated May 18,1979, (Ibid., p. 100), petitioner filed its Reply on June 2,1979 (Ibid., pp. 101-112).

Thereafter, in the Resolution dated June 13, 1979, the petition was given due course and the parties were required to submit simultaneously their respective memoranda. (Ibid., p. 114).

On July 18, 1979, petitioner filed its Memorandum (Ibid., pp. 116-144), while private respondents filed their Memorandum on August 1, 1979 (Ibid., pp. 146-155).

In a Resolution dated August 10, 1979, this case was considered submitted for decision (Ibid., P. 158).

In its Memorandum, petitioner raised the following issues:

1. WHETHER OR NOT THE DEEDS OF REAL ESTATE MORTGAGE ARE VALID; AND

2. WHETHER OR NOT THE SUPERVENING ISSUANCE IN FAVOR OF PRIVATE RESPONDENTS OF MISCELLANEOUS SALES PATENT NO. 4776 ON APRIL 24, 1972 UNDER ACT NO. 730 AND THE COVERING ORIGINAL CERTIFICATE OF TITLE NO. P-2554 ON MAY 15,1972 HAVE THE EFFECT OF INVALIDATING THE DEEDS OF REAL ESTATE MORTGAGE. (Memorandum for Petitioner, Rollo, p. 122).

This petition is impressed with merit.

The pivotal issue in this case is whether or not a valid real estate mortgage can be constituted on the building erected on the land belonging to another.

The answer is in the affirmative.

In the enumeration of properties under Article 415 of the Civil Code of the Philippines, this Court ruled that, "it is obvious that the inclusion of "building" separate and distinct from the land, in said provision of law can only mean that a building is by itself an immovable property." (Lopez vs. Orosa, Jr., et al., L-10817-18, Feb. 28, 1958; Associated Inc. and Surety Co., Inc. vs. Iya, et al., L-10837-38, May 30,1958).

Thus, while it is true that a mortgage of land necessarily includes, in the absence of stipulation of the improvements thereon, buildings, still a building by itself may be mortgaged apart from the land on which it has been built. Such a mortgage would be still a real estate mortgage for the building would still be considered immovable property even if dealt with separately and apart from the land (Leung Yee vs. Strong Machinery Co., 37 Phil. 644). In the same manner, this Court has also established that possessory rights over said properties before title is vested on the grantee, may be validly transferred or conveyed as in a deed of mortgage (Vda. de Bautista vs. Marcos, 3 SCRA 438 [1961]).

Coming back to the case at bar, the records show, as aforestated that the original mortgage deed on the 2-storey semi-concrete residential building with warehouse and on the right of occupancy on the lot where the building was erected, was executed on November 19, 1971 and registered under the provisions of Act 3344 with the Register of Deeds of Zambales on November 23, 1971. Miscellaneous Sales Patent No. 4776 on the land was issued on April 24, 1972, on the basis of which OCT No. 2554 was issued in the name of private respondent Fernando Magcale on May 15, 1972. It is therefore without question that the original mortgage was executed before the issuance of the final patent and before the government was divested of its title to the land, an event which takes effect only on the issuance of the sales patent and its subsequent registration in the Office of the Register of Deeds (Visayan Realty Inc. vs. Meer, 96 Phil. 515; Director of Lands vs. De Leon, 110 Phil. 28; Director of Lands vs. Jurado, L-14702, May 23, 1961; Pena "Law on Natural Resources", p. 49). Under the foregoing considerations, it is evident that the mortgage executed by private respondent on his own building which was erected on the land belonging to the government is to all intents and purposes a valid mortgage.

As to restrictions expressly mentioned on the face of respondents' OCT No. P-2554, it will be noted that Sections 121, 122 and 124 of the Public Land Act, refer to land already acquired under the Public Land Act, or any improvement thereon and therefore have no application to the assailed mortgage in the case at bar which was executed before such eventuality. Likewise, Section 2 of Republic Act No. 730, also a restriction appearing on the face of private respondent's title has likewise no application in the instant case, despite its reference to encumbrance or alienation before the patent is issued because it refers specifically to encumbrance or alienation on the land itself and does not mention anything regarding the improvements existing thereon.

But it is a different matter, as regards the second mortgage executed over the same properties on May 2, 1973 for an additional loan of P20,000.00 which was registered with the Registry of Deeds of Olongapo City on the same date. Relative thereto, it is evident that such mortgage executed after the issuance of the sales patent and of the Original Certificate of Title, falls squarely under the prohibitions stated in

Sections 121, 122 and 124 of the Public Land Act and Section 2 of Republic Act 730, and is therefore null and void.

Petitioner points out that private respondents, after physically possessing the title for five years, voluntarily surrendered the same to the bank in 1977 in order that the mortgaged may be annotated, without requiring the bank to get the prior approval of the Ministry of Natural Resources beforehand, thereby implicitly authorizing Prudential Bank to cause the annotation of said mortgage on their title.

However, the Court, in recently ruling on violations of Section 124 which refers to Sections 118, 120, 122 and 123 of Commonwealth Act 141, has held:

... Nonetheless, we apply our earlier rulings because we believe that as in pari delicto may not be invoked to defeat the policy of the State neither may the doctrine of estoppel give a validating effect to a void contract. Indeed, it is generally considered that as between parties to a contract, validity cannot be given to it by estoppel if it is prohibited by law or is against public policy (19 Am. Jur. 802). It is not within the competence of any citizen to barter away what public policy by law was to preserve (Gonzalo Puyat & Sons, Inc. vs. De los Amas and Alino supra). ... (Arsenal vs. IAC, 143 SCRA 54 [1986]).

This pronouncement covers only the previous transaction already alluded to and does not pass upon any new contract between the parties (Ibid), as in the case at bar. It should not preclude new contracts that may be entered into between petitioner bank and private respondents that are in accordance with the requirements of the law. After all, private respondents themselves declare that they are not denying the legitimacy of their debts and appear to be open to new negotiations under the law (Comment; Rollo, pp. 95-96). Any new transaction, however, would be subject to whatever steps the Government may take for the reversion of the land in its favor.

PREMISES CONSIDERED, the decision of the Court of First Instance of Zambales & Olongapo City is hereby MODIFIED, declaring that the Deed of Real Estate Mortgage for P70,000.00 is valid but ruling that the Deed of Real Estate Mortgage for an additional loan of P20,000.00 is null and void, without prejudice to any appropriate action the Government may take against private respondents.

SO ORDERED.

Teehankee, C.J., Narvasa, Cruz and Gancayco, JJ., concur.

 ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

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

ANTONIA BICERRA, DOMINGO BICERRA, BERNARDO BICERRA, CAYETANO BICERRA, LINDA BICERRA, PIO BICERRA and EUFRICINA BICERRA, plaintiffs-appellants, vs.TOMASA TENEZA and BENJAMIN BARBOSA, defendants-appellees.

Agripino Brillantes and Alberto B. Bravo for plaintiffs-appellants.Ernesto Parol for defendants-appellees.

MAKALINTAL, J.:

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

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

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

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

The order appealed from is affirmed. The appeal having been admitted in forma pauperis, no costs are adjudged.

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

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-20329             March 16, 1923

THE STANDARD OIL COMPANY OF NEW YORK, petitioner, vs.JOAQUIN JARAMILLO, as register of deeds of the City of Manila, respondent.

Ross, Lawrence and Selph for petitioner.City Fiscal Revilla and Assistant City Fiscal Rodas for respondent.

STREET, J.:

This cause is before us upon demurrer interposed by the respondent, Joaquin Jaramillo, register of deeds of the City of Manila, to an original petition of the Standard Oil Company of New York, seeking a peremptory mandamusto compel the respondent to record in the proper register a document purporting to be a chattel mortgage executed in the City of Manila by Gervasia de la Rosa, Vda. de Vera, in favor of the Standard Oil Company of New York.

It appears from the petition that on November 27, 1922, Gervasia de la Rosa, Vda. de Vera, was the lessee of a parcel of land situated in the City of Manila and owner of the house of strong materials built thereon, upon which date she executed a document in the form of a chattel mortgage, purporting to convey to the petitioner by way of mortgage both the leasehold interest in said lot and the building which stands thereon.

The clauses in said document describing the property intended to be thus mortgage are expressed in the following words:

Now, therefore, the mortgagor hereby conveys and transfer to the mortgage, by way of mortgage, the following described personal property, situated in the City of Manila, and now in possession of the mortgagor, to wit:

(1) All of the right, title, and interest of the mortgagor in and to the contract of lease hereinabove referred to, and in and to the premises the subject of the said lease;

(2) The building, property of the mortgagor, situated on the aforesaid leased premises.

After said document had been duly acknowledge and delivered, the petitioner caused the same to be presented to the respondent, Joaquin Jaramillo, as register of deeds of the City of Manila, for the purpose of having the same recorded in the book of record of chattel mortgages. Upon examination of the instrument, the respondent was of the opinion that it was not a chattel mortgage, for the reason that the interest therein mortgaged did not appear to be personal property, within the meaning of the Chattel Mortgage Law, and registration was refused on this ground only.

We are of the opinion that the position taken by the respondent is untenable; and it is his duty to accept the proper fee and place the instrument on record. The duties of a register of deeds in respect to the registration of chattel mortgage are of a purely ministerial character; and no provision of law can be cited which confers upon him any judicial or quasi-judicial power to determine the nature of any document of which registration is sought as a chattel mortgage.

The original provisions touching this matter are contained in section 15 of the Chattel Mortgage Law (Act No. 1508), as amended by Act No. 2496; but these have been transferred to section 198 of the Administrative Code, where they are now found. There is nothing in any of these provisions conferring upon the register of deeds any authority whatever in respect to the "qualification," as the term is used in Spanish law, of chattel mortgage. His duties in respect to such instruments are ministerial only. The efficacy of the act of recording a chattel mortgage consists in the fact that it operates as constructive notice of the existence of the contract, and the legal effects of the contract must be discovered in the

instrument itself in relation with the fact of notice. Registration adds nothing to the instrument, considered as a source of title, and affects nobody's rights except as a specifies of notice.

Articles 334 and 335 of the Civil Code supply no absolute criterion for discriminating between real property and personal property for purpose of the application of the Chattel Mortgage Law. Those articles state rules which, considered as a general doctrine, are law in this jurisdiction; but it must not be forgotten that under given conditions property may have character different from that imputed to it in said articles. It is undeniable that the parties to a contract may by agreement treat as personal property that which by nature would be real property; and it is a familiar phenomenon to see things classed as real property for purposes of taxation which on general principle might be considered personal property. Other situations are constantly arising, and from time to time are presented to this court, in which the proper classification of one thing or another as real or personal property may be said to be doubtful.

The point submitted to us in this case was determined on September 8, 1914, in an administrative ruling promulgated by the Honorable James A. Ostrand, now a Justice of this Court, but acting at that time in the capacity of Judge of the fourth branch of the Court of First Instance of the Ninth Judicial District, in the City of Manila; and little of value can be here added to the observations contained in said ruling. We accordingly quote therefrom as follows:

It is unnecessary here to determine whether or not the property described in the document in question is real or personal; the discussion may be confined to the point as to whether a register of deeds has authority to deny the registration of a document purporting to be a chattel mortgage and executed in the manner and form prescribed by the Chattel Mortgage Law.

Then, after quoting section 5 of the Chattel Mortgage Law (Act No. 1508), his Honor continued:

Based principally upon the provisions of section quoted the Attorney-General of the Philippine Islands, in an opinion dated August 11, 1909, held that a register of deeds has no authority to pass upon the capacity of the parties to a chattel mortgage which is presented to him for record. A fortiori a register of deeds can have no authority to pass upon the character of the property sought to be encumbered by a chattel mortgage. Of course, if the mortgaged property is real instead of personal the chattel mortgage would no doubt be held ineffective as against third parties, but this is a question to be determined by the courts of justice and not by the register of deeds.

In Leung Yee vs. Frank L. Strong Machinery Co. and Williamson (37 Phil., 644), this court held that where the interest conveyed is of the nature of real, property, the placing of the document on record in the chattel mortgage register is a futile act; but that decision is not decisive of the question now before us, which has reference to the function of the register of deeds in placing the document on record.

In the light of what has been said it becomes unnecessary for us to pass upon the point whether the interests conveyed in the instrument now in question are real or personal; and we declare it to be the duty of the register of deeds to accept the estimate placed upon the document by the petitioner and to register it, upon payment of the proper fee.

The demurrer is overruled; and unless within the period of five days from the date of the notification hereof, the respondent shall interpose a sufficient answer to the petition, the writ of mandamus will be issued, as prayed, but without costs. So ordered.

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-40411             August 7, 1935

DAVAO SAW MILL CO., INC., plaintiff-appellant, vs.APRONIANO G. CASTILLO and DAVAO LIGHT & POWER CO., INC., defendants-appellees.

Arsenio Suazo and Jose L. Palma Gil and Pablo Lorenzo and Delfin Joven for appellant.J.W. Ferrier for appellees.

MALCOLM, J.:

The issue in this case, as announced in the opening sentence of the decision in the trial court and as set forth by counsel for the parties on appeal, involves the determination of the nature of the properties described in the complaint. The trial judge found that those properties were personal in nature, and as a consequence absolved the defendants from the complaint, with costs against the plaintiff.

The Davao Saw Mill Co., Inc., is the holder of a lumber concession from the Government of the Philippine Islands. It has operated a sawmill in the sitio of Maa, barrio of Tigatu, municipality of Davao, Province of Davao. However, the land upon which the business was conducted belonged to another person. On the land the sawmill company erected a building which housed the machinery used by it. Some of the implements thus used were clearly personal property, the conflict concerning machines which were placed and mounted on foundations of cement. In the contract of lease between the sawmill company and the owner of the land there appeared the following provision:

That on the expiration of the period agreed upon, all the improvements and buildings introduced and erected by the party of the second part shall pass to the exclusive ownership of the party of the first part without any obligation on its part to pay any amount for said improvements and buildings; also, in the event the party of the second part should leave or abandon the land leased before the time herein stipulated, the improvements and buildings shall likewise pass to the ownership of the party of the first part as though the time agreed upon had expired: Provided, however, That the machineries and accessories are not included in the improvements which will pass to the party of the first part on the expiration or abandonment of the land leased.

In another action, wherein the Davao Light & Power Co., Inc., was the plaintiff and the Davao, Saw, Mill Co., Inc., was the defendant, a judgment was rendered in favor of the plaintiff in that action against the defendant in that action; a writ of execution issued thereon, and the properties now in question were levied upon as personalty by the sheriff. No third party claim was filed for such properties at the time of the sales thereof as is borne out by the record made by the plaintiff herein. Indeed the bidder, which was the plaintiff in that action, and the defendant herein having consummated the sale, proceeded to take possession of the machinery and other properties described in the corresponding certificates of sale executed in its favor by the sheriff of Davao.

As connecting up with the facts, it should further be explained that the Davao Saw Mill Co., Inc., has on a number of occasions treated the machinery as personal property by executing chattel mortgages in favor of third persons. One of such persons is the appellee by assignment from the original mortgages.

Article 334, paragraphs 1 and 5, of the Civil Code, is in point. According to the Code, real property consists of —

1. Land, buildings, roads and constructions of all kinds adhering to the soil;

x x x           x x x           x x x

5. Machinery, liquid containers, instruments or implements intended by the owner of any building or land for use in connection with any industry or trade being carried on therein and which are expressly adapted to meet the requirements of such trade of industry.

Appellant emphasizes the first paragraph, and appellees the last mentioned paragraph. We entertain no doubt that the trial judge and appellees are right in their appreciation of the legal doctrines flowing from the facts.

In the first place, it must again be pointed out that the appellant should have registered its protest before or at the time of the sale of this property. It must further be pointed out that while not conclusive, the characterization of the property as chattels by the appellant is indicative of intention and impresses upon the property the character determined by the parties. In this connection the decision of this court in the case of Standard Oil Co. of New Yorkvs. Jaramillo ( [1923], 44 Phil., 630), whether obiter dicta or not, furnishes the key to such a situation.

It is, however not necessary to spend overly must time in the resolution of this appeal on side issues. It is machinery which is involved; moreover, machinery not intended by the owner of any building or land for use in connection therewith, but intended by a lessee for use in a building erected on the land by the latter to be returned to the lessee on the expiration or abandonment of the lease.

A similar question arose in Puerto Rico, and on appeal being taken to the United States Supreme Court, it was held that machinery which is movable in its nature only becomes immobilized when placed in a plant by the owner of the property or plant, but not when so placed by a tenant, a usufructuary, or any person having only a temporary right, unless such person acted as the agent of the owner. In the opinion written by Chief Justice White, whose knowledge of the Civil Law is well known, it was in part said:

To determine this question involves fixing the nature and character of the property from the point of view of the rights of Valdes and its nature and character from the point of view of Nevers & Callaghan as a judgment creditor of the Altagracia Company and the rights derived by them from the execution levied on the machinery placed by the corporation in the plant. Following the Code Napoleon, the Porto Rican Code treats as immovable (real) property, not only land and buildings, but also attributes immovability in some cases to property of a movable nature, that is, personal property, because of the destination to which it is applied. "Things," says section 334 of the Porto Rican Code, "may be immovable either by their own nature or by their destination or the object to which they are applicable." Numerous illustrations are given in the fifth subdivision of section 335, which is as follows: "Machinery, vessels, instruments or implements intended by the owner of the tenements for the industrial or works that they may carry on in any building or upon any land and which tend directly to meet the needs of the said industry or works." (See also Code Nap., articles 516, 518 et seq. to and inclusive of article 534, recapitulating the things which, though in themselves movable, may be immobilized.) So far as the subject-matter with which we are dealing — machinery placed in the plant — it is plain, both under the provisions of the Porto Rican Law and of the Code Napoleon, that machinery which is movable in its nature only becomes immobilized when placed in a plant by the owner of the property or plant. Such result would not be accomplished, therefore, by the placing of machinery in a plant by a tenant or a usufructuary or any person having only a temporary right. (Demolombe, Tit. 9, No. 203; Aubry et Rau, Tit. 2, p. 12, Section 164; Laurent, Tit. 5, No. 447; and decisions quoted in Fuzier-Herman ed. Code Napoleon under articles 522 et seq.) The distinction rests, as pointed out by Demolombe, upon the fact that one only having a temporary right to the possession or enjoyment of property is not presumed by the law to have applied movable property belonging to him so as to deprive him of it by causing it by an act of immobilization to become the property of another. It follows that abstractly speaking the machinery put by the Altagracia Company in the plant belonging to Sanchez did not lose its character of movable property and become immovable by destination. But in the concrete immobilization took place because of the express provisions of

the lease under which the Altagracia held, since the lease in substance required the putting in of improved machinery, deprived the tenant of any right to charge against the lessor the cost such machinery, and it was expressly stipulated that the machinery so put in should become a part of the plant belonging to the owner without compensation to the lessee. Under such conditions the tenant in putting in the machinery was acting but as the agent of the owner in compliance with the obligations resting upon him, and the immobilization of the machinery which resulted arose in legal effect from the act of the owner in giving by contract a permanent destination to the machinery.

x x x           x x x           x x x

The machinery levied upon by Nevers & Callaghan, that is, that which was placed in the plant by the Altagracia Company, being, as regards Nevers & Callaghan, movable property, it follows that they had the right to levy on it under the execution upon the judgment in their favor, and the exercise of that right did not in a legal sense conflict with the claim of Valdes, since as to him the property was a part of the realty which, as the result of his obligations under the lease, he could not, for the purpose of collecting his debt, proceed separately against. (Valdes vs. Central Altagracia [192], 225 U.S., 58.)

Finding no reversible error in the record, the judgment appealed from will be affirmed, the costs of this instance to be paid by the appellant.

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-41643             July 31, 1935

B.H. BERKENKOTTER, plaintiff-appellant, vs.CU UNJIENG E HIJOS, YEK TONG LIN FIRE AND MARINE INSURANCE COMPANY, MABALACAT SUGAR COMPANY and THE PROVINCE SHERIFF OF PAMPANGA, defendants-appellees.

Briones and Martinez for appellant.Araneta, Zaragoza and Araneta for appellees Cu Unjieng e Hijos.No appearance for the other appellees.

VILLA-REAL, J.:

This is an appeal taken by the plaintiff, B.H. Berkenkotter, from the judgment of the Court of First Instance of Manila, dismissing said plaintiff's complaint against Cu Unjiengs e Hijos et al., with costs.

In support of his appeal, the appellant assigns six alleged errors as committed by the trial court in its decision in question which will be discussed in the course of this decision.

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 declaring that the additional machinery and equipment, as improvement incorporated with the central are subject to the mortgage deed executed in favor of the defendants Cu Unjieng e Hijos.

It is admitted by the parties that on April 26, 1926, the Mabalacat Sugar Co., Inc., owner of the sugar central situated in Mabalacat, Pampanga, obtained from the defendants, Cu Unjieng e Hijos, a loan secured by a first mortgage constituted on two parcels and land "with all its buildings, improvements, sugar-cane mill, steel railway, telephone line, apparatus, utensils and whatever forms part or is necessary complement of said sugar-cane mill, steel railway, telephone line, now existing or that may in the future exist is said lots."

On October 5, 1926, shortly after said mortgage had been constituted, the Mabalacat Sugar Co., Inc., decided to increase the capacity of its sugar central by buying additional machinery and equipment, so that instead of milling 150 tons daily, it could produce 250. The estimated cost of said additional machinery and equipment was approximately P100,000. In order to carry out this plan, B.A. Green, president of said corporation, proposed to the plaintiff, B.H. Berkenkotter, to advance the necessary amount for the purchase of said machinery and equipment, promising to reimburse him as soon as he could obtain an additional loan from the mortgagees, the herein defendants Cu Unjieng e Hijos. Having agreed to said proposition made in a letter dated October 5, 1926 (Exhibit E), B.H. Berkenkotter, on October 9th of the same year, delivered the sum of P1,710 to B.A. Green, president of the Mabalacat Sugar Co., Inc., the total amount supplied by him to said B.A. Green having been P25,750. Furthermore, B.H. Berkenkotter had a credit of P22,000 against said corporation for unpaid salary. With the loan of P25,750 and said credit of P22,000, the Mabalacat Sugar Co., Inc., purchased the additional machinery and equipment now in litigation.

On June 10, 1927, B.A. Green, president of the Mabalacat Sugar Co., Inc., applied to Cu Unjieng e Hijos for an additional loan of P75,000 offering as security the additional machinery and equipment acquired by said B.A. Green and installed in the sugar central after the execution of the original mortgage deed, on April 27, 1927, together with whatever additional equipment acquired with said loan. B.A. Green failed to obtain said loan.

Article 1877 of the Civil Code provides as follows.

ART. 1877. A mortgage includes all natural accessions, improvements, growing fruits, and rents not collected when the obligation falls due, and the amount of any indemnities paid or due the owner by the insurers of the mortgaged property or by virtue of the exercise of the power of eminent domain, with the declarations, amplifications, and limitations established by law, whether the estate continues in the possession of the person who mortgaged it or whether it passes into the hands of a third person.

In the case of Bischoff vs. Pomar and Compañia General de Tabacos (12 Phil., 690), cited with approval in the case of Cea vs. Villanueva (18 Phil., 538), this court laid shown the following doctrine:

1. REALTY; MORTGAGE OF REAL ESTATE INCLUDES IMPROVEMENTS AND FIXTURES. — It is a rule, established by the Civil Code and also by the Mortgage Law, with which the decisions of the courts of the United States are in accord, that in a mortgage of real estate, the improvements on the same are included; therefore, all objects permanently attached to a mortgaged building or land, although they may have been placed there after the mortgage was constituted, are also included. (Arts. 110 and 111 of the Mortgage Law, and 1877 of the Civil Code; decision of U.S. Supreme Court in the matter of Royal Insurance Co. vs. R. Miller, liquidator, and Amadeo [26 Sup. Ct. Rep., 46; 199 U.S., 353].)

2. ID.; ID.; INCLUSION OR EXCLUSION OF MACHINERY, ETC. — In order that it may be understood that the machinery and other objects placed upon and used in connection with a mortgaged estate are excluded from the mortgage, when it was stated in the mortgage that the improvements, buildings, and machinery that existed thereon were also comprehended, it is indispensable that the exclusion thereof be stipulated between the contracting parties.

The appellant contends that the installation of the machinery and equipment claimed by him in the sugar central of the Mabalacat Sugar Company, Inc., was not permanent in character inasmuch as B.A. Green, in proposing to him to advance the money for the purchase thereof, made it appear in the letter, Exhibit E, that in case B.A. Green should fail to obtain an additional loan from the defendants Cu Unjieng e Hijos, said machinery and equipment would become security therefor, said B.A. Green binding himself not to mortgage nor encumber them to anybody until said plaintiff be fully reimbursed for the corporation's indebtedness to him.

Upon acquiring the machinery and equipment in question with money obtained as loan from the plaintiff-appellant by B.A. Green, as president of the Mabalacat Sugar Co., Inc., the latter became owner of said machinery and equipment, otherwise B.A. Green, as such president, could not have offered them to the plaintiff as security for the payment of his credit.

Article 334, paragraph 5, of the Civil Code gives the character of real property to "machinery, liquid containers, instruments or implements intended by the owner of any building or land for use in connection with any industry or trade being carried on therein and which are expressly adapted to meet the requirements of such trade or industry.

If the installation of the machinery and equipment in question in the central of the Mabalacat Sugar Co., Inc., in lieu of the other of less capacity existing therein, for its sugar industry, converted them into real property by reason of their purpose, it cannot be said that their incorporation therewith was not permanent in character because, as essential and principal elements of a sugar central, without them the sugar central would be unable to function or carry on the industrial purpose for which it was established. Inasmuch as the central is permanent in character, the necessary machinery and equipment installed for carrying on the sugar 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 encumbering them until Berkenkotter has been fully reimbursed therefor, is not incompatible with the permanent character of the incorporation of said machinery and equipment with the sugar central of the Mabalacat Sugar Co., Inc., as nothing could prevent B.A. Green from giving them as security at least under a second mortgage.

As to the alleged sale of said machinery and equipment to the plaintiff and appellant after they had been permanently incorporated with sugar central of the Mabalacat Sugar Co., Inc., and while the mortgage constituted on said sugar central to Cu Unjieng e Hijos remained in force, only the right of redemption of the vendor Mabalacat Sugar Co., Inc., in the sugar central with which said machinery and equipment had been incorporated, was transferred thereby, subject to the right of the defendants Cu Unjieng e Hijos under the first mortgage.

For the foregoing considerations, we are of the opinion and so hold: (1) That 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) that 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; and (3) that 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.

Wherefore, finding no error in the appealed judgment, it is affirmed in all its parts, with costs to the appellant. So ordered.

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-17898            October 31, 1962

PASTOR D. AGO, petitioner, vs.THE HON. COURT OF APPEALS, HON. MONTANO A. ORTIZ, Judge of the Court of First Instance of Agusan, THE PROVINCIAL SHERIFF OF SURIGAO and GRACE PARK ENGINEERING, INC., respondents.

Jose M. Luison for petitioner.Norberto J. Quisumbing for respondent Grace Park Engineering, Inc.The Provincial Fiscal of Surigao for respondent Sheriff of Surigao.

LABRABOR, J.:

Appeal by certiorari to review the decision of respondent Court of Appeals in CA-G.R. No. 26723-R entitled "Pastor D. Ago vs. The Provincial Sheriff of Surigao, et al." which in part reads:

In this case for certiorari and prohibition with preliminary injunction, it appears from the records that the respondent Judge of the Court of First Instance of Agusan rendered judgment (Annex "A") in open court on January 28, 1959, basing said judgment on a compromise agreement between the parties.

On August 15, 1959, upon petition, the Court of First Instance issued a writ of execution.

Petitioner's motion for reconsideration dated October 12, 1959 alleges that he, or his counsel, did not receive a formal and valid notice of said decision, which motion for reconsideration was denied by the court below in the order of November 14, 1959.

Petitioner now contends that the respondent Judge exceeded in his jurisdiction in rendering the execution without valid and formal notice of the decision.

A compromise agreement is binding between the parties and becomes the law between them. (Gonzales vs. Gonzales G.R. No. L-1254, May 21, 1948, 81 Phil. 38; Martin vs. Martin, G.R. No. L-12439, May 22, 1959) .

It is a general rule in this jurisdiction that a judgment based on a compromise agreement is not appealable and is immediately executory, unless a motion is filed on the ground fraud, mistake or duress. (De los Reyes vs. Ugarte, 75 Phil. 505; Lapena vs. Morfe, G.R. No. L-10089, July 31, 1957)

Petitioner's claim that he was not notified or served notice of the decision is untenable. The judgment on the compromise agreement rendered by the court below dated January 28, 1959,

was given in open court. This alone is a substantial compliance as to notice. (De los Reyes vs. Ugarte, supra)

IN VIEW THEREOF, we believe that the lower court did not exceed nor abuse its jurisdiction in ordering the execution of the judgment. The petition for certiorari is hereby dismissed and the writ of preliminary injunction heretofore dissolved, with costs against the petitioner.

IT IS SO ORDERED.

The facts of the case may be briefly stated as follows: In 1957, petitioner Pastor D. Ago bought sawmill machineries and equipments from respondent Grace Park Engineer domineering, Inc., executing a chattel mortgage over said machineries and equipments to secure the payment of balance of the price remaining unpaid of P32,000.00, which petitioner agreed to pay on installment basis.

Petitioner Ago defaulted in his payment and so, in 1958 respondent Grace Park Engineering, Inc. instituted extra-judicial foreclosure proceedings of the mortgage. To enjoin said foreclosure, petitioner herein instituted Special Civil Case No. 53 in the Court of First Instance of Agusan. The parties to the case arrived at a compromise agreement and submitted the same in court in writing, signed by Pastor D. Ago and the Grace Park Engineering, Inc. The Hon. Montano A. Ortiz, Judge of the Court of First Instance of Agusan, then presiding, dictated a decision in open court on January 28, 1959.

Petitioner continued to default in his payments as provided in the judgment by compromise, so Grace Park Engineering, Inc. filed with the lower court a motion for execution, which was granted by the court on August 15, 1959. A writ of execution, dated September 23, 1959, later followed.

The herein respondent, Provincial Sheriff of Surigao, acting upon the writ of execution issued by the lower court, levied upon and ordered the sale of the sawmill machineries and equipments in question. These machineries and equipments had been taken to and installed in a sawmill building located in Lianga, Surigao del Sur, and owned by the Golden Pacific Sawmill, Inc., to whom, petitioner alleges, he had sold them on February 16, 1959 (a date after the decision of the lower court but before levy by the Sheriff).

Having been advised by the sheriff that the public auction sale was set for December 4, 1959, petitioner, on December 1, 1959, filed the petition for certiorari and prohibition with preliminary injunction with respondent Court of Appeals, alleging that a copy of the aforementioned judgment given in open court on January 28, 1959 was served upon counsel for petitioner only on September 25, 1959 (writ of execution is dated September 23, 1959); that the order and writ of execution having been issued by the lower court before counsel for petitioner received a copy of the judgment, its resultant last order that the "sheriff may now proceed with the sale of the properties levied constituted a grave abuse of discretion and was in excess of its jurisdiction; and that the respondent Provincial Sheriff of Surigao was acting illegally upon the allegedly void writ of execution by levying the same upon the sawmill machineries and equipments which have become real properties of the Golden Pacific sawmill, Inc., and is about to proceed in selling the same without prior publication of the notice of sale thereof in some newspaper of general circulation as required by the Rules of Court.

The Court of Appeals, on December 8, 1959, issued a writ of preliminary injunction against the sheriff but it turned out that the latter had already sold at public auction the machineries in question, on December 4, 1959, as scheduled. The respondent Grace Park Engineering, Inc. was the only bidder for P15,000.00, although the certificate sale was not yet executed. The Court of Appeals constructed the sheriff to suspend the issuance of a certificate of sale of the said sawmill machineries and equipment sold by him on December 4, 1959 until the final decision of the case. On November 9, 1960 the Court of Appeals rendered the aforequoted decision.

Before this Court, petitioner alleges that the Court of Appeals erred (1) in holding that the rendition of judgment on compromise in open court on January 1959 was a sufficient notice; and (2) in not resolving

the other issues raised before it, namely, (a) the legality of the public auction sale made by the sheriff, and (b) the nature of the machineries in question, whether they are movables or immovables.

The Court of Appeals held that as a judgment was entered by the court below in open court upon the submission of the compromise agreement, the parties may be considered as having been notified of said judgment and this fact constitutes due notice of said judgment. This raises the following legal question: Is the order dictated in open court of the judgment of the court, and is the fact the petitioner herein was present in open court was the judgment was dictated, sufficient notice thereof? The provisions of the Rules of Court decree otherwise. Section 1 of Rule 35 describes the manner in which judgment shall be rendered, thus:

SECTION 1. How judgment rendered. — All judgments determining the merits of cases shall be in writing personally and directly prepared by the judge, and signed by him, stating clearly and distinctly the facts and the law on which it is based, filed with the clerk of the court.

The court of first instance being a court of record, in order that a judgment may be considered as rendered, must not only be in writing, signed by the judge, but it must also be filed with the clerk of court. The mere pronouncement of the judgment in open court with the stenographer taking note thereof does not, therefore, constitute a rendition of the judgment. It is the filing of the signed decision with the clerk of court that constitutes rendition. While it is to be presumed that the judgment that was dictated in open court will be the judgment of the court, the court may still modify said order as the same is being put into writing. And even if the order or judgment has already been put into writing and signed, while it has not yet been delivered to the clerk for filing it is still subject to amendment or change by the judge. It is only when the judgment signed by the judge is actually filed with the clerk of court that it becomes a valid and binding judgment. Prior thereto, it could still be subject to amendment and change and may not, therefore, constitute the real judgment of the court.

Regarding the notice of judgment, the mere fact that a party heard the judge dictating the judgment in open court, is not a valid notice of said judgment. If rendition thereof is constituted by the filing with the clerk of court of a signed copy (of the judgment), it is evident that the fact that a party or an attorney heard the order or judgment being dictated in court cannot be considered as notice of the real judgment. No judgment can be notified to the parties unless it has previously been rendered. The notice, therefore, that a party has of a judgment that was being dictated is of no effect because at the time no judgment has as yet been signed by the judge and filed with the clerk.

Besides, the Rules expressly require that final orders or judgments be served personally or by registered mail. Section 7 of Rule 27 provides as follows:

SEC. 7. Service of final orders or judgments. — Final orders or judgments shall be served either personally or by registered mail.

In accordance with this provision, a party is not considered as having been served with the judgment merely because he heard the judgment dictating the said judgment in open court; it is necessary that he be served with a copy of the signed judgment that has been filed with the clerk in order that he may legally be considered as having been served with the judgment.

For all the foregoing, the fact that the petitioner herein heard the trial judge dictating the judgment in open court, is not sufficient to constitute the service of judgement as required by the above-quoted section 7 of Rule 2 the signed judgment not having been served upon the petitioner, said judgment could not be effective upon him (petitioner) who had not received it. It follows as a consequence that the issuance of the writ of execution null and void, having been issued before petitioner her was served, personally or by registered mail, a copy of the decision.

The second question raised in this appeal, which has been passed upon by the Court of Appeals, concerns the validity of the proceedings of the sheriff in selling the sawmill machineries and equipments at public auction with a notice of the sale having been previously published.

The record shows that after petitioner herein Pastor D. Ago had purchased the sawmill machineries and equipments he assigned the same to the Golden Pacific Sawmill, Inc. in payment of his subscription to the shares of stock of said corporation. Thereafter the sawmill machinery and equipments were installed in a building and permanently attached to the ground. By reason of such installment in a building, the said sawmill machineries and equipment became real estate properties in accordance with the provision of Art. 415 (5) of the Civil Code, thus:

ART. 415. The following are immovable property:

xxx           xxx           xxx

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

This Court in interpreting a similar question raised before it in the case of Berkenkotter vs. Cu Unjieng e Hijos, 61 Phil. 683, held that the installation of the machine and equipment in the central of the Mabalacat Sugar Co., Inc. for use in connection with the industry carried by the company, converted the said machinery and equipment into real estate by reason of their purpose. Paraphrasing language of said decision we hold that by the installment of the sawmill machineries in the building of the Gold Pacific Sawmill, Inc., for use in the sawing of logs carried on in said building, the same became a necessary and permanent part of the building or real estate on which the same was constructed, converting the said machineries and equipments into real estate within the meaning of Article 415(5) above-quoted of the Civil Code of the Philippines.

Considering that the machineries and equipments in question valued at more than P15,000.00 appear to have been sold without the necessary advertisement of sale by publication in a newspaper, as required in Sec. 16 of Rule 39 of the Rules of Court, which is as follows:

SEC. 16. Notice of sale of property on execution. — Before the sale of property on execution, notice thereof must be given as follows:

xxx           xxx           xxx

(c) In case of real property, by posting a similar notice particularly describing the property for twenty days in three public places in the municipality or city where the property is situated, and also where the property is to be sold, and, if the assessed value of the property exceeds four hundred pesos, by publishing a copy of the notice once a week, for the same period, in some newspaper published or having general circulation in the province, if there be one. If there are newspapers published in the province in both the English and Spanish languages, then a like publication for a like period shall be made in one newspaper published in the English language, and in one published in the Spanish language.

the sale made by the sheriff must be declared null and void.

WHEREFORE, the decision of the Court of Appeals sought to be reviewed is hereby set aside and We declare that the issuance of the writ of execution in this case against the sawmill machineries and equipments purchased by petitioner Pastor D. Ago from the Grace Park Engineering, Inc., as well as the

sale of the same by the Sheriff of Surigao, are null and void. Costs shall be against the respondent Grace Park Engineering, Inc.

Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon, Regala and Makalintal, JJ.,concur.Padilla, J., took no part.

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-17500             May 16, 1967

PEOPLE'S BANK AND TRUST CO. and ATLANTIC GULF AND PACIFIC CO. OF MANILA, plaintiffs-appellants, vs.DAHICAN LUMBER COMPANY, DAHICAN AMERICAN LUMBER CORPORATION and CONNELL BROS. CO. (PHIL.), defendants-appellants.

Angel S. Gamboa for defendants-appellants.Laurel Law Offices for plaintiffs-appellants.

DIZON, J.:

On September 8, 1948, Atlantic Gulf & Pacific Company of Manila, a West Virginia corporation licensed to do business in the Philippines — hereinafter referred to as ATLANTIC — sold and assigned all its rights in the Dahican Lumber concession to Dahican Lumber Company — hereinafter referred to as DALCO — for the total sum of $500,000.00, of which only the amount of $50,000.00 was paid. Thereafter, to develop the concession, DALCO obtained various loans from the People's Bank & Trust Company — hereinafter referred to as the BANK — amounting, as of July 13, 1950, to P200,000.00. In addition, DALCO obtained, through the BANK, a loan of $250,000.00 from the Export-Import Bank of Washington D.C., evidenced by five promissory notes of $50,000.00 each, maturing on different dates, executed by both DALCO and the Dahican America Lumber Corporation, a foreign corporation and a stockholder of DALCO, — hereinafter referred to as DAMCO, all payable to the BANK or its order.

As security for the payment of the abovementioned loans, on July 13, 1950 DALCO executed in favor of the BANK — the latter acting for itself and as trustee for the Export-Import Bank of Washington D.C. — a deed of mortgage covering five parcels of land situated in the province of Camarines Norte together with all the buildings and other improvements existing thereon and all the personal properties of the mortgagor located in its place of business in the municipalities of Mambulao and Capalonga, Camarines Norte (Exhibit D). On the same date, DALCO executed a second mortgage on the same properties in favor of ATLANTIC to secure payment of the unpaid balance of the sale price of the lumber concession amounting to the sum of $450,000.00 (Exhibit G). Both deeds contained the following provision extending the mortgage lien to properties to be subsequently acquired — referred to hereafter as "after acquired properties" — by the mortgagor:

All property of every nature and description taken in exchange or replacement, and all buildings, machinery, fixtures, tools equipment and other property which the Mortgagor may hereafter acquire, construct, install, attach, or use in, to, upon, or in connection with the premises, shall

immediately be and become subject to the lien of this mortgage in the same manner and to the same extent as if now included therein, and the Mortgagor shall from time to time during the existence of this mortgage furnish the Mortgagee with an accurate inventory of such substituted and subsequently acquired property.

Both mortgages were registered in the Office of the Register of Deeds of Camarines Norte. In addition thereto DALCO and DAMCO pledged to the BANK 7,296 shares of stock of DALCO and 9,286 shares of DAMCO to secure the same obligations.

Upon DALCO's and DAMCO's failure to pay the fifth promissory note upon its maturity, the BANK paid the same to the Export-Import Bank of Washington D.C., and the latter assigned to the former its credit and the first mortgage securing it. Subsequently, the BANK gave DALCO and DAMCO up to April 1, 1953 to pay the overdue promissory note.

After July 13, 1950 — the date of execution of the mortgages mentioned above — DALCO purchased various machineries, equipment, spare parts and supplies in addition to, or in replacement of some of those already owned and used by it on the date aforesaid. Pursuant to the provision of the mortgage deeds quoted theretofore regarding "after acquired properties," the BANK requested DALCO to submit complete lists of said properties but the latter failed to do so. In connection with these purchases, there appeared in the books of DALCO as due to Connell Bros. Company (Philippines) — a domestic corporation who was acting as the general purchasing agent of DALCO — thereinafter called CONNELL — the sum of P452,860.55 and to DAMCO, the sum of P2,151,678.34.

On December 16, 1952, the Board of Directors of DALCO, in a special meeting called for the purpose, passed a resolution agreeing to rescind the alleged sales of equipment, spare parts and supplies by CONNELL and DAMCO to it. Thereafter, the corresponding agreements of rescission of sale were executed between DALCO and DAMCO, on the one hand and between DALCO and CONNELL, on the other.

On January 13, 1953, the BANK, in its own behalf and that of ATLANTIC, demanded that said agreements be cancelled but CONNELL and DAMCO refused to do so. As a result, on February 12, 1953; ATLANTIC and the BANK, commenced foreclosure proceedings in the Court of First Instance of Camarines Norte against DALCO and DAMCO. On the same date they filed an ex-parte application for the appointment of a Receiver and/or for the issuance of a writ of preliminary injunction to restrain DALCO from removing its properties. The court granted both remedies and appointed George H. Evans as Receiver. Upon defendants' motion, however, the court, in its order of February 21, 1953, discharged the Receiver.

On March 2, 1953, defendants filed their answer denying the material allegations of the complaint and alleging several affirmative defenses and a counterclaim.

On March 4 of the same year, CONNELL, filed a motion for intervention alleging that it was the owner and possessor of some of the equipments, spare parts and supplies which DALCO had acquired subsequent to the execution of the mortgages sought to be foreclosed and which plaintiffs claimed were covered by the lien. In its order of March 18,1953 the Court granted the motion, as well as plaintiffs' motion to set aside the order discharging the Receiver. Consequently, Evans was reinstated.

On April 1, 1953, CONNELL filed its answer denying the material averment of the complaint, and asserting affirmative defenses and a counterclaim.

Upon motion of the parties the Court, on September 30, 1953, issued an order transferring the venue of the action to the Court of First Instance of Manila where it was docketed as Civil Case No. 20987.

On August 30, 1958, upon motion of all the parties, the Court ordered the sale of all the machineries, equipment and supplies of DALCO, and the same were subsequently sold for a total consideration of P175,000.00 which was deposited in court pending final determination of the action. By a similar agreement one-half (P87,500.00) of this amount was considered as representing the proceeds obtained from the sale of the "undebated properties" (those not claimed by DAMCO and CONNELL), and the other half as representing those obtained from the sale of the "after acquired properties".

After due trial, the Court, on July 15, 1960, rendered judgment as follows:

IN VIEW WHEREFORE, the Court:

1. Condemns Dahican Lumber Co. to pay unto People's Bank the sum of P200,000,00 with 7% interest per annum from July 13, 1950, Plus another sum of P100,000.00 with 5% interest per annum from July 13, 1950; plus 10% on both principal sums as attorney's fees;

2. Condemns Dahican Lumber Co. to pay unto Atlantic Gulf the sum of P900,000.00 with 4% interest per annum from July 3, 1950, plus 10% on both principal as attorney's fees;

3. Condemns Dahican Lumber Co. to pay unto Connell Bros, the sum of P425,860.55, and to pay unto Dahican American Lumber Co. the sum of P2,151,678.24 both with legal interest from the date of the filing of the respective answers of those parties, 10% of the principals as attorney's fees;

4. Orders that of the sum realized from the sale of the properties of P175,000.00, after deducting the recognized expenses, one-half thereof be adjudicated unto plaintiffs, the court no longer specifying the share of each because of that announced intention under the stipulation of facts to "pool their resources"; as to the other one-half, the same should be adjudicated unto both plaintiffs, and defendant Dahican American and Connell Bros. in the proportion already set forth on page 9, lines 21, 22 and 23 of the body of this decision; but with the understanding that whatever plaintiffs and Dahican American and Connell Bros. should receive from the P175,000.00 deposited in the Court shall be applied to the judgments particularly rendered in favor of each;

5. No other pronouncement as to costs; but the costs of the receivership as to the debated properties shall be borne by People's Bank, Atlantic Gulf, Connell Bros., and Dahican American Lumber Co., pro-rata.

On the following day, the Court issued the following supplementary decision:

IN VIEW WHEREOF, the dispositive part of the decision is hereby amended in order to add the following paragraph 6:

6. If the sums mentioned in paragraphs 1 and 2 are not paid within ninety (90) days, the Court orders the sale at public auction of the lands object of the mortgages to satisfy the said mortgages and costs of foreclosure.

From the above-quoted decision, all the parties appealed.

Main contentions of plaintiffs as appellants are the following: that the "after acquired properties" were subject to the deeds of mortgage mentioned heretofore; that said properties were acquired from suppliers other than DAMCO and CONNELL; that even granting that DAMCO and CONNELL were the real suppliers, the rescission of the sales to DALCO could not prejudice the mortgage lien in favor of plaintiffs; that considering the foregoing, the proceeds obtained from the sale of the "after acquired properties" as

well as those obtained from the sale of the "undebated properties" in the total sum of P175,000.00 should have been awarded exclusively to plaintiffs by reason of the mortgage lien they had thereon; that damages should have been awarded to plaintiffs against defendants, all of them being guilty of an attempt to defraud the former when they sought to rescind the sales already mentioned for the purpose of defeating their mortgage lien, and finally, that defendants should have been made to bear all the expenses of the receivership, costs and attorney's fees.

On the other hand, defendants-appellants contend that the trial court erred: firstly, in not holding that plaintiffs had no cause of action against them because the promissory note sued upon was not yet due when the action to foreclose the mortgages was commenced; secondly, in not holding that the mortgages aforesaid were null and void as regards the "after acquired properties" of DALCO because they were not registered in accordance with the Chattel Mortgage Law, the court erring, as a consequence, in holding that said properties were subject to the mortgage lien in favor of plaintiffs; thirdly, in not holding that the provision of the fourth paragraph of each of said mortgages did not automatically make subject to such mortgages the "after acquired properties", the only meaning thereof being that the mortgagor was willing to constitute a lien over such properties; fourthly, in not ruling that said stipulation was void as against DAMCO and CONNELL and in not awarding the proceeds obtained from the sale of the "after acquired properties" to the latter exclusively; fifthly, in appointing a Receiver and in holding that the damages suffered by DAMCO and CONNELL by reason of the depreciation or loss in value of the "after acquired properties" placed under receivership was damnum absque injuria and, consequently, in not awarding, to said parties the corresponding damages claimed in their counterclaim; lastly, in sentencing DALCO and DAMCO to pay attorney's fees and in requiring DAMCO and CONNELL to pay the costs of the Receivership, instead of sentencing plaintiffs to pay attorney's fees.

Plaintiffs' brief as appellants submit six assignments of error, while that of defendants also as appellants submit a total of seventeen. However, the multifarious issues thus before Us may be resolved, directly or indirectly, by deciding the following issues:

Firstly, are the so-called "after acquired properties" covered by and subject to the deeds of mortgage subject of foreclosure?; secondly, assuming that they are subject thereto, are the mortgages valid and binding on the properties aforesaid inspite of the fact that they were not registered in accordance with the provisions of the Chattel Mortgage Law?; thirdly, assuming again that the mortgages are valid and binding upon the "after acquired properties", what is the effect thereon, if any, of the rescission of sales entered into, on the one hand, between DAMCO and DALCO, and between DALCO and CONNELL, on the other?; and lastly, was the action to foreclose the mortgages premature?

A. Under the fourth paragraph of both deeds of mortgage, it is crystal clear that all property of every nature and description taken in exchange or replacement, as well as all buildings, machineries, fixtures, tools, equipments, and other property that the mortgagor may acquire, construct, install, attach; or use in, to upon, or in connection with the premises — that is, its lumber concession — "shall immediately be and become subject to the lien" of both mortgages in the same manner and to the same extent as if already included therein at the time of their execution. As the language thus used leaves no room for doubt as to the intention of the parties, We see no useful purpose in discussing the matter extensively. Suffice it to say that the stipulation referred to is common, and We might say logical, in all cases where the properties given as collateral are perishable or subject to inevitable wear and tear or were intended to be sold, or to be used — thus becoming subject to the inevitable wear and tear — but with the understanding — express or implied — that they shall be replaced with others to be thereafter acquired by the mortgagor. Such stipulation is neither unlawful nor immoral, its obvious purpose being to maintain, to the extent allowed by circumstances, the original value of the properties given as security. Indeed, if such properties were of the nature already referred to, it would be poor judgment on the part of the creditor who does not see to it that a similar provision is included in the contract.

B. But defendants contend that, granting without admitting, that the deeds of mortgage in question cover the "after acquired properties" of DALCO, the same are void and ineffectual because they were not registered in accordance with the Chattel Mortgage Law. In support of this and of the proposition that,

even if said mortgages were valid, they should not prejudice them, the defendants argue (1) that the deeds do not describe the mortgaged chattels specifically, nor were they registered in accordance with the Chattel Mortgage Law; (2) that the stipulation contained in the fourth paragraph thereof constitutes "mere executory agreements to give a lien" over the "after acquired properties" upon their acquisition; and (3) that any mortgage stipulation concerning "after acquired properties" should not prejudice creditors and other third persons such as DAMCO and CONNELL.

The stipulation under consideration strongly belies defendants contention. As adverted to hereinbefore, it states that all property of every nature, building, machinery etc. taken in exchange or replacement by the mortgagor "shall immediately be and become subject to the lien of this mortgage in the same manner and to the same extent as if now included therein". No clearer language could have been chosen.

Conceding, on the other hand, that it is the law in this jurisdiction that, to affect third persons, a chattel mortgage must be registered and must describe the mortgaged chattels or personal properties sufficiently to enable the parties and any other person to identify them, We say that such law does not apply to this case.

As the mortgages in question were executed on July 13, 1950 with the old Civil Code still in force, there can be no doubt that the provisions of said code must govern their interpretation and the question of their validity. It happens however, that Articles 334 and 1877 of the old Civil Code are substantially reproduced in Articles 415 and 2127, respectively, of the new Civil Code. It is, therefore, immaterial in this case whether we take the former or the latter as guide in deciding the point under consideration.

Article 415 does not define real property but enumerates what are considered as such, among them being machinery, receptacles, instruments or replacements intended by owner of the tenement for an industry or works which may be carried on in a building or on a piece of land, and shall tend directly to meet the needs of the said industry or works.

On the strength of the above-quoted legal provisions, the lower court held that inasmuch as "the chattels were placed in the real properties mortgaged to plaintiffs, they came within the operation of Art. 415, paragraph 5 and Art. 2127 of the New Civil Code".

We find the above ruling in agreement with our decisions on the subject:

(1) In Berkenkotter vs. Cu Unjieng, 61 Phil. 663, We held that Article 334, paragraph 5 of the Civil Code (old) gives the character of real property to machinery, liquid containers, instruments or replacements intended by the owner of any building or land for use in connection with any industry or trade being carried on therein and which are expressly adapted to meet the requirements of such trade or industry.

(2) In Cu Unjieng e Hijos vs. Mabalacat Sugar Co., 58 Phil. 439, We held that a mortgage constituted on a sugar central includes not only the land on which it is built but also the buildings, machinery and accessories installed at the time the mortgage was constituted as well as the buildings, machinery and accessories belonging to the mortgagor, installed after the constitution thereof .

It is not disputed in the case at bar that the "after acquired properties" were purchased by DALCO in connection with, and for use in the development of its lumber concession and that they were purchased in addition to, or in replacement of those already existing in the premises on July 13, 1950. In Law, therefore, they must be deemed to have been immobilized, with the result that the real estate mortgages involved herein — which were registered as such — did not have to be registered a second time as chattel mortgages in order to bind the "after acquired properties" and affect third parties.

But defendants, invoking the case of Davao Sawmill Company vs. Castillo, 61 Phil. 709, claim that the "after acquired properties" did not become immobilized because DALCO did not own the whole area of its lumber concession all over which said properties were scattered.

The facts in the Davao Sawmill case, however, are not on all fours with the ones obtaining in the present. In the former, the Davao Sawmill Company, Inc., had repeatedly treated the machinery therein involved as personal property by executing chattel mortgages thereon in favor of third parties, while in the present case the parties had treated the "after acquired properties" as real properties by expressly and unequivocally agreeing that they shall automatically become subject to the lien of the real estate mortgages executed by them. In the Davao Sawmill decision it was, in fact, stated that "the characterization of the property as chattels by the appellant is indicative of intention and impresses upon the property the character determined by the parties" (61 Phil. 112, emphasis supplied). In the present case, the characterization of the "after acquired properties" as real property was made not only by one but by both interested parties. There is, therefore, more reason to hold that such consensus impresses upon the properties the character determined by the parties who must now be held in estoppel to question it.

Moreover, quoted in the Davao Sawmill case was that of Valdez vs. Central Altagracia, Inc. (225 U.S. 58) where it was held that while under the general law of Puerto Rico, machinery placed on property by a tenant does not become immobilized, yet, when the tenant places it there pursuant to contract that it shall belong to the owner, it then becomes immobilized as to that tenant and even as against his assignees and creditors who had sufficient notice of such stipulation. In the case at bar it is not disputed that DALCO purchased the "after acquired properties" to be placed on, and be used in the development of its lumber concession, and agreed further that the same shall become immediately subject to the lien constituted by the questioned mortgages. There is also abundant evidence in the record that DAMCO and CONNELL had full notice of such stipulation and had never thought of disputed validity until the present case was filed. Consequently all of them must be deemed barred from denying that the properties in question had become immobilized.

What We have said heretofore sufficiently disposes all the arguments adduced by defendants in support their contention that the mortgages under foreclosure are void, and, that, even if valid, are ineffectual as against DAMCO and CONNELL.

Now to the question of whether or not DAMCO CONNELL have rights over the "after acquired properties" superior to the mortgage lien constituted thereon in favor of plaintiffs. It is defendants' contention that in relation to said properties they are "unpaid sellers"; that as such they had not only a superior lien on the "after acquired properties" but also the right to rescind the sales thereof to DALCO.

This contention — it is obvious — would have validity only if it were true that DAMCO and CONNELL were the suppliers or vendors of the "after acquired properties". According to the record, plaintiffs did not know their exact identity and description prior to the filing of the case bar because DALCO, in violation of its obligation under the mortgages, had failed and refused theretofore to submit a complete list thereof. In the course of the proceedings, however, when defendants moved to dissolve the order of receivership and the writ of preliminary injunction issued by the lower court, they attached to their motion the lists marked as Exhibits 1, 2 and 3 describing the properties aforesaid. Later on, the parties agreed to consider said lists as identifying and describing the "after acquire properties," and engaged the services of auditors to examine the books of DALCO so as to bring out the details thereof. The report of the auditors and its annexes (Exhibits V, V-1 — V4) show that neither DAMCO nor CONNELL had supplied any of the goods of which they respective claimed to be the unpaid seller; that all items were supplied by different parties, neither of whom appeared to be DAMCO or CONNELL that, in fact, CONNELL collected a 5% service charge on the net value of all items it claims to have sold to DALCO and which, in truth, it had purchased for DALCO as the latter's general agent; that CONNELL had to issue its own invoices in addition to those o f the real suppliers in order to collect and justify such service charge.

Taking into account the above circumstances together with the fact that DAMCO was a stockholder and CONNELL was not only a stockholder but the general agent of DALCO, their claim to be the suppliers of the "after acquired required properties" would seem to be preposterous. The most that can be claimed on the basis of the evidence is that DAMCO and CONNELL probably financed some of the purchases. But if DALCO still owes them any amount in this connection, it is clear that, as financiers, they can not claim any right over the "after acquired properties" superior to the lien constituted thereon by virtue of the deeds

of mortgage under foreclosure. Indeed, the execution of the rescission of sales mentioned heretofore appears to be but a desperate attempt to better or improve DAMCO and CONNELL's position by enabling them to assume the role of "unpaid suppliers" and thus claim a vendor's lien over the "after acquired properties". The attempt, of course, is utterly ineffectual, not only because they are not the "unpaid sellers" they claim to be but also because there is abundant evidence in the record showing that both DAMCO and CONNELL had known and admitted from the beginning that the "after acquired properties" of DALCO were meant to be included in the first and second mortgages under foreclosure.

The claim that Belden, of ATLANTIC, had given his consent to the rescission, expressly or otherwise, is of no consequence and does not make the rescission valid and legally effective. It must be stated clearly, however, in justice to Belden, that, as a member of the Board of Directors of DALCO, he opposed the resolution of December 15, 1952 passed by said Board and the subsequent rescission of the sales.

Finally, defendants claim that the action to foreclose the mortgages filed on February 12, 1953 was premature because the promissory note sued upon did not fall due until April 1 of the same year, concluding from this that, when the action was commenced, the plaintiffs had no cause of action. Upon this question the lower court says the following in the appealed judgment;

The other is the defense of prematurity of the causes of action in that plaintiffs, as a matter of grace, conceded an extension of time to pay up to 1 April, 1953 while the action was filed on 12 February, 1953, but, as to this, the Court taking it that there is absolutely no debate that Dahican Lumber Co., was insolvent as of the date of the filing of the complaint, it should follow that the debtor thereby lost the benefit to the period.

x x x unless he gives a guaranty or security for the debt . . . (Art. 1198, New Civil Code);

and as the guaranty was plainly inadequate since the claim of plaintiffs reached in the aggregate, P1,200,000 excluding interest while the aggregate price of the "after-acquired" chattels claimed by Connell under the rescission contracts was P1,614,675.94, Exh. 1, Exh. V, report of auditors, and as a matter of fact, almost all the properties were sold afterwards for only P175,000.00, page 47, Vol. IV, and the Court understanding that when the law permits the debtor to enjoy the benefits of the period notwithstanding that he is insolvent by his giving a guaranty for the debt, that must mean a new and efficient guaranty, must concede that the causes of action for collection of the notes were not premature.

Very little need be added to the above. Defendants, however, contend that the lower court had no basis for finding that, when the action was commenced, DALCO was insolvent for purposes related to Article 1198, paragraph 1 of the Civil Code. We find, however, that the finding of the trial court is sufficiently supported by the evidence particularly the resolution marked as Exhibit K, which shows that on December 16, 1952 — in the words of the Chairman of the Board — DALCO was "without funds, neither does it expect to have any funds in the foreseeable future." (p. 64, record on appeal).

The remaining issues, namely, whether or not the proceeds obtained from the sale of the "after acquired properties" should have been awarded exclusively to the plaintiffs or to DAMCO and CONNELL, and if in law they should be distributed among said parties, whether or not the distribution should be pro-rata or otherwise; whether or not plaintiffs are entitled to damages; and, lastly, whether or not the expenses incidental to the Receivership should be borne by all the parties on a pro-rata basis or exclusively by one or some of them are of a secondary nature as they are already impliedly resolved by what has been said heretofore.

As regard the proceeds obtained from the sale of the of after acquired properties" and the "undebated properties", it is clear, in view of our opinion sustaining the validity of the mortgages in relation thereto, that said proceeds should be awarded exclusively to the plaintiffs in payment of the money obligations secured by the mortgages under foreclosure.

On the question of plaintiffs' right to recover damages from the defendants, the law (Articles 1313 and 1314 of the New Civil Code) provides that creditors are protected in cases of contracts intended to defraud them; and that any third person who induces another to violate his contract shall be liable for damages to the other contracting party. Similar liability is demandable under Arts. 20 and 21 — which may be given retroactive effect (Arts. 225253) — or under Arts. 1902 and 2176 of the Old Civil Code.

The facts of this case, as stated heretofore, clearly show that DALCO and DAMCO, after failing to pay the fifth promissory note upon its maturity, conspired jointly with CONNELL to violate the provisions of the fourth paragraph of the mortgages under foreclosure by attempting to defeat plaintiffs' mortgage lien on the "after acquired properties". As a result, the plaintiffs had to go to court to protect their rights thus jeopardized. Defendants' liability for damages is therefore clear.

However, the measure of the damages suffered by the plaintiffs is not what the latter claim, namely, the difference between the alleged total obligation secured by the mortgages amounting to around P1,200,000.00, plus the stipulated interest and attorney's fees, on the one hand, and the proceeds obtained from the sale of "after acquired properties", and of those that were not claimed neither by DAMCO nor CONNELL, on the other. Considering that the sale of the real properties subject to the mortgages under foreclosure has not been effected, and considering further the lack of evidence showing that the true value of all the properties already sold was not realized because their sale was under stress, We feel that We do not have before Us the true elements or factors that should determine the amount of damages that plaintiffs are entitled recover from defendants. It is, however, our considered opinion that, upon the facts established, all the expenses of the Receivership, which was deemed necessary to safeguard the rights of the plaintiffs, should be borne by the defendants, jointly and severally, in the same manner that all of them should pay to the plaintiffs, jointly a severally, attorney's fees awarded in the appealed judgment.

In consonance with the portion of this decision concerning the damages that the plaintiffs are entitled to recover from the defendants, the record of this case shall be remanded below for the corresponding proceedings.

Modified as above indicated, the appealed judgment is affirmed in all other respects. With costs.

Concepcion, C.J., Reyes, J.B.L., Regala, Makalintal, Bengzon, J.P., Zaldivar, Sanchez and Castro, JJ., concur.

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

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

BOARD OF ASSESSMENT APPEALS, CITY ASSESSOR and CITY TREASURER OF QUEZON CITY,petitioners, vs.MANILA ELECTRIC COMPANY, respondent.

Assistant City Attorney Jaime R. Agloro for petitioners.Ross, Selph and Carrascoso for respondent.

PAREDES, J.:

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

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

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

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

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

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

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

ordering the cancellation of the said tax declarations and the petitioner City Treasurer of Quezon City to refund to the respondent the sum of P11,651.86. The motion for reconsideration having been denied, on April 22, 1959, the instant petition for review was filed.

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

The tax exemption privilege of the petitioner is quoted hereunder:

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

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

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

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

The term "poles" was also used to denominate the steel supports or towers used by an association used to convey its electric power furnished to subscribers and members, constructed for the purpose of fastening high voltage and dangerous electric wires alongside public highways. The steel supports or towers were made of iron or other metals consisting of two pieces running from the ground up some thirty

feet high, being wider at the bottom than at the top, the said two metal pieces being connected with criss-cross iron running from the bottom to the top, constructed like ladders and loaded with high voltage electricity. In form and structure, they are like the steel towers in question. (Salt River Valley Users' Ass'n v. Compton, 8 P. 2nd, 249-250.)

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

In a case, the defendant admitted that the structure on which a certain person met his death was built for the purpose of supporting a transmission wire used for carrying high-tension electric power, but claimed that the steel towers on which it is carried were so large that their wire took their structure out of the definition of a pole line. It was held that in defining the word pole, one should not be governed by the wire or material of the support used, but was considering the danger from any elevated wire carrying electric current, and that regardless of the size or material wire of its individual members, any continuous series of structures intended and used solely or primarily for the purpose of supporting wires carrying electric currents is a pole line (Inspiration Consolidation Cooper Co. v. Bryan 252 P. 1016).

It is evident, therefore, that the word "poles", as used in Act No. 484 and incorporated in the petitioner's franchise, should not be given a restrictive and narrow interpretation, as to defeat the very object for which the franchise was granted. The poles as contemplated thereon, should be understood and taken as a part of the electric power system of the respondent Meralco, for the conveyance of electric current from the source thereof to its consumers. If the respondent would be required to employ "wooden poles", or "rounded poles" as it used to do fifty years back, then one should admit that the Philippines is one century behind the age of space. It should also be conceded by now that steel towers, like the ones in question, for obvious reasons, can better effectuate the purpose for which the respondent's franchise was granted.

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

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

x x x           x x x           x x x

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

x x x           x x x           x x x

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

x x x           x x x           x x x

The steel towers or supports in question, do not come within the objects mentioned in paragraph 1, because they do not constitute buildings or constructions adhered to the soil. They are not construction

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

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

IN VIEW HEREOF, the decision appealed from is hereby affirmed, with costs against the petitioners.

Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera and Regala, JJ., concur.Makalintal, J., concurs in the result.Dizon, J., took no part.

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-19527             March 30, 1963

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

San Juan, Africa and Benedicto and Hilado and Hilado for petitioner.Paredes, Poblador, Cruz and Nazareno and Manuel Soriano for respondents.

REYES, J.B.L., J.:

Petition for a writ of certiorari against the Court of First Instance of Negros Occidental.

It appears that during the lifetime of Esperidion Presbitero, judgment was rendered against him by the Court of Appeals on October 14, 1959, in CA-G.R. No. 20879,

... to execute in favor of the plaintiff, within 30 days from the time this judgment becomes final, a deed of reconveyance of Lot No. 788 of the cadastral survey of Valladolid, free from all liens and encumbrances, and another deed of reconveyance of a 7-hectare portion of Lot No. 608 of the same cadastral survey, also free from all liens and encumbrances, or, upon failure to do so, to pay to the plaintiff the value of each of the said properties, as may be determined by the Court a quo upon evidence to be presented by the parties before it. The defendant is further adjudged to pay to the plaintiff the value of the products received by him from the 5-hectare portion equivalent to 20 cavans of palay per hectare every year, or 125 cavans yearly, at the rate of P10.00 per cavan, from 1951 until possession of the said 5-hectare portion is finally delivered to the plaintiff with legal interest thereon from the time the complaint was filed; and to pay to the plaintiff the sum of P1,000.00 by way of attorney's fees, plus costs.

This judgment, which became final, was a modification of a decision of the Court of First Instance of Negros Occidental, in its Civil Case No. 3492, entitled "Helen Caram Nava, plaintiff, versus Esperidion Presbitero, defendant."

Thereafter, plaintiff's counsel, in a letter dated December 8, 1959, sought in vain to amicably settle the case through petitioner's son, Ricardo Presbitero. When no response was forthcoming, said counsel asked for, and the court a quo ordered on June 9, 1960, the issuance of a partial writ of execution for the sum of P12,250.00. On the following day, June 10, 1960, said counsel, in another friendly letter, reiterated his previous suggestion for an amicable settlement, but the same produced no fruitful result. Thereupon, on June 21, 1960, the sheriff levied upon and garnished the sugar quotas allotted to plantation audit Nos. 26-237, 26-238, 26-239, 26-240 and 26-241 adhered to the Ma-ao Mill District and "registered in the name of Esperidion Presbitero as the original plantation-owner", furnishing copies of the writ of execution and the notice of garnishment to the manager of the Ma-ao Sugar Central Company, Bago, Negros Occidental, and the Sugar Quota Administration at Bacolod City, but without presenting for registration copies thereof to the Register of Deeds.

Plaintiff Helen Caram Nava (herein respondent) then moved the court, on June 22, 1960, to hear evidence on the market value of the lots; and after some hearings, occasionally protracted by postponements, the trial court, on manifestation of defendant's willingness to cede the properties in litigation, suspended the proceedings and ordered him to segregate the portion of Lot 608 pertaining to the plaintiff from the mass of properties belonging to the defendant within a period to expire on August 24, 1960, and to effect the final conveyance of the said portion of Lot 608 and the whole of Lot 788 free from any lien and encumbrance whatsoever. Because of Presbitero's failure to comply with this order within the time set forth by the court, the plaintiff again moved on August 25, 1960 to declare the market value of the lots in question to be P2,500.00 per hectare, based on uncontradicted evidence previously adduced. But the court, acting on a prayer of defendant Presbitero, in an order dated August 27, 1960, granted him twenty (20) days to finalize the survey of Lot 608, and ordered him to execute a reconveyance of Lot 788 not later than August 31, 1960. Defendant again defaulted; and so plaintiff, on September 21, 1960, moved the court for payment by the defendant of the sum of P35,000.00 for the 14 hectares of land at P2,500.00 to the hectare, and the court, in its order dated September 24, 1960, gave the defendant until October 15, 1960 either to pay the value of the 14 hectares at the rate given or to deliver the clean titles of the lots. On October 15, 1960, the defendant finally delivered Certificate of Title No. T-28046 covering Lot 788, but not the title covering Lot 608 because of an existing encumbrance in favor of the Philippine National Bank. In view thereof, Helen Caram Nava moved for, and secured on October 19, 1960, a writ of execution for P17,500.00, and on the day following wrote the sheriff to proceed with the auction sale of the sugar quotas previously scheduled for November 5, 1960. The sheriff issued the notice of auction sale on October 20, 1960.

On October 22, 1960, death overtook the defendant Esperidion Presbitero.

Proceedings for the settlement of his estate were commenced in Special Proceedings No. 2936 of the Court of First Instance of Negros Occidental; and on November 4, 1960, the special administrator, Ricardo Presbitero, filed an urgent motion, in Case No. 3492, to set aside the writs of execution, and to

order the sheriff to desist from holding the auction sale on the grounds that the levy on the sugar quotas was invalid because the notice thereof was not registered with the Register of Deeds, as for real property, and that the writs, being for sums of money, are unenforceable since Esperidion Presbitero died on October 22, 1960, and, therefore, could only be enforced as a money claim against his estate.

This urgent motion was heard on November 5, 1960, but the auction sale proceeded on the same date, ending in the plaintiff's putting up the highest bid for P34,970.11; thus, the sheriff sold 21,640 piculs of sugar quota to her.

On November 10, 1960, plaintiff Nava filed her opposition to Presbitero's urgent motion of November 4, 1960; the latter filed on May 4, 1961 a supplement to his urgent motion; and on May 8 and 23, 1961, the court continued hearings on the motion, and ultimately denied it on November 18, 1961.

On January 11, 1962, plaintiff Nava also filed an urgent motion to order the Ma-ao Sugar Central to register the sugar quotas in her name and to deliver the rentals of these quotas corresponding to the crop year 1960-61 and succeeding years to her. The court granted this motion in its order dated February 3, 1962. A motion for reconsideration by Presbitero was denied in a subsequent order under date of March 5, 1962. Wherefore, Presbitero instituted the present proceedings for certiorari.

A preliminary restraining writ was thereafter issued by the court against the respondents from implementing the aforesaid orders of the respondent Judge, dated February 3, 1960 and March 5, 1962, respectively. The petition further seeks the setting aside of the sheriff's certificate of sale of the sugar quotas made out in favor of Helen Caram Nava, and that she be directed to file the judgment credit in her favor in Civil Case No. 3492 as a money claim in the proceedings to settle the Estate of Esperidion Presbitero.

The petitioner denies having been personally served with notice of the garnishment of the sugar quotas, but this disclaimer cannot be seriously considered since it appears that he was sent a copy of the notice through the chief of police of Valladolid on June 21, 1960, as certified to by the sheriff, and that he had actual knowledge of the garnishment, as shown by his motion of November 4, 1960 to set aside the writs of execution and to order the sheriff to desist from holding the auction sale.

Squarely at issue in this case is whether sugar quotas are real (immovable) or personal properties. If they be realty, then the levy upon them by the sheriff is null and void for lack of compliance with the procedure prescribed in Section 14, Rule 39, in relation with Section 7, Rule 59, of the Rules of Court requiring "the filing with the register of deeds a copy of the orders together with a description of the property . . . ."

In contending that sugar quotas are personal property, the respondent, Helen Caram Nava, invoked the test formulated by Manresa (3 Manresa, 6th Ed. 43), and opined that sugar quotas can be carried from place to place without injury to the land to which they are attached, and are not one of those included in Article 415 of the Civil Code; and not being thus included, they fall under the category of personal properties:

ART. 416. The following are deemed to be personal property:

x x x           x x x           x x x

4. In general, all things which can be transported from place to place without impairment of the real property to which they are fixed.

Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted and approved by this Honorable Court, without prejudice to the parties adducing other evidence to prove their case not covered by this stipulation of facts. 1äwphï1.ñët

Respondent likewise points to evidence she submitted that sugar quotas are, in fact, transferred apart from the plantations to which they are attached, without impairing, destroying, or diminishing the potentiality of either quota or plantation. She was sustained by the lower court when it stated that "it is a matter of public knowledge and it is universal practice in this province, whose principal industry is sugar, to transfer by sale, lease, or otherwise, sugar quota allocations from one plantation to any other" and that it is "specious to insist that quotas are improvements attaching to one plantation when in truth and in fact they are no longer attached thereto for having been sold or leased away to be used in another plantation". Respondent would add weight to her argument by invoking the role that sugar quotas play in our modern social and economic life, and cites that the Sugar Office does not require any registration with the Register of Deeds for the validity of the sale of these quotas; and, in fact, those here in question were not noted down in the certificate of title of the land to which they pertain; and that Ricardo Presbitero had leased sugar quotas independently of the land. The respondent cites further that the U.S.-Philippine Trade Relations Act, approved by the United States Congress in 1946, limiting the production of unrefined sugar in the Philippines did not allocate the quotas for said unrefined sugar among lands planted to sugarcane but among "the sugar producing mills and plantation OWNERS", and for this reason Section 3 of Executive Order No. 873, issued by Governor General Murphy, authorizes the lifting of sugar allotments from one land to another by means only of notarized deeds.

While respondent's arguments are thought-provoking, they cannot stand against the positive mandate of the pertinent statute. The Sugar Limitation Law (Act 4166, as amended) provides —

SEC. 9. The allotment corresponding to each piece of land under the provisions of this Act shall be deemed to be an improvement attaching to the land entitled thereto ....

and Republic Act No. 1825 similarly provides —

SEC. 4. The production allowance or quotas corresponding to each piece of land under the provisions of this Act shall be deemed to be an improvement attaching to the land entitled thereto ....

And Executive Order No. 873 defines "plantation" as follows:

(a) The term 'plantation' means any specific area of land under sole or undivided ownership to which is attached an allotment of centrifugal sugar.

Thus, under express provisions of law, the sugar quota allocations are accessories to land, and can not have independent existence away from a plantation, although the latter may vary. Indeed, this Court held in the case ofAbelarde vs. Lopez, 74 Phil. 344, that even if a contract of sale of haciendas omitted "the right, title, interest, participation, action (and) rent" which the grantors had or might have in relation to the parcels of land sold, the sale would include the quotas, it being provided in Section 9, Act 4166, that the allotment is deemed an improvement attached to the land, and that at the time the contract of sale was signed the land devoted to sugar were practically of no use without the sugar allotment.

As an improvement attached to land, by express provision of law, though not physically so united, the sugar quotas are inseparable therefrom, just like servitudes and other real rights over an immovable. Article 415 of the Civil Code, in enumerating what are immovable properties, names —

10. Contracts for public works, and servitudes and other real rights over immovable property. (Emphasis supplied)

It is by law, therefore, that these properties are immovable or real, Article 416 of the Civil Code being made to apply only when the thing (res) sought to be classified is not included in Article 415.

The fact that the Philippine Trade Act of 1946 (U.S. Public Law 371-79th Congress) allows transfers of sugar quotas does not militate against their immovability. Neither does the fact that the Sugar Quota Office does not require registration of sales of quotas with the Register of Deeds for their validity, nor the fact that allocation of unrefined sugar quotas is not made among lands planted to sugarcane but among "the sugar producing mills and plantation OWNERS", since the lease or sale of quotas are voluntary transactions, the regime of which, is not necessarily identical to involuntary transfers or levies; and there cannot be a sugar plantation owner without land to which the quota is attached; and there can exist no quota without there being first a corresponding plantation.

Since the levy is invalid for non-compliance with law, it is impertinent to discuss the survival or non-survival of claims after the death of the judgment debtor, gauged from the moment of actual levy. Suffice it to state that, as the case presently stands, the writs of execution are not in question, but the levy on the quotas, and, because of its invalidity, the levy amount to no levy at all. Neither is it necessary, or desirable, to pass upon the conscionableness or unconscionableness of the amount produced in the auction sale as compared with the actual value of the quotas inasmuch as the sale must necessarily be also illegal.

As to the remedial issue that the respondents have presented: that certiorari does not lie in this case because the petitioner had a remedy in the lower court to "suspend" the auction sale, but did not avail thereof, it may be stated that the latter's urgent motion of November 4, 1960, a day before the scheduled sale (though unresolved by the court on time), did ask for desistance from holding the sale.

WHEREFORE, the preliminary injunction heretofore granted is hereby made permanent, and the sheriff's certificate of sale of the sugar quotas in question declared null and void. Costs against respondent Nava.

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. 6295           September 1, 1911

THE UNITED STATES, plaintiff-appellee, vs.IGNACIO CARLOS, defendant-appellant.

A. D. Gibbs for appellant. Acting Attorney-General Harvey for appellee.

PER CURIAM:

The information filed in this case is as follows:

The undersigned accuses Ignacio Carlos of the crime of theft, committed as follows:

That on, during, and between the 13th day of February, 1909, and the 3d day of March, 1910, in the city of Manila, Philippine Islands, the said Ignacio Carlos, with intent of gain and without violence or intimidation against the person or force against the thing, did then and there, willfully, unlawfully, and feloniously, take, steal , and carry away two thousand two hundred and seventy-three (2,273) kilowatts of electric current, of the value of nine hundred and nine (909) pesos and

twenty (20) cents Philippine currency, the property of the Manila Electric Railroad and Light Company, a corporation doing business in the Philippine Islands, without the consent of the owner thereof; to the damage and prejudice of the said Manila Electric Railroad and Light Company in the said sum of nine hundred and nine (909) pesos and twenty (20) cents Philippine currency, equal to and equivalent of 4,546 pesetas Philippine currency. All contrary to law.

(Sgd.) L. M. SOUTWORTH, Prosecuting Attorney.

Subscribed and sworn to before me this 4th day of March, 1910, in the city of Manila, Philippine Islands, by L. M. Southworth, prosecuting attorney for the city of Manila.

(Sgd.) CHARLES S. LOBINGIER, Judge, First Instance.

A preliminary investigation has heretofore been conducted in this case, under my direction, having examined the witness under oath, in accordance with the provisions of section 39 of Act No. 183 of the Philippine Commission, as amended by section 2 of Act No. 612 of the Philippine Commission.

(Sgd) L. M. SOUTHWORTH, Prosecuting Attorney.

Subscribed and sworn to before me this 4th day of March, 1910, in the city of Manila, Philippine Islands, by L. M. Southworth, prosecuting attorney for the city of Manila.

(Sgd.) CHARLES LOBINGIER, Judge, First Instance.

A warrant for the arrest of the defendant was issued by the Honorable J. C. Jenkins on the 4th of March and placed in the hands of the sheriff. The sheriff's return shows that the defendant gave bond for his appearance. On the 14th of the same month counsel for the defendant demurrer to the complaint on the following grounds:

1 That the court has no jurisdiction over the person of the accused nor of the offense charged because the accused has not been accorded a preliminary investigation or examination as required by law and no court, magistrate, or other competent authority has determined from a sworn complaint or evidence adduced that there is probable cause to believe that a crime has been committed, or that this defendant has committed any crime.

2 That the facts charged do not constitute a public offense.

The demurrer was overruled on the same day and the defendant having refused to plead, a plea of not guilty was entered by direction of the court for him and the trial proceeded.

After due consideration of all the proofs presented and the arguments of counsel the trial court found the defendant guilty of the crime charged and sentenced him to one year eight months and twenty-one days' presidio correccional, to indemnify the offended party, The Manila Electric Railroad and Light Company, in the sum of P865.26, to the corresponding subsidiary imprisonment in case of insolvency and to the payment of the costs. From this judgment the defendant appealed and makes the following assignments of error:

I.

The court erred in overruling the objection of the accused to the jurisdiction of the court, because he was not given a preliminary investigation as required by law, and in overruling his demurrer for the same reason.

II.

The court erred in declaring the accused to be guilty, in view of the evidence submitted.

III.

The court erred in declaring that electrical energy may be stolen.

IV.

The court erred in not declaring that the plaintiff consented to the taking of the current.

V.

The court erred in finding the accused guilty of more than one offense.

VI.

The court erred in condemning the accused to pay P865.26 to the electric company as damages.

Exactly the same question as that raised in the first assignment of error, was after a through examination and due consideration, decided adversely to appellant's contention in the case of U. S. vs. Grant and Kennedy (18 Phil. Rep., 122). No sufficient reason is presented why we should not follow the doctrine enunciated in that case.

The question raised in the second assignment of error is purely one fact. Upon this point the trial court said:

For considerably more than a year previous to the filing of this complaint the accused had been a consumer of electricity furnished by the Manila Electric Railroad and Light Company for a building containing the residence of the accused and three other residences, and which was equipped, according to the defendant's testimony, with thirty electric lights. On March 15, 1909, the representatives of the company, believing that more light was being used than their meter showed, installed an additional meter (Exhibit A) on a pole outside of defendant's house, and both it and the meter (Exhibit B) which had been previously installed in the house were read on said date. Exhibit A read 218 kilowatt hours; Exhibit B, 745 kilowatt hours. On March 3, 1910 each was read again, Exhibit A showing 2,718 kilowatt hours and Exhibit B, 968. It is undisputed that the current which supplied the house passed through both meters and the city electrician testifies that each meter was tested on the date of the last reading and was "in good condition." The result of this registration therefore is that while the outsider meter (Exhibit A) showed a consumption in defendant's building of 2,500 kilowatt hours of electricity, this inside meter (Exhibit B) showed but 223 kilowatt hours. In other words the actual consumption, according to the outside meter, was more than ten times as great as that registered by the one inside. Obviously this difference could not be due to normal causes, for while the electrician called by the defense (Lanusa) testifies to the possibility of a difference between two such meters, he places the extreme limit of such difference between them 5 per cent. Here, as we have seen, the difference is more than 900 per cent. Besides, according to the defendant's electrician, the outside meter should normally run faster, while according to the test made in this case the inside meter (Exhibit B) ran the faster. The city electrician also testifies that the electric current could have been deflected from the

inside meter by placing thereon a device known as a "jumper" connecting the two outside wires, and there is other testimony that there were marks on the insulation of the meter Exhibit B which showed the use of such a device. There is a further evidence that the consumption of 223 kilowatt hours, registered by the inside meter would not be a reasonable amount for the number of lights installed in defendant's building during the period in question, and the accused fails to explain why he should have had thirty lights installed if he needed but four or five.

On the strength of this showing a search warrant was issued for the examination of defendant's premises and was duly served by a police officer (Hartpence). He was accompanied at the time by three employees of the Manila Electric Railroad and Light Company, and he found there the accused, his wife and son, and perhaps one or two others. There is a sharp conflict between the several spectators on some points but on one there is no dispute. All agree that the "jumper" (Exhibit C) was found in a drawer of a small cabinet in the room of defendant's house where the meter was installed and not more than 20 feet therefrom. In the absence of a satisfactory explanation this constituted possession on defendant's part, and such possession, under the Code of Civil Procedure, section 334 (10), raises the presumption that the accused was the owner of a device whose only use was to deflect the current from the meter.

Is there any other "satisfactory explanation" of the "jumper's" presence? The only one sought to be offered is the statement by the son of the accused, a boy of twelve years, that he saw the "jumper" placed there by the witness Porter, an employee of the Light Company. The boy is the only witness who so testifies and Porter himself squarely denies it. We can not agree with counsel for the defense that the boy's interest in the outcome of this case is less than that of the witness for the prosecution. It seems to us that his natural desire to shield his father would far outweight any interest such an employee like Porter would have and which, at most, would be merely pecuniary.

There is, however, one witness whom so far as appears, has no interest in the matter whatsoever. This is officer Hartpence, who executed the search warrant. He testifies that after inspecting other articles and places in the building as he and the other spectators, including the accused, approached the cabinet in which the "jumper" was found, the officer's attention was called to the defendant's appearance and the former noticed that the latter was becoming nervous. Where the only two witnesses who are supposed to know anything of the matter thus contradict each other this item of testimony by the officer is of more than ordinary significance; for if, as the accused claims, the "jumper" was placed in the cabinet for the first time by Porter there would be no occasion for any change of demeanor on the part of the accused. We do not think that the officer's declination to wait until defendant should secure a notary public shows bias. The presence of such an official was neither required nor authorized by law and the very efficacy of a search depends upon its swiftness.

We must also agree with the prosecuting attorney that the attending circumstances do not strengthen the story told by the boy; that the latter would have been likely to call out at the time he saw the "jumper" being placed in the drawer, or at least directed his father's attention to it immediately instead of waiting, as he says, until the latter was called by the officer. Finally, to accept the boy's story we must believe that this company or its representatives deliberately conspired not merely to lure the defendant into the commission of a crime but to fasten upon him a crime which he did not commit and thus convict an innocent man by perjured evidence. This is a much more serious charge than that contained in the complaint and should be supported by very strong corroborating circumstances which we do not find here. We are, accordingly, unable to consider as satisfactory defendant's explanation of the "jumper's" presence.

The only alternative is the conclusion that the "jumper" was placed there by the accused or by some one acting for him and that it was the instrument by which the current was deflected from the matter Exhibit B and the Light Company deprived of its lawful compensation.

After a careful examination of the entire record we are satisfied beyond peradventure of a doubt that the proofs presented fully support the facts as set forth in the foregoing finding.

Counsel for the appellant insists that the only corporeal property can be the subject of the crime of larceny, and in the support of this proposition cites several authorities for the purpose of showing that the only subjects of larceny are tangible, movable, chattels, something which could be taken in possession and carried away, and which had some, although trifling, intrinsic value, and also to show that electricity is an unknown force and can not be a subject of larceny.

In the U. S. vs. Genato (15 Phi. Rep., 170) the defendant, the owner of the store situated at No. 154 Escolta, Manila, was using a contrivance known as a "jumper" on the electric meter installed by the Manila Electric Railroad and the Light Company. As a result of the use of this "jumper" the meter, instead of making one revolution in every four seconds, registered one in seventy-seven seconds, thereby reducing the current approximately 95 per cent. Genato was charged in the municipal court with a violation of a certain ordinance of the city of Manila, and was sentenced to pay a fine of P200. He appealed to the Court of First Instance, was again tried and sentenced to pay the same fine. An appeal was taken from the judgment of the Court of First Instance to the Supreme Court on the ground that the ordinance in question was null and void. It is true that the only question directly presented was of the validity of the city ordinance. The court, after holding that said ordinance was valid, said:

Even without them (ordinances), the right of ownership of electric current is secured by articles 517 and 518 of the Penal Code; the application of these articles in case of subtraction of gas, a fluid used for lighting, and in some respects resembling electricity, is confirmed by the rule laid down in the decisions of the supreme court of Spain January 20, 1887, and April 1, 1897, construing and enforcing the provisions of articles 530 and 531 of the penal code of that country, articles identical with articles 517 and 518 of the code in force in these Islands.

Article 517 of the Penal Code above referred to reads as follows:

The following are guilty of larceny:

(1) Those who with intent of gain and without violence or intimidation against the person, or force against things, shall take another's personal property without the owner's consent.

And article 518 fixes the penalty for larceny in proportion to the value of the personal property stolen.

It is true that electricity is no longer, as formerly, regarded by electricians as a fluid, but its manifestation and effects, like those of gas, may be seen and felt. The true test of what is a proper subject of larceny seems to be not whether the subject is corporeal, but whether it is capable of appropriation by another than the owner.

It is well-settled that illuminating gas may be the subject of larceny, even in the absence of a statute so providing. (Decisions of supreme court of Spain, January 20, 1887, and April 1, 1897, supra; also (England) Queen vs. Firth, L. R. 1 C. C., 172, 11 Cox C. C., 234; Queen vs. White, 3 C. & K., 363, 6 Cox C. C., 213; Woods vs. People, 222 III., 293, 7 L. R. A., 520; Commonwealth vs. Shaw, 4 Allen (Mass), 308; State vs. Wellman, 34 Minn., 221, N. W. Rep., 385, and 25 Cyc., p. 12, note 10.)

In the case of Commonwealth vs. Shaw, supra, the court, speaking through Chief Justice Bigelow, said:

There is nothing in the nature of gas used for illuminating purposes which renders it incapable of being feloniously taken and carried away. It is a valuable article of merchandise, bought and sold like other personal property, susceptible of being severed from a mass or larger quantity, and of being transported from place to place. In the present case it appears that it was the property of

the Boston Gas Light Company; that it was in their possession by being confined in conduits and tubes which belonged to them, and that the defendant severed a portion of that which was in the pipes of the company by taking it into her house and there consuming it. All this being proved to have been done by her secretly and with intent to deprive the company of their property and to appropriate it to her own use, clearly constitutes the crime of larceny.

Electricity, the same as gas, is a valuable article of merchandise, bought and sold like other personal property and is capable of appropriation by another. So no error was committed by the trial court in holding that electricity is a subject of larceny.

It is urged in support of the fourth assignment of error that if it be true that the appellant did appropriate to his own use the electricity as charged he can not be held guilty of larceny for any part of the electricity thus appropriated, after the first month, for the reason that the complaining party, the Manila Electric Road and Light Company, knew of this misappropriation and consented thereto.

The outside meter was installed on March 15, 1909, and read 218 kilowatt hours. On the same day the inside meter was read and showed 745 kilowatt hours. Both meters were again read on March 3, 1910, and the outside one showed 2,718 kilowatt hours while the one on the inside only showed 968, the difference in consumption during this time being 2,277 kilowatt hours. The taking of this current continued over a period of one year, less twelve days. Assuming that the company read both meters at the end of each month; that it knew the defendant was misappropriating the current to that extent; and that t continued to furnish the current, thereby giving the defendant an opportunity to continue the misppropriation, still, we think, that the defendant is criminally responsible for the taking of the whole amount, 2,277 kilowatt hours. The company had a contract with the defendant to furnish him with current for lighting purposes. It could not stop the misappropriation without cutting off the current entirely. It could not reduce the current so as to just furnish sufficient for the lighting of two, three, or five lights, as claimed by the defendant that he used during the most of this time, but the current must always be sufficiently strong to furnish current for the thirty lights, at any time the defendant desired to use them.

There is no pretense that the accused was solicited by the company or any one else to commit the acts charged. At most there was a mere passive submission on the part of the company that the current should be taken and no indication that it wished it to be taken, and no knowledge by the defendant that the company wished him to take the current, and no mutual understanding between the company and the defendant, and no measures of inducement of any kind were employed by the company for the purpose of leading the defendant into temptation, and no preconcert whatever between him and company. The original design to misappropriate this current was formed by the defendant absolutely independent of any acts on the part of the company or its agents. It is true, no doubt, as a general proposition, that larceny is not committed when the property is taken with the consent of its owner. It may be difficult in some instances to determine whether certain acts constitute, in law, such "consent." But under the facts in the case at bar it is not difficult to reach a conclusion that the acts performed by the plaintiff company did not constitute a consent on its part the defendant take its property. We have been unable to find a well considered case holding contrary opinion under similar facts, but, there are numerous cases holding that such acts do not constitute such consent as would relieve the taker of criminal responsibility. The fourth assignment of error is, therefore, not well founded.

It is also contended that since the "jumper" was not used continuously, the defendant committed not a single offense but a series of offenses. It is, no doubt, true that the defendant did not allow the "jumper" to remain in place continuously for any number of days as the company inspected monthly the inside meter. So the "jumper" was put on and taken off at least monthly, if not daily, in order to avoid detection, and while the "jumper" was off the defendant was not misappropriating the current. The complaint alleged that the defendant did on, during, and between the 13th day of February, 1909, and the 3d of March, 1910. willfully, unlawfully, and feloniously take, steal, and carry away 2,277 kilowatts of electric current of the value of P909. No demurrer was presented against this complaint on the ground that more than one crime was charged. The Government had no opportunity to amend or correct this error, if error at all. In the case of U. S. vs. Macaspac (12 Phil. Rep., 26), the defendant received from one Joquina Punu the sum of

P31.50, with the request to deliver it to Marcelina Dy-Oco. The defendant called upon Marcelina, but instead of delivering the said amount she asked Marcelina for P30 in the name of Joaquina who had in no way authorized her to do so. Marcelina gave her P30, believing that Joaquina had sent for it. Counsel for the defendant insisted that the complaint charged his client with two different crimes ofestafa in violation of section 11 of General Orders, No. 58. In disposing of this question this court said:

The said defect constitutes one of the dilatory pleas indicated by section 21, and the accused ought to have raised the point before the trial began. Had this been done, the complaint might have been amended in time, because it is merely a defect of form easily remedied. . . . Inasmuch as in the first instance the accused did not make the corresponding dilatory plea to the irregularity of the complaint, it must be understood that has waived such objection, and is not now entitled to raise for the first time any question in reference thereto when submitting to this court her assignment of errors. Apart from the fact that the defense does not pretend that any of the essential rights of the accused have been injured, the allegation of the defect above alluded to, which in any case would only affect form of the complaint, can not justify a reversal of the judgment appealed from, according to the provisions of section 10 of General Orders, No. 58.

In the case at bar it is not pointed out wherein any of the essential rights of the defendant have been prejudiced by reason of the fact that the complaint covered the entire period. If twelve distinct and separate complaints had been filed against the defendant, one for each month, the sum total of the penalties imposed might have been very much greater than that imposed by the court in this case. The covering of the entire period by one charge has been beneficial, if anything, and not prejudicial to the rights of the defendant. The prosecuting attorney elected to cover the entire period with one charge and the accused having been convicted for this offense, he can not again be prosecuted for the stealing of the current at any time within that period. Then, again, we are of the opinion that the charge was properly laid. The electricity was stolen from the same person, in the same manner, and in the same place. It was substantially one continuous act, although the "jumper" might have been removed and replaced daily or monthly. The defendant was moved by one impulse to appropriate to his own use the current, and the means adopted by him for the taking of the current were in the execution of a general fraudulent plan.

A person stole gas for the use of a manufactory by means of pipe, which drew off the gas from the main without allowing it to pass through the meter. The gas from this pipe was burnt every day, and turned off at night. The pipe was never closed at this junction with the main, and consequently always remained full of gas. It was held, that if the pipe always remained full, there was, in fact, a continuous taking of the gas and not a series of separate talkings. It was held also that even if the pipe had not been kept full, the taking would have been continuous, as it was substantially all one transaction. (Regina vs. Firth, L. R., 1 C. C., 172; 11 Cox C. C., 234. Cited on p. 758 of Wharton's Criminal Law, vol. 1, 10th ed.)

The value of the electricity taken by the defendant was found by the trial court to be P865.26. This finding is fully in accordance with the evidence presented. So no error was committed in sentencing the defendant to indemnify the company in this amount, or to suffer the corresponding subsidiary imprisonment in case of insolvency.

The judgment being strictly in accordance with the law and the merits of the case, same is hereby affirmed, with costs against the appellant.

Arellano, C.J., Torres, Mapa and Carson, JJ.

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. 18520           September 26, 1922

INVOLUNTARY INSOLVENCY OF PAUL STROCHECKER, appellee, vs.ILDEFONSO RAMIREZ, creditor and appellant. WILLIAM EDMONDS, assignee.

Lim & Lim for appellant.Ross & Lawrence and Antonio T. Carrascoso, jr., for the Fidelity & Surety Co.

ROMUALDEZ, J.:

The question at issue in this appeal is, which of the two mortgages here in question must be given preference? Is it the one in favor of the Fidelity & Surety Co., or that in favor of Ildefonso Ramirez. The first was declared by the trial court to be entitled to preference.

In the lower court there were three mortgagees each of whom claimed preference. They were the two above mentioned and Concepcion Ayala. The latter's claim was rejected by the trial court, and from that ruling she did not appeal.

There is no question as to the priority in time of the mortgage in favor of the Fidelity & Surety Co. which was executed on March 10, 1919, and registered in due time in the registry of property, that in favor of the appellant being dated September 22, 1919, and registered also in the registry.

The appellant claims preference on these grounds: (a) That the first mortgage above-mentioned is not valid because the property which is the subject-matter thereof is not capable of being mortgaged, and the description of said property is not sufficient; and (b) that the amount due the appellant is a purchase price, citing article 1922 of the Civil Code in support thereof, and that his mortgage is but a modification of the security given by the debtor on February 15, 1919, that is, prior to the mortgage executed in favor of the Fidelity & Surety Co.

As to the first ground, the thing that was mortgaged to this corporation is described in the document as follows:

. . . his half interest in the drug business known as Antigua Botica Ramirez (owned by Srta. Dolores del Rosario and the mortgagor herein referred to as the partnership), located at Calle Real Nos. 123 and 125, District of Intramuros, Manila, Philippine Islands.

With regard to the nature of the property thus mortgaged, which is one-half interest in the business above described, such interest is a personal property capable of appropriation and not included in the enumeration of real properties in article 335 of the Civil Code, and may be the subject of mortgage. All personal property may be mortgaged. (Sec. 2, Act No. 1508.)

The description contained in the document is sufficient. The law (sec. 7, Act No. 1508) requires only a description of the following nature:

The description of the mortgaged property shall be such as to enable the parties to the mortgage, or any other person, after reasonable inquiry and investigation, to identify the same.

Turning to the second error assigned, numbers 1, 2, and 3 of article 1922 of the Civil Code invoked by the appellant are not applicable. Neither he, as debtor, nor the debtor himself, is in possession of the property

mortgaged, which is, and since the registration of the mortgage has been, legally in possession of the Fidelity & Surety Co. (Sec. 4, Act No. 1508; Meyers vs. Thein, 15 Phil., 303.)

In no way can the mortgage executed in favor of the appellant on September 22, 1919, be given effect as of February 15, 1919, the date of the sale of the drug store in question. On the 15th of February of that year, there was a stipulation about a persons security, but not a mortgage upon any property, and much less upon the property in question.

Moreover, the appellant cannot deny the preferential character of the mortgage in favor of the Fidelity & Surety Co. because in the very document executed in his favor it was stated that his mortgage was a second mortgage, subordinate to the one made in favor of the Fidelity & Surety Co.

The judgment appealed from is affirmed with costs against the appellant. So ordered.

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-6098            August 12, 1911

THE INSULAR GOVERNMENT, plaintiff-appellee, vs.ALDECOA AND COMPANY, defendant-appellant.

Emilio Pineda for appellant.Attorney-General Villamor for appellee.

TORRES, J.:

On April 20, 1907, the Attorney-General filed a written complaint in the Court of First Instance of Surigao against the firm of Aldecoa & Co., alleging that the defendant, a mercantile copartnership company organized under the laws in force in these Islands and domiciled in this city of Manila with a branch office in Surigao, continues to operate as such mercantile copartnership company under the name of Aldecoa & Co.,; that the said defendant, knowing that it had no title or right whatever to two adjoining parcels of land, which belong to the domain of the Government of the United States and were placed under the administration and control of the Government of these Islands, has been occupying them illegally for the past seventeen years, more or less, having constructed on the land a wharf, located along the railroad, and built warehouses of light material for the storage of coal — all for its exclusive use and benefit; that of the said two parcels of land, the parcel B has an area of 11 centares, approximately, and the parcel A, 84 centares, more or less, and their situation, metes and bounds, together with other details thereunto pertaining, are set out in the judgment of the court; that these lands, situated in Bilang-bilang, in the pueblo of Surigao and the province of the same name, belonged to the late Spanish Government in the Philippines and are now the property of the Government of the United States and were placed under the control of the Insular Government, which, by virtue of the treaty of Paris, has succeeded the former in all its rights; that, since the year 1901, the defendant has been requested repeatedly by the Attorney-General, in representation of the Insular Government, to recognize the latter's right of dominion over the same and to deliver to it the said property, and that, by reason of such demands, Aldecoa & Co., on February 25, 1903, recognizing the Insular Government's ownership, agreed to return the land, but that later, after several delays, it concluded by persisting in its attempt illegally to continue occupying the said

land and refused to return it to the Insular Government; wherefore the Attorney-General asked the court to enter judgment declaring the Insular Government to be the owner of the land claimed, and to order that the plaintiff be placed in possession of the same, together with the fruits collected by the defendants since it took such possession, and those awaiting collection, and to sentence the defendant to pay the costs.

Counsel for the defendant, Aldecoa & Co., in liquidation, answering the preceding complaint, set forth that it denied each and all of the allegations of the complaint, with the exception of those which it expressly admitted in its answer; and that it admitted paragraph 2 of the complaint, that is, the fact of the defendant's being a mercantile copartnership company, organized under the laws in force in these Islands. As a special defense, it alleged that it held and possessed, as owner, and had full and absolute dominion over, the lands claimed by the plaintiff in paragraph 1 of the complaint. The defendant therefore prayed that judgment be rendered in its favor, by absolving it from the complaint, with the costs against the plaintiff, together with the other relief solicited.

The provincial fiscal of Surigao presented a motion on November 3, 1908, for the purpose of amending the preceding complaint, with the permission of the court, by inserting, between paragraphs 4 and 5 of the complaint, a separate paragraph, as follows: "that Aldecoa and Company's possession of the lands here in question, was in fact interrupted during the years 1900, 1901, and 1902;" but, in view of the ruling of the court by an order of November 5, 1908, directing the plaintiff, within three days to specify the facts that constituted the alleged interruption of the defendant's possession of the lands in question, the provincial fiscal presented, on the 6th of the same month, a new written motion whereby be requested permission to amend the previous complaint by inserting between the said paragraphs 4 and 5 of the original complaint, a separate paragraph, as follows. "That the municipality of Surigao, in the year 1900, and through the mediation of Captain Kendrick, removed the posts and wire which enclosed the property here in question, the sole sign of possession that the defendant then had to the said lands." Inasmuch as no objection whatever was raised to the amendment requested, the court granted the same by an order of December 7, 1908.

The case came up for hearing on the 1st of December of that year and, after the presentation of testimony by both parties, the documents exhibited being attached to the record, the court, on December 10, 1909, rendered judgment and found that the land in question was public land and belonged to the State, and ordered the defendant to return it to the plaintiff might have the crops and the buildings on the land, upon the payment of an indemnity therefor, or might compel the defendant to pay him the value of the land, as provided by article 361 of the Civil Code. Counsel for the defendant excepted to this judgment, and by a written motion of the 4th of January asked for a rehearing of the case on the grounds that the said judgment was unwarranted by the evidence and was contrary to law. This motion was disallowed, exception thereto was taken by the appellant and, the required bill of exceptions being filed, in which was set out, at the request of the provincial fiscal, the latter's exception to the order issued by the judge on January 24, while in Cagayan, Province of Misamis, granting an extension of time for the presentation of the bill of exceptions, it was certified and transmitted to the clerk of this court.

The demand of the representative of the Government is for the recovery of possession of two united parcels of land, belonging to the public use and domain, which are at present occupied by the defendant Aldecoa & Co. The latter claims to have the full and absolute ownership of the said land and to have held it as owner since 1889, by virtue of a verbal permit from the politico-military governor of Surigao.

From the proceedings had and by the testimony of a large number of competent witnesses, one of whom was introduced by the defendant party itself, it was clearly proved that, in 1889, the land in litigation, as well as Bates Avenue, was, during the extraordinary high tides, usually covered by sea water that would extend to the other side of the said avenue, as far as the warehouse of Aldecoa & Co. that was erected there, and, at the ordinary low tides, as far as the wall built along the shore by the aforesaid firm and designated by the numbers 5, 6, and 7 in the plan, Exhibit A. This plan, according to the agreement between the parties, exactly represents the land in litigation.

It was likewise proved that nearly all the land in question was low land and swampy in certain places, with aquatic bushes growing upon it; that it had been gradually raised by the action of the sea, which in its ebb and flow left sand and other sediment on the low ground; that the retaining wall erected to prevent the sea water from reaching the said warehouse, that is on the opposite side of Bates Avenue, contributed in a large measure toward raising the level of the land; and that, furthermore, between the years 1889 and 1890, there were two piers on the said land, one named Carloto, alongside of which the vessels used to lie that called at Surigao during their voyages.

It is, then, incontrovertible that the land in question is of the public domain and belongs to the State, inasmuch as at the present time it is partly shore land and in part, was such formerly, and now is land formed by the action of the sea.

Treating of the sea coasts and shores as property of the public use and domain, partida 3, title 28, law 3, says:

The things which belong in common to all the living creatures of this world, are; The air, rain water, the sea and its shores; for every living creature may use them, according to its needs, etc.

Law 4 of the same title and partida says, among other things:

And by the seashore is understood all that space of ground covered by the waters of the sea, in their highest annual tides, whether in winter or summer.

The Law of Waters of August 3, 1866, extended to these Islands by the royal decree of the 8th of the same month and year and, together with the decree ordering its enforcement, issued by the Gobierno General on September 21, 1871, was published in the Official Gazette of the 24th of the same month, which law was not substituted nor repealed by that of June 13, 1879, promulgated in Spain and not extended to these Islands, provides, in article 1, that:

The following are part of the national domain open to public use:

xxx           xxx           xxx

2. The coast sea, that is, the maritime zone encircling the coasts, to the full width recognized by international law. . . .

3. The shores. By the shore is understood that space alternately covered and uncovered by the movement of the tide. Its interior or terrestial limit is the line reached by the highest equinoctial tides. Where the tides are not appreciable, the shore begins on the land side at the line reached by the sea during ordinary storms or tempests.

ART. 4. Lands added to the shores by accretions and alluvium deposits caused by the action of the sea, form part of the public domain. When they are no longer washed by the waters of the sea, and are not necessary for the purposes of public utility, or for the establishment of special industries, or for the coast-guard service, the Government shall declare them to be the property of the owners of the estates adjacent thereto and as increment thereof.

ART. 5. Lands reclaimed from the sea in consequence of works constructed by the State, or by the provinces, pueblos, pr private persons, with proper permission, shall become the property of the party constructing such works, unless otherwise provided by the terms of the grant of authority.

ART. 17. The use of the shores also belongs to the public under the police supervision of the civil authorities; all persons may fish thereon, wash, bathe, embark and disembark on pleasure trips, spread and dry clothes and nets bathe cattle, remove sand, and collect stones, shells, plants, shellfish, and other products of the sea, and do other things of a like nature. these rights may be restricted by virtue of the regulations necessary for the coast defense or police supervision, or in the interest of public utility or decency.

ART. 18. In no place on the coasts, shores, ports, or entrances of rivers, nor on the islands referred to in article 3, shall new works of any kind whatever be constructed, nor any building be erected, without proper permission, in accordance with the provisions of this law and with those of the law regarding ports.

On the supposition that Aldecoa & Co. commenced to occupy the land and shore herein concerned, prior to the enforcement of the Civil Code in these Islands, it is unquestionable that the issue pending decision must be determined in accordance with the provisions of the said Law of Waters of August 3, 1866, inasmuch as the shores, as well as the lands united thereto by the accretions and alluvium deposits produced by the action of the sea, are of the public use and domain.

Excluding the space occupied by Bates Avenue, that lies between the defendant's buildings and the shore and the lands added to the latter by the action of the sea in the sitio called Bilang-bilang, all this said land, together with the adjacent shore, belongs to the public domain and is intended for public uses. So that the defendant, in construction on the two aforementioned parcels of land a retaining wall, a pier or wharf, a railway, and warehouses for the storage of coal, for its exclusive use and benefit, did all this without due and competent authority and has been illegally occupying the land since 1901 by the representative of the Insular Government, Aldecoa & Co., by a letter of February 25, 1903, acknowledged that the land belonged to the Government and consented to vacate it, although it afterwards persisted in its claim that it was the owner of the land and refused to vacate and place it at the disposal of the Insular Government, whose representative, in view of the defendant's changed attitude in the matter, was forced to bring this action to recover its possession.

Aldecoa & Co. endeavored to prove that the land, consisting of the two united parcels A and B, belonged to them in fee simple, on account of their having begun to occupy it through a verbal permit from the then politico-military governor of Surigao. Although the record does not show the nature of the permit obtained, yet it is inferred from the document Exhibit C I that the said permit was a verbal authorization to occupy the land on condition that the defendant should later on prepare title deeds thereto, and that this authorization was granted for the purpose of furnishing facilities to, and benefiting the merchants of Surigao, in view of the backward condition of things in those regions at the time. It is certain, however, that Aldecoa & Co. did not obtain or solicit permission from the Government to establish themselves there and erect thereon their buildings and works, nor did they endeavor to obtain any title of ownership to the said land, as one of their witnesses, Juan Y. Aldecoa, testified. Furthermore, in the said letter or document Exhibit C I, the attorney then representing the defendant prayed that in case of sale or total or partial lease thereof Aldecoa & Co. should be given preference to any other party, on account of the important improvements they had made on the land.

It is true that, notwithstanding the fact that the lands which become an adjacent part of the shores through the accretions occasioned by the action of the sea, when they are no longer covered by such waters, or are not necessary for the purposes of public utility, for the establishment of special industries, or for the coast-guard service, may be declared by the Government to be the property of the owners of the estates adjacent thereto; but the defendant has not proven that it obtained for itself, in conformity with the provisions of article 4 of the said Law of Waters, such declaration of ownership, and competent authorization obtained from the Insular Government is indispensible in order that private person may construct works on the seashore and thereby secure lands for his profit and benefit, pursuant to article 5 of the same law, inasmuch as article 18 strictly prohibits the construction of any works or the erection of any building at any place on the coasts and shores, without proper authorization.

Aside from the verbal permission alleged, but not duly proven, and leaving aside the fact that the same is not admissible in official and administrative proceedings, it has in no wise been proved that Aldecoa & Co. obtained from the Insular Government any authorization whatever to erect a retaining wall, to construct a pier and warehouses, and to lay a railway wall, to construct a pier and warehouses, and to lay a railway on the land in question, which belonged to the state and was destined to public uses, as the defendant must have very well known; nor could any right whatever be created in its favor, and to the prejudice of the State, by its having filled in, without the proper permission, the aforementioned land for the purpose of raising the level thereof.

The Civil Code, which went into effect in these Islands on December 7, 1889, the twentieth day of its publication in the Gaceta de Manila of the 17th of November of the same year, confirms the provisions of the said Law of Waters, since, in its article 339, it prescribes that:

Property of public ownership is —

1. That destined to the public use, such as roads, canals, rivers, torrents, ports, and bridges constructed by the State, and banks, shores, roadsteads, and that of a similar character.

Article 341 of the same code provides:

Property of public ownership, when no longer devoted to general uses or to the requirement of the defense of the territory, shall become a part of the State property.

The shores and the lands reclaimed from the sea, while they continue to be devoted to public uses and no grant whatever has been made of any portion of them to private persons, remain a part of the public domain and are for public uses, and, until they are converted into patrimonial property of the State, such lands, thrown up by the action of the sea, and the shores adjacent thereto, are not susceptible of prescription, inasmuch as, being dedicated to the public uses, they are not subject of commerce among men, in accordance with the provision of article 1936 of the Civil Code.

The occupation or material possession of any land formed upon the shore by accretions and alluvium deposits occasioned by the sea, where the occupant or possessor is a private person and holds without previous permission or authorization from the Government, granted in due form, although he may have had the intention to hold it for the purpose of making it his own, is illegal possession on his part and amounts to nothing more than a mere detainer of the land, which is out of the sphere of the commerce of men, as belonging to the public domain and being allotted to public uses and for the use of all persons who live at the place where it is situated.

The record does not disclose that Aldecoa & Co. had obtained from the Spanish Government of the Philippines the requisite authorization legally to occupy the said two parcels of land of which they now claim to be the owners; wherefore, the occupation or possession which the allege they hold is a mere detainer that can merit from the law no protection such as is afforded only to the person legally in possession.

The politico-military governor of Surigao having had no authority or power to grant the possession or ownership of the said two parcels of land, could not have authorized their occupancy under a title of ownership. At the most, he may have, as alleged, verbally authorized the defendant to construct a pier, to fill in with earth the passageway necessary to enable the same to be reached from Bates Avenue, to erect a retaining wall to prevent the sea water, which used to inundate the said avenue, from flowing inward as far as the defendant's warehouses, and to build warehouses on the high land, raised by the action of the water near the shore; but such verbal authorization, even admitting that it was actually given, and the material occupation enjoyed by the defendant during more than ten years, have not created rights such as could legitimize a detention to the prejudice of the public, and of the State which represents the community, the sole entity entitled to the use and enjoyment of the land and shore usurped, for the very

reason that such shores and lands belong to the national domain, are intended for public uses and are not susceptible of prescription, as they do not pertain to the commerce of men.

The subject of this suit, as has been seen, is a tract of land that is a continuation of the shore at the sitio of Bilang-bilang and was formed on that shore by alluvium deposits occasioned by the action of the waters of the sea, that is, was land reclaimed from the sea, as fully proven by the record in this case; therefore the present issue is identical with that decided in the case of Ker & Co. vs. Cauden (6 Phil. Rep., 732) relative to a tract of land formed by the action of the sea and which has become a part of the so-called Sangley Point, in the Province of Cavite, and consequently the findings and doctrine established in that decision are properly applicable to this action, as may be seen by a perusal of that case.

The land in question, together with the shore of which it forms a part, is not, considering its conditions, comprised within the provisions of section 54 of Act No. 926, for the reason that it can not be deemed to be agricultural public lands, nor mangrove-swamp land, inasmuch as it is unquestionable, as the record shows it to have been proven, that the disputed property is land which was reclaimed from the sea through accretions produced by the action of the water upon a high part of the shore, and is, therefore, land intended for public uses. This classification loses none of its force from the fact that a part of the land is swampy, because this circumstance does not divest it of its true character as land gained from the sea by accretion.

Mangrove-swamp land, which is generally situated inland at a certain distance from the seashore, although it is usually inundated by the waters of the sea, especially at high tide, can not be confounded with the land formed by the action of the sea and which forms the shore line thereof; and for this reason, the decisions rendered in the cases of Montano vs. Insular Government (12 Phil. Rep., 572), and Mapa vs. Insular Government (10 Phil. Rep., 175), wherein due consideration was given to the provisions of section 54 of Act No. 926, have no application to the present action, which solely concerns land formed by the action of the sea, and the shore that is a part of it, both intended for public uses, while the references made by the appellant party apply to building lots, fisheries and nipa lands that were inundated by sea water and which, though covered with a good deal of water, could not be said to be navigable ways. The land in question, on the contrary, together with its adjacent shore, borders on water of great depth, the Pacific Ocean, for, besides the pier constructed at the place by the defendant and appellant, there were two others, and all intended for the service of the steamships that plied the high seas and were accustomed to enter the said port and there anchor alongside of these piers.

Under no consideration could the land herein concerned, together with the shore upon which it is formed, be classed as agricultural land susceptible of appropriation, and as such form the basis for the allegation of the possession of an imperfect or prescriptive title thereto, because, as aforestated, so long as the land in litigation belongs to the national domain and is reserved for public uses, it is not capable of being appropriated by any private person, except through express authorization granted in due form by a competent authority — a requisite which the defendant and appellant was unable to prove for the purpose of legalizing his possession.

However, on the supposition that the defendant, Aldecoa & Co., began to occupy the said land and shore after first obtaining verbal permission from a politico-military governor, constructing thereon a pier, warehouse, and retaining wall, it is right to hold, as did the lower court in his judgment, that it acted in good faith, and under such a supposition, the provisions of article 361 of the Civil Code must be complied with.

For the foregoing reasons, in the course of the explanation of which the errors attributed to the judgment appealed from have been disposed of, it is our opinion that such judgment should be fully affirmed, as it is in accordance with the law. The costs shall be assessed against the appellant. So ordered.

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-3279             March 11, 1908

THE CITY OF MANILA, petitioner-appellee, vs.THE INSULAR GOVERNMENT, ET AL., respondents-appellants.

Attorney-General Araneta for the Government.Modesto Reyes for appellee.

JOHNSON, J.:

On the 11th day of November, 1904, the city of Manila, through its attorney, filed a petition in the Court of Land Registration for the registration of a certain parcel or tract of land described by metes and bounds in the first paragraph of said petition as follows:

A parcel of land situated in Paco, a district of this city. It is bounded on the north by properties belonging to Chas. M. Stone, Prudencio de Leon, Asuncion Ventura, Petra Carnero y Garcia, Evaristo Roxas and brothers, Silvestra Sarmiento, Evaristo Gonzalez y Valdes, Mariano Vergara, Bernardo Yalon, Julio Gonzaga, Leoncia Mañalac, Geronimo Morales, Antonio Bautista, Doroteo Palacio, and Gualberta de los Reyes; on the south and on the east by property owned by Miguel Fabie and brothers, and on the west by properties belonging to Gualberta de los Reyes and Toribia Cruz. Beginning at the intersection of the northern line of Calle Real and the eastern line of Calle Peñafrancia (new street lines), approved on 21st December, 1903, and 17th February, 1904, respectively, by the Municipal Board, thence S. 4 degrees and 8 minutes E., 157.09 meters to the point marked "0;) thence N., 79 degrees 37 minutes W., 1830 meters along the southern boundary of the property owned by Evaristo Gonzalez Valdes and Mariano Vergara to point No. 1; thence N. 11 degrees 25 minutes E., 6.20 meters along the western boundary of the property belonging to Mariano Vergara to point No. 2; thence N. 86 degrees 38 minutes W., 29.60 meters along the southern boundary of the property owned by Mariano Vergara to point No. 3; thence N. 4 degrees 14 minutes E., 22.49 meters along the western boundary of the property of Mariano Vergara, to point No. 4; thence No. 11 degrees 42 minutes W., 5.71 meters along the western boundary of the property belonging to Bernardo Yalon to point No. 5; thence s. 89 degrees 50 minutes W., 78.00 meters to a stone monument along the southern boundary of the property owned by Julio Gonzaga, Leoncia Mañalac, Geronimo Morales, to point No. 6; thence N. 89 degrees 22 minutes W., 24.17 meters along the southern boundary of the property belonging to Antonio Bautista, to point No. 7; thence S. 55 degrees 56 minutes W., 16.81 meters along the southeastern boundary of the property owned by Doroteo Palacio to point No. 8; thence N. 86 degrees 49 minutes W., 25.50 meters along the southern boundary of the properties owned by Doroteo Palacio and Gualberta de los Reyes to point No. 9; thence S. 15 degrees 30 minutes W., 16.47 meters to a stone monument, along the eastern boundary of the property owned by Gualberta de los Reyes and Toribia Cruz to point No. 10; thence S. 7 degrees 35 minutes W., 14.16 meters along the eastern boundary of the property owned by Toribia Cruz to point No. 11; thence S. 75 degrees 39 minutes E., 14.37 meters along the northern boundary of the property of Miguel Fabie and brothers to point No. 12; thence N. 88 degrees 3 minutes E., 45.35 meters along the northern boundary of the property belonging to Miguel Fabie and brothers to point No. 13; thence S. 89 degrees 11 minutes E., 70.15 meters to a stone monument to Miguel Fabie and brothers to point No. 14; thence S. 86 degrees 33 minutes E., 85.07 meters to a stone monument along the northern boundary of the property of Miguel Fabie and brothers to point No. 15; thence

N. 83 degrees 8 minutes E., 14.49 meters along the northern boundary of the property owned by Miguel Fabie and brothers to point no. 16; thence N. 47 degrees E., 158.35 meters along the northwestern boundary of Miguel Fabie and brothers to point No. 17; thence N. 70 degrees 22 minutes W., 40.74 meters along the southern boundary of the properties owned by Charles M. Stone, Prudencio de Leon, and Asuncion Ventura (Looban) to point No. 18; thence N. 83 degrees 22 minutes W., 7.38 meters along a stone fence and the southern boundary of the properties belonging to Asuncion Ventura (Looban) and Petra Garcia to point No. 19; thence S. 30 degrees 34 minutes W., 21.12 meters along a stone fence and the western boundary of the property owned by Petra Carnero y Garcia to point No. 20; thence S. 74 degrees 58 minutes W., 8.70 meters along the northern boundary of the property of Evaristo Roxas and brothers to point No. 21; thence s. 22 degrees 4 minutes W., 34.75 meters along the eastern boundary of the property owned by Evaristo Roxas and brothers to point 22; thence N. 68 degrees 47 minutes W., 26.40 meters along the southern boundary of the property belonging to Evaristo Roxas and brothers to point No. 23; thence S. 68 degrees 47 minutes W., 85.61 meters along the eastern boundary of the properties owned by Silvestra Sarmiento and Evaristo Gonzalez y Valdes to point No. 24; thence N. 84 degrees 58 minutes W., 12.85 meters to a stone monument along the southern boundary of the property owned by Evaristo Gonzalez Valdes to point No. 25; thence N. 79 degrees 37 minutes W., 11.10 meters along the southern boundary of the property owned by Evaristo Gonzalez Valdes to point No. 0, the point of the beginning. Containing 10,472.23 square meters of extension. Bearings magnetic.

The said city alleged that it was the absolute owner of the said land; that said land was assessed by the city of Manila in the sum of $1,780, United States currency; that there existed no liens of whatever character against said land; that the land was unoccupied; that the said city obtained title to the said land by reason of being the successor to all the rights and actions of the old city of Manila (ayuntamiento de Manila), to which said property formerly belonged.

To this petition of the petitioner, the Insular Government presented the following opposition to the registration of said land:

The Solicitor-General, representing the Insular Government, appears before the court, and states:

I. That the city of Manila, represented by its attorney, Modesto Reyes, requests that, in compliance with the Land Registration Act, a parcel of land situated in Paco, a district of this city, of which it claims to be the absolute owner, and the description of which is specified in the petition be inscribed in its name.

II. That the land in question is the property of the Government of the United States under the control of the Insular Government.

III. That by virtue thereof, the Solicitor-General opposes the inscription asked for, and requests the court to deny the petition with the costs.

To this petition of the petitioner one Geronimo Morales also presented the following opposition to the registration of a portion of the land described in the second paragraph of said petition:

Now comes the undersigned before this court and says:

1. That the city of Manila, by its attorney, Modesto Reyes, has, in conformity with the provisions of the Land Registration Act, applied for the registration of a certain parcel of land located in the district of Paco, of this city, of which it alleges sole and absolute ownership, and the description of which is included in the application.

2. That the plan and description of the said land as they appear in the petition are incorrect, for there is included in the same a part of a building lot belonging to the undersigned, and situated in the barrio of Rosario of said district, with an area of 84 meters more or less, as will be seen in the plan to be filed later.

3. Therefore, the undersigned files his opposition to the registration applied for, as far as it has any bearing on the building lot of the undersigned which is included in the plan and description of the applicant, and this honorable court is requested to deny the application as far as it relates to the said building lot, with the costs against the petitioner.

After the presentation of the petition on the part of the said petitioner, one of the examiners of titles of the Court of Land Registration made an examination of the title claimed by the petitioner and made the following report to the judge of the said court of Land Registration.

The examiner of titles of this judicial district, after going over the papers in the case of the city, represented by its attorney, Modesto Reyes, states that:

1. The application filed by the city of Manila, is not accompanied by any document relative to its alleged ownership, but sets forth that said city, as the successor in rights and interest of the former ayuntamiento de Manila, is the owner of the land described in the petition above referred to.

2. In the office of the register of deeds there is no record of any act or contract opposing the claim of the applicant; nor does there appear, from the investigations held, any fact contrary to those quoted in the application. The present limits of the land in question may be held as correct.

3. The city of Manila, in order to acquire title to the land above mentioned, must show the ownership which the former ayuntamiento had over said land.

OPINION.

Based on the above report, the undersigned is of the opinion that the title of the city of Manila, represented by its attorney, Modesto Reyes, is defective and can not be registered.

Manila, December 7, 1904.

AGUEDO VELARDE.

On the 14th of March, 1905, the cause was duly brought on for trial and during the trial of said cause the petitioner attempted to establish by proof the following facts

First. That said land formerly belonged to the old city of Manila (ayuntamiento de Manila) under the sovereignty of Spain.

Second. That the present city of Manila is at present the owner of said land by virtue of being the successor of the old city of Manila.

Third. That the old city of Manila from the year 1894 until the change of sovereignty in the Philippine Archipelago had rented said land, had received rents therefor, and in a general way had administered the same.

The respondent, the Central Government of the Philippine Islands, presented no proof whatever in opposition to the claim of the petitioner, relying the fact that the petitioner was not entitled to have said land registered, for the following reasons:

First. That the land in question was public land, belonging to the Central Government; that the same had never been granted to any person or corporation or municipality by the Spanish Government.

Second. That the city of Manila, neither the present nor the old city, was the owner of said land.

On the 15th day of February, 1906, the judge of the said court filed his decision by which he denied the registration of the land claimed by the said Geronimo Morales and granted the registration of the rest of said described property in favor of the said city. Against this order allowing the registration of said tract of land the respondent duly excepted and gave notice of his intention to appeal.

The Attorney-General, representing the respondent in this court, made the following assignment of error:

There is nothing in the record which justifies the conclusion of the judgment of the court below, to the effect that the land in question is owned by the city of Manila.

The only proof presented during the trial by the petitioner which tended in any way to support its claim was that in the year 1894 and thereafter the old city of Manila (ayuntamiento de Manila) rented said land and received the rent therefor, and that the present city of Manila succeeded to the rights of said old city. No proof was offered by the plaintiff, documentary or other, to show in any way by what right said old city exercised this right of control over said property.

We are of the opinion, and so hold, that the mere renting of property and receiving the rent therefor can not, of themselves, in the absence of other proof, support a claim of ownership of such property.

It has been argued that every pueblo organized by the Spanish Government in its insular possessions has had granted to it, as a matter of course, certain lands for public purposes, such as public commons, pasture lands, etc. Our attention has not been called to any law or royal decree in which this contention is supported and we have searched in vain to find such a provision. Upon the contrary we have found a royal decree of the — day of — showing that the people of the pueblo of Dilao (now the barrio of Paco in which this very land is located) had petitioned for a grant of a comunal, etc., and which was denied.

One of the earliest provisions of law relating to the rights of pueblos in the insular possessions of the Spanish Government is that de las reducciones, y pueblos de indios (settlements and pueblos of natives) of December 1, 1573, as amended by that of the 10th of October, 1618, found in Law VIII, Title III of Book VI of the Recopilacion de las Leyes de Indias, and which it as follows:

The sites whereon the pueblos and settlements are to be built must have water facilities, lands, forests, entrances and exits, lands for cultivation, and an exido (common, public land) one league long, wherein the natives may keep their cattle, without mingling them with those owned by Spaniards.

This provision of law seems to have been amplified in article 53 of the Ordinances of Good Government, dated February 26, 1768, and extended to the pueblos of the Philippine Islands by proclamation on the 11th day of September, 1801. This article clearly indicates that these lands should be designated by the Spanish Government for the use and benefit de las reducciones, y pueblos de los indios. Said article 53 is in part as follows:

It is held to be comunal (common public) the territory of the settlements and pueblos inhabited by natives, to which, from the time of their foundation or organization, the necessary lands were

alloted in conformity with Law VII, Title III, Book VI of the Recopilacion de las Leyes de Indias, etc.

This article 53 clearly indicates the following:

First. That the King continued to be the absolute owner of said lands;

Second. That the pueblos were only given the mere usufruct of the same;

Third. That the King might at any time annul such grant; and

Fourth. That a designation, of the particular land so granted, was a necessary prerequisite for the holding of the same for the purposes indicated, by the said pueblo. (See Autos Acordados, Vol. I, pp. 29, 48.)

As a further confirmation of the fact that the pueblos of the Philippine Islands did not have, as a matter of right, acomunal, etc., unless the same had been expressly granted, we find the following provision in the royal decree of February 28, 1883, which is as follows:

On the recommendation of the minister for the colonies, and in conformity with the opinion submitted by the council of the state, sitting in banc, I hereby decree the following:

ARTICLE 1. The legua comunal for the Philippine Islands, under the provisions of Law VIII, Title III, Book VI, of the Recopilacion de Indias, as far as the pueblos already established and those which may be established thereafter are concerned, shall be of an area of 20,000 feet, equivalent to a league of 20 degrees, without regard to the geometrical figure resulting from the topography of the locality, or to conditions relating to property rights over the land itself or over land adjoining the same.

ART. 2. The pueblos not having said land alloted to them may apply and obtain the same by means of the corresponding proceedings.

ART. 3. When the conditions so require, the pueblos may institute proceedings to obtain an extension of said comunal land, in order that the latter may be in keeping with the number of inhabitants, the number of heads of each pueblo. Given at the palace, on February 28, 1883.

Following this royal decree we have the superior decreto of the 1st of August, 1883, relating to the legua comunal, with the following provisions:

Legua comunal. — In order to comply with and carry out the provisions of the royal decree of February 28 of the current year, published in the Gaceta de Manila on June 28 last, and relating to the legua comunal, on the recommendation of the direccion general de administracion civil, I hereby order that the following regulations be observed:

1. The provincial chiefs shall take special care to inform the gobernadorcillos of the towns under their control of the decree relating to the legua comunal, making them understand that the superficial extension to be occupied by the same is that corresponding to a square, the sides of which measure 20,000 feet, equivalent to a square league, (de veinte al drado), and that the land should be uncultivated or untilled.

2. The towns not having said portion of land assigned may apply for the same to this central government through the chief of the province or district, inclosing with the petition a report of the principalia, stating the said circumstance and as many particulars as may exist in their archives regarding the matter.

3. The said documents shall be forwarded to the direccion general de administracion civil, through the provincial chief, and the said office, upon the information from the bureau of forestry, shall recommend to me what it may deem proper.

4. After the "legua comunal" has been granted by this Government, the bureau of forestry shall proceed to the setting up of the boundary marks of the same, executing a certificate of the land, which, after being signed by the officer conducting the proceedings and by the principalia of the town, will be submitted for my approval through the direccion general de administracion civil.

5. For the legua comunal uncultivated land will be selected, whenever possible, which may be in proper condition for the pasture of cattle and cultivation of building timber and the necessary industries to meet the requirements of the inhabitants.

6. In order to increase the said communal land, when the requirements of the towns may demand, it will be necessary to institute new proceedings, which will be annexed to a statement signed by the principalia, showing the number of the inhabitants of the town, the kind and number of the extension of the lands which, bearing in mind the local conditions, they may deem necessary to meet the requirements of the former and nourishment for the latter.

7. These statements will be forwarded to the direccion general by the chief of the province, together with his opinion, in which he will state whether or not he considers the petition to be unreasonable.

8. The offices under the department of finance will furnish the direccion general de administracion with the necessary documents for verifying the truth of the declarations made by the principalias of the towns, regarding the number of the inhabitants and heads of cattle.

9. The direccion general de administracion civil, with the report of the bureau of forestry and, should it be deemed necessary, of the board of agriculture, shall recommend to me the extension to be finally marked for the legua comunal.

10. After the area of the land has been determined by this general government, the bureau of forestry shall proceed with the appointment and the setting of marks of the new communal land, a certificate being executed in the same form as previously stated.

11. The expenses arising from the proceedings, as well as those arising from the setting up of boundary marks of the legua comunal and its final establishment, must be paid by the town to which the concession has been granted. (Gazette No. 42, August 11.)

By the royal decree of the 23rd of December, 1870, it was made necessary by monuments or otherwise to mark the division lines of the different pueblos of the Philippine Islands. (Gaceta de Madrid, February 24.)

By the royal order of the 17th of January, 1885, it was provided that, when a pueblo should show to the Government of the Philippine Islands that its legua comunal was insufficient, it might, upon petition, have such lines increased. (Gaceta de Madrid, March 15, 1885.)

The royal decree of the 19th of May, 1893, relating to the municipal government (Gaceta de Madrid, May 22, 1893) contains no provisions with reference to the granting to pueblos of the legua comunal, etc.

The question of the right of pueblos in the insular possessions of the Spanish Government to public lands has come before the Supreme Court of the United States several times in its relation to pueblos in the territory acquired by the United States from the King of Spain.

In the case of Grisar vs. McDowell (6 Wallace, 363, 373) Justice Field in discussing this question said:

These laws provided for the assignment to the pueblos, for their use and the use of their inhabitants, of land not exceeding in extent 4 square leagues. Such assignment was to be made by the public authorities of the Government upon the original establishment of the pueblo, or afterwards upon the petition of its officers or inhabitants; and the land to be measured off in a square or prolonged form, according to the nature and condition of the country. All lands within the general limits stated, which had previously become private property or were required for public purposes, were reserved and excepted from the assignment.

Until the lands were thus definitely assigned and measured off, the right or claim of the pueblo was an imperfect one. It was a right which the Government might refuse to recognize at all, or might recognize in a qualified form; it might be burdened with conditions, and it might be restricted to less limits than the 4 square leagues, which was the usual quantity assigned.

In the case of United States vs. Santa Fe (165 U. S., 707), in which this same question was involved, Justice White of the Supreme Court of the United States said:

It can not be doubted that under the law of Spain it was necessary that the proper authorities should particularly designate the land to be acquired by towns or pueblos before a vested right or title to the use thereof could arise.

Elizondo, in his work entitled Practica Universal Forense (vol. 5, p. 226), makes the following statement relating to the question presented here:

There is nothing whatever designated by law as belonging to towns, other than that which by royal privilege, custom, or contract between man and man is granted to them, so that although there be assigned to the towns at the time of their constitution territorio or pertinencias, which may be common to all the residents, without each one having the right to use them separately, it is a prerogative reserved to the sovereigns to divided the terminos of the provinces and towns, assigning to these the use and enjoyment, but the domain remaining in the sovereigns themselves.

Chief Justice Fuller, speaking for the court in the case of United States vs. Sandoval and in the case of Morton vs. United States (167 U.S., 278, 297), said:

"Under the laws of the Indies, lands not actually allotted to setters remained the property of the King, to be disposed of by him or by those on whom he might confer that power. As Mr. Hall says (Chap. VII, § 122): "The fee of the lands embraced within the limits of pueblos continued to remain in the sovereign, and never in the pueblo as a corporate body."

The petitioner herein not having presented proof showing that the land in question had been granted to it by the former sovereign in these Islands, and not having shown that it was entitled to said lands by virtue of some law of the present sovereign of these Islands, the Court of Land Registration was not empowered to grant the registration of said lands in favor of said petitioner. The judgment, therefore, of the lower court is hereby reversed. So ordered.

Torres, Carson, Willard, and Tracey, JJ., concur.

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-9865 December 24, 1915

VERGO D. TUFEXIS, plaintiff-appellant, vs.FRANCISCO OLAGUERA and THE MUNICIPAL COUNCIL OF GUINOBATAN, represented by its president, Agapito Paulate, defendants-appellees.

Rafael de la Sierra for appellant.Attorney-General Avanceña for appellee Municipal Council of Guinobatan.No appearance for the other appellee.

 

TORRES, J.:

Counsel for plaintiff, in his written petition of May 13, 1913, prayed the Court of First Instance of Albay to declare that his client was entitled to the possession and use of the land referred to in the complaint in conformity with the terms of the Government concession (Exhibit A), of which he claimed to be the sole and lawful owner; that the defendants be ordered to remove from the said land all the stores, sheds, billiard tables, and other obstructions thereon, so that plaintiff might reconstruct the public market building on the said land in accordance with the provisions of the said concession, and that they be ordered to pay jointly and severally to the plaintiff, as damages, the sum of P250 per month from March 1, 1912, until the date on which the land be vacated, and to pay the legal costs and expenses of the suit.

After the complaint had been answered by counsel for the defendant Francisco Olaguera, who prayed that his client be absolved therefrom, with the costs against the plaintiff, the provincial fiscal, in the name and representation of the municipality of Guinobatan, demurred on the ground that plaintiff lacked the personality to institute the action and further alleged that the complaint did not set forth sufficient facts to constitute a cause of action.1awphil.net

By an order of August 25, 1913, the court sustained the demurrer filed by the defendant municipality of Guinobatan, allowed plaintiff ten days in which to amend his complaint, and notified him that unless he did so within that period the action would be dismissed.

Counsel for plaintiff, by a writing of the 27th of the said month, set forth: That he objected to the above ruling as he believed it erroneous and contrary to law; that he did not desire to amend his complaint, wherefore, in accordance with the provisions of section 101 of the Code of Civil Procedure, the court should render such judgment in the case as the law might warrant, and his exception to the said ruling should be entered on the record. By an order of September 1, 1913, the court, overruling the motion made by the defendant Olaguera, dismissed the complaint filed by the plaintiff, Vergo D. Tufexis, against the municipal council of Guinobatan on the ground that plaintiff had not amended his complaint. Plaintiff's counsel, when notified of this ruling, excepted thereto and moved for a rehearing and a new trial. This motion was overruled, whereupon the plaintiff excepted and filed the proper bill of exceptions.

In the complaint filed by counsel for Vergo D. Tufexis, it was alleged that on September 30, 1911, plaintiff acquired at a public sale held in execution of a judgment rendered against Ricardo Pardo y Pujol, a piece of property situated in the municipality of Guinobatan, consisting of a frame building of strong materials

with a galvanized-iron roof, erected on a parcel of land belonging to that municipality and intended for a public market; that plaintiff also acquired at the sale all the right, interest, title, and participation in the said property that appertained or might appertain to Pardo y Pujol; that the said building was constructed by virtue of a concession granted by the former Spanish government to Ricardo Pardo y Cabañas, father of the judgment debtor, who, by a public instrument of July 31, 1912, renounced his right to redeem the said property and conveyed it to plaintiff, together with all his rights therein, the instrument of grant, Exhibit A, being attached to the complaint as a part thereof; that on January 2, 1912, the said building was totally destroyed by an accidental fire; that subsequent to the date just mentioned and for several months thereafter the municipal council of Guinobatan carried on negotiations with plaintiff for the purchase of his rights in the said concession; that these negotiations could not be brought to a conclusion because the municipal council had acted therein deceitfully, fraudulently, and in bad faith and for the sole purpose of beguiling, deceiving, and prejudicing plaintiff in order to prevent him from exercising his right to reconstruct the burned market building and utilize it in accordance with the terms of the said concession; that the defendant municipal council, without plaintiff's consent and in connivance with the other defendant, Francisco Olaguera, had authorized the latter unlawfully to take possession of all the land from March 1, 1912, in violation of plaintiff's rights; that the said Olaguera occupied the same with booths or stores for the sale of groceries and other merchandise, for billiard tables, and other analogous uses and derived unlawful gain from the revenues and rents produced by the said buildings; that plaintiff was entitled to the possession of the said land in accordance with the concession, which was in full force and effect and belonged to plaintiff; that plaintiff proposed to construct another public market building on the same land, but that the defendants had prevented him from using the land and reconstructing thereon the said public market building, and refused to recognize plaintiff's right and to vacate the land that had been occupied by the burned edifice.

The provincial fiscal alleged as a ground for the demurrer that in no part of the instrument of concession did it appear that the privilege granted to Ricardo Pardo y Cabañas had likewise been granted to his successors or assignees, and that therefore such rights and actions as might have appertained to the assignee, Pardo y Cabañas, could not be conveyed to nor could they be acquired by any other person; that it was alleged in the complaint that the building was completely destroyed by fire on January 2, 1912, and that if plaintiff's right to the possession of the land was conditioned by the existence thereon of the said market building, such right had terminated by the disappearance of the building, inasmuch as plaintiff's right of action for the possession of the land was a corollary of the existence or nonexistence of the market building, and upon the disappearance of the latter the eland had reverted to the control of its owner; that pursuant to the terms of the said concession, the land belonging to the municipality was granted for the purpose of constructing thereon a market, and as this market had disappeared plaintiff would need a new concession, if it could be obtained, in order to be entitled to the possession of the land and to construct a new building; that by plaintiff's acquiring the right, title and interest of Ricardo Pardo y Pujol in the land he could not be understood to have also acquired such right and interest in the building intended for a public market, for the purchase of the building refers only to the edifice itself and it never could be understood that plaintiff acquired any right in the concession, which was never sold to him, as the complaint contains no allegation whatever that he purchased or acquired such right; that a personal privilege like the said concession is only temporary and is extinguished at the death of the grantee, unless otherwise provided in the grant; and that, from the lack of an allegation in the complaint that plaintiff legally purchased or acquired the right in the said concession, it was evident that the complaint did not allege sufficient facts to constitute a cause of action and was fatally defective.

The question presented in the case at bar consists of whether a building of strong materials, erected by the said debtor's father, Ricardo Pardo y Cabañas, on land belonging to the municipality of Guinobatan and intended for a public market, by virtue of a concession granted on August 4, 1884, under the conditions therein imposed upon the grantee, could be attached and sold for the payment of a certain debt owed by Ricardo Pardo y Pujol to a third person who had obtained a final judgment.

In deciding this question it is indispensable to determine what rights were acquired by Pardo y Pujol's father by virtue of the said concession granted to him by the Spanish Government, in the building erected

by him on a parcel of land belonging to the municipality of Guinobatan. The concession referred to contains, among other provisions, the following:itc-a1f

ARTICLE 1. There is hereby granted to Mr. Ricardo Pardo y Cabañas the parcel of land in the pueblo of Guinobatan, a prolongation of another parcel belonging to him, situated between the store and house of the Chinaman Valentin Garcia and that of Mr. Roco, following the line of Calle Real or Calzada de Albay and that of Calle del Carmen, up to and as far as the square that is to be laid out in the said pueblo.

ART. 2. On the said land the petitioner shall construct a public market building, with a galvanized-iron roof, in accordance with the plan submitted to this office on the 13th of last May and which was approved by his Excellency the Governor-General in conformity with the changes recommended by the advisory board of the consulting board of public works; and these changes are those hereinafter specified.

ART. 3. The said Mr. Pardo is granted the right to enjoy the revenue derived from the floor space of the market for the period of forty years, since the revenue from such floor space appertains to the grantee of the said service. By floor space is meant the right to shelter or retail merchandise in the market belonging to the grantee.

ART. 4. On the expiration of the said period both the land aforementioned and the building thereon constructed shall be the property of the Government and the building shall be delivered to it in good condition.

ART. 5. It shall be obligatory for every vendor to sell his goods in the said market, which shall be the only one in the said pueblo.

ART. 7. The said authority shall put Mr. Pardo in possession of the land affected by this concession, and the proper proceedings in connection therewith shall be had in the presence of the chief engineer of public works of the said district and the headmen of the pueblo.

ART. 8. Mr. Pardo shall inform this office of the date of the commencement of the work of construction, and the work shall be inspected by the public works officials residing in Albay; the building when completed shall be examined and accepted by the chief engineer of the district of Nueva Caceres or by the deputy to whom the latter may delegate this duty: all with the knowledge of the office of the inspector of public works.

The land on which the building was erected and which is referred to in the foregoing articles, contained in the franchise granted by the Government of the former sovereignty, belongs to the municipality of Guinobatan. Although the building was constructed at the expense and with the money of the grantee, Ricardo Pardo y Cabañas, it is, nevertheless, the property of the state or of the said municipality, and was temporarily transferred to the grantee, Pardo y Cabañas, in order that he might enjoy the usufruct of its floor space for forty years, but on the termination of this period the said right of usufruct was to cease and the building was to belong finally and absolutely to the state or the municipality in representation thereof.

For these reasons, then, there is no question that the building and the land on which it was erected, since they did not belong to the grantee, Pardo y Cabañas, nor do they belong to his son and heir, Ricardo Pardo y Pujol, could not be attached or sold for the payment of a debt contracted by the latter.

The concession granted by the former Spanish Government is personal and transferable only by inheritance, and in no manner could it be conveyed as a special personal privilege to another and a third person unless were an hereditary successor of the grantee, Pardo y Cabañas, without knowledge and consent of the administrative authorities under whose control the special right of usufruct in the floor space of the said market building was enjoyed and exercised.

Even though it is unquestionable that the creditor has a right to collect the money due him, out of his debtor's property, yet when among such property is included the right of usufruct in a public-service building and this right is closely related to a service of a public character, the right that lies in behalf of the creditor for the collection of a debt from the person who enjoys the said special privilege of right of usufruct in the floor space of a building intended for a public market is not absolute and may be exercised only through the action of a court of justice with respect to the profits or revenues obtained under the special right of usufruct granted to the debtor.

Ricardo Pardo y Pujol, as the successor and heir of the grantee, Pardo y Cabañas, is bound to pay his debts and his property can be attached on petition of his creditors. However, his personal privilege of usufruct in the floor space of the public market building of Guinobatan cannot be attached like any ordinary right, because that would mean that a person who has contracted with the state or with the Governmental authorities to furnish a service of a public character would be substituted, for another person who took no part in the contract, and that the regular course of a public service would be disturbed by the more or less legal action of the creditors of a grantee, to the prejudice of the state and the public interests.

It is indeed true that the building, which for many years served as a public market in the pueblo of Guinobatan, was erected out of the private funds of the grantee, Pardo y Cabañas, and at first sight it seems natural that the latter, who paid the cost of the construction of the building, should be its owner. However, judging from the agreement between him and the Government authorities, he was granted the right to usufruct in the floor space of the said building in order that, during the period of forty years, he might reimburse himself for and collect the value of the building constructed by him; and it must be believed that Pardo y Cabañas, before executing the contract with the Government for the purpose of obtaining the right of usufruct granted to him and before accepting the contract, thought over its conditions deliberately and maturely and felt sure that he would profit thereby, that is, that he would reimburse himself for the value of the building he erected, and obtain interest on the investment and other advantages by enjoying the usufruct for the space of forty long years, as in fact even after his death this right continued to be enjoyed by his son, Ricardo Pardo y Pujol. Therefore, the said privilege conferred on the grantee by the Spanish Government on August 4, 1884, was neither onerous nor prejudicial to him or his heir, but on the contrary was beneficial to them.

So, if neither the land nor the building in question belongs to Pardo y Pujol, it is evident that they could not be attached or sold at public auction to satisfy his debt and, consequently, the attachment and sale of the said Government property executed on petition of the creditor of the said Pardo y Pujol are notoriously illegal, null and void, and the acquisition of the property by plaintiff confers upon him no right whatever based on the said concession.

In the decision in the case of Lopez vs. Alvarez (9 Phil. Rep., 28) the principle was asserted that:

In attachments of all kinds it is an essential condition that the thing which is attached shall be the property of the debtor, and from no provision of the Mortgage Law can any conclusion be drawn which shall be contrary to this principle.

This same principle was set up in the decision of the case of Alvaran vs. Marquez (11 Phil. Rep., 263).

It having been demonstrated by the foregoing reasons that the building constructed on land of the municipality of Guinobatan for a public market could not be attached and sold as the result of a debt contracted by Ricardo Pardo y Pujol in favor of a third person, we shall now proceed to examine whether an attachment would lie of the special right, granted by the former Spanish Government to the said debtor's father, of usufruct in the floor space of the said market and right to collect the revenues therefrom for the period of forty years, counted from the date of the granting of the said right.

Without the consent of the proper administrative official, a grantee, or one charged with conducting a public service such as a market of the municipality of Guinobatan, cannot be permitted to be substituted by any other person, though this latter be a creditor of the usufructuary grantee. Hence, we hold that the attachment of the right of usufruct in the said building and of collecting the revenue obtained from the floor space of the said public market of Guinobatan, was illegal, because, were this right susceptible of attachment, a third person, as a creditor or a purchaser, might exercise such right, notwithstanding his personal status, instead of the grantee contractor. This theory does not bar the creditor from collecting the money owed him by the grantee, inasmuch as he has the right to petition the courts to allow him through proper legal proceedings to collect his money out of the revenues produced by the usufruct conferred by the Government on the grantee of the said service.

The concession obtained by Ricardo Pardo y Pujol's father on August 4, 1884, is a true sovereignty and the grantee, Pardo y Cabañas, and therefore the stipulations made by and between the contracting parties, the obligation to which that contract may have given rise, and the consequences that may have been entailed by the contract, all come within the scope of the civil law which guarantees the rights of the contracting parties.

Although in our opinion the said concession is somewhat of the nature of a franchise, yet we do not think that the provisions of sections 56 to 61 of Act No. 1459 are applicable to the case at bar, for these sections refer to a franchise granted to a corporation, while the concession given by the former Spanish Government was granted to a private party and not to a corporation or judicial entity. Therefore, though under the said Act a franchise is subject to attachment, the Act contains no express provision whatever which authorizes the attachment and sale of a right or franchise especially granted to a private party under the conditions in which the concession in question was granted. The substitution of a third person instead of the one who obtained such an administrative concession must be explicitly authorized by the proper official of the administrative branch of the Government in order that the substitute may exercise the right so granted.

In the case of Ricardo y Pujol, the grantee of the usufruct on the floor space in the said market building in Guinobatan, his creditor, in order to obtain the payment of his credit, could have applied to the courts for an attachment of the revenues or proceeds collected by his said debtor by virtue of the said concession; but it was in no wise proper to attach and sell the right granted by the public administration to operate and enjoy the usufruct of the floor space of the said public market.

Although there is no similarity between the management of a public market and that of a railroad company, yet for the reason that the operation of the one as well as the other is of public interest, when a creditor of such a company sues to collect a debt it would be improper to attach the stationary equipment and rolling stock of the railroad — only the gross receipts of the business over and above the amount required for its operation could be touched. This same legal principle holds in the case where the grantee of a market is a debtor and his property is attached on petition of his creditor. The receipts of the market may be attached, but not the right to operate and conduct the service, which is of a public character.

In fact, article 1448 of the Ley de Enjuiciamiento Civil, cited in this decision, not as a law now in force, but for the purpose of setting out a principle of law, prohibits the levy of attachments on railroads opened to public service, and on the stations, stores, shops, lands, works and buildings necessary for their operation, or on the locomotives, rails and other material intended for the operation of the line. When execution is levied on such railroad companies, the proceedings are governed by the provisions of the Law of November 12, 1869, extended by a royal order of August 3, 1886, to the overseas provinces. This law prescribes among other things that attachments may be levied and executed only on the gross receipts remaining after the necessary operating expenses have been deducted.

In harmony with this legal provision, the supreme court of the State of Nebraska, in which State there is no law whatever that authorizes the attachment and sale of a bridge belonging to a corporation, in the case of the Overton Bridge co. vs. Means (33 Neb., 857) laid down the principle that such a bridge and

the rights of the corporation therein could not be sold to satisfy a judgment against the corporation for the reason that:

The property of corporations which are closed as public agencies, such as railroad and bridge companies, which is essential to the exercise of their corporate franchise, and the discharge of the duties they have assumed toward the general public, cannot, without statutory authority, be sold to satisfy a common law judgment.

It cites decisions of several states, and also, in the decision referred to, cited Morawetz on Private Corporations, section 1125, and held that after attachment of the property not necessary to enable the corporation to perform its duties to the public, the only remedy remaining to a judgment creditor was to obtain the appointment of a receiver and a sequestration of the company's earnings.

The supreme court of Alabama, in deciding a similar case (Gardner vs. Mobile & Northwestern R.R. Co., 102 Ala., 635, 645), affirmed the same principle and said:

The only remedy of a judgment creditor is to obtain the appointment of a receiver and the sequestration of its income or earnings.

It is to be noted that section 56 of Act No. 1459, which permits the sale under execution of a corporation's franchise, is in no wise applicable to the case at bar, for the reason that, since this Act was promulgated on March 1, 1906, it could not and cannot affect the laws, decrees, and orders of the Spanish government in conformity with which the administrative concession, Exhibit A, was granted to Pardo y Cabañas.

The operation of a railroad is of public interest, and concerns both the public and the state, even though the superintendent and management thereof be conducted by a private company. Therefore, the property of a railroad, either its rolling stock or permanent equipment, is not subject to attachment and sale, and the rights of the creditors of the operating company may be exercised for the collection of their credit only of the gross receipts after the operation of the railroad is insured from its own income.

This decision is based on the provisions of the aforecited law and the premise that the usufruct of the floor space of the public market of Guinobatan, granted to Ricardo Pardo y Pujol's father was not subject to attachment on account of its being of a public character, but still the latter's creditor could have applied for a writ of execution and laid an attachment on the proceeds obtained from the operation of the market, which proceeds or income could have been collected by a receiver and intervenor.

This, however, was not done, but on the creditor's petition the public market building, which was not his debtor's property, together with all the right, interest, title and participation which the latter had or might have had therein, was attached and sold; and as plaintiff was unable to acquire any right or title in such property illegally sold and illegally acquired by him at public auction or in the usufruct of the floor space of the building, it is unquestionable that he lacks the personality to claim possession of the land that belongs to the municipality or the enjoyment and exercise of the right conferred by the aforesaid administrative concession, which was and is inalienable on account of its being a personal right. For the same reason, plaintiff has no right to reconstruct the burned building on the land where it formerly stood.

The only right to which the creditor was entitled was to petition for the attachment of the income and proceeds obtained from the use of the floor space of the market; but he did not avail himself of this right, nor were the receipts therefrom attached, nor were they adjudicated either to the creditor or to the plaintiff Tufexis. Therefore, the order of dismissal appealed is in accordance with law and the merits of the case, and likewise the errors assigned thereto have been duly refuted by the reasons set forth herein.

For the foregoing considerations, we hereby affirm the said order of dismissal, with the costs against the appellant. So ordered.

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-28379             March 27, 1929

THE GOVERNMENT OF THE PHILIPPINE ISLANDS, applicant-appellant, vs.CONSORCIA CABANGIS, ET AL., claimants-appellees.

Attorney-General Jaranilla for appellant.Abad Santos, Camus & Delgado for appellees.

VILLA-REAL, J.:

The Government of the Philippine Islands appeals to this court from the judgment of the Court of First Instance of Manila in cadastral proceeding No. 373 of the Court of First Instance of Manila, G. L. R. O. Cadastral Record No. 373, adjudicating the title and decreeing the registration of lots Nos. 36, 39 and 40, block 3055 of the cadastral survey of the City of Manila in favor of Consuelo, Consorcia, Elvira and Tomas, surnamed Cabangis, in equal parts, and dismissing the claims presented by the Government of the Philippine Islands and the City of Manila.

In support of its appeal, the appellant assigns the following alleged errors as committed by the trial court in its judgment, to wit:

1. The lower court erred in not holding that the lots in question are of the public domain, the same having been gained from the sea (Manila Bay) by accession, by fillings made by the Bureau of Public Works and by the construction of the break-water (built by the Bureau of Navigation) near the mouth of Vitas Estero.

2. The lower court erred in holding that the lots in question formed part of the big parcel of land belonging to the spouses Maximo Cabangis and Tita Andres, and in holding that these spouses and their successors in interest have been in continuous, public, peaceful and uninterrupted possession of said lots up to the time this case came up.

3. The lower court erred in holding that said lots existed before, but that due to the current of the Pasig River and to the action of the big waves in Manila Bay during the south-west monsoons, the same disappeared.

4. The lower court erred in adjudicating the registration of the lands in question in the name of the appellees, and in denying the appellant's motion for a new trial.

A preponderance of the evidence in the record which may properly be taken into consideration in deciding the case, proves the following facts:

Lots 36, 39 and 40, block 3035 of cadastral proceeding No. 71 of the City of Manila, G. L. R. O. Record No. 373, were formerly a part of a large parcel of land belonging to the predecessor of the herein claimants and appellees. From the year 1896 said land began to wear away, due to the action of the waves of Manila Bay, until the year 1901 when the said lots became completely submerged in water in

ordinary tides, and remained in such a state until 1912 when the Government undertook the dredging of Vitas Estuary in order to facilitate navigation, depositing all the sand and silt taken from the bed of the estuary on the low lands which were completely covered with water, surrounding that belonging to the Philippine Manufacturing Company, thereby slowly and gradually forming the lots, the subject matter of this proceeding.

Up to the month of February, 1927 nobody had declared lot 39 for the purposes of taxation, and it was only in the year 1926 that Dr. Pedro Gil, in behalf of the claimants and appellees, declared lot No. 40 for such purpose.

In view of the facts just stated, as proved by a preponderance of the evidence, the question arises: Who owns lots 36, 39 and 40 in question?

The claimants-appellees contend that inasmuch as the said lots once formed a part of a large parcel of land belonging to their predecessors, whom they succeeded, and their immediate predecessor in interest, Tomas Cabangis, having taken possession thereof as soon as they were reclaimed, giving his permission to some fishermen to dry their fishing nets and deposit their bancas thereon, said lots belong to them.

Article 339, subsection 1, of the Civil Code, reads:

Article 339. Property of public ownership is —

1. That devoted to public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, riverbanks, shorts, roadsteads, and that of a similar character.

x x x           x x x           x x x

Article 1, case 3, of the Law of Waters of August 3, 1866, provides as follows:

ARTICLE 1. The following are part of the national domain open to public use:

x x x           x x x           x x x

3. The Shores. By the shore is understood that space covered and uncovered by the movement of the tide. Its interior or terrestrial limit is the line reached by the highest equinoctial tides. Where the tides are not appreciable, the shore begins on the land side at the line reached by the sea during ordinary storms or tempests.

In the case of Aragon vs. Insular Government (19 Phil., 223), with reference to article 339 of the Civil Code just quoted, this court said:

We should not be understood, by this decision, to hold that in a case of gradual encroachment or erosion by the ebb and flow of the tide, private property may not become 'property of public ownership,' as defined in article 339 of the code, where it appears that the owner has to all intents and purposes abandoned it and permitted it to be totally destroyed, so as to become a part of the 'playa' (shore of the seas), 'rada' (roadstead), or the like. . . .

In the Enciclopedia Juridica Espanola, volume XII, page 558, we read the following:

With relative frequency the opposite phenomenon occurs; that is, the sea advances and private properties are permanently invaded by the waves, and in this case they become part of the shore or beach. They then pass to the public domain, but the owner thus dispossessed does not retain

any right to the natural products resulting from their new nature; it is a de facto case of eminent domain, and not subject to indemnity.

Now then , when said land was reclaimed, did the claimants-appellees or their predecessors recover it as their original property?

As we have seen, the land belonging to the predecessors of the herein claimants-appellees began to wear way in 1896, owing to the gradual erosion caused by the ebb and flow of the tide, until the year 1901, when the waters of Manila Bay completely submerged a portion of it, included within lots 36, 39 and 40 here in question, remaining thus under water until reclaimed as a result of certain work done by the Government in 1912. According to the above-cited authorities said portion of land, that is, lots 36, 39 and 40, which was private property, became a part of the public domain. The predecessors of the herein claimants-appellees could have protected their land by building a retaining wall, with the consent of competent authority, in 1896 when the waters of the sea began to wear it away, in accordance with the provisions of Article 29 of the aforecited Law of Waters of August 3, 1866, and their failure to do so until 1901, when a portion of the same became completely covered by said waters, remaining thus submerged until 1912, constitutes abandonment.

Now then: The lots under discussion having been reclaimed from the seas as a result of certain work done by the Government, to whom do they belong?

The answer to this question is found in article 5 of the aforementioned Law of Waters, which is as follows:

ART. 5. Lands reclaimed from the sea in consequence of works constructed by the State, or by the provinces, pueblos or private persons, with proper permission, shall become the property of the party constructing such works, unless otherwise provided by the terms of the grant of authority.

The fact that from 1912 some fishermen had been drying their fishing nets and depositing their bancas on lots 36, 39 and 40, by permission of Tomas Cabangis, does not confer on the latter or his successors the ownership of said lots, because, as they were converted into public land, no private person could acquire title thereto except in the form and manner established by the law.

In the case of Buzon vs. Insular Government and City of Manila (13 Phil., 324), cited by the claimants-appellees, this court, admitting the findings and holdings of the lower court, said the following:

If we heed the parol evidence, we find that the seashore was formerly about one hundred brazas distant from the land in question; that, in the course of time, and by the removal of a considerable quantity of sand from the shore at the back of the land for the use of the street car company in filling in Calle Cervantes, the sea water in ordinary tides now covers part of the land described in the petition.

The fact that certain land, not the bed of a river or of the sea, is covered by sea water during the period of ordinary high tide, is not a reason established by any law to cause the loss thereof, especially when, as in the present case, it becomes covered by water owing to circumstances entirely independent of the will of the owner.

In the case of Director of Lands vs. Aguilar (G.R. No. 22034),1 also cited by the claimants-appellees, wherein the Government adduced no evidence in support of its contention, the lower court said in part:

The contention of the claimants Cabangis is to the effect that said lots are a part of the adjoining land adjudicated to their deceased father, Don Tomas Cabangis, which, for over fifty years had belonged to their deceased grandmother, Tita Andres, and that, due to certain improvements made in Manila Bay, the waters of the sea covered a large part of the lots herein claimed.

The Government of the Philippine Islands also claims the ownership of said lots, because, at ordinary high tide, they are covered by the sea.

Upon petition of the parties, the lower court made an ocular inspection of said lots on September 12, 1923, and on said inspection found some light material houses built thereon, and that on that occasion the waters of the sea did not reach the aforesaid lots.

From the evidence adduced at the trial of this cause, it may be inferred that Tita Andres, during her lifetime was the owner of a rather large parcel of land which was adjudicated by a decree to her son Tomas Cabangis; the lots now in question are contiguous to that land and are covered by the waters of the sea at extraordinary high tide; some 50 years before the sea did not reach said strip of land, and on it were constructed, for the most part, light material houses, occupied by the tenants of Tita Andres, to whom they paid rent. Upon her death, her son Tomas Cabangis succeeded to the possession, and his children succeeded him, they being the present claimants, Consuelo, Jesus, Tomas, and Consorcia Cabangis.

The Government of the Philippine Islands did not adduce any evidence in support of its contention, with the exception of registry record No. 8147, to show that the lots here in question were not excluded from the application presented in said proceeding.

It will be seen that in the case of Buzon vs. Insular Government and City of Manila, cited above, the rise of the waters of the sea that covered the lands there in dispute, was due not to the action of the tide but to the fact that a large quantity of sand was taken from the sea at the side of said land in order to fill in Cervantes Street, and this court properly held that because of this act, entirely independent of the will of the owner of said land, the latter could not lose the ownership thereof, and the mere fact that the waters of the sea covered it as a result of said act, is not sufficient to convert it into public land, especially, as the land was high and appropriate for building purposes.

In the case of the Director of Lands vs. Aguilar also cited by the claimants-appellees, the Insular Government did not present any evidence in support of its contention, thus leaving uncontradicted the evidence adduced by the claimants Aguilar et al., as to the ownership, possession and occupation of said lots.

In the instant case the evidence shows that from 1896, the waves of Manila Bay had been gradually and constantly washing away the sand that formed the lots here in question, until 1901, when the sea water completely covered them, and thus they remained until the year 1912. In the latter year they were reclaimed from the sea by filling in with sand and silt extracted from the bed of Vitas Estuary when the Government dredged said estuary in order to facilitate navigation. Neither the herein claimants-appellees nor their predecessors did anything to prevent their destruction.

In conclusion, then, we hold that the lots in question having disappeared on account of the gradual erosion due to the ebb and flow of the tide, and having remained in such a state until they were reclaimed from the sea by the filling in done by the Government, they are public land. (Aragon vs. Insular Government, 19 Phil., 223; Francisco vs. Government of the Philippine Islands, 28 Phil., 505).

By virtue whereof, the judgment appealed from is reversed and lots Nos. 36, 39 and 40 of cadastral proceeding No. 373 of the City of Manila are held to be public land belonging to the Government of the United States under the administration and control of the Government of the Philippine Islands. So ordered.

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-37986             March 1, 1934

EUFEMIA MERCADO, plaintiff-appellant, vs.THE MUNICIPAL PRESIDENT OF MACABEBE, PAMPANGA, and THE SECRETARY OF COMMERCE AND COMMUNICATIONS, defendants-appellee.

Eusebio Orense and Nicolas Belmonte for appellant.Provincial Fiscal Daza for appellees.

DIAZ, J.:

This is an appeal taken by Eufemia Mercado from a judgment rendered by the Court of First Instance of Pampanga dismissing her appeal from an order of the Secretary of Commerce and Communications wherein said official directed Romulo Mercado, the appellant's predecessor in interest, to remove the two dikes which he had constructed at both ends of the creek named Batasan-Limasan or Pinac Buñgalun, which traverses part of the hacienda described in certificate of Title No. 329 of the registry of deeds of Pampanga, and formerly belonging to said Romulo Mercado, but which now belongs to the appellant by virtue of a formal donation made to her by said Romulo Mercado, after the institution of this action.

After due trial, the court a quo held that the creek in question is property of the public domain.

The contention of the appellant's predecessor in interest in the record of the investigation conducted by the Secretary of Commerce and Communications, through his agents, and that of the appellant, both in the court a quo and in this court, is that the said Batasan-Limasan or Pinac Buñgalun creek is not a natural but an artificial creek which had been developed on his hacienda by means of excavations made by his men on two different occasions, the former before the revolution or during the Spanish regime, and the latter after the revolution.

The appellees, in turn, contend that the creek in question is a natural navigable creek which already existed on the said hacienda of the appellant not only long before the revolution but also from the time immemorial.

The evidence presented by the appellant shows that formerly when her so-called hacienda still belonged to her grandfather Mariano Mercado, the portion of the said creek, indicated on the plan Exhibit 2 by two parallel lines in black ink drawn from the point marked 3 towards the center until it turns northwards, was but a recess or arm then called Buñgalun, of the Nasi River, which arm was lost in the hacienda. It extended close to a small creek called Batasan-Limasan which derived its waters, particularly during high tide, from the large creek called Limasan indicated on the aforesaid plan.

Mariano Mercado, the original owner of the hacienda, in order to facilitate the cutting and transportation of firewood and other products, produced on the said hacienda, towards the Nasi River on the east or towards Limasan creek on the west, connected the two recesses or bodies of water in question by means of excavations and, after having so connected them, made other excavations at both ends towards the

said river and creek, thus constructing a sort of canal directly connecting both bodies of water, and which later became known as the Batasan-Limasan or Pinac Buñgalun creek.

The said Batasan-Limasan or Pinac Buñgalun creek or canal already existed at the time of the institution of the registration proceedings wherein judgment was rendered resulting in the issuance of certificate of title No. 329 in favor of Romulo Mercado. On the plan of the land, which was presented in the said case, the aforesaid creek appears; and at the time the case was tried as well as when the certificate of title was issued in favor of the applicant Romulo Mercado, none of the herein defendants nor the Insular Government filed opposition or objection thereto.

Once the said Batasan-Limasan or Pinac Buñgalun creek or canal was opened from the Nasi River to Limasan creek, not only the residents of the hacienda and those who visited it but also some of the residents of the nearby barrios and municipalities began to use it as a means of communication in attending to their needs, sometimes with the permission of the owners of the hacienda, and at other times without even the latter's knowledge. It was then that Romulo Mercado, the appellant's predecessor in interest, decided to convert the said creek into a fish pond and with that object in view, in 1928 he closed the two opening thereof towards the Nasi River on one side and Limasan creek on the other side.

The appellant's witnesses, Romulo Mercado, Maximo dela Peña and Andres Limin testified that the creek in question became navigable only from the time Mariano Mercado had excavated both ends and the junction of the former two recesses from which said creek had been formed; that the former owners of the hacienda had employed about 60 men for a period of two weeks in order to perform such task, and that during the revolution and for about ten years, in view of the fact that many people entered the hacienda to cut or carry away firewood without permission, Romulo Mercado ordered the creek closed in order to prevent the entrance into and passage of strangers through it.

On the other hand, the appellee's tried to prove by means of their witnesses Castor Quiambao, Maximino Guintu and Lorenzo Magat, that the creek in question has existed on the appellant's hacienda from time immemorial, and that they had been passing through and fishing in it, as others had done, as often as they wished, long before the revolution until it was closed by the appellant's predecessor in interest in 1928. To that effect, they presented resolution No. 6 of the municipal council of Macabebe, Pampanga, placing at public auction the privilege of fishing in the Batasan-Limasan creek (Exhibit 6), among other rivers and creeks. However, they failed to establish that anybody had ever obtained such privilege, for which reason said evidence cannot be given any weight, there being no doubt, as there can be no doubt, that a mere notice, as Exhibit 6, does not constitute sufficient evidence that the creek in question is the property of the public domain.1ªvvphi1.ne+

The testimony of the said witnesses for the appellees seems insufficient to overcome that of the witnesses for the appellant on the ground that Castor Quiambao is relatively young and he himself admitted that in his youth, as he remembered, he used to pass through the creek in question only once or twice a month. The other witnesses, not being residents of the place, were in no better position to know what the appellant's witnesses knew as to the true nature, conditions and changes which the said creek had undergone, inasmuch as the latter witnesses had lived and worked in that same place for many years.

However, considering that the evidence of both parties is equiponderant, could not the question be decided by taking into consideration only, or mainly, the undisputed fact that the creek in question, both during the first years of its existence, when it was but a small creek formed by the channels or recesses called Batasan-Limasan and Buñgalun by some witnesses, and after it had been converted into said creek, whether naturally or artificially, that it, by means of man's labor, with openings toward the Nasi River and toward the Limasan creek, derived its waters from the aforesaid river and creek, which unquestionably belong to the public domain?

The lower court, invoking the provisions of articles 339, 407 and 408 of the Civil Code, decided the question mainly by taking said fact into consideration.

The pertinent parts of the aforesaid three articles provide as follows:

Property of public ownership is —

1. That devoted to public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, riverbanks, shores, roadsteads, and that of a similar character. (Art. 339.)

The following are of public ownership:

1. Rivers and their natural channels;

2. Continuous or intermittent waters from springs or brooks running in their natural channels and the channels themselves;

3. Waters rising continuously or intermittently on lands of public ownership;

x x x           x x x           x x x

8. Waters which flow continuous or intermittently from lands belonging to private parties, to the State, to provinces, or to towns, from the moment they leave such lands. (Art. 407.)

The following are of private ownership:

1. Waters, either continuous or intermittent rising on private estates, while they run through them;

2. Lakes and ponds and their beds when formed by nature on said estates;

3. Subterranean waters found on the same;

4. Rain waters falling thereon as long as they remain within their boundaries;

5. The channels of flowing streams, continuous or intermittent, formed by rain water, and those of brooks crossing estates which are not of public ownership.

The water, bed, banks, and floodgates of a ditch or aqueduct are deemed to be an integral part of the estate or building for which the waters are intended. The owners of estates through or along the boundaries of which the aqueduct passes can assert no ownership over it, nor any right to make use of its beds or banks, unless they base their claim on title deeds which specify the right or the ownership claimed. (Art, 408.)

It will be noted that the appellant cannot invoke in her favor the article last quoted on the ground that although it is true that the Batasan-Limasan or Pinac Buñgalun creek passes through her hacienda, it is none the less true that it is not included in any of the kinds of private property therein enumerated. The appellant and her predecessors in interest, in closing the two openings of the said creek and converting it into a fish pond, not only appropriated for themselves the channel of the said creek but also the creek itself; and a creek is not a brook because the latter is but a short, almost continuous stream of water (Diccionario de la Real Academia Española), while the former is a recess or arm extending from a river, which participates in the ebb and flow of the sea. (15Enciclopedia Juridica Española, 216.)

On the other hand, the aforecited article 339 provides that canals, rivers, torrents, . . . and those of a similar character are property of public ownership, and the similarity between rivers, canals, and creeks is undoubtedly obvious on the ground that, as has been stated, a creek is no other than an arm extending from a river. Furthermore, under article 407, the Batasan-Limasan or Pinac Buñgalun creek may be considered as belonging to the class of property enumerated in paragraph 8 thereof. And, in addition to the foregoing, the Contentious Court of Spain (Tribunal Contencioso de España) in a decision dated June 25, 1890, laid down the doctrine that creeks are property of the public domain (15 Enciclopedia Juridica Española, 216).

And even granting that the Batasan-Limasan creek acquired the proportions which it had, before it was closed, as a result of excavations made by laborers of the appellant's predecessor in interest, it being a fact that, since the time it was opened as a water route between the Nasi River and Limasan creek, the owners thereof as well as strangers, that is, both the residents of the hacienda and those of other nearby barrios and municipalities, had been using it not only for their bancas to pass through but also for fishing purposes, and it being also a fact that such was the condition of the creek at least since 1906 until it was closed in 1928, if the appellant and her predecessors in interest had acquired any right to the creek in question by virtue of excavations which they had made thereon, they had lost such right through prescription inasmuch as they failed to obtain, and in fact they have not obtained, the necessary authorization to devote it to their own use to the exclusion of all others. The use and enjoyment of a creek, as any other property susceptible of appropriation, may be acquired or lost through prescription, and the appellant and her predecessors in interest certainly lost such right through the said cause, and they cannot now claim it exclusively for themselves after the general public had been openly using the same from 1906 to 1928. When two different interests, one being private and the other public, are in conflict with one another, the former should yield to the latter.

It is useless for the appellant now to allege that she has obtained certificate of title No. 396 in her favor because the said certificate does not confer upon her any right to the creek in question, inasmuch as the creek, being of the public domain, is included among the various exceptions enumerated in section 39 of Act No. 496 to which the said certificate is subject by express provision of the law, and furthermore, because it so appears in the certificate itself.

The doctrine laid down in the case of the Government of the Philippine Islands vs. Santos (G. R. No. 27202, promulgated September 2, 1927, not reported), which the appellant invokes in her favor, is not applicable herein because the subject matter in that case is not of the same nature as the Batasan-Limasan or Pinac Buñgalun creek. The thing involved therein was simply a date or, in the words of the trial court, a low depression on the defendant's land where there was a waterway passable by bancas at high tide, but which completely dried up at low tide and during the dry season. From what has been hereinbefore stated, it may be inferred that the Batasan-Limasan creek is perfectly navigable by bancas throughout the year, inasmuch as at the time it was measured in November by employees and agents of the Bureau of Lands, it was more than two meters deep at its mouth and around a meter and a half deep at its shallow parts. Furthermore, in the case of Urbano Santos, the creek in question was closed a few years after excavations had been made in the land under consideration.

Wherefore, the judgment appealed from is hereby affirmed, with costs against the appellant. So ordered.

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-7054            January 20, 1913

MUNICIPALITY OF HINUNANGAN, plaintiff-appellee, vs.THE DIRECTOR OF LANDS, defendant-appellant.

Attorney-General Villamor, for appellant. Provincial Fiscal De la Rama, for appellee.

MORELAND, J.:

This is an appeal from the judgment of the Court of Land Registration, ordering the registration of the title of the petitioner to the lands described in the petition. The appeal is taken by the Insular Government from the registration of the title of one of the parcels of land only. It is situated in the municipality of Hinunangan, Province of Leyte, and contains an area of 10,328.8 square meters. It is bounded on the northeast by the maritime zone; on the southeast by North America Street; on the southwest by Manilili Street, and on the northwest by San Isidro Labrador Street. Upon this lot is built a stone fort which has stood there from time immemorial and was in times past used as a defense against the invasion of the Moros.

Formerly, as now, the defense of the national territory against invasion by foreign enemies rested upon the state and not upon the towns and villages and for this reason all of the defenses were constructed by the National Government. In volume 2, book 3, title 7, law 1 of the Laws of the Indies appears the following:

We command that all the ground roundabout the castles and fortresses be clear and unoccupied, and if any building is erected within 300 paces of the wall or other building so strong that even at a greater distance it would prejudice the defenses, it shall be torn down, and the owner of the same shall be paid from the Royal Treasury for the damages caused him.

Book 4, title 7, law 12, reads as follows:

We order that, for the security and defense of the cities as is now assured by the castles and fortresses, no building shall be erected within 300 paces of the walls or stockades of the new cities.

Article 339 of the Civil Code is as follows, in part:

ART. 339. The following are public property:

xxx           xxx           xxx

2. That which belongs privately to the state, which is not for public use and which is destined for the public good or to increase the national riches, such as walls, fortresses and other constructions for the defense of the country, and the mines as long as no concession in regard to them is made.

Article 341 of the Civil Code provides:

ART. 341. Public property, when it ceases to be used for the public good or for the necessities of the defense of the country, becomes a part of the property of the state.

From these provisions it seems clear that the fortress in question was erected for the national defense and was a part of the property of the state destined and used for that purpose. As a necessary result, the land upon which it stands must also have been dedicated to that purpose.

The fact that said fortress may not have been used for many years for the purposes for which it was originally built does not of necessity deprive the state of its ownership therein. As we have seen, the Civil Code provides that, when the fortress ceases to be used for the purposes for which it was constructed, it becomes the property of the state in what may be called the private sense. That the municipality may have exercised within recent years acts of ownership over the land by permitting it to be occupied and consenting to the erection of private houses thereon does not determine necessarily that the land has become the property of the municipality. We have held in several cases that, where the municipality has occupied lands distinctly for public purposes, such as for the municipal court house, the public school, the public market, or other necessary municipal building, we will, in the absence of proof to the contrary, presume a grant from the state in favor of the municipality; but, as indicated by the wording, that rule may be invoked only as to property which is used distinctly for public purposes. It cannot be applied against the state when occupied for any other purpose.

The evidence does not disclose that the municipality has used the land for purposes distinctly public.

The judgment in relation to the parcel of land heretofore described is reversed and the petition as to that parcel dismissed. In all other respects the judgment is affirmed. So ordered.

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-2017         November 24, 1906

THE MUNICIPALITY OF OAS, plaintiff-appellee, vs.BARTOLOME ROA, defendant-appellant.

Del-Pan, Ortigas and Fisher, for appellant. Enrique Llopiz for appellee.

 

WILLARD, J.:

The plaintiff brought this action for the recovery of a tract of land in the pueblo of Oas, claiming that it was a part of the public square of said town. The defendant in his answer alleged that he was the owner of the property. Judgment was rendered in favor of the plaintiff and the defendant has brought the case here by bill of exceptions.

As we look at the case, the only question involved is one of fact. Was the property in question a part of the public square of the town of Oas? The testimony upon this point in favor of the plaintiff consisted of statements made by witnesses to the effect that this land had always been a part of the public square, and of certain resolutions adopted by the principalia of the pueblo reciting the same fact, the most important of these being the minutes of the meeting of the 27th of February, 1892. In that document it is expressly stated that this land was bought in 1832 by the then parish priest for the benefit of the pueblo. It recites various proceedings taken thereafter in connection with this ownership, including among them an order of the corregidor of Nueva Caceres prohibiting the erection of houses upon the land by reason of the fact above recited — namely, that the land belonged to the pueblo. This resolution terminated with an

order to the occupant of the building then standing upon the property that he should not repair it. The defendant signed this resolution.

It further appears that the same building was almost entirely destroyed by a baguio on the 13th and 14th of May, 1893, and that the authorities of the puebo ordered the complete demolition thereof. The resolution of the 31st of May, 1893, declared that the then owner of the building, Jose Castillo, had no right to reconstruct it because it was situated upon land which did not belong to him. This resolution was also signed by the defendant.

The evidence on the part of the defendant tends to show that in 1876 Juana Ricarte and Juana Riquiza sold the land in question to Juan Roco, and that on the 17th day of December, 1894, Jose Castillo sold it to the defendant. No deed of conveyance from Juan Roco to Jose Castillo was presented in evidence, but Castillo, testifying as a witness, said that he had bought the property by verbal contract from Roco, his father-in-law. The defendant, after his purchase in 1894, procured a possessory of information which was allowed by an order of the justice of the peace of Oas on the 19th day of January, 1895, and recorded in the Registry of Property on the 28th of March of the same year.

In this state of the evidence, we can not say that the proof is plainly and manifestly against the decision of the court below. Unless it is so, the finding of fact made by that court can not be reversed. (De la Rama vs. De la Rama, 201 U. S., 303.)

The two statements signed by Roa, one in 1892 and the other in 1893, are competent evidence against him. They are admissions by him to the effect that at that time the pueblo was the owner of the property in question. They are, of course, not conclusive against him. He was entitled to, and did present evidence to overcome the effect of these admissions. The evidence does not make out a case of estoppel against him. (sec. 333, par. 1, Code of Civil Procedure.)

The admissibility of these statements made by Roa do not rest upon section 278 of the Code of Civil Procedure, which relates to declarations or admissions made by persons not a party to the suit, but it rests upon the principle that when the defendant in a suit has himself made an admission of any fact pertinent to issue involved, it can be received against him.

This action was commenced on the 17th of December, 1902. There is no evidence of any adverse occupation of this land for thirty years, consequently the extraordinary period of prescription does not apply. The defendant can not rely upon the ordinary period of prescription of ten years because he was not a holder in good faith. He knew at that time of his purchase in 1894, and had so stated in writing, that the pueblo was the owner of the property. So that, even if the statute of limitations ran against a municipality in reference to a public square, it could not avail the defendant in this case.

It appears that Roa has constructed upon the property, and that there now stands thereon, a substantial building. As early as 1852 this land had been used by the municipality constructed thereon buildings for the storage of property of the State, quarters for the cuadrilleros, and others of a like character. It therefore had ceased to be property used by the public and had become a part of the bienes patrimoniales of the pueblo. (Civil Code, arts. 341, 344.) To the case are applicable those provisions of the Civil Code which relate to the construction by one person of a building upon land belonging to another. Article 364 of the Civil Code is as follows:

Where there has been bad faith, not only on the part of the person who built, sowed, or planted on another's land, but also on the part of the owner of the latter, the rights of both shall be the same as if they had acted in good faith.

Bad faith on the part of the owner is understood whenever the act has been executed in his presence with his knowledge and tolerance and without objection.

The defendant constructed the building in bad faith for, as we have said, he had knowledge of the fact that his grantor was not the owner thereof. There was a bad faith also on the part of the plaintiff in accordance with the express provisions of article 364 since it allowed Roa to construct the building without any opposition on its part and to so occupy it for eight years. The rights of the parties must, therefore, be determined as if they both had acted in good faith. Their rights in such cases are governed by article 361 of the Civil Code, which is as follows:

The owner of the land on which the building, sowing, or planting is done in good faith shall have a right to appropriate as his own the work, sowing, or planting after the indemnity mentioned in articles 453 and 454, or, to oblige the person who has built or planted, to pay him the value of the land and to force the person who sowed to pay the proper rent.

The judgment of the court below is so modified as to declare that the plaintiff is the owner of the land and that it has the option of buying the building thereon, which is the property of the defendant, or of selling to him the land on which it stands. The plaintiff is entitled to recover the costs of both instances.1âwphil.net

After the expiration of twenty days let judgment be entered in accordance herewith and at the proper time thereafter let the record be remanded to the court below for proper action. So ordered.

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-5013             March 11, 1909

JEREMIAH J. HARTY, Roman Catholic Archbishop of Manila, plaintiff-appellee, vs.THE MUNICIPALITY OF VICTORIA, Province of Tarlac, defendant-appellant.

F. Buencamino for appellant. Hartigan and Rohde for appellee.

TORRES, J.:

On January 17, 1908, the representative of Mgr. Jeremiah J. Harty, archbishop of the Roman Catholic Church, as the legal administrator of all the properties and rights of the Catholic Church within the archbishopric of Manila, filed a written complaint in the Court of First Instance of Tarlac against the municipality of Victoria, alleging that the parish of the said town had been and was then the owner of a parcel of land within the said municipality, known as the plaza of the church of Victoria; that it had acquired said parcel of land more than sixty years previously, and had continued to possess the same ever since up to 1901, in which year the defendant municipality unlawfully and forcibly seized the said property, claiming to be entitled thereto and retaining it to the present day. For the purposes of the complaint, a description of the meters and bounds of the land in question was set forth in the writing, and plaintiff prayed that, in view of what was therein set forth, judgment be entered holding that the said land was the property of the parish of Victoria, of the Roman Catholic Apostolic Church, and that the defendant be ordered to vacate the same and to pay the costs of the action.

The defendant municipality answered the complaint through its attorney and offered a general denial of all the facts stated therein, especially of those numbered 4, 5, 6, and 7; in special defense it alleged that

the plazadescribed in No. 4 of the complaint was founded when the sitio denominated Canarum, a barrio of the town of Tarlac, was converted into a civil town in 1855; that the parish of Tarlac was established many years after the civil town, and that therefore, it neither had then, nor has now any title to the plaza claimed, and that the complaint injured the defendant, and for this reason it prayed that judgment be entered absolving the defendant of the complaint with costs and damages against the plaintiff.

Evidence was adduced by both parties, and the documents exhibited, to one of which the plaintiff objected, were made of record; the trial court rendered judgment on the 15th of June, 1908, holding that the parish of Victoria of the Roman Catholic Apostolic Church, had a better right to the possession of the land described in the complaint, and sentenced the defendant to vacate the same and to pay the costs. To said judgment the representative of the defendant excepted and moved for a new trial on the ground that it was contrary to the weight of the evidence, and he notified the court that, if his motion were overruled, he would appeal to the Supreme Court. The motion for a new trial was overruled; the defendant excepted, and presented the corresponding bill of exceptions which, after receipt of a copy had been acknowledged by the adverse party, was approved. On the 1st of September last, the appellant was ordered to furnish bond in the sum of P1,000 to insure the fulfillment of the judgment in the event that it should be totally or partially affirmed. To said order the defendant excepted, but furnished the bond as directed by the court.

In view of the nature of the action brought by the plaintiff against the municipality of Victoria, Province of Tarlac, the question that has arisen between the contending parties consists only in determining who is the owner and proprietor of the parcel of land that surrounds the parish church of the said town, and which is called the publicplaza of the same.

Article 339 of the Civil Code reads:

Property of public ownership is:

1. That destined to the public use, such as roads, canals, rivers, torrents, ports, and bridges constructed by the State, and banks, shores, roadsteads, and that of a similar character.

Article 344 of said code also reads:

Property for public use in provinces and in towns comprises the provincial and town roads, the squares, streets, fountains, and public waters, the promenades, and public works of general service supported by the said towns or provinces.

From the evidence presented by both parties it appears that the town of Victoria, which was formerly only a barrio of the town of Tarlac and known as Canarum, was converted into a town in 1855, and named Victoria; to this end they must have laid out the streets and the plaza of the town, in the center of which were situated the church and parish house from the commencement, and at the expiration of about twelve years the parish of said town was constituted and the parish who was to perform the office of curate was appointed; that from the very beginning, the large tract of land that surrounds the church and the parish house was known as a public plaza, destined to the use of all the residents of the recently founded town; public performances and religious processions were held thereon without hindrance either on the part of the local authorities or of the curate of said town.

It must be assumed that the principal residents of the old barrio, being interested in the conversion of the barrio into a civil town, arranged in such a way that the barrio, as the center of the future town which was subsequently called Victoria, should have streets and a public plaza with its church and parish house, and also a tribunal or building destined for the use of the municipality and the local official at that time called the gobernadorcillo and later on capitán municipal, as has occurred in the foundation of all the towns in these Islands, under the old administrative laws.

It may be true that the father of the witness Casimiro Tañedo, who owned the space of land where the church and parish house were erected, had voluntarily donated it to the Catholic Church, the only one known at the time, but proper proof is lacking that the donation affirmed by the said Tañedo comprehended the whole of the large tract which at the present time constitute the plaza of the town.

It was a custom observed by all the towns established administratively in these Islands under the old Laws of the Indies, that on their creation, a certain amount of land was always reserved for plazas, commons, and special and communal property, and as it is unquestionable that the said large space of land was left vacant in the center of the town of Victoria when it was constituted as a civil town, more than twelve years prior to the appointment of a permanent curate therein, there are good grounds to suppose that the late Vicente Tañedo donated the land now occupied by the church and the parish house in said municipality for religious purposes, or to the church, but not to the parish curate because at the time there was no curate at the new town of Victoria.

Even though all the remaining space of land which now forms the great plaza of the town of Victoria had been owned by the said Tañedo, it must be presumed that he waived his right thereto for the benefit of the townspeople, since from the creation or establishment of the town, down to the present day, all the residents, including the curate of said town, have enjoyed the free use of said plaza; it has not been satisfactorily shown that the municipality or the principales of the town of Victoria had donated the whole of said land to the curate of Victoria or to the Catholic Church, as alleged, nor could it have been so donated, it being a public plaza destined to public use and was not of private ownership, or patrimony of the town of Victoria, or of the Province of Tarlac.

It should be noted that, among other things, plazas destined to the public use are not subject to prescription. (Art. 1936, Civil Code.)

That both the curates and the gobernadorcillos of the said town procured fruit trees and plants to be set out in theplaza, does not constitute an act of private ownership, but evidences the public use thereof, or perhaps the intention to improve and embellish the said plaza for the benefit of the townspeople.

Certain it is that the plaintiff has not proven that the Catholic Church or the parish of Victoria was the owner or proprietor of the said extensive piece of land which now forms the public plaza of said town, nor that it was in possession thereof under the form and conditions required by law, inasmuch as it has been fully proven that saidplaza has been used without let or hindrance by the public and the residents of the town of Victoria ever since its creation. For the above reasons it is our opinion that the judgment appealed from should be reversed, and that it should be held, as we do hereby hold, that the whole of the land not occupied by the church of the town of Victoria and its parish house, is a public plaza of the said town, of public use, and that in consequence thereof, the defendant is absolved of the complaint without any special ruling as to the costs of both instances.

Arellano, C. J., Mapa, Johnson, Carson, and Willard, JJ., concur.

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-9069             March 31, 1915

THE MUNICIPALITY OF CAVITE, plaintiff-appellant, vs.HILARIA ROJAS and her husband TIUNG SIUKO, alias SIWA, defendants-appellees.

Attorney-General Villamor for appellant.J. Y. Pinzon for appellees.

TORRES, J.:

Appeal filed through bill of exceptions by the Attorney-General, representing the plaintiff municipality of Cavite, from the judgment of March 27, 1913, whereby the Honorable Herbert D. Gale, judge, dismissed the complaint with costs against the plaintiff party, declaring that the said municipality had no right to require that the defendants vacate the land in question.

By an instrument dated December 5, 1911, afterwards amended on March 14, 1912, the provincial fiscal of Cavite, representing the municipality of that name, filed a complaint in the Court of First Instance of said province alleging that the plaintiff municipal corporation, duly organized and constituted in accordance with Act No. 82, and as the successor to the rights s aid entity had under the late Spanish government, and by virtue of Act No. 1039, had exclusive right, control and administration over the streets, lanes, plazas, and public places of the municipality of Cavite; that the defendants, by virtue of a lease secured from the plaintiff municipality, occupy a parcel of land 93 square meters in area that forms part o the public plaza known under the name of Soledad, belonging to the municipality of Cavite, the defendants having constructed thereon a house, through payment to the plaintiff for occupation thereof of a rental of P5,58 a quarter in advance, said defendants being furthermore obligated to vacate the leased land within sixty days subsequent to plaintiff's demand to that effect; that the defendants have been required by the municipality to vacate and deliver possession of the said land, but more than the sixty days within which they having done so to date; that the lease secured from the municipality of Cavite, by virtue whereof the defendants occupy the land that is the subject matter of the complaint, is ultra vires and therefore ipso factonull and void and of no force or effect, for the said land is an integral portion of a public plaza of public domain and use, and the municipal council of Cavite has never at any time had any power or authority to withdraw it from public use, and to lease it to a private party for his own use, and so the defendants have never had any right or occupy or to retain the said land under leasehold, or in any other way, their occupation of the parcel being furthermore illegal; and therefore prayed that judgment be rendered declaring that possession of the sad land lies with the plaintiff and ordering the defendants to vacate the land and deliver possession thereof to said plaintiff, with the costs against the defendants.

The demurrer filed to the foregoing complaint having been overruled, with exception on the part of the defendants, in their answer of April 10, 1912, they admitted some of the allegations contained in the complaint but denied that the parcel of land which they occupy and to which the complaint refers forms and integral part of Plaza Soledad, or that the lease secured by them from the municipality of Cavite was null and void and ultra vires, stating if they refused to vacate said land it was because they had acquired the right of possession thereof. As a special defense they alleged that, according to the lease, they could only be ordered to vacate the land leased when the plaintiff municipality might need it for decoration or other public use, which does not apply in the present case; and in a cross-complaint they alleged that on the land which is the subject matter of the complaint the defendants have erected a house of strong materials, assessed at P3,000, which was constructed under a license secured from the plaintiff municipality; that if they should be ordered to vacate the said land they would suffer damages to the extent of P3,000, wherefore they prayed that they be absolved from the complaint, or in the contrary case that the plaintiff be sentenced to indemnify them in the sum of P3,000 as damages, and to pay the costs.

After hearing of the case, wherein both parties submitted parol and documentary evidence, the court rendered the judgment that he been mentioned, whereto counsel for the municipality excepted and in writing asked for a reopening of the case and the holding of a new trial. This motion was denied, with exception on the part of the appellant, and the forwarded to the clerk of this court.

It is duly proven in the record that, upon presentation of an application by Hilaria Rojas, he municipal council of Cavite by resolution No. 10, dated July 3, 107, Exhibit C, leased to the said Rojas some 70 or 80 square meters of Plaza Soledad, on condition that she pay rent quarterly in advance according to the schedule fixed in Ordinance No. 43, land within sixty days subsequent to notification to that effect. The record shows (receipts, Exhibit 1) that she has paid the land tax on the house erected on the lot.

The boundary line between the properties of the municipality of Cavite and the naval reservation, as fixed in Act No. 1039 of the Philippine Commission, appears in the plan prepared by a naval engineer and submitted as evidence by the plaintiff, Exhibit C of civil case No. 274 of the Cavite court and registered in this court as No. 9071. According to said plan, defendant's house is erected on a plat of ground that forms part of the promenade called Plaza Soledad, and this was also so proven by the testimony of the plaintiff's witnesses.

By section 3 of the said Act No. 1039, passed January 12, 1904, the Philippine Commission granted to the municipality of Cavite all the land included in the tract called Plaza Soledad. In the case of Nicolas vs. Jose (6 Phil. Rep., 589), wherein the municipality of Cavite, represented by its president Catalino Nicolas, sought inscription in its name of the land comprised in the said Palza Soledad, with objection on the part of Maria Jose et al. who is sought that inscription be decreed in their name of the parcels of land in this plaza occupied by them, this court decided that neither the municipality nor the objectors were entitled to inscription, for with respect to the objectors said plaza belonged to the municipality of Cavite and with respect to the latter the said Plaza Soledad was not transferable property of that municipality to be inscribed in its name, because he intention of Act No. 1039 was that the said plaza and other places therein enumerated should be kept open for public transit; herefore there can be no doubt that the defendant has no right to continue to occupy the land of the municipality leased by her, for it is an integral portion of Plaza Soledad, which if for public use and is reserved for the common benefit.

According to article 344 of the Civil Code: "Property for public use in provinces and in towns comprises the provincial and town roads, the squares, streets, fountains, and public waters, the promenades, and public works of general service supported by said towns or provinces."

The said Plaza Soledad being a promenade for public use, the municipal council of Cavite could not in 1907 withdraw or exclude from public use a portion thereof in order to lease it for the sole benefit of the defendant Hilaria Rojas. In leasing a portion of said plaza or public place to the defendant for private use the plaintiff municipality exceeded its authority in the exercise of its powers by executing a contract over a thing of which it could not dispose, nor is it empowered so to do.

The Civil Code, articles 1271, prescribes that everything which is not outside he commerce of man may be the object of a contract, and plazas and streets are outside of this commerce, as was decided by the supreme court of Spain in its decision of February 12, 195, which says: "Communal things that cannot be soud because they are by their very nature outside of commerce are those for public use, such as the plazas, streets, common lands, rivers, fountains, etc."

Therefore, it must be concluded that the contract, Exhibit C, whereby he municipality of Cavite leased to Hilaria Rojas a portion of the Plaza Soledad is null and void and of no force or effect, because it is contrary to the law and the thing leased cannot be the object of a contract. On the hyphotesis that the said lease is null and void in accordance with the provisions of article 1303 of the Civil Code, the defendant must restore and deliver possession of the land described in the complaint to the municipality of Cavite, which in its turn must restore to the said defendant all the sums it may have received from her in the nature of rentals just as soon as she restores the land improperly leased. For the same reasons as have been set forth, and as said contract is null and void in its origin, it can produce no effect and consequently the defendant is not entitled to claim that the plaintiff municipality indemnity her for the damages she may suffer by the removal of her house from the said land.

For all the foregoing reasons we must reverse the judgment appealed from and declare, as we do declare, that the land occupied by Hilaria Rojas forms part of the public plaza called Soledad, and as the lease of said parcel of land is null and void, we order the defendant to vacate it and release the land in question within thirty days, leaving it cleared as it was before hr occupation. There is no ground for the indemnity sought in the nature of damages, but the municipality must in its turn to the defendant the rentals collected; without finding as to the costs. So ordered.

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-24950             March 25, 1926

VIUDA DE TAN TOCO, plaintiff-appellant, vs.THE MUNICIPAL COUNCIL OF ILOILO, defendant-appellee.

Arroyo & Evangelista for appellant.Provincial Fiscal Borromeo Veloso for appelle.

VILLAMOR, J.:

It appears from the record that the widow of Tan Toco had sued the municipal council of Iloilo for the amount of P42,966.40, being the purchase price of two strips of land, one on Calle J. M. Basa consisting of 592 square meters, and the other on Calle Aldiguer consisting of 59 square meters, which the municipality of Iloilo had appropriated for widening said street. The Court of First Instance of Iloilo sentenced the said municipality to pay the plaintiff the amount so claimed, plus the interest, and the said judgment was on appeal affirmed by this court.1

On account of lack of funds the municipality of Iloilo was unable to pay the said judgment, wherefore plaintiff had a writ of execution issue against the property of the said municipality, by virtue of which the sheriff attached two auto trucks used for street sprinkling, one police patrol automobile, the police stations on Mabini street, and in Molo and Mandurriao and the concrete structures, with the corresponding lots, used as markets by Iloilo, Molo, and Mandurriao.

After notice of the sale of said property had been made, and a few days before the sale, the provincial fiscal of Iloilo filed a motion which the Court of First Instance praying that the attachment on the said property be dissolved, that the said attachment be declared null and void as being illegal and violative of the rights of the defendant municipality.

Plaintiffs counsel objected o the fiscal's motion but the court, by order of August 12, 1925, declared the attachment levied upon the aforementioned property of the defendant municipality null and void, thereby dissolving the said attachment.

From this order the plaintiff has appealed by bill of exceptions. The fundamental question raised by appellant in her four assignments of error is whether or not the property levied upon is exempt from execution.

The municipal law, section 2165 of the Administrative Code, provides that:

Municipalities are political bodies corporate, and as such are endowed with the faculties of municipal corporations, to be exercised by and through their respective municipal government in conformity with law.

It shall be competent for them, in their proper corporate name, to sue and be sued, to contract and be contracted with, to acquire and hold real and personal property for municipal purposes, and generally to exercise the powers hereinafter specified or otherwise conferred upon them by law.

For the purposes of the matter here in question, the Administrative Code does not specify the kind of property that a municipality may acquire. However, article 343 of the Civil Code divides the property of provinces and towns (municipalities) into property for public use and patrimonial property. According to article 344 of the same Code, provincial roads and foot-path, squares, streets, fountains and public waters, drives and public improvements of general benefit built at the expense of the said towns or provinces, are property for public use.

All other property possessed by the said towns and provinces is patrimonial and shall be subject to the provisions of the Civil Code except as provided by special laws.

Commenting upon article 344, Mr. Manresa says that "In accordance with administrative legislation" (Spanish) we must distinguish, as to the patrimonial property of the towns, "between that a common benefit and that which is private property of the town. The first differs from property for public use in that generally its enjoyment is less, as it is limited to neighbors or to a group or class thereof; and, furthermore, such use, more or less general, is not intrinsic with this kind of property, for by its very nature it may be enjoyed as though it were private property. The third group, that is, private property, is used in the name of the town or province by the entities representing it and, like and private property, giving a source of revenue."

Such distinction, however, is of little practical importance in this jurisdiction in view of the different principles underlying the functions of a municipality under the American rule. Notwithstanding this, we believe that the principle governing property of the public domain of the State is applicable to property for public use of the municipalities as said municipal is similar in character. The principle is that the property for public use of the State is not within the commerce of man and, consequently, is inalienable and not subject to prescription. Likewise, property for public of the municipality is not within the commerce of man so long as it is used by the public and, consequently, said property is also inalienable.

The American Law is more explicit about this matter as expounded by Mcquilin in Municipal Corporations, volume 3, paragraph 1160, where he says that:

States statutes often provide the court houses, jails and other buildings owned by municipalities and the lots on which they stand shall be exempt from attachment and execution. But independent of express statutory exemption, as a general proposition, property, real and personal, held by municipal corporations, in trust for the benefit of their inhabitants, and used for public purposes, is exempt.

For example, public buildings, school houses, streets, squares, parks, wharves, engines and engine houses, and the like, are not subject to execution. So city waterworks, and a stock of liquors carried in a town dispensary, are exempt. The reason for the exemption is obvious. Municipal corporations are created for public purposes and for the good of the citizens in their aggregate or public capacity. That they may properly discharge such public functions corporate property and revenues are essential, and to deny them these means the very purpose of their creation would be materially impeded, and in some instances practically destroy it. Respecting this subject the Supreme Court of Louisiana remarked: "On the first view of this question there is something very repugnant to the moral sense in the idea that a municipal corporation should

contract debts, and that, having no resources but the taxes which are due to it, these should not be subjected by legal process to the satisfaction of its creditors. This consideration, deduced from the principles of moral equity has only given way to the more enlarged contemplation of the great and paramount interests of public order and the principles of government."

It is generally held that property owned by a municipality, where not used for a public purpose but for quasi private purposes, is subject to execution on a judgment against the municipality, and may be sold. This rule applies to shares of stock owned by a municipal corporation, and the like. But the mere fact that corporate property held for public uses is being temporarily used for private purposes does not make it subject execution.

If municipal property exempt from execution is destroyed, the insurance money stands in lieu thereof and is also exempt.

The members or inhabitants of a municipal corporation proper are not personally liable for the debts of the municipality, except that in the New England States the individual liability of the inhabitant is generally maintained.

In Corpus Juris, vol 23, page 355, the following is found:

Where property of a municipal or other public corporation is sough to be subjected to execution to satisfy judgments recovered against such corporation, the question as to whether such property is leviable or not is to be determined by the usage and purposes for which it is held. The rule is that property held for public uses, such as public buildings, streets, squares parks, promenades, wharves, landing places fire engines, hose and hose carriages, engine houses, public markets, hospitals, cemeteries, and generally everything held for governmental purposes, is not subject to levy and sale under execution against such corporation. The rule also applies to funds in the hands of a public officer. Likewise it has been held that taxes due to a municipal corporation or country cannot be seized under execution by a creditor of such corporation. But where a municipal corporation or country owns in its proprietary, as distinguished from its public or governmental capacity, property not useful or used for a public purpose but for quasi private purposes, the general rule is that such property may be seized and sold under execution against the corporation, precisely as similar property of individuals is seized and sold. But property held for public purposes is not subject to execution merely because it is temporarily used for private purposes, although if the public use is wholly abandoned it becomes subject to execution. Whether or not property held as public property is necessary for the public use is a political, rather than a judicial question.

In the case of City of New Orleans vs. Louisiana Construction Co., Ltd. (140 U. S., 654; 35 Law. ed., 556), it was held that a wharf for unloading sugar and molasses, open to the public, was property for the public use of the City of New Orleans and was not subject to attachment for the payment of the debts of the said city.

In that case it was proven that the said wharf was a parcel of land adjacent to the Mississippi River where all shipments of sugar and molasses taken to New Orleans were unloaded.

That city leased the said wharf to the Louisiana Construction Company, Ltd., in order that it might erect warehouses so that the merchandise upon discharge might not be spoiled by the elements. The said company was given the privilege of charging certain fees for storing merchandise in the said warehouses and the public in general had the right to unload sugar and molasses there by paying the required fees, 10 per cent of which was turned over to the city treasury.

The United States Supreme Court on an appeal held that the wharf was public property, that it never ceased to be such in order to become private property of the city; wherefore the company could not levy execution upon the wharf in order to collect the amount of the judgment rendered in favor thereof.

In the case of Klein vs. City of New Orleans (98 U. S., 149; 25 Law. ed., 430), the Supreme Court of the United States that a public wharf on the banks of the Mississippi River was public property and not subject to execution for the payment of a debt of the City of New Orleans where said wharf was located.

In this case a parcel of land adjacent to the Mississippi River, which formerly was the shore of the river and which later enlarged itself by accession, was converted into a wharf by the city for public use, who charged a certain fee for its use.

It was held that the land was public property as necessary as a public street and was not subject to execution on account of the debts of the city. It was further held that the fees collected where also exempt from execution because they were a part of the income of the city.

In the case of Tufexis vs. Olaguera and Municipal Council of Guinobatan (32 Phil., 654), the question raised was whether for the payment of a debt to a third person by the concessionaire of a public market, the said public market could be attached and sold at public auction. The Supreme Court held that:

Even though a creditor is unquestionably entitled to recover out of his debtor's property, yet when among such property there is included the special right granted by the Government of usufruct in a building intended for a public service, and when this privilege is closely related to a service of a public character, such right of the creditor to the collection of a debt owed him by the debtor who enjoys the said special privilege of usufruct in a public market is not absolute and may be exercised only through the action of court of justice with respect to the profits or revenue obtained under the special right of usufruct enjoyed by debtor.

The special concession of the right of usufruct in a public market cannot be attached like any ordinary right, because that would be to permit a person who has contracted with the state or with the administrative officials thereof to conduct and manage a service of a public character, to be substituted, without the knowledge and consent of the administrative authorities, by one who took no part in the contract, thus giving rise to the possibility of the regular course of a public service being disturbed by the more or less legal action of a grantee, to the prejudice of the state and the public interests.

The privilege or franchise granted to a private person to enjoy the usufruct of a public market cannot lawfully be attached and sold, and a creditor of such person can recover his debt only out of the income or revenue obtained by the debtor from the enjoyment or usufruct of the said privilege, in the same manner that the rights of such creditors of a railroad company can be exercised and their credit collected only out of the gross receipts remaining after deduction has been made therefrom of the operating expenses of the road. (Law of November 12, 1896, extended to the overseas provinces by the royal order of August 3, 1886.)

For the reasons contained in the authorities above quoted we believe that this court would have reached the same conclusion if the debtor had been municipality of Guinobatan and the public market had been levied upon by virtue of the execution.

It is evident that the movable and immovable property of a municipality, necessary for governmental purpose, may not be attached and sold for the payment of a judgment against the municipality. The supreme reason for this rule is the character of the public use to which such kind of property is devoted. The necessity for government service justifies that the property of public of the municipality be exempt from execution just as it is necessary to exempt certain property of private individuals in accordance with section 452 of the Code of Civil Procedure.

Even the municipal income, according to the above quoted authorities, is exempt from levy and execution. In volume 1, page 467, Municipal Corporations by Dillon we find that:

Municipal corporations are instituted by the supreme authority of a state for the public good. They exercise, by delegation from the legislature, a portion of the sovereign power. The main object of their creation is to act as administrative agencies for the state, and to provide for the police and local government of certain designated civil divisions of its territory. To this end they are invested with certain governmental powers and charged with civil, political, and municipal duties. To enable them beneficially to exercise these powers and discharge these duties, they are clothed with the authority to raise revenues, chiefly by taxation, and subordinately by other modes as by licenses, fines, and penalties. The revenue of the public corporation is the essential means by which it is enabled to perform its appointed work. Deprived of its regular and adequate supply of revenue, such a corporation is practically destroyed and the ends of its erection thwarted. Based upon considerations of this character, it is the settled doctrine of the law that only the public property but also the taxes and public revenues of such corporations cannot be seized under execution against them, either in the treasury or when in transit to it. Judgments rendered for taxes, and the proceeds of such judgments in the hands of officers of the law, are not subject to execution unless so declared by statute. The doctrine of the inviolability of the public revenues by the creditor is maintained, although the corporation is in debt, and has no means of payment but the taxes which it is authorized to collect.

Another error assigned by counsel for appellant is the holding of the court a quo that the proper remedy for collecting the judgment in favor of the plaintiff was by way or mandamus.

While this question is not necessarily included in the one which is the subject of this appeal, yet we believe that the holding of the court, assigned as error by appellant's counsel, is true when, after a judgment is rendered against a municipality, it has no property subject to execution. This doctrine is maintained by Dillon (Municipal Corporations, vol. 4, par. 1507, 5th ed.) based upon the decisions of several States of the Union upholding the same principle and which are cited on page 2679 of the aforesaid work. In this sense this assignment of error, we believe, is groundless.

By virtue of all the foregoing, the judgment appealed from should be and is hereby affirmed with costs against the appellant. So ordered.

Avanceña, C. J., Street, Malcolm, Ostrand, Johns, Romualdez and Villa-Real., JJ., concur.

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-1354             July 28, 1947

FELIZA CAPISTRANO, ET AL., petitioners, vs.EMILIO PEÑA, Judge of First Instance of Manila, VALERIANO FUGOSO, Mayor of City of Manila, LAMBERTO JAVALERA, Chief of Police of City of Manila, and THE SHERIFF OF CITY OF MANILA,respondents.

Jose S. Sarte for petitioners.Assistant City Fiscal Julio Villamor for respondents.

TUASON, J.:

The petitioners herein severally own and conduct eating places housed in a temporary structure erected on Plaza Miranda, City of Manila, in the immediate vicinity of the Quiapo Church and the site of the burned parish house or convent. The place as part of a public plaza is admittedly city property dedicated to public use.

Under date of June 29, 1946, the petitioners brought an action for injunction in the Court of First Instance of Manila complaining that the City Mayor had ordered the Chief of Police "to remove the shacks and stalls around the Quiapo Church including the restaurants in question and that the respondents, through their agents and laborers, are now removing or trying to remove the said restaurants." The plaintiffs were granted a writ of preliminary injunction.

The defendants for answer alleged, among other things, that the plaintiffs had violated existing ordinances and sanitary rules and regulations; that said plaintiffs had not secured building permits pursuant to existing city ordinances to construct the above-mentioned structure; that the plaintiff's restaurants had been found unsanitary by officers of the city health service.

Upon the issues thus joined, the parties went to trial, after which the court rendered judgment "declaring that the restaurants in question constitute a nuisance and that the Mayor of the City of Manila is empowered to revoke the licenses of the plaintiffs, order the closure of the said restaurants and require the plaintiffs to remove the same or cause them to be removed at the plaintiffs' expense, with costs against the plaintiffs." In the same judgment the preliminary injunction was dissolved.

Following the rendition of the aforesaid judgment the plaintiffs filed with this court a petition for certiorari (G.R. No. L-1314) against the Honorable Emilio Peña, trial Judge; the Mayor, and the Chief of Police. That petition was dismissed on the ground that certiorari was not the appropriate remedy. Meanwhile execution of the judgment had been issued by the respondent Judge, whereupon the plaintiffs came back with the instant petition for prohibition, making the sheriff respondent besides the above-named city officials and the trial judge.

The issuance of execution is out of step with the judgment. The judgment does not call for execution in favor of the defendants as it amounts to a dismissal of the case. The defendants have not been granted or asked for any affirmative relief, nor are the plaintiffs required to do anything. There is nothing to execute. For this reason, the respondent Judge in issuing execution went beyond the bounds of his jurisdiction. To this extent, prohibition is in order.

Nevertheless, the setting aside of the order of execution will not materially help the petitioners. The City Mayor and the Chief of Police or their agents may, in consequence of the judgment, proceed to remove the plaintiffs' building on their own account, unaided by the court or the sheriff. Section 4 of Rule 39 provides that "unless otherwise ordered by the court, a judgment in an action for injunction . . . shall not be stayed after its rendition and before an appeal is taken or during the pendency of an appeal. The trial court, however, in its discretion, when appeal is taken from a judgment granting, dissolving or denying an injunction, may make an order suspending, modifying, restoring, or granting such injunction during the pendency of the appeal, upon such terms as to bond or otherwise as it may consider proper for the pictures in bold outline the effect of the judgment in an injunction case and the course open to the plaintiff if the case is dismissed. The judgment in this case imports that the defendants are at liberty to do what the plaintiffs seek to prevent. It denotes that the court will not interfere with the defendants' authority to tear down the plaintiffs' shacks if the plaintiffs themselves do not do so. To stop them from removing the structure during the pendency of the appeal, the plaintiffs' remedy is to obtain a new writ of temporary injunction. Such temporary injunction has to be secured from the Court that rendered the judgment if it still

has jurisdiction over the case, otherwise from the higher court to which the appeal has been elevated, on motion to be filed in the principal case. Prohibition in a separate proceeding is not a substitute for this temporary relief.

Prohibition lies where the proceedings of any tribunal, person, etc., are without or in excess of its or his jurisdiction, or with grave abuse of discretion. (Section 2, Rule 67.) With the elimination of the order of execution, there remains only the legality of the judgment to consider. The legality of the judgment is unquestioned. It was absolutely within the competence of the court a quo to render this judgment, and unless and until said judgment is reversed or a restraining order is issued, the city authorities may proceed to close the plaintiffs' business. While execution is unnecessary to aid the defendant Mayor and Chief of Police, their power is untrammeled, even more now than before the case against them was dismissed, to exercise what they claim is their authority and duty to abate public nuisance and protect public health. The lawfulness and reasonableness of their proposed action is yet to be finally decided by a superior court, but for the time being they have in their favor the presumption that the action which they contemplate is in accordance with law.

For another thing, prohibition does not lie since there is plain and adequate remedy at law available to the plaintiffs, namely, the review of the main case on appeal, and pending final determination of the appeal, the remedy by motion for preliminary injunction, as above indicated.

The petition is granted so far as it attacks the legality of the execution, and the respondent Judge and the Sheriff are commanded to desist from carrying out said execution. The petition is denied in so far as it seeks to prohibit the Mayor and the Chief of Police of the City of Manila from closing the petitioners' business and removing their building. There will be no special pronouncement as to costs.

Moran, C.J., Paras, Feria, Pablo, Bengzon, Hontiveros, and Padilla, JJ., concur.

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-260             March 25, 1946

FELIPE SAAVEDRA, petitioner, vs.POTENCIANO PECSON, Judge of First Instance of Zamboanga, respondent.

Atilano and Atilano for petitioner.Respondent Judge in his own behalf.

PERFECTO, J.:

On December 18, 1945, Valeriano Turija filed in the municipal court of Zamboanga a complaint for the recovery of an automobile valued at P450 against petitioner Felipe Saavedra, who acquired the same from Arthur D. Walker, an American enlisted man, said car belonging to the plaintiff from whom it was seized and appropriated by the Japanese forces during the enemy occupation and, after the liberation, had been in the possession and control of the PCAU before its transfer by Arthur D. Walker to petitioner.

Petitioner filed a motion to dismiss the complaint on the ground that the municipal court has no jurisdiction over the subject matter of the action, for the reason that the car has lost its character as private property to take on the status of enemy state property and, therefore, the claim and adjudication of the same should be made in and by the Office of the Custodian of Enemy Property established by the United States Government in Zamboanga. On January 2, 1946, the municipal court, declaring itself without jurisdiction, ordered the dismissal of the case. On January 3, 1946, the plaintiff appealed.

After both parties were given ample opportunity to present their oral arguments in support of their respective contentions on the question of the jurisdiction of the municipal court, the Honorable Potenciano Pecson, Judge of the Court of First Instance of Zamboanga, issued on January 7, 1946, an order reversing the order of dismissal of the municipal court, declaring it with jurisdiction to try the case, and remanding the same for further proceedings, without costs. On January 9, 1946, petitioner moved for reconsideration of said order of January 7, but the motion was denied on January 11.

Now petitioner comes to us to seek the annullment of the order of the respondent judge dated January 7, 1946, as having been issued in excess of his jurisdiction.

We do not find any merit in petitioner's contention.

It appearing that the complaint for the recovery of the automobile in question has been disposed of by the municipal court of Zamboanga upon a question of law and not upon a trial on the merits, the respondent judge has jurisdiction to issue the order dated January 7, 1946, in accordance with section 10 of Rule 40 of the Rules of Court, which reads as follows:

SEC. 10. Appellate powers of Courts of First Instance where action not tried on its merits by inferior courts.— Where the action has been disposed of by an inferior court upon a question of law and not after a valid trial upon the merits, the Court of First Instance shall on appeal review the ruling of the inferior court and may affirm or reverse it, as the case may be. In case of reversal, the case shall be remanded for further proceedings.

Whether respondent acted correctly or not in issuing said order, the proper remedy for petitioner would be by appeal. But in the instant case, it appears that an appeal against the order would be futile because the order is well-taken as the municipal court, without any shadow of doubt, has jurisdiction to decided the litigation on the merits, it appearing that the value of the litigated personal property is within the range of the concurrent jurisdiction between a court of first instance and a municipal court.

Petitioner's contention that, because the property had been appropriated by the Japanese forces during enemy occupation, the automobile has lost its character as private property to take on the status of enemy state property, lacks merit. The illegal seizure made by the Japanese could not, and cannot, change the nature, character, and status of a property legally belonging to a civilian private citizen. Petitioner who is in possession of the automobile in question appears also to be a private citizen, residing in the district of Tetuan, Zamboanga City. The litigation is, therefore, between two private citizens, both residing within the territorial jurisdiction of the municipal court, and there is nothing to show that the automobile is not within the jurisdiction of said court.

Petition is dismissed, with costs to be taxed against petitioner.

Moran, C.J., Ozaeta, Paras, Jaranilla, Feria, De Joya, Pablo, Hilado, Bengzon, and Briones, JJ., concur.

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++