Diamond Farms, Inc. v. Diamond Farm Workers Multi-Purpose Cooperative, G.R. No. 192999, 18 July 2012

Facts:

On July 2, 2002, petitioner filed a complaint⁷ for unlawful occupation, damages and attorney s fees against respondents. Petitioner alleged that as of November 1995, it was the holder of TCT Nos. 112068 and 112073 covering two parcels of land within the 109-hectare land. It alleged that it had been in possession for a long time of the two lands, which had a total area of 74.3393 hectares (74-hectare land), and grew thereon export-quality banana, producing on average 11,000 boxes per week worth P1.46 million. It alleged that the DAR s August 5, 2000. Respondents admitted that petitioner was the holder of TCT Nos. 112068 and 112073, covering the 74-hectare land and that the said land produces 11,000 boxes of export-quality bananas per week. However, were acquired by the government upon the issuance of TCTs in the name of the Republic of the Philippines.

During the proceedings before the Office of the Regional Adjudicator, petitioner submitted its computation of respondents production and profit share from the 109-hectare land for the years 1995 to 1999 and accordingly deposited the amount of P2.51 million.

The Regional Agrarian Reform Adjudicator ruled that petitioner lost its ownership of the subject land when the government acquired it and CLOAs were issued in favor of the 278 CARP beneficiaries.

Petitioner appealed to the DARAB, but the DARAB denied petitioner s appeal in a Decision dated December 11, 2006. The DARAB ruled that petitioner is unlawfully occupying the subject land; hence, its complaint against respondents for unlawful occupation lacks merit. It also ruled that petitioner is no longer entitled to possess the subject land; that petitioner lost its ownership thereof; that ownership was transferred to the 278 CARP beneficiaries; that the appeals from the Distribution Order concern distribution and will not restore petitioner s ownership; that the 278 CARP beneficiaries can now exercise their rights of ownership and possession; and that petitioner should have delivered possession of the 109-hectare land to the CARP beneficiaries on August 5, 2000 instead of remaining in possession and in control of farm operations.

Petitioner appealed to the CA. The CA in the assailed Decision affirmed the DARAB decision. 

Issue:

1. Whether or not respondents are guilty of unlawful occupation?

Ruling:

1. No, respondents are not guilty of unlawful occupation.

Article 429 of the Civil Code provides that the owner or lawful possessor of a thing has the right to exclude any person from the enjoyment and disposal thereof. For this purpose, he may use such force as may be reasonably necessary to repel or prevent an actual or threatened unlawful physical invasion or usurpation of his property.

In this case, petitioner is the farm operator and manager while respondents are the farm workers. Both parties enjoyed possession of the land. Together, they worked thereon. Before CARP, petitioner was the landowner, farm operator and manager. Respondents are its farm workers. After the deferment period, CARP finally dawned. Petitioner lost its status as landowner, but not as farm operator and manager. Respondents remained as petitioner s farm workers and received wages from petitioner. Now, the unrebutted claim of respondents in their answer and position paper is that they guarded the 74-hectare land to protect their rights as farm workers and CARP beneficiaries. They were compelled to do so when petitioner attempted to install other workers thereon, after it conspired with 67 CARP beneficiaries to occupy the 35-hectare land. They were fairly successful since the intruders were able to occupy the pumping structure. The government, including this Court, cannot condone petitioner s act to thwart the CARP s implementation. Installing workers on a CARP-covered land when the DAR has already identified the CARP beneficiaries of the land and has already ordered the distribution of the land to them serves no other purpose than to create an impermissible roadblock to installing the legitimate beneficiaries on the land. We also find the action taken by respondents to guard the land as reasonable and necessary to protect their legitimate possession and prevent precisely what petitioner attempted to do. 

Note:

Since respondents themselves have asked petitioner to resume its farm operation, petitioner s possession cannot be said to be illegal and unjustified.

Bradford United Church of Christ, Inc. v. Ando, G.R. No. 195669, May 30, 2016

Facts:

Before Branch 2 of the MTCC of Mandaue City, the petitioner Bradford United Church of Christ, Inc. (BUCCI) filed a Complaint for unlawful detainer and damages against herein respondents Dante Ando, Abenigo Augis, Edgar Cardones, Zacarias Gutierrez, Cornelio Ibarra, Jr., Zenaida Ibarra, Teofilo Lirasan, Eunice Lirasan, Ruth Mission, Dolly Resales and Eunice Tambangan, in their capacities as Members of the Mandaue Bradford Church Council, the Mandaue Bradford Church (MBC), and the United Church of Christ in the Philippines, Inc. (UCCPI). BUCCI failed to mention in its certification against non-forum-shopping a complete statement of the present status of another case concerning the recovery of ownership of certain parcels of land earlier filed before the Regional Trial Court (RTC) by the UCCPI and the MBC against BUCCI.

The RTC of Mandaue City-rendered its judgment in the recovery of ownership case against therein plaintiffs UCCPI and MBC and in favor of therein defendant BUCCI.  MTCC Branch 2 of Mandaue City, issued an Order dated March 31,2005 dismissing the unlawful detainer case with prejudice for BUCCI's failure to comply with the rule on certification against forum shopping. BUCCI appealed to the RTC.

Petitioner BUCCI's verification and certification against forum-shopping attached to the instant Petition, stated that UCCP had also filed an appeal with the CA pertaining to the recovery of ownership suit; and this appeal was docketed as CA-GR. No. 00983, then still pending adjudication before the CA. In the same verification and certification against forum-shopping, BUCCI stressed that the case for recovery of ownership of the disputed parcels of land was entirely different from the unlawful detainer case, because the first case does not involve at all the issue of material/ physical possession of Lot 3-F.

BUCCI posits that the most decisive factor in determining the existence of forum-shopping is the presence of all the elements of litis pendentia, namely, (1) identity of parties or representation in both cases; (2) identity of rights asserted and reliefs prayed for; (3) the reliefs are founded on the same facts; and (4) the identity of the preceding particulars should be such that any judgment which may be rendered in the other action, will, regardless of which party is successful, amount to res judicata in the action under consideration.

Issue:

Whether or not BUCCI committed forum-shopping when it failed to disclose in the certification on non-forum shopping of the unlawful detainer case a complete statement of the status of the action for recovery of ownership of property then pending before the RTC of Mandaue City?

Ruling:

No, BUCCI did not commit forum-shopping.

Section 5, Rule 7 of the Rules of Court, provides: The plaintiff or principal party shall certify under oath in the complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification annexed thereto and simultaneously filed therewith: (a) that he has not theretofore commenced any action or filed any claim involving the same issues in any court, tribunal or quasi-judicial agency and, to the best of his knowledge, no such other action or claim is pending therein; (b) if there is such other pending action or claim, a complete statement of the present status thereof; and (c) if he should thereafter learn that the same or similar action or claim has been filed or is pending, he shall report that fact within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been filed.

Here, there is only identity of parties between the summary action of unlawful detainer and the land ownership recovery case. However, the issues raised are not identical or similar in the two cases. The issue in the unlawful detainer case is which party is entitled to, or should be awarded, the material or physical possession of the disputed parcel of land, (or possession thereof as a fact); whereas the issue in the action for recovery of ownership is which party has the right to be recognized as lawful owner of the disputed parcels of land. Petitioner and respondent are the same parties in the annulment and ejectment cases. The issue of ownership was likewise being contended, with same set of evidence being presented in both cases. However, it cannot be inferred that a judgment in the ejectment case would amount to res judicata in the annulment case, and vice-versa. in ejectment suits, the only issue for resolution is the physical or material possession of the property involved, independent of any claim of ownership by any of the party litigants. However, the issue of ownership may be provisionally ruled upon for the sole purpose of determining who is entitled to possession de facto. Therefore, the provisional determination of ownership in the ejectment case cannot be clothed with finality.

Garcia v. Court of Appeals, G.R. No. 133140, August 10, 1999

Facts:

Atty. Pedro V. Garcia, in whose name TCT No. S-31269 covering a parcel of land identified as Lot 17 situated at Bel Air II Village, Makati, was registered, sold with the consent of his wife Remedios T. Garcia, the same to their daughter Ma. Luisa Magpayo and her husband Luisito Magpayo. The Magpayos mortgaged the land to the Philippine Bank of Communications (PBCom) to secure a loan. The Magpayos failed to pay their loan upon its maturity, hence, the mortgage was extrajudicially foreclosed and at the public auction sale, PBCom which was the highest bidder bought the land. PBCom filed at the Regional Trial Court (RTC) of Makati a petition for the issuance of a writ of possession over the land. Mrs. Magpayo's brother, Jose Ma. T. Garcia (Garcia), who was in possession of the land, refused to honor it and filed a motion for Intervention in the above-said PBCom petition, which motion was denied. PBCom averred, inter alia, that Garcia's claim over the land is belied by the fact that it is not among the properties owned by his mother listed in the Inventory of Real Estate. The Magpayos, on the other hand, asserted that title over the land was transferred to them by Mrs. Magpayo's parents to enable them (Magpayos) to borrow from PBCom.

RTC Ruling:

The court a quo denied the motion for summary judgment on the ground that PBCom raised in its answer both factual and legal issues.

CA Ruling:

CA reversed the Ruling of RTC.

Issue:

WON Garcia is the owner and possessor of the property?

Ruling:

No, Garcia is not the owner and the possessor of the property.

Ownership confers certain rights to the owner, one of which is the right to dispose of the thing by way of sale.  possession is defined as the holding of a thing or the enjoyment of a right. Literally, to possess means to actually and physically occupy a thing with or without right. Possession may be had in one of two ways: possession in the concept of an owner and possession of a holder. "A possessor in the concept of an owner may be the owner himself or one who claims to be so." On the other hand, "one who possesses as a mere holder acknowledges in another a superior right which he believes to be ownership, whether his belief be right or wrong.

In this case, Atty. Pedro Garcia and his wife Remedios exercised their right to dispose of what they owned when they sold the subject property to the Magpayo spouses. The records show that petitioner occupied the property not in the concept of an owner for his stay was merely tolerated by his parents. Petitioner's subsequent claim of ownership as successor to his mother's share in the conjugal asset is belied by the fact that the property was not included in the inventory of the estate submitted by his father to the intestate court. This buttresses the ruling that indeed the property was no longer considered owned by petitioner's parents. The Magpayo spouses were already the owners when they mortgaged the property to PBCom.

Hence, Garcia is not the owner and the possessor of the property.

Republic v. Tan, G.R. NO. 199537, February 10, 2016

Republic of Philippines vs Tan

Facts:

Tan applied for the original registration of title of Lot No. 4080, Cad. 545-D (new) situated in Casili, Consolacion, Cebu (the subject lot). She alleged that she is the absolute owner in fee simple of the said 7,807 square-meter parcel of residential land she purchased from a certain Julian Gonzaga on 

After complying with the jurisdictional requirements, the land registration court issued an order of general default, excepting the State which was duly represented by the Solicitor General.

Land Registration Court:

The land registration court granted Tan’s application. The court confirmed her title over the subject lot and ordered its registration.

The Republic appealed the case to the CA, arguing that Tan failed to prove that she is a Filipino citizen who has been in open, continuous, exclusive, and notorious possession and occupation of the subject lot, in the concept of an owner, since June 12, 1945, or earlier.

CA Ruling:

The CA denied the appeal. The CA observed that under the Public Land Act, there are two kinds of applicants for original registration: (1) those who had possessed the land since June 12, 1945; and (2) those who already acquired the property through prescription. The respondent’s application fell under the second category.

The CA noted that before land of the public domain can be acquired by prescription, it must have been declared alienable and disposable agricultural land. The CA pointed to the certification issued by the Community Environment and Natural Resources Office (CENRO) as evidence that the subject was classified as alienable and disposable on September 1, 1965

The Republic filed the present petition for review on certiorari.

Issue:

WON the land is under public domain?

Ruling:

Yes, the land is under public domain.

The court ruled that only private property can be acquired by prescription. Property of public dominion is outside the commerce of man. It cannot be the object of prescription  because prescription does not run against the State in its sovereign capacity. However, when property of public dominion is no longer intended for public use or for public service, it becomes part of the patrimonial property of the State.  When this happens, the property is withdrawn from public dominion and becomes property of private ownership, albeit still owned by the State. The property is now brought within the commerce of man and becomes susceptible to the concepts of legal possession and prescription.1avvphi1There must be an express declaration by the State that the public dominion property is no longer intended for public service or the development of the national wealth or that the property has been converted into patrimonial. Without such express declaration, the property, even if classified as alienable or disposable, remains property of the public dominion, pursuant to Article 420(2), and thus incapable of acquisition by prescription.

In this case, Even though it has been declared alienable and disposable, the property has not been withdrawn from public use or public service. Without this, prescription cannot begin to run because the property has not yet been converted into patrimonial property of the State. It remains outside the commerce of man and the respondent’s physical possession and occupation thereof do not produce any legal effect. The respondent has never acquired legal possession of the property.

Hence, the land is under public domain.

 

Binalay v. Manalo, G.R. No. 92161, March 18, 1991

Facts:

Respondent Guillermo Manalo acquired 8.65 hectares thereof from Faustina Taccad, daughter of Judge Juan Taccad. He then purchased another 1.80 hectares from Gregorio Taguba who had earlier acquired the same from Judge Juan Taccad. The two (2) parcels of land belonging to respondent Manalo were surveyed and consolidated into one lot, designated as Lot No. 307, Pls-964. Lot 307 which contains 4.6489 hectares includes: (a) the whole of the 1.80 hectares acquired from Gregorio Taguba; and (b) 2.8489 hectares out of the 8.65 hectares purchased from Faustina Taccad. As the survey was conducted on a rainy month, a portion of the land bought from Faustina Taccad then under water was left unsurveyed and was not included in Lot 307. The Sketch Plan submitted during the trial of this case and which was identified by respondent Manalo shows that the Cagayan River running from south to north, forks at a certain point to form two (2) branches—the western and the eastern branches—and then unites at the other end, further north, to form a narrow strip of land. The eastern branch of the river cuts through the land of respondent Manalo and is inundated with water only during the rainy season. The bed of the eastern branch is the submerged or the unsurveyed portion of the land belonging to respondent Manalo. For about eight (8) months of the year when the level of water at the point where the Cagayan River forks is at its ordinary depth, river water does not flow into the eastern branch. While this condition persists, the eastern bed is dry and is susceptible to cultivation. 

There is this Lot 821 which is located directly opposite Lot 307 and is separated from the latter only by the eastern branch of the Cagayan River during the rainy season and, during the dry season, by the exposed, dry river bed, being a portion of the land bought from Faustina Taccad. Respondent Manalo claims that Lot 821 also belongs to him by way of accretion to the submerged portion of the property to which it is adjacent. 

Petitioners who are in possession of Lot 821, upon the other hand, insist that they own Lot 821. They occupy the outer edges of Lot 821 along the river banks, i.e., the fertile portions on which they plant tobacco and other agricultural products.

On 24 July 1974, respondent Manalo filed a complaints before the then Court of First Instance of Isabela, Branch 3 for quieting of title, possession and damages against petitioners. He alleged ownership of the two (2) parcels of land he bought separately from Faustina Taccad and Gregorio Taguba for which reason he prayed that judgment be entered ordering petitioners to vacate the western strip of the unsurveyed portion. Respondent Manalo likewise prayed that judgment be entered declaring him as owner of Lot 821 on which he had laid his claim during the survey.

CFI Ruling;

CFI renders judgment against the defendants(petitioners) and in favor of the plaintiff(respondent).

CA Ruling:

Court of Appeals affirmed the decision of the trial court.

Issue:

WON Manolo own Lot 821 by way of accretion to the submerged portion of the property to which it is adjacent? 

Ruling:

No, Manolo does not own Lot 821 by way of accretion to the submerged portion of the property to which it is adjacent

Article 420 of the Civil Code states:

The following things are property of public dominion:

(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores, roadsteads, and others of similar character;

(2) Those which belong to the State, without being for public use, and are intended for some public service or for the development of the national wealth.

Accretion as a mode of acquiring property under Article 457 of the Civil Code requires the concurrence of three (3) requisites: (a) that the deposition of soil or sediment be gradual and imperceptible; (b) that it be the result of the action of the waters of the river (or sea); and (c) that the land where accretion takes place is adjacent to the banks of rivers (or the sea coast).

Pursuant to Article 420 of the Civil Code, respondent Manalo did not acquire private ownership of the bed of the eastern branch of the river even if it was included in the deeds of absolute sale executed by Gregorio Taguba and Faustina Taccad in his favor. These vendors could not have validly sold land that constituted property of public dominion. The Court considers that there was no evidence to prove that Lot 821 is an increment to Lot 307 and the bed of the eastern branch of the river. As it is, the claimed accretion (Lot 821) lies on the bank of the river not adjacent to Lot 307 but directly opposite Lot 307 across the river.

Hence, Manolo does not own Lot 821 by way of accretion to the submerged portion of the property to which it is adjacent.

Overall SC Ruling:

1. Respondent Manalo is hereby declared the owner of Lot 307.
2. The regularly submerged portion or the eastern bed of the Cagayan River is hereby DECLARED to be property of public dominion.
3. The ownership of Lot 821 shall be determined in an appropriate action that may be instituted by the interested parties inter se. If respondent Manalo had proved prior possession, it was limited physically to Lot 307 and the depressed portion or the eastern river bed. The testimony of Dominga Malana who was a tenant for Justina Taccad did not indicate that she was also cultivating Lot 821. The tax declarations presented by petitioners conflict with those of respondent Manalo. The evidence of record on this point is less than satisfactory and the Court feels compelled to refrain from determining the ownership and possession of Lot 821, adjudging neither petitioners nor respondent Manalo as owner(s) thereof.

Republic v. Tri-Plus Corporation, G.R. No. 150000, September 26, 2006

Facts:

Tri-Plus alleged that it is the owner in fee simple of the subject parcels of land, including the improvements thereon, having acquired the same through purchase; and that it is in actual, continuous, public, notorious, exclusive and peaceful possession of the subject properties in the concept of an owner for more than 30 years, including that of its predecessors-in-interest.

On September 4, 1997, the trial court received an Opposition to the Application for Registration filed by the Republic of the Philippines through the Office of the Solicitor General (OSG) on the grounds that neither the applicant nor its predecessors-in-interest have been in open, continuous, exclusive and notorious possession and occupation of the land in question since June 12, 1945 or prior thereto; that the muniments of title submitted by the applicant which consists, among others, of tax declarations and receipts of tax payments, do not constitute competent and sufficient evidence of a bona fide acquisition of the land applied for or of its open, continuous, exclusive and notorious possession and occupation thereof in the concept of owner since June 12, 1945 or prior thereto.

MTC Ruling:

The totality of the evidence, both documentary and testimonial, of the applicant clearly shows that it and its predecessors-in-interest had been in actual, public, exclusive and continuous possession in concept of owner of the parcels of land above-mentioned for no less than thirty (30) years prior to the filing of the instant petition for registration of its imperfect title. 

CA Ruling:

The CA rendered the presently assailed Decision finding no reversible error in the appealed judgment, thereby, affirming the same.

Petitioner contends that since the applicant failed to discharge the burden of proving that the subject properties are alienable and disposable, there is no basis for the CA to rule that these properties are private lands.

Issue:

WON the assailed land is a private land?

Ruling:

No, the assailed land is not a private land.

Section 6 of Commonwealth Act No. 141, as amended, provides that the classification and reclassification of public lands into alienable or disposable, mineral or forest land is the prerogative of the Executive Department. Under the Regalian doctrine, which is embodied in our Constitution, all lands of the public domain belong to the State, which is the source of any asserted right to any ownership of land. All lands not appearing to be clearly within private ownership are presumed to belong to the State. Accordingly, public lands not shown to have been reclassified or released as alienable agricultural land or alienated to a private person by the State remain part of the inalienable public domain.

Applicants for confirmation of imperfect title must prove the following: (a) that the land forms part of the alienable and disposable agricultural lands of the public domain; and (b) that they have been in open, continuous, exclusive and notorious possession and occupation of the same under a bona fide claim of ownership either since time immemorial or since June 12, 1945.

In the present case, the Court finds merit in petitioner's contention that respondent failed to prove the first requirement that the properties sought to be titled forms part of the alienable and disposable agricultural lands of the public domain. Respondents failed to submit a certification from the proper government agency to prove that the lands subject for registration are indeed alienable and disposable. As to the second requirement, respondent and its predecessors-in-interest failed to prove that they had been in open, continuous, exclusive and notorious possession of the subject properties under a bona fide claim of ownership since June 12, 1945 or earlier, as required by law.

Hence, the assailed land is not a private land.

Bachrach Motor Co. v. Ledesma, G.R. No. L-42462, August 31, 1937

Facts:

The plaintiff, the Bachrach Motor Co., Inc., on June 30, 1927, obtained judgment in civil case No. 31597 of the Court of First Instance of Manila against the defendant Mariano Lacson Ledesma, in the sum of P3,442.75, with interest thereon from March 30, 1927, with costs. That a writ of execution of said judgment was issued on August 20, 1927, and Jose Y. Orosa was appointed Special sheriff to execute it. That on October 4, 1927, said Jose Y. Orosa, as special sheriff, in compliance with the writ of execution in question, attached all right, title to and interest which the defendant Mariano Lacson Ledesma may have in "Any bonus, dividend, share of stock, money, or other property which that defendant is entitle to receive from the Talisay-Silay Milling Co., Inc., by virtue of the fact that such defendant has mortgage his land in favor of the Philippine National Bank to guarantee the indebtedness of the Talisay-Silay Milling Co., Inc., or which such defendant is entitled to receive from the Talisay-Silay Milling Co., Inc., on account of being a stockholder in the corporation or which he is entitled to receive from that corporation for any other cause or pretext whatsoever." That notice of said attachment was served not only upon the defendant Mariano Lacson Ledesma but also upon the herein defendant the Talisay-Silay Milling Co., Inc., which received a copy of the notice of attachment, as evidenced by the Annex A attached to this stipulation of facts. That on October 3, 1927, the herein plaintiff, the Bachrach Motor Co., Inc., obtained judgment in case No. 31821 of the Court of First Instance of Manila against the defendant Mariano Lacson Ledesma, in the sum of four thousand four hundred pesos and seventy-eight centavos with interest at 10 per cent per annum on the sum of P3,523.82 from April 30, 1927; in the sum of P14,171, 52 with interest at 10 per cent per annum on the sum of P13,290.89 from April 30, 1927; and in the sum of P1,150.72 with the legal interest of 6 per cent per annum thereon from May 25, 1927, and the costs. A copy of said judgment is attached to this stipulation of facts and marked Annex B. That a writ of execution of said judgment was issue, thereby causing the attachment, sale and adjudication to the plaintiff the Bachrach Motor Co., Inc., for the sum of P100, Philippine currency, of the defendant Mariano Lacson Ledesma's right of redemption over the following properties to wit: "Original certificate of title No. 1929 (Lot No. 1473 of the Cadastral Survey of Bacolod) containing an area of 2,647 square meters, more or less. It appears stipulated by the parties that, by virtue of the letters of the Philippine National Bank and having been so asked by Mariano Lacson Ledesma, certificate No. 772 covering the 6,300 stock dividends was delivered as security to Attorney Roman Lacson as representative of the bank, on February 27, 1930, in view of the fact that the original shares covered by certificate Nos. 145, 146 and 147 had been previously mortgaged to the same bank. On February 25, 1931, the Talisay-Silay Milling Co., Inc., in conformity with the letter of the Philippines National Bank of the 19th of said month, cancelled certificate No. 772 and in lieu thereof issued certificate No. 1155 in favor of said bank, which certificate includes the 6,300 stock dividends, among other shares. On the other hand, the garnishment obtained by the plaintiff, upon which it bases all its alleged preferred right was notified to the parties and became effective on August 11, 1930, more than five months after the delivery of certificate No. 772. The plaintiff, in its second assignment of error, maintains that the pledge is ineffective as against it because evidence of its date was not made to appear in a public instrument and concludes that its right to the 6,300 stock dividends is superior and preferred. It is admitted that the delivery of the certificate in question and the pledge thereof were not made to appear in a public instrument.

 

Issue:

WON  the pledge of   the 6300 stocks dividend is valid?

Ruling:

Yes, the pledge of the 6300 stocks dividend is valid.

The Court ruled that a contract of pledge or chattel mortgage should be deemed legally entered into and should produce all its effects and consequences, provided it appears to have been in some manner perfected and that the things pledged have been delivered, and in a contrary case, and even if the creditor has not received them or has not retained them in his custody, provided that the contract of pledge or chattel mortgage appears in a notarial document and is inscribed in the registry of deeds of the province.

In this case, the pledge of the 6,300 stock dividends is valid against the plaintiff for the reason that the certificate was delivered to the creditor bank, notwithstanding the fact that the contract does not appear in a public instrument.

 

The plaintiff further contends that the pledge could not legally exist because the certificate was not the shares themselves, making it understood that a certificate of stock or of stock dividends can not be the subject matter of the contract of pledge or of chattel mortgage. Neither is this contention tenable. Certificates of stock or of stock dividends, under the Corporation Law, are quasi negotiable instruments in the sense that they may be given in pledge or mortgage to secure an obligation.

Hence, the pledge of the 6300 stocks dividend is valid.

Philippine Refining Co. v. Jarque, 61 Phil 229

Facts:

^{The mere mortgage of a ship is a contract entered into by the parties to it without reference to navigation or perils of the sea, and does not, therefore, confer admiralty jurisdiction. (Bogart vs. Steamboat John Jay [1854], 17 How., 399.)}

^{Coming now to the merits, it appears that on varying dates the Philippine Refining Co., Inc., and Francisco Jarque executed three mortgages on the motor vessels Pandan and Zaragoza. These documents were recorded in the record of transfers and incumbrances of vessels for the port of Cebu and each was therein denominated a "chattel mortgage". Neither of the first two mortgages had appended an affidavit of good faith. The third mortgage contained such an affidavit, but this mortgage was not registered in the customs house until May 17, 1932, or within the period of thirty days prior to the commencement of insolvency proceedings against Francisco Jarque; also, while the last mentioned mortgage was subscribed by Francisco Jarque and M. N. Brink, there was nothing to disclose in what capacity the said M. N. Brink signed. A fourth mortgage was executed by Francisco Jarque and Ramon Aboitiz on the motorship Zaragoza and was entered in the chattel mortgage registry of the register of deeds on May 12, 1932, or again within the thirty-day period before the institution of insolvency proceedings. These proceedings were begun on June 2, 1932, when a petition was filed with the Court of First Instance of Cebu in which it was prayed that Francisco Jarque be declared an insolvent debtor, which soon thereafter was granted, with the result that an assignment of all the properties of the insolvent was executed in favor of Jose Corominas.}

^{On these facts, Judge Jose M. Hontiveros declined to order the foreclosure of the mortgages, but on the contrary sustained the special defenses of fatal defectiveness of the mortgages. In so doing we believe that the trial judge acted advisedly.}

Issue:

WON vessels are personal property?

Rulings:

Yes, vessels are personal property.

^{Vessels are considered personal property under the civil law. (Code of Commerce, article 585.) Similarly under the common law, vessels are personal property although occasionally referred to as a peculiar kind of personal property. (Reynolds vs. Nielson [1903], 96 Am. Rep., 1000; Atlantic Maritime Co vs. City of Gloucester [1917], 117 N. E., 924.) Since the term "personal property" includes vessels, they are subject to mortgage agreeably to the provisions of the Chattel Mortgage Law. (Act No. 1508, section 2.) Indeed, it has heretofore been accepted without discussion that a mortgage on a vessel is in nature a chattel mortgage. (McMicking vs. Banco Español-Filipino [1909], 13 Phil., 429; Arroyo vs. Yu de Sane [1930], 54 Phil., 511.) The only difference between a chattel mortgage of a vessel and a chattel mortgage of other personalty is that it is not now necessary for a chattel mortgage of a vessel to be noted n the registry of the register of deeds, but it is essential that a record of documents affecting the title to a vessel be entered in the record of the Collector of Customs at the port of entry. (Rubiso and Gelito vs. Rivera [1917], 37 Phil., 72; Arroyo vs. Yu de Sane, supra.) Otherwise a mortgage on a vessel is generally like other chattel mortgages as to its requisites and validity. (58 C.J., 92.)}

Makati Leasing & Finance Corp. v. Wearever Textile Mills, Inc., G.R. No. 58469, May 16, 1983

Full text: https://www.lawphil.net/judjuris/juri1983/may1983/gr_l_58469_1983.html

Facts:

It appears that in order to obtain financial accommodations from herein petitioner Makati Leasing and Finance Corporation, the private respondent Wearever Textile Mills, Inc., discounted and assigned several receivables with the former under a Receivable Purchase Agreement. To secure the collection of the receivables assigned, private respondent executed a Chattel Mortgage over certain raw materials inventory as well as a machinery described as an Artos Aero Dryer Stentering Range. Upon private respondent's default, petitioner filed a petition for extrajudicial foreclosure of the properties mortgage to it. However, the Deputy Sheriff assigned to implement the foreclosure failed to gain entry into private respondent's premises and was not able to effect the seizure of the aforedescribed machinery. Petitioner thereafter filed a complaint for judicial foreclosure with the Court of First Instance of Rizal, Branch VI, docketed as Civil Case No. 36040, the case before the lower court. Acting on petitioner's application for replevin, the lower court issued a writ of seizure, the enforcement of which was however subsequently restrained upon private respondent's filing of a motion for reconsideration. The Court of Appeals, in certiorari and prohibition proceedings subsequently filed by herein private respondent, set aside the Orders of the lower court and ordered the return of the drive motor seized by the sheriff pursuant to said Orders, after ruling that the machinery in suit cannot be the subject of replevin, much less of a chattel mortgage, because it is a real property pursuant to Article 415 of the new Civil Code, the same being attached to the ground by means of bolts and the only way to remove it from respondent's plant would be to drill out or destroy the concrete floor, the reason why all that the sheriff could do to enforce the writ was to take the main drive motor of said machinery. When petitioner returned the subject motor drive, it made itself unequivocably clear that said action was without prejudice to a motion for reconsideration of the Court of Appeals decision, as shown by the receipt duly signed by respondent's representative.  Considering that petitioner has reserved its right to question the propriety of the Court of Appeals' decision, the contention of private respondent that this petition has been mooted by such return may not be sustained.

            

The next and the more crucial question to be resolved in this Petition is whether the machinery in suit is real or personal property from the point of view of the parties, with petitioner arguing that it is a personality, while the respondent claiming the contrary, and was sustained by the appellate court, which accordingly held that the chattel mortgage constituted thereon is null and void, as contended by said respondent.

Issue:

WON a machinery can be a personal property?

Ruling:

Yes, a machinery can be a personal property. 

The court used the ruling in the case of Tumalad v. Vicencio,  where this Court, ruled that although there is no specific statement referring to the subject house as personal property, yet by ceding, selling or transferring a property by way of chattel mortgage defendants-appellants could only have meant to convey the house as chattel, or at least, intended to treat the same as such, so that they should not now be allowed to make an inconsistent stand by claiming otherwise. Moreover, the subject house stood on a rented lot to which defendants-appellants merely had a temporary right as lessee, and although this can not in itself alone determine the status of the property, it does so when combined with other factors to sustain the interpretation that the parties, particularly the mortgagors, intended to treat the house as personality. subject house as personality.

 

In the present case from the application of the abovequoted pronouncement. If a house of strong materials, like what was involved in the above Tumalad case, may be considered as personal property for purposes of executing a chattel mortgage thereon as long as the parties to the contract so agree and no innocent third party will be prejudiced thereby, there is absolutely no reason why a machinery, which is movable in its nature and becomes immobilized only by destination or purpose, may not be likewise treated as such. This is really because one who has so agreed is estopped from denying the existence of the chattel mortgage. As stated in Standard Oil Co. of New York v. Jaramillo, it is undeniable that the parties to a contract may by agreement treat as personal property that which by nature would be real property, as long as no interest of third parties would be prejudiced thereby.

 

Hence, a machinery can be a personal property.