G.R. No.

L-20329

Marc h 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. 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 BajacBajac, 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. Ardoin Street 6,

SOUTH: By No. Ardoin Street

2,

EAST: By 37 Canda Street, and WEST: Street. By Ardoin

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

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; xxx xxx xxx

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.

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. xxx xxx xxx

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. G.R. No. L-17870 September 29, 1962

MINDANAO BUS COMPANY, petitioner, vs. THE CITY ASSESSOR & TREASURER and the BOARD OF TAX APPEALS of Cagayan de Oro City,respondents. Binamira, Barria and Irabagon Vicente E. Sabellina for respondents. LABRADOR, J.: This is a petition for the review of the decision of the Court of Tax Appeals in C.T.A. Case No. 710 holding that the petitioner Mindanao Bus Company is liable to the payment of the realty tax on its maintenance and repair equipment hereunder referred to. Respondent City Assessor of Cagayan de Oro City assessed at P4,400 petitioner's above-mentioned equipment. Petitioner appealed the assessment to the respondent Board of Tax Appeals on the ground that the same are not realty. The Board of Tax Appeals of the City sustained the city assessor, so petitioner herein filed with the Court of Tax Appeals a petition for the review of the assessment. In the Court of Tax Appeals the parties submitted the following stipulation of facts: Petitioner and respondents, thru their respective counsels agreed to the following stipulation of facts: 1. That petitioner is a public utility solely engaged in transporting passengers and cargoes by motor trucks, over its authorized lines in the Island of Mindanao, collecting rates approved by the Public Service Commission; 2. That petitioner has its main office and shop at Cagayan de Oro City. It maintains Branch Offices and/or stations at Iligan for petitioner.

City, Lanao; Pagadian, Zamboanga del Sur; Davao City and Kibawe, Bukidnon Province; 3. That the machineries sought to be assessed by the respondent as real properties are the following: (a) Hobart Electric Welder Machine, appearing in the attached photograph, marked Annex "A"; (b) Storm Boring Machine, appearing in the attached photograph, marked Annex "B"; (c) Lathe machine with motor, appearing in the attached photograph, marked Annex "C"; (d) Black and Decker Grinder, appearing in the attached photograph, marked Annex "D"; (e) PEMCO Hydraulic Press, appearing in the attached photograph, marked Annex "E"; (f) Battery charger (Tungar charge machine) appearing in the attached photograph, marked Annex "F"; and (g) D-Engine Waukesha-M-Fuel, appearing in the attached photograph, marked Annex "G". 4. That these machineries are sitting on cement or wooden platforms as may be seen in the attached photographs which form part of this agreed stipulation of facts; 5. That petitioner is the owner of the land where it maintains and operates a garage for its TPU motor trucks; a repair shop; blacksmith and carpentry shops, and with these machineries which are placed therein, its TPU trucks are made; body constructed; and same are repaired in a condition to be serviceable in the TPU land transportation business it operates; 6. That these machineries have never been or were never used as industrial equipments to produce finished products for sale, nor to repair machineries, parts and the like offered to the general public indiscriminately for business or commercial purposes for which petitioner has never engaged in, to date.1awphl.nt The Court of Tax Appeals having sustained the respondent city assessor's ruling, and having denied a motion for reconsideration, petitioner brought the case to this Court assigning the following errors: 1. The Honorable Court of Tax Appeals erred in upholding respondents' contention that the questioned assessments are valid; and that said tools, equipments or machineries are immovable taxable real properties. 2. The Tax Court erred in its interpretation of paragraph 5 of Article 415 of the New Civil Code, and holding that pursuant thereto the movable equipments are taxable realties, by reason of their being intended or destined for use in an industry. 3. The Court of Tax Appeals erred in denying petitioner's contention that the respondent City Assessor's power to

assess and levy real estate taxes on machineries is further restricted by section 31, paragraph (c) of Republic Act No. 521; and 4. The Tax Court erred in denying petitioner's motion for reconsideration. Respondents contend that said equipments, tho movable, are immobilized by destination, in accordance with paragraph 5 of Article 415 of the New Civil Code which provides: Art. 415. The following are immovable properties: xxx xxx xxx

(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or works which may be carried on in a building or on a piece of land, and which tend directly to meet the needs of the said industry or works. (Emphasis ours.) Note that the stipulation expressly states that the equipment are placed on wooden or cement platforms. They can be moved around and about in petitioner's repair shop. In the case of B. H. Berkenkotter vs. Cu Unjieng, 61 Phil. 663, the Supreme Court said: Article 344 (Now Art. 415), 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 and 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 principle 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. (Emphasis ours.) So that movable equipments to be immobilized in contemplation of the law must first be "essential and principal elements" of an industry or works without which such industry or works would be "unable to function or carry on the industrial purpose for which it was established." We may here distinguish, therefore, those movable which become immobilized by destination because they are essential and principal elements in the industry for those which may not be so considered immobilized because they are merely incidental, not essential and principal. Thus, cash registers, typewriters, etc., usually found and used in hotels, restaurants, theaters, etc. are merely incidentals and are not and should not be considered immobilized by destination, for these businesses can continue or carry on their functions without these equity comments. Airline companies use forklifts, jeep-wagons, pressure pumps, IBM machines, etc. which are incidentals, not essentials, and thus retain their movable nature. On the other hand, machineries of breweries used in the manufacture of liquor and soft drinks, though movable in nature, are immobilized because they are essential to said industries; but the delivery trucks and adding machines which they

usually own and use and are found within their industrial compounds are merely incidental and retain their movable nature. Similarly, the tools and equipments in question in this instant case are, by their nature, not essential and principle municipal elements of petitioner's business of transporting passengers and cargoes by motor trucks. They are merely incidentals acquired as movables and used only for expediency to facilitate and/or improve its service. Even without such tools and equipments, its business may be carried on, as petitioner has carried on, without such equipments, before the war. The transportation business could be carried on without the repair or service shop if its rolling equipment is repaired or serviced in another shop belonging to another. The law that governs the determination of the question at issue is as follows: Art. 415. The following are immovable property: xxx xxx xxx

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

(5) Machinery, receptacles, instruments or implements intended 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; (Civil Code of the Phil.) Aside from the element of essentiality the above-quoted provision also requires that the industry or works be carried on in a building or on a piece of land. Thus in the case of Berkenkotter vs. Cu Unjieng, supra, the "machinery, liquid containers, and instruments or implements" are found in a building constructed on the land. A sawmill would also be installed in a building on land more or less permanently, and the sawing is conducted in the land or building. But in the case at bar the equipments in question are destined only to repair or service the transportation business, which is not carried on in a building or permanently on a piece of land , as demanded by the law. Said equipments may not, therefore, be deemed real property. Resuming what we have set forth above, we hold that the equipments in question are not absolutely essential to the petitioner's transportation business, and petitioner's business is not carried on in a building, tenement or on a specified land, so said equipment may not be considered real estate within the meaning of Article 415 (c) of the Civil Code. WHEREFORE, the decision subject of the petition for review is hereby set aside and the equipment in question declared not subject to assessment as real estate for the purposes of the real estate tax. Without costs. So ordered. 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.

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 196061 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: xxx xxx xxx

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. 1wph1.t 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. G.R. No. L-26278 August 4, 1927 , plaintiff-appellant, ET AL., defendants.

LEON SIBAL vs. EMILIANO J. VALDEZ EMILIANO J. VALDEZ, appellee.

J. E. Blanco for Felix B. Bautista and Santos and Benitez for appellee. JOHNSON, J.:

appellant.

The action was commenced in the Court of First Instance of the Province of Tarlac on the 14th day of December 1924. The facts are about as conflicting as it is possible for facts to be, in the trial causes. As a first cause of action the plaintiff alleged that the defendant Vitaliano Mamawal, deputy sheriff of the Province of Tarlac, by virtue of a writ of execution issued by the Court of First Instance of Pampanga, attached and sold to the defendant Emiliano J. Valdez the sugar cane planted by the plaintiff and his tenants on seven parcels of land described in the complaint in the third paragraph of the first cause of action; that within one year from the date of the attachment and sale the plaintiff offered to redeem said sugar cane and tendered to the defendant Valdez the amount sufficient to cover the price paid by the latter, the interest thereon and any assessments or taxes which he may have paid thereon after the purchase, and the interest corresponding thereto and that Valdez refused to accept the money and to return the sugar cane to the plaintiff. As a second cause of action, the plaintiff alleged that the defendant Emiliano J. Valdez was attempting to harvest the palay planted in four of the seven parcels mentioned in the first cause of action; that he had harvested and taken possession of the palay in one of said seven parcels and in another parcel described in the second cause of action, amounting to 300 cavans; and that all of said palay belonged to the plaintiff. Plaintiff prayed that a writ of preliminary injunction be issued against the defendant Emiliano J. Valdez his attorneys and agents, restraining them (1) from distributing him in the possession of the parcels of land described in the complaint; (2) from taking possession of, or harvesting the sugar cane in question; and (3) from taking possession, or harvesting the palay in said parcels of land. Plaintiff also prayed that a judgment be rendered in his favor and against the defendants ordering them to consent to the redemption of the sugar cane in question, and that the defendant Valdez be condemned to pay to the plaintiff the sum of P1,056 the value of palay harvested by him in the two parcels abovementioned ,with interest and costs. On December 27, 1924, the court, after hearing both parties and upon approval of the bond for P6,000 filed by the plaintiff, issued the writ of preliminary injunction prayed for in the complaint. The defendant Emiliano J. Valdez, in his amended answer, denied generally and specifically each and every allegation of the complaint and step up the following defenses:

(a) That the sugar cane in question had the nature of personal property and was not, therefore, subject to redemption; (b) That he was the owner of parcels 1, 2 and 7 described in the first cause of action of the complaint; (c) That he was the owner of the palay in parcels 1, 2 and 7; and (d) That he never attempted to harvest the palay in parcels 4 and 5. The defendant Emiliano J. Valdez by way of counterclaim, alleged that by reason of the preliminary injunction he was unable to gather the sugar cane, sugar-cane shoots (puntas de cana dulce) palay in said parcels of land, representing a loss to him of P8,375.20 and that, in addition thereto, he suffered damages amounting to P3,458.56. He prayed, for a judgment (1) absolving him from all liability under the complaint; (2) declaring him to be the absolute owner of the sugar cane in question and of the palay in parcels 1, 2 and 7; and (3) ordering the plaintiff to pay to him the sum of P11,833.76, representing the value of the sugar cane and palay in question, including damages. Upon the issues thus presented by the pleadings the cause was brought on for trial. After hearing the evidence, and on April 28, 1926, the Honorable Cayetano Lukban, judge, rendered a judgment against the plaintiff and in favor of the defendants (1) Holding that the sugar cane in question was personal property and, as such, was not subject to redemption; (2) Absolving the defendants from all liability under the complaint; and (3) Condemning the plaintiff and his sureties Cenon de la Cruz, Juan Sangalang and Marcos Sibal to jointly and severally pay to the defendant Emiliano J. Valdez the sum of P9,439.08 as follows: (a) P6,757.40, the value of the sugar cane; (b) 1,435.68, the value of the sugar-cane shoots; (c) 646.00, the value of palay harvested by plaintiff; (d) 600.00, the value of 150 cavans of palay which the defendant was not able to raise by reason of the injunction, at P4 cavan. 9,439.08 From that judgment the plaintiff appealed and in his assignments of error contends that the lower court erred: (1) In holding that the sugar cane in question was personal property and, therefore, not subject to redemption; (2) In holding that parcels 1 and 2 of the complaint belonged to Valdez, as well as parcels 7 and 8, and that the palay therein was planted by Valdez; (3) In holding that Valdez, by reason of the preliminary injunction failed to realized P6,757.40 from the sugar cane and P1,435.68 from sugar-cane shoots (puntas de cana dulce);

(4) In holding that, for failure of plaintiff to gather the sugar cane on time, the defendant was unable to raise palay on the land, which would have netted him the sum of P600; and. (5) In condemning the plaintiff and his sureties to pay to the defendant the sum of P9,439.08. It appears from the record: (1) That on May 11, 1923, the deputy sheriff of the Province of Tarlac, by virtue of writ of execution in civil case No. 20203 of the Court of First Instance of Manila (Macondray & Co., Inc. vs. Leon Sibal),levied an attachment on eight parcels of land belonging to said Leon Sibal, situated in the Province of Tarlac, designated in the second of attachment as parcels 1, 2, 3, 4, 5, 6, 7 and 8 (Exhibit B, Exhibit 2-A). (2) That on July 30, 1923, Macondray & Co., Inc., bought said eight parcels of land, at the auction held by the sheriff of the Province of Tarlac, for the sum to P4,273.93, having paid for the said parcels separately as follows (Exhibit C, and 2-A): Parcel 1 ............................................................. ........ 2 ............................................................. ........ 3 ............................................................. ........ 4 ............................................................. ........ 5 ............................................................. ........ 6 ............................................................. ........ 7 with the .......................... house thereon P1.00

2,000.00

120.93

1,000.00

1.00

1.00

150.00

8 ............................................................. ........ 4,273.93

1,000.00 ======== ==

(3) That within one year from the sale of said parcel of land, and on the 24th day of September, 1923, the judgment debtor, Leon Sibal, paid P2,000 to Macondray & Co., Inc., for the account of the redemption price of said parcels of land, without specifying the particular parcels to which said amount was to applied. The redemption price said eight parcels was reduced, by virtue of said transaction, to P2,579.97 including interest (Exhibit C and 2).

The record further shows: (1) That on April 29, 1924, the defendant Vitaliano Mamawal, deputy sheriff of the Province of Tarlac, by virtue of a writ of execution in civil case No. 1301 of the Province of Pampanga (Emiliano J. Valdez vs. Leon Sibal 1. the same parties in the present case), attached the personal property of said Leon Sibal located in Tarlac, among which was included the sugar cane now in question in the seven parcels of land described in the complaint (Exhibit A). (2) That on May 9 and 10, 1924, said deputy sheriff sold at public auction said personal properties of Leon Sibal, including the sugar cane in question to Emilio J. Valdez, who paid therefor the sum of P1,550, of which P600 was for the sugar cane (Exhibit A). (3) That on April 29,1924, said deputy sheriff, by virtue of said writ of execution, also attached the real property of said Leon Sibal in Tarlac, including all of his rights, interest and participation therein, which real property consisted of eleven parcels of land and a house and camarin situated in one of said parcels (Exhibit A). (4) That on June 25, 1924, eight of said eleven parcels, including the house and the camarin, were bought by Emilio J. Valdez at the auction held by the sheriff for the sum of P12,200. Said eight parcels were designated in the certificate of sale as parcels 1, 3, 4, 5, 6, 7, 10 and 11. The house and camarin were situated on parcel 7 (Exhibit A). (5) That the remaining three parcels, indicated in the certificate of the sheriff as parcels 2, 12, and 13, were released from the attachment by virtue of claims presented by Agustin Cuyugan and Domiciano Tizon (Exhibit A). (6) That on the same date, June 25, 1924, Macondray & Co. sold and conveyed to Emilio J. Valdez for P2,579.97 all of its rights and interest in the eight parcels of land acquired by it at public auction held by the deputy sheriff of Tarlac in connection with civil case No. 20203 of the Court of First Instance of Manila, as stated above. Said amount represented the unpaid balance of the redemption price of said eight parcels, after payment by Leon Sibal of P2,000 on September 24, 1923, fro the account of the redemption price, as stated above. (Exhibit C and 2). The foregoing statement of facts shows: (1) The Emilio J. Valdez bought the sugar cane in question, located in the seven parcels of land described in the first cause of action of the complaint at public auction on May 9 and 10, 1924, for P600. (2) That on July 30, 1923, Macondray & Co. became the owner of eight parcels of land situated in the Province of Tarlac belonging to Leon Sibal and that on September 24, 1923, Leon Sibal paid to Macondray & Co. P2,000 for the account of the redemption price of said parcels. (3) That on June 25, 1924, Emilio J. Valdez acquired from Macondray & Co. all of its rights and interest in the said eight parcels of land.

(4) That on June 25, 1924, Emilio J. Valdez also acquired all of the rights and interest which Leon Sibal had or might have had on said eight parcels by virtue of the P2,000 paid by the latter to Macondray. (5) That Emilio J. Valdez became the absolute owner of said eight parcels of land. The first question raised by the appeal is, whether the sugar cane in question is personal or real property. It is contended that sugar cane comes under the classification of real property as "ungathered products" in paragraph 2 of article 334 of the Civil Code. Said paragraph 2 of article 334 enumerates as real property the following: Trees, plants, and ungathered products, while they are annexed to the land or form an integral part of any immovable property." That article, however, has received in recent years an interpretation by the Tribunal Supremo de Espaa, which holds that, under certain conditions, growing crops may be considered as personal property. (Decision of March 18, 1904, vol. 97, Civil Jurisprudence of Spain.) Manresa, the eminent commentator of the Spanish Civil Code, in discussing section 334 of the Civil Code, in view of the recent decisions of the supreme Court of Spain, admits that growing crops are sometimes considered and treated as personal property. He says: No creemos, sin embargo, que esto excluya la excepcionque muchos autores hacen tocante a la venta de toda cosecha o de parte de ella cuando aun no esta cogida (cosa frecuente con la uvay y la naranja), y a la de lenas, considerando ambas como muebles. El Tribunal Supremo, en sentencia de 18 de marzo de 1904, al entender sobre un contrato de arrendamiento de un predio rustico, resuelve que su terminacion por desahucio no extingue los derechos del arrendario, para recolectar o percibir los frutos correspondientes al ao agricola, dentro del que nacieron aquellos derechos, cuando el arrendor ha percibido a su vez el importe de la renta integra correspondiente, aun cuando lo haya sido por precepto legal durante el curso del juicio, fundandose para ello, no solo en que de otra suerte se daria al desahucio un alcance que no tiene, sino en que, y esto es lo interesante a nuestro proposito, la consideracion de inmuebles que el articulo 334 del Codigo Civil atribuge a los frutos pendientes, no les priva del caracter de productos pertenecientes, como tales, a quienes a ellos tenga derecho, Ilegado el momento de su recoleccion. xxx xxx xxx

Mas actualmente y por virtud de la nueva edicion de la Ley Hipotecaria, publicada en 16 de diciembre de 1909, con las reformas introducidas por la de 21 de abril anterior, la hipoteca, salvo pacto expreso que disponga lo contrario, y cualquiera que sea la naturaleza y forma de la obligacion que garantice, no comprende los frutos cualquiera que sea la situacion en que se encuentre. (3 Manresa, 5. edicion, pags. 22, 23.) From the foregoing it appears (1) that, under Spanish authorities, pending fruits and ungathered products may be sold and transferred as personal property; (2) that the Supreme Court of Spain, in a case of ejectment of a lessee of an agricultural land, held that the lessee was entitled to gather the products corresponding to the agricultural year, because said fruits did not go with the land but belonged separately to the lessee; and (3) that under the Spanish Mortgage Law of 1909, as amended, the mortgage of a piece of land does not include the fruits

and products existing thereon, unless the contract expressly provides otherwise. An examination of the decisions of the Supreme Court of Louisiana may give us some light on the question which we are discussing. Article 465 of the Civil Code of Louisiana, which corresponds to paragraph 2 of article 334 of our Civil Code, provides: "Standing crops and the fruits of trees not gathered, and trees before they are cut down, are likewise immovable, and are considered as part of the land to which they are attached." The Supreme Court of Louisiana having occasion to interpret that provision, held that in some cases "standing crops" may be considered and dealt with as personal property. In the case of Lumber Co. vs. Sheriff and Tax Collector (106 La., 418) the Supreme Court said: "True, by article 465 of the Civil Code it is provided that 'standing crops and the fruits of trees not gathered and trees before they are cut down . . . are considered as part of the land to which they are attached, but the immovability provided for is only one in abstracto and without reference to rights on or to the crop acquired by others than the owners of the property to which the crop is attached. . . . The existence of a right on the growing crop is a mobilization by anticipation, a gathering as it were in advance, rendering the crop movable quoad the right acquired therein. Our jurisprudence recognizes the possible mobilization of the growing crop." (Citizens' Bank vs. Wiltz, 31 La. Ann., 244; Porche vs. Bodin, 28 La., Ann., 761; Sandel vs. Douglass, 27 La. Ann., 629; Lewis vs. Klotz, 39 La. Ann., 267.) "It is true," as the Supreme Court of Louisiana said in the case of Porche vs. Bodin (28 La. An., 761) that "article 465 of the Revised Code says that standing crops are considered as immovable and as part of the land to which they are attached, and article 466 declares that the fruits of an immovable gathered or produced while it is under seizure are considered as making part thereof, and incurred to the benefit of the person making the seizure. But the evident meaning of these articles, is where the crops belong to the owner of the plantation they form part of the immovable, and where it is seized, the fruits gathered or produced inure to the benefit of the seizing creditor. A crop raised on leased premises in no sense forms part of the immovable. It belongs to the lessee, and may be sold by him, whether it be gathered or not, and it may be sold by his judgment creditors. If it necessarily forms part of the leased premises the result would be that it could not be sold under execution separate and apart from the land. If a lessee obtain supplies to make his crop, the factor's lien would not attach to the crop as a separate thing belonging to his debtor, but the land belonging to the lessor would be affected with the recorded privilege. The law cannot be construed so as to result in such absurd consequences. In the case of Citizen's Bank vs. Wiltz (31 La. Ann., 244)the court said: If the crop quoad the pledge thereof under the act of 1874 was an immovable, it would be destructive of the very objects of the act, it would render the pledge of the crop objects of the act, it would render the pledge of the crop impossible, for if the crop was an inseparable part of the realty possession of the latter would be necessary to that of the former; but such is not the case. True, by article 465 C. C. it is provided that "standing crops and the fruits of trees not gathered and trees before they are cut down are likewise immovable and are considered as part of the land to which they are attached;" but the immovability provided for is only one in abstracto and without reference to rights on or to the crop acquired by other than the owners of the property to which the crop was attached. The immovability of a growing crop is in the order of

things temporary, for the crop passes from the state of a growing to that of a gathered one, from an immovable to a movable. The existence of a right on the growing crop is a mobilization by anticipation, a gathering as it were in advance, rendering the crop movable quoad the right acquired thereon. The provision of our Code is identical with the Napoleon Code 520, and we may therefore obtain light by an examination of the jurisprudence of France. The rule above announced, not only by the Tribunal Supremo de Espaa but by the Supreme Court of Louisiana, is followed in practically every state of the Union. From an examination of the reports and codes of the State of California and other states we find that the settle doctrine followed in said states in connection with the attachment of property and execution of judgment is, that growing crops raised by yearly labor and cultivation are considered personal property. (6 Corpuz Juris, p. 197; 17 Corpus Juris, p. 379; 23 Corpus Juris, p. 329: Raventas vs. Green, 57 Cal., 254; Norris vs. Watson, 55 Am. Dec., 161; Whipple vs. Foot, 3 Am. Dec., 442; 1 Benjamin on Sales, sec. 126; McKenzie vs. Lampley, 31 Ala., 526; Crinevs. Tifts and Co., 65 Ga., 644; Gillitt vs. Truax, 27 Minn., 528; Preston vs. Ryan, 45 Mich., 174; Freeman on Execution, vol. 1, p. 438; Drake on Attachment, sec. 249; Mechem on Sales, sec. 200 and 763.) Mr. Mechem says that a valid sale may be made of a thing, which though not yet actually in existence, is reasonably certain to come into existence as the natural increment or usual incident of something already in existence, and then belonging to the vendor, and then title will vest in the buyer the moment the thing comes into existence. (Emerson vs. European Railway Co., 67 Me., 387; Cutting vs. Packers Exchange, 21 Am. St. Rep., 63.) Things of this nature are said to have a potential existence. A man may sell property of which he is potentially and not actually possessed. He may make a valid sale of the wine that a vineyard is expected to produce; or the gain a field may grow in a given time; or the milk a cow may yield during the coming year; or the wool that shall thereafter grow upon sheep; or what may be taken at the next cast of a fisherman's net; or fruits to grow; or young animals not yet in existence; or the good will of a trade and the like. The thing sold, however, must be specific and identified. They must be also owned at the time by the vendor. (Hull vs. Hull, 48 Conn., 250 [40 Am. Rep., 165].) It is contended on the part of the appellee that paragraph 2 of article 334 of the Civil Code has been modified by section 450 of the Code of Civil Procedure as well as by Act No. 1508, the Chattel Mortgage Law. Said section 450 enumerates the property of a judgment debtor which may be subjected to execution. The pertinent portion of said section reads as follows: "All goods, chattels, moneys, and other property, both real and personal, * * * shall be liable to execution. Said section 450 and most of the other sections of the Code of Civil Procedure relating to the execution of judgment were taken from the Code of Civil Procedure of California. The Supreme Court of California, under section 688 of the Code of Civil Procedure of that state (Pomeroy, p. 424) has held, without variation, that growing crops were personal property and subject to execution. Act No. 1508, the Chattel Mortgage Law, fully recognized that growing crops are personal property. Section 2 of said Act provides: "All personal property shall be subject to mortgage, agreeably to the provisions of this Act, and a mortgage executed in pursuance thereof shall be termed a chattel mortgage." Section 7 in part provides: "If growing crops be mortgaged the mortgage may contain an agreement stipulating that the mortgagor binds himself properly to tend, care for and protect the crop while growing. It is clear from the foregoing provisions that Act No. 1508 was enacted on the assumption that "growing crops" are personal property. This

consideration tends to support the conclusion hereinbefore stated, that paragraph 2 of article 334 of the Civil Code has been modified by section 450 of Act No. 190 and by Act No. 1508 in the sense that "ungathered products" as mentioned in said article of the Civil Code have the nature of personal property. In other words, the phrase "personal property" should be understood to include "ungathered products." At common law, and generally in the United States, all annual crops which are raised by yearly manurance and labor, and essentially owe their annual existence to cultivation by man, . may be levied on as personal property." (23 C. J., p. 329.) On this question Freeman, in his treatise on the Law of Executions, says: "Crops, whether growing or standing in the field ready to be harvested, are, when produced by annual cultivation, no part of the realty. They are, therefore, liable to voluntary transfer as chattels. It is equally well settled that they may be seized and sold under execution. (Freeman on Executions, vol. p. 438.) We may, therefore, conclude that paragraph 2 of article 334 of the Civil Code has been modified by section 450 of the Code of Civil Procedure and by Act No. 1508, in the sense that, for the purpose of attachment and execution, and for the purposes of the Chattel Mortgage Law, "ungathered products" have the nature of personal property. The lower court, therefore, committed no error in holding that the sugar cane in question was personal property and, as such, was not subject to redemption. All the other assignments of error made by the appellant, as above stated, relate to questions of fact only. Before entering upon a discussion of said assignments of error, we deem it opportune to take special notice of the failure of the plaintiff to appear at the trial during the presentation of evidence by the defendant. His absence from the trial and his failure to cross-examine the defendant have lent considerable weight to the evidence then presented for the defense. Coming not to the ownership of parcels 1 and 2 described in the first cause of action of the complaint, the plaintiff made a futile attempt to show that said two parcels belonged to Agustin Cuyugan and were the identical parcel 2 which was excluded from the attachment and sale of real property of Sibal to Valdez on June 25, 1924, as stated above. A comparison of the description of parcel 2 in the certificate of sale by the sheriff (Exhibit A) and the description of parcels 1 and 2 of the complaint will readily show that they are not the same. The description of the parcels in the complaint is as follows: 1. La caa dulce sembrada por los inquilinos del ejecutado Leon Sibal 1. en una parcela de terreno de la pertenencia del citado ejecutado, situada en Libutad, Culubasa, Bamban, Tarlac, de unas dos hectareas poco mas o menos de superficie. 2. La caa dulce sembrada por el inquilino del ejecutado Leon Sibal 1., Ilamado Alejandro Policarpio, en una parcela de terreno de la pertenencia del ejecutado, situada en Dalayap, Culubasa, Bamban, Tarlac de unas dos hectareas de superficie poco mas o menos." The description of parcel 2 given in the certificate of sale (Exhibit A) is as follows: 2a. Terreno palayero situado en Culubasa, Bamban, Tarlac, de 177,090 metros cuadrados de superficie, linda al N. con Canuto Sibal, Esteban Lazatin and Alejandro Dayrit; al E. con Francisco Dizon, Felipe Mau and others; al S. con Alejandro Dayrit, Isidro Santos and Melecio Mau; y al O. con Alejandro

Dayrit and Paulino Vergara. Tax No. 2854, vador amillarado P4,200 pesos. On the other hand the evidence for the defendant purported to show that parcels 1 and 2 of the complaint were included among the parcels bought by Valdez from Macondray on June 25, 1924, and corresponded to parcel 4 in the deed of sale (Exhibit B and 2), and were also included among the parcels bought by Valdez at the auction of the real property of Leon Sibal on June 25, 1924, and corresponded to parcel 3 in the certificate of sale made by the sheriff (Exhibit A). The description of parcel 4 (Exhibit 2) and parcel 3 (Exhibit A) is as follows: Parcels No. 4. Terreno palayero, ubicado en el barrio de Culubasa,Bamban, Tarlac, I. F. de 145,000 metros cuadrados de superficie, lindante al Norte con Road of the barrio of Culubasa that goes to Concepcion; al Este con Juan Dizon; al Sur con Lucio Mao y Canuto Sibal y al Oeste con Esteban Lazatin, su valor amillarado asciende a la suma de P2,990. Tax No. 2856. As will be noticed, there is hardly any relation between parcels 1 and 2 of the complaint and parcel 4 (Exhibit 2 and B) and parcel 3 (Exhibit A). But, inasmuch as the plaintiff did not care to appear at the trial when the defendant offered his evidence, we are inclined to give more weight to the evidence adduced by him that to the evidence adduced by the plaintiff, with respect to the ownership of parcels 1 and 2 of the compliant. We, therefore, conclude that parcels 1 and 2 of the complaint belong to the defendant, having acquired the same from Macondray & Co. on June 25, 1924, and from the plaintiff Leon Sibal on the same date. It appears, however, that the plaintiff planted the palay in said parcels and harvested therefrom 190 cavans. There being no evidence of bad faith on his part, he is therefore entitled to one-half of the crop, or 95 cavans. He should therefore be condemned to pay to the defendant for 95 cavans only, at P3.40 a cavan, or the sum of P323, and not for the total of 190 cavans as held by the lower court. As to the ownership of parcel 7 of the complaint, the evidence shows that said parcel corresponds to parcel 1 of the deed of sale of Macondray & Co, to Valdez (Exhibit B and 2), and to parcel 4 in the certificate of sale to Valdez of real property belonging to Sibal, executed by the sheriff as above stated (Exhibit A). Valdez is therefore the absolute owner of said parcel, having acquired the interest of both Macondray and Sibal in said parcel. With reference to the parcel of land in Pacalcal, Tarlac, described in paragraph 3 of the second cause of action, it appears from the testimony of the plaintiff himself that said parcel corresponds to parcel 8 of the deed of sale of Macondray to Valdez (Exhibit B and 2) and to parcel 10 in the deed of sale executed by the sheriff in favor of Valdez (Exhibit A). Valdez is therefore the absolute owner of said parcel, having acquired the interest of both Macondray and Sibal therein. In this connection the following facts are worthy of mention: Execution in favor of Macondray & Co., May 11, 1923. Eight parcels of land were attached under said execution. Said parcels of land were sold to Macondray & Co. on the 30th day of July, 1923. Rice paid P4,273.93. On September 24, 1923, Leon Sibal paid to Macondray & Co. P2,000 on the redemption of said parcels of land. (See Exhibits B and C ). Attachment, April 29, 1924, in favor of Valdez. Personal property of Sibal was attached, including the sugar cane in question. (Exhibit A) The said personal property so attached, sold at public auction May 9 and 10, 1924. April 29, 1924, the real property was attached under the

execution in favor of Valdez (Exhibit A). June 25, 1924, said real property was sold and purchased by Valdez (Exhibit A). June 25, 1924, Macondray & Co. sold all of the land which they had purchased at public auction on the 30th day of July, 1923, to Valdez. As to the loss of the defendant in sugar cane by reason of the injunction, the evidence shows that the sugar cane in question covered an area of 22 hectares and 60 ares (Exhibits 8, 8-b and 8-c); that said area would have yielded an average crop of 1039 picos and 60 cates; that one-half of the quantity, or 519 picos and 80 cates would have corresponded to the defendant, as owner; that during the season the sugar was selling at P13 a pico (Exhibit 5 and 5-A). Therefore, the defendant, as owner, would have netted P 6,757.40 from the sugar cane in question. The evidence also shows that the defendant could have taken from the sugar cane 1,017,000 sugar-cane shoots (puntas de cana) and not 1,170,000 as computed by the lower court. During the season the shoots were selling at P1.20 a thousand (Exhibits 6 and 7). The defendant therefore would have netted P1,220.40 from sugar-cane shoots and not P1,435.68 as allowed by the lower court. As to the palay harvested by the plaintiff in parcels 1 and 2 of the complaint, amounting to 190 cavans, one-half of said quantity should belong to the plaintiff, as stated above, and the other half to the defendant. The court erred in awarding the whole crop to the defendant. The plaintiff should therefore pay the defendant for 95 cavans only, at P3.40 a cavan, or P323 instead of P646 as allowed by the lower court. The evidence also shows that the defendant was prevented by the acts of the plaintiff from cultivating about 10 hectares of the land involved in the litigation. He expected to have raised about 600 cavans of palay, 300 cavans of which would have corresponded to him as owner. The lower court has wisely reduced his share to 150 cavans only. At P4 a cavan, the palay would have netted him P600. In view of the foregoing, the judgment appealed from is hereby modified. The plaintiff and his sureties Cenon de la Cruz, Juan Sangalang and Marcos Sibal are hereby ordered to pay to the defendant jointly and severally the sum of P8,900.80, instead of P9,439.08 allowed by the lower court, as follows: P6,757.40 1,220.40 323.00 600.00 for the sugar cane; for the sugar cane shoots; for the palay harvested by plaintiff in parcels 1 and 2; for the palay which defendant could have raised.

MARIANO L. CASTILLO, HIPOLITA DYTIAPCO CASTILLO, AIDA CASTILLO HERRERA, HERMITO HERRERA, JOSE L. CASTILLO, LILIA MACEDA CASTILLO, TERESITA L. CASTILLO, REGISTER OF DEEDS OF BATANGAS and THE INTERMEDIATE APPELLATE COURT, respondents. Castro, Nardo, Quintanilla, Gonzales & Macatangay Law Office for respondents. PARAS, J.: This is a petition for review on certiorari of the April 26, 1984 Decision of the then Intermediate Appellate Court *reversing the February 6, 1976 Decision of the then Court of First Instance of Batangas, Branch VI, in Civil Case No. 2044. The antecedental facts of this case, as found by the then Intermediate Appellate Court, are as follows: Sometime in 1951, the late Modesto Castillo applied for the registration of two parcels of land, Lots 1 and 2, located in Banadero, Tanauan, Batangas, described in Plan Psu-119166, with a total area of 39,755 square meters. In a decision dated August 31, 1951, the said Modesto Castillo, married to Amanda Lat, was declared the true and absolute owner of the land with the improvements thereon, for which Original Certificate of Title No. 0665 was, issued to him by the Register of Deeds at Batangas, Batangas, on February 7, 1952. By virtue of an instrument dated March 18, 1960, the said Lots 1 and 2 covered by Original Certificate of Title No. 0-665, together with Lot No. 12374 covered by Transfer Certificate of Title No. 3254-A and Lot No. 12377 covered by Transfer Certificate of Title No. 3251-A, were consolidated and sub-divided into Lots 1 to 9 under Pcs-1046. After the death of Modesto Castillo, or on August 31, 1960, Amanda Lat Vda. de Castillo, et al., executed a deed of partition and assumption of mortgage in favor of Florencio L. Castillo, et al., as a result of which Original Certificate of Title No. D-665 was cancelled, and in lieu thereof, new transfer cerfificates of title were issued to Florencio Castillo, et al., to wit: Transfer Certificate of Title No. 21703 (Lot 4) (and) Transfer Certificate of Title No. 21704 to Florencio Castillo (Lot 5); Transfer Certificate of Title No. T21708 to Carlos L. Castillo (Lot 7); Transfer Certificate of Title No. T-21712 to Mariano L. Castillo (Lot 6); Transfer Certificate of Title No. T21713 to Jose L. Castillo (Lot 9); Transfer Certificate of Title No. T-21718 to Aida C. Herrera (Lot 2); and Transfer Certificate of Title No. T-21727 to Teresita L. Castillo (Lot 8). The Republic of the Philippines filed Civil Case No. 2044 with the lower court for the annulment of the certificates of title issued to defendants Amanda Lat Vda. de Castillo, et al., as heirs/successors of Modesto Castillo, and for the reversion of the lands covered thereby (Lots 1 and 2, Psu-119166) to the State. It was alleged that said lands had always formed part of the Taal Lake, washed and inundated by the waters thereof, and being of public ownership, it could not be the subject of registration as private property. Appellants herein, defendants below, alleged in their answer that the Government's action was already barred by the

8,900.80 ============ In all other respects, the judgment appealed from is hereby affirmed, with costs. So ordered. G.R. No. L-69002 June 30, 1988 REPUBLIC OF THE PHILIPPINES, petitioner, vs. AMANDA LAT VDA. DE CASTILLO, FLORENCIO T. CASTILLO, SOLEDAD LOTA CASTILLO, CARLOS L. CASTILLO, NIEVES KATIGBAK CASTILLO,

decision of the registration court; that the action has prescribed; and that the government was estopped from questioning the ownership and possession of appellants. After trial, the then Court of First Instance of Batangas, Branch VI, presided over by Honorable Benjamin Relova, in a Decision dated February 6, 1976 (Record on Appeal, pp. 62-69), ruled in favor of herein petitioner Republic of the Philippines. The decretal portion of the said decision, reads: WHEREFORE, the Register of Deeds of Batangas is hereby ordered to cancel Original Certificate of Title No. 0-665 in the name of Modesto Castillo and the subsequent Transfer of Certificates of Title issued over the property in the names of the defendants. Lots Nos. 1 and 2 of Plan Psu-19166 are hereby declared public lands belonging to the state. Without pronouncement as to costs. The Court of Appeals, on appeal, in a Decision promulgated on April 26,1984, reversed and set aside the appealed decision, and dismissed the complaint (Record, pp. 31-41). Herein petitioner filed a Motion for Reconsideration (Record, pp. 42-51), but the same was denied in a Resolution promulgated on October 12,1984 (Record, p. 52). Hence, the instant petition. The sole issue raised in this case is whether or not the decision of the Land Registration Court involving shore lands constitutes res adjudicata. There is no question that one of the requisites of res judicata is that the court rendering the final judgment must have jurisdiction over the subject matter (Ramos v. Pablo, 146 SCRA 24 [1986]; that shores are properties of the public domain intended for public use (Article 420, Civil Code) and, therefore, not registrable. Thus, it has long been settled that portions of the foreshore or of the territorial waters and beaches cannot be registered. Their inclusion in a certificate of title does not convert the same into properties of private ownership or confer title upon the registrant (Republic v. Ayala y Cia, 14 SCRA, 259 [1965], citing the cases of Dizon, et al. v. Bayona, et al., 98 Phil. 943; and Dizon, et al. v. Rodriguez, et al., 13 SCRA 704). But an important bone of contention is the nature of the lands involved in this case. Petitioner contends "that "Lots 1 and 2, PSU-119166 had always formed part of the Taal Lake, washed and inundated by the waters thereof. Consequently, the same were not subject to registration, being outside the commerce of men; and that since the lots in litigation are of public domain (Art. 502), par. 4 Civil Code) the registration court (of 1951) did not have jurisdiction to adjudicate said lands as private property, hence, res judicata does not apply. (Rollo, pp. 37-38). The Government presented both oral and documentary evidence. As summarized by the Intermediate Appelate Court (now Court of Appeals), the testimonies of the witnesses for the petitioner are as follows: 1. Rosendo Arcenas, a Geodetic Engineer connected with the Bureau of Lands since 1961, testified to the effect that Lots 1 and 2, Psu-119166, which are the lots in question, adjoin the cadastral survey of Tanauan, Batangas (Cad. 168); that the original boundary of the original cadastral survey was

foreshore land as indicated on the plan; that the cadastral survey of Tanauan was executed sometime in 1923; that the first survey executed of the land after 1923 was the one executed in 1948 under Plan Psu-119166 that in the relocation survey of the disputed lots in 1962 under SWO-40601, said lots were annotated on the plan as claimed by the Republic of the Philippines in the same manner that it was so annotated in Plan Psu-119166; thus showing that the Government was the only claimant of the land during the survey in 1948; that during the relocation survey made in 1962, old points cannot be Identified or located because they were under water by about forty centimeters; that during the ocular inspection of the premises on November 23, 1970, he found that 2 monuments of the lots in question were washed out by the waters of the Baloyboy Creek; that he also found duck pens along the lots in question; that there are houses in the premises as well as some camotes and bananas; and that he found also some shells ('suso') along the banks of the Taal lake (Tsn, Nov. 16, 1970, pp. 13-21; Feb. 16, 1971, pp. 4-36). 2. Braulio Almendral testified to the effect that he is a resident of Tanauan, Batangas, near the Taal lake; that like himself there are other occupants of the land among whom are Atanacio Tironas, Gavino Mendoza, Juliano Tirones, Agapito Llarena, etc.; that it was they who filled up the area to make it habitable; that they filled up the area with shells and sand; that their occupation is duck raising; and that the Castillos never stayed in or occupied the premises (Tsn, Nov. 16, 1970, pp. 32-50). 3. Arsenio Ibay, a Geodetic Engineer connected with the Bureau of Lands since 1968, also testified to the effect that in accordance with the cadastral plan of Tanauan, the only private claim of Sixto Castillo referred to Lots 1006 to 1008; that the Castillos never asserted any private claim to the lots in question during the cadastral survey;' that in the preparation of plan Psu-119166, Lots 12374 and 12377 were made as reference to conform to previously approved plans; that lot 12374 is a portion of cadastral lot 10107, SWO-86738 while Lot 22377 is a portion of Lot 10108 of the same plan (Tsn, Nov. 25, 1970, pp. 115-137). 4. Jose Isidro, a Land Investigator of the Bureau of Lands, testified to the effect that pursuant to the order of the Director of Lands, he, together with Engineer Rufino Santiago and the barrio captain of Tanauan, Batangas, conducted an investigation of the land in question; that he submitted a report of investigation, dated October 19, 1970 (Exh. H-1); that portions of the lot in question were covered by public land applications filed by the occupants thereof; that Engineer Santiago also submitted a report (Exh. H-8); that he had notified Dr. Mariano Castillo before conducting the investigation (Tsn, Nov. 25,1970, pp. 137-162). 5. Rufino Santiago, another Geodetic Engineer connected with the Bureau of Lands, testified to the effect that on October 19,1970, he submitted a report of investigation regarding the land in

question; that he noted on the plan Exhibit H-9 the areas on which the houses of Severo Alcantara and others were built; that he found that the land was planted to coconuts which are about 15 years old; that the land is likewise improved with rice paddies; that the occupants thereof are duck raisers; that the area had been elevated because of the waste matters and duck feeds that have accumulated on the ground through the years (Tsn, Nov. 26,1970, pp. 163-196). 6. Pablo Tapia, Barrio Captain of Tanauan, Batangas, since 1957, testified to the effect that the actual occupants of Lots I and 2 are Atanacio Tirones,tc.; that during the war the water line reached up to a point marked Exhibit A-9 and at present the water has receded to a point up to Exhibit A-12; that the reasons why the waters of Taal lake have receded to the present level is because of the fillings made by the people living in Lots 1 and 2; that there are several duck pens all over the place; that the composition of the soil is a mixture of mud and duck feeds; that improvements consist of bananas, bamboos and palay; that the shoreline is not even in shape because of the Baloyboy Creek; that the people in the area never came to know about the registration case in which the lots in question were registered; that the people living in the area, even without any government aid, helped one another in the construction of irrigated rice paddies; that he helped them file their public land applications for the portions occupied by them; that the Castillos have never been in possession of the premises; that the people depend upon duck raising as their means of their livelihood; that Lots 1 and 2 were yet inexistent during the Japanese occupation; and that the people started improving the area only during liberation and began to build their houses thereon. (Tsn, Nov. 26,1970, pp. 197-234). Among the exhibits formally offered by the Government are: the Original Plan of Tanauan, Batangas, particularly the Banader Estate, the Original Plan of PSU-119166, Relocation Verification Survey Plan, maps, and reports of Geodetic Engineers, all showing the original shoreline of the disputed areas and the fact that the properties in question were under water at the time and are still under water especially during the rainy season (Hearing, March 17,1971, TSN, pp. 46-47). On the other hand, private respondents maintain that Lots 1 and 2 have always been in the possession of the Castillo family for more than 76 years and that their possession was public, peaceful, continuous, and adverse against the whole world and that said lots were not titled during the cadastral survey of Tanauan, because they were still under water as a result of the eruption of Taal Volcano on May 5, 1911 and that the inundation of the land in question by the waters of Taal Lake was merely accidental and does not affect private respondents' ownership and possession thereof pursuant to Article 778 of the Law of Waters. They finally insisted that this issue of facts had been squarely raised at the hearing of the land registration case and, therefore, res judicata (Record on Appeal, pp. 63-64). They submitted oral and documentary evidence in support of their claim. Also summarized by respondent Appellate Court, the testimonies of the witnesses of private respondents are as follows:

1. Silvano Reano, testified to the effect that he was the overseer of the property of the late Modesto Castillo located at Banadero,Tanauan, Batangas since 1944 to 1965; that he also knows Lots 1 and 2, the parcels of land in question, since he was managing said property; that the occupants of said Lots 1 and 2 were engaged in duck raising; that those occupants were paying the Castillos certain amount of money because their animals used to get inside the lots in question; that he was present during the survey of the land in 1948; and that aside from the duck pens which are built in the premises, the land is planted to rice (Tsn, April 14, 1971, pp. 62-88). 2. Dr. Mariano Castillo, testified to the effect that the late Modesto Castillo was a government official who held high positions in the Government; and that upon his death the land was subdivided among his legal heirs. (Appellee's Brief, pp. 4-9). As above-stated, the trial court decided the case in favor of the government but the decision was reversed on appeal by the Court of Appeals. A careful study of the merits of their varied contentions readily shows that the evidence for the government has far outweighed the evidence for the private respondents. Otherwise stated, it has been satisfactorily established as found by the trial court, that the properties in question were the shorelands of Taal Lake during the cadastral survey of 1923. Explaining the first survey of 1923, which showed that Lots 1 and 2 are parts of the Taal Lake, Engineer Rosendo Arcenas testified as follows: ATTY. AGCAOILI: Q Now, you mentioned Engineer that a subject matter of that plan which appears to be Lots 1 and 2 are adjoining cadastral lots of the Tanauan Cadastre, now, will you please state to the Court what is the basis of that statement of yours? A The basis of that statement is the plan itself, because there is here an annotation that the boundary on the northeastern side is Tanauan Cadastre 168 which indicates that the boundary of the original cadastral survey of Tanauan Cadastre way back in the year 1923 adjoins a foreshore land which is also indicated in this plan as foreshore lands of Taal lake, sir. xxx xxx xxx Q Now, on this plan Exhibit "A2", there are two lots indicated namely, Lots 12374 and 12377, what do these lots represent?

A This is the cadastral lot executed in favor of a certain Modesto Castillo that corresponds to Lots 12374 and another Lot 12377, sir. Q At the time this survey plan Psu-119166 and marked as Exhibit "A-2" was executed in 1948, were these lots 1 and 2 already in existence as part of the cadastral survey? A No, sir, because there is already a foreshore boundary. Q Do I understand from you Mr. Witness at the time of the survey of this land these two lots form part of this portion? A Yes, sir. Q When again was the cadastral survey of Tanauan, Batangas, executed if you know? A In the year 1923, sir. (Hearing of Nov. 16, 1970, TSN pp. 15-17). Such fact was further verified in the Verification-Relocation Survey of 1948 by Engineer Arcenas who conducted said survey himself and reported the following: That as per original plan Psu-119166, it appears that Lot 1 and Lot 2, Psu-119166 surveyed and approved in the name of Modesto Castillo is a portion of Taal Lake and as such it appears to be under water during the survey of cadastral Lot No. 12374 and Lot No. 12377, which was surveyed and approved in the name of Modesto Castillo under Cad. 168. To support this theory is the annotation appearing and printed along lines 2-3-4-5 of Lot 1, Psu-119166 and along lines 4-5-6 of Lot 2, Psu119166 which notations clearly indicates that such boundary of property was a former shorelines of Taal Lake, in other words, it was the extent of cultivation being the shorelines and the rest of the area going to the southwestern direction are already covered by water level. Another theory to bolster and support this Idea is the actual location now in the verificationrelocation survey of a known geographic point were Barrio Boundary Monument (BBM N. 22) is under water level quite for sometimes as evidence by earthworks (collection of mud) that amount over its surface by eighty (80) centimeters below the ground, see notation appearing on verificationrelocation plan previously submitted. (ReVerification-Relocation Survey Exhibits, pp. 64-65).

Said surveys were further confirmed by the testimonies of witnesses to the effect that from 1950 to 1969, during rainy season, the water of Taal lake even went beyond the questioned lots; and that the water, which was about one (1) foot, stayed up to more or less two (2) to three (3) months (Testimonies of Braulio Almendral and Anastacio Tirones both residents of Banadero, Tanauan, Batangas (Hearing of Nov. 16, 1970, TSN, pp. 41-42 and Hearing of Nov. 23, 1970, TSN, pp. 93, 98-99, respectively). In the Relocation Survey of 1962, there were no definite boundary or area of Lots 1 and 2 because a certain point is existing which was under water by 40 centimeters (Testimony of Engineer Arcena, Hearing of Nov. 16,1970, TSN, p. 20). Lakeshore land or lands adjacent to the lake, like the lands in question must be differentiated from foreshore land or that part of the land adjacent to the sea which is alternately covered and left dry by the ordinary flow of the tides (Castillo, Law on Natural Resources, Fifth Edition, 1954, p. 67). Such distinction draws importance from the fact that accretions on the bank of a lake, like Laguna de Bay, belong to the owners of the estate to which they have been added (Gov't. v. Colegio de San Jose, 53 Phil. 423) while accretion on a sea bank still belongs to the public domain, and is not available for private ownership until formally declared by the government to be no longer needed for public use (Ignacio v. Director of Lands, 108 Phil. 335 [1960]). But said distinction will not help private respondents because there is no accretion shown to exist in the case at bar. On the contrary, it was established that the occupants of the lots who were engaged in duck raising filled up the area with shells and sand to make it habitable. The defense of long possession is likewise not available in this case because, as already ruled by this Court, mere possession of land does not by itself automatically divest the land of its public character (Cuevas v. Pineda, 143 SCRA 674 [1968]). PREMISES CONSIDERED, the April 26,1984 Decision of the then Intermediate Appellate Court is hereby SET ASIDE and REVERSED and the February 6,1976 Decision of the then Court of First Instance of Batangas is hereby AFFIRMED and REINSTATED. SO ORDERED. G.R. No. L-31271 April 29, 1974 ROMEO MARTINEZ and LEONOR SUAREZ, spouses, petitionersappellants, vs. HON. COURT OF APPEALS, SECRETARY and UNDERSECRETARY OF PUBLIC WORKS & COMMUNICATIONS, respondents-appellees. ESGUERRA, J.: Petition for review by certiorari of the judgment of the Court of Appeals dated November 17, 1969 in its CA-G.R. 27655-R which reverses the judgment of the Court of First Instance of Pampanga in favor of petitioners-appellants against the Secretary and Undersecretary of Public Works & Communications in the case instituted to annul the order of November 25, 1958 of respondent Secretary of Public Works & Communications directing the removal by the petitioners of the dikes they had constructed on Lot No. 15856 of the Register of Deeds of Pampanga, which order was issued pursuant to the provisions of Republic Act No. 2056. The dispositive portion of the judgment of reversal of the Court of Appeals reads as follows:

IN VIEW OF THE FOREGOING CONSIDERATIONS, the judgment appealed from is hereby reversed, and another entered: [1] upholding the validity of the decision reached by the respondent officials in the administrative case; [2] dissolving the injunction issued by the Court below; and [3] cancelling the registration of Lot No. 2, the disputed area, and ordering its reconveyance to the public domain. No costs in this instance. The background facts are stated by the Court of Appeals as follows: The spouses Romeo Martinez and Leonor Suarez, now petitionersappellees, are the registered owners of two (2) parcels of land located in Lubao, Pampanga, covered by transfer certificate of title No. 15856 of the Register of Deeds of the said province. Both parcels of land are fishponds. The property involved in the instant case is the second parcel mentioned in the above-named transfer certificate of title.chanroblesvirtualawlibrary chanrobles virtual law library The disputed property was originally owned by one Paulino Montemayor, who secured a "titulo real" over it way back in 1883. After the death of Paulino Montemayor the said property passed to his successors-in-interest, Maria Montemayor and Donata Montemayor, who in turn, sold it, as well as the first parcel, to a certain Potenciano Garcia.chanroblesvirtualawlibrary chanrobles virtual law library Because Potenciano Garcia was prevented by the then municipal president of Lubao, Pedro Beltran, from restoring the dikes constructed on the contested property, the former, on June 22, 1914, filed Civil Case No. 1407 with the Court of First Instance against the said Pedro Beltran to restrain the latter in his official capacity from molesting him in the possession of said second parcel, and on even date, applied for a writ of preliminary injunction, which was issued against said municipal president. The Court, by decision promulgated June 12, 1916, declared permanent the preliminary injunction, which, decision, on appeal, was affirmed by the Supreme Court on August 21, 1918. From June 22, 1914, the dikes around the property in question remained closed until a portion thereof was again opened just before the outbreak of the Pacific War.chanroblesvirtualawlibrary chanrobles virtual law library On April 17, 1925. Potenciano Garcia applied for the registration of both parcels of land in his name, and the Court of First Instance of Pampanga, sitting as land registration court, granted the registration over and against the opposition of the Attorney-General and the Director of Forestry. Pursuant to the Court's decision, original certificate of title No. 14318, covering said parcels 1 and 2 was issued to the spouses Potenciano Garcia and Lorenza Sioson.chanroblesvirtualawlibrary chanrobles virtual law library These parcels of land were subsequently bought by Emilio Cruz de Dios in whose name transfer certificate of title No. 1421 was first issued on November 9, 1925.chanroblesvirtualawlibrary chanrobles virtual law library Thereafter, the ownership of these properties changed hands until eventually they were acquired by the herein appellee spouses who hold them by virtue of transfer certificate of title No. 15856.chanroblesvirtualawlibrary chanrobles virtual law library To avoid any untoward incident, the disputants agreed to refer the matter to the Committee on Rivers and Streams, by then composed of the Honorable Pedro Tuason, at that time Secretary of Justice, as chairman, and the Honorable Salvador Araneta and Vicente Orosa, Secretary of Agriculture and National Resources and Secretary of Public Works and Communications, respectively, as members. This committee thereafter appointed a Sub-Committee to investigate the case and to conduct an ocular inspection of the contested property, and on March 11, 1954, said Sub-Committee submitted its report to the Committee on

Rivers and Streams to the effect that Parcel No. 2 of transfer certificate of title No. 15856 was not a public river but a private fishpond owned by the herein spouses.chanroblesvirtualawlibrary chanrobles virtual law library On July 7, 1954, the Committee on Rivers and Streams rendered its decision the dispositive part of which reads: "In view of the foregoing considerations, the spouses Romeo Martinez and Leonor Suarez should be restored to the exclusive possession, use and enjoyment of the creek in question which forms part of their registered property and the decision of the courts on the matter be given full force and effect." The municipal officials of Lubao, led by Acting Mayor Mariano Zagad, apparently refused to recognize the above decision, because on September 1, 1954, the spouses Romeo Martinez and Leonor Suarez instituted Civil Case No. 751 before the Court of First Instance of Pampanga against said Mayor Zagad, praying that the latter be enjoined from molesting them in their possession of their property and in the construction of the dikes therein. The writ of preliminary injunction applied for was issued against the respondent municipal Mayor, who immediately elevated the injunction suit for review to the Supreme Court, which dismissed Mayor Zagad's petition on September 7, 1953. With this dismissal order herein appellee spouses proceeded to construct the dikes in the disputed parcel of land.chanroblesvirtualawlibrary chanrobles virtual law library Some four (4) years later, and while Civil Case No. 751 was still pending the Honorable Florencio Moreno, then Secretary of Public Works and Communications, ordered another investigation of the said parcel of land, directing the appellees herein to remove the dikes they had constructed, on the strength of the authority vested in him by Republic Act No. 2056, approved on June 13, 1958, entitled "An Act To Prohibit, Remove and/or Demolish the Construction of Dams. Dikes, Or Any Other Walls In Public Navigable Waters, Or Waterways and In Communal Fishing Grounds, To Regulate Works in Such Waters or Waterways And In Communal Fishing Grounds, And To Provide Penalties For Its Violation, And For Other Purposes. 1 The said order which gave rise to the instant proceedings, embodied a threat that the dikes would be demolished should the herein appellees fail to comply therewith within thirty (30) days.chanroblesvirtualawlibrary chanrobles virtual law library The spouses Martinez replied to the order by commencing on January 2, 1959 the present case, which was decided in their favor by the lower Court in a decision dated August 10, 1959, the dispositive part of which reads: "WHEREFORE, in view of the foregoing considerations, the Court hereby declares the decision, Exhibit S, rendered by the Undersecretary of Public Works and Communications null and void; declares the preliminary injunction, hereto for issued, permanent, and forever enjoining both respondents from molesting the spouses Romeo Martinez and Leonor Suarez in their possession, use and enjoyment of their property described in Plan Psu-9992 and referred to in their petition." chanrobles virtual law library "Without pronouncement as to costs." chanrobles virtual law library "SO ORDERED." As against this judgment respondent officials of the Department of Public Works and Communications took the instant appeal, contending that the lower Court erred: chanrobles virtual law library

1. In holding that then Senator Rogelio de la Rosa, complainant in the administrative case, is not an interested party and his letter-complaint dated August 15, 1958 did not confer jurisdiction upon the respondent Undersecretary of Public Works and Communications to investigate the said administrative case; chanrobles virtual law library 2. In holding that the duty to investigate encroachments upon public rivers conferred upon the respondent Secretary under Republic Act No. 7056 cannot be lawfully delegated by him to his subordinates; chanrobles virtual law library 3. In holding that the investigation ordered by the respondent Secretary in this case is illegal on the ground that the said respondent Secretary has arrogated unto himself the power, which he does not possess, of reversing, making nugatory, and setting aside the two lawful decisions of the Court Exhibits K and I, and even annulling thereby, the one rendered by the highest Tribunal of the land; chanrobles virtual law library 4. In not sustaining respondent's claim that petitioners have no cause of action because the property in dispute is a public river and in holding that the said claim has no basis in fact and in law; chanrobles virtual law library 5. In not passing upon and disposing counterclaim; chanrobles virtual law library of respondent's

SEVENTH OF THE SUCCESSIVE INNOCENT PURCHASERS THEREOF AND WHO IN PURCHASING THE SAME RELIED ON THE PRINCIPLE THAT THE PERSONS DEALING WITH REGISTERED LAND NEED NOT GO BEHIND THE REGISTER TO DETERMINE THE CONDITION OF THE PROPERTY. The 1st and 2nd assignment of errors, being closely related, will be taken up together.chanroblesvirtualawlibrary chanrobles virtual law library The ruling of the Court of Appeals that Lot No. 2 covered by Transfer Certificate of Title No. 15856 of the petitioners-appellants is a public stream and that said title should be cancelled and the river covered reverted to public domain, is assailed by the petitioners-appellants as being a collateral attack on the indefeasibility of the torrens title originally issued in 1925 in favor of the petitioners-appellants' predecessor-in-interest, Potenciano Garcia, which is violative of the rule of res judicata. It is argued that as the decree of registration issued by the Land Registration Court was not re-opened through a petition for review filed within one (1) year from the entry of the decree of title, the certificate of title issued pursuant thereto in favor of the appellants for the land covered thereby is no longer open to attack under Section 38 of the Land Registration Act (Act 496) and the jurisprudence on the matter established by this Tribunal. Section 38 of the Land Registration Act cited by appellants expressly makes a decree of registration, which ordinarily makes the title absolute and indefeasible, subject to the exemption stated in Section 39 of the said Act among which are: "liens, claims or rights arising or existing under the laws or Constitution of the United States or of the Philippine Islands which the statute of the Philippine Islands cannot require to appear of record in the registry." chanrobles virtual law library At the time of the enactment of Section 496, one right recognized or existing under the law is that provided for in Article 339 of the old Civil Code which reads as follows: Property of public ownership is: chanrobles virtual law library 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. (Par. 1) The above-mentioned properties are parts of the public domain intended for public use, are outside the commerce of men and, therefore, not subject to private appropriation. ( 3 Manresa, 6th ed. 101104.) chanrobles virtual law library In Ledesma v. Municipality of Iloilo, 49 Phil. 769, this Court held: A simple possession of a certificate of title under the Torrens system does not necessarily make the possessor a true owner of all the property described therein. If a person obtains title under the Torrens system which includes by mistake or oversight, lands which cannot be registered under the Torrens system, he does not by virtue of said certificate alone become the owner of the land illegally included. In Mercado v. Municipal President of Macabebe, 59 Phil. 592, it was also said: It is useless for the appellant now to allege that she has obtained certificate of title No. 329 in her favor because the said certificate does not confer upon her any right to the creek in question, inasmuch as the said creek, being of the public domain, is included among the various exceptions enumerated in Section 39 of Act 496 to which the said certificate is subject by express provision of the law.

6. In not sustaining respondent's claim that the petition should not have been entertained on the ground that the petitioners have not exhausted administrative remedies; and chanrobles virtual law library 7. In holding that the decision of the respondents is illegal on the ground that it violates the principles that laws shall have no retroactive effect unless the contrary is provided and in holding that the said Republic Act No. 2056 is unconstitutional on the ground that respondents' threat of prosecuting petitioners under Section 3 thereof for acts done four years before its enactment renders the said lawex post facto. The Court of Appeals sustained the above-mentioned assignment of errors committed by the Court of First Instance of Pampanga and, as previously stated, reversed the judgment of the latter court. From this reversal this appeal by certiorari was taken, and before this Court, petitioners-appellants assigned the following errors allegedly committed by the Court of Appeals: 1. THE COURT OF APPEALS ERRED IN DECLARING IN THE INSTANT CASE THAT PARCEL NO. 2 OF TRANSFER CERTIFICATE OF TITLE NO. 15856 IS A PUBLIC RIVER AND ORDERING THE CANCELLATION OF ITS REGISTRATION BECAUSE THIS CONSTITUTES A COLLATERAL ATTACK ON A TORRENS TITLE IN VIOLATION OF THE LAW AND THE WELL-SETTLED JURISPRUDENCE ON THE MATTER.chanroblesvirtualawlibrary chanrobles virtual law library 2. THE COURT OF APPEALS ERRED IN REOPENING AND RE-LITIGATING THE ISSUE AS TO WHETHER OR NOT LOT NO. 2 OF TRANSFER CERTIFICATE OF TITLE NO. 15856 REGISTER OF DEEDS OF PAMPANGA, IS A PUBLIC RIVER NOTWITHSTANDING THE FACT THAT THIS ISSUE HAS BEEN LONG RESOLVED AND SETTLED BY THE LAND REGISTRATION COURT OF PAMPANGA IN LAND REGISTRATION PROCEEDING NO. 692 AND IS NOW RES JUDICATA.chanroblesvirtualawlibrary chanrobles virtual law library 3. THE COURT OF APPEALS ERRED IN ORDERING THE CANCELLATION OF THE REGISTRATION OF LOT NO. 2 OF TRANSFER CERTIFICATE OF TITLE NO. 15856 NOTWITHSTANDING THE FACT THAT THE TORRENS TITLE COVERING IT HAS BEEN VESTED IN THE PETITIONERS WHO ARE THE

The same ruling was laid down in Director of Lands v. Roman Catholic Bishop of Zamboanga, 61 Phil. 644, as regards public plaza.chanroblesvirtualawlibrary chanrobles virtual law library In Dizon, et al. v. Rodriguez, et al., G.R. No. L-20300-01 and G.R. No. L20355-56, April 30, 1965, 20 SCRA 704, it was held that the incontestable and indefeasible character of a Torrens certificate of title does not operate when the land covered thereby is not capable of registration.chanroblesvirtualawlibrary chanrobles virtual law library It is, therefore, clear that the authorities cited by the appellants as to the conclusiveness and incontestability of a Torrens certificate of title do not apply here. The Land Registration Court has no jurisdiction over nonregisterable properties, such as public navigable rivers which are parts of the public domain, and cannot validly adjudge the registration of title in favor of a private applicant. Hence, the judgment of the Court of First Instance of Pampanga as regards the Lot No. 2 of Certificate of Title No. 15856 in the name of petitioners-appellants may be attacked at any time, either directly or collaterally, by the State which is not bound by any prescriptive period provided for by the Statute of Limitations (Article 1108, par. 4, new Civil Code). The right of reversion or reconveyance to the State of the public properties fraudulently registered and which are not capable of private appropriation or private acquisition does not prescribe. (Republic v. Ramona Ruiz, et al., G.R. No. L-23712, April 29, 1968, 23 SCRA 348; Republic v. Ramos, G.R. No. L-15484, January 31, 1963, 7 SCRA 47.) chanrobles virtual law library When it comes to registered properties, the jurisdiction of the Secretary of Public Works & Communications under Republic Act 2056 to order the removal or obstruction to navigation along a public and navigable creek or river included therein, has been definitely settled and is no longer open to question (Lovina v. Moreno, G.R. No L-17821, November 29, 1963, 9 SCRA 557; Taleon v. Secretary of Public Works & Communications G.R. No. L-24281, May 16, 1961, 20 SCRA 69, 74).chanroblesvirtualawlibrary chanrobles virtual law library The evidence submitted before the trial court which was passed upon by the respondent Court of Appeals shows that Lot No. 2 (Plan Psu 992) of Transfer Certificate of Title No. 15856, is a river of the public domain. The technical description of both Lots Nos. 1 and 2 appearing in Original Certificate of Title No. 14318 of the Register of Deeds of Pampanga, from which the present Transfer Certificate of Title No. 15856 was derived, confirms the fact that Lot No. 2 embraced in said title is bounded practically on all sides by rivers. As held by the Court of First Instance of Pampanga in Civil Case No. 1247 for injunction filed by the petitioners' predecessors-in-interest against the Municipal Mayor of Lubao and decided in 1916 (Exh. "L"), Lot No. 2 is a branch of the main river that has been covered with water since time immemorial and, therefore, part of the public domain. This finding having been affirmed by the Supreme Court, there is no longer any doubt that Lot No. 2 of Transfer Certificate of Title No. 15856 of petitioners is a river which is not capable of private appropriation or acquisition by prescription. (Palanca v. Com. of the Philippines, 69 Phil. 449; Meneses v. Com. of the Philippines, 69 Phil. 647). Consequently, appellants' title does not include said river. II As regards the 3rd assignment of error, there is no weight in the appellants' argument that, being a purchaser for value and in good faith of Lot No. 2, the nullification of its registration would be contrary to the law and to the applicable decisions of the Supreme Court as it would destroy the stability of the title which is the core of the system of registration. Appellants cannot be deemed purchasers for value and in good faith as in the deed of absolute conveyance executed in their favor, the following appears:

6. Que la segunda parcela arriba descrita y mencionada esta actualmente abierta, sin malecones y excluida de la primera parcela en virtud de la Orden Administrative No. 103, tal como fue enmendada, del pasado regimen o Gobierno.chanroblesvirtualawlibrary chanrobles virtual law library 7. Que los citados compradores Romeo Martinez y Leonor Suarez se encargan de gestionar de las autoridades correspondientes para que la citada segunda parcela pueda ser convertida de nuevo en pesqueria, corriendo a cuenta y cargo de los mismos todos los gastos.chanroblesvirtualawlibrary chanrobles virtual law library 8. Que en el caso de que dichos compradores no pudiesen conseguir sus propositos de convertir de nuevo en pesquera la citada segunda parcela, los aqui vendedores no devolveran ninguna cantidad de dinero a los referidos compradores; este es, no se disminuiriat el precio de esta venta. (Exh. 13-a, p. 52, respondents record of exhibits) These stipulations were accepted by the petitioners-appellants in the same conveyance in the following terms: Romeo Martinez y Leonor Suarez, mayores de edad, filipinos y residentes en al Barrio de Julo Municipio de Malabon, Provincia de Rizal, por la presente, declaran que estan enterados del contenido de este documento y lo aceptan en los precisos terminos en que arriba uedan consignados. (Exh. 13-a, ibid) Before purchasing a parcel of land, it cannot be contended that the appellants who were the vendees did not know exactly the condition of the land that they were buying and the obstacles or restrictions thereon that may be put up by the government in connection with their project of converting Lot No. 2 in question into a fishpond. Nevertheless, they willfully and voluntarily assumed the risks attendant to the sale of said lot. One who buys something with knowledge of defect or lack of title in his vendor cannot claim that he acquired it in good faith (Leung Lee v. Strong Machinery Co., et al., 37 Phil. 664).chanroblesvirtualawlibrary chanrobles virtual law library The ruling that a purchaser of a registered property cannot go beyond the record to make inquiries as to the legality of the title of the registered owner, but may rely on the registry to determine if there is no lien or encumbrances over the same, cannot be availed of as against the law and the accepted principle that rivers are parts of the public domain for public use and not capable of private appropriation or acquisition by prescription.chanroblesvirtualawlibrary chanrobles virtual law library FOR ALL THE FOREGOING, the judgment of the Court of Appeals appealed from is in accordance with law, and the same is hereby affirmed with costs against the petitioners-appellants.