Chua Guan v.

Samahang Magsasaka

FACTS:

1. On June 18, 1931, Gonzalo H. Co Toco, the owner of 5,894 shares of the capital stock of Samahang
Magsasaka Inc. represented by 9 certificates having a par value of P5 per share mortgaged said shares to
Chua Chiu to guarantee the payment of a debt of P20,000 due on or before 19 June 1932.

2. The said certificates of stock were delivered with the mortgage to the mortgagee, Chua Chiu. The said
mortgage was duly registered in the office of the registered of deeds of Manila on 23 June 1931, and in
the office of the said corporation on 30 September 1931.

3. On 28 November 1931, Chua Chiu assigned all his right and interest in said mortgage to the Chua
Guan and the assignment in the office of the register of deeds in the City of Manila on 28 December
1931, and in the office of the said corporation on 4 January 1932.

4. Co Toco defaulted in the payment of said debt at maturity and Chua Guan foreclosed said mortgage
and delivered the certificates of stock and copies of the mortgage and assignment to the sheriff of the
City of Manila in order to sell the said shares at public auction. The sheriff auctioned said shares on 22
December 1932, and the plaintiff having been the highest bidder for the sum of P14,390, the sheriff
executed in his favor a certificate of sale of said shares.

5. The plaintiff tendered the certificates of stock standing in the name of Co Toco to the proper officers
of the corporation or cancellation and demanded that they issue new certificates in the name of Chua
Guan. The officers (the individual defendants) refused and still refuse to issue said new shares in the
name of Chua Guan.

6. An action for writ of mandamus was filed with the CFI Nueva Ecija, praying that the defendants
transfer the said 5,894shares of stock to the plaintiff by cancelling the old certificates and issuing new
ones in their stead.

7. The parties entered into a stipulation in which the defendants admitted all of the allegations of the
complaint and the plaintiff admitted all of the special defenses in the answer of the defendants, and on
this stipulation they submitted the casefor decision.

8. As special defense, the defendants refused to cancel said certificates (Co Tocos) and to issue new
ones in the name of Chua Guan because prior to the date of the latters demand (4 February 1933), 9
attachments had been issued and served and noted on the books of the corporation against Co Tocos
shares and Chua Guan objected to having these attachments noted on the new certificates which he
demanded.

9. The Supreme Court affirmed the judgment appealed from, holding that the attaching creditors are
entitled to priority over the defectively registered mortgage of the appellant.

ISSUE:

Whether or not the registration of said chattel mortgage in the registry of chattel mortgages in the
office of the register of deeds of Manila, under date of July 23,1931, give constructive notice to the said
attaching creditors.
HELD:

YES. The attaching creditors are entitled to priority over the defectively registered mortgage of the
appellant.

RATIO:

1. Section 4 of Act No. 1508 provides two ways for executing a valid chattel mortgage which shall be
effective against third persons:

a.The possession of the property mortgage must be delivered to and retained by the mortgagee

b.Without such delivery, the mortgage must be recorded in the proper office or offices of the register or
registers of deeds.2. As to the proper place of registration of such a mortgage. - Section 4 provides that
in such a case the mortgage resides at the time of making the same or, if he is a non-resident, in the
province in which the property is situated; and it also provides that if the property is situated in a
different province from that in which the mortgagor resides the mortgage shall be recorded both in the
province of the mortgagor's residence and in the province where the property is situated.3. With
respect to a chattel mortgage of shares of stock of a corporation - Registration in the province of the
owner's domicile should be sufficient, those who lend on such security would be confronted with the
practical difficulty of being compelled not only to search the records of every province in which the
mortgagor might have been domiciled but also every province in which a chattel mortgage by any
former owner of such shares might be registered..

Chua Guan v. SAMAHANG MAGSASAKA INC.(1935) 1)

Facts:

Gonzalo H. Co Toco was the owner of 5,894 shares of the capital

stock of the said corporation represented by nine certificates. 2) Gonzalo

H. Co Toco, a resident of Manila, mortgaged said 5,894 shares to Chua

Chiu to guarantee the payment of a debt 3) The said certificates of stock

were delivered with the mortgage to the mortgagee, Chua Chiu. 4) The

said mortgage was duly registered in the office of the register of deeds of

Manila on June 23, 1931, and in the office of the said corporation on

September 30, 1931. 5) Subsequently, Chua Chiu assigned all his right

and interest in said mortgage to the plaintiff and the assignment was

registered in the office of the register of deeds in the City of Manila on

December 28, 1931, and in the office of the said corporation on January 4,

1932. 6) The debtor, Gonzalo H. Co Toco, having defaulted in the

payment of said debt at maturity, the plaintiff foreclosed said mortgage

and delivered the certificates of stock and copies of the mortgage and

assignment to the sheriff in order to sell the said shares at public auction.

7) The sheriff auctioned said 5,894 shares of stock on December 22, 1932,

and the plaintiff having been the highest bidder for the sum of P14,390,

the sheriff executed in his favor a certificate of sale of said shares. 8) The

plaintiff tendered the certificates of stock standing in the name of Gonzalo

H. Co Toco to the proper officers of the corporation for cancellation and

demanded that they issue new certificates in the name of the plaintiff. 9)

The said officers (the individual defendants) refused and still refuse to

issue said new shares in the name of the plaintiff. 10) The prayer is that a

writ of mandamus be issued requiring the defendants to transfer the said

5,894 shares of stock to the plaintiff by cancelling the old certificates and

issuing new ones in their stead. 11) C Defense: that the defendants refuse

to cancel the said certificates standing in the name of Gonzalo H. Co Toco

on the books .of the corporation and to issue new

ones in the name of the plaintiff because prior to the date when the

plaintiff made his demand, to wit, February 4, 1933, nine attachments had

been issued and served and noted on the books of the corporation against

the shares of Gonzalo H. Co Toco and the plaintiff objected to having

these attachments noted on the new certificates which he demanded. 12) It

will be noted that the first eight of the said writs of attachment were

served on the corporation and noted on its records before the corporation

received notice from the mortgagee Chua Chiu of the mortgage of said

shares dated June 18, 1931. 13) No question is raised as to the validity of

said mortgage or of said writs of attachment and the sole question

presented for decision is whether the said mortgage takes priority over the

said writs of attachment. 14)

ISSUE:
Did the registration of said chattel mortgage in the registry of

chattel mortgages in the office of the register of deeds of Manila, under

date of July 23, 1931, give constructive notice to the said attaching

creditors?

HELD:

The attaching creditors are entitled to priority over the defectively

registered mortgage of the appellant RATIO: The property in the shares

maybe deemed to be situated in the province in which the corporation has

its principal office or place of business. If this province is also the

province of the owner's domicile, a single registration is sufficient. If not,

the chattel mortgage should be registered both at the owner's domicile and

in the province where the corporation has its principal office or place of

business. In this sense the property mortgaged is not the certificate but the

participation and share of the owner in the assets of the corporation

RICARDO PRESBITERO vs, FERNANDEZ (Immovable Calinisan)

Facts:

1) ESPERIDION Presbitero failed to furnish Nava the value of the properties under litigation.
2) Presbitero was ordered by the lower court to pay Nava to settle his debts.
3) Nava's counsel still tried to settle this case with Presbitero, out of court. But to no avail.
4) Thereafter, the sheriff levied upon and garnished the sugar quotas allotted to the plantation and
adhered to the Ma-ao Mill District and registered in the name of Presbitero as the original
plantation owner.
5) The sheriff was not able to present for registration thererof to the Registry of Deeds.
6) The court then ordered Presbitero to segregate the portion of Lot 608 pertaining to Nava from
the mass of properties belonging to the defendant within a period to expire on August 1960.
7) Bottomline, Presbitero did not meet his obligations, and the auction sale was scheduled.
8) Presbitero died after.
9) RICARDO Presbitero, the estate administrator, then petitioned that the sheriff desist in holding
the auction sale on the ground that the levy on the sugar quotas was invalid because the notice
thereof was not registered with the Registry of Deeds.

Issue:

W/N the sugar quotas are real (immovable) or personal properties.

Held:

They are real properties.

a) The Sugar Limitation Law xxx attaching to the land xxx (p 631)

b) RA 1825 xxx to be an improvement attaching to the land xxx (p 631)

c) EO # 873 "plantation" xxx to which is attached an allotment of centrifugal sugar.

Under the express provisions of law, the sugar quota allocations are accessories to the land, and
cannot have independent existence away from a plantation. Since the levy is invalid for non-compliance
with law, xxx the levy amount to no levy at all.
Berkenkotter v. Cu Unjieng

Facts:

On 26 April 1926, the Mabalacat Sugar Company obtained from Cu Unjieng e Hijos, a loan
secured by a first mortgage constituted on 2 parcels of land "with all its buildings,
improvements, sugar-cane mill, steel railway, telephone line, apparatus, utensils and whatever
forms part or is a necessary complement of said sugar-cane mill, steel railway, telephone line,
now existing or that may in the future exist in said lots.
On 5 October 1926, the Mabalacat Sugar Company decided to increase the capacity of its
sugar central by buying additional machinery and equipment, so that instead of milling 150 tons
daily, it could produce 250.
Green proposed to the Berkenkotter, to advance the necessary amount for the purchase of said
machinery and equipment, promising to reimburse him as soon as he could obtain an additional
loan from the mortgagees, Cu Unjieng e Hijos, and that in case Green should fail to obtain an
additional loan from Cu Unjieng e Hijos, said machinery and equipment would become security
therefore, said Green binding himself not to mortgage nor encumber them to anybody until
Berkenkotter be fully reimbursed for the corporation's indebtedness to him.
Having agreed to said proposition made in a letter dated 5 October 1926, Berkenkotter, on 9
October 1926, delivered the sum of P1,710 to Green, the total amount supplied by him to Green
having beenP25,750.
Furthermore, Berkenkotter had a credit of P22,000 against said corporation for unpaid salary.
With the loan of P25,750 and said credit of P22,000, the Mabalacat Sugar Co., Inc., purchased
the additional machinery and equipment.
On 10 June 1927, Green applied to Cu Unjieng e Hijos for an additional loan of P75,000 offering
as security the additional machinery and equipment acquired by said Green and installed in the
sugar central after the execution of the original mortgage deed, on 27 April 1927, together with
whatever additional equipment acquired with said loan. Green failed to obtain said loan. Hence,
abovementioned mortgage was in effect.

Issue:

Are the additional machines also considered mortgaged?

Held:

Article 1877 of the Civil Code provides that mortgage includes all natural accessions,
improvements,growing fruits, and rents not collected when the obligation falls due, and the amount of
any indemnities paid or due the owner by the insurers of the mortgaged property or by virtue of the
exercise of the power of eminent domain, with the declarations, amplifications, and limitations
established by law, whether the state continues in the possession of the person who mortgaged it
or whether it passes into the hands of a third person.It is a rule, that in a mortgage of real estate, the
improvements on the same are included; therefore, all objects permanently attached to a mortgaged
building or land, although they may have been placed there after the mortgage was constituted, are also
included.
Article 334, paragraph 5, of the Civil Code gives the character of real property to machinery,
liquidcontainers, instruments or implements intended by the owner of any building or land for use
inconnection with any industry or trade being carried on therein and which are expressly adapted
tomeet the requirements of such trade or industry. The installation of a machinery and equipment in
amortgaged sugar central, in lieu of another of less capacity, for the purpose of carrying out
theindustrialfunctions of the latter and increasing production, constitutes a permanent improvement
onsaid sugar central and subjects said machinery and equipment to the mortgage constituted thereon.
Tumalad v. Vicencio

FACTS:

Vicencio and Simeon executed a chattel mortgage in favor of plaintiffs Tumalad over their house, which
was being rented by Madrigal and company. This was executed to guarantee a loan, payable in one year
with a 12% per annum interest.

The mortgage was extrajudicially foreclosed upon failure to pay the loan. The house was sold at a public
auction and the plaintiffs were the highest bidder. A corresponding certificate of sale was issued.
Thereafter, the plaintiffs filed an action for ejectment against the defendants, praying that the latter
vacate the house as they were the proper owners.

ISSUE:

W/N the chattel mortgage was null and void ab initio because only personal properties can be subject of
a chattel mortgage.

HELD:

Certain deviations have been allowed from the general doctrine that buildings are immovable property
such as when through stipulation, parties may agree to treat as personal property those by their nature
would be real property. This is partly based on the principle of estoppel wherein the principle is
predicated on statements by the owner declaring his house as chattel, a conduct that may conceivably
stop him from subsequently claiming otherwise.

In the case at bar, though there be no specific statement referring to the subject house as personal
property, yet by ceding, selling or transferring a property through chattel mortgage could only have
meant that defendant conveys the house as chattel, or at least, intended to treat the same as such, so
that they should not now be allowed to make an inconsistent stand by claiming otherwise.
Philippine Refining Co. v. Jarque

Facts:

Philippine Refining Co., Inc., and Francisco Jarque executed three chattel mortgages on the motor
vessels Pandan and Zaragoza, which were recorded in the record of transfers and incumbrances of
vessels for the port of Cebu. The mortgages had no appended affidavit of good faith except for the 3rd
mortgage, which was not registered in the customs house within the period of 30 days prior to the start
of the insolvency proceedings against Francisco Jarque.

A fourth mortgage was executed by Francisco Jarque and Ramon Aboitiz on the motorship Zaragoza and
was entered in the chattel mortgage registry of the register of deeds.

Francisco Jarque was then declared to be an insolvent debtor that resulted to an assignment of all his
properties in favor of Jose Corominas.

Judge Jose M. Hontiveros declined the foreclosure of the mortgages and sustained the special defenses
of fatal defectiveness of the mortgages.

Issue:

Whether or not the mortgages are defective.

Held:

Vessels are considered personal property under the civil law. (Code of Commerce, article 585.) Similarly
under the common law, vessels are personal property although occasionally referred to as a peculiar
kind of personal property.

Since the term "personal property" includes vessels, they are subject to mortgage agreeably to the
provisions of the Chattel Mortgage Law. (Act No. 1508, section 2.)

The only difference between a chattel mortgage of a vessel and a chattel mortgage of other personalty
is that it is not now necessary for a chattel mortgage of a vessel to be noted in the registry of the
register of deeds, but it is essential that a record of documents affecting the title to a vessel be entered
in the record of the Collector of Customs at the port of entry. Otherwise a mortgage on a vessel is
generally like other chattel mortgages as to its requisites and validity.

A good chattel mortgage according to Section 5 of The Chattel Mortgage Law, includes the requirement
of an affidavit of good faith appended to the mortgage and recorded therewith. The absence of the
affidavit vitiates a mortgage as against creditors and subsequent encumbrancers. As a consequence a
chattel mortgage of a vessel wherein the affidavit of good faith required by the Chattel Mortgage Law is
lacking, is unenforceable against third persons.i
Sibal v. Valdez

FACTS:

The deputy sheriff of Tarlac attached and sold to Valdez the sugarcane planted by the plaintiff. The
plaintiff asked for the redemption of the sugarcane. Valdez said that it cannot be subject to redemption
because it is a personal property.

ISSUE:

WON the sugarcane in question is a personal or real property.

HELD:

Sugarcane is under real property as ungathered products. The Supreme Court of Louisiana provided that
standing crops are considered as part of the land to which they are attached but the immovability
provided for is only one in abstract. The existence of a right on the growing crop is mobilization by
anticipation, a gathering as it were in advance, rendering the crop movable quoad the right acquired
therein.

-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.

-Act 1508 (Chattel Mortgage Law) recognize growing crops as personal property.

Crops whether growing or ready to be harvested, when produced by annual cultivation, is not part of
realty.

Paragraph 2 of Art. 334 of the Civil Code has been modified by Sec. 450 of Code of Civil Procedure and
Act no. 1508 in the sense that for purposes of attachment and execution and Chattel Mortgage Law,
ungathered products have the nature of personal property.

SIBAL v. VALDEZ G.R. No. L-26278 August 4, 1927

Johnson, J.

Doctrine:

A crop raised on leased premises belongs to the lessee and in no sense

forms part of the immovable.

Ungathered products have the nature of personal property. In other

words, the phrase personal property should be understood to include

ungathered products. Crops, whether growing or standing in the field

ready to be harvested, are, when produced by annual cultivation, no part

of the realty.
 A valid sale may be made of a thing, which though not yet actually in

existence, is reasonably certain to come into existence. A man may sell

property of which he is potentially and not actually possessed.

Facts:

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. 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. However, Valdez refused to accept the money and

to return the sugar cane to the plaintiff.

Meanwhile, defendant argued that the sugar cane was personal property

hence not subject to redemption.

Issue:

1. Whether or not the sugar cane is to be classified as personal

property

2. Whether or not future crops to be harvested can be considered a valid

object of sale

Held:

1. No. 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.

Ungathered products have the nature of personal property. In other

words, the phrase personal property should be understood to include

ungathered products. Crops, whether growing or standing in the field

ready to be harvested, are, when produced by annual cultivation, no part

of the realty.

2. Yes. 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.).

A man may sell property of which he is potentially and not actually

possessed
Bachrach vs Ledesma

FACTS:

June 30, 1927: CFI favored Bachrach Motor Co., Inc

(Bachrach) against Mariano Lacson Ledesma

Ledesma mortgaged to the Philippine National Bank (PNB) Talisay-Silay

Milling Co., Inc shares

September 29, 1928: PNB brought an action against Ledesma and his wife

Concepcion Diaz for the recovery of a mortgage credit

January 2, 1929: PNB amended its complaint by including the Bachrach

Motor Co., Inc., as party defendant because they claim to have rights to

some of the subject matters of this complaint

January 30, 1929: Bachrach field a gen. denial

CFI: favored PNB

December 20, 1929: Bachrach brought an action in the CFI against the

Talisay-Silay Milling Co., Inc., to recover P13,850 against the bonus or

dividend w/c, by virtue of the resolution of December 22, 1923, Central

Talisay-Silay Milling Co., Inc., had declared in favor of Ledesma as one

of the owners of the hacienda which had been mortgaged to the PNB to

secure the obligation of the Talisay-Silay Milling Co., Inc. in favor of said

bank

CFI: favored Bachrach

ISSUE:

W/N shares of stock are personal property and therefore can be

subject to pledge or chattel mortgage

HELD:

YES. AFIRMED

section 4 of the Chattel Mortgage Law, in so far as it provides that a

chattel mortgage shall not be valid against any person except the

mortgagor, his executors or administrators, unless the possession of the

property is delivered to and retained by the mortgagee or unless the

mortgage is recorded in the office of the register of deeds of the province

in which the mortgagor resides.

pledge of the 6,300 stock dividends is valid against the Bachrach because

the certificate was delivered to the creditor bank, notwithstanding the fact

that the contract does not appear in a public instrument

Certificates of stock or of stock dividends, under the Corporation Law, are

quasi negotiable instruments in the sense that they may be given in pledge

or mortgage to secure an obligation

certificates of stock, while not negotiable in the sense of the law merchant,

like bills and notes, are so framed and dealt with as to be transferable,

when property endorsed, by mere delivery, and as they frequently convey,

by estoppel against the corporation or against prior holders, as good a title

to the transferee as if they were negotiable, and inasmuch as a large

commercial use is made of such certificates as collateral security, and it is

to the public interest that such use should be simplify and facilitated by

placing them as nearly as possible on the plane of commercial paper, they

are often spoken of and treated as quasi negotiable, that is as having some

of the attributes and partaking of the character of negotiable instruments,

in passing from hand to hand, especially where they are accompanied by

an assignment and power of attorney, executed in blank, to transfer them

to anyone who may obtain possession as holders, even though such

assignment and power are under seal