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Estavillo, Kia G.

Tsai v. CA

GR 120098, October 2, 2001

FACTS: Ever Textile Mills, Inc. (EVERTEX) obtained loan from Philippine Bank of Communications
(PBCom), secured by a Real and Chattel Mortgage over the lot where its factory stands, and the
chattels located therein as enumerated in a schedule attached to the mortgage contract. PBCom
again granted a second loan to EVERTEX which was secured by a Chattel Mortgage over personal
properties similar to those listed in the first mortgage deed. During the execution of the second
mortgage, EVERTEX purchased various machines and equipment. Upon EVERTEX's failure to meet
its obligation. PBCom, commenced extrajudicial foreclosure of the mortgage. PBCom leased the
entire factory premises to Ruby Tsai and sold to the same the factory, lock, stock and barrel
including the contested machineries. EVERTEX filed a complaint for annulment of sale,
reconveyance, and damages against PBCom, alleging that the extrajudicial foreclosure of subject
mortgage was not valid, and that PBCom, without any legal or factual basis, appropriated the
contested properties which were not included in the Real and Chattel Mortgage of the first
mortgage contract nor in the second contract which is a Chattel Mortgage, and neither were
those properties included in the Notice of Sheriff's Sale.

ISSUE: Whether or not the inclusion of the questioned properties in the foreclosed properties is
proper

HELD: No. Inasmuch as the subject mortgages were intended by the parties to involve chattels,
insofar as equipment and machinery were concerned, the Chattel Mortgage Law applies, which
provides in Section 7 thereof that: a chattel mortgage shall be deemed to cover only the
property described therein and not like or substituted property thereafter acquired by the
mortgagor and placed in the same depository as the property originally mortgaged, anything in
the mortgage to the contrary notwithstanding. And, since the disputed machineries were
acquired in 1981 and could not have been involved in the 1975 or 1979 chattel mortgages, it was
consequently an error on the part of the Sheriff to include subject machineries with the
properties enumerated in said chattel mortgages. As the auction sale of the subject properties to
PBCom is void, no valid title passed in its favor. Consequently, the sale thereof to Tsai is also a
nullity under the elementary principle of nemo dat quod non habet, one cannot give what one
does not haveAssuming arguendo that the properties in question are immovable by nature,
nothing detracts the parties from treating it as chattels to secure an obligation under the principle
of estoppel. An immovable may be considered a personal property if there is a stipulation as
when it is used as security in the payment of an obligation where a chattel mortgage is executed
over it, as in the case at bar.
Estavillo, Kia G.

Bukidnon Doctors v. MBTC

GR 161882, July 8, 2005

FACTS: Petitioner Bukidnon Doctors Hospital, Inc., obtained a loan of P25 million from
respondent Metropolitan Bank and Trust Company to be used for the construction of its hospital.
To secure this loan, the petitioner mortgaged six parcels of land located in Valencia, Bukidnon,
covered by TCT Nos. T-52197, T-52198, T-52199, T-52200, T-52201, and T-52202 and registered
in the name of Dr. Rene Sison and Rory P. Roque, President and Administrator, respectively, of
the petitioner. Upon petitioners default in the payment of the loan, the mortgage was
extrajudicially foreclosed and the mortgaged lots were sold in a public auction to respondent
bank, being the sole and highest bidder. The petitioner failed to redeem the properties within
the period of redemption. Forthwith, the respondent consolidated its ownership over the
properties and was issued new certificates of title on 1 October 2001. Subsequently, however,
the parties entered into a lease agreement to enable the petitioner to continue its
operation.After almost two years after said agreement, respondent demanded that the
petitioner vacate the leased premises. When the petitioner refused, respondent initiated
ane* parte proceeding for the issuance of a writ of possession.

ISSUE: Whether or not the court correctly ruled that respondent was still entitled to a writ of
possession despite a lease agreement executed.

HELD: NO. In the case at bar, it is not disputed that after the foreclosure of the property in
question and the issuance of new certificates of title in favor of the respondent, the petitioner
and the respondent entered into a contract of lease of the subject properties. This new
contractual relation presupposed that the petitioner recognized that possession of the properties
had been legally placed in the hands of the respondent, and that the latter had taken such
possession but delivered it to the former as lessee of the property. By paying the monthly rentals,
the petitioner also recognized the superior right of the respondent to the possession of the
property as owner thereof. And by accepting the monthly rentals, the respondent enjoyed the
fruits of its possession over the subject property.[24] Clearly, the respondent is in material
possession of the subject premises. Thus, the trial courts issuance of a writ of possession is not
only superfluous, but improper under the law. Moreover, as a lessee, the petitioner was a
legitimate possessor of the subject properties under Article 525 of the Civil Code. Thus, it could
not be deprived of its lawful possession by a mere ex parte motion for a writ of possession.

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