Facts:

The case of Samuel Bischoff vs. Juan D. Pomar and the Compania General de Tabacos de Filipinas revolves around a dispute regarding ownership of a steam sugar mill and its associated equipment located at Hacienda San Jose in San Carlos, Occidental Negros. The plaintiff, Samuel Bischoff, claimed ownership of the steam sugar mill, which included a portable 8-horsepower boiler, a complete tramway with rails, and fifteen small cars. He alleged that the defendants, specifically the Compania General de Tabacos, unlawfully took possession of his property while acting as a receiver for Romana Ganzon, who was in debt to the company. The complaint was filed on December 27, 1905, after Bischoff's repeated demands for the return of his property were ignored, resulting in daily losses of P30.

In their defense, the Compania General de Tabacos asserted that the property claimed by Bischoff was included in a mortgage executed by Romana Ganzon in favor of Lazaro Mota. This mortgage was...

Facts:

Background of the Case:

• Samuel Bischoff, the plaintiff, claimed ownership of a steam sugar mill, a portable 8-horsepower boiler, a tramway with rails and fittings, and fifteen small cars located at Hacienda San Jose in San Carlos, Occidental Negros.
• The defendant, Compania General de Tabacos, had obtained the appointment of a receiver, Juan Pomar, for the property of Romana Ganzon, which included the aforementioned equipment.
• Bischoff alleged that Pomar unlawfully took possession of his property and refused to return it despite repeated demands, causing him damages of P30 per day.

Mortgage Details:

• Romana Ganzon had mortgaged Hacienda San Jose to Lazaro Mota on July 20, 1900, to secure a loan of 11,209 pesos. The mortgage was later increased to 15,386.20 pesos and then to 21,423.93 pesos.
• On September 30, 1904, Mota transferred the mortgage credit to Compania General de Tabacos.
• On December 10, 1904, Ganzon executed another mortgage in favor of the company for a total debt of 53,042.53 pesos, including the transferred credit and additional amounts.
• The mortgage instruments included the hacienda, its buildings, machinery, and other improvements.

Bischoff’s Claim:

• Bischoff claimed he purchased the disputed property from Ganzon under a pacto de retro (sale with right of repurchase) on November 8, 1904.
• He argued that the machinery and tramway were not included in the mortgage and should be returned to him.

Issue:

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Ruling:

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Ratio:

1. Inclusion of Improvements in Mortgage:

   • Under Article 110 of the Mortgage Law and Article 1877 of the Civil Code, a mortgage extends to natural accessions, improvements, and machinery permanently attached to the property, even if not explicitly mentioned in the mortgage instrument.
   • The machinery and tramway were integral to the operation of Hacienda San Jose and were therefore included in the mortgage.

2. Effect of Pacto de Retro Sale:

   • Bischoff’s purchase of the property under pacto de retro did not extinguish the mortgage encumbrance. The property remained subject to the mortgage, and Bischoff was bound to respect the rights of the mortgagee (Compania General de Tabacos).

3. No Liability for Damages:

   • The defendants acted within their legal rights by taking possession of the mortgaged property, including the disputed machinery and tramway. Bischoff’s claim for damages was unfounded because he purchased property already encumbered by the mortgage.

4. Legal Precedents:

   • The Court cited the doctrine established in The Royal Insurance Company vs. R. Miller, which aligns with the principle that mortgage rights extend to improvements and indemnities related to the mortgaged property.

Conclusion:

The Supreme Court upheld the lower court’s decision, ruling that the disputed property was included in the mortgage and that Bischoff’s purchase did not override the mortgagee’s rights. The defendants were absolved of liability, and Bischoff was left to pursue his claims against Romana Ganzon.