Leung Yee vs. Frank L. Strong Machinery Co.

G.R. No. L-11658
A dispute over ownership of a building arose when a machinery company claimed prior possession and purchase, while a plaintiff registered a sheriff’s sale. The Court ruled the machinery company had superior rights due to prior possession and good faith, invalidating the plaintiff’s claim.
chattel mortgage registry real property

Case Digest (G.R. No. L-11658)

Facts:

Leung Yee v. Frank L. Strong Machinery Company and J. G. Williamson, G.R. No. 11658, February 15, 1918, the Supreme Court En Banc, Carson, J., writing for the Court. The plaintiff-appellant was Leung Yee; the defendants-appellees were Frank L. Strong Machinery Company and J. G. Williamson.

The antecedent transactions began when the Compania Agricola Filipina purchased rice‑cleaning machinery from the machinery company and executed a chattel mortgage in favor of the machinery company that described the machinery and also included “the building of strong materials” in which the machinery was installed; the mortgage made no reference to the land. The mortgagor defaulted; the sheriff sold the mortgaged property pursuant to the mortgage terms and the machinery company bought it in. The chattel mortgage was registered in the chattel mortgage registry, and an annotation of the sale in satisfaction of the mortgage was entered in that registry on December 29, 1913.

On or about January 14, 1914, the mortgagor executed a public deed of sale of the land on which the building stood in favor of the machinery company; that deed was not registered and did not mention the building. The machinery company had gone into possession of the building about December 1913 and remained in possession thereafter.

At about the same time as the chattel mortgage, the mortgagor gave a separate mortgage on the building to Leung Yee to secure construction indebtedness. After default, Leung obtained judgment, levied execution upon the building, and bought it at the sheriff’s sale on or about December 18, 1914; Leung then registered the sheriff’s certificate of sale in the land registry of Cavite. At the time of the levy the machinery company, then in possession, filed a sworn claim of title with the sheriff and demanded release. Thereafter Leung executed an indemnity bond for P12,000 in favor of the sheriff, and the sheriff sold the property at public auction to Leung as the highest bidder.

Leung sued to recover possession of the building. The trial court relied on Article 1473 of the Civil Code and ruled for the machinery company, on the ground that the machinery company’s title to the building had been registered prior to Leung’s registration. The Supreme Court rejected the trial court’s stated ground (that a chattel mortgage registry inscription equated to land registration) but nonetheless affirmed the judgment on the alternate ground that Leung’s p...(Pro-only)

Issues:

  • Does an entry or annotation in the chattel mortgage registry operate as a registration in the land registry for purposes of priority under Article 1473 of the Civil Code?
  • Was Leung Yee a purchaser in good faith entitled to priority by his purchase at sheriff’s sale and inscription of the sheriff’s certificate of sale, given the machinery company’s prior acquisition and possession and Leung’s knowled...(Pro-only)

Ruling:

  • (Pro-only)

Ratio:

  • (Pro-only)

Doctrine:

  • (Pro-only)
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