G.R. No. 215932 - Civil Service Commission vs. Rebong

The action was instituted by Mariano Velasco & Co., the plaintiff and appellee, to foreclose a mortgage executed by Gochuico & Co.
The mortgage was executed on February 28, 1913, in favor of Mariano Velasco & Co., for a principal amount of P125,000 plus attorneys' fees and the costs of the action.
The property subject to the mortgage was land formerly owned by Buenaventura Gochuico, which later formed the principal capital of the mercantile association “Gochuico & Co.”

After the death of Buenaventura Gochuico (date unspecified), his estate was administered in the probate court of Manila and ultimately closed (as evidenced by record No. 2770).
The minor heirs, Manuel Gochuico and Francisco Gochuico, were represented by their appointed guardian, Melecio Saludes, during the probate proceedings.
An agreement among the heirs, approved by the court, led to the organization of the mercantile association “Gochuico & Co.” to facilitate the division of the estate.
The land in question, which was the main asset of the estate, was subsequently registered in the name of “Gochuico & Co.” under the Torrens system on September 27, 1912, subject to existing incumbrances.

A mortgage dated July 1, 1912, in favor of Mariano Velasco & Co. for the sum of P110,000, noted against Gochuico & Co.
A contract of lease executed on August 14, 1912, in favor of the Alhambra Cigar and Cigarette Manufacturing Company.

These encumbrances were expressly documented in the certificate of title, with the later mortgage (of February 28, 1913) being indorsed on that certificate without any reference to the prior mortgage.

The mortgage was executed and delivered by Gochuico & Co. on February 28, 1913, and became effective on March 1, 1913.
It was set to mature on March 1, 1917, with a specific acceleration clause that provided for the entire principal and interest to become immediately due upon default in any monthly interest payment.
Notably, while the certificate of title indicated the prior mortgage from July 1, 1912, the document of the February 28, 1913 mortgage made no reference to it.

The contract of lease in favor of the Alhambra Cigar and Cigarette Manufacturing Company was executed on August 14, 1912, and duly registered.
A key provision of the lease stipulated that the lessee was bound to maintain the lessor's (Alhambra’s) uninterrupted use and disposition of the property for the duration of the lease, even if ownership transferred.
The plaintiff, Mariano Velasco & Co., was fully aware of this lease condition at the time it accepted the mortgage, thereby rendering it bound by the terms of the lease.

The minor heirs, Manuel and Francisco Gochuico, consented through their guardian (with the approval of the probate court) for their interest in the land to become part of the capital of “Gochuico & Co.”
With the lapse of time and subsequent acquisition of interests by third parties—relying on the Torrens registration—the minor heirs lost their right to claim an interest in the property, though this did not preclude potential actions for damages against other coheirs.

Whether the sale of the property for the purpose of satisfying the mortgage debt must be made subject to the leasehold interest of the Alhambra Cigar and Cigarette Manufacturing Company as stipulated in its August 14, 1912 lease contract.

Whether the mortgage executed on February 28, 1913, should be construed as a renewal of the earlier mortgage dated July 1, 1912, particularly in light of the differences in reference and documentation between the two instruments.

Whether the minor heirs, having consented to the incorporation of the land into the capital of “Gochuico & Co.” and allowing its registration under the Torrens system, have thereby forfeited any claim to an interest in the subject property.