GR L 932; (December, 1902) (Digest)
G.R. No. L-932, December 31, 1902
PEDRO REGALADO, plaintiff-appellee, vs. LUCHSINGER & CO., defendants-appellants.
FACTS:
In March 1893, Luchsinger & Co. filed an executive action against Jose Regalado y Santa Ana to collect a debt based on a promissory note. Among the properties attached was a warehouse and lot. A judgment in favor of Luchsinger & Co. was affirmed by the Royal Audiencia of Manila in 1897. Execution was delayed due to various circumstances. On April 13, 1900, the attached property was ordered sold at public auction. On the day of the sale, Pedro Regalado, son of the judgment debtor, filed a complaint in intervention, claiming absolute ownership of the property and seeking to suspend the sale and dissolve the attachment. Luchsinger & Co. opposed, alleging Pedro’s acquisition occurred after their attachment levy. The sale was suspended. The property had been subject to two prior mortgages (Bischoff and Montelibano), which were eventually assigned to Jose Maria Regalado and later paid off using the ₱15,000 purchase price from Pedro Regalado’s acquisition of the property from his father. Pedro’s deed was registered on May 25, 1900. The Court of First Instance dismissed Pedro’s ownership claim but recognized him as a preferred creditor for the ₱15,000 used to pay the mortgages, ordering that sum (plus expenses, less rents) be paid to him from the sale proceeds before satisfying Luchsinger & Co.’s claim. Pedro’s complaint, however, solely asserted ownership and never raised any claim as a preferred creditor.
ISSUE:
Whether the trial court erred in deciding the case on an issue not raised by the pleadingsspecifically, by treating Pedro Regalado as a preferred creditor when his complaint only claimed ownership of the attached property.
RULING:
Yes. The Supreme Court reversed the judgment of the Court of First Instance. The pleadings framed the sole issue as one of ownership. Pedro Regalado intervened solely on the ground of ownership, not as a preferred creditor. The trial court, on its own, raised and decided the issue of preferred credit without prior notice to the parties, thereby deciding a matter not presented in the pleadings. Under Spanish procedure (then applicable), the court had no authority to adjudicate issues not raised by the parties. Consequently, the judgment was reversed, and the case was remanded to the trial court for a new trial. Costs were awarded against the appellee, Pedro Regalado.