FACTS:

Ever Textile Mills, Inc. (EVERTEX) obtained loan from Philippine Bank of
Communications (PBCom), secured by a deed of 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 enumerated in a list attached thereto. These listed properties were
similar to those listed in the first mortgage deed. After the date of the execution
of the second mortgage mentioned above, EVERTEX purchased various machines
and equipments. Upon EVERTEX's failure to meet its obligation to PBCom, the
latter commenced extrajudicial foreclosure proceedings against EVERTEX under
Act 3135 and Act 1506 or "The Chattel Mortgage Law". PBCom then
consolidated its ownership over the lot and all the properties in it. It leased the
entire factory premises to Ruby Tsai and sold to the same the factory, lock, stock
and barrel including the contested machineries.

VERTEX filed a complaint for annulment of sale, reconveyance, and

damages against PBCom, alleging inter alia 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.

ISSUES:

1) W/N the contested properties are personal or movable properties

2) W/N the sale of these properties to a third person (Tsai) by the bank through
an irregular foreclosure sale is valid.

HELD:

1) Nature of the Properties and Intent of the Parties

The nature of the disputed machineries, i.e., that they were heavy, bolted or
cemented on the real property mortgaged does not make them ipso facto
immovable under Article 415 (3) and (5) of the New Civil Code. While it is true
that the properties appear to be immobile, a perusal of the contract of Real and
Chattel Mortgage executed by the parties herein reveal their intent, that is - to
treat machinery and equipment as chattels.

In the first mortgage contract, reflective of the true intention of PBCOM and
EVERTEX was the typing in capital letters, immediately following the printed
caption of mortgage, of the phrase "real and chattel." So also, the "machineries
and equipment" in the printed form of the bank had to be inserted in the blank
space of the printed contract and connected with the word "building" by
typewritten slash marks. Now, then, if the machineries in question were
contemplated to be included in the real estate mortgage, there would have been
no necessity to ink a chattel mortgage specifically mentioning as part III of
Schedule A a listing of the machineries covered thereby. It would have sufficed
to list them as immovables in the Deed of Real Estate Mortgage of the land and
building involved. As regards the second contract, the intention of the parties is
clear and beyond question. It refers solely to chattels. The inventory list of the
mortgaged properties is an itemization of 63 individually described machineries
while the schedule listed only machines and 2,996,880.50 worth of finished
cotton fabrics and natural cotton fabrics.

UNDER PRINCIPLE OF STOPPEL

Assuming 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. As far back as Navarro v. Pineda, 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.

2) Sale of the Properties Not Included in the Subject of Chattel Mortgage is Not
Valid

The auction sale of the subject properties to PBCom is void. 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.
Section 7 provides 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." Since the disputed machineries were acquired later after the
two mortgage contracts were executed, 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 lease and sale of said personal properties were irregular and illegal
because they were not duly foreclosed nor sold at the auction, no valid title
passed in its favor. Consequently, the sale thereof to Ruby Tsai is also a nullity
under the elementary principle of nemo dat quod non habet, one cannot give
what one does not have.

Serg's v. PCI Leasing

Sergs Products, Inc. vs. PCI Leasing G.R. No. 137705. August 22, 2000

FACTS:

PCI Leasing and Finance filed a complaint for sum of money, with an application
for a writ of replevin.
Judge issued a writ of replevin directing its sheriff to seize and deliver the
machineries and equipment to PCI Leasing after 5 days and upon the payment of
the necessary expenses.

The sheriff proceeded to petitioner's factory, seized one machinery, with word
that he would return for other machineries.

Petitioner (Sergs Products) filed a motion for special protective order to defer
enforcement of the writ of replevin.

PCI Leasing opposed the motion on the ground that the properties were still
personal and therefore can still be subjected to seizure and writ of replevin.

Petitioner asserted that properties sought to be seized were immovable as

defined in Article 415 of the Civil Code.

Sheriff was still able to take possession of two more machineries

In its decision on the original action for certiorari filed by the Petitioner, the
appellate court, Citing the Agreement of the parties, held that the subject
machines were personal property, and that they had only been leased, not
owned, by petitioners; and ruled that the "words of the contract are clear and
leave no doubt upon the true intention of the contracting parties."

ISSUE: Whether or not the machineries became real property by virtue of

immobilization.

Ruling:

Petitioners contend that the subject machines used in their factory were not
proper subjects of the Writ issued by the RTC, because they were in fact real
property.

Writ of Replevin: Rule 60 of the Rules of Court provides that writs of replevin are
issued for the recovery of personal property only.

Article 415 (5) of the Civil Code provides that machinery, receptacles,
instruments or implements intended by the owner of the tenement for an
industry or works which may be carried on in a building or on a piece of land, and
which tend directly to meet the needs of the said industry or works

In the present case, the machines that were the subjects of the Writ of Seizure
were placed by petitioners in the factory built on their own land.They were
essential and principal elements of their chocolate-making industry.Hence,
although each of them was movable or personal property on its own, all of them
have become immobilized by destination because they are essential and
principal elements in the industry.

However, contracting parties may validly stipulate that a real property be

considered as personal. After agreeing to such stipulation, they are consequently
estopped from claiming otherwise.Under the principle of estoppel, a party to a
contract is ordinarily precluded from denying the truth of any material fact found
therein.

Section 12.1 of the Agreement between the parties provides The PROPERTY is,
and shall at all times be and remain, personal property notwithstanding that the
PROPERTY or any part thereof may now be, or hereafter become, in any manner
affixed or attached to or embedded in, or permanently resting upon, real
property or any building thereon, or attached in any manner to what is
permanent.

The machines are personal property and they are proper subjects of the Writ of
Replevin .

ENRIQUE V OROSA

FACTS: Enrique Lopez is a resident of Balayan Batangas and owner of Lopez

sawmill, and hereinto referred as the plaintiff in the case while Vicente Orosa jr.
also of the same address is the respondent. Vicente Orosa invited Enrique lopez
to join them in investing in a theater business, Although Lopez expressed his
unwillingness to join orosa, he supplied them with the necessary lumber for the
construction of the building on which is said to be contructed on the lot of orosa,
the total lumber supplied amounting to 62,255.85 pesos, of which orosa was able
to pay only 20,848.50 pesos leaving a balance of 41,771.35 pesos. On nov
12,1947 Lopez filed a case against Vicente orosa and plaza theater inc. praying
that defendants be sentenced to pay him jointly and severally the sum of
P41,771.35, with legal interest from the firing of the action; that in case
defendants fail to pay the same, that the building and the land covered by OCT
No. O-391 owned by the corporation be sold at public auction and the proceeds
thereof be applied to said indebtedness; or that the 420 shares of the capital
stock of the Plaza Theatre, Inc., assigned by Vicente Orosa, Jr., to said plaintiff be
sold at public auction for the same purpose; and for such other remedies as may
be warranted by the circumstances. Plaintiff also caused the annotation of a
notice of lis pendens on said properties with the Register of Deeds. Issues: 1)
whether a materialman's lien for the value of the materials used in the
construction of a building attaches to said structure alone and does not extend to
the land on which the building is adhered to; and (2) whether the lower court and
the Court of Appeals erred in not providing that the material mans liens is
superior to the mortgage executed in favor surety company not only on the
building but also on the land. Held: The two cases were heard jointly and in a
decision dated 30 October 1952, the lower Court held that Orosa and the Plaza
Theatre, Inc., were jointly liable for the unpaid balance of the cost of lumber used
in the construction of the building and the plaintiff thus acquired the
materialman's lien over the same; the lien being merely confined to the building
and did not extend to the land on which the construction was made.

Yap vs. Taada

Doctrine: Article 415, par. 3 of the Civil Code considers and immovable property
as everything attached to an immovable in a fixed manner, in such a way that it
cannot be separated therefrom without breaking the material or deteriorating
the object. The pump does not fit this description. It could be, and was, in
fact,separated from Yaps premises without being broken of suffering
deterioration. Obviously, the separation or removal of the pump involved nothing
more complicated that the loosening of bolts or dismantling of other fasteners.

Facts: The case began in the City Court of Cebu with the filing of Goulds Pumps
International (Phil), Inc. of a complaint against Yap and his wife seeking recovery
of P1,459.30, representing the balance of the price and installation cost of a
water pump in the latters premises. The Court rendered judgment in favor of
herein respondent after they presented evidence ex-parte due to failure of
petitioner Yap to appear before the Court. Petitioner then appealed to the CFI,
particularly to the sale of Judge Tanada. For again failure to appear for pre-trial,
Yap was declared in default. He filed for a motion for reconsideration which was
denied by Judge Tanada. On October 15, 1969, Tanada granted Goulds Motion
for Issuance of Writ of Execution. Yap forthwith filed an Urgent Motion for
Reconsideration of the said Order. In the meantime, the Sheriff levied on the
water pump in question and by notice scheduled the execution sale thereof. But
in view of the pendency of Yaps motion, suspension of sale was directed by
Judge Tanada. It appears, however, that this was not made known to the Sheriff
whocontinued with the auction sale and sold the property to the highest bidder,
Goulds. Because of such, petitioner filed a Motion to Set Aside Execution Sale
and to Quash Alias Writ of Execution. One of his arguments was that the sale was
made without the notice required by Sec. 18, Rule 29 of the New Rules of Court,
i.e. notice by publication in case of execution of sale of real property, the pump
and its accessories being immovable because attached to the ground with the
character of permanency. Such motion was denied by the CFI.

Issue: Whether or not the pump and its accessories are immovable property

Held: No. The water pump and its accessories are NOT immovable properties.
The argument of Yap that the water pump had become immovable property by
its being installed in his residence is untenable. Article 415, par. 3 of the Civil
Code considers and immovable property as everything attached to an
immovable in a fixed manner, in such a way that it cannot be separated
therefrom without breaking the material or deteriorating the object. The pump
does not fit this description. It could be, and was, in fact,separated from Yaps
premises without being broken of suffering deterioration. Obviously, the
separation or removal of the pump involved nothing more complicated that the
loosening of bolts or dismantling of other fasteners.

Machinery & Engineering Supplies vs. CA

Doctrine: The special civil action of replevin is applicable only to personal

property. When the machinery and equipment in question appeared to be
attached to the land, particularly to the concrete foundation of said premises, in
a fixed manner, in such a way that the former could not be separated from the
latter without breaking the material or deterioration of the object, it had become
an immovable property under Art. 415(3).
Facts: Herein petitioner filed a complaint for replevin in the CFI of Manila against
Ipo Limestone Co., and Dr. Antonio Villarama, for the recovery of the machineries
and equipments sold and delivered to said defendants at their factory in Barrio
Bigti, Norzagaray, Bulacan. The respondent judge issued an order, commanding
Provincial Sheriff of Bulacan to seize and take immediate possession of the
properties specified in the order. Two deputy sheriffs of Bulacan, Ramon S.
Roco(president of Machinery), and a crew of technical men and laborers
proceeded to Bigti, for the purpose of carrying the courts order into effect.
Leonardo Contreras, Manager of the respondent Company, and Pedro Torres, in
charge thereof, met the deputy sheriffs, and Contreras handed to them a letter
addressed to Atty. Palad (ex-officio Provincial Sheriff of Bulacan), protesting
against the seizure of the properties in question, on the ground that they are not
personal properties.

Later on, they went to the factory. Rocos attention was called to the fact that the
equipments could not possibly be dismantled without causing damages or
injuries to the wooden frames attached to them. But Roco insisted in dismantling
the equipments on his own responsibility, alleging that the bond was posted for
such eventuality, the deputy sheriffs directed that some of the supports thereof
be cut.

The defendant Company filed an urgent motion for the return of the properties
seized by the deputy sheriffs. On the same day, the trial court issued an order,
directing the Provincial Sheriff of Bulacan to return the machineries to the place
where they were installed. The deputy sheriffs returned the properties seized, by
depositing them along the road, near the quarry, of the defendant Company, at
Bigti, without the benefit of inventory and without re-installing them in their
former position and replacing the destroyed posts, which rendered their use
impracticable.

The trial court ordered Roco to furnish the Provincial Sheriff with the necessary
funds, technical men, laborers, equipments and materials. Roco raised the issue
to the CA; a writ of preliminary injunction was issued but the CA subsequently
dismissed for lack of merit. A motion for reconsideration was denied.

Issue: Whether or not the machineries and equipments were personal properties
and, therefore, could be seized by replevin.

Held: No. The special civil action known as replevin, governed by the Rules of
Court, is applicable only to personal property. When the sheriff repaired to the
premises of respondent company, the machinery and equipment in question
appeared to be attached to the land, particularly to the concrete foundation of
said premises, in a fixed manner, in such a way that the former could not be
separated from the latter without breaking the material or deterioration of the
object. Hence, in order to remove said outfit, it became necessary, not only to
unbolt the same, but, also, to cut some of its wooden supports. Moreover, said
machinery and equipment were intended by the owner of the tenement for an
industry carried on said immovable and tended directly to meet the needs of
the said industry. For these reasons, they were already immovable property
pursuant to paragraphs 3 and 5 of Article 415 of the Civil Code.

Mr. Ramon Roco, insisted on the dismantling of at his own responsibility,

stating that, precisely, that is the reason why plaintiff posted a bond. In this
manner, petitioner clearly assumed the corresponding risks. It is well settled
that, when restitution of what has been ordered, the goods in question shall be
returned in substantially the same condition as when taken. It follows that
petitioner must also do everything necessary to the reinstallation of said
property in conformity with its original condition.

ATLANTIC GULF AND PACIFIC COMPANY OFMANILA, INC., vs. COURT OF

APPEALS,

G.R. Nos. 114841-42, 20 October 1995, 247 SCRA 606REGALADO, J p:Petitioner

moves for the reconsideration of our judgment promulgated in this case on
August 23, 1995contending that (1) private respondents are
permittedthereunder to recover damages twice for the same actor omission, and
(2) the interests adjudged on theawarded damages should be reckoned from the
date offinality of our aforesaid judgment rendered herein.We reject the first
submission. It is theorized bypetitioner that our affirmance of the judgment of
thetrial court, which granted damages for both the"damage proper to the land"
and "rentals for the sameproperty," runs afoul of the proscription in Article
2177of the Civil Code against double recovery of damagesfor the same
act.Petitioner overlooks the fact that private respondents,as plaintiffs in the
actions filed in the court below,specifically alleged that as a result of
petitioner'sdredging operations the soil of the former's property"became infertile,
salty, unproductive and unsuitablefor agriculture." They further averred that
petitioner'sheavy equipment "used to utilize (private respondents')land as a
depot or parking lot of these equipment(t)without paying any rent
therefor."Respondent Court of Appeals affirmed the factualfindings and
conclusions of the trial court on the natureand cause of the twin items of
damages sustained byprivate respondents, thus:The main reason why (private
respondents') propertieswere damaged, as found by the trial court, was due
tothe dredging operations undertaken by (petitioner) onthe area, which findings
are supported by the testimonyof Carlito Castillo, testifying in Civil Case No.
10276,and Teodora Dimaculangan, in Civil Case No. 10696. . .. Neither has
(petitioner) asseverated against (privaterespondents') submission that their
properties wereused by (petitioner) as a dump site for its equipmentand trucks,
and proof are the photographs of theirproperties showing tracks left by truck
tires on theirproperties. (Parenthetical indication of the partiesconcerned are
made for easy reference.)It is, therefore, clearly apparent that petitioner
wasguilty of two culpable transgressions on the propertyrights of private
respondents, that is, for the ruinationof the agricultural fertility or utility of the
soil of theirproperty and, further, for the unauthorized use of saidproperty as a
dump site or depot for petitioner's heavyequipment and trucks. Consequently,
albeit withdiffering amounts, both courts correctly awardeddamages both for the
destruction of the land and for theunpaid rentals, or more correctly denominated,
for thereasonable value of its use and occupation of thepremises. There is
consequently no merit in saidobjection of petitioner.The second proposition of
petitioner is better taken, inlight of the reconciliation and clarification
undertakenby the Court of the heretofore imprecise and varyingpronouncements
on the imposition of interest in judgments for a sum of money.In the recent case
of Eastern Shipping Lines, Inc. vs. Courtof Appeals, et al., the Court adopted
interpretative ruleson the matter of the imposable interest and the
accrualthereof. The rules pertinent to the interest involved inthe case at bar are
hereunder briefed as applied to thecontroversy on the computation and the
reckoning datethereof

When an obligation not constituting a loan orforbearance of money is breached,

interest on theamount of the damages awarded may be imposed atthe rate of six
percent (6%) per annum. No interest shallbe adjudged on unliquidated claims
unless the samecan be established with reasonable certainty. Since thepleadings
of herein private respondents in the trialcourt did not spell out said amounts with
certitude, thelegal interest thereon shall run only from thepromulgation of
judgment of said court, it being at thatstage that the quantification of damages
may bedeemed to have been reasonably ascertained.The actual base for the
computation of such legalinterest, however, shall be the amount as
finallyadjudged by this Court. Furthermore, when our judgment herein becomes
final and executory, the rateof legal interest shall be twelve percent (12%) from
suchfinality until the satisfaction of the total judgmentaccount, the interim period
being effectively equivalentto a forbearance of credit.ACCORDINGLY, and by way
of clarification, the judgment rendered by this Court in the instant caseshall be
understood to mean that the legal interest to bepaid by petitioner is six percent
(6%) of the amount duecomputed from September 6, 1990 when judgment
wasrendered by the trial court. Additionally, interest oftwelve percent (12%) shall
be imposed on such totalamount due upon the finality of the judgment of
theCourt herein until the full satisfaction thereof.SO ORDERED

Chavez v Public Estate Authority

Facts:On November 20, 1973, the government through the Commissioner of

Public Highways signeda contract with the Construction and Development
Corporation of the Philippines (CDCP) toreclaim certain foreshore and offshore
areas of Manila Bay. The contract also included theconstruction of Phases I and II
of the Manila-Cavite Coastal Road. CDCP obligated itself tocarry out all the works
in consideration of fifty percent of the total reclaimed land.On April 25, 1995 the
PEA entered into a Joint Venture Agreement (JVA) with AMARI todevelop the
Freedom Islands. This JVA was entered into through negotiation without
publicbidding.The Senate Committee on Government Corporations and Public
Enterprises, and theCommittee on Accountability of Public Officers and
Investigations, conducted a jointinvestigation. Among the conclusion are: that
the reclaimed lands PEA seeks to transfer to AMARI under the JVA are lands of
the public domain which the government has not classifiedas alienable lands and
therefore PEA cannot alienate these lands, the certificates of the titlecovering the
Freedom Islands are thus void, and the JVA itself is illegal.On December 5, 1997,
President Ramos created a Legal Task Force to conduct a study on thelegality of
the JVA. The Task Force upheld the legality of the JVA, contrary to the conclusions
of the Senate Committees.On April 27, 1998, Petitioner as taxpayer filed the
instant petition for mandamus with prayer for the issuance of a writ of
preliminary injunction and TRO. Petitioner contends the governmentstands to
lose billions of pesos in the sale by PEA of the reclaimed lands to AMARI.
Petitioner prays that PEA publicly disclose the terms of any renegotiation of the
JVA. Furthermore,petitioner assails the sale to AMARI of lands of the public
domains as blatant violation of Sec 3, Art XII of the Constitution prohibiting the
sale of alienable lands of the public domain to privatecorporations. Petitioner
assert that he seeks to enjoin the loss of billion of pesos in properties of the State
that are of public dominion.Issue:Whether or not the petitioner has legal standing
to bring the suit.Ratio Decidendi:The petitioner has standing to bring the
taxpayers suit because the petition seeks to compelPEA to comply with its
constitutional duties. This duties are particularly in answer of the right of citizens
to information on matters of public concern, and of a constitutional provision
intended toinsure the equitable distribution of alienable lands of the public
domain among Filipino citizens.Furthermore, the court considered that the
petition raised matters of transcendental importancetot eh public. The mere fact
that the petitioner is a citizen satisfies the requirement of personalinterest when
the proceeding involves the assertion of a public right. Also, ordinary
taxpayershave a right to initiate and prosecute actions questioning the validity of
acts or orders of government agencies or instrumentalities if the issues raise are
of paramount public interest andif they immediately affect the social, economic
and moral well being of the people.The amended JVA does not make the issue
moot and academic since this compels the court toinsure the government itself
does not violate a provision of the Constitution intended tosafeguard the national
patrimony. The content of the amended JVA seeks to transfer title andownership
of reclaimed lands to a single corporation. The court does not hesitate to resolve
thelegal or constitutional issues raised to formulate controlling principles to
guide the bench, bar and the public.

The instant case raises constitutional issues of transcendental importance to the

public. Courtcan resolve this case without determining any factual issue related
to the case. The instant caseis a petition for mandamus which falls under the
original jurisdiction of the Court. Furthermore,PEA was under a positive legal duty
to disclose to the public the terms and conditions for thesale of its lands. The
principle of exhaustion of administrative remedies does not apply when theissue
involved is purely legal or constitutional question.The right to information
includes official information on on-going negotiations before a finalagreement as
required by the constitution.The Supreme Court granted the petition. PEA and
Amari Coastal Bay Development Corporationare permanently enjoined from
implementing the amended JVA which is hereby declared nulland void ab initio.

Salvador H. Laurel, petitioner, vs. Ramon Garcia,

as head of the Asset Privatization Trust, Raul Manglapus, as Secretary of Foreign

Affairs, and Catalino Macaraig, as Executive Secretary, respondents.
Facts: The subject property in this case is one of the 4 properties in Japan
acquired by the Philippine government under the Reparations Agreement
entered into with Japan, the Roppongi property. The said property was acquired
from the Japanese government through Reparations Contract No. 300. It consists
of the land and building for the Chancery of the Philippine Embassy. As intended,
it became the site of the Philippine Embassy until the latter was transferred to
Nampeidai when the Roppongi building needed major repairs. President Aquino
created a committee to study the disposition/utilization of Philippine government
properties in Tokyo and Kobe, Japan. The President issued EO 296 entitling non-
Filipino citizens or entities to avail of separations' capital goods and services in
the event of sale, lease or disposition.

Issues: Whether or not the Chief Executive, her officers and agents, have the
authority and jurisdiction, to sell the Roppongi property.

Ruling: It is not for the President to convey valuable real property of the
government on his or her own sole will. Any such conveyance must be
authorized and approved by a law enacted by the Congress. It requires executive
and legislative concurrence. It is indeed true that the Roppongi property is
valuable not so much because of the inflated prices fetched by real property in
Tokyo but more so because of its symbolic value to all Filipinos, veterans and
civilians alike. Whether or not the Roppongi and related properties will eventually
be sold is a policy determination where both the President and Congress must
concur. Considering the properties' importance and value, the laws on conversion
and disposition of property of public dominion must be faithfully followed.

Laurel vs. Garcia

Salvador H. Laurel vs. Ramon Garcia, et. Al.

G. R. No. 92013. July 25, 1990.

Doctrine: A property continues to be part of the public domain, not available for
private appropriation or ownership until there is a formal declaration on the part
of the government to withdraw it from being such.

Facts: The subject Roppongi property is one of the four properties in Japan
acquired by the Philippine government under the Reparations Agreement
entered into with Japan on 9 May 1956, the other lots being the Nampeidai
Property (site of Philippine Embassy Chancery), the Kobe Commercial Property
(Commercial lot used as warehouse and parking lot of consulate staff), and the
Kobe Residential Property (a vacant residential lot).

The properties and the capital goods and services procured from the Japanese
government for national development projects are part of the indemnification to
the Filipino people for their losses in life and property and their suffering during
World War II.

The Reparations Agreement provides that reparations valued at $550 million

would be payable in 20 years in accordance with annual schedules of
procurements to be fixed by the Philippine and Japanese governments (Article 2,
Reparations Agreement).

The Roppongi property was acquired from the Japanese government under the
Second Year Schedule and listed under the heading Government Sector,
through Reparations Contract 300 dated 27 June 1958. The Roponggi property
consists of the land and building for the Chancery of the Philippine Embassy. As
intended, it became the site of the Philippine Embassy until the latter was
transferred to Nampeidai on 22 July 1976 when the Roppongi building needed
major repairs. Due to the failure of our government to provide necessary funds,
the Roppongi property has remained undeveloped since that time.

During the incumbency of President Aquino, a proposal was made by former

Philippine Ambassador to Japan, Carlos J. Valdez, to lease the subject property to
Kajima Corporation, a Japanese firm, in exchange of the construction of 2
buildings in Roppongi, 1 building in Nampeidai, and the renovation of the
Philippine Chancery in Nampeidai. The Government did not act favorably to said
proposal, but instead, on 11 August 1986, President Aquino created a committee
to study the disposition or utilization of Philippine government properties in Tokyo
and Kobe though AO-3, and AO 3-A to 3-D. On 25 July 1987, the President issued
EO 296 entitling non-Filipino citizens or entities to avail of reparations capital
goods and services in the event of sale, lease or disposition. The four properties
in Japan including the Roppongi were specifically mentioned in the first
Whereas clause. Amidst opposition by various sectors, the Executive branch of
the government has been pushing, with great vigor, its decision to sell the
reparations properties starting with the Roppongi lot.

Two petitions for prohibition were filed seeking to enjoin respondents, their
representatives and agents from proceeding with the bidding for the sale of the
3,179 sq. m. of land at 306 Ropponggi, 5-Chome Minato-ku, Tokyo, Japan
scheduled on 21 February 1990; the temporary restaining order of which was
granted by the court on 20 February 1990. In G.R. No. 92047, a writ of
mandamus was prayed for to compel the respondents to fully disclose to the
public the basis of their decision to push through with the sale of the Roppongi
property inspite of strong public opposition and to explain the proceedings which
effectively prevent the participation of Filipino citizens and entities in the bidding
process.

Issues: Can the Roppongi property and others of its kind be alienated by the
Philippine Government?

Does the Chief Executive, her officers and agents, have the authority and
jurisdiction, to sell the Roppongi property?

Held: No. The Roppongi property was acquired together with the other properties
through reparation agreements. They were assigned to the government sector
and that the Roppongi property was specifically designated under the agreement
to house the Philippine embassy. It is of public dominion unless it is convincingly
shown that the property has become patrimonial. The respondents have failed to
do so.

As property of public dominion, the Roppongi lot is outside the commerce of

man. It cannot be alienated. Its ownership is a special collective ownership for
general use and payment, in application to the satisfaction of collective needs,
and resides in the social group. The purpose is not to serve the State as the
juridical person but the citizens; it is intended for the common and public welfare
and cannot be the object of appropriation.

The fact that the Roppongi site has not been used for a long time for actual
Embassy service doesnt automatically convert it to patrimonial property. Any
such conversion happens only if the property is withdrawn from public use. A
property continues to be part of the public domain, not available for private
appropriation or ownership until there is a formal declaration on the part of the
government to withdraw it from being such.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 136438 November 11, 2004
TEOFILO C. VILLARICO, petitioner,
vs.
VIVENCIO SARMIENTO, SPOUSES BESSIE SARMIENTO-DEL MUNDO & BETH DEL
MUNDO, ANDOKS LITSON CORPORATION and MARITES
CARINDERIA, respondents.

DECISION

SANDOVAL-GUTIERREZ, J.:
Before us is a petition for review on certiorari of the Decision1 of the Court of Appeals
dated December 7, 1998 in CA-G.R. CV No. 54883, affirming in toto the Decision 2 of the
Regional Trial Court (RTC) of Paraaque City, Branch 259, dated November 14, 1996, in
Civil Case No. 95-044.
The facts of this case, as gleaned from the findings of the Court of Appeals, are:
Teofilo C. Villarico, petitioner, is the owner of a lot in La Huerta, Paraaque City, Metro
Manila with an area of sixty-six (66) square meters and covered by Transfer Certificate of
Title (T.C.T.) No. 95453 issued by the Registry of Deeds, same city.
Petitioners lot is separated from the Ninoy Aquino Avenue (highway) by a strip of land
belonging to the government. As this highway was elevated by four (4) meters and
therefore higher than the adjoining areas, the Department of Public Works and Highways
(DPWH) constructed stairways at several portions of this strip of public land to enable the
people to have access to the highway.
Sometime in 1991, Vivencio Sarmiento, his daughter Bessie Sarmiento and her husband
Beth Del Mundo, respondents herein, had a building constructed on a portion of said
government land. In November that same year, a part thereof was occupied by Andoks
Litson Corporation and Marites Carinderia, also impleaded as respondents.
In 1993, by means of a Deed of Exchange of Real Property, petitioner acquired a 74.30
square meter portion of the same area owned by the government. The property was
registered in his name as T.C.T. No. 74430 in the Registry of Deeds of Paraaque City.
In 1995, petitioner filed with the RTC, Branch 259, Paraaque City, a complaint for accion
publiciana against respondents, docketed as Civil Case No. 95-044. He alleged inter alia
that respondents structures on the government land closed his "right of way" to the
Ninoy Aquino Avenue; and encroached on a portion of his lot covered by T.C.T. No. 74430.
Respondents, in their answer, specifically denied petitioners allegations, claiming that
they have been issued licenses and permits by Paraaque City to construct their
buildings on the area; and that petitioner has no right over the subject property as it
belongs to the government.
After trial, the RTC rendered its Decision, the dispositive portion of which reads:
"WHEREFORE, premises considered, judgment is hereby rendered:
1. Declaring the defendants to have a better right of possession over the
subject land except the portion thereof covered by Transfer Certificate of
Title No. 74430 of the Register of Deeds of Paraaque;
2. Ordering the defendants to vacate the portion of the subject premises
described in Transfer Certificate of Title No. 74430 and gives its possession
to plaintiff; and
3. Dismissing the claim for damages of the plaintiff against the defendants,
and likewise dismissing the claim for attorneys fees of the latter against
the former.
Without pronouncement as to costs.
SO ORDERED."3
The trial court found that petitioner has never been in possession of any portion of the
public land in question. On the contrary, the defendants are the ones who have been in
actual possession of the area. According to the trial court, petitioner was not deprived of
his "right of way" as he could use the Kapitan Tinoy Street as passageway to the
highway.
On appeal by petitioner, the Court of Appeals issued its Decision affirming the trial
courts Decision in toto, thus:
"WHEREFORE, the judgment hereby appealed from is hereby AFFIRMED in toto,
with costs against the plaintiff-appellant.
SO ORDERED."4
In this petition, petitioner ascribes to the Court of Appeals the following assignments of
error:
"I
THE FINDINGS OF FACT OF THE HON. COURT OF APPEALS CONTAINED A
CONCLUSION WITHOUT CITATION OF SPECIFIC EVIDENCE ON WHICH THE SAME
WAS BASED.
II
THE HON. COURT OF APPEALS ERRED IN CONSIDERING THAT THE ONLY ISSUE IN
THIS CASE IS WHETHER OR NOT THE PLAINTIFF-APPELLANT HAS ACQUIRED A
RIGHT OF WAY OVER THE LAND OF THE GOVERNMENT WHICH IS BETWEEN HIS
PROPERTY AND THE NINOY AQUINO AVENUE.
III
THE HON. COURT OF APPEALS ERRED IN CONCLUDING THAT ACCION PUBLICIANA
IS NOT THE PROPER REMEDY IN THE CASE AT BAR.
IV
 THE HON. COURT OF APPEALS ERRED IN CONCLUDING THAT THE EXISTENCE OF
THE PLAINTIFF-APPELLANTS RIGHT OF WAY DOES NOT CARRY POSSESSION OVER
THE SAME.
V
THE HON. COURT OF APPEALS ERRED IN NOT RESOLVING THE ISSUE OF WHO HAS
THE BETTER RIGHT OF POSSESSION OVER THE SUBJECT LAND BETWEEN THE
PLAINTIFF-APPELLANT AND THE DEFENDANT-APPELLEES."5
In their comment, respondents maintain that the Court of Appeals did not err in ruling
that petitioners action for accion publiciana is not the proper remedy in asserting his
"right of way" on a lot owned by the government.
Here, petitioner claims that respondents, by constructing their buildings on the lot in
question, have deprived him of his "right of way" and his right of possession over a
considerable portion of the same lot, which portion is covered by his T.C.T. No. 74430 he
acquired by means of exchange of real property.
It is not disputed that the lot on which petitioners alleged "right of way" exists belongs to
the state or property of public dominion. Property of public dominion is defined by Article
420 of the Civil Code as follows:
"ART. 420. The following things are property of public dominion:
(1) Those intended for public use such as roads, canals, rivers, torrents, ports and
bridges constructed by the State, banks, shores, roadsteads, and other of similar
character.
(2) Those which belong to the State, without being for public use, and are
intended for some public service or for the development of the national wealth."
Public use is "use that is not confined to privileged individuals, but is open to the
indefinite public."6 Records show that the lot on which the stairways were built is for the
use of the people as passageway to the highway. Consequently, it is a property of public
dominion.
Property of public dominion is outside the commerce of man and hence it: (1) cannot be
alienated or leased or otherwise be the subject matter of contracts; (2) cannot be
acquired by prescription against the State; (3) is not subject to attachment and
execution; and (4) cannot be burdened by any voluntary easement. 7
Considering that the lot on which the stairways were constructed is a property of public
dominion, it can not be burdened by a voluntary easement of right of way in favor of
herein petitioner. In fact, its use by the public is by mere tolerance of the government
through the DPWH. Petitioner cannot appropriate it for himself. Verily, he can not claim
any right of possession over it. This is clear from Article 530 of the Civil Code which
provides:
"ART. 530. Only things and rights which are susceptible of being appropriated may
be the object of possession."
Accordingly, both the trial court and the Court of Appeals erred in ruling that respondents
have better right of possession over the subject lot.
However, the trial court and the Court of Appeals found that defendants buildings were
constructed on the portion of the same lot now covered by T.C.T. No. 74430 in
petitioners name. Being its owner, he is entitled to its possession.
WHEREFORE, the petition is DENIED. The assailed Decision of the Court of Appeals dated
December 7, 1998 in CA-G.R. CV No. 54883 is AFFIRMED with MODIFICATION in the sense
that neither petitioner nor respondents have a right of possession over the disputed lot
where the stairways were built as it is a property of public dominion. Costs against
petitioner.
SO ORDERED.
Panganiban, (Chairman), Carpio Morales and Garcia, JJ., concur.
Corona, J., on leave.
Republic vs. Court of Appeals
Doctrine: When the sea moved towards the estate and the tide invaded it, the invaded
property became foreshore land and passed the realm of the public domain and
accordingly cannot be a subject of a free patent.
Facts: Josefina Morato, private respondent, applied sometime in 1972 a free patent on a
parcel of land situated at Pinagtalleran, Calauag, Quezon. On January 16, 1974, the
patent was approved and the Register of Deeds issued an Original Certificate of Title in
favor of Morato on February 4, 1974. Both the free patent and the title specifically
required that the land shall not be alienated or encumbered within five years from the
date of the issuance of the patent. Upon reports that Morato encumbered the said land,
violating the 5-year prohibition of the patent, the District Land Officer in Lucena City
conducted an investigation. The officer found out that Morato mortgaged the said
property to Nenita Co and Antonio Quilatan on October 24, 1974, who subsequently built
a house on it. Two years later, or on February 2, 1976, part of the property was also
leased by Morato to Perfecto Advincula where a warehouse was thereafter constructed.
Moreover it was found out that the said property was a portion of the Calauag Bay, five to
six feet deep under water during high tide and two feet deep at low tide, and not suitable
to vegetation. Petitioner then filed a complaint for the cancellation of the title and
reversion of the parcel of land to the public domain on the grounds that the land is a
foreshore land and was mortgaged and leased within the five-year prohibitory period. The
lower court dismissed the complaint ruling that there was no violation of the five-year
ban since Morato did not encumber nor alienate the land as it was merely leased, and
the mortgage the latter entered into with Nenita Co and Antonio Quilatan covered only
the improvement and not the land itself. Upon appeal, CA affirmed in toto the courts
decision. Hence, this petition.
Issue: Whether the questioned land is a foreshore land and thus must be reverted to the
public domain.
Held: Yes. The Supreme Court defined a foreshore land as that parcel of land which is
between high and low water and left dry by the flux and reflux of the tides; it is that
strip of land that lies between the high and low water marks and that is alternatively
wet and dry according to the flow of the tide. From the factual findings of the lower
court, it was found out that years before the issuance of the free patent to private
respondent, the questioned land was subjected to several natural calamities like
earthquakes and typhoons that caused severe erosion of the land. Then private
respondent introduced improvements and developments to the land. At the time then of
the issuance of free patent of land to Morato, it was not covered by water but due to the
gradual sinking of the land caused by natural calamities, the sea advances had
permanently invaded a portion of subject land. During high tide, at least half of the land
is 6 feet deep under water and three feet deep during low tide. The Calauag Bay has
extended up to a portion of the land. Thus, uncontestedly, the land has become a
foreshore land and is now a part of the public domain pursuant to Article 420 of the New
Civil Code being part of the shores defined therein. Accordingly, it cannot be disposed
of by the government and appropriated by a private individual, i.e. be a subject of a free
patent.
Province of Zamboanga Del Norte v. City of Zamboanga, et al
FACTS: After Zamboanga Province was divided into two (Zamboanga Del Norte and
Zamboanga Del Sur), Republic Act 3039 was passed providing that--
"All buildings, properties, and assets belonging to the former province of Zamboanga and
located within the City of Zamboanga are hereby transferred free of charge in favor of
the City of Zamboanga."
Suit was brought alleging that this grant without just compensation was unconstitutional
because it deprived the province of property without due process. Included in the
properties were the capital site and capitol building, certain school sites, hospital and
leprosarium sites, and high school playgrounds.
ISSUES:
Are the properties mentioned, properties for public use or patrimonial property?
Should the city pay for said properties?
HELD:
If we follow the Civil Code classification, only the high school playgrounds are for public
use since it is the only one that is available to the general public, and all the rest are
patrimonial property since they are not devoted to public use but to public service. But if
we follow the law on Municipal Corporations, as long as the purpose is for a public
service, the property should be considered for PUBLIC USE.
If the Civil Code classification is used, since almost all the properties involved are
patrimonial, the law would be unconstitutional since the province would be deprived of
its own property without just compensation. If the law on Municipal Corporations would
be followed, the properties would be of public dominion, and therefore NO
COMPENSATION would be required. It is the law on Municipal Corporations that should be
followed. Firstly, while the Civil Code may classify them as patrimonial, they should not
be regarded as ordinary private property. They should fall under the control of the State,
otherwise certain governmental activities would be impaired. Secondly, Art. 424, 2nd
paragraph itself says "without prejudice to the provisions of special laws."
Rabuco vs. Villegas
Doctrine: When a property is owned by a political subdivision in its public and
governmental capacity, the Congress has absolute control as distinguished from
patrimonial property owned by it in its private or proprietary capacity of which it could
not be deprived without due process and without just compensation.
Facts: In the early morning of April 19, 1970, a large fire of undetermined origin gutted
the Malate area including the lot on which petitioners had built their homes and
dwellings. Respondents city officials then took over the lot and kept petitioners from
reconstructing or repairing their burned dwellings. At petitioners instance, the Court
issued on June 17, 1970 a temporary restraining order enjoining respondents city officials
from performing any act constituting an interference in or disturbance of herein
petitioners possession of Lot No. 21-B, Block No. 610, of the Cadastral Survey of the City
of Manila as safeguarded them under the Courts subsisting preliminary injunction of
August 17, 1965 pursuant to RA 3120.
Issue: Whether RA 3120 is unconstitutional as it infringes the right to due process.
Held: No. The Court herein upholds the constitutionality of Republic Act 3120 on the
strength of the established doctrine that the subdivision of communal land of the State
(although titled in the name of the municipal corporation) and conveyance of the
resulting subdivision lots by sale on installment basis to bona fide occupants by
Congressional authorization and disposition does not constitute infringements of the due
process clause or the eminent domain provisions of the Constitution but operates simply
as a manifestation of the legislatures right of control and power to deal with State
property.
Macasiano vs. Diokno
Doctrine: Properties of the local government which are devoted to public service are
deemed public and are under the absolute control of Congress. Hence, local governments
have no authority whatsoever to control or regulate the use of public properties unless
specific authority is vested upon them by Congress.
Facts: On June 13, 1990, the respondent municipality passed Ordinance No. 86, Series of
1990 which authorized the closure of J. Gabriel, G.G. Cruz, Bayanihan, Lt. Garcia
Extension and Opena Streets located at Baclaran, Paraaque, Metro Manila and the
establishment of a flea market thereon, pursuant to MMC Ordinance No. 2, Series of
1979, authorizing and regulating the use of certain city and/or municipal streets, roads
and open spaces within Metropolitan Manila as sites for flea market and/or vending
areas, under certain terms and conditions..
On June 20, 1990, the municipal council of Paraaque issued a resolution authorizing
Paraaque Mayor Walfrido N. Ferrer to enter into contract with any service cooperative
for the establishment, operation, maintenance and management of flea markets and/or
vending areas.
On August 8, 1990, respondent municipality and respondent Palanyag, a service
cooperative, entered into an agreement whereby the latter shall operate, maintain and
manage the flea market in the aforementioned streets with the obligation to remit dues
to the treasury of the municipal government of Paraaque. Consequently, market stalls
were put up by respondent Palanyag on the said streets.
On September 13, 1990, petitioner Brig. Gen. Macasiano, PNP Superintendent of the
Metropolitan Traffic Command, ordered the destruction and confiscation of stalls along
G.G. Cruz and J. Gabriel St. in Baclaran. These stalls were later returned to respondent
Palanyag.
Issue: Whether or not an ordinance or resolution issued by the municipal council of
Paraaque authorizing the lease and use of public streets or thoroughfares as sites for
flea markets is valid.
Held: No. The ordinance or resolution authorizing the lease and use of public streets or
thoroughfares as sites for a flea market is invalid. Property for public use, in the
provinces, cities and municipalities, consists of the provincial roads, city streets, the
squares, fountains, public waters, promenades, and public works for public service paid
for by said provinces, cities or municipalities. All other property possessed by any of
them is patrimonial and shall be governed by this Code, without prejudice to the
provisions of special laws.
Based on the foregoing, J. Gabriel G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena
streets are local roads used for public service and are therefore considered public
properties of respondent municipality. Properties of the local government which are
devoted to public service are deemed public and are under the absolute control of
Congress. Hence, local governments have no authority whatsoever to control or regulate
the use of public properties unless specific authority is vested upon them by Congress.
Even assuming, in gratia argumenti, that respondent municipality has the authority to
pass the disputed ordinance, the same cannot be validly implemented because it cannot
be considered approved by the Metropolitan Manila Authority due to non-compliance by
respondent municipality of the conditions imposed by the former for the approval of the
ordinance.
Further, it is of public notice that the streets along Baclaran area are congested with
people, houses and traffic brought about by the proliferation of vendors occupying the
streets. To license and allow the establishment of a flea market along J. Gabriel, G.G.
Cruz, Bayanihan, Lt. Garcia Extension and Opena streets in Baclaran would not help in
solving the problem of congestion. Verily, the powers of a local government unit are not
absolute. They are subject to limitations laid down by toe Constitution and the laws such
as our Civil Code. Moreover, the exercise of such powers should be subservient to
paramount considerations of health and well-being of the members of the community.
Every local government unit has the sworn obligation to enact measures that will
enhance the public health, safety and convenience, maintain peace and order, and
promote the general prosperity of the inhabitants of the local units. Based on this
objective, the local government should refrain from acting towards that which might
prejudice or adversely affect the general welfare.
Mindanao Bus Co. vs. City Assessor
Doctrine: Movable equipment, to be immobilized in contemplation of Article 415 of the
Civil Code, must be the essential and principal elements of an industry or works which
are carried on in a building or on a piece of land. Thus, where the business is one of
transportation, which is carried on without a repair or service shop, and its rolling
equipment is repaired or serviced in a shop belonging to another, the tools and
equipment in its repair shop which appear movable are merely incidentals and may not
be considered immovables , and, hence, not subject to assessment as real estate for
purposes of the real estate tax.
Facts: Respondent City Assessor of Cagayan de Oro City assessed at P4,400 petitioners
equipment in its repair or service shop. Petitioner appealed the assessment to the
respondent Board of Tax Appeals on the ground that the same are not realty. The Board
of Tax Appeals of the City sustained the city assessor, so petitioner herein filed with the
Court of Tax Appeals a petition for the review of the assessment. The Court of Tax
Appeals having sustained the respondent city assessors ruling, and having denied a
motion for reconsideration, petitioner brought the case to this Court.
Issue: Whether the Tax Court erred in its interpretation of paragraph 5 of Article 415 of
the New Civil Code, and holding that pursuant thereto, the movable equipments are
taxable realties, by reason of their being intended or destined for use in an industry.
Held: Yes. Movable equipments, to be immobilized in contemplation of Article 415 of the
Civil Code, must be the essential and principal elements of an industry or works which
are carried on in a building or on a piece of land. Thus, where the business is one of
transportation, which is carried on without a repair or service shop, and its rolling
equipment is repaired or serviced in a shop belonging to another, the tools and
equipments in its repair shop which appear movable are merely incidentals and may not
be considered immovables, and, hence, not subject to assessment as real estate for
purposes of the real estate tax.
Similarly, the tool and equipment in question in this instant case are, by their nature, not
essential and principal elements of petitioners business of transporting passengers and
cargoes by motor trucks. They are merely incidentals acquired as movables and used
only for expediency to facilitate and/or improve its service. Even without such tools and
equipment, its business may be carried on, as petitioner has carried on without such
equipments, before the war. The transportation business could be carried on without the
repair or service shop if its rolling equipment is repaired or serviced in another shop
belonging to another.
Article 415 of the Civil Code requires that the industry or works be carried on in a building
or on a piece of land. But in the case at bar the equipments in question are destined only
to repair or service the transportation business, which is not carried on in a building or
permanently on a piece of land, as demanded by the law. Said equipment may not,
therefore, be deemed as real property.
Makati Leasing vs. Wearever Textile
Doctrine: Where a chattel mortgage is constituted on a machinery permanently attached
to the ground, the machinery is to be considered as personal property.
Facts: Wearever Textile Mills, Inc. discounted and assigned several receivables with
Makati Leasing and Financial Corp. under a Receivable Purchase Agreement so that the
latter would lend money to the former. In order to secure the collection of the receivables
assigned, Wearever executed a Chattel Mortgage over certain raw materials inventory as
well as a machinery (Artos Aero Dryer Stentering Range). Upon default of Wearever in
paying what is due, Makati Leasing filed a petition for extrajudicial foreclosure of the
properties mortgaged to it. The Sheriff assigned to execute such foreclosure, however,
failed to enter the premises of Wearever to effect the seizure of the machinery.
Afterwhich, petitioner filed a complaint for a judicial foreclosure with the RTC of Rizal
which was granted even after the motion for reconsideration filed by the private
respondent. Enforcing then the writ of seizure issued by the lower court, the Sheriff
removed the main drive motor of the machinery. Upon appeal, CA reversed the ruling of
the RTC and ordered the return of the motor to Wearever since the said machinery
cannot be the subject of a replevin and chattel mortgage for it is a real property pursuant
to Art. 415 (3) of the NCC. CA argued that the machinery is attached to the ground by
means of bolts and the only way to remove it from the respondents plant would be to
drill out or destroy the concrete floor which is why all that the sheriff could do to
enforce the writ was to take the main drive motor of the machinery. Hence, this petition
for certiorari.
Issue: Whether the machinery is a personal property.
Hld: Yes. By destination, it is a real property but by virtue of the intention of the parties
stipulated in their chattel mortgage contract, the machinery was intended to be a
personal property. The Court made reference to its ruling in Tumalad v. Vicencio and
Standard Oil Co. of New York v. Jaramillo where it held that a real property may be
considered as a personal property for purposes of executing a chattel mortgage thereon
as long as the parties to the contract so agree and no innocent third party will be
prejudiced thereby, and once the parties so agreed, they are already stopped from
claiming otherwise. Private respondent contended that its characterization of the subject
machinery as chattel in their agreement should not be appreciated against it because it
had never represented nor agreed in such as it was merely required and dictated on by
the petitioner to sign a chattel mortgage in blank form. The Court was not persuaded by
its contention as the said issue was not duly raised in the lower and appellate courts nor
will the said signing in blank by the respondent make the contract void but merely
voidable by a proper action in court. Furthermore as it was undeniable that it benefited
from the chattel mortgage, it cannot be allowed to impugn its efficacy for equity reasons.
Evangelista vs. Alto Surety & Insurance Co., Inc.
Doctrine: Parties to a deed of chattel mortgage may agree to consider a house as
personal property for purposes of said contract. However, this view is good only insofar
as the contracting parties are concerned.
FACTS: Santos Evangelista instituted Civil Case No. 8235 of the CFI Manila for a sum of
money. He also obtained a writ of attachment, which was levied upon a house, built by
Rivera on a land situated in Manila and leased to him by filing copy of said writ and the
corresponding notice of attachment with the Office of the Register of Deeds of Manila on
June 8, 1949. Judgment was rendered in favor of Evangelista. On October 8, 1951, he
bought the house at a public auction held in compliance with the writ of execution issued
in said case. The corresponding definite deed of sale was issued to him upon expiration
of the period of redemption. When Evangelista sought to take possession of the house,
Rivera refused to surrender it, upon the ground that he had leased the property from the
Alto Surety & Insurance Co., Inc. and that the latter is now the true owner of said
property. It appears that on May 10, 1952, a definite deed of sale of the same house had
been issued to Alto Surety, as the highest bidder at an auction sale held, on September
29, 1950, in compliance with a writ of execution issued in Civil Case 6268 of the same
court in which judgment, for the sum of money, had been rendered in favor of Alto
Surety. As such, Evangelista instituted an action against Alto Surety and Ricardo Rivera,
for the purpose of establishing his title over said house, and securing possession thereof,
apart from recovering damages. After due trial, the CFI Manila rendered judgment for
Evangelista. The Court of Appeals reversed the decision and absolved Alto Surety from
the complaint, upon the ground that, although the writ of attachment in favor of
Evangelista had been filed with the Register of Deeds of Manila prior to the sale in favor
of Alto Surety, Evangelista did not acquire thereby a preferential lien, the attachment
having been levied as if the house in question were immovable property, although, in the
opinion of the Court of Appeals, it is ostensibly a personal property. Thus, the Court of
Appeals held, the order of attachment . . . should have been served in the manner
provided in subsection (e) of section 7 of Rule 59, of the Rules of Court. Evangelista filed
an appeal by Certiorari with the Supreme Court.
Issue: Whether a house, constructed by the lessee of the land on which it is built, should
be dealt with, for purposes of attachment, as immovable property, or a personal property.
Held: Said house is not personal property, much less a debt or credit or other personal
property not capable of manual delivery, but immovable property. As held in Laddera v.
Hodges, a true building is immovable or real property, whether it is erected by the
owner of the land or by a usufructuary or lessee. It is true that the parties to a deed of
chattel mortgage may agree to consider a house as personal property for purposes of
said contract. However, this view is good only insofar as the contracting parties are
concerned. It is based partly upon the principle of estoppel. Neither is this principle nor
said view applicable to strangers to said contract. Much less is it in point where there has
been no contract whatsoever, with respect to the status of the house involved as in the
case at bar. The rules on execution do not allow, and should not be interpreted as to
allow, the special consideration that parties to a contract may have desired to impart to
real estate as personal property, when they are not ordinarily so. Sales on execution
affect the public and third persons. The regulation governing sales on execution are for
public officials to follow. The form of proceedings prescribed for each kind of property is
suited to its character, not to the character which the parties have given to it or desire to
give it. The regulations were never intended to suit the consideration that parties, may
have privately given to the property levied upon. Enforcement of regulations would be
difficult were the convenience or agreement of private parties to determine or govern the
nature of the proceedings.