Tsai v.

CA
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.


D E C I S I O N


SANDOVAL-GUTIERREZ, J.:
Before us is a petition for review on certiorari of the Decision
1
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.