Ladera vs.

Hodges
No. 8027-R. September 23, 1952.

Reyes, J.B.L., J.

Doctrine: Article 315 of the Civil Code (now Article 415, New Civil Code) makes no distinction as to
whether the owner of the land is or is not the owner of the building.

Facts: Ladera entered into a contract with Hodges whereby the latter promised to sell a lot subject to
certain terms and conditions. In case of failure of the purchaser to make a monthly payment within 60
days after it fell due, this contract may be taken and considered as rescinded and annulled, in which
case all sums of money paid would be considered rentals and the vendor shall be at liberty to dispose of
the parcel of land with all the improvements theron to any other person in a manner as if this contract
had never been made. After the execution of the contract, Ladera built on a lot a house of mixed
materials assessed at P4500.

Unfortunately, Ladera failed to pay the agreed installments, whereupon the appellant rescinded the
contract and filed an action for ejectment. The MTC rendered a decision upon agreement of the parties-
Ladera to vacate and surrender possession of the lot and pay P10 a month until delivery of the premises.
The court issued an alias writ of execution and pursuant thereto the sheriff levied upon all rights,
interests, and participation over your house standing on the lot. The sheriff posted the notices of the
sale but did not publish the same in a newspaper of general circulation.

At the auction sale Ladera did not attend because she had gone to Manila and the sheriff sold the
property to Avelina Magno as the highest bidder. On July 6, 1948, Hodges sold the lot to Manuel Villa
and on the same day the latter purchased the house from Magno for P200 but this last transaction was
not recorded.

Ladera returned to Iloilo after the sale and learned of its results. She went to see the sheriff and upon
the latters representation that she could redeem the property, she paid him P230 and the sheriff issued
a receipt. It does not appear, however, that this money was turned over to Hodges. Thereupon, Ladera
spouses filed an action against Hodges, the sheriff, and the judgment sale purchasers, Magno and Villa
to set aside the sale and recover the house. The lower court ruled in favor of Ladera. Hodges et al
contend that the house being built on land owned by another person should be regarded in law as
movable or personal property.

Issue: Whether the house being built on land owned by another should be regarded as movable
property.

Held: According to Article 334 of the Civil Code (now 415), Immovable property are the following:
Lands, building, roads, and constructions of all kinds adhering to the soil; Applying the principle Ubi lex
non distinguit nec nos distinguere debemu, the law makes no distinction as to whether the owner of the
land is or is not the owner of the building. In view of the plain terms of the statute, the only possible
doubt could arise in the case of a house sold for demolition.

In the case of immovables by destination, the code requires that they be placed by the owner of the
tenement, in order to acquire the same nature or consideration of real property. In cases of immovable
by incorporation, the code nowhere requires that the attachment or incorporation be made by the
owner of the land. The only criterion is union or incorporation with the soil.

Ladera did not declare his house to be a chattel mortgage. The object of the levy or sale was real
property. The publication in a newspaper of general circulation was indispensible. It being admitted that
no publication was ever made, the execution sale was void and conferred no title on the purchaser.

The alleged purchaser at the auction sale, Magno, is a mere employee of the creditor Hodges and the
low bid made by her as well as the fact that she sold the house to Villa on the same day that Hodges sold
him the land, proves that she was merely acting for and in behalf of Hodges.

It should be noted that in sales of immovables, the lack of title of the vendor taints the rights of
subsequent purchasers. Unlike in sales of chattels and personalty, in transactions covering real property,
possession in good faith is not equivalent to title.

Caveat: Anyone who claims this digest as his own without proper authority shall be held liable under the
law of Karma.


MINDANAO BUS COMPANY, petitioner,
vs.
THE CITY ASSESSOR & TREASURER and the BOARD OF TAX APPEALS of Cagayan de Oro City,
respondents.

Binamira, Barria and Irabagon for petitioner.
Vicente E. Sabellina for respondents.


LABRADOR, J.:

This is a petition for the review of the decision of the Court of Tax Appeals in C.T.A. Case No. 710 holding
that the petitioner Mindanao Bus Company is liable to the payment of the realty tax on its maintenance
and repair equipment hereunder referred to.

Respondent City Assessor of Cagayan de Oro City assessed at P4,400 petitioner's above-mentioned
equipment. 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.

In the Court of Tax Appeals the parties submitted the following stipulation of facts:

Petitioner and respondents, thru their respective counsels agreed to the following stipulation of facts:

1. That petitioner is a public utility solely engaged in transporting passengers and cargoes by motor
trucks, over its authorized lines in the Island of Mindanao, collecting rates approved by the Public
Service Commission;

2. That petitioner has its main office and shop at Cagayan de Oro City. It maintains Branch Offices and/or
stations at Iligan City, Lanao; Pagadian, Zamboanga del Sur; Davao City and Kibawe, Bukidnon Province;

3. That the machineries sought to be assessed by the respondent as real properties are the following:

(a) Hobart Electric Welder Machine, appearing in the attached photograph, marked Annex "A";

(b) Storm Boring Machine, appearing in the attached photograph, marked Annex "B";

(c) Lathe machine with motor, appearing in the attached photograph, marked Annex "C";

(d) Black and Decker Grinder, appearing in the attached photograph, marked Annex "D";

(e) PEMCO Hydraulic Press, appearing in the attached photograph, marked Annex "E";

(f) Battery charger (Tungar charge machine) appearing in the attached photograph, marked Annex "F";
and

(g) D-Engine Waukesha-M-Fuel, appearing in the attached photograph, marked Annex "G".

4. That these machineries are sitting on cement or wooden platforms as may be seen in the attached
photographs which form part of this agreed stipulation of facts;

5. That petitioner is the owner of the land where it maintains and operates a garage for its TPU motor
trucks; a repair shop; blacksmith and carpentry shops, and with these machineries which are placed
therein, its TPU trucks are made; body constructed; and same are repaired in a condition to be
serviceable in the TPU land transportation business it operates;

6. That these machineries have never been or were never used as industrial equipments to produce
finished products for sale, nor to repair machineries, parts and the like offered to the general public
indiscriminately for business or commercial purposes for which petitioner has never engaged in, to
date.1awphl.nt

The Court of Tax Appeals having sustained the respondent city assessor's ruling, and having denied a
motion for reconsideration, petitioner brought the case to this Court assigning the following errors:

1. The Honorable Court of Tax Appeals erred in upholding respondents' contention that the questioned
assessments are valid; and that said tools, equipments or machineries are immovable taxable real
properties.

2. 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.

3. The Court of Tax Appeals erred in denying petitioner's contention that the respondent City Assessor's
power to assess and levy real estate taxes on machineries is further restricted by section 31, paragraph
(c) of Republic Act No. 521; and

4. The Tax Court erred in denying petitioner's motion for reconsideration.

Respondents contend that said equipments, tho movable, are immobilized by destination, in accordance
with paragraph 5 of Article 415 of the New Civil Code which provides:

Art. 415. The following are immovable properties:

x x x x x x x x x

(5) 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. (Emphasis ours.)

Note that the stipulation expressly states that the equipment are placed on wooden or cement
platforms. They can be moved around and about in petitioner's repair shop. In the case of B. H.
Berkenkotter vs. Cu Unjieng, 61 Phil. 663, the Supreme Court said:

Article 344 (Now Art. 415), paragraph (5) of the Civil Code, gives the character of real property to
"machinery, liquid containers, instruments or implements intended by the owner of any building or land
for use in connection with any industry or trade being carried on therein and which are expressly
adapted to meet the requirements of such trade or industry."

If the installation of the machinery and equipment in question in the central of the Mabalacat Sugar Co.,
Inc., in lieu of the other of less capacity existing therein, for its sugar and industry, converted them into
real property by reason of their purpose, it cannot be said that their incorporation therewith was not
permanent in character because, as essential and principle elements of a sugar central, without them
the sugar central would be unable to function or carry on the industrial purpose for which it was
established. Inasmuch as the central is permanent in character, the necessary machinery and equipment
installed for carrying on the sugar industry for which it has been established must necessarily be
permanent. (Emphasis ours.)

So that movable equipments to be immobilized in contemplation of the law must first be "essential and
principal elements" of an industry or works without which such industry or works would be "unable to
function or carry on the industrial purpose for which it was established." We may here distinguish,
therefore, those movable which become immobilized by destination because they are essential and
principal elements in the industry for those which may not be so considered immobilized because they
are merely incidental, not essential and principal. Thus, cash registers, typewriters, etc., usually found
and used in hotels, restaurants, theaters, etc. are merely incidentals and are not and should not be
considered immobilized by destination, for these businesses can continue or carry on their functions
without these equity comments. Airline companies use forklifts, jeep-wagons, pressure pumps, IBM
machines, etc. which are incidentals, not essentials, and thus retain their movable nature. On the other
hand, machineries of breweries used in the manufacture of liquor and soft drinks, though movable in
nature, are immobilized because they are essential to said industries; but the delivery trucks and adding
machines which they usually own and use and are found within their industrial compounds are merely
incidental and retain their movable nature.

Similarly, the tools and equipments in question in this instant case are, by their nature, not essential and
principle municipal elements of petitioner's 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 equipments, 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.

The law that governs the determination of the question at issue is as follows:

Art. 415. The following are immovable property:

x x x x x x x x x

(5) 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; (Civil Code of the Phil.)

Aside from the element of essentiality the above-quoted provision also requires that the industry or
works be carried on in a building or on a piece of land. Thus in the case of Berkenkotter vs. Cu Unjieng,
supra, the "machinery, liquid containers, and instruments or implements" are found in a building
constructed on the land. A sawmill would also be installed in a building on land more or less
permanently, and the sawing is conducted in the land or building.

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 equipments may not, therefore, be deemed real property.

Resuming what we have set forth above, we hold that the equipments in question are not absolutely
essential to the petitioner's transportation business, and petitioner's business is not carried on in a
building, tenement or on a specified land, so said equipment may not be considered real estate within
the meaning of Article 415 (c) of the Civil Code.

WHEREFORE, the decision subject of the petition for review is hereby set aside and the equipment in
question declared not subject to assessment as real estate for the purposes of the real estate tax.
Without costs.

So ordered.

Bengzon, C.J., Padilla, Bautista Angelo, Reyes, J.B.L., Paredes, Dizon and Makalintal, JJ., concur.
Regala, Concepcion and Barrera JJ., took no part.


MAKATI LEASING and FINANCE CORPORATION, petitioner,
vs.
WEAREVER TEXTILE MILLS, INC., and HONORABLE COURT OF APPEALS, respondents.
Loreto C. Baduan for petitioner.
Ramon D. Bagatsing & Assoc. (collaborating counsel) for petitioner.
Jose V. Mancella for respondent.

DE CASTRO, J.:
Petition for review on certiorari of the decision of the Court of Appeals (now Intermediate Appellate
Court) promulgated on August 27, 1981 in CA-G.R. No. SP-12731, setting aside certain Orders later
specified herein, of Judge Ricardo J. Francisco, as Presiding Judge of the Court of First instance of Rizal
Branch VI, issued in Civil Case No. 36040, as wen as the resolution dated September 22, 1981 of the said
appellate court, denying petitioner's motion for reconsideration.
It appears that in order to obtain financial accommodations from herein petitioner Makati Leasing and
Finance Corporation, the private respondent Wearever Textile Mills, Inc., discounted and assigned
several receivables with the former under a Receivable Purchase Agreement. To secure the collection of
the receivables assigned, private respondent executed a Chattel Mortgage over certain raw materials
inventory as well as a machinery described as an Artos Aero Dryer Stentering Range.
Upon private respondent's default, petitioner filed a petition for extrajudicial foreclosure of the
properties mortgage to it. However, the Deputy Sheriff assigned to implement the foreclosure failed to
gain entry into private respondent's premises and was not able to effect the seizure of the
aforedescribed machinery. Petitioner thereafter filed a complaint for judicial foreclosure with the Court
of First Instance of Rizal, Branch VI, docketed as Civil Case No. 36040, the case before the lower court.
Acting on petitioner's application for replevin, the lower court issued a writ of seizure, the enforcement
of which was however subsequently restrained upon private respondent's filing of a motion for
reconsideration. After several incidents, the lower court finally issued on February 11, 1981, an order
lifting the restraining order for the enforcement of the writ of seizure and an order to break open the
premises of private respondent to enforce said writ. The lower court reaffirmed its stand upon private
respondent's filing of a further motion for reconsideration.
On July 13, 1981, the sheriff enforcing the seizure order, repaired to the premises of private respondent
and removed the main drive motor of the subject machinery.
The Court of Appeals, in certiorari and prohibition proceedings subsequently filed by herein private
respondent, set aside the Orders of the lower court and ordered the return of the drive motor seized by
the sheriff pursuant to said Orders, after ruling that the machinery in suit cannot be the subject of
replevin, much less of a chattel mortgage, because it is a real property pursuant to Article 415 of the
new Civil Code, the same being attached to the ground by means of bolts and the only way to remove it
from respondent's plant would be to drill out or destroy the concrete floor, the reason why all that the
sheriff could do to enfore the writ was to take the main drive motor of said machinery. The appellate
court rejected petitioner's argument that private respondent is estopped from claiming that the
machine is real property by constituting a chattel mortgage thereon.
A motion for reconsideration of this decision of the Court of Appeals having been denied, petitioner has
brought the case to this Court for review by writ of certiorari. It is contended by private respondent,
however, that the instant petition was rendered moot and academic by petitioner's act of returning the
subject motor drive of respondent's machinery after the Court of Appeals' decision was promulgated.
The contention of private respondent is without merit. When petitioner returned the subject motor
drive, it made itself unequivocably clear that said action was without prejudice to a motion for
reconsideration of the Court of Appeals decision, as shown by the receipt duly signed by respondent's
representative. 1 Considering that petitioner has reserved its right to question the propriety of the Court
of Appeals' decision, the contention of private respondent that this petition has been mooted by such
return may not be sustained.
The next and the more crucial question to be resolved in this Petition is whether the machinery in suit is
real or personal property from the point of view of the parties, with petitioner arguing that it is a
personality, while the respondent claiming the contrary, and was sustained by the appellate court,
which accordingly held that the chattel mortgage constituted thereon is null and void, as contended by
said respondent.
A similar, if not Identical issue was raised in Tumalad v. Vicencio, 41 SCRA 143 where this Court,
speaking through Justice J.B.L. Reyes, ruled:
Although there is no specific statement referring to the subject house as personal property, yet by
ceding, selling or transferring a property by way of chattel mortgage defendants-appellants could only
have meant to convey the house as chattel, or at least, intended to treat the same as such, so that they
should not now be allowed to make an inconsistent stand by claiming otherwise. Moreover, the subject
house stood on a rented lot to which defendants-appellants merely had a temporary right as lessee, and
although this can not in itself alone determine the status of the property, it does so when combined
with other factors to sustain the interpretation that the parties, particularly the mortgagors, intended to
treat the house as personality. Finally, unlike in the Iya cases, Lopez vs. Orosa, Jr. & Plaza Theatre, Inc. &
Leung Yee vs. F.L. Strong Machinery & Williamson, wherein third persons assailed the validity of the
chattel mortgage, it is the defendants-appellants themselves, as debtors-mortgagors, who are attacking
the validity of the chattel mortgage in this case. The doctrine of estoppel therefore applies to the herein
defendants-appellants, having treated the subject house as personality.
Examining the records of the instant case, We find no logical justification to exclude the rule out, as the
appellate court did, the present case from the application of the abovequoted pronouncement. If a
house of strong materials, like what was involved in the above Tumalad case, may be considered as
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, there is absolutely no reason
why a machinery, which is movable in its nature and becomes immobilized only by destination or
purpose, may not be likewise treated as such. This is really because one who has so agreed is estopped
from denying the existence of the chattel mortgage.
In rejecting petitioner's assertion on the applicability of the Tumalad doctrine, the Court of Appeals lays
stress on the fact that the house involved therein was built on a land that did not belong to the owner of
such house. But the law makes no distinction with respect to the ownership of the land on which the
house is built and We should not lay down distinctions not contemplated by law.
It must be pointed out that the characterization of the subject machinery as chattel by the private
respondent is indicative of intention and impresses upon the property the character determined by the
parties. As stated in Standard Oil Co. of New York v. Jaramillo, 44 Phil. 630, it is undeniable that the
parties to a contract may by agreement treat as personal property that which by nature would be real
property, as long as no interest of third parties would be prejudiced thereby.
Private respondent contends that estoppel cannot apply against it because it had never represented nor
agreed that the machinery in suit be considered as personal property but was merely required and
dictated on by herein petitioner to sign a printed form of chattel mortgage which was in a blank form at
the time of signing. This contention lacks persuasiveness. As aptly pointed out by petitioner and not
denied by the respondent, the status of the subject machinery as movable or immovable was never
placed in issue before the lower court and the Court of Appeals except in a supplemental memorandum
in support of the petition filed in the appellate court. Moreover, even granting that the charge is true,
such fact alone does not render a contract void ab initio, but can only be a ground for rendering said
contract voidable, or annullable pursuant to Article 1390 of the new Civil Code, by a proper action in
court. There is nothing on record to show that the mortgage has been annulled. Neither is it disclosed
that steps were taken to nullify the same. On the other hand, as pointed out by petitioner and again not
refuted by respondent, the latter has indubitably benefited from said contract. Equity dictates that one
should not benefit at the expense of another. Private respondent could not now therefore, be allowed
to impugn the efficacy of the chattel mortgage after it has benefited therefrom,
From what has been said above, the error of the appellate court in ruling that the questioned machinery
is real, not personal property, becomes very apparent. Moreover, the case of Machinery and
Engineering Supplies, Inc. v. CA, 96 Phil. 70, heavily relied upon by said court is not applicable to the case
at bar, the nature of the machinery and equipment involved therein as real properties never having
been disputed nor in issue, and they were not the subject of a Chattel Mortgage. Undoubtedly, the
Tumalad case bears more nearly perfect parity with the instant case to be the more controlling
jurisprudential authority.
WHEREFORE, the questioned decision and resolution of the Court of Appeals are hereby reversed and
set aside, and the Orders of the lower court are hereby reinstated, with costs against the private
respondent.
SO ORDERED.
Makasiar (Chairman), Aquino, Concepcion Jr., Guerrero and Escolin JJ., concur.
Abad Santos, J., concurs in the result.


G.R. No. L-11139
SANTOS EVANGELISTA, petitioner,
vs.
ALTO SURETY & INSURANCE CO., INC., respondent.

Gonzalo D. David for petitioner.
Raul A. Aristorenas and Benjamin Relova for respondent.

CONCEPCION, J.:

This is an appeal by certiorari from a decision of the Court of Appeals.

Briefly, the facts are: On June 4, 1949, petitioner herein, Santos Evangelista, instituted Civil Case No.
8235 of the Court of First, Instance of Manila entitled " Santos Evangelista vs. Ricardo Rivera," for a sum
of money. On the same date, he obtained a writ of attachment, which 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. In due course,
judgment was rendered in favor of Evangelista, who, on October 8, 1951, bought the house at public
auction held in compliance with the writ of execution issued in said case. The corresponding definite
deed of sale was issued to him on October 22, 1952, 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. respondent herein 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 respondent, as the highest bidder at an auction sale held, on
September 29, 1950, in compliance with a writ of execution issued in Civil Case No. 6268 of the same
court, entitled "Alto Surety & Insurance Co., Inc. vs. Maximo Quiambao, Rosario Guevara and Ricardo
Rivera," in which judgment, for the sum of money, had been rendered in favor respondent herein, as
plaintiff therein. Hence, on June 13, 1953, Evangelista instituted the present action against respondent
and Ricardo Rivera, for the purpose of establishing his (Evangelista) title over said house, securing
possession thereof, apart from recovering damages.

In its answer, respondent alleged, in substance, that it has a better right to the house, because the sale
made, and the definite deed of sale executed, in its favor, on September 29, 1950 and May 10, 1952,
respectively, precede the sale to Evangelista (October 8, 1951) and the definite deed of sale in his favor
(October 22, 1952). It, also, made some special defenses which are discussed hereafter. Rivera, in effect,
joined forces with respondent. After due trial, the Court of First Instance of Manila rendered judgment
for Evangelista, sentencing Rivera and respondent to deliver the house in question to petitioner herein
and to pay him, jointly and severally, forty pesos (P40.00) a month from October, 1952, until said
delivery, plus costs.

On appeal taken by respondent, this decision was reversed by the Court of Appeals, which absolved said
respondent 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 respondent,
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." As such, 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, reading:

The property of the defendant shall be attached by the officer executing the order in the following
manner:

(e) Debts and credits, and other personal property not capable of manual delivery, by leaving with the
person owing such debts, or having in his possession or under his control, such credits or other personal
property, or with, his agent, a copy of the order, and a notice that the debts owing by him to the
defendant, and the credits and other personal property in his possession, or under his control, belonging
to the defendant, are attached in pursuance of such order. (Emphasis ours.)

However, the Court of Appeals seems to have been of the opinion, also, that the house of Rivera should
have been attached in accordance with subsection (c) of said section 7, as "personal property capable of
manual delivery, by taking and safely keeping in his custody", for it declared that "Evangelists could not
have . . . validly purchased Ricardo Rivera's house from the sheriff as the latter was not in possession
thereof at the time he sold it at a public auction."

Evangelista now seeks a review, by certiorari, of this decision of the Court of Appeals. In this connection,
it is not disputed that although the sale to the respondent preceded that made to Evangelists, the latter
would have a better right if the writ of attachment, issued in his favor before the sale to the respondent,
had been properly executed or enforced. This question, in turn, depends upon whether the house of
Ricardo Rivera is real property or not. In the affirmative case, the applicable provision would be
subsection (a) of section 7, Rule 59 of the Rules of Court, pursuant to which the attachment should be
made "by filing with the registrar of deeds a copy of the order, together with a description of the
property attached, and a notice that it is attached, and by leaving a copy of such order, description, and
notice with the occupant of the property, if any there be."

Respondent maintains, however, and the Court of Appeals held, that Rivera's house is personal
property, the levy upon which must be made in conformity with subsections (c) and (e) of said section 7
of Rule 59. Hence, the main issue before us is whether a house, constructed the lessee of the land on
which it is built, should be dealt with, for purpose, of attachment, as immovable property, or as personal
property.

It is, our considered opinion that said house is not personal property, much less a debt, credit or other
personal property not capable of manual delivery, but immovable property. As explicitly held, in Laddera
vs. Hodges (48 Off. Gaz., 5374), "a true building (not merely superimposed on the soil) is immovable or
real property, whether it is erected by the owner of the land or by usufructuary or lessee. This is the
doctrine of our Supreme Court in Leung Yee vs. Strong Machinery Company, 37 Phil., 644. And it is
amply supported by the rulings of the French Court. . . ."

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 (Luna vs. Encarnacion, 48 Off. Gaz., 2664[[*]]; Standard Oil Co. of
New York vs. Jaramillo, 44 Phil., 630; De Jesus vs. Juan Dee Co., Inc., 72 Phil., 464). However, this view is
good only insofar as the contracting parties are concerned. It is based, partly, upon the principle of
estoppel. Neither this principle, nor said view, is 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. Apart from this, in Manarang vs. Ofilada (99 Phil., 108; 52 Off. Gaz., 3954), we held:

The question now before us, however, is: Does the fact that the parties entering into a contract
regarding a house gave said property the consideration of personal property in their contract, bind the
sheriff in advertising the property's sale at public auction as personal property? It is to be remembered
that in the case at bar the action was to collect a loan secured by a chattel mortgage on the house. It is
also to be remembered that in practice it is the judgment creditor who points out to the sheriff the
properties that the sheriff is to levy upon in execution, and the judgment creditor in the case at bar is
the party in whose favor the owner of the house had conveyed it by way of chattel mortgage and,
therefore, knew its consideration as personal property.

These considerations notwithstanding, we hold that the rules on execution do not allow, and, we should
not interpret them in such a way as to allow, the special consideration that parties to a contract may
have desired to impart to real estate, for example, 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. When the
rules speak of personal property, property which is ordinarily so considered is meant; and when real
property is spoken of, it means property which is generally known as real property. 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. We therefore hold that the mere fact that
a house was the subject of the chattel mortgage and was considered as personal property by the parties
does not make said house personal property for purposes of the notice to be given for its sale of public
auction. This ruling is demanded by the need for a definite, orderly and well defined regulation for
official and public guidance and would prevent confusion and misunderstanding.

We, therefore, declare that the house of mixed materials levied upon on execution, although subject of
a contract of chattel mortgage between the owner and a third person, is real property within the
purview of Rule 39, section 16, of the Rules of Court as it has become a permanent fixture of the land,
which, is real property. (42 Am. Jur. 199-200; Leung Yee vs. Strong Machinery Co., 37 Phil., 644; Republic
vs. Ceniza, et al., 90 Phil., 544; Ladera, et al. vs. Hodges, et al., [C.A.] Off. Gaz. 5374.)" (Emphasis ours.)

The foregoing considerations apply, with equal force, to the conditions for the levy of attachment, for it
similarly affects the public and third persons.

It is argued, however, that, even if the house in question were immovable property, its attachment by
Evangelista was void or ineffective, because, in the language of the Court of Appeals, "after presenting a
Copy of the order of attachment in the Office of the Register of Deeds, the person who might then be in
possession of the house, the sheriff took no pains to serve Ricardo Rivera, or other copies thereof." This
finding of the Court of Appeals is neither conclusive upon us, nor accurate.

The Record on Appeal, annexed to the petition for Certiorari, shows that petitioner alleged, in paragraph
3 of the complaint, that he acquired the house in question "as a consequence of the levy of an
attachment and execution of the judgment in Civil Case No. 8235" of the Court of First Instance of
Manila. In his answer (paragraph 2), Ricardo Rivera admitted said attachment execution of judgment. He
alleged, however, by way a of special defense, that the title of respondent "is superior to that of plaintiff
because it is based on a public instrument," whereas Evangelista relied upon a "promissory note" which
"is only a private instrument"; that said Public instrument in favor of respondent "is superior also to the
judgment in Civil Case No. 8235"; and that plaintiff's claim against Rivera amounted only to P866, "which
is much below the real value" of said house, for which reason it would be "grossly unjust to acquire the
property for such an inadequate consideration." Thus, Rivera impliedly admitted that his house had
been attached, that the house had been sold to Evangelista in accordance with the requisite formalities,
and that said attachment was valid, although allegedly inferior to the rights of respondent, and the
consideration for the sale to Evangelista was claimed to be inadequate.

Respondent, in turn, denied the allegation in said paragraph 3 of the complaint, but only " for the
reasons stated in its special defenses" namely: (1) that by virtue of the sale at public auction, and the
final deed executed by the sheriff in favor of respondent, the same became the "legitimate owner of the
house" in question; (2) that respondent "is a buyer in good faith and for value"; (3) that respondent
"took possession and control of said house"; (4) that "there was no valid attachment by the plaintiff
and/or the Sheriff of Manila of the property in question as neither took actual or constructive
possession or control of the property at any time"; and (5) "that the alleged registration of plaintiff's
attachment, certificate of sale and final deed in the Office of Register of Deeds, Manila, if there was any,
is likewise, not valid as there is no registry of transactions covering houses erected on land belonging to
or leased from another." In this manner, respondent claimed a better right, merely under the theory
that, in case of double sale of immovable property, the purchaser who first obtains possession in good
faith, acquires title, if the sale has not been "recorded . . . in the Registry of Property" (Art. 1544, Civil
Code of the Philippines), and that the writ of attachment and the notice of attachment in favor of
Evangelista should be considered unregistered, "as there is no registry of transactions covering houses
erected on land belonging to or leased from another." In fact, said article 1544 of the Civil Code of the
Philippines, governing double sales, was quoted on page 15 of the brief for respondent in the Court of
Appeals, in support of its fourth assignment of error therein, to the effect that it "has preference or
priority over the sale of the same property" to Evangelista.

In other words, there was no issue on whether copy of the writ and notice of attachment had been
served on Rivera. No evidence whatsoever, to the effect that Rivera had not been served with copies of
said writ and notice, was introduced in the Court of First Instance. In its brief in the Court of Appeals,
respondent did not aver, or even, intimate, that no such copies were served by the sheriff upon Rivera.
Service thereof on Rivera had been impliedly admitted by the defendants, in their respective answers,
and by their behaviour throughout the proceedings in the Court of First Instance, and, as regards
respondent, in the Court of Appeals. In fact, petitioner asserts in his brief herein (p. 26) that copies of
said writ and notice were delivered to Rivera, simultaneously with copies of the complaint, upon service
of summons, prior to the filing of copies of said writ and notice with the register deeds, and the truth of
this assertion has not been directly and positively challenged or denied in the brief filed before us by
respondent herein. The latter did not dare therein to go beyond making a statement for the first time
in the course of these proceedings, begun almost five (5) years ago (June 18, 1953) reproducing
substantially the aforementioned finding of the Court of Appeals and then quoting the same.

Considering, therefore, that neither the pleadings, nor the briefs in the Court of Appeals, raised an issue
on whether or not copies of the writ of attachment and notice of attachment had been served upon
Rivera; that the defendants had impliedly admitted-in said pleadings and briefs, as well as by their
conduct during the entire proceedings, prior to the rendition of the decision of the Court of Appeals
that Rivera had received copies of said documents; and that, for this reason, evidently, no proof was
introduced thereon, we, are of the opinion, and so hold that the finding of the Court of Appeals to the
effect that said copies had not been served upon Rivera is based upon a misapprehension of the specific
issues involved therein and goes beyond the range of such issues, apart from being contrary to the
aforementioned admission by the parties, and that, accordingly, a grave abuse of discretion was
committed in making said finding, which is, furthermore, inaccurate.

Wherefore, the decision of the Court of Appeals is hereby reversed, and another one shall be entered
affirming that of the Court of First Instance of Manila, with the costs of this instance against respondent,
the Alto Surety and Insurance Co., Inc. It is so ordered.

Paras, C.J., Bengzon, Montemayor, Reyes, A., Bautista Angelo, Labrador, Reyes, J.B.L., Endencia and
Felix, JJ., concur.

G.R. No. 120098 October 2, 2001

RUBY L. TSAI, petitioner,
vs.
HON. COURT OF APPEALS, EVER TEXTILE MILLS, INC. and MAMERTO R VILLALUZ, respondents.

x---------------------------------------------------------x

[G.R. No. 120109. October 2, 2001.]

PHILIPPINE BANK OF COMMUNICATIONS, petitioner,
vs.
HON. COURT OF APPEALS, EVER TEXTILE MILLS and MAMERTO R VILLALUZ, respondents.

QUISUMBING, J.:

These consolidated cases assail the decision1 of the Court of Appeals in CA-G.R. CV No. 32986, affirming
the decision2 of the Regional Trial Court of Manila, Branch 7, in Civil Case No. 89-48265. Also assailed is
respondent court's resolution denying petitioners' motion for reconsideration.

On November 26, 1975, respondent Ever Textile Mills, Inc. (EVERTEX) obtained a three million peso
(P3,000,000.00) loan from petitioner Philippine Bank of Communications (PBCom). As security for the
loan, EVERTEX executed in favor of PBCom, a deed of Real and Chattel Mortgage over the lot under TCT
No. 372097, where its factory stands, and the chattels located therein as enumerated in a schedule
attached to the mortgage contract. The pertinent portions of the Real and Chattel Mortgage are quoted
below:

MORTGAGE

(REAL AND CHATTEL)

xxx xxx xxx

The MORTGAGOR(S) hereby transfer(s) and convey(s), by way of First Mortgage, to the MORTGAGEE, . .
. certain parcel(s) of land, together with all the buildings and improvements now existing or which may
hereafter exist thereon, situated in . . .

"Annex A"

(Real and Chattel Mortgage executed by Ever Textile Mills in favor of PBCommunications continued)

LIST OF MACHINERIES & EQUIPMENT

A. Forty Eight (48) units of Vayrow Knitting Machines-Tompkins made in Hongkong:

Serial Numbers Size of Machines

xxx xxx xxx

B. Sixteen (16) sets of Vayrow Knitting Machines made in Taiwan.

xxx xxx xxx

C. Two (2) Circular Knitting Machines made in West Germany.

xxx xxx xxx

D. Four (4) Winding Machines.

xxx xxx xxx

SCHEDULE "A"

I. TCT # 372097 - RIZAL

xxx xxx xxx

II. Any and all buildings and improvements now existing or hereafter to exist on the above-
mentioned lot.

III. MACHINERIES & EQUIPMENT situated, located and/or installed on the above-mentioned lot
located at . . .

(a) Forty eight sets (48) Vayrow Knitting Machines . . .

(b) Sixteen sets (16) Vayrow Knitting Machines . . .

(c) Two (2) Circular Knitting Machines . . .

(d) Two (2) Winding Machines . . .

(e) Two (2) Winding Machines . . .

IV. Any and all replacements, substitutions, additions, increases and accretions to above properties.

xxx xxx xxx3

On April 23, 1979, PBCom granted a second loan of P3,356,000.00 to EVERTEX. The loan was secured by
a Chattel Mortgage over personal properties enumerated in a list attached thereto. These listed
properties were similar to those listed in Annex A of the first mortgage deed.

After April 23, 1979, the date of the execution of the second mortgage mentioned above, EVERTEX
purchased various machines and equipments.

On November 19, 1982, due to business reverses, EVERTEX filed insolvency proceedings docketed as SP
Proc. No. LP-3091-P before the defunct Court of First Instance of Pasay City, Branch XXVIII. The CFI
issued an order on November 24, 1982 declaring the corporation insolvent. All its assets were taken into
the custody of the Insolvency Court, including the collateral, real and personal, securing the two
mortgages as abovementioned.

In the meantime, upon EVERTEX's failure to meet its obligation to PBCom, the latter commenced
extrajudicial foreclosure proceedings against EVERTEX under Act 3135, otherwise known as "An Act to
Regulate the Sale of Property under Special Powers Inserted in or Annexed to Real Estate Mortgages"
and Act 1506 or "The Chattel Mortgage Law". A Notice of Sheriff's Sale was issued on December 1, 1982.

On December 15, 1982, the first public auction was held where petitioner PBCom emerged as the
highest bidder and a Certificate of Sale was issued in its favor on the same date. On December 23, 1982,
another public auction was held and again, PBCom was the highest bidder. The sheriff issued a
Certificate of Sale on the same day.

On March 7, 1984, PBCom consolidated its ownership over the lot and all the properties in it. In
November 1986, it leased the entire factory premises to petitioner Ruby L. Tsai for P50,000.00 a month.
On May 3, 1988, PBCom sold the factory, lock, stock and barrel to Tsai for P9,000,000.00, including the
contested machineries.

On March 16, 1989, EVERTEX filed a complaint for annulment of sale, reconveyance, and damages with
the Regional Trial Court against PBCom, alleging inter alia that the extrajudicial foreclosure of subject
mortgage was in violation of the Insolvency Law. EVERTEX claimed that no rights having been
transmitted to PBCom over the assets of insolvent EVERTEX, therefore Tsai acquired no rights over such
assets sold to her, and should reconvey the assets.

Further, EVERTEX averred that PBCom, without any legal or factual basis, appropriated the contested
properties, which were not included in the Real and Chattel Mortgage of November 26, 1975 nor in the
Chattel Mortgage of April 23, 1979, and neither were those properties included in the Notice of Sheriff's
Sale dated December 1, 1982 and Certificate of Sale . . . dated December 15, 1982.

The disputed properties, which were valued at P4,000,000.00, are: 14 Interlock Circular Knitting
Machines, 1 Jet Drying Equipment, 1 Dryer Equipment, 1 Raisin Equipment and 1 Heatset Equipment.

The RTC found that the lease and sale of said personal properties were irregular and illegal because they
were not duly foreclosed nor sold at the December 15, 1982 auction sale since these were not included
in the schedules attached to the mortgage contracts. The trial court decreed:

WHEREFORE, judgment is hereby rendered in favor of plaintiff corporation and against the defendants:

1. Ordering the annulment of the sale executed by defendant Philippine Bank of Communications
in favor of defendant Ruby L. Tsai on May 3, 1988 insofar as it affects the personal properties listed in
par. 9 of the complaint, and their return to the plaintiff corporation through its assignee, plaintiff
Mamerto R. Villaluz, for disposition by the Insolvency Court, to be done within ten (10) days from finality
of this decision;

2. Ordering the defendants to pay jointly and severally the plaintiff corporation the sum of
P5,200,000.00 as compensation for the use and possession of the properties in question from November
1986 to February 1991 and P100,000.00 every month thereafter, with interest thereon at the legal rate
per annum until full payment;

3. Ordering the defendants to pay jointly and severally the plaintiff corporation the sum of
P50,000.00 as and for attorney's fees and expenses of litigation;

4. Ordering the defendants to pay jointly and severally the plaintiff corporation the sum of
P200,000.00 by way of exemplary damages;

5. Ordering the dismissal of the counterclaim of the defendants; and

6. Ordering the defendants to proportionately pay the costs of suit.

SO ORDERED.4

Dissatisfied, both PBCom and Tsai appealed to the Court of Appeals, which issued its decision dated
August 31, 1994, the dispositive portion of which reads:

WHEREFORE, except for the deletion therefrom of the award; for exemplary damages, and reduction of
the actual damages, from P100,000.00 to P20,000.00 per month, from November 1986 until subject
personal properties are restored to appellees, the judgment appealed from is hereby AFFIRMED, in all
other respects. No pronouncement as to costs.5

Motion for reconsideration of the above decision having been denied in the resolution of April 28, 1995,
PBCom and Tsai filed their separate petitions for review with this Court.

In G.R No. 120098, petitioner Tsai ascribed the following errors to the respondent court:

I

THE HONORABLE COURT OF APPEALS (SECOND DIVISION) ERRED IN EFFECT MAKING A CONTRACT FOR
THE PARTIES BY TREATING THE 1981 ACQUIRED MACHINERIES AS CHATTELS INSTEAD OF REAL
PROPERTIES WITHIN THEIR EARLIER 1975 DEED OF REAL AND CHATTEL MORTGAGE OR 1979 DEED OF
CHATTEL MORTGAGE.

II

THE HONORABLE COURT OF APPEALS (SECOND DIVISION) ERRED IN HOLDING THAT THE DISPUTED 1981
MACHINERIES ARE NOT REAL PROPERTIES DEEMED PART OF THE MORTGAGE DESPITE THE CLEAR
IMPORT OF THE EVIDENCE AND APPLICABLE RULINGS OF THE SUPREME COURT.

III

THE HONORABLE COURT OF APPEALS (SECOND DIVISION) ERRED IN DEEMING PETITIONER A
PURCHASER IN BAD FAITH.

IV

THE HONORABLE COURT OF APPEALS (SECOND DIVISION) ERRED IN ASSESSING PETITIONER ACTUAL
DAMAGES, ATTORNEY'S FEES AND EXPENSES OF LITIGATION FOR WANT OF VALID FACTUAL AND
LEGAL BASIS.

V

THE HONORABLE COURT OF APPEALS (SECOND DIVISION) ERRED IN HOLDING AGAINST PETITIONER'S
ARGUMENTS ON PRESCRIPTION AND LACHES.6

In G.R. No. 120098, PBCom raised the following issues:

I.

DID THE COURT OF APPEALS VALIDLY DECREE THE MACHINERIES LISTED UNDER PARAGRAPH 9 OF THE
COMPLAINT BELOW AS PERSONAL PROPERTY OUTSIDE OF THE 1975 DEED OF REAL ESTATE MORTGAGE
AND EXCLUDED THEM FROM THE REAL PROPERTY EXTRAJUDICIALLY FORECLOSED BY PBCOM DESPITE
THE PROVISION IN THE 1975 DEED THAT ALL AFTER-ACQUIRED PROPERTIES DURING THE LIFETIME OF
THE MORTGAGE SHALL FORM PART THEREOF, AND DESPITE THE UNDISPUTED FACT THAT SAID
MACHINERIES ARE BIG AND HEAVY, BOLTED OR CEMENTED ON THE REAL PROPERTY MORTGAGED BY
EVER TEXTILE MILLS TO PBCOM, AND WERE ASSESSED FOR REAL ESTATE TAX PURPOSES?

II

CAN PBCOM, WHO TOOK POSSESSION OF THE MACHINERIES IN QUESTION IN GOOD FAITH, EXTENDED
CREDIT FACILITIES TO EVER TEXTILE MILLS WHICH AS OF 1982 TOTALLED P9,547,095.28, WHO HAD
SPENT FOR MAINTENANCE AND SECURITY ON THE DISPUTED MACHINERIES AND HAD TO PAY ALL THE
BACK TAXES OF EVER TEXTILE MILLS BE LEGALLY COMPELLED TO RETURN TO EVER THE SAID
MACHINERIES OR IN LIEU THEREOF BE ASSESSED DAMAGES. IS THAT SITUATION TANTAMOUNT TO A
CASE OF UNJUST ENRICHMENT?7

The principal issue, in our view, is whether or not the inclusion of the questioned properties in the
foreclosed properties is proper. The secondary issue is whether or not the sale of these properties to
petitioner Ruby Tsai is valid.

For her part, Tsai avers that the Court of Appeals in effect made a contract for the parties by treating the
1981 acquired units of machinery as chattels instead of real properties within their earlier 1975 deed of
Real and Chattel Mortgage or 1979 deed of Chattel Mortgage.8 Additionally, Tsai argues that
respondent court erred in holding that the disputed 1981 machineries are not real properties.9 Finally,
she contends that the Court of Appeals erred in holding against petitioner's arguments on prescription
and laches10 and in assessing petitioner actual damages, attorney's fees and expenses of litigation, for
want of valid factual and legal basis.11

Essentially, PBCom contends that respondent court erred in affirming the lower court's judgment
decreeing that the pieces of machinery in dispute were not duly foreclosed and could not be legally
leased nor sold to Ruby Tsai. It further argued that the Court of Appeals' pronouncement that the pieces
of machinery in question were personal properties have no factual and legal basis. Finally, it asserts that
the Court of Appeals erred in assessing damages and attorney's fees against PBCom.

In opposition, private respondents argue that the controverted units of machinery are not "real
properties" but chattels, and, therefore, they were not part of the foreclosed real properties, rendering
the lease and the subsequent sale thereof to Tsai a nullity.12

Considering the assigned errors and the arguments of the parties, we find the petitions devoid of merit
and ought to be denied.

Well settled is the rule that the jurisdiction of the Supreme Court in a petition for review on certiorari
under Rule 45 of the Revised Rules of Court is limited to reviewing only errors of law, not of fact, unless
the factual findings complained of are devoid of support by the evidence on record or the assailed
judgment is based on misapprehension of facts.13 This rule is applied more stringently when the
findings of fact of the RTC is affirmed by the Court of Appeals.14

The following are the facts as found by the RTC and affirmed by the Court of Appeals that are decisive of
the issues: (1) the "controverted machineries" are not covered by, or included in, either of the two
mortgages, the Real Estate and Chattel Mortgage, and the pure Chattel Mortgage; (2) the said
machineries were not included in the list of properties appended to the Notice of Sale, and neither were
they included in the Sheriff's Notice of Sale of the foreclosed properties.15

Petitioners contend that the nature of the disputed machineries, i.e., that they were heavy, bolted or
cemented on the real property mortgaged by EVERTEX to PBCom, make them ipso facto immovable
under Article 415 (3) and (5) of the New Civil Code. This assertion, however, does not settle the issue.
Mere nuts and bolts do not foreclose the controversy. We have to look at the parties' intent.

While it is true that the controverted properties appear to be immobile, a perusal of the contract of Real
and Chattel Mortgage executed by the parties herein gives us a contrary indication. In the case at bar,
both the trial and the appellate courts reached the same finding that the true intention of PBCOM and
the owner, EVERTEX, is to treat machinery and equipment as chattels. The pertinent portion of
respondent appellate court's ruling is quoted below:

As stressed upon by appellees, appellant bank treated the machineries as chattels; never as real
properties. Indeed, the 1975 mortgage contract, which was actually real and chattel mortgage, militates
against appellants' posture. It should be noted that the printed form used by appellant bank was mainly
for real estate mortgages. But reflective of the true intention of appellant PBCOM and appellee 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 1979 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 sixty-three (63) individually
described machineries while the schedule listed only machines and 2,996,880.50 worth of finished
cotton fabrics and natural cotton fabrics.16

In the absence of any showing that this conclusion is baseless, erroneous or uncorroborated by the
evidence on record, we find no compelling reason to depart therefrom.

Too, 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, 9 SCRA 631 (1963), 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, as in the case at bar.

In the instant case, the parties herein: (1) executed a contract styled as "Real Estate Mortgage and
Chattel Mortgage," instead of just "Real Estate Mortgage" if indeed their intention is to treat all
properties included therein as immovable, and (2) attached to the said contract a separate "LIST OF
MACHINERIES & EQUIPMENT". These facts, taken together, evince the conclusion that the parties'
intention is to treat these units of machinery as chattels. A fortiori, the contested after-acquired
properties, which are of the same description as the units enumerated under the title "LIST OF
MACHINERIES & EQUIPMENT," must also be treated as chattels.

Accordingly, we find no reversible error in the respondent appellate court's ruling that 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, which provides in Section 7 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."

And, since the disputed machineries were acquired in 1981 and could not have been involved in the
1975 or 1979 chattel mortgages, 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 auction sale of the subject properties to PBCom is void, no valid title passed in its favor.
Consequently, the sale thereof to Tsai is also a nullity under the elementary principle of nemo dat quod
non habet, one cannot give what one does not have.17

Petitioner Tsai also argued that assuming that PBCom's title over the contested properties is a nullity,
she is nevertheless a purchaser in good faith and for value who now has a better right than EVERTEX.

To the contrary, however, are the factual findings and conclusions of the trial court that she is not a
purchaser in good faith. Well-settled is the rule that the person who asserts the status of a purchaser in
good faith and for value has the burden of proving such assertion.18 Petitioner Tsai failed to discharge
this burden persuasively.

Moreover, a purchaser in good faith and for value is one who buys the property of another without
notice that some other person has a right to or interest in such property and pays a full and fair price for
the same, at the time of purchase, or before he has notice of the claims or interest of some other person
in the property.19 Records reveal, however, that when Tsai purchased the controverted properties, she
knew of respondent's claim thereon. As borne out by the records, she received the letter of
respondent's counsel, apprising her of respondent's claim, dated February 27, 1987.20 She replied
thereto on March 9, 1987.21 Despite her knowledge of respondent's claim, she proceeded to buy the
contested units of machinery on May 3, 1988. Thus, the RTC did not err in finding that she was not a
purchaser in good faith.

Petitioner Tsai's defense of indefeasibility of Torrens Title of the lot where the disputed properties are
located is equally unavailing. This defense refers to sale of lands and not to sale of properties situated
therein. Likewise, the mere fact that the lot where the factory and the disputed properties stand is in
PBCom's name does not automatically make PBCom the owner of everything found therein, especially in
view of EVERTEX's letter to Tsai enunciating its claim.

Finally, petitioners' defense of prescription and laches is less than convincing. We find no cogent reason
to disturb the consistent findings of both courts below that the case for the reconveyance of the
disputed properties was filed within the reglementary period. Here, in our view, the doctrine of laches
does not apply. Note that upon petitioners' adamant refusal to heed EVERTEX's claim, respondent
company immediately filed an action to recover possession and ownership of the disputed properties.
There is no evidence showing any failure or neglect on its part, for an unreasonable and unexplained
length of time, to do that which, by exercising due diligence, could or should have been done earlier.
The doctrine of stale demands would apply only where by reason of the lapse of time, it would be
inequitable to allow a party to enforce his legal rights. Moreover, except for very strong reasons, this
Court is not disposed to apply the doctrine of laches to prejudice or defeat the rights of an owner.22

As to the award of damages, the contested damages are the actual compensation, representing rentals
for the contested units of machinery, the exemplary damages, and attorney's fees.

As regards said actual compensation, the RTC awarded P100,000.00 corresponding to the unpaid rentals
of the contested properties based on the testimony of John Chua, who testified that the P100,000.00
was based on the accepted practice in banking and finance, business and investments that the rental
price must take into account the cost of money used to buy them. The Court of Appeals did not give full
credence to Chua's projection and reduced the award to P20,000.00.

Basic is the rule that to recover actual damages, the amount of loss must not only be capable of proof
but must actually be proven with reasonable degree of certainty, premised upon competent proof or
best evidence obtainable of the actual amount thereof.23 However, the allegations of respondent
company as to the amount of unrealized rentals due them as actual damages remain mere assertions
unsupported by documents and other competent evidence. In determining actual damages, the court
cannot rely on mere assertions, speculations, conjectures or guesswork but must depend on competent
proof and on the best evidence obtainable regarding the actual amount of loss.24 However, we are not
prepared to disregard the following dispositions of the respondent appellate court:

. . . In the award of actual damages under scrutiny, there is nothing on record warranting the said award
of P5,200,000.00, representing monthly rental income of P100,000.00 from November 1986 to February
1991, and the additional award of P100,000.00 per month thereafter.

As pointed out by appellants, the testimonial evidence, consisting of the testimonies of Jonh (sic) Chua
and Mamerto Villaluz, is shy of what is necessary to substantiate the actual damages allegedly sustained
by appellees, by way of unrealized rental income of subject machineries and equipments.

The testimony of John Cua (sic) is nothing but an opinion or projection based on what is claimed to be a
practice in business and industry. But such a testimony cannot serve as the sole basis for assessing the
actual damages complained of. What is more, there is no showing that had appellant Tsai not taken
possession of the machineries and equipments in question, somebody was willing and ready to rent the
same for P100,000.00 a month.

xxx xxx xxx

Then, too, even assuming arguendo that the said machineries and equipments could have generated a
rental income of P30,000.00 a month, as projected by witness Mamerto Villaluz, the same would have
been a gross income. Therefrom should be deducted or removed, expenses for maintenance and repairs
. . . Therefore, in the determination of the actual damages or unrealized rental income sued upon, there
is a good basis to calculate that at least four months in a year, the machineries in dispute would have
been idle due to absence of a lessee or while being repaired. In the light of the foregoing rationalization
and computation, We believe that a net unrealized rental income of P20,000.00 a month, since
November 1986, is more realistic and fair.25

As to exemplary damages, the RTC awarded P200,000.00 to EVERTEX which the Court of Appeals
deleted. But according to the CA, there was no clear showing that petitioners acted malevolently,
wantonly and oppressively. The evidence, however, shows otherwise.It is a requisite to award
exemplary damages that the wrongful act must be accompanied by bad faith,26 and the guilty acted in a
wanton, fraudulent, oppressive, reckless or malevolent manner.27 As previously stressed, petitioner
Tsai's act of purchasing the controverted properties despite her knowledge of EVERTEX's claim was
oppressive and subjected the already insolvent respondent to gross disadvantage. Petitioner PBCom
also received the same letters of Atty. Villaluz, responding thereto on March 24, 1987.28 Thus, PBCom's
act of taking all the properties found in the factory of the financially handicapped respondent, including
those properties not covered by or included in the mortgages, is equally oppressive and tainted with bad
faith. Thus, we are in agreement with the RTC that an award of exemplary damages is proper.

The amount of P200,000.00 for exemplary damages is, however, excessive. Article 2216 of the Civil Code
provides that no proof of pecuniary loss is necessary for the adjudication of exemplary damages, their
assessment being left to the discretion of the court in accordance with the circumstances of each
case.29 While the imposition of exemplary damages is justified in this case, equity calls for its reduction.
In Inhelder Corporation v. Court of Appeals, G.R. No. L-52358, 122 SCRA 576, 585, (May 30, 1983), we
laid down the rule that judicial discretion granted to the courts in the assessment of damages must
always be exercised with balanced restraint and measured objectivity. Thus, here the award of
exemplary damages by way of example for the public good should be reduced to P100,000.00.

By the same token, attorney's fees and other expenses of litigation may be recovered when exemplary
damages are awarded.30 In our view, RTC's award of P50,000.00 as attorney's fees and expenses of
litigation is reasonable, given the circumstances in these cases.

WHEREFORE, the petitions are DENIED. The assailed decision and resolution of the Court of Appeals in
CA-G.R. CV No. 32986 are AFFIRMED WITH MODIFICATIONS. Petitioners Philippine Bank of
Communications and Ruby L. Tsai are hereby ordered to pay jointly and severally Ever Textile Mills, Inc.
the following: (1) P20,000.00 per month, as compensation for the use and possession of the properties
in question from November 198631 until subject personal properties are restored to respondent
corporation; (2) P100,000.00 by way of exemplary damages, and (3) P50,000.00 as attorney's fees and
litigation expenses. Costs against petitioners.

SO ORDERED.

Bellosillo, Mendoza, Buena and De Leon, Jr., JJ., concur.

SERGS PRODUCTS, INC., and SERGIO T. GOQUIOLAY, petitioners, vs. PCI LEASING AND FINANCE, INC.,
respondent.
D E C I S I O N
PANGANIBAN, J.:

After agreeing to a contract stipulating that a real or immovable property be considered as personal or
movable, a party is estopped from subsequently claiming otherwise. Hence, such property is a proper
subject of a writ of replevin obtained by the other contracting party.

The Case

Before us is a Petition for Review on Certiorari assailing the January 6, 1999 Decision[1] of the Court of
Appeals (CA)[2] in CA-GR SP No. 47332 and its February 26, 1999 Resolution[3] denying reconsideration.
The decretal portion of the CA Decision reads as follows:

WHEREFORE, premises considered, the assailed Order dated February 18, 1998 and Resolution dated
March 31, 1998 in Civil Case No. Q-98-33500 are hereby AFFIRMED. The writ of preliminary injunction
issued on June 15, 1998 is hereby LIFTED.*4+

In its February 18, 1998 Order,[5] the Regional Trial Court (RTC) of Quezon City (Branch 218)[6] issued a
Writ of Seizure.*7+ The March 18, 1998 Resolution*8+ denied petitioners Motion for Special Protective
Order, praying that the deputy sheriff be enjoined from seizing immobilized or other real properties in
(petitioners) factory in Cainta, Rizal and to return to their original place whatever immobilized
machineries or equipments he may have removed.*9+

The Facts

The undisputed facts are summarized by the Court of Appeals as follows:[10]

On February 13, 1998, respondent PCI Leasing and Finance, Inc. (PCI Leasing for short) filed with the
RTC-QC a complaint for *a+ sum of money (Annex E), with an application for a writ of replevin docketed
as Civil Case No. Q-98-33500.

On March 6, 1998, upon an ex-parte application of PCI Leasing, respondent judge issued a writ of
replevin (Annex B) 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.

On March 24, 1998, in implementation of said writ, the sheriff proceeded to petitioners factory,
seized one machinery with [the] word that he [would] return for the other machineries.

On March 25, 1998, petitioners filed a motion for special protective order (Annex C), invoking the
power of the court to control the conduct of its officers and amend and control its processes, praying for
a directive for the sheriff to defer enforcement of the writ of replevin.

This motion was opposed by PCI Leasing (Annex F), on the ground that the properties *were] still
personal and therefore still subject to seizure and a writ of replevin.

In their Reply, petitioners asserted that the properties sought to be seized *were+ immovable as
defined in Article 415 of the Civil Code, the parties agreement to the contrary notwithstanding. They
argued that to give effect to the agreement would be prejudicial to innocent third parties. They further
stated that PCI Leasing [was] estopped from treating these machineries as personal because the
contracts in which the alleged agreement [were] embodied [were] totally sham and farcical.

On April 6, 1998, the sheriff again sought to enforce the writ of seizure and take possession of the
remaining properties. He was able to take two more, but was prevented by the workers from taking the
rest.

On April 7, 1998, they went to *the CA+ via an original action for certiorari.

Ruling of the Court of Appeals

Citing the Agreement of the parties, the appellate court held that the subject machines were personal
property, and that they had only been leased, not owned, by petitioners. It also ruled that the words of
the contract are clear and leave no doubt upon the true intention of the contracting parties. Observing
that Petitioner Goquiolay was an experienced businessman who was not unfamiliar with the ways of
the trade, it ruled that he should have realized the import of the document he signed. The CA
further held:

Furthermore, to accord merit to this petition would be to preempt the trial court in ruling upon the
case below, since the merits of the whole matter are laid down before us via a petition whose sole
purpose is to inquire upon the existence of a grave abuse of discretion on the part of the [RTC] in issuing
the assailed Order and Resolution. The issues raised herein are proper subjects of a full-blown trial,
necessitating presentation of evidence by both parties. The contract is being enforced by one, and [its]
validity is attacked by the other a matter x x x which respondent court is in the best position to
determine.

Hence, this Petition.[11]

The Issues

In their Memorandum, petitioners submit the following issues for our consideration:

A. Whether or not the machineries purchased and imported by SERGS became real property by virtue
of immobilization.

B. Whether or not the contract between the parties is a loan or a lease.*12+

In the main, the Court will resolve whether the said machines are personal, not immovable, property
which may be a proper subject of a writ of replevin. As a preliminary matter, the Court will also address
briefly the procedural points raised by respondent.

The Courts Ruling

The Petition is not meritorious.

Preliminary Matter:Procedural Questions

Respondent contends that the Petition failed to indicate expressly whether it was being filed under Rule
45 or Rule 65 of the Rules of Court. It further alleges that the Petition erroneously impleaded Judge
Hilario Laqui as respondent.

There is no question that the present recourse is under Rule 45. This conclusion finds support in the
very title of the Petition, which is Petition for Review on Certiorari.*13+

While Judge Laqui should not have been impleaded as a respondent,[14] substantial justice requires that
such lapse by itself should not warrant the dismissal of the present Petition. In this light, the Court
deems it proper to remove, motu proprio, the name of Judge Laqui from the caption of the present
case.

Main Issue: Nature of the Subject Machinery

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. Serious policy considerations, they argue,
militate against a contrary characterization.

Rule 60 of the Rules of Court provides that writs of replevin are issued for the recovery of personal
property only.[15] Section 3 thereof reads:

SEC. 3. Order. -- Upon the filing of such affidavit and approval of the bond, the court shall issue an
order and the corresponding writ of replevin describing the personal property alleged to be wrongfully
detained and requiring the sheriff forthwith to take such property into his custody.

On the other hand, Article 415 of the Civil Code enumerates immovable or real property as follows:

ART. 415. The following are immovable property:

x x x....................................x x x....................................x x x

(5) 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;

x x x....................................x x x....................................x x x

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. Indisputably, 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.*16+ In that sense, petitioners are correct in arguing that the said
machines are real, not personal, property pursuant to Article 415 (5) of the Civil Code.[17]

Be that as it may, we disagree with the submission of the petitioners that the said machines are not
proper subjects of the Writ of Seizure.

The Court has held that contracting parties may validly stipulate that a real property be considered as
personal.[18] 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.

Hence, in Tumalad v. Vicencio,[19] the Court upheld the intention of the parties to treat a house as a
personal property because it had been made the subject of a chattel mortgage. The Court ruled:

x x x. Although there is no specific statement referring to the subject house as personal property, yet
by ceding, selling or transferring a property by way of chattel mortgage defendants-appellants could
only have meant to convey the house as chattel, or at least, intended to treat the same as such, so that
they should not now be allowed to make an inconsistent stand by claiming otherwise.

Applying Tumalad, the Court in Makati Leasing and Finance Corp. v. Wearever Textile Mills[20] also held
that the machinery used in a factory and essential to the industry, as in the present case, was a proper
subject of a writ of replevin because it was treated as personal property in a contract. Pertinent
portions of the Courts ruling are reproduced hereunder:

x x x. If a house of strong materials, like what was involved in the above Tumalad case, may be
considered as 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, there is
absolutely no reason why a machinery, which is movable in its nature and becomes immobilized only by
destination or purpose, may not be likewise treated as such. This is really because one who has so
agreed is estopped from denying the existence of the chattel mortgage.

In the present case, the Lease Agreement clearly provides that the machines in question are to be
considered as personal property. Specifically, Section 12.1 of the Agreement reads as follows:[21]

12.1 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.

Clearly then, petitioners are estopped from denying the characterization of the subject machines as
personal property. Under the circumstances, they are proper subjects of the Writ of Seizure.

It should be stressed, however, that our holding -- that the machines should be deemed personal
property pursuant to the Lease Agreement is good only insofar as the contracting parties are
concerned.[22] Hence, while the parties are bound by the Agreement, third persons acting in good faith
are not affected by its stipulation characterizing the subject machinery as personal.[23] In any event,
there is no showing that any specific third party would be adversely affected.

Validity of the Lease Agreement

In their Memorandum, petitioners contend that the Agreement is a loan and not a lease.[24] Submitting
documents supposedly showing that they own the subject machines, petitioners also argue in their
Petition that the Agreement suffers from intrinsic ambiguity which places in serious doubt the intention
of the parties and the validity of the lease agreement itself.*25+ In their Reply to respondents
Comment, they further allege that the Agreement is invalid.[26]

These arguments are unconvincing. The validity and the nature of the contract are the lis mota of the
civil action pending before the RTC. A resolution of these questions, therefore, is effectively a resolution
of the merits of the case. Hence, they should be threshed out in the trial, not in the proceedings
involving the issuance of the Writ of Seizure.

Indeed, in La Tondea Distillers v. CA,[27] the Court explained that the policy under Rule 60 was that
questions involving title to the subject property questions which petitioners are now raising -- should
be determined in the trial. In that case, the Court noted that the remedy of defendants under Rule 60
was either to post a counter-bond or to question the sufficiency of the plaintiffs bond. They were not
allowed, however, to invoke the title to the subject property. The Court ruled:

In other words, the law does not allow the defendant to file a motion to dissolve or discharge the writ
of seizure (or delivery) on ground of insufficiency of the complaint or of the grounds relied upon
therefor, as in proceedings on preliminary attachment or injunction, and thereby put at issue the matter
of the title or right of possession over the specific chattel being replevied, the policy apparently being
that said matter should be ventilated and determined only at the trial on the merits.*28+

Besides, these questions require a determination of facts and a presentation of evidence, both of which
have no place in a petition for certiorari in the CA under Rule 65 or in a petition for review in this Court
under Rule 45.[29]

Reliance on the Lease Agreement

It should be pointed out that the Court in this case may rely on the Lease Agreement, for nothing on
record shows that it has been nullified or annulled. In fact, petitioners assailed it first only in the RTC
proceedings, which had ironically been instituted by respondent. Accordingly, it must be presumed
valid and binding as the law between the parties.

Makati Leasing and Finance Corporation[30] is also instructive on this point. In that case, the Deed of
Chattel Mortgage, which characterized the subject machinery as personal property, was also assailed
because respondent had allegedly been required to sign a printed form of chattel mortgage which was
in a blank form at the time of signing. The Court rejected the argument and relied on the Deed, ruling
as follows:

x x x. Moreover, even granting that the charge is true, such fact alone does not render a contract void
ab initio, but can only be a ground for rendering said contract voidable, or annullable pursuant to Article
1390 of the new Civil Code, by a proper action in court. There is nothing on record to show that the
mortgage has been annulled. Neither is it disclosed that steps were taken to nullify the same. x x x

Alleged Injustice Committed on the Part of Petitioners

Petitioners contend that if the Court allows these machineries to be seized, then its workers would be
out of work and thrown into the streets.*31+ They also allege that the seizure would nullify all efforts to
rehabilitate the corporation.

Petitioners arguments do not preclude the implementation of the Writ. As earlier discussed, law and
jurisprudence support its propriety. Verily, the above-mentioned consequences, if they come true,
should not be blamed on this Court, but on the petitioners for failing to avail themselves of the remedy
under Section 5 of Rule 60, which allows the filing of a counter-bond. The provision states:

SEC. 5. Return of property. -- If the adverse party objects to the sufficiency of the applicants bond, or
of the surety or sureties thereon, he cannot immediately require the return of the property, but if he
does not so object, he may, at any time before the delivery of the property to the applicant, require the
return thereof, by filing with the court where the action is pending a bond executed to the applicant, in
double the value of the property as stated in the applicants affidavit for the delivery thereof to the
applicant, if such delivery be adjudged, and for the payment of such sum to him as may be recovered
against the adverse party, and by serving a copy bond on the applicant.

WHEREFORE, the Petition is DENIED and the assailed Decision of the Court of Appeals AFFIRMED. Costs
against petitioners.

SO ORDERED.

Melo, (Chairman), Vitug, Purisima, and Gonzaga-Reyes, JJ., concur.

G.R. No. L-64261 December 26, 1984

JOSE BURGOS, SR., JOSE BURGOS, JR., BAYANI SORIANO and J. BURGOS MEDIA SERVICES, INC.,
petitioners,
vs.
THE CHIEF OF STAFF, ARMED FORCES OF THE PHILIPPINES, THE CHIEF, PHILIPPINE CONSTABULARY, THE
CHIEF LEGAL OFFICER, PRESIDENTIAL SECURITY COMMAND, THE JUDGE ADVOCATE GENERAL, ET AL.,
respondents.

Lorenzo M. Taada, Wigberto E. Taada, Martiniano Vivo, Augusto Sanchez, Joker P. Arroyo, Jejomar
Binay and Rene Saguisag for petitioners.

The Solicitor General for respondents.



ESCOLIN, J.:

Assailed in this petition for certiorari prohibition and mandamus with preliminary mandatory and
prohibitory injunction is the validity of two [2] search warrants issued on December 7, 1982 by
respondent Judge Ernani Cruz-Pano, Executive Judge of the then Court of First Instance of Rizal [Quezon
City], under which the premises known as No. 19, Road 3, Project 6, Quezon City, and 784 Units C & D,
RMS Building, Quezon Avenue, Quezon City, business addresses of the "Metropolitan Mail" and "We
Forum" newspapers, respectively, were searched, and office and printing machines, equipment,
paraphernalia, motor vehicles and other articles used in the printing, publication and distribution of the
said newspapers, as well as numerous papers, documents, books and other written literature alleged to
be in the possession and control of petitioner Jose Burgos, Jr. publisher-editor of the "We Forum"
newspaper, were seized.

Petitioners further pray that a writ of preliminary mandatory and prohibitory injunction be issued for
the return of the seized articles, and that respondents, "particularly the Chief Legal Officer, Presidential
Security Command, the Judge Advocate General, AFP, the City Fiscal of Quezon City, their
representatives, assistants, subalterns, subordinates, substitute or successors" be enjoined from using
the articles thus seized as evidence against petitioner Jose Burgos, Jr. and the other accused in Criminal
Case No. Q- 022782 of the Regional Trial Court of Quezon City, entitled People v. Jose Burgos, Jr. et al. 1

In our Resolution dated June 21, 1983, respondents were required to answer the petition. The plea for
preliminary mandatory and prohibitory injunction was set for hearing on June 28, 1983, later reset to
July 7, 1983, on motion of the Solicitor General in behalf of respondents.

At the hearing on July 7, 1983, the Solicitor General, while opposing petitioners' prayer for a writ of
preliminary mandatory injunction, manifested that respondents "will not use the aforementioned
articles as evidence in the aforementioned case until final resolution of the legality of the seizure of the
aforementioned articles. ..." 2 With this manifestation, the prayer for preliminary prohibitory injunction
was rendered moot and academic.

Respondents would have this Court dismiss the petition on the ground that petitioners had come to this
Court without having previously sought the quashal of the search warrants before respondent judge.
Indeed, petitioners, before impugning the validity of the warrants before this Court, should have filed a
motion to quash said warrants in the court that issued them. 3 But this procedural flaw notwithstanding,
we take cognizance of this petition in view of the seriousness and urgency of the constitutional issues
raised not to mention the public interest generated by the search of the "We Forum" offices, which was
televised in Channel 7 and widely publicized in all metropolitan dailies. The existence of this special
circumstance justifies this Court to exercise its inherent power to suspend its rules. In the words of the
revered Mr. Justice Abad Santos in the case of C. Vda. de Ordoveza v. Raymundo, 4 "it is always in the
power of the court [Supreme Court] to suspend its rules or to except a particular case from its
operation, whenever the purposes of justice require it...".

Respondents likewise urge dismissal of the petition on ground of laches. Considerable stress is laid on
the fact that while said search warrants were issued on December 7, 1982, the instant petition
impugning the same was filed only on June 16, 1983 or after the lapse of a period of more than six [6]
months.

Laches is failure or negligence for an unreasonable and unexplained length of time to do that which, by
exercising due diligence, could or should have been done earlier. It is negligence or omission to assert a
right within a reasonable time, warranting a presumption that the party entitled to assert it either has
abandoned it or declined to assert it. 5

Petitioners, in their Consolidated Reply, explained the reason for the delay in the filing of the petition
thus:

Respondents should not find fault, as they now do [p. 1, Answer, p. 3, Manifestation] with the fact that
the Petition was filed on June 16, 1983, more than half a year after the petitioners' premises had been
raided.

The climate of the times has given petitioners no other choice. If they had waited this long to bring their
case to court, it was because they tried at first to exhaust other remedies. The events of the past eleven
fill years had taught them that everything in this country, from release of public funds to release of
detained persons from custody, has become a matter of executive benevolence or largesse

Hence, as soon as they could, petitioners, upon suggestion of persons close to the President, like Fiscal
Flaminiano, sent a letter to President Marcos, through counsel Antonio Coronet asking the return at
least of the printing equipment and vehicles. And after such a letter had been sent, through Col. Balbino
V. Diego, Chief Intelligence and Legal Officer of the Presidential Security Command, they were further
encouraged to hope that the latter would yield the desired results.

After waiting in vain for five [5] months, petitioners finally decided to come to Court. [pp. 123-124,
Rollo]

Although the reason given by petitioners may not be flattering to our judicial system, We find no ground
to punish or chastise them for an error in judgment. On the contrary, the extrajudicial efforts exerted by
petitioners quite evidently negate the presumption that they had abandoned their right to the
possession of the seized property, thereby refuting the charge of laches against them.

Respondents also submit the theory that since petitioner Jose Burgos, Jr. had used and marked as
evidence some of the seized documents in Criminal Case No. Q- 022872, he is now estopped from
challenging the validity of the search warrants. We do not follow the logic of respondents. These
documents lawfully belong to petitioner Jose Burgos, Jr. and he can do whatever he pleases with them,
within legal bounds. The fact that he has used them as evidence does not and cannot in any way affect
the validity or invalidity of the search warrants assailed in this petition.

Several and diverse reasons have been advanced by petitioners to nullify the search warrants in
question.

1. Petitioners fault respondent judge for his alleged failure to conduct an examination under oath or
affirmation of the applicant and his witnesses, as mandated by the above-quoted constitutional
provision as wen as Sec. 4, Rule 126 of the Rules of Court . 6 This objection, however, may properly be
considered moot and academic, as petitioners themselves conceded during the hearing on August 9,
1983, that an examination had indeed been conducted by respondent judge of Col. Abadilla and his
witnesses.

2. Search Warrants No. 20-82[a] and No. 20- 82[b] were used to search two distinct places: No. 19, Road
3, Project 6, Quezon City and 784 Units C & D, RMS Building, Quezon Avenue, Quezon City, respectively.
Objection is interposed to the execution of Search Warrant No. 20-82[b] at the latter address on the
ground that the two search warrants pinpointed only one place where petitioner Jose Burgos, Jr. was
allegedly keeping and concealing the articles listed therein, i.e., No. 19, Road 3, Project 6, Quezon City.
This assertion is based on that portion of Search Warrant No. 20- 82[b] which states:

Which have been used, and are being used as instruments and means of committing the crime of
subversion penalized under P.D. 885 as amended and he is keeping and concealing the same at 19 Road
3, Project 6, Quezon City.

The defect pointed out is obviously a typographical error. Precisely, two search warrants were applied
for and issued because the purpose and intent were to search two distinct premises. It would be quite
absurd and illogical for respondent judge to have issued two warrants intended for one and the same
place. Besides, the addresses of the places sought to be searched were specifically set forth in the
application, and since it was Col. Abadilla himself who headed the team which executed the search
warrants, the ambiguity that might have arisen by reason of the typographical error is more apparent
than real. The fact is that the place for which Search Warrant No. 20- 82[b] was applied for was 728
Units C & D, RMS Building, Quezon Avenue, Quezon City, which address appeared in the opening
paragraph of the said warrant. 7 Obviously this is the same place that respondent judge had in mind
when he issued Warrant No. 20-82 [b].

In the determination of whether a search warrant describes the premises to be searched with sufficient
particularity, it has been held "that the executing officer's prior knowledge as to the place intended in
the warrant is relevant. This would seem to be especially true where the executing officer is the affiant
on whose affidavit the warrant had issued, and when he knows that the judge who issued the warrant
intended the building described in the affidavit, And it has also been said that the executing officer may
look to the affidavit in the official court file to resolve an ambiguity in the warrant as to the place to be
searched." 8

3. Another ground relied upon to annul the search warrants is the fact that although the warrants
were directed against Jose Burgos, Jr. alone, articles b belonging to his co-petitioners Jose Burgos, Sr.,
Bayani Soriano and the J. Burgos Media Services, Inc. were seized.

Section 2, Rule 126 of the Rules of Court, enumerates the personal properties that may be seized under
a search warrant, to wit:

Sec. 2. Personal Property to be seized. A search warrant may be issued for the search and seizure of
the following personal property:

[a] Property subject of the offense;

[b] Property stolen or embezzled and other proceeds or fruits of the offense; and

[c] Property used or intended to be used as the means of committing an offense.

The above rule does not require that the property to be seized should be owned by the person against
whom the search warrant is directed. It may or may not be owned by him. In fact, under subsection [b]
of the above-quoted Section 2, one of the properties that may be seized is stolen property. Necessarily,
stolen property must be owned by one other than the person in whose possession it may be at the time
of the search and seizure. Ownership, therefore, is of no consequence, and it is sufficient that the
person against whom the warrant is directed has control or possession of the property sought to be
seized, as petitioner Jose Burgos, Jr. was alleged to have in relation to the articles and property seized
under the warrants.

4. Neither is there merit in petitioners' assertion that real properties were seized under the disputed
warrants. Under Article 415[5] of the Civil Code of the Philippines, "machinery, receptables, 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" are considered immovable property. In Davao Sawmill Co. v. Castillo 9 where this legal provision
was invoked, this Court ruled that machinery which is movable by nature becomes immobilized when
placed by the owner of the tenement, property or plant, but not so when placed by a tenant,
usufructuary, or any other person having only a temporary right, unless such person acted as the agent
of the owner.

In the case at bar, petitioners do not claim to be the owners of the land and/or building on which the
machineries were placed. This being the case, the machineries in question, while in fact bolted to the
ground remain movable property susceptible to seizure under a search warrant.

5. The questioned search warrants were issued by respondent judge upon application of Col. Rolando N.
Abadilla Intelligence Officer of the P.C. Metrocom. 10 The application was accompanied by the Joint
Affidavit of Alejandro M. Gutierrez and Pedro U. Tango, 11 members of the Metrocom Intelligence and
Security Group under Col. Abadilla which conducted a surveillance of the premises prior to the filing of
the application for the search warrants on December 7, 1982.

It is contended by petitioners, however, that the abovementioned documents could not have provided
sufficient basis for the finding of a probable cause upon which a warrant may validly issue in accordance
with Section 3, Article IV of the 1973 Constitution which provides:

SEC. 3. ... and no search warrant or warrant of arrest shall issue except upon probable cause to be
determined by the judge, or such other responsible officer as may be authorized by law, after
examination under oath or affirmation of the complainant and the witnesses he may produce, and
particularly describing the place to be searched and the persons or things to be seized.

We find petitioners' thesis impressed with merit. Probable cause for a search is defined as such facts and
circumstances which would lead a reasonably discreet and prudent man to believe that an offense has
been committed and that the objects sought in connection with the offense are in the place sought to
be searched. And when the search warrant applied for is directed against a newspaper publisher or
editor in connection with the publication of subversive materials, as in the case at bar, the application
and/or its supporting affidavits must contain a specification, stating with particularity the alleged
subversive material he has published or is intending to publish. Mere generalization will not suffice.
Thus, the broad statement in Col. Abadilla's application that petitioner "is in possession or has in his
control printing equipment and other paraphernalia, news publications and other documents which
were used and are all continuously being used as a means of committing the offense of subversion
punishable under Presidential Decree 885, as amended ..." 12 is a mere conclusion of law and does not
satisfy the requirements of probable cause. Bereft of such particulars as would justify a finding of the
existence of probable cause, said allegation cannot serve as basis for the issuance of a search warrant
and it was a grave error for respondent judge to have done so.

Equally insufficient as basis for the determination of probable cause is the statement contained in the
joint affidavit of Alejandro M. Gutierrez and Pedro U. Tango, "that the evidence gathered and collated
by our unit clearly shows that the premises above- mentioned and the articles and things above-
described were used and are continuously being used for subversive activities in conspiracy with, and to
promote the objective of, illegal organizations such as the Light-a-Fire Movement, Movement for Free
Philippines, and April 6 Movement." 13

In mandating that "no warrant shall issue except upon probable cause to be determined by the judge, ...
after examination under oath or affirmation of the complainant and the witnesses he may produce; 14
the Constitution requires no less than personal knowledge by the complainant or his witnesses of the
facts upon which the issuance of a search warrant may be justified. In Alvarez v. Court of First Instance,
15 this Court ruled that "the oath required must refer to the truth of the facts within the personal
knowledge of the petitioner or his witnesses, because the purpose thereof is to convince the committing
magistrate, not the individual making the affidavit and seeking the issuance of the warrant, of the
existence of probable cause." As couched, the quoted averment in said joint affidavit filed before
respondent judge hardly meets the test of sufficiency established by this Court in Alvarez case.

Another factor which makes the search warrants under consideration constitutionally objectionable is
that they are in the nature of general warrants. The search warrants describe the articles sought to be
seized in this wise:

1] All printing equipment, paraphernalia, paper, ink, photo (equipment, typewriters, cabinets,
tables, communications/recording equipment, tape recorders, dictaphone and the like used and/or
connected in the printing of the "WE FORUM" newspaper and any and all documents communication,
letters and facsimile of prints related to the "WE FORUM" newspaper.

2] Subversive documents, pamphlets, leaflets, books, and other publication to promote the
objectives and piurposes of the subversive organization known as Movement for Free Philippines, Light-
a-Fire Movement and April 6 Movement; and,

3] Motor vehicles used in the distribution/circulation of the "WE FORUM" and other subversive
materials and propaganda, more particularly,

1] Toyota-Corolla, colored yellow with Plate No. NKA 892;

2] DATSUN pick-up colored white with Plate No. NKV 969

3] A delivery truck with Plate No. NBS 524;

4] TOYOTA-TAMARAW, colored white with Plate No. PBP 665; and,

5] TOYOTA Hi-Lux, pick-up truck with Plate No. NGV 427 with marking "Bagong Silang."

In Stanford v. State of Texas 16 the search warrant which authorized the search for "books, records,
pamphlets, cards, receipts, lists, memoranda, pictures, recordings and other written instruments
concerning the Communist Party in Texas," was declared void by the U.S. Supreme Court for being too
general. In like manner, directions to "seize any evidence in connectionwith the violation of SDC 13-3703
or otherwise" have been held too general, and that portion of a search warrant which authorized the
seizure of any "paraphernalia which could be used to violate Sec. 54-197 of the Connecticut General
Statutes [the statute dealing with the crime of conspiracy]" was held to be a general warrant, and
therefore invalid. 17 The description of the articles sought to be seized under the search warrants in
question cannot be characterized differently.

In the Stanford case, the U.S. Supreme Courts calls to mind a notable chapter in English history: the era
of disaccord between the Tudor Government and the English Press, when "Officers of the Crown were
given roving commissions to search where they pleased in order to suppress and destroy the literature
of dissent both Catholic and Puritan Reference herein to such historical episode would not be relevant
for it is not the policy of our government to suppress any newspaper or publication that speaks with
"the voice of non-conformity" but poses no clear and imminent danger to state security.

As heretofore stated, the premises searched were the business and printing offices of the "Metropolitan
Mail" and the "We Forum newspapers. As a consequence of the search and seizure, these premises
were padlocked and sealed, with the further result that the printing and publication of said newspapers
were discontinued.

Such closure is in the nature of previous restraint or censorship abhorrent to the freedom of the press
guaranteed under the fundamental law, 18 and constitutes a virtual denial of petitioners' freedom to
express themselves in print. This state of being is patently anathematic to a democratic framework
where a free, alert and even militant press is essential for the political enlightenment and growth of the
citizenry.

Respondents would justify the continued sealing of the printing machines on the ground that they have
been sequestered under Section 8 of Presidential Decree No. 885, as amended, which authorizes "the
sequestration of the property of any person, natural or artificial, engaged in subversive activities against
the government and its duly constituted authorities ... in accordance with implementing rules and
regulations as may be issued by the Secretary of National Defense." It is doubtful however, if
sequestration could validly be effected in view of the absence of any implementing rules and regulations
promulgated by the Minister of National Defense.

Besides, in the December 10, 1982 issue of the Daily Express, it was reported that no less than President
Marcos himself denied the request of the military authorities to sequester the property seized from
petitioners on December 7, 1982. Thus:

The President denied a request flied by government prosecutors for sequestration of the WE FORUM
newspaper and its printing presses, according to Information Minister Gregorio S. Cendana.

On the basis of court orders, government agents went to the We Forum offices in Quezon City and took
a detailed inventory of the equipment and all materials in the premises.

Cendaa said that because of the denial the newspaper and its equipment remain at the disposal of the
owners, subject to the discretion of the court. 19

That the property seized on December 7, 1982 had not been sequestered is further confirmed by the
reply of then Foreign Minister Carlos P. Romulo to the letter dated February 10, 1983 of U.S.
Congressman Tony P. Hall addressed to President Marcos, expressing alarm over the "WE FORUM "
case. 20 In this reply dated February 11, 1983, Minister Romulo stated:

2. Contrary to reports, President Marcos turned down the recommendation of our authorities to
close the paper's printing facilities and confiscate the equipment and materials it uses. 21

IN VIEW OF THE FOREGOING, Search Warrants Nos. 20-82[a] and 20-82[b] issued by respondent judge
on December 7, 1982 are hereby declared null and void and are accordingly set aside. The prayer for a
writ of mandatory injunction for the return of the seized articles is hereby granted and all articles seized
thereunder are hereby ordered released to petitioners. No costs.

SO ORDERED.

Fernando, C.J., Teehankee, Makasiar, Concepcion, Jr., Melencio-Herrera, Plana, Relova, Gutierrez, Jr., De
la Fuente and Cuevas, JJ., concur.

Aquino, J., took no part.

G.R. Nos. L-10817-18 February 28, 1958

ENRIQUE LOPEZ, petitioner,
vs.
VICENTE OROSA, JR., and PLAZA THEATRE, INC., respondents.

Nicolas Belmonte and Benjamin T. de Peralta for petitioner.
Tolentino & Garcia and D. R. Cruz for respondent Luzon Surety Co., Inc. Jose B. Macatangay for
respondent Plaza Theatre, Inc.

FELIX, J.:

Enrique Lopez is a resident of Balayan, Batangas, doing business under the trade name of Lopez-Castelo
Sawmill. Sometime in May, 1946, Vicente Orosa, Jr., also a resident of the same province, dropped at
Lopez' house and invited him to make an investment in the theatre business. It was intimated that
Orosa, his family and close friends were organizing a corporation to be known as Plaza Theatre, Inc., that
would engage in such venture. Although Lopez expressed his unwillingness to invest of the same, he
agreed to supply the lumber necessary for the construction of the proposed theatre, and at Orosa's
behest and assurance that the latter would be personally liable for any account that the said
construction might incur, Lopez further agreed that payment therefor would be on demand and not
cash on delivery basis. Pursuant to said verbal agreement, Lopez delivered the lumber which was used
for the construction of the Plaza Theatre on May 17, 1946, up to December 4 of the same year. But of
the total cost of the materials amounting to P62,255.85, Lopez was paid only P20,848.50, thus leaving a
balance of P41,771.35.

We may state at this juncture that the Plaza Theatre was erected on a piece of land with an area of
679.17 square meters formerly owned by Vicente Orosa, Jr., and was acquired by the corporation on
September 25, 1946, for P6,000. As Lopez was pressing Orosa for payment of the remaining unpaid
obligation, the latter and Belarmino Rustia, the president of the corporation, promised to obtain a bank
loan by mortgaging the properties of the Plaza Theatre., out of which said amount of P41,771.35 would
be satisfied, to which assurance Lopez had to accede. Unknown to him, however, as early as November,
1946, the corporation already got a loan for P30,000 from the Philippine National Bank with the Luzon
Surety Company as surety, and the corporation in turn executed a mortgage on the land and building in
favor of said company as counter-security. As the land at that time was not yet brought under the
operation of the Torrens System, the mortgage on the same was registered on November 16, 1946,
under Act No. 3344. Subsequently, when the corporation applied for the registration of the land under
Act 496, such mortgage was not revealed and thus Original Certificate of Title No. O-391 was
correspondingly issued on October 25, 1947, without any encumbrance appearing thereon.

Persistent demand from Lopez for the payment of the amount due him caused Vicente Orosa, Jr. to
execute on March 17, 1947, an alleged "deed of assignment" of his 420 shares of stock of the Plaza
Theater, Inc., at P100 per share or with a total value of P42,000 in favor of the creditor, and as the
obligation still remained unsettled, Lopez filed on November 12, 1947, a complaint with the Court of
First Instance of Batangas (Civil Case No. 4501 which later became R-57) against Vicente Orosa, Jr. 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.

Defendants Vicente Orosa, Jr. and Plaza Theatre, Inc., filed separate answers, the first denying that the
materials were delivered to him as a promoter and later treasurer of the corporation, because he had
purchased and received the same on his personal account; that the land on which the movie house was
constructed was not charged with a lien to secure the payment of the aforementioned unpaid
obligation; and that the 420 shares of stock of the Plaza Theatre, Inc., was not assigned to plaintiff as
collaterals but as direct security for the payment of his indebtedness. As special defense, this defendant
contended that as the 420 shares of stock assigned and conveyed by the assignor and accepted by Lopez
as direct security for the payment of the amount of P41,771.35 were personal properties, plaintiff was
barred from recovering any deficiency if the proceeds of the sale thereof at public auction would not be
sufficient to cover and satisfy the obligation. It was thus prayed that he be declared exempted from the
payment of any deficiency in case the proceeds from the sale of said personal properties would not be
enough to cover the amount sought to be collected.

Defendant Plaza Theatre, Inc., on the other hand, practically set up the same line of defense by alleging
that the building materials delivered to Orosa were on the latter's personal account; and that there was
no understanding that said materials would be paid jointly and severally by Orosa and the corporation,
nor was a lien charged on the properties of the latter to secure payment of the same obligation. As
special defense, defendant corporation averred that while it was true that the materials purchased by
Orosa were sold by the latter to the corporation, such transactions were in good faith and for valuable
consideration thus when plaintiff failed to claim said materials within 30 days from the time of removal
thereof from Orosa, lumber became a different and distinct specie and plaintiff lost whatever rights he
might have in the same and consequently had no recourse against the Plaza Theatre, Inc., that the claim
could not have been refectionary credit, for such kind of obligation referred to an indebtedness incurred
in the repair or reconstruction of something already existing and this concept did not include an entirely
new work; and that the Plaza Theatre, Inc., having been incorporated on October 14, 1946, it could not
have contracted any obligation prior to said date. It was, therefore, prayed that the complaint be
dismissed; that said defendant be awarded the sum P 5,000 for damages, and such other relief as may
be just and proper in the premises.

The surety company, in the meantime, upon discovery that the land was already registered under the
Torrens System and that there was a notice of lis pendens thereon, filed on August 17, 1948, or within
the 1-year period after the issuance of the certificate of title, a petition for review of the decree of the
land registration court dated October 18, 1947, which was made the basis of OCT No. O-319, in order to
annotate the rights and interests of the surety company over said properties (Land Registration Case No.
17 GLRO Rec. No. 296). Opposition thereto was offered by Enrique Lopez, asserting that the amount
demanded by him constituted a preferred lien over the properties of the obligors; that the surety
company was guilty of negligence when it failed to present an opposition to the application for
registration of the property; and that if any violation of the rights and interest of said surety would ever
be made, same must be subject to the lien in his favor.

The two cases were heard jointly and in a decision dated October 30, 1952, the lower Court, after
making an exhaustive and detailed analysis of the respective stands of the parties and the evidence
adduced at the trial, held that defendants Vicente Orosa, Jr., 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. In making the pronouncement that the lien
was merely confined to the building and did not extend to the land on which the construction was
made, the trial judge took into consideration the fact that when plaintiff started the delivery of lumber
in May, 1946, the land was not yet owned by the corporation; that the mortgage in favor of Luzon
Surety Company was previously registered under Act No. 3344; that the codal provision (Art. 1923 of the
old Spanish Civil Code) specifying that refection credits are preferred could refer only to buildings which
are also classified as real properties, upon which said refection was made. It was, however, declared
that plaintiff's lien on the building was superior to the right of the surety company. And finding that the
Plaza Theatre, Inc., had no objection to the review of the decree issued in its favor by the land
registration court and the inclusion in the title of the encumbrance in favor of the surety company, the
court a quo granted the petition filed by the latter company. Defendants Orosa and the Plaza Theatre,
Inc., were thus required to pay jointly the amount of P41,771.35 with legal interest and costs within 90
days from notice of said decision; that in case of default, the 420 shares of stock assigned by Orosa to
plaintiff be sold at public auction and the proceeds thereof be applied to the payment of the amount
due the plaintiff, plus interest and costs; and that the encumbrance in favor of the surety company be
endorsed at the back of OCT No. O-391, with notation I that with respect to the building, said mortgage
was subject to the materialman's lien in favor of Enrique Lopez.

Plaintiff tried to secure a modification of the decision in so far as it declared that the obligation of
therein defendants was joint instead of solidary, and that the lien did not extend to the land, but same
was denied by order the court of December 23, 1952. The matter was thus appealed to the Court of
appeals, which affirmed the lower court's ruling, and then to this Tribunal. In this instance, plaintiff-
appellant raises 2 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.

It is to be noted in this appeal that Enrique Lopez has not raised any question against the part of the
decision sentencing defendants Orosa and Plaza Theatre, Inc., to pay jointly the sum of P41,771.35, so
We will not take up or consider anything on that point. Appellant, however, contends that the lien
created in favor of the furnisher of the materials used for the construction, repair or refection of a
building, is also extended to the land which the construction was made, and in support thereof he relies
on Article 1923 of the Spanish Civil Code, pertinent law on the matter, which reads as follows:

ART. 1923. With respect to determinate real property and real rights of the debtor, the following are
preferred:

x x x x x x x x x

5. Credits for refection, not entered or recorded, with respect to the estate upon which the refection
was made, and only with respect to other credits different from those mentioned in four preceding
paragraphs.

It is argued that in view of the employment of the phrase real estate, or immovable property, and
inasmuch as said provision does not contain any specification delimiting the lien to the building, said
article must be construed as to embrace both the land and the building or structure adhering thereto.
We cannot subscribe to this view, for while it is true that generally, real estate connotes the land and
the building constructed thereon, it is obvious that the inclusion of the building, separate and distinct
from the land, in the enumeration of what may constitute real properties1 could mean only one thing
that a building is by itself an immovable property, a doctrine already pronounced by this Court in the
case of Leung Yee vs. Strong Machinery Co., 37 Phil., 644. Moreover, and in view of the absence of any
specific provision of law to the contrary, a building is an immovable property, irrespective of whether or
not said structure and the land on which it is adhered to belong to the same owner.

A close examination of the provision of the Civil Code invoked by appellant reveals that the law gives
preference to unregistered refectionary credits only with respect to the real estate upon which the
refection or work was made. This being so, the inevitable conclusion must be that the lien so created
attaches merely to the immovable property for the construction or repair of which the obligation was
incurred. Evidently, therefore, the lien in favor of appellant for the unpaid value of the lumber used in
the construction of the building attaches only to said structure and to no other property of the obligors.

Considering the conclusion thus arrived at, i.e., that the materialman's lien could be charged only to the
building for which the credit was made or which received the benefit of refection, the lower court was
right in, holding at the interest of the mortgagee over the land is superior and cannot be made subject
to the said materialman's lien.

Wherefore, and on the strength of the foregoing considerations, the decision appealed from is hereby
affirmed, with costs against appellant. It is so ordered.

Paras, C.J., Bengzon, Padilla, Montemayor, Reyes, A., Bautista Angelo, Labrador, Concepcion, Reyes,
J.B.L. and Endencia, JJ., concur.


G.R. No. L-32917 July 18, 1988

JULIAN S. YAP, petitioner,
vs.
HON. SANTIAGO O. TAADA, etc., and GOULDS PUMPS INTERNATIONAL (PHIL.), INC., respondents.

Paterno P. Natinga for private respondent.



NARVASA, J.:

The petition for review on certiorari at bar involves two (2) Orders of respondent Judge Taada 1 in Civil
Case No. 10984. The first, dated September 16, 1970, denied petitioner Yap's motion to set aside
execution sale and to quash alias writ of execution. The second, dated November 21, 1970, denied Yap's
motion for reconsideration. The issues concerned the propriety of execution of a judgment claimed to
be "incomplete, vague and non-final," and the denial of petitioner's application to prove and recover
damages resulting from alleged irregularities in the process of execution.

The antecedents will take some time in the telling. The case began in the City Court of Cebu with the
filing by Goulds Pumps International (Phil.), Inc. of a complaint 2 against Yap and his wife 3 seeking
recovery of P1,459.30 representing the balance of the price and installation cost of a water pump in the
latter's premises. 4 The case resulted in a judgment by the City Court on November 25, 1968, reading as
follows:

When this case was called for trial today, Atty. Paterno Natinga appeared for the plaintiff Goulds and
informed the court that he is ready for trial. However, none of the defendants appeared despite notices
having been served upon them.

Upon petition Atty. Natinga, the plaintiff is hereby allowed to present its evidence ex-parte.

After considering the evidence of the plaintiff, the court hereby renders judgment in favor of the
plaintiff and against the defendant (Yap), ordering the latter to pay to the former the sum of Pl,459.30
with interest at the rate of 12% per annum until fully paid, computed from August 12, 1968, date of the
filing of the complaint; to pay the sum of P364.80 as reasonable attorney's fees, which is equivalent " to
25% of the unpaid principal obligation; and to pay the costs, if any.

Yap appealed to the Court of First Instance. The appeal was assigned to the sala of respondent Judge
Taada. For failure to appear for pre-trial on August 28, 1968, this setting being intransferable since the
pre-trial had already been once postponed at his instance, 5 Yap was declared in default by Order of
Judge Taada dated August 28, 1969, 6 reading as follows:

When this case was called for pre-trial this morning, the plaintiff and counsel appeared, but neither the
defendants nor his counsel appeared despite the fact that they were duly notified of the pre-trial set this
morning. Instead he filed an Ex-Parte Motion for Postponement which this Court received only this
morning, and on petition of counsel for the plaintiff that the Ex-Parte Motion for Postponement was not
filed in accordance with the Rules of Court he asked that the same be denied and the defendants be
declared in default; .. the motion for the plaintiff being well- grounded, the defendants are hereby
declared in default and the Branch Clerk of Court ..is hereby authorized to receive evidence for the
plaintiff and .. submit his report within ten (10) days after reception of evidence.

Goulds presented evidence ex parte and judgment by default was rendered the following day by Judge
Taada requiring Yap to pay to Goulds (1) Pl,459.30 representing the unpaid balance of the pump
purchased by him; (2) interest of 12% per annum thereon until fully paid; and (3) a sum equivalent to
25% of the amount due as attorney's fees and costs and other expenses in prosecuting the action.
Notice of the judgment was served on Yap on September 1, 1969. 7

On September 16, 1969 Yap filed a motion for reconsideration. 8 In it he insisted that his motion for
postponement should have been granted since it expressed his desire to explore the possibility of an
amicable settlement; that the court should give the parties time to arrive at an amicable settlement
failing which, he should be allowed to present evidence in support of his defenses (discrepancy as to the
price and breach of warranty). The motion was not verified or accompanied by any separate affidavit.
Goulds opposed the motion. Its opposition 9 drew attention to the eleventh-hour motion for
postponement of Yap which had resulted in the cancellation of the prior hearing of June 30, 1969
despite Goulds' vehement objection, and the re-setting thereof on August 28, 1969 with intransferable
character; it averred that Yap had again sought postponement of this last hearing by another eleventh-
hour motion on the plea that an amicable settlement would be explored, yet he had never up to that
time ever broached the matter, 10 and that this pattern of seeking to obtain last-minute postponements
was discernible also in the proceedings before the City Court. In its opposition, Goulds also adverted to
the examination made by it of the pump, on instructions of the City Court, with a view to remedying the
defects claimed to exist by Yap; but the examination had disclosed the pump's perfect condition. Yap's
motion for reconsideration was denied by Order dated October 10, 1969, notice of which was received
by Yap on October 4, 1969. 11

On October 15, 1969 Judge Taada issued an Order granting Goulds' Motion for Issuance of Writ of
Execution dated October 14, 1969, declaring the reasons therein alleged to be meritorious. 12 Yap
forthwith filed an "Urgent Motion for Reconsideration of Order" dated October 17, 1969, 13 contending
that the judgment had not yet become final, since contrary to Goulds' view, his motion for
reconsideration was not pro forma for lack of an affidavit of merit, this not being required under Section
1 (a) of Rule 37 of the Rules of Court upon which his motion was grounded. Goulds presented an
opposition dated October 22, 1969. 14 It pointed out that in his motion for reconsideration Yap had
claimed to have a valid defense to the action, i.e., ".. discrepancy as to price and breach of seller's
warranty," in effect, that there was fraud on Goulds' paint; Yap's motion for reconsideration should
therefore have been supported by an affidavit of merit respecting said defenses; the absence thereof
rendered the motion for reconsideration fatally defective with the result that its filing did not interrupt
the running of the period of appeal. The opposition also drew attention to the failure of the motion for
reconsideration to specify the findings or conclusions in the judgment claimed to be contrary to law or
not supported by the evidence, making it a pro forma motion also incapable of stopping the running of
the appeal period. On October 23, 1969, Judge Taada denied Yap's motion for reconsideration and
authorized execution of the judgment. 15 Yap sought reconsideration of this order, by another motion
dated October 29, 1969. 16 This motion was denied by Order dated January 26, 1970. 17 Again Yap
moved for reconsideration, and again was rebuffed, by Order dated April 28, 1970. 18

In the meantime the Sheriff levied on the water pump in question, 19 and by notice dated November 4,
1969, scheduled the execution sale thereof on November 14, 1969. 20 But in view of the pendency of
Yap's motion for reconsideration of October 29, 1969, suspension of the sale was directed by Judge
Taada in an order dated November 6, 1969. 21

Counsel for the plaintiff is hereby given 10 days time to answer the Motion, dated October 29, 1969,
from receipt of this Order and in the meantime, the Order of October 23, 1969, insofar as it orders the
sheriff to enforce the writ of execution is hereby suspended.

It appears however that a copy of this Order was not transmitted to the Sheriff "through oversight,
inadvertence and pressure of work" of the Branch Clerk of Court. 22 So the Deputy Provincial Sheriff
went ahead with the scheduled auction sale and sold the property levied on to Goulds as the highest
bidder. 23 He later submitted the requisite report to the Court dated November 17, 1969, 24 as well as
the "Sheriffs Return of Service" dated February 13, 1970, 25 in both of which it was stated that
execution had been "partially satisfied." It should be observed that up to this time, February, 1970, Yap
had not bestirred himself to take an appeal from the judgment of August 29, 1969.

On May 9, 1970 Judge Taada ordered the issuance of an alias writ of execution on Gould's ex parte
motion therefor. 26 Yap received notice of the Order on June 11. Twelve (1 2) days later, he filed a
"Motion to Set Aside Execution Sale and to Quash Alias Writ of Execution." 27 As regards the original,
partial execution of the judgment, he argued that

1) "the issuance of the writ of execution on October 16, 1969 was contrary to law, the judgment
sought to be executed not being final and executory;" and

2) "the sale was made without the notice required by Sec. 18, Rule 39, of the New Rules of Court,"
i.e., notice by publication in case of execution sale of real property, the pump and its accessories being
immovable because attached to the ground with character of permanency (Art. 415, Civil Code).

And with respect to the alias writ, he argued that it should not have issued because

1) "the judgment sought to be executed is null and void" as "it deprived the defendant of his day in
court" and "of due process;"

2) "said judgment is incomplete and vague" because there is no starting point for computation of
the interest imposed, or a specification of the "other expenses incurred in prosecuting this case" which
Yap had also been ordered to pay;

3) "said judgment is defective because it contains no statement of facts but a mere recital of the
evidence; and

4) "there has been a change in the situation of the parties which makes execution unjust and
inequitable" because Yap suffered damages by reason of the illegal execution.

Goulds filed an opposition on July 6, 1970. Yap's motion was thereafter denied by Order dated
September 16, 1970. Judge Taada pointed out that the motion had "become moot and academic" since
the decision of August 29, 1969, "received by the defendant on September 1, 1969 had long become
final when the Order for the Issuance of a Writ of Execution was promulgated on October 15, 1969." His
Honor also stressed that

The defendant's Motion for Reconsideration of the Courts decision was in reality one for new trial.
Regarded as motion for new trial it should allege the grounds for new trial, provided for in the Rules of
Court, to be supported by affidavit of merits; and this the defendant failed to do. If the defendant
sincerely desired for an opportunity to submit to an amicable settlement, which he failed to do extra
judicially despite the ample time before him, he should have appeared in the pre- trial to achieve the
same purpose.

Judge Taada thereafter promulgated another Order dated September 21, 1970 granting a motion of
Goulds for completion of execution of the judgment of August 29, 1969 to be undertaken by the City
Sheriff of Cebu. Once more, Yap sought reconsideration. He submitted a "Motion for Reconsideration of
Two Orders" dated October 13, 1970, 28 seeking the setting aside not only of this Order of September
21, 1970 but also that dated September 16, 1970, denying his motion to set aside execution dated June
23, 1970. He contended that the Order of September 21, 1970 (authorizing execution by the City Sheriff)
was premature, since the 30-day period to appeal from the earlier order of September 16, 1970
(denying his motion to set aside) had not yet expired. He also reiterated his view that his motion for
reconsideration dated September 15, 1969 did not require that it be accompanied by an affidavit of
merits. This last motion was also denied for "lack of merits," by Order dated November 21, 1970. 29

On December 3, 1970, Yap filed a "Notice of Appeal" manifesting his intention to appeal to the Supreme
Court on certiorari only on questions of law, "from the Order ... of September 16, 1970 ... and from the
Order ... of November 21, 1970, ... pursuant to sections 2 and 3 of Republic Act No. 5440." He filed his
petition for review with this Court on January 5, 1971, after obtaining an extension therefor. 30

The errors of law he attributes to the Court a quo are the following: 31

1) refusing to invalidate the execution pursuant to its Order of October 16, 1969 although the
judgment had not then become final and executory and despite its being incomplete and vague;

2) ignoring the fact that the execution sale was carried out although it (the Court) had itself
ordered suspension of execution on November 6, 1969;

3) declining to annul the execution sale of the pump and accessories subject of the action although
made without the requisite notice prescribed for the sale of immovables; and

4) refusing to allow the petitioner to prove irregularities in the process of execution which had
resulted in damages to him.

Notice of the Trial Court's judgment was served on Yap on September 1, 1969. His motion for
reconsideration thereof was filed 15 days thereafter, on September 16, 1969. Notice of the Order
denying the motion was received by him on October 14, 1969. The question is whether or not the
motion for reconsideration which was not verified, or accompanied by an affidavit of merits (setting
forth facts constituting his meritorious defenses to the suit) or other sworn statement (stating facts
excusing his failure to appear at the pre-trial was pro forma and consequently had not interrupted the
running of the period of appeal. It is Yap's contention that his motion was not pro forma for lack of an
affidavit of merits, such a document not being required by Section 1 (a) of Rule 37 of the Rules of Court
upon which his motion was based. This is incorrect.

Section 2, Rule 37 precisely requires that when the motion for new trial is founded on Section 1 (a), it
should be accompanied by an affidavit of merit.

xxx xxx xxx

When the motion is made for the causes mentioned in subdivisions (a) and (b) of the preceding section,
it shall be proved in the manner provided for proof of motions. Affidavit or affidavits of merits shall also
be attached to a motion for the cause mentioned in subdivision (a) which may be rebutted by counter-
affidavits.

xxx xxx xxx 32

Since Yap himself asserts that his motion for reconsideration is grounded on Section 1 (a) of Rule 37, 33
i.e., fraud, accident, mistake or excusable negligence which ordinary prudence could not have guarded
against and by reason of which ... (the) aggrieved party has probably been impaired in his rights" this
being in any event clear from a perusal of the motion which theorizes that he had "been impaired in his
rights" because he was denied the right to present evidence of his defenses (discrepancy as to price and
breach of warranty) it was a fatal omission to fail to attach to his motion an affidavit of merits, i.e., an
affidavit "showing the facts (not conclusions) constituting the valid x x defense which the movant may
prove in case a new trial is granted." 34 The requirement of such an affidavit is essential because
obviously "a new trial would be a waste of the court's time if the complaint turns out to be groundless
or the defense ineffective." 35

In his motion for reconsideration, Yap also contended that since he had expressed a desire to explore
the possibility of an amicable settlement, the Court should have given him time to do so, instead of
declaring him in default and thereafter rendering judgment by default on Gould's ex parte evidence.

The bona fides of this desire to compromise is however put in doubt by the attendant circumstances. It
was manifested in an eleventh-hour motion for postponement of the pre-trial which had been
scheduled with intransferable character since it had already been earlier postponed at Yap's instance; it
had never been mentioned at any prior time since commencement of the litigation; such a possible
compromise (at least in general or preliminary terms) was certainly most appropriate for consideration
at the pre-trial; in fact Yap was aware that the matter was indeed a proper subject of a pre-trial agenda,
yet he sought to avoid appearance at said pre-trial which he knew to be intransferable in character.
These considerations and the dilatory tactics thus far attributable to him-seeking postponements of
hearings, or failing to appear therefor despite notice, not only in the Court of First Instance but also in
the City Court proscribe belief in the sincerity of his avowed desire to negotiate a compromise.
Moreover, the disregard by Yap of the general requirement that "(n)otice of a motion shall be served by
the applicant to all parties concerned at least three (3) days before the hearing thereof, together with a
copy of the motion, and of any affidavits and other papers accompanying it," 36 for which no
justification whatever has been offered, also militates against the bona fides of Yap's expressed wish for
an amicable settlement. The relevant circumstances do not therefore justify condemnation, as a grave
abuse of discretion, or a serious mistake, of the refusal of the Trial Judge to grant postponement upon
this proferred ground.

The motion for reconsideration did not therefore interrupt the running of the period of appeal. The time
during which it was pending before the court from September 16, 1969 when it was filed with the
respondent Court until October 14, 1969 when notice of the order denying the motion was received by
the movant could not be deducted from the 30-day period of appeal. 37 This is the inescapable
conclusion from a consideration of Section 3 of Rule 41 which in part declares that, "The "time during
which a motion to set aside the judgment or order or for a new trial has been pending shall be
deducted, unless such motion fails to satisfy the requirements of Rule 37. 38

Notice of the judgment having been received by Yap on September 1, 1969, and the period of appeal
therefrom not having been interrupted by his motion for reconsideration filed on September 16, 1969,
the reglementary period of appeal expired thirty (30) days after September 1, 1969, or on October 1,
1969, without an appeal being taken by Yap. The judgment then became final and executory; Yap could
no longer take an appeal therefrom or from any other subsequent orders; and execution of judgment
correctly issued on October 15, 1969, "as a matter of right." 39

The next point discussed by Yap, that the judgment is incomplete and vague, is not well taken. It is true
that the decision does not fix the starting time of the computation of interest on the judgment debt, but
this is inconsequential since that time is easily determinable from the opinion, i.e., from the day the
buyer (Yap) defaulted in the payment of his obligation, 40 on May 31, 1968. 41 The absence of any
disposition regarding his counterclaim is also immaterial and does not render the judgment incomplete.
Yap's failure to appear at the pre-trial without justification and despite notice, which caused the
declaration of his default, was a waiver of his right to controvert the plaintiff s proofs and of his right to
prove the averments of his answer, inclusive of the counterclaim therein pleaded. Moreover, the
conclusion in the judgment of the merit of the plaintiff s cause of action was necessarily and at the same
time a determination of the absence of merit of the defendant's claim of untenability of the complaint
and of malicious prosecution.

Yap's next argument that the water pump had become immovable property by its being installed in his
residence is also untenable. The Civil Code considers as immovable property, among others, anything
"attached to an immovable in a fixed manner, in such a way that it cannot be separated therefrom
without breaking the material or deterioration of the object." 42 The pump does not fit this description.
It could be, and was in fact separated from Yap's premises without being broken or suffering
deterioration. Obviously the separation or removal of the pump involved nothing more complicated
than the loosening of bolts or dismantling of other fasteners.

Yap's last claim is that in the process of the removal of the pump from his house, Goulds' men had
trampled on the plants growing there, destroyed the shed over the pump, plugged the exterior casings
with rags and cut the electrical and conduit pipes; that he had thereby suffered actual-damages in an
amount of not less than P 2,000.00, as well as moral damages in the sum of P 10,000.00 resulting from
his deprivation of the use of his water supply; but the Court had refused to allow him to prove these acts
and recover the damages rightfully due him. Now, as to the loss of his water supply, since this arose
from acts legitimately done, the seizure on execution of the water pump in enforcement of a final and
executory judgment, Yap most certainly is not entitled to claim moral or any other form of damages
therefor.

WHEREFORE, the petition is DENIED and the appeal DISMISSED, and the Orders of September 16, 1970
and November 21, 1970 subject thereof, AFFIRMED in toto. Costs against petitioner.

Cruz, Gancayco, Grio-Aquino and Medialdea, JJ., concur

Machinery & Engineering Supplies, Inc. v. Court of Appeals 96 Phil. 70


D E C I S I O N


CONCEPCION, J.:


This is an appeal by certiorari, taken by petitioner Machinery and Engineering Supplies Inc., from a
decision of the Court of Appeals denying an original petition for certiorari filed by said petitioner against
Hon. Potenciano Pecson, Ipo Limestone Co., Inc., and Antonio Villarama, the respondents herein.

The pertinent facts are set forth in the decision of the Court of Appeals, from which we
quote:jgc:chanrobles.com.ph

"On March 13, 1953, the herein petitioner filed a complaint for replevin in the Court of First Instance of
Manila, Civil Case No. 19067, entitled Machinery & Engineering Supplies, Inc., Plaintiff, v. Ipo Limestone
Co., Inc., and Dr. Antonio Villarama, defendants, for the recovery of the machineries and equipments
sold and delivered to said defendants at their factory in barrio Bigti, Norzagaray, Bulacan. Upon
application ex-parte of the petitioner, accompanied by the affidavit of Ramon S. Roco, president of
petitioner company, and upon approval of petitioners bond in the sum of P15,769.00, on March 13,
1953, respondent judge issued an order, commanding the Provincial Sheriff of Bulacan to seize and take
immediate possession of the properties specified in the order (Appendix I, Answer). On March 19, 1953,
two deputy sheriffs of Bulacan, the said Ramon S. Roco, 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. Leopoldo C. Palad, ex-officio Provincial Sheriff of
Bulacan, signed by Atty. Adolfo Garcia of the defendants therein, protesting against the seizure of the
properties in question, on the ground that they are not personal properties. Contending that the
Sheriffs duty is merely ministerial, the deputy sheriffs, Roco, the letters crew of technicians and
laborers, Contreras and Torres 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. As 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 (Appendix 2). On March 20, 1953, the defendant Company filed an urgent
motion, with a counter-bond in the amount of P15,769, 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 and equipments to the place where they were installed at the time of
the seizure (Appendix 3). On March 21, 1953, 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. On March 23, 1953, the defendants counsel asked the
Provincial Sheriff if the machineries and equipments, dumped on the road would he re-installed to their
former position and condition (letter, Apendix 4). On March 24, 1953, the Provincial Sheriff filed an
urgent motion in court, manifesting that Roco had been asked to furnish the Sheriffs office with
expenses, laborers, technical men and equipments, to carry into effect the courts order, to return the
seized properties in the same way said Roco found them on the day of seizure, but said Roco absolutely
refused to do so, and asking the court that the Plaintiff therein be ordered to provide the required aid or
relieve the said Sheriff of the duty of complying with the said order of March 20, 1953 (Appendix 5). On
March 30, 1953, the trial court ordered the Provincial Sheriff and the Plaintiff to reinstate the
machineries and equipments removed by them in their original condition in which they were found
before their removal at the expense of the Plaintiff (Appendix 7). An urgent motion of the Provincial
Sheriff dated April 15, 1953, praying for an extension of 20 days within which to comply with the order
of the court (Appendix 10) was denied; and on May 4, 1953, the trial court ordered the Plaintiff therein
to furnish the Provincial Sheriff within 5 days with the necessary funds, technical men, laborers,
equipments and materials to effect the repeatedly mentioned re-installation (Appendix 13)."
(Petitioners brief, Appendix A, pp. I-IV.)

Thereupon petitioner instituted in the Court of Appeals civil case G. R. No. 11248-R, entitled "Machinery
& Engineering Supplies, Inc. v. Honorable Potenciano Pecson, Provincial Sheriff of Bulacan, Ipo
Limestone Co., Inc., and Antonio Villarama." In the petition therein filed, it was alleged that, in ordering
the petitioner to furnish the provincial sheriff of Bulacan "with necessary funds, technical men, laborers,
equipment and materials, to effect the installation of the machinery and equipment" in question, the
Court of First Instance of Bulacan had committed a grave abuse of discretion and acted in excess of its
jurisdiction, for which reason it was prayed that its order to this effect be nullified, and that, meanwhile,
a writ of preliminary injunction be issued to restrain the enforcement of said order of May 4, 1953.
Although the aforementioned writ was issued by the Court of Appeals, the same subsequently dismissed
the case for lack of merit, with costs against the petitioner, upon the following
grounds:jgc:chanrobles.com.ph

"While the seizure of the equipments and personal properties was ordered by the respondent Court, it
is, however, logical to presume that said court did not authorize the petitioner or its agents to destroy,
as they did, said machineries and equipments, by dismantling and unbolting the same from their
concrete basements, and cutting and sawing their wooden supports, thereby rendering them
unserviceable and beyond repair, unless those parts removed, cut and sawed be replaced, which the
petitioner, notwithstanding the respondent Courts order, adamantly refused to do. The Provincial
Sheriffs tortious act, in obedience to the insistent proddings of the president of the petitioner, Ramon S.
Roco, has no justification in law, notwithstanding the Sheriffs claim that his duty was ministerial. It was
the bounden duty of the respondent Judge to give redress to the respondent Company, for the unlawful
and wrongful acts committed by the petitioner and its agents. And as this was the true object of the
order of March 30, 1953, we can not but hold that same was within its jurisdiction to issue. The
ministerial duty of the Sheriff should have its limitations. The Sheriff knew or must have known what is
inherently right and inherently wrong, more so when, as in this particular case, the deputy sheriffs were
shown a letter of respondent Companys attorney, that the machineries and equipments were not
personal properties and, therefore, not subject to seizure by the terms of the order. While it may be
conceded that this was a question of law too technical to decide on the spot, it would not have cost the
Sheriff much time and difficulty to bring the letter to the courts attention and have the equipments and
machineries guarded, so as not to frustrate the order of seizure issued by the trial court. But, acting
upon the directives of the president of the Petitioner, to seize the properties at any cost, the deputy
sheriffs lent themselves as instruments to harass and embarras the respondent Company. The
respondent Court, in issuing the order sought to be annulled, had not committed abuse of discretion at
all or acted in an arbitrary or despotic manner, by reason of passion or personal hostility; on the
contrary, it issued said order, guided by the well known principle that if the property has to be returned,
it should be returned in as good a condition as when taken (Bachrach Motor Co., Inc., v. Bona, 44 Phil.,
378). If any one had gone beyond the scope of his authority, it is the respondent Provincial Sheriff. But
considering the fact that he acted under the pressure of Ramon S. Roco, and that the order impugned
was issued not by him, but by the respondent Judge, We simply declare that said Sheriffs act was most
unusual and the result of a poor judgment. Moreover, the Sheriff not being an officer exercising judicial
functions, the writ may not reach him, for certiorari lies only to review judicial actions.

The Petitioner complains that the respondent Judge had completely disregarded his manifestation that
the machineries and equipments seized were and still are the Petitioners property until fully paid for
and as such never became immovable. The question of ownership and the applicability of Art. 415 of the
new Civil Code are immaterial in the determination of the only issue involved in this case. It is a matter
of evidence which should be decided in the hearing of the case on the merits. The question as to
whether the machineries or equipments in litigation are immovable or not is likewise immaterial,
because the only issue raised before the trial court was whether the Provincial Sheriff of Bulacan, at the
Petitioners instance, was justified in destroying the machineries and in refusing to restore them to their
original form, at the expense of the Petitioner. Whatever might be the legal character of the
machineries and equipments, would not in any way justify their destruction by the Sheriffs and the said
Petitioners." (Petitioners brief, Appendix A, pp IV-VII.)

A motion for reconsideration of this decision of the Court of Appeals having been denied, petitioner has
brought the case to Us for review by writ of certiorari. Upon examination of the record, We are satisfied,
however, that the Court of Appeals was justified in dismissing the case.

The special civil action known as replevin, governed by Rule 62 of the Rules of Court, is applicable only
to "personal property."

"Ordinarily replevin may be brought to recover any specific personal property unlawfully taken or
detained from the owner thereof, provided such property is capable of identification and delivery; but
replevin will not lie for the recovery of real property or incorporeal personal property." (77 C. J. S. 17)
(Italics supplied.)

When the sheriff repaired to the premises of respondent, Ipo Limestone Co., Inc., 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
Civil Code of the Philippines, which are substantially identical to paragraphs 3 and 5 of Article 334 of the
Civil Code of Spain. As such immovable property, they were not subject to replevin.

"In so far as an article, including a fixture annexed by a tenant, is regarded as part of the realty, it is not
the subject of trover, replevin, detinus, or any action lying only for personality; . . .

". . . the action of replevin does not lie for articles so annexed to the realty as to be part thereof, as, for
example, a house or a turbine pump constituting part of a buildings cooling system; . . . (36 C.J.S. 1000
& 1001)

Moreover, as the provincial sheriff hesitated to remove the property in question, petitioners agent and
president, Mr. Ramon Roco, insisted "on the dismantling 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.

Such assumption of risk becomes more apparent when we consider that, pursuant to Section 5 of Rule
62 of the Rules of Court, the defendant in an action for replevin is entitled to the return of the property
in dispute upon the filing of a counterbond, as provided therein. In other words, petitioner knew that
the restitution of said property to respondent company might be ordered under said provision of the
Rules of Court, and that, consequently, it may become necessary for petitioner to meet the liabilities
incident to such return.

Lastly, although the parties have not cited, and We have not found, any authority squarely in point -
obviously because real property are not subject to replevin - it is well settled that, when the restitution
of what has been ordered, the goods in question shall be returned in substantially the same condition as
when taken (54 C.J., 590-600, 640-641). Inasmuch as the machinery and equipment involved in this case
were duly installed and affixed in the premises of respondent company when petitioners representative
caused said property to be dismantled and then removed, it follows that petitioner must also do
everything necessary to the reinstallation of said property in conformity with its original condition.

Wherefore, the decision of the Court of Appeals is hereby affirmed, with costs against the petitioner. So
ordered.

Pablo, Bengzon, Padilla, Montemayor, Reyes, A., Jugo, Bautista Angelo and Reyes, J. B. L., JJ., concur.

Paras, C.J., concurs in the result.