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FACTS: 1. First mortgage: Compania Agricola Filipina bought rice-cleaning machinery from the machinery company and this was secured by a chattel mortgage on the machinery and the building to which it was installed. Upon failure to pay, the chattel mortgage was foreclosed, the building and machinery sold in public auction and bought by the machinery company. 2. Days after, the Compania Agricola Filipina executed a deed of sale over the land to which the building stood in favor of the machinery company. This was done to cure any defects that may arise in the machinery companys ownership of the building. 3. Second mortgage: on or about the date to which the chattel mortgage was excecuted, Compania executed a real estate mortgage over the building in favor of Leung Yee, distinct and separate from the land. This is to secure payment for its indebtedness for the construction of the building. Upon failure to pay, the mortgage was foreclosed. 4. The machinery company then filed a case, demanding that it be declared the rightful owner of the building. The trial court held that it was the machinery company which was the rightful owner as it had its title before the building was registered prior to the date of registry of Leung Yees certificate.
HELD: The building in which the machinery was installed was real property, and the mere fact that the parties seem to have dealt with it separate and apart from the land on which it stood in no wise changed the character as real property. It follows that neither the original registry in the chattel mortgage registry of the instrument purporting to be a chattel mortgage of the building and the machinery installed therein, nor the annotation in the registry of the sale of the mortgaged property, had any effect whatever so far as the building is concerned. *LANDMARK CASE
MAKATI LEASING AND FINANCE CORPORATION V.WEAREVER TEXTILE MILLS122 SCRA 296
FACTS: To be able to secure financial accommodations from the petitioner, the private respondent discounted and assigned several receivables under a Receivable Purchase Agreement. To secure the collection of there ceivables, a chattel mortgage was executed over machinery found in the factory of the private respondent. As the private respondent failed to pay, the mortgage was extrajudicially foreclosed. Nonetheless, the sheriff was unable to seize the machinery. This prompted petitioner to file an action for replevin. The CA reversed the decision of the trial court and ordered the return of the drive motor, after ruling that the machinery may not be the subject of a chattel mortgage, given that it was an immovable under the provisions of Article 415. The same was attached to the ground by means of bolts andthe only way to remove it from the plant would be to drill the ground. HELD: There is no logical justification to exclude the rule out that the machinery may be considered as personal property, and subject to a chattel mortgage. If a house may be considered as personal property for purposes of executing a chattel mortgage, what more a machinery, which is movable by nature and becomes immobilized only by destination or purpose, may not be likewise treated as such
the expiration of the lease agreement. The lessee also treated the machinery as personal property in executing chattel mortgages in favor of third persons. The machinery was levied upon by the sheriff as personalty pursuant to a writ of execution obtained without any protest being registered. Furthermore, machinery only becomes immobilized when placed in a plant by the owner of the property or plant, but not when so placed by a tenant,usufructuary, or any person having temporary right, unless such person acted as the agent of the owner.
While the two storage tanks are not embodied in the land, they may nevertheless be considered as improvements in the land, enhancing its utility and rendering it useful to the oil industry. For purposes of taxation, the term real property may include things, which should generally be considered as personal property. it is familiar phenomenon to see things classified as real property for purposes of taxation which on general principle may be considered as personal property.
J. MORELAND, DISSENTING: An electric current is not a tangible thing, a chattel, but is a condition or state on which a thing or chattel finds itself; and that a condition or state cannot be stolen independently of the thing or chattel of which it is acondition or state. That it is chattels, which are subjects of larceny and not conditions. (Electricity is only energy)
ASSOCIATED INSURANCE AND SURETY COMPANY V. IYA, ET. AL 103 SCRA 972 G.R. Nos. L-10837-38 May 30, 1958
FACTS: Spouses Valino were the owners of a house, payable on installments from Philippine Realty Corporation. To be able to purchase on credit rice from NARIC, they filed a surety bond subscribed by petitioner and therefor, they executed an alleged chattel mortgage on the house in favor of the surety company. The spouses didnt own yet the land on which the house was constructed on at the time of the undertaking. After being able to purchase the land, to be able to secure payment for indebtedness, the spouses executed a real estate mortgage in favor of Iya. The spouses were not able to satisfy obligation with NARIC, petitioner was compelled to pay. The spouses werent able to pay the surety company despite demands and thus, the company foreclosed the chattel mortgage. It later learned of the real estate mortgage over the house and lot secured by the spouses. This prompted the company to file an action against the spouses. Also, Iya filed another civil action against the spouses, asserting that she has a better right over the property. The trial court heard the two cases jointly and it held that the surety company had a preferred right over the building as since when the chattel mortgage was secured, the land wasnt owned yet by the spouses making the building then a chattel and not a real property.
PEOPLE'S BANK AND TRUST CO. vs. DAHICAN LUMBER COMPANY G.R. No. L-17500 May 16, 1967
Facts: On September 8, 1948, Atlantic Gulf & Pacific Company of Manila, a West Virginia corporation licensed to do business in the Philippines sold and assigned all its rights in the Dahican Lumber concession to Dahican Lumber Company - hereinafter referred to as DALCO - for the total sum of $500,000.00, of which only the amount of $50,000.00 was paid. Thereafter, to develop the concession, DALCO obtained various loans from the People's Bank & Trust Company amounting, as of July 13, 1950, to P200,000.00. In addition, DALCO obtained, through the BANK, a loan of $250,000.00 from the Export-Import Bank of Washington D.C., evidenced by five promissory notes of $50,000.00 each, maturing on different dates, executed by both DALCO and the Dahican America Lumber Corporation, a foreign corporation and a stockholder of DALCO, As security for the payment of the abovementioned loans, on July 13, 1950 DALCO executed in favor of the BANK a deed of mortgage covering five parcels of land situated in the province of Camarines Norte together with all the buildings and other improvements existing thereon and all the personal properties of the mortgagor located in its place of business in the municipalities of Mambulao and Capalonga, Camarines Norte. On the same date, DALCO executed a second mortgage on the same properties in favor of ATLANTIC to secure payment of the unpaid balance of the sale price of the lumber concession amounting to the sum of $450,000.00. Both deeds contained a provision extending the mortgage lien to properties to be subsequently acquired by the mortgagor. Both mortgages were registered in the Office of the Register of Deeds of Camarines Norte. In addition thereto DALCO and DAMCO pledged to the BANK 7,296 shares of stock of DALCO and 9,286 shares of DAMCO to secure the same obligation.
Upon DALCO's and DAMCO's failure to pay the fifth promissory note upon its maturity, the BANK paid the same to the ExportImport Bank of Washington D.C., and the latter assigned to the former its credit and the first mortgage securing it. Subsequently, the BANK gave DALCO and DAMCO up to April 1, 1953 to pay the overdue promissory note.c
After July 13, 1950 - the date of execution of the mortgages mentioned above - DALCO purchased various machineries, equipment, spare parts and supplies in addition to, or in replacement of some of those already owned and used by it on the date aforesaid. Pursuant to the provision of the mortgage deeds quoted theretofore regarding "after acquired properties," the BANK requested DALCO to submit complete lists of said properties but the latter failed to do so. In connection with these purchases, there appeared in the books of DALCO as due to Connell Bros. Company (Philippines) - a domestic corporation who was acting as the general purchasing agent of DALCO -the sum of P452,860.55 and to DAMCO, the sum of P2,151,678.34.chan
On December 16, 1952, the Board of Directors of DALCO, in a special meeting called for the purpose, passed a resolution agreeing to rescind the alleged sales of equipment, spare parts and supplies by CONNELL and DAMCO to it. On January 13, 1953, the BANK, in its own behalf and that of ATLANTIC, demanded that said agreements be cancelled but CONNELL and DAMCO refused to do so. As a result, on February 12, 1953; ATLANTIC and the BANK, commenced foreclosure proceedings in the Court of First Instance of Camarines Norte against DALCO and DAMCO. Upon motion of the parties the Court, on September 30, 1953, issued an order transferring the venue of the action to the Court of First Instance of Manila. On August 30, 1958, upon motion of all the parties, the Court ordered the sale of all the machineries, equipment and supplies of DALCO, and the same were subsequently sold for a total consideration of P175,000.00 which was deposited in court pending final determination of the action. By a similar agreement one-half (P87,500.00) of this amount was considered as representing the proceeds obtained from the sale of the "undebated properties" (those not claimed by DAMCO and CONNELL), and the other half as representing those obtained from the sale of the "after acquired properties".
ISSUE: WON the "after acquired properties" were subject to the deeds of mortgage mentioned heretofore. Assuming that they are subject thereto, WON the mortgages are valid and binding on the properties aforesaid inspite of the fact that they were not registered in accordance with the provisions of the Chattel Mortgage Law. HELD: Under the fourth paragraph of both deeds of mortgage, it is crystal clear that all property of every nature and description taken in exchange or replacement, as well as all buildings, machineries, fixtures, tools, equipments, and other property that the mortgagor may acquire, construct, install, attach; or use in, to upon, or in connection with the premises - that is, its lumber concession - "shall immediately be and become subject to the lien" of both mortgages in the same manner and to the same extent as if already included therein at the time of their execution. Such stipulation is neither unlawful nor immoral, its obvious purpose being to maintain, to the extent allowed by circumstances, the original value of the properties given as security. Article 415 does not define real property but enumerates what are considered as such, among them being machinery, receptacles, instruments or replacements intended by owner of the tenement for an industry or works which may be carried on in a building or on a piece of land, and shall tend directly to meet the needs of the said industry or works. On the strength of the above-quoted legal provisions, the lower court held that inasmuch as "the chattels were placed in the real properties mortgaged to plaintiffs, they came within the operation of Art. 415, paragraph 5 and Art. 2127 of the New Civil Code". In the present case, the characterization of the "after acquired properties" as real property was made not only by one but by both interested parties. There is, therefore, more reason to hold that such consensus impresses upon the properties the character determined by the parties who must now be held in estoppel to question it.
ISSUE: 1. Whether or not said property could be a subject for mortgage. 2. Whether the respondent is clothe with authority to determine such. . RULING: The duties of a register of deeds in respect to the registration of chattel mortgages are of purely ministerial character and no provision of law can be cited which confers upon him any judicial or quasi-judicial power to determine the nature of any document of which registration is sought as a chattel mortgage. The efficacy of the act of recording a chattel mortgage consists in the fact that it operates as constructive notice of the existence of the contract, and the legal effects of the contract must be discovered in the instrument itself in relation with the fact of notice. Registration adds nothing to the instrument, considered as a source of title, and affects nobodys rights except as a species of notice. The parties to a contract may by agreement treat as personal property that which by nature would be real property and it is a familiar phenomenon to see things classed as real property for purposes of taxation which on general principle might be considered personal property. It is unnecessary to determine whether or not the property described in the document is real or personal. The issue is to be determined by the Court and not by the register of deeds.
Berkenkotter v. Cu Unjieng
Facts: On 26 April 1926, the Mabalacat Sugar Company obtained from Cu Unjieng e Hijos, a loan secured by a first mortgage constituted on 2 parcels of land "with all its buildings, improvements, sugar-canemill, steel railway, telephone line, apparatus, utensils and whatever forms part or is a necessary complement of said sugar -cane mill, steel railway, telephone line, now existing or that may in the future exist in said lots. On 5 October 1926, the Mabalacat Sugar Company decided to increase the capacity of its sugar central by buying additional machinery and equipment, so that instead of milling 150 tons daily, it could produce 250. Green proposed to the Berkenkotter, to advance the necessary amount for the purchase of said machinery and equipment, promising to reimburse him as soon as he could obtain an additional loan from the mortgagees, Cu Unjieng e Hijos, and that in case Green should fail to obtain an additional loan from Cu Unjieng e Hijos, said machinery and equipment would become security therefore, said Green binding himself not to mortgage nor encumber them to anybody until Berkenkotter be fully reimbursed for the corporation's indebtedness to him. Having agreed to said proposition made in a letter dated 5 October
1926, Berkenkotter, on 9 October 1926, delivered the sum of P1,710 to Green, the total amount supplied by him to Green having beenP25,750. Furthermore, Berkenkotter had a credit of P22,000 against said corporation for unpaid salary. With the loan of P25,750 and said credit of P22,000, the Mabalacat Sugar Co., Inc., purchased the additional machinery and equipment.On 10 June 1927, Green applied to Cu Unjieng e Hijos for an additional loan of P75,000 offering as security the additional machinery and equipment acquired by said Green and installed in the sugar central after the execution of the original mortgage deed, on 27 April 1927, together with whatever a d d i t i o n a l e q u i p m e n t a c q u i r e d w i t h s a i d l o a n . G r e e n f a i l e d t o o b t a i n s a i d l o a n . H e n c e , a b o v e mentioned mortgage was in effect. Issue: Are the additional machines also considered mortgaged? Held: Article 1877 of the Civil Code provides that mortgage includes all natural accessions, improvements, g r o w i n g f r u i t s , a n d r e n t s n o t c o l l e c t e d w h e n t h e o b l i g a t i o n f a l l s d u e , a n d t h e a m o u n t o f a n y indemnities paid or due the owner by the insurers of the mortgaged property or by virtue of the exercise of the power of eminent domain, with the declarations, amplifications, and limitations established by law, whether the state continues in the possession of the person who mortgaged it or w h e t h e r i t p a s s e s i n t o t h e h a n d s o f a t h i r d p e r s o n . It is a rule, that in a mortgage of real estate, the improvements on the same are included; therefore, all objects permanently attached to a mortgaged building or land, although they may have been placed there after the mortgage was constituted, are also included. Article 334, paragraph 5, of the Civil Code gives the character of real property to machinery, liquid containers, instruments or implements intende d 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. The installation of a machinery and equipment in a mortgaged sugar central, in lieu of another of less capacity, for the purpose of carrying out the industrial functions of the latter and increasing production, constitutes a permanent improvement on said sugar central and subjects said machinery and equipment to the mortgage constituted thereon
BURGOS, SR. V. CHIEF OF STAFF, AFP [133 SCRA 800; G.R. NO. 64261; 26 DEC 1984]
Tuesday, February 03, 2009 Posted by Coffeeholic Writes
Facts: Petitioners assail the validity of 2 search warrants issued on December 7, 1982 by respondent Judge Cruz-Pano of the then Court of First Instance of Rizal, 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. 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. Respondents contend that petitioners should have filed a motion to quash said warrants in the court that issued them before impugning the validity of the same before this Court. Respondents also assail the petition on ground of laches (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). Respondents further state that since petitioner had already used as evidence some of the documents seized in a prior criminal case, he is stopped from challenging the validity of the search warrants. Petitioners submit the following reasons to nullify the questioned warrants: 1. Respondent Judge failed to conduct an examination under oath or affirmation of the applicant and his witnesses, as mandated by the above-quoted constitutional provision as well as Sec. 4, Rule 126 of
the
Rules
of
Court.
2. The search warrants pinpointed only one address which would be the former abovementioned address. 3. Articles belonging to his co-petitioners were also seized although the warrants were only directed against Jose Burgos, Jr. 4. Real properties were seized.
5. The application along with a joint affidavit, upon which the warrants were issued, from the Metrocom Intelligence and Security Group could not have provided sufficient basis for the finding of a probable cause upon which a warrant may be validly issued in accordance with Section 3, Article IV of the 1973 Constitution. Respondents 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 sequestration of the property of any person engaged in subversive activities against the government in accordance with implementing rules and regulations as may be issued by the Secretary of National Defense.
Issue:
Whether
or
Not
the
search
warrants
were
validly
issued
and
executed.
Held: In regard to the quashal of warrants that petitioners should have initially filed to the lower court, this Court takes cognizance of this petition in view of the seriousness and urgency of the constitutional Issue 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. With the contention pertaining to laches, the petitioners gave an explanation evidencing that they have exhausted other extra-judicial efforts to remedy the situation, negating the presumption that they have abandoned their right to the possession of the seized property. On the enumerated reasons: 1. This objection 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. 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. 3. Section 2, Rule 126, of the Rules of Court, 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. 4. 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 broad statements in the application and joint affidavit are mere conclusions of law and does not satisfy the requirements of probable cause. Deficient 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. In Alvarez v. Court of First Instance, 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." Another factor which makes the search warrants under consideration constitutionally objectionable is that they are in the nature of general warrants. The description of the articles sought to be seized under the search warrants in question are too general. With regard to the respondents invoking PD 885, there is an absence of any implementing rules and regulations promulgated by the Minister of National Defense. Furthermore, President Marcos himself denies the request of military authorities to sequester the property seized from petitioners. The closure of the premises subjected to search and seizure is contrary to the freedom of the press as guaranteed in our fundamental law. The search warrants are declared null and void.
FACTS: Two deeds of mortgages were issued by spouses Racho in favor of GSIS as security for two loans obtained by them. They also executed a promissory note. Due to the failure to comply with the terms of the mortgage, the mortgages were extrajudicially foreclosed. The foreclosure was being assailed by the spouses as they alleged that the mortgage contracts were signed not as guarantees or sureties but merely gave their common property for the sole benefit of the other spouses. Both sides of the case used the provisions on accommodation parties in the Negotiable Instruments Law. The trial court dismissed the action but this was reversed by the appellate court.
HELD: Both parties rely on the Negotiable Instruments Law but this is misplaced. The promissory note and the deeds of mortgage are not negotiable instruments as they lack the fourth requisite which is it must be payable to order or bearer. EN BANC G.R. No. L-17898 October 31, 1962
PASTOR D. AGO, Petitioner, vs. THE HON. COURT OF APPEALS, HON. MONTANO A. ORTIZ, Judge of the Court of First Instance of Agusan, THE PROVINCIAL SHERIFF OF SURIGAO and GRACE PARK ENGINEERING, INC., Respondents. LABRABOR, J.: chanrobles virtual law library
Appeal by certiorari to review the decision of respondent Court of Appeals in CA-G.R. No. 26723-R entitled "Pastor D. Ago vs. The Provincial Sheriff of Surigao, et al." which in part reads: In this case for certiorari and prohibition with preliminary injunction, it appears from the records that the respondent Judge of the Court of First Instance of Agusan rendered judgment (Annex "A") in open court on January 28, 1959, basing said judgment on a compromise agreement between the parties.chanroblesvirtualawlibrary chanrobles virtual law library On August 15, 1959, upon petition, the Court of First Instance issued a writ of execution.chanroblesvirtualawlibrary chanrobles virtual law library Petitioner's motion for reconsideration dated October 12, 1959 alleges that he, or his counsel, did not receive a formal and valid notice of said decision, which motion for reconsideration was denied by the court below in the order of November 14, 1959.chanroblesvirtualawlibrary chanrobles virtual law library Petitioner now contends that the respondent Judge exceeded in his jurisdiction in rendering the execution without valid and formal notice of the decision.chanroblesvirtualawlibrary chanrobles virtual law library A compromise agreement is binding between the parties and becomes the law between them. (Gonzales vs. Gonzales G.R. No. L1254, May 21, 1948, 81 Phil. 38; Martin vs. Martin, G.R. No. L-12439, May 22, 1959) .chanroblesvirtualawlibrary chanrobles virtual law library It is a general rule in this jurisdiction that a judgment based on a compromise agreement is not appealable and is immediately executory, unless a motion is filed on the ground fraud, mistake or duress. (De los Reyes vs. Ugarte, 75 Phil. 505; Lapena vs. Morfe, G.R. No. L-10089, July 31, 1957) chanrobles virtual law library Petitioner's claim that he was not notified or served notice of the decision is untenable. The judgment on the compromise agreement rendered by the court below dated January 28, 1959, was given in open court. This alone is a substantial compliance as to notice. (De los Reyes vs. Ugarte, supra) chanrobles virtual law library IN VIEW THEREOF, we believe that the lower court did not exceed nor abuse its jurisdiction in ordering the execution of the judgment. The petition for certiorari is hereby dismissed and the writ of preliminary injunction heretofore dissolved, with costs against the petitioner.chanroblesvirtualawlibrary chanrobles virtual law library IT IS The facts of the case may be briefly stated as follows: In 1957, petitioner Pastor D. Ago bought sawmill machineries and equipments from respondent Grace Park Engineer domineering, Inc., executing a chattel mortgage over said machineries and equipments to secure the payment of balance of the price remaining unpaid of P32,000.00, which petitioner agreed to pay on installment basis.chanroblesvirtualawlibrary chanrobles virtual law library Petitioner Ago defaulted in his payment and so, in 1958 respondent Grace Park Engineering, Inc. instituted extra-judicial foreclosure proceedings of the mortgage. To enjoin said foreclosure, petitioner herein instituted Special Civil Case No. 53 in the Court of First Instance of Agusan. The parties to the case arrived at a compromise agreement and submitted the same in court in writing, signed by Pastor D. Ago and the Grace Park Engineering, Inc. The Hon. Montano A. Ortiz, Judge of the Court of First Instance of Agusan, then presiding, dictated a decision in open court on January 28, 1959.chanroblesvirtualawlibrary chanrobles virtual law library Petitioner continued to default in his payments as provided in the judgment by compromise, so Grace Park Engineering, Inc. filed with the lower court a motion for execution, which was granted by the court on August 15, 1959. A writ of execution, dated September 23, 1959, later followed.chanroblesvirtualawlibrary chanrobles virtual law library The herein respondent, Provincial Sheriff of Surigao, acting upon the writ of execution issued by the lower court, levied upon and ordered the sale of the sawmill machineries and equipments in question. These machineries and equipments had been taken to and installed in a sawmill building located in Lianga, Surigao del Sur, and owned by the Golden Pacific Sawmill, Inc., to whom, petitioner alleges, he had sold them on February 16, 1959 (a date after the decision of the lower court but before levy by the Sheriff).chanroblesvirtualawlibrary chanrobles virtual law library
Having been advised by the sheriff that the public auction sale was set for December 4, 1959, petitioner, on December 1, 1959, filed the petition for certiorari and prohibition with preliminary injunction with respondent Court of Appeals, alleging that a copy of the aforementioned judgment given in open court on January 28, 1959 was served upon counsel for petitioner only on September 25, 1959 (writ of execution is dated September 23, 1959); that the order and writ of execution having been issued by the lower court before counsel for petitioner received a copy of the judgment, its resultant last order that the "sheriff may now proceed with the sale of the properties levied constituted a grave abuse of discretion and was in excess of its jurisdiction; and that the respondent Provincial Sheriff of Surigao was acting illegally upon the allegedly void writ of execution by levying the same upon the sawmill machineries and equipments which have become real properties of the Golden Pacific sawmill, Inc., and is about to proceed in selling the same without prior publication of the notice of sale thereof in some newspaper of general circulation as required by the Rules of Court.chanroblesvirtualawlibrary chanrobles virtual law library The Court of Appeals, on December 8, 1959, issued a writ of preliminary injunction against the sheriff but it turned out that the latter had already sold at public auction the machineries in question, on December 4, 1959, as scheduled. The respondent Grace Park Engineering, Inc. was the only bidder for P15,000.00, although the certificate sale was not yet executed. The Court of Appeals constructed the sheriff to suspend the issuance of a certificate of sale of the said sawmill machineries and equipment sold by him on December 4, 1959 until the final decision of the case. On November 9, 1960 the Court of Appeals rendered the aforequoted decision.chanroblesvirtualawlibrary chanrobles virtual law library Before this Court, petitioner alleges that the Court of Appeals erred (1) in holding that the rendition of judgment on compromise in open court on January 1959 was a sufficient notice; and (2) in not resolving the other issues raised before it, namely, (a) the legality of the public auction sale made by the sheriff, and (b) the nature of the machineries in question, whether they are movables or immovables.chanroblesvirtualawlibrary chanrobles virtual law library The Court of Appeals held that as a judgment was entered by the court below in open court upon the submission of the compromise agreement, the parties may be considered as having been notified of said judgment and this fact constitutes due notice of said judgment. This raises the following legal question: Is the order dictated in open court of the judgment of the court, and is the fact the petitioner herein was present in open court was the judgment was dictated, sufficient notice thereof? The provisions of the Rules of Court decree otherwise. Section 1 of Rule 35 describes the manner in which judgment shall be rendered, thus: SECTION 1. How judgment rendered. - All judgments determining the merits of cases shall be in writing personally and directly prepared by the judge, and signed by him, stating clearly and distinctly the facts and the law on which it is based, filed with the clerk of the court. The court of first instance being a court of record, in order that a judgment may be considered as rendered, must not only be in writing, signed by the judge, but it must also be filed with the clerk of court. The mere pronouncement of the judgment in open court with the stenographer taking note thereof does not, therefore, constitute a rendition of the judgment. It is the filing of the signed decision with the clerk of court that constitutes rendition. While it is to be presumed that the judgment that was dictated in open court will be the judgment of the court, the court may still modify said order as the same is being put into writing. And even if the order or judgment has already been put into writing and signed, while it has not yet been delivered to the clerk for filing it is still subject to amendment or change by the judge. It is only when the judgment signed by the judge is actually filed with the clerk of court that it becomes a valid and binding judgment. Prior thereto, it could still be subject to amendment and change and may not, therefore, constitute the real judgment of the court.chanroblesvirtualawlibrary chanrobles virtual law library Regarding the notice of judgment, the mere fact that a party heard the judge dictating the judgment in open court, is not a valid notice of said judgment. If rendition thereof is constituted by the filing with the clerk of court of a signed copy (of the judgment), it is evident that the fact that a party or an attorney heard the order or judgment being dictated in court cannot be considered as notice of the real judgment. No judgment can be notified to the parties unless it has previously been rendered. The notice, therefore, that a party has of a judgment that was being dictated is of no effect because at the time no judgment has as yet been signed by the judge and filed with the clerk.chanroblesvirtualawlibrary chanrobles virtual law library Besides, the Rules expressly require that final orders or judgments be served personally or by registered mail. Section 7 of Rule 27 provides as follows: SEC. 7. Service of final orders or judgments. - Final orders or judgments shall be served either personally or by registered mail. In accordance with this provision, a party is not considered as having been served with the judgment merely because he heard the judgment dictating the said judgment in open court; it is necessary that he be served with a copy of the signed judgment that has
been filed with the clerk in order that he may legally be considered as having been served with the judgment.chanroblesvirtualawlibrary chanrobles virtual law library For all the foregoing, the fact that the petitioner herein heard the trial judge dictating the judgment in open court, is not sufficient to constitute the service of judgement as required by the above-quoted section 7 of Rule 2 the signed judgment not having been served upon the petitioner, said judgment could not be effective upon him (petitioner) who had not received it. It follows as a consequence that the issuance of the writ of execution null and void, having been issued before petitioner her was served, personally or by registered mail, a copy of the decision.chanroblesvirtualawlibrary chanrobles virtual law library The second question raised in this appeal, which has been passed upon by the Court of Appeals, concerns the validity of the proceedings of the sheriff in selling the sawmill machineries and equipments at public auction with a notice of the sale having been previously published.chanroblesvirtualawlibrary chanrobles virtual law library The record shows that after petitioner herein Pastor D. Ago had purchased the sawmill machineries and equipments he assigned the same to the Golden Pacific Sawmill, Inc. in payment of his subscription to the shares of stock of said corporation. Thereafter the sawmill machinery and equipments were installed in a building and permanently attached to the ground. By reason of such installment in a building, the said sawmill machineries and equipment became real estate properties in accordance with the provision of Art. 415 (5) of the Civil Code, thus: ART. 415. The following are immovable property: xxx xxx xxx chanrobles virtual law library
(5) Machinery, receptacles, instruments or implements tended 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; This Court in interpreting a similar question raised before it in the case of Berkenkotter vs. Cu Unjieng e Hijos, 61 Phil. 683, held that the installation of the machine and equipment in the central of the Mabalacat Sugar Co., Inc. for use in connection with the industry carried by the company, converted the said machinery and equipment into real estate by reason of their purpose. Paraphrasing language of said decision we hold that by the installment of the sawmill machineries in the building of the Gold Pacific Sawmill, Inc., for use in the sawing of logs carried on in said building, the same became a necessary and permanent part of the building or real estate on which the same was constructed, converting the said machineries and equipments into real estate within the meaning of Article 415(5) above-quoted of the Civil Code of the Philippines.chanroblesvirtualawlibrary chanrobles virtual law library Considering that the machineries and equipments in question valued at more than P15,000.00 appear to have been sold without the necessary advertisement of sale by publication in a newspaper, as required in Sec. 16 of Rule 39 of the Rules of Court, which is as follows: SEC. 16. Notice of sale of property on execution. - Before the sale of property on execution, notice thereof must be given as follows: xxx xxx xxx chanrobles virtual law library
(c) In case of real property, by posting a similar notice particularly describing the property for twenty days in three public places in the municipality or city where the property is situated, and also where the property is to be sold, and, if the assessed value of the property exceeds four hundred pesos, by publishing a copy of the notice once a week, for the same period, in some newspaper published or having general circulation in the province, if there be one. If there are newspapers published in the province in both the English and Spanish languages, then a like publication for a like period shall be made in one newspaper published in the English language, and in one published in the Spanish language. the sale made by the sheriff must be declared null and void.chanroblesvirtualawlibrary chanrobles virtual law library WHEREFORE, the decision of the Court of Appeals sought to be reviewed is hereby set aside and We declare that the issuance of the writ of execution in this case against the sawmill machineries and equipments purchased by petitioner Pastor D. Ago from the Grace Park Engineering, Inc., as well as the sale of the same by the Sheriff of Surigao, are null and void. Costs shall be against the respondent Grace Park Engineering, Inc.chanroblesvirtualawlibrary chanrobles virtual law library