I.

GENERAL CONCEPT OF PROPERTY The building or shed, the elevated water tank, the car hoist under a
separate shed, the air compressor, the underground gasoline tank, neon
G.R. No. L-50466 May 31, 1982 lights signboard, concrete fence and pavement and the lot where they
are all placed or erected, all of them used in the pursuance of the
CALTEX (PHILIPPINES) INC., petitioner,  gasoline service station business formed the entire gasoline service-
vs. station. 
CENTRAL BOARD OF ASSESSMENT APPEALS and CITY ASSESSOR OF
PASAY, respondents. As to whether the subject properties are attached and affixed to the
tenement, it is clear they are, for the tenement we consider in this
AQUINO, J.: particular case are (is) the pavement covering the entire lot which was
constructed by the owner of the gasoline station and the improvement
which holds all the properties under question, they are attached and
This case is about the realty tax on machinery and equipment installed by Caltex
affixed to the pavement and to the improvement. 
(Philippines) Inc. in its gas stations located on leased land. 
The pavement covering the entire lot of the gasoline service station, as
The machines and equipment consists of underground tanks, elevated tank, elevated
well as all the improvements, machines, equipments and apparatus are
water tanks, water tanks, gasoline pumps, computing pumps, water pumps, car washer,
allowed by Caltex (Philippines) Inc. ...
car hoists, truck hoists, air compressors and tireflators. The city assessor described the
said equipment and machinery in this manner: 
The underground gasoline tank is attached to the shed by the steel pipe
to the pump, so with the water tank it is connected also by a steel pipe to
A gasoline service station is a piece of lot where a building or shed is
the pavement, then to the electric motor which electric motor is placed
erected, a water tank if there is any is placed in one corner of the lot, car
under the shed. So to say that the gasoline pumps, water pumps and
hoists are placed in an adjacent shed, an air compressor is attached in
underground tanks are outside of the service station, and to consider only
the wall of the shed or at the concrete wall fence. 
the building as the service station is grossly erroneous. (pp. 58-60,
Rollo). 
The controversial underground tank, depository of gasoline or crude oil,
is dug deep about six feet more or less, a few meters away from the
The said machines and equipment are loaned by Caltex to gas station operators under
shed. This is done to prevent conflagration because gasoline and other
an appropriate lease agreement or receipt. It is stipulated in the lease contract that the
combustible oil are very inflammable. 
operators, upon demand, shall return to Caltex the machines and equipment in good
condition as when received, ordinary wear and tear excepted. 
This underground tank is connected with a steel pipe to the gasoline
pump and the gasoline pump is commonly placed or constructed under
The lessor of the land, where the gas station is located, does not become the owner of
the shed. The footing of the pump is a cement pad and this cement pad
the machines and equipment installed therein. Caltex retains the ownership thereof
is imbedded in the pavement under the shed, and evidence that the
during the term of the lease. 
gasoline underground tank is attached and connected to the shed or
building through the pipe to the pump and the pump is attached and
affixed to the cement pad and pavement covered by the roof of the The city assessor of Pasay City characterized the said items of gas station equipment
building or shed.  and machinery as taxable realty. The realty tax on said equipment amounts to P4,541.10
annually (p. 52, Rollo). The city board of tax appeals ruled that they are personalty. The The issue is whether the pieces of gas station equipment and machinery already
assessor appealed to the Central Board of Assessment Appeals.  enumerated are subject to realty tax. This issue has to be resolved primarily under the
provisions of the Assessment Law and the Real Property Tax Code. 
The Board, which was composed of Secretary of Finance Cesar Virata as chairman,
Acting Secretary of Justice Catalino Macaraig, Jr. and Secretary of Local Government Section 2 of the Assessment Law provides that the realty tax is due "on real property,
and Community Development Jose Roño, held in its decision of June 3, 1977 that the including land, buildings, machinery, and other improvements" not specifically exempted
said machines and equipment are real property within the meaning of sections 3(k) & (m) in section 3 thereof. This provision is reproduced with some modification in the Real
and 38 of the Real Property Tax Code, Presidential Decree No. 464, which took effect on Property Tax Code which provides: 
June 1, 1974, and that the definitions of real property and personal property in articles
415 and 416 of the Civil Code are not applicable to this case. SEC. 38. Incidence of Real Property Tax.— There shall be levied,
assessed and collected in all provinces, cities and municipalities an
The decision was reiterated by the Board (Minister Vicente Abad Santos took Macaraig's annual ad valorem tax on real property, such as land, buildings,
place) in its resolution of January 12, 1978, denying Caltex's motion for reconsideration, machinery and other improvements affixed or attached to real property
a copy of which was received by its lawyer on April 2, 1979.  not hereinafter specifically exempted. 

On May 2, 1979 Caltex filed this certiorari petition wherein it prayed for the setting aside The Code contains the following definitions in its section 3: 
of the Board's decision and for a declaration that t he said machines and equipment are
personal property not subject to realty tax (p. 16, Rollo).  k) Improvements — is a valuable addition made to property or an
amelioration in its condition, amounting to more than mere repairs or
The Solicitor General's contention that the Court of Tax Appeals has exclusive appellate replacement of waste, costing labor or capital and intended to enhance
jurisdiction over this case is not correct. When Republic act No. 1125 created the Tax its value, beauty or utility or to adapt it for new or further purposes. 
Court in 1954, there was as yet no Central Board of Assessment Appeals. Section 7(3)
of that law in providing that the Tax Court had jurisdiction to review by appeal decisions m) Machinery — shall embrace machines, mechanical contrivances,
of provincial or city boards of assessment appeals had in mind the local boards of instruments, appliances and apparatus attached to the real estate. It
assessment appeals but not the Central Board of Assessment Appeals which under the includes the physical facilities available for production, as well as the
Real Property Tax Code has appellate jurisdiction over decisions of the said local boards installations and appurtenant service facilities, together with all other
of assessment appeals and is, therefore, in the same category as the Tax Court.  equipment designed for or essential to its manufacturing, industrial or
agricultural purposes (See sec. 3[f], Assessment Law). 
Section 36 of the Real Property Tax Code provides that the decision of the Central Board
of Assessment Appeals shall become final and executory after the lapse of fifteen days We hold that the said equipment and machinery, as appurtenances to the gas station
from the receipt of its decision by the appellant. Within that fifteen-day period, a petition building or shed owned by Caltex (as to which it is subject to realty tax) and which
for reconsideration may be filed. The Code does not provide for the review of the Board's fixtures are necessary to the operation of the gas station, for without them the gas station
decision by this Court.  would be useless, and which have been attached or affixed permanently to the gas
station site or embedded therein, are taxable improvements and machinery within the
Consequently, the only remedy available for seeking a review by this Court of the meaning of the Assessment Law and the Real Property Tax Code. 
decision of the Central Board of Assessment Appeals is the special civil action of
certiorari, the recourse resorted to herein by Caltex (Philippines), Inc. 
Caltex invokes the rule that machinery which is movable in its nature only becomes The Central Board of Assessment Appeals did not commit a grave abuse of discretion in
immobilized when placed in a plant by the owner of the property or plant but not when so upholding the city assessor's is imposition of the realty tax on Caltex's gas station and
placed by a tenant, a usufructuary, or any person having only a temporary right, unless equipment. 
such person acted as the agent of the owner (Davao Saw Mill Co. vs. Castillo, 61 Phil
709).  WHEREFORE, the questioned decision and resolution of the Central Board of
Assessment Appeals are affirmed. The petition for certiorari is dismissed for lack of
That ruling is an interpretation of paragraph 5 of article 415 of the Civil Code regarding merit. No costs. 
machinery that becomes real property by destination. In the Davao Saw Mills case the
question was whether the machinery mounted on foundations of cement and installed by SO ORDERED. 
the lessee on leased land should be regarded as real property for purposes of execution
of a judgment against the lessee. The sheriff treated the machinery as personal property. Barredo (Chairman), Guerrero, De Castro and Escolin, JJ., concur. 
This Court sustained the sheriff's action. (Compare with Machinery & Engineering
Supplies, Inc. vs. Court of Appeals, 96 Phil. 70, where in a replevin case machinery was
Concepcion, Jr. and Abad Santos, JJ., took no part.
treated as realty). 
G.R. No. L-18456           November 30, 1963
Here, the question is whether the gas station equipment and machinery permanently
affixed by Caltex to its gas station and pavement (which are indubitably taxable realty)
should be subject to the realty tax. This question is different from the issue raised in CONRADO P. NAVARRO, plaintiff-appellee, 
the Davao Saw Mill case.  vs.
RUFINO G. PINEDA, RAMONA REYES, ET AL., defendants-appellants.
Improvements on land are commonly taxed as realty even though for some purposes
they might be considered personalty (84 C.J.S. 181-2, Notes 40 and 41). "It is a familiar Deogracias Tañedo, Jr. for plaintiff-appellee.
phenomenon to see things classed as real property for purposes of taxation which on Renato A. Santos for defendants-appellants.
general principle might be considered personal property" (Standard Oil Co. of New York
vs. Jaramillo, 44 Phil. 630, 633).  PAREDES, J.:

This case is also easily distinguishable from Board of Assessment Appeals vs. Manila On December 14, 1959, defendants Rufino G. Pineda and his mother Juana Gonzales
Electric Co., 119 Phil. 328, where Meralco's steel towers were considered poles within (married to Gregorio Pineda), borrowed from plaintiff Conrado P. Navarro, the sum of
the meaning of paragraph 9 of its franchise which exempts its poles from taxation. The P2,500.00, payable 6 months after said date or on June 14, 1959. To secure the
steel towers were considered personalty because they were attached to square metal indebtedness, Rufino executed a document captioned "DEED OF REAL ESTATE and
frames by means of bolts and could be moved from place to place when unscrewed and CHATTEL MORTGAGES", whereby Juana Gonzales, by way of Real Estate
dismantled.  Mortgage hypothecated a parcel of land, belonging to her, registered with the Register of
Deeds of Tarlac, under Transfer Certificate of Title No. 25776, and Rufino G. Pineda, by
Nor are Caltex's gas station equipment and machinery the same as tools and equipment way of Chattel Mortgage, mortgaged his two-story residential house, having a floor area
in the repair shop of a bus company which were held to be personal property not subject of 912 square meters, erected on a lot belonging to Atty. Vicente Castro, located at Bo.
to realty tax (Mindanao Bus Co. vs. City Assessor, 116 Phil. 501).  San Roque, Tarlac, Tarlac; and one motor truck, registered in his name, under Motor
Vehicle Registration Certificate No. A-171806. Both mortgages were contained in one
instrument, which was registered in both the Office of the Register of Deeds and the
Motor Vehicles Office of Tarlac.
When the mortgage debt became due and payable, the defendants, after demands made
on them, failed to pay. They, however, asked and were granted extension up to June 30,
1960, within which to pay. Came June 30, defendants again failed to pay and, for the
second time, asked for another extension, which was given, up to July 30, 1960. In the
second extension, defendant Pineda in a document entitled "Promise", categorically
stated that in the remote event he should fail to make good the obligation on such date
(July 30, 1960), the defendant would no longer ask for further extension and there would
be no need for any formal demand, and plaintiff could proceed to take whatever action
he might desire to enforce his rights, under the said mortgage contract. In spite of said
promise, defendants, failed and refused to pay the obligation.
On August 10, 1960, plaintiff filed a complaint for foreclosure of the mortgage and for
damages, which consisted of liquidated damages in the sum of P500.00 and 12% per
annum interest on the principal, effective on the date of maturity, until fully paid.
Defendants, answering the complaint, among others, stated —
Defendants admit that the loan is overdue but deny that portion of paragraph 4 of
the First Cause of Action which states that the defendants unreasonably failed
and refuse to pay their obligation to the plaintiff the truth being the defendants
are hard up these days and pleaded to the plaintiff to grant them more time within
which to pay their obligation and the plaintiff refused;
WHEREFORE, in view of the foregoing it is most respectfully prayed that this
Honorable Court render judgment granting the defendants until January 31,
1961, within which to pay their obligation to the plaintiff.
On September 30, 1960, plaintiff presented a Motion for summary Judgment, claiming
that the Answer failed to tender any genuine and material issue. The motion was set for
hearing, but the record is not clear what ruling the lower court made on the said motion.
On November 11, 1960, however, the parties submitted a Stipulation of Facts, wherein
the defendants admitted the indebtedness, the authenticity and due execution of the
Real Estate and Chattel Mortgages; that the indebtedness has been due and unpaid
since June 14, 1960; that a liability of 12% per annum as interest was agreed, upon
failure to pay the principal when due and P500.00 as liquidated damages; that the
instrument had been registered in the Registry of Property and Motor Vehicles Office,
both of the province of Tarlac; that the only issue in the case is whether or not the
residential house, subject of the mortgage therein, can be considered a Chattel and the
propriety of the attorney's fees.
On February 24, 1961, the lower court held —
... WHEREFORE, this Court renders decision in this Case:
(a) Dismissing the complaint with regard to defendant Gregorio Pineda;
(b) Ordering defendants Juana Gonzales and the spouses Rufino Pineda and
Ramon Reyes, to pay jointly and severally and within ninety (90) days from the
receipt of the copy of this decision to the plaintiff Conrado P. Navarro the
principal sum of P2,550.00 with 12% compounded interest per annum from June
14, 1960, until said principal sum and interests are fully paid, plus P500.00 as
liquidated damages and the costs of this suit, with the warning that in default of
said payment of the properties mentioned in the deed of real estate mortgage
and chattel mortgage (Annex "A" to the complaint) be sold to realize said
mortgage debt, interests, liquidated damages and costs, in accordance with the
pertinent provisions of Act 3135, as amended by Act 4118, and Art. 14 of the
Chattel Mortgage Law, Act 1508; and
(c) Ordering the defendants Rufino Pineda and Ramona Reyes, to deliver
immediately to the Provincial Sheriff of Tarlac the personal properties mentioned
in said Annex "A", immediately after the lapse of the ninety (90) days above-
mentioned, in default of such payment.
The above judgment was directly appealed to this Court, the defendants therein
assigning only a single error, allegedly committed by the lower court, to wit —
In holding that the deed of real estate and chattel mortgages appended to the
complaint is valid, notwithstanding the fact that the house of the defendant Rufino
G. Pineda was made the subject of the chattel mortgage, for the reason that it is
erected on a land that belongs to a third person.
Appellants contend that article 415 of the New Civil Code, in classifying a house as
immovable property, makes no distinction whether the owner of the land is or not the
owner of the building; the fact that the land belongs to another is immaterial, it is enough
that the house adheres to the land; that in case of immovables by incorporation, such as
houses, trees, plants, etc; the Code does not require that the attachment or incorporation
be made by the owner of the land, the only criterion being the union or incorporation with
the soil. In other words, it is claimed that "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" (Lopez v. Orosa, G.R. Nos. L-10817-8, Feb. 28, 1958). (See
also the case of Leung Yee v. Strong Machinery Co., 37 Phil. 644). Appellants argue that
since only movables can be the subject of a chattel mortgage (sec. 1, Act No. 3952) then
the mortgage in question which is the basis of the present action, cannot give rise to an
action for foreclosure, because it is nullity. (Citing Associated Ins. Co., et al. v. Isabel Iya
v. Adriano Valino, et al., L-10838, May 30, 1958.)
The trial court did not predicate its decision declaring the deed of chattel mortgage valid
solely on the ground that the house mortgaged was erected on the land which belonged
to a third person, but also and principally on the doctrine of estoppel, in that "the parties
have so expressly agreed" in the mortgage to consider the house as chattel "for its
smallness and mixed materials of sawali and wood". In construing arts. 334 and 335 of
the Spanish Civil Code (corresponding to arts. 415 and 416, N.C.C.), for purposes of the
application of the Chattel Mortgage Law, it was held that under certain conditions, "a
property may have a character different from that imputed to it in said articles. It is
undeniable that the parties to a contract may by agreement, treat as personal property
that which by nature would be real property" (Standard Oil Co. of N.Y. v. Jaranillo, 44
Phil. 632-633)."There can not be any question that a building of mixed materials may be
the subject of a chattel mortgage, in which case, it is considered as between the parties
as personal property. ... The matter depends on the circumstances and the intention of
the parties". "Personal property may retain its character as such where it is so agreed by
the parties interested even though annexed to the realty ...". (42 Am. Jur. 209-210, cited
in Manarang, et al. v. Ofilada, et al., G.R. No. L-8133, May 18, 1956; 52 O.G. No. 8, p.
3954.) The view that parties to a deed of chattel mortgagee may agree to consider a
house as personal property for the purposes of said contract, "is good only insofar as the
contracting parties are concerned. It is based partly, upon the principles of estoppel ..."
(Evangelista v. Alto Surety, No. L-11139, Apr. 23, 1958). In a case, a mortgage house
built on a rented land, was held to be a personal property, not only because the deed of
mortgage considered it as such, but also because it did not form part of the land
(Evangelista v. Abad [CA];36 O.G. 2913), for it is now well settled that an object placed
on land by one who has only a temporary right to the same, such as a lessee or
usufructuary, does not become immobilized by attachment (Valdez v. Central Altagracia,
222 U.S. 58, cited in Davao Sawmill Co., Inc. v. Castillo, et al., 61 Phil. 709). Hence, if a
house belonging to a person stands on a rented land belonging to another person, it may
be mortgaged as a personal property is so stipulated in the document of mortgage.
(Evangelista v. Abad, supra.) It should be noted, however, that the principle is predicated
on statements by the owner declaring his house to be a chattel, a conduct that may
conceivably estop him from subsequently claiming otherwise (Ladera, et al.. v. C. N.
Hodges, et al., [CA]; 48 O.G. 5374). The doctrine, therefore, gathered from these cases
is that although in some instances, a house of mixed materials has been considered as a
chattel between them, has been recognized, it has been a constant criterion
nevertheless that, with respect to third persons, who are not parties to the contract, and
specially in execution proceedings, the house is considered as an immovable property
(Art. 1431, New Civil Code).
In the case at bar, the house in question was treated as personal or movable property,
by the parties to the contract themselves. In the deed of chattel mortgage, appellant
Rufino G. Pineda conveyed by way of "Chattel Mortgage" "my personal properties", a
residential house and a truck. The mortgagor himself grouped the house with the truck,
which is, inherently a movable property. The house which was not even declared for
taxation purposes was small and made of light construction materials: G.I. sheets
roofing, sawali and wooden walls and wooden posts; built on land belonging to another.
The cases cited by appellants are not applicable to the present case. The Iya cases (L-
10837-38, supra), refer to a building or a house of strong materials, permanently adhered
to the land, belonging to the owner of the house himself. In the case of Lopez v. Orosa,
(L-10817-18), the subject building was a theatre, built of materials worth more than
P62,000, attached permanently to the soil. In these cases and in the Leung Yee
case, supra, third persons assailed the validity of the deed of chattel mortgages; in the
present case, it was one of the parties to the contract of mortgages who assailed its
validity.
CONFORMABLY WITH ALL THE FOREGOING, the decision appealed from, should be,
as it is hereby affirmed, with costs against appellants.
Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Barrera, Dizon, Regala, and
Makalintal, JJ., concur.
G.R. No. L-30173 September 30, 1971
GAVINO A. TUMALAD and GENEROSA R. TUMALAD, plaintiffs-appellees, 
vs.
ALBERTA VICENCIO and EMILIANO SIMEON, defendants-appellants.
Castillo & Suck for plaintiffs-appellees.
Jose Q. Calingo for defendants-appellants
REYES, J.B.L., J.:
Case certified to this Court by the Court of Appeals (CA-G.R. No. 27824-R) for the
reason that only questions of law are involved.
This case was originally commenced by defendants-appellants in the municipal court of
Manila in Civil Case No. 43073, for ejectment. Having lost therein, defendants-appellants
appealed to the court a quo (Civil Case No. 30993) which also rendered a decision
against them, the dispositive portion of which follows:
WHEREFORE, the court hereby renders judgment in favor of the
plaintiffs and against the defendants, ordering the latter to pay jointly and
severally the former a monthly rent of P200.00 on the house, subject-
matter of this action, from March 27, 1956, to January 14, 1967, with
interest at the legal rate from April 18, 1956, the filing of the complaint,
until fully paid, plus attorney's fees in the sum of P300.00 and to pay the
costs.
It appears on the records that on 1 September 1955 defendants-appellants executed a
chattel mortgage in favor of plaintiffs-appellees over their house of strong materials
located at No. 550 Int. 3, Quezon Boulevard, Quiapo, Manila, over Lot Nos. 6-B and 7-B,
Block No. 2554, which were being rented from Madrigal & Company, Inc. The mortgage
was registered in the Registry of Deeds of Manila on 2 September 1955. The herein
mortgage was executed to guarantee a loan of P4,800.00 received from plaintiffs-
appellees, payable within one year at 12% per annum. The mode of payment was
P150.00 monthly, starting September, 1955, up to July 1956, and the lump sum of
P3,150 was payable on or before August, 1956. It was also agreed that default in the
payment of any of the amortizations, would cause the remaining unpaid balance to
becomeimmediately due and Payable and —
the Chattel Mortgage will be enforceable in accordance with the
provisions of Special Act No. 3135, and for this purpose, the Sheriff of the
City of Manila or any of his deputies is hereby empowered and
authorized to sell all the Mortgagor's property after the necessary
publication in order to settle the financial debts of P4,800.00, plus 12%
yearly interest, and attorney's fees... 
2
When defendants-appellants defaulted in paying, the mortgage was extrajudicially
foreclosed, and on 27 March 1956, the house was sold at public auction pursuant to the
said contract. As highest bidder, plaintiffs-appellees were issued the corresponding
certificate of sale.  Thereafter, on 18 April 1956, plaintiffs-appellant commenced Civil
3
Case No. 43073 in the municipal court of Manila, praying, among other things, that the
house be vacated and its possession surrendered to them, and for defendants-
appellants to pay rent of P200.00 monthly from 27 March 1956 up to the time the
possession is surrendered.  On 21 September 1956, the municipal court rendered its
4
decision —
... ordering the defendants to vacate the premises described in the
complaint; ordering further to pay monthly the amount of P200.00 from
March 27, 1956, until such (time that) the premises is (sic) completely
vacated; plus attorney's fees of P100.00 and the costs of the suit. 5
Defendants-appellants, in their answers in both the municipal court and court a
quo impugned the legality of the chattel mortgage, claiming that they are still the owners
of the house; but they waived the right to introduce evidence, oral or documentary.
Instead, they relied on their memoranda in support of their motion to dismiss, predicated
mainly on the grounds that: (a) the municipal court did not have jurisdiction to try and
decide the case because (1) the issue involved, is ownership, and (2) there was no
allegation of prior possession; and (b) failure to prove prior demand pursuant to Section
2, Rule 72, of the Rules of Court.6
During the pendency of the appeal to the Court of First Instance, defendants-appellants
failed to deposit the rent for November, 1956 within the first 10 days of December, 1956
as ordered in the decision of the municipal court. As a result, the court granted plaintiffs-
appellees' motion for execution, and it was actually issued on 24 January 1957.
However, the judgment regarding the surrender of possession to plaintiffs-appellees
could not be executed because the subject house had been already demolished on 14
January 1957 pursuant to the order of the court in a separate civil case (No. 25816) for
ejectment against the present defendants for non-payment of rentals on the land on
which the house was constructed.
The motion of plaintiffs for dismissal of the appeal, execution of the supersedeas bond
and withdrawal of deposited rentals was denied for the reason that the liability therefor
was disclaimed and was still being litigated, and under Section 8, Rule 72, rentals
deposited had to be held until final disposition of the appeal.7
On 7 October 1957, the appellate court of First Instance rendered its decision, the
dispositive portion of which is quoted earlier. The said decision was appealed by
defendants to the Court of Appeals which, in turn, certified the appeal to this Court.
Plaintiffs-appellees failed to file a brief and this appeal was submitted for decision without
it.
Defendants-appellants submitted numerous assignments of error which can be
condensed into two questions, namely: .
(a) Whether the municipal court from which the case originated had
jurisdiction to adjudicate the same;
(b) Whether the defendants are, under the law, legally bound to pay
rentals to the plaintiffs during the period of one (1) year provided by law
for the redemption of the extrajudicially foreclosed house.
We will consider these questions seriatim.
(a) Defendants-appellants mortgagors question the jurisdiction of the municipal court
from which the case originated, and consequently, the appellate jurisdiction of the Court
of First Instance a quo, on the theory that the chattel mortgage is void ab initio; whence it
would follow that the extrajudicial foreclosure, and necessarily the consequent auction
sale, are also void. Thus, the ownership of the house still remained with defendants-
appellants who are entitled to possession and not plaintiffs-appellees. Therefore, it is
argued by defendants-appellants, the issue of ownership will have to be adjudicated first
in order to determine possession. lt is contended further that ownership being in issue, it
is the Court of First Instance which has jurisdiction and not the municipal court.
Defendants-appellants predicate their theory of nullity of the chattel mortgage on two
grounds, which are: (a) that, their signatures on the chattel mortgage were obtained
through fraud, deceit, or trickery; and (b) that the subject matter of the mortgage is a
house of strong materials, and, being an immovable, it can only be the subject of a real
estate mortgage and not a chattel mortgage.
On the charge of fraud, deceit or trickery, the Court of First Instance found defendants-
appellants' contentions as not supported by evidence and accordingly dismissed the
charge,  confirming the earlier finding of the municipal court that "the defense of
8
ownership as well as the allegations of fraud and deceit ... are mere allegations." 9
It has been held in Supia and Batiaco vs. Quintero and Ayala  that "the answer is a mere
10
statement of the facts which the party filing it expects to prove, but it is not
evidence;  and further, that when the question to be determined is one of title, the Court
11
is given the authority to proceed with the hearing of the cause until this fact is clearly
established. In the case of Sy vs. Dalman,  wherein the defendant was also a successful
12
bidder in an auction sale, it was likewise held by this Court that in detainer cases the aim
of ownership "is a matter of defense and raises an issue of fact which should be
determined from the evidence at the trial." What determines jurisdiction are the
allegations or averments in the complaint and the relief asked for.  13
Moreover, even granting that the charge is true, fraud or deceit does not render a
contract void ab initio, and can only be a ground for rendering the 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
14
is it disclosed that steps were taken to nullify the same. Hence, defendants-appellants'
claim of ownership on the basis of a voidable contract which has not been voided fails.
It is claimed in the alternative by defendants-appellants that even if there was no fraud,
deceit or trickery, the chattel mortgage was still null and void ab initio because only
personal properties can be subject of a chattel mortgage. The rule about the status of
buildings as immovable property is stated in Lopez vs. Orosa, Jr. and Plaza Theatre
Inc., cited in Associated Insurance Surety Co., Inc. vs. Iya, et al.   to the effect that —
15 16
 ... it is obvious that the inclusion of the building, separate and distinct
from the land, in the enumeration of what may constitute real properties
(art. 415, New Civil Code) could only mean one thing — that a building is
by itself an immovable property irrespective of whether or not said
structure and the land on which it is adhered to belong to the same
owner.
Certain deviations, however, have been allowed for various reasons. In the case
of Manarang and Manarang vs. Ofilada,  this Court stated that "it is undeniable that the
17
parties to a contract may by agreement treat as personal property that which by nature
would be real property", citing Standard Oil Company of New York vs. Jaramillo.   In the
18
latter case, the mortgagor conveyed and transferred to the mortgagee by way of
mortgage "the following described personal property."   The "personal property"
19
consisted of leasehold rights and a building. Again, in the case of Luna vs.
Encarnacion,  the subject of the contract designated as Chattel Mortgage was a house
20
of mixed materials, and this Court hold therein that it was a valid Chattel mortgage
because it was so expressly designated and specifically that the property given as
security "is a house of mixed materials, which by its very nature is considered personal
property." In the later case of Navarro vs. Pineda,  this Court stated that —
21
The view that parties to a deed of chattel mortgage may agree to
consider a house as personal property for the purposes of said contract,
"is good only insofar as the contracting parties are concerned. It is based,
partly, upon the principle of estoppel" (Evangelista vs. Alto Surety, No. L-
11139, 23 April 1958). In a case, a mortgaged house built on a rented
land was held to be a personal property, not only because the deed of
mortgage considered it as such, but also because it did not form part of
the land (Evangelists vs. Abad, [CA]; 36 O.G. 2913), for it is now settled
that an object placed on land by one who had only a temporary right to
the same, such as the lessee or usufructuary, does not become
immobilized by attachment (Valdez vs. Central Altagracia, 222 U.S. 58,
cited in Davao Sawmill Co., Inc. vs. Castillo, et al., 61 Phil. 709). Hence, if
a house belonging to a person stands on a rented land belonging to
another person, it may be mortgaged as a personal property as so
stipulated in the document of mortgage. (Evangelista vs. Abad, Supra.) It
should be noted, however that the principle is predicated on statements
by the owner declaring his house to be a chattel, a conduct that may
conceivably estop him from subsequently claiming otherwise. (Ladera vs.
C.N. Hodges, [CA] 48 O.G. 5374):  22
In the contract now before Us, the house on rented land is not only expressly designated
as Chattel Mortgage; it specifically provides that "the mortgagor ... voluntarily CEDES,
SELLS and TRANSFERS by way of Chattel Mortgage  the property together with its
23
leasehold rights over the lot on which it is constructed and participation ..."   Although
24
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
defendats-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 personalty. Finally unlike in the Iya cases, Lopez vs. Orosa, Jr. and
Plaza Theatre, Inc.   and Leung Yee vs. F. L. Strong Machinery and
25
Williamson,   wherein third persons assailed the validity of the chattel mortgage,  it is the
26 27
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 personalty.
(b) Turning to the question of possession and rentals of the premises in question. The
Court of First Instance noted in its decision that nearly a year after the foreclosure sale
the mortgaged house had been demolished on 14 and 15 January 1957 by virtue of a
decision obtained by the lessor of the land on which the house stood. For this reason,
the said court limited itself to sentencing the erstwhile mortgagors to pay plaintiffs a
monthly rent of P200.00 from 27 March 1956 (when the chattel mortgage was foreclosed
and the house sold) until 14 January 1957 (when it was torn down by the Sheriff), plus
P300.00 attorney's fees.
Appellants mortgagors question this award, claiming that they were entitled to remain in
possession without any obligation to pay rent during the one year redemption period after
the foreclosure sale, i.e., until 27 March 1957. On this issue, We must rule for the
appellants.
Chattel mortgages are covered and regulated by the Chattel Mortgage Law, Act No.
1508.  Section 14 of this Act allows the mortgagee to have the property mortgaged sold
28
at public auction through a public officer in almost the same manner as that allowed by Since the defendants-appellants were occupying the house at the time of the auction
Act No. 3135, as amended by Act No. 4118, provided that the requirements of the law sale, they are entitled to remain in possession during the period of redemption or within
relative to notice and registration are complied with.   In the instant case, the parties
29
one year from and after 27 March 1956, the date of the auction sale, and to collect the
specifically stipulated that "the chattel mortgage will be enforceable in accordance with rents or profits during the said period.
the provisions of Special Act No. 3135 ... ."  (Emphasis supplied).
30

Section 6 of the Act referred to   provides that the debtor-mortgagor (defendants-
31
appellants herein) may, at any time within one year from and after the date of the auction
sale, redeem the property sold at the extra judicial foreclosure sale. Section 7 of the
same Act   allows the purchaser of the property to obtain from the court the possession
32
during the period of redemption: but the same provision expressly requires the filing of a
petition with the proper Court of First Instance and the furnishing of a bond. It is only
upon filing of the proper motion and the approval of the corresponding bond that the
order for a writ of possession issues as a matter of course. No discretion is left to the
court.   In the absence of such a compliance, as in the instant case, the purchaser can
33
not claim possession during the period of redemption as a matter of right. In such a case,
It will be noted further that in the case at bar the period of redemption had not yet expired
when action was instituted in the court of origin, and that plaintiffs-appellees did not
choose to take possession under Section 7, Act No. 3135, as amended, which is the law
selected by the parties to govern the extrajudicial foreclosure of the chattel mortgage.
Neither was there an allegation to that effect. Since plaintiffs-appellees' right to possess
was not yet born at the filing of the complaint, there could be no violation or breach
thereof. Wherefore, the original complaint stated no cause of action and was prematurely
filed. For this reason, the same should be ordered dismissed, even if there was no
assignment of error to that effect. The Supreme Court is clothed with ample authority to
review palpable errors not assigned as such if it finds that their consideration is
necessary in arriving at a just decision of the cases. 
37

the governing provision is Section 34, Rule 39, of the Revised Rules of Court   which
34

also applies to properties purchased in extrajudicial foreclosure It follows that the court below erred in requiring the mortgagors to pay rents for the year
proceedings.  Construing the said section, this Court stated in the aforestated case
35
following the foreclosure sale, as well as attorney's fees.
of Reyes vs. Hamada.
FOR THE FOREGOING REASONS, the decision appealed from is reversed and another
In other words, before the expiration of the 1-year period within which the one entered, dismissing the complaint. With costs against plaintiffs-appellees.
judgment-debtor or mortgagor may redeem the property, the purchaser
thereof is not entitled, as a matter of right, to possession of the same.
Thus, while it is true that the Rules of Court allow the purchaser to
receive the rentals if the purchased property is occupied by tenants, he
is, nevertheless, accountable to the judgment-debtor or mortgagor as the G.R. Nos. L-10837-38             May 30, 1958
case may be, for the amount so received and the same will be duly
credited against the redemption price when the said debtor or mortgagor ASSOCIATED INSURANCE and SURETY COMPANY, INC., plaintiff, 
effects the redemption. Differently stated, the rentals receivable from vs.
tenants, although they may be collected by the purchaser during the ISABEL IYA, ADRIANO VALINO and LUCIA VALINO, defendants.
redemption period, do not belong to the latter but still pertain to the
debtor of mortgagor. The rationale for the Rule, it seems, is to secure for ISABEL IYA, plaintiff, 
the benefit of the debtor or mortgagor, the payment of the redemption vs.
amount and the consequent return to him of his properties sold at public ADRIANO VALINO, LUCIA VALINO and ASSOCIATED INSURANCE and SURETY
auction. (Emphasis supplied) COMPANY. INC., defendants.

The Hamada case reiterates the previous ruling in Chan vs. Espe. 36
Jovita L. de Dios for defendant Isabel Iya.
M. Perez Cardenas and Apolonio Abola for defendant Associated Insurance and Surety
Co., Inc.
FELIX, J.:
Adriano Valino and Lucia A. Valino, husband and wife, were the owners and possessors
of a house of strong materials constructed on Lot No. 3, Block No. 80 of the Grace Park
Subdivision in Caloocan, Rizal, which they purchased on installment basis from the
Philippine Realty Corporation. On November 6, 1951, to enable her to purchase on credit
rice from the NARIC, Lucia A. Valino filed a bond in the sum of P11,000.00 (AISCO Bond
No. G-971) subscribed by the Associated Insurance and Surety Co., Inc., and as
counter-guaranty therefor, the spouses Valino executed an alleged chattel mortgage on
the aforementioned house in favor of the surety company, which encumbrance was duly
registered with the Chattel Mortgage Register of Rizal on December 6, 1951. It is
admitted that at the time said undertaking took place, the parcel of land on which the
house is erected was still registered in the name of the Philippine Realty Corporation.
Having completed payment on the purchase price of the lot, the Valinos were able to
secure on October 18, 1958, a certificate of title in their name (T.C.T. No. 27884).
Subsequently, however, or on October 24, 1952, the Valinos, to secure payment of an
indebtedness in the amount of P12,000.00, executed a real estate mortgage over the lot
and the house in favor of Isabel Iya, which was duly registered and annotated at the back
of the certificate of title.
On the other hand, as Lucia A. Valino, failed to satisfy her obligation to the NARIC, the
surety company was compelled to pay the same pursuant to the undertaking of the bond.
In turn, the surety company demanded reimbursement from the spouses Valino, and as
the latter likewise failed to do so, the company foreclosed the chattel mortgage over the
house. As a result thereof, a public sale was conducted by the Provincial Sheriff of Rizal
on December 26, 1952, wherein the property was awarded to the surety company for
P8,000.00, the highest bid received therefor. The surety company then caused the said
house to be declared in its name for tax purposes (Tax Declaration No. 25128).
Sometime in July, 1953, the surety company learned of the existence of the real estate
mortgage over the lot covered by T.C.T. No. 26884 together with the improvements
thereon; thus, said surety company instituted Civil Case No. 2162 of the Court of First
Instance of Manila naming Adriano and Lucia Valino and Isabel Iya, the mortgagee, as
defendants. The complaint prayed for the exclusion of the residential house from the real
estate mortgage in favor of defendant Iya and the declaration and recognition of plaintiff's
right to ownership over the same in virtue of the award given by the Provincial Sheriff of
Rizal during the public auction held on December 26, 1952. Plaintiff likewise asked the
Court to sentence the spouses Valino to pay said surety moral and exemplary damages,
attorney's fees and costs. Defendant Isabel Iya filed her answer to the complaint alleging
among other things, that in virtue of the real estate mortgage executed by her co-
defendants, she acquired a real right over the lot and the house constructed thereon; that
the auction sale allegedly conducted by the Provincial Sheriff of Rizal as a result of the
foreclosure of the chattel mortgage on the house was null and void for non-compliance
with the form required by law. She, therefore, prayed for the dismissal of the complaint
and anullment of the sale made by the Provincial Sheriff. She also demanded the
amount of P5,000.00 from plaintiff as counterclaim, the sum of P5,000.00 from her co-
defendants as crossclaim, for attorney's fees and costs.
Defendants spouses in their answer admitted some of the averments of the complaint
and denied the others. They, however, prayed for the dismissal of the action for lack of
cause of action, it being alleged that plaintiff was already the owner of the house in
question, and as said defendants admitted this fact, the claim of the former was already
satisfied.
On October 29, 1953, Isabel Iya filed another civil action against the Valinos and the
surety company (Civil Case No. 2504 of the Court of First Instance of Manila) stating that
pursuant to the contract of mortgage executed by the spouses Valino on October 24,
1952, the latter undertook to pay a loan of P12,000.00 with interest at 12% per annum or
P120.00 a month, which indebtedness was payable in 4 years, extendible for only one
year; that to secure payment thereof, said defendants mortgaged the house and lot
covered by T.C.T. No. 27884 located at No. 67 Baltazar St., Grace Park Subdivision,
Caloocan, Rizal; that the Associated Insurance and Surety Co., Inc., was included as a
party defendant because it claimed to have an interest on the residential house also
covered by said mortgage; that it was stipulated in the aforesaid real estate mortgage
that default in the payment of the interest agreed upon would entitle the mortgagee to
foreclose the same even before the lapse of the 4-year period; and as defendant
spouses had allegedly failed to pay the interest for more than 6 months, plaintiff prayed
the Court to order said defendants to pay the sum of P12,000.00 with interest thereon at
12% per annum from March 25, 1953, until fully paid; for an additional sum equivalent to
20% of the total obligation as damages, and for costs. As an alternative in case such
demand may not be met and satisfied plaintiff prayed for a decree of foreclosure of the
land, building and other improvements thereon to be sold at public auction and the
proceeds thereof applied to satisfy the demands of plaintiff; that the Valinos, the surety
company and any other person claiming interest on the mortgaged properties be barred
and foreclosed of all rights, claims or equity of redemption in said properties; and for
deficiency judgment in case the proceeds of the sale of the mortgaged property would be
insufficient to satisfy the claim of plaintiff.
Defendant surety company, in answer to this complaint insisted on its right over the
building, arguing that as the lot on which the house was constructed did not belong to the
spouses at the time the chattel mortgage was executed, the house might be considered
only as a personal property and that the encumbrance thereof and the subsequent
foreclosure proceedings made pursuant to the provisions of the Chattel Mortgage Law
were proper and legal. Defendant therefore prayed that said building be excluded from
the real estate mortgage and its right over the same be declared superior to that of
plaintiff, for damages, attorney's fees and costs.
Taking side with the surety company, defendant spouses admitted the due execution of
the mortgage upon the land but assailed the allegation that the building was included
thereon, it being contended that it was already encumbered in favor of the surety
company before the real estate mortgage was executed, a fact made known to plaintiff
during the preparation of said contract and to which the latter offered no objection. As a
special defense, it was asserted that the action was premature because the contract was
for a period of 4 years, which had not yet elapsed.
The two cases were jointly heard upon agreement of the parties, who submitted the
same on a stipulation of facts, after which the Court rendered judgment dated March 8,
1956, holding that the chattel mortgage in favor of the Associated Insurance and Surety
Co., Inc., was preferred and superior over the real estate mortgage subsequently
executed in favor of Isabel Iya. It was ruled that as the Valinos were not yet the
registered owner of the land on which the building in question was constructed at the
time the first encumbrance was made, the building then was still a personality and a
chattel mortgage over the same was proper. However, as the mortgagors were already
the owner of the land at the time the contract with Isabel Iya was entered into, the
building was transformed into a real property and the real estate mortgage created
thereon was likewise adjudged as proper. It is to be noted in this connection that there is
no evidence on record to sustain the allegation of the spouses Valino that at the time
they mortgaged their house and lot to Isabel Iya, the latter was told or knew that part of
the mortgaged property, i.e., the house, had previously been mortgaged to the surety
company.
The residential building was, therefore, ordered excluded from the foreclosure prayed for
by Isabel Iya, although the latter could exercise the right of a junior encumbrance. So the
spouses Valino were ordered to pay the amount demanded by said mortgagee or in their
default to have the parcel of land subject of the mortgage sold at public auction for the
satisfaction of Iya's claim.
There is no question as to appellant's right over the land covered by the real estate
mortgage; however, as the building constructed thereon has been the subject of 2
mortgages; controversy arise as to which of these encumbrances should receive
preference over the other. The decisive factor in resolving the issue presented by this
appeal is the determination of the nature of the structure litigated upon, for where it be
considered a personality, the foreclosure of the chattel mortgage and the subsequent
sale thereof at public auction, made in accordance with the Chattel Mortgage Law would
be valid and the right acquired by the surety company therefrom would certainly deserve
prior recognition; otherwise, appellant's claim for preference must be granted. The lower
Court, deciding in favor of the surety company, based its ruling on the premise that as
the mortgagors were not the owners of the land on which the building is erected at the
time the first encumbrance was made, said structure partook of the nature of a personal
property and could properly be the subject of a chattel mortgage. We find reason to hold
otherwise, for as this Court, defining the nature or character of a building, has said:
. . . 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 properties
(Art. 415, new Civil Code) could only mean one thing — that a building is by itself
an immovable property . . . Moreover, and in view of the absence of any specific
provision 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. (Lopez vs. Orosa, G.R. Nos. supra, p. 98).
A building certainly cannot be divested of its character of a realty by the fact that the land
on which it is constructed belongs to another. To hold it the other way, the possibility is
not remote that it would result in confusion, for to cloak the building with an uncertain
status made dependent on the ownership of the land, would create a situation where a
permanent fixture changes its nature or character as the ownership of the land changes
hands. In the case at bar, as personal properties could only be the subject of a chattel
mortgage (Section 1, Act 3952) and as obviously the structure in question is not one, the
execution of the chattel mortgage covering said building is clearly invalid and a nullity.
While it is true that said document was correspondingly registered in the Chattel
Mortgage Register of Rizal, this act produced no effect whatsoever for where the interest
conveyed is in the nature of a real property, the registration of the document in the
registry of chattels is merely a futile act. Thus, the registration of the chattel mortgage of
a building of strong materials produce no effect as far as the building is concerned
(Leung Yee vs. Strong Machinery Co., 37 Phil., 644). Nor can we give any consideration
to the contention of the surety that it has acquired ownership over the property in
question by reason of the sale conducted by the Provincial Sheriff of Rizal, for as this
Court has aptly pronounced:
A mortgage creditor who purchases real properties at an extrajudicial foreclosure
sale thereof by virtue of a chattel mortgage constituted in his favor, which
mortgage has been declared null and void with respect to said real properties,
acquires no right thereto by virtue of said sale (De la Riva vs. Ah Keo, 60 Phil.,
899).
Wherefore the portion of the decision of the lower Court in these two cases appealed
from holding the rights of the surety company, over the building superior to that of Isabel
Iya and excluding the building from the foreclosure prayed for by the latter is reversed
and appellant Isabel Iya's right to foreclose not only the land but also the building erected
thereon is hereby recognized, and the proceeds of the sale thereof at public auction (if
the land has not yet been sold), shall be applied to the unsatisfied judgment in favor of
Isabel Iya. This decision however is without prejudice to any right that the Associated
Insurance and Surety Co., Inc., may have against the spouses Adriano and Lucia Valino
on account of the mortgage of said building they executed in favor of said surety
company. Without pronouncement as to costs. It is so ordered.
G.R. No. L-11658            February 15, 1918
LEUNG YEE, plaintiff-appellant,  levied execution upon the building, bought it in at the sheriff's sale on or about the 18th
vs.
FRANK L. STRONG MACHINERY COMPANY and J. G. WILLIAMSON, defendants-
appellees. 
Booram and Mahoney for appellant.
Williams, Ferrier and SyCip for appellees.  claim of title and demanding the release of the property from the levy. Thereafter, upon
CARSON, J.:
The "Compañia Agricola Filipina" bought a considerable quantity of rice-cleaning
machinery company from the defendant machinery company, and executed a chattel
mortgage thereon to secure payment of the purchase price. It included in the mortgage
deed the building of strong materials in which the machinery was installed, without any
reference to the land on which it stood. The indebtedness secured by this instrument not
having been paid when it fell due, the mortgaged property was sold by the sheriff, in
pursuance of the terms of the mortgage instrument, and was bought in by the machinery
company. The mortgage was registered in the chattel mortgage registry, and the sale of
the property to the machinery company in satisfaction of the mortgage was annotated in
the same registry on December 29, 1913. 
A few weeks thereafter, on or about the 14th of January, 1914, the "Compañia Agricola
Filipina" executed a deed of sale of the land upon which the building stood to the
machinery company, but this deed of sale, although executed in a public document, was
not registered. This deed makes no reference to the building erected on the land and
would appear to have been executed for the purpose of curing any defects which might
be found to exist in the machinery company's title to the building under the sheriff's
certificate of sale. The machinery company went into possession of the building at or
about the time when this sale took place, that is to say, the month of December, 1913,
and it has continued in possession ever since. 
At or about the time when the chattel mortgage was executed in favor of the machinery
company, the mortgagor, the "Compañia Agricola Filipina" executed another mortgage to
the plaintiff upon the building, separate and apart from the land on which it stood, to
secure payment of the balance of its indebtedness to the plaintiff under a contract for the
construction of the building. Upon the failure of the mortgagor to pay the amount of the
indebtedness secured by the mortgage, the plaintiff secured judgment for that amount,
of December, 1914, and had the sheriff's certificate of the sale duly registered in the land
registry of the Province of Cavite. 
At the time when the execution was levied upon the building, the defendant machinery
company, which was in possession, filed with the sheriff a sworn statement setting up its
demand of the sheriff, the plaintiff executed an indemnity bond in favor of the sheriff in
the sum of P12,000, in reliance upon which the sheriff sold the property at public auction
to the plaintiff, who was the highest bidder at the sheriff's sale.  the ground assigned by the trial judge. We are of opinion, however, that the judgment
This action was instituted by the plaintiff to recover possession of the building from the
machinery company.  sheriff's certificate of sale in his favor was made in good faith, and that the machinery
The trial judge, relying upon the terms of article 1473 of the Civil Code, gave judgment in
favor of the machinery company, on the ground that the company had its title to the
building registered prior to the date of registry of the plaintiff's certificate.  long prior to the date of the sheriff's sale to the plaintiff.
Article 1473 of the Civil Code is as follows:  It has been suggested that since the provisions of article 1473 of the Civil Code require
If the same thing should have been sold to different vendees, the ownership shall
be transfer to the person who may have the first taken possession thereof in
good faith, if it should be personal property. 
Should it be real property, it shall belong to the person acquiring it who first
recorded it in the registry.
Should there be no entry, the property shall belong to the person who first took
possession of it in good faith, and, in the absence thereof, to the person who
presents the oldest title, provided there is good faith.
The registry her referred to is of course the registry of real property, and it must be
apparent that the annotation or inscription of a deed of sale of real property in a chattel
mortgage registry cannot be given the legal effect of an inscription in the registry of real
property. By its express terms, the Chattel Mortgage Law contemplates and makes
provision for mortgages of personal property; and the sole purpose and object of the
chattel mortgage registry is to provide for the registry of "Chattel mortgages," that is to
say, mortgages of personal property executed in the manner and form prescribed in the
statute. The building of strong materials in which the rice-cleaning machinery was
installed by the "Compañia Agricola Filipina" 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 its character as real property. It follows that neither the original
registry in the chattel mortgage of the building and the machinery installed therein, not
the annotation in that registry of the sale of the mortgaged property, had any effect
whatever so far as the building was concerned. 
We conclude that the ruling in favor of the machinery company cannot be sustained on
must be sustained on the ground that the agreed statement of facts in the court below
discloses that neither the purchase of the building by the plaintiff nor his inscription of the
company must be held to be the owner of the property under the third paragraph of the
above cited article of the code, it appearing that the company first took possession of the
property; and further, that the building and the land were sold to the machinery company
 
"good faith," in express terms, in relation to "possession" and "title," but contain no
express requirement as to "good faith" in relation to the "inscription" of the property on
the registry, it must be presumed that good faith is not an essential requisite of
registration in order that it may have the effect contemplated in this article. We cannot
agree with this contention. It could not have been the intention of the legislator to base
the preferential right secured under this article of the code upon an inscription of title in
bad faith. Such an interpretation placed upon the language of this section would open
wide the door to fraud and collusion. The public records cannot be converted into
instruments of fraud and oppression by one who secures an inscription therein in bad
faith. The force and effect given by law to an inscription in a public record presupposes
the good faith of him who enters such inscription; and rights created by statute, which are
predicated upon an inscription in a public registry, do not and cannot accrue under an
inscription "in bad faith," to the benefit of the person who thus makes the inscription. 
Construing the second paragraph of this article of the code, the supreme court of Spain
held in its sentencia of the 13th of May, 1908, that: 
This rule is always to be understood on the basis of the good faith mentioned in
the first paragraph; therefore, it having been found that the second purchasers
who record their purchase had knowledge of the previous sale, the question is to
be decided in accordance with the following paragraph. (Note 2, art. 1473, Civ.
Code, Medina and Maranon [1911] edition.) 
Although article 1473, in its second paragraph, provides that the title of
conveyance of ownership of the real property that is first recorded in the registry
shall have preference, this provision must always be understood on the basis of
the good faith mentioned in the first paragraph; the legislator could not have
 wished to strike it out and to sanction bad faith, just to comply with a mere
formality which, in given cases, does not obtain even in real disputes between
third persons. (Note 2, art. 1473, Civ. Code, issued by the publishers of the La
Revista de los Tribunales, 13th edition.) 
The agreed statement of facts clearly discloses that the plaintiff, when he bought the
building at the sheriff's sale and inscribed his title in the land registry, was duly notified
that the machinery company had bought the building from plaintiff's judgment debtor; that
it had gone into possession long prior to the sheriff's sale; and that it was in possession
at the time when the sheriff executed his levy. The execution of an indemnity bond by the
plaintiff in favor of the sheriff, after the machinery company had filed its sworn claim of
ownership, leaves no room for doubt in this regard. Having bought in the building at the
sheriff's sale with full knowledge that at the time of the levy and sale the building had
already been sold to the machinery company by the judgment debtor, the plaintiff cannot
be said to have been a purchaser in good faith; and of course, the subsequent inscription
of the sheriff's certificate of title must be held to have been tainted with the same defect.  have led to its discovery had he acted with that measure of precaution which may
Perhaps we should make it clear that in holding that the inscription of the sheriff's
certificate of sale to the plaintiff was not made in good faith, we should not be understood
as questioning, in any way, the good faith and genuineness of the plaintiff's claim against
the "Compañia Agricola Filipina." The truth is that both the plaintiff and the defendant
company appear to have had just and righteous claims against their common debtor. No
criticism can properly be made of the exercise of the utmost diligence by the plaintiff in
asserting and exercising his right to recover the amount of his claim from the estate of
the common debtor. We are strongly inclined to believe that in procuring the levy of
execution upon the factory building and in buying it at the sheriff's sale, he considered
that he was doing no more than he had a right to do under all the circumstances, and it is
highly possible and even probable that he thought at that time that he would be able to
maintain his position in a contest with the machinery company. There was no collusion
on his part with the common debtor, and no thought of the perpetration of a fraud upon
the rights of another, in the ordinary sense of the word. He may have hoped, and
doubtless he did hope, that the title of the machinery company would not stand the test
of an action in a court of law; and if later developments had confirmed his unfounded
hopes, no one could question the legality of the propriety of the course he adopted.
But it appearing that he had full knowledge of the machinery company's claim of
ownership when he executed the indemnity bond and bought in the property at the
sheriff's sale, and it appearing further that the machinery company's claim of ownership
was well founded, he cannot be said to have been an innocent purchaser for value. He
took the risk and must stand by the consequences; and it is in this sense that we find that
he was not a purchaser in good faith.
One who purchases real estate with knowledge of a defect or lack of title in his vendor
cannot claim that he has acquired title thereto in good faith as against the true owner of
the land or of an interest therein; and the same rule must be applied to one who has
knowledge of facts which should have put him upon such inquiry and investigation as
might be necessary to acquaint him with the defects in the title of his vendor. A
purchaser cannot close his eyes to facts which should put a reasonable man upon his
guard, and then claim that he acted in good faith under the belief that there was no
defect in the title of the vendor. His mere refusal to believe that such defect exists, or his
willful closing of his eyes to the possibility of the existence of a defect in his vendor's title,
will not make him an innocent purchaser for value, if afterwards develops that the title
was in fact defective, and it appears that he had such notice of the defects as would
reasonably be acquired of a prudent man in a like situation. Good faith, or lack of it, is in
its analysis a question of intention; but in ascertaining the intention by which one is
actuated on a given occasion, we are necessarily controlled by the evidence as to the
conduct and outward acts by which alone the inward motive may, with safety, be
determined. So it is that "the honesty of intention," "the honest lawful intent," which
constitutes good faith implies a "freedom from knowledge and circumstances which
ought to put a person on inquiry," and so it is that proof of such knowledge overcomes
the presumption of good faith in which the courts always indulge in the absence of proof
to the contrary. "Good faith, or the want of it, is not a visible, tangible fact that can be
seen or touched, but rather a state or condition of mind which can only be judged of by
actual or fancied tokens or signs." (Wilder vs. Gilman, 55 Vt., 504, 505; Cf. Cardenas
Lumber Co. vs. Shadel, 52 La. Ann., 2094-2098; Pinkerton Bros. Co. vs. Bromley, 119
Mich., 8, 10, 17.) 
We conclude that upon the grounds herein set forth the disposing part of the decision
and judgment entered in the court below should be affirmed with costs of this instance
against the appellant. So ordered.
[G.R. No. 156295. September 23, 2003.]
MARCELO R. SORIANO, Petitioner, v. SPOUSES RICARDO and
 ROSALINA GALIT, Respondents.
DECISION
YNARES-SANTIAGO, J.:
Petitioner was issued a writ of possession in Civil Case No. 6643 1 for Sum of
Money by the Regional Trial Court of Balanga, Bataan, Branch 1. The writ of
possession was, however, nullified by the Court of Appeals in CA-G.R. SP No.
65891 2 because it included a parcel of land which was not among those
explicitly enumerated in the Certificate of Sale issued by the Deputy Sheriff,
but on which stand the immovables covered by the said Certificate. Petitioner
contends that the sale of these immovables necessarily encompasses the
land on which they stand.
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Dissatisfied, petitioner filed the instant petition for review on certiorari.
Respondent Ricardo Galit contracted a loan from petitioner Marcelo Soriano,
in the total sum of P480,000.00, evidenced by four promissory notes in the
amount of P120,000.00 each dated August 2, 1996; 3 August 15, 1996; 4
September 4, 1996 5 and September 14, 1996. 6 This loan was secured by a
real estate mortgage over a parcel of land covered by Original Certificate of
Title No. 569. 7 After he failed to pay his obligation, Soriano filed a complaint
for sum of money against him with the Regional Trial Court of Balanga City,
Branch 1, which was docketed as Civil Case No. 6643. 8  area of 30 sq. meters, more or less . . . (constructed on TCT No. T40785);
Respondents, the Spouses Ricardo and Rosalina Galit, failed to file their
answer. Hence, upon motion of Marcelo Soriano, the trial court declared the
spouses in default and proceeded to receive evidence for petitioner Soriano
ex parte.
On July 7, 1997, the Regional Trial Court of Balanga City, Branch 1 rendered
judgment 9 in favor of petitioner Soriano, the dispositive portion of which
reads:chanrob1es virtual 1aw library
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and
against the defendant ordering the latter to pay: chanrob1es virtual 1aw library
1. the plaintiff the amount of P350,000.00 plus 12% interest to be computed
from the dates of maturity of the promissory notes until the same are fully
paid;
2. the plaintiff P20,000.00, as attorney’s fees; and
3. the costs of suit.
SO ORDERED. 10 
The judgment became final and executory. Accordingly, the trial court issued
a writ of execution in due course, by virtue of which, Deputy Sheriff Renato
E. Robles levied on the following real properties of the Galit spouses:
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1. A parcel of land covered by Original Certificate of Title No. T-569
(Homestead Patent No. 14692) situated in the Bo. of Tapulac, Orani, Bataan.
Bounded on the SW, along line 1-2 by Lot No. 3, Cad. 145; containing an
area of THIRTY FIVE THOUSAND SEVEN HUNDRED FIFTY NINE (35,759)
SQUARE METERS, more or less . . .;
2. STORE/HOUSE — CONSTRUCTED on Lot No. 1103 made of strong
materials G.I. roofing situated at Centro I, Orani, Bataan, . . . containing an
3. BODEGA — constructed on Lot 1103, made of strong materials, G.I.
roofing, situated in Centro I, Orani, Bataan, . . . with a floor area of 42.75 sq.
m. more or less . . . . 11 
At the sale of the above-enumerated properties at public auction held on
December 23, 1998, petitioner was the highest and only bidder with a bid
price of P483,000.00. Accordingly, on February 4, 1999, Deputy Sheriff
Robles issued a Certificate of Sale of Execution of Real Property, 12 which
reads: chanrob1es virtual 1aw library
CERTIFICATE OF SALE ON EXECUTION OF REAL PROPERTY  more or less . . .
TO ALL WHO MAY SEE THESE PRESENTS: chanrob1es virtual 1aw library
GREETINGS: chanrob1es virtual 1aw library
I HEREBY that (sic) by virtue of the writ of execution dated October 16, 1998,
issued in the above-entitled case by the HON. BENJAMIN T. VIANZON,
ordering the Provincial Sheriff of Bataan or her authorized Deputy Sheriff to
cause to be made (sic) the sum of P350,000.00 plus 12% interest to be
computed from the date of maturity of the promissory notes until the same
are fully paid; P20,000.00 as attorney’s fees plus legal expenses in the
implementation of the writ of execution, the undersigned Deputy Sheriff sold
at public auction on December 23, 1998 the rights and interests of
defendants Sps. Ricardo and Rosalina Galit, to the plaintiff Marcelo Soriano,
the highest and only bidder for the amount of FOUR HUNDRED EIGHTY
THREE THOUSAND PESOS (P483,000.00, Philippine Currency), the following
real estate properties more particularly described as follows:
ORIGINAL CERTIFICATE OF TITLE NO. T-569
A parcel of land (Homestead Patent No. 14692) situated in the Bo. of
Tapulac, Orani, Bataan, . . . . Bounded on the SW., along line 1-2 by Lot No.
3, Cad. 145, containing an area of THIRTY FIVE THOUSAND SEVEN HUNDRED
FIFTY NINE (35,759) SQUARE METERS, more or less . . .
TAX DEC. NO. — PROPERTY INDEX NO. 018-09-001-02
STOREHOUSE — constructed on Lot 1103, made of strong materials G.I.
roofing situated at Centro I, Orani, Bataan . . . containing an area of 30 sq.
meters, more or less . . . (constructed on TCT No. 40785)
TAX DEC. NO. 86 — PROPERTY INDEX No. 018-09-001-02
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BODEGA — constructed on Lot 1103, made of strong materials G.I. roofing
situated in Centro I, Orani, Bataan, . . . with a floor area of 42.75 sq. m.
IT IS FURTHER CERTIFIED, that the aforesaid highest and lone bidder,
Marcelo Soriano, being the plaintiff did not pay to the Provincial Sheriff of
Bataan the amount of P483,000.00, the sale price of the above described
property which amount was credited to partial/full satisfaction of the
judgment embodied in the writ of execution.
The period of redemption of the above described real properties together with
all the improvements thereon will expire One (1) year from and after the
registration of this Certificate of Sale with the Register of Deeds.
This Certificate of Sheriff’s Sale is issued to the highest and lone bidder,
Marcelo Soriano, under guarantees prescribed by law.
Balanga, Bataan, February 4, 1999.
On April 23, 1999, petitioner caused the registration of the "Certificate of
Sale on Execution of Real Property" with the Registry of Deeds. chanrob1es virtua1 1aw 1ibrary
The said Certificate of Sale registered with the Register of Deeds includes at
the dorsal portion thereof the following entry, not found in the Certificate of
Sale on file with Deputy Sheriff Renato E. Robles: 13 
ORIGINAL CERTIFICATE OF TITLE NO. T-40785 
A parcel of land (Lot No. 1103 of the Cadastral Survey of Orani), with the
improvements thereon, situated in the Municipality of Orani, Bounded on the
NE; by Calle P. Gomez; on the E. by Lot No. 1104; on the SE by Calle
Washington; and on the W. by Lot 4102, containing an area of ONE
HUNDRED THIRTY NINE (139) SQUARE METERS, more or less. All points
referred to are indicated on the plan; bearing true; declination 0 deg. 40’E.,
date of survey, February 191-March 1920.
On February 23, 2001, ten months from the time the Certificate of Sale on
Execution was registered with the Registry of Deeds, petitioner moved 14 for
the issuance of a writ of possession. He averred that the one-year period of
redemption had elapsed without the respondents having redeemed the
properties sold at public auction; thus, the sale of said properties had already
become final. He also argued that after the lapse of the redemption period,
the titles to the properties should be considered, for all legal intents and
purposes, in his name and favor. 15  her (sic) heirs, successors, assigns and all persons claiming rights and
On June 4, 2001, the Regional Trial Court of Balanga City, Branch 1 granted
the motion for issuance of writ of possession. 16 Subsequently, on July 18,
2001, a writ of possession 17 was issued in petitioner’s favor which reads: chanrob1es virtual 1aw library
WRIT OF POSSESSION  18th day of July 2001, at Balanga City.
Mr. Renato E. Robles
Deputy Sheriff  OIC
RTC, Br. 1, Balanga City
Greetings: chanrob1es virtual 1aw library
WHEREAS on February 3, 2001, the counsel for plaintiff filed Motion for the
Issuance of Writ of Possession;
WHEREAS on June 4, 2001, this court issued an order granting the issuance
of the Writ of Possession;
WHEREFORE, you are hereby commanded to place the herein plaintiff Marcelo
Soriano in possession of the property involved in this case situated (sic) more
particularly described as: chanrob1es virtual 1aw library
1. STORE HOUSE constructed on Lot No. 1103 situated at Centro 1, Orani,
Bataan covered by TCT No. 40785;
2. BODEGA constructed on Lot No. 1103 with an area of 42.75 square meters
under Tax Declaration No. 86 situated at Centro 1, Orani, Bataan;
3. Original Certificate of Title No. 40785 with an area of 134 square meters
known as Lot No. 1103 of the Cadastral Survey of Orani. . .
against the mortgagor/former owners Sps. Ricardo and Rosalinda (sic) Galit,
interests adverse to the petitioner and make a return of this writ every thirty
(30) days from receipt hereof together with all the proceedings thereon until
the same has been fully satisfied.
WITNESS THE HONORABLE BENJAMIN T. VIANZON, Presiding Judge, this
(Sgd) GILBERT S. ARGONZA
Respondents filed a petition for certiorari with the Court of Appeals, which
was docketed as CA-G.R. SP No. 65891, assailing the inclusion of the parcel
of land covered by Transfer Certificate of Title No. T-40785 among the list of
real properties in the writ of possession. 18 Respondents argued that said
property was not among those sold on execution by Deputy Sheriff Renato E.
Robles as reflected in the Certificate of Sale on Execution of Real Property.
In opposition, petitioner prayed for the dismissal of the petition because
respondent spouses failed to move for the reconsideration of the assailed
order prior to the filing of the petition. Moreover, the proper remedy against
the assailed order of the trial court is an appeal, or a motion to quash the
writ of possession.
On May 13, 2002, the Court of Appeals rendered judgment as follows: chanrob1es virtual 1aw library
WHEREFORE, the instant petition is hereby GRANTED. Accordingly, the writ of
possession issued by the Regional Trial Court of Balanga City, Branch 1, on
18 July 2001 is declared NULL and VOID.
In the event that the questioned writ of possession has already been
implemented, the Deputy Sheriff of the Regional Trial Court of Balanga City,
Branch 1, and private respondent Marcelo Soriano are hereby ordered to
cause the redelivery of Transfer Certificate of Title No. T-40785 to the
petitioners.
SO ORDERED. 19  do so is lost. It is, however, equally settled that the Rules of Court seek to
Aggrieved, petitioner now comes to this Court maintaining that —
1.) THE SPECIAL CIVIL ACTION OF CERTIORARI UNDER RULE 65 IS NOT THE
PLAIN, SPEEDY AND ADEQUATE REMEDY OF THE RESPONDENTS IN
ASSAILING THE WRIT OF POSSESSION ISSUED BY THE LOWER COURT BUT
THERE WERE STILL OTHER REMEDIES AVAILABLE TO THEM AND WHICH
WERE NOT RESORTED TO LIKE THE FILING OF A MOTION FOR
RECONSIDERATION OR MOTION TO QUASH OR EVEN APPEAL.
2.) THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DECLARING
THE CERTIFICATE OF SALE ON EXECUTION OF REAL PROPERTY AS NULL AND
VOID AND SUBSEQUENTLY THE WRIT OF POSSESSION BECAUSE THE SAME
IS A PUBLIC DOCUMENT WHICH ENJOYS THE PRESUMPTION OF REGULARITY
AND IT CANNOT BE OVERCOME BY A MERE STRANGE FEELING THAT
SOMETHING IS AMISS ON ITS SURFACE SIMPLY BECAUSE THE
TYPEWRITTEN WORDS ON THE FRONT PAGE AND AT THE DORSAL PORTION
THEREOF IS DIFFERENT OR THAT IT IS UNLIKELY FOR THE SHERIFF TO USE
THE DORSAL PORTION OF THE FIRST PAGE BECAUSE THE SECOND PAGE IS
MERELY HALF FILLED AND THE NOTATION ON THE DORSAL PORTION COULD
STILL BE MADE AT THE SECOND PAGE.
On the first ground, petitioner contends that respondents were not without
remedy before the trial court. He points out that respondents could have filed
a motion for reconsideration of the Order dated June 4, 1999, but they did
not do so. Respondents could also have filed an appeal but they, likewise, did
not do so. When the writ of possession was issued, respondents could have
filed a motion to quash the writ. Again they did not. Respondents cannot now
avail of the special civil action for certiorari as a substitute for these
remedies. They should suffer the consequences for sleeping on their rights.
1ibrary
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We disagree.
Concededly, those who seek to avail of the procedural remedies provided by
the rules must adhere to the requirements thereof, failing which the right to
eliminate undue reliance on technical rules and to make litigation as
inexpensive as practicable and as convenient as can be done. 20 This is in
accordance with the primary purpose of the 1997 Rules of Civil Procedure as
provided in Rule 1, Section 6, which reads: chanrob1es virtual 1aw library
Section 6. Construction. — These rules shall be liberally construed in order to
promote their objective of securing a just, speedy and inexpensive
determination of every action and proceeding. 21 
The rules of procedure are not to be applied in a very rigid, technical sense
and are used only to help secure substantial justice. If a technical and rigid
enforcement of the rules is made, their aim would be defeated. 22 They
should be liberally construed so that litigants can have ample opportunity to
prove their claims and thus prevent a denial of justice due to technicalities.
23 Thus, in China Banking Corporation v. Members of the Board of Trustees
of Home Development Mutual Fund, 24 it was held: chanrob1es virtual 1aw library
. . .while certiorari as a remedy may not be used as a substitute for an
appeal, especially for a lost appeal, this rule should not be strictly enforced if
the petition is genuinely meritorious. 25 It has been said that where the rigid
application of the rules would frustrate substantial justice, or bar the
vindication of a legitimate grievance, the courts are justified in exempting a
particular case from the operation of the rules. 26 (Emphasis ours)
Indeed, well-known is the rule that departures from procedure may be
forgiven where they do not appear to have impaired the substantial rights of
the parties. 27 Apropos in this regard is Cometa v. CA, 28 where we said that
— Deeds. The object of scrutiny, however, is not the copy of the Certificate of
There is no question that petitioners were remiss in attending with dispatch
to the protection of their interests as regards the subject lots, and for that
reason the case in the lower court was dismissed on a technicality and no
definitive pronouncement on the inadequacy of the price paid for the levied
properties was ever made. In this regard, it bears stressing that procedural
rules are not to be belittled or dismissed simply because their non-
observance may have resulted in prejudice to a party’s substantive rights as
in this case. Like all rules, they are required to be followed except when only
for the most persuasive of reasons they may be relaxed to relieve a litigant of
an injustice not commensurate with the degree of his thoughtlessness in not
complying with the procedure prescribed. 29 (emphasis and Italics supplied.)
In short, since rules of procedure are mere tools designed to facilitate the
attainment of justice, their strict and rigid application which would result in
technicalities that tend to frustrate rather than promote substantial justice
must always be avoided. 30 Technicality should not be allowed to stand in
the way of equitably and completely resolving the rights and obligations of
the parties. 31  Sale. Thus, it has been held that while a public document like a notarized
Eschewing, therefore, the procedural objections raised by petitioner, it
behooves us to address the issue of whether or not the questioned writ of
possession is in fact a nullity considering that it includes real property not
expressly mentioned in the Certificate of Sale of Real Property.
Petitioner, in sum, dwells on the general proposition that since the certificate
of sale is a public document, it enjoys the presumption of regularity and all
entries therein are presumed to be done in the performance of regular
functions.
The argument is not persuasive.
There are actually two (2) copies of the Certificate of Sale on Execution of
Real Properties issued on February 4, 1999 involved, namely: (a) copy which
is on file with the deputy sheriff; and (b) copy registered with the Registry of
Sale on Execution of Real Properties issued by the deputy sheriff on February
4, 1999, 32 but the copy thereof subsequently registered by petitioner with
the Registry of Deeds on April 23, 1999, 33 which included an entry on the
dorsal portion of the first page thereof describing a parcel of land covered by
OCT No. T-40785 not found in the Certificate of Sale of Real Properties on file
with the sheriff.
True, public documents by themselves may be adequate to establish the
presumption of their validity. However, their probative weight must be
evaluated not in isolation but in conjunction with other evidence adduced by
the parties in the controversy, much more so in this case where the contents
of a copy thereof subsequently registered for documentation purposes is
being contested. No reason has been offered how and why the questioned
entry was subsequently intercalated in the copy of the certificate of sale
subsequently registered with the Registry of Deeds. Absent any satisfactory
explanation as to why said entry was belatedly inserted, the surreptitiousness
of its inclusion coupled with the furtive manner of its intercalation casts
serious doubt on the authenticity of petitioner’s copy of the Certificate of
deed of sale is vested with the presumption of regularity, this is not a
guarantee of the validity of its contents. 34 
It must be pointed out in this regard that the issuance of a Certificate of Sale
is an end result of judicial foreclosure where statutory requirements are
strictly adhered to; where even the slightest deviations therefrom will
invalidate the proceeding 35 and the sale. 36 Among these requirements is
an explicit enumeration and correct description of what properties are to be
sold stated in the notice. The stringence in the observance of these
requirements is such that an incorrect title number together with a correct
technical description of the property to be sold and vice versa is deemed a
substantial and fatal error which results in the invalidation of the sale. 37 
The certificate of sale is an accurate record of what properties were actually
sold to satisfy the debt. The strictness in the observance of accuracy and
correctness in the description of the properties renders the enumeration in
the certificate exclusive. Thus, subsequently including properties which have
not been explicitly mentioned therein for registration purposes under
suspicious circumstances smacks of fraud. The explanation that the land on
which the properties sold is necessarily included and, hence, was belatedly
typed on the dorsal portion of the copy of the certificate subsequently
registered is at best a lame excuse unworthy of belief.
The appellate court correctly observed that there was a marked difference in
the appearance of the typewritten words appearing on the first page of the
copy of the Certificate of Sale registered with the Registry of Deeds 38 and
those appearing at the dorsal portion thereof. Underscoring the irregularity of
the intercalation is the clearly devious attempt to let such an insertion pass
unnoticed by typing the same at the back of the first page instead of on the
second page which was merely half-filled and could accommodate the entry
with room to spare.
The argument that the land on which the buildings levied upon in execution is
necessarily included is, likewise, tenuous. Article 415 of the Civil Code
provides: chanrob1es virtual 1aw library
ART. 415. The following are immovable property: chanrob1es virtual 1aw library
(1) Land, buildings, roads and constructions of all kinds adhered to the soil:
library
x          x           x
(3) Everything 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;
(4) Statues, reliefs, paintings or other objects for use or ornamentation,
placed in buildings or on lands by the owner of the immovable in such a
manner that it reveals the intention to attach them permanently to the
tenements;
(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;
chanrob1es virtua1 1aw 1ibrary (6) Animal houses, pigeon houses, beehives, fish ponds or breeding places of
similar nature, in case their owner has placed them or preserves them with
the intention to have them permanently attached to the land, and forming a
permanent part of it; the animals in these places are also included;
x          x           x
(9) Docks and structures which, though floating, are intended by their nature
and object to remain at a fixed place on a river, lake or coast;
x       x       x.
The foregoing provision of the Civil Code enumerates land and buildings
separately. This can only mean that a building is, by itself, considered
immovable. 39 Thus, it has been held that —
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. . . while it is true that a mortgage of land necessarily includes, in the
absence of stipulation of the improvements thereon, buildings, still a building
by itself may be mortgaged apart from the land on which it has been built.
Such mortgage would be still a real estate mortgage for the building would
still be considered immovable property even if dealt with separately and apart
from the land. 40 (emphasis and Italics supplied)
In this case, considering that what was sold by virtue of the writ of execution
issued by the trial court was merely the storehouse and bodega constructed
on the parcel of land covered by Transfer Certificate of Title No. T-40785,
which by themselves are real properties of respondents spouses, the same
should be regarded as separate and distinct from the conveyance of the lot
on which they stand.
WHEREFORE, in view of all the foregoing, the petition is hereby DENIED for
lack of merit. The Decision dated May 13, 2002 of the Court of Appeals in CA-
G.R. SP No. 65891, which declared the writ of possession issued by the
Regional Trial Court of Balanga City, Branch 1, on July 18, 2001, null and
void, is AFFIRMED in toto.
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SO ORDERED.