Primary Holding

A house constructed on leased land is considered immovable property, not personal property, for purposes of attachment and execution, regardless of agreements between private parties treating it as chattel. Therefore, the rules for attaching immovable property must be followed.

Background

Santos Evangelista sued Ricardo Rivera for a sum of money and obtained a writ of attachment on a house Rivera built on leased land. Later, Alto Surety & Insurance Co., Inc. claimed ownership of the same house based on a prior auction sale resulting from a separate case against Rivera. Evangelista sued to establish his title and gain possession.

Facts

• 1. Ricardo Rivera built a house on land he leased in Manila.
• 2. Evangelista sued Rivera for debt and attached the house. The attachment was registered with the Register of Deeds.
• 3. Evangelista bought the house at a public auction following his successful suit against Rivera.
• 4. Prior to Evangelista's auction purchase, Alto Surety had also won a case against Rivera and purchased the same house at an earlier auction, also executing a definite deed of sale.
• 5. Alto Surety argued their sale was prior and the house was personal property, making Evangelista's attachment improper and ineffective.
• 6. Evangelista claimed the house was immovable property and his attachment was prior and valid, giving him superior right.
• 7. Rivera initially refused to surrender possession to Evangelista claiming Alto Surety’s ownership.

Arguments of the Petitioners

• 1. Evangelista’s attachment was valid and prior in time to Alto Surety’s purchase.
• 2. The house, being a building, is inherently immovable property, regardless of any agreement to treat it as personal property in a chattel mortgage context.
• 3. The attachment was properly executed for immovable property by registering it with the Register of Deeds.
• 4. Alto Surety did not validly acquire the house because Evangelista’s prior attachment created a preferential right.

Arguments of the Respondents

• 1. Alto Surety’s purchase and deed of sale were prior to Evangelista’s sale, thus giving them a better right.
• 2. The house should be considered personal property for purposes of attachment, or at least for their prior sale to be considered valid.
• 3. Evangelista’s attachment was improperly executed as if it were immovable property, but it should have been treated as personal property, requiring manual seizure.
• 4. Even if the house was immovable, Evangelista's attachment was invalid because Rivera was allegedly not served with copies of the writ and notice of attachment.
• 5. In case of double sale, Alto Surety obtained possession first in good faith and should be favored under Article 1544 of the Civil Code, arguing Evangelista's attachment was unregistered in a supposed registry for houses on leased land.

Issues

• 1. Is a house, constructed by a lessee on leased land, considered movable or immovable property for purposes of attachment and execution?
• 2. Was Evangelista’s writ of attachment properly executed if the house is considered immovable property?
• 3. Did the Court of Appeals err in finding that Rivera was not served with copies of the writ and notice of attachment?
• 4. Does the principle of chattel mortgage agreement between parties affect the nature of the house as real property with respect to third parties like attaching creditors?

Ruling

• 1. The Supreme Court ruled that the house is immovable property. It is not personal property, much less a debt or credit.
• 2. The Court rejected the Court of Appeals' finding that Rivera was not served with copies of the writ and notice of attachment, stating this issue was not raised in pleadings or prior briefs, and was contrary to implied admissions and conduct of the parties. The Court deemed this finding a misapprehension and grave abuse of discretion.
• 3. The Court affirmed the doctrine that a true building is immovable property regardless of who erected it.
• 4. Agreements between private parties to treat immovable property as personal property in chattel mortgages are not binding on third parties and do not alter the inherent nature of the property for purposes of execution and attachment.
• 5. Evangelista’s attachment, being prior and properly executed for immovable property, was valid and created a preferential right, making his title superior to Alto Surety’s.

Doctrines

• 1. Doctrine of Immovable Property: A true building is inherently immovable property, whether erected by the landowner, usufructuary, or lessee.
• 2. Principle of Estoppel (Limited Application): While parties to a chattel mortgage can agree to treat a house as personal property, this agreement is based on estoppel and is only binding between them, not against third parties like attaching creditors.
• 3. Rules of Attachment for Immovable Property: Attachment of immovable property is properly executed by filing a copy of the order and notice with the Register of Deeds, as Evangelista did.

Key Excerpts

• 1. "a true building (not merely superimposed on the soil) is immovable or real property, whether it is erected by the owner of the land or by a usufructuary or lessee."
• 2. "When the rules speak of personal property, property which is ordinarily so considered is meant; and when real property is spoken of, it means properly which is generally known, as real property. The regulations were never intended to suit the consideration that parties may have privately given to the property levied upon."

Precedents Cited

• 1. Laddera vs. Hodges (48 Off. Gaz., 5374): Cited to support the doctrine that a true building is immovable property.
• 2. Leung Yee vs. Strong Machinery Company (37 Phil., 644): Also cited to support the doctrine of a house being immovable property.
• 3. Manarang vs. Ofilada (99 Phil., 108): Used to illustrate that while parties can treat a house as personal property in a chattel mortgage, this does not bind third parties, and for purposes of execution, the inherent nature of the property prevails.
• 4. Luna vs. Encarnacion (48 Off. Gaz., 2664): Acknowledged as an exception where parties in a chattel mortgage can treat a house as personal property for that specific contract, but distinguished from the present case concerning attachment and third parties.
• 5. Standard Oil Co. of New York vs. Jaramillo (44 Phil., 630): Similar to Luna vs. Encarnacion, regarding chattel mortgage agreements.
• 6. De Jesus vs. Juan Dee Co., Inc. (72 Phil., 464): Same point regarding chattel mortgage agreements.
• 7. Republic vs. Ceniza (90 Phil., 544): Used to reinforce the doctrine of immovability of buildings.

Statutory and Constitutional Provisions

• 1. Rule 59, Section 7, Rules of Court: Discussed subsections (a), (c), and (e) regarding methods of attachment, specifically for real and personal property.
• 2. Rule 39, Section 16, Rules of Court: Mentioned in relation to the nature of the house as real property in the context of execution sales.
• 3. Article 1544, Civil Code of the Philippines: Cited by respondent regarding double sales of immovable property, but ultimately deemed inapplicable as the core issue was not double sale but proper attachment and nature of the property.