Evangelista vs. Alto Surety & Ins. Co., Inc.

A house constructed by a lessee on land belonging to another is immovable or real property for purposes of attachment and execution, regardless of any private contract treating it as personal property; attachment is therefore properly levied by filing with the Register of Deeds under Rule 59, Section 7(a) of the Rules of Court.

A dispute arose between two judgment creditors over a house built by Ricardo Rivera on land he leased in Manila. Evangelista obtained a writ of attachment against the house in 1949, while Alto Surety later purchased the same house at a sheriff's sale in 1950 pursuant to a different judgment. The central conflict involved determining the nature of the property to resolve which creditor held priority.

• CFI Manila: Civil Case No. 8235 filed by Evangelista against Rivera on June 4, 1949; writ of attachment obtained same day and filed with Register of Deeds on June 8, 1949; judgment rendered for Evangelista; house sold at auction to Evangelista on October 8, 1951 (definite deed October 22, 1952); judgment for Evangelista in the present action to establish title and recover possession (filed June 13, 1953)
• Court of Appeals: Reversed the CFI decision, absolving Alto Surety on the ground that the house was personal property and the attachment was invalid for non-compliance with Rule 59, Section 7(c) and (e)
• Supreme Court: Granted certiorari, reversed the CA, and affirmed the CFI decision

• Santos Evangelista (petitioner) instituted a collection suit against Ricardo Rivera in the CFI of Manila on June 4, 1949, and secured a writ of attachment
• The writ was levied upon a house built by Rivera on leased land in Manila by filing a copy of the writ and notice of attachment with the Office of the Register of Deeds on June 8, 1949
• Judgment was rendered in favor of Evangelista; on October 8, 1951, he purchased the house at public auction pursuant to execution, receiving the definite deed on October 22, 1952
• Unbeknownst to Evangelista initially, Alto Surety (respondent) had obtained a definite deed of sale for the same house on May 10, 1952, as highest bidder at an auction held on September 29, 1950 (from Civil Case No. 6268)
• Rivera refused to surrender possession to Evangelista, claiming Alto Surety was the true owner
• Evangelista filed an action to establish his title and recover possession against both Alto Surety and Rivera
• The CFI ruled for Evangelista; the CA reversed, holding the house was "ostensibly personal property" and the attachment procedurally defective

• The house is immovable property by nature, having been constructed on land (even if leased), and thus subject to attachment under Rule 59, Section 7(a) by filing with the Register of Deeds
• The writ of attachment was duly registered on June 8, 1949, prior to Alto Surety's purchase, creating a valid lien and preferential right
• The issue of lack of service of the writ on Rivera was never raised in the lower courts; respondents impliedly admitted service through their pleadings and conduct by focusing their defense on the alleged superiority of Alto Surety's title and the inadequacy of consideration
• The CA gravely abused discretion in making a factual finding (lack of service) that was not raised as an issue and was contrary to the implied admissions of the parties

• The house is personal property, "ostensibly" so, and capable of manual delivery; therefore, attachment should have been effected under Rule 59, Section 7(c) (taking custody) or Section 7(e) (leaving copy with debtor), not by mere registration
• The attachment was void because the sheriff failed to serve copies of the order and notice on the occupant (Rivera) as required by Section 7(a) for real property
• Alto Surety is a buyer in good faith and for value who first obtained possession
• Under Article 1544 of the Civil Code (double sales), the purchaser who first obtains possession in good faith prevails if the sale is unregistered; there being no registry for houses on leased land, Alto Surety's possession gives it priority
• The registration of Evangelista's attachment is invalid because there is no registry of transactions covering houses erected on land belonging to or leased from another

• Procedural Issues: Whether the CA committed grave abuse of discretion in finding that copies of the writ and notice of attachment were not served on Rivera, when this issue was not raised in the pleadings or briefs below and was impliedly admitted by the defendants' conduct.
• Substantive Issues: Whether a house built by a lessee on leased land is real or personal property for purposes of attachment under the Rules of Court.

• Procedural: Yes, the CA committed grave abuse of discretion. Neither the pleadings in the CFI nor the briefs in the CA raised the issue of lack of service of the writ on Rivera. Both Rivera and Alto Surety impliedly admitted service through their answers (which challenged the validity of the attachment on other grounds) and their conduct throughout the proceedings. The CA's finding was beyond the issues raised, contrary to the admissions of the parties, and unsupported by evidence.
• Substantive: The house is immovable property. A true building erected on soil is immovable property whether built by the owner, usufructuary, or lessee. While parties may by contract treat a house as personal property (as in a chattel mortgage), this convention binds only the contracting parties based on estoppel and does not affect strangers or alter the nature of the property for purposes of attachment. Attachment affects the public and third persons; the procedure for levy must follow the statutory classification of the property (real or personal), not private contractual characterizations. Since the house is real property, Evangelista's attachment by filing with the Register of Deeds under Rule 59, Section 7(a) was valid and created a preferential lien superior to Alto Surety's claim.

• Immovable Property by Nature (Buildings) — A building firmly attached to the land is immovable property regardless of whether the builder is the landowner, usufructuary, or lessee. The SC applied Leung Yee v. Strong Machinery Co. and Ladera v. Hodges to affirm that Rivera's house was real property.
• Limitation of Chattel Mortgage Characterization — Parties to a chattel mortgage may agree to treat a house as personal property, but this is binding only between them (based on estoppel) and does not apply to strangers or for purposes of attachment/execution. The SC cited Manarang v. Ofilada to emphasize that rules on execution are for public guidance and must follow the general classification of property, not private agreements.
• Public Policy on Attachment Procedures — The form of proceedings for attachment is suited to the character of the property as generally known (real or personal), not to the character the parties desire to give it. This ensures definite, orderly regulation for public officials and prevents confusion.
• Implied Admission by Conduct — Issues not raised in pleadings or briefs and impliedly admitted by a party's conduct and alternative defenses are deemed admitted and cannot be raised for the first time to overturn a judgment.

• "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."
• "The parties to a deed of chattel mortgage may agree to consider a house as personal property for purposes of said contract... However, this view is good only insofar as the contracting parties are concerned. It is based, partly, upon the principle of estoppel. Neither this principle, nor said view, is applicable to strangers to said contract."
• "The form of proceedings prescribed for each kind of property is suited to its character, not to the character which the parties have given to it or desire to give it... The regulations were never intended to suit the consideration that parties may have privately given to the property levied upon."

• Leung Yee v. Strong Machinery Co., 37 Phil. 644 — Controlling precedent establishing that buildings are immovable property regardless of who erects them (owner, usufructuary, or lessee)
• Ladera v. Hodges, 48 Off. Gaz. 5374 — Followed; reaffirmed that buildings are immovable property
• Manarang v. Ofilada, 99 Phil. 108 — Controlling precedent holding that a house subject to chattel mortgage remains real property for purposes of execution sale; emphasized public policy requiring adherence to statutory property classifications in enforcement proceedings
• Luna v. Encarnacion, 48 Off. Gaz. 2664; Standard Oil Co. of New York v. Jaramillo, 44 Phil. 630; De Jesus v. Juan Dee Co., Inc., 72 Phil. 464 — Cited for the principle that parties may contractually treat a house as personal property (but limited to inter partes effect)

• Rule 59, Section 7(a), Rules of Court — Governs attachment of real property by filing with the Register of Deeds and leaving a copy with the occupant; applied to validate Evangelista's attachment
• Rule 59, Section 7(c) and (e), Rules of Court — Governs attachment of personal property (capable of manual delivery and not capable of manual delivery, respectively); the CA erroneously applied these provisions
• Article 1544, Civil Code of the Philippines — Governing double sales; invoked by respondent but held inapplicable because Evangelista's prior valid attachment created a lien, not merely a contractual sale