Haystack: Manarang v. Ofilada (GR L-8133, 18 May 1956)

Manarang v. Ofilada
[G.R. No. L-8133. May 18, 1956.]
En Banc, Labrador (J): 10 concur

Facts: On 8 September 951, Lucia D. Manarang obtained a loan of P200 from Ernesto Esteban, and to secure its payment she executed a chattel mortgage over a house of mixed materials erected on a lot on Alvarado Street, Manila. As Manarang did not pay the loan as agreed upon, Esteban brought an action against her in the municipal court of Manila for its recovery, alleging that the loan was secured by a chattel mortgage on her property. Judgment having been entered in Esteban's favor, execution was issued against the same property mortgaged. Before the property could be sold Manarang offered to pay the sum of P277 (amount of the judgment of P250, the interest thereon, the costs, and the sheriff's fees), but the sheriff refused the tender unless the additional amount of P260 representing the publication of the notice of sale in two newspapers be paid also. So the Manarangs brought the suit to compel the sheriff to accept the amount of P277 as full payment of the judgment and to annul the published notice of sale.

It is to be noted that in the complaint filed in the municipal court, a copy of the chattel mortgage is attached and mention made of its registration, and in the prayer request is made that the house mortgaged be sold at public auction to satisfy the debt. It is also important to note that the house mortgaged was levied upon at Manarang's request.

The case facts do not mention circumstances of the case as decided in the municipal court to elevate the case to the Court of First Instance

The Court of First Instance denied the petition, holding that although real property may sometimes be considered as personal property, the sheriff was in duty bound to cause the publication of the notice of its sale in order to make the sale valid or to prevent its being declared void or voidable.

The Supreme Court affirmed the judgment appealed, with costs.

1. Building is real property, general rule; exceptions
The general principle of law is that a building permanently fixed to the freehold becomes a part of it, that prima facie a house is real estate, belonging to the owner of the land on which it stands, even though it was erected against the will of the landowner, or without his consent. The general rule does not apply (1) where the improvement is made with the consent of the landowner, and pursuant to an understanding either expressed or implied that it shall remain personal property, or (2) to a building which is wrongfully removed from the land and placed on the land of the person removing it.

2. Criterion to determine property as personal or real
Among the principal criteria for determining whether property remains personally or becomes realty are annexation to the soil, either actual or construction, and the intention of the parties.

3. Personal property may retain character by agreement
Personal property may retain its character as such where it is so agreed by the parties interested even though annexed to the realty, or where it is affixed in the soil to be used for a particular purpose for a short period and then removed as soon as it has served its purpose.

4. Building of mixed materials may be subject of a chattel mortgage
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. (see Luna vs. Encarnacion 48 OG No. 7, p. 2664; Standard Oil vs. Jaranillo, 44 Phil., 630; and De Jesus vs. Guan Dee Co. 72 Phil., 464). The matter depends on the circumstances and the intention of the parties.

5. Real and personal property are real and personal property as they mean ordinarily under the Rules of Execution
The rules on execution do not allow, and should not be interpreted as to allow, the special consideration that parties to a contract may have desired to impart to real estate as personal property, when they are not ordinarily so. Sales on execution affect the public and third persons. The regulation governing sales on execution are for public officials to follow. The form of proceedings prescribed for each kind of property is suited to its character, not to the character which the parties have given to it or desire to give it. The regulations were never intended to suit the consideration that parties, may have privately given to the property levied upon. Enforcement of regulations would be difficult were the convenience or agreement of private parties to determine or govern the nature of the proceedings.

6. House of mixed material levied upon on execution is real property
The house of mixed materials levied upon on execution, although subject of a contract of chattel mortgage between the owner and a third person, is real property within the purview of Rule 39, section 16, of the Rules of Court as it has become a permanent fixture on the land, which is real property. (42 Am. Jur. 199-200; Leung Yee vs. Strong Machinery Co., 37 Phil., 644; Republic vs. Ceniza, et al., 90 Phil., 544; Ladera, et al. vs. Hodges [C. A], 48 OG 5374.).

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