G.R. No. L-50008 August 31, 1987PRUDENTIAL BANK,petitioner,vs.HONORABLE DOMINGO D. PANIS, Presiding Judge of Branch III, Court of First Instance of Zambales and Olongapo City; FERNANDO MAGCALE & TEODULA BALUYUT-MAGCALE,respondents.PARAS,J.:This is a petition for review on certiorari of the November 13, 1978 Decision*of the then Court of First Instance of Zambales and Olongapo City in Civil Case No. 2443-0 entitled "Spouses Fernando A. Magcale and Teodula Baluyut-Magcale vs. Hon. Ramon Y. Pardo and Prudential Bank" declaring that the deeds of real estate mortgage executed by respondent spouses in favor of petitioner bank are null and void.The undisputed facts of this case by stipulation of the parties are as follows:... on November 19, 1971, plaintiffs-spouses Fernando A. Magcale and Teodula Baluyut Magcale secured a loan in the sum of P70,000.00 from the defendant Prudential Bank. To secure payment of this loan, plaintiffs executed in favor of defendant on the aforesaid date a deed of Real Estate Mortgage over the following described properties:l. A 2-STOREY, SEMI-CONCRETE, residential building with warehouse spaces containing a total floor area of 263 sq. meters, more or less, generally constructed of mixed hard wood and concrete materials, under a roofing of cor. g. i. sheets; declared and assessed in the name of FERNANDO MAGCALE under Tax Declaration No. 21109, issued by the Assessor of Olongapo City with an assessed value of P35,290.00. This building is the only improvement of the lot.2. THE PROPERTY hereby conveyed by way of MORTGAGE includes the right of occupancy on the lot where the above property is erected, and more particularly described and bounded, as follows:A first class residential land Identffied as Lot No. 720, (Ts-308, Olongapo Townsite Subdivision) Ardoin Street, East Bajac-Bajac, Olongapo City, containing an area of 465 sq. m. more or less, declared and assessed in the name of FERNANDO MAGCALE under Tax Duration No. 19595 issued by the Assessor of Olongapo City with an assessed value of P1,860.00; bounded on theNORTH: By No. 6, Ardoin StreetSOUTH: By No. 2, Ardoin StreetEAST: By 37 Canda Street, andWEST: By Ardoin Street.All corners of the lot marked by conc. cylindrical monuments of the Bureau of Lands as visible limits. ( Exhibit "A, " also Exhibit "1" for defendant).Apart from the stipulations in the printed portion of the aforestated deed of mortgage, there appears a rider typed at the bottom of the reverse side of the document under the lists of the properties mortgaged which reads, as follows:AND IT IS FURTHER AGREED that in the event the Sales Patent on the lot applied for by the Mortgagors as herein stated is released or issued by the Bureau of Lands, the Mortgagors hereby authorize the Register of Deeds to hold the Registration of same until this Mortgage is cancelled, or to annotate this encumbrance on the Title upon authority from the Secretary of Agriculture and Natural Resources, which title with annotation, shall be released in favor of the herein Mortgage.From the aforequoted stipulation, it is obvious that the mortgagee (defendant Prudential Bank) was at the outset aware of the fact that the mortgagors (plaintiffs) have already filed a Miscellaneous Sales Application over the lot, possessory rights over which, were mortgaged to it.Exhibit "A" (Real Estate Mortgage) was registered under the Provisions of Act 3344 with the Registry of Deeds of Zambales on November 23, 1971.On May 2, 1973, plaintiffs secured an additional loan from defendant Prudential Bank in the sum of P20,000.00. To secure payment of this additional loan, plaintiffs executed in favor of the said defendant another deed of Real Estate Mortgage over the same properties previously mortgaged in Exhibit "A." (Exhibit "B;" also Exhibit "2" for defendant). This second deed of Real Estate Mortgage was likewise registered with the Registry of Deeds, this time in Olongapo City, on May 2,1973.On April 24, 1973, the Secretary of Agriculture issued Miscellaneous Sales Patent No. 4776 over the parcel of land, possessory rights over which were mortgaged to defendant Prudential Bank, in favor of plaintiffs. On the basis of the aforesaid Patent, and upon its transcription in the Registration Book of the Province of Zambales, Original Certificate of Title No. P-2554 was issued in the name of Plaintiff Fernando Magcale, by the Ex-Oficio Register of Deeds of Zambales, on May 15, 1972.For failure of plaintiffs to pay their obligation to defendant Bank after it became due, and upon application of said defendant, the deeds of Real Estate Mortgage (Exhibits "A" and "B") were extrajudicially foreclosed. Consequent to the foreclosure was the sale of the properties therein mortgaged to defendant as the highest bidder in a public auction sale conducted by the defendant City Sheriff on April 12, 1978 (Exhibit "E"). The auction sale aforesaid was held despite written request from plaintiffs through counsel dated March 29, 1978, for the defendant City Sheriff to desist from going with the scheduled public auction sale (Exhibit "D")." (Decision, Civil Case No. 2443-0, Rollo, pp. 29-31).Respondent Court, in a Decision dated November 3, 1978 declared the deeds of Real Estate Mortgage as null and void (Ibid., p. 35).On December 14, 1978, petitioner filed a Motion for Reconsideration (Ibid., pp. 41-53), opposed by private respondents on January 5, 1979 (Ibid., pp. 54-62), and in an Order dated January 10, 1979 (Ibid., p. 63), the Motion for Reconsideration was denied for lack of merit. Hence, the instant petition (Ibid., pp. 5-28).The first Division of this Court, in a Resolution dated March 9, 1979, resolved to require the respondents to comment (Ibid., p. 65), which order was complied with the Resolution dated May 18,1979, (Ibid., p. 100), petitioner filed its Reply on June 2,1979 (Ibid., pp. 101-112).Thereafter, in the Resolution dated June 13, 1979, the petition was given due course and the parties were required to submit simultaneously their respective memoranda. (Ibid., p. 114).On July 18, 1979, petitioner filed its Memorandum (Ibid., pp. 116-144), while private respondents filed their Memorandum on August 1, 1979 (Ibid., pp. 146-155).In a Resolution dated August 10, 1979, this case was considered submitted for decision (Ibid., P. 158).In its Memorandum, petitioner raised the following issues:1. WHETHER OR NOT THE DEEDS OF REAL ESTATE MORTGAGE ARE VALID; AND2. WHETHER OR NOT THE SUPERVENING ISSUANCE IN FAVOR OF PRIVATE RESPONDENTS OF MISCELLANEOUS SALES PATENT NO. 4776 ON APRIL 24, 1972 UNDER ACT NO. 730 AND THE COVERING ORIGINAL CERTIFICATE OF TITLE NO. P-2554 ON MAY 15,1972 HAVE THE EFFECT OF INVALIDATING THE DEEDS OF REAL ESTATE MORTGAGE. (Memorandum for Petitioner, Rollo, p. 122).This petition is impressed with merit.The pivotal issue in this case is whether or not a valid real estate mortgage can be constituted on the building erected on the land belonging to another.The answer is in the affirmative.In the enumeration of properties under Article 415 of the Civil Code of the Philippines, this Court ruled that, "it is obvious that the inclusion of "building" separate and distinct from the land, in said provision of law can only mean that a building is by itself an immovable property." (Lopez vs. Orosa, Jr., et al., L-10817-18, Feb. 28, 1958; Associated Inc. and Surety Co., Inc. vs. Iya, et al., L-10837-38, May 30,1958).Thus, 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 a 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 (Leung Yee vs. Strong Machinery Co., 37 Phil. 644). In the same manner, this Court has also established that possessory rights over said properties before title is vested on the grantee, may be validly transferred or conveyed as in a deed of mortgage (Vda. de Bautista vs. Marcos, 3 SCRA 438 [1961]).Coming back to the case at bar, the records show, as aforestated that the original mortgage deed on the 2-storey semi-concrete residential building with warehouse and on the right of occupancy on the lot where the building was erected, was executed on November 19, 1971 and registered under the provisions of Act 3344 with the Register of Deeds of Zambales on November 23, 1971. Miscellaneous Sales Patent No. 4776 on the land was issued on April 24, 1972, on the basis of which OCT No. 2554 was issued in the name of private respondent Fernando Magcale on May 15, 1972. It is therefore without question that the original mortgage was executed before the issuance of the final patent and before the government was divested of its title to the land, an event which takes effect only on the issuance of the sales patent and its subsequent registration in the Office of the Register of Deeds (Visayan Realty Inc. vs. Meer, 96 Phil. 515; Director of Lands vs. De Leon, 110 Phil. 28; Director of Lands vs. Jurado, L-14702, May 23, 1961; Pena "Law on Natural Resources", p. 49). Under the foregoing considerations, it is evident that the mortgage executed by private respondent on his own building which was erected on the land belonging to the government is to all intents and purposes a valid mortgage.As to restrictions expressly mentioned on the face of respondents' OCT No. P-2554, it will be noted that Sections 121, 122 and 124 of the Public Land Act, refer to land already acquired under the Public Land Act, or any improvement thereon and therefore have no application to the assailed mortgage in the case at bar which was executed before such eventuality. Likewise, Section 2 of Republic Act No. 730, also a restriction appearing on the face of private respondent's title has likewise no application in the instant case, despite its reference to encumbrance or alienation before the patent is issued because it refers specifically to encumbrance or alienation on the land itself and does not mention anything regarding the improvements existing thereon.But it is a different matter, as regards the second mortgage executed over the same properties on May 2, 1973 for an additional loan of P20,000.00 which was registered with the Registry of Deeds of Olongapo City on the same date. Relative thereto, it is evident that such mortgage executed after the issuance of the sales patent and of the Original Certificate of Title, falls squarely under the prohibitions stated in Sections 121, 122 and 124 of the Public Land Act and Section 2 of Republic Act 730, and is therefore null and void.Petitioner points out that private respondents, after physically possessing the title for five years, voluntarily surrendered the same to the bank in 1977 in order that the mortgaged may be annotated, without requiring the bank to get the prior approval of the Ministry of Natural Resources beforehand, thereby implicitly authorizing Prudential Bank to cause the annotation of said mortgage on their title.However, the Court, in recently ruling on violations of Section 124 which refers to Sections 118, 120, 122 and 123 of Commonwealth Act 141, has held:... Nonetheless, we apply our earlier rulings because we believe that as inpari delictomay not be invoked to defeat the policy of the State neither may the doctrine of estoppel give a validating effect to a void contract. Indeed, it is generally considered that as between parties to a contract, validity cannot be given to it by estoppel if it is prohibited by law or is against public policy (19 Am. Jur. 802). It is not within the competence of any citizen to barter away what public policy by law was to preserve (Gonzalo Puyat & Sons, Inc. vs. De los Amas and Alinosupra). ... (Arsenal vs. IAC, 143 SCRA 54 [1986]).This pronouncement covers only the previous transaction already alluded to and does not pass upon any new contract between the parties (Ibid), as in the case at bar. It should not preclude new contracts that may be entered into between petitioner bank and private respondents that are in accordance with the requirements of the law. After all, private respondents themselves declare that they are not denying the legitimacy of their debts and appear to be open to new negotiations under the law (Comment; Rollo, pp. 95-96). Any new transaction, however, would be subject to whatever steps the Government may take for the reversion of the land in its favor.PREMISES CONSIDERED, the decision of the Court of First Instance of Zambales & Olongapo City is hereby MODIFIED, declaring that the Deed of Real Estate Mortgage for P70,000.00 is valid but ruling that the Deed of Real Estate Mortgage for an additional loan of P20,000.00 is null and void, without prejudice to any appropriate action the Government may take against private respondents.SO ORDERED.MAKATI LEASING and FINANCE CORPORATION,petitioner,vs.WEAREVER TEXTILE MILLS, INC., and HONORABLE COURT OF APPEALS,respondents.Loreto C. Baduan for petitioner.Ramon D. Bagatsing & Assoc. (collaborating counsel) for petitioner.Jose V. Mancella for respondent.DE CASTRO,J.:Petition for review on certiorari of the decision of the Court of Appeals (now Intermediate Appellate Court) promulgated on August 27, 1981 in CA-G.R. No. SP-12731, setting aside certain Orders later specified herein, of Judge Ricardo J. Francisco, as Presiding Judge of the Court of First instance of Rizal Branch VI, issued in Civil Case No. 36040, as wen as the resolution dated September 22, 1981 of the said appellate court, denying petitioner's motion for reconsideration.It appears that in order to obtain financial accommodations from herein petitioner Makati Leasing and Finance Corporation, the private respondent Wearever Textile Mills, Inc., discounted and assigned several receivables with the former under a Receivable Purchase Agreement. To secure the collection of the receivables assigned, private respondent executed a Chattel Mortgage over certain raw materials inventory as well as a machinery described as an Artos Aero Dryer Stentering Range.Upon private respondent's default, petitioner filed a petition for extrajudicial foreclosure of the properties mortgage to it. However, the Deputy Sheriff assigned to implement the foreclosure failed to gain entry into private respondent's premises and was not able to effect the seizure of the aforedescribed machinery. Petitioner thereafter filed a complaint for judicial foreclosure with the Court of First Instance of Rizal, Branch VI, docketed as Civil Case No. 36040, the case before the lower court.Acting on petitioner's application for replevin, the lower court issued a writ of seizure, the enforcement of which was however subsequently restrained upon private respondent's filing of a motion for reconsideration. After several incidents, the lower court finally issued on February 11, 1981, an order lifting the restraining order for the enforcement of the writ of seizure and an order to break open the premises of private respondent to enforce said writ. The lower court reaffirmed its stand upon private respondent's filing of a further motion for reconsideration.On July 13, 1981, the sheriff enforcing the seizure order, repaired to the premises of private respondent and removed the main drive motor of the subject machinery.The Court of Appeals, in certiorari and prohibition proceedings subsequently filed by herein private respondent, set aside the Orders of the lower court and ordered the return of the drive motor seized by the sheriff pursuant to said Orders, after ruling that the machinery in suit cannot be the subject of replevin, much less of a chattel mortgage, because it is a real property pursuant to Article 415 of the new Civil Code, the same being attached to the ground by means of bolts and the only way to remove it from respondent's plant would be to drill out or destroy the concrete floor, the reason why all that the sheriff could do to enfore the writ was to take the main drive motor of said machinery. The appellate court rejected petitioner's argument that private respondent is estopped from claiming that the machine is real property by constituting a chattel mortgage thereon.A motion for reconsideration of this decision of the Court of Appeals having been denied, petitioner has brought the case to this Court for review by writ of certiorari. It is contended by private respondent, however, that the instant petition was rendered moot and academic by petitioner's act of returning the subject motor drive of respondent's machinery after the Court of Appeals' decision was promulgated.The contention of private respondent is without merit. When petitioner returned the subject motor drive, it made itself unequivocably clear that said action was without prejudice to a motion for reconsideration of the Court of Appeals decision, as shown by the receipt duly signed by respondent's representative.1Considering that petitioner has reserved its right to question the propriety of the Court of Appeals' decision, the contention of private respondent that this petition has been mooted by such return may not be sustained.The next and the more crucial question to be resolved in this Petition is whether the machinery in suit is real or personal property from the point of view of the parties, with petitioner arguing that it is a personality, while the respondent claiming the contrary, and was sustained by the appellate court, which accordingly held that the chattel mortgage constituted thereon is null and void, as contended by said respondent.A similar, if not Identical issue was raised inTumalad v. Vicencio,41 SCRA 143 where this Court, speaking through Justice J.B.L. Reyes, ruled:Although 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 defendants-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 personality. Finally, unlike in the Iya cases,Lopez vs. Orosa, Jr. & Plaza Theatre, Inc. & Leung Yee vs. F.L. Strong Machinery & Williamson,wherein third persons assailed the validity of the chattel mortgage, it is the 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 personality.Examining the records of the instant case, We find no logical justification to exclude the rule out, as the appellate court did, the present case from the application of the abovequoted pronouncement. If a house of strong materials, like what was involved in the above Tumalad case, may be considered as personal property for purposes of executing a chattel mortgage thereon as long as the parties to the contract so agree and no innocent third party will be prejudiced thereby, there is absolutely no reason why a machinery, which is movable in its nature and becomes immobilized only by destination or purpose, may not be likewise treated as such. This is really because one who has so agreed is estopped from denying the existence of the chattel mortgage.In rejecting petitioner's assertion on the applicability of the Tumalad doctrine, the Court of Appeals lays stress on the fact that the house involved therein was built on a land that did not belong to the owner of such house. But the law makes no distinction with respect to the ownership of the land on which the house is built and We should not lay down distinctions not contemplated by law.It must be pointed out that the characterization of the subject machinery as chattel by the private respondent is indicative of intention and impresses upon the property the character determined by the parties. As stated inStandard Oil Co. of New York v. Jaramillo, 44 Phil. 630, it is undeniable that the parties to a contract may by agreement treat as personal property that which by nature would be real property, as long as no interest of third parties would be prejudiced thereby.Private respondent contends that estoppel cannot apply against it because it had never represented nor agreed that the machinery in suit be considered as personal property but was merely required and dictated on by herein petitioner to sign a printed form of chattel mortgage which was in a blank form at the time of signing. This contention lacks persuasiveness. As aptly pointed out by petitioner and not denied by the respondent, the status of the subject machinery as movable or immovable was never placed in issue before the lower court and the Court of Appeals except in a supplemental memorandum in support of the petition filed in the appellate court. Moreover, even granting that the charge is true, such fact alone does not render a contract voidab initio, but can only be a ground for rendering said 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 is it disclosed that steps were taken to nullify the same. On the other hand, as pointed out by petitioner and again not refuted by respondent, the latter has indubitably benefited from said contract. Equity dictates that one should not benefit at the expense of another. Private respondent could not now therefore, be allowed to impugn the efficacy of the chattel mortgage after it has benefited therefrom,From what has been said above, the error of the appellate court in ruling that the questioned machinery is real, not personal property, becomes very apparent. Moreover, the case ofMachinery and Engineering Supplies, Inc. v. CA, 96 Phil. 70, heavily relied upon by said court is not applicable to the case at bar, the nature of the machinery and equipment involved therein as real properties never having been disputed nor in issue, and they were not the subject of a Chattel Mortgage. Undoubtedly, the Tumalad case bears more nearly perfect parity with the instant case to be the more controlling jurisprudential authority.WHEREFORE, the questioned decision and resolution of the Court of Appeals are hereby reversed and set aside, and the Orders of the lower court are hereby reinstated, with costs against the private respondent.SO ORDERED.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...2When 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.3Thereafter, on 18 April 1956, plaintiffs-appellant commenced Civil 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.4On 21 September 1956, the municipal court rendered its 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.5Defendants-appellants, in their answers in both the municipal court and courta quoimpugned 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.6During 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.7On 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 questionsseriatim.(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 Instancea quo, on the theory that the chattel mortgage is voidab 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,8confirming the earlier finding of the municipal court that "the defense of ownership as well as the allegations of fraud and deceit ... are mere allegations."9It has been held in Supia andBatiaco vs. Quintero and Ayala10that "the answer is a mere statement of the facts which the party filing it expects to prove,but it is not evidence;11and further, that when the question to be determined is one of title, the Court is given the authority to proceed with the hearing of the cause until this fact is clearly established. In the case ofSy vs. Dalman,12wherein the defendant was also a successful 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.13Moreover, even granting that the charge is true, fraud or deceit does not render a contract voidab 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.14There is nothing on record to show that the mortgage has been annulled. Neither 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 voidab initiobecause only personal properties can be subject of a chattel mortgage. The rule about the status of buildings as immovable property is stated inLopez vs. Orosa, Jr. and Plaza Theatre Inc.,15cited inAssociated Insurance Surety Co., Inc. vs. Iya, et al.16to the effect that ... 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 thata building is by itself an immovable propertyirrespective 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 ofManarang and Manarang vs. Ofilada,17this Court stated that "it is undeniable that the parties to a contract may by agreement treat as personal property that which by nature would be real property", citingStandard Oil Company of New York vs. Jaramillo.18In the latter case, the mortgagor conveyed and transferred to the mortgagee by way of mortgage "the following describedpersonal property."19The "personal property" consisted of leasehold rights and a building. Again, in the case ofLuna vs. Encarnacion,20the subject of the contract designated as Chattel Mortgage was a house of mixed materials, and this Court hold therein that it was a valid Chattel mortgage because it was soexpressly designatedand 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 ofNavarro vs. Pineda,21this Court stated that 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 arented landwas 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):22In 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 TRANSFERSby way of Chattel Mortgage23the property together with its leasehold rights over the lot on which it is constructed and participation ..."24Although there is no specific statement referring to the subject house as personal property, yet by ceding, selling or transferring a propertyby way of chattel mortgagedefendants-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.25andLeung Yee vs. F. L. Strong Machinery and Williamson,26whereinthird personsassailed the validity of the chattel mortgage,27it is the 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. 1508.28Section 14 of this Act allows the mortgagee to have the property mortgaged sold at public auction through a public officer in almost the same manner as that allowed by Act No. 3135, as amended by Act No. 4118, provided that the requirements of the law relative to notice and registration are complied with.29In the instant case, the parties specifically stipulated that "the chattel mortgage will beenforceable in accordance with the provisions of Special Act No. 3135... ."30(Emphasis supplied).Section 6 of the Act referred to31provides that the debtor-mortgagor (defendants-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 Act32allows the purchaser of the property to obtain from the court the possession 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.33In the absence of such a compliance, as in the instant case, the purchaser can not claim possession during the period of redemption as a matter of right. In such a case, the governing provision is Section 34, Rule 39, of the Revised Rules of Court34which also applies to properties purchased in extrajudicial foreclosure proceedings.35Construing the said section, this Court stated in the aforestated case ofReyes vs. Hamada.In other words, before the expiration of the 1-year period within which the 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 ormortgagor as the 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 effects the redemption.Differently stated, the rentals receivable from tenants, although they may be collected by the purchaser during the 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 the benefit of the debtor or mortgagor, the payment of the redemption amount and the consequent return to him of his properties sold at public auction. (Emphasis supplied)The Hamada case reiterates the previous ruling inChan vs. Espe.36Since the defendants-appellants were occupying the house at the time of the auction sale, they are entitled to remain in possession during the period of redemption or within one year from and after 27 March 1956, the date of the auction sale, and to collect the rents or profits during the said period.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.37It follows that the court below erred in requiring the mortgagors to pay rents for the year following the foreclosure sale, as well as attorney's fees.FOR THE FOREGOING REASONS, the decision appealed from is reversed and another one entered, dismissing the complaint. With costs against plaintiffs-appellees.SERGS PRODUCTS, INC., and SERGIO T. GOQUIOLAY,petitioners,vs.PCI LEASING AND FINANCE, INC.,respondent.D E C I S I O NPANGANIBAN,J.:After agreeing to a contract stipulating that a real or immovable property be considered as personal or movable, a party is estopped from subsequently claiming otherwise.Hence, such property is a proper subject of a writ of replevin obtained by the other contracting party.The CaseBefore us is a Petition for Review on Certiorari assailing the January 6, 1999 Decision[1]of the Court of Appeals (CA)[2]in CA-GR SP No. 47332 and its February 26, 1999 Resolution[3]denying reconsideration.The decretal portion of the CA Decision reads as follows:WHEREFORE, premises considered, the assailed Order dated February 18, 1998 and Resolution dated March 31, 1998 in Civil Case No. Q-98-33500 are herebyAFFIRMED.The writ of preliminary injunction issued on June 15, 1998 is herebyLIFTED.[4]In its February 18, 1998 Order,[5]the Regional Trial Court (RTC) of Quezon City (Branch 218)[6]issued a Writ of Seizure.[7]The March 18, 1998 Resolution[8]denied petitioners Motion for Special Protective Order, praying that the deputy sheriff be enjoined from seizing immobilized or other real properties in (petitioners) factory in Cainta, Rizal and to return to their original place whatever immobilized machineries or equipments he may have removed.[9]The FactsThe undisputed facts are summarized by the Court of Appeals as follows:[10]On February 13, 1998, respondent PCI Leasing and Finance, Inc. (PCI Leasing for short) filed with the RTC-QC a complaint for [a] sum of money (Annex E), with an application for a writ of replevin docketed as Civil Case No. Q-98-33500.On March 6, 1998, upon an ex-parte application of PCI Leasing, respondent judge issued a writ of replevin (Annex B) directing its sheriff to seize and deliver the machineries and equipment to PCI Leasing after 5 days and upon the payment of the necessary expenses.On March 24, 1998, in implementation of said writ, the sheriff proceeded to petitioners factory, seized one machinery with [the] word that he [would] return for the other machineries.On March 25, 1998, petitioners filed a motion for special protective order (Annex C), invoking the power of the court to control the conduct of its officers and amend and control its processes, praying for a directive for the sheriff to defer enforcement of the writ of replevin.This motion was opposed by PCI Leasing (Annex F), on the ground that the properties [were] still personal and therefore still subject to seizure and a writ of replevin.In their Reply, petitioners asserted that the properties sought to be seized [were] immovable as defined in Article 415 of the Civil Code, the parties agreement to the contrary notwithstanding.They argued that to give effect to the agreement would be prejudicial to innocent third parties.They further stated that PCI Leasing [was] estopped from treating these machineries as personal because the contracts in which the alleged agreement [were] embodied [were] totally sham and farcical.On April 6, 1998, the sheriff again sought to enforce the writ of seizure and take possession of the remaining properties.He was able to take two more, but was prevented by the workers from taking the rest.On April 7, 1998, they went to [the CA] via an original action for certiorari.Ruling of the Court of AppealsCiting the Agreement of the parties, the appellate court held that the subject machines were personal property, and that they had only been leased, not owned, by petitioners.It also ruled that the words of the contract are clear and leave no doubt upon the true intention of the contracting parties.Observing that Petitioner Goquiolay was an experienced businessman who was not unfamiliar with the ways of the trade,it ruled that he should have realized the import of the document he signed.The CA further held:Furthermore, to accord merit to this petition would be to preempt the trial court in ruling upon the case below, since the merits of the whole matter are laid down before us via a petition whose sole purpose is to inquire upon the existence of a grave abuse of discretion on the part of the [RTC] in issuing the assailed Order and Resolution.The issues raised herein are proper subjects of a full-blown trial, necessitating presentation of evidence by both parties.The contract is being enforced by one, and [its] validity is attacked by the other a matter x x x which respondent court is in the best position to determine.Hence, this Petition.[11]The IssuesIn their Memorandum, petitioners submit the following issues for our consideration:A. Whether or not the machineries purchased and imported by SERGS became real property by virtue of immobilization.B. Whether or not the contract between the parties is a loan or a lease.[12]In the main, the Court will resolve whether the said machines are personal, not immovable, property which may be a proper subject of a writ of replevin.As a preliminary matter, the Court will also address briefly the procedural points raised by respondent.The Courts RulingThe Petition is not meritorious.Preliminary Matter:Procedural QuestionsRespondent contends that the Petition failed to indicate expressly whether it was being filed under Rule 45 or Rule 65 of the Rules of Court.It further alleges that the Petition erroneously impleadedJudge Hilario Laqui as respondent.There is no question that the present recourse is under Rule 45.This conclusion finds support in the very title of the Petition, which is Petition for Review on Certiorari.[13]While Judge Laqui should not have been impleaded as a respondent,[14]substantial justice requires that such lapse by itself should not warrant the dismissal of the present Petition.In this light, the Court deems it proper to remove,motu proprio, the name of Judge Laqui from the caption of the present case.Main Issue:Nature of the Subject MachineryPetitioners contend that the subject machines used in their factory were not proper subjects of the Writ issued by the RTC, because they were in fact real property.Serious policy considerations, they argue, militate against a contrary characterization.Rule 60 of the Rules of Court provides that writs of replevin are issued for the recovery of personal property only.[15]Section 3 thereof reads:SEC. 3.Order.-- Upon the filing of such affidavit and approval of the bond, the court shall issue an order and the corresponding writ of replevin describing the personal property alleged to be wrongfully detained and requiring the sheriff forthwith to take such property into his custody.On the other hand, Article 415 of the Civil Code enumerates immovable or real property as follows:ART. 415.The following are immovable property:x x x....................................x x x....................................x x x(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;x x x....................................x x x....................................x x xIn the present case, the machines that were the subjects of the Writ of Seizure were placed by petitioners in the factory built on their own land.Indisputably, they were essential and principal elements of their chocolate-making industry.Hence, although each of them was movable or personal property on its own, all of them have become immobilized by destination because they are essential and principal elements in the industry.[16]In that sense, petitioners are correct in arguing that the said machines are real, not personal, property pursuant to Article 415 (5) of the Civil Code.[17]Be that as it may, we disagree with the submission of the petitioners that the said machines are not proper subjects of the Writ of Seizure.The Court has held that contracting parties may validly stipulate that a real property be consideredas personal.[18]After agreeing to such stipulation, they are consequently estopped from claiming otherwise.Under the principle of estoppel, a party to a contract is ordinarily precluded from denying the truth of any material fact found therein.Hence, inTumalad v. Vicencio,[19]the Court upheld the intention of the parties to treat ahouseas a personal propertybecause it had been made the subject of a chattel mortgage.The Court ruled:x x x.Although 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.ApplyingTumalad,the Court inMakati Leasing and Finance Corp. v. Wearever Textile Mills[20]also held that the machinery used in a factory and essential to the industry, as in the present case, was a proper subject of a writ of replevin because it was treated as personal property in a contract.Pertinent portions of the Courts ruling are reproduced hereunder:x x x.If a house of strong materials, like what was involved in the above Tumalad case, may be considered as personal property for purposes of executing a chattel mortgage thereon as long as the parties to the contract so agree and no innocent third party will be prejudiced thereby, there is absolutely no reason why a machinery, which is movable in its nature and becomes immobilized only by destination or purpose, may not be likewise treated as such.This is really because one who has so agreed is estopped from denying the existence of the chattel mortgage.In the present case, the Lease Agreement clearly provides that the machines in question are to be consideredas personal property.Specifically, Section 12.1 of the Agreement reads as follows:[21]12.1The PROPERTY is, and shall at all times be and remain, personal property notwithstanding that the PROPERTY or any part thereof may now be, or hereafter become, in any manner affixed or attached to or embedded in, or permanently resting upon, real property or any building thereon, or attached in any manner to what is permanent.Clearly then, petitioners are estopped from denying the characterization of the subject machines as personal property.Under the circumstances, they are proper subjects of the Writ of Seizure.It should be stressed, however, that our holding -- that the machines should be deemed personal property pursuant to the Lease Agreement is good only insofar as the contracting parties are concerned.[22]Hence, while the parties are bound by the Agreement, third persons acting in good faith are not affected by its stipulation characterizing the subject machinery as personal.[23]In any event, there is no showing that any specific third party would be adversely affected.Validity of the Lease AgreementIn their Memorandum, petitioners contend that the Agreement is a loan and not a lease.[24]Submitting documents supposedly showing that they own the subject machines, petitioners also argue in their Petition that the Agreement suffers from intrinsic ambiguity which places in serious doubt the intention of the parties and the validity of the lease agreement itself.[25]In their Reply to respondents Comment, they further allege that the Agreement is invalid.[26]These arguments are unconvincing.The validity and the nature of the contract are thelis motaof the civil action pending before the RTC.A resolution of these questions, therefore, is effectively a resolution of the merits of the case.Hence, they should be threshed out in the trial, not in the proceedings involving the issuance of the Writ of Seizure.Indeed, inLa Tondea Distillers v. CA,[27]the Court explained that the policy under Rule 60 was that questions involving title to the subject property questions which petitioners are now raising --should be determined in the trial.In that case, the Court noted that the remedy of defendants under Rule 60 was either to post a counter-bond or to question the sufficiency of the plaintiffs bond.They were not allowed, however, to invoke the title to the subject property.The Court ruled:In other words, the law does not allow the defendant to file a motion to dissolve or discharge the writ of seizure (or delivery) on ground of insufficiency of the complaint or of the grounds relied upon therefor, as in proceedings on preliminary attachment or injunction, and thereby put at issue the matter of the title or right of possession over the specific chattel being replevied, the policy apparently being that said matter should be ventilated and determined only at the trial on the merits.[28]Besides, these questions require a determination of facts and a presentation of evidence, both of which have no place in a petition for certiorari in the CA under Rule 65 or in a petition for review in this Court under Rule 45.[29]Reliance on the Lease AgreementIt should be pointed out that the Court in this case may rely on the Lease Agreement, fornothing on record shows that it has been nullified or annulled.In fact, petitioners assailed it first only in the RTC proceedings, which had ironically been instituted by respondent.Accordingly, it must be presumed valid and binding as the law between the parties.Makati Leasing and Finance Corporation[30]is also instructive on this point.In that case, the Deed of Chattel Mortgage, which characterized the subject machinery as personal property, was also assailed because respondent had allegedly been required to sign a printed form of chattel mortgage which was in a blank form at the time of signing.The Court rejected the argument and relied on the Deed, ruling as follows:x x x.Moreover, even granting that the charge is true, such fact alone does not render a contract voidab initio, but can only be a ground for rendering said 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 is it disclosed that steps were taken to nullify the same. x x xAlleged Injustice Committed on the Part of PetitionersPetitioners contend that if the Court allows these machineries to be seized, then its workers would be out of work and thrown into the streets.[31]They also allege that the seizure would nullify all efforts to rehabilitate the corporation.Petitioners arguments do not preclude the implementation of the Writ.As earlier discussed, law and jurisprudence support its propriety.Verily, the above-mentioned consequences, if they come true, should not be blamed on this Court, but on the petitioners for failing to avail themselves of the remedy under Section 5 of Rule 60, which allows the filing of a counter-bond.The provision states:SEC. 5.Return of property. --If the adverse party objects to the sufficiency of the applicants bond, or of the surety or sureties thereon, he cannot immediately require the return of the property, but if he does not so object, he may, at any time before the delivery of the property to the applicant, require the return thereof, by filing with the court where the action is pending a bond executed to the applicant, in double the value of the property as stated in the applicants affidavit for the delivery thereof to the applicant, if such delivery be adjudged, and for the payment of such sum to him as may be recovered against the adverse party, and by serving a copy bond on the applicant.WHEREFORE, the Petition isDENIEDand the assailed Decision of the Court of AppealsAFFIRMED.Costs against petitioners.JULIAN S. YAP,petitioner,vs.HON. SANTIAGO O. TAADA, etc., and GOULDS PUMPS INTERNATIONAL (PHIL.), INC.,respondents.Paterno P. Natinga for private respondent.NARVASA,J.:The petition for review on certiorari at bar involves two (2) Orders of respondent Judge Taada1in Civil Case No. 10984. The first, dated September 16, 1970, denied petitioner Yap's motion to set aside execution sale and to quash alias writ of execution. The second, dated November 21, 1970, denied Yap's motion for reconsideration. The issues concerned the propriety of execution of a judgment claimed to be "incomplete, vague and non-final," and the denial of petitioner's application to prove and recover damages resulting from alleged irregularities in the process of execution.The antecedents will take some time in the telling. The case began in the City Court of Cebu with the filing by Goulds Pumps International (Phil.), Inc. of a complaint2against Yap and his wife3seeking recovery of P1,459.30 representing the balance of the price and installation cost of a water pump in the latter's premises.4The case resulted in a judgment by the City Court on November 25, 1968, reading as follows:When this case was called for trial today, Atty. Paterno Natinga appeared for the plaintiff Goulds and informed the court that he is ready for trial. However, none of the defendants appeared despite notices having been served upon them.Upon petition Atty. Natinga, the plaintiff is hereby allowed to present its evidence ex-parte.After considering the evidence of the plaintiff, the court hereby renders judgment in favor of the plaintiff and against the defendant (Yap), ordering the latter to pay to the former the sum of Pl,459.30 with interest at the rate of 12% per annum until fully paid, computed from August 12, 1968, date of the filing of the complaint; to pay the sum of P364.80 as reasonable attorney's fees, which is equivalent " to 25% of the unpaid principal obligation; and to pay the costs, if any.Yap appealed to the Court of First Instance. The appeal was assigned to thesalaof respondent Judge Taada. For failure to appear for pre-trial on August 28, 1968, this setting being intransferable since the pre-trial had already been once postponed at his instance,5Yap was declared in default by Order of Judge Taada dated August 28, 1969,6reading as follows:When this case was called for pre-trial this morning, the plaintiff and counsel appeared, but neither the defendants nor his counsel appeared despite the fact that they were duly notified of the pre-trial set this morning. Instead he filed an Ex-Parte Motion for Postponement which this Court received only this morning, and on petition of counsel for the plaintiff that the Ex-Parte Motion for Postponement was not filed in accordance with the Rules of Court he asked that the same be denied and the defendants be declared in default; .. the motion for the plaintiff being well- grounded, the defendants are hereby declared in default and the Branch Clerk of Court ..is hereby authorized to receive evidence for the plaintiff and .. submit his report within ten (10) days after reception of evidence.Goulds presented evidenceex parteand judgment by default was rendered the following day by Judge Taada requiring Yap to pay to Goulds (1) Pl,459.30 representing the unpaid balance of the pump purchased by him; (2) interest of 12% per annum thereon until fully paid; and (3) a sum equivalent to 25% of the amount due as attorney's fees and costs and other expenses in prosecuting the action. Notice of the judgment was served on Yap on September 1, 1969.7On September 16, 1969 Yap filed a motion for reconsideration.8In it he insisted that his motion for postponement should have been granted since it expressed his desire to explore the possibility of an amicable settlement; that the court should give the parties time to arrive at an amicable settlement failing which, he should be allowed to present evidence in support of his defenses (discrepancy as to the price and breach of warranty). The motion was not verified or accompanied by any separate affidavit. Goulds opposed the motion. Its opposition9drew attention to the eleventh-hour motion for postponement of Yap which had resulted in the cancellation of the prior hearing of June 30, 1969 despite Goulds' vehement objection, and the re-setting thereof on August 28, 1969 with intransferable character; it averred that Yap had again sought postponement of this last hearing by another eleventh-hour motion on the plea that an amicable settlement would be explored, yet he had never up to that time ever broached the matter,10and that this pattern of seeking to obtain last-minute postponements was discernible also in the proceedings before the City Court. In its opposition, Goulds also adverted to the examination made by it of the pump, on instructions of the City Court, with a view to remedying the defects claimed to exist by Yap; but the examination had disclosed the pump's perfect condition. Yap's motion for reconsideration was denied by Order dated October 10, 1969, notice of which was received by Yap on October 4, 1969.11On October 15, 1969 Judge Taada issued an Order granting Goulds' Motion for Issuance of Writ of Execution dated October 14, 1969, declaring the reasons therein alleged to be meritorious.12Yap forthwith filed an "Urgent Motion for Reconsideration of Order" dated October 17, 1969,13contending that the judgment had not yet become final, since contrary to Goulds' view, his motion for reconsideration was notpro formafor lack of an affidavit of merit, this not being required under Section 1 (a) of Rule 37 of the Rules of Court upon which his motion was grounded. Goulds presented an opposition dated October 22, 1969.14It pointed out that in his motion for reconsideration Yap had claimed to have a valid defense to the action, i.e., ".. discrepancy as to price and breach of seller's warranty," in effect, that there was fraud on Goulds' paint; Yap's motion for reconsideration should therefore have been supported by an affidavit of merit respecting said defenses; the absence thereof rendered the motion for reconsideration fatally defective with the result that its filing did not interrupt the running of the period of appeal. The opposition also drew attention to the failure of the motion for reconsideration to specify the findings or conclusions in the judgment claimed to be contrary to law or not supported by the evidence, making it apro formamotion also incapable of stopping the running of the appeal period. On October 23, 1969, Judge Taada denied Yap's motion for reconsideration and authorized execution of the judgment.15Yap sought reconsideration of this order, by another motion dated October 29, 1969.16This motion was denied by Order dated January 26, 1970.17Again Yap moved for reconsideration, and again was rebuffed, by Order dated April 28, 1970.18In the meantime the Sheriff levied on the water pump in question,19and by notice dated November 4, 1969, scheduled the execution sale thereof on November 14, 1969.20But in view of the pendency of Yap's motion for reconsideration of October 29, 1969, suspension of the sale was directed by Judge Taada in an order dated November 6, 1969.21Counsel for the plaintiff is hereby given 10 days time to answer the Motion, dated October 29, 1969, from receipt of this Order and in the meantime, the Order of October 23, 1969, insofar as it orders the sheriff to enforce the writ of execution is hereby suspended.It appears however that a copy of this Order was not transmitted to the Sheriff "through oversight, inadvertence and pressure of work" of the Branch Clerk of Court.22So the Deputy Provincial Sheriff went ahead with the scheduled auction sale and sold the property levied on to Goulds as the highest bidder.23He later submitted the requisite report to the Court dated November 17, 1969,24as well as the "Sheriffs Return of Service" dated February 13, 1970,25in both of which it was stated that execution had been "partially satisfied."It should be observed that up to this time, February, 1970, Yap had not bestirred himself to take an appeal from the judgment of August 29, 1969.On May 9, 1970 Judge Taada ordered the issuance of an alias writ of execution on Gould'sex partemotion therefor.26Yap received notice of the Order on June 11. Twelve (1 2) days later, he filed a "Motion to Set Aside Execution Sale and to QuashAliasWrit of Execution."27As regards theoriginal,partial execution of the judgment, he argued that 1) "the issuance of the writ of execution on October 16, 1969 was contrary to law, the judgment sought to be executed not being final and executory;" and2) "the sale was made without the notice required by Sec. 18, Rule 39, of the New Rules of Court," i.e., notice by publication in case of execution sale of real property, the pump and its accessories being immovable because attached to the ground with character of permanency (Art. 415, Civil Code).And with respect to thealiaswrit, he argued that it should not have issued because 1) "the judgment sought to be executed is null and void" as "it deprived the defendant of his day in court" and "of due process;"2) "said judgment is incomplete and vague" because there is no starting point for computation of the interest imposed, or a specification of the "other expenses incurred in prosecuting this case" which Yap had also been ordered to pay;3) "said judgment is defective because it contains no statement of facts but a mere recital of the evidence; and4) "there has been a change in the situation of the parties which makes execution unjust and inequitable" because Yap suffered damages by reason of the illegal execution.Goulds filed an opposition on July 6, 1970. Yap's motion was thereafter denied by Order dated September 16, 1970. Judge Taada pointed out that the motion had "become moot and academic" since the decision of August 29, 1969, "received by the defendant on September 1, 1969 had long become final when the Order for the Issuance of a Writ of Execution was promulgated on October 15, 1969." His Honor also stressed that The defendant's Motion for Reconsideration of the Courts decision was in reality one for new trial. Regarded as motion for new trial it should allege the grounds for new trial, provided for in the Rules of Court, to be supported by affidavit of merits; and this the defendant failed to do. If the defendant sincerely desired for an opportunity to submit to an amicable settlement, which he failed to do extra judicially despite the ample time before him, he should have appeared in the pre- trial to achieve the same purpose.Judge Taada thereafter promulgated another Order dated September 21, 1970 granting a motion of Goulds for completion of execution of the judgment of August 29, 1969 to be undertaken by the City Sheriff of Cebu. Once more, Yap sought reconsideration. He submitted a "Motion for Reconsideration of Two Orders" dated October 13, 1970,28seeking the setting aside not only of this Order of September 21, 1970 but also that dated September 16, 1970, denying his motion to set aside execution dated June 23, 1970. He contended that the Order of September 21, 1970 (authorizing execution by the City Sheriff) was premature,since the 30-day period to appeal from the earlier order of September 16, 1970 (denying his motion to set aside) had not yet expired.He also reiterated his view that his motion for reconsideration dated September 15, 1969 did not require that it be accompanied by an affidavit of merits. This last motion was also denied for "lack of merits," by Order dated November 21, 1970.29On December 3, 1970, Yap filed a "Notice of Appeal" manifesting his intention to appeal to the Supreme Court on certiorari only on questions of law, "from the Order ... of September 16, 1970 ... and from the Order ... of November 21, 1970, ... pursuant to sections 2 and 3 of Republic Act No. 5440." He filed his petition for review with this Court on January 5, 1971, after obtaining an extension therefor.30The errors of law he attributes to the Courta quoare the following:311) refusing to invalidate the execution pursuant to its Order of October 16, 1969 although the judgment had not then become final and executory and despite its being incomplete and vague;2) ignoring the fact that the execution sale was carried out although it (the Court) had itself ordered suspension of execution on November 6, 1969;3) declining to annul the execution sale of the pump and accessories subject of the action although made without the requisite notice prescribed for the sale of immovables; and4) refusing to allow the petitioner to prove irregularities in the process of execution which had resulted in damages to him.Notice of the Trial Court's judgment was served on Yap on September 1, 1969. His motion for reconsideration thereof was filed 15 days thereafter, on September 16, 1969. Notice of the Order denying the motion was received by him on October 14, 1969. The question is whether or not the motion for reconsideration which was not verified, or accompanied by an affidavit of merits (setting forth facts constituting his meritorious defenses to the suit) or other sworn statement (stating facts excusing his failure to appear at the pre-trial waspro formaand consequently had not interrupted the running of the period of appeal. It is Yap's contention that his motion was notpro formafor lack of an affidavit of merits, such a document not being required by Section 1 (a) of Rule 37 of the Rules of Court upon which his motion was based. This is incorrect.Section 2, Rule 37 precisely requires that when the motion for new trial is founded on Section 1 (a), it should be accompanied by an affidavit of merit.xxx xxx xxxWhen the motion is made for the causes mentioned in subdivisions (a) and (b) of the preceding section, it shall be proved in the manner provided for proof of motions.Affidavit or affidavits of merits shall also be attached to a motion for the cause mentioned in subdivision (a)which may be rebutted by counter-affidavits.xxx xxx xxx32Since Yap himself asserts that his motion for reconsideration is grounded on Section 1 (a) of Rule 37,33i.e., fraud, accident, mistake or excusable negligence which ordinary prudence could not have guarded against and by reason of which ... (the) aggrieved party has probably been impaired in his rights" this being in any event clear from a perusal of the motion which theorizes that he had "been impaired in his rights" because he was denied the right to present evidence of his defenses (discrepancy as to price and breach of warranty) it was a fatal omission to fail to attach to his motion an affidavit of merits, i.e., an affidavit "showing the facts (not conclusions) constituting the valid x x defense which the movant may prove in case a new trial is granted."34The requirement of such an affidavit is essential because obviously "a new trial would be a waste of the court's time if the complaint turns out to be groundless or the defense ineffective."35In his motion for reconsideration, Yap also contended that since he had expressed a desire to explore the possibility of an amicable settlement, the Court should have given him time to do so, instead of declaring him in default and thereafter rendering judgment by default on Gould'sex parteevidence.Thebona fidesof this desire to compromise is however put in doubt by the attendant circumstances. It was manifested in an eleventh-hour motion for postponement of the pre-trial which had been scheduled with intransferable character since it had already been earlier postponed at Yap's instance; it had never been mentioned at any prior time since commencement of the litigation; such a possible compromise (at least in general or preliminary terms) was certainly most appropriate for consideration at the pre-trial; in fact Yap was aware that the matter was indeed a proper subject of a pre-trial agenda, yet he sought to avoid appearance at said pre-trial which he knew to be intransferable in character. These considerations and the dilatory tactics thus far attributable to him-seeking postponements of hearings, or failing to appear therefor despite notice, not only in the Court of First Instance but also in the City Court proscribe belief in the sincerity of his avowed desire to negotiate a compromise. Moreover, the disregard by Yap of the general requirement that "(n)otice of a motion shall be served by the applicant to all parties concerned at least three (3) days before the hearing thereof, together with a copy of the motion, and of any affidavits and other papers accompanying it,"36for which no justification whatever has been offered, also militates against thebona fidesof Yap's expressed wish for an amicable settlement. The relevant circumstances do not therefore justify condemnation, as a grave abuse of discretion, or a serious mistake, of the refusal of the Trial Judge to grant postponement upon this proferred ground.The motion for reconsideration did not therefore interrupt the running of the period of appeal. The time during which it was pending before the court from September 16, 1969 when it was filed with the respondent Court until October 14, 1969 when notice of the order denying the motion was received by the movant could not be deducted from the 30-day period of appeal.37This is the inescapable conclusion from a consideration of Section 3 of Rule 41 which in part declares that, "The "time during which a motion to set aside the judgment or order or for a new trial has been pending shall be deducted, unlesssuch motion fails to satisfy the requirements of Rule 37.38Notice of the judgment having been received by Yap on September 1, 1969, and the period of appeal therefrom not having been interrupted by his motion for reconsideration filed on September 16, 1969, the reglementary period of appeal expired thirty (30) days after September 1, 1969, or on October 1, 1969, without an appeal being taken by Yap. The judgment then became final and executory; Yap could no longer take an appeal therefrom or from any other subsequent orders; and execution of judgment correctly issued on October 15, 1969, "as a matter of right."39The next point discussed by Yap, that the judgment is incomplete and vague, is not well taken. It is true that the decision does not fix the starting time of the computation of interest on the judgment debt, but this is inconsequential since that time is easily determinable from the opinion, i.e., from the day the buyer (Yap) defaulted in the payment of his obligation,40on May 31, 1968.41The absence of any disposition regarding his counterclaim is also immaterial and does not render the judgment incomplete. Yap's failure to appear at the pre-trial without justification and despite notice, which caused the declaration of his default, was a waiver of his right to controvert the plaintiff s proofs and of his right to prove the averments of his answer, inclusive of the counterclaim therein pleaded. Moreover, the conclusion in the judgment of the merit of the plaintiff s cause of action was necessarily and at the same time a determination of the absence of merit of the defendant's claim of untenability of the complaint and of malicious prosecution.Yap's next argument that the water pump had become immovable property by its being installed in his residence is also untenable. The Civil Code considers as immovable property, among others, anything "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."42The pump does not fit this description. It could be, and was in fact separated from Yap's premises without being broken or suffering deterioration. Obviously the separation or removal of the pump involved nothing more complicated than the loosening of bolts or dismantling of other fasteners.Yap's last claim is that in the process of the removal of the pump from his house, Goulds' men had trampled on the plants growing there, destroyed the shed over the pump, plugged the exterior casings with rags and cut the electrical and conduit pipes; that he had thereby suffered actual-damages in an amount of not less than P 2,000.00, as well as moral damages in the sum of P 10,000.00 resulting from his deprivation of the use of his water supply; but the Court had refused to allow him to prove these acts and recover the damages rightfully due him. Now, as to the loss of his water supply, since this arose from acts legitimately done, the seizure on execution of the water pump in enforcement of a final and executory judgment, Yap most certainly is not entitled to claim moral or any other form of damages therefor.WHEREFORE, the petition is DENIED and the appeal DISMISSED, and the Orders of September 16, 1970 and November 21, 1970 subject thereof, AFFIRMEDin toto.Costs against petitioner.BOARD OF ASSESSMENT APPEALS, CITY ASSESSOR and CITY TREASURER OF QUEZON CITY,petitioners,vs.MANILA ELECTRIC COMPANY,respondent.Assistant City Attorney Jaime R. Agloro for petitioners.Ross, Selph and Carrascoso for respondent.PAREDES,J.:From the stipulation of facts and evidence adduced during the hearing, the following appear:On October 20, 1902, the Philippine Commission enacted Act No. 484 which authorized the Municipal Board of Manila to grant a franchise to construct, maintain and operate an electric street railway and electric light, heat and power system in the City of Manila and its suburbs to the person or persons making the most favorable bid. Charles M. Swift was awarded the said franchise on March 1903, the terms and conditions of which were embodied in Ordinance No. 44 approved on March 24, 1903. Respondent Manila Electric Co. (Meralco for short), became the transferee and owner of the franchise.Meralco's electric power is generated by its hydro-electric plant located at Botocan Falls, Laguna and is transmitted to the City of Manila by means of electric transmission wires, running from the province of Laguna to the said City. These electric transmission wires which carry high voltage current, are fastened to insulators attached on steel towers constructed by respondent at intervals, from its hydro-electric plant in the province of Laguna to the City of Manila. The respondent Meralco has constructed 40 of these steel towers within Quezon City, on land belonging to it. A photograph of one of these steel towers is attached to the petition for review, marked Annex A. Three steel towers were inspected by the lower court and parties and the following were the descriptions given there of by said court:The first steel tower is located in South Tatalon, Espaa Extension, Quezon City. The findings were as follows: the ground around one of the four posts was excavated to a depth of about eight (8) feet, with an opening of about one (1) meter in diameter, decreased to about a quarter of a meter as it we deeper until it reached the bottom of the post; at the bottom of the post were two parallel steel bars attached to the leg means of bolts; the tower proper was attached to the leg three bolts; with two cross metals to prevent mobility; there was no concrete foundation but there was adobe stone underneath; as the bottom of the excavation was covered with water about three inches high, it could not be determined with certainty to whether said adobe stone was placed purposely or not, as the place abounds with this kind of stone; and the tower carried five high voltage wires without cover or any insulating materials.The second tower inspected was located in Kamuning Road, K-F, Quezon City, on land owned by the petitioner approximate more than one kilometer from the first tower. As in the first tower, the ground around one of the four legs was excavate from seven to eight (8) feet deep and one and a half (1-) meters wide. There being very little water at the bottom, it was seen that there was no concrete foundation, but there soft adobe beneath. The leg was likewise provided with two parallel steel bars bolted to a square metal frame also bolted to each corner. Like the first one, the second tower is made up of metal rods joined together by means of bolts, so that by unscrewing the bolts, the tower could be dismantled and reassembled.The third tower examined is located along Kamias Road, Quezon City. As in the first two towers given above, the ground around the two legs of the third tower was excavated to a depth about two or three inches beyond the outside level of the steel bar foundation. It was found that there was no concrete foundation. Like the two previous ones, the bottom arrangement of the legs thereof were found to be resting on soft adobe, which, probably due to high humidity, looks like mud or clay. It was also found that the square metal frame supporting the legs were not attached to any material or foundation.On November 15, 1955, petitioner City Assessor of Quezon City declared the aforesaid steel towers for real property tax under Tax declaration Nos. 31992 and 15549. After denying respondent's petition to cancel these declarations, an appeal was taken by respondent to the Board of Assessment Appeals of Quezon City, which required respondent to pay the amount of P11,651.86 as real property tax on the said steel towers for the years 1952 to 1956. Respondent paid the amount under protest, and filed a petition for review in the Court of Tax Appeals (CTA for short) which rendered a decision on December 29, 1958, ordering the cancellation of the said tax declarations and the petitioner City Treasurer of Quezon City to refund to the respondent the sum of P11,651.86. The motion for reconsideration having been denied, on April 22, 1959, the instant petition for review was filed.In upholding the cause of respondents, the CTA held that: (1) the steel towers come within the term "poles" which are declared exempt from taxes under part II paragraph 9 of respondent's franchise; (2) the steel towers are personal properties and are not subject to real property tax; and (3) the City Treasurer of Quezon City is held responsible for the refund of the amount paid. These are assigned as errors by the petitioner in the brief.The tax exemption privilege of the petitioner is quoted hereunder:PAR 9. The grantee shall be liable to pay the same taxes upon its real estate, buildings, plant (not including poles, wires, transformers, and insulators), machinery and personal property as other persons are or may be hereafter required by law to pay ... Said percentage shall be due and payable at the time stated in paragraph nineteen of Part One hereof, ...and shall be in lieu of all taxes and assessments of whatsoever nature and by whatsoever authority upon the privileges, earnings, income, franchise, and poles, wires, transformers, and insulators of the grantee from which taxes and assessments the granteeis hereby expressly exempted. (Par. 9, Part Two, Act No. 484 Respondent's Franchise; emphasis supplied.)The word "pole" means "a long, comparatively slender usually cylindrical piece of wood or timber, as typically the stem of a small tree stripped of its branches; also by extension, a similar typically cylindrical piece or object of metal or the like". The term also refers to "anupright standard to the top of which something is affixed or by which something is supported; as a dovecote set on a pole; telegraph poles; a tent pole; sometimes, specifically a vessel's master (Webster's New International Dictionary 2nd Ed., p. 1907.) Along the streets, in the City of Manila, may be seen cylindrical metal poles, cubical concrete poles, and poles of the PLDT Co. which are made of two steel bars joined together by an interlacing metal rod. They are called "poles" notwithstanding the fact that they are no made of wood. It must be noted from paragraph 9, above quoted, that the concept of the "poles" for which exemption is granted, is not determined by their place or location, nor by the character of the electric current it carries, nor the material or form of which it is made, but the use to which they are dedicated. In accordance with the definitions, pole is not restricted to a long cylindrical piece of wood or metal, but includes "upright standards to the top of which something is affixed or by which something is supported. As heretofore described, respondent's steel supports consists of a framework of four steel bars or strips which are bound by steel cross-arms atop of which are cross-arms supporting five high voltage transmission wires (See Annex A) and their sole function is to support or carry such wires.The conclusion of the CTA that the steel supports in question are embraced in the term "poles" is not a novelty. Several courts of last resort in the United States have called these steel supports "steel towers", and they denominated these supports or towers, as electric poles. In their decisions the words "towers" and "poles" were used interchangeably, and it is well understood in that jurisdiction that a transmission tower or pole means the same thing.In a proceeding to condemn land for the use of electric power wires, in which the law provided that wires shall be constructed upon suitablepoles, this term was construed to mean either wood or metal poles and in view of the land being subject to overflow, and the necessary carrying of numerous wires and the distance between poles, the statute was interpreted to includetowersorpoles. (Stemmons and Dallas Light Co. (Tex) 212 S.W. 222, 224; 32-A Words and Phrases, p. 365.)The term "poles" was also used to denominate the steel supports or towers used by an association used to convey its electric power furnished to subscribers and members, constructed for the purpose of fastening high voltage and dangerous electric wires alongside public highways. The steel supports or towers were made of iron or other metals consisting of two pieces running from the ground up some thirty feet high, being wider at the bottom than at the top, the said two metal pieces being connected with criss-cross iron running from the bottom to the top, constructed like ladders and loaded with high voltage electricity. In form and structure, they are like the steel towers in question. (Salt River Valley Users' Ass'n v. Compton, 8 P. 2nd, 249-250.)The term "poles" was used to denote the steel towers of an electric company engaged in the generation of hydro-electric power generated from its plant to the Tower of Oxford and City of Waterbury. These steel towers are about 15 feet square at the base and extended to a height of about 35 feet to a point, and are embedded in the cement foundations sunk in the earth, the top of which extends above the surface of the soil in the tower of Oxford, and to the towers are attached insulators, arms, and other equipment capable of carrying wires for the transmission of electric power (Connecticut Light and Power Co. v. Oxford, 101 Conn. 383, 126 Atl. p. 1).In a case, the defendant admitted that the structure on which a certain person met his death was built for the purpose of supporting a transmission wire used for carrying high-tension electric power, but claimed that the steel towers on which it is carried were so large that their wire took their structure out of the definition of a pole line. It was held that in defining the word pole, one should not be governed by the wire or material of the support used, but was considering the danger from any elevated wire carrying electric current, and that regardless of the size or material wire of its individual members, any continuous series of structures intended and used solely or primarily for the purpose of supporting wires carrying electric currents is a pole line (Inspiration Consolidation Cooper Co. v. Bryan 252 P. 1016).It is evident, therefore, that the word "poles", as used in Act No. 484 and incorporated in the petitioner's franchise, should not be given a restrictive and narrow interpretation, as to defeat the very object for which the franchise was granted. The poles as contemplated thereon, should be understood and taken as a part of the electric power system of the respondent Meralco, for the conveyance of electric current from the source thereof to its consumers. If the respondent would be required to employ "wooden poles", or "rounded poles" as it used to do fifty years back, then one should admit that the Philippines is one century behind the age of space. It should also be conceded by now that steel towers, like the ones in question, for obvious reasons, can better effectuate the purpose for which the respondent's franchise was granted.Granting for the purpose of argument that the steel supports or towers in question are no