Pastor D. Ago vs. Court of Appeals, Hon. Montano A.

Ortiz, The Provincial Sheriff of Surigao and Grace

Park Engineering, Inc.

(Art. 415)

GR. No. L-17898

October 31, 1962

FACTS

In 1957, Pastor D. Ago bought sawmill machineries and equipment from respondent Grace Park
Engineering, Inc., executing a chattel mortgage over said machineries and equipment to secure the
payment of balance of the price remaining unpaid of P32,000.00, which Ago agreed to pay on
installment basis.

Ago defaulted in his payment and so, in 1958 Grace Park Engineering, Inc. instituted extra-judicial
foreclosure proceedings of the mortgage. To enjoin said foreclosure, Ago instituted a special civil action
and both parties arrived at a compromise agreement.

Ago continued to default in his payments as provided in the judgment by compromise, so Grace Park
Engineering, Inc. filed with the lower court a motion for execution, which was granted by the court. A
writ of execution, dated September 23, 1959, later followed.

Ago defaulted in his payment and so, in 1958 Grace Park Engineering, Inc. instituted extra-judicial
foreclosure proceedings of the mortgage. To enjoin said foreclosure, Ago instituted a special civil action
and both parties arrived at a compromise agreement.

Ago continued to default in his payments as provided in the judgment by compromise, so Grace Park
Engineering, Inc. filed with the lower court a motion for execution, which was granted by the court. A
writ of execution, dated September 23, 1959, later followed.

The sheriff sold at public auction the machineries in question, on December 4, 1959, as scheduled, to
Grace Park Engineering, Inc. for Php 15,000.00

ISSUE

Whether or not the subject machineries and equipment on execution are movable properties, which
were validly sold in accordance with law.

RULING

NO. The subject machineries and equipment are immovable properties.

By the installation of the sawmill machineries in the building of the Gold Pacific Sawmill, Inc., for use in
the sawing of logs carried on in said building, the same became a necessary and permanent part of the
building or real estate on which the same was constructed, converting the said machineries and
equipment into real estate within the meaning of Article 415(5) above-quoted of the Civil Code of the
Philippines.

ART. 415. The following are immovable property:

xxx xxx xxx

(5) Machinery, receptacles, instruments or implements tended 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;

Considering that the immovable properties in question valued at more than P15,000.00 appear to have
been sold without the necessary advertisement of sale by publication in a newspaper, as required by law
(Notice of Sale of Property on Execution, Sec. 16, Rule 39, Rules of Court), the sale made by the sheriff
must be declared null and void.