SAMPAGUITA PICTURES, INC., PLAINTIFF-APPELLANT, VS. JALWINDOR MANUFACTURERS, INC., DEFENDANT-APPELLEE.

This case was certified to this Court by the Court of Appeals
pursuant to the provisions of Section 17, paragraph (6) in relation to Section
31 of the Judiciary Act of 1948.

Plaintiff-appellant Sampaguita Pictures, Inc. (hereinafter
referred to as Sampaguita) is the owner of the Sampaguita
Pictures Building
located at the corner of General Araneta and General Roxas Streets, Cubao, Quezon
City.  The
roofdeck of the building and all existing improvements thereon were leased by
Sampaguita to Capitol “300” Inc.(Capitol for short), and it was
agreed, among other things, that the premises shall be used by said club for
social purposes exclusively for its members and guests; that all permanent
improvements made by the lessee on the leased premises shall belong to the
lessor without any obligation on the part of the lessor to reimburse the lessee
for the sum spent for said improvements; that the improvements made by lessee
have been considered as part of the consideration of the monthly rental and
said improvements belong to the lessor; that any remodelling, alterations
and/or addition to the premises shall be at the expense of the lessee and such
improvements belong to the lessor, without any obligation to reimburse the
lessee of any sum spent for said improvements. (pp. 29-32,
Record on Appeal).

Capitol “300” purchased on credit from
defendant-appellee Jalwindor Manufacturers, Inc.  (hereinafter
referred to as Jalwindor) glass and wooden jalousies which were delivered and
installed in the leased premises by Jalwindor, replacing the existing
windows.  On June 1, 1964, Jalwindor filed with the Court of First
Instance of Rizal, Quezon City, an action for collection of a sum of money with a petition
for preliminary attachment against Capitol for its failure to pay its
purchases.  The parties submitted to the
trial court a Compromise Agreement wherein Capitol acknowledged its
indebtedness to Jalwindor in the amount of P9,531.09,
exclusive of attorney’s fees and interest, payable in monthly installments of
at least P300.00 a month beginning December 15, 1964; and pending liquidation
of the said obligation, all the materials purchased by Capitol will be
considered as security for such undertaking. 
(p. 13, Record on Appeal).

In the meantime, Capitol “300” was not able to pay
rentals to Sampaguita from March 1,
1964 to April 30, 1965,
water, electric and telephone services. 
Sampaguita filed a complaint for ejectment and for collection of a sum
of money against Capitol and on June 8,
1965, the City Court of Quezon City rendered judgment ordering
Capitol to vacate the premises and to pay Sampaguita.

On the other hand, Capitol likewise failed to comply with the
terms of the Compromise Agreement, and on July 31, 1965, the Sheriff of Quezon City made levy on the
glass and wooden jalousies in question. 
Sampaguita filed a third-party claim alleging that it is the owner of
said materials and not Capitol, Jalwindor, however, filed an idemnity bond in
favor of the Sheriff and the items were sold at public auction on August 30, 1965 with Jalwindor as the
highest bidder for P6,000.00.

Sampaguita filed with the Court of First Instance of Rizal,
Branch IV of Quezon City, an action to nullify the
Sheriff’s Sale and for the issuance
of a writ of preliminary injunction against Jalwindor from detaching the glass
and wooden jalousies.  Jalwindor was
ordered to maintain the status quo pending final determination of
the case.  No actual hearing was held and
the parties submitted the fol­lowing stipulation of facts for the consideration
of the court.

“1.  That plaintiff and defendant are both
domestic corporations duly organized and existing by and under the laws of the Philippines;

“2.  That plaintiff leased to the CAPITOL
“300”, Inc. the roofdeck of the Sampaguita building and all the
existing improvements thereon for a monthly rental of P650.00; that the parties
to the lease contract agreed that all permanent improvements made by the lessee
on the leased premises shall belong to the lessor without any obligation on the
part of the lessor to reimburse the lessee for the sum spent for said
improvements; that it was agreed upon by the parties that the improvements made
by the lessee have been considered as part of the consideration of the monthly
rental;

“3.  That CAPITOL “300”, Inc. made
alterations on the leased premises; that it removed the then existing windows
and replaced them with the following items bought on credit from the JALWINDOR
MANUFACTURERS, INC., valued at P9,531.09, to wit:

‘J-21 (lever-type) Solex Bluepane Glass Jalousies

11 Sets 15′-1 3/4″ x 47-7/8″ (5 units)

4      “    13′-5 3/4″ x 47-7/3″ (5 units)

3      “    10′-9 3/4″ x 47-7/7″ (4 units)

2      “    18′-1 3/4″ x 65-3/8″ (6 units)

1   Set    9′-1 3/4“  x 65-3/8″ (3 units)

1              3′-0″        x 65-3/8″ (1 unit)

115 Pcs. Roto Operators for J-21

MODEL J-21 (Roto-type) Glass and Wood Jalousies

8 Sets    32-1/2″ x
60″ Solex Bluepane

19  “       31-1/4″ x 48″ Solex Bluepane

18  “       34″       x
48“  Wood’

“4. That after the
CAPITOL “300”, Inc. failed to pay the price of the items mentioned in
the preceding paragraph, JALWINDOR MANUFACTURERS, Inc. filed a case for collection
of a sum of money against CAPITOL “300”, Inc. with the Court of First
Instance of Rizal (Branch IV, Quezon City), Civil Case No. Q-8040; that by
virtue of a Compromise Agreement, CAPITOL “300”, Inc. acknowledged
indebtedness in favor of JALWINDOR in the amount of P9,531.09,
with a stipulation in the said Compromise Agreement, that the items forming
part of the improvements will form as security for such an undertaking;

“5. That due to the non-compliance by CAPITOL
“300”, Inc., JALWINDOR executed judgment; that the Sheriff of Quezon
City made levy on the items above-stated in paragraph 3 hereof and sold them at
a public auction to JALWINDOR MANUFACTURERS, INC. as the highest bidder, on
August 30, 1965, for the total amount of P6,000.00;

“6. That after CAPITOL “300”, Inc. failed
to pay the rentals in arrears from March
1, 1964 to April 30, 1965,
water, electric and telephone services amounting to P10,772.90,
the plaintiff SAMPAGUITA PICTURES, INC. filed with the City Court of Quezon
City, Civil Case No. II-13161 for ejectment and collection of a sum of money
against the CAPITOL “300”, Inc.; that the City Court rendered
judgment in favor of the Sampaguita Pictures, Inc., on June 8, 1965, ordering
the CAPITOL “300”, Inc. to vacate the premises located at the
Sampaguita Building and to pay the Sampaguita Pictures, Inc.;

“7. That after the Sheriff of Quezon City made levy
on the items above-stated in paragraph 3 hereof situated on the roofdeck of the
Sampaguita Building, plaintiff filed a Third Party Claim stated in its
affidavit on the ground of its right and title to the possession of the items
and that CAPITOL “300”, Inc. has no right or title whatsoever to the
possession over said items; that defendant filed a bond to indemnify the
Sheriff against the claim, and the Sheriff sold the items to the defendant;
that the JALWINDOR MANUFACTURERS, Inc., being the highest bidder and the
execution creditor, considered itself paid to the amount of P6,000.00;

“8. That the parties herein agree that the matter
of attorney’s fees be left to the sound discretion of the Court, which shall
not be less than P500.00.” (Record on Appeal, pp.
11-14).”

On October 20, 1967,
based on said Stipulation of Facts, the lower court dismissed the complaint and
ordered Sampaguita to pay Jalwindor the amount of P500.00 as attorney’s
fees.  Sampaguita filed a motion for
reconsideration which was like­wise denied, hence, the instant appeal.

Petitioner-appellant raised the following assignment of errors:

I

“The lower court erred in holding that Capitol “300”
Inc. could not legally transfer or assign the glass and wooden jalousies in
question to the plaintiff-appellant.

II

“The lower court erred in not holding that plaintiff-appellant
was the rightful owner of the glass and wooden jalousies when they were sold by
the Sheriff at the public auction.

III

“The lower court erred in not declaring as null and void the
levy on execution and the Sheriff’s sale at public auction of the glass and
wooden jalousies.

IV

“The lower court erred in holding that defendant-appellee
become the rightful owner of the glass and wooden jalousies.”

When the glass and wooden jalousies in question were delivered
and installed in the leased premises, Capitol became the owner thereof.  Ownership is not transferred by perfection of
the contract but by delivery, either actual or constructive.  This is true even if the purchase has been
made on credit, as in the case at bar. 
Payment of the purchase price is not essential to the transfer of
ownership as long as the property sold has been delivered.  Ownership is acquired from the moment the
thing sold was delivered to vendee, as when it is placed in his control and
possession.  (Arts. 1477, 1496 and 1497,
Civil Code of the Phil.)

Capitol entered into a lease contract with Sampaguita in 1964,
and the latter became the owner of the items in question by virtue of the
agreement in said contract “that all permanent improvements made by lessee
shall belong to the lessor and that said improvements have been considered as
part of the monthly rentals.”  When
levy or said items was made on July
31, 1965, Capitol, the judgment debtor, was no longer the owner
thereof.

The action taken by Sampaguita to protect its interest is
sanctioned by Section 17, Rule 39 of the Rules of Court, which reads:

“Section 17.  Proceedings where property
claimed by third person.

‘xxxx The officer is not liable for
damages for the taking or keeping of the property to any third-party claimant
unless a claim is made by the latter and unless an action for damages is
brought by him against the officer within one hundred twenty (120) days from
the date of the filing of the bond.  But
nothing herein contained shall prevent claimant or any third person from
vindicating his claim to the property by any action.’ “

It is, likewise, recognized in the case
of Bayer Phil., Inc. vs. Agana, et al., 63 SCRA 358, wherein the Court
declared, “that the rights of third party claimants over certain prop­erties
levied upon by the Sheriff to satisfy the judgment, may not be taken up in the
case where such claims are pre­sented but in a separate and independent action
instituted by claimants.  xxxx and should
a third-party appear to claim the property levied upon by the Sheriff and the
claim is denied, the remedy contemplated by the rules is the filing by said
party of a reivindicatory action against the execution creditor or the
purchaser of the property after the sale is completed or a complaint for
damages to be charged against the bond filed by the creditor in favor of the
sheriff.  xxx.
Thus, when a property levied upon by the sheriff pursuant to a writ of
execution is claimed by a third person in a sworn statement of ownership
thereof, as prescribed by the rules, an entirely different matter calling for a
new adjudication arises.”

The items in question were illegally levied upon since they do
not belong to the judgment debtor.  The
power of the Court in execution of judgment extends only to properties
unquestionably belonging to the judgment debtor.  The fact that Capitol failed to pay Jalwindor
the purchase price of the items levied upon did not prevent the transfer of
ownership to Capitol.  The complaint of
Sampaguita to nullify the Sheriff’s sale is well-founded, and should
prosper.  Execution sales affect the
rights of judgment debtor only, and the purchaser in the auction sale acquires
only the right as the debtor has at the time of sale.  Since the items already belong to Sampaguita
and not to Capitol, the judgment debtor, the levy and auction sale are, accordingly,
null and void.  It is well-settled in
this jurisdiction that the sheriff is not authorized to attach property not
belonging to the judgment debtor.  (Arabay, Inc. vs. Salvador, et al., 3 PHILAJUR, 413 [1978],
Herald Publishing vs. Ramos, 88 Phil. 94, 100).

WHEREFORE, the decision appealed from is hereby reversed,
and plaintiff-appellant Sampaguita is declared the lawful owner of the disputed
glass and wooden jalousies. 
Defendant-appellee Jalwindor is permanently enjoined from detaching said
items from the roofdeck of the Sampaguita Pictures Building, and is also
ordered to pay plaintiff-appellant the sum of P1,000.00 for and as attorney’s
fees, and costs.

SO ORDERED.

Teehankee, Acting C.J., (Chairman), Makasiar, Fernandez,
Guerrero, and Melencio-Herrera, JJ., concur.