Case Summary (G.R. No. L-43059)
Facts
Sampaguita Pictures, Inc. owned the Sampaguita Pictures Building in Quezon City, which it leased to Capitol “300” Inc. under conditions that any permanent improvements made by Capitol would belong to Sampaguita. Capitol purchased glass and wooden jalousies from Jalwindor Manufacturers, Inc. on credit, which were subsequently installed in the leased premises. When Capitol failed to pay its debts to Jalwindor, the latter filed a collection action and obtained a compromise agreement stating the materials would serve as security for the debt.
Legal Proceedings
Capitol defaulted on its rental payments to Sampaguita, prompting the latter to file for ejectment and collection of dues. The City Court of Quezon City ruled in favor of Sampaguita, ordering Capitol to vacate and pay the owed amounts. Due to Capitol’s further defaults, Jalwindor executed a levy on the jalousies, which led to their sale at a public auction, where Jalwindor was the highest bidder.
Third-Party Claim and Initial Ruling
Sampaguita contested the Sheriff’s sale through a third-party claim asserting ownership of the jalousies. Jalwindor posted an indemnity bond, and the items were sold despite Sampaguita's claim. The lower court ruled against Sampaguita, stating that Capitol could not legally transfer ownership of the jalousies.
Legal Principles of Ownership
Ownership Transfer: According to the Civil Code of the Philippines, ownership is acquired through delivery, regardless of payment status. The lease agreement explicitly stated that improvements made by Capitol were the property of Sampaguita, thus establishing Sampaguita’s ownership prior to the levy.
Court’s Analysis
The Court underscored that ownership had passed to Sampaguita at the moment the jalousies were delivered, citing the lease terms as the legal basis. The Sheriff’s act of levying items owned by a third party (Sampaguita) was not authorized under law,
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Case Overview
- This case concerns a dispute over ownership of glass and wooden jalousies installed in a leased property owned by Sampaguita Pictures, Inc.
- The case was certified to the Supreme Court by the Court of Appeals under the Judiciary Act of 1948 provisions.
- The main parties involved are:
- Plaintiff-Appellant: Sampaguita Pictures, Inc. (owner of the building)
- Defendant-Appellee: Jalwindor Manufacturers, Inc. (supplier of the jalousies)
- Lessee: Capitol "300" Inc. (tenant of the premises)
Lease Agreement Details
- Sampaguita leased the roofdeck of its building to Capitol "300" for social purposes, with specific stipulations regarding improvements.
- Key clauses included:
- All permanent improvements made by Capitol would belong to Sampaguita without reimbursement obligations.
- Improvements were considered part of the monthly rental payment.
- Capitol was responsible for any alterations and improvements at its own expense.
Events Leading to Dispute
- Capitol purchased jalousies from Jalwindor on credit, which were delivered and installed in the leased premises.
- Capitol defaulted on payments to both Jalwindor and Sampaguita, leading to:
- Jalwindor filing a collection action and seeking preliminary attachment against Capitol.
- A Compromise Agreement was made, acknowledging Capi