G.R. No.

L-17898 October 31, 1962

PASTOR D. AGO, petitioner,

Jose M. Luison for petitioner.

LABRABOR, J.:

Appeal by certiorari to review the decision of respondent Court of Appeals in CA-G.R. No. 26723-R
entitled "Pastor D. Ago vs. The Provincial Sheriff of Surigao, et al." which in part reads:

In this case for certiorari and prohibition with preliminary injunction, it appears from the records that
the respondent Judge of the Court of First Instance of Agusan rendered judgment (Annex "A") in open
court on January 28, 1959, basing said judgment on a compromise agreement between the parties.

On August 15, 1959, upon petition, the Court of First Instance issued a writ of execution.

Petitioner's motion for reconsideration dated October 12, 1959 alleges that he, or his counsel, did not
receive a formal and valid notice of said decision, which motion for reconsideration was denied by the
court below in the order of November 14, 1959.

Petitioner now contends that the respondent Judge exceeded in his jurisdiction in rendering the
execution without valid and formal notice of the decision.

A compromise agreement is binding between the parties and becomes the law between them.
(Gonzales vs. Gonzales G.R. No. L-1254, May 21, 1948, 81 Phil. 38; Martin vs. Martin, G.R. No. L-12439,
May 22, 1959) .

It is a general rule in this jurisdiction that a judgment based on a compromise agreement is not
appealable and is immediately executory, unless a motion is filed on the ground fraud, mistake or
duress. (De los Reyes vs. Ugarte, 75 Phil. 505; Lapena vs. Morfe, G.R. No. L-10089, July 31, 1957)

Petitioner's claim that he was not notified or served notice of the decision is untenable. The judgment
on the compromise agreement rendered by the court below dated January 28, 1959, was given in open
court. This alone is a substantial compliance as to notice. (De los Reyes vs. Ugarte, supra)

IN VIEW THEREOF, we believe that the lower court did not exceed nor abuse its jurisdiction in ordering
the execution of the judgment. The petition for certiorari is hereby dismissed and the writ of preliminary
injunction heretofore dissolved, with costs against the petitioner.

IT IS SO ORDERED.

The facts of the case may be briefly stated as follows: In 1957, petitioner Pastor D. Ago bought sawmill
machineries and equipments from respondent Grace Park Engineer domineering, Inc., executing a
chattel mortgage over said machineries and equipments to secure the payment of balance of the price
remaining unpaid of P32,000.00, which petitioner agreed to pay on installment basis.

Petitioner Ago defaulted in his payment and so, in 1958 respondent Grace Park Engineering, Inc.
instituted extra-judicial foreclosure proceedings of the mortgage. To enjoin said foreclosure, petitioner
herein instituted Special Civil Case No. 53 in the Court of First Instance of Agusan. The parties to the case
arrived at a compromise agreement and submitted the same in court in writing, signed by Pastor D. Ago
and the Grace Park Engineering, Inc. The Hon. Montano A. Ortiz, Judge of the Court of First Instance of
Agusan, then presiding, dictated a decision in open court on January 28, 1959.

Petitioner 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
on August 15, 1959. A writ of execution, dated September 23, 1959, later followed.

The herein respondent, Provincial Sheriff of Surigao, acting upon the writ of execution issued by the
lower court, levied upon and ordered the sale of the sawmill machineries and equipments in question.
These machineries and equipments had been taken to and installed in a sawmill building located in
Lianga, Surigao del Sur, and owned by the Golden Pacific Sawmill, Inc., to whom, petitioner alleges, he
had sold them on February 16, 1959 (a date after the decision of the lower court but before levy by the
Sheriff).

Having been advised by the sheriff that the public auction sale was set for December 4, 1959, petitioner,
on December 1, 1959, filed the petition for certiorari and prohibition with preliminary injunction with
respondent Court of Appeals, alleging that a copy of the aforementioned judgment given in open court
on January 28, 1959 was served upon counsel for petitioner only on September 25, 1959 (writ of
execution is dated September 23, 1959); that the order and writ of execution having been issued by the
lower court before counsel for petitioner received a copy of the judgment, its resultant last order that
the "sheriff may now proceed with the sale of the properties levied constituted a grave abuse of
discretion and was in excess of its jurisdiction; and that the respondent Provincial Sheriff of Surigao was
acting illegally upon the allegedly void writ of execution by levying the same upon the sawmill
machineries and equipments which have become real properties of the Golden Pacific sawmill, Inc., and
is about to proceed in selling the same without prior publication of the notice of sale thereof in some
newspaper of general circulation as required by the Rules of Court.

The Court of Appeals, on December 8, 1959, issued a writ of preliminary injunction against the sheriff
but it turned out that the latter had already sold at public auction the machineries in question, on
December 4, 1959, as scheduled. The respondent Grace Park Engineering, Inc. was the only bidder for
P15,000.00, although the certificate sale was not yet executed. The Court of Appeals constructed the
sheriff to suspend the issuance of a certificate of sale of the said sawmill machineries and equipment
sold by him on December 4, 1959 until the final decision of the case. On November 9, 1960 the Court of
Appeals rendered the aforequoted decision.

Before this Court, petitioner alleges that the Court of Appeals erred (1) in holding that the rendition of
judgment on compromise in open court on January 1959 was a sufficient notice; and (2) in not resolving
the other issues raised before it, namely, (a) the legality of the public auction sale made by the sheriff,
and (b) the nature of the machineries in question, whether they are movables or immovables.
The Court of Appeals held that as a judgment was entered by the court below in open court upon the
submission of the compromise agreement, the parties may be considered as having been notified of said
judgment and this fact constitutes due notice of said judgment. This raises the following legal question:
Is the order dictated in open court of the judgment of the court, and is the fact the petitioner herein was
present in open court was the judgment was dictated, sufficient notice thereof? The provisions of the
Rules of Court decree otherwise. Section 1 of Rule 35 describes the manner in which judgment shall be
rendered, thus:

SECTION 1. How judgment rendered. — All judgments determining the merits of cases shall be in writing
personally and directly prepared by the judge, and signed by him, stating clearly and distinctly the facts
and the law on which it is based, filed with the clerk of the court.

The court of first instance being a court of record, in order that a judgment may be considered as
rendered, must not only be in writing, signed by the judge, but it must also be filed with the clerk of
court. The mere pronouncement of the judgment in open court with the stenographer taking note
thereof does not, therefore, constitute a rendition of the judgment. It is the filing of the signed decision
with the clerk of court that constitutes rendition. While it is to be presumed that the judgment that was
dictated in open court will be the judgment of the court, the court may still modify said order as the
same is being put into writing. And even if the order or judgment has already been put into writing and
signed, while it has not yet been delivered to the clerk for filing it is still subject to amendment or
change by the judge. It is only when the judgment signed by the judge is actually filed with the clerk of
court that it becomes a valid and binding judgment. Prior thereto, it could still be subject to amendment
and change and may not, therefore, constitute the real judgment of the court.

Regarding the notice of judgment, the mere fact that a party heard the judge dictating the judgment in
open court, is not a valid notice of said judgment. If rendition thereof is constituted by the filing with the
clerk of court of a signed copy (of the judgment), it is evident that the fact that a party or an attorney
heard the order or judgment being dictated in court cannot be considered as notice of the real
judgment. No judgment can be notified to the parties unless it has previously been rendered. The
notice, therefore, that a party has of a judgment that was being dictated is of no effect because at the
time no judgment has as yet been signed by the judge and filed with the clerk.

Besides, the Rules expressly require that final orders or judgments be served personally or by registered
mail. Section 7 of Rule 27 provides as follows:

SEC. 7. Service of final orders or judgments. — Final orders or judgments shall be served either
personally or by registered mail.

In accordance with this provision, a party is not considered as having been served with the judgment
merely because he heard the judgment dictating the said judgment in open court; it is necessary that he
be served with a copy of the signed judgment that has been filed with the clerk in order that he may
legally be considered as having been served with the judgment.

For all the foregoing, the fact that the petitioner herein heard the trial judge dictating the judgment in
open court, is not sufficient to constitute the service of judgement as required by the above-quoted
section 7 of Rule 2 the signed judgment not having been served upon the petitioner, said judgment
could not be effective upon him (petitioner) who had not received it. It follows as a consequence that
the issuance of the writ of execution null and void, having been issued before petitioner her was served,
personally or by registered mail, a copy of the decision.

The second question raised in this appeal, which has been passed upon by the Court of Appeals,
concerns the validity of the proceedings of the sheriff in selling the sawmill machineries and equipments
at public auction with a notice of the sale having been previously published.

The record shows that after petitioner herein Pastor D. Ago had purchased the sawmill machineries and
equipments he assigned the same to the Golden Pacific Sawmill, Inc. in payment of his subscription to
the shares of stock of said corporation. Thereafter the sawmill machinery and equipments were installed
in a building and permanently attached to the ground. By reason of such installment in a building, the
said sawmill machineries and equipment became real estate properties in accordance with the provision
of Art. 415 (5) of the Civil Code, thus:

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;

This Court in interpreting a similar question raised before it in the case of Berkenkotter vs. Cu Unjieng e
Hijos, 61 Phil. 683, held that the installation of the machine and equipment in the central of the
Mabalacat Sugar Co., Inc. for use in connection with the industry carried by the company, converted the
said machinery and equipment into real estate by reason of their purpose. Paraphrasing language of
said decision we hold that by the installment 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 equipments into real estate within the meaning of Article 415(5)
above-quoted of the Civil Code of the Philippines.

Considering that the machineries and equipments 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
in Sec. 16 of Rule 39 of the Rules of Court, which is as follows:

SEC. 16. Notice of sale of property on execution. — Before the sale of property on execution, notice
thereof must be given as follows:

xxx xxx xxx

(c) In case of real property, by posting a similar notice particularly describing the property for twenty
days in three public places in the municipality or city where the property is situated, and also where the
property is to be sold, and, if the assessed value of the property exceeds four hundred pesos, by
publishing a copy of the notice once a week, for the same period, in some newspaper published or
having general circulation in the province, if there be one. If there are newspapers published in the
province in both the English and Spanish languages, then a like publication for a like period shall be
made in one newspaper published in the English language, and in one published in the Spanish
language.
the sale made by the sheriff must be declared null and void.