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Case Digest - Navarro v. Pineda

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CASE DIGEST

CASE NO. 4
NAVARRO V. PINEDA
GR NO. L-18456

FACTS:

Rufino Pineda and his mother, Juana Gonzales, borrowed from plaintiff Conrado Navarro, the sum of
P2550.00, and payable 6 months after date. Pineda executed “Deed of Real Estate and Chattel
Mortgages,” whereby his mother, by way of Real Estate Mortgage hypothecated a parcel of land, belonging
to her. Both mortgages were contained in one instrument, which was registered in both the Office of the
Register of Deeds and the Motor Vehicles Office of Tarlac. The defendants failed to pay when the
mortgage became due and payable. The plaintiff gave two extensions. They still failed to pay.

When the plaintiff filed a complaint for foreclosure of the mortgage, defendant questioned the validity of the
chattel mortgage over his house on the ground that the house, being an immovable property, could not be
the subject of a chattel mortgage. Defendant cited cases to prove their point (Lopez v. Ororsa; Associated
Ins. & Surety Co. v. Iya; and Leung Yee v. Strong Machinery Co.)

Additional note (for recit purposes):

– In the second extension, the defendants promised that should they fail to pay the obligation on such date,
they would no longer ask for further extension and there would be no need for any formal demand, and
plaintiff could proceed to take whatever action he might desire to enforce his rights, under the said
mortgage contract.

ISSUE:

Whether or not the Deed of Real Estate and Chattel Mortgages is valid, particularly on the questions of
whether or not the residential house, subject of the mortgage therein, can be considered a chattel and the
propriety of the attorney’s fees.

HELD:

Yes. The Deed of Real Estate and Chattel Mortgage is valid. The parties to the contract treated the house
in question as personal or movable property. In the deed of chattel mortgage, appellant Rufino G. Pineda
conveyed by way of “Chattel Mortgage” “my personal properties,” a residential house and a truck. The
mortgagor himself grouped the house with the truck, which is, inherently a movable property. The house
which was not even declared for taxation purposes was small and made of light construction materials: G.I.
sheets roofing, sawali and wooden walls and wooden posts; built on land belonging to another.

The cases cited by appellants are not applicable to the present case. The Iya cases refer to a building or a
house of strong materials, permanently adhered to the land, belonging to the owner of the house himself. In
the case of Lopez vs. Orosa the subject building was a theater, built of materials worth more than
P62,000.00 attached permanently to the soil. In these two cases and in the Leung Yee Case, supra, third
persons assailed the validity of the deed of chattel mortgages; in the present case, it was one of the parties
to the contract of mortgages who assailed its validity.

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