Rufino Pineda and his mother Juana Gonzales borrowed P2,500 from Conrado Navarro in 1959, securing the loan with a real estate mortgage on Juana's land and a chattel mortgage on Rufino's house and truck. When the loan became due in 1960, the defendants failed to pay and requested extensions, but still did not pay after the final extended deadline. Navarro sued to foreclose on the mortgages. The lower court found the mortgages valid and ordered the properties sold to repay the loan. On appeal, the defendants argued the house could not be mortgaged as a chattel since it was attached to the land. However, the higher court upheld the
Rufino Pineda and his mother Juana Gonzales borrowed P2,500 from Conrado Navarro in 1959, securing the loan with a real estate mortgage on Juana's land and a chattel mortgage on Rufino's house and truck. When the loan became due in 1960, the defendants failed to pay and requested extensions, but still did not pay after the final extended deadline. Navarro sued to foreclose on the mortgages. The lower court found the mortgages valid and ordered the properties sold to repay the loan. On appeal, the defendants argued the house could not be mortgaged as a chattel since it was attached to the land. However, the higher court upheld the
Rufino Pineda and his mother Juana Gonzales borrowed P2,500 from Conrado Navarro in 1959, securing the loan with a real estate mortgage on Juana's land and a chattel mortgage on Rufino's house and truck. When the loan became due in 1960, the defendants failed to pay and requested extensions, but still did not pay after the final extended deadline. Navarro sued to foreclose on the mortgages. The lower court found the mortgages valid and ordered the properties sold to repay the loan. On appeal, the defendants argued the house could not be mortgaged as a chattel since it was attached to the land. However, the higher court upheld the
Rufino Pineda and his mother Juana Gonzales borrowed P2,500 from Conrado Navarro in 1959, securing the loan with a real estate mortgage on Juana's land and a chattel mortgage on Rufino's house and truck. When the loan became due in 1960, the defendants failed to pay and requested extensions, but still did not pay after the final extended deadline. Navarro sued to foreclose on the mortgages. The lower court found the mortgages valid and ordered the properties sold to repay the loan. On appeal, the defendants argued the house could not be mortgaged as a chattel since it was attached to the land. However, the higher court upheld the
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G.R. No. L-18456
November 30, 1963
CONRADO P. NAVARRO, plaintiff-appellee,
vs. RUFINO G. PINEDA, RAMONA REYES, ET AL., defendants-appellants. Deogracias Taedo, Jr. for plaintiff-appellee. Renato A. Santos for defendants-appellants. PAREDES, J.: On December 14, 1959, defendants Rufino G. Pineda and his mother Juana Gonzales (married to Gregorio Pineda), borrowed from plaintiff Conrado P. Navarro, the sum of P2,500.00, payable 6 months after said date or on June 14, 1959. To secure the indebtedness, Rufino executed a document captioned "DEED OF REAL ESTATE and CHATTEL MORTGAGES", whereby Juana Gonzales, by way of Real Estate Mortgage hypothecated a parcel of land, belonging to her, registered with the Register of Deeds of Tarlac, under Transfer Certificate of Title No. 25776, and Rufino G. Pineda, by way of Chattel Mortgage, mortgaged his two-story residential house, having a floor area of 912 square meters, erected on a lot belonging to Atty. Vicente Castro, located at Bo. San Roque, Tarlac, Tarlac; and one motor truck, registered in his name, under Motor Vehicle Registration Certificate No. A-171806. 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.
On August 10, 1960, plaintiff filed a complaint for
foreclosure of the mortgage and for damages, which consisted of liquidated damages in the sum of P500.00 and 12% per annum interest on the principal, effective on the date of maturity, until fully paid. Defendants, answering the complaint, among others, stated Defendants admit that the loan is overdue but deny that portion of paragraph 4 of the First Cause of Action which states that the defendants unreasonably failed and refuse to pay their obligation to the plaintiff the truth being the defendants are hard up these days and pleaded to the plaintiff to grant them more time within which to pay their obligation and the plaintiff refused; WHEREFORE, in view of the foregoing it is most respectfully prayed that this Honorable Court render judgment granting the defendants until January 31, 1961, within which to pay their obligation to the plaintiff.
On September 30, 1960, plaintiff presented a Motion
for summary Judgment, claiming that the Answer failed to tender any genuine and material issue. The motion was set for hearing, but the record is not clear what ruling the lower court made on the said motion. On November 11, 1960, however, the parties submitted a Stipulation of Facts, wherein the defendants admitted the indebtedness, the authenticity and due execution of the Real Estate and Chattel When the mortgage debt became due and payable, the Mortgages; that the indebtedness has been due and defendants, after demands made on them, failed to pay. unpaid since June 14, 1960; that a liability of 12% per annum as interest was agreed, upon failure to pay the They, however, asked and were granted extension up to June 30, 1960, within which to pay. Came June 30, principal when due and P500.00 as liquidated damages; that the instrument had been registered in the defendants again failed to pay and, for the second time, asked for another extension, which was given, up Registry of Property and Motor Vehicles Office, both of the province of Tarlac; that the only issue in the case to July 30, 1960. In the second extension, defendant Pineda in a document entitled "Promise", categorically is whether or not the residential house, subject of the mortgage therein, can be considered a Chattel and the stated that in the remote event he should fail to make propriety of the attorney's fees. good the obligation on such date (July 30, 1960), the defendant would no longer ask for further extension and there would be no need for any formal demand, On February 24, 1961, the lower court held and plaintiff could proceed to take whatever action he might desire to enforce his rights, under the said ... WHEREFORE, this Court renders decision mortgage contract. In spite of said promise, in this Case: defendants, failed and refused to pay the obligation. (a) Dismissing the complaint with regard to defendant Gregorio Pineda;
(b) Ordering defendants Juana Gonzales and
the spouses Rufino Pineda and Ramon Reyes, to pay jointly and severally and within ninety (90) days from the receipt of the copy of this decision to the plaintiff Conrado P. Navarro the principal sum of P2,550.00 with 12% compounded interest per annum from June 14, 1960, until said principal sum and interests are fully paid, plus P500.00 as liquidated damages and the costs of this suit, with the warning that in default of said payment of the properties mentioned in the deed of real estate mortgage and chattel mortgage (Annex "A" to the complaint) be sold to realize said mortgage debt, interests, liquidated damages and costs, in accordance with the pertinent provisions of Act 3135, as amended by Act 4118, and Art. 14 of the Chattel Mortgage Law, Act 1508; and
said structure and the land on which it is adhered to,
belong to the same owner" (Lopez v. Orosa, G.R. Nos. L-10817-8, Feb. 28, 1958). (See also the case of Leung Yee v. Strong Machinery Co., 37 Phil. 644). Appellants argue that since only movables can be the subject of a chattel mortgage (sec. 1, Act No. 3952) then the mortgage in question which is the basis of the present action, cannot give rise to an action for foreclosure, because it is nullity. (Citing Associated Ins. Co., et al. v. Isabel Iya v. Adriano Valino, et al., L-10838, May 30, 1958.)
The trial court did not predicate its decision declaring
the deed of chattel mortgage valid solely on the ground that the house mortgaged was erected on the land which belonged to a third person, but also and principally on the doctrine of estoppel, in that "the parties have so expressly agreed" in the mortgage to consider the house as chattel "for its smallness and (c) Ordering the defendants Rufino Pineda and mixed materials of sawali and wood". In construing Ramona Reyes, to deliver immediately to the arts. 334 and 335 of the Spanish Civil Code Provincial Sheriff of Tarlac the personal (corresponding to arts. 415 and 416, N.C.C.), for properties mentioned in said Annex "A", purposes of the application of the Chattel Mortgage immediately after the lapse of the ninety (90) Law, it was held that under certain conditions, "a days above-mentioned, in default of such property may have a character different from that payment. imputed to it in said articles. It is undeniable that the parties to a contract may by agreement, treat as personal property that which by nature would be real The above judgment was directly appealed to this property" (Standard Oil Co. of N.Y. v. Jaranillo, 44 Court, the defendants therein assigning only a single Phil. 632-633)."There can not be any question that a error, allegedly committed by the lower court, to wit building of mixed materials may be the subject of a
chattel mortgage, in which case, it is considered as
between the parties as personal property. ... The matter In holding that the deed of real estate and chattel mortgages appended to the complaint is depends on the circumstances and the intention of the valid, notwithstanding the fact that the house of parties". "Personal property may retain its character as such where it is so agreed by the parties interested the defendant Rufino G. Pineda was made the even though annexed to the realty ...". (42 Am. Jur. subject of the chattel mortgage, for the reason 209-210, cited in Manarang, et al. v. Ofilada, et al., that it is erected on a land that belongs to a G.R. No. L-8133, May 18, 1956; 52 O.G. No. 8, p. third person. 3954.) The view that parties to a deed of chattel mortgagee may agree to consider a house as personal Appellants contend that article 415 of the New Civil property for the purposes of said contract, "is good Code, in classifying a house as immovable property, makes no distinction whether the owner of the land is only insofar as the contracting parties are concerned. It or not the owner of the building; the fact that the land is based partly, upon the principles of estoppel ..." (Evangelista v. Alto Surety, No. L-11139, Apr. 23, belongs to another is immaterial, it is enough that the 1958). In a case, a mortgage house built on a rented house adheres to the land; that in case of immovables by incorporation, such as houses, trees, plants, etc; the land, was held to be a personal property, not only because the deed of mortgage considered it as such, Code does not require that the attachment or but also because it did not form part of the land incorporation be made by the owner of the land, the only criterion being the union or incorporation with the (Evangelista v. Abad [CA];36 O.G. 2913), for it is now soil. In other words, it is claimed that "a building is an well settled that an object placed on land by one who has only a temporary right to the same, such as a lessee immovable property, irrespective of whether or not
or usufructuary, does not become immobilized by
Bengzon, C.J., Padilla, Bautista Angelo, Labrador, attachment (Valdez v. Central Altagracia, 222 U.S. 58, Barrera, Dizon, Regala, and Makalintal, JJ., concur. cited in Davao Sawmill Co., Inc. v. Castillo, et al., 61 Phil. 709). Hence, if a house belonging to a person stands on a rented land belonging to another person, it may be mortgaged as a personal property is so stipulated in the document of mortgage. (Evangelista v. Abad, supra.) It should be noted, however, that the principle is predicated on statements by the owner declaring his house to be a chattel, a conduct that may conceivably estop him from subsequently claiming otherwise (Ladera, et al.. v. C. N. Hodges, et al., [CA]; 48 O.G. 5374). The doctrine, therefore, gathered from these cases is that although in some instances, a house of mixed materials has been considered as a chattel between them, has been recognized, it has been a constant criterion nevertheless that, with respect to third persons, who are not parties to the contract, and specially in execution proceedings, the house is considered as an immovable property (Art. 1431, New Civil Code). In the case at bar, the house in question was treated as personal or movable property, by the parties to the contract themselves. 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 (L-10837-38, supra), 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 v. Orosa, (L-10817-18), the subject building was a theatre, built of materials worth more than P62,000, attached permanently to the soil. In these 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. CONFORMABLY WITH ALL THE FOREGOING, the decision appealed from, should be, as it is hereby affirmed, with costs against appellants.