Plaintiff-Appellee Vs Vs Defendants-Appellants Deogracias Tañedo, Jr. Renato A. Santos
Plaintiff-Appellee Vs Vs Defendants-Appellants Deogracias Tañedo, Jr. Renato A. Santos
Plaintiff-Appellee Vs Vs Defendants-Appellants Deogracias Tañedo, Jr. Renato A. Santos
SYLLABUS
DECISION
PAREDES , J : p
When the mortgage debt became due and payable, the defendants, after
demands made on them, failed to pay. They, however, asked and were granted an
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extension up to June 30, 1960, within which to pay. Came June 30, defendants again
failed to pay and, for the second time, asked for another extension, which was given, up
to July 30, 1960. In the second extension, defendant Pineda in a document entitled
"Promise", categorically stated that in the remote event he should fail to make 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, and plaintiff could
proceed to take whatever action he might desire to enforce his rights, under the said
mortgage contract. In spite of said promise, defendants failed and refused to pay the
obligation.
On August 10, 1960, plaintiff led 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; . . .
The above judgment was directly appealed to this Court, the defendants therein
assigning only a single error, allegedly committed by the lower court, to wit —
"In holding that the deed of real estate and chattel mortgages
appended to the complaint is valid, notwithstanding the fact that the house
of the defendant Ru no G. Pineda was made the subject of the chattel
mortgage, for the reason that it is erected on a land that belongs to a third
person."
Appellants contend that Article 415 of the New Civil Code, in classifying a house
as immovable property, makes no distinctions whether the owner of the land is or is not
the owner of the building; the fact that the land belongs to another is immaterial, it is
enough that the house adheres to the land; that in case of immovables by incorporation,
such as houses, trees, plants, etc; the Code does not require that the attachment or
incorporation be made by the owner of the land, the only criterion being the union or
incorporation with the soil. In other words, it is claimed that "a building is an immovable
property, irrespective of whether or not said structure and the land on which it is
adhered to, belong to the same owner" (Lopez vs. Orosa, G.R. Nos. L-10817-8, Feb. 28,
1958). (See also the case of Leung Yee vs. 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 a nullity. (Citing
Associated Ins. Co., et al. vs. Isabel Iya, Isabel Iya vs. 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 a
chattel "for its smallness and mixed materials of sawali and wood". In construing Arts.
334 and 335 of the Spanish Civil Code (corresponding to Arts. 415 and 416, N.C.C.), for
purposes of the application of the Chattel Mortgage Law, it was held that under certain
conditions, "a property may have a character different from that 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 property" (Standard Oil Co. of N.Y.
vs. Jaranillo, 44 Phil., 632-633). "There can not be any question that a 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 depends on the circumstances
and the intention of the parties". "Personal property may retain its character as such
where it is so agreed by the parties interested even though annexed to the realty . . .".
(42 Am. Jur. 209-210, cited in Manarang, et al. vs. O lada, et al., G.R. No. L-8133, May
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18, 1956; 52 O.G. No. 8, p. 3954). The view that parties to a deed of chattel mortgage
may agree to consider a house as personal property for the purposes of said contract,
"is good only insofar as the contracting parties are concerned. It is based, partly, upon
the principles of estoppel . . ." (Evangelista vs. Alto Surety No. L-11139, Apr. 23, 1958).
In a case, a mortgaged house built on a rented land, was held to be a personal property
not only because the deed of mortgage considered. it as such, but also because it did
not form an integral part of the land (Evangelista vs. Abad, [CA]; 36 O.G. 2913), for it is
now well settled that an object placed on land by one who has only a temporary right to
the same, such as a lessee or usufructuary, does not become immobilized by
attachment (Valdez vs. Central Altagracia, 222 U.S. 58, cited in Davao Sawmill Co. Inc.
vs. 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 if
so stipulated in the document of mortgage (Evangelista vs. 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 subsequent
claiming otherwise (Ladera, et al. vs. C.W. 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 the parties and
that the validity of the contract 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 Ru no 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 roo ng, 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 vs. Orosa, (L-10817-18), 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.
CONFORMABLY WITH ALL THE FOREGOING, the decision appealed from, should
be, as it is hereby affirmed, with costs against appellants.
Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Barrera, Dizon, Regala and
Makalintal, JJ., concur.