G.R. No. L-30173 September 30, 1971
GAVINO A. TUMALAD and GENEROSA R. TUMALAD, plaintiffs-appellees
ALBERTA VICENCIO and EMILIANO SIMEON, defendants-appellants.
On Sep 1, 1955, Vicencio and Simeon executed a chattel mortgage in favor of Tumalad over their house of strong materials located at Quiapo, Manila over Lot Nos 6B and 7B, Block 2554, which were being rented from Madrigal & Company, Inc. It was also agreed that in default the payment of any amortizations would cause the remaining unpaid balance to become immediately due and payable, the Sheriff of the City of Manila or any of his deputies is empowered and authorized to sell all the mortgagor’s property after the necessary publication in order to settle the financial debts, plus interest and yearly fees.
When Vicencio & Simeon defaulted in paying, the mortgage was extrajudicially foreclosed, and on 27 Mar 1956, the house was sold at public auction pursuant to the sent contract. As highest bidder, Tumalad were issued corresponding certificate of sale. Municipal court eventually rendered a decision ordering defendants to vacate the premises described in the complaint.
During the pendency of the appeal to the CFI, Vicencio and Simeon failed to deposit rent for Nov 1956. As a result, the court granted Tumalad’s motion for execution, and it was issued Jan 1957. However, the judgement regarding the surrender of possession to Tumalad could not be executed because the subject house had been already demolished on Jan 1957 pursuant to the order of court in a separate civil case for ejectment against the present defendants for non-payment of rentals on the land where the house was constructed.
Vicencio & Simeon predicate their theory of nullity of the chattel mortgage on two grounds: a) that their signatures on the chattel mortgage were obtained through fraud, deceit, or trickery, and b) that the subject matter of mortgage is a house o strong materials, and being an immovable, it can only be the subject of a real estate mortgage and not a chattel mortgage.
Whether the subject of chattel mortgage, which is a house of strong material and being an immovable, is valid.
Yes. The subject matter of chattel mortgage is valid.
The house on rented land is not only expressly designated as chattel mortgage. It specifically provides that the mortgagor voluntarily cedes, sells, and transfers, by way of Chattel Mortgage, the property together with its leasehold rights over the lot on which it is constructed. Although there is no specific statement referring to the subject house as personal property, yet by ceding, selling, or transferring a property by way of chattel mortgage, Vicencio & Simeon could only have meant to convey the house as chattel, or at least, intended to treat the same as such, so that they should not be allowed to make an inconsistent stand by claiming otherwise.
Moreover, the subject house stood on a rented lot to which Vicencio and Simeon merely had a temporary right as lessee, although this cannot in itself alone determine the status of the property, it does so when combined with other factors to sustain the interpretation that the parties intended to treat the house as personal property.
Finally, it is Vicencio and Simeon themselves who are attacking the validity of the chattel mortgage in this case. The doctrine therefore applies to the herein defendants, having treated the subject house as personal property.
FOR THE FOREGOING REASONS, the decision appealed from is reversed and another one entered, dismissing the complaint. With costs against plaintiffs-appellees.