On 1 September 1955 Vicencio and Simeon executed a chattel mortgage in favor of the Tumaladsover their house of strong materials located at Quiapo, Manila, which were being rented from Madrigal& Company, Inc. The mortgage was registered in the Registry of Deeds of Manila on 2 September 1955. The mortgage was executed to guarantee a loan of P4,800.00 received from the Tumalads,payable within one year at 12% yearly. Monthly payments are to be made starting September 1955 toJuly 1956, and the lump sum of P3,150 was payable on or before August 1956. It was also agreedthat default in the payment of any of the amortizations would cause the remaining unpaid balance tobecome immediately due and payable, the Chattel Mortgage enforceable, and the Sheriff of Manilaauthorized the to sell the property in a public auction for payment of debt. When Vicencio and Simeondefaulted in paying, the mortgage was extrajudicially foreclosed, and on 27 March 1956, the housewas sold at public auction pursuant to the said contract. As highest bidder, the Tumalads were issuedthe corresponding certificate of sale.On 18 April 1956, the Tumalads commenced civil case in the MTC of Manila, praying that the housebe vacated and its possession surrendered to them, and for Vicencio and Simeon to pay rent of P200.00 monthly from 27 March 1956 up to the time the possession is surrendered. On 21 September 1956, the municipal court rendered its decision in favor of the Tumalads. Vicencios appealed to thecourt a quo which also rendered a decision against them. On appeal, the case was elevated to theSupreme Court by the Court of Appeals for the reason that only questions of law are involved.Tumalads failed to file a brief and this appeal was submitted for decision without it.Nearly a year after the foreclosure sale the mortgaged house had been demolished on January 1957by virtue of a decision obtained by the lessor of the land on which the house stood.
Whether or not the chattel mortgage was null and void
because only personal properties canbe subject of a chattel mortgage?
The inclusion of the building, separate and distinct from the land, in the enumeration of what mayconstitute real properties (art. 415, New Civil Code) could only mean one thing — that
a building is by itself an immovable property
irrespective of whether or not said structure and the land on which it isadhered to belong to the same owner. Certain deviations, however, have been allowed for variousreasons; if parties to a contract by agreement treat as personal property that which by nature wouldbe real property.In the contract now before Us, the house on rented land is not only expressly designated as ChattelMortgage; 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 isconstructed and participation ..."Although there is no specific statement referring to the subject house as personal property, yet byceding, selling or transferring a property
by way of chattel mortgage
Vicencios could only have meantto convey the house as chattel, or at least, intended to treat the same as such, so that they should notnow be allowed to make an inconsistent stand by claiming otherwise.Moreover, the subject house stood on a rented lot to which Vicencios merely had a temporary right aslessee, and although this can not in itself alone determine the status of the property, it does so when