September 30, 1971

GAVINO A. TUMALAD and GENEROSA R. TUMALAD, plaintiffs-appellees,

vs.
ALBERTA VICENCIO and EMILIANO SIMEON, defendants-appellants.

Facts: The defendants, Alberta Vicencio and Emiliano Simeon, executed a Chattel Mortgage of their house
of strong materials in favor to plaintiff, Gavino A. Tumalad and Generosa R. Tumalad. Defendant’s house
was erected on the land of Madrigal and Company, Inc. It was agreed that in default of payment of any
amortizations, shall cause the entire debt become immediately due and demandable.

Upon default, the mortgage was extra judicially foreclosed in favor of the plaintiff as the highest bidder. As
such, plaintiffs commenced a civil actions praying that the house be vacated and for the possession of the
property. Obtaining a favorable judgment thereto, they moved for it’s execution. However, the judgment of
possession cannot be executed for reason that the house was already torn down.

Issue: Whether or not, the subject matter of the mortgage, a house of strong materials, be the object of a
chattel mortgage?

Ruling:
Held that “it is obvious that the inclusion of the building, separate and distinct from the land, in the
enumeration of what may constitute 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 is adhered to belong to the same owner”, however it admits an exceptions. As in the case
at bar, since the land was rented and there was no express provision referring to the house as immovable,
nevertheless, by selling or transferring a house by way of chattel mortgage, the house is treated as a chattel.
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 principle of estoppel. 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 part
of the land, for it is now settled that an object placed on land by one who had only a temporary right to the
same, such as the lessee or usufructuary, does not become immobilized by attachment. 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 as so stipulated in the document of mortgage. 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. In the contract between the parties, 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 and participation ..." Moreover, the
house stood on a rented land giving the defendant a temporary right as lessee. As such, it did not form part
of the land. Though this distinction alone, cannot per se determine the nature of the property, it does when
so combined with other factors, as when the parties intended to treat the house as personal property.