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Republic of the Philippines paid, plus attorney's fees in the sum of P300.

00 and to
SUPREME COURT pay the costs.
Manila
It appears on the records that on 1 September 1955 defendants-
EN BANC appellants executed a chattel mortgage in favor of plaintiffs-appellees
over their house of strong materials located at No. 550 Int. 3, Quezon
Boulevard, Quiapo, Manila, over Lot Nos. 6-B and 7-B, Block No.
2554, which were being rented from Madrigal & Company, Inc. The
G.R. No. L-30173 September 30, 1971 mortgage was registered in the Registry of Deeds of Manila on 2
September 1955. The herein mortgage was executed to guarantee a
GAVINO A. TUMALAD and GENEROSA R. TUMALAD, plaintiffs- loan of P4,800.00 received from plaintiffs-appellees, payable within
appellees, one year at 12% per annum. The mode of payment was P150.00
vs. monthly, starting September, 1955, up to July 1956, and the lump
ALBERTA VICENCIO and EMILIANO SIMEON, defendants- sum of P3,150 was payable on or before August, 1956. It was also
appellants. agreed that default in the payment of any of the amortizations, would
cause the remaining unpaid balance to becomeimmediately due and
Castillo & Suck for plaintiffs-appellees. Payable and —

Jose Q. Calingo for defendants-appellants. the Chattel Mortgage will be enforceable in accordance
with the provisions of Special Act No. 3135, and for this
purpose, the Sheriff of the City of Manila or any of his
deputies is hereby empowered and authorized to sell
all the Mortgagor's property after the necessary
REYES, J.B.L., J.: publication in order to settle the financial debts of
P4,800.00, plus 12% yearly interest, and attorney's
Case certified to this Court by the Court of Appeals (CA-G.R. No. fees... 2
27824-R) for the reason that only questions of law are involved.
When defendants-appellants defaulted in paying, the mortgage was
This case was originally commenced by defendants-appellants in the extrajudicially foreclosed, and on 27 March 1956, the house was sold
municipal court of Manila in Civil Case No. 43073, for ejectment. at public auction pursuant to the said contract. As highest bidder,
Having lost therein, defendants-appellants appealed to the court a plaintiffs-appellees were issued the corresponding certificate of sale. 3
quo (Civil Case No. 30993) which also rendered a decision against Thereafter, on 18 April 1956, plaintiffs-appellant commenced Civil
them, the dispositive portion of which follows: Case No. 43073 in the municipal court of Manila, praying, among
other things, that the house be vacated and its possession
WHEREFORE, the court hereby renders judgment in surrendered to them, and for defendants-appellants to pay rent of
favor of the plaintiffs and against the defendants, P200.00 monthly from 27 March 1956 up to the time the possession is
ordering the latter to pay jointly and severally the surrendered. 4 On 21 September 1956, the municipal court rendered
former a monthly rent of P200.00 on the house, its decision —
subject-matter of this action, from March 27, 1956, to
January 14, 1967, with interest at the legal rate from ... ordering the defendants to vacate the premises
April 18, 1956, the filing of the complaint, until fully described in the complaint; ordering further to pay
monthly the amount of P200.00 from March 27, 1956,

subject house had been already demolished on 14 January 1957 pursuant to the order of the court in a separate civil case (No. whence it would follow that the extrajudicial foreclosure. but it is not evidence. until such (time that) the premises is (sic) completely (a) Whether the municipal court from which the case vacated. Therefore. lt is contended January 1957. the reason that the liability therefor was disclaimed and was still being litigated. in their answers in both the municipal court bound to pay rentals to the plaintiffs during the period and court a quo impugned the legality of the chattel mortgage. it is the Court of First Instance possession to plaintiffs-appellees could not be executed because the which has jurisdiction and not the municipal court. and (b) that the subject matter of the mortgage is a house of strong The motion of plaintiffs for dismissal of the appeal. legally Defendants-appellants. We will consider these questions seriatim. In the case of Sy vs. which are: (a) that. 1956 house still remained with defendants-appellants who are entitled to within the first 10 days of December. their signatures on the rentals on the land on which the house was constructed.00 and the costs originated had jurisdiction to adjudicate the same. the court granted plaintiffs. 11 and further.. rentals deposited had to be On the charge of fraud. Thus. are mere allegations. and (2) there was no allegation of prior municipal court from which the case originated. it is argued by of the municipal court. being an immovable. it can only be the subject of a supersedeas bond and withdrawal of deposited rentals was denied for real estate mortgage and not a chattel mortgage. in turn. Instead. 7 found defendants-appellants' contentions as not supported by evidence and accordingly dismissed the charge. of the suit. predicated mainly on the grounds that: (a) the municipal court did not have jurisdiction to try and decide the case because (1) the issue (a) Defendants-appellants mortgagors question the jurisdiction of the involved. deceit or trickery. deceit. 6 theory that the chattel mortgage is void ab initio. defendants-appellants. of one (1) year provided by law for the redemption of claiming that they are still the owners of the house.. chattel mortgage were obtained through fraud. Rule 72. under the law. the Court of First Instance held until final disposition of the appeal. the appellate court of First Instance rendered its earlier finding of the municipal court that "the defense of ownership as decision. but they waived the extrajudicially foreclosed house. "the answer is a mere statement of the facts which the party filing it expects to prove. the right to introduce evidence. Dalman. the judgment regarding the surrender of further that ownership being in issue. or trickery. and consequently. 25816) Defendants-appellants predicate their theory of nullity of the chattel for ejectment against the present defendants for non-payment of mortgage on two grounds. plus attorney's fees of P100. 12 wherein the . consequent auction sale. the dispositive portion of which is quoted earlier. is ownership. execution of the materials. authority to proceed with the hearing of the cause until this fact is clearly established. on the 2. and it was actually issued on 24 adjudicated first in order to determine possession. 1956 as ordered in the decision possession and not plaintiffs-appellees. Quintero and Ayala 10 that file a brief and this appeal was submitted for decision without it. they relied on their memoranda in support of their motion to dismiss. are also void. However. namely: . the Court is given the which can be condensed into two questions. and under Section 8. 8 confirming the On 7 October 1957. and necessarily the During the pendency of the appeal to the Court of First Instance. the issue of ownership will have to be appellees' motion for execution. Rule 72. the possession. Plaintiffs-appellees failed to It has been held in Supia and Batiaco vs." 9 decision was appealed by defendants to the Court of Appeals which. the ownership of the defendants-appellants failed to deposit the rent for November. oral or documentary. and. The said well as the allegations of fraud and deceit . 5 (b) Whether the defendants are. and (b) failure to prove prior demand pursuant to Section appellate jurisdiction of the Court of First Instance a quo. As a result. certified the appeal to this Court. that when the Defendants-appellants submitted numerous assignments of error question to be determined is one of title. of the Rules of Court.

" 19 The "personal property" consisted of leasehold rights and by way of chattel mortgage defendants-appellants could only have a building. Castillo.G. 17 this Court expressly designated as Chattel Mortgage. vs. fraud or deceit does may agree to consider a house as personal property not render a contract void ab initio. the mortgagor conveyed and transferred to the Although there is no specific statement referring to the subject house mortgagee by way of mortgage "the following described personal as personal property.. voluntarily CEDES. 2913). however that the principle is predicated on Civil Code) could only mean one thing — that a statements by the owner declaring his house to be a building is by itself an immovable property irrespective chattel. of the New Civil Code.G. cited in Davao Sawmill Theatre Inc. Hence. Jr.. 61 Phil. 23 April 1958). and Plaza Central Altagracia. et al. It is based. it was materials. L-11139. Co. immovable property is stated in Lopez vs. C. vs. it specifically provides that stated that "it is undeniable that the parties to a contract may by "the mortgagor . Abad. rights over the lot on which it is constructed and participation . it is adhered to belong to the same owner. mortgage considered it as such. 222 U. Pineda. "is good only insofar rendering the contract voidable or annullable pursuant to Article 1390 as the contracting parties are concerned. by a proper action in court. 13 The view that parties to a deed of chattel mortgage Moreover. a disclosed that steps were taken to nullify the same. however. selling or transferring a property property. Orosa. not only because the deed of contract which has not been voided fails. No. Hodges. determined from the evidence at the trial. for it is now settled that an object there was no fraud. 21 this Court stated that — relief asked for. so that they should not now be allowed to make an .. Encarnacion. such as the lessee or usufructuary." What determines which by its very nature is considered personal property. intended to treat the of the contract designated as Chattel Mortgage was a house of mixed same as such. Again. it is obvious that the inclusion of the building.N. 709). SELLS and TRANSFERS by agreement treat as personal property that which by nature would be way of Chattel Mortgage 23 the property together with its leasehold real property". Jaramillo. (Ladera vs. (Evangelista vs.. the house on rented land is not only In the case of Manarang and Manarang vs. in the case of Luna vs.) It should be of what may constitute real properties (art.S. 415.. a conduct that may conceivably estop him from of whether or not said structure and the land on which subsequently claiming otherwise. and this Court hold therein that it was a valid Chattel likewise held by this Court that in detainer cases the aim of ownership mortgage because it was so expressly designated and specifically "is a matter of defense and raises an issue of fact which should be that the property given as security "is a house of mixed materials. 58. Supra. It is claimed in the alternative by defendants-appellants that even if 36 O. in the enumeration mortgage.. have been allowed for various reasons. Ofilada. 15 cited in Associated Insurance Surety Co. In a case. personal property as so stipulated in the document of separate and distinct from the land.. it may be mortgaged as a . 20 the subject meant to convey the house as chattel.. Hence. does of a chattel mortgage. 5374): 22 Certain deviations. upon the principle of estoppel" (Evangelista vs. Iya. Inc. the chattel mortgage was still placed on land by one who had only a temporary right null and void ab initio because only personal properties can be subject to the same. and can only be a ground for for the purposes of said contract. on record to show that the mortgage has been annulled." 24 18 In the latter case.. New noted. 16 to the effect that — house belonging to a person stands on a rented land belonging to another person. 14 There is nothing partly. deceit or trickery. Abad. The rule about the status of buildings as not become immobilized by attachment (Valdez vs. citing Standard Oil Company of New York vs. In the contract now before Us. [CA]. Neither is it Alto Surety.defendant was also a successful bidder in an auction sale. or at least. [CA] 48 O.. yet by ceding. even granting that the charge is true. Inc." In the later jurisdiction are the allegations or averments in the complaint and the case of Navarro vs. if a et al. but also because it did not form part of the land (Evangelists vs. mortgaged house built on a rented land was held to be defendants-appellants' claim of ownership on the basis of a voidable a personal property.

In such a case. the parties specifically stipulated that "the chattel mortgage will be enforceable in accordance with the provisions of Special Act No. before the expiration of the 1-year been demolished on 14 and 15 January 1957 by virtue of a decision period within which the judgment-debtor or mortgagor obtained by the lessor of the land on which the house stood." 30 (Emphasis supplied). the said court limited itself to sentencing the erstwhile entitled. 3135. which also applies to properties purchased in extrajudicial foreclosure proceedings.. and although this can not in itself alone purchaser of the property to obtain from the court the possession determine the status of the property. accountable to the judgment-debtor or mortgagor as the case may be. The doctrine redemption as a matter of right. although they may be collected by the purchaser during the redemption Chattel mortgages are covered and regulated by the Chattel Mortgage period. Moreover. Since the defendants-appellants were occupying the house at the 31 Section 6 of the Act referred to provides that the debtor-mortgagor time of the auction sale. particularly requires the filing of a petition with the proper Court of First Instance the mortgagors. 4118. effects the redemption. 33 In the absence of such a compliance. Lopez vs. for the amount so Appellants mortgagors question this award. 27 it is the court. and Plaza Theatre. who are the purchaser can not claim possession during the period of attacking the validity of the chattel mortgage in this case. We must rule for the appellants. Differently stated. Orosa. 28 Section 14 of this Act allows the mortgagee to debtor of mortgagor. intended to treat the house as personalty. Finally and the furnishing of a bond. No discretion is left to the third persons assailed the validity of the chattel mortgage. provision is Section 34. at any time within one year from during the period of redemption or within one year from and after 27 . claiming that they were received and the same will be duly credited against the entitled to remain in possession without any obligation to pay rent redemption price when the said debtor or mortgagor during the one year redemption period after the foreclosure sale. the payment of the redemption amount and amended by Act No. it does so when combined with during the period of redemption: but the same provision expressly other factors to sustain the interpretation that the parties. The rationale for the Rule. Espe. F. Act No. do not belong to the latter but still pertain to the Law. On this issue. he is.. For this may redeem the property. as a matter of right. 36 3135 . Hamada. they are entitled to remain in possession (defendants-appellants herein) may. as in the instant case. 29 In the instant public auction. P300. redeem the property sold at the stood on a rented lot to which defendats-appellants merely had a extra judicial foreclosure sale. of the Revised Rules of Court 34 having treated the subject house as personalty. defendants-appellants themselves. is to secure for the benefit of the debtor or officer in almost the same manner as that allowed by Act No. It is only upon filing of the proper motion unlike in the Iya cases. the subject house and after the date of the auction sale. the rentals until 27 March 1957. Section 7 of the same Act 32 allows the temporary right as lessee. Thus. as debtors-mortgagors. plus purchased property is occupied by tenants. .00 from 27 March same. Strong Machinery and Williamson. the purchaser thereof is not reason. receivable from tenants. as mortgagor. nevertheless. to possession of the mortgagors to pay plaintiffs a monthly rent of P200. provided that the requirements of the law the consequent return to him of his properties sold at relative to notice and registration are complied with. The Hamada case reiterates the previous ruling in Chan vs. (Emphasis supplied) case. Jr. in question. The Court of First Instance noted in its decision that nearly a year after the foreclosure sale the mortgaged house had In other words. i.00 attorney's fees.inconsistent stand by claiming otherwise. Inc. this Court stated in the (b) Turning to the question of possession and rentals of the premises aforestated case of Reyes vs. while it is true that the Rules of Court 1956 (when the chattel mortgage was foreclosed and the house sold) allow the purchaser to receive the rentals if the until 14 January 1957 (when it was torn down by the Sheriff). 35 Construing the said section. Rule 39. it have the property mortgaged sold at public auction through a public seems.e. the governing of estoppel therefore applies to the herein defendants-appellants. 1508. 25 and the approval of the corresponding bond that the order for a writ of and Leung Yee vs. L. 26 wherein possession issues as a matter of course..

1947. Teehankee.. pages 17-18. 16 No. 103 Phil.C. Sarmiento. Deala. Rollo. 63 Phil. there could be no violation or breach thereof. 3135. N. 5 Page 20. C. L-1246.. 582 and De los Reyes vs. Elepaño. therefor. demand. Article 1290. 972. 1 Exhibit "A. page 213." page 4. made upon him personally. the date of the auction sale. L-3466. Villamor and Makasiar. after demand the complaint." supra. 13 October 1950. FOR THE FOREGOING REASONS. and to collect the rents or 6 Now Section 2. 103 Phil. pages 21-25. concur. shall bring such action against a tenant for Section 7. reversed and another one entered. Dizon.J. Rollo. Act No. 4 Page 2. five (5) days in the case of building.. page 97. 98. Id. 36. as well as attorney's Rollo. Neither was there an allegation to that effect.. unless the tenant shall have failed to pay mortgage. or his legal representative or and that plaintiffs-appellees did not choose to take possession under assign. 3 Exhibit "B. 12 L-19200. Castro. 22 SCRA 834. L-10827-38. 30 May 1958. Revised Rules of Court." Supreme Court is clothed with ample authority to review palpable errors not assigned as such if it finds that their consideration is 7 See CFI order of 20 February 1957. 27 February 1958." page 1.. 79 Phil. Makalintal. 37 Defendants' Record on Appeal. 2. Zaldivar. even if there was no assignment of error to that effect. necessary in arriving at a just decision of the cases. the same should be ordered on the premises. Barredo. fees. profits during the said period. L-10817-18. rents for the year following the foreclosure sale. dismissing the complaint. It follows that the court below erred in requiring the mortgagors to pay 8 Page 31. 28 February 1958.C." Exhibit "A. G. — No landlord. JJ. Since such rent or comply with such conditions for a period of plaintiffs-appellees' right to possess was not yet born at the filing of .. No. 14 Last paragraph. Defendants' Record on appeal. Rollo.March 1956. Folder of Exhibits.. 13 See Canaynay vs. which is the law selected by failure to pay rent due or to comply with the conditions the parties to govern the extrajudicial foreclosure of the chattel of his lease. et al.R. 9 See Municipal court decision. Fernando. . 320-321. Concepcion. supra. the original complaint stated no cause of action and was written notice of such demand upon the person found prematurely filed. For this reason. page 115. or by serving Wherefore. The premises if no persons be found thereon. 27 August 2 See paragraph "G. Folder of Exhibits. Rule 70. 11 Emphasis supplied. pages 199-200. Defendants' Record on Appeal. Landlord. With costs against plaintiffs-appellees. 15 No. 10 59 Phil. the decision appealed from is Defendants' Record on Appeal. See Footnotes also Aquino vs. which reads that — It will be noted further that in the case at bar the period of redemption "SEC. or by posting such notice on the dismissed. to proceed against tenant only after had not yet expired when action was instituted in the court of origin. as amended.

profits have been received by the judgment creditor or purchaser. Folder of violating the mortgage or without complying with the Exhibits. to give him possession thereof during the redemption period. 32 Section 7. 3135. 30 November 1963. requirements of this Act. 18 No. may redeem the same at any time within the term of one year from and after the date of the sale. the debtor. 91 Phil. to indemnify the debtor in case it be shown that the sale was made without 24 See paragraph 2 of Exhibit "A." supra." (Emphasis supplied) ." (Emphasis supplied) . 30 June 1952. the 21 No. 31 May or judgment creditor of said debtor. 18 May 1956. L-8133. as amended. amount equivalent to the use of the property for a period of twelve months. purchaser may petition the Court of First Instance of the province or place where the property or any part 22 Emphasis supplied. of the Code of Civil Procedure. No.. 34. L-6493.17 No. having a lien on the property subsequent to the mortgage or deed of trust under which the property is 36 No. 9 SCRA 631. states: . supra. L-4637. from the time of his redemption until another redemption. 16 March 1923. from the time of the sale until a 28 Effective 1 August 1906. from property thus sold preceding such redemption. and a redemptioner. or by the assignee or 31 Section 6. No. Act No. 14 SCRA 215." page 1. the amounts of such rents and profits shall "In all cases in which an extrajudicial sale is made be a credit upon the redemption money to be paid. 531. 33 See De Gracia vs. But when any such rents and 30 See paragraph "G. 632. Hamada. thereof is situated. 25 Supra. Statement thereof and credit therefor on redemption. No. 91 Phil." Exhibit "A. L-4637. 20 No. or any person 1965. — The purchaser. 20 April 1961. L-20329. San Jose. "In any sale made under the provisions of this Act. as amended. 34 "SEC. in so far as these are not inconsistent with the provisions of this Act. provides: either of them.. inclusive. his successor in interest or any judicial creditor 35 See Reyes vs. 531.. 1 SCRA 1004. sections four hundredand sixty-four to four hundred and sixty-six. 26 Supra. use and occupation thereof when such property is in possession of a tenant. 109. sold. Encarnacion. L-16777. L-19967. redemption. 30 receive the rents of the property sold or the value of the June 1952. . or by a redemptioner. 25 March 1954. 99 Phil. Pineda. et al... 44 Phil. 19 Emphasis supplied. is entitled to 29 See Luna vs. et al. Emphasis supplied. and such redemption shall be governed by the provisions of . Rents and profits pending redemption. L-18456. 27 See Navarro vs. 3135.. Act No. furnishing bond in an 23 Emphasis supplied." under the special power hereinbefore referred to.

78 Phil. Santaells vs.. of the Revised Rules of Court.198. 155 Fed.. 719.37 Saura Import & Export Co. See also Sec.. Andal.. vs. Vol. et al. Rules of Court (1965 Ed). . No. Rule 51. 7. Philippine International Surety Co.. Mast vs. 3. Superior Drill Co. 31 May 1963. 148. L-15184. Francisco. page 765. 8 SCRA 143. Hernandez vs. Cf. 45.Otto Lange Co. 154 Fed.