7/26/2019 4 Associated Insurance and Surety Co vs Iya

Associated Insurance and Surety Co vs. Iya, 103 Phil. 972

FACTS S!ouses "alino o#n a house o$ stron% &aterials. The s!ouses

"alino e'ecuted a chattel mortgage on the said house

in $avor o$ Associated Insurance and Surety Co&!any. Su(se)uently, to secure !

ay&ent $or inde(tedness, the s!ouses
e'ecuted a real estate mortgage over the house and lot in $avor o$ Isa(el
Iya. *hen the "alinos $ailed to co&!ly #ith their o(li%ations to the surety
co&!any, the latter &oved to $oreclose o$ the chattel &ort%a%e and the
house #as later a#arded to the surety co&!any.

*hen the surety co&!any learned that the house and lot #as
su(+ect to a real estate &ort%a%e, they led a co&!laint $or the e'clusion
o$ the house $ro& such &ort%a%e. Iya, on the other
hand, sou%ht to annul the chattel &ort%a%e contendin% that the
(uildin% is a real property, thus, cannot (e the o(+ect o$ such &ort%a%e.
The surety co&!any ar%ued that at the ti&e o$ the e'ecution o$ the
chattel &ort%a%e, the lot #as not yet o#ned (y the s!ouses, &a-in% the
house as personal property.

ISS / Should the residential house (e considered as !ersonal !ro!erty *ho

has a (etter ri%ht to the house

/CISI

. A (uildin% is an i&&ova(le (y itsel$, se!arate and distinct $ro& the

land. A (uildin% is an i&&ova(le !ro!erty irres!ective o$ #hether or
not said structure and the land on
#hich it is adhered to (elon% to the sa&e o#ner
nly !ersonal !ro!erties can (e the su(+ect o$ a chattel &ort%a%e and
since the structure in this case is an i&&ova(le, it cannot su(+ect to a
chattel &ort%a%e. There$ore, the chattel &ort%a%e and the sale on
#hich it #as (ased should (e declared null and void.

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7/26/2019 4 Associated Insurance and Surety Co vs Iya

In this case, a!!ellant Isa(el Iya has a (etter ri%ht to $oreclose not only
the land (ut also to the house (ecause a (uildin% certainly cannot (e
divested o$ its realty character (y the $act

that the land on #hich it is constructed (elon%s to another.

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