B) O, owner of Lot A, learning that Japanese soldiers may have buried gold and other treasures at the

adjoining vacant Lot B belonging to spouses X & Y, excavated in Lot B where she succeeded in unearthing
gold and precious stones. How will the treasures found by O be divided? (1%) (1). 100% to O as finder (2). 50%
to O and 50% to the spouses X and Y (3). 50% to O and 50% to the state (4). None of the above.

SUGGESTED ANSWER: No. 4. None of the above.

The general rule is that the treasure shall belong to the spouses X and Y, the owner of Lot B. Under
Article 438 (NCC), the exception is that when the discovery of a hidden treasure is made on the
property of another and by chance, one-half thereof shall belong to the owner of the land and the other
one-half is allowed to the finder. In the problem, the finding of the treasure was not by chance because
O knew that the treasure was in Lot B. While a trespasser is also not entitled to any share, and there is
no indication in the problem whether or not O was a trespasser, O is not entitled to a share because the
finding was not “by chance.”

Property; chattel mortgage over immovables

1994 No. 15:
Vini constructed a building on a parcel of land he leased from Andrea. He
chattel mortgaged the land to Felicia. When he could not pay Felicia. Felicia initiated
foreclosure proceedings. Vini claimed that the building he had constructed on the
leased land cannot be validly foreclosed because the building was, by law, an
immovable.
Is Vini correct? Alternative Answers':

a) The Chattel Mortgage is void and cannot be foreclosed because the

building is an immovable and cannot be an object of a chattel mortgage.
b) It depends. If the building was intended and is built of light materials, the
chattel mortgage may be considered as valid as between the parties and it may be
considered in respect to them as movable property, since it can be removed from
one place to another. But if the building is of strong material and is not capable of
being removed or transferred without being destroyed, the chattel mortgage is void
and cannot be foreclosed.

c) If it was the land which Vini chattel mortgaged, such mortgage would be
void, or at least unenforceable, since he was not the owner of the land.
If what was mortgaged as a chattel is the building, the chattel mortgage is
valid as between the parties only, on grounds of estoppel which would preclude the
mortgagor from assailing the contract on the ground that its subject-matter Is an
immovable. Therefore Vini's defense is untenable, and Felicia can foreclose the
mortgage over the building, observing, however, the procedure prescribed for the
execution of sale of a judgment debtor's immovable under Rule 39, Rules of Court,
specifically, that the notice of auction sale should be published in a newspaper of
general circulation.

d) The problem that Vini mortgaged the land by way of a chattel mortgage is
untenable. Land can only be the subject matter of a real estate mortgage and only
an absolute owner of real property may mortgage a parcel of land. (Article 2085 (2)
Civil Code). Hence, there can be no foreclosure.

But on the assumption that what was mortgaged by way of chattel mortgage
was the building on leased land, then the parties are treating the building as chattel.
A building that uis not merely superimposed on the ground is an immovable property
and a chattel mortgage on said building is legally void but the parties cannot be
allowed to disavow their contract on account of estoppel by deed. However, if third
parties are involved such chattel mortgage Is void and has no effect.