GR L 18456; (November, 1963) (Digest)
G.R. No. L-18456 November 30, 1963
CONRADO P. NAVARRO, plaintiff-appellee, vs. RUFINO G. PINEDA, RAMONA REYES, ET AL., defendants-appellants.
FACTS
Defendants Rufino G. Pineda and Juana Gonzales borrowed P2,500.00 from plaintiff Conrado P. Navarro. To secure the loan, they executed a single instrument titled “DEED OF REAL ESTATE and CHATTEL MORTGAGES.” Juana Gonzales mortgaged a parcel of land she owned via a real estate mortgage. Rufino Pineda mortgaged, by way of chattel mortgage, his two-story residential house erected on a lot belonging to a third person, Atty. Vicente Castro, and a motor truck. The debt matured, and despite extensions, defendants failed to pay. Navarro filed a complaint for foreclosure. The parties stipulated that the primary issue was whether the residential house, built on land owned by another, could be validly mortgaged as a chattel.
ISSUE
Whether a residential house constructed on land belonging to another person can be validly constituted as a chattel mortgage, such that its foreclosure can be ordered upon the debtor’s default.
RULING
Yes. The Supreme Court affirmed the lower court’s decision ordering foreclosure. The legal logic hinges on the principle of estoppel and the nature of the property as between the contracting parties. While Article 415 of the Civil Code generally classifies buildings as immovable property by incorporation, regardless of land ownership, an exception exists when the owner of the building is not the owner of the land. In such a case, the parties may treat the structure as personal or movable property for their purposes. This is particularly true for a lessee or one with a temporary right, as the building does not become immobilized by attachment to the soil belonging to another.
Here, the mortgagor, Rufino Pineda, explicitly declared the house as part of “my personal properties” in the chattel mortgage deed, grouping it with an inherently movable truck. The house was of light materials (G.I. sheets, sawali, wood) and built on another’s land. By their own contract, the parties treated the house as chattel. Consequently, the mortgagor is estopped from assailing the mortgage’s validity on the ground that the house is an immovable, as this defense is not available against the other party to the contract. The cases cited by appellants involving buildings of strong materials permanently attached to the mortgagor’s own land, or where third parties assailed the mortgage, are inapplicable. Therefore, the chattel mortgage over the house is valid between the parties, and foreclosure is proper.