TUMALAD V. VICENCIO

Although a building is an immovable; the parties to a contract may by agreement treat as personal property that which by nature is a real property however they are estopped from subsequently claiming otherwise.

FACTS:

Alberta Vicencio and Emiliano Simeon received a loan of P4, 800 from Gavino and Generosa Tumalad. To guaranty said loan, Vicencio executed a chattel mortgage in favor of Tumalad over their house of strong materials which stood on a land which was rented from the Madrigal & Company, Inc. When Vicencio defaulted in paying, the house was extrajudicially foreclosed, pursuant to their contract. It was sold to Tumalad and they instituted a Civil case in the Municipal Court of Manila to have Vicencio vacate the house and pay rent.

The MTC decided in favor of Tumalad ordering Vicencio to vacate the house and pay rent until they have completely vacated the house. Vicencio is questioning the legality of the chattel mortgage on the ground that 1) the signature on it was obtained thru fraud and 2) the mortgage is a house of strong materials which is an immovable therefore can only be the subject of a REM. On appeal, the CFI found in favor of Tumalad, and since the Vicencio failed to deposit the rent ordered, it issued a writ of execution, however the house was already demolished pursuant to an order of the court in an ejectment suit against Vicencio for non-payment of rentals. Thus the case at bar.

ISSUE:

Whether or not the chattel mortgage is void since its subject is an immovable

HELD:

NO.
Although a building is by itself an immovable property, parties to a contract may treat as personal property that which by nature would be real property and it would be valid and good only insofar as the contracting parties are concerned. By principle of estoppel, the owner declaring his house to be a chattel may no longer subsequently claim otherwise.

When Vicencio executed the Chattel Mortgage, it specifically provides that the mortgagor cedes, sells and transfers by way of Chattel mortgage. They intended to treat it as chattel therefore are now estopped from claiming otherwise. Also the house stood on rented land which was held in previous jurisprudence to be personalty since it was placed on the land by one who had only temporary right over the property thus it does not become immobilized by attachment.

[Vicencio though was not made to pay rent since the action was instituted during the period of redemption therefore Vicencio still had a right to remain in possession of the property]