PIANSAY v. DAVID

As it may be true that the parties who agreed to attach the house in a chattel mortgage may be bound thereto under the doctrine of estoppel, the same does not bind third persons.

FACTS:

Conrado S. David received a loan of P3,000 with interest at 12% per annum from Claudia B. Vda. de Uy Kim, one of the plaintiffs, and to secure the payment of the same, Conrado S. David executed a chattel mortgage on a house situated at 1259 Sande Street, Tondo, Manila. The mortgage was foreclosed and was sold to Kim to satisfy the debt. 2 years later after the foreclosure, the house was sold by Kim to Marcos Magubat. The latter then filed to collect the loan from David and to declare the sale issued by Kim in favour of Piansay null and void. (It appears that Kim sold the house to two people, namely Piansay and Magubat) The trial court approved of the collection of the loan from David but dismissed the complaint regarding the questioned sale between Kim and Piansay, declaring the latter as rightful owner of the house and awarding damages to him. CA reversed the decision making David the rightful owner and ing him and his co-defendant, Mangubat, to levy the house. Now Petitioners are trying to release the said property from the aforementioned levy by claiming that Piansay is the rightful owner of the house.

ISSUE:

Whether or not the sale between Kim and Piansay was valid?

RULING:

Since it is a rule in our law that buildings and constructions are regarded as mere accesories to the land (following the Roman maxim omne quod solo inaedificatur solo credit) it is logical that said accessories should partaked of the nature of the principal thing, which is the land forming, as they do, but a single object (res) with it in contemplation of law. A mortgage creditor who purchases real properties at an extra-judicial foreclosure sale thereof by virtue of a chattel mortgage constituted in his favor, which mortgage has been declared null and void with respect to said real properties acquires no right thereto by virtue of said sale Thus, Mrs. Uy Kim had no right to foreclose the alleged chattel mortgage constituted in her favor, because it was in reality a mere contract of an unsecured loan. It follows that the Sheriff was not authorized to sell the house as a result of the foreclosure of such chattel mortgage. And as Mrs. Uy Kim could not have acquired the house when the Sheriff sold it at public auction, she could not, in the same token, it validly to Salvador Piansay. Conceding that the contract of sale between Mrs. Uy Kim and Salvador Piansay was of no effect, we cannot nevertheless set it aside upon instance of Mangubat because, as the court below opined, he is not a party thereto nor has he any interest in the subject matter therein, as it was never sold or mortgaged to him At any rate, regardless of the validity of a contract constituting a chattel mortgage on a house, as between the parties to said contract, the same cannot and does not bind third persons, who are not parties to the aforementioned contract or their privies. As a consequence, the sale of the house in question in the proceedings for the extrajudicial foreclosure of said chattel mortgage, is null and void insofar as defendant Mangubat is concerned, and did not confer upon Mrs. Uy Kim, as buyer in said sale, any dominical right in and to said house, so that she could not have transmitted to her assignee, plaintiff Piansay any such right as against defendant Mangubat. In short plaintiffs have no cause of action against the defendants herein.