Haystack: Piansay v. David (GR L-19468, 30 October 1964)

Piansay v. David
[G.R. No. L-19468. October 30, 1964.]
En Banc, Cocnepcion (J): 10 concur

Facts: On 11 December 1943, Conrado S. David received a loan of P3,000 with interest at 12% per annum from Claudia B. Vda. de Uy Kim, and to secure the payment of the same, David executed a chattel mortgage on a house situated at 1259 Sande Street, Tondo, Manila. The chattel mortgage was registered with the Register of Deeds of Manila on 19 December 1948. On 10 February 1953, the mortgaged house was sold at public auction to satisfy the indebtedness to Claudia B. Vda. de Uy Kim, and the house was sold to Claudia B. Vda. de Uy Kim in the said foreclosure proceedings. On 22 March 1954, Vda. de Uy Kim sold the same house to Salvador Piansay for P5,000.00.

On 22 November 1949, David mortgaged the said house to Marcos Mangubat. On 1 March 1956, Mangubat filed a complaint against David with the CFI Manila (Civil Case 29078), for the collection of the loan of P2,000. On 24 March 1956, the complaint was amended to include Piansay and Vda. de Uy Kim as party defendants and praying that auction sale of 10 February 1953 and the deed of absolute sale between Vda. De Uy Kim and Piansay be annulled. The Court ordered David to pay Mangubat the sum of P2,000, damages and attorney’s fees; but dismissed the case against Uy Kim and Piansay. The case was appealed to the Court of Appeals, which affirmed the decision but setting aside the award of damages in favor of Uy Kim.

In the execution of Civil Case 29078, which was affirmed by the Court of Appeals (CA-GR 21797-R), the house which had been bought by Uy Kim at the foreclosure proceedings and sold by her to Piansay was levied upon at the instance of Mangubat. To prevent the sale at public auction of the house in question, Piansay and Uy Kim filed a petition for certiorari and mandamus with preliminary injunction in the CA (CA-GR 28974-R, Claudia B. Vda. de Uy Kim and Salvador Piansay vs. Hon. Judge Jesus Y. Perez, et al.). Acting upon the said petition, the CA denied the petition to lift or discharge the writ of execution on 28 April 1961.

Thereupon, or on 31 July 1961, Piansay and Uy Kim instituted the present action at the CFI Manila (Civil Case 47664), against David and Mangubat. After due hearing the lower court issued the order appealed from granting said motion and dismissing the complaint, with costs against the Piansay and Uy Kim. A reconsideration of said order having been denied, Piansay and Uy Kim interposed an appeal directly to the Supreme Court.

The Supreme Court affirmed the orders affirmed from, with costs against Piansay and Vda. De Uy Kim.

1. Building and construction partake the nature of the principal thing, i.e. land
Since it is a rule in the law that buildings and constructions are regarded as mere accessories to the land (following the Roman maxim omne quod solo inaedificatur solo credit) it is logical that said accessories should partake 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 (Ladera v. Hodges).

2. Act of registering in Chattel Mortgage register of an interest in the nature of real property is futile
Tthe registration of the document in the registry of chattels is merely a futile act, where the interest conveyed is in the nature of real property. The registration of the chattel mortgage of a building of strong materials produced no effect as far as the building is concerned (Leung Yee vs. Strong Machinery Co., cited in Ladera v. Hodges).

3. No right acquired by chattel Mortgage creditor who purchase real property at extra-judicial foreclosure sale
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'. (De la Riva vs. Ah Kee, cited in Ladera v. Hodges). In the present case, 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 Uy Kim could not have acquired the house at public auction, she could not have sold it validly to Salvador Piansay.

4. House may be levied upon as it remained the property of mortgage debtor
The mere fact that the dispositive part of the decision in Civil Case 29078 states that the complaint is dismissed with respect to defendants Claudia B. de Uy Kim, Leonardo Uy Kim and Salvador Piansay is of no moment because the chattel mortgage executed by David in favor of Claudia B. de Uy Kim might not be annulled but still it did not transmit any right from David to Uy Kim. Piansay in Civil Case 47664 cannot assail the right of Mangubat to levy execution upon the house in question because it had remained the property of defendant David.

5. Chattel mortgage of a house between parties is valid, but does not bind third persons; Plaintiffs have no cause of action
Regardless of the validity of a contract constituting a chattel mortgage on a house, as between the parties to said contract (Standard Oil Co. of N.Y. vs. Jaramillo), the same cannot and does not bind third persons, who are not parties to the aforementioned contract or their privies (Leung Yee vs. Strong Machinery Co.; Evangelista vs. Alto Surety; Navarro vs. Pineda). As a consequence, the sale of the house in question in the proceedings for the extra-judicial 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 (De la Riva vs. Ah Yee), so that she could not have transmitted to her assignee, Piansay, any such right as against Mangubat. In short, plaintiffs have no cause of action against the defendants herein.

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