(4) GAVINO A. TUMALAD and GENEROSA R.

TUMALAD, plaintiffs-appellees, v
from March 27, 1956, to January 14, 1967, with interest at the legal rate from
ALBERTA VICENCIO and EMILIANO SIMEON, defendants-appellants. Sep 30, 1971 April 18, 1956, the filing of the complaint, until fully paid).
Appeal from a decision of the CFI Manila
REYES, J.B.L., J.
FACTS
Sep 1 1955: Ds executed a chattel mortgage in favor of Gavino & Generosa
Tumalad over their house of strong materials located at Quezon Boulevard,
Quiapo, Manila, over Lot Nos. 6-B and 7-B, Block No. 2554, which were being
rented from Madrigal & Company, Inc.
The mortgage was registered in the RoD Manila on 2 September 1955.
- the mortgage was executed to guarantee a loan of P4,800 received from the
Tumalads, payable within one year at 12% per annum.
- the mode of payment was P150 monthly, from September, 1955 to July 1956,
and the lump sum of P3,150 was payable on or before August, 1956.
- that default in the payment of any of the amortizations, would cause the
remaining unpaid balance to become immediately due and payable and xxx

The said decision was appealed by the Ds to the CA which, in turn, certified the
appeal to the SC (only questions of law are involved).
Ds' arguments: the case should be dismissed:
(1) the municipal court did not have jurisdiction to try and decide the case
because the chattel mortgage is void ab initio:
(a) their signatures on the chattel mortgage were obtained through fraud,
deceit, or trickery; and
(b) that the subject matter of the mortgage is a house of strong materials, and,
being an immovable, it can only be the subject of a real estate mortgage and not
a chattel mortgage.
(2) there was no allegation of prior possession; and (b) failure to prove prior
demand pursuant to Section 2, Rule 72, of the Rules of Court.

WON the chattel mortgage is void ab initio.

the Chattel Mortgage will be enforceable in accordance with the provisions of Special Act Held: No.
No. 3135, and for this purpose, the Sheriff of the City of Manila or any of his deputies is WON there is fraud, deceit or trickery.
hereby empowered and authorized to sell all the Mortgagor's property after the necessary Held: No. CFI found defendants-appellants' contentions as not supported by
publication in order to settle the financial debts of P4,800.00, plus 12% yearly interest, and evidence and therefore the charge should be dismissed. even granting that the
attorney's fees xxx
charge is true, fraud or deceit does not render a contract void ab initio, and can
only be a ground for rendering the contract voidable or annullable by a proper
Ds defaulted-> the mortgage was extrajudicially foreclosed (March 27, 1956) action in court. There is nothing on record to show that the mortgage has been
the house was sold at public auction to the Tumalads who were issued the
annulled. Neither is it disclosed that steps were taken to nullify the same.
corresponding certificate of sale.
WON the subject matter of the mortgage is an immovable.
April 18 1956: the Tumalads commenced an ejectment case in the municipal
Held: No.
court of Manila, praying, among other things:
In the case of Navarro vs. Pineda, SC stated that:
that the house be vacated and its possession surrendered to them, and The view that parties to a deed of chattel mortgage may agree to consider a house as
for Ds to pay rent of P200 monthly from 27 March 1956 up to the time personal property for the purposes of said contract, "is good only insofar as the
contracting parties are concerned. It is based, partly, upon the principle of estoppel"
the possession is surrendered.
(Evangelista vs. Alto Surety, No. L-11139, 23 April 1958) xxx
Sep. 21 1956, the municipal court ruled in favor of the Tumalads and granted
both prayers.
In the contract now before Us, the house on rented land is not only expressly
designated as Chattel Mortgage; it specifically provides that "the mortgagor ...
CFI Manila affirmed the decision w/ modification (pay monthly rent of P200

voluntarily CEDES, SELLS and TRANSFERS by way of Chattel Mortgage the

property together with its leasehold rights over the lot on which it is
constructed and participation ..." Although there is no specific statement
referring to the subject house as personal property, yet by ceding, selling or
transferring a property by way of chattel mortgage defendants-appellants could
only have meant to convey the house as chattel, or at least, intended to treat the
same as such, so that they should not now be allowed to make an inconsistent
stand by claiming otherwise.
Moreover, the subject house stood on a rented lot to which Ds merely had a
temporary right as lessee, and although this can not in itself alone determine
the status of the property, it does so when combined with other factors to
sustain the interpretation that the parties, particularly the mortgagors,
intended to treat the house as personalty.
Finally unlike in the Iya cases, Lopez vs. Orosa, Jr. and Plaza Theatre, Inc. and
Leung Yee vs. F. L. Strong Machinery and Williamson, wherein third persons
assailed the validity of the chattel mortgage, it is the defendants-appellants
themselves, as debtors-mortgagors, who are attacking the validity of the chattel
mortgage in this case. The doctrine of estoppel therefore applies to the herein
defendants-appellants, having treated the subject house as personalty.
DISPOSITIVE: Judgment partly affirmed. CFI erred in requiring the mortgagors
to pay rents for the year following the foreclosure sale i.e. from March 27, 1956
until March 27 1957. , as well as attorney's fees.