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Felix, J.
Rizal (Quezon City)
-Sps Adriano and Lucia Valino owned a house of
strong materials in Grace Park Subdivision,
Caloocan, Rizal purchased from Philippine
Realty Corporation
-Lucia filed an P11K bond subscribed by the
Associated Insurance & Surety Co., Inc., executed
CHATTEL MORTGAGE on house as counterguaranty in favor of surety company (registered
with CM Register of Rizal on December 6, 1951)
-at time of undertaking, land on which house was
erected was still registered in the name of
Philippine Realty Corporation
-Valinos executed an REM over the lot AND house
in favor of Isabel Iya to secure loan of P12K on
October 24, 1952
-certificate of title of land in the names of Sps
Valino was secured on October 18, 1958
-Lucia failed to pay NARIC, Associated Insurance
paid. Demaned payment from sps Valino, the
latter failed. AISC foreclosed CM over house.
Property was awarded to AISC for P8K
-July 1958, AISC discovered REM over the lot
complaint against Sps Valino and Isabel Iya,
praying for exclusion of house from REM n favor
of Iya and declaration and recognition of AISCs
right to ownership over the same
-Iya: by virtue of REM, she acquired real right
over lot and house, auction sale from foreclosure
-iya filed complaint against Sps Valino and AISC
praying for payment of debt with interest, and if
not paid, for foreclosure of land, bldg., and other

improvements, and that Sps Valino and AISC be

barred and foreclosed of all rights, claims or
equity of redemption
-AISC: lot on which house was constructed did
NOT belong to Sps Valino at the time CM was
executed, house might be considered PP, CM
proper. Prayed that house be excluded from REM
-Lower court: CM superior over REM in favor of
Iya. Valinos were not yet owner of land during
CM, so bldg. was still PP that time. However, they
were already the owners during REM. So both CM
and REM are valid. Therfore, house excluded from
foreclosure of REM
ISSUE: Which of the two mortgages should be
given preference over the other?
If PP: CM valid, AISC has better right
If RP: Iya has better right to house
Lopez vs. Orosa: bldg. is by itself immovable,
irrespective of who owns the land
-A bldg. cannot be divested of its character of a
realty by the fact that the land on which it is
constructed belongs to another
-Since PP could only be subject of a CM, and since
house is RP, CM is null and void.
-Thus the registration of CM of a bldg. of strong
materials produces no effect
-Claim of AISC that it has acquired ownership
over house by reason of foreclosure sale invalid
- Mortgage creditor who purchases RP at
an extra judicial foreclosure sale by virtue of a CM
in his favor, which mortgage has been declared
null and void acquires no right (De la Riva v. Ah
-Therefore: Iya has right to foreclose both land
and house without prejudice to any right that
AISC may have over Sps Valino