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    Associated Insurance Vs Iya

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    Angelee Therese Alayon
    This case involves a dispute over which of two mortgages had preference - a real estate mortgage or a chattel mortgage. The Spouses Valino took out a chattel mortgage on their house with Associated Insurance to cover a bond, and later executed a real estate mortgage on the same property with Iya. When Valino defaulted on payments, both parties sought to foreclose. The court ruled the real estate mortgage had preference, as the house was an immovable property and thus could not be subject to a chattel mortgage, which is only for personal property. Even though the chattel mortgage was registered, this registration was invalid and of no effect since it attempted to encumber real property.

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    Associated Insurance Vs Iya

    Uploaded by

    Angelee Therese Alayon
    13 views1 page
    This case involves a dispute over which of two mortgages had preference - a real estate mortgage or a chattel mortgage. The Spouses Valino took out a chattel mortgage on their house with Associated Insurance to cover a bond, and later executed a real estate mortgage on the same property with Iya. When Valino defaulted on payments, both parties sought to foreclose. The court ruled the real estate mortgage had preference, as the house was an immovable property and thus could not be subject to a chattel mortgage, which is only for personal property. Even though the chattel mortgage was registered, this registration was invalid and of no effect since it attempted to encumber real property.

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    This case involves a dispute over which of two mortgages had preference - a real estate mortgage or a chattel mortgage. The Spouses Valino took out a chattel mortgage on their house with Associated Insurance to cover a bond, and later executed a real estate mortgage on the same property with Iya. When Valino defaulted on payments, both parties sought to foreclose. The court ruled the real estate mortgage had preference, as the house was an immovable property and thus could not be subject to a chattel mortgage, which is only for personal property. Even though the chattel mortgage was registered, this registration was invalid and of no effect since it attempted to encumber real property.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    13 views1 page

    Associated Insurance Vs Iya

    Uploaded by

    Angelee Therese Alayon
    This case involves a dispute over which of two mortgages had preference - a real estate mortgage or a chattel mortgage. The Spouses Valino took out a chattel mortgage on their house with Associated Insurance to cover a bond, and later executed a real estate mortgage on the same property with Iya. When Valino defaulted on payments, both parties sought to foreclose. The court ruled the real estate mortgage had preference, as the house was an immovable property and thus could not be subject to a chattel mortgage, which is only for personal property. Even though the chattel mortgage was registered, this registration was invalid and of no effect since it attempted to encumber real property.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    ASSOCIATED INSURANCE VS.

    IYA
    G.R. Nos. L-10837-38            

    FACTS:

    Spouses Adriano and Lucia Valino, were the owners and possessors of a house of
    strong materials, which they purchased on installment basis from the Philippine Realty
    Corporation. to enable them to buy on credit rice from NARIC Lucia Valino filed a bond in
    the sum of 11,000 subscribed by the Associated Insurance and Surety Co., Inc., and as
    counter-guaranty therefor, the spouses Valino executed an alleged chattel mortgage on the
    aforementioned house in favor of the surety company, which encumbrance was duly
    registered with the Chattel Mortgage Register of Rizal. Once the payment was completed
    they were able to secure the title for the house.
    After to secure payment for the indebtedness for 12,000 pesos they executed a real
    estate mortgage over the house and lot in favor of Iya and was annotated at the back of the
    title. On the other hand, Valino, failed to satisfy her obligation to the NARIC, the surety
    company was compelled to pay the same pursuant to the undertaking of the bond. In turn,
    the surety company demanded reimbursement from the spouses Valino, but failed to do so,
    and chattel mortgage over the house was foreclosed.
    Both the surety company and Iya filed a case against the Sps. Valino and were jointly
    heard upon agreement of the parties. The CFI ruled in favor of the surety company and Iya.
    ISSUE:
    Which of the 2 mortgages should receive preference.

    RULING:
    The real estate mortgage should receive preference.

    Real estate connotes the land and the building constructed thereon, it is obvious
    that the inclusion of the building, separate and distinct from the land, in the enumeration of
    what may constitute real properties (Art. 415, new Civil Code) could only mean one thing
    — that a building is by itself an immovable property.

    A building certainly cannot be divested of its character of a realty by the fact that the
    land on which it is constructed belongs to another. To hold it the other way, the possibility
    is not remote that it would result in confusion, for to cloak the building with an uncertain
    status made dependent on the ownership of the land, would create a situation where a
    permanent fixture changes its nature or character as the ownership of the land changes
    hands. In the case at bar, as personal properties could only be the subject of a chattel
    mortgage (Section 1, Act 3952) and as obviously the structure in question is not one, the
    execution of the chattel mortgage covering said building is clearly invalid and a nullity.

    Even if the document was correspondingly registered in the Chattel Mortgage


    Register of Rizal, this act produced no effect whatsoever for where the interest conveyed is
    in the nature of a real property, the registration of the document in the registry of chattels
    is merely a futile act. Thus, the registration of the chattel mortgage of a building of strong
    materials produce no effect as far as the building is concerned (Leung Yee vs. Strong
    Machinery Co., 37 Phil., 644).

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