CASE DIGEST: PRUDENTIAL BANK vs. JUDGE PANIS (G.R. No. L-50008. August 31, 1987)

G.R. No. L-50008 August 31, 1987. PRUDENTIAL BANK v. JUDGE PANIS

FACTS: 

Spouses Magcale executed a real estate mortgage in favor of Prudential Bank to secure a loan in the amount of Php70,000. Spouses Magcale then executed another real estate mortgage in securing a loan from the same in the amount of Php20,000. Spouses Magcale failed to pay their obligation and Prudential Bank then subjected the property to a public auction. Respondent Court then issued a decision rendering the contracts of real estate mortgage null and void. Petitioner filed an MR but was denied. Hence, this petition.

ISSUE: 

Whether a valid real estate mortgage can be constituted on the building erected on the land belonging to another.

RULING: 

Yes, a valid real estate mortgage can be constituted on the building erected on the land belonging to another because a building by itself maybe mortgaged upon the land on which it is erected.

In Article 415, the building is separate and distinct from the land. It can only mean that a building by itself is an immovable property. 

Hence, in this case, the 70k mortgage is valid but the 20k mortgage is null and void because the government divested the title to its land.