I. Classification of Property
A. Immovable and Movable
1.
Article 414
.
All things which are or maybe the object of appropriation areconsidered either:(1) Immovable or real property; or(2) Movable or personal property.
Parties to a contract may by agreement treat as personal property that which by nature would be real property.
Standard Oil Company v. Jaramillo
Building was mortgaged to SOC. SOC soughtto compel Jaramillo, register of deeds, toregister a CHATTEL mortgage issued in SOC’sfavor. The objects of the document were theleasehold rights over a certain property andthe house constructed over the sameproperty.Jaramillo refused to register the documentbecause the objects did not appear to bepersonal property under the Chattel MortgageLaw. SOC filed for mandamus.
HELD:
The document should be registered. Itis undeniable that the parties to a contractmay by agreement treat as personal propertythat which by nature would be real property.The register’s duty is MINISTERIAL, he cannot determine the nature of the documentsought to be registered.
2.
Article 415
. The following are immovableproperty:(1) Land, buildings, roads and constructions of all kinds adhered to the soil;(2) Trees, plants, and growing fruits, whilethey are attached to the land or form anintegral part of an immovable;(3) Everything attached to an immovable in afixed manner, in such a way that it cannotbe separated therefrom without breakingthe material or deterioration of the object(incorporation);(4) Statues, reliefs, paintings, or other objectsfor use or ornamentation, placed inbuildings or on lands by the owner of theimmovable in such a manner that it revealsthe intention to attach them permanently tothe tenements (destination);(5) Machinery, receptacles, instruments orimplements intended by the owner of thetenement for an industry or works whichmay be carried on in a building or on apiece of land, and which tend directly tomeet the needs of the said industry orworks (destination);(6) Animal houses, pigeon-houses, beehives,fish ponds or breeding places of similarnature, in case their owner has placed themor preserves them with the intention tohave them permanently attached to theland, and forming a permanent part of it;the animals in these places are included(destination);(7) Fertilizer actually used on a piece of land;(8) Mines, quarries, and slag dumps, while thematter thereof forms part of the bed, andwaters either running or stagnant;(9) Docks and structures which, thoughtfloating, are intended by their nature andobject to remain at a fixed place on a river,lake, or coast;(10) Contracts for public works, and servitudesand other real rights over immovableproperty.Does not define, only enumerates.Academic Classification of Immovables (NIDA)1.Nature (trees and plants, land)2.Incorporation (buildings)3.Destination or purpose (machineryplaced by owner on tenement for directuse of industry or works to be carriedon therein)4.Analogy (like the right of usufruct,public works, servitudes)---If a building is not adhered to the soil and thereis no intent of permanency, it is personalproperty.---(4) 1. movable property must be placed in animmovable property2. by the owner of the immovable3. the intention must be to attach itpermanently (destination)cmtPage 1 of 423/7/2004
---Provision in lease that improvements madeshall belong to the lessor upon termination of the lease – air-conditioner installed by lessee.Will AC be turned over to the lessor? Yes.Lessee acted as an agent of the lessor.---(5) RequisitesA.Placed by the owner;B.Intended for an industry or workscarried on in building or land;C.Machines must tend to directly meetthe needs of the industry;D.Machines must be essential andprincipal elements in the industry; notmere incidentals.
Ex.
Sewing machines placed in own houseintended to be used as a garments factory.Immovable?
Yes. Machines placed by owner;for industry…; tend directly to meet…;essential…If other person’s house, immovableEffect of separation: If temporarily taken away,still immovable.
---
Sale of real property in the CM Registry cannot bind third persons in good faith.
Leung Yee v. Strong Machinery
Agricola purchased rice-cleaning machineryfrom Strong and executed a
chattel
mortgageover the machinery
and the building
in whichit was installed. Agricola defaulted and Strongpurchased the building at auction. Themortgage and sale were registered in the CMregistry.Agricola later sold the land to Strong, the salebeing in an unregistered public document.It turns out that the building was also REM toLeung Yee to secure payment of aconstruction contract. When Agricoladefaulted, Leung Yee purchased the buildingat a sheriff’s sale (this sale took place afterthe building was bought by Strong).Leung Yee brought suit to recover possessionof the building.
HELD:
Strong has a better right over thebuilding. This is true only because Leung Yeeknew of the chattel mortgage to Strong whenhe purchased the building; he was a buyer inbad faith. The sale of the building cannot bindthird persons in good faith because it was thesale of real property registered not in theRegistry of Real Property but the CM Registry.
A building may be validly mortgaged separately from the land upon which it is built.
Prudential Bank v. Judge Panis
Owners of a building on leased land obtained2 loan from the bank, the loans secured byREMs over the building. The owners defaulted,prompting the foreclosure of the mortgage.The respondent court ruled that the REMswere void, holding that a building may not bemortgaged separately from the land on whichit is built.
HELD:
The 1
st
REM, executed before title of land was transferred to the mortgagor, isvalid. Article 415 mentions ‘buildings’ separate from land; this means that thebuilding by itself is an immovable and may bethe subject of a REM.The 2
nd
REM, executed after title wastransferred, is void for being violative of thePublic Land Act.
To be considered as real property by destination, the machinery etc. must be (1) essential and principal elements of the industry and (2) the industry must be carried out in a building or piece of land
Mindanao Bus Co. v. City Assessor
The City Assessor sought to impose realty taxon certain MAINTENANCE AND REPAIREQUIPMENT of MBC.MBC opposed, contending that the items werenot real property; the items in question aremovable.
HELD:
The items are personal property. Theyare not immobilized by destination or purposeas contended by the City Assessor. To beconsidered as real property by destination,they must be (1) essential and principalelements of the industry and (2) the industrymust be carried out in a building or piece of land.In this case, the items are only incidentals tothe transport business and the business iscmtPage 2 of 423/7/2004
carried on not in a building or piece of landbut around the streets of Mindanao.
A stipulation in the lease agreement to treat the real property as personal is binding upon the parties. The parties are estopped from claiming otherwise.
Serg’s Products v. PCI Leasing
PCI filed a complaint for a sum of money andan application for a writ of replevin on thechocolate manufacturing equipment of Serg’s.Serg’s claims property is real and not subjectto a writ of seizure.
HELD:
The property is real under Article 415BUT it was stipulated in the lease agreementthat they would be treated as personal. Serg’sis ESTOPPED from claiming that they are realin character.
Steel electric towers are personal property provided they can be removed without substantial breakage or deterioration.
Board of Assessment Appeals v. Meralco
The City Assessor sought to impose realty taxon steel towers of MERALCO. The taxes werepaid under protest, MERALCO contending thatthe towers were exempt from taxation andthat they were personal and not real property.
HELD:
The towers are personal property.They are not buildings adhered to the soil(415-1); they are not attached to animmovable in a fixed manner and they can beseparated without substantial damage ordeterioration (3) and they are notmachineries intended for works on the land(5).
3.
Article 416
. The following things aredeemed to be personal property:(1) Those movables susceptible of appropriation which are not included in thepreceding article;(2) Real property which by any specialprovision of law is considered as personalty;(3) Forces of nature which are brought undercontrol by science; and(4) In general, all things which can betransported from place to place withoutimpairment of the real property to whichthey are fixed.
For purposes of the Chattel Mortgage Law, ungathered products have the nature of personal property and may be attached and executed upon.
Sibal v. Valdez
Sibal’s sugarcane crops were attached andsold to Valdez in order to satisfy a judgmentdebt. The lot on which the crops were locatedhad been previously attached and sold toanother creditor, Macondray. Valdez laterpurchased the land from Macondray.Sibal sought to redeem the sugarcane fromValdez on the assumption that it was realproperty (growing fruits attached to the land).Plaintiff contends that the sugarcane ispersonal property and not subject toredemption.
HELD:
Although the sugarcane may beconsidered as growing fruits and is ordinarilyreal property, for the purposes of the ChattelMortgage Law, the crops must be regarded aspersonal property. This is because the right tothe growing crops given to the defendantmobilized the crops by anticipation. It is as if there was a gathering in advance renderingthe crop movable.
Electricity may be appropriated; it can be the object of theft.
US v. Carlos
Accused was convicted for the theft of electriccurrent by means of a jumper. Accusedcontends that electricity is intangible andcannot be the object of theft.
HELD:
Accused is guilty of theft.The Revised Penal Code provides thatpersonal property is the subject of theft.Electricity is a valuable article of merchandiseand can be bought and sold like any otherpersonal property.The true test of what is a proper subject of larceny is not whether the subject is corporealor incorporeal, but whether it is capable of appropriation by another than the owner.cmtPage 3 of 423/7/2004
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