6.

 
Lopez vs. Orosa and Plaza Theatre, 103 SCRA 98FACTS:
Orosa invited Lopez to invest with him in building a theatre. Lopez supplied lumber for
theconstruction of the said theatre. The materials totaled 62k but Orosa was only able to pay 20kthus
leaving a balance of almost 42k. Later on respondents acquired a bank loan of 30k, withLuzon Surety
Company as their surety and the land and building were mortgaged as counter-security. Petitioner
sued to collect the unpaid amount for the materials and was able to get a judgment against the
respondents making them jointly liable to pay the remaining amount. Also,
he was able to obtain a materialman‘s lien on the building of the theatre. The stocks amountingto 42k
shall be sold in public auction in case the respondents default. Petitioner wasn‘t happy
because he also wanted a lien on the land, urging that the judgment lien should include it sincethe
building and the land are inseparable.
ISSUE:
Whether or not the building and the land are inseparable?
 HELD:
No. The contention that the lien embraces both the land and the building or structure adheringthereto
is without merit. While it is true that generally, real estate connotes the land and thebuilding
constructed thereon, it is obvious that the inclusion of the building, separate and distinctfrom the land,
in the enumeration of what may constitute real properties (Article 415 of the newCivil Code) could
mean only one thing
—
 that a building is by itself an immovable property.Moreover, and in view of the absence of any
specific provision of law to the contrary, a buildingis an immovable property, irrespective of whether
or not said structure and the land on which itis adhered to belong to the same owner.

8. Bicerra vs. Tenezza, 6 SCRA 648

FACTS:
The Bicerras were the owners of a house built on a lot owned by them andsituated in the
municipality of Lagangilang. Tenezza forcibly demolished the house,asserting that they are
the rightful owners of the land. Failureto restore the house and to deliver the materials by the
defendants,plaintiffs were forced to file an action against them for damages as well as
praying that the courthold them as the proper owners of the house. The court dismissed the case
for lack of jurisdiction.
ISSUES:
 Whether or not the house demolished is still considered an immovable property?
HELD:
No. A house is classified as immovable property by reason of its adherence to the soil on whichit is
built. The classification holds true regardless of the fact that the house may be situated onland
belonging to another owner. But once the house is demolished, it ceases to exist as suchand the
hence its character as immovable likewise ceases.

9. Leung Yee vs. F.L. Strong Machinery Co. And Williamson, 37 SCRA 644
FACTS:
Compania Agricola Filipina bought rice-cleaning machinery from the machinery company 
andthis was secured by a chattel mortgage on the machinery and the building to
whichit was installed. Upon failure to pay, the chattel mortgage was foreclosed, the building and
machinery sold in public auction and bought by the machinery company. Then Compania Agricola
Filipina executed a deed of sale over the land to which the building stood in favor of
themachinery company. This was done to cure any defects that may arise in the machinery
company‘s ownership of the building.
 On or about the date to which the chattelmortgage was executed, Compania executed a real
estatemortgage over the building in favor of Leung Yee, distinct and separate from the land.This
is to secure payment for its indebtedness for the construction of the building. Upon failureto pay, the
mortgage was foreclosed.The machinery company then filed a case, demanding that it bedeclared the
rightful owner of the building. The trial court held that it was the machinery
company which was the
rightfulowner as it had its title before the building was registered prior to the date of registry of
Leung Yee‘s certificate.
 
ISSUE:
 Whether or not the building in question is an immovable?
HELD:
The building made out of strong materials in which the machinery was installed is real property.The
mere fact that the parties dealt with it as separate and apart from the land (or as personalproperty) does
not change its character as real property. In this case, it follows that neither theoriginal registry in the
chattel mortgage of the building and the machinery installed therein, northe annotation in the registry
of the sale of the mortgaged property had any legal effect.

10. Standard Oil Co. of New York vs. Jaramillo, 44 SCRA 630FACTS:
De la Rosa was the lessee of a piece of land, on which a house she
ownswas built. She executed a chattel mortgage in favor of the petitioner 
—
purporting theleasehold interest in the land and the ownership ofhouse. After such, the petitioner
moved for its registration with the Register of Deeds, forthe purpose of having the same
recorded in the book of record of chattel mortgages. Aftersaid document had been duly
acknowledge and delivered, the petitioner caused the same to bepresented to the respondent, Joaquin
Jaramillo, as register of deeds of the City of Manila, forthe purpose of having the same recorded in the
book of record of chattel mortgages. Uponexamination of the instrument, the respondent was of the
opinion that it was not a chattelmortgage, for the reason that the interest therein mortgaged did not
appear to be personalproperty, within the meaning of the Chattel Mortgage Law, and registration was
refused on thisground only.
ISSUE:
 
Whether or not respondent‘s position is tenable?
 
HELD:
No. The respondent‘s
 duties, as a register of deeds, in respect to the registration of chattelmortgage are of a
purely ministerial character; and no provision of law can be cited whichconfers upon him any judicial
or quasi-judicial power to determine the nature of any document ofwhich registration is sought as a
chattel mortgage.Generally, he should accept the qualification of theproperty adopted by the person
who presents the instrument forregistration and should place the instrument on record,
upon payment of the proper fee,leaving the effects of registration to be determined by the
court if such question should arise forlegal determination. The Civil Code supplies no absolute
criterion in discriminating between real

 
property and personal property for purposes of the application of the Chattel MortgageLaw. The
articles state general doctrines, nonetheless, itmust not be forgotten that under given conditions,
property may havecharacter different from that imputed to it in the said articles. It isundeniable that
the parties in a contract may by agreement treat as personal propertythat which by nature would be
real property.

11. Punsalan vs. Lacsamana, 21 SCRA 331

 
FACTS:
 
Punsalan was the owner of a piece of land, which he mortgaged in favor of PNB. Due to hisfailure to
pay, the mortgage was foreclosed and the land was sold in a public auction to whichPNB was the
highest bidder. On a relevant date, while Punsalan was still the possessor of theland, it secured a
permit for the construction of a warehouse. A deed of sale was executedbetween PNB and Punsalan.
This contract was amended to include the warehouse and theimprovement thereon. By virtue of these
instruments, respondent Lacsamana secured title overthe property in her name.
 
Petitioner then sought for the annulment of the deed of sale. Among his allegations was that thebank
did not own the building and thus, it should not be included in the said deed.
 
Petitioner‘s complaint was dismissed for improper venue. The trial court held that the actionbeing
filed in actuality by petitioner is a real action involving his right over a real property.
 
ISSUE:
 
W/N the warehouse is an immovable and must be tried in the province where the property lies.
 
HELD:
 
Warehouse claimed to be owned by petitioner is an immovable or real property. Buildings arealways
immovable under the Code. A building treated separately from the land on which it isstood is
immovable property and the mere fact that the parties to a contract seem to have dealtwith it separate
and apart from the land on which it stood in no wise changed its character asimmovable property.

 12. Prudential Bank vs. Panis 153 SCRA 390

FACTS:
 
Spouses Magcale secured a loan from Prudential Bank. To secure payment, they executed areal
estate mortgage over a residential building. The mortgage included also the right to occupythe lot and
the information about the sales patent applied for by the spouses for the lot to whichthe building stood.
After securing the first loan, the spouses secured another from the samebank. To secure payment,
another real estate mortgage was executed over the sameproperties. The Secretary of Agriculture then
issued a Miscellaneous Sales Patent over the landwhich was later on mortgaged to the bank. The
spouses then failed to pay for the loan and theREM was extrajudicially foreclosed and sold in public
auction despite opposition from thespouses. The respondent court held that the REM was null and
void.
 
 
ISSUE:
 
Whether or not a valid REM mortgage can be constituted on the building erected on thebelonging to
another.
 
HELD: A real estate mortgage can be constituted on the building erected on the land belongingto
another. The inclusion of building distinct and separate from the land in the Civil Code canonly mean
that the building itself is an immovable property. While it is true that a mortgage ofland necessarily
includes in the absence of stipulation of the improvements thereon, buildings,still a building in itself
may be mortgaged by itself apart from the land on which it is built. Such amortgage would still be
considered as a REM for the building would still be considered asimmovable property even if dealt
with separately and apart from the land. The original mortgageon the building and right to occupancy
of the land was executed before the issuance of thesales patent and before the government was
divested of title to the land. Under the foregoing, itis evident that the mortgage executed by private
respondent on his own
 
building was a valid mortgage. As to the second mortgage, it was done after the sales patentwas
issued and thus prohibits pertinent provisions of the Public Land Act.
 
13. Tumalad vs. Vicencio
 
FACTS: Vicencio and Simeon executed a chattel mortgage in favor of plaintiffs Tumalad overtheir
house, which was being rented by Madrigal and company. This was executed to guaranteea loan,
payable in one year with a 12% per annum interest. The mortgage was extrajudiciallyforeclosed upon
failure to pay the loan. The house was sold at a public auction and the plaintiffswere the highest
bidder. A corresponding certificate of sale was issued. Thereafter, the plaintiffsfiled an action for
ejectment against the defendants, praying that the latter vacate the house asthey were the proper
owners.
 
ISSUE: W/N the chattel mortgage was null and void ab initio because only personal propertiescan be
subject of a chattel mortgage.
 
HELD: Certain deviations have been allowed from the general doctrine that buildings areimmovable
property such as when through stipulation, parties may agree to treat as personalproperty those by
their nature would be real property. This is partly based on the principle ofestoppel wherein the
principle is predicated on statements by the owner declaring his house aschattel, a conduct that may
conceivably stop him from subsequently claiming otherwise.
 
In the case at bar, though there be no specific statement referring to the subject house aspersonal
property, yet by ceding, selling or transferring a property through chattel mortgagecould only have
meant that defendant conveys the house as chattel, or at least, intended totreat the same as such, so
that they should not now be allowed to make an inconsistent standby claiming otherwise.
 

 
 
14. Makati Leasing and Finance Corporation vs Wennever Texttile Mills
 
FACTS:
 
To obtain financial accommodations from Makati Leasing, Wearever Textile discounted
andassigned several receivables under a Receivable Purchase Agreement with Makati Leasing.
Tosecure the collection of receivables, it executed a chattel mortgage over several raw materialsand a
machinery – Artos Aero Dryer Stentering Range (Dryer). Wearever defaulted thus theproperties
mortgaged were extrajudicially foreclosed. The sheriff, after the restraining order waslifted, was able
to enter the premises of Wearever and removed the drive motor of the Dryer.The CA reversed the
order of the CFI, ordering the return of the drive motor since it cannot bethe subject of a replevin suit
being an immovable bolted to the ground. Thus the case at bar.
 
ISSUE: Whether the dryer is an immovable property
 
HELD: NO. The SC relied on its ruling in Tumalad v. Vicencio, that if a house of strong materialscan
be the subject of a Chattel Mortgage as long as the parties to the contract agree and noinnocent 3rd
party will be prejudiced then moreso that a machinery may treated as a movablesince it is movable by
nature and becomes immobilized only by destination. And treating it as achattel by way of a Chattel
Mortgage, Wearever is estopped from claiming otherwise.
 
15. Serg‘s Products and Gaquiloy vs. PCI Leasing and Finance 338 SCRA 499
 
FACTS:
 
PCI filed a case for collection of a sum of money as well as a writ of replevin
for theseizure of machineries, subject of a chattel mortgage executed by petitioner in favor of PC
I.Machineries of petitioner were seized and petitioner filed a motion for special protectiveorder. It
asserts that the machineries were real property and could not be subject of a chattelmortgage.Issue:
Whether or not the machineries become real property by virtue of immobilization.
 
HELD:
 
The machineries in question have become immobilized by destination because they areessential
and principal elements in the industry, and thus have become immovable in nature.Nonetheless, they
are still proper subjects for a chattel mortgage. Contracting parties mayvalidly stipulate that a real
property be considered as personal. After agreement,
they areconsequently estopped from claiming otherwise.

17. NAVARRO VS. PINEDA9 SCRA 631

FACTS:
Pineda and his mother executed real estate and chattel mortgages in favor of Navarro,to secure a loan
they got from the latter. The REM covered a parcel of land owned by themother while the chattel
mortgage covered aresidential house. Due to the failure to pay the loan, they asked
for extensions to pay forthe loan. On the second extension, Pineda executed a promise wherein in
case of default in
payment, he wouldn‘t ask for any additional extension and there would be no need for any
formal demand. In spite of this, they still failed to pay. Navarro then filed for the
foreclosure ofthe mortgages. The courtdecided in his favor.
ISSUE:
Whether or not the deed of real estate mortgage and chattel mortgage appended to thecomplaint is
valid notwithstanding the fact that the house was made subject of chattel mortgagefor the reason that
it is erected on a land that belongs to a third person.HELD:

 
Yes. Where a house stands on a rented land belonging to another person, it maybe the subject
matter of a chattel mortgage as personal property if so stipulated in the documentof mortgage, and in
an action by the mortgagee for the foreclosure, the validityOf the chattel mortgage cannot be assailed
by one of the parties to the contract of mortgage.Furthermore, although in some instances, a house of
mixed materials has been considered as achattel between the parties and that the validity ofthe
contract between them, has been recognized, it has been a constantcriterion that with respect to
thirdPersons, who are not parties to the contract, and especially in execution proceedings, the houseis
considered as immovable property.

18. DAVAO SAWMILL V. CASTILLOG.R. No. L-40411 August 7, 1935FACTS:

 Davao Sawmill Co., operated a sawmill. However, the land upon which the
business wasconducted was leased from another person. On the land, Davao Sawmill erected a
buildingwhich housed the machinery it used. Some of the machines were mounted and placed
onfoundations of cement.. The contract of lease stated that on the expiration of the
period agreedupon, all the improvements and buildings introduced and erected by Davao sawmill
shall passto the exclusive ownership of the lessor without any obligation on its part to pay any amount
forsaid improvements and buildings; which do not include the machineries and accessories in
theimprovements.In another action, a writ of execution was issued against the company and the
properties inquestion were levied upon. The company assailed the said writ contending that the
machineriesand accessories were personal in nature, hence, not subject to writ of execution. The trial
judgeruled in favour of the company.ISSUE:
Whether or not the machineries and equipment were personal propertyHELDYes, the subject
properties are personal in nature.
Art.415
 (NCC) provides that real property consists of (5) Machinery, receptacles, instrumentsor implements
intended by the owner of the tenement for an industry or works which may becarried on in a building
or on a piece of land, and which tend directly to meet the needs of thesaid industry or works.
Machinery is naturally movable. However, machinery only becomesimmovable when placed in a
land by the owner of the property or land but not when so placedby a tenant or any person having
only a temporary right, unless such person acted as the agentof the owner. In the case at bar, the
machinery is intended not by the owner of the land but bythe saw mill company for use in connection
with its trade

19. TSAI V. CAGr. No. 120098, October 2, 2001FACTS:

Ever Textile Mills, Inc. (EVERTEX) obtained loan from Philippine Bank of
Communications(PBCom), secured by a Real and Chattel Mortgage over the lot where its factory
stands, andthe chattels located therein as enumerated in a schedule attached to the
mortgagecontract. PBCom again granted a second loan to EVERTEX which was secured by a
ChattelMortgage over personal properties similar to those listed in the first mortgage deed. During
theexecution of the second mortgage, EVERTEX purchased various machines and equipment.Upon
EVERTEX's failure to meet its obligation. PBCom, commenced extrajudicial foreclosure ofthe
mortgage. PBCom leased the entire factory premises to Ruby Tsai and sold to the samethe factory,
lock, stock and barrel including the contested machineries.EVERTEX filed a complaint for
annulment of sale, reconveyance, and damages againstPBCom, alleging that the extrajudicial
foreclosure of subject mortgage was not valid, and thatPBCom, without any legal or factual basis,
appropriated the contested properties which werenot included in the Real and Chattel Mortgage of the
first mortgage contract nor in the secondcontract which is a Chattel Mortgage, and neither were those
properties included in the Noticeof Sheriff's Sale.
ISSUE:
 Whether or not the machineries and equipment were personal properties
HELD:
 YES, the machineries and equipment are personal properties. The nature of the disputedmachineries,
i.e., that they were heavy, bolted or cemented on the real property mortgageddoes not make them
ipso facto
 immovable under Article 415 (3) and (5) of the New CivilCode. While it is true that the properties
appear to be immobile, a perusal of the contract ofReal and Chattel Mortgage executed by the parties
herein reveal their intent, that is - to treatmachinery and equipment as chattels. If the machineries in
question were contemplated to beincluded in the real estate mortgage, there would have been no
necessity to ink a chattelmortgage specifically with a listing of the machineries covered
thereby. Assuming that the properties in question are immovable by nature, nothing
detracts the partiesfrom treating it as chattels to secure an obligation under the principle of
estoppel, where animmovable may be considered a personal property if there is a stipulation as when
it is used assecurity in the payment of an obligation where a chattel mortgage is
executed over it.

20.  MINDANAO BUS CO. V. CITY ASSESSOR DIGEST

G.R. No. L-17870 29 September 1962FACTS:
Petitioner is a public utility company engaged in the transport of passengers and cargo bymotor
vehicles. Petitioner likewise owned a land where it maintains a garage, a repair shop andblacksmith or
carpentry shops. The machineries are placed thereon in wooden and cementplatforms. The City
Assessor of CDO then assessed a P4,400 realty tax on said machineriesand repair equipment.
Petitioner appealed on the ground that the same are not real properties.
 
ISSUE
: Whether or not the machineries and equipment are considered immobilized and thussubject to a
realty tax
HELD:
NO. The Supreme Court held that said machineries and equipment are not subject to theassessment
of real estate tax.
Art. 415
 of the NCC classifies the following as immovableproperty xxx (5) Machinery, receptacles,
instruments or implements intended by the owner ofthe tenement for an industry or works which
may be carried on in a building or on a piece ofland, and which tend directly to meet the needs of the
said industry or works;Said equipment are not considered immobilized as they are merely incidental,
not essential andprincipal to the business of the petitioner. The transportation business could be
carried onwithout repair or service shops of its rolling equipment as they can be repaired or services
inanother shop belonging to another Aside from the element of essentiality the Art.415 (5)
also requires that the industry or works becarried on in a building or on a piece of land. As
such, the equipment in question are notdeemed real property and not subject to realty tax, because
the transportation business
is notcarried on in a building or permanently on a piece of land,
 as demanded by law.

21. BOARD OF ASSESSMENT APPEALS V. MERALCOG.R. No. L-15334. January 31,

1964FACTS:
Meralco‘s electric power is generated by its hydro
-electric plant located at Botocan Falls,Laguna and is transmitted to the City of Manila by means of
electric transmission wires, runningfrom the province of Laguna to the said City. These electric
transmission wires which carry highvoltage current, are fastened to insulators attached on steel
towers. Meralco has constructed 40of these steel towers within Quezon City, on land belonging to it.
 T
he QC City Assessor declared the MERALCO's steel towers subject to real property tax. Afterthe
denial of MERALCO's petition to cancel these declarations, an appeal was taken to the QCBoard of
Assessment Appeals, which required respondent to pay real property tax on the saidsteel towers for
the years 1952 to 1956.MERALCO paid the amount under protest, and filed a petition for review in
the Court of Tax Appeals (CTA) which rendered a decision ordering the cancellation of
the said tax declarationsand the refunding to MERALCO by the QC City Treasurer.
ISSUE:
 Whether or not the steel towers of an electric company constitute real property for thepurposes of real
property tax.
HELD:
NO. The steel towers of an electric company do not constitute real property for the purposes ofreal
property tax.
Steel towers are not immovable property under paragraph 1, 3 and 5 ofArticle 415 (NCC)
because
they do not constitute buildings or constructions adhered to thesoil. As per description, given by the
lower court, they are removable and merely attached to asquare metal frame by means of bolts, which
when unscrewed could easily be dismantled andmoved from place to place.

 
They cannot be included under paragraph 3, as they are not attached to an immovable in afixed
manner, and they can be separated without breaking the material or causing deteriorationupon the
object to which they are attached. These steel towers or supports do not also fallunder paragraph 5, for
they are not machineries or receptacles, instruments or implements, andeven if they were, they are not
intended for industry or works on the land.Petitioner is not engaged in an industry or works on the
land in which the steel supports ortowers are constructed.

22. MANILA ELECTRIC CO. V. CENTRAL BOARD OF ASSESSMENT APPEALS114

SCRA 273FACTS:
Petitioner owns two oil storage tanks, made of steel plates wielded andassembled on the spot. Their
bottoms rest on a foundation consisted of compactedearth, sand pad as immediate layer, and asphalt
stratum as top layer. The tanks are within theCaltex refinery compound. They are used for storing
fuel oil for Meralco's power plants.The municipal treasurer of Batangas made an assessment for realty
tax on the two tanks, basedon the report of the Board of Assessors. Meralco contends that the said oil
storage tanks do notfall within any of the kinds of real property enumerated in article 415 of the Civil
Code the tanksare not attached to the land and that they were placed on leased land, not on the land
owned byMeralco.
ISSUE : Whether or not the oil storage tanks constitute real property for the purposes ofreal
property taxHELD:
YES. While the two storage tanks are not embodied in the land, they maynevertheless be
considered as improvements in the land, enhancing its utility andrendering it useful to the oil
industry. It is undeniable that the two tanks have been installed withsome degree of permanence as
receptacles for the considerable quantities of oil needed byMeralco for its operations.For
purposes of taxation, the term real property may include things,
whichshould generally be considered as personal property. It is a familiarphenomenon to see
things classified as real property for purposes oftaxation which on general principle may be
considered as personalproperty.

INVOLUNTARY INSOLVENCY OF PAUL STROCHECKER vs. RAMIREZ44 PHIL

933
FACTS:
The half-interest in the business (Antigua Botica Ramirez) was mortgaged with Fidelity &Surety Co.
on March 10, 1919, and registered in due time in the registry of property, whileanother mortgage was
made with Ildefonso Ramirez on 22 September 1919 and registered alsoin the registry. Raised in the
lower court, the trial court declared the mortgage of Fidelity &Surety Co. entitled to preference over
that of Ildefonso Ramirez and another mortgage byConcepcion Ayala. Ayala did not appeal, but
Ramirez did.

ISSUE:
Whether or not half-interest over a business is a movable property.

RULING:Yes. Interest in business may be subject of mortgage With regard to the nature of
theproperty mortgaged which is one-half interest in the business, such interest is a personalproperty
capable of appropriation and not included in the enumeration of movable properties in Article 414
of the Civil Code, and may be the subject of mortgage.

Hongkong & Shanghai Banking v. Aldecoa & Co.

Court has jurisdiction as bank does not seek to exercise mortgage right
on real properties in the provinces
The bank is not seeking to exercise its mortgage rights upon the mortgages
which the defendant firm holds upon certain real properties in the Provinces of
Albay and Ambos Camarines and to sell these properties at public auction in
these proceedings; nor does the judgment of the trial court directs that this be
done. Before that property can be sold the original mortgagors will have to be
made parties. The bank is not trying to foreclose any mortgages on real
property executed by Aldecoa & Co.

Rivera v. Rubiso

A series of sales had taken place:

1. First, Gelito had sold is 2/3 share to Chinaman Sy Qui.

2. When Sy Qui acquired full ownership of the company, he sold Valentina to Florentino Rivera
for P2,500 on January 4, 1915. The sale was registered in the Bureau of Customs over two
months later on March 17, 1915.
3. Shorty after the sale to Rivera, a suit was brought against Sy Qui to enforce payment of a
certain sum of money. Valentina was placed at a public auction and was purchased by Sy
Qui’s creditor, Fausto Rubiso. He bought the vessel for P55.45. The sale was registered in the
Office of the Collector of Customs on January 27, 1915 and in the commercial registry on
March 14, 1925.

The first buyer, Florentino Rivera, contends that he had lost the ship when it
got stranded somewhere in Batangas. He claims that Rubiso took possession
of the vessel without his knowledge or consent. Rivera seeks to be
indemnified for the profits he could have collected from the vessel’s voyages
had Rivera not taken it. But, does he have the right to the vessel?

ISSUE:

Who is the rightful owner of the merchant vessel--Rivera or Rubiso?

RULING:

Rubiso. It is true that the sale to Rivera had taken place prior to the public
auction where Rubiso bought the vessel, but the same was entered in the
customs registry only on March 17, 1915. Rubiso, however, had acted more
swiftly by registering the property much earlier in the Office of the Collector
Customs and in the commercial registry in the same month. Although the sale
to Rivera had taken place first, the registration made by Rubiso was made
earlier.

Rubiso did the smart thing by registering the property at the commercial
registry. Pursuant to Article 573 of the Code of Commerce, the acquisition of a
vessel must be registered at the commercial registry in order to bind third
parties. Such registration is necessary and indispensible in order that the
purchaser’s rights may be maintained against a claim filed by third persons.

With respect to the rights of two purchasers, whichever of them first registered
his acquisition of the vessel is the one entitled to enjoy the protection of the
law. By first registration, he becomes the absolute owner of the boat and is
freed from all encumbrances and claims by strangers.

RUBISO V. RIVERA
37 PHIL 72
 

FACTS:
Rubiso filed a complaint against Rivera for the recovery of a pilot boat.  He alleged  that  he  is 
the  rightful  owner  of  a  pilot  boat,  which  was  stranded and recovered by Rivera.  The latter
refused to return the said boat as he alleged too that he was the owner thereof.  It was known that
the original
owners of the boat had secretly sold the pilot boat to Rivera on an earlier date than the sale in a
public auction to Rubiso.  Nonetheless, material is the fact that the entry into the customs registry
of the sale of the boat was later than the recording of the sale to Rubiso.  
 

HELD:
The requisite of registration in the registry, of the purchase of the vessel, is necessary  and 
indispensable  in  order  that  the  purchaser’s  rights  may  be maintained  against  a  third 
person.    Such  registration  is  required  both  by the Code of Commerce and Act 1900.  It is
undeniable, ergo, that Rivera doesn’t have a better right than Rubiso over the pilot boat.
 
Ships  and  vessels,  whether  moved  by  steam  or  by  sail,  partake,  to  a certain extent of the
nature and conditions of real property, on account of their value and importance in world
commerce; and for this, the provisions of the Code of Commerce are nearly identical with Article
1473 of the CC.