1

PRELIMINARY
CONCEPT

OF

PROPERTY

Property mass of things or objects useful to human activity and which are necessary to life,
for which reason they may in one way or another be organizes and distributed, but always for
the use of man
Right to Property the juridical tie by virtue of which a person has the exclusive power to
receive or obtain all the benefits from a things, except those prohibited or restricted by law or
by the rights of others; emphasizes the vinculum between man and the things (while ownership
refers to the mass of rights over the thing)

AS

A THING

Things (cosa) all objects that exist which can be of utility to man
Property (bienes) all those that are already appropriated or are in the possession of man
Appropriation equivalent to occupation, which is the willful apprehension of a
corporeal object which has no owner, with intent to acquire its ownership
Thus, while things are all those that can be possessed, property means those that are already
possessed and are found in mans patrimony.
Note: The Civil Code uses the words things and property as identical to each other. From the
point of view of the Code, therefore, property includes not only things which are already
possessed by man, but also those which are susceptible of being possessed by him.
Requisites for an object to be juridical considered as a thing or property:
(1) Utility - the capacity to satisfy human wants
(2) Substantivity or individuality the quality of having a separate and autonomous
existence
(3) Apportionability or the susceptibility of being possessed by man
Common things (res communes) things which, as a whole mass, are not
susceptible of appropriation (e.g., sunlight, air, ocean), but under certain
conditions, a limited quantity of the whole mass may be appropriated and
thereby converted into property (e.g., electricity, oxygen, distilled water).
Res Nullius those which have been intentionally abandoned by their owners;
still considered in law as property because they are susceptible of appropriation,
although it is not actually appropriated (for the moment they have no owners)
Things cannot be considered as property when they are not susceptible of appropriation
because of physical impossibility or legal impossibility.

AS

A RIGHT

The rights considered as property (i.e., patrimonial in character) are of two kinds:

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(1) Real (jus in re) the power belonging to a person over a specific thing, without a passive
subject individually determined against whom such right may be personally exercised.
Elements:
o A subject and an object connected by a relation of ownership of the
former over the latter.
o A general obligation or duty of respect for such relation, there being no
particular passive subject.
o Effective actions recognized by law to protect such relation against
anyone who may want to disturb it.
In Spanish law, after which our law is patterned, the doctrine of unlimited
number of real rights prevails.
Classes of real rights:
(1) Of full control (domino pleno) plenary rights allowing the holder to
exercise full control over the subject property
(a) Ownership
(b) Possession
(2) Of enjoyment (domino menos pleno) rights allowing the holder to
enjoy certain aspects of the subject property
(a) Usufruct
(b) Easements
(c) Recorded lease
(3) Of guaranty (domino limitado) rights allowing the holder to subject
the property as security for the payment of an obligation
(a) Mortgage
(b) Pledge
(c) Antichresis
(d) Retention
(2) Personal (jus ad rem; obligation) the power belonging to one person to demand of
another, as a definite passive subject, the fulfillment of a prestation to give, to do, or not
to do
Elements:
o There are two subjects, active and passive, who are determined and
specified; the passive subject being bound to perform the prestation
incumbent upon him, by reason of a juridical tie which binds him to the
active subject.
o A general obligation on the part of third persons to respect the relation
between the active and passive subjects.
o Effective actions in favor of the active subject against the passive subject
for the performance of the prestation by the latter.

REAL RIGHT
BY THE NUMBER OF
PERSONS INVOLVED

BY THE OBJECT OF THE

Definite active subject, and

the rest of the world as
passive subject without
individual determination
Corporeal thing

PERSONAL RIGHT
Definite active subject and a
definite passive subject
(debtor)
Intangible things, the

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prestation of the debtor

JURIDICAL RELATION

BY THE MANNER IN
WHICH THE WILL OF THE
ACTIVE SUBJECT

Affects the thing directly

Affects the thing indirectly

through the prestation of the
debtor

By mode and title

By title alone

By loss or destruction of the

thing

Survives the subject matter

Give rise to real actions (actio

in rem) against third persons

Give rise to only personal

(actio in personam) actions
against the definite debtor

AFFECTS THE THING

RELATED TO IT

BY THE CAUSES OF
CREATING THE JURIDICAL
RELATION

BY THE METHODS OF
EXTINGUISHMENT OF THE
JURIDICAL RELATION

BY THE NATURE OF THE

ACTIONS ARISING
THEREFROM

DEFINITION
Art. 414. All things which are or may be the object of appropriation are considered either:
(1) Immovable or real property; or
(2) Movable or personal property. (333)
Property anything which is or may be the object of appropriation
Protection: The Constitution protects property and provides that no person may be
deprived thereof without due process of law. Protection also entails the enforcement by
the law of property rights (i.e., if a persons rights are violated, he may seek redress
from the law and avail himself of the States coercive powers to repair injury).
Limitation: Every piece of property and every property right is held subject to
reasonable state regulation, to the end that its use shall not be injurious to the health
and welfare of the community.
(a) Police power the power to impose limitations or restrictions on property
interests to promote public welfare
(b) Eminent domain the power to take or appropriate private property for public
use subject to payment of just compensation to the owner
(c) Taxation the power to impose exactions or forced contributions which become
public funds
The limitation on property is also related to the concept of abuse of rights under Art.
19, which provides that every person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his due, and observe honesty
and good faith.

China Banking Corporation v. CA (2000)

Doctrine: Property under the civil law comprehends every species of title, inchoate or complete,
legal or equitable.
Facts: (Feb. 1984): A notice of levy was issued on a conjugal land to the extent of pertaining
to the portion of Alfonso in connection with a Metrobank case. (June 1985): China Banking
filed a collection suit against Chua and won. (Sept. 1986): A certificate of sale was executed in
favor of Metrobank. (Nov. 1988): Alfonso assigned his right to redeem the portion of the land
to his son Paulino Chua and the latter redeemed the said land at the same day. (Feb. 1991): A
notice of levy was issued against the right and interest of Chua in connection with the China
Banking case. (May 1992): A certificate of sale was executed in favor of China Bank.
Held: Sale of the land in favor of China Banking is valid. Assignment of the right of redemption
made by Alfonso to Paulino was done to defraud China Bank and is hereby rescinded under
Art. 1387 CC. After foreclosure of Alfonsos share over the residential land, the only property
Alfonso has was his right to redeem the same, it forming part of his patrimony. Despite
Alfonsos knowledge that his right of redemption is the only property he had, he still assigned
the said right to redeem to Paulino.

CLASSIFICATION

OF

PROPERTY

The classification is important in determining:

(a) The formalities governing a transaction over the property;
(b) If the property is subject to real property taxes;
(c) If the property may validly be the subject of chattel mortgage or real estate mortgage;
(d) Which procedure is applicable for attachment or execution;
(e) If the taking of the property can be considered theft;
(f) If the property can be seized under a search warrant;
(g) Registration;
(h) Venue of action; and
(i) Which period applies for acquisitive prescription of property

KINDS
(A) As to their nature:
(1) Real;
(2) Personal; or
(3) Mixed
(B) As to their ownership:
(1) Public; or
(2) Private
(C) As to their divisibility:
(1) Divisible can be divided physically or juridically without injury; or
(2) Indivisible cannot be divided without destroying their nature or rendering
impossible the fulfillment of the juridical relation of which they are the object

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(D) As to their consumability:
(1) Consumable cannot be used in a manner appropriate to their nature without
being consumed; or
(2) Non-consumable not consumed by use
(E) As to their susceptibility of substitution:
(1) Fungible those which belong to a common genus which includes several
species of the same kind, perfectly permitting substitution of one by the others;
or
(2) Non-fungible those specifically determined and cannot be substituted
(F) As to their alienability:
(1) Within the commerce of man; or
(2) Outside the commerce of man
(G) As to their existence in time:
(1) Existing or present exist in actuality, either physical or legal; or
(2) Future do not exist in actuality, but whose existence can be reasonable
expected with more or less probability
(H) As to their dependence or importance:
(1) Principal those to which other things are considered dependent or
subordinated; or
(2) Accessory those which are dependent or subordinated to the principal
(I) As to their definiteness or designation:
(1) Generic indicates its homogenous nature, but not the individual; or
(2) Specific indicates the species or its nature and the individual
(J) As to their manifestability to the senses:
(1) Corporeal; or
(2) Incorporeal

BY MOBILITY
IMMOVABLE/REAL PROPERTY
Art. 415. The following are immovable property:
(1) Land, buildings, roads and constructions of all kinds adhered to the soil;
(2) Trees, plants, and growing fruits, while they are attached to the land or form an integral part
of an immovable;
(3) Everything attached to an immovable in a fixed manner, in such a way that it cannot be
separated therefrom without breaking the material or deterioration of the object;
(4) Statues, reliefs, paintings or other objects for use or ornamentation, placed in buildings or on
lands by the owner of the immovable in such a manner that it reveals the intention to attach them
permanently to the tenements;

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(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for
an industry or works which may be carried on in a building or on a piece of land, and which tend
directly to meet the needs of the said industry or works;
(6) Animal houses, pigeon-houses, beehives, fish ponds or breeding places of similar nature, in
case their owner has placed them or preserves them with the intention to have them permanently
attached to the land, and forming a permanent part of it; the animals in these places are
included;
(7) Fertilizer actually used on a piece of land;
(8) Mines, quarries, and slag dumps, while the matter thereof forms part of the bed, and waters
either running or stagnant;
(9) Docks and structures which, though floating, are intended by their nature and object to remain
at a fixed place on a river, lake, or coast;
(10) Contracts for public works, and servitudes and other real rights over immovable property.
(334a)
Note: For purposes of taxation, the term real property may include things which
should generally be regarded as personal property.
(A) By nature those which cannot be moved from place to place
(1) Land, buildings, roads and constructions of all kinds adhered to the soil (par. 1)
Land is the best example of an immovable. It is real by nature and
definition, even if it is rented.
The inclusion of buildings, separate and distinct from the land in the
enumeration of what may constitute real properties means that a
building is by itself an immovable property, provided it is more or less of
a permanent structure independent of and regardless of the ownership of
the land on which it is erected since the law makes no distinction.
o Exceptions: (1) a building of provisional character, without fixed
or integral adherence to the soil, that can be easily removed or
destroyed independently of the tenement on which it stands may
also be considered as movable property; (2) where a building or
hose has been sold to be demolished immediately, a French court
has held that the sale involved movable property, because what
was really sold was the materials of which the house was made.
Roads and constructions (e.g., railroads), whether public or private, are
immovable. They are considered integral parts of the land.
Standard Oil v. Jaramillo (1923)
Doctrine: Articles 415 and 416 of the Civil Code supply no absolute criterion for
discriminating between real property and personal property. Under given conditions property

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may have character different from that imputed to it in the said articles. Parties to a contract
may by agreement treat as personal property that which by nature would be real property.
Facts: Gervasia de la Rosa, a lessee of a parcel of land and owner of a house of strong
materials built thereon conveyed via chattel mortgage her leasehold interest in the land and the
building which stands on it to Standard Oil. Standard Oil sought to register the mortgage in
the Registry of Deeds. Jaramillo refused to enter the mortgage into the registry arguing that the
interest mortgaged is real property and not personal property and therefore cannot be conveyed
through a chattel mortgage.
Held: The duties of a register of deeds in respect to the registration of a chattel mortgage are
purely ministerial in character. Nothing in the Chattel Mortgage Law or in the Administrative
Code provides for authority to the Register of Deeds with respect to the qualification of the
mortgage. The registration of a mortgage adds nothing to the instrument and only serves as
constructive notice of the existence of a contract. It is not the position of the Register of Deeds
to pass upon the character of property sought to be encumbered via a mortgage since such
question can only be passed upon by a court of law.
Leung Yee v. F.L. Strong Machinery Company (1918)
Doctrine: The Chattel Mortgage Law applies to mortgages over movable property. The building
to which the machinery was attached is immovable property. The fact that the building was
treated separate from the land on which it stood (sold separate from the land) in no way
changed its nature as an immovable. Even the treatment of an immovable property as a
movable does not change the nature that such property is immovable. Also, the mere fact that
the mortgage over said building was registered in the chattel mortgage registry does not change
the nature of the building as an immovable property.
Facts: Compaa Agricola Filipina (CAF) bought rice-cleaning machinery from Strong
Machinery Company (SMC) and executed a chattel mortgage over said machinery. CAF failed to
pay the mortgage so the machinery was foreclosed and sold to the SMC. The mortgage was
registered in the chattel mortgage registry. SMC took possession of the building. After that, CAF
mortgaged the building (excluding the land) in favor of Leung Yee. CAF against failed to pay the
mortgage so Yee, despite knowing that SMC already bought the building, bought it at the
sheriffs sale.
Held: SMC is the rightful owner of the subject property. Yee bought the building in bad faith
hence his claim cannot prevail over that of SMC. Yee bought the building despite the fact that
he was duly notified that SMC had bought the building from CAF and that SMC took
possession of said building. The rule is that one who purchases real estate with knowledge of a
defect or lack of title in his vendor cannot claim that he has acquired title thereto.
Navarro v. Pineda (1963)

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Doctrine: Under certain conditions, a property may have a character different from that
imputed to it in said articles. It is undeniable that the parties to a contract may by agreement,
treat as personal property that which by nature would be real property.
Facts: Rufino Pineda and his mother Juana Gonzales loaned P2,500.00 from Conrado Navarro.
Gonzales, by way of Real Estate Mortgage, hypothecated a parcel of land; and Pineda, by way of
Chattel Mortgage, mortgaged his house and one motor truck. Said house was erected on a lot
belonging to Atty. Vicente Castro. They failed to pay the mortgage debt. Navarro filed a
complaint for foreclosure and damages. Lower court ruled in favor of Navarro, and ordered
Pineda and Gonzales to pay. And if they fail to do so, that they deliver to the Provincial Sheriff
the properties they mortgaged.
Held: The deed of real estate and chattel mortgages are valid. It is true that only movables can
be the subject of a chattel mortgage. However, in the case at bar, the doctrine of estoppel
should be applied. The parties expressly agreed in the mortgage to consider the house as
chattel because it was small. Since the house was considered as personal by the parties to the
contract, then thats how the court will decide.
Bicerra v. Teneza (1962)
Doctrine: A house is considered an immovable because of its adherence to the soil and the fact
that there are different owners for the house and land is immaterial. However, when the house
is demolished, it is no longer an immovable.
Facts: Tomasa Teneza and Benjamin Barbosa were owners of a house. Antonio Bicerra et al.
forcibly demolished said house and claimed to be the owners thereof. The materials of the
house were brought to the barrio lieutenant. They refused to restore it to Teneza and Barbosa
so the latter filed an action to be declared owners of the house and the materials recovered
from the dismantling plus damages. CFI dismissed the action for lack of jurisdiction.
Held: The action does not involve title to real property and is therefore not cognizable by the
CFI. It pertains to the Justice of Peace because it does not involve real property.
Associated Insurance & Surety Company, Inc. v. Iya (1958)
Doctrine: A building cannot be divested of its character as a real property by the fact that the
land on which it is constructed belongs to another. It is an immovable property irrespective of
whether or not said structure and the land on which it is adhered to belong to the same owner.
The inclusion of buildings, separate and distinct from land, in the enumeration of what may
constitute real properties in Art. 415 connotes that a building is by itself an immovable
property.
Facts: Spouses Valino entered into a chattel mortgage over their house with AISCO. After
securing the title over their lot, the spouses also entered into a real estate mortgage over the
house and lot with Isabel Iya. AISCO foreclosed the CM and acquired the house. AISCO filed a
case to exclude the house from the REM and have their ownership over the house declared and

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recognized, alleging that the house was a personal property at the time because the spouses
did not own the land it was situated upon and as such, was a proper subject of a CM.
Held: The house is a real property. It does not change its nature or character as the ownership
of the land changes hands. The act of registering the CM produced no effect as the interest
therein is in the nature of real property and only personal property may be the subject of a CM.
A mortgage creditor who purchases real properties at an extrajudicial foreclosure sale by virtue
of a CM constituted in his favor, which mortgage has been declared null and void with respect
real properties, acquires no right thereto by virtue of said sale. Iyas right to foreclose the land
and house over that of AISCO is recognized, without prejudice to any right that AISCO may
have against the spouses.
Evangelista v. Alto Surety (1958)
Doctrine: Parties to a deed of chattel mortgage may agree to consider a house as personal
property for purposes of said contract. However, this view is good only insofar as the
contracting parties are concerned. It is based, partly, upon the principle of estoppel. Neither
this principle, nor said view, is applicable to strangers to said contract. The rules on execution
do not allow, and should not be interpreted as to allow, the special consideration that parties to
a contract may have desired to impart to real estate as personal property, when they are not
ordinarily so. Sales on execution affect the public and third persons. The regulation governing
sales on execution are for public officials to follow. The form of proceedings prescribed for each
kind of property is suited to its character, not to the character which the parties have given to it
or desire to give it. The regulations were never intended to suit the consideration that parties,
may have privately given to the property levied upon.
Facts: Santos Evangelista instituted a civil case against Ricardo Rivera for a sum of money.
Evangelista obtained a writ of attachment, which was levied upon a house, built by Rivera on a
land leased to him. Judgment was rendered in favor of Evangelista, who bought the house at
public auction held in compliance with the writ of execution. When Evangelista sought to take
possession of the house, Rivera refused to surrender it, upon the ground that he had leased
the property from the Alto Surety & Insurance Co., Inc. and that the latter is now the true
owner of said property. It appears that a definite deed of sale of the same house had been
issued to Alto Surety, as the highest bidder at an auction sale in compliance with a writ of
execution issued in civil case against Ricardo in which judgment for the sum of money, had
been rendered in favor of Alto Surety.
Held: Although the writ of attachment in favor of Evangelista had been filed with the Register
of Deeds of Manila prior to the sale in favor of Alto Surety, Evangelista did not acquire thereby a
preferential lien, the attachment having been levied as if the house in question were immovable
property.
Lopez v. Orosa (1958)
Doctrine: While it is generally held that real estate connotes the land and the building, it is
obvious that the inclusion of the building, separate and distinct from the land, in the

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enumeration of what constitutes real property could only mean that a building, by itself, is an
immovable property. It is immovable irrespective of whether or not said structure and the land
on which it is adhered to belong to the same owner.
Facts: Enrique Lopez, owner of Lopez-Castelo Sawmill, was invited by Vicente Orosa to make
an investment in the theatre business (Plaza Theatre, Inc.). Lopez declined to invest but agreed
to supply the lumber necessary for the construction of the proposed theatre. As Lopez was
pressing Orosa for payment, the latter and president of the corporation promised to obtain a
bank loan by mortgaging the properties of the Plaza Theatre., out of which the unpaid balance
would be satisfied. But unknown to Lopez, the corporation already obtained a loan with Luzon
Surety Company as surety, and the corporation in turn executed a mortgage on the land and
building in favor of the said company as counter-security.
Held: The lien for the value of the materials used in the construction of a building is attached
to said structure alone and does not extend to the land. The lien attaches only to the
immovable property for the construction or repair of which the obligation was incurred. Thus,
the lien attached only to the building. The interest of the mortgagee over the land is superior
and cannot be made subject to the said material-mans lien.
Tumalad v. Vicencio (1971)
Doctrine: Although a building is by itself an immovable property, parties to a contract may
treat as personal property that which by nature would be real property and it would be valid
and good only insofar as the contracting parties are concerned. By principle of estoppel, the
owner declaring his house to be a chattel may no longer subsequently claim otherwise.
Facts: Alberta Vicencio and Emiliano Simeon executed a chattel mortgage over their house of
strong materials which stood on a land which was rented from the Madrigal & Company, Inc. in
favor of Gavino and Generosa Tumalad to guaranty a loan received from the latter. When
Vicencio defaulted in paying, the mortgage was extrajudicially foreclosed and the Tumalads
acquired the said house. MTC ordered Vicencio to vacate the house and pay rentals until such
time that premises is completely vacated.
Held: The chattel mortgage is valid. The doctrine of estoppel applies. Although there is no
specific statement referring to the subject house as personal property, yet by ceding, selling or
transferring a property by way of chattel mortgage could only have meant to convey the house
as chattel, or at least, intended to treat the same as such, so that the parties should not now
be allowed to make an inconsistent stand by claiming otherwise. Vicencio is not legally bound
to pay rent since the action was instituted during the period of redemption, therefore Vicencio
still had a right to remain in possession of the property.
(2) Mines, quarries, and slag dumps, while the matter thereof forms part of the bed,
and waters either running or stagnant (par. 8)
(B) By incorporation those which are essentially movables, but are attached to an
immovable in such manner as to be an integral part thereof

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In case of immovables by incorporation, Art. 415 does not require that the
attachment be made by the owner, the only criterion is the union (or
incorporation).

(1) Trees, plants, and growing fruits, while they are attached to the land or form an
integral part of an immovable (par. 2)
They are immovable property on the theory that they derive their
existence or sustenance from the soil.
Once trees or plants are cut or uprooted, whether for firewood, or lumber,
or other use, they become movable.
o Exception: when timber constitutes the natural product of the
tenement, it still forms an integral part of the immovable.
Note: For purposes of attachment, execution, and the chattel mortgage
law, growing crops or fruits or ungathered products or fruits have the
nature of personal property.
(2) Everything attached to an immovable in a fixed manner, in such a way that it
cannot be separated therefrom without breaking the material or deterioration of
the object (par. 3)
All objects placed by human agency on or under the surface with the
intention of permanent annexation become part of the land and lose
their identity as movables. Physical attachment, without the intent of
permanent annexation, is not in itself enough.
(3) Fertilizer actually used on a piece of land (par. 7)
(C) By destination those which are essentially movables, but by the purpose for which
they have been placed in an immovable, partake of the nature of the latter because of
the added utility derived therefrom
(1) Statues, reliefs, paintings or other objects for use or ornamentation, placed in
buildings or on lands by the owner of the immovable in such a manner that it
reveals the intention to attach them permanently to the tenements (par. 4)
If placed by a person not the owner (e.g., lessee, usufructuary) of the
immovable, the object will not attain the character of immovable unless
such person acts as an agent of the owner.
The main consideration is the intention to attach the objects
permanently to the immovable.
(2) Machinery, receptacles, instruments or implements intended by the owner of the
tenement for an industry or works which may be carried on in a building or on a
piece of land, and which tend directly to meet the needs of the said industry or
works (par. 5)
The immovable condition of these objects depends upon their being
destined for use in the industry or work in the tenement; the moment
they are separated, not necessarily from the immovable, but from the

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industry or work in which they are utilized, they recover their condition
as movables.
Machinery which is movable in nature, only becomes immobilized when
placed on a plant by the owner of the property or plant, but not so when
placed by a tenant, usufructuary, or a person having only a temporary
right, unless such person acted as an agent of the owner.
o Thus, where a tenant places the machinery under the express
provision of a lease that it shall become a part of the plant
belonging to the owner upon the termination of the lease without
compensation to the lessee, the tenant acts as an agent of the
owner and the immobilization of the machinery arises from the ac
of the owner in giving by contract a permanent destination to the
machinery.
The machinery or implements covered are those which are the principal
and essential elements of the business, i.e., those without which the
business would be unable to function or carry out its purpose. It does
not cover those items which are merely incidental to the business.
This article excludes those which are merely for decorative purposes, and
even those which are necessary for other purposes distinct from the
requirements of the industry or works being carried on in the tenement.
Sergs Products Inc. v. PCI Leasing and Finance Inc. (2000)
Doctrine: Contracting parties may validly stipulate that a real property be considered as
personal. After agreeing to such stipulation, they are consequently estopped from claiming
otherwise. Under the principle of estoppel, a party to a contract is ordinarily precluded from
denying the truth of any material fact found therein.
Facts: PCI Leasing and Finance filed a complaint for sum of money, with an application for a
writ of replevin. Judge issued a writ of replevin directing its sheriff to seize and deliver the
machineries and equipment to PCI Leasing. The sheriff proceeded to Sergs Products Inc.
factory, seized one machinery. Sergs filed a motion for special protective order to defer
enforcement of the writ of replevin, asserting that properties sought to be seized were
immovable, hence not proper subjects of the writ. Sheriff was still able to take possession of
two more machineries.
Held: The machines are personal property and they are proper subjects of the Writ of Replevin
(Rule 60 ROC). The machines that were the subjects of the Writ of Seizure were placed by
Sergs in the factory built on their own land. They were essential and principal elements of
their chocolate-making industry. Hence, although each of them was movable or personal
property on its own, all of them have become immobilized by destination because they are
essential and principal elements in the industry (Art 415(5) CC). However, Section 12.1 of the
Agreement between the parties provides The PROPERTY is, and shall at all times be and
remain, personal property notwithstanding that the PROPERTY or any part thereof may now
be, or hereafter become, in any manner affixed or attached to or embedded in, or permanently
resting upon, real property or any building thereon, or attached in any manner to what is
permanent.

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Ago v. CA (1962)
Doctrine: The installation of the machine and equipment for use in connection with the
industry carried by the company, converted the said machinery and equipment into real estate
by reason of their purpose.
Facts: Pasto Ago bought sawmill machineries from Grace Park and executed a chattel mortgage
over the property to secure the payment of balance. Due to his continued default, Grace Park
moved for the issuance a writ of execution which was granted and the Provincial Sheriff
ordered the sale of the said machineries. However, Ago said that he already sold these to
Golden Pacific Sawmill and were already installed. Ago filed a petition for certiorari and
prohibition, claiming that he wasnt property notified of the decision and that the sale must be
preceded by a publication of a notice of sale because it concerns real property.
Held: After Agos purchase of the machineries, he immediately assigned these to Golden
Pacific. Said company installed these and attached it to the building. By reason of such
installment in a building, the said sawmill machineries and equipment became real estate
properties in accordance with the provision of Art. 415 (5). Considering that the machineries
and equipment in question valued at more than P15,000.00 appear to have been sold without
the necessary advertisement of sale by publication in a newspaper, as required in Sec. 16 of
Rule 39 ROC, the sale is null and void.
Mindanao Bus v. City Assessor (1962)
Doctrine: We may here distinguish, therefore, those movable which become immobilized by
destination because they are essential and principal elements in the industry for those which
may not be so considered immobilized because they are merely incidental, not essential and
principal. Thus, cash registers, typewriters, etc., usually found and used in hotels, restaurants,
theaters, etc. are merely incidentals and are not and should not be considered immobilized by
destination, for these businesses can continue or carry on their functions without these equity
comments. On the other hand, machineries of breweries used in the manufacture of liquor and
soft drinks, though movable in nature, are immobilized because they are essential to said
industries; but the delivery trucks which they usually own and use and are found within their
industrial compounds are merely incidental and retain their movable nature.
Facts: Mindanao Bus is a public utility solely engaged in transporting passengers and cargoes
by motor trucks. The City Assessor assessed a number of Mindanao Bus machineries (e.g.,
black and decker grinder, PEMCO hydraulic press, etc.).
Held: The equipment in question is not subject to assessment as real estate for the purposes of
real estate tax. In the case at bar the equipment in question are destined only to repair or
service the transportation business, which is not carried on in a building or permanently on a
piece of land.
Davao Sawmill Company v. Castillo (1935)

14

Doctrine: Machinery which is movable in its nature only becomes immobilized when placed in
a plant by the owner of the property or plant, but not when so placed by a tenant, a
usufructuary, or any person having only a temporary right, unless such person acted as the
agent of the owner. Distinction lies upon the fact that one only having a temporary right to the
possession or enjoyment of property is not presumed by the law to have applied movable
property belonging to him so as to deprive him of it by causing it by an act of immobilization to
become the property of another.
Facts: Davao Sawmill, a holder of a lumber concession, owned machineries placed in a
building erected on land belonging to another. In the contract of lease between the sawmill
company and the owner of the land, it is stipulated that on the expiration of the period agreed
upon or in the event the company should leave the land before the time stipulated, ownership
of all the improvements and buildings (except the machineries) erected by the company will
pass to the exclusive ownership of the owner of the land without any obligation on its part to
pay any amount for said improvements and buildings. In another action, a judgment was
rendered in favor of defendant Davao Light & Power Co. Inc. wherein a writ of execution is
issued and the properties in question were levied upon as personalty by the sheriff. It should
further be explained that the Davao Saw Mill Co., Inc., has on a number of occasions treated
the machinery as personal property by executing chattel mortgages in favor of third persons.
Held: The subject properties are personal in natures. The machineries are intended not by the
owner of the land but the sawmill company for use in connection with its trade. Therefore, the
machineries are not real properties.
Meralco Securities Industrial Corp. v. Board of Assessment Appeals (1982)
Doctrine: Art 415(l) and (3) provides that real property may consist of constructions of all
kinds adhered to the soil and everything attached to an immovable in a fixed manner, in such a
way that it cannot be separated therefrom without breaking the material or deterioration of the
object.
Facts: Meralco Securities installed from Batangas to Manila a pipeline system consisting of
cylindrical steel pipes joined together and buried not less than one meter below the surface
along the shoulder of the public highway. The pipes are embedded in the soil and are welded
together so as to preclude breakage or damage thereto and prevent leakage of oil. The valves are
welded to the pipes so as to make the pipeline system one single piece of property. In order to
repair, replace, remove or transfer segments of the pipeline, the pipes have to be cold-cut by
means of a rotary hard-metal pipe-cutter after digging or excavating them out of the ground
where they are buried. In points where the pipeline traversed rivers or creeks, the pipes were
laid beneath the bed thereof. Hence, the pipes are permanently attached to the land. Pursuant
to the Assessment Law, the provincial assessor of Laguna treated the pipeline as real property
and issued Tax Declarations containing the assessed values of portions of the pipeline.
Held: The pipeline system is considered real property. It is a construction adhering to the soil.
It is attached to the land in such a way that it cannot be separated therefrom without

15
dismantling the steel pipes. What are being characterized as real property are not the steel
pipes but the pipeline system as a whole.
Peoples Banks and Trust Co. v. Dahican Lumber Co. (1967)
Doctrine: Machinery, receptacles, instruments or replacements intended by the owner of the
tenement for an industry or works which may be carried on in a building or a piece of land,
and shall tend directly to meet the needs of the said industry or works are classified as
immovable properties.
Facts: Atlantic Gulf & Pacific Company of Manila sold and assigned all its rights in the
Dahican Lumber concession to Dahican Lumber Company (DALCO). To develop the concession,
DALCO obtained various loans from the People's Bank & Trust Company (BANK). In addition,
DALCO obtained, through the BANK, a loan from the Export-Import Bank of Washington D.C.
executed by both DALCO and the Dahican America Lumber Corporation (DAMCO). DALCO
executed in favor of the BANK a deed of mortgage covering five parcels of land together with all
the buildings and other improvements existing thereon and all the personal properties of the
mortgagor located in its place of business On the same date, DALCO executed a second
mortgage on the same properties in favor of ATLANTIC. Both deeds contained a provision
extending the mortgage lien to properties to be subsequently acquired by the mortgagor. After
the date of execution of the mortgages, DALCO purchased various machineries, equipment,
spare parts and supplies in addition to, or in replacement of some of those already owned and
used by it.
Held: After-acquired property is considered immovable and part of the real estate mortgages,
thus may be foreclosed. Under the fourth paragraph of both deeds of mortgage, all property of
every nature and description taken in exchange or replacement, as well as all buildings,
machineries, fixtures, tools, equipment, and other property that the mortgagor may acquire,
construct, install, attach; or use in, to upon, or in connection with the premises - that is, its
lumber concession - "shall immediately be and become subject to the lien" of both mortgages in
the same manner and to the same extent as if already included therein at the time of their
execution. Such stipulation is neither unlawful nor immoral, its obvious purpose being to
maintain, to the extent allowed by circumstances, the original value of the properties given as
security. In the present case, the characterization of the "after acquired properties" as real
property was made not only by one but by both interested parties. There is, therefore, more
reason to hold that such consensus impresses upon the properties the character determined
by the parties who must now be held in estoppel to question it.
Burgos v. Chief of Staff (1984)
Doctrine: A movable property such as machinery or equipment may be considered as
immovable only when placed by the owner of the tenement. It remains movable though bolted
to the ground if it was placed by a tenant or any person having only temporary rights over
place.

16
Facts: Two search warrants were issued under which the premises of We Forum and
Metropolitan Mail were searched. Among the seized articles and items were office and printing
machines, equipment, paraphernalia, motor vehicles and other articles used in the printing,
publication and distribution of the said newspapers, as well as numerous papers, documents,
books and other written literature owned by Jose Burgos, Jr, publisher-editor of the We Forum.
Held: Burgos neither assert to be the owners of the land/building to which seized items were
bolted, so the same remain as movable properties and may be the subject of a valid seizure.
However, the Court ruled in the end that the search warrants were issued without probable
cause. Hence, invalid.
Berkenkotter v. Cu Unjieng (1935)
Doctrine: If the installation of the machinery and equipment is essential and principal
elements of the industry or works carried out on the piece of land, it is permanent in character.
Facts: Mabalacat Sugar Co. obtained a loan from Cu Unjieng, mortgaging two parcels of land
with all its buildings, improvements, sugarcane mill, etc... now existing or that may in the
future exist in said lots. B.A. Green, president of MSC, decided to buy additional machinery by
taking out a loan from B. H. Berkenkotter. The latter agreed on Greens promise to reimburse
him with an additional loan from Cu Unjieng, and on the stipulation that a) the machinery as
the security of the loan, and b) Green would not mortgage nor encumber them until
Berkenkotter was reimbursed. Green defaulted on the mortgage, and Cu Unjieng took
ownership of the lots and the machinery. Berkenkotter tried to redeem the machinery, but Cu
Unjieng argued that it was immovable property together with the parcels of land.
Held: The machinery constitutes a permanent improvement on the land and is now owned by
Cu Unjieng. Despite being security for a loan, the machinery acquires a permanent character
because its incorporation therein is essential and necessary for carrying on the sugar industry
for which it was established. Berkenkotter does not have any ownership right over the
machinery. The fact that Green promised not to encumber the machinery does not change the
fact that the property is real and not personal. Berkenkotter only holds the right to redeem the
machinery from Cu Unjieng, subject to the rights transferred to them under the first mortgage.
Makati Leasing and Finance Corp. v. Wearever Textile Mills, Inc. (1983)
Doctrine: If a house of strong materials, like what was involved in the Tumalad case, may be
considered as personal property for purposes of executing a chattel mortgage thereon as long
as the parties to the contract so agree and no innocent third party will be prejudiced thereby,
there is absolutely no reason why a machinery, which is movable in its nature and becomes
immobilized only by destination or purpose, may not be likewise treated as such. This is really
because one who has so agreed is estopped from the denying the existence of the chattel
mortgage.
Facts: Wearever Textile Mills, Inc. executed a chattel mortgage contract in favor of Makati
Leasing and Finance Corporation covering certain raw materials and machinery. Upon default,

17
Makati Leasing filed a petition for judicial foreclosure of the properties mortgaged. Acting on
Makati Leasings application for replevin, the lower court issued a writ of seizure. Pursuant
thereto, the sheriff enforcing the seizure order seized the machinery subject matter of the
mortgage. In a petition for certiorari and prohibition, the Court of Appeals ordered the return of
the machinery on the ground that the same cannot be the subject of replevin because it is a
real property pursuant to Art. 415 CC, the same being attached to the ground by means of
bolts and the only way to remove it from Wearever Textiles plant would be to drill out or destroy
the concrete floor.
Held: It is undeniable that the parties to a contract may, by agreement, treat as personal
property that which by nature would be a real property as long as no interest of third parties
would be prejudiced thereby. As such, Wearever Textile could no longer be allowed to impugn
the efficacy of the chattel mortgage after it has benefited therefrom. Therefore, the questioned
machinery should be considered as personal property.
(3) Animal houses, pigeon-houses, beehives, fish ponds or breeding places of similar
nature, in case their owner has placed them or preserves them with the
intention to have them permanently attached to the land, and forming a
permanent part of it; the animals in these places are included (par. 6)
(4) Docks and structures which, though floating, are intended by their nature and
object to remain at a fixed place on a river, lake, or coast (par. 9)
FELS Energy v. Province of Batangas (2007)
Doctrine: Energy barges are immovable property which are subject to real property taxes, in
accordance with Art. 415 (9) CC, "[d]ocks and structures which, though floating, are intended
by their nature and object to remain at a fixed place on a river, lake, or coast". Thus, power
barges are categorized as immovable property by destination, being in the nature of machinery
and other implements intended by the owner for an industry or work which may be carried on
in a building or on a piece of land and which tend directly to meet the needs of said industry or
work.
Facts: National Power Corporation (NPC) entered into an agreement with FELS, leasing their
diesel power barges for 5 years. FELS received a tax assessment from the provincial assessor
on these barges. FELS forwarded the assessment to NPC, as per their stipulation in the lease
agreement that NPC would be liable to pay for real property tax. NPC filed a case with the Local
Board of Assessment Appeals (LBAA) to appeal the tax assessed on the barges, claiming that
these barges are not constitute immovable property subject to real property tax. The LBAA
disagreed with them and said it was taxable still. CBAA and CA affirmed.
Held: The power barges are immovable property subject to real property tax. Although the
government affords exemption of tax payment to government owned and controlled industries,
it is obvious from the lease contract that the power barge is not owned by NPC but rather,
FELS, therefore FELS is not exempt from paying as its valid owner. Although the parties in the
lease contract stipulated that NPC will be the one paying real taxes, this contract only binds

18
the two parties. The privilege granted to NPC, as a government instrumentality exempt from
taxes, cannot be extended to FELS. The covenant is between FELS and NPC and does not bind
a third person not privy thereto, in this case, the Province of Batangas.
(D) By analogy or by law
(1) Contracts for public works, and servitudes and other real rights over immovable
property (par. 10)
Presberito v. Fernandez (1963)
Doctrine: As an improvement attached to land, by express provision of law, though not
physically so united, the sugar quotas are inseparable therefrom, just like servitudes and other
real rights over an immovable. These properties are, therefore, immovable or real.
Facts: CA ordered Ricardo Eperidion to execute a deed of reconveyance, as well as, payment of
the value of the products received by Esperidion from the 5-hectare porion to Helen Caram
Nava. A writ of execution was granted by the court. The sheriff levied upon and garnished the
sugar quotas but without presenting for registration copies of the writ of execution and the
notice of garnishment to the Register of Deeds. Thereafter, an auction sale was conducted and
the sheriff sold 21,640 piculs of sugar quota to Nava.
Held: According to The Sugar Limitation Law, the sugar quota allocations are accessories to
land, and cannot have independent existence away from a plantation, although the latter may
vary. Hence, the levy is null and void for lack of compliance with the procedure prescribed in
Section 14, Rule 39, in relation with Section 7, Rule 59, ROC requiring the filing with the
register of deeds a copy of the orders together with a description of the property ....
Hong Kong and Shanghai Bank v. Aldecoa & Co. (1915)
Doctrine: Art. 164 CC: The parent cannot alienate the real property of the child, the usufruct
or administration of which belongs to them, nor encumber the same, except for sufficient
reasons of utility or necessity, and after authorization from the judge of the domicile, upon
hearing by the department of public prosecution, excepting the provisions which, with regard
to the effects of transfers, the mortgage law establishes.
Facts: Joaquin, Zoilo, and Cecilia Ibaez de Aldecoa were legitimate children of Zoilo Ibaez de
Aldecoa and Isabel Palet. At the time of the fathers death, he was a member and managing
director of Aldecoa and Co. Isabel Palet, entered into a new contract with various persons
whereby the property, goodwill, and liabilities were taken over. Isabel entered into the new
partnership as a capitalistic partner and caused her three young children to appear in the
articles of partnership as industrial partners. Aldecoa and Co. obtained a credit from HSBC
secured by a mortgage of shares and real properties. Aldecoa and Co. went into liquidation and
obtained another loan from the bank upon the condition that this would be covered by the
previous mortgage. Joaquin and Zoilo Ibaez de Aldecoa filed an action against the bank for
the purpose of annulling the mortgages executed by them on the grounds that they were
minors at the time incapable of creating a valid mortgage upon their real property.

19

Held: Joaquin, Zoilo, and Cecilia are not subsidiarily liable to the bank as industrial partners
of Aldecoa and Co. for the debts of the latter. Art. 164 prohibits formal encumbrances such as
mortgages, voluntary easements, usufructuary rights, and others which create specific liens
upon specific real property. It prohibits the creation of real rights, especially registrable leases
in favor of third persons. None of the children validly ratified the contract after acquiring
capacity to do so.

MOVABLE/PERSONAL PROPERTY 416-417

Art. 416. The following things are deemed to be personal property:
(1) Those movables susceptible of appropriation which are not included in the preceding article;
(2) Real property which by any special provision of law is considered as personal property;
(3) Forces of nature which are brought under control by science; and
(4) In general, all things which can be transported from place to place without impairment of the
real property to which they are fixed. (335a)
Art. 417. The following are also considered as personal property:
(1) Obligations and actions which have for their object movables or demandable sums; and
(2) Shares of stock of agricultural, commercial and industrial entities, although they may have
real estate. (336a)
General test of movable character:
(1) Whether it can be carried from place to place;
(2) Whether the change of location can be effected without injury to an immovable to which
the object may be attached; and
(3) Whether the object is not included in any the ten paragraphs of Art. 415 CC.
(A) By nature
(1) Those movables susceptible of appropriation which are not included in Art. 415
(Art. 416, par. 1)
(2) Real property which by any special provision of law is considered as personality
(Art. 416, par. 2)
(3) Forces of nature which are brought under control by science (Art. 416, par. 3)
(4) In general, all things which can be transported from place to place without
impairment of the real property to which they are fixed (Art. 416, par. 4)
(B) By analogy
(1) Obligations and actions which have for their object movables or demandable
sums (Art. 417, par. 1)
(2) Shares of stock of agricultural, commercial and industrial entities, although
they may have real estate. (Art. 417, par. 2)

20
Note: The Chattel Mortgage Law, recognizes that growing crops are personal property and be
the object of chattel mortgage.
Sec. 7, Act No. 1508: If growing crops be mortgaged the mortgage may contain an
agreement stipulating that the mortgagor binds himself properly to tend, care for and
protect the crop while growing xxx
Semi-movables are now classified as movables. They include all those which are susceptible of
moving by themselves without assistance from any outside force, e.g., animals.
Laurel v. Abrogar (2009)
Doctrine: The term personal property as used in Art.308, RPC should be interpreted in the
context of the CC definition of real and personal property. Any personal property, tangible or
intangible, corporeal or incorporeal, capable of appropriation can be the object of theft.
Facts: Laurel was charged with theft under Art. 308, RPC for taking, stealing, and using the
international long distance calls belonging to PLDT by conducting International Simple Resale
(ISR). This is an MR filed by PLDT from an SC decision granting Laurels Motion to Quash and
which held that international long distance calls and the business of providing
telecommunication or telephone services are not personal properties under Art. 308, RPC.
Held: The only requirement for personal property to be capable of theft is that it be subject to
appropriation. The business of providing telecommunication or telephone service is personal
property which can be the object of theft under Art. 308, RPC. Laurels acts constitute theft of
respondent PLDTs business and service, committed by means of the unlawful use of the
latters facilities.
Sibal v. Valdez (1927)
Doctrine: Ungathered products/groing crops may be considered personal property under
certain conditions.
Facts: Leon Sibal alleged that Vitaliano Mamawal, deputy Sheriff, refused his offer to redeem
his sugar can which was attached and sold to Emiliano Valdez. He is asking for a judgment
ordering the defendants to consent to the redemption of the sugar cane. CFI ruled in favor of
Valdez, holding that the sugar cane was personal property and therefore not subject to
redemption.
Held: It was contended that the sugar cane is real property as it falls under ungathered
products in Art. 334 CC. However, Art. 334 CC has been modified by Sec. 450 of the Code of
Civil Procedure (COCP) and Act No. 1508, the Chattel Mortgage Law (CML). The COCP was
derived from the COCP of California which provides that growing crops are personal property
and subject to execution. The CML was enacted on the assumption that growing crops are
personal property. This is shown in Section 7 which in part states: "If growing crops be
mortgaged the mortgage may contain an agreement stipulating that the mortgagor binds
himself properly to tend, care for and protect the crop while growing.

21

Caltex v. Board of Assessment Appeals (1982)

Doctrine: Improvements on land are commonly taxed as realty even though they might be
considered personalty. It is a familiar phenomenon to see things classified as real property for
purposes of taxation which on general principle might be considered personal property
Facts: Caltex (Philippines) Inc. was being assessed with realty tax by the city assessor of Pasay
on machinery and equipment installed in its stations located on leased land. As to whether the
subject properties (machines and equipment) are attached and affixed to the tenement, it is
clear they are, for the tenement we consider in this particular case is the pavement covering
the entire lot which was constructed by the owner of the gasoline station and the improvement
which holds all the properties under question, they are attached and affixed to the pavement
and to the improvement.
Held: Sec.2 of the Assessment Law provides that the realty tax is due on real property,
including land, buildings, machinery, and other improvements not specifically exempted in
Sec.3 thereof. The subject machines and equipment are taxable improvement and machinery
within the meaning of the Assessment Law and the Real Property Tax Code, because the same
are necessary to the operation of the gas station and have been attached/affixed/embedded
permanently to the gas station site.
Board of Assessment Appeals v. Meralco (1964)
Doctrine: Article 415 of the Civil Code does: (1) Land, buildings, roads, and constructions of
all kinds adhered to the soil; (3) Everything attached to an immovable in a fixed manner, in
such a way that it cannot be separated therefrom without breaking the material or
deterioration of the object; (5) Machinery, receptacles, instruments or implements intended by
the owner of the tenement for an industry or works which may be carried in a building or on a
piece of land, and which tends directly to meet the needs of the said industry or works.
Facts: Meralcos electric power is generated by its hydro-electric plant located at Botocan Falls,
Laguna and is transmitted to Manila by means of electric transmission wires, running from
Laguna to Manila. These electric transmission wires are attached to steel towers constructed by
MERALCO. MERALCO constructed 40 steel towers in Quezon City on land belonging to it.
There was no concrete foundation; thus it was only attached, and not built on the land. City
Assessor of Quezon City declared the steel towers for real property tax. CTA cancelled the tax
declarations and ordered the City Treasure to refund Meralco.
Held: The steel towers or supports do not come within the objects mentioned in Art. 415 CC
because they do not constitute buildings or constructions adhered to the soil. They are not
construction analogous to buildings nor adhering to the soil. They are removable and merely
attached to a square metal frame by means of bolts, which when unscrewed could easily be
dismantled and moved from place to place. They can be separated also separable without
breaking the material or causing deterioration upon the object to which they are attached.

22
They are also not machineries. Hence, they are not real properties subject to a real property
tax.
Philippine Refining Co., Inc. v. Jarque (1935)
Doctrine: Vessels are considered personal property under civil law. Therefore it may be subject
to the provisions of the Chattel Mortgage Law.
Facts: Philippine Refining Co. Inc. (PRC) and Francisco Jarque executed 3 mortgages on the
motor vessels Pandan and Zaragoza. Neither of the first 2 mortgages had appended an affidavit
of good faith. Jarque was declared insolvent and as a result all of his properties were assigned
in favor of Jose Corominas. Judge Jose M. Hontiveros declined to order the foreclosure of the
mortgages, but on the contrary sustained the special defenses of fatal defectiveness of the
mortgages.
Held: A mortgage on a vessel, therefore, is in nature a chattel mortgage. The Chattel Mortgage
Law says that a good chattel mortgage includes an affidavit of good faith. The absence of such
affidavit makes mortgage unenforceable against creditors and subsequent encumbrances.
Art. 418. Movable property is either consumable or nonconsumable. To the first class belong
those movables which cannot be used in a manner appropriate to their nature without their being
consumed; to the second class belong all the others. (337)
Definition: See Classification of Property Kinds

A classification of things into fungibles and non-fungibles is a classification according

to purpose, depending on whether they can be substituted by other things of the same
kind, quality, and quantity. The classification into consumable or non-consumable is
according to the nature of the thing.
o Thus, money may be fungible, even if consisting of a certain quantity of metal
coins; but such coins are non-consumable.
It is the intention of the parties to a contract that determines whether the object is
fungible or non-fungible, and not the consumable or non-consumable nature of the
thing.