LAW ON PROPERTY| LECTURES OF ATTY. EDISON C.

BATACAN BASED ON PARAS

FIRST EXAM
COVERAGE| ARTICLES 414-475

WHAT IS PROPERTY?
Under the Civil Law:
All things whether tangible [physical
objects] or intangible [rights] which are or
may be the object of appropriation or
object that can be owned. (See Art. 414
NCC).
Limitation:
It follows that those which cannot be
appropriated are not considered property.
[i.e. stars, moon, air, planets, etc.]
Appropriation defined:
The New Civil Law Code does not define
what appropriation is, but it has been
considered as equivalent to occupation,
which is the willful apprehension of a
corporeal object (tangible) which has no
owner, and with intent to acquire its
ownership. There is seizure with an intent
to own it.
CASES INVOLVING PROPERTY in relation to
due process:
Is the right to hold office a property?
In a CA case, Escao v. Gil, February 11,
1958, it was held that the right to office,
though not a vested property right, in a
technical sense, is property. An office may
be considered as property in controversies
relating to the question as to which of two
persons is entitled thereto.
In Cornejo v. Gabriel, 41 Phil. 200, it was
ruled that property, under the due process
clause of the Constitution, includes the
right to hold, occupy and exercise an
office.
Is the right to ones labor a property?
In Mizona v. Great Pacific Life Assurance
Corporation, July 21, 1986, the Court held
that the right of a person to his labor is
deemed to be property within the meaning
of constitutional guarantees. As it involves

his means of livelihood, a person cannot

be deprived, therefore, of his labor or work
without due process of law.
Property v. Right to Property
Property may refer to the object (tangible)
or (intangible) a right. It may refer to a
corporeal or an incorporeal thing.
The right to property is the juridical tie
that binds the owner to a thing. It includes
the right to enjoy all the benefits derived
from the property/thing. It is independent
from
the
property/thing
itself.
Article 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)
Importance of the Classification of
Property
into
Immovables
and
Movables
The
classification
of
property
into
immovables or movables does not assume
its importance from the fact of mobility or
non-mobility, but from the fact that
different provisions of the law govern the
acquisition, possession, disposition, loss,
and registration of immovables and
movables.
Examples:
(a)
In general, a donation of real
property, like land, must be in a public
instrument, otherwise the alienation will
not be valid even as between the parties
to the transaction. (Art. 749). Upon the
other hand, the donation of an Audi
automobile, worth let us say, P1.8 million,
needs only to be in a private instrument.
(Art. 748).

LAW ON PROPERTY| LECTURES OF ATTY. EDISON C.

BATACAN BASED ON PARAS
FIRST EXAM
COVERAGE| ARTICLES 414-475

(b)
The ownership of real property may
be acquired by prescription although there
is bad faith, in thirty (30) years (Art.
1137); whereas, acquisition in bad faith of
personal property needs only eight (8)
years. (Art. 1132).
(c)
Generally, to affect third persons,
transactions involving real property must
be recorded in the Registry of Property;
this is not so in the case of personal
property.
Classification of Things
There are three kinds of things, depending
on the nature of their ownership:
(a)

res nullius (belonging to no one)

Abandoned Property v. (Res

Property Belonging to No One

Nullius)

Abandoned property means a thing

previously belonging to one, but was left
by its owner without intent to recover. As
such, the thing is reverted to a thing
belonging to no one, res nullius.
(b)
res
communes
(belonging
to
everyone)
(c)
res alicujus (belonging to someone)

the law it is real property by virtue of a

contract. Is this possible?
Technically, it would seem that under the
Civil Code, it is only the LAW, not the
parties, which may consider certain real
property (like growing crops) as personal
property for the purpose of making a
chattel mortgage. (See Art. 416, par.2).
Also,
for
purposes
of
taxation,
improvements on real property which are
essentially movables may be considered
as subject to real property tax.
However, in Evangelista vs. Abad, 36
O.G. 2913 and Navarro vs. Pineda, 9 SCRA
631, the Supreme Court ruled that a real
property may be treated as personal
property provided that two conditions are
met:
a) The parties mutually agree to consider
the
real
property
[i.e.
house],
a
personalty; and
b) That no innocent third person shall be
prejudiced thereby.
The validity of the chattel mortgage
constituted on a house cannot be
questioned by the owner of the house
because he is placed under estoppel
from denying the existence of the chattel
mortgage.

*Res Alicujus
These are objects, tangible or intangible,
which are owned privately, either in a
collective or individual capacity. And
precisely because they can be owned,
they
really
should
be
considered
property. Examples: your book, your
shares of stock, your parcel of land.
May parties by agreement treat as
personal
property
that
which
by
classification under the law be real
property?
In some instances, the parties treat a
property as personal property but under

Thus, ESTOPPEL applies. By virtue of a

contract, when the parties treat a real
property as a personal property such as in
a chattel mortgage, they are estopped
from claiming otherwise.
In Tumalad v. Vicencio, 41 SCRA 143, it
was held that certain deviations have
been allowed from the general doctrine
that buildings are immovable property
such as when through stipulation, parties
may
agree
to
treat
as
personal
property those by their nature would
be real property. This is partly based on
the principle of estoppel wherein the
principle is predicated on statements by
the owner declaring his house as chattel, a
2

LAW ON PROPERTY| LECTURES OF ATTY. EDISON C.

BATACAN BASED ON PARAS
FIRST EXAM
COVERAGE| ARTICLES 414-475

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 as personal property, yet by ceding,
selling or transferring a property through
chattel mortgage could only have meant
that defendant conveys the house as
chattel, or at least, intended to treat
the same as
such, so that they should not now be
allowed to make an inconsistent stand
by claiming otherwise.
What is the effect of a lease contract
between
the
parties
involving
a
machinery?
In the case of Sergs Products Inc., and vs.
PCI Leasing and Finance, Inc., August 22,
2000, Sergs Products by virtue of a
contract of lease, leased from PCI some
machinery and equipment. Under the said
contract both parties stipulated that the
said equipment and machinery be treated
as personal property, although technically
real property. When Sergs defaulted in
their obligation, PCI filed with a complaint
for sum of money, with an application for
a writ of replevin (an action to recover
personal property). Sergs countered that
the subject machines used in their factory
were not proper subjects of the replevin,
because they were in fact real property.
The Court held that after agreeing to a
contract stipulating that a real or
immovable property be considered as
personal or movable, a party is estopped
from subsequently claiming otherwise.
Hence, such property is a proper subject
of a writ of replevin obtained by the other
contracting party.
In Tsai vs. Court Of Appeals, 366 SCRA
324, it was held that the nature of the
disputed machineries, i.e., that they were
heavy, bolted or cemented on the real
property mortgaged, does not make them
ipso facto immovable under (see) Article
415 (3) and (5) of the New Civil Code, as
the parties intent has to be looked into.

While it is true that the controverted

properties appear to be immobile, a
perusal of the Contract of Real and
Chatttel Mortgage executed by the parties
show a contrary indication.
In Standard Oil Company of New York v.
Jaramillio, 44 SCRA 630, it was held that it
must not be forgotten that under given
conditions property may have character
different from that imputed to it in the law.
It is undeniable that the parties to a
contract may by agreement treat as
personal property that which by nature
would be real property; and it is a familiar
phenomenon to see things classed as real
property for purposes of taxation which on
general principle might be considered
personal property.
In the case at bar, the intention of the
parties is to treat the said machineries and
equipment as chattels. The parties
executed a Real Estate Mortgage and
Chattel Mortgage, instead of just Real
Estate Mortgage if indeed their intention is
to treat all the properties included therein
as immovable. Also attached to the said
contract is a separate List of Machineries
and Equipment. These facts evince the
conclusion that the parties intend to treat
the machineries as chattels-personal
property.
In Leung Yee v. Strong Machinery Co., 37
PHIL 644, the Compania Agricola Filipina
(CAF) purchased from Strong Machinery
Co. ricecleaning machines which CAF
installed in one of its buildings. As security
for the purchase price, CAF executed a
chattel mortgage on the machines and the
building on which they had been installed.
When CEF failed to pay, the registered
mortgage was foreclosed and Strong
Machinery Co. purchased the building.
This sale was annotated in the Chattel
Mortgage Registry.
Later,
Strong
Machinery
Co.
also
purchased from Agricola the lot on which
the building was constructed. The sale
wasn't registered in the Registry of
Property BUT Strong Machinery Co. took
3

LAW ON PROPERTY| LECTURES OF ATTY. EDISON C.

BATACAN BASED ON PARAS
FIRST EXAM
COVERAGE| ARTICLES 414-475

possession of the building and the lot.

However, the same building had been
previously purchased by Leung Yee, a
creditor of Agricola, at a sheriff's sale
despite his knowledge of the prior sale in
favor of Strong Machinery Co.. The sale to
Leung Yee was registered in the Registry
of Property. Was the property's nature
changed by its registration in the Chattel
Mortgage Registry? The Court held that
where the interest conveyed is of the
nature of real property, the placing of the
document on record in the Chattel
Mortgage Registry is a futile act. Chattel
Mortgage refers to the mortgage of
Personal Property executed in the manner
and form prescribed in the statute. Since
the building is REAL PROPERTY, its sale as
annotated in the Chattel Mortgage
Registry cannot be given the legal effect
of registration in the Registry of Real
Property. The mere fact that the parties
decided to deal with the building as
personal property does not change its
character as real property. Neither the
original registry in the chattel mortgage
registry, nor the annotation in said
registry of the sale of the mortgaged
property had any effect on the building.

IMMOVABLE PROPERTY
Art.
415.
The
following
immovable property:

are

(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
there- from 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;
(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;

LAW ON PROPERTY| LECTURES OF ATTY. EDISON C.

BATACAN BASED ON PARAS
FIRST EXAM
COVERAGE| ARTICLES 414-475

(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.
Characteristics of Property

(a)
utility for the satisfaction of moral
or economic wants
(b)
susceptibility of appropriation
(c)
individuality or substantivity (i.e., it
can exist by itself, and not merely as a
part of a whole). (Hence, the human hair
becomes property only when it is
detached from the owner.)