Subject: Property Topic: Immovable or movable property

Yee vs. Strong Machinery 37, Phil. 664, February 15, 1918

Facts: The Compania Agricola Filipna (Agricola), purchased from Strong Machinery Co., (Strong Machinery), rice-cleaning materials which the former installed in one of its building. As a security for the purchase price, Agricola executed a Chattel Mortgage on the machines and the building on which they had been installed. Upon buyers failure to pay, the registered mortgage was foreclosed and the building was purchased by Strong Machinery Co. This sale was annotated in the Chattel Mortgage Registry. Lather the Agricola also sold to Strong Machinery the lot on which the building had been constructed. This sale was not registered in the Registry of Property but Strong Machinery took possession of the building and lot. Previously, however, the same building had been purchased at a Sheriffs sale by Leung Yee, a creditor of Agricola, although Leung Yee knew all the time of the prior sale in favor of Strong Machinery. The sale in favor of Leung Yee was recorded in the Registry of Property. Leung Yee now sues to recover the property from Strong Machinery. The trial judge gave judgment in favor of the machinery company. Hence, this appeal. Issue: 1. Whether or not the trial judge erred in sustaining the machinery company on the ground that it had its title to the building registered prior to the date of registry of plaintiffs certificate. 2. Whether or not the sale of a building separate and apart from the land which it stands change its character as a real property. Held: 1. We conclude that the ruling in favor of the machinery company cannot be sustained on the ground assigned by the trial judge. We are of opinion, however, that the judgment must be sustained on the ground that the agreed statement of facts in the court below discloses that neither the purchase of the building by the plaintiff nor his inscription of the sheriffs certificate of sale in his favor was made in good faith, and that the machinery company must be held to be the owner of the property Article 1544 of the New Civil Code, it appearing that the company first took possession of the property; and further, that the building and the land were sold to the machinery company long prior to the date of the sheriffs sale to the plaintiff. But it appearing that he had full knowledge of the machinery companys claim of ownership when he executed the indemnity bond and bought in the property at the sheriffs sale, and it appearing further that the machinery companys claim of ownership was well founded, he cannot be said to have been an innocent purchaser for value. He took the risk and must stand by the consequences; and it is in this sense that we find that he was not a purchaser in good faith

2. The building of strong materials in which the rice-cleaning machinery was installed by the "Compaia Agricola Filipina" was real property, and the mere fact that the parties seem to have dealt with it separate and apart from the land on which it stood in no wise changed its character as real property. As a real property, therefore, its sale as annotated in the Chattel Mortgage Registry cannot be given 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. Thus, neither the original registry in the Chattel Mortgage registry, nor the annotation in said registry sale of the mortgaged property had any effect on the building. The sole purpose and object of the chattel mortgage registry is to provide for the registry of "chattel mortgages," and transfers thereof, that is to say, mortgages of personal property executed in the manner and form prescribed in the statute. Neither the original registry in a chattel mortgage registry of an instrument purporting to be a chattel mortgage of a building and the machinery installed therein, nor the annotation in that registry of the sale of the mortgaged property, had any effect whatever so far as the building is concerned Disposition: WHEREFORE, The decision of the trial court is hereby affirmed. Prepared by: KRISTEL DOMINIQUE A. LORAYES