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LEUNG YEE

vs. FRANK L. STRONG MACHINERY COMPANY & J. G. WILLIAMSON


G.R. No. L-11658
February 15, 1918
FACTS:

Compania Agricola Filipina bought rice-cleaning machines from Strong Machinery Co. and
installed it in one of its buildings

Agricola executed a chattel on the machines and the building where it was installed as a
security for the purchase price

Unable to pay, mortgage was foreclosed and building was purchased by Strong Machinery
Co. the sale was annotated in the Chattel Mortgage Registry

Later, Agricola sold the lot where the building was constructed to Strong Machinery Co.
sale was not registered in Registry of Property but the latter took possession

Previously, Leung Yee (a creditor of Agricola) bought the building at a sheriffs sale, and this
was recorded in the Registry

Before purchasing the property, Yee knew about the prior sale to Strong Machinery Co. he
now sues to recover the property from Strong Machinery Co.

LAW/S:

ACT NO. 1508 (Chattel Mortgage Law)


Chattel mortgage is a conditional sale of personal property as security
Should be recorded with the Chattel Mortgage Registry to be legally binding

ART. 415, NEW CIVIL CODE


PAR.1: Land, buildings, roads, and constructions of all kinds adhered to the soil
Buildings and land are immovable property

ART. 1473, NEW CIVIL CODE


Rules on determining ownership if property is sold to different vendees:
Personal Property - grant ownership to person who 1st possessed it in good faith
Real Property grant ownership to person who 1st recorded it in the Registry
No Entry grant to person who 1st possessed in good faith
No Proof of Possession grant to person who presents oldest title

ISSUE/S:

Whether or not the property's nature changed by its registration in the Chattel Mortgage
Registry

Whether or not Leung Yee has a better right to the property since the sale to him was duly
registered with the Land Registry

RULING:

NO, THE NATURE OF THE PROPERTY HAS NOT CHANGED


By inclusion, buildings and land are 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

STRONG MACHINERY CO. HAS BETTER RIGHT


Leung Yee was not a buyer in good faith (had previous knowledge of an earlier sale)
Though the sale to Strong Machinery Co. was not recorded in the proper registry, it
was the first the possess the property in good faith

NOTE:

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

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