LAW ON PROPERTY| Lectures of atty. edison c. batacan BASED on PARAS first exam COVERAGE| Articles 414-475

LAW ON PROPERTY| Lectures of atty. edison c. batacan BASED on PARAS first exam COVERAGE| Articles 414-475SY 2015-2016 FIRST SEMESTER

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).

(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 Nullius) Property Belonging to No One

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)

*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 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.

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 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 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 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 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;(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.)4