Leung Yee v. Strong Machinery Co.

Doctrine: 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.

Procedure: Leung Yee filed an action to recover possession of the building from the machinery company.

LC: The trial judge, relying upon the terms of article 1473 of the Civil Code, gave judgment in favor of the machinery
company, on the ground that the company had its title to the building registered prior to the date of registry of the
plaintiff's certificate.

SC: Ruled in favor of Strong Machinery Company and with cost against Leung Yee.

Facts:
Compañia Agricola Filipina bought several rice-cleaning machinery from Frank L. Strong Machinery Company (machinery
company) and executed a chattel mortgage to secure payment of the purchase price. The deed of mortgage includes
the building where the machinery was installed without any reference to the land on which it stood. Since Compañia
Agricola Filipina failed to pay when due, the mortgaged property was sold by the sheriff and was bought by the
machinery company.

Few weeks later, Compañia Agricola Filipina executed a deed of sale of the land where the building stood to the
machinery company. In effect, machinery company possessed the building when the sale took place and continued its
possession ever since.

When the chattel mortgage was executed, Compañia Agricola Filipina executed another mortgage in favor of Yee over
the building to pay its debt to the machinery company. Since Compañia Agricola Filipina failed to pay when due, Yee
secured a judgment to levy execution upon the building and bought the building at the sheriff‘s sale; Yee secured the
sheriff‘s certificate of sale and registered it in the land registry.

When the execution was levied upon the building, machinery company filed with the sheriff a sworn statement setting
up its claim of title and demanding the release of property from the levy. On the other hand, Yee filed an action to
recover possession of the building from the machinery company. Trial court ruled in favor of the machinery company on
the basis of Article 1473 of the Civil Code; it ruled that the machinery company registered the title to the building prior
to the registration date of Yee‘s certificate.

ISSUE:
Whether or not the nature of property is changed by its registration in the Chattel Mortgage Registry.

HELD:
No. The registry under Article 1473 of the Civil Code refers to registry of real property and the annotation or inscription
of a deed of sale of real property in a chattel mortgage registry cannot be given the legal effect of an inscription in the
registry of real property.

The Chattel Mortgage Law contemplates mortgages of personal property. The sole purpose and object of the chattel
mortgage registry is the registration of personal property mortgages executed in the manner and form prescribed in the
statute.

In this case, the building where the rice-cleaning machinery was installed was real property. The mere fact that the
parties dealt with it as separate and apart from the land on which it stood does not change its character as real property.
Neither the original registry of the building in the chattel mortgage nor the annotation of sale of the mortgaged property
in the registry had any effect on the building‘s nature as immovable property.