Property: Title I, Chapter 1 — Immovable Property

Property

Chapter 1 — Immovable Property

(LTESM-AFMDC)

Article 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 therefrom 

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.

(1) Definition of ‘Immovable Property’ 

• The law does not define what properties are immovable; they are merely enumerated. 
• While it is true that the dictionary defines immovable property as that which is firmly fixed, settled, or fastened, and while in general, immovable property is that which is fixed in a definite place, still there are many exceptions to this general criterion. 
• The etymological meaning should, therefore, yield to the legal or juridical significance attached to the term by the law.
• As a matter of fact, the enumeration given in Art. 415 does not give an absolute criterion as to which properties are real, and which are personal.

(2) Academic Classification of Real Properties (NIDA)

1. Real property by nature
• ex. trees and plants
2. Real property by incorporation
• ex. building
3. Real property by destination or purpose
• ex. machinery placed by the owner of a tenement on it for direct use in an industry to be carried on therein 
4. Real property by analogy
• ex. right of usufruct, or a contract for public works, or easements and servitudes, or “sugar quotas” under Republic Act 1825 and Executive Order 873.

(3) Paragraph 1: ‘Land, buildings, roads, and constructions of all kinds adhered to the soil.’ 

• Land is the best example of immovable property. 
• It is immovable by its very nature. 
• And even if land is moved by an earthquake, an extraordinary happening, the land should still be considered immovable. 
• A shovelful of land however, should be considered personal property, since this no longer adheres to the soil. 
• If land is rented, it is still immovable. 

• Buildings are considered immovable provided they are more or less of a permanent structure, substantially adhering to the land, and not mere superimpositions on the land like barong-barongs or quonset fixtures and provided there is the intent of permanent annexation.
• Note that the law uses the term “adhered’’ and not “superimposed.’
• And this is true, whether the building is built on one’s own land, or on rented land. The reason is clear: the law on this point does not distinguish as to who built or owns the building. 
• It is obvious that the inclusion of “building,’’ separate and distinct from the land, in Art. 415, can only mean that a building is by itself an immovable property. 
• The general rule is that mortgage on a building is a real estate mortgage, and not a mortgage on a chattel (personal property) or a chattel mortgage. 
• The nature of the building as real property does not depend on the way the parties deal with it.
• A dismantled house and/or materials of such house should be regarded as personal properties.

• Leung Yee v. Strong Machinery, 37 Phil 644, G.R. No. L-1165, February 15, 1918 ⭐
• The “Compania Agricola Filipina” purchased from “Strong Machinery Co.” rice-cleaning machines which the former installed in one of its buildings. 
• As security for the purchase price, the buyer executed a chattel mortgage on the machines and the building on which they had been installed. 
• Upon buyer’s failure to pay, the registered mortgage was foreclosed, and the building was purchased by the seller, the “Strong Machinery Co.” This sale was annotated in the Chattel Mortgage Registry. 
• Later, 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 the Machinery Co. took possession of the building and the lot. 
• Previously however, the same building had been purchased at a sheriff’s sale by Leung Yee, a creditor of “Agricola,” although Leung Yee knew all the time of the prior sale in favor of “Strong Machinery.” This sale in favor of Leung Yee was recorded in the Registry. 
• Leung Yee now sues to recover the property from “Strong Machinery.” 
• Who has a better right to the property?
• The building is real property, therefore, its sale as annotated in the Chattel Mortgage Registry can not 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. 
• Thus, 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. 
• However, since the land and the building had first been purchased by “Strong Machinery” (ahead of Leung Yee), and this fact was known to Leung Yee, it follows that Leung Yee was not a purchaser in good faith, and should therefore not be entitled to the property. 
• “Strong Machinery” thus has a better right to the property. 

• Prudential Bank v. Panis, G.R. No. 50008, Aug 31, 1988 ⭐
• In the enumeration of properties under Article 415, the inclusion of “building” separate and distinct from the land, in said provision of law, can only mean that a building is by itself an immovable property. 
• While a mortgage of land necessarily includes, in the absence of stipulation of the improvements thereon, buildings, still a building by itself may be mortgaged apart from the land on which it has been built. Such a mortgage would still be a real estate mortgage for the building would still be considered immovable property even if dealt with separately and apart from the land. 
• Possessory rights, thus, over buildings before title is vested on the grantee may be validly transferred or conveyed as in a deed of mortgage. 

• May a house built on rented land be the object of a mortgage?
• Yes, in a real mortgage (real estate mortgage). 
• It may even be the subject of a chattel mortgage provided two conditions are present; namely:
• that the parties to the contract so agree, and 
• that no innocent third party will be prejudiced. 
• Thus, if a chattel mortgage, duly registered, is made on a building, and subsequently a real mortgage is made on the land and the building, it is the real mortgage, not the chattel mortgage which should be preferred. This is particularly true with respect to third persons. 
• Moreover, insofar as execution proceedings are considered, the house would be considered real property. This is really because one who has so agreed is estopped from denying the existence of the chattel mortgage. 
• However, even if so stipulated as personal property, still for purposes of sale at a public auction (particularly regarding notice by publication) under Rule 39, Sec. 15 of the Rules of Court on execution sales, the house should be considered real property. 
• Moreover, a building subjected to a chattel mortgage, cannot be sold extra-judicially under the provisions of Act 3135 since said Act refers only to real estate mortgages.

• Building Mortgaged Separately from the Land on Which It Has Been Built 
• While it is true that a mortgage of land necessarily includes, in the absence of stipulation, the improvements thereon, including buildings, still a building by itself may be mortgaged apart from the land on which it has been built. 
• Such a mortgage would still be a real estate mortgage for the building would still be considered immovable property even if dealt with separately and apart from the land.
• In case such a building is made the subject of a chattel mortgage, and the mortgage is registered in the chattel mortgage registry, the mortgage would still be void in so far as third persons are concerned. 
• NOTE: There is no legal compulsion to register (to serve as notice to third persons), transactions over buildings that do not belong to the owners of the lands on which they stand. There is no registry in this jurisdiction of buildings apart from the land. 

• Sale or Mortgage of a Building which Would Be the Object of Immediate Demolition
• A building that is sold or mortgaged and which would immediately be demolished may be considered personal property and the sale or mortgage thereof would be a sale of chattel, or a chattel mortgage respectively, for the true object of the contract would be the materials thereof. 

• Bicerra, et al. v. Teneza, et al. L-16218, Nov. 29, 1962 
• A complaint was filed in the Court of First Instance (now Regional Trial Court) alleging that the defendants had forcibly demolished the house of the plaintiffs worth P200. The plaintiffs asked for damages or for a declaration that the materials belong to them. 
• Does the CFI (now RTC) have jurisdiction? 
• No, because no real property is being sued upon, the house having ceased to exist, and the amount of damages sought does not exceed the jurisdictional amount in inferior courts. While it is true that the complaint also seeks that the plaintiffs be declared the owners of the dismantled house or the materials, such does not in any way constitute the relief itself, but is only incidental to the real cause of action — which concerns the recovery of damages. 

• Ministerial Duty of the Registrar of Property 
• When parties present to the registrar of property a document of chattel mortgage, the registrar must record it as such even if in his opinion, the object of the contract is real property. 
• This is because his duties in respect to the registration of chattel mortgages are of a purely ministerial character, as long as the proper fee has been paid. 
• Thus in one case, the tenant executed a deed of chattel mortgage on the building she had built on the land she was renting. The court held that the registrar has the ministerial duty to record the chattel mortgage since he is not empowered to determine the nature of any document of which registration is sought as a chattel mortgage.

• Standard Oil Co. v. Jaranillo 44 Phil. 631, G.R. No. L-20329, March 16, 1923 ⭐
• De la Rosa, who was renting a parcel of land in Manila, constructed a building of strong materials thereon, which she conveyed to plaintiff by way of chattel mortgage. 
• When the mortgagee was presenting the deed to the Register of Deeds of Manila for registration in the Chattel Mortgage Registry, the Registrar refused to allow the registration on the ground that the building was a real property, not personal property, and therefore could not be the subject of a valid chattel mortgage.
• May the deed be registered in the chattel mortgage registry? 
• Yes, because the Registrar’s duty is ministerial in character. There is no legal provision conferring upon him any judicial or quasi-judicial power to determine the nature of the document presented before him. 
• He should therefore accept the legal fees being tendered, and place the document on record. 

• Toledo-Banaga v. CA 102 SCAD 906, 302 SCRA 331,G.R. No. 127941, January 28, 1999 ⭐
• It is a ministerial function of the Register of Deeds to comply with the decision of the court to issue a title and register a property in the name of a certain person, especially when the decision had attained finality. 

• Constructions of All Kinds 
• Though the law says “constructions of all kinds adhered to the soil,” it is understood that the attachment must be more or less permanent.
• A wall or a fence would be a good example of this kind of real property by incorporation. 
• This is true even if the fence or wall is built only of stones as long as there is an intent to permanently annex the same. 
• Even railroad tracks or rails would come under this category, for although they are not exactly roads, they are certainly “constructions.” 
• Note, however, that wooden scaffoldings on which painters stand while painting the walls of a house are merely personal property in view of the lack of “adherence” to the soil.

(4) Paragraph 2: ‘Trees, plants and growing crops, while they are attached to the land or form an integral part of an immovable.’ 

• Trees and Plants 
• No matter what their size may be, trees and plants are considered real property, by nature if they are the spontaneous products of the soil, and by incorporation, if they were planted thru labor. 
• But the moment they are detached or uprooted from the land, they become personal property, except in the case of uprooted timber, if the land is timber land. 
• This is because, although no longer attached, the timber still forms an “integral part” of the timber land — immovable.
• Indeed, trees blown by a typhoon still remain part of the land upon which they rest, and should be considered real property. 

• Registration of Land Containing Trees and Plants 
• A filed registration proceedings for a parcel of land. The land contained trees and plants still annexed to the soil. If A succeeds in having the land registered under his name, will he also be considered the owner of the trees and plants?
• Yes, trees and plants annexed to the land are parts thereof, and unless rights or interests in such trees or plants are claimed in the registration proceedings by others, they become the property of the person to whom the land is adjudicated. 

• Growing Crops on One’s Own Land 
• Growing crops, by express codal provisions, are considered real property by incorporation. 
• Moreover, under the Rules of Court, growing crops are attached in the same way as real property. (Rule 57, Sec. 7). 
• However, under the chattel mortgage law, growing crops may be considered as personal property, and may thus be the subject of a chattel mortgage.
• Moreover, a sale of growing crops should be considered a sale of personal property. 
• This is because when the crops are sold, it is understood that they are to be gathered. 
• A harvest may indeed be classed as a sale of future or hereafter-acquired property. 
• However, in a Court of Appeals case, it was held that coconut trees remain real property even if sold separate and apart from the land on which they grow — as long as the trees are still attached to the land or form an integral part thereof.

• Growing Crops on Another’s Land
• Inasmuch as the law makes no distinction, growing crops whether on one’s land or on another’s, as in the case of a usufructuary, a possessor or a tenant, should be considered real property. 
• The important thing is for them to be still attached to the land. 
• On the other hand, once they have been severed, they become personal property, even if left still scattered or lying about the land. 

• Synonyms 
• “growing crops’’
• “standing crops’’ 
• “ungathered fruits’’
• “growing fruits’’ 

• Sibal v. Valdez, 50 Phil 512, G.R. No. L-26278, August 4, 1927
• Paragraph 2 of article 334 of the Civil Code has been modified by section 450 of the Code of Civil Procedure and by Act No. 1508, in the sense that, for the purpose of attachment and execution, and for the purposes of the Chattel Mortgage Law, "ungathered products" have the nature of personal property. 

(5) Paragraph 3: ‘Everything attached to an immovable in a f ixed manner, in such a way that it cannot be separated therefrom without breaking the material or deterioration of the object.’ 

• Under this paragraph, for the incorporated thing to be considered real property, the injury or breakage or deterioration in case of separation, must be substantial.
• In Roman Law, things included in paragraph 3 were called res vinta.
• Examples: 
• a fixed fire escape stairway firmly embedded in the walls of a house 
• an aqueduct
• a sewer
• a well

• Par. 3 Distinguished from Par. 4:
• Par. 3
• cannot be separated from immovable without breaking or deterioration
• need not be placed by the owner
• real property by incorporation
• Par. 4 
• can be separated from immovable without breaking or deterioration
• must be placed by the owner, or by his agent, express or implied
• real property by incorporation and destination 

• Query: Suppose the properties referred to in paragraph 3 are temporarily removed, but there is an intention to replace them, should they be considered real or personal property? 
• It is believed that they should be regarded as personal property inasmuch as the “incorporation” has ceased. 
• The Partidas contained an express provision making said property real, but in view of the elimination in the Code of said provision, we may say that same should no longer apply, despite a contrary opinion expressed by a member of the Code Commission. 

(6) Paragraph 4: ‘Statues, reliefs, paintings or other objects for use or ornamentation, placed in buildings or on land by the owner of the immovable in such a manner that it reveals the intention to attach them permanently to the tenements.’ 

• Examples: 
• a fixed statue in the garden of a house
• a permanent painting on the ceiling
• a picture embedded in the concrete walls of a house
• a rug or carpet fastened to the floor, as in the case of wall to wall carpeting
• a picture hanging on the wall should be considered chattel

• Placing by the Owner
• The objects must be placed by the owner of the immovable (buildings or lands) and not necessarily by the owner of the object. 
• Of course, the owner of the building or land may act thru his agent, or if he be insane, thru his duly appointed guardian.
• If placed by a mere tenant, the objects must remain chattels or personalty for the purposes of the Chattel Mortgage Law. 
• BAR:
• If during the construction of my house, I request my neighbor to keep in the meantime a painting which I own and my friend attaches said painting on his own wall, should the painting be regarded as real or personal property? 
• Personal, in view of the lack of intent to attach permanently in my neighbor’s house. 
• Note the word “permanently” in paragraph No. 4. 

(7) Paragraph 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.’ 

• Essential Requisites
1. The placing must be made by the owner of the tenement, his agent, or duly authorized legal representative. 
2. The industry or works must be carried on in the building or on the land. 
• A transportation business is not carried on in a building or in the compound. 
3. The machines, etc., must tend directly to meet the needs of said industry or works. (Adaptability).
4. The machines must be essential and principal elements in the industry, and not merely incidental.
• Thus, cash registers, typewriters, calculators, computers, fax machines, etc., usually found and used in hotels, restaurants, theaters, etc. are merely incidentals, and not and should not be considered immobilized by destination, for these businesses can continue or carry on their functions without these equipment. 
• The same applies to the repair or service shop of the transportation business be cause the vehicles may be repaired or serviced in another shop belonging to another. 
• On the other hand, machineries of breweries used in the manufacture of liquor and soft drinks, though movable by nature, are immobilized because they are essential to said industries; but the delivery trucks and adding machines which they usually own and use and are found within their industrial compounds are merely incidentals and retain their movable nature. 

• Paragraph 5 refers to real property by destination or purpose.

• Effect of Separation
• If the machine is still in the building, but is no longer used in the industry conducted therein, the machine reverts to the condition of a chattel. 
• Upon the other hand, if still needed for the industry, but separated from the tenement temporarily, the property continues to be immovable, inasmuch as paragraph 5 refers, not to real property by incorporation, but to real property by destination or purpose. 

• Examples of the machinery, receptacles, instruments, implements. 
1. Machines placed in a sugar central (and therefore, if the central has already been the subject of a real estate mortgage, the machines become subject also to such mortgage)
2. Machines attached to concrete foundations of build ings in a fixed manner such that they cannot be separated therefrom without unbolting the same and cutting some of their wooden supports. 

• Cases 
• Davao Sawmill Co. v. Castillo 61 Phil. 709 ⭐
• A tenant placed machines for use in a saw mill on the land of the landlord. 
• Is the machinery real or personal? 
• As a rule, the machinery should be considered as personal, since it was not placed on the land by the owner of said land. 
• Immobilization by destination or purpose cannot generally be made by a person whose pos session of the property is only temporary, otherwise we will be forced to presume that he intended to give the property permanently away in favor of the owner of the premises. 
• Valdez v. Central Altagracia, Inc. 225 U.S. 58
• Suppose in the first case, the tenant had promised to give the machinery later to the owner of the land; or suppose the tenant acted only as the agent of the owner of the land, would the machinery be considered real or personal? 
• The machinery would be considered as real property in both instances.
• “Machinery placed on property by a tenant does not become immobilized: when however, a tenant places it there pursuant to a contract that it shall belong to the owner, it becomes immobilized as to that tenant and his assigns having notice, although it does not become so as to the creditors not having legal notice of the lease.’’ 
• “Machinery which is movable in its nature becomes immobilized when placed in a plant by the owner of the property or plant, but not when so placed by a tenant, a usufructuary, or a person having only a temporary right, unless such person acted as the agent of the owner.’’ 
• B.H. Berkenkotter v. Cu Unjieng 61 Phil. 663  ⭐
• The Mabalacat Sugar Company borrowed from the defendant a sum of money, mortgaging as security two lots together with all its buildings and improvements. Later, to increase its productive capacity, the Company purchased additional machines and a new sugar mill which were needed for the sugar industry. 
• Are the additional machines also considered mortgaged? 
• The mortgage of a parcel of land generally includes all future improvements that may be found on said parcel. These improvements include real properties, like the additional machines and sugar mill purchased. 
• Said additional machinery are real properties because they are essential and principal elements of the sugar central. Without them, the sugar central would be unable to carry out its industrial purpose.
• Ago v. Court of Appeals, et al. L-17898, Oct. 31, 1962 
• Sawmill machineries and equipment installed in a sawmill for use in the sawing of logs, a process carried on in said building, become real properties, and if they are judicially sold on execution without the necessary advertisement of sale by publication in a newspaper as required in Section 16 of Rule 39 of the Rules of Court, the sale made by the sheriff would be null and void. 
• People’s Bank & Trust v. Dahican Lumber, G.R. No. L-17500, May 16, 1967  ⭐
• Several parcels of land were the objects of a real estate mortgage. The mortgage deed also stated that the mortgage included essential after-acquired properties such as machinery, fixtures, tools, and equipment. The real mortgage was then registered as such in the Registry of Deeds. 
• Should the deed also be registered in the chattel mortgage registry insofar as it covered the after acquired machinery, fixtures, tools and equipment? 
• No more, since the after-acquired properties had been immobilized by destination (they were used in the development of the lumber concession).
• Please observe that in this case, the parties to the real mortgage had treated the after-acquired properties as real properties by agreeing that they would be automatically subject to the lien of the real estate mortgage executed by them.
• In the Davao Sawmill Co. v. Castillo (61 Phil. 709) case, the parties had treated after-acquired properties, including the machines, as personal property by executing chattel mortgages thereon. Hence, this Davao Sawmill case cannot apply to the instant case.

• Board of Assessment v. Meralco 10 SCRA 68,G.R. No. L-15334, January 31, 1964 ⭐
• Are the steel towers or poles of the MERALCO considered real or personal properties? 
• They are personal (not real) properties. 
• Be it noted that: 
• they do not come under Par. 1 of Art. 415 because they are neither buildings or constructions adhered to the soil; 
• they do not come under Par. 3 because they are not attached to an immovable in a fixed manner, that is, they can be separated without breaking the material or causing deterioration of the object to which they are attached;  
• they do not come under Par. 5 because they are not machineries, receptacles, or instruments, but even if they are, they are not intended for an industry to be carried on in the premises. 
• BAR 
• When is machinery attached to land or a tenement considered immovable? 
• Par. 5, Art. 415
• Give the exception. 
• When placed on the land or tenement by a tenant.
• Give the exception to the exception.
• When the tenant had promised to leave the machinery on the tenement at the end of the lease, or when he acted only as agent of the owner of the land.

(8) Paragraph 6: ‘Animal houses, pigeon-houses, beehives, fishponds 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.’ 

• Non-necessity for this Paragraph insofar as “Houses’’ are Concerned 
• The “houses” referred to here may already be deemed included in paragraph 1 when speaking of “constructions of all kinds adhered to the soil.” 

• The Animals Inside
• Inasmuch as there used to be doubts before as to whether or not the animals in the “houses” are included as real property, the Code Commission decided to eliminate confusion on the matter. 

• Suppose the Animals are Temporarily Outside
• It is submitted that even if the animals are temporarily outside, they may still be considered as “real property,’’ as long as the intent to return is present, as in the case of a homing pigeon. 
• But from the point of view of criminal law, they must be considered as personal property, and may properly be the object of theft or robbery. 

• Alienation of the Animals 
• When the animals inside the permanent animal houses are alienated onerously or gratuitously, it is believed that the transaction is an alienation of personal property, unless the building or the tenement is itself also alienated.
• This is because in said alienation, the animal structures must of necessity be detached from the immovable. Hence, an ordinary inter vivos donation of a pigeon-house need not be in a public instrument. 

• Temporary Structures of Cages 
• A temporary bird cage easily removable, or which may be carried from place to place, is a chattel. The birds inside are also chattel. 

(9) Paragraph 7: ‘Fertilizer actually used on a piece of land.’

• Fertilizers still in the barn and even those already on the ground but wrapped inside some newspapers or any other covering are still to be considered personal property, for they have not yet been “actually” used or spread over the land. 

(10) Paragraph 8: ‘Mines, quarries, and slag dumps while the matter thereof forms part of the bed, and waters, either running or stagnant.’ 

• Mines, including the minerals still attached thereto, are real properties, but when the minerals have been extracted, the latter become chattels.

• “Slag dump’’ is the dirt and soil taken from a mine and piled upon the surface of the ground.
• Inside the “dump’’ can be found the minerals.

• The “waters” referred to are those still attached to or running thru the soil or ground. 
• But “water” itself as distinguished from “waters,” is clearly personal property. 
• Upon the other hand, canals, rivers, lakes, and such part of the sea as may be the object of appropriation, are classified as real property. 

(11) Paragraph 9: ‘Docks and structures which, though floating, are intended by their nature and object to remain at a fixed place on a river, or coast.’  

• Floating House
• A floating house tied to a shore or bank post and used as a residence is considered real property, considering that the “waters” on which it floats, are considered immovables. 
• In a way, we may say that the classification of the accessory (the floating house) follows the classification of the principal (the waters). 
• However, if the floating house makes it a point to journey from place to place, it assumes the category of a vessel. 

• Vessels
• Vessels are considered personal property. 
• As a matter of fact, they are indeed very movable. 
• Because they are personal property, they may be the subject of a chattel mortgage.
• However, a chattel mortgage on a vessel should be registered not in the Registry of Deeds or Property, but in the record of the Collector of Customs at the Port of Entry. 
• In all other respects, however, a chattel mortgage on a vessel is generally like other chattel mortgages as to its requisites and validity. 
• Note: A chattel mortgage on a car in order to affect third persons should not only be registered in the Chattel Mortgage Registry but also in the Motor Vehicles Office.
• Although vessels are personal property, they partake to a certain extent of the nature and conditions of real property because of their value and importance in the world of commerce. 
• Hence, the rule in the Civil Code with reference to acquisition of rights over immovable property (particularly the rules on double sale) can be applied to vessels. 
• (This is specially so since the rules in the Civil Code, Art. 1544, on a double sale of realty are repeated in the Code of Commerce.) 
• Hence, priority of registration by a purchaser in good faith will give him a better right than one who registers his right subsequently. 
• This is true whether the ships or vessels be moved by steam or by sail. 

• BAR
• Is the steamship President Cleveland personal or real property? 
• It can be moved from place to place, hence, it is personal property, although it partakes the nature of real property in view of its importance in the world of commerce. 

(12) Paragraph 10: ‘Contracts for public works, and servitudes and other real rights over immovable property.’ 

• Compared with the Old Law 
• Under the old Civil Code, the words “administrative concessions for public works” were used instead of “contracts for public works.”

• Rights 
• The properties referred to in paragraph 10 are not material things but rights, which are necessarily intangible. 
• The piece of paper on which the contract for public works has been written is necessarily personal property, but the contract itself, or rather, the right to the contract, is real property. 
• A servitude or easement is an encumbrance imposed on an immovable for the benefit of another immovable belonging to another owner, or for the benefit of a person, group of persons, or a community (like the easement of right of way). (Arts. 613-614). 
• Other real rights over real property include real mortgage, antichresis, possessory retention, usufruct and leases of real property, when:
• the leases have been registered in the Registry of Property; or 
• even if not registered, if their duration is for more than a year. 
• Upon the other hand, the usufruct of personal property or a lease of personal property, should be considered personal property. 

• Presbitero v. Fernandez – L-19527, March 30, 1963  ⭐
• Are “sugar quotas” real or personal property?
• They are real property, for they are by law considered “real rights over immovable property” just like servitudes and easements. (See Art. 415, No. 10). 
• EO 873 regards them as “improvements” attached, though not physically, to the land.

• Real Property by Analogy 
• It should be noted that the properties or rights referred to in paragraph 10 are considered real property by analogy, inasmuch as, although they are not material, they nevertheless partake of the essential characteristics of immovable property. 

• Old Real Rights Eliminated
• The real right of use and habitation, Arts. 523-529 of the old Civil Code, and the real right of censo (ground rents), Arts. 1604-1664 of the old Civil Code, have been eliminated in the new Civil Code, because according to the Code Commission, they have never been referred to in Philippine contracts or wills.