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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:
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:
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