CIVIL LAW

IX. PROPERTY, OWNERSHIP, AND ITS MODIFICATIONS

A. Property

2. Classification of Property

a. According to Nature

Under Philippine law, particularly the Civil Code of the Philippines, property can be classified according to its nature into two main categories: Movable Property and Immovable Property. Below is a detailed discussion of the classifications, their definitions, and key legal principles.

1. Immovable Property (Real Property)

Defined under Article 415 of the Civil Code, immovable property includes those items that, by their nature, essence, or purpose, are fixed and cannot be moved without altering their substance or destination. The following are the specific classifications:

a. Land

Includes the soil, ground, and surface of the earth.
All improvements or structures built or attached to the land (e.g., buildings, roads) are inherently immovable as accessories to the land.

b. Buildings and Constructions

Structures permanently attached to the land are classified as immovable.
Ownership of a building may or may not coincide with ownership of the land where it stands, creating potential issues like accession continua or disputes under Art. 448 (good faith builder).

c. Trees, Plants, and Growing Crops

Permanently planted or rooted plants and trees are considered immovable.
Crops that have not been severed from the land are also immovable.

d. Machinery, Instruments, or Implements

Machinery installed by the owner for an industry or work, provided they are fixed to the immovable property and intended for permanent use.

e. Dams, Piers, and Other Constructions

These include man-made structures that integrate with the immovable land for functionality, usually for public or economic purposes.

f. Rights in Immovable Property

Rights associated with immovables, such as servitudes, easements, usufructs, and mortgages, are themselves classified as immovable property.

2. Movable Property (Personal Property)

Defined under Article 416 and Article 417 of the Civil Code, movable property refers to items not fixed to the land and capable of transportation from one place to another without substantial alteration or damage. Movable property can be further divided into:

a. Tangible Movables (Corporal Property)

Objects perceptible to the senses, such as furniture, vehicles, jewelry, and merchandise.

b. Intangible Movables (Incorporal Property)

Rights that are enforceable, such as credits, shares, bonds, intellectual property, and goodwill.

c. Fruits and Crops When Severed

When products of the soil, like fruits or crops, are harvested, they become movable property, even if they were previously immovable.

Key Legal Doctrines and Principles

1. Doctrine of Accession

Under Articles 440–465, the principle of accession governs ownership of things produced by property (e.g., fruits of a tree) or items attached to property (e.g., constructions).

2. Lex Situs Principle

The location of immovable property determines the law applicable to its ownership, use, and transfer. This ensures that local laws prevail regarding real estate transactions.

3. Mode of Acquisition

Movable and immovable property are subject to different modes of acquisition:

Movables: Acquired by delivery and possession.
Immovables: Acquired through formal execution of public instruments and registration under the Torrens System.

4. Possession and Prescription

Possession of both movable and immovable property can lead to ownership through acquisitive prescription, provided legal conditions are met.

5. Classification's Legal Consequences

Taxation: Real properties are subject to real property tax, while movables are not.
Security Interests: Immovable property can be used for real mortgages, while movable property can be pledged or covered under chattel mortgage laws.

Summary of Differences Between Movable and Immovable Property

Aspect	Movable Property	Immovable Property
Definition	Capable of transport without damage.	Fixed, permanent by nature or use.
Legal Basis	Articles 416-417, Civil Code	Article 415, Civil Code
Transfer	Requires delivery.	Requires public instrument & registration.
Security	Pledge, Chattel Mortgage	Real Mortgage
Possession	Easier to acquire physical possession.	Subject to Torrens registration.

Practical Implications in Legal Practice

Contract Drafting
- Ensure precision in defining property types, especially in contracts for sale, lease, or mortgage.
Land Disputes
- Immovable property disputes frequently involve encroachments, overlapping claims, and easements.
Taxation and Government Regulation
- Different tax regimes and regulatory frameworks apply to movable and immovable properties, necessitating compliance.
Business Transactions
- Proper classification is crucial for security arrangements (e.g., loans, credits).

This detailed classification provides the foundation for interpreting, negotiating, and litigating property-related matters in the Philippines.