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Davao Saw Mill vs. Castillo - GR No. 40411 - Case Digest
Davao Saw Mill vs. Castillo - GR No. 40411 - Case Digest
CASTILLO
DAVAO SAW MILL Co., INC., plaintiff and appellant, vs.
APRONIANO G. CASTILLO and DAVAO LIGHT & POWER Co.,
INC., def endants and appellees.
G.R. No. 40411, August 7, 1935
Recit-Ready Case Summary: Lessee Davao Sawmill placed machinery in a building erected on land belonging to another with the
understanding that the machinery was not included in the improvements which would pass to the lessor on the expiration (or
abandonment) of the lease contract. Davao Sawmill even treated the machinery as personal property by executing chattel mortgages in
favor of third persons. Later, the machinery was levied upon by the sheriff as personalty pursuant to a writ of execution obtained without
any protest being registered.
General Rule of Law/Doctrine: Machinery which is movable in its nature only 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 any person having only a temporary right, unless
such person acted as the agent of the owner.
FACTS: Davao Saw Mill conducted its business on a parcel of land belonging to appellee, Castillo, via lease. The contract of lease
provided that “upon expiration of the period agreed upon, all the improvements and buildings introduced and erected by the [lessee]
shall pass to the exclusive ownership of the [lessor] without any obligation on tis part to pay any amount for said improvements and
buildings.” Appellant Davao Saw Mill installed machinery within the period of lease. Later, this machinery was levied upon by the sheriff
of Davao as personalty pursuant to a writ of execution rendered by a judgement in favor of Davao Light & Power, in another action.
ISSUE: WON the machinery installed by the lessee, Davao Saw Mill, on the leased property is classified as personal property?
HELD: YES. Machinery is classified as personal property. Art. 335 of the NCC provides that “real property consists of… 5. Machinery,
liquid containers, instruments or implements intended by the owner of any building or land for use in connection with any industry or
trade being carried on therein and which are expressly adapted to meet the requirements of such trade or industry.” Machinery which is
movable in its nature only 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 any person having only a temporary right, unless such person acted as the agent of the owner. The
machinery in controversy installed by appellant Davao Saw Mill falls within the ambit of personal property as defined under Art. 355 of
the NCC.
The trial judge found that those properties were personal in nature, and as a consequence absolved the defendants from the complaint,
with costs against the plaintiff. Supreme Court affirms the judgement of the lower court.
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Property - SUNG