Davao Saw Mill Co, Inc., v.

Castillo

G.R. No: L-40411

Petitioner/s: Davao Saw Mill Co., Inc.
Respondent/s: Aproniano G. Castillo and Davao Light and Power Co.
Ponente: J. Malcolm
Action:
Date: August 7, 1935
FACTS
1.
2.
3.

4.
5.

6.

The issue in the case involves the determination of the nature of the properties
described in the complaint. There were two actions involved in this case.
ACTION 1: Trial judge: properties were personal in nature. Hence, absolved the
defendants from complaint, with costs against plaintiff.
Davao Saw Mill operated a sawmill in sitio Maa, barrio Tigatu, Davao.
a. The land upon which the business was conducted belonged to another
peson.
b. The sawmill company erected a building which housed the machinery
used by ut.
Some implements were clearly personal property. The conflict concerns the
machines were placed and mounted on the foundations of the cement.
Provisions of the CONTRACT OF LEASE between the sawmill company and the
land owner:
a. Upon expiration of the period agreed upon, all the improvements and
buildings introduced and erected by the party (lessee) shall pass to the
exclusive ownership of the lessor without any obligation on its part to pay
any amount for said improvements and buidlings
b. Same rules apply in the event the lessee should leave or abandond the
land before the time stipulated
c. PROVIDED, however, that the machineries and accessories are NOT
included in the improvements which will pass to the lessor on the
expiration or abandonment of the lease.
ACTION 2: Davao Light & Power v. Davao Saw Mill. Judgment was rendered in
favor of plaintiff and against defendant. Properties in question were levied upon by
the sheriff. The bidder, which was the Davao Light, proceeded to take possession of
the machinery.

7.

Additional facts: Davao Saw Mill on a number of occassions treated the

machinery as personal property by executing chattel mortgages in favor of third
persons. (one of such persons is the appellee)

ISSUE 1: WON the machinery of Davao Sawmill is real propertyNO. It is personal

property.
HELD
1. Article 334 paragraphs 1 and 5 of the (old) Civil Code: real property consists of--(1) Land, buildings, roads, and constructions of all kinds adhering to the soil;
(5) Machinery, liquid containers, instruments or implements intended by the owner
of any buidling or land for use in connection with any industry or trade being carried
on therein and which are expressly adpated to meet the requirements of such trade
of industry.
2. Arguments of parties:
a. Davao Saw Mill (appellant) : emphasizes the first paragraph
b. Davao Light & Power (appellee) empahizes: the fifth paragraph
3. The Philippine Supreme Court cited the decision of the US Supreme Court written by Chief
Justice White involving a similar question which arose in Puerto Rico
DOCTRINE: Machinery which is movable in its nature only becomes immobilized when
placed in a plany 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.
Chief Justice White: Immovable (real) property, not only land and buidlings, but also attributes
immovability in some cases to property of a movable nature, that is, personal property,
because of the destination to which it is applied.
Things may be immovable either (1) by their own nature OR (2) by their destination or the
object to thich they are applicable.
GENERAL RULE: Machinery is movable in its nature (personal property)
EXCEPTION: Machinery becomes immobilized when placed in a plant by the OWNER of the
property or plant. Such result would not be accomplished, therefore, by the placing of
machinery in a plant by a tenant or usufructuary or any person having only a temporary right.
DISPO: Judgement AFFIRMED.

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