DAVAO SAW MILL CO., INC.

vs. APRONIANO G. CASTILLO and DAVAO LIGHT & POWER CO., INC.
G.R. No. L-40411
August 7, 1935
FACTS:

Davao Sawmill Co. operated a sawmill on the land upon belonging to another person

Though a tenant, it constructed a building and installed machinery

Some of the implements used were clearly personal property

The contract of lease between Davao Sawmill and the landowner stated:
That on the expiration of the period agreed upon, all the improvements and
buildings introduced and erected by the party of the second part shall pass to the
exclusive ownership of the lessor without any obligation on its part to pay any
amount for said improvements and buildings; which do not include the machineries
and accessories in the improvements"

LAW/S:

ART. 415, NEW CIVIL CODE:

Real property consists of
1. Land, buildings, roads and constructions of all kinds adhering to the soil;
xxx

xxx

xxx

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.
ISSUE/S:

Whether or not the machineries and equipment were personal in nature

RULING:

YES, THEY ARE PERSONAL IN NATURE.

The machinery and equipment does not meet requisites of Par. 5 of Art. 415

A tenant installed the machinery and equipment

There was no intention to give the property permanently away in favor of

the owner of the premises as stipulated in the contract of lease

NOTE:

GENERAL RULE: Placed by owner + essential/principal element of the industry

REAL PROPERTY
EXCEPTION: Placed by the tenant PERSONAL PROPERTY
EXCEPTION TO THE EXCEPTION:
o Tenant promised to give when lease ends REAL PROPERTY
o Tenant acting as agent REAL PROPERTY