+

Davao Sawmill Co. v.

Castillo
Patricia Jillianne Degollado

+
Relevant FACTS
1.) Davao Sawmill Co. is the holder of a lumber
concession from the Philippines, and the land
upon which the business was conducted
belonged to another person.
2.) On the land, Davao Sawmill erected a
building
which
housed
the
machinery
(sawmill) used by it.
3.) In the contract of lease, Davao Sawmill
agreed to turn over, free of charge, all
improvements and the building erected by it
on the premises with the exception of
machineries, which shall remain with the
Davao Sawmill.

+
Relevant FACTS
4.) Another action was brought by the Davao
Light and Power Co. (mortgagee) where the
judgment was rendered against Davao
Sawmill (mortgagor). A writ of execution was
issued and the machineries placed on the
sawmill were levied upon by the sheriff.
5.) Davao Light and Power Co. proceeded to
purchase the machinery and other properties
auctioned by the sheriff.

+
Relevant ISSUES
Whether

or not the machinery involved is a

real property

+
Relevant ARGUMENTS
Davao

Light and Power (Plaintiff- Apellant)

Art. 334, Paragraphs 1 and 5 of the 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 building or land for use in
connection with any industry xxx

Relevant DOCTRINE or
PRONOUNCEMENT
As

a rule, the machinery only becomes

immobilized if placed in a plant by the owner
of the property or plant

It

should be considered personal property, if

the objects are placed by a mere tenant,
usufructuary, or any person having only a
temporary right
UNLESS, the person acted as the agent of
the owner

+
Relevant DECISION
The

machinery (saw mill) must be classified

as personal property since it was agreed by
both of the parties that the machinery be
returned to Davao Saw Mill on the expiration
or abandonment of the lease

+
QUESTIONS
X

constructed a building which it utilized as a

sawmill on leased land. If X places his
unmounted saw mill inside the building, is the
grill movable or immovable? Why?

ANSWER: The sawmill is immovable. Article 415, paragraph

5 provides that machinery intended by the owner of the
tenement for an industry which may be carried on in a
building and which tend direct to meet the needs of the
industry is an immovable property. In this case, the sawmill
was intended by X, the owner of the building, to be placed
inside and to be used to meet the needs of the business.

+
QUESTIONS
Y

constructed a building which it utilized as a

sawmill on a leased land. If X places and
actually uses his unmounted sawmill outside
the building but still on the leased land for the
purpose of the business, is the grill movable or
immovable? Why?

ANSWER: The sawmill is movable. Article 415, paragraph 5 provides

that machinery intended by the owner of the tenement for an
industry which may be carried on lands and which tend direct to
meet the needs of the industry is an immovable property. In this
case, the sawmill was placed outside the building and on the leased
land. Despite the usage of the grill to meet the needs of the business,
the sawmill is still a movable or personal property because the land
which it is placed is not owned by X who is a mere tenant of the land.