Davao Sawmill Co. vs Castillo Davao Sawmill Co. vs Castillo 61 PHIL 709 GR No. L-40411 August 7, 1935

A tenant placed machines for use in a sawmill on the landlord's land.

FACTS

Davao Sawmill Co., operated a sawmill. The land upon which the business was conducted was leased from another

person. On the land, Davao Sawmill erected a building which housed the machinery it used. Some of the machines

were mounted and placed on foundations of cement. In the contract of lease, Davo Sawmill agreed to turn over free

of charge all improvements and buildings erected by it on the premises with the exception of machineries, which

shall remain with the Davao Sawmill. In an action brought by the Davao Light and Power Co., judgment was

rendered against Davao Sawmill. A writ of execution was issued and the machineries placed on the sawmill were

levied upon as personalty by the sheriff. Davao Light and Power Co., proceeded to purchase the machinery and

other properties auctioned by the sheriff.

ISSUE

Are the machineries real or personal property?

HELD

Art.415 of the New Civil Code provides that Real Property consists of: (1) Lands, buildings, roads and

constructions of all kinds adhered to the soil;

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(5) Machinery, receptacles, instruments or implements intended by the owner pf the tenement for an industry ot

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;

Appellant should have registered its protest before or at the time of the sale of the property. While not conclusive,

the appellant's characterization of the property as chattels is indicative of intention and impresses upon the property

the character determined by the parties.

Machinery is naturally movable. However, machinery may be immobilized by destination or purpose under the

following conditions:

General Rule: The machinery only becomes immobilized if placed in a plant by the owner of the property or plant.

Immobilization cannot be made by a tenant, a usufructuary, or any person having only a temporary right.

Exception: The tenant, usufructuary, or temporary possessor acted as agent of the owner of the premises; or he

intended to permanently give away the property in favor of the owner. As a rule, therefore, the machinery should be

considered as Personal Property, since it was not placed on the land by the owner of the said land.