01 Davao Sawmill v. Castillo

DAVAO SAW MILL V.
CASTILLO
August 7, 1935; MALCOLM
Petitioner: DAVAO SAW MILL Co., INC.

Respondent: APRONIANO G. CASTILLO and DAVAO LIGHT & POWER Co., INC.
FACTS:
 Davao Saw Mill Co., Inc., is the holder of a lumber concession
 It has operated a sawmill in Maa, Tigatu, Davao. However, the land upon which the business was
conducted belonged to another person. On the land, the sawmill company erected a building
which housed the machinery used by it.
o Some of the implements used were personal property (machines which were placed and
mounted on foundations of cement).
 The contract of lease between the sawmill company and the owner of the land states:
o "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 party of the first part without any obligation on its part to pay any
amount for said improvements and buildings; also, in the event the party of the second
part should leave or abandon the land leased before the time herein stipulated, the
improvements and buildings shall likewise pass to the ownership of the party of the first
part as though the time agreed upon had expired: Provided, however, That the
machineries and accessories are not included in the improvements which will pass to the
party of the first part on the expiration or abandonment of the land leased."
 In Davao Light & Power Co., Inc. v. Davao Saw Mill Co., Inc. , a judgment was rendered in favor
Davao Light & Power Co. and a writ of execution issued against Davao Saw Mill Co., and the
properties now in question were levied upon as personalty by the sheriff. Having consummated
the sale, DVL&P proceeded to take possession of the machinery and other properties described in
the corresponding certificates of sale executed in its favor by the sheriff.
o Davao Saw Mill Co., Inc., has on a number of occasions treated the machinery as personal
property by executing chattel mortgages in favor of third persons, one of whom is the
appellee by assignment from the original mortgagees.
 Article 334 states that real property consists of—
o 1. Land, buildings, roads and constructions of all kinds adhering to the soil;
o 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.
ARQUERO – A2021
ISSUES/HELD:
1. WON the machinery is personal property. YES!
 While not conclusive, the characterization of the property as chattels by the appellant is indicative
of intention and impresses upon the property the character determined by the parties.
 The machinery was not intended by the owner of any building or land for use in connection
therewith, but intended by a lessee for use in a building erected on the land by the latter to be
returned to the lessee on the expiration or abandonment of the lease.
 Valdes vs. Central Altagracia: 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:
o “It is plain that machinery which is movable in its nature only becomes immobilized when
placed in a plant by the owner of the property or plant. Such result would not be
accomplished by the placing of machinery in a plant by a tenant or a usufructuary or any
person having only a temporary right. The distinction rests, as pointed out by
Demolombe, upon the fact that one only having a temporary right to the possession or
enjoyment of property is not presumed by the law to have applied movable property
belonging to him so as to deprive him of it by causing it by an act of immobilization to
become the property of another. The tenant in putting in the machinery was acting but as
the agent of the owner in compliance with the obligations resting upon him, and the
immobilization of the machinery which resulted arose in legal effect from the act of the
owner in giving by contract a permanent destination to the machinery.”
DISPOSITIVE:
Finding no reversible error in the record, the judgment appealed from will be affirmed, the costs of this
instance to be paid by the appellant.
ARQUERO – A2021

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DAVAO SAW MILL V.

Petitioner: DAVAO SAW MILL Co., INC.

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