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Davao Saw Mill Co. v. Castillo, 61 Phil 709, G.R. No. 40411, 7 August 1935

This case involves a dispute over whether machinery installed by a sawmill company on leased land was considered real or personal property. The sawmill company had erected a building on leased land to house machinery used in its business. It later executed a chattel mortgage on the machinery. The court ruled that the machinery was not immobilized and remained personal property because the sawmill company was just a lessee, not the owner of the underlying land, and intended to remove the machinery when its lease ended. As the machinery was characterized as personal property by both parties originally, the court upheld this determination.

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146 views1 page

Davao Saw Mill Co. v. Castillo, 61 Phil 709, G.R. No. 40411, 7 August 1935

This case involves a dispute over whether machinery installed by a sawmill company on leased land was considered real or personal property. The sawmill company had erected a building on leased land to house machinery used in its business. It later executed a chattel mortgage on the machinery. The court ruled that the machinery was not immobilized and remained personal property because the sawmill company was just a lessee, not the owner of the underlying land, and intended to remove the machinery when its lease ended. As the machinery was characterized as personal property by both parties originally, the court upheld this determination.

Uploaded by

Arnold Bagalante
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Davao Saw Mill Co. v. Castillo, 61 Phil 709, G.R. No.

40411, 7 August 1935

Doctrine:

1. 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.

Facts:

The Davao Saw Mill Co., Inc., is the holder of a lumber concession from the Government of the Philippine
Islands. It has operated a sawmill in the sitio of Maa, barrio of Tigatu, municipality of Davao, Province of
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.

Davao Saw Mill executed a chattel mortgage on the machineries in favour of the Davao Light and Power Co.

Both Parties cited Article 415 of the NCC in this case, Davao Saw Mill cites paragraph 1 while the other cites
paragraph 5

Issue:

Whether the machineries constructed on the building that Davao Saw Mill owned is considered as real
property

Ruling:

No.

In the first place, it must again be pointed out that the appellant should have registered its protest before or
at the time of the sale of this property. It must further be pointed out that 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.

It is, however not necessary to spend overly must time in the resolution of this appeal on side issues. It is
machinery which is involved; moreover, machinery 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 leas

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