Davao Sawmill v.

Castillo

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

Facts:
Davao Saw Mill Co., Inc., is the holder of a lumber concession from the Government of the Philippine
Islands. However, the land upon which the business was conducted belonged to another person. On
the land the sawmill company erected a building that housed the machinery used by it. Some of the
implements thus used were clearly personal property, the conflict concerning machines that were
placed and mounted on foundations of cement. In the contract of lease between the sawmill company
and the owner of the land there appeared the following provision: 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 machinery and accessories in
the improvements.
Held:
 The subject properties are personal in nature. Article 334, paragraph 5, of the [Old] Civil Code,
provides that real property consists of (5) Machinery, liquid containers, instruments,or
implements iintended bythe owner of any building or land for use in connection with any industry
or trade being carried
on  t h e r e i n   a n d   w h i c h   a r e   e x p r e s s l y   a d a p t e d   t o   m e e t   t h e   r e q u i r e m e n t s   o f   s u c h   t r
a d e   o f   t h e industry. Machinery which is movable in nature only becomes immovable when placed
in  land by the ownero f t h e p r o p e r t y o r l a n d b u t n o t w h e n s o p l a c e d b y a t e n a n t o r
a n y p e r s o n h a v i n g o n l y a temporary right, unless such person acted as the agent of the owner.
In the case at the bar, the machinery is intended not by the owner of the land but by the saw
mill company for use in connection with its trade . In this sense, the machinery is not a real
property.
Issue: 
whether or not the machineries and equipments were personal in nature.
Ruling/Rationale:
Yes. The Supreme Court affirmed the decision of the lower court.