+

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.