Case Name: Davao Saw Mill Co.

, Inc v Aproniano Castillo and Davao Light & By: Sherwin Bries
Power Co., Inc. Topic:
GR No. L-40411
Date: August 7, 1935
Facts
Davao Saw Mill Co., Inc., is the holder of a lumber concession of the Philippines and has operated a sawmill in the
sitio of Maa, Davao province. However, the land where the business was conducted was owned by another. They
erected a building which housed the machinery used by it. Some of the implements used were mounted on foundations
of cement.
In the contract of lease between the owner and the saw mill company, the sawmill company agreed to turn over all the
improvements and buildings introduced without any obligation to pay any amount for the said improvement and
buildings and likewise if they should leave or abandon the land leased before the time stipulated.
In the case of Davao Light & Power Co., Inc v Davao Saw Mill Co., Inc., judgment was rendered in favor of the
DLPCI and the properties in question were levied. The plaintiff as the highest bidder proceeded to take possession of
the machinery and the other properties described by the corresponding certificates of sale.
Davao Saw Mill Co., Inc. has on a number of occassions treated the machinery as personal property by executing
chattel mortgages in favor of third persons.
Trial Court ruled in favor of the defendant stating that the properties were personal in nature.

Issue/s
Whether or not the properties were real property or personal property? Personal

Ruling
The characterization of property as chattels by appellant is indicative of intention and impresses upon the property the
character determined by the parties.
In a case take to the United States Supreme Court, it was held that 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,
usufructuary, or any person having only a temporary right, unless such persons acted as the agent of the owner.
It is personal property since it was not placed in the land by the owner.

Doctrine Notes
Article 415 NCC (314 OCC)
Real Property consists of:
(1) Lands, buildings, roads and constructions of all kinds adhered to the soil
(5) Machinery, receptacles, instruments or implements intended by the owner
of the tenement for an industry or 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;