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G.R. No.

L-40411             August 7, 1935 That on the expiration of the period treated the machinery as personal property by
agreed upon, all the improvements and executing chattel mortgages in favor of third
DAVAO SAW MILL CO., INC., plaintiff- buildings introduced and erected by persons. One of such persons is the appellee
appellant, the party of the second part shall pass by assignment from the original mortgages.
vs. to the exclusive ownership of the party
APRONIANO G. CASTILLO and DAVAO of the first part without any obligation Article 334, paragraphs 1 and 5, of the Civil
LIGHT & POWER CO., INC., defendants- on its part to pay any amount for said Code, is in point. According to the Code, real
appellees. improvements and buildings; also, in property consists of —
the event the party of the second part
Arsenio Suazo and Jose L. Palma Gil and should leave or abandon the land 1. Land, buildings, roads and
Pablo Lorenzo and Delfin Joven for appellant. leased before the time herein constructions of all kinds adhering to
J.W. Ferrier for appellees. stipulated, the improvements and the soil;
buildings shall likewise pass to the
ownership of the party of the first part
MALCOLM, J.: xxx     xxx     xxx
as though the time agreed upon had
expired: Provided, however, That the
The issue in this case, as announced in the machineries and accessories are not 5. Machinery, liquid containers,
opening sentence of the decision in the trial included in the improvements which instruments or implements intended by
court and as set forth by counsel for the parties will pass to the party of the first part on the owner of any building or land for
on appeal, involves the determination of the the expiration or abandonment of the use in connection with any industry or
nature of the properties described in the land leased. trade being carried on therein and
complaint. The trial judge found that those which are expressly adapted to meet
properties were personal in nature, and as a the requirements of such trade of
In another action, wherein the Davao Light &
consequence absolved the defendants from industry.
Power Co., Inc., was the plaintiff and the
the complaint, with costs against the plaintiff.
Davao, Saw, Mill Co., Inc., was the defendant,
a judgment was rendered in favor of the Appellant emphasizes the first paragraph, and
The Davao Saw Mill Co., Inc., is the holder of a plaintiff in that action against the defendant in appellees the last mentioned paragraph. We
lumber concession from the Government of the that action; a writ of execution issued thereon, entertain no doubt that the trial judge and
Philippine Islands. It has operated a sawmill in and the properties now in question were levied appellees are right in their appreciation of the
the sitio of Maa, barrio of Tigatu, municipality upon as personally by the sheriff. No third legal doctrines flowing from the facts.
of Davao, Province of Davao. However, the party claim was filed for such properties at the
land upon which the business was conducted time of the sales thereof as is borne out by the In the first place, it must again be pointed out
belonged to another person. On the land the record made by the plaintiff herein. Indeed the that the appellant should have registered its
sawmill company erected a building which bidder, which was the plaintiff in that action, protest before or at the time of the sale of this
housed the machinery used by it. Some of the and the defendant herein having property. It must further be pointed out that
implements thus used were clearly personal consummated the sale, proceeded to take while not conclusive, the characterization of
property, the conflict concerning machines possession of the machinery and other the property as chattels by the appellant is
which were placed and mounted on properties described in the corresponding indicative of intention and impresses upon the
foundations of cement. In the contract of lease certificates of sale executed in its favor by the property the character determined by the
between the sawmill company and the owner sheriff of Davao. parties. In this connection the decision of this
of the land there appeared the following court in the case of Standard Oil Co. of New
provision: York vs. Jaramillo ( [1923], 44 Phil., 630),
As connecting up with the facts, it should
further be explained that the Davao Saw Mill whether obiter dicta or not, furnishes the key to
Co., Inc., has on a number of occasions such a situation.
It is, however not necessary to spend overly are applicable." Numerous illustrations become immovable by destination. But
must time in the resolution of this appeal on are given in the fifth subdivision of in the concrete immobilization took place
side issues. It is machinery which is involved; section 335, which is as follows: because of the express provisions of the
moreover, machinery not intended by the "Machinery, vessels, instruments or lease under which the Altagracia held,
owner of any building or land for use in implements intended by the owner of the since the lease in substance required
connection therewith, but intended by a lessee tenements for the industrial or works that the putting in of improved machinery,
for use in a building erected on the land by the they may carry on in any building or deprived the tenant of any right to
latter to be returned to the lessee on the upon any land and which tend directly to charge against the lessor the cost such
expiration or abandonment of the lease. meet the needs of the said industry or machinery, and it was expressly
works." (See also Code Nap., articles stipulated that the machinery so put in
A similar question arose in Puerto Rico, and on 516, 518 et seq. to and inclusive of should become a part of the plant
appeal being taken to the United States article 534, recapitulating the things belonging to the owner without
Supreme Court, it was held that machinery which, though in themselves movable, compensation to the lessee. Under such
which is movable in its nature only becomes may be immobilized.) So far as the conditions the tenant in putting in the
immobilized when placed in a plant by the subject-matter with which we are dealing machinery was acting but as the agent
owner of the property or plant, but not when so — machinery placed in the plant — it is of the owner in compliance with the
placed by a tenant, a usufructuary, or any plain, both under the provisions of the obligations resting upon him, and the
person having only a temporary right, unless Porto Rican Law and of the Code immobilization of the machinery which
such person acted as the agent of the owner. Napoleon, that machinery which is resulted arose in legal effect from the act
In the opinion written by Chief Justice White, movable in its nature only becomes of the owner in giving by contract a
whose knowledge of the Civil Law is well immobilized when placed in a plant by permanent destination to the machinery.
known, it was in part said: the owner of the property or plant. Such
result would not be accomplished, xxx     xxx     xxx
To determine this question involves therefore, by the placing of machinery in
fixing the nature and character of the a plant by a tenant or a usufructuary or The machinery levied upon by Nevers
property from the point of view of the any person having only a temporary & Callaghan, that is, that which was
rights of Valdes and its nature and right. (Demolombe, Tit. 9, No. 203; placed in the plant by the Altagracia
character from the point of view of Aubry et Rau, Tit. 2, p. 12, Section 164; Company, being, as regards Nevers &
Nevers & Callaghan as a judgment Laurent, Tit. 5, No. 447; and decisions Callaghan, movable property, it follows
creditor of the Altagracia Company and quoted in Fuzier-Herman ed. Code that they had the right to levy on it
the rights derived by them from the Napoleon under articles 522 et seq.) The under the execution upon the judgment
execution levied on the machinery distinction rests, as pointed out by in their favor, and the exercise of that
placed by the corporation in the plant. Demolombe, upon the fact that one only right did not in a legal sense conflict
Following the Code Napoleon, the Porto having a temporary right to the with the claim of Valdes, since as to
Rican Code treats as immovable (real) possession or enjoyment of property is him the property was a part of the
property, not only land and buildings, but not presumed by the law to have applied realty which, as the result of his
also attributes immovability in some movable property belonging to him so as obligations under the lease, he could
cases to property of a movable nature, to deprive him of it by causing it by an not, for the purpose of collecting his
that is, personal property, because of the act of immobilization to become the debt, proceed separately against.
destination to which it is applied. property of another. It follows that (Valdes vs. Central Altagracia [192],
"Things," says section 334 of the Porto abstractly speaking the machinery put by 225 U.S., 58.)
Rican Code, "may be immovable either the Altagracia Company in the plant
by their own nature or by their belonging to Sanchez did not lose its
Finding no reversible error in the record, the
destination or the object to which they character of movable property and
judgment appealed from will be affirmed, the
costs of this instance to be paid by the

Villa-Real, Imperial, Butte, and Goddard, JJ.,