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Davao Sawmill Co. v. Castillo: Property Nature Dispute

The Davao Sawmill Company leased land from an owner to operate a sawmill. The lease agreement stated that buildings and improvements would become the property of the land owner at the end of the lease, but machinery was excluded. The sawmill company mounted some machinery onto foundations. A court found the machinery was personal property. The Supreme Court affirmed, holding that as the sawmill company was a temporary possessor of the land and the lease specified the machinery would remain their property, the machinery retained its personal property nature despite being attached to foundations.

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88 views2 pages

Davao Sawmill Co. v. Castillo: Property Nature Dispute

The Davao Sawmill Company leased land from an owner to operate a sawmill. The lease agreement stated that buildings and improvements would become the property of the land owner at the end of the lease, but machinery was excluded. The sawmill company mounted some machinery onto foundations. A court found the machinery was personal property. The Supreme Court affirmed, holding that as the sawmill company was a temporary possessor of the land and the lease specified the machinery would remain their property, the machinery retained its personal property nature despite being attached to foundations.

Uploaded by

Monalizts D.
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

Case:

Davao Sawmill Co. v. Castillo 61 Phil. 709

Facts: The Davao Saw Mill Co., Inc., is the holder of a lumber concession from the Government of the
PhilippineIslands. It has operated a sawmill in thesi tio of Maa, barrio of Tigatu, municipality of Davao,
Province ofDavao. However, the land upon which the business was conducted belonged to another
person. On theland the sawmill company erected a building which housed the machinery used by it.
Some of theimplements thus used were clearly personal property, the conflict concerning machines
which were placedand mounted on foundations of cement. In the contract of lease between the sawmill
company and theowner 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 party of the first partwithout any obligation on
its part to pay any amount for said improvements and buildings; also, in the event the party of the
second part should leave or abandon the land leased before the time hereinstipulated, the
improvements and buildings shall likewise pass to the ownership of the party of the firstpart as though
the time agreed upon had expired: Provided, however, That the machineries andaccessories are not
included in the improvements which will pass to the party of the first part on the expiration or
abandonment of the land leased. The trial judge found that those properties were personal in nature
and as a consequence absolved the defendants from the complaint.

Issue: Whether or not the trial judge erred in finding that the subject properties are personal in nature.

Held:

As connecting up with the facts, it should further be explained that the Davao Saw Mill Co., Inc.,
has on anumber of occasions treated the machinery as personal property by executing chattel
mortgages in favorof third persons. One of such persons is the appellee by assignment from the original
mortgages. Article 334, paragraphs 1 and 5, of the [Old]Civil Code, is in point. According to the 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
landfor use in connection with any industry or trade being carried on therein and which are expressly
adaptedto meet the requirements of such trade of industry. Appellant emphasizes the first paragraph,
and appellees the last mentioned paragraph. We entertain nodoubt that the trial judge and appellees
are right in their appreciation of the legal doctrines flowing fromthe facts. As a rule, the machinery
should be considered as personal, since it was not placed on the land by theowner of the land
immobilization by destination on purpose cannot generally be made by a person, whosepossession of
the property is only temporary, otherwise was will be forced to presume that be intended togive the
property permanently to the owner of the land. In this case, they had stipulated that the land inthe end
thereby be acted as an agent for the owner of the land. In this sense the property (machines foruse in
the sawmill) became real property. The judgment appealed from is hereby affirmed.

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