DAVAO SAW MILL CO. VS. CASTILLO G.R. No. L-40411 August 7, 1935

DAVAO SAW MILL CO. VS. CASTILLO

G.R. No. L-40411     August 7, 1935

MALCOLM, J.:

FACTS:

Petitioner is the holder of a lumber concession.  It operated a sawmill on a land, which it doesn’t own.  Part of the lease agreement was a stipulation in which after the lease agreement, all buildings and improvements would pass to the ownership of the lessor, which would not include machineries and  accessories.    In  connection  to  this,  petitioner  had  in  its  sawmill machineries and other equipment wherein some were bolted in foundations of cement.  

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

HELD:

The machinery must be classified as personal property.

The lessee placed the machinery in the building erected on land belonging to another, with the understanding that the machinery was not included in the improvements which would pass to the lessor on the expiration of the lease  agreement.    The  lessee  also  treated  the  machinery  as  personal

property  in  executing  chattel  mortgages  in  favor  of  third  persons.    The machinery was levied upon by the sheriff as personalty pursuant to a writ of execution obtained without any protest being registered.

Furthermore, machinery 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  temporary  right,  unless  such  person acted as the agent of the owner.