Case Digest (G.R. No. 41506)
Facts:
In Davao Saw Mill Co., Inc. v. Aproniano G. Castillo and Davao Light & Power Co., Inc. (61 Phil. 709, August 7, 1935), the appellant, Davao Saw Mill Co., Inc., held a Government lumber concession and operated a sawmill on land owned by a third party in Sitio Maa, Barrio Tigatu, Municipality of Davao. The company erected a building with machinery mounted on cement foundations. Its lease provided that all improvements and buildings would pass to the lessor at lease expiry or abandonment, except “machineries and accessories,” which remained the lessee’s property. Separately, Davao Light & Power Co., Inc. obtained a judgment against the sawmill company, and its sheriff levied upon and sold the disputed machinery as personal property. The appellant neither filed a third-party claim nor protested at the sale, and the appellee took possession. The appellant had previously treated the machines as personalty by execu...Case Digest (G.R. No. 41506)
Facts:
- Parties and Background
- Davao Saw Mill Co., Inc. (appellant) holds a government lumber concession and operates a sawmill in Sitio Maa, Barrio Tigatu, Municipality of Davao.
- The land on which the sawmill operates belongs to a private owner, who leased it to the sawmill company under written contract.
- Lease Agreement and Property Improvements
- The lease stipulates that upon expiration or abandonment, all improvements and buildings erected by the lessee pass to the lessor without compensation, except machineries and accessories, which remain the lessee’s property.
- The sawmill company constructed a building housing its machinery, including units firmly mounted on cement foundations.
- Litigation and Executory Proceedings
- In a separate action, Davao Light & Power Co., Inc. obtained judgment against the sawmill company; a writ of execution issued, and its sheriff levied on the disputed machinery as personal property.
- No third-party claim was filed at or before the sheriff’s sale; Davao Light & Power purchased the machinery at execution sale and took actual possession.
- Treatment and Legal Classification of Machinery
- The sawmill company consistently treated the machinery as chattels, evidenced by multiple chattel mortgages executed in its favor.
- Civil Code, Art. 334(1) defines real property as land, buildings, constructions adhering to the soil; Art. 334(5) characterizes as immovables “machinery … intended by the owner of any building or land for use in connection with any industry … and which are expressly adapted to meet the requirements of such trade or industry.”
Issues:
- Are the disputed machines and accessories real property (immovable) or personal property (movable)?
- Does the lessee’s contractual right to remove machinery at lease termination override the Civil Code’s rule on “immovables by destination”?
- Was the levy and sale in execution valid, given the character of the property and the absence of a third-party claim?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)