DAVAO SAW MILL CO. VS. CASTILLO
61 SCRA 709
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.
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.