#4 Davao Saw Mill

VS.
Castillo and Davao Light & Power Co.
G.R. NO. L-40411
(Mortgage)
BERNARDO, MARY CHELEAN MICHELLE L.
11681683
BERNARDO, MARY CHELEAN MICHELLE

ISSUE
• WON the chattel mortgage on the machineries executed by
Davao Saw Mill in favor of Davao Light should be classified as
personal property
 RULE/ LAW
• Art. 415 of the New Civil Code-
• (1) ) Land, buildings, roads and constructions of all kinds adhered to the soil
• (5) Machinery, receptacles, instruments or implements intended by the owner of the tenement
for an industry or works which may be carried on in a building or on a piece of land, and which tend
directly to meet the needs of the said industry or works;

• Art. 2140. By a chattel mortgage, personal property is recorded in the Chattel

Mortgage Register as a security for the performance of an obligation.
• Manual of instructions for sheriffs of the NLRC
• Rule III, SECTION 2. Issuance, Form, and Contents of a Writ of Execution.
• 1) If the execution be for the payment of a sum of money by the losing party, the writ shall be served by the
sheriff upon the losing party or upon any other person required by law to obey the same before proceeding
to satisfy the judgment out of the personal property of such party and if no sufficient personal property can
be found, then out of his real property;
 JURISPRUDENCE

• Standard Oil Co. of New York vs. Jaramillo ( [1923], 44 Phil., 630)
• It must further be pointed out that while not conclusive, the characterization of the
property as chattels by the appellant is indicative of intention and impresses upon
the property the character determined by the parties.

• Valdes vs. Central Altagracia [192], 225 U.S., 58.

• held that machinery which is movable in its nature only becomes immobilized when
placed in a plant by the owner of the property or plant, but not when so placed by a
tenant
ARGUMENTS OF THE PARTIES

DAVAO DAVAO LIGHT &

SAWMILL POWER

Article 334, Article 334,

paragraph 1 (NCC paragraph 5 (NCC
Art. 415 (1) Art. 415 (5)
BERNARDO, MARY CHELEAN MICHELLE
ANALYSIS
THE LAND
Improvements
by
Davao Sawmill
machineries and other
equipment bolted on the
ground
Agreement: upon expiration of
lease, improvements and buildings
introduced and erected by Davao
Sawmill shall pass to the owner of the
land. However, machineries and
accessories are not included
In another case:
- Sawmill executed the machinery
in a chattel mortgage in favor of
Davao Light.
Davao Saw Mill
- Judgement in favor of Davao light
leasing the land - A writ of execution was issued by
from… the court against Sawmill
- machineries in question were
levied upon as personalty by the
sheriff. No third party claim was
filed for such properties at the
time of the sales
Owner of the land
**Must be noted that: the Sawmill treated the
machinery as personal property by executing chattel
mortgages on it.
 CONCLUSION:
• The SC ruled that the machinery were movables. It was Davao
Sawmill's intention of treating it as personal property as they executed
it in chattel mortgages. Sawmill should have registered its protest before
or at the time of the sale of property.
• The Davao Sawmill placed the machinery in the building erected on land
belonging to another,
• 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 perso
n acted as the agent of the owner.