Art.

415(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
Requisites
1. They must be machinery, receptacles,
instruments or implements
2. They must be placed by the owner of the
tenement or by the agent
Davao Sawmill vs Castillo

G.R. No. L-40411 August 7, 1935

Facts:
• Davao Saw Mill Co., Inc., is the holder of a lumber
concession from the Government of the Philippine
Islands. However, the land upon which the business
was conducted belonged to another person. On the
land the sawmill company erected a building which
housed the machinery used by it.
• Some of the implements thus used were clearly
personal property, the conflict concerning machines
which were placed and mounted on foundations of
cement. In the contract of lease between the sawmill
company and the owner 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 lessor without any obligation on its part
to pay any amount for said improvements and buildings;
which do not include the machineries and accessories in
the improvements.
• Davao Sawmill treated the machinery as personal
property by executing chattel mortgages in favor of
third persons. The defendants argued that the
machineries are real properties
• The lower court rendered decision in favor of the
defendants.
Issue:
•Whether or not the machineries and
equipment were personal in nature.
Ruling:
• No. the machineries and equipment are not personal in
nature.

• “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, a usufructuary, or any person
having only a temporary right, unless such person
acted as the agent of the owner.”
EXCEPTION
• If in the contract of lease, it is stipulated that such
machinery, receptacles, instruments or implements
placed there by the lessee will become, at the
termination of the lease, the property of the lessor.

• In that case, they will be considered as immovable

property since in placing them, the lessee will just be
merely acting as an agent of the lessor.
3. There must be an industry or work carried
in such building or on the piece of land;
4. They must tend directly to meet the needs
of said industry or work
•Installation of a machinery or equipment for
use in connection with the industry carried
by the company converts the machinery and
equipment into real property by reason of
their purpose
Must be ESSENTIAL and PRINCIPAL elements
of the industry of works

• Without which the industry or works would not be

able to function or carry on with the purpose for
which it was established
Cash registers and typewriters
• not considered as immobilized by destination,
because businesses can still continue their functions
without them.
Art 415(6)
• Animal houses, pigeon-houses, beehives, fish
ponds or breeding places of similar nature, in
case their owner has placed them or preserves
them with the intention to have them
permanently attached to the land, and forming a
permanent part of it; the animals in these places
are included.
• They should be placed by the owner of the land
in order to acquire the same nature or
consideration of a real property.

• If not, it could still be real property. (art 415(1)),

• provided that attachment is of permanent character
• ANIMALS IN PIGEON-HOUSES, BEEHIVES,
FISHPONDS AND BREEDING places are likewise
considered as real property
• EXCEPTION:
• ART 426(2) Real property which by any special
provision of law is considered as personal property;
• fish in fishponds-personal property for purposes of
theft under the Revised Penal Code