THIRDDIVISION

[G.R.No.137705.August22,2000]

SERGS PRODUCTS, INC., and SERGIO T. GOQUIOLAY,

petitioners,vs.PCILEASINGANDFINANCE,INC.,respondent.
DECISION
PANGANIBAN,J.:
After agreeing to a contract stipulating that a real or immovable property be
considered as personal or movable, a party is estopped from subsequently claiming
otherwise.Hence,suchpropertyisapropersubjectofawritofreplevinobtainedbythe
othercontractingparty.
TheCase
Before us is a Petition for Review on Certiorari assailing the January 6, 1999
Decision[1]oftheCourtofAppeals(CA)[2]inCAGRSPNo.47332anditsFebruary26,
1999Resolution[3] denying reconsideration. The decretal portion of the CA Decision
readsasfollows:
WHEREFORE,premisesconsidered,theassailedOrderdatedFebruary18,1998and
ResolutiondatedMarch31,1998inCivilCaseNo.Q9833500areherebyAFFIRMED.The
writofpreliminaryinjunctionissuedonJune15,1998isherebyLIFTED.[4]
In its February 18, 1998 Order,[5] the Regional Trial Court (RTC) of Quezon City
(Branch 218)[6] issued a Writ of Seizure.[7] The March 18, 1998 Resolution[8] denied
petitioners Motion for Special Protective Order, praying that the deputy sheriff be
enjoined from seizing immobilized or other real properties in (petitioners) factory in
Cainta,Rizalandtoreturntotheiroriginalplacewhateverimmobilizedmachineriesor
equipmentshemayhaveremoved.[9]
TheFacts
TheundisputedfactsaresummarizedbytheCourtofAppealsasfollows:[10]
OnFebruary13,1998,respondentPCILeasingandFinance,Inc.(PCILeasingforshort)filed
withtheRTCQCacomplaintfor[a]sumofmoney(AnnexE),withanapplicationforawritof
replevindocketedasCivilCaseNo.Q9833500.

OnMarch6,1998,uponanexparteapplicationofPCILeasing,respondentjudgeissuedawrit
ofreplevin(AnnexB)directingitssherifftoseizeanddeliverthemachineriesandequipmentto
PCILeasingafter5daysanduponthepaymentofthenecessaryexpenses.
OnMarch24,1998,inimplementationofsaidwrit,thesheriffproceededtopetitionersfactory,
seizedonemachinerywith[the]wordthathe[would]returnfortheothermachineries.
OnMarch25,1998,petitionersfiledamotionforspecialprotectiveorder(AnnexC),invoking
thepowerofthecourttocontroltheconductofitsofficersandamendandcontrolitsprocesses,
prayingforadirectiveforthesherifftodeferenforcementofthewritofreplevin.
ThismotionwasopposedbyPCILeasing(AnnexF),onthegroundthattheproperties[were]
stillpersonalandthereforestillsubjecttoseizureandawritofreplevin.
IntheirReply,petitionersassertedthatthepropertiessoughttobeseized[were]immovableas
definedinArticle415oftheCivilCode,thepartiesagreementtothecontrarynotwithstanding.
Theyarguedthattogiveeffecttotheagreementwouldbeprejudicialtoinnocentthirdparties.
TheyfurtherstatedthatPCILeasing[was]estoppedfromtreatingthesemachineriesaspersonal
becausethecontractsinwhichtheallegedagreement[were]embodied[were]totallyshamand
farcical.
OnApril6,1998,thesheriffagainsoughttoenforcethewritofseizureandtakepossessionof
theremainingproperties.Hewasabletotaketwomore,butwaspreventedbytheworkersfrom
takingtherest.
OnApril7,1998,theywentto[theCA]viaanoriginalactionforcertiorari.
RulingoftheCourtofAppeals
Citing the Agreement of the parties, the appellate court held that the subject
machineswerepersonalproperty,andthattheyhadonlybeenleased,notowned,by
petitioners.It also ruled that the words of the contract are clear and leave no doubt
uponthetrueintentionofthecontractingparties.ObservingthatPetitionerGoquiolay
wasanexperiencedbusinessmanwhowasnotunfamiliarwiththewaysofthetrade,it
ruled that he should have realized the import of the document he signed. The CA
furtherheld:
Furthermore,toaccordmerittothispetitionwouldbetopreemptthetrialcourtinrulinguponthe
casebelow,sincethemeritsofthewholematterarelaiddownbeforeusviaapetitionwhose
solepurposeistoinquireupontheexistenceofagraveabuseofdiscretiononthepartofthe
[RTC]inissuingtheassailedOrderandResolution.Theissuesraisedhereinareproper
subjectsofafullblowntrial,necessitatingpresentationofevidencebybothparties.Thecontract
isbeingenforcedbyone,and[its]validityisattackedbytheotheramatterxxxwhich
respondentcourtisinthebestpositiontodetermine.
Hence,thisPetition.[11]
TheIssues

IntheirMemorandum,petitionerssubmitthefollowingissuesforourconsideration:
A.WhetherornotthemachineriespurchasedandimportedbySERGSbecamerealproperty
byvirtueofimmobilization.
B.Whetherornotthecontractbetweenthepartiesisaloanoralease.[12]
In the main, the Court will resolve whether the said machines are personal, not
immovable, property which may be a proper subject of a writ of replevin. As a
preliminary matter, the Court will also address briefly the procedural points raised by
respondent.
TheCourtsRuling
ThePetitionisnotmeritorious.
PreliminaryMatter:ProceduralQuestions
Respondent contends that the Petition failed to indicate expressly whether it was
beingfiledunderRule45orRule65oftheRulesofCourt.Itfurtherallegesthatthe
PetitionerroneouslyimpleadedJudgeHilarioLaquiasrespondent.
ThereisnoquestionthatthepresentrecourseisunderRule45.Thisconclusion
finds support in the very title of the Petition, which is Petition for Review on
Certiorari.[13]
WhileJudgeLaquishouldnothavebeenimpleadedasarespondent,[14]substantial
justicerequiresthatsuchlapsebyitselfshouldnotwarrantthedismissalofthepresent
Petition.Inthislight,theCourtdeemsitpropertoremove,motuproprio,thenameof
JudgeLaquifromthecaptionofthepresentcase.
MainIssue:NatureoftheSubjectMachinery
Petitionerscontendthatthesubjectmachinesusedintheirfactorywerenotproper
subjectsoftheWritissuedbytheRTC,becausetheywereinfactrealproperty.Serious
policyconsiderations,theyargue,militateagainstacontrarycharacterization.
Rule 60 of the Rules of Court provides that writs of replevin are issued for the
recoveryofpersonalpropertyonly.[15]Section3thereofreads:
SEC.3.Order.Uponthefilingofsuchaffidavitandapprovalofthebond,thecourtshallissue
anorderandthecorrespondingwritofreplevindescribingthepersonalpropertyallegedtobe
wrongfullydetainedandrequiringthesheriffforthwithtotakesuchpropertyintohiscustody.
On the other hand, Article 415 of the Civil Code enumerates immovable or real
propertyasfollows:

ART.415.Thefollowingareimmovableproperty:
xxx....................................xxx....................................xxx
(5)Machinery,receptacles,instrumentsorimplementsintendedbytheownerofthetenement
foranindustryorworkswhichmaybecarriedoninabuildingoronapieceofland,andwhich
tenddirectlytomeettheneedsofthesaidindustryorworks
xxx....................................xxx....................................xxx
Inthepresentcase,themachinesthatwerethesubjectsoftheWritofSeizurewere
placed by petitioners in the factory built on their own land. Indisputably, they were
essential and principal elements of their chocolatemaking industry.Hence, although
eachofthemwasmovableorpersonalpropertyonitsown,allofthemhavebecome
immobilized by destination because they are essential and principal elements in the
industry.[16]Inthatsense,petitionersarecorrectinarguingthatthesaidmachinesare
real,notpersonal,propertypursuanttoArticle415(5)oftheCivilCode.[17]
Bethatasitmay,wedisagreewiththesubmissionofthepetitionersthatthesaid
machinesarenotpropersubjectsoftheWritofSeizure.
TheCourthasheldthatcontractingpartiesmayvalidlystipulatethatarealproperty
beconsideredaspersonal.[18]Afteragreeingtosuchstipulation,theyareconsequently
estoppedfromclaimingotherwise.Undertheprincipleofestoppel,apartytoacontract
isordinarilyprecludedfromdenyingthetruthofanymaterialfactfoundtherein.
Hence,inTumaladv.Vicencio,[19] the Court upheld the intention of the parties to
treatahouseasapersonalpropertybecauseithadbeenmadethesubjectofachattel
mortgage.TheCourtruled:
xxx.Althoughthereisnospecificstatementreferringtothesubjecthouseaspersonal
property,yetbyceding,sellingortransferringapropertybywayofchattelmortgagedefendants
appellantscouldonlyhavemeanttoconveythehouseaschattel,oratleast,intendedtotreat
thesameassuch,sothattheyshouldnotnowbeallowedtomakeaninconsistentstandby
claimingotherwise.
Applying Tumalad, the Court in Makati Leasing and Finance Corp. v. Wearever
Textile Mills[20] also held that the machinery used in a factory and essential to the
industry,asinthepresentcase,wasapropersubjectofawritofreplevinbecauseitwas
treatedaspersonalpropertyinacontract.PertinentportionsoftheCourtsrulingare
reproducedhereunder:
xxx.Ifahouseofstrongmaterials,likewhatwasinvolvedintheaboveTumaladcase,maybe
consideredaspersonalpropertyforpurposesofexecutingachattelmortgagethereonaslongas
thepartiestothecontractsoagreeandnoinnocentthirdpartywillbeprejudicedthereby,there
isabsolutelynoreasonwhyamachinery,whichismovableinitsnatureandbecomes
immobilizedonlybydestinationorpurpose,maynotbelikewisetreatedassuch.Thisisreally
becauseonewhohassoagreedisestoppedfromdenyingtheexistenceofthechattel
mortgage.
In the present case, the Lease Agreement clearly provides that the machines in
questionaretobeconsideredaspersonalproperty.Specifically,Section12.1ofthe
Agreementreadsasfollows:[21]

12.1ThePROPERTYis,andshallatalltimesbeandremain,personalproperty
notwithstandingthatthePROPERTYoranypartthereofmaynowbe,orhereafterbecome,in
anymanneraffixedorattachedtoorembeddedin,orpermanentlyrestingupon,realpropertyor
anybuildingthereon,orattachedinanymannertowhatispermanent.
Clearly then, petitioners are estopped from denying the characterization of the
subject machines as personal property. Under the circumstances, they are proper
subjectsoftheWritofSeizure.
It should be stressed, however, that our holding that the machines should be
deemedpersonalpropertypursuanttotheLeaseAgreementisgoodonlyinsofaras
the contracting parties are concerned.[22] Hence, while the parties are bound by the
Agreement, third persons acting in good faith are not affected by its stipulation
characterizingthesubjectmachineryaspersonal.[23]Inanyevent,thereisnoshowing
thatanyspecificthirdpartywouldbeadverselyaffected.
ValidityoftheLeaseAgreement
In their Memorandum, petitioners contend that the Agreement is a loan and not a
lease.[24] Submitting documents supposedly showing that they own the subject
machines, petitioners also argue in their Petition that the Agreement suffers from
intrinsic ambiguity which places in serious doubt the intention of the parties and the
validityoftheleaseagreementitself.[25]IntheirReplytorespondentsComment,they
furtherallegethattheAgreementisinvalid.[26]
Theseargumentsareunconvincing.Thevalidityandthenatureofthecontractare
thelismotaofthecivilactionpendingbeforetheRTC.Aresolutionofthesequestions,
therefore, is effectively a resolution of the merits of the case.Hence, they should be
threshed out in the trial, not in the proceedings involving the issuance of the Writ of
Seizure.
Indeed,inLaTondeaDistillersv.CA,[27]theCourtexplainedthatthepolicyunder
Rule 60 was that questions involving title to the subject property questions which
petitionersarenowraisingshouldbedeterminedinthetrial.Inthatcase,theCourt
notedthattheremedyofdefendantsunderRule60waseithertopostacounterbondor
toquestionthesufficiencyoftheplaintiffsbond.Theywerenotallowed,however,to
invokethetitletothesubjectproperty.TheCourtruled:
Inotherwords,thelawdoesnotallowthedefendanttofileamotiontodissolveordischarge
thewritofseizure(ordelivery)ongroundofinsufficiencyofthecomplaintorofthegroundsrelied
upontherefor,asinproceedingsonpreliminaryattachmentorinjunction,andtherebyputat
issuethematterofthetitleorrightofpossessionoverthespecificchattelbeingreplevied,the
policyapparentlybeingthatsaidmattershouldbeventilatedanddeterminedonlyatthetrialon
themerits.[28]
Besides, these questions require a determination of facts and a presentation of
evidence,bothofwhichhavenoplaceinapetitionforcertiorariintheCAunderRule65
orinapetitionforreviewinthisCourtunderRule45.[29]

RelianceontheLeaseAgreement
It should be pointed out that the Court in this case may rely on the Lease
Agreement,fornothingonrecordshowsthatithasbeennullifiedorannulled.Infact,
petitioners assailed it first only in the RTC proceedings, which had ironically been
institutedbyrespondent.Accordingly,itmustbepresumedvalidandbindingasthelaw
betweentheparties.
MakatiLeasingandFinanceCorporation[30]isalsoinstructiveonthispoint.Inthat
case, the Deed of Chattel Mortgage, which characterized the subject machinery as
personalproperty,wasalsoassailedbecauserespondenthadallegedlybeenrequired
to sign a printed form of chattel mortgage which was in a blank form at the time of
signing.TheCourtrejectedtheargumentandreliedontheDeed,rulingasfollows:
xxx.Moreover,evengrantingthatthechargeistrue,suchfactalonedoesnotrendera
contractvoidabinitio,butcanonlybeagroundforrenderingsaidcontractvoidable,or
annullablepursuanttoArticle1390ofthenewCivilCode,byaproperactionincourt.Thereis
nothingonrecordtoshowthatthemortgagehasbeenannulled.Neitherisitdisclosedthat
stepsweretakentonullifythesame.xxx
AllegedInjusticeCommittedonthePartofPetitioners
PetitionerscontendthatiftheCourtallowsthesemachineriestobeseized,thenits
workerswouldbeoutofworkandthrownintothestreets.[31]Theyalsoallegethatthe
seizurewouldnullifyalleffortstorehabilitatethecorporation.
Petitioners arguments do not preclude the implementation of the Writ.As earlier
discussed, law and jurisprudence support its propriety. Verily, the abovementioned
consequences, if they come true, should not be blamed on this Court, but on the
petitioners for failing to avail themselves of the remedy under Section 5 of Rule 60,
whichallowsthefilingofacounterbond.Theprovisionstates:
SEC.5.Returnofproperty.Iftheadversepartyobjectstothesufficiencyoftheapplicants
bond,orofthesuretyorsuretiesthereon,hecannotimmediatelyrequirethereturnofthe
property,butifhedoesnotsoobject,hemay,atanytimebeforethedeliveryofthepropertyto
theapplicant,requirethereturnthereof,byfilingwiththecourtwheretheactionispendinga
bondexecutedtotheapplicant,indoublethevalueofthepropertyasstatedintheapplicants
affidavitforthedeliverythereoftotheapplicant,ifsuchdeliverybeadjudged,andforthe
paymentofsuchsumtohimasmayberecoveredagainsttheadverseparty,andbyservinga
copybondontheapplicant.
WHEREFORE,thePetitionisDENIED and the assailed Decision of the Court of
AppealsAFFIRMED.Costsagainstpetitioners.
SOORDERED.
Melo,(Chairman),Vitug,Purisima,andGonzagaReyes,JJ.,concur.
[1] Rollo,pp.177180.

[2] PennedbyJusticeRomeoA.Brawner(Divisionactingchairman),withtheconcurrenceofJusticesEloyR.BelloJr.and

MartinS.VillaramaJr.
[3] Rollo,p.189.
[4] CADecision,p.3rollo,p.179.
[5] Rollo,p.356.
[6] PresidedbyJudgeHilarioL.Laqui.
[7] Rollo,pp.2324.
[8] Rollo,pp.7879.
[9] MotionforSpecialProtectiveOrder,pp.34rollo,pp.7677.
[10] CADecision,pp.12rollo,pp.177178.
[11] ThecasewasdeemedsubmittedforresolutiononOctober21,1999,uponreceiptbythisCourtofthepetitioners
MemorandumsignedbyAtty.VictorBasilioN.DeLeonofAntonioR.Bautista&Partners.RespondentsMemorandum,
whichwassignedbyAtty.AmadorF.BriosoJr.ofPerez&CalimaLawOffices,hadbeenfiledearlieronSeptember29,1999.
[12] PetitionersMemorandum,p.3rollo,p.376.
[13] Section1,Rule45oftheRulesofCourt.
[14] Section4(a)ofRule45providesthatthepetitionshallstatethefullnameoftheparties,withoutimpleadingthelower
courtsorjudgesthereofeitheraspetitionersorrespondents.
[15] BAFinancev.CA,258SCRA102,July5,1996FilinvestCreditv.CA,248SCRA549,September27,1995Machinery
EngineeringSupplyv.CA,96Phil.70,October29,1954.
[16] MindanaoBusCo.v.CityAssessorandTreasurer,6SCRA197,September29,1962,perLabrador,J.SeealsoVitug,
CompendiumofCivilLawandJurisprudence,1986ed.,pp.99100.
[17] PeoplesBank&TrustCo.v.DahicanLumber,20SCRA84,May16,1967Burgosv.ChiefofStaff,133SCRA800,
December26,1984DavaoSawmillCo.v.Castillo,61Phil.709,August7,1935.
[18] ChuaPengHianv.CA,133SCRA572,December19,1984StandardOilCo.v.Jaranillo,44Phil.630,March16,1923
Lunav.Encarnacion,91Phil.531,June30,1952Manarangv.Ofilada,99Phil.109,May18,1956PeoplesBank&Trust
Co.v.DahicanLumber,supra.
[19] 41SCRA143,153,September30,1971,perReyes,JBL,J.
[20] 122SCRA296,300,May16,1983,perDeCastro,J.
[21] Rollo,p.262.
[22] Evangelistav.AltoSuretyandInsuranceCo.,103Phil.401,April23,1958Navarrov.Pineda,9SCRA631,November
30,1963.
[23] Vitug,supra,pp.100101.
[24] PetitionersMemorandum,p.8rollo,p.381.
[25] Petition,p.10rollo,p.12.
[26] Reply,p.7rollo,p.301.
[27] 209SCRA553,567,June8,1992,perNarvasa,CJ.
[28] Ibid.
[29] SeeFuentesv.CourtofAppeals,268SCRA703,February26,1997.
[30] Supra,p.301.
[31] Petition,p.16rollo,p.18.