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THIRDDIVISION

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

SERGSPRODUCTS,INC.,andSERGIOT.GOQUIOLAY,petitioners,vs.PCI
LEASINGANDFINANCE,INC.,respondent.
DECISION
PANGANIBAN,J.:
Afteragreeingtoacontractstipulatingthatarealorimmovablepropertybeconsideredas
personalormovable,apartyisestoppedfromsubsequentlyclaimingotherwise.Hence,such
propertyisapropersubjectofawritofreplevinobtainedbytheothercontractingparty.
TheCase
BeforeusisaPetitionforReviewonCertiorariassailingtheJanuary6,1999Decision[1]of
theCourtofAppeals(CA)[2]inCAGRSPNo.47332anditsFebruary26,1999Resolution[3]
denyingreconsideration.ThedecretalportionoftheCADecisionreadsasfollows:
WHEREFORE,premisesconsidered,theassailedOrderdatedFebruary18,1998andResolution
datedMarch31,1998inCivilCaseNo.Q9833500areherebyAFFIRMED.Thewritofpreliminary
injunctionissuedonJune15,1998isherebyLIFTED.[4]
InitsFebruary18,1998Order,[5]theRegionalTrialCourt(RTC)ofQuezonCity(Branch
218)[6]issuedaWritofSeizure.[7]TheMarch18,1998Resolution[8]deniedpetitionersMotion
for Special Protective Order, praying that the deputy sheriff be enjoined from seizing
immobilized or other real properties in (petitioners) factory in Cainta, Rizal and to return to
theiroriginalplacewhateverimmobilizedmachineriesorequipmentshemayhaveremoved.[9]
TheFacts
TheundisputedfactsaresummarizedbytheCourtofAppealsasfollows:[10]
OnFebruary13,1998,respondentPCILeasingandFinance,Inc.(PCILeasingforshort)filedwith
theRTCQCacomplaintfor[a]sumofmoney(AnnexE),withanapplicationforawritofreplevin
docketedasCivilCaseNo.Q9833500.
OnMarch6,1998,uponanexparteapplicationofPCILeasing,respondentjudgeissuedawritof
replevin(AnnexB)directingitssherifftoseizeanddeliverthemachineriesandequipmenttoPCI
Leasingafter5daysanduponthepaymentofthenecessaryexpenses.
OnMarch24,1998,inimplementationofsaidwrit,thesheriffproceededtopetitionersfactory,seized
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onemachinerywith[the]wordthathe[would]returnfortheothermachineries.
OnMarch25,1998,petitionersfiledamotionforspecialprotectiveorder(AnnexC),invokingthe
powerofthecourttocontroltheconductofitsofficersandamendandcontrolitsprocesses,praying
foradirectiveforthesherifftodeferenforcementofthewritofreplevin.
ThismotionwasopposedbyPCILeasing(AnnexF),onthegroundthattheproperties[were]still
personalandthereforestillsubjecttoseizureandawritofreplevin.
IntheirReply,petitionersassertedthatthepropertiessoughttobeseized[were]immovableas
definedinArticle415oftheCivilCode,thepartiesagreementtothecontrarynotwithstanding.They
arguedthattogiveeffecttotheagreementwouldbeprejudicialtoinnocentthirdparties.Theyfurther
statedthatPCILeasing[was]estoppedfromtreatingthesemachineriesaspersonalbecausethe
contractsinwhichtheallegedagreement[were]embodied[were]totallyshamandfarcical.
OnApril6,1998,thesheriffagainsoughttoenforcethewritofseizureandtakepossessionofthe
remainingproperties.Hewasabletotaketwomore,butwaspreventedbytheworkersfromtaking
therest.
OnApril7,1998,theywentto[theCA]viaanoriginalactionforcertiorari.
RulingoftheCourtofAppeals
Citing theAgreement of the parties, the appellate court held that the subject machines
werepersonalproperty,andthattheyhadonlybeenleased,notowned,bypetitioners.Italso
ruledthatthewordsofthecontractareclearandleavenodoubtuponthetrueintentionofthe
contracting parties. Observing that Petitioner Goquiolay was an experienced businessman
who was not unfamiliar with the ways of the trade,it ruled that he should have realized the
importofthedocumenthesigned.TheCAfurtherheld:
Furthermore,toaccordmerittothispetitionwouldbetopreemptthetrialcourtinrulinguponthecase
below,sincethemeritsofthewholematterarelaiddownbeforeusviaapetitionwhosesolepurpose
istoinquireupontheexistenceofagraveabuseofdiscretiononthepartofthe[RTC]inissuingthe
assailedOrderandResolution.Theissuesraisedhereinarepropersubjectsofafullblowntrial,
necessitatingpresentationofevidencebybothparties.Thecontractisbeingenforcedbyone,and
[its]validityisattackedbytheotheramatterxxxwhichrespondentcourtisinthebestpositionto
determine.
Hence,thisPetition.[11]
TheIssues
IntheirMemorandum,petitionerssubmitthefollowingissuesforourconsideration:
A.WhetherornotthemachineriespurchasedandimportedbySERGSbecamerealpropertybyvirtue
ofimmobilization.
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
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matter,theCourtwillalsoaddressbrieflytheproceduralpointsraisedbyrespondent.
TheCourtsRuling
ThePetitionisnotmeritorious.
PreliminaryMatter:ProceduralQuestions
Respondent contends that the Petition failed to indicate expressly whether it was being
filed under Rule 45 or Rule 65 of the Rules of Court. It further alleges that the Petition
erroneouslyimpleadedJudgeHilarioLaquiasrespondent.
There is no question that the present recourse is under Rule 45. This conclusion finds
supportintheverytitleofthePetition,whichisPetitionforReviewonCertiorari.[13]
While Judge Laqui should not have been impleaded as a respondent,[14] substantial
justice requires that such lapse by itself should not warrant the dismissal of the present
Petition.Inthislight,theCourtdeemsitpropertoremove,motuproprio,thenameofJudge
Laquifromthecaptionofthepresentcase.
MainIssue:NatureoftheSubjectMachinery
Petitioners contend that the subject machines used in their factory were not proper
subjectsoftheWritissuedbytheRTC,becausetheywereinfactrealproperty.Seriouspolicy
considerations,theyargue,militateagainstacontrarycharacterization.
Rule60oftheRulesofCourtprovidesthatwritsofreplevinareissuedfortherecoveryof
personalpropertyonly.[15]Section3thereofreads:
SEC.3.Order.Uponthefilingofsuchaffidavitandapprovalofthebond,thecourtshallissuean
orderandthecorrespondingwritofreplevindescribingthepersonalpropertyallegedtobewrongfully
detainedandrequiringthesheriffforthwithtotakesuchpropertyintohiscustody.
Ontheotherhand,Article415oftheCivilCodeenumeratesimmovableorrealproperty
asfollows:
ART.415.Thefollowingareimmovableproperty:
xxx....................................xxx....................................xxx
(5)Machinery,receptacles,instrumentsorimplementsintendedbytheownerofthetenementforan
industryorworkswhichmaybecarriedoninabuildingoronapieceofland,andwhichtenddirectly
tomeettheneedsofthesaidindustryorworks
xxx....................................xxx....................................xxx
In the present case, the machines that were the subjects of the Writ of Seizure were
placedbypetitioners in the factory built on their own land.Indisputably, they were essential
andprincipalelementsoftheirchocolatemakingindustry.Hence,althougheachofthemwas
movableorpersonalpropertyonitsown,allofthemhavebecomeimmobilizedbydestination
becausetheyareessentialandprincipalelementsintheindustry.[16]Inthatsense,petitioners
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are correct in arguing that the said machines are real, not personal, property pursuant to
Article415(5)oftheCivilCode.[17]
Be that as it may, we disagree with the submission of the petitioners that the said
machinesarenotpropersubjectsoftheWritofSeizure.
The Court has held that contracting parties may validly stipulate that a real property be
consideredaspersonal.[18]Afteragreeingtosuchstipulation,theyareconsequentlyestopped
from claiming otherwise. Under the principle of estoppel, a party to a contract is ordinarily
precludedfromdenyingthetruthofanymaterialfactfoundtherein.
Hence,inTumaladv.Vicencio,[19]theCourtupheldtheintentionofthepartiestotreata
houseasapersonalpropertybecause it had been made the subject of a chattel mortgage.
TheCourtruled:
xxx.Althoughthereisnospecificstatementreferringtothesubjecthouseaspersonalproperty,yet
byceding,sellingortransferringapropertybywayofchattelmortgagedefendantsappellantscould
onlyhavemeanttoconveythehouseaschattel,oratleast,intendedtotreatthesameassuch,so
thattheyshouldnotnowbeallowedtomakeaninconsistentstandbyclaimingotherwise.
Applying Tumalad, the Court in Makati Leasing and Finance Corp. v. Wearever Textile
Mills[20]alsoheldthatthemachineryusedinafactoryandessentialtotheindustry,asinthe
present case, was a proper subject of a writ of replevin because it was treated as personal
propertyinacontract.PertinentportionsoftheCourtsrulingarereproducedhereunder:
xxx.Ifahouseofstrongmaterials,likewhatwasinvolvedintheaboveTumaladcase,maybe
consideredaspersonalpropertyforpurposesofexecutingachattelmortgagethereonaslongasthe
partiestothecontractsoagreeandnoinnocentthirdpartywillbeprejudicedthereby,thereis
absolutelynoreasonwhyamachinery,whichismovableinitsnatureandbecomesimmobilizedonly
bydestinationorpurpose,maynotbelikewisetreatedassuch.Thisisreallybecauseonewhohasso
agreedisestoppedfromdenyingtheexistenceofthechattelmortgage.
Inthepresentcase,theLeaseAgreementclearlyprovidesthatthemachinesinquestion
aretobeconsideredaspersonalproperty.Specifically,Section12.1oftheAgreementreads
asfollows:[21]
12.1ThePROPERTYis,andshallatalltimesbeandremain,personalpropertynotwithstandingthat
thePROPERTYoranypartthereofmaynowbe,orhereafterbecome,inanymanneraffixedor
attachedtoorembeddedin,orpermanentlyrestingupon,realpropertyoranybuildingthereon,or
attachedinanymannertowhatispermanent.
Clearly then, petitioners are estopped from denying the characterization of the subject
machinesaspersonalproperty.Underthecircumstances,theyarepropersubjectsoftheWrit
ofSeizure.
Itshouldbestressed,however,thatourholdingthatthemachinesshouldbedeemed
personal property pursuant to the Lease Agreement is good only insofar as the contracting
partiesareconcerned.[22]Hence,whilethepartiesareboundbytheAgreement,thirdpersons
actingingoodfaitharenotaffectedbyitsstipulationcharacterizingthesubjectmachineryas
personal.[23]Inanyevent,thereisnoshowingthatanyspecificthirdpartywouldbeadversely
affected.
ValidityoftheLeaseAgreement

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IntheirMemorandum,petitionerscontendthattheAgreementisaloanandnotalease.
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 validity of the lease
agreement itself.[25] In their Reply to respondents Comment, they further allege that the
Agreementisinvalid.[26]
[24]

Theseargumentsareunconvincing.Thevalidityandthenatureofthecontractarethelis
motaofthecivilactionpendingbeforetheRTC.Aresolutionofthesequestions,therefore,is
effectively a resolution of the merits of the case.Hence, they should be threshed out in the
trial,notintheproceedingsinvolvingtheissuanceoftheWritofSeizure.
Indeed,inLaTondeaDistillersv.CA,[27]theCourtexplainedthatthepolicyunderRule60
wasthatquestionsinvolvingtitletothesubjectpropertyquestionswhichpetitionersarenow
raisingshould bedeterminedin thetrial.In that case, the Court noted that the remedy of
defendantsunderRule60waseithertopostacounterbondortoquestionthesufficiencyof
theplaintiffsbond.Theywerenotallowed,however,toinvokethetitletothesubjectproperty.
TheCourtruled:
Inotherwords,thelawdoesnotallowthedefendanttofileamotiontodissolveordischargethewrit
ofseizure(ordelivery)ongroundofinsufficiencyofthecomplaintorofthegroundsreliedupon
therefor,asinproceedingsonpreliminaryattachmentorinjunction,andtherebyputatissuethe
matterofthetitleorrightofpossessionoverthespecificchattelbeingreplevied,thepolicyapparently
beingthatsaidmattershouldbeventilatedanddeterminedonlyatthetrialonthemerits.[28]
Besides,thesequestionsrequireadeterminationoffactsandapresentationofevidence,
bothofwhichhavenoplaceinapetitionforcertiorariintheCAunderRule65orinapetition
forreviewinthisCourtunderRule45.[29]
RelianceontheLeaseAgreement
ItshouldbepointedoutthattheCourtinthiscasemayrelyontheLeaseAgreement,for
nothingonrecord shows that it has been nullified or annulled.In fact, petitioners assailed it
first only in the RTC proceedings, which had ironically been instituted by respondent.
Accordingly,itmustbepresumedvalidandbindingasthelawbetweentheparties.
MakatiLeasingandFinanceCorporation[30]isalsoinstructiveonthispoint.Inthatcase,
the Deed of Chattel Mortgage, which characterized the subject machinery as personal
property,wasalsoassailedbecauserespondenthadallegedlybeenrequiredtosignaprinted
formofchattelmortgagewhichwasinablankformatthetimeofsigning.TheCourtrejected
theargumentandreliedontheDeed,rulingasfollows:
xxx.Moreover,evengrantingthatthechargeistrue,suchfactalonedoesnotrenderacontractvoid
abinitio,butcanonlybeagroundforrenderingsaidcontractvoidable,orannullablepursuantto
Article1390ofthenewCivilCode,byaproperactionincourt.Thereisnothingonrecordtoshowthat
themortgagehasbeenannulled.Neitherisitdisclosedthatstepsweretakentonullifythesame.xxx
AllegedInjusticeCommittedonthePartofPetitioners
Petitioners contend that if the Court allows these machineries to be seized, then its
workerswouldbeoutofworkandthrownintothestreets.[31]Theyalsoallegethattheseizure
wouldnullifyalleffortstorehabilitatethecorporation.
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Petitioners arguments do not preclude the implementation of the Writ. As earlier

discussed, law and jurisprudence support its propriety. Verily, the abovementioned
consequences,iftheycometrue,shouldnotbeblamedonthisCourt,butonthepetitioners
forfailingtoavailthemselvesoftheremedyunderSection5ofRule60,whichallowsthefiling
ofacounterbond.Theprovisionstates:
SEC.5.Returnofproperty.Iftheadversepartyobjectstothesufficiencyoftheapplicantsbond,or
ofthesuretyorsuretiesthereon,hecannotimmediatelyrequirethereturnoftheproperty,butifhe
doesnotsoobject,hemay,atanytimebeforethedeliveryofthepropertytotheapplicant,requirethe
returnthereof,byfilingwiththecourtwheretheactionispendingabondexecutedtotheapplicant,in
doublethevalueofthepropertyasstatedintheapplicantsaffidavitforthedeliverythereoftothe
applicant,ifsuchdeliverybeadjudged,andforthepaymentofsuchsumtohimasmayberecovered
againsttheadverseparty,andbyservingacopybondontheapplicant.
WHEREFORE,thePetitionisDENIEDandtheassailedDecisionoftheCourtofAppeals
AFFIRMED.Costsagainstpetitioners.
SOORDERED.
Melo,(Chairman),Vitug,Purisima,andGonzagaReyes,JJ.,concur.
[1] Rollo,pp.177180.
[2] PennedbyJusticeRomeoA.Brawner(Divisionactingchairman),withtheconcurrenceofJusticesEloyR.BelloJr.andMartinS.

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,uponreceiptbythisCourtofthepetitionersMemorandum
signedbyAtty.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,withoutimpleadingthelowercourtsor
judgesthereofeitheraspetitionersorrespondents.
[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,December
26,1984DavaoSawmillCo.v.Castillo,61Phil.709,August7,1935.
[18] ChuaPengHianv.CA,133SCRA572,December19,1984StandardOilCo.v.Jaranillo,44Phil.630,March16,1923Lunav.
Encarnacion,91Phil.531,June30,1952Manarangv.Ofilada,99Phil.109,May18,1956PeoplesBank&TrustCo.v.Dahican
Lumber,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,November30,1963.
[23] Vitug,supra,pp.100101.
[24] PetitionersMemorandum,p.8rollo,p.381.
[25] Petition,p.10rollo,p.12.
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[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.

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