G.R. No. 137705 - Serg's Products, Inc. vs. PCI Leasing and Fice, Inc.

Petitioners Sergas Products, Inc. and Sergio T. Goquiolay entered into a lease-purchase agreement with PCI Leasing and Finance, Inc. for the acquisition of chocolate-making machinery. Section 12.1 of the Agreement expressly provided that the “PROPERTY is, and shall at all times be and remain, personal property notwithstanding that the PROPERTY … may now be, or hereafter become, … affixed to … real property.”
Under Article 415(5) of the Civil Code, machinery intended by the owner for an industry and essential to works carried on in a building are immovable by destination. Petitioners installed the machines in their factory on land they owned, making them, by default, real property.

On February 13, 1998, PCI Leasing filed with the RTC of Quezon City a complaint for sum of money with an application for a writ of replevin (Civil Case No. Q-98-33500).
On March 6, 1998, the RTC issued ex parte a writ of replevin directing the sheriff to seize and deliver the machinery to PCI upon bond and expenses. The sheriff seized one machine on March 24 and two more on April 6, 1998; petitioners sought a special protective order to defer enforcement.
Petitioners filed a petition for certiorari with the Court of Appeals (CA-GR SP No. 47332), which on January 6, 1999 affirmed the RTC’s order lifting the preliminary injunction and denied petitioners’ challenge, holding the machinery personal by contract. Petitioners then filed this Petition for Review on Certiorari under Rule 45 before the Supreme Court.

Whether the subject machinery, although immobilized by destination under Article 415(5), became real property.
Whether, by virtue of the lease-purchase contract stipulating the machinery as personal property, petitioners are estopped from claiming they are immovable.