Case Summary (G.R. No. 137705)
Key Dates
• Feb. 13, 1998 – PCI Leasing files complaint for sum of money with application for writ of replevin (RTC QC).
• Mar. 6, 1998 – Ex parte issuance of writ of replevin directing seizure of factory machinery.
• Mar. 24–Apr. 6, 1998 – Sheriff seizes three machines; petitioners move for protective order.
• Jan. 6, 1999 – Court of Appeals affirms RTC’s writ of seizure and lifts preliminary injunction.
• Aug. 22, 2000 – Supreme Court issues decision denying petition for review on certiorari.
Procedural History
PCI Leasing obtained from the RTC a writ of replevin and seizure of machinery under their lease agreement. Petitioners moved for a special protective order to prevent seizure of allegedly immobilized assets. The RTC denied relief; the Court of Appeals affirmed. Petitioners sought Supreme Court review under Rule 45.
Factual Background
Under a lease agreement, petitioners had imported and installed machinery in their chocolate-making factory. PCI Leasing secured an ex parte writ of replevin, and the sheriff seized several machines. Petitioners maintained these were immovable by destination (Art. 415[5], Civil Code) and thus not subject to replevin. They further challenged the lease’s validity as a sham.
Issues Presented
- Whether the factory machines, by immobilization, became immovable property and thus beyond the scope of a writ of replevin.
- Whether the contract between the parties constitutes a loan rather than a lease.
Nature of Replevin and Immovable Property
Rule 60 permits replevin of personal property only. Civil Code, Art. 415(5) classifies machinery essential to an industry, when attached to land or buildings, as immovable by destination. Petitioners correctly assert the machines, in isolation, meet that definition.
Effect of Contractual Stipulation and Estoppel
Parties may validly agree to treat real property as personal. Once they do so, neither may later dispute the characterization (estoppel). In Tumalad v. Vicencio and Makati Leasing v. Wearever Textile Mills, the Court upheld that a chattel mortgage or lease clause treating a house or factory machinery as personal property binds the parties and renders the assets subject to replevin. Section 12.1 of the lease here expressly maintains the machinery as personal property “notwithstanding” any affixation.
Contract Validity and Proper Forum
Petitioners’ challenges to the nature and validity of the lease go to the merits of the underlying civil action. Ru
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Facts
- On February 13, 1998, PCI Leasing and Finance, Inc. (“PCI Leasing”) filed with the Regional Trial Court of Quezon City (Branch 218) Civil Case No. Q-98-33500 for sum of money, including an application for a writ of replevin.
- On March 6, 1998, the trial court issued ex parte a writ of replevin directing the sheriff to seize specified machinery and equipment and to deliver them to PCI Leasing after five days upon payment of expenses.
- On March 24, 1998, the sheriff seized one machine from petitioners’ factory in Cainta, Rizal, announcing a return for remaining machines.
- On March 25, 1998, petitioners moved for a special protective order to enjoin seizure of “immobilized or other real properties” in their plant and to restore any removed machinery, arguing that the items were immovable by destination under Article 415 of the Civil Code.
- PCI Leasing opposed, maintaining the items remained personal property and within the scope of the writ.
- On April 6, 1998, the sheriff seized two additional machines but was prevented by workers from taking the rest.
- On April 7, 1998, petitioners filed an original certiorari petition with the Court of Appeals to annul the writ enforcement.
Procedural History
- Trial Court (Quezon City RTC, Branch 218) issued writ of seizure (February 18, 1998), denied petitioners’ protective order (March 18, 1998), and lifted a preliminary injunction (June 15, 1998).
- Court of Appeals (CA-GR SP No. 47332) affirmed the RTC’s orders in a Decision dated January 6, 1999, and denied reconsideration on February 26, 1999.
- Petitioners elevated the case to the Supreme Court by a Petition for Review on Certiorari under Rule 45 of the Rul