GR 137705; (August, 2000) (Digest)
G.R. No. 137705 ; August 22, 2000
SERG’S PRODUCTS, INC., and SERGIO T. GOQUIOLAY, petitioners, vs. PCI LEASING AND FINANCE, INC., respondent.
FACTS
Respondent PCI Leasing filed a complaint for a sum of money with an application for a writ of replevin against petitioners. The writ sought to seize machineries and equipment located in petitioners’ factory. The Regional Trial Court granted the writ ex-parte. The sheriff seized one machinery and attempted to seize others. Petitioners filed a motion for a special protective order, arguing that the properties were immovable under Article 415 of the Civil Code as they were installed in the factory, and thus not proper subjects of replevin, which applies only to personal property. They contended that the parties’ contractual stipulation treating the properties as personal should not bind them.
Petitioners asserted that the machineries, by nature and purpose, were real property due to their immobilization. They further claimed the underlying contracts were sham. The RTC denied their motion. The Court of Appeals affirmed the RTC, holding that the contractual agreement between the parties, wherein the machineries were expressly stipulated to be personal property, was binding. It noted petitioner Goquiolay was an experienced businessman who understood the contract’s import.
ISSUE
Whether the subject machineries are personal property, thus validly subject to a writ of replevin, despite being attached to the factory.
RULING
Yes. The Supreme Court affirmed the Court of Appeals. The core legal principle is that parties may by agreement treat as personal property those which are ordinarily considered real property. This is rooted in the principle of estoppel. Here, the contracts between the parties explicitly stipulated that the machineries, even if attached to the building, would retain their character as personal property. By agreeing to this stipulation, petitioners are estopped from subsequently claiming the properties are immovable to evade their contractual obligations, particularly the recovery provisions in case of default.
The Court emphasized that while Article 415 of the Civil Code defines immovable property, it does not preclude parties from mutually agreeing to treat immobilized equipment as personal. Such agreements are valid and binding between the parties. The characterization as personal property for purposes of the contract, including its enforcement via replevin, does not affect the character of the property with respect to third parties. Therefore, the machineries, by contractual fiat for the purpose of the lease agreement, were personal property and a proper subject of the writ of replevin issued by the trial court. The Petition was denied.