Serg's Products, Inc. v. PCI Leasing and Finance, Inc.
REITERATIONFacts
The Antecedents: Respondent PCI Leasing and Finance, Inc. filed a complaint for a sum of money with an application for a writ of replevin against petitioners Serg's Products, Inc. and Sergio T. Goquiolay, seeking to recover certain machineries and equipment. Procedural History: The Regional Trial Court (RTC) issued a writ of seizure. Petitioners filed a motion for a special protective order to prevent the sheriff from seizing immobilized or real properties and to return any seized items. The RTC denied this motion. Petitioners then elevated the matter to the Court of Appeals (CA). The Petition: The CA affirmed the RTC's order and lifted the writ of preliminary injunction. The CA ruled that the subject machines were personal property based on the parties' agreement and that the words of the contract were clear. Petitioners then filed a Petition for Review on Certiorari with the Supreme Court.
Issue(s)
Whether or not the machineries purchased and imported by SERG’S became real property by virtue of immobilization. Whether or not the contract between the parties is a loan or a lease. Whether or not the machineries are proper subjects of a writ of replevin.
Ruling
The Petition is denied, and the assailed Decision of the Court of Appeals is affirmed. The machineries are proper subjects of a writ of replevin.
Ratio Decidendi
On whether the machineries became real property by virtue of immobilization: While the machines were placed in the factory on petitioners' land and were essential to their industry, thus potentially immobilizing them by destination under Article 415(5) of the Civil Code, the parties' contract explicitly stipulated that these machines be considered personal property. Under the principle of estoppel, parties are bound by their contractual agreements and are precluded from asserting a claim inconsistent with their prior agreement. Therefore, for the purpose of the contract between the parties, the machines are to be treated as personal property. On whether the contract is a loan or a lease and the validity of the agreement: The determination of whether the contract is a loan or a lease, and the validity of the agreement itself, are matters that go into the merits of the main case. These issues require a full-blown trial with presentation of evidence and cannot be resolved in a proceeding for a writ of seizure or in a petition for certiorari. The Court cannot preempt the RTC's determination of these substantive issues. On whether the machineries are proper subjects of a writ of replevin: Rule 60 of the Rules of Court provides that writs of replevin are issued for the recovery of personal property only. However, the Lease Agreement between the parties clearly states that the machines are to be considered personal property, notwithstanding their potential immobilization by destination. By virtue of the principle of estoppel, petitioners are estopped from denying this characterization. Consequently, the machines are proper subjects of a writ of replevin, as long as no innocent third party is prejudiced.
Main Doctrine
A party is estopped from subsequently claiming that a real property is immovable after agreeing in a contract that it be considered personal property, making it a proper subject of a writ of replevin.