Makati Leasing and Finance Corp. vs Wearever Textile Mills Inc.

,
G.R. No. 58469
May 16, 1983

Facts:
Wearever Textile Mills, Inc. executed a chattel mortgage contract in favor of Makati Leasing and
Finance Corporation covering certain raw materials and machinery. Upon default, Makati Leasing filed
a petition for judicial foreclosure of the properties mortgaged. Acting on Makati Leasing’s application
for replevin, the lower court issued a writ of seizure. Pursuant thereto, the sheriff enforcing the seizure
order and removed the main motor of the subject machinery. In a petition for certiorari and prohibition,
the Court of Appeals ordered the return of the machinery on the ground that the same cannot be the
subject of replevin because it is a real property pursuant to Article 415 of the new Civil Code, the same
being attached to the ground by means of bolts and the only way to remove it from Wearever textile’s
plant would be to drill out or destroy the concrete floor. When the motion for reconsideration of Makati
Leasing was denied by the Court of Appeals, Makati Leasing elevated the matter to the Supreme Court.

Issue:
Whether or not the machinery in suit is real or personal property from the point of view of the parties.

Held:
The said machinery is a personal property. Like what was involved in the Tumalad case, if a house of
strong materials, may be considered as personal property for purposes of executing a chattel mortgage
thereon, as long as the parties to the contract so agree and no innocent third party will be
prejudiced thereby, there is absolutely no reason why a machinery, which is movable in its nature and
becomes immobilized only by destination or purpose, may not be likewise treated as such. This is really
because one who has so agreed is estopped from the denying the existence of the chattel mortgage. The
decision of the Court of Appeals was set aside and the order of the lower court was reinstated.