G.R. No. 137705. August 22, 2000
SERG’S PRODUCTS, INC., AND SERGIO T. GOQUIOLAY, PETITIONERS, VS. PCI LEASING AND FINANCE, INC., RESPONDENT.
PANGANIBAN, J.:
property be considered as personal or movable, a party is estopped from
subsequently claiming otherwise. Hence, such property is a proper
subject of a writ of replevin obtained by the other contracting party.
The Case
Before us is a Petition for Review on Certiorari assailing the January 6, 1999 Decision[1] of the Court of Appeals (CA)[2] in CA-GR SP No. 47332 and its February 26, 1999 Resolution[3] denying reconsideration. The decretal portion of the CA Decision reads as follows:
“WHEREFORE, premises considered, the assailed Order dated February
18, 1998 and Resolution dated March 31, 1998 in Civil Case No.
Q-98-33500 are hereby AFFIRMED. The writ of preliminary injunction
issued on June 15, 1998 is hereby LIFTED.”[4]In its February 18, 1998 Order,[5] the Regional Trial Court (RTC) of Quezon City (Branch 218)[6] issued a Writ of Seizure.[7] The March 18, 1998 Resolution[8]
denied petitioners’ Motion for Special Protective Order, praying that
the deputy sheriff be enjoined “from seizing immobilized or other real
properties in (petitioners’) factory in Cainta, Rizal and to return to
their original place whatever immobilized machineries or equipments he
may have removed.”[9]
The Facts
The undisputed facts are summarized by the Court of Appeals as follows:[10]
“On February 13, 1998, respondent PCI Leasing and Finance, Inc.
(“PCI Leasing” for short) filed with the RTC-QC a complaint for [a] sum
of money (Annex ‘E’), with an application for a writ of replevin
docketed as Civil Case No. Q-98-33500.“On March 6, 1998, upon an ex-parte application of PCI Leasing,
respondent judge issued a writ of replevin (Annex ‘B’) directing its
sheriff to seize and deliver the machineries and equipment to PCI
Leasing after 5 days and upon the payment of the necessary expenses.“On March 24, 1998, in implementation of said writ, the sheriff
proceeded to petitioner’s factory, seized one machinery with [the] word
that he [would] return for the other machineries.“On March 25, 1998, petitioners filed a motion for special
protective order (Annex ‘C’), invoking the power of the court to control
the conduct of its officers and amend and control its processes,
praying for a directive for the sheriff to defer enforcement of the writ
of replevin.“This motion was opposed by PCI Leasing (Annex ‘F’), on the ground
that the properties [were] still personal and therefore still subject
to seizure and a writ of replevin.“In their Reply, petitioners asserted that the properties sought
to be seized [were] immovable as defined in Article 415 of the Civil
Code, the parties’ agreement to the contrary notwithstanding. They
argued that to give effect to the agreement would be prejudicial to
innocent third parties. They further stated that PCI Leasing [was]
estopped from treating these machineries as personal because the
contracts in which the alleged agreement [were] embodied [were] totally
sham and farcical.“On April 6, 1998, the sheriff again sought to enforce the writ of
seizure and take possession of the remaining properties. He was able
to take two more, but was prevented by the workers from taking the rest.“On April 7, 1998, they went to [the CA] via an original action for certiorari.”
Ruling of the Court of Appeals
Citing the Agreement of the parties, the appellate court held that the
subject machines were personal property, and that they had only been
leased, not owned, by petitioners. It also ruled that the “words of the
contract are clear and leave no doubt upon the true intention of the
contracting parties.” Observing that Petitioner Goquiolay was an
experienced businessman who was “not unfamiliar with the ways of the
trade,” it ruled that he “should have realized the import of the
document he signed.” The CA further held:
“Furthermore, to accord merit to this petition would be to preempt
the trial court in ruling upon the case below, since the merits of the
whole matter are laid down before us via a petition whose sole purpose
is to inquire upon the existence of a grave abuse of discretion on the
part of the [RTC] in issuing the assailed Order and Resolution. The
issues raised herein are proper subjects of a full-blown trial,
necessitating presentation of evidence by both parties. The contract is
being enforced by one, and [its] validity is attacked by the other – a
matter x x x which respondent court is in the best position to
determine.”Hence, this Petition.[11]
The Issues
In their Memorandum, petitioners submit the following issues for our consideration:
“A. Whether or not the machineries purchased and imported by SERG’S became real property by virtue of immobilization.
B. Whether or not the contract between the parties is a loan or a lease.”[12]
In the main, the Court will resolve whether the said machines are
personal, not immovable, property which may be a proper subject of a
writ of replevin. As a preliminary matter, the Court will also address
briefly the procedural points raised by respondent.
The Court’s Ruling
The Petition is not meritorious.
Preliminary Matter:Procedural Questions
Respondent contends that the Petition failed to indicate expressly
whether it was being filed under Rule 45 or Rule 65 of the Rules of
Court. It further alleges that the Petition erroneously impleaded
Judge Hilario Laqui as respondent.
There is no question that the present recourse is under Rule 45. This
conclusion finds support in the very title of the Petition, which is
“Petition for Review on Certiorari.”[13]
While Judge Laqui should not have been impleaded as a respondent,[14]
substantial justice requires that such lapse by itself should not
warrant the dismissal of the present Petition. In this light, the Court
deems it proper to remove, motu proprio, the name of Judge Laqui from
the caption of the present case.
Main Issue: Nature of the Subject Machinery
Petitioners contend that the subject machines used in their factory were
not proper subjects of the Writ issued by the RTC, because they were in
fact real property. Serious policy considerations, they argue,
militate against a contrary characterization.
Rule 60 of the Rules of Court provides that writs of replevin are issued for the recovery of personal property only.[15] Section 3 thereof reads:
“SEC. 3. Order. – Upon the filing of such affidavit and
approval of the bond, the court shall issue an order and the
corresponding writ of replevin describing the personal property alleged
to be wrongfully detained and requiring the sheriff forthwith to take
such property into his custody.”
On the other hand, Article 415 of the Civil Code enumerates immovable or real property as follows:
“ART. 415. The following are immovable property:
x x x………………………………x x x………………………………x x x
(5) Machinery, receptacles, instruments or implements intended by the
owner of the tenement for an industry or works which may be carried on
in a building or on a piece of land, and which tend directly to meet the
needs of the said industry or works;
x x x………………………………x x x………………………………x x x”
In the present case, the machines that were the subjects of the Writ of
Seizure were placed by petitioners in the factory built on their own
land. Indisputably, they were essential and principal elements of their
chocolate-making industry. Hence, although each of them was movable or
personal property on its own, all of them have become “immobilized by
destination because they are essential and principal elements in the
industry.”[16] In that sense,
petitioners are correct in arguing that the said machines are real, not
personal, property pursuant to Article 415 (5) of the Civil Code.[17]
Be that as it may, we disagree with the submission of the petitioners
that the said machines are not proper subjects of the Writ of Seizure.
The Court has held that contracting parties may validly stipulate that a real property be considered as personal.[18]
After agreeing to such stipulation, they are consequently estopped
from claiming otherwise. Under the principle of estoppel, a party to a
contract is ordinarily precluded from denying the truth of any material
fact found therein.
Hence, in Tumalad v. Vicencio,[19]
the Court upheld the intention of the parties to treat a house as a
personal property because it had been made the subject of a chattel
mortgage. The Court ruled:
“x x x. Although there is no specific statement referring to the
subject house as personal property, yet by ceding, selling or
transferring a property by way of chattel mortgage defendants-appellants
could only have meant to convey the house as chattel, or at least,
intended to treat the same as such, so that they should not now be
allowed to make an inconsistent stand by claiming otherwise.”
Applying Tumalad, the Court in Makati Leasing and Finance Corp. v. Wearever Textile Mills[20]
also held that the machinery used in a factory and essential to the
industry, as in the present case, was a proper subject of a writ of
replevin because it was treated as personal property in a contract.
Pertinent portions of the Court’s ruling are reproduced hereunder:
“x x x. If a house of strong materials, like what was involved in
the above Tumalad case, 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 denying the existence of the chattel
mortgage.”
In the present case, the Lease Agreement clearly provides that the
machines in question are to be considered as personal property.
Specifically, Section 12.1 of the Agreement reads as follows:[21]
“12.1 The PROPERTY is, and shall at all times be and remain,
personal property notwithstanding that the PROPERTY or any part thereof
may now be, or hereafter become, in any manner affixed or attached to or
embedded in, or permanently resting upon, real property or any building
thereon, or attached in any manner to what is permanent.”Clearly then, petitioners are estopped from denying the
characterization of the subject machines as personal property. Under
the circumstances, they are proper subjects of the Writ of Seizure.It should be stressed, however, that our holding — that the
machines should be deemed personal property pursuant to the Lease
Agreement – is good only insofar as the contracting parties are
concerned.[22] Hence, while
the parties are bound by the Agreement, third persons acting in good
faith are not affected by its stipulation characterizing the subject
machinery as personal.[23] In any event, there is no showing that any specific third party would be adversely affected.
Validity of the Lease Agreement
In their Memorandum, petitioners contend that the Agreement is a loan and not a lease.[24]
Submitting documents supposedly showing that they own the subject
machines, petitioners also argue in their Petition that the Agreement
suffers from “intrinsic ambiguity which places in serious doubt the
intention of the parties and the validity of the lease agreement
itself.”[25] In their Reply to respondent’s Comment, they further allege that the Agreement is invalid.[26]
These arguments are unconvincing. The validity and the nature of
the contract are the lis mota of the civil action pending before the
RTC. A resolution of these questions, therefore, is effectively a
resolution of the merits of the case. Hence, they should be threshed
out in the trial, not in the proceedings involving the issuance of the
Writ of Seizure.
Indeed, in La Tondeña Distillers v. CA,[27]
the Court explained that the policy under Rule 60 was that questions
involving title to the subject property – questions which petitioners
are now raising — should be determined in the trial. In that case,
the Court noted that the remedy of defendants under Rule 60 was either
to post a counter-bond or to question the sufficiency of the plaintiff’s
bond. They were not allowed, however, to invoke the title to the
subject property. The Court ruled:
“In other words, the law does not allow the defendant to file a
motion to dissolve or discharge the writ of seizure (or delivery) on
ground of insufficiency of the complaint or of the grounds relied upon
therefor, as in proceedings on preliminary attachment or injunction, and
thereby put at issue the matter of the title or right of possession
over the specific chattel being replevied, the policy apparently being
that said matter should be ventilated and determined only at the trial
on the merits.”[28]
Besides, these questions require a determination of facts and a
presentation of evidence, both of which have no place in a petition for
certiorari in the CA under Rule 65 or in a petition for review in this
Court under Rule 45.[29]
Reliance on the Lease Agreement
It should be pointed out that the Court in this case may rely on the
Lease Agreement, for nothing on record shows that it has been nullified
or annulled. In fact, petitioners assailed it first only in the RTC
proceedings, which had ironically been instituted by respondent.
Accordingly, it must be presumed valid and binding as the law between
the parties.
Makati Leasing and Finance Corporation[30]
is also instructive on this point. In that case, the Deed of Chattel
Mortgage, which characterized the subject machinery as personal
property, was also assailed because respondent had allegedly been
required “to sign a printed form of chattel mortgage which was in a
blank form at the time of signing.” The Court rejected the argument and
relied on the Deed, ruling as follows:
“x x x. Moreover, even granting that the charge is true, such fact
alone does not render a contract void ab initio, but can only be a
ground for rendering said contract voidable, or annullable pursuant to
Article 1390 of the new Civil Code, by a proper action in court. There
is nothing on record to show that the mortgage has been annulled.
Neither is it disclosed that steps were taken to nullify the same. x x
x”
Alleged Injustice Committed on the Part of Petitioners
Petitioners contend that “if the Court allows these machineries to be
seized, then its workers would be out of work and thrown into the
streets.”[31] They also allege that the seizure would nullify all efforts to rehabilitate the corporation.
Petitioners’ arguments do not preclude the implementation of the Writ.
As earlier discussed, law and jurisprudence support its propriety.
Verily, the above-mentioned consequences, if they come true, should not
be blamed on this Court, but on the petitioners for failing to avail
themselves of the remedy under Section 5 of Rule 60, which allows the
filing of a counter-bond. The provision states:
“SEC. 5. Return of property. – If the adverse party
objects to the sufficiency of the applicant’s bond, or of the surety or
sureties thereon, he cannot immediately require the return of the
property, but if he does not so object, he may, at any time before the
delivery of the property to the applicant, require the return thereof,
by filing with the court where the action is pending a bond executed to
the applicant, in double the value of the property as stated in the
applicant’s affidavit for the delivery thereof to the applicant, if such
delivery be adjudged, and for the payment of such sum to him as may be
recovered against the adverse party, and by serving a copy bond on the
applicant.”
WHEREFORE, the Petition is DENIED and the assailed Decision of the Court of Appeals AFFIRMED. Costs against petitioners.
SO ORDERED.
Melo, (Chairman), Vitug, Purisima, and Gonzaga-Reyes, JJ., concur.
[1] Rollo, pp. 177-180.
[2] Penned by Justice Romeo
A. Brawner (Division acting chairman), with the concurrence of Justices
Eloy R. Bello Jr. and Martin S. Villarama Jr.
[3] Rollo, p. 189.
[4] CA Decision, p. 3; rollo, p. 179.
[5] Rollo, p. 356.
[6] Presided by Judge Hilario L. Laqui.
[7] Rollo, pp. 23-24.
[8] Rollo, pp. 78-79.
[9] Motion for Special Protective Order, pp. 3-4; rollo, pp. 76-77.
[10] CA Decision, pp. 1-2; rollo, pp. 177-178.
[11] The case was deemed
submitted for resolution on October 21, 1999, upon receipt by this Court
of the petitioners’ Memorandum signed by Atty. Victor Basilio N. De
Leon of Antonio R. Bautista & Partners. Respondent’s Memorandum,
which was signed by Atty. Amador F. Brioso Jr. of Perez & Calima Law
Offices, had been filed earlier on September 29, 1999.
[12] Petitioners’ Memorandum, p. 3; rollo, p. 376.
[13] Section 1, Rule 45 of the Rules of Court.
[14] Section 4 (a) of Rule 45
provides that the petition shall state the full name of the parties,
“without impleading the lower courts or judges thereof either as
petitioners or respondents.”
[15] BA Finance v. CA, 258
SCRA 102, July 5, 1996; Filinvest Credit v. CA, 248 SCRA 549, September
27, 1995; Machinery Engineering Supply v. CA, 96 Phil. 70, October 29,
1954.
[16] Mindanao Bus Co. v. City
Assessor and Treasurer, 6 SCRA 197, September 29, 1962, per Labrador,
J. See also Vitug, Compendium of Civil Law and Jurisprudence, 1986
ed., pp. 99-100.
[17] People’s Bank &
Trust Co. v. Dahican Lumber, 20 SCRA 84, May 16, 1967; Burgos v. Chief
of Staff, 133 SCRA 800, December 26, 1984; Davao Sawmill Co. v.
Castillo, 61 Phil. 709, August 7, 1935.
[18] Chua Peng Hian v. CA,
133 SCRA 572, December 19, 1984; Standard Oil Co. v. Jaranillo, 44 Phil.
630, March 16, 1923; Luna v. Encarnacion, 91 Phil. 531, June 30, 1952;
Manarang v. Ofilada, 99 Phil. 109, May 18, 1956; People’s Bank &
Trust Co. v. Dahican Lumber, supra.
[19] 41 SCRA 143, 153, September 30, 1971, per Reyes, JBL, J.
[20] 122 SCRA 296, 300, May 16, 1983, per De Castro, J.
[21] Rollo, p. 262.
[22] Evangelista v. Alto Surety and Insurance Co., 103 Phil. 401, April 23, 1958; Navarro v. Pineda, 9 SCRA 631, November 30, 1963.
[23] Vitug, supra, pp. 100-101.
[24] Petitioners’ Memorandum, p. 8; rollo, p. 381.
[25] Petition, p. 10; rollo, p. 12.
[26] Reply, p. 7; rollo, p. 301.
[27] 209 SCRA 553, 567, June 8, 1992, per Narvasa, CJ.
[28] Ibid.
[29] See Fuentes v. Court of Appeals, 268 SCRA 703, February 26, 1997.
[30] Supra, p. 301.
[31] Petition, p. 16; rollo, p. 18.