The Leasing Company Inc. (“LCI”) and SPI Inc. (“SPI”) executed a Lease Agreement.
The agreement provides, among others, that “(t)he 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.”
Years later, LCI filed in court a complaint for a sum of money, with an application for a writ of replevin. The court granted the application for a writ of replevin and directed its sheriff to seize and deliver the factory machineries to LCI.
SPI moved for the deferment of the implementation of the order. It argued that, despite their agreement, the pieces of property sought to be seized are immovable as defined in Article 415 of the Civil Code, and thus cannot be made subjects of a writ of replevin.
Q: What is a writ of replevin?
A: A writ of replevin is a provisional court order that is issued for the recovery of personal property only.
Q: May factory machineries be considered as real properties?
A: Yes. Paragraph (5) of Art. 415 of the Civil Code provides that 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.
In other words, while the machineries are 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.
Q. The above, notwithstanding, may factory machines still be subject of a writ of replevin?
A: Yes. Contracting parties may validly stipulate that a real property be considered as personal. 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.
Thus, a machinery used in a factory and essential to the industry can be proper subject of a writ of replevin because it was treated as personal property in a contract.
(Sources: Serg’s Products, Inc. vs. PCI Leasing and Finance, Inc, G.R. No. 137705, August 22, 2000; see also the cited case of Makati Leasing and Finance Corp. v. Wearever Textile Mills, 122 SCRA 296, 300, May 16, 1983)
Ma. Soledad Deriquito-Mawis is currently the Dean, Lyceum of the Philippines University; president of Philippine Association of Law Schools; and Senior Partner at Gatchalian Castro & Mawis Law Office