THIRD DIVISION
[G.R. No. 137705.
August 22, 2000]
SERG’S PRODUCTS, INC., and SERGIO T. GOQUIOLAY, petitioners,
vs. PCI LEASING AND FINANCE, INC., respondent.
D E C I S I O N
PANGANIBAN, J.:
After agreeing
to a contract stipulating that a real or immovable 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.