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Serg’s Products, Inc. v. PCI Leasing and Finance, Inc.

G.R. No. 137705, August 22, 2000

QUESTION:
P and S entered into a Leasing Agreement for the machineries and equipment of P and the Agreement
provides that the property is, and shall at all times be and remain, personal property. P filed a
complaint for a sum of money, with an application for a writ of replevin. Upon an ex-parte application
of P, the judge issued a writ of replevin directing its sheriff to seize and deliver the machineries and
equipment to P after 5 days and upon the payment of the necessary expenses. During the
implementation of said writ, the sheriff proceeded to S factory, seized one machinery with the word
that he would return for the other machineries. S filed a motion for special protective order to defer
enforcement of the writ of replevin. P opposed the motion on the ground that the properties were
still personal and therefore can still be subjected to seizure and writ of replevin. S contends that the
subject machines used in their factory were not proper subjects of the Writ issued, because they were
in fact real property. Under Art. 415 par. 5 of the Civil code: 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, are immovable properties. Is S correct?

SUGGESTED ANSWER:
No.

Section 3, Rule 60 of the Rules of Court provides that writs of replevin are issued for the recovery of
personal property only. Moreover, jurisprudence provides that 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.

In the case at bar, the Lease Agreement clearly provides that the machines in question are to be
considered as personal property. 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.