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GR No. L-58469 Case Digest

Petitioner had provided financial accommodations to Respondent under a Receivables Purchase Agreement, secured by a Chattel Mortgage on Respondent's raw materials and machinery, including an Artos Aero Dryer Stentering Range. Respondent defaulted and Petitioner sought extrajudicial foreclosure, but the sheriff could not gain entry. Petitioner then sought judicial foreclosure, and the lower court issued a writ of seizure allowing entry. The sheriff seized the main drive motor but the appellate court reversed and ordered its return. Petitioner appealed to the highest court. The highest court ruled the machinery was personal property for purposes of the chattel mortgage, reversing the appellate court and reinstating the lower court's order allowing seizure.

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197 views1 page

GR No. L-58469 Case Digest

Petitioner had provided financial accommodations to Respondent under a Receivables Purchase Agreement, secured by a Chattel Mortgage on Respondent's raw materials and machinery, including an Artos Aero Dryer Stentering Range. Respondent defaulted and Petitioner sought extrajudicial foreclosure, but the sheriff could not gain entry. Petitioner then sought judicial foreclosure, and the lower court issued a writ of seizure allowing entry. The sheriff seized the main drive motor but the appellate court reversed and ordered its return. Petitioner appealed to the highest court. The highest court ruled the machinery was personal property for purposes of the chattel mortgage, reversing the appellate court and reinstating the lower court's order allowing seizure.

Uploaded by

Raym Trabajo
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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GR No L-58469

MAKATI LEASING and FINANCE CORPORATION,  vs. WEAREVER TEXTILE MILLS, INC.,

Petitioner and respondent had their financial accommodations. Respondent was assigned
several receivables under Receivable Purchase Agreement. To secure the collection of the
assigned receivable, respondent executed Chattel Mortgage over raw materials and machinery
described as an Artos Aero Dryer Stentering Range.

Respondent is in default and petitioner filed petition for extrajudicial foreclosure of the properties
mortgage to it. Upon implementation of the foreclosure, Deputy Sheriff failed to gain entry into
the respondent's premises. As result, the deputy Sheriff failed to effect the seizure of the
machinery.

Petitioner filed a complaint for judicial foreclosure. Lower court issued writ of seizure, gave its
order to break open the premises of the respondent to enforce the writ. Sheriff enforced the
seizure and removed the main drive motor of the machinery.

Respondent filed in the Appellate Court. Order of the Lower Court was reversed and ordered
the sheriff to return the drive motor. Petitioner brought the case before the Highest Court for
review by writ of certiorari. 

Issue:

Whether or not the machinery in suit is personal property

Held:

Yes. The machinery in suit is personal property.

As the highest court linked to the Tumalad case, the same case is treated the same. A house
built in a strong material be considered as personal property for purposes of chattel mortgage.

A mortgage be executed to a real property as long as parties agreed and no innocent third party
be injured. Considering that the machinery becomes real property when it becomes
immobilized, there is no reason not considering the machine as personal property for mortgage
purposes.

Court of Appeals decision are reversed and set aside and order of the lower court are hereby
reinstated.

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