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Case Digest - G.R. No. L-58469 - Makati Leasing and Fice Corp. vs. Wearever Textile Mills, Inc

The Supreme Court ruled in G.R. No. L-58469 that the machinery in question is classified as personal property, validating the chattel mortgage despite its physical attachment to the ground. The Court emphasized the doctrine of estoppel, preventing Wearever Textile Mills from denying the characterization of the machinery as personal property. The decision reversed the Court of Appeals' ruling and reinstated the lower court's orders, affirming the validity of the chattel mortgage.

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7 views2 pages

Case Digest - G.R. No. L-58469 - Makati Leasing and Fice Corp. vs. Wearever Textile Mills, Inc

The Supreme Court ruled in G.R. No. L-58469 that the machinery in question is classified as personal property, validating the chattel mortgage despite its physical attachment to the ground. The Court emphasized the doctrine of estoppel, preventing Wearever Textile Mills from denying the characterization of the machinery as personal property. The decision reversed the Court of Appeals' ruling and reinstated the lower court's orders, affirming the validity of the chattel mortgage.

Uploaded by

Matt H
Copyright
© © All Rights Reserved
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Download as PDF, TXT or read online on Scribd
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03/02/2025, 09:00 Case Digest: G.R. No. L-58469 - Makati Leasing and Fice Corp. vs.

Leasing and Fice Corp. vs. Wearever Textile Mills, Inc.

Title
Makati Leasing and Fice Corp. vs. Wearever Textile Mills, Inc.

Case Decision Date


G.R. No. L-58469 16 May 1983

A machinery, treated as personal property via chattel mortgage, was ruled valid by
the Supreme Court, emphasizing party agreement and estoppel.

Jur.ph - Case Digest (G.R. No. L-58469)


Direct Answer Model - Comprehensive

Facts:
The case involves Makati Leasing and Finance Corporation as the petitioner and
Wearever Textile Mills, Inc. as the respondent. The events leading to the case began
when Wearever Textile Mills, Inc. sought financial assistance from Makati Leasing and
Finance Corporation. To secure this financial accommodation, Wearever discounted
and assigned several receivables to Makati under a Receivable Purchase Agreement.
Additionally, Wearever executed a Chattel Mortgage over certain raw materials and a
specific machinery known as the Artos Aero Dryer Stentering Range. Following
Wearever's default on the agreement, Makati initiated an extrajudicial foreclosure of
the mortgaged properties. However, the Deputy Sheriff assigned to the case was
unable to enter Wearever's premises to seize the machinery. Consequently, Makati
filed a complaint for judicial foreclosure in the Court of First Instance of Rizal, Branch
VI, which was docketed as Civil Case No. 36040. The lower court initially issued a writ
of seizure, but enforcement was restrained after Wearever filed a motion for
reconsideration. On February 11, 1981, the lower court lifted the restraining order and
ordered the sheriff to break open the premises to enforce the writ. On July 13, 1981, the
sheriff executed the seizure order and removed the main drive motor from the
machinery. Wearever subsequently filed a petition for certiorari and prohibition with
the Court of Appeals, which ruled in favor of Wearever, stating that the machinery was
real property and thus could not be subject to replevin or chattel mortgage. The
appellate court ordered the return of the seized motor and denied Makati's motion for
reconsideration. Makati then sought a review of the appellate court's decision through
a writ of certiorari.

Issue:
1. Is the machinery in question considered real or personal property?

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03/02/2025, 09:00 Case Digest: G.R. No. L-58469 - Makati Leasing and Fice Corp. vs. Wearever Textile Mills, Inc.

2. Does the doctrine of estoppel apply to Wearever Textile Mills, Inc. regarding the
characterization of the machinery as personal property?
3. Was the Court of Appeals correct in ruling that the chattel mortgage constituted
on the machinery is null and void?

Ruling:
1. The Supreme Court ruled that the machinery in question is personal property.
2. The Court held that the doctrine of estoppel applies to Wearever, preventing it
from denying the characterization of the machinery as personal property.
3. The Supreme Court reversed the decision of the Court of Appeals, reinstating the
orders of the lower court, thereby validating the chattel mortgage.

Ratio:
The Supreme Court's decision hinged on the classification of the machinery as
personal property, despite its physical attachment to the ground. The Court referenced
the principle established in the case of Tumalad vs. Vicencio, which allows parties to
treat property that is inherently real as personal property if they mutually agree to do
so, provided that no third-party interests are adversely affected. The Court
emphasized that the intention of the parties is paramount in determining the nature of
the property. It rejected the appellate court's distinction based on the ownership of the
land, asserting that such a distinction is not supported by law. The Court also noted
that Wearever had benefited from the chattel mortgage and could not later claim it
was void due to a lack of agreement on its characterization. The ruling reinforced the
idea that parties are bound by their agreements and cannot later contradict their prior
representations. Thus, the Court concluded that the machinery was indeed personal
property, and the chattel mortgage was valid, leading to the reversal of the appellate
court's decision.

https://jur.ph/jurisprudence/digest/makati-leasing-and-finance-corp-v-w earever-textile-mills-inc 2/2

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