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    Makati Leasing V Wearever

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    Naomi Quimpo
    This case involved a dispute over whether a machinery permanently attached to the ground could be subject to a chattel mortgage. [1] Makati Leasing provided financing to Wearever Textile secured by a chattel mortgage over raw materials and machinery. [2] When Wearever defaulted, Makati sought to repossess the collateral but Wearever argued the machinery was real property. [3] The Supreme Court ruled that while the machinery was a real property by nature, the parties agreed in their contract to treat it as personal property for purposes of the chattel mortgage, making it enforceable.

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    Makati Leasing V Wearever

    Uploaded by

    Naomi Quimpo
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    This case involved a dispute over whether a machinery permanently attached to the ground could be subject to a chattel mortgage. [1] Makati Leasing provided financing to Wearever Textile secured by a chattel mortgage over raw materials and machinery. [2] When Wearever defaulted, Makati sought to repossess the collateral but Wearever argued the machinery was real property. [3] The Supreme Court ruled that while the machinery was a real property by nature, the parties agreed in their contract to treat it as personal property for purposes of the chattel mortgage, making it enforceable.

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    Makati Leasing v Wearever

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    This case involved a dispute over whether a machinery permanently attached to the ground could be subject to a chattel mortgage. [1] Makati Leasing provided financing to Wearever Textile secured by a chattel mortgage over raw materials and machinery. [2] When Wearever defaulted, Makati sought to repossess the collateral but Wearever argued the machinery was real property. [3] The Supreme Court ruled that while the machinery was a real property by nature, the parties agreed in their contract to treat it as personal property for purposes of the chattel mortgage, making it enforceable.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    960 views1 page

    Makati Leasing V Wearever

    Uploaded by

    Naomi Quimpo
    This case involved a dispute over whether a machinery permanently attached to the ground could be subject to a chattel mortgage. [1] Makati Leasing provided financing to Wearever Textile secured by a chattel mortgage over raw materials and machinery. [2] When Wearever defaulted, Makati sought to repossess the collateral but Wearever argued the machinery was real property. [3] The Supreme Court ruled that while the machinery was a real property by nature, the parties agreed in their contract to treat it as personal property for purposes of the chattel mortgage, making it enforceable.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
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    of 1

    MAKATI LEASING & FINANCIAL CORP. vs. WEAREVER TEXTILE MILLS J.

    De Castro, 1983
    Doctrine: Where a chattel mortgage is constituted on a machinery permanently attached to the ground, the machinery is to be considered as personal property. Facts: Wearever Textile Mills, Inc. discounted and assigned several receivables with Makati Leasing and Financial Corp. under a Receivable Purchase Agreement so that the latter would lend money to the former. In order to secure the collection of the receivables assigned, Wearever executed a Chattel Mortgage over certain raw materials inventory as well as a machinery (Artos Aero Dryer Stentering Range). Upon default of Wearever in paying what is due, Makati Leasing filed a petition for extrajudicial foreclosure of the properties mortgaged to it. The Sheriff assigned to execute such foreclosure, however, failed to enter the premises of Wearever to effect the seizure of the machinery. After which, petitioner filed a complaint for a judicial foreclosure with the RTC of Rizal which was granted even after the motion for reconsideration filed by the private respondent. Enforcing then the writ of seizure issued by the lower court, the Sheriff removed the main drive motor of the machinery. Upon appeal, CA reversed the ruling of the RTC and ordered the return of the motor to Wearever since the said machinery cannot be the subject of a replevin and chattel mortgage for it is a real property pursuant to Art. 415 (3) of the NCC. CA argued that the machinery is attached to the ground by means of bolts and the only way to remove it from the respondents plant would be to drill out or destroy the concrete floor which is why all that the sheriff could do to enforce the writ was to take the main drive motor of the machinery. Hence, this petition for certiorari. Issue/Held: Whether the personal property - YES machinery is a executing a chattel mortgage thereon as long as the parties to the contract so agree and no innocent third party will be prejudiced thereby, and once the parties so agreed, they are already stopped from claiming otherwise. Private respondent contended that its characterization of the subject machinery as chattel in their agreement should not be appreciated against it because it had never represented nor agreed in such as it was merely required and dictated on by the petitioner to sign a chattel mortgage in blank form. The Court was not persuaded by its contention as the said issue was not duly raised in the lower and appellate courts nor will the said signing in blank by the respondent make the contract void but merely voidable by a proper action in court. Furthermore as it was undeniable that it benefited from the chattel mortgage, it cannot be allowed to impugn its efficacy for equity reasons.

    By destination, it is a real property but by virtue of the intention of the parties stipulated in their chattel mortgage contract, the machinery was intended to be a personal property. The Court made reference to its ruling in Tumalad v. Vicencio and Standard Oil Co. of New York v. Jaramillo where it held that a real property may be considered as a personal property for purposes of

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