122 SCRA 296



To  be  able  to  secure  financial  accommodations  from  the  petitioner,  the private  respondent  discounted  and  assigned  several  receivables  under  a Receivable   Purchase   Agreement.      To   secure   the   collection   of   the receivables, a chattel mortgage was executed over machinery found in the factory of the private respondent.   
As the private  respondent failed  to pay, the mortgage was extrajudicially foreclosed.    Nonetheless,  the  sheriff  was  unable  to  seize  the  machinery.  This prompted petitioner to file an action for replevin.  

The CA  reversed the decision  of the trial  court and ordered the return of the drive motor, after ruling that the machinery may not be the subject of a chattel mortgage, given that it was an immovable under the provisions of Article 415.  The same was attached to the ground by means of bolts and the only way to remove it from the plant would be to drill the ground.


There is no logical justification to exclude the rule out that the machinery may  be  considered  as  personal  property,  and  subject  to  a  chattel mortgage.  If a house may be considered as personal property for purposes of executing a chattel mortgage, what more a machinery, which is movable
by  nature  and becomes  immobilized  only  by  destination  or  purpose,  may not be likewise treated as such.