MAKATI LEASING AND FINANCE CORPORATION V. WEAREVER TEXTILE MILLS
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.