DAVAO SAW MILL CO., INC., plaintiff-appellant,
Such result would not be accomplished,
vs.
APRONIANO G. CASTILLO and DAVAO LIGHT & POWER CO.,
INC., defendants-appellees.
involves the determination of the nature of the properties
described in the complaint. The trial judge found that those
properties were personal in nature, and as a consequence
absolved the defendants from the complaint, with costs
against the plaintiff.
The Davao Saw Mill Co., Inc., is the holder of a lumber
concession from the Government of the Philippine Islands. It
has operated a sawmill. . However, the land upon which the
business was conducted belonged to another person. On the
land the sawmill company erected a building which housed
the machinery used by it. Some of the implements thus used
were clearly personal property. In the contract of lease
between the sawmill company and the owner of the land
there appeared the following provision:
That on the expiration of the period agreed upon, all the
improvements and buildings introduced and erected by the
party of the second part shall pass to the exclusive ownership
of the party of the first part without any obligation on its part
to pay any amount for said improvements and buildings; also,
in the event the party of the second part should leave or
abandon the land leased before the time herein stipulated,
the improvements and buildings shall likewise pass to the
ownership of the party of the first part as though the time
agreed upon had expired: Provided, however, That the
machineries and accessories are not included in the
improvements which will pass to the party of the first part on
the expiration or abandonment of the land leased.
another action Davao Light & Power Co., Inc., was the plaintiff
and the Davao, Saw, Mill Co., Inc., was the defendant, a
judgment was rendered in favor of the plaintiff. properties
now in question were levied upon as personalty by the sheriff.
No third party claim was filed for such properties at the time
of the sale. Indeed the bidder, which was the plaintiff in that
action, and the defendant herein having consummated the
sale, proceeded to take possession of the machinery and
other properties described in the corresponding certificates
of sale executed in its favor by the sheriff of Davao.
In connection to facts, Davao Saw Mill Co., Inc., has on a
number of occasions treated the machinery as personal
property by executing chattel mortgages in favor of third
persons. One of such persons is the appellee by assignment
from the original mortgages.
We entertain no doubt that the trial judge and appellees are
right in their appreciation of the legal doctrines flowing from
the facts. appellant should have registered its protest before
or at the time of the sale of this property. the characterization
of the property as chattels by the appellant is indicative of
intention and impresses upon the property the character
determined by the parties.
it was held that machinery which is movable in its nature only
becomes immobilized when placed in a plant by the owner of
the property or plant, but not when so placed by a tenant, a
usufructuary, or any person having only a temporary right,
unless such person acted as the agent of the owner. (Puerto
Rico case taken to the US SC). it is plain, both under the
provisions of the Porto Rican Law and of the Code Napoleon,
that machinery which is movable in its nature only becomes
immobilized when placed in a plant by the owner of the
property or plant.
therefore, by the placing of machinery in a plant by a tenant
or a usufructuary or any person having only a temporary
right.
since the lease in substance required the putting in of
improved machinery, deprived the tenant of any right to
charge against the lessor the cost such machinery, and it was
expressly stipulated that the machinery so put in should
become a part of the plant belonging to the owner without
compensation to the lessee. Under such conditions the tenant
in putting in the machinery was acting but as the agent of the
owner in compliance with the obligations resting upon him,
and the immobilization of the machinery which resulted arose
in legal effect from the act of the owner in giving by contract a
permanent destination to the machinery.
Finding no reversible error in the record, the judgment
appealed from will be affirmed, the costs of this instance to
be paid by the appellant.
G.R. No. L-17870 September 29, 1962
MINDANAO BUS COMPANY, petitioner,
vs.
THE CITY ASSESSOR & TREASURER and the BOARD OF TAX
APPEALS of Cagayan de Oro City,respondents.
Petition for Review holding that the petitioner Mindanao Bus
Company is liable to the payment of the realty tax on its
maintenance and repair equipment
Respondent City Assessor of Cagayan de Oro City assessed at
P4,400 petitioner's above-mentioned equipment. Petitioner
appealed the assessment to the respondent Board of Tax
Appeals on the ground that the same are not realty. The
Board of Tax Appeals of the City sustained the city assessor, so
petitioner herein filed with the Court of Tax Appeals a petition
for the review of the assessment.
Stipulation of facts: 1. That petitioner is a public utility solely
engaged in transporting passengers and cargoes by motor
trucks, over its authorized lines in the Island of Mindanao,
collecting rates approved by the Public Service Commission;
2. That petitioner has its main office and shop at Cagayan de
Oro City. 3. That the machineries sought to be assessed by the
respondent as real properties 4. That these machineries are
sitting on cement or wooden platforms as may be seen in the
attached photographs 5. That petitioner is the owner of the
land where it maintains and operates a garage for its TPU
motor trucks; a repair shop; blacksmith and carpentry shops,
and with these machineries which are placed therein, 6. That
these machineries have never been or were never used as
industrial equipments to produce finished products for sale,
nor to repair machineries.
The Court of Tax Appeals having sustained the respondent city
assessor's ruling, Hence the petition.
ISSUE: 2. The Tax Court erred in its interpretation of
paragraph 5 of Article 415 of the New Civil Code, and holding
that pursuant thereto the movable equipments are taxable
realties, by reason of their being intended or destined for use
in an industry.
HELD: So that movable equipments to be immobilized in
contemplation of the law must first be "essential and principal
elements" of an industry or works without which such
industry or works would be "unable to function or carry on
the industrial purpose for which it was established." We may
here distinguish, therefore, those movable which become
immobilized by destination because they are essential and
principal elements in the industry for those which may not be
so considered immobilized because they are merely
incidental, not essential and principal.
Similarly, the tools and equipments in question in this instant
case are, by their nature, not essential and principle municipal
elements of petitioner's business of transporting passengers
and cargoes by motor trucks. They are merely incidentals
acquired as movables and used only for expediency to
facilitate and/or improve its service. The transportation
business could be carried on without the repair or service
shop if its rolling equipment is repaired or serviced in another
shop belonging to another.
But in the case at bar the equipments in question are
destined only to repair or service the transportation
business, which is not carried on in a building or permanently
on a piece of land, as demanded by the law. Said equipments
may not, therefore, be deemed real property. equipment in
question declared not subject to assessment as real estate for
the purposes of the real estate tax.
CAPITOL WIRELESS, INC., Petitioner, v. THE PROVINCIAL
TREASURER OF BATANGAS, THE PROVINCIAL ASSESSOR OF
BATANGAS, THE MUNICIPAL TREASURER AND ASSESSOR OF
NASUGBU, BATANGAS, Respondents.
Petitioner Capitol Wireless Inc. (Capwire) is a Philippine
corporation in the business of providing international
telecommunications services. 3 As such provider, Capwire has
signed agreements with other local and foreign
telecommunications companies covering an international
network of submarine cable systems. The agreements provide
for co-ownership and other rights among the parties over the
network.
Petitioner Capwire claims that it is co-owner only of the so-
called "Wet Segment" of the APCN, while the landing stations
or terminals and Segment E of APCN located in Nasugbu,
Batangas are allegedly owned by the Philippine Long Distance
Telephone Corporation (PLDT).6 Moreover, it alleges that the
Wet Segment is laid in international, and not Philippine,
waters.7
Capwire claims that as co-owner, it does not own any
particular physical part of the cable system but, consistent
with its financial contributions, it owns the right to use a
certain capacity of the said system. 8This property right is
allegedly reported in its financial books as "Indefeasible
Rights in Cable Systems."9
However, for loan restructuring purposes, Capwire claims that
"it was required to register the value of its right," hence, it
engaged an appraiser to "assess the market value of the
international submarine cable system and the cost to
Capwire. As a result, respondent Provincial Assessor of
Batangas issued the Assessments of Real Property (ARP)
against Capwire. It had determined that the submarine cable
systems described in Capwire's Sworn Statement of True
Value of Real Properties are taxable real property, a
determination that was contested by Capwire.
Capwire received a Warrant of Levy and a Notice of Auction
Sale, respectively, from the respondent. Capwire filed a
Petition for Prohibition and Declaration of Nullity of Warrant
of Levy, Notice of Auction Sale and/or Auction Sale with the
Regional Trial Court. RTC issued an Order dismissing the
petition for failure of the petitioner Capwire to follow the
requisite of payment under protest as well as failure to
appeal to the Local Board of Assessment Appeals (LBAA). It
then filed an appeal to the Court of Appeals. 20CA dismissed
the appeal and affirmed the order of the RTC. CA noted that
Capwire failed to pay the tax assessed against it under
protest, another strict requirement under Section 252 of the
Local Government Code.24
Hence, the petition.
ISSUE: Whether submarine communications cables be
classified as taxable real property by the local governments?
HELD: We hold in the affirmative.The petition is denied. No
error attended the ruling of the appellate court that the case
involves factual questions that should have been resolved
before the appropriate administrative bodies.
Submarine or undersea communications cables are akin to
electric transmission lines which this Court has recently
declared 37as "no longer exempted from real property tax"
and may qualify as "machinery" subject to real property tax
under the Local Government Code. To the extent that the
equipment's location is determinable to be within the taxing
authority's jurisdiction, the Court sees no reason to
distinguish between submarine cables used for
communications and aerial or underground wires or lines
used for electric transmission, so that both pieces of property
do not merit a different treatment in the aspect of real
property taxation. Both electric lines and communications
cables, in the strictest sense, are not directly adhered to the
soil but pass through posts, relays or landing stations, but
both may be classified under the term "machinery" as real
property under Article 415(5)38 of the Civil Code for the
simple reason that such pieces of equipment serve the
owner's business or tend to meet the needs of his industry or
works that are on real estate. Even objects in or on a body of
water may be classified as such, as "waters" is classified as an
immovable under Article 415(8)39 of the Code.
As earlier stated, a way for Capwire to claim that its cable
system is not covered by such authority is by showing a
domestic enactment or even contract, or an international
agreement or treaty exempting the same from real property
taxation. It failed to do so, however, despite the fact that the
burden of proving exemption from local taxation is upon
whom the subject real property is declared.
SERGS PRODUCTS, INC., and SERGIO T.
GOQUIOLAY, petitioners, vs. PCI LEASING
AND FINANCE, INC., respondent.
After agreeing to a contract stipulating that a real or
immovable property be considered as personal or movable, a
party is estopped from subsequently claiming
otherwise. Hence, such property is a proper subject of a writ
of replevin obtained by the other contracting party
On February 13, 1998, respondent PCI Leasing filed with the
RTC-QC a complaint for a sum of money ,with an application
for a writ of replevin. upon an ex-parte application of PCI
Leasing, respondent judge issued a writ of replevin (Annex B)
directing its sheriff to seize and deliver the machineries and
equipment to PCI Leasing after 5 days and upon the payment
of the necessary expenses. implementation of said writ, the
sheriff proceeded to petitioners factory, seized one machinery
with [the] word that he [would] return for the other
machineries. petitioners filed a motion for special protective
order asserting that properties sought to be seized were
immovable and that respondent is stopped from treting the
machineries as personal because the contracts in which the
alleged agreement [were] embodied [were] totally sham and
farcical.
They went to [the CA] via an original action for certiorari. the
appellate court held that the subject machines were personal
property, and that they had only been leased, not owned, by
petitioners.
ISSUES: A. Whether or not the machineries purchased and
imported by SERGS became real property by virtue of
immobilization.
HELD: The Petition is not meritorious. In the present
case, the machines that were the subjects of the Writ of
Seizure were placed by petitioners in the factory built on
their own land. Indisputably, they were essential and
principal elements of their chocolate-making
industry. Hence, although each of them was movable or
personal property on its own, all of them have become
immobilized by destination because they are essential
and principal elements in the industry. [16] In that sense,
petitioners are correct in arguing that the said machines
are real, not personal, property pursuant to Article 415
(5) of the Civil Code.[17]
If a house of strong materials, like what was involved in
the above Tumalad case, may be considered as personal
property for purposes of executing a chattel mortgage
thereon as long as the parties to the contract so agree
and no innocent third party will be prejudiced thereby,
there is absolutely no reason why a machinery, which is
movable in its nature and becomes immobilized only by
destination or purpose, may not be likewise treated as
such. This is really because one who has so agreed is
estopped from denying the existence of the chattel
mortgage. (Tumalad case)
It should be stressed, however, that our holding -- that
the machines should be deemed personal property
pursuant to the Lease Agreement is good only insofar as
the contracting parties are concerned. [22] Hence, while
the parties are bound by the Agreement, third persons
acting in good faith are not affected by its stipulation
characterizing the subject machinery as personal. [23] In
any event, there is no showing that any specific third
party would be adversely affected.
Petitioners contend that if the Court allows these
machineries to be seized, then its workers would be out
of work and thrown into the streets. ] They also allege
that the seizure would nullify all efforts to rehabilitate
the corporation. Petitioners arguments do not preclude
the implementation of the Writ
WHEREFORE, the Petition is DENIED and the assailed
Decision of the Court of Appeals AFFIRMED. Costs
against petitioners.
G.R. No. L-58469 May 16, 1983
MAKATI LEASING and FINANCE CORPORATION, petitioner,
vs.
WEAREVER TEXTILE MILLS, INC., and HONORABLE COURT OF
APPEALS, respondents.
It appears that in order to obtain financial accommodations
from herein petitioner, the private respondent Wearever
Textile Mills, Inc., discounted and assigned several receivables
with the former under a Receivable Purchase Agreement. To
secure the collection of the receivables assigned, private
respondent executed a Chattel Mortgage over certain raw
materials inventory as well as a machinery described as an
Artos Aero Dryer Stentering Range.
Upon private respondent's default, petitioner filed a petition
for extrajudicial foreclosure of the properties mortgage to it.
However, the Deputy Sheriff assigned to implement the
foreclosure failed to gain entry into private respondent's
premises and was not able to effect the seizure of the
aforedescribed machinery. Petitioner thereafter filed a
complaint for judicial foreclosure with the CFI.
RTC:the lower court issued a writ of seizure, the enforcement
of which was however subsequently restrained upon private
respondent's filing of a motion for reconsideration. lower
court finally issued lifting the restraining order for the
enforcement of the writ of seizure and an order to break
open the premises of private respondent to enforce said writ.
CA: The Court of Appeals, in certiorari and prohibition
proceedings subsequently filed by herein private respondent,
set aside the Orders of the lower court and ordered the
return of the drive motor seized after ruling that the
machinery in suit cannot be the subject of replevin, much less
of a chattel mortgage, because it is a real property , the same
being attached to the ground by means of bolts and the only
way to remove it from respondent's plant would be to drill
out or destroy the concrete floor. The appellate court rejected
petitioner's argument that private respondent is estopped
from claiming that the machine is real property by
constituting a chattel mortgage thereon.
ISSUE: whether the machinery in suit is real or personal
property from the point of view of the parties, with petitioner
arguing that it is a personality
HELD: Although there is no specific statement referring to the
subject house as personal property, yet by ceding, selling or
transferring a property by way of chattel mortgage
defendants-appellants could only have meant to convey the
house as chattel, or at least, intended to treat the same as
such, so that they should not now be allowed to make an
inconsistent stand by claiming otherwise. Moreover, the
subject house stood on a rented lot to which defendants-
appellants merely had a temporary right as lessee, and
although this can not in itself alone determine the status of
the property, it does so when combined with other factors to
sustain the interpretation that the parties, particularly the
mortgagors, intended to treat the house as personality.
(Tumalad vs Vicencio)
We find no logical justification to exclude the rule out, as the
appellate court did, the present case from the application of
the abovequoted pronouncement. If a house of strong
materials, like what was involved in the above Tumalad case,
may be considered as personal property for purposes of
executing a chattel mortgage thereon as long as the parties to
the contract so agree and no innocent third party will be
prejudiced thereby, there is absolutely no reason why a
machinery, which is movable in its nature and becomes
immobilized only by destination or purpose, may not be
likewise treated as such. This is really because one who has so
agreed is estopped from denying the existence of the chattel
mortgage.
In rejecting petitioner's assertion on the applicability of the
Tumalad doctrine, the Court of Appeals lays stress on the fact
that the house involved therein was built on a land that did
not belong to the owner of such house. But the law makes no
distinction with respect to the ownership of the land on
which the house is built and We should not lay down
distinctions not contemplated by law.
It must be pointed out that the characterization of the subject
machinery as chattel by the private respondent is indicative of
intention and impresses upon the property the character
determined by the parties. As aptly pointed out by petitioner
and not denied by the respondent, the status of the subject
machinery as movable or immovable was never placed in
issue before the lower court and the Court of Appeals except
in a supplemental memorandum in support of the petition
filed in the appellate court. As aptly pointed out by petitioner
and not denied by the respondent, the status of the subject
machinery as movable or immovable was never placed in
issue before the lower court and the Court of Appeals except
in a supplemental memorandum in support of the petition
filed in the appellate court.
WHEREFORE, the questioned decision and resolution of the
Court of Appeals are hereby reversed and set aside, and the
Orders of the lower court are hereby reinstated.
G.R. No. L-50466 May 31, 1982
CALTEX (PHILIPPINES) INC., petitioner,
vs.
CENTRAL BOARD OF ASSESSMENT APPEALS and CITY
ASSESSOR OF PASAY, respondents.
This case is about the realty tax on machinery and equipment
installed by Caltex (Philippines) Inc. in its gas stations located
on leased land.
The controversial underground tank, depository of gasoline or
crude oil, is dug deep about six feet more or less, a few
meters away from the shed. This is done to prevent
conflagration because gasoline and other combustible oil are
very inflammable.
As to whether the subject properties are attached and affixed
to the tenement, it is clear they are, for the tenement we
consider in this particular case are (is) the pavement covering
the entire lot which was constructed by the owner of the
gasoline station and the improvement which holds all the
properties under question, they are attached and affixed to
the pavement and to the improvement. The pavement
covering the entire lot of the gasoline service station, as well
as all the improvements, machines, equipments and
apparatus are allowed by Caltex (Philippines) Inc. ...
So to say that the gasoline pumps, water pumps and
underground tanks are outside of the service station, and to
consider only the building as the service station is grossly
erroneous.
The lessor of the land, where the gas station is located, does
not become the owner of the machines and equipment
installed therein. Caltex retains the ownership thereof during
the term of the lease.
The city assessor of Pasay City characterized the said items of
gas station equipment and machinery as taxable realty. The
city board of tax appeals ruled that they are personalty. The
assessor appealed to the Central Board of Assessment
Appeals. The Board, held in its decision of June 3, 1977 that
the said machines and equipment are real property within the
meaning of sections 3(k) & (m) and 38 of the Real Property
Tax Code, Presidential Decree No. 464, which took effect on
June 1, 1974, and that the definitions of real property and
personal property in articles 415 and 416 of the Civil Code are
not applicable to this case.
Caltex filed this certiorari petition. The Solicitor General's
contention that the Court of Tax Appeals has exclusive
appellate jurisdiction over this case is not correct. Tax Court
had jurisdiction to review by appeal decisions of provincial or
city boards of assessment appeals had in mind the local
boards of assessment appeals but not the Central Board of
Assessment Appeals, therefore, in the same category as the
Tax Court.
ISSUE: The issue is whether the pieces of gas station
equipment and machinery already enumerated are subject to
realty tax. This issue has to be resolved primarily under the
provisions of the Assessment Law and the Real Property Tax
Code.
Section 2 of the Assessment Law provides that the realty tax
is due "on real property, including land, buildings, machinery,
and other improvements" not specifically exempted in section
3 thereof.
HELD: We hold that the said equipment and machinery, as
appurtenances to the gas station building or shed owned by
Caltex (as to which it is subject to realty tax) and which
fixtures are necessary to the operation of the gas station, for
without them the gas station would be useless, and which
have been attached or affixed permanently to the gas station
site or embedded therein, are taxable improvements and
machinery within the meaning of the Assessment Law and
the Real Property Tax Code.
Improvements on land are commonly taxed as realty even
though for some purposes they might be considered
personalty (84 C.J.S. 181-2, Notes 40 and 41). "It is a familiar
phenomenon to see things classed as real property for
purposes of taxation which on general principle might be
considered personal property" (Standard Oil Co. of New York
vs. Jaramillo, 44 Phil. 630, 633).
Caltex's gas station equipment and machinery ARE NOT the
same as tools and equipment in the repair shop of a bus
company which were held to be personal property not
subject to realty tax (Mindanao Bus Co. vs. City Assessor, 116
Phil. 501).
WHEREFORE, the questioned decision and resolution of the
Central Board of Assessment Appeals are affirmed. The
petition for certiorari is dismissed for lack of merit.
G.R. No. L-46245 May 31, 1982
MERALCO SECURITIES INDUSTRIAL
CORPORATION, petitioner,
vs.
CENTRAL BOARD OF ASSESSMENT APPEALS, BOARD OF
ASSESSMENT APPEALS OF LAGUNA and PROVINCIAL
ASSESSOR OF LAGUNA, respondents.
The record reveals that pursuant to a pipeline concession
issued under the Petroleum Act of 1949, Republic Act No.
387, Meralco Securities installed from Batangas to Manila a
pipeline system consisting of cylindrical steel pipes joined
together and buried not less than one meter below the
surface along the shoulder of the public highway.
The pipes are embedded in the soil and are firmly and solidly
welded together so as to preclude breakage or damage
thereto and prevent leakage or seepage of the oil. The valves
are welded to the pipes so as to make the pipeline system one
single piece of property from end to end.
In order to repair, replace, remove or transfer segments of the
pipeline, the pipes have to be cold-cut by means of a rotary
hard-metal pipe-cutter after digging or excavating them out of
the ground where they are buried and laid beneath the bed
thereof. Hence, the pipes are permanently attached to the
land.
However, Meralco Securities notes that segments of the
pipeline can be moved from one place to another shown in
permit issued by sec of DPWH and provides that the
government reserves the right to require the removal or
transfer of the pipes by and at the concessionaire's expense
should they be affected by any road repair or improvement.
Pursuant to the Assessment Law the provincial assessor of
Laguna treated the pipeline as real property and issued Tax
Declarations containing the assessed values of portions of the
pipeline. Meralco Securities appealed the assessments to the
Board of Assessment Appeals of Laguna but the board
upheld the assessments. Meralco Securities brought the case
to the Central Board of Assessment Appeals ruled that the
pipeline is subject to realty tax .
Meralco Securities filed the instant petition for certiorari. The
Solicitor General contends that certiorari is not proper in this
case because the Board acted within its jurisdiction.
We hold that certiorari was properly availed of in this case. It
is a writ issued by a superior court to an inferior court, board
or officer exercising judicial or quasi-judicial functions
whereby the record of a particular case is ordered to be
elevated for review and correction in matters of law (14 C.J.S.
121-122; 14 Am Jur. 2nd 777).
ISSUE: WON THE PIPLEINES ARE REAL PROPERTY AND
TAXABLE
HELD: It is incontestable that the pipeline of Meralco
Securities does not fall within any of the classes of exempt
real property enumerated in section 3 of the Assessment Law
and section 40 of the Real Property Tax Code.
Article 415[l] and [3] provides that real property may consist
of constructions of all kinds adhered to the soil and everything
attached to an immovable in a fixed manner, in such a way
that it cannot be separated therefrom without breaking the
material or deterioration of the object.
The pipeline system in question is indubitably a construction
adhering to the soil (Exh. B, p. 39, Rollo). It is attached to the
land in such a way that it cannot be separated therefrom
without dismantling the steel pipes which were welded to
form the pipeline. Insofar as the pipeline uses valves, pumps
and control devices to maintain the flow of oil, it is in a sense
machinery within the meaning of the Real Property Tax Code.
It should be borne in mind that what are being characterized
as real property are not the steel pipes but the pipeline
system as a whole. Meralco Securities has apparently two
pipeline systems. A pipeline for conveying petroleum has
been regarded as real property for tax purposes
We hold that the Central Board of Assessment Appeals did
not act with grave abuse of discretion, did not commit any
error of law and acted within its jurisdiction in sustaining the
holding of the provincial assessor and the local board of
assessment appeals that Meralco Securities' pipeline system
in Laguna is subject to realty tax. WHEREFORE, the
questioned decision and resolution are affirmed. The
petition is dismissed. No costs.
G.R. No. 168557 February 16, 2007
FELS ENERGY, INC., Petitioner,
vs.
THE PROVINCE OF BATANGAS and
THE OFFICE OF THE PROVINCIAL ASSESSOR OF
BATANGAS, Respondents.
Before us are two consolidated cases. The first is a petition for
review on certiorari. the second, also a petition for review on
certiorari. Both petitions were dismissed on the ground of
prescription.
On January 18, 1993, NPC entered into a lease contract with
Polar Energy, Inc. over 3x30 MW diesel engine power barges
moored at Balayan Bay in Calaca, Batangas. The contract,
denominated as an Energy Conversion Agreement , was for a
period of five years.
Subsequently, Polar Energy, Inc. assigned its rights under the
Agreement to FELS. The NPC initially opposed the assignment
of rights. FELS received an assessment of real property taxes
on the power barges from Provincial Assessor Lauro C.
Andaya of Batangas City. FELS referred the matter to NPC,
reminding it of its obligation under the Agreement to pay all
real estate taxes. It then gave NPC the full power and
authority to represent it in any conference regarding the real
property assessment of the Provincial Assessor.
NPC sought reconsideration of the Provincial Assessors
decision to assess real property taxes on the power barges.
However, the motion was denied. and the Provincial Assessor
advised NPC to pay the assessment.8 This prompted NPC to
file a petition with the Local Board of Assessment Appeals
(LBAA) for the setting aside of the assessment and the
declaration of the barges as non-taxable items; it also prayed
that should LBAA find the barges to be taxable, the Provincial
Assessor be directed to make the necessary corrections.9
Provincial Assessor averred that the barges were real property
for purposes of taxation. LBAA rendered a
Resolution11 denying the petition. FELS is hereby ordered to
pay the real estate tax
(The LBAA ruled that the power plant facilities, while they
may be classified as movable or personal property, are
nevertheless considered real property for taxation purposes
because they are installed at a specific location with a
character of permanency. The LBAA also pointed out that the
owner of the bargesFELS, a private corporationis the one
being taxed, not NPC. A mere agreement making NPC
responsible for the payment of all real estate taxes and
assessments will not justify the exemption of FELS; such a
privilege can only be granted to NPC and cannot be extended
to FELS. Finally, the LBAA also ruled that the petition was filed
out of time.)
Aggrieved, FELS appealed the LBAAs ruling to the Central
Board of Assessment Appeals (CBAA). the Provincial Treasurer
of Batangas City issued a Notice of Levy and Warrant by
Distraint13over the power barges. It then filed a Motion to Lift
Levy. the CBAA issued an Order 14 lifting the levy and distraint
on the properties of FELS in order not to preempt and render
ineffectual, nugatory and illusory any resolution or judgment
which the Board would issue.
During the pendency of the case, both FELS and NPC filed
several motions to admit bond to guarantee the payment of
real property taxes assessed by the Provincial Assessor and it
was duly approved by the CBAA.
On April 6, 2000, the CBAA rendered a Decision17 finding the
power barges exempt from real property tax (Ruling in favor
of FELS and NPC, the CBAA reasoned that the power barges
belong to NPC; since they are actually, directly and exclusively
used by it). NPC and FELS filed and MR but the CBAA denied
their motions.
Dissatisfied, FELS filed a petition for review before the CA. of
the appellate court rendered judgment in denying the
petition on the ground of prescription.
ISSUE: A. Whether power barges, which are floating and
movable, are personal properties and therefore, not subject
to real property tax.
B. Assuming that the subject power barges are real
properties, whether they are exempt from real estate tax
under Section 234 of the Local Government Code ("LGC").
HELD: Petitioners contentions are bereft of merit.
PRESCRIPTION: To reiterate, if the taxpayer fails to appeal in
due course, the right of the local government to collect the
taxes due with respect to the taxpayers property becomes
absolute upon the expiration of the period to appeal. 38 It also
bears stressing that the taxpayers failure to question the
assessment in the LBAA renders the assessment of the local
assessor final, executory and demandable, thus, precluding
the taxpayer from questioning the correctness of the
assessment, or from invoking any defense that would reopen
the question of its liability on the merits.
PROPERTY: We affirm the findings of the LBAA and CBAA that
the owner of the taxable properties is petitioner FELS, which
in fine, is the entity being taxed by the local government.
As found by the appellate court, the CBAA and LBAA power
barges are real property and are thus subject to real property
tax. This is also the inevitable conclusion, considering that
G.R. No. 165113 was dismissed for failure to sufficiently show
any reversible error. Tax assessments by tax examiners are
presumed correct and made in good faith, with the taxpayer
having the burden of proving otherwise. 48 Besides, factual
findings of administrative bodies, which have acquired
expertise in their field, are generally binding and conclusive
upon the Court; we will not assume to interfere with the
sensible exercise of the judgment of men especially trained in
appraising property.
Moreover, Article 415 (9) of the New Civil Code provides that
"[d]ocks and structures which, though floating, are intended
by their nature and object to remain at a fixed place on a
river, lake, or coast" are considered immovable property.
Thus, power barges are categorized as immovable property by
destination, being in the nature of machinery and other
implements intended by the owner for an industry or work
which may be carried on in a building or on a piece of land
and which tend directly to meet the needs of said industry or
work.
OWNERSHIP OF POWER BARGES. POLAR shall own the Power
Barges and all the fixtures, fittings, machinery and equipment
on the Site used in connection with the Power Barges which
have been supplied by it at its own cost. POLAR shall operate,
manage and maintain the Power Barges for the purpose of
converting Fuel of NAPOCOR into electricity. 52
It follows then that FELS cannot escape liability from the
payment of realty taxes.
SECTION 234. Exemptions from Real Property Tax. The
following are exempted from payment of the real property
tax:
(c) All machineries and equipment that are actually, directly
and exclusively used by local water districts and government-
owned or controlled corporations engaged in the supply and
distribution of water and/or generation and transmission of
electric power; x x x
Indeed, the law states that the machinery must be actually,
directly and exclusively used by the government owned or
controlled corporation.
. The privilege granted to petitioner NPC cannot be extended
to FELS. The covenant is between FELS and NPC and does not
bind a third person not privy thereto, in this case, the
Province of Batangas.
WHEREFORE, the Petitions are DENIED and the assailed
Decisions and Resolutions AFFIRMED.
G.R. No. L-15334 January 31, 1964
BOARD OF ASSESSMENT APPEALS, CITY ASSESSOR and CITY
TREASURER OF QUEZON CITY, petitioners,
vs.
MANILA ELECTRIC COMPANY, respondent.
Philippine Commission enacted Act No. 484 which authorized
the Municipal Board of Manila to grant a franchise to
construct, maintain and operate an electric street railway and
electric light, heat and power system in the City of Manila and
its suburbs to the person or persons making the most
favorable bid. Charles M. Swift was awarded the said
franchise. Respondent Manila Electric Co. (Meralco for short),
became the transferee and owner of the franchise.
The respondent Meralco has constructed 40 of these steel
towers within Quezon City, on land belonging to it. . Three
steel towers were inspected by the lower court and parties.
petitioner City Assessor of Quezon City declared the
aforesaid steel towers for real property tax. After denying
respondent's petition to cancel these declarations, an appeal
was taken by respondent to the Board of Assessment
Appeals of Quezon City, which required respondent to pay
the amount of P11,651.86 as real property tax on the said
steel towers for the years 1952 to 1956. Respondent paid the
amount under protest, and filed a petition for review in the
Court of Tax Appeals which rendered a decision on ordering
the cancellation of the said tax declarations and the
petitioner City Treasurer of Quezon City to refund to the
respondent the sum of P11,651.86. The motion for
reconsideration having been denied, on April 22, 1959, the
instant petition for review was filed.
(CTA held that: (1) the steel towers come within the term
"poles" which are declared exempt from taxes under part II
paragraph 9 of respondent's franchise; (2) the steel towers
are personal properties and are not subject to real property
tax; and (3) the City Treasurer of Quezon City is held
responsible for the refund of the amount paid)
ISSUE: WON THE CTA ERRED IN ITS DECISION STATING THAT
THE STEEL TOWERS ARE PERSONAL PROEPRTIES AND ARE
NOT SUBJECT TO REAL PROPERTY
HELD: The conclusion of the CTA that the steel supports in
question are embraced in the term "poles" is not a novelty.
Several courts of last resort in the United States have called
these steel supports "steel towers", and they denominated
these supports or towers, as electric poles. In their decisions
the words "towers" and "poles" were used interchangeably,
and it is well understood in that jurisdiction that a
transmission tower or pole means the same thing. The poles
as contemplated thereon, should be understood and taken as
a part of the electric power system of the respondent
Meralco, for the conveyance of electric current from the
source thereof to its consumers.
Granting for the purpose of argument that the steel supports
or towers in question are not embraced within the term poles,
the logical question posited is whether they
constitute real properties, so that they can be subject to a
real property tax.
The steel towers or supports in question, do not come within
the objects mentioned in paragraph 1, because they do not
constitute buildings or constructions adhered to the soil. They
are not construction analogous to buildings nor adhering to
the soil. As per description, given by the lower court, they are
removable and merely attached to a square metal frame by
means of bolts, which when unscrewed could easily be
dismantled and moved from place to place. They can not be
included under paragraph 3, as they are not attached to an
immovable in a fixed manner, and they can be separated
without breaking the material or causing deterioration upon
the object to which they are attached. Each of these steel
towers or supports consists of steel bars or metal strips,
joined together by means of bolts, which can be disassembled
by unscrewing the bolts and reassembled by screwing the
same. These steel towers or supports do not also fall under
paragraph 5, for they are not machineries, receptacles,
instruments or implements, and even if they were, they are
not intended for industry or works on the land. Petitioner is
not engaged in an industry or works in the land in which the
steel supports or towers are constructed.
It is finally contended that the CTA erred in ordering the City
Treasurer of Quezon City to refund the sum of P11,651.86,
despite the fact that Quezon City is not a party to the case. It
is argued that as the City Treasurer is not the real party in
interest, but Quezon City, which was not a party to the suit,
notwithstanding its capacity to sue and be sued, he should
not be ordered to effect the refund.
IN VIEW HEREOF, the decision appealed from is hereby
affirmed, with costs against the petitioners.
G.R. No. 6295 September 1, 1911
THE UNITED STATES, plaintiff-appellee,
vs.
IGNACIO CARLOS, defendant-appellant.
The undersigned accuses Ignacio Carlos of the crime of theft,
the said Ignacio Carlos, willfully, unlawfully, and feloniously,
take, steal , and carry away two thousand two hundred and
seventy-three (2,273) kilowatts of electric current, of the
value of nine hundred and nine (909) pesos and twenty (20)
cents Philippine currency, the property of the Manila Electric
Railroad and Light Company without the consent of the
owner thereof; to the damage and prejudice of the said
Manila Electric Railroad and Light Company in the said sum of
nine hundred and nine (909) pesos and twenty (20) cents
Philippine currency, equal to and equivalent of 4,546 pesetas
Philippine currency.
A preliminary investigation has heretofore been conducted in
this case. A warrant for the arrest of the defendant was
issued. The sheriff's return shows that the defendant gave
bond for his appearance. The counsel of the defendant filed a
demurrer but was overruled and the trial proceeded.
trial court found the defendant guilty of the crime charged
and sentenced him to one year eight months and twenty-one
days' presidio correccional, to indemnify the offended party,
The Manila Electric Railroad and Light Company, in the sum of
P865.26, to the corresponding subsidiary imprisonment in
case of insolvency and to the payment of the costs. The
defendant appealed.
Counsel for the appellant insists that the only corporeal
property can be the subject of the crime of larceny, and in the
support of this proposition cites several authorities for the
purpose of showing that the only subjects of larceny are
tangible, movable, chattels, something which could be taken
in possession and carried away, and which had some,
although trifling, intrinsic value, and also to show that
electricity is an unknown force and can not be a subject of
larceny.
ISSUE: III. The court erred in declaring that electrical energy
may be stolen.
HELD: Even without them (ordinances), the right of ownership
of electric current is secured by articles 517 and 518 of the
Penal Code; the application of these articles in case of
subtraction of gas, a fluid used for lighting, and in some
respects resembling electricity, is confirmed by the rule laid
down in the decisions of the supreme court of Spain (us VS
Genato)
The following are guilty of larceny:
(1) Those who with intent of gain and without violence or
intimidation against the person, or force against things, shall
take another's personal property without the owner's
consent.
And article 518 fixes the penalty for larceny in proportion to
the value of the personal property stolen.
It is true that electricity is no longer, as formerly, regarded by
electricians as a fluid, but its manifestation and effects, like
those of gas, may be seen and felt. The true test of what is a
proper subject of larceny seems to be not whether the
subject is corporeal, but whether it is capable of
appropriation by another than the owner.
In the case of Commonwealth vs. Shaw, supra, the court,
speaking through Chief Justice Bigelow, said:
There is nothing in the nature of gas used for illuminating
purposes which renders it incapable of being feloniously
taken and carried away. It is a valuable article of merchandise,
bought and sold like other personal property, susceptible of
being severed from a mass or larger quantity, and of being
transported from place to place. In the present case it
appears that it was the property of the Boston Gas Light
Company; that it was in their possession by being confined in
conduits and tubes which belonged to them, and that the
defendant severed a portion of that which was in the pipes of
the company by taking it into her house and there consuming
it.
In the present case it appears that it was the property of the
Boston Gas Light Company; that it was in their possession by
being confined in conduits and tubes which belonged to
them, and that the defendant severed a portion of that
which was in the pipes of the company by taking it into her
house and there consuming it.
The judgment being strictly in accordance with the law and
the merits of the case, same is hereby affirmed, with costs
against the appellant.
G.R. No. 155076 February 27, 2006
LUIS MARCOS P. LAUREL, Petitioner,
vs.
HON. ZEUS C. ABROGAR, Presiding Judge of the Regional
Trial Court, Makati City, Branch 150, PEOPLE OF THE
PHILIPPINES& PHILIPPINE LONG DISTANCE TELEPHONE
COMPANY, Respondents.
Before us is a Petition for Review on Certiorari.
Philippine Long Distance Telephone Company (PLDT) is the
holder of a legislative franchise to render local and
international telecommunication services under Republic Act
No. 7082.2 Under said law, PLDT is authorized to establish,
operate, manage, lease, maintain and purchase
telecommunication systems, including transmitting, receiving
and switching stations, for both domestic and international
calls. For this purpose, it has installed an estimated 1.7 million
telephone lines nationwide.
PLDT alleges that one of the alternative calling patterns that
constitute network fraud and violate its network integrity is
that which is known as International Simple Resale (ISR). ISR is
a method of routing and completing international long
distance calls using International Private Leased Lines (IPL),
cables, antenna or air wave or frequency, which connect
directly to the local or domestic exchange facilities of the
terminating country (the country where the call is destined).
The IPL is linked to switching equipment which is connected
to a PLDT telephone line/number. In the process, the calls
bypass the IGF found at the terminating country, or in some
instances, even those from the originating country. 4
One such alternative calling service is that offered by Baynet
Co., Ltd. (Baynet) which sells "Bay Super Orient Card" phone
cards to people who call their friends and relatives in the
Philippines. With said card, one is entitled to a 27-minute call
to the Philippines for about 37.03 per minute. According to
PLDT, calls made through the IPL never pass the toll center of
IGF operators in the Philippines. Using the local line, the
Baynet card user is able to place a call to any point in the
Philippines, provided the local line is National Direct Dial
(NDD) capable.
PLDT asserts that Baynet conducts its ISR activities by utilizing
an IPL to course its incoming international long distance calls
from Japan. The IPL is linked to switching equipment, which is
then connected to PLDT telephone lines/numbers and
equipment, with Baynet as subscriber. Consequently, the
operator of an ISR is able to evade payment of access,
termination or bypass charges and accounting rates, as well
as compliance with the regulatory requirements of the NTC.
Thus, the ISR operator offers international telecommunication
services at a lower rate, to the damage and prejudice of
legitimate operators like PLDT.6
PLDT also discovered that Baynet subscribed to a total of 123
PLDT telephone lines/numbers. PLDT incurred an estimated
monthly loss of P10,185,325.96.9 Records at the Securities
and Exchange Commission (SEC) also revealed that Baynet
was not authorized to provide international or domestic long
distance telephone service in the country.
PLDT filed a complaint against Baynet for fraud and 2 search
warrants were issued. NBI agents searched its office and its
officers was arrested while in the act of manning the
operations of Baynet.
State Prosecutor Ofelia L. Calo conducted an inquest
investigation and issued a Resolution , finding probable cause
for theft against the respondents including Laurel.
Accused Laurel filed a "Motion to Quash (with Motion to
Defer Arraignment)" on the ground that the factual
allegations in the Amended Information do not constitute the
felony of theft. He claimed that telephone calls with the use
of PLDT telephone lines, whether domestic or international,
belong to the persons making the call, not to PLDT. He argued
that the caller merely uses the facilities of PLDT, and what the
latter owns are the telecommunication infrastructures or
facilities through which the call is made. He also asserted that
PLDT is compensated for the callers use of its facilities by way
of rental; for an outgoing overseas call, PLDT charges the
caller per minute, based on the duration of the call. Thus, no
personal property was stolen from PLDT. According to Laurel,
the P20,370,651.92 stated in the Information, if anything,
represents the rental for the use of PLDT facilities, and not the
value of anything owned by it.
The prosecution, through private complainant PLDT, opposed
the motion,14 contending that the movant unlawfully took
personal property belonging to it. It averred that such
service/facility is akin to electricity which, although an
intangible property, may, nevertheless, be appropriated and
be the subject of theft.
The prosecution further alleged that "international business
calls and revenues constitute personal property envisaged in
Article 308 of the Revised Penal Code." Moreover, the
intangible telephone services/facilities belong to PLDT and
not to the movant and the other accused, because they have
no telephone services and facilities of their own duly
authorized by the NTC;
The prosecution pointed out that the accused, as well as the
movant, were paid in exchange for their illegal appropriation
and use of PLDTs telephone services and facilities; on the
other hand, the accused did not pay a single centavo for their
illegal ISR operations.
RTC issued an Order16 denying the Motion to Quash the
Amended Information.
Laurel filed a Motion for Reconsideration 17 of the Order,
alleging that international long distance calls are not personal
property, and are not capable of appropriation. He
maintained that business or revenue is not considered
personal property, and that the prosecution failed to adduce
proof of its existence and the subsequent loss of personal
property belonging to another.
RTC: RTC denied the movants Motion for Reconsideration.
This time, it ruled that what was stolen from PLDT was its
"business" because, as alleged in the Amended Information,
the international long distance calls made through the
facilities of PLDT formed part of its business. (cited
Strochecker v. Ramirez,20where the Court ruled that interest in
business is personal property capable of appropriation. It
further declared that, through their ISR operations, the
movant and his co-accused deprived PLDT of fees for
international long distance calls, and that the ISR used by the
movant and his co-accused was no different from the
"jumper" used for stealing electricity.)
Laurel then filed a Petition for Certiorari with the CA. Thus,
Laurel concluded, "there is no crime if there is no law
punishing the crime."
CA: the CA rendered judgment dismissing the petition. 27 The
appellate court ruled that a petition for certiorari under Rule
65 of the Rules of Court was not the proper remedy of the
petitioner. On the merits of the petition, it held that while
business is generally an activity which is abstract and
intangible in form. The CA opined that PLDTs business of
providing international calls is personal property which may
be the object of theft. Hence, the petition.
ISSUE: THE COURT OF APPEALS ERRED IN RULING THAT THE
TERM "BUSINESS" IS PERSONAL PROPERTY WITHIN THE
MEANING OF ART. 308 OF THE REVISED PENAL CODE. 30
HELD:
OSG: Office of the Solicitor General (OSG) maintains that the
amended information clearly states all the essential elements
of the crime of theft. The OSG maintains that the
international long distance calls alleged in the amended
information should be construed to mean "business" of PLDT,
which, while abstract and intangible in form, is personal
property susceptible of appropriation.31 The OSG avers that
what was stolen by petitioner and his co-accused is the
business of PLDT providing international long distance calls
which, though intangible, is personal property of the PLDT.
On the second issue, we find and so hold that the
international telephone calls placed by Bay Super Orient Card
holders, the telecommunication services provided by PLDT
and its business of providing said services are not personal
properties under Article 308 of the Revised Penal Code. The
construction by the respondents of Article 308 of the said
Code to include, within its coverage, the aforesaid
international telephone calls, telecommunication services and
business is contrary to the letter and intent of the law.
The rule is that, penal laws are to be construed strictly. It is
Congress, not the Court, which is to define a crime, and
ordain its punishment.
One is apt to conclude that "personal property" standing
alone, covers both tangible and intangible properties and are
subject of theft under the Revised Penal Code. But the words
"Personal property" under the Revised Penal Code must be
considered in tandem with the word "take" in the law. The
statutory definition of "taking" and movable property
indicates that, clearly, not all personal properties may be the
proper subjects of theft. The general rule is that, only
movable properties which have physical or material existence
and susceptible of occupation by another are proper objects
of theft.52
Thus, movable properties under Article 308 of the Revised
Penal Code should be distinguished from the rights or
interests to which they relate. A naked right existing merely in
contemplation of law, although it may be very valuable to the
person who is entitled to exercise it, is not the subject of theft
or larceny.55 Such rights or interests are intangible and cannot
be "taken" by another. Thus, right to produce oil, good will or
an interest in business, or the right to engage in business,
credit or franchise are properties. So is the credit line
represented by a credit card. However, they are not proper
subjects of theft or larceny because they are without form or
substance, the mere "breath" of the Congress. On the other
hand, goods, wares and merchandise of businessmen and
credit cards issued to them are movable properties with
physical and material existence and may be taken by another;
hence, proper subjects of theft.
We agree with the contention of the respondents that
intangible properties such as electrical energy and gas are
proper subjects of theft. The reason for this is that, as
explained by this Court in United States v. Carlos
Gas and electrical energy should not be equated with
business or services provided by business entrepreneurs to
the public. Business does not have an exact definition.
Business is also defined as a commercial activity for gain
benefit or advantage.67 Business, like services in business,
although are properties, are not proper subjects of theft
under the Revised Penal Code because the same cannot be
"taken" or "occupied."
If it was its intention to include "business" as personal
property under Article 308 of the Revised Penal Code, the
Philippine Legislature should have spoken in language that is
clear and definite: that business is personal property under
Article 308 of the Revised Penal Code.
Respondent PLDT does not acquire possession, much less,
ownership of the voices of the telephone callers or of the
electronic voice signals or current emanating from said calls.
The human voice and the electronic voice signals or current
caused thereby are intangible and not susceptible of
possession, occupation or appropriation by the respondent
PLDT or even the petitioner, for that matter. PLDT merely
transmits the electronic voice signals through its facilities and
equipment. Baynet Card Ltd., through its operator, merely
intercepts, reroutes the calls and passes them to its toll
center.
The petitioner is not charged, under the Amended
Information, for theft of telecommunication or telephone
services offered by PLDT. Even if he is, the term "personal
property" under Article 308 of the Revised Penal Code cannot
be interpreted beyond its seams so as to include
"telecommunication or telephone services" or computer
services for that matter. The word "service" has a variety of
meanings dependent upon the context, or the sense in which
it is used; and, in some instances, it may include a sale. 76 A
service is generally not considered property and a theft of
service would not, therefore, constitute theft since there can
be no caption or asportation.77 Neither is the unauthorized
use of the equipment and facilities of PLDT by the petitioner
theft under the aforequoted provision of the Revised Penal
Code.
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED.
The assailed Orders of the Regional Trial Court and the
Decision of the Court of Appeals are REVERSED and SET
ASIDE. The Regional Trial Court is directed to issue an order
granting the motion of the petitioner to quash the Amended
Information.
G.R. No. 179408, March 05, 2014
PHILIPPINE LONG DISTANCE TELEPHONE
COMPANY, Petitioner, v. ABIGAIL R. RAZON ALVAREZ AND
VERNON R. RAZON, Respondents.
Before the Court is a petition for review
on certiorari1 assailing the decision of the CA on the validity of
four search waraants issued by the RTC.
Philippine Long Distance Telephone Company (PLDT) is the
grantee of a legislative franchise 5 which authorizes it to carry
on the business of providing basic and enhanced
telecommunications services in and between areas in the
Philippines and between the Philippines and other countries
and territories. Pursuant to its franchise, PLDT offers to the
public wide range of services duly authorized by NTC.
To safeguard the integrity of its network, PLDT regularly
conducts investigations on various prepaid cards marketed
and sold abroad to determine alternative calling patterns
(ACP) and network fraud that are being perpetrated against it.
To prevent or stop network fraud, PLDTs ACP Detection
Division (ACPDD) regularly visits foreign countries to conduct
market research on various prepaid phone cards offered
abroad that allow their users to make overseas calls to PLDT
subscribers in the Philippines at a cheaper rate.
During a test call placed at the PLDTACPDD office, the
receiving phone reflected a PLDT telephone number as the
calling number used, as if the call was originating from a local
telephone in Metro Manila. Upon verification with the PLDTs
Integrated Customer Management (billing) System, the
ACPDD learned that the subscriber of the reflected telephone
number is Abigail R. Razon Alvarez, with address in
Paranaque. . It further learned that several lines are installed
at this address with Abigail and Vernon R. Razon
(respondents), among others, as subscribers. 10
To validate its findings, the ACPDD conducted the same test
calls on November 5, 2003 at the premises of the NTC in
Quezon City (and in the presence of an NTC representative 11).
Similar test calls subsequently conducted using the prepaid
cards Unity Card and IDT Supercalling Cardrevealed the same
results. According to PLDT, had an ordinary and legitimate call
been made, the screen of the calleridequipped receiving
phone would not reflect a local number or any number at all.
Since calls through the internet never pass the toll center of
the PLDTs IGF, users of these prepaid cards can place a call to
any point in the Philippines (provided the local line is NDD
capable) without the call appearing as coming from abroad.
Mr. Lawrence Narciso of the PLDTs Quality Control Division,
together with the operatives of the Philippine National Police
(PNP), conducted an ocular inspection at the said residence
and discovered that PLDT telephone lines were connected to
several pieces of equipment.
Police Superintendent Gilbert C. Cruz filed a consolidated
application for a search warrant 18 before Judge Francisco G.
Mendiola of the RTC, for the crimes of theft and violation of
PD No. 401. According to PLDT, the respondents are engaged
in a form of network fraud known as International Simple
Resale (ISR) which amounts to theft under the RPC.
Judge Mendiola found probable cause for the issuance of the
search warrants applied for. Accordingly, four search
warrants20 were issued.
respondents filed with the RTC a motion to quash 24 the search
warrants. RTC denied the respondents' motion to quash.
Having been rebuffed27 in their motion for
28
reconsideration, the respondents filed a petition
for certiorari with the CA. 29
CA rendered the assailed decision and resolution, granting the
respondents' petition for certiorari. The CA quashed SW Al
and SW A2 (for theft) on the ground that they were issued
for nonexistent crimes. With respect to SW Bl and SW B
2 (for violation of PD No. 401), the CA upheld paragraphs one
to six of the enumeration of items subject of the search The
CA, however, nullified the ensuing paragraphs, 7, 8 and 9, for
lack of particularity and ordered the return of the items
seized under these provisions
HELD: We partially grant the petition.
(Laurel case) On January 13, 2009 (or while the present
petition was pending in court), the Court En Bancunanimously
granted PLDTs motion for reconsideration. 39 The Court ruled
that even prior to the passage of the RPC, jurisprudence is
settled that any personal property, tangible or intangible,
corporeal or incorporeal, capable of appropriation can be the
object of theft. 40 This jurisprudence, in turn, applied the
prevailing legal meaning of the term personal property
under the old Civil Code as anything susceptible of
appropriation and not included in the foregoing chapter (not
real property). 41PLDTs telephone service or its business of
providing this was appropriable personal property and was, in
fact, the subject of appropriation in an ISR operation,
facilitated by means of the unlawful use of PLDTs facilities. In
this regard, the Amended Information inaccurately describes
the offense by making it appear that what [Laurel] took were
the international long distance telephone calls, rather than
respondent PLDTs business.
Indeed, while it may be conceded that international long
distance calls, the matter alleged to be stolen xxx, take the
form of electrical energy, it cannot be said that such
international long distance calls were personal properties
belonging to PLDT since the latter could not have acquired
ownership over such calls. PLDT merely encodes, augments,
enhances, decodes and transmits said calls using its complex
communications infrastructure and facilities. PLDT not being
the owner of said telephone calls, then it could not validly
claim that such telephone calls were taken without its
consent. It is the use of these communications facilities
without the consent of PLDT that constitutes the crime of
theft, which is the unlawful taking of the telephone services
and business.
Therefore, the business of providing telecommunication and
the telephone service are personal property under Article 308
WHEREFORE, premises considered, the petition is PARTIALLY
GRANTED. The decision and the resolution of the Court of
Appeals in CAG.R. SP No. 89213 are hereby MODIFIED in
that SW Al and SW A2 are hereby declared valid and
constitutional. SO ORDERED.
BUILDINGS
petitioner, Antonio Punsalan, Jr., was the former registered
owner of a parcel of land consisting of 340 square meters
situated in Bamban, Tarlac. mortgaged said land to
respondent PNB (Tarlac Branch) in the amount of P10,000.00,
but for failure to pay said amount, the property was
foreclosed. Respondent PNB (Tarlac Branch) was the highest
bidder in said foreclosure proceedings. However, the bank
secured title thereto only on December 14, 1977.
In the meantime, in 1974, while the properly was still in the
alleged possession of petitioner and with the alleged
acquiescence of respondent PNB (Tarlac Branch), and upon
securing a permit from the Municipal Mayor, petitioner
constructed a warehouse on said property. Petitioner
declared said warehouse for tax purposes for which he was
issued Tax Declaration No. 5619. Petitioner then leased the
warehouse to one Hermogenes Sibal for a period of 10 years
starting January 1975.
Deed of Sale was executed between respondent PNB and
respondent Lacsamana over the property. This contract was
amended particularly to include in the sale, the building and
improvement thereon. - Lacsamana secured title over the
property in her name as well as separate tax declarations for
the land and building.
petitioner commenced suit for "Annulment of Deed of Sale
with Damages" against herein respondents PNB and
Lacsamana. essentially impugning the validity of the sale of
the building as embodied in the Amended Deed of Sale.
, respondent PNB filed a Motion to Dismiss on the ground
that venue was improperly laid considering that the building
was real property under article 415 (1) of the New Civil Code
and therefore section 2(a) of Rule 4 should apply. 4
Opposing said Motion to Dismiss, petitioner contended that
the action for annulment of deed of sale with damages is in
the nature of a personal action, which seeks to recover not
the title nor possession of the property but to compel
payment of damages, which is not an action affecting title to
real property.
RTC: respondent Court granted respondent PNB's Motion to
Dismiss as follows: which warehouse is an immovable
property pursuant to Article 415, No. 1 of the New Civil Code;
and, as such the action of the plaintiff is a real action affecting
title to real property which, under Section 2, Rule 4 of the
New Rules of Court, must be tried in the province where the
property or any part thereof lies.
MR- In his Motion for Reconsideration of the aforestated
Order, petitioner reiterated the argument that the action to
annul does not involve ownership or title to property but is
limited to the validity of the deed of sale. respondent Court
denied reconsideration for lack of merit
Petitioner then filed a Motion to Set Case for Pre-trial, in so
far as respondent Lacsamana was concerned. respondent
Court denied said Motion to Set Case for Pre-trial as the case
was already dismissed in the previous Orders.
Hence, this Petition for Certiorari
ISSUE: WON THE SUBJECT PROPERTIES ARE IMMOVABLE
PROPERTIES WHICH INCLUDES REAL ACTION.
HELD: We affirm respondent Court's Order denying the
setting for pre-trial
The warehouse claimed to be owned by petitioner is an
immovable or real property as provided in article 415(l) of the
Civil Code. 6 Buildings are always immovable under the
Code. 7 A building treated separately from the land on which
it stood is immovable property and the mere fact that the
parties to a contract seem to have dealt with it separate and
apart from the land on which it stood in no wise changed its
character as immovable property. 8
While it is true that petitioner does not directly seek the
recovery of title or possession of the property in question, his
action for annulment of sale and his claim for damages are
closely intertwined with the issue of ownership of the
building which, under the law, is considered immovable
property, the recovery of which is petitioner's primary
objective. The prevalent doctrine is that an action for the
annulment or rescission of a sale of real property does not
operate to efface the fundamental and prime objective and
nature of the case, which is to recover said real property. It is
a real action. 9
Respondent Court, therefore, did not err in dismissing the
case on the ground of improper venue (Section 2, Rule 4) 10,
which was timely raised (Section 1, Rule 16) 11.
Petitioner's other contention that the case should proceed in
so far as respondent Lacsamana is concerned as she had
already filed an Answer, which did not allege improper venue
and, therefore, issues had already been joined, is likewise
untenable. Respondent PNB is an indispensable party as the
validity of the Amended Contract of Sale between the former
and respondent Lacsamana is in issue. It would, indeed, be
futile to proceed with the case against respondent Lacsamana
alone.
WHEREFORE, the petition is hereby denied without prejudice
to the refiling of the case by petitioner Antonio Punsalan, Jr. in
the proper forum.
G.R. No. L-50008 August 31, 1987
PRUDENTIAL BANK, petitioner,
vs.
HONORABLE DOMINGO D. PANIS, Presiding Judge of Branch
III, Court of First Instance of Zambales and Olongapo City;
FERNANDO MAGCALE & TEODULA BALUYUT-
MAGCALE, respondents.
This is a petition for review on certiorari. declaring that the
deeds of real estate mortgage executed by respondent
spouses in favor of petitioner bank are null and void.
plaintiffs-spouses Fernando A. Magcale and Teodula Baluyut
Magcale secured a loan in the sum of P70,000.00 from the
defendant Prudential Bank. To secure payment of this loan,
plaintiffs executed in favor of defendant on the aforesaid date
a deed of Real Estate Mortgage.
Apart from the stipulations in the printed portion of the
aforestated deed of mortgage, there appears a rider typed at
the bottom of the reverse side of the document under the
lists of the properties mortgaged which reads, as follows:
AND IT IS FURTHER AGREED that in the event the Sales Patent
on the lot applied for by the Mortgagors as herein stated is
released or issued by the Bureau of Lands, the Mortgagors
hereby authorize the Register of Deeds to hold the
Registration of same until this Mortgage is cancelled, or to
annotate this encumbrance on the Title upon authority from
the Secretary of Agriculture and Natural Resources, which
title with annotation, shall be released in favor of the herein
Mortgage.
From the aforequoted stipulation, it is obvious that the
mortgagee (defendant Prudential Bank) was at the outset
aware of the fact that the mortgagors (plaintiffs) have already
filed a Miscellaneous Sales Application over the lot,
possessory rights over which, were mortgaged to it.
plaintiffs secured an additional loan from defendant
Prudential Bank in the sum of P20,000.00. To secure payment
of this additional loan, plaintiffs executed in favor of the said
defendant another deed of Real Estate Mortgage over the
same properties previously mortgaged.
the Secretary of Agriculture issued Miscellaneous Sales Patent
No. 4776 over the parcel of land, possessory rights over which
were mortgaged to defendant Prudential Bank, in favor of
plaintiffs. On the basis of the aforesaid Patent, and upon its
transcription in the Registration Book of the Province of
Zambales, Original Certificate of Title No. P-2554 was issued
in the name of Plaintiff Fernando Magcale, by the Ex-Oficio
Register of Deeds of Zambales
For failure of plaintiffs to pay their obligation to defendant
Bank after it became due, and upon application of said
defendant, the deeds of Real Estate Mortgage (Exhibits "A"
and "B") were extrajudicially foreclosed. There was an auction
sale but the sheriff desist from going on wih the bidding.
Respondent Court, in a Decision declared the deeds of Real
Estate Mortgage as null and void.
Thereafter, the petition was given due course and the parties
were required to submit simultaneously their respective
memoranda.
ISSUE: The pivotal issue in this case is whether or not a valid
real estate mortgage can be constituted on the building
erected on the land belonging to another.
HELD: This petition is impressed with merit. The answer is in
the affirmative.
In the enumeration of properties under Article 415 of the Civil
Code of the Philippines, this Court ruled that, "it is obvious
that the inclusion of "building" separate and distinct from the
land, in said provision of law can only mean that a building is
by itself an immovable property."
Thus, while it is true that a mortgage of land necessarily
includes, in the absence of stipulation of the improvements
thereon, buildings, still a building by itself may be mortgaged
apart from the land on which it has been built. Such a
mortgage would be still a real estate mortgage for the
building would still be considered immovable property even if
dealt with separately and apart from the land (Leung Yee vs.
Strong Machinery Co., 37 Phil. 644). In the same manner, this
Court has also established that possessory rights over said
properties before title is vested on the grantee, may be validly
transferred or conveyed as in a deed of mortgage.
MORTGAGE: Under the foregoing considerations, it is evident
that the mortgage executed by private respondent on his own
building which was erected on the land belonging to the
government is to all intents and purposes a valid mortgage.
But it is a different matter, as regards the second mortgage
executed over the same properties on May 2, 1973 for an
additional loan of P20,000.00. , it is evident that such
mortgage executed after the issuance of the sales patent and
of the Original Certificate of Title, falls squarely under the
prohibitions stated in Sections 121, 122 and 124 of the Public
Land Act and Section 2 of Republic Act 730, and is therefore
null and void.
PREMISES CONSIDERED, the decision of the Court of First
Instance of Zambales & Olongapo City is hereby MODIFIED,
declaring that the Deed of Real Estate Mortgage for
P70,000.00 is valid but ruling that the Deed of Real Estate
Mortgage for an additional loan of P20,000.00 is null and
void, without prejudice to any appropriate action the
Government may take against private respondents.
G.R. No. 189061 August 6, 2014
MIDWAY MARITIME AND TECHNOLOGICAL FOUNDATION,
represented by its Chairman/President PhD in Education DR.
SABINO M. MANGLICMOT, Petitioner,
vs.
MARISSA E. CASTRO, ET AL., Respondents.
The petitioner Midway Maritime and Technological
Foundation (petitioner) is the lessee of two parcels of land in
Cabanatuan City. Its president, Dr. Sabino Manglicmot
(Manglicmot), is married to Adoracion Cloma (Adoracion),
who is the registered owner of the property. Inside said
property stands a residential building, which is now the
subject matter of the dispute, owned by the respondents.
The two parcels of land, on a portion of which the residential
building stand, were originally owned by the respondents
father Louis Castro, Sr. The elder Castro was also the president
of Cabanatuan City Colleges (CCC). Castro mortgaged the
property to Bancom Development Corporation (Bancom) to
secure a loan. During the subsistence of the mortgage, CCCs
board of directors agreed to a 15-year lease of a portion of
the property to the Castrochildren, herein respondents, who
subsequently built the residential house now in dispute.
When CCC failed to pay its obligation, Bancom foreclosed the
mortgage and the property was sold at public auction and
Bancom as the highest bidder. Bancom thereafter assigned
the credit to Union Bank of the Philippines. and later on,
Union Bank consolidated its ownership over the properties in
1984 due to CCCs failure to redeem the property. When
Union Bank sought the issuance of a writ of possession over
the properties, which included the residential building,
respondents opposed the same. The case reached the Court
and ruled that the residential house owned by the
respondents should not have been included in the writ of
possession issued by the trial court as CCC has no title over it.
In the meantime, Adoracions father, Tomas Cloma (Tomas),
bought the two parcels of land from Union Bank in an auction
sale. Tomas subsequently leased the property to the
petitioner and thereafter, sold the same to Adoracion.Several
suits were brought by the respondents against the petitioner,
which is an action for Ownership, Recovery of Possession and
Damages.
In their Amended Complaint 2 the respondents alleged that:
(1) they are the owners ofthe residential building subject of
the dispute, which they used from 1977 to 1985 when they
left for the United States of America and instituted their
uncle, Josefino C. Castro (Josefino), as the caretaker; (2)
Manglicmot, who was the President of the petitioner Midway
Maritime and Technological Foundation, leased the building
(except for the portion occupied by Josefino) from Lourdes
Castro, mother of the respondentswithmonthly rent of
6,000.00, which was later to be increased to 10,000.00 in
after Josefino vacates his occupied portion; (3) the petitioner
failed to pay rent starting August 1995, thus prompting the
respondents to file the action. Petitioner denied repondents
ownership of the residential building and claimed that
Adoracion owns the building, having bought the same
together with the land on which it stands.
RTC of Cabanatuan City rendered judgment in favor of the
respondents, declared them as the absolute owners of the
residential building and ordered petitioner to pay the
respondents unpaidrentals from August 1995 until fully paid.
The Court of Appeals (CA) dismissed the petitioners appeal
and affirmed the RTC decision
ISSUE: swhether there was a lease agreement between the
petitioner and the respondents as regards the residential
building. / won the respondents ownership of the residential
building is already an established fact.
HELD: Given the existence of the lease,the petitioners claim
denying the respondents ownership of the residential house
must be rejected. the respondentsownership of the
residential building is already an established fact
Given the existence of the lease,the petitioners claim denying
the respondents ownership of the residential house must be
rejected.
"Nemo dat quod non habet. One can sell only what one owns
or is authorized to sell, and the buyer can acquire no more
right than what the seller can transfer legally." 18 It must be
pointed out that what Tomas bought from Union Bank in the
auction sale werethe two parcels of land originally owned and
mortgaged by CCC to Bancom, and which mortgage was later
assigned by Bancom to Union Bank. Contrary to the
petitioners assertion, the property subject of the mortgage
and consequently the auction sale pertains only to these two
parcels of land and did not include the residential house.
[Article 2127 of the Civil Code] extends the effects of the real
estate mortgage to accessions and accessories found on the
hypothecated property when the secured obligation becomes
due. The law is predicated on an assumption that the
ownership of such accessions and accessories also belongs to
the mortgagor as the owner of the principal. The provision
has thus been seen by the Court, x x x, to mean that all
improvements subsequently introduced or owned by the
mortgagor on the encumbered property are deemed to form
part of the mortgage. That the improvements are to be
considered so incorporated only if so owned by the
mortgagor is a rule that can hardly be debated since a
contract of security, whether real or personal, needs as an
indispensable element thereof the ownership by the pledgor
ormortgagor of the property pledged or mortgaged.
A sale would result in the transmission of title to the buyer
which is feasible only if the seller can be in a position to
convey ownership of the thing sold (Article 1458, Civil Code).
in the instant case, that a foreclosure would be ineffective
unless the mortgagor has title to the property to be
foreclosed. As regards the ruling of the RTC of Cabanatuan
City, Branch) that the advertised sale of the property included
allthe improvements thereon,23 suffice it to say that said case
involved an action for ejectment and any resolution by the
RTC on the matter of the ownership of the improvements of
the property.
Also, Adoracions subsequent acquisition of the two parcels of
land from her father does not necessarily entail the
acquisition of the residential building. "A building by itself is a
realor immovable property distinct from the land on which it
is constructed. therefore can be a separate subject of
contracts."26 Whatever Adoracion acquired from her father is
still subject to the limitation pronounced by the Court in
Castro, and the sale between Adoracion and Tomas is
confined only to the two parcels of land and excluded the
residential building owned by the respondents. It is beyond
question that Tomas, and subsequently, Adoracion, could
nothave acquired a right greater than what their
predecessors-in-interest CCC and later, Union Bank had.
The foregoing issue, however, cannot be considered in the
present action. As established from the facts ofthis case, the
residential house is located on a portion of the property that
was leased by CCC to the respondents. Disputing the lease
between CCC and the respondents, in effect, goes into the
right of the respondents to maintain the residential house in
question and eventually, their right to have the same leased
to the petitioner.
the lease between CCC and the respondents already expired.
The fact that Adoracion subsequently bought the property did
not ipso facto terminate the lease. Also, Adoracions
subsequent acquisition of the two parcels of land from her
father does not necessarily entail the acquisition of the
residential building. "A building by itself is a realor immovable
property distinct from the land on which it is constructedr,
Adoracion, acquired the property in 1993.
It cannot be denied that the transferors/purchasers of the
property all had knowledge of the lease between CCC and the
respondents; yet, not any of the transferors/purchasers
moved to terminate the lease.
Petition is denied for lack of merit.
G.R. No. 120098 October 2, 2001
RUBY L. TSAI, petitioner,
vs.
HON. COURT OF APPEALS, EVER TEXTILE MILLS, INC. and
MAMERTO R VILLALUZ, respondents.
x---------------------------------------------------------x
[G.R. No. 120109. October 2, 2001.]
PHILIPPINE BANK OF COMMUNICATIONS, petitioner,
vs.
HON. COURT OF APPEALS, EVER TEXTILE MILLS and
MAMERTO R VILLALUZ, respondents.
On November 26, 1975, respondent Ever Textile Mills, Inc.
obtained a three million peso (P3,000,000.00) loan from
petitioner Philippine Bank of Communications (PBCom). As
security for the loan, executed in favor of PBCom, a deed of
Real and Chattel Mortgage over the lot, where its factory
stands, and the chattels located therein as enumerated in a
schedule attached to the mortgage contract.
The MORTGAGOR(S) hereby transfer(s) and convey(s), by way
of First Mortgage, to the MORTGAGEE, . . . certain parcel(s) of
land, together with all the buildings and improvements now
existing or which may hereafter exist thereon, situated in . .
PBCom granted a second loan of P3,356,000.00 to EVERTEX.
The loan was secured by a Chattel Mortgage over personal
properties enumerated. the date of the execution of the
second mortgage mentioned above, EVERTEX purchased
various machines and equipments.
Due to business reverses, EVERTEX filed insolvency
proceedings and CFI issued an order declaring the corporation
insolvent. All its assets were taken into the custody of the
Insolvency Court, including the collateral, real and personal,
securing the two mortgages.
Upon EVERTEX's failure to meet its obligation to PBCom, the
latter commenced extrajudicial foreclosure proceedings
against EVERTEX. , the first public auction was held where
petitioner PBCom emerged as the highest bidder and a
Certificate of Sale was issued in its favor on the same date.
Another public auction was held and again, PBCom was the
highest bidder.
PBCom consolidated its ownership over the lot and all the
properties in it. it leased the entire factory premises to
petitioner Ruby L. Tsai for P50,000.00 a month. PBCom sold
the factory, lock, stock and barrel to Tsai for P9,000,000.00,
including the contested machineries.
EVERTEX filed a complaint for annulment of sale,
reconveyance, and damages with the Regional Trial Court
against PBCom, alleging inter alia that the extrajudicial
foreclosure of subject mortgage was in violation of the
Insolvency Law. The disputed properties, which were valued
at P4,000,000.00
The RTC found that the lease and sale of said personal
properties were irregular and illegal because they were not
duly foreclosed nor sold at the December 15, 1982 auction
sale since these were not included in the schedules attached
to the mortgage contracts. (Ordering the defendants to pay
jointly and severally the plaintiff corporation the sum of
P5,200,000.00 as compensation for the use and possession of
the properties in question).
Dissatisfied, both PBCom and Tsai appealed to the Court of
Appeals, which issued its decision the dispositive portion.
ISSUE: II THE HONORABLE COURT OF APPEALS (SECOND
DIVISION) ERRED IN HOLDING THAT THE DISPUTED 1981
MACHINERIES ARE NOT REAL PROPERTIES DEEMED PART OF
THE MORTGAGE DESPITE THE CLEAR IMPORT OF THE
EVIDENCE AND APPLICABLE RULINGS OF THE SUPREME
COURT.
The principal issue, in our view, is whether or not the
inclusion of the questioned properties in the foreclosed
properties is proper
HELD: we find the petitions devoid of merit and ought to be
denied.
While it is true that the controverted properties appear to be
immobile, a perusal of the contract of Real and Chattel
Mortgage executed by the parties herein gives us a contrary
indication. In the case at bar, both the trial and the appellate
courts reached the same finding that the true intention of
PBCOM and the owner, EVERTEX, is to treat machinery and
equipment as chattels.
As stressed upon by appellees, appellant bank treated the
machineries as chattels; never as real properties. Indeed, the
1975 mortgage contract, which was actually real and chattel
mortgage, militates against appellants' posture.
the "machineries and equipment" in the printed form of the
bank had to be inserted in the blank space of the printed
contract and connected with the word "building" by
typewritten slash marks. . It would have sufficed to list them
as immovables in the Deed of Real Estate Mortgage of the
land and building involved. . It would have sufficed to list
them as immovables in the Deed of Real Estate Mortgage of
the land and building involved.
Too, assuming arguendo that the properties in question are
immovable by nature, nothing detracts the parties from
treating it as chattels to secure an obligation under the
principle of estoppels. . As far back as Navarro v. Pineda, 9
SCRA 631 (1963), an immovable may be considered a
personal property if there is a stipulation as when it is used
as security in the payment of an obligation where a chattel
mortgage is executed over it, as in the case at bar.
In the instant case, the parties herein: (1) executed a contract
styled as "Real Estate Mortgage and Chattel Mortgage,"
instead of just "Real Estate Mortgage" if indeed their
intention is to treat all properties included therein as
immovable, and (2) attached to the said contract a separate
"LIST OF MACHINERIES & EQUIPMENT". These facts, taken
together, evince the conclusion that the parties' intention is
to treat these units of machinery as chattels. description as
the units enumerated under the title "LIST OF MACHINERIES
& EQUIPMENT," must also be treated as chattels.
Accordingly, we find no reversible error in the respondent
appellate court's ruling that inasmuch as the subject
mortgages were intended by the parties to involve chattels,
insofar as equipment and machinery were concerned, the
Chattel Mortgage Law applies, which provides in Section 7
thereof that: "a chattel mortgage shall be deemed to
cover only the property described therein and not like or
substituted property thereafter acquired by the mortgagor
and placed in the same depository as the property originally
mortgaged, anything in the mortgage to the contrary
notwithstanding."
WHEREFORE, the petitions are DENIED. The assailed decision
and resolution of the Court of Appeals in CA-G.R. CV No.
32986 are AFFIRMED WITH MODIFICATIONS. Petitioners
Philippine Bank of Communications and Ruby L. Tsai are
hereby ordered to pay jointly and severally Ever Textile Mills,
Inc. the following: (1) P20,000.00 per month, as
compensation for the use and possession of the properties in
question from November 198631 until subject personal
properties are restored to respondent corporation; (2)
P100,000.00 by way of exemplary damages, and (3)
P50,000.00 as attorney's fees and litigation expenses. Costs
against petitioners.
G.R. No. L-20329 March 16, 1923
THE STANDARD OIL COMPANY OF NEW YORK, petitioner,
vs.
JOAQUIN JARAMILLO, as register of deeds of the City of
Manila, respondent.
It appears from the petition that on November 27, 1922,
Gervasia de la Rosa, Vda. de Vera, was the lessee of a parcel
of land situated in the City of Manila and owner of the house
of strong materials built thereon, upon which date she
executed a document in the form of a chattel mortgage,
purporting to convey to the petitioner by way of mortgage
both the leasehold interest in said lot and the building which
stands thereon.
The clauses in said document describing the property
intended to be thus mortgage are expressed (Now, therefore,
the mortgagor hereby conveys and transfer to the mortgage,
by way of mortgage, the following described personal
property, situated in the City of Manila, and now in
possession of the mortgagor, to wit)
(1) All of the right, title, and interest of the mortgagor in and
to the contract of lease hereinabove referred to, and in and to
the premises the subject of the said lease;
(2) The building, property of the mortgagor, situated on the
aforesaid leased premises.
said document had been duly acknowledge and delivered, the
petitioner caused the same to be presented to the
respondent, Joaquin Jaramillo, as register of deeds of the City
of Manila, for the purpose of having the same recorded in the
book of record of chattel mortgages. Upon examination of the
instrument, the respondent was of the opinion that it was not
a chattel mortgage, for the reason that the interest therein
mortgaged did not appear to be personal property, within the
meaning of the Chattel Mortgage Law, and registration was
refused on this ground only.
ISSUE: WON THE DOCUMENT/INSTRUMENT IN QUESTION IS
REAL OR PERSONAL PROERTY
HELD: We are of the opinion that the position taken by the
respondent is untenable; and it is his duty to accept the
proper fee and place the instrument on record.
Registration adds nothing to the instrument, considered as a
source of title, and affects nobody's rights except as a
specifies of notice.
Articles 334 and 335 of the Civil Code supply no absolute
criterion for discriminating between real property and
personal property for purpose of the application of the
Chattel Mortgage Law. . It is undeniable that the parties to a
contract may by agreement treat as personal property that
which by nature would be real property; and it is a familiar
phenomenon to see things classed as real property for
purposes of taxation which on general principle might be
considered personal property. Other situations are constantly
arising, and from time to time are presented to this court, in
which the proper classification of one thing or another as real
or personal property may be said to be doubtful.
if the mortgaged property is real instead of personal the
chattel mortgage would no doubt be held ineffective as
against third parties, but this is a question to be determined
by the courts of justice and not by the register of deeds.
G.R. No. L-11139 April 23, 1958
SANTOS EVANGELISTA, petitioner,
vs.
ALTO SURETY & INSURANCE CO., INC., respondent.
Civil case for a sum of money.
On the same date, he obtained a writ of attachment, which
levied upon a house, built by Rivera on a land situated in
Manila and leased to him, by filing copy of said writ and the
corresponding notice of attachment with the Office of the
Register of Deeds of Manila
In due course, judgment was rendered in favor of Evangelista,
who, bought the house at public auction held in compliance
with the writ of execution issued in said case. The deed of
sale was issued to him upon expiration of the period of
redemption. When Evangelista sought to take possession of
the house, Rivera refused to surrender it, upon the ground
that he had leased the property from the Alto Surety &
Insurance Co., Inc. respondent herein and that the latter
is now the true owner of said property. It appears that a
definite deed of sale of the same house had been issued to
respondent, as the highest bidder at an auction sale, in
compliance with a writ of execution issued in Civil Case No.
6268 of the same court. judgment, for the sum of money,
had been rendered in favor respondent herein, as plaintiff
therein. Hence, Evangelista instituted the present action
against respondent and Ricardo Rivera, for the purpose of
establishing his (Evangelista) title over said house, securing
possession thereof, apart from recovering damages.
On appeal taken by respondent, this decision was reversed by
the Court of Appeals, which absolved said respondent from
the complaint, upon the ground that, although the writ of
attachment in favor of Evangelista had been filed with the
Register of Deeds of Manila prior to the sale in favor of
respondent, Evangelista did not acquire thereby a preferential
lien, the attachment having been levied as if the house in
question were immovable property, although in the opinion
of the Court of Appeals, it is "ostensibly a personal property."
section 7 of Rule 59," of the Rules of Court, reading:
The property of the defendant shall be attached by the officer
executing the order in the following manner:
(e) Debts and credits, and other personal property not
capable of manual delivery, by leaving with the person owing
such debts, or having in his possession or under his control,
such credits or other personal property, or with, his agent, a
copy of the order, and a notice that the debts owing by him to
the defendant, and the credits and other personal property in
his possession, or under his control, belonging to the
defendant, are attached in pursuance of such order.
(Emphasis ours.)
the Court of Appeals seems to have been of the opinion, also,
that the house of Rivera should have been attached in
accordance with subsection (c) of said section 7, as "personal
property capable of manual delivery, by taking and safely
keeping in his custody", for it declared that "Evangelists could
not have . . . validly purchased Ricardo Rivera's house from
the sheriff as the latter was not in possession thereof at the
time he sold it at a public auction."
ISSUE: WON THE HOUE OF RICARDO IS PROPERTY OR NOT / :
Does the fact that the parties entering into a contract
regarding a house gave said property the consideration of
personal property in their contract, bind the sheriff in
advertising the property's sale at public auction as personal
property?
HELD: In the affirmative case, the applicable provision would
be subsection (a) of section 7, Rule 59 of the Rules of Court,
pursuant to which the attachment should be made "by filing
with the registrar of deeds a copy of the order, together with
a description of the property attached, and a notice that it is
attached, and by leaving a copy of such order, description,
and notice with the occupant of the property, if any there be."
It is, our considered opinion that said house is not personal
property, much less a debt, credit or other personal property
not capable of manual delivery, but immovable property.
"a true building (not merely superimposed on the soil) is
immovable or real property, whether it is erected by the
owner of the land or by usufructuary or lessee. This is the
doctrine of our Supreme Court in Leung Yee vs. Strong
Machinery Company
It is true that the parties to a deed of chattel mortgage may
agree to consider a house as personal property for purposes
of said contract.
It is to be remembered that in the case at bar the action was
to collect a loan secured by a chattel mortgage on the house.
It is also to be remembered that in practice it is the judgment
creditor who points out to the sheriff the properties that the
sheriff is to levy upon in execution, and the judgment creditor
in the case at bar is the party in whose favor the owner of the
house had conveyed it by way of chattel mortgage and,
therefore, knew its consideration as personal property.
When the rules speak of personal property, property which is
ordinarily so considered is meant; and when real property is
spoken of, it means property which is generally known as real
property. The regulations were never intended to suit the
consideration that parties may have privately given to the
property levied upon. Enforcement of regulations would be
difficult were the convenience or agreement of private parties
to determine or govern the nature of the proceedings. We
therefore hold that the mere fact that a house was the
subject of the chattel mortgage and was considered as
personal property by the parties does not make said house
personal property for purposes of the notice to be given for its
sale of public auction. This ruling is demanded by the need for
a definite, orderly and well defined regulation for official and
public guidance and would prevent confusion and
misunderstanding.
We, therefore, declare that the house of mixed materials
levied upon on execution , although subject of a contract of
chattel mortgage between the owner and a third person, is
real property within the purview of Rule 39, section 16, of the
Rules of Court as it has become a permanent fixture of the
land, which, is real property.
Respondent, in turn, denied the allegation in said paragraph 3
of the complaint, but only " for the reasons stated in its
special defenses" namely: (1) that by virtue of the sale at
public auction, and the final deed executed by the sheriff in
favor of respondent, the same became the "legitimate owner
of the house" in question; (2) that respondent "is a buyer in
good faith and for value"; (3) that respondent "took
possession and control of said house"; (4) that "there was no
valid attachment by the plaintiff and/or the Sheriff of Manila
of the property in question as neither took actual or
constructive possession or control of the property at any
time"; and (5) "that the alleged registration of plaintiff's
attachment, certificate of sale and final deed in the Office of
Register of Deeds, Manila, if there was any, is likewise, not
valid as there is no registry of transactions covering houses
erected on land belonging to or leased from another." In this
manner, respondent claimed a better right, merely under the
theory that, in case of double sale of immovable property,
Wherefore, the decision of the Court of Appeals is hereby
reversed, and another one shall be entered affirming that of
the Court of First Instance of Manila, with the costs of this
instance against respondent, the Alto Surety and Insurance
Co., Inc. It is so ordered.
G.R. No. L-11658 February 15, 1918
LEUNG YEE, plaintiff-appellant,
vs.
FRANK L. STRONG MACHINERY COMPANY and
The "Compaia Agricola Filipina" bought a considerable
quantity of rice-cleaning machinery company from the
defendant machinery company, and executed a chattel
mortgage thereon to secure payment of the purchase price. It
included in the mortgage deed the building of strong
materials in which the machinery was installed, without any
reference to the land on which it stood. The indebtedness
secured by this instrument not having been paid when it fell
due, the mortgaged property was sold by the sheriff, in
pursuance of the terms of the mortgage instrument, and was
bought in by the machinery company. The mortgage was
registered in the chattel mortgage registry, and the sale of the
property to the machinery company in satisfaction of the
mortgage was annotated in the same registry
The indebtedness secured by this instrument not having been
paid when it fell due, the mortgaged property was sold by the
sheriff, in pursuance of the terms of the mortgage instrument,
and was bought in by the machinery company. The mortgage
was registered in the chattel mortgage registry, and the sale
of the property to the machinery company in satisfaction of
the mortgage was annotated in the same registry.
"Compaia Agricola Filipina" executed a deed of sale of the
land upon which the building stood to the machinery
company, but this deed of sale, although executed in a public
document, was not registered. This deed makes no reference
to the building erected on the land and would appear to have
been executed for the purpose of curing any defects which
might be found to exist in the machinery company's title to
the building under the sheriff's certificate of sale. The
machinery company went into possession of the building at or
about the time when this sale took place, that is to say, the
month of December, 1913, and it has continued in possession
ever since.
At or about the time when the chattel mortgage was executed
in favor of the machinery company, the mortgagor, the
"Compaia Agricola Filipina" executed another mortgage to
the plaintiff upon the building, separate and apart from the
land on which it stood, to secure payment of the balance of
its indebtedness to the plaintiff under a contract for the
construction of the building. Upon the failure of the
mortgagor to pay the amount of the indebtedness secured by
the mortgage, the plaintiff secured judgment for that amount,
levied execution upon the building, bought it in at the sheriff's
sale.
At the time when the execution was levied upon the building,
the defendant machinery company, which was in possession,
filed with the sheriff a sworn statement setting up its claim of
title and demanding the release of the property from the levy.
Thereafter, upon demand of the sheriff, the plaintiff executed
an indemnity bond in favor of the sheriff in the sum of
P12,000, in reliance upon which the sheriff sold the property
at public auction to the plaintiff, who was the highest bidder
at the sheriff's sale.
This action was instituted by the plaintiff to recover
possession of the building from the machinery company.
The trial judge, relying upon the terms of article 1473 of the
Civil Code, gave judgment in favor of the machinery company,
on the ground that the company had its title to the building
registered prior to the date of registry of the plaintiff's
certificate.
Article 1473 of the Civil Code is as follows:
If the same thing should have been sold to different vendees,
the ownership shall be transfer to the person who may have
the first taken possession thereof in good faith, if it should be
personal property.
Should it be real property, it shall belong to the person
acquiring it who first recorded it in the registry.
Should there be no entry, the property shall belong to the
person who first took possession of it in good faith, and, in the
absence thereof, to the person who presents the oldest title,
provided there is good faith.
The registry here referred to is of course the registry of real
property, and it must be apparent that the annotation or
inscription of a deed of sale of real property in a chattel
mortgage registry cannot be given the legal effect of an
inscription in the registry of real property. By its express
terms, the Chattel Mortgage Law contemplates and makes
provision for mortgages of personal property; and the sole
purpose and object of the chattel mortgage registry is to
provide for the registry of "Chattel mortgages," that is to say,
mortgages of personal property executed in the manner and
form prescribed in the statute.
The building of strong materials in which the rice-cleaning
machinery was installed by the "Compaia Agricola Filipina"
was real property, and the mere fact that the parties seem
to have dealt with it separate and apart from the land on
which it stood in no wise changed its character as real
property. It follows that neither the original registry in the
chattel mortgage of the building and the machinery installed
therein, not the annotation in that registry of the sale of the
mortgaged property, had any effect whatever so far as the
building was concerned.
HELD: We conclude that the ruling in favor of the machinery
company cannot be sustained on the ground assigned by the
trial judge. We are of opinion, however, that the judgment
must be sustained on the ground that the agreed statement
of facts in the court below discloses that neither the purchase
of the building by the plaintiff nor his inscription of the
sheriff's certificate of sale in his favor was made in good faith,
and that the machinery company must be held to be the
owner of the property under the third paragraph of the above
cited article of the code, it appearing that the company first
took possession of the property; and further, that the building
and the land were sold to the machinery company long prior
to the date of the sheriff's sale to the plaintiff.
The force and effect given by law to an inscription in a public
record presupposes the good faith of him who enters such
inscription; and rights created by statute, which are
predicated upon an inscription in a public registry, do not and
cannot accrue under an inscription "in bad faith," to the
benefit of the person who thus makes the inscription.
Although article 1473, in its second paragraph, provides that
the title of conveyance of ownership of the real property that
is first recorded in the registry shall have preference, this
provision must always be understood on the basis of the good
faith mentioned in the first paragraph.
Having bought in the building at the sheriff's sale with full
knowledge that at the time of the levy and sale the building
had already been sold to the machinery company by the
judgment debtor, the plaintiff cannot be said to have been a
purchaser in good faith; and of course, the subsequent
inscription of the sheriff's certificate of title must be held to
have been tainted with the same defect.
But it appearing that he had full knowledge of the machinery
company's claim of ownership when he executed the
indemnity bond and bought in the property at the sheriff's
sale, and it appearing further that the machinery company's
claim of ownership was well founded, he cannot be said to
have been an innocent purchaser for value.
One who purchases real estate with knowledge of a defect or
lack of title in his vendor cannot claim that he has acquired
title thereto in good faith as against the true owner of the
land or of an interest therein; and the same rule must be
applied to one who has knowledge of facts which should have
put him upon such inquiry and investigation as might be
necessary to acquaint him with the defects in the title of his
vendor.
We conclude that upon the grounds herein set forth the
disposing part of the decision and judgment entered in the
court below should be affirmed with costs of this instance
against the appellant. So ordered.