JALALON, JEANINE VANESSA R.
PROPERTY
G.R. No. 207942 January 12, 2015
YINLU BICOL MINING CORPORATION, Petitioner,
vs.
TRANS-ASIA OIL AND ENERGY DEVELOPMENT
CORPORATION, Respondent.
DECISION
BERSAMIN, J.:
Rights pertaining to mining patents issued pursuant to the Philippine Bill of
1902 and existing prior to November 15, 1935 are vested rights that cannot
be impaired.
Antecedents
This case involves 13 mining claims over the area located in Barrio Larap,
Municipality of Jose Panganiban, Camarines Norte, a portion of which was
owned and mined by Philippine Iron Mines, Inc. (PIMI), which ceased
operations in 1975 due to financial losses. PIMI's portion (known as the
PIMI Larap Mines) was sold in a foreclosure sale to the Manila Banking
Corporation (MBC) and Philippine Commercial and Industrial Bank (PCIB,
later Banco De Oro, or BD0).1
In 1976, the Gold Mining Development Project Team, Mining Technology
Division, The Mining Group of the Bureau of Mines prepared a so-called
Technical Feasibility Study on the Possible Re-Opening of the CPMI
Project of PIM (Mining Aspect) and the Exploration Program (Uranium
Project) at Larap, Jose Panganiban, Camarines Norte, which discussed in
detail, among others, an evaluation of the ore reserve and a plan of
operation to restore the mine to normal commercial mining production and
budgetary estimate should the Bureau of Mines take over and run the PIMI
Larap Mines. The Government then opened the area for exploration. In
November 1978, the Benguet Corporation-Getty Oil Consortium began
exploration for uranium under an Exploration Permit of the area, but
withdrew in 1982 after four years of sustained and earnest exploration. 2
Trans-Asia Oil and Energy Development Corporation (Trans-Asia) then
explored the area from 1986 onwards. In 1996, it entered into an operating
agreement with Philex Mining Corporation over the area, their agreement
being duly registered by the Mining Recorder Section of Regional Office
No. V of the Department of Environment and Natural Resources (DENR).
In 1997, Trans-Asia filed an application for the approval of Mineral
Production Sharing Agreement (MPSA)3 over the area in that Regional
Office of the DENR, through the Mines and Geosciences Bureau (MGB), in
Daraga, Albay. The application, which was amended in 1999, was granted
on July28, 2007 under MPSA No. 252-2007-V, by which Trans-Asia was
given the exclusive right to explore, develop and utilize the mineral
deposits in the portion of the mineral lands.4
On August 31, 2007, Yinlu Bicol Mining Corporation (Yinlu) informed the
DENR by letter that it had acquired the mining patents of PIMI from
MBC/BDO by way of a deed of absolute sale, stating that the areas covered
by its mining patents were within the areas of Trans-Asias MPSA. Based
on the documents submitted by Yinlu, four of the six transfer certificates of
title (TCTs) it held covered four mining claims under Patent Nos. 15, 16, 17
and 18 respectively named as Busser, Superior, Bussamer and Rescue
Placer Claims, with an aggregate area of 192 hectares. The areas covered
occupied more than half of the MPSA area of Trans-Asia. 5
On September 14, 2007, Trans-Asia informed Yinlu by letter that it would
commence exploration works in Yinlus areas pursuant to the MPSA, and
requested Yinlu to allow its personnel to access the areas for the works to
be undertaken. On September 23, 2007, Yinlu replied that Trans-Asia could
proceed with its exploration works on its own private property in the
Calambayungan area, not in the areas covered by its (Yinlu) mining
patents.6 This response of Yinlu compelled Trans-Asia to seek the assistance
of the MGB Regional Office V in resolving the issues between the parties.
It was at that point that Trans-Asia learned that the registration of its MPSA
had been put on hold because of Yinlus request to register the deed of
absolute sale in its favor.7
The matter was ultimately referred to the DENR Secretary, who directed the
MGB Regional Office V toverify the validity of the mining patents of
Yinlu. On November 29, 2007, the MGB Regional Office V informed the
Office of the DENR Secretary that there was no record on file showing the
existence of the mining patents of Yinlu. Accordingly, the parties were
required to submit their respective position papers. 8
The issues presented for consideration and resolution by the DENR
Secretary were: (1) whether the mining patents held by Yinlu were issued
prior to the grant of the MPSA; and (2) whether the mining patents were
still valid and subsisting.9
On May 21, 2009, DENR Secretary Jose L. Atienza, Jr. issued his order
resolving the issues in Yinlus favor, 10finding that the mining patents had
been issued to PIMI in 1930 asevidenced by and indicated in PIMIs
certificates of title submitted by Yinlu; and that the patents were validly
transferred to and were now owned by Yinlu. 11 He rejected Trans-Asias
argument that Yinlus patents had no effect and were deemed abandoned
1
because Yinlu had failed to register them pursuant to Section 101 of
Presidential Decree No. 463, as amended. He declared that the DENR did
not issue any specific order cancelling suchpatents. He refuted Trans-Asias
contention that there was a continuing requirement under the Philippine Bill
of 1902 for the mining patent holder to undertake improvements in order to
have the patents subsist, and that Yinlu failed to perform its obligation to
register and to undertake the improvement, observing that the requirement
was not an absolute imposition. He noted that the suspension of PIMIs
operation in 1974 due tofinancial losses and the foreclosure of its
mortgaged properties by the creditor banks (MBC/PCIB) constituted force
majeure that justified PIMIs failure in 1974 to comply with the registration
requirement under P.D. No. 463; that the Philippine Bill of 1902, which was
the basis for issuing the patents, allowed the private ownership of minerals,
rendering the minerals covered by the patents to be segregated from the
public domain and be considered private property; and that the Regalian
doctrine, under which the State owned all natural resources, was adopted
only by the 1935, 1973 and 1987 Constitutions.12
Consequently, DENR Secretary Atienza, Jr. ordered the amendment of
Trans-Asias MPSA by excluding there from the mineral lands covered by
Yinlus mining patents, to wit:
WHEREFORE, premises considered, the Mineral Production Sharing
Agreement No. 252-2007-V is hereby ordered amended, to excise there
from the areas covered by the mining patents of Yinlu Bicol Mining
Corporation as described and defined in the Transfer Certificates of Title
concerned: Provided, That the consequent conduct of mining operations in
the said mining patents shall be undertaken in accordance with all the
pertinent requirements of Republic Act No. 7942, the Philippine Mining Act
of 1995, and its implementing rules and regulations.
SO ORDERED.13
Trans-Asia moved for reconsideration,14 but the DENR Secretary denied the
motion on November 27, 2009,holding in its resolution that the arguments
raised by the motion only rehashed matters already decided. 15
Trans-Asia appealed to the Office of the President (OP).
On May 4, 2010, the OP rendered its decision in O.P. Case No. 09-L-638
affirming in totothe assailed order and resolution of the DENR
Secretary,16 to wit:
The first contention of appellee is untenable. It is conceded that Presidential
Decree (PD) No. 463, otherwise known as the Mineral Resources
Development Decree, prescribed requirements for the registration of all
JALALON, JEANINE VANESSA R.
mining patents with the Director of Mines within a certain period, among
others. The existence of the mining claims were in fact registered in the
Office of the Register of Deeds for the Camarines Norte prior to the
issuance of PD 463, as found in the 4 TCTs issued to PIMI that were
foreclosed by MBC, and eventually purchased by appellee through an
Absolute Deed of Sale. The existence of the mining patents, therefore,
subsists. Under the Philippine Constitution, there is an absolute prohibition
against alienation of natural resources. Mining locations may only be
subject to concession or lease. The only exception is where a location of a
mining claim was perfected prior to November 15, 1935, when the
government under the 1935 Constitution was inaugurated, and according to
the laws existing at that time a valid location of a mining claim segregated
the area from the public domain, and the locator is entitled to a grant of the
beneficial ownership of the claim and the right to a patent therefore (Gold
Creek Mining Corporation vs. Rodriguez, 66 Phil 259). The right of the
locator to the mining patent is a vested right, and the Constitution
recognizes such right as an exception to the prohibition against alienation of
natural resources. The right of the appellee as the beneficial owner of the
subject mining patents in this case, therefore, is superior to the claims of
appellant. The existence of the TCTs in the name of appellee further
bolsters the existence of the mining patents. Under PD 1529, also known as
the Property Registration Decree, once a title is cleared of all claims or
where none exists, the ownership over the real property covered by the
Torrens title becomes conclusive and indefeasible even as against the
government. Noteworthy is the fact that the title trace backs of the said
TCTs show that the titles were executed infavour of the appellees
predecessors-in-interest pursuant to Act No. 496, otherwise known as the
Land Registration Act of 1902, in relation to the Philippine Bill of 1902,
which govern the registration of mineral patents.
xxxx
After a careful and thorough evaluation and study of the records of this
case, this Office agrees with the DENR, as the assailed decisions are in
accord with facts, law and jurisprudence relevant to the case.
WHEREFORE, premises considered, the assailed Order and Resolution of
the DENR dated May 21, 2009 and November 27, 2009, respectively, are
hereby AFFIRMED in toto.
SO ORDERED.17
Trans-Asia filed a first and a second motion for reconsideration.
Trans-Asia stated in its first motion for reconsideration that the OP erred:
(1) in resurrecting Yinlus mining patents despite failure to comply with the
PROPERTY
requirements of Presidential Decree No. 463; (2) in holding that Yinlus
predecessors-in-interest had continued to assert their rights to the mining
patents; and (3) in not holding that the mining patent had been abandoned
due to laches. The OP denied the first motion through the resolution dated
June 29, 2010,18 emphasizing that there was no cogent reason to disturb the
decision because the grounds were mere reiterations of arguments already
passed upon and resolved.
Nothing daunted, Trans-Asia presented its second motion for
reconsideration, but this motion was similarly denied in the resolution of
March 31, 2011,19 the OP disposing thusly:
xxxx
After a second thorough evaluation and study of the records of this case,
this Office finds no cogent reason to disturb its earlier Decision. The second
paragraph of Section 7, Administrative Order No. 18 dated February 12,
1987 provides that "[o]nly one motion for reconsideration by any one party
shall be allowed and entertained, save in exceptionally meritorious cases."
This second motion is clearly unmeritorious.
WHEREFORE, premises considered, the instant motion is hereby
DENIED. The Decision and Resolution of this Office dated May 4, 2010
and June 29, 2010, respectively, affirming the DENR decisions, are hereby
declared final. Let the records of the case be transmitted to the DENR for
its appropriate disposition.
SO ORDERED.20
Trans-Asia then appealed tothe Court of Appeals (CA).
On October 30, 2012, the CA promulgated the assailed decision reversing
and setting aside the rulings of the DENR Secretary and the OP. 21 It agreed
with the DENR Secretary and the OP that Yinlu held mining patents over
the disputed mining areas, but ruled that Yinlu was required to register the
patents under PD No. 463 in order for the patents to be recognized in its
favor. It found that Yinlu and its predecessors-in-interest did not register the
patents pursuant to PD No. 463; hence, the patents lapsed and had no more
effect,22 viz:
WHEREFORE, premises considered, the petition is hereby GRANTED.
The Decision dated May 4, 2010, as well as the Resolutions dated June 29,
2010 and March 31, 2011, respectively, rendered by the Office of the
President in OP Case No. 09-L-638, and the Order dated May 21, 2009 as
well as the Resolution dated November 27, 2009 issued by the DENR
Secretary in DENR Case No. 8766 are REVERSED and SET ASIDE.
2
SO ORDERED.23
Yinlu sought reconsideration of the decision. On June 27, 2013, the CA
denied the motion for reconsideration.24
Issues
In its appeal, Yinlu raises the following issues, namely:
I.
WHETHER OR NOT THE PETITION FOR CERTIORARI FILED
BEFORE THE COURT OF APPEALS WAS FILED BEYOND THE
REGLEMENTARY PERIOD.
II.
WHETHER OR NOT PETITIONER YINLUS MINING PATENTS ARE
VALID, EXISTING AND IMPERVIOUS TO THE MINERAL
PRODUCTION SHARING AGREEMENT SUBSEQUENTLY GRANTED
TO THE RESPONDENT TRANS-ASIA.
III.
WHETHER OR NOT PETITIONER YINLUS TITLES BASED ON
"PATENTS" WERE MINING PATENTS OR SOME OTHER PATENT.
IV.
WHETHER OR NOT PETITIONER YINLUS PURCHASE OF ITS
TITLES INCLUDED PURCHASEOF THE MINERALS FOUND
THEREIN.
V.
WHETHER OR NOT THE COURT OF APPEALS DISREGARDED
CONSTITUTIONAL RIGHT OF PETITIONER YINLU THAT ITS
PRIVATE PROPERTY SHALL NOT BE TAKEN FOR PUBLIC USE
WITHOUT JUST COMPENSATION.
VI.
WHETHER OR NOT THE PRINCIPLE OF LACHES APPLY TO TITLED
PROPERTY.
VII.
JALALON, JEANINE VANESSA R.
WHETHER OR NOT THE SHARE OF THE REPUBLIC OF THE
PHILIPPINES IN ITS NATURAL RESOURCES WAS AFFECTED BY
THE MINING PATENTS OF PETITIONER YINLU.25
Ruling
The petition is meritorious.
I Procedural Issue:
Tardiness of Trans-Asias Appeal
Yinlu contends that the CA should have outrightly dismissed TransAsias
appeal for being taken beyond the required period for appealing; and that
Trans-Asias filing of the second motion for reconsideration was improper
inasmuch as the motion did not cite any exceptional circumstances or
reasons as required by Section 7 of the OPs Administrative Order No. 18
Series of 1987.26
The contention of Yinlu is correct.
Section 1,27 Rule 43 of the Rules of Court provides that a judgment
rendered by the OP in the exercise of its quasi-judicial function is
appealable to the CA. Section 4 28 of the Rule states that the appeal must be
taken within 15 days "from notice of the award, judgment, final order or
resolution, or from the date of its lastpublication, if publication is required
by law for its effectivity, or of the denial of petitioners motion for new trial
or reconsideration x x x."
Trans-Asia received a copy of the OP resolution dated June 29, 2010
denying the first motion for reconsideration on July 14, 2010. 29 Hence, it
had until July 29, 2010 to appeal to the CA by petition for review. However,
it filed the petition for review only on May 11, 2011, 30 or nearly 10 months
from its receipt of the denial. Under the circumstances, its petition for
review was filed way beyond the prescribed 15-day period.
The CA opined that Trans-Asias petition for review was timely filed, citing
the fact that Trans-Asia filed its second motion for reconsideration dated
July 20, 2010 which the OP denied through the resolution dated March 31,
2011. It pointed out that Trans-Asia received a copy of the resolution dated
March 31, 2011 on April 26, 2011; hence, the 15-day appeal period should
be reckoned from April 26, 2011, rendering its filing of the petition for
review in the CA on May 11, 2011 timely and within the required period. It
observed that Trans-Asias filing of the second motion for reconsideration
was allowed under Section 7 of Administrative Order No. 18 of the OP
Rules on Appeal because the second motion was exceptionally meritorious,
PROPERTY
not pro forma, for, even if the motion reiterated issues already passed upon
by the OP, that alone did not render the motion pro formaif it otherwise
complied with the rules.31
It is true that Section 7 of Administrative Order No. 18 of the OP Rules on
Appeal authorizes the filing of a second motion for reconsideration. But
that authority is conditioned upon the second motion being upon a highly
meritorious ground.32 The rule remains to be only one motion for
reconsideration is allowed. In that regard, the Court stresses that the
determination of whether or not the ground raised in the second motion for
reconsideration was exceptionally meritorious lies solely belonged to the
OP.33 The CA could not usurp the OPs determination in order to make its
own.
As earlier indicated, the OP found and declared the second motion for
reconsideration of Trans-Asia "clearly unmeritorious" when it denied the
motion on March 31, 2011. Consequently, the filing of the second motion
for reconsideration on July 20, 2010 did not stop the running of the appeal
period that had commenced on July 14, 2010, the date of receipt by
TransAsia of the OP resolution denying the first motion for reconsideration.
The decision of the OP inevitably became final and immutable as a matter
of law by July 29, 2010, the last day of the reglementary period under
Section 4 of Rule 43.
In taking cognizance of Trans-Asias appeal despite its tardiness, therefore,
the CA gravely erred. Under Section 4 of Rule 43, the reckoning of the 15-
day period to perfect the appeal starts from the receipt of the resolution
denying the motion for reconsideration. Section 4 specifically allows only
one motion for reconsideration to an appealing party; as such, the reckoning
is from the date of notice of the denial of the first motion for
reconsideration.34 With Trans-Asia having received the denial on July 14,
2010, its 15-day appeal period was until July 29, 2010. The filing of the
petition for review only on May 11, 2011 was too late.
Verily, an appeal should be taken in accordance with the manner and within
the period set by the law establishing the right to appeal. To allow Trans-
Asia to transgress the law would be to set at naught procedural rules that
were generally mandatory and inviolable. This is because appeal, being
neither a constitutional right nor part of due process, is a mere statutory
privilege to be enjoyed by litigants who comply with the law allowing the
appeal. Failure to comply will causethe loss of the privilege. Moreover,
procedural rules prescribing the time within which certain acts must be
done are indispensable to the prevention of needless delays and to the
orderly and speedy discharge of judicial business. Among such rules is that
regulating the perfection of an appeal, which is mandatory as well as
3
jurisdictional. The consequence of the failure to perfect an appeal within the
limited time allowed is to preclude the appellate court from acquiring
jurisdiction over the case in order to review and revise the judgment that
meanwhile became final and immutable by operation of law. 35
Although procedural rules may be relaxed in the interest of substantial
justice, there are no reasons to relax them in Trans-Asias favor. As noted,
the OP found the ground for the second motion for reconsideration "clearly
unmeritorious." To ignore such finding without justification is to unduly
deprive the OP of its authority and autonomy to enforce its own rules of
procedure. On the other hand, Trans-Asiacould have easily avoided its dire
situation by appealing within the period instead of rehashing its already
discarded arguments in the OP.
II Substantive Issues:
Yinlus mining patents constituted
vested rights that could not be disregarded
The finality and immutability of the decision of the OP are not the only
reasons for turning down Trans-Asias appeal. Trans-Asias cause also
failed the tests of substance and validity.
Yinlu claims that its mining patents, being evidenced by its TCTs that were
registered pursuant to Act No. 496 (Land Registration Act of 1902) in
relation to the Philippine Bill of 1902 (Act of Congress of July 1 , 1902),
the governing law on the registration of mineral patents, were valid,
existing and indefeasible; that it was the absolute owner of the lands the
TCTs covered; that the TCTs were issued pursuant to mineral patents based
on Placer Claims36 named Busser, Superior, Bussamer and Rescue; that the
TCTs were presented to and confirmed by the DENR and the OP; that
Section 21 of the Philippine Bill of 1902 allowed citizens of the United
States and of the Philippine Islands to explore, occupy and purchase
mineral lands; that after the exploration and claim of the mineral land, the
owner of the claim and of the mineral patents was entitled to all the
minerals found in the area subject of the claim as stated in Section 27 of the
Philippine Bill of 1902; that the person holding even a mere mineral claim
was already entitled to all the minerals found in such area; that, as such, the
mineral claims that had been patented and perfected by registration still
enjoyed the same privilege of exclusivity in exploiting the minerals within
the patent; that aside from being entitled to the minerals found within the
mineral claim and patent, it was also entitled to the exclusive possession of
the land covered by the claim; that its mining patents are property rights
that the Government should not appropriate for itself or for others; that its
registered mineral patents, being valid and existing, could not be defeated
JALALON, JEANINE VANESSA R.
by adverse, open and notorious possession and prescription; that its
substantive rights overmineral claims perfected under the Philippine Bill of
1902 subsisted despite the changes of the Philippine Constitution and of the
mining laws; that the Constitution could not impair vested rights; that
Section 100 and Section 101 of PD No. 463 would impair its vested rights
under its mineral patents if said provisions were applied to it; and that
Section 99 of PD No. 463 expressly prohibited the application of Section
100 and Section 101 to vested rights.37
Yinlu asserts that contrary to the claim of Trans-Asia, the titles issued to it
were mining patents, not homestead patents. 38 It stresses that the TCTs from
which it derived its own TCTs were issued pursuant to Patents 15, 16, 17
and 18; that under the Philippine Bill of 1902, there was no mineral patent
separate from the original certificate of title issued pursuant thereto; that the
mineral patent applied for under the procedure outlined in the Philippine
Bill of 1902 resulted to an original certificate of title issued under Act No.
496; that the beginning statements mentioned in Yinlus title stated
"pursuant to Patent No._____,________Placer Claim;" that as such, its
mineral patents were part of its actual titles; that Section 21 of the
Philippine Bill of 1902 allowed the titling of the land and the exploration of
both the surface and the minerals beneath the surface; and that its TCTs
were already inclusive of the minerals located in the properties by virtue of
the Philippine Bill of 1902, and thus could not be separately soldor
mortgaged from each other.39
The decision of the OP was actually unassailable in point of law and
history.
During the period of Spanish colonization, the disposition and exploration
of mineral lands in the Philippines were governed by the Royal Decree of
May 14, 1867,40 otherwise known as The Spanish Mining Law. 41 The
Regalian doctrine was observed, to the effect that minerals belonged to the
State wherever they could be found, whether in public or private lands.
During the American occupation, the fundamental law on mining was
incorporated in the Philippine Bill of 1902, whose Section 21 42 declared:
That all valuable mineral deposits in public lands in the Philippine Islands,
both surveyed and unsurveyed, are hereby declared to be free and open to
exploration, occupation, and purchase, and the land in which they are found
to occupation and purchase, by citizens of the United States, or of said
Islands. Its Section 27 provided that a holder of the mineral claim so located
was entitled to all the minerals that liewithin his claim, but he could not
mine outside the boundary lines of his claim. Pursuant to the Philippine Bill
of 1902, therefore, once a mining claim was made or a mining patent was
issued over a parcel of land in accordance with the relative provisions of the
Philippine Bill of 1902, such land was considered private property and no
PROPERTY
longer part of the public domain. The claimant or patent holder was the
owner of both the surface of the land and of the minerals found underneath.
The term mining claim connotes a parcel of land containing a precious
metal in its soil or rock. It is usuallyused in mining jargon as synonymous
with the term location, which means the act of appropriating a mining claim
on the public domain according to the established law or rules. 43 A mining
patentpertains to a title granted by the government for the said mining
claim.
Under the 1935 Constitution, which took effect on November 15 1935, the
alienation of natural resources, with the exception of public agricultural
land, was expressly prohibited. The natural resources being referred therein
included mineral lands of public domain, but not mineral lands that at the
time the 1935 Constitution took effect no longer formed part of the public
domain. Consequently, such prohibition against the alienation of natural
resources did not apply to a mining claim or patent existing prior to
November 15, 1935. Jurisprudence has enlightened us on this point.
In McDaniel v. Apacible, 44 the petitioner sought to prohibit the Secretary of
Agriculture and Natural Resources from leasing a parcel of petroleum land
in San Narciso in Province of Tayabas. He claimed that on June 7, 1916 he
entered an unoccupied land in San Narciso and located therein three
petroleum mineral claims in accordance with the Philippine Bill of 1902;
that on July 15, 1916, here corded the three mineral claims with the mining
office of the Municipality of Lucena through notices of location under the
names Maglihi No. 1, Maglihi No. 2, and Maglihi No. 3; that he had been in
open and continuous possession of the claims since June 7, 1916; that in
1918, he drilled five wells on said claims and made discoveries of
petroleum on them; thaton June 18, 1921, respondent Juan Cuisia applied
with respondent Galicano Apacible, as the Secretary of Agriculture and
Natural Resources, for the lease of a land whose boundaries included his
three claims; that he protested in writing to Secretary Apacible the inclusion
in the Cuisia lease application of his three mineral claims; that Secretary
Apacible denied his protest,and was about to grant the lease application by
virtue of Act No. 2932; thatsaid law, in so far as it purported to declare open
to lease lands containing petroleum oil on which mineral claims had been
validly located and held, and upon which discoveries of petroleum oil had
been made, was void and unconstitutional for it deprived him of his
property without due process of law and without compensation; and that
Secretary Apacible was without jurisdiction to lease to Cuisia his mining
claims. The Court granted the petition, ruling as follows:
4
Mr. Lindlay, one of the highest authorities on Mining Law, has discussed
extensively the question now before us. (Lindlay on Mines, vol. I, sections
322, 539.)
The general rule is that a perfected, valid appropriation of public mineral
lands operates as a withdrawalof the tract from the body of the public
domain, and so long as such appropriation remains valid and subsisting, the
land covered thereby is deemed private property. A mining claim perfected
under the law is property in the highest sense, which may be sold and
conveyed and will pass by descent. It has the effect of a grant (patent) by
the United States of the right of present and exclusive possession of the
lands located. And even though the locator may obtain a patent to such
lands, his patent adds but little to his security. (18 Ruling Case Law, p. 1152
and cases cited.)
The owner of a perfected valid appropriation of public mineral lands is
entitled to the exclusive possession and enjoyment against everyone,
including the Government itself. Where there is a valid and perfected
location of a mining claim, the area becomes segregated from the public
domain and the property of the locator.
It was said by the Supreme Court of the State of Oregon, "The Government
itself cannot abridge the rights of the miner to a perfected valid location of
public mineral land. The Government may not destroy the locator's right by
withdrawing the land from entry or placing it in a state of reservation."
(Belk vs. Meagher, 104 U. S., 279; Sullivan vs. Iron Silver Mining Co., 143
U. S., 431.)
A valid and subsisting location of mineral land, made and kept up in
accordance with the provisions of the statutes of the United States, has the
effect of a grant by the United States of the present and exclusive
possession of the lands located, and this exclusive right of possession and
enjoyment continues during the entire life of the location. There is no
provision for, nor suggestion of, a prior termination thereof. (Gwillim vs.
Donnellan, 115 U. S., 45; Clipper Mining Co. vs. Eli Mining & Land Co.,
194 U. S., 220.)
There isno pretense in the present case that the petitioner has not complied
with all the requirements of the law in making the location of the mineral
placer claims in question, or that the claims in question were ever
abandoned or forfeited by him. The respondents may claim, however, that
inasmuch as a patent has not been issued to the petitioner, he has acquired
no property right in said mineral claims. But the Supreme Court of the
United States, in the cases of Union Oil Co, vs. Smith (249 U. S., 337), and
St. Louis Mining & Milling Co, vs. Montana Mining Co. (171 U. S., 650),
JALALON, JEANINE VANESSA R.
held that even without a patent, the possessory right of a locator after
discovery of minerals upon the claim is a property right in the fullest sense,
unaffected by the fact that the paramount title to the land is in the United
States. There is no conflict in the rulings of the Court upon that question.
With one voice they affirm thatwhen the right to a patent exists, the full
equitable title has passed to the purchaser or to the locator with all the
benefits, immunities, and burdens of ownership, and that no third party can
acquire from the Government any interest as against him. (Manuel vs.
Wulff, 152 U. S., 504, and cases cited.)
Even without a patent, the possessory right of a qualified locator after
discovery of minerals upon the claim is a property right in the fullest sense,
unaffected by the fact that the paramount title to the land is in the
Government, and it is capable of transfer by conveyance, inheritance, or
devise. (Union Oil Co. vs. Smith, 249 U. S., 337; Forbes vs. Jarcey, 94 U.
4S., 762; Belk vs. Meagher, 104 U. S., 279; Del Monte Mining Co. vs. Last
Chance Mining Co., 171 U. S., 55;Elver vs. Wood, 208 U. S., 226, 232.)
Actual and continuous occupation of a valid mining location, based upon
discovery, is not essential to the preservation of the possessory right. The
right is lost only by abandonment as by nonperformance of the annual labor
required. (Union Oil Co. vs. Smith, 249 U. S., 337; Farrell vs. Lockhart,
210 U. S., 142; Bradford vs. Morrison, 212 U. S., 389.)
The discovery of minerals in the ground by one who has a valid mineral
location perfects his claim and his location not only against third persons,
but also against the Government. A mining claim perfected under the law is
property in the highest sense of that term, which may be sold and conveyed,
and will pass by descent, and is not therefore subject to the disposal of the
Government. (Belk vs. Meagher, 104 U. S., 279, 283; Sullivan vs. Iron
Silver Mining Co., 143 U. S., 431; Consolidated Mutual Oil Co. vs. United
States, 245 Fed. Rep., 521; Van Ness vs. Rooney, 160 Cal., 131, 136, 137.)
The moment the locator discovered a valuable mineral deposit on the lands
located, and perfected his location in accordance with law, the power of the
United States Government to deprive him of the exclusive right to the
possession and enjoyment of the located claim was gone, the lands had
become mineral lands and they were exempted from lands that could be
granted to any other person. The reservations of public lands cannot be
made so as to include prior mineral perfected locations; and, of course, if a
valid mining location is made upon public lands afterward included in a
reservation, such inclusion or reservation does not affect the validity of the
former location. By such location and perfection, the land located is
segregated from the public domain even as against the Government. (Union
PROPERTY
Oil Co. vs. Smith, 249 U. S., 337; Van Ness vs. Rooney, 160 Cal., 131; 27
Cyc, 546.)
From all of the foregoing arguments and authorities we must conclude that,
inasmuch as the petitioner had located, held and perfected his location of
the mineral lands inquestion, and had actually discovered petroleum oil
therein, he had acquired a property right in said claims; that said Act No.
2932, which deprives him of such right, without due process of law, is in
conflict with section 3 of the Jones Law, and is therefore unconstitutional
and void. Therefore the demurrer herein is hereby overruled, and it is
hereby ordered and decreed that, unless the respondents answer the petition
herein within a period of five days from notice hereof, that a final judgment
beentered, granting the remedy prayed for in the petition. So ordered. 45
In Gold Creek Mining Corporation v. Rodriguez,46 the petitioner prayed that
Eulogio Rodriguez as the Secretary of Agriculture and Commerce, and
Quirico Abadilla, as the Director of the Bureau of Mines, be compelled to
approve its application for patent on a certain mining claim. It alleged that it
owned the Nob Fraction mineral claim situated in Itogon, Mountain
Province, and located on public lands by C. L. ODowd in accordance with
the provisions of the Philippine Bill of 1902; that said claim was located on
January 1,1929, and was registered in the office of the mining recorder of
Mountain Province on January 7, 1929; that by itself and its predecessor-in-
interest it had been in continuous and exclusive possession of the claim
from the date of location thereof; and that prior to November 15, 1935, it
filed an application for patent but both respondents failed and refused to
grant the application despite its having complied with all the requirements
of the law for the issuance of such patent. On the other hand, the
respondents contended that the petitioner was not entitled as a matter of
right to a patent to said mineral claim because the 1935 Constitution
provided that "natural resources, with the exception of public agricultural
land, shall not be alienated."The Court ordered the respondents to dispose
of the application for patent on its merits, unaffected by the prohibition
against the alienation of natural resources provided in Section 1, Article XII
of the 1935 Constitution and in Commonwealth Act No. 137, explaining:
This is one of several cases now pending in this court which call for an
interpretation, a determination of the meaning and scope, of section 1 of
Article XII of the Constitution, with reference to mining claims. The cases
have been instituted as test cases, with a view to determining the status,
under the Constitution and the Mining Act (Commonwealth Act No. 137),
of the holders of unpatented mining claims which were located under the
provisions of the Act of Congress of July 1, 1902, as amended.
5
In view of the importance of the matter, we deem it conducive to the public
interest to meet squarelythe fundamental question presented, disregarding
for that purpose certain discrepancies found in the pleadings filed in this
case. This is in accord with the view expressed by the Solicitor-General in
his memorandum where he says that "the statements of facts in both briefs
of the petitioners may be accepted for the purpose of the legal issues raised.
We deny some of the allegations in the petitions and allege new ones in our
answers, but these discrepancies are not of such a nature or importance as
should necessitate introduction of evidence before the cases are submitted
for decision. From our view of the cases, these may be submitted on the
facts averred in the complaints, leaving out the difference between the
allegations inthe pleadings to be adjusted or ironed out by the parties later,
which, we are confident, can be accomplished without much difficulty.
Section 1 of Article XII of the Constitution reads as follows:
"Section 1. All agricultural, timber, and mineral lands of the public domain,
waters, minerals, coal, petroleum, and other mineral oils, all forces of
potential energy, and other natural resources of the Philippines belong to the
State, and their disposition, exploitation, development, or utilization shall
be limited to citizens of the Philippines, or to corporations or associations at
least sixty per centum of the capital of which is owned by such citizens,
subject to any existing right, grant, lease, or concession at the time of the
inauguration of the Government established under this Constitution. Natural
resources, with the exception of public agricultural land, shall not be
alienated, and no license, concession, or lease for the exploitation,
development, or utilization of any of the natural resources shall be granted
for a period exceeding twenty-five years, renewable for another twenty-five
years, except as to water rights for irrigation, water supply, fisheries, or
industrial uses other than the development of water power, in which cases
beneficial use may be the measure and the limit of the grant."
The fundamental principle of constitutional construction is to give effect to
the intent of the framers of the organic law and of the people adopting it.
The intention to which force is to be given is that which is embodied and
expressed in the constitutional provisions themselves. It is clear that the
foregoing constitutional provision prohibits the alienation of natural
resources, with the exception of public agricultural land. It seems likewise
clear that the term "natural resources," as used therein, includes mineral
lands of the public domain, but not mineral lands which at the time the
provision took effect no longer formed part of the public domain. The
reason for this conclusion is found in the terms of the provision itself. It
first declares that all agricultural, timber, and mineral lands of the public
domain, etc., and other natural resources of the Philippines, belong to the
State. It then provides that "their disposition, exploitation, development, or
JALALON, JEANINE VANESSA R.
utilization shall be limited to citizens of the Philippines, or to corporations
or associations at least sixty per centumof the capital of which is owned by
such citizens, subject to any existing right, grant, lease, or concession at the
time of the inauguration of the Government established under this
Constitution." Next comes the prohibition against the alienation of natural
resources. This prohibition is directed against the alienation of such natural
resources as were declared to be the property of the State. And as only
"agricultural, timber, and mineral lands of the public domain" were declared
property of the State, it is fair to conclude that mineral lands which at the
time the constitutional provision took effect no longer formed part of the
public domain, do not come within the prohibition.
This brings us to the inquiry of whether the mining claim involved in the
present proceeding formed part of the public domain on November 15,
1935, when the provisions of Article XII of the Constitution became
effective in accordance with section 6 of Article XV thereof. In deciding
this point, it should be borne in mind that a constitutional provision must be
presumed to have been framed and adopted in the light and understanding
of prior and existing laws and with reference to them. "Courts are bound to
presume that the people adopting a constitution are familiar with the
previous and existing laws upon the subjects to which its provisions relate,
and upon which theyexpress their judgment and opinion in its adoption."
(Barry vs.Truax, 13 N. D., 181; 99 N. W., 769; 65 L. R. A., 762.)
It is not disputed that the location of the mining claim under consideration
was perfected prior to November 15, 1935, when the Government of the
Commonwealth was inaugurated; and according to the laws existing at that
time, as construed and applied by this court in McDaniel vs. Apacible and
Cuisia (42 Phil., 749), a valid location of a mining claim segregated the area
from the public domain. Said the court in that case: "The moment the
locator discovered a valuable mineral deposit on the lands located, and
perfected his location in accordance with law, the power of the United
States Governmentto deprive him of the exclusive right to the possession
and enjoyment of the located claim was gone, the lands had become
mineral lands and they were exempted from lands that could be granted to
any other person. The reservations of public lands cannot be made so as to
include prior mineral perfected locations; and, of course, if a valid mining
location is made upon public lands afterward included in a reservation, such
inclusion or reservation does not affect the validity of the former location.
By such location and perfection, the land located is segregated from the
public domain even as against the Government. (Union Oil Co. vs. Smith,
249 U. S., 337; Van Ness vs. Rooney, 160 Cal., 131; 27 Cyc., 546.)"
The legal effect of a valid location of a mining claim is not only to
segregate the area from the public domain, but to grant to the locator the
PROPERTY
beneficial ownership of the claim and the right to a patent therefor upon
compliance with the terms and conditions prescribed by law. "Where there
is a valid location of a mining claim, the area becomes segregated from the
public domain and the property of the locator." (St. Louis Mining & Milling
Co. vs. Montana Mining Co., 171 U. S., 650, 655; 43 Law. ed., 320, 322.)
"When a location of a mining claim is perfected it has the effect of a grant
by the United States of the right of present and exclusive possession, with
the right to the exclusive enjoyment ofall the surface ground as well as of
all the minerals within the lines of the claim, except as limited by the
extralateral rights of adjoining locators; and this is the locator's right before
as well as after the issuance of the patent. While a lode locator acquires a
vested property right by virtue of his location, made in compliance with the
mining laws, the fee remains in the government until patent issues" (18 R.
C. L., 1152.) In Noyes vs. Mantle (127 U. S., 348, 351; 32 Law. ed., 168,
170), the court said:
"There is no pretense in this case that the original locators did not comply-
with all the requirements of the 1aw in making the location of the Pay
Streak Lode Mining claim, or that the claim was ever abandoned or
forfeited. They were the discoverers of the claim. They marked its
boundaries by stakes, so that they could be readily traced. They posted the
required notice, which was duly recorded in compliance with the
regulations of the district. They had thus done all that was necessary under
the law for the acquisition of an exclusive right to the possession and
enjoyment of the ground. The claim was thenceforth their property. They
needed only a patent of the United States to render their title perfect, and
that they could obtain at any time upon proof what they had done in
locating the claim, and of subsequent expenditures to a specified amount in
developing it. Until the patent issued the government held the title in trust
for the locators or their vendees. The ground itself was not afterwards open
to sale."
In a recent case decided by the Supreme Court of the United States, it was
said:
"The rule is established by innumerable decisions of this court, and of state
and lower Federal courts, thatwhen the location of a mining claim is
perfected under the law, it has the effect of a grant by the United States of
the right of present and exclusive possession. The claim is property in the
fullest sense of that term; and may be sold, transferred, mortgaged, and
inherited without infringing any right or title of the United States. The right
of the owner is taxable by the state; and is 'real property,' subject to the lien
of a judgment recovered against the owner in a state or territorial court.
(Belk vs. Neagher, 104 U. S., 279, 283; 26 L. ed., 735, 737; 1 Mor. Min.
Rep., 510; Manuel vs. Wulff, 152 U. S., 505, 510, 511; 38 L. ed., 532-534;
6
14, Sup. Ct. Rep., 651; 18Mor. Min. Rep., 85; Elder vs.Wood, 208 U. S.,
226, [317] 232; 52 L. ed., 464, 466; 28 Sup. Ct. Rep., 263; Bradford
vs.Morrison, 212 U. S., 389; 53 L. ed., 564; 29 Sup. Ct. Rep., 349.) The
owner is not required to purchase the claim or secure patent from the
United States; but so long as he complies with the provisions of the mining
laws, his possessory right,for all practical purposes of ownership, is as good
as though secured by patent." (Wilbur vs. United States ex rel. Krushnic,
280 U. S., 306; 74 Law. ed., 445.)
The Solicitor-General admits in his memorandum that the decision in the
McDaniel case is determinative, of the fundamental question involved in
the instant case. But he maintains "that this decision is based on a
misapprehension of the authorities on which the court relied," and that it "is
not well founded and should be abandoned." We do not deem it necessary
to belabor this point. Whether well-founded or not, the decision in that case
was the law when section 1 of Article XII of the Constitution became
effective; and even if we weredisposed to overrule that decision now, our
action could not affect rights already fixed under it.
Our conclusion is that, as the mining claim under consideration no longer
formed part of the public domain when the provisions of Article XII of the
Constitution became effective, it does not come within the prohibition
against the alienation of natural resources; and the petitioner has the right to
a patent therefor upon compliance with the terms and conditions prescribed
by law.
It remains to consider whether mandamus is the proper remedy in this case.
In Wilbur vs.United States ex rel. Krushnic, supra, the Supreme Court of
the United States held that"mandamus will lie to compel the Secretary of
the Interior to dispose of an application for a patent for a mining claim on
its merits, where his refusal to do so is based on his misinterpretation of a
statute." In the course of its decision the court said: "While the decisions of
this court exhibit a reluctance to direct a writ of mandamus against an
executive officer, they recognize the duty to do so by settled principles of
law in some cases. (Lane vs.Hoglund, 244 U. S., 174, 181; 61 L. ed., 1066,
1069; 37 Sup. Ct. Rep., 552; and case cited.) In Roberts vs.United States
(176 U. S., 221, 231; 44 L. ed., 443, 447; 20 Sup. Ct. Rep., 376), referred to
and quoted in the Hoglund case, this court said:
"Every statute to some extent requires construction by the public officer
whose duties may be defined therein. Such officer must read the law, and he
must therefore, in a certainsense, construe it, in order to form a judgment
from its language what duty he is directed by the statute to perform. But
that does not necessarily and in all cases make the duty of the officer
anything other than a purely ministerial one. If the law direct him to
JALALON, JEANINE VANESSA R.
perform an act in regard to which no discretion is committed to him, and
which, upon the facts existing, he is bound to perform, then that act is
ministerial, although depending upon a statute which requires, in some
degree a construction of its language by the officer. Unless this be so, the
value of this writ is very greatly impaired. Every executive officer whose
duty is plainly devolved upon him by a statute might refuse to perform it,
and when his refusal isbrought before the court he might successfully plead
that the performance of the duty involved the construction of a statute by
him, and therefore it was not ministerial, and the court would on that
account be powerless to give relief. Such a limitation of the powers of the
court, we think, would be most unfortunate, as it would relieve from
judicial supervision all executive officers in the performance of their duties,
whenever they should plead that the duty required of them arose upon the
construction of a statute, no matter how plain its language, nor how plainly
theyviolated their duty in refusing to perform the act required.'" In the
instant case, we are not justified, upon the state of the pleadings, to grant
the relief sought by the petitioner. Considering, however, that the refusal of
the respondents to act on the application for a patent on its merits was due
to their misinterpretation of certain constitutional and statutory provisions,
following the precedent established by the Supreme Court of the United
States in Wilbur vs. United States ex rel. Krushnic, supra, a writ of
mandamus should issue directing the respondents to dispose of the
application for patent on its merits, unaffected by the prohibition against the
alienation of natural resources contained in section 1 of Article XII of the
Constitution and in Commonwealth Act No. 137. So ordered. 47
The foregoing rulings wereapplied and cited in Salacot Mining Company v.
Rodriguez,48 Republic v. Court of Appeals49 and Atok-Big Wedge Mining
Co., Inc. v. Court of Appeals.50 Here, the records show that TCT Nos. 93,
94, 95, 96, 97 and 98 involved six parcels of land with an area of 248.342
hectares situated in Barrio Larap and Santa Elena, Municipality of Jose
Panganiban, Camarines Norte.51 The TCTs were transferred tothe MBC and
PCIB after PIMIs properties were sold in the foreclosure sale conducted on
December 20, 1975.52 Consequently, new TCTs, namely: TCT Nos. 14565,
14566, 14567, 14568, 14569 and 14570, were issued to MBC and PCIB
cancelling TCT Nos. 93, 94, 95, 96, 97 and 98. 53 MBC and BDO, as
registered owners of said lands, subsequently sold the same to Yinlu by
virtue of a Deed of Absolute Sale. 54 Hence, TCT Nos. 72336, 72337, 72338,
72339, 72340 and 72341 were issued to Yinlu as the new registered
owner.55
It also appears that TCT Nos. 94, 95, 96 and 97 covered mining lands with
an aggregate area of 192 hectares. The lands wereoriginally registered in
1925, and the TCTs were issued toPIMI in 1930. These TCTs of PIMI
corresponded to more than half of the areas involved in Trans-Asias
PROPERTY
MPSA. However, the TCTs of PIMI constituted mining patents and mining
claims of the lands they covered. TCT No. 94 was issued pursuant to Patent
No. 15 under the Busser Placer Claim; TCT No. 95,Patent No. 16 under the
Superior Placer Claim; TCT No. 96, Patent No. 17 under the Bussemer
Placer Claim; and TCT No. 97, Patent No. 18 under the Rescue Placer
Claim.56Considering that these TCTs werevalidly transferred to Yinlu by
virtue of the deed of absolute sale, and with the consequent issuance of
TCT Nos. 72336, 72337, 72338 and 72339 in itsname, Yinlu was the owner
and holder of the mining patents entitled not only to whatever was on the
surface but also to the minerals found underneath the surface.
The lands and minerals covered by Yinlus mining patents are private
properties. The Government, whether through the DENR or the MGB,
could not alienate or dispose of the lands or mineral through the MPSA
granted to Trans-Asia or any other person or entity. Yinlu had the exclusive
right to explore, develop and utilize the minerals therein, and it could
legally transfer or assign such exclusive right. We uphold the rulings of the
DENR Secretary and the OP to exclude the disputed areas that had been
established to belong exclusively to Yinlu as registered owner to be taken
out of the coverage of Trans-Asias MPSA.
Still, Trans-Asia insists that Yinlus mining patents should no longer be
recognized because they were not registered pursuant to Section 100 and
Section 101 of PD No. 463, which read: Section 100. Old Valid Mining
Rights May Come Under This Decree. Holders of valid and subsisting
mining locations and other rights under other laws, irrespective of the areas
covered, may avail of the rights and privileges granted under this Decree by
making the necessary application therefor and approval thereof by the
Director within a period of two (2) years from the dateof approval of this
Decree.
Section 101. Recognition and Survey of Old Subsisting Mining Claims. All
mining grants patents, locations, leases and permits subsisting at the time of
the approval of this Decree shall be recognized if registered pursuant to
Section 100 hereof: Provided, That Spanish Royal Grants and unpatented
mining claims located and registered under the Act of the United States
Congress of July 1, 1902, as amended, otherwise known as the "Philippine
Bill", as shall be surveyed within one (1) year from the approval of this
Decree: Provided, further, That no such mining rights shall be recognized if
there is failure to comply with the fundamental requirements of the
respective grants: And provided, finally, That such grants, patents,
locations, leases orpermits as may be recognized by the Director after
proper investigation shall comply with the applicable provisions of this
Decree, more particularly with the annual work obligations, submittal of
reports, fiscal provisions and other obligations.
7
Trans-Asia submits that because MBC/BDO did not comply with the
requirement for the registration of the patents, Yinlus mining rights should
now be deemed abandoned because no title or right was passed to it. In that
sense, Trans-Asia maintains that Yinlu had no vested right. We disagree
with Trans-Asia.
Although Section 100 and Section 101 of PD No. 463 require registration
and annual work obligations, Section 99 of PD No. 463 nevertheless
expressly provides that the provisions of PD No. 463 shall not apply if their
application will impair vested rights under other mining laws, viz: Section
99. Non-impairment of Vested or Acquired Substantive Rights. Changes
made and new provisionsand rules laid down by this Decree which may
prejudice or impair vested or acquired rights in accordance with order
mining laws previously in force shall have no retroactive effect. Provided,
That the provisions of this Decree which are procedural in nature shall
prevail.
The concept of a vested right was discussed and applied in Ayog v. Cusi
Jr.57 Therein, the Director of Land sawarded on January 21, 1953 to Bian
Development Co, Inc. (BDCI) a parcel of land on the basis of its 1951 Sales
Application. BDCI filed an ejectment suit against the occupants of the land
who had refused to vacate. In its judgment, the trial court ordered the
occupants to vacate the land. The judgment was affirmed by the Court of
Appeals and by this Court. BDCI thenmoved for the execution of the trial
courts judgment, but the occupants opposed on the ground that the
adoption of the 1973 Constitution, which took effect on January 17, 1973,
was a supervening event that rendered it legally impossible to execute the
trial courts judgment. They invoked the constitutional prohibition that "no
private corporation or association may hold alienable lands of the public
domain except by lease not to exceed one thousand hectares in the area."
The Court rejected the invocation, and ruled that BDCI had a vested right in
the land, to wit:
We hold that the said constitutional prohibition has no retroactive
application to the sales application of Bian Development Co., Inc. because
it already acquired a vested right to the land applied for at the time the 1973
Constitution took effect.
That vested right has to be respected. It could not be abrogated by the new
Constitution.1wphi1 Section 2, Article XIII of the 1935 Constitution
allows private corporation to purchase public lands not exceeding one
thousand and twenty-four hectares. Petitioners prohibition action is barred
by the doctrine of vested rights in constitutional law.
JALALON, JEANINE VANESSA R.
A right is vested when the right to enjoyment has become the property of
some particular person or persons as a present interest. (16 C.J.S. 1173). It
is "the privilege to enjoy property legally vested, to enforce contracts, and
enjoy the rights of property conferred by existing law" (12 C.J. 955, Note
46, No. 6) or "some right or interest in property which has become fixed
and established and is no longer open to doubt or controversy" (Downs vs.
Blount, 170 Fed. 15, 20, cited in Balboa vs. Farrales, 51 Phil. 498, 502).
The due process clause prohibits the annihilation of vested rights. A state
may not impair vested rights by legislative enactment, by the enactment or
by the subsequent repeal of a municipal ordinance, or by a change in the
constitution of the State, except in a legitimate exercise of the police power
(16 C.J.S. 1177-78).
It has been observed that, generally, the term "vested right" expresses the
concept of present fixed interest, which in right reason and natural justice
should be protected against arbitrary State action, or an innately just an
imperative right which an enlightened free society, sensitive to inherent and
irrefragable individual rights, cannot deny (16 C.J.S. 1174, Note 71, No. 5,
citing Pennsylvania Greyhound Lines, Inc. vs. Rosenthal, 192 Atl. 2nd
587).58
In Republic v. Court of Appeals, 59 we stated that mining rights acquired
under the Philippine Bill of 1902 and prior to the effectivity of the 1935
Constitution were vested rights that could not be impaired even by the
Government. Indeed, the mining patents ofYinlu were issued pursuant to
the Philippine Bill of 1902 and were subsisting prior to the effectivity of the
1935 Constitution. Consequently, Yinlu and its predecessors-in-interest had
acquired vested rights in the disputed mineral lands that could not and
should not be impaired even in light of their past failure to comply with the
requirement of registration and annual work obligations.
Relevantly, we advert to the DENRs finding that PIMIs failure to register
the patents in 1974 pursuant to PD No. 463 was excusable because of its
suffering financial losses at that time, which eventually led to the
foreclosure of the mortgages on its assets by the MBC and PCIB as its
creditors.60 The failure of Yinlus predecessors-in-interest to register and
perform annual work obligations did not automatically mean that they had
already abandoned their mining rights, and that such rights had already
lapsed. For one, the DENR itself declaredthat it had not issued any specific
order cancelling the mining patents. 61 Also, the tenets of due process
required that Yinlu and its predecessors-in-interest be given written notice
of their non-compliance with PD No. 463 and the ample opportunity to
comply. If they still failed to comply despite such notice and opportunity,
then written notice must further be given informing them of the cancellation
PROPERTY
of their mining patents. In the absence of any showing that the DENR had
provided the written notice and opportunity to Yinlu and its predecessors-
ininterest to that effect, it would really be inequitable to consider them to
have abandoned their patents, or to consider the patents as having lapsed.
Verily, as held in McDaniel and Gold Creek, supra, a mining patent
obtained under the Philippine Bill of 1902 was a protected private property.
The protection should be basic and guaranteed, for no less than Section 1,
Article III of the 1987 Constitution decrees that no person shall be deprived
of property without due process of law.
Nonetheless, we deem it significant to remind that Yinlu has been directed
by the DENR to henceforth conduct its mining operations in accordance
with Republic Act No. 7942 (Philippine Mining Act of 1995) and its
implementing rules and regulations.
WHEREFORE, we REVERSE and SET ASIDE the decision promulgated
on October 30, 2012 by the Court of Appeals; REINSTATE the decision
issued on May 4, 2010 and resolutions dated June 29, 2010 and March 31,
2011 by the Office of the President in O.P. Case No. 09-L-638; and
DIRECT the respondents to pay the costs of suit.
SO ORDERED.
respondents reply that all that the provincial governor and the provincial
G.R. No. L-16887 November 17, 1920
8
MIGUEL R. CORNEJO, petitioner,
vs.
ANDRES GABRIEL, provincial governor of Rizal, and the
PROVINCIAL BOARD OF RIZAL, composed of ANDRES GABRIEL,
PEDRO MAGSALIN and CATALINO S. CRUZ, respondents.
Gregorio Perfecto for petitioner.
MALCOLM, J.:
The petitioner in this case, the suspended municipal president of Pasay,
Rizal, seeks by these proceedings in mandamus to have the provincial
governor and the provincial board of the Province of Rizal temporarily
restrained from going ahead with investigation of the charges filed against
him pending resolution of the case, and to have an order issue directed to
the provincial governor commanding him to return the petitioner to his
position as municipal president of Pasay. The members of the provincial
board have interposed a demurrer based on the ground that this court has no
right to keep them from complying with the provisions of the law. The
provincial governor has filed an answer to the petition, in which he alleges
as a special defense that numerous complaints have been received by him
against the conduct of Miguel R. Cornejo, municipal president of Pasay;
that these complaints were investigated by him; that he came to the
conclusion that agreeable to the powers conferred upon provincial
governors, the municipal president should be temporarily suspended, and
that an investigation is now being conducted by the provincial board.
Counsel for petitioner has argued, with much eloquence, that his client has
been deprived of an office, to which he was elected by popular vote,
without having an opportunity to be heard in his own defense. The
board have done in this case is to comply with the requirements of the law
which they are sworn to enforce. Obviously, therefore, we should first have
before us the applicable provisions of the Philippine law bearing on the
subject of suspension of public officers.
Under the title of "Provincial supervision over municipal officers," Article
IV of Chapter 57 of the Administrative Code, provides:
The provincial governor shall receive and investigate complaints against
municipal officers for neglect of duty, oppression, corruption, or other form
of maladministration in office. for minor delinquency he may reprimand the
offender; and if a more severe punishment seems to be desirable, he shall
submit written charges touching the matter to the provincial board, and he
JALALON, JEANINE VANESSA R.
may in such case suspend the officer (not being the municipal treasurer)
pending action by the board, if in his opinion the charge be one affecting
the official integrity of the officer in question. Where suspension is thus
effected, the written charges against the officer shall be filed with the board
within ten days.
Trial of municipal officer by provincial board. When written charges are
preferred by a provincial governor against a municipal officer, the
provincial board shall, at its next meeting, regular or special, furnish a copy
of said charges to the accused official, with a notification of the time and
place of hearing thereon; and at the time and place appointed, the board
shall proceed to hear and investigate the truth or falsity of said charges,
giving the accused official full opportunity to be heard. The hearing shall
occur as soon as may be practicable, and in case suspension has been
effected, not later than fifteen days from the date the accused is furnished a
copy of the charges, unless the suspended official shall, on sufficient
grounds, request an extension of time to prepare his defense.
Action by provincial board. If, upon due consideration, the provincial
board shall adjudge that the charges are not sustained, the proceedings shall
be dismissed; if it shall adjudge that the accused has been guilty of
misconduct which would be sufficiently punished by reprimand, or further
reprimand, it shall direct the provincial governor to deliver such reprimand
in pursuance of its judgment; and in either case the official, if previously
suspended, shall be reinstated.
If in the opinion of the board the case is one requiring more severe
discipline, it shall without unnecessary delay forward to the Chief of the
Executive Bureau certified copies of the record in the case, including the
charges, the evidence, and the findings of the board, to which shall be
added the recommendation of the board as to whether the official ought to
be suspended, further suspended, or finally dismissed from office; and in
such case the board may exercise its discretion to reinstate the official, if
already suspended, or to suspend him or continue his suspension pending
final action.
The trial of a suspended municipal official and the proceedings incident
thereto shall be given preference over the current and routine business of
the board.
Action by Chief of Executive Bureau. Upon receiving the papers in any
such proceeding the Chief of the Executive Bureau shall review the case
without unnecessary delay and shall make such order for the reinstatement,
dismissal, suspension, or further suspension of the official, as the facts shall
warrant. Disciplinary suspension made upon order of the chief of the
PROPERTY
Executive Bureau shall be without pay and in duration shall not exceed two
months. No final dismissal hereinunder shall take effect until recommended
by the Department Head and approved by the Governor-General.
With the foregoing legal provisions in mind, certain aspects of the case can
be disposed of without difficulty. Thus it cannot be seriously contended that
the courts should interfere with an orderly investigation which is about to
be conducted by the provincial board. Nor can there be any doubt as to the
meaning of the law. A very minute and extensive procedure is provided by
the Legislature for central and provincial supervision of municipal officers.
The provincial governor, in receiving and investigating complaints against
such officers, may take three courses. For a minor delinquency he may
reprimand the offender; but if the maladministration in office is more
serious he may temporarily suspend the officer, and thereafter may file
written charges against the officer with the provincial board. The procedure
followed before the provincial board and later on appeal to the Chief of the
Executive Bureau, while interesting, does not concern us. The important
fact is that the law, in permitting a provincial governor temporarily to
suspend a municipal officer, makes no mention of a formal hearing of the
charges.
In the exercise of this disciplinary power by the provincial governor, all that
he can do before the presentation of formal charges is either to reprimand
the officer or to suspend him temporarily from office. In the latter case the
provincial governor's action is not a finality. The law is especially careful to
guard the rights of officer charged with maladministration in office. But the
point is made that, notwithstanding the provisions of the law and
notwithstanding long official practice, the temporary suspension of a
municipal officer, without an opportunity to be heared in his own defense,
is in contravention of the provisions of the Philippine Bill of Rights
concerning due process of law.
So much has been written on the subject of due process of law that is would
be futile to enter into its intricate mazes. It is self-evident, however, that, in
ordinary cases, to condemn without a hearing violates the due process of
law clause of the American Constitution and of the Philippine Bill of
Rights. It is for this reason that we can well understand the logic of those
who cling to this through and to whom a contemplated violation of the
Constitution is most repugnant. It is but fair, in ordinary cases, that a public
official should not be removed or suspended without notice, charges, a trial,
and an opportunity for explanation. But not permitting our judgment to be
unduly swayed by sympathy for the petitioner's brave fight, and recalling
again that the courts have ordinarily to give effect to legislative purposes, it
is further only fair to mention certain exceptions to the due process of law
rule, which would seem to include the instant case.
9
The fact should not be lost sight of that we are dealing with an
administrative proceeding and not with a judicial proceeding. As Judge
Cooley, the leading American writer on constitutional Law, has well said,
due process of law is not necessarily judicial process; much of the process
by means of which the Government is carried on, and the order of society
maintained, is purely executive or administrative, which is as much due
process of law, as is judicial process. While a day in court is a matter of
right in judicial proceedings, in administrative proceedings it is otherwise
since they rest upon different principles. (Weimer vs. bunbury [1874], 30
Mich., 201; Den. vs. Hoboken Land and Improvement Co. [1856], 18 How.,
272 followed in Forbes vs. Chuoco Tiaco [1910], 16 Phil., 534; Tan
Te vs. Bell {1914], 27 Phil., 354; U.S. vs. Gomez Jesus [1915], 31 Phil.,
218 and other Philippine cases). In certain proceedings, therefore, of an
administrative character, it may be stated, without fear of contradiction, that
the right to a notice and hearing are not essential to due process of law.
Examples of special or summary proceedings affecting the life, liberty or
property of the individual without any hearing can easily be recalled.
Among these are the arrest of an offender pending the filing of charges; the
restraint of property in tax cases; the granting of preliminary injunction ex
parte; and the suspension of officers or employees by the Governor-General
or a Chief of a Bureau pending an investigation. (See
Weimer vs. Bunbury, supra; 12 C.J., 1224; Administrative Code, sec. 694.)
Again, for this petition to come under the due process of law prohibition, it
would be necessary to consider an office as "property." It is, however, well
settled in the United States, that a public office is not property within the
sense of the constitutional guaranties of due proces of law, but is a public
trust or agency. In the case of Taylor vs.Beckham ([1899], 178, U. S., 548),
Mr. Chief Justice Fuller said that: "Decisions are numerous to the effect that
public offices are mere agencies or trust, and not property as such." The
basic idea of government in the Philippine Islands, as in the United States,
is that of a popular representative government, the officers being mere
agents and not rulers of the people, one where no one man or set of men has
a proprietary or contractual right to an office, but where every officer
accepts office pursuant to the provisions of the law and holds the office as a
trust for the people whom he represents.
Coming now to the more specific consideration of the issue in this case, we
turn to the article by Prof. Frank J. Goodnow, generally considered the
leading authority in the United States on the subject of Administration Law,
in Vol. 29, Cyclopedia of Law and Procedure, and find the rules as to
suspension of public officers laid down very concisely as follows: "Power
to suspend may be exercised without notice to the person suspended." (P.
1405.) The citation by Professor Goodnow to support his conclusion is
State of Florida, ex rel. Attorney-General vs. Johnson ([1892], 30 Fla., 433;
JALALON, JEANINE VANESSA R.
18 L. R. A., 410). It was here held by the Supreme Court of Florida that the
governor could, under section 15 of the executive article of the
Constitution, suspend an officer for neglect of duty in office without giving
previous notice to the officer of the charge made against him.
A later compilation of the pertinent authorities is to be found in 22 Ruling
Case Law, pp. 564, 565. On the subject of suspension of public officers it is
heared said:
The suspension of an officer pending his trial for misconduct, so as to tie
his hands for the time being, seems to be universally accepted as fair, and
often necessary. . . . Notice and hearing are not prerequisite to suspension
unless required by statute and therefore suspension without such notice
does not deprive the officer of property without due process of law. Nor is a
suspension wanting in due process of law or a denial of the equal protection
of the laws because the evidence against the officer is not produced and he
is not given an opportunity to confront his accusers and cross-examine the
witnesses.lawph!l.net
The case to support the first sentence in the above enunciation of the rule is
State vs. Megaarden (85 Minn., 41), which in turn is predicated on
State vs. Peterson ([1892], 50 Minn., 239). In a discussion of the subject
more general than specific, it was said:
The safety of the state, which is the highest law, imperatively requires the
suspension, pending his trial, of a public officer, especially a custodian
of public funds, charged with malfeasance or nonfeasance in office.
Suspension does not remove the officer, but merely prevents him, for the
time being, from performing the functions of his office; and from the very
necessities of the case must precede a trial or hearing. Such temporary
suspension without previous hearing is fully in accordance with the
analogies of the law. It is a constitutional principle that no person shall be
deprived of his liberty or property except by due process of law, which
includes notice and a hearing, yet it was never claimed that in criminal
procedure a person could not be arrested and deprived of his liberty until a
trial could reasonably be had, or that in civil actions ex parte and temporary
injunctions might not be issued and retained in proper case, until a trial
could be had, and the rights of the parties determined. We have no doubt,
therefore, of the authority of the legislature to vest the governor with power
to temporarily suspend a county treasurer pending the investigation of the
charges against him, of official misconduct.
The case cited by the editors of Ruling Case Law as authority for their
second sentence is that of Griner vs.Thomas ([1907], 101 Texas, 36; 16
Ann. Cas., 944). The holding of the court here was that it is within the
PROPERTY
power of the legislature to authorize the temporary suspension of a public
officer during the pendency of valid proceedings to remove such officer and
as an incident to such proceedings, notwithstanding the fact that the
constitution has given power to remove such officer only for cause and after
a hearing. Notice and hearing are not preprequisites to the suspension of a
public officer under a statute which does not provide for such notice and
hearing.
The third case cited by Ruling Case Law comes from the United States
Supreme Court. (Wilson vs. North Carolina [1897], 169 U.S, 586.) An
examination of the decision, however, shows that while it tends to
substantiate the rule, the facts are not exactly on all fours with those before
us. Without, therefore, stopping to set forth the facts, only the following
from the body of the decisioned be noted, viz.:
In speaking of the statute and the purpose of this particular provision the
Supreme Court of the State said: "The duty of suspension was imposed
upon the Governor from the highest motives of public policy to prevent the
danger to the public interests which might arise from leaving such great
powers and responsibilities in the hands of men legally disqualified. To
leave them in full charge of their office until the next biennial session of the
legislature, or pending litigation which might be continued for year, would
destroy the very object of the law. As the Governor was, therefore, by the
very and spirit of the law, required to act and act promptly, necessarily upon
his own findings of fact, we are compelled to hold that such official action
was, under the circumstances, due process of law. Even if it were proper,
the Governor would have no power to direct an issue like a chancellor."
The highest court of the State has held that this statue was not a violation of
the constitution of the State; that the hearing before the Governor was
sufficient; that the office was substantially an administrative one, although
the commission was designed by a statute subsequent to that which created
it, a court of record; that the officer taking office under the statute was
bound to take it on the terms provided for therein; that he was lawfully
suspended from office; and that he was not entitled to a trial by jury upon
the hearing of this case in the trial court. As a result the court held that the
defendant had not been deprived of his property without due process of law,
nor had he been denied the equal protection of the laws.
xxx xxx xxx
We are of opinion the plaintiff in error was not deprived of any right
guaranteed to him by the Federal Constitution, by reason of the proceedings
before the Governor under the statute above mentioned, and resulting in his
suspension from office.
10
The procedure was in accordance with the constitution and laws of the
State. It was taken under a valid statute creating a state office in a
constitutional manner, as the state court has held. What kind and how much
of a hearing the officer should have before suspension by the Governor was
a matter for the state legislature to determine, having regard to the
constitution of the State. (There can also be cited as supporting authority
State ex rel. Wendling vs. Board of Police and Fire Commissioners [1915],
159 Wis., 295; Sumpter vs. State {1906], 81 Ark., 60; Gray vs. McLendon
[1901], 134 Ga., 224; State vs. Police Commissioners, 16 Mo. App., 947;
Preston vs. City of Chicago [1910], 246 III., 26; and People vs. Draper
[1910], 124 N.Y.S., 758, where it was held that the legislature has the right
to authorize an officer to remove an appointive or elective officer without
notice or hearing.)
Certain intimations have been made that under the procedure prescribed by
the law an injustice might be done municipal officers. Such suppositions are
not unusual even as to cases before the courts, but in this as in all other
instances, the presumption always is that the law will be followed and that
the investigation and the hearing will be impartial. In the language of
Justice Trent in Severino vs. Governor-General ([1910], 16 Phil., 366, 402),
"the presumption is just as conclusive in favor of executive action, as to its
correctness and justness, as it is in favor of judicial action." We entertain no
doubt that the provincial governor, fully conscious of the trust reposed in
him by the law, will act only in cases where strong reasons exist for
exercising the power of suspension and upon a high consideration of his
duty.
The suggestion that an unfriendly governor might unduly delay the hearing
is also without much force. The same might be said of any administrative
officer, or in fact of any judicial officer. The presumption, again, is that
every officer will do his duty promptly, and if he does not, certainly a
remedy can be found to make him do so. Not only this, but the law before
us expedites the proceedings by fixing a short period of ten days within
which the provincial governor must lay the charges before the provincial
board, which must be heard by the latter body within fifteen days. Of more
compelling force is the suggestion from the other side that the public
interest might suffer detriment by postponing the temporary suspension
until after the hearing.
Our holding, after most thoughtful consideration, is that the provisions of
section 2188 of the Administrative Code are clear and that they do not
offend the due process of law clause of the Philippine Bill of Rights.
Accordingly, it is our duty to apply the law without fear or favor.
Petition denied with costs. So ordered.
JALALON, JEANINE VANESSA R.
Mapa, C.J., Street, Avancea and Villamor, JJ., concur.
Separate Opinions
JOHNSON, J., dissenting:
This is an original action for the writ of mandamus to require the
respondents to reinstate the petitioner to his office as president of the
municipality of Pasay, Province of Rizal.
The facts upon which the petition is based are not in dispute. They are not
only admitted by the demurrer of the respondent Andres Gabriel buy were
expressly admitted by him in open court. They are:
(1) That the petitioner was duly elected by the people of the municipality of
Pasay as president for the period of three years from the 16th day of
October, 1919;
(2) That the petitioner was suspended from said office on the 13th day of
September, 1920, by the respondent Andres Gabriel, without notice, without
a hearing, and without an opportunity to present any proof whatsoever in
his defense.
The facts having been admitted, we have only a question of law to decide,
to wit: Is the governor of a province authorized under the law to suspend a
municipal president from his office, to which he has been legally elected
for a period fixed by the law, without notice, without a hearing and without
an opportunity to present proof in his defense?
Section 3 (first paragraph) of the Jones Law provides "that no law shall be
enacted in said Islands which shall deprive any person of life, liberty or
property without due process of law, or deny to any person therein the equal
protection of the law."
Section 2188 of Act No. 2711 provides:
SEC. 2188. Supervisory authority of provincial governor over municipal
officers. The provincial governor shall receive the investigate complaints
against municipal officers for neglect of duty, oppression, corruption, or
other form of maladministration in office. For minor delinquency he may
reprimand the offender; and if a more severe punishment seems to be
desirable, he shall submit written charges touching the matter to the
provincial board, and he may in such case suspend the officer (not being the
municipal treasurer) pending action by the board, if in his opinion the
PROPERTY
charge be one affecting the official integrity of the officer in question.
Where suspension is thus effected, the written charges against the officer
shall be filed with the board within ten days.
It will be noted that while section 2188 provides for a suspension, it makes
no provision for the procedure in such cases. In the absence of a procedure
prescribed by the statute, we are of the opinion that the procedure marked
by the Constitution (Jones Law) must be followed, to wit: That no person
shall be deprived of his life, liberty, or property, without due process of
law. "Due process of law" has been defined many, many times, and simply
means that before a man can be deprived of his life, liberty or property,
he must be given an opportunity to defend himself.
The right to hold, occupy and exercise an office is as much as species of
property within the protection of the law, as any other thing capable of
possession; and, to wrongfully deprive one of it or unjustly withhold it, is
an injury which the law can redress in as ample a manner as any other
wrong. And that right is regarded as a right within the protection of the
Fourteenth Amendment to the Constitution of the United States, which
says: "No State shall make or enforce any law which shall abridge the
privileges or immunities of citizens of the United States; nor shall nay State
deprive any person of life, liberty or property without due process of law."
(Pennoyer vs. Neff, 95 U.S., 714; Dent vs. West Virginia, 129 U.S., 114,
124; Huling vs. Kaw, etc. Ry. Co., 130 U.S., 559; Scott vs. Neal, 154 U.S.,
34; New Orleans Waterworks vs. New Orleans, 164 U.S., 471;
Twining vs. New Jersey, 211 U. S., 78, 110; Haddock vs. Haddock, 201
U.S., 562, 567, Michigan Trust Co. vs. Ferry, 175 fed., 667;
Bunton vs. Lyford, 37 N.H., 512 [75 Am. Dec., 144]; Foster vs. Kansas, 112
U.S., 201.)
The power to remove an officer who has been duly elected for a specified
period can be exercised only, and for just cause, after the officer has had an
opportunity for defense.
In the absence of express power, given in express words, the presumption
must be, in view of the provisions of the Jones Law above quoted, that the
legislature intended that every officer duly elected for a fixed period should
be entitled to hold his office until the expiration of such period, unless
removed therefrom for cause, after a fair and impartial investigation in
which he has been given an opportunity to defend himself. (1 Dillon, Mun.
Corporations, sec. 250; Fields vs. Commonwealth, 32 Pa., 478;
Stadler vs. Detroit, 13 Mich., 346; State vs. Bryce, 7 Ohio St., 2; Bagg's
Case, 11 Coke, 93; Hobokan vs. Gear, 27 H.J.L., 265; Dullan vs. Wilson, 53
Mich., 392; People vs.Therrien, 80 Mich., 187; Robbinson vs. Miner, 68
Mich., 549.)
11
It seems to me that if the hero of the Filipino people, Jose Rizal, could read
the decision of the majority of this court and thereby learn that one of the
citizens of the Philippine Islands has been deprived of
his property and rights, without a hearing, he would turn over in his grave
and, with a wailing cry, exclaim: "A social cancer of a new type is again in
my beloved land!"
The question presented is not a new one. It has been discussed since long
before the English people, in mass, met upon the fields of Runnymede and
demanded and obtained from an unwilling king the Magna Charta, which
has constituted the chief stone in the political edifice of all the civilized
nations since that time (years 1215). In creating the constitution for the
Filipino people, the United States Government expressly provided that no
person, no Filipino, no citizen of the Philippine Islands, shall be deprived of
his life or property without "due process of law."
The question has been presented to the courts many, many times, and
without exception the said provision of the constitution has been sustained,
except where the same constitution contains other provisions authorizing
the suspension of officers without a hearing. In the Philippine Islands there
is no authority in the constitution (the Jones Law) authorizing or justifying
the statute in question. Not only is such a statute not authorized but it
is absolutely prohibited by the provisions of the Jones Law quoted above.
The Jones Law provides that no law shall be enacted, etc.
In a discussion of the subject before us we must bear in mind the distinction
between an appointive and an elected officer. There are a few cases which
hold that in case of an appointive officer, where the appointment is at the
pleasure of the appointing power, his suspension or removal is exercisable
at the mere discretion of the appointing power. (State vs. St. Louis, 90 Mo.,
19; Field vs. Commonwealth, 32 Pa. St., 478; State vs. Johnson, 18 L. R. A.,
410.)
Where a person is appointed to an office and is a mere employee, whose
position does not have the dignity of an office, and, by virtue of his
appointment, may be removed or suspended at the will of the appointing
power, then, of course, the rule is different. Such persons are not officers
but mere employees. (Thorpp vs. Langdon, 40 Mich., 673;
People vs. McDill, 15 Mich., 182; Portman vs. State Board, etc. 50 Mich.,
258; Attorney-General vs. Cain, 84 Mich., 223.)
On the other hand the authorities are practically unanimous, where the
appointment or election is made for a definite term and the removal is to be
for cause, that the power of removal or suspension cannot be exercised
without due notice and hearing. (Mechem on Public Officers, sec. 454;
JALALON, JEANINE VANESSA R.
Dullan vs. Wilson, 53 Mich., 392 [51 Am. Rep., 128]; Bagg's Case, 11
Coke, 99; King vs. Gaskin, 8 Term Rep., 209; Ramshay's Case, Ad. & E.
[N.S.], 190; Williams vs. Bagot, 3 B. & C., 786; Queen vs. Archbishop, 1
Ell. & El., 545; Page vs. Hardin, 8 B. Mon. [Ky.], 672; Willard's Appeal, 4
R. I., 601; Field vs. Commonwealth, 32 Pa., St., 478; State vs. Bryce, 7
Ohio, 82; Foster vs.Kansas, 112 U. S., 201; Kenard vs. Louisiana, 92 U.S.,
480.)
The constitution and laws of the Philippine Islands having created the office
of president of the different municipalities and having fixed definitely the
tenure of said office, the legislature, by virtue of the provisions of the Jones
Law, is prohibited from enacting any law which would justify any
individual in the state in removing him from office without first presenting
charges against him and giving him an opportunity to be heard. (Removal
of Public Officer, 25 Am. Law Rev., 201; State vs. Commonwealth, 3
Metcalf [Ky.], 237; Page vs. Hardin [supra]; Brown vs.Grover, 6 Bush
[Ky.], 1; Commonwealth vs. Gamble, 62 Pa., 342; State vs. Draper, 50 Mo.,
353; State vs. Thoman, 10 Kansas, 191; State vs. McMeely, 24 La. Ann.,
19; Cooley, Const. Lim., 6th ed., p. 78; People vs. Draper, 15 N.Y., 532;
State vs. Williams, 5 Wis., 308; State vs. Baker, 38 Wis., 71;
State vs. Hewitt, 16 L. R. A., 413.)
In the case of State vs. Hewitt (16 L. R. A., 413) the attorney-general of the
State of South Dakota admitted in open court "that it is true, as contended
by the relator, that the preponderance of authorities is against the removal
of the officer for cause, whose term of office is fixed by law, without formal
charges and a hearing thereon on timely notice."
Mr. Justice Bailey of the English Court, in the case of Williams vs. Bagot (3
Barn and C., 785), said: "It is contrary to common sense of justice that any
party could be deprived of his rights and be concluded unheard."
Every officer in the Philippine Government who has been legally elected
for a fixed period has a right to be heard under the provisions of the Jones
Law before he can be deprived of his rights. He has a right to be heard and
to explain.
In the absence of express constitutional authority, the Philippine Legislature
is prohibited from enacting a law by which any officer elected by the people
for a definite period may be suspended or removed from his office without
first having been given an opportunity to be heard and to present whatever
defense he may have. (Jones Law, sec. 3; Dullan vs. Wilson, 51 Mich., 128;
Hallgreen vs. Campbell, 82 Mich., 255; Jacques vs. Little, 51 Kansas, 300.)
In the case of Dullan vs. Wilson (53 Mich., 392) the Supreme Court of the
State of Michigan, with whom Mr. Justice Cooley agreed, said: "We have
PROPERTY
examined carefully the authorities cited upon the brief of the learned
counsel for relator in support of the position that no notice is required to be
given, and that the action of the Executive is final and conclusive. It is
sufficient to say, without commenting specially upon them, that the
reasoning of those cases does not commend itself to our judgment. They
appear to us to be opposed, not only to the decided weight of authority, but
also to the fundamental principles of justice."
In the case of Hallgreen vs. Campbell (82 Mich., 255), the Supreme Court
of the State of Michigan said: "We have not found any case where an
officer who is appointed for a fixed term has been held to be removable
except for cause, and, wherever cause must be assigned for the removal of
the officer, he is entitled to notice and a chance to defend himself."
In the case of Han vs. Boston (142 Mass., 90) it was held that no power to
remove or suspend an officer could be exercised until after notice and an
opportunity by the official in question to be heard in his own defense.
In the case of State vs. St. Louis (90 Mo., 19) the Supreme Court said:
"When the removal is not discretionary, but must be for a cause, . . . and
nothing is said as to the procedure, a specification of the charges, notice,
and an opportunity to be heard are essential."
Mr. Dillon, in his valuable work on Municipal Corporations (sec. 250) says:
"Where the right of removal or suspension is confined to specific causes,
such power cannot be exercised until there have been formulated charges
against the officer, notice thereof, and an opportunity for defense."
(Biggs vs. McBride, 17 Ore., 640; State vs. Hawkins, 44 Ohio St., 98.)
In the case of State vs. Hastings (16 L. R. A., 791, 797) the Supreme Court
of Nebraska, after citing and commenting not only upon the cases cited
above but also upon other cases, said: "It seems plain to us that the doctrine
of these cases is in accord with the weight of authority and is supported by
the soundest reasons."
It is true that a few cases can be found which hold that an officer may be
suspended under a statute, without notice and without a hearing. But it is
believed that an examinations of each of such cases will show that such
statues are authorized by the constitution of the particular state.
(Grines vs. District Judge, 101 Tex., 36 Poe vs.State, 72 Tex., 625,
State vs. Johnson, 18 L. R. A., 410.)
All that has been said above relates only to the petition
for mandamus against the respondent the provincial governor of Rizal. I am
fully convinced that a great preponderance of the jurisprudence upon the
question which I have here discussed shows clearly that the petitioner
12
herein was suspended in a manner not authorized by law, and that the writ
of mandamus prayed for should be issued, directing the reinstatement of the
petitioner.
With reference to the respondent provincial board, the record shows that it
was not a party to the acts complained of in the petition in the present case.
The petition, therefore, as against the provincial board should be denied.
ARAULLO, J., dissenting:
Section 2188 of the Administrative Code which empowers the provincial
governor to investigate complaints against municipal officers for neglect of
duty, corruption or other form of maladministration in office does not, as
may be seen from the text itself of said section, empower the provincial
governor to suspend the officer against whom the complaint may be
presented pending the investigation. There is even no word whatever in said
section from which such power may be inferred.
The suspension of the officer against whom the complaint may have been
presented (when he is not a municipal treasurer) may, according to said
section, be ordered by the provincial governor when written charges are
submitted by the latter to the provincial board after the investigation has
been made, if he thinks it desirable to impose a more severe punishment, or
if, in his opinion, the charge is one affecting the official integrity of the
officer in question; and, in this case, that is, when the suspension is effected
after the investigation is held, such written charge against said official must
be presented by the governor to the provincial board within the period of
ten days. Therefore, it is clear and evident, according to the text of said
section, that during the investigation that the provincial governor may hold,
in view of a charge presented against a municipal officer, the latter cannot
be suspended from his office for the simple reason that such investigation
may end in a reprimand of the officer, which is the only punishment that the
provincial governor may impose in such case upon the municipal officer,
and the law does not empower the governor to order said suspension at that
time, except only when a complaint is presented against the municipal
officer to the provincial board.
If, as has been said, the investigation which the provincial governor may
hold against a municipal officer may end either in the imposition of a
punishment, such as a reprimand of the officer or in a complaint against the
municipal officer which the provincial governor may submit to the
provincial board, in the latter case suspending said municipal officer
from that time, that is, from the time the complaint is made and submitted
to the board within the period of ten days, a period determined and fixed,
which the law grants for said purposes, it is evident that the municipal
JALALON, JEANINE VANESSA R.
officer should be notified of the complaint and therefore should be heard in
said investigation; otherwise, in holding the investigation without the
presence of the officer against whom the complaint may have been
presented, and, in holding, at most, a summary trial against him without
first hearing him or giving him an opportunity to defend himself, the
reprimand imposed upon him as the result of the investigation in the first
case to which said article 2188 refers, would be a penalty imposed upon the
officer without due process of law.
If this is true, it is also true that the officer subjected to investigation should
be notified of the complaint and should be heard in said investigation for, if
such investigation should end in a charge which the provincial governor
may consider proper to present against him to the provincial board, such
investigation would be the basis of the charge against the officer and the
provincial board should take cognizance of such investigation in the
corresponding proceeding. If the most vulgar criminal is notified of the
complaint presented against him before a justice of the peace and is heard
in the preliminary investigation which this judicial officer must hold before
the corresponding information is filed by the fiscal in a court of first
instance, and if in that investigation he is given the opportunity to plead
guilty or not guilty as well as to defend himself in order that the justice of
peace holding the investigation may consider the merits of the complaint
and the result thereof, so that he may determine whether or not reasonable
motives exist for him to believe that the accused is guilty and also to
determine, as a consequence, whether sufficient motives exist to present
against the accused the corresponding information in the Court of First
Instance these being facts which the fiscal in turn should consider before
filing the corresponding information it is unreasonable, unjust and illegal
that, in a preliminary investigation such as that held by the provincial
governor in the second case referred to in section 2188 by virtue of the
complaint presented to him against a municipal officer, such municipal
officer should not be notified of the complaint or head or given the
opportunity to defend himself in order that the provincial governor may
duly determine whether it is proper to impose upon said officer a more
severe punishment or whether the abuse or neglect of duty imputed to him
is among those that affect the official integrity of said officer.
When a complaint charging the commission of a delito (felony) is laid
before a magistrate, the accused is entitled as of right to a preliminary
investigation as to "probable cause" before being committed to stand trial
for the crime charged therein. (U.S. vs. M'Govern, 6 Phil., 621)
When a preliminary examination, under the provisions of General Orders,
No. 58, is conducted by a judge or by a justice of the peace in this
jurisdiction, either within or without the city of Manila, the accused has a
PROPERTY
right to be present and to be heard by himself and by counsel and to present Cornejo, municipal president of Pasay, against Andres Gabriel, provincial
witnesses in his behalf. . . . . (U. S. vs. Grant and Kennedy, 18 Phil., 122.) governor of Rizal as well as against the provincial board of Rizal,
composed of Andres Gabriel, Pedro Magsalin, and Catalino S. Cruz, is well
The object of a preliminary investigation, or a previous inquiry of some taken, and the respondents should be, as they not are, ordered to pay the
kind, before an accused person is placed upon trial, is to secure the innocent costs.
against hasty, malicious, and oppressive prosecutions, and to protect him
from an open and public accusation of crime, from the trouble, expenses G.R. Nos. L-10817-18 February 28, 1958
and anxiety of a public trial, and also to protect the State from useless and
expensive prosecutions. (U.S. vs. Grant and Kennedy, 18 Phil., 122.) ENRIQUE LOPEZ, petitioner,
vs.
The doctrine established by this court in the cases above mentioned, and in VICENTE OROSA, JR., and PLAZA THEATRE, INC., respondents.
many others that need not be cited, is applicable also to the case where an
investigation is held, according to said section 2188 of the Administrative Nicolas Belmonte and Benjamin T. de Peralta for petitioner.
Code, by the provincial governor by virtue of a complaint presented against Tolentino & Garcia and D. R. Cruz for respondent Luzon Surety Co., Inc.
a municipal officer, because without an investigation held in legal form, Jose B. Macatangay for respondent Plaza Theatre, Inc.
that is, by hearing the person accused of a crime in a judicial complaint or
the municipal officer accused in a complaint presented to the provincial FELIX, J.:
governor, and giving him the opportunity to defend himself, the information
Enrique Lopez is a resident of Balayan, Batangas, doing business under the
against the accused in the first case, can not be filed in the Court of First
trade name of Lopez-Castelo Sawmill. Sometime in May, 1946, Vicente
Instance and, in the second case, the complaint against the municipal
Orosa, Jr., also a resident of the same province, dropped at Lopez' house
officer, which may result in his discharge, can not be presented to the
and invited him to make an investment in the theatre business. It was
provincial board; and as the right to be present at the investigation, and be
intimated that Orosa, his family and close friends were organizing a
heard by himself or through an attorney and present witnesses in his favor,
corporation to be known as Plaza Theatre, Inc., that would engage in such
which are what constitute due process of law, is an essential right of the
venture. Although Lopez expressed his unwillingness to invest of the same,
accused in either case, then, if in the investigation by the provincial
he agreed to supply the lumber necessary for the construction of the
governor of Rizal, of the complaint received by him against Miguel
proposed theatre, and at Orosa's behest and assurance that the latter would
Cornejo, municipal president of Pasay, and referred to in his answer, said
be personally liable for any account that the said construction might incur,
governor, without previously notifying the accused municipal president of
Lopez further agreed that payment therefor would be on demand and not
said charges, held a preliminary investigation in his absence, without
cash on delivery basis. Pursuant to said verbal agreement, Lopez delivered
hearing him and without giving him an opportunity to defend himself, the
the lumber which was used for the construction of the Plaza Theatre on
complaint against said municipal officer filed by said provincial governor
May 17, 1946, up to December 4 of the same year. But of the total cost of
or Rizal with the provincial board is without foundation and is illegal for
the materials amounting to P62,255.85, Lopez was paid only P20,848.50,
want of due proces of law in said investigation. Therefore, the
thus leaving a balance of P41,771.35.
administrative proceeding instituted against said municipal officer by virtue
of that complaint is for that reason affected with a radical vice and it is
We may state at this juncture that the Plaza Theatre was erected on a piece
evident that the provincial governor has not acted in accordance with the
of land with an area of 679.17 square meters formerly owned by Vicente
clear and conclusive provisions of the section of the Administrative Code
Orosa, Jr., and was acquired by the corporation on September 25, 1946, for
already cited and that he has acted in excess of his powers, not only in
P6,000. As Lopez was pressing Orosa for payment of the remaining unpaid
ordering the suspension of the municipal president, petitioner herein, but
obligation, the latter and Belarmino Rustia, the president of the corporation,
also in presenting to the provincial board, as a result of said investigation,
promised to obtain a bank loan by mortgaging the properties of the Plaza
the complaint against him. Hence the proceeding instituted before said
Theatre., out of which said amount of P41,771.35 would be satisfied, to
provincial board by virtue of said complaint, is illegal and void.
which assurance Lopez had to accede. Unknown to him, however, as early
as November, 1946, the corporation already got a loan for P30,000 from the
For the reasons above stated, in dissenting from the respectable opinion of
Philippine National Bank with the Luzon Surety Company as surety, and
the majority, I am of the opinion that the petition presented by Miguel
13
JALALON, JEANINE VANESSA R.
the corporation in turn executed a mortgage on the land and building in
favor of said company as counter-security. As the land at that time was not
yet brought under the operation of the Torrens System, the mortgage on the
same was registered on November 16, 1946, under Act No. 3344.
Subsequently, when the corporation applied for the registration of the land
under Act 496, such mortgage was not revealed and thus Original
Certificate of Title No. O-391 was correspondingly issued on October 25,
1947, without any encumbrance appearing thereon.
Persistent demand from Lopez for the payment of the amount due him
caused Vicente Orosa, Jr. to execute on March 17, 1947, an alleged "deed of
assignment" of his 420 shares of stock of the Plaza Theater, Inc., at P100
per share or with a total value of P42,000 in favor of the creditor, and as the
obligation still remained unsettled, Lopez filed on November 12, 1947, a
complaint with the Court of First Instance of Batangas (Civil Case No.
4501 which later became R-57) against Vicente Orosa, Jr. and Plaza
Theater, Inc., praying that defendants be sentenced to pay him jointly and
severally the sum of P41,771.35, with legal interest from the firing of the
action; that in case defendants fail to pay the same, that the building and the
land covered by OCT No. O-391 owned by the corporation be sold at public
auction and the proceeds thereof be applied to said indebtedness; or that the
420 shares of the capital stock of the Plaza Theatre, Inc., assigned by
Vicente Orosa, Jr., to said plaintiff be sold at public auction for the same
purpose; and for such other remedies as may be warranted by the
circumstances. Plaintiff also caused the annotation of a notice of lis
pendens on said properties with the Register of Deeds.
Defendants Vicente Orosa, Jr. and Plaza Theatre, Inc., filed separate
answers, the first denying that the materials were delivered to him as a
promoter and later treasurer of the corporation, because he had purchased
and received the same on his personal account; that the land on which the
movie house was constructed was not charged with a lien to secure the
payment of the aforementioned unpaid obligation; and that the 420 shares
of stock of the Plaza Theatre, Inc., was not assigned to plaintiff as
collaterals but as direct security for the payment of his indebtedness. As
special defense, this defendant contended that as the 420 shares of stock
assigned and conveyed by the assignor and accepted by Lopez as direct
security for the payment of the amount of P41,771.35 were personal
properties, plaintiff was barred from recovering any deficiency if the
proceeds of the sale thereof at public auction would not be sufficient to
cover and satisfy the obligation. It was thus prayed that he be declared
exempted from the payment of any deficiency in case the proceeds from the
sale of said personal properties would not be enough to cover the amount
sought to be collected.
PROPERTY
Defendant Plaza Theatre, Inc., on the other hand, practically set up the same
line of defense by alleging that the building materials delivered to Orosa
were on the latter's personal account; and that there was no understanding
that said materials would be paid jointly and severally by Orosa and the
corporation, nor was a lien charged on the properties of the latter to secure
payment of the same obligation. As special defense, defendant corporation
averred that while it was true that the materials purchased by Orosa were
sold by the latter to the corporation, such transactions were in good faith
and for valuable consideration thus when plaintiff failed to claim said
materials within 30 days from the time of removal thereof from Orosa,
lumber became a different and distinct specie and plaintiff lost whatever
rights he might have in the same and consequently had no recourse against
the Plaza Theatre, Inc., that the claim could not have been refectionary
credit, for such kind of obligation referred to an indebtedness incurred in
the repair or reconstruction of something already existing and this concept
did not include an entirely new work; and that the Plaza Theatre, Inc.,
having been incorporated on October 14, 1946, it could not have contracted
any obligation prior to said date. It was, therefore, prayed that the complaint
be dismissed; that said defendant be awarded the sum P 5,000 for damages,
and such other relief as may be just and proper in the premises.
The surety company, in the meantime, upon discovery that the land was
already registered under the Torrens System and that there was a notice
of lis pendens thereon, filed on August 17, 1948, or within the 1-year period
after the issuance of the certificate of title, a petition for review of the
decree of the land registration court dated October 18, 1947, which was
made the basis of OCT No. O-319, in order to annotate the rights and
interests of the surety company over said properties (Land Registration
Case No. 17 GLRO Rec. No. 296). Opposition thereto was offered by
Enrique Lopez, asserting that the amount demanded by him constituted a
preferred lien over the properties of the obligors; that the surety company
was guilty of negligence when it failed to present an opposition to the
application for registration of the property; and that if any violation of the
rights and interest of said surety would ever be made, same must be subject
to the lien in his favor.
The two cases were heard jointly and in a decision dated October 30, 1952,
the lower Court, after making an exhaustive and detailed analysis of the
respective stands of the parties and the evidence adduced at the trial, held
that defendants Vicente Orosa, Jr., and the Plaza Theatre, Inc.,
were jointly liable for the unpaid balance of the cost of lumber used in the
construction of the building and the plaintiff thus acquired the
materialman's lien over the same. In making the pronouncement that the
lien was merely confined to the building and did not extend to the land on
which the construction was made, the trial judge took into consideration the
14
fact that when plaintiff started the delivery of lumber in May, 1946, the land
was not yet owned by the corporation; that the mortgage in favor of Luzon
Surety Company was previously registered under Act No. 3344; that the
codal provision (Art. 1923 of the old Spanish Civil Code) specifying that
refection credits are preferred could refer only to buildings which are also
classified as real properties, upon which said refection was made. It was,
however, declared that plaintiff's lien on the building was superior to the
right of the surety company. And finding that the Plaza Theatre, Inc., had no
objection to the review of the decree issued in its favor by the land
registration court and the inclusion in the title of the encumbrance in favor
of the surety company, the court a quo granted the petition filed by the latter
company. Defendants Orosa and the Plaza Theatre, Inc., were thus required
to pay jointly the amount of P41,771.35 with legal interest and costs within
90 days from notice of said decision; that in case of default, the 420 shares
of stock assigned by Orosa to plaintiff be sold at public auction and the
proceeds thereof be applied to the payment of the amount due the plaintiff,
plus interest and costs; and that the encumbrance in favor of the surety
company be endorsed at the back of OCT No. O-391, with notation I that
with respect to the building, said mortgage was subject to the materialman's
lien in favor of Enrique Lopez.
Plaintiff tried to secure a modification of the decision in so far as it declared
that the obligation of therein defendants was joint instead of solidary, and
that the lien did not extend to the land, but same was denied by order the
court of December 23, 1952. The matter was thus appealed to the Court of
appeals, which affirmed the lower court's ruling, and then to this Tribunal.
In this instance, plaintiff-appellant raises 2 issues: (1) whether a
materialman's lien for the value of the materials used in the construction of
a building attaches to said structure alone and does not extend to the land on
which the building is adhered to; and (2) whether the lower court and the
Court of Appeals erred in not providing that the material mans liens is
superior to the mortgage executed in favor surety company not only on the
building but also on the land.
It is to be noted in this appeal that Enrique Lopez has not raised any
question against the part of the decision sentencing defendants Orosa and
Plaza Theatre, Inc., to pay jointly the sum of P41,771.35, so We will not
take up or consider anything on that point. Appellant, however, contends
that the lien created in favor of the furnisher of the materials used for the
construction, repair or refection of a building, is also extended to the land
which the construction was made, and in support thereof he relies on Article
1923 of the Spanish Civil Code, pertinent law on the matter, which reads as
follows:
JALALON, JEANINE VANESSA R.
ART. 1923. With respect to determinate real property and real rights of the
debtor, the following are preferred:
xxx xxx xxx
5. Credits for refection, not entered or recorded, with respect to the estate
upon which the refection was made, and only with respect to other credits
different from those mentioned in four preceding paragraphs.
It is argued that in view of the employment of the phrase real estate, or
immovable property, and inasmuch as said provision does not contain any
specification delimiting the lien to the building, said article must be
construed as to embrace both the land and the building or structure adhering
thereto. We cannot subscribe to this view, for while it is true that generally,
real estate connotes the land and the building constructed thereon, it is
obvious that the inclusion of the building, separate and distinct from the
land, in the enumeration of what may constitute real properties 1 could mean
only one thing that a building is by itself an immovable property, a
doctrine already pronounced by this Court in the case of Leung Yee vs.
Strong Machinery Co., 37 Phil., 644. Moreover, and in view of the absence
of any specific provision of law to the contrary, a building is an immovable
property, irrespective of whether or not said structure and the land on which
it is adhered to belong to the same owner.
A close examination of the provision of the Civil Code invoked by
appellant reveals that the law gives preference to unregistered refectionary
credits only with respect to the real estate upon which the refection or work
was made. This being so, the inevitable conclusion must be that the lien so
created attaches merely to the immovable property for the construction or
repair of which the obligation was incurred. Evidently, therefore, the lien in
favor of appellant for the unpaid value of the lumber used in the
construction of the building attaches only to said structure and to no other
property of the obligors.
Considering the conclusion thus arrived at, i.e., that the materialman's lien
could be charged only to the building for which the credit was made or
which received the benefit of refection, the lower court was right in,
holding at the interest of the mortgagee over the land is superior and cannot
be made subject to the said materialman's lien.
Wherefore, and on the strength of the foregoing considerations, the decision
appealed from is hereby affirmed, with costs against appellant. It is so
ordered.
Paras, C.J., Bengzon, Padilla, Montemayor, Reyes, A., Bautista Angelo,
Labrador, Concepcion, Reyes, J.B.L. and Endencia, JJ., concur.
PROPERTY
G.R. No. 169211 March 6, 2013
STAR TWO (SPV-AMC), INC.,1 Petitioner,
vs.
PAPER CITY CORPORATION OF THE PHILIPPINES, Respondent.
DECISION
PEREZ, J.:
For review before this Court is a Petition for Review on Certiorari filed by
Rizal Commercial Banking Corporation now substituted by Star Two (SPV-
AMC), Inc. by virtue of Republic Act No. 91822 otherwise known as the
"Special Purpose Vehicle Act of 2002," assailing the 8 March 2005
Decision and 8 August 2005 Resolution of the Special Fourth Division of
the Court of Appeals (CA) in CA-G.R. SP No. 82022 upholding the 15
covered the machineries and equipments of Paper City. 12
August 2003 and 1 December 2003 Orders of the Valenzuela Regional Trial
Court (RTC) ruling that the subject machineries and equipments of Paper
City Corporation (Paper City) are movable properties by agreement of the
parties and cannot be considered as included in the extrajudicial foreclosure
sale of the mortgaged land and building of Paper City. 3
The facts as we gathered from the records are:
Rizal Commercial Banking Corporation (RCBC), Metropolitan Bank and
Trust Co. (Metrobank) and Union Bank of the Philippines (Union Bank) are
banking corporations duly organized and existing under the laws of the
Philippines.
On the other hand, respondent Paper City is a domestic corporation engaged
in the manufacture of paper products particularly cartons, newsprint and
clay-coated paper.4
From 1990-1991, Paper City applied for and was granted the following
loans and credit accommodations in peso and dollar denominations by
RCBC: P10,000,000.00 on 8 January 1990,5 P14,000,000.00 on 19 July
1990,6P10,000,000.00 on 28 June 1991,7 and P16,615,000.00 on 28
November 1991.8 The loans were secured by four (4) Deeds of Continuing
Chattel Mortgages on its machineries and equipments found inside its paper
plants.
On 25 August 1992, a unilateral Cancellation of Deed of Continuing Chattel
Mortgage on Inventory of Merchandise/Stocks-in-Trade was executed by
RCBC through its Branch Operation Head Joey P. Singh and Asst. Vice
15
President Anita O. Abad over the merchandise and stocks-in-trade covered
by the continuing chattel mortgages.9
On 26 August 1992, RCBC, Metrobank and Union Bank (creditor banks
with RCBC instituted as the trustee bank) entered into a Mortgage Trust
Indenture (MTI) with Paper City. In the said MTI, Paper City acquired an
additional loan of One Hundred Seventy Million Pesos (P170,000,000.00)
from the creditor banks in addition to the previous loan from RCBC
amounting to P110,000,000.00 thereby increasing the entire loan to a total
of P280,000,000.00. The old loan of P110,000,000.00 was partly secured by
various parcels of land covered by TCT Nos. T-157743, V-13515, V-1184,
V-1485, V-13518 and V-13516 situated in Valenzuela City pursuant to five
(5) Deeds of Real Estate Mortgage dated 8 January 1990, 27 February
1990, 19 July 1990, 20 February 1992 and 12 March 1992. 10 The new loan
obligation of P170,000,000.00 would be secured by the same five (5) Deeds
of Real Estate Mortgage and additional real and personal properties
described in an annex to MTI, Annex "B." 11 Annex "B" of the said MTI
The MTI was later amended on 20 November 1992 to increase the
contributions of the RCBC and Union Bank to P80,000,000.00
and P70,000,000.00, respectively. As a consequence, they executed a Deed
of Amendment to MTI13 but still included as part of the mortgaged
properties by way of a first mortgage the various machineries and
equipments located in and bolted to and/or forming part of buildings
generally described as:
Annex "A"
A. Office Building
Building 1, 2, 3, 4, and 5
Boiler House
Workers Quarter/Restroom
Canteen
Guardhouse, Parking Shed, Elevated Guard
Post and other amenities
B. Pollution Tank Nos. 1 and 2.
Reserve Water Tank and Swimming Pool
Waste Water Treatment Tank
Elevated Concrete Water Tank
And other Improvements listed in Annex "A"
C. Power Plants Nos. 1 and 2
Fabrication Building
JALALON, JEANINE VANESSA R.
Various Fuel, Water Tanks and Pumps
Transformers
Annex "B"
D. D. Material Handling Equipment
Paper Plant No. 3
A Second Supplemental Indenture to the 26 August 1992 MTI was executed
on 7 June 1994 to increase the amount of the loan from P280,000,000.00
to P408,900,000.00 secured against the existing properties composed of
land, building, machineries and equipments and inventories described in
Annexes "A" and "B."14
Finally, a Third Supplemental Indenture to the 26 August 1992 MTI was
executed on 24 January 1995 to increase the existing loan obligation
of P408,900,000.00 to P555,000,000.00 with an additional security
composed of a newly constructed two-storey building and other
improvements, machineries and equipments located in the existing plant
site.15
Paper City was able to comply with its loan obligations until July 1997. But
economic crisis ensued which made it difficult for Paper City to meet the
terms of its obligations leading to payment defaults. 16 Consequently, RCBC
filed a Petition for Extrajudicial Foreclosure Under Act No. 3135 Against
the Real Estate Mortgage executed by Paper City on 21 October
1998.17 This petition was for the extra-judicial foreclosure of eight (8)
parcels of land including all improvements thereon enumerated as TCT
Nos. V-9763, V-13515, V-13516, V-13518, V-1484, V-1485, V-6662 and V-
6663 included in the MTI dated 26 August 1992, Supplemental
MTI dated 20 November 1992, Second Supplemental Indenture on the MTI
dated 7 June 1994 and Third Supplemental Indenture on the MTI dated 24
January 1995.18 Paper City then had an outstanding obligation with the
creditor banks adding up to Nine Hundred One Million Eight Hundred One
Thousand Four Hundred Eighty-Four and 10/100 Pesos (P901,801,484.10),
inclusive of interest and penalty charges.19
A Certificate of Sale was executed on 8 February 1999 certifying that the
eight (8) parcels of land with improvements thereon were sold on 27
November 1998 in the amount of Seven Hundred Two Million Three
Hundred Fifty-One Thousand Seven Hundred Ninety-Six Pesos and 28/100
(P702,351,796.28) in favor of the creditor banks RCBC, Union Bank and
Metrobank as the highest bidders.20
PROPERTY
This foreclosure sale prompted Paper City to file a Complaint 21 docketed as of Paper City and the cancellation only refers to the merchandise/stocks-in-
Civil Case No. 164-V-99 on 15 June 1999 against the creditor banks trade and not to machineries and equipments.26
alleging that the extra-judicial sale of the properties and plants was null and
void due to lack of prior notice and attendance of gross and evident bad RCBC in turn filed its Motion for Reconsideration to persuade the court to
faith on the part of the creditor banks. In the alternative, it prayed that in reverse its 15 August 2003 Order. However, the same was denied by the
case the sale is declared valid, to render the whole obligation of Paper City trial court through its 1 December 2003 Order reiterating the finding and
as fully paid and extinguished. Also prayed for was the return conclusion of the previous Order.27
of P5,000,000.00 as excessive penalty and the payment of damages and
Aggrieved, RCBC filed with the CA a Petition for Certiorari under Rule 65
attorneys fees.
to annul the Orders dated 15 August 2003 and 1 December 2003 of the trial
In the meantime, Paper City and Union Bank entered into a Compromise court,28 for the reasons that:
Agreement which was later approved by the trial court on 19 November
2001. It was agreed that the share of Union Bank in the proceeds of the I. Paper City gave its conformity to consider the subject machineries and
foreclosure shall be up to 34.23% of the price and the remaining possible equipment as real properties when the president and Executive Vice
President of Paper City signed the Mortgage Trust Indenture as well as its
liabilities of Paper City shall be condoned by the bank. Paper City likewise
subsequent amendments and all pages of the annexes thereto which
waived all its claim and counter charges against Union Bank and agreed to
itemized all properties that were mortgaged. 29
turn-over its proportionate share over the property within 120 days from the
date of agreement.22
II. Under Section 8 of Act No. 1508, otherwise known as "The Chattel
On the other hand, the negotiations between the other creditor banks and Mortgage Law" the consent of the mortgagor (Paper City) is not required in
Paper City remained pending. During the interim, Paper City filed with the order to cancel a chattel mortgage. Thus the "Cancellation of Deed of
Continuing Chattel Mortgage on Inventory of Merchandise/Stocks-in-
trial court a Manifestation with Motion to Remove and/or Dispose
Trade" dated August 25, 1992 is valid and binding on the Paper City even
Machinery on 18 December 2002 reasoning that the machineries located
assuming that it was executed unilaterally by petitioner RCBC. 30
inside the foreclosed land and building were deteriorating. It posited that
since the machineries were not included in the foreclosure of the real estate
III. The four (4) Deeds of Chattel Mortgage that were attached as Annexes
mortgage, it is appropriate that it be removed from the building and sold to
"A" to "D" to the December 18, 2003 "Manifestation with Motion to
a third party.23
Remove and/or Dispose of Machinery" were executed from January 8, 1990
Acting on the said motion, the trial court, on 28 February 2003 issued an until November 28, 1991. On the other hand, the "Cancellation of Deed of
Order denying the prayer and ruled that the machineries and equipments Continuing Chattel Mortgage" was executed on August 25, 1992 while the
were included in the annexes and form part of the MTI dated 26 August MTI and the subsequent supplemental amendments thereto were executed
from August 26, 1992 until January 24, 1995. It is of the contention of
1992 as well as its subsequent amendments. Further, the machineries and
RCBC that Paper Citys unreasonable delay of ten
equipments are covered by the Certificate of Sale issued as a consequence
of foreclosure, the certificate stating that the properties described therein
(10) years in assailing that the disputed machineries and equipments were
with improvements thereon were sold to creditor banks to the defendants at
personal amounted to estoppel and ratification of the characterization that
public auction.24
the same were real properties.31
Paper City filed its Motion for Reconsideration 25 on 4 April 2003 which
IV. The removal of the subject machineries or equipment is not among the
was favorably granted by the trial court in its Order dated 15 August 2003.
reliefs prayed for by the Paper City in its June 11, 1999 Complaint. The
The court justified the reversal of its order on the finding that the disputed
Paper City sought the removal of the subject machineries and equipment
machineries and equipments are chattels by agreement of the parties
only when it filed its December 18, 2002 Manifestation with Motion to
through their inclusion in the four (4) Deeds of Chattel Mortgage dated 28
Remove and/or Dispose of Machinery.32
January 1990, 19 July 1990, 28 June 1991 and 28 November 1991. It
further ruled that the deed of cancellation executed by RCBC on 25 August
1992 was not valid because it was done unilaterally and without the consent
16
JALALON, JEANINE VANESSA R.
V. Paper City did not specify in its various motions filed with the
respondent judge the subject machineries and equipment that are allegedly
excluded from the extrajudicial foreclosure sale. 33
VI. The machineries and equipments mentioned in the four (4) Deeds of
Chattel Mortgage that were attached on the Manifestation with Motion to
Remove and/or Dispose of Machinery are the same machineries and
equipments included in the MTI and supplemental amendments, hence, are
treated by agreement of the parties as real properties. 34
In its Comment,35 Paper City refuted the claim of RCBC that it gave its
consent to consider the machineries and equipments as real properties. It
alleged that the disputed properties remained within the purview of the
existing chattel mortgages which in fact were acknowledged by RCBC in
the MTI particularly in Section 11.07 which reads:
Section 11.07. This INDENTURE in respect of the MORTGAGE
OBLIGATIONS in the additional amount not exceeding TWO HUNDRED
TWENTY MILLION SIX HUNDRED FIFTEEN THOUSAND PESOS
(P220,615,000.00) shall be registered with the Register of Deeds of
Valenzuela, Metro Manila, apportioned based on the corresponding
loanable value of the MORTGAGED PROPERTIES, viz:
a. Real Estate Mortgage P206,815,000.00
b. Chattel Mortgage P13,800,000.0036
Paper City argued further that the subject machineries and equipments were
not included in the foreclosure of the mortgage on real properties
particularly the eight (8) parcels of land. Further, the Certificate of Sale of
the Foreclosed Property referred only to "lands and improvements" without
any specification and made no mention of the inclusion of the subject
properties.37
In its Reply,38 RCBC admitted that there was indeed a provision in the MTI
mentioning a chattel mortgage in the amount of P13,800,000.00. However,
it justified that its inclusion in the MTI was merely for the purpose of
ascertaining the amount of the loan to be extended to Paper City. 39 It
reiterated its position that the machineries and equipments were no longer
treated as chattels but already as real properties following the MTI. 40
On 8 March 2005, the CA affirmed41 the challenged orders of the trial court.
The dispositive portion reads:
WHEREFORE, finding no grave abuse of discretion committed by public
respondent, the instant petition is hereby DISMISSED for lack of merit.
PROPERTY
The assailed Orders dated 15 August and 2 December 2003, issued by Hon.
Judge Floro P. Alejo are hereby AFFIRMED. No costs at this instance. 42
The CA relied on the "plain language of the MTIs:
Undoubtedly, nowhere from any of the MTIs executed by the parties can
we find the alleged "express" agreement adverted to by petitioner. There is
no provision in any of the parties MTI, which expressly states to the effect
that the parties shall treat the equipments and machineries as real property.
On the contrary, the plain and unambiguous language of the aforecited
MTIs, which described the same as personal properties, contradicts
petitioners claims.43
It was also ruled that the subject machineries and equipments were not
included in the extrajudicial foreclosure sale. The claim of inclusion was
contradicted by the very caption of the petition itself, "Petition for Extra-
Judicial Foreclosure of Real Estate Mortgage Under Act No. 3135 As
Amended." It opined further that this inclusion was further stressed in the
Certificate of Sale which enumerated only the mortgaged real properties
bought by RCBC without the subject properties.44
RCBC sought reconsideration but its motion was denied in the CAs
Resolution dated 8 August 2005.
RCBC before this Court reiterated all the issues presented before the
appellate court:
1. Whether the unreasonable delay of ten (10) years in assailing that the
disputed machineries and equipments were personal properties amounted to
estoppel on the part of Paper City;
2. Whether the Cancellation of Deed of Continuing Mortgage dated 25
August 1992 is valid despite the fact that it was executed without the
consent of the mortgagor Paper City;
3. Whether the subsequent contracts of the parties such as Mortgage Trust
Indenture dated 26 August 1992 as well as the subsequent supplementary
amendments dated 20 November 1992, 7 June 1992, and 24 January 1995
included in its coverage of mortgaged properties the subject machineries
and equipment; and
4. Whether the subject machineries and equipments were included in the
extrajudicial foreclosure dated 21 October 1998 which in turn were sold to
the creditor banks as evidenced by the Certificate of Sale dated 8 February
1999.
17
We grant the petition.
By contracts, all uncontested in this case, machineries and equipments are
included in the mortgage in favor of RCBC, in the foreclosure of the
mortgage and in the consequent sale on foreclosure also in favor of
petitioner.
The mortgage contracts are the original MTI of 26 August 1992 and its
amendments and supplements on 20 November 1992, 7 June 1994, and 24
January 1995. The clear agreements between RCBC and Paper City follow:
The original MTI dated 26 August 1992 states that:
MORTGAGE TRUST INDENTURE
This MORTGAGE TRUST INDENTURE, executed on this day of August
26, 1992, by and between:
PAPER CITY CORPORATION OF THE PHILIPPINES, x x x hereinafter
referred to as the "MORTGAGOR");
-and-
RIZAL COMMERCIAL BANKING CORPORATION, x x x (hereinafter
referred to as the "TRUSTEE").
xxxx
WHEREAS, against the same mortgaged properties and additional real and
personal properties more particularly described in ANNEX "B" hereof, the
MORTGAGOR desires to increase their borrowings to TWO HUNDRED
EIGHTY MILLION PESOS (P280,000,000.00) or an increase of ONE
HUNDRED SEVENTY MILLION PESOS (P170,000,000.00) xxx from
various banks/financial institutions;
xxxx
GRANTING CLAUSE
NOW, THEREFORE, this INDENTURE witnesseth:
THAT the MORTGAGOR in consideration of the premises and of the
acceptance by the TRUSTEE of the trust hereby created, and in order to
secure the payment of the MORTGAGE OBLIGATIONS which shall be
incurred by the MORTGAGOR pursuant to the terms hereof xxx hereby
states that with the execution of this INDENTURE it will assign, transfer
and convey as it has hereby ASSIGNED, TRANSFERRED and
JALALON, JEANINE VANESSA R.
CONVEYED by way of a registered first mortgage unto RCBC x x x the
various parcels of land covered by several Transfer Certificates of Title
issued by the Registry of Deeds, including the buildings and existing
improvements thereon, as well as of the machinery and equipment more
particularly described and listed that is to say, the real and personal
properties listed in Annexes "A" and "B" hereof of which the
MORTGAGOR is the lawful and registered owner. 45 (Emphasis and
underlining ours)
The Deed of Amendment to MTI dated 20 November 1992 expressly
provides:
NOW, THEREFORE, premises considered, the parties considered have
amended and by these presents do further amend the Mortgage Trust
Indenture dated August 26, 1992 including the Real Estate Mortgage as
follows:
xxxx
2. The Mortgage Trust Indenture and the Real Estate Mortgage are hereby
amended to include as part of the Mortgage Properties, by way of a first
mortgage and for pari-passu and pro-rata benefit of the existing and new
creditors, various machineries and equipment owned by the Paper City,
located in and bolted to and forming part of the following, generally
describes as x x x more particularly described and listed in Annexes "A"
and "B" which are attached and made integral parts of this Amendment. The
machineries and equipment listed in Annexes "A" and "B" form part of the
improvements listed above and located on the parcels of land subject of the
Mortgage Trust Indenture and the Real Estate Mortgage. 46 (Emphasis and
underlining ours)
A Second Supplemental Indenture to the 26 August 1992 MTI executed on
7 June 1994 to increase the amount of loan from P280,000,000.00
to P408,900,000.00 also contains a similar provision in this regard:
WHEREAS, the Paper City desires to increase its borrowings to be secured
by the INDENTURE from PESOS: TWO HUNDRED EIGHTY MILLION
(P280,000,000.00) to PESOS: FOUR HUNDRED EIGHT MILLION NINE
HUNDRED THOUSAND (P408,900,000.00) or an increase of PESOS:
ONE HUNDRED TWENTY EIGHT MILLION NINE HUNDRED
THOUSAND (P128,900,000.00) x x x which represents additional loan/s
granted to the Paper City to be secured against the existing properties
composed of land, building, machineries and equipment and inventories
more particularly described in Annexes "A" and "B" of the INDENTURE x
x x.47
PROPERTY
(Emphasis and underlining ours)
Finally, a Third Supplemental Indenture to the 26 August 1992 MTI
executed on 24 January 1995 contains a similar provision:
WHEREAS, in order to secure NEW/ADDITIONAL LOAN
OBLIGATION under the Indenture, there shall be added to the collateral
pool subject of the Indenture properties of the Paper City composed of
newly constructed two (2)-storey building, other land improvements and
machinery and equipment all of which are located at the existing Plant Site
in Valenzuela, Metro Manila and more particularly described in Annex "A"
hereof x x x.48 (Emphasis and underlining ours)
Repeatedly, the parties stipulated that the properties mortgaged by Paper
City to RCBC are various parcels of land including the buildings and
existing improvements thereon as well as the machineries and equipments,
which as stated in the granting clause of the original mortgage, are "more
particularly described and listed that is to say, the real and personal
properties listed in Annexes A and B x x x of which the Paper City is the "Machineries and Equipments," "Yard and Outside," and "Additional
lawful and registered owner." Significantly, Annexes "A" and "B" are
itemized listings of the buildings, machineries and equipments typed single
spaced in twenty-seven pages of the document made part of the records.
As held in Gateway Electronics Corp. v. Land Bank of the Philippines, 49 the
rule in this jurisdiction is that the contracting parties may establish any
agreement, term, and condition they may deem advisable, provided they are
not contrary to law, morals or public policy. The right to enter into lawful
contracts constitutes one of the liberties guaranteed by the Constitution.
It has been explained by the Supreme Court in Norton Resources and
Development Corporation v. All Asia Bank Corporation 50 in reiteration of
the ruling in Benguet Corporation v. Cabildo51 that:
x x x A court's purpose in examining a contract is to interpret the intent of
the contracting parties, as objectively manifested by them. The process of
interpreting a contract requires the court to make a preliminary inquiry as to
whether the contract before it is ambiguous. A contract provision is
ambiguous if it is susceptible of two reasonable alternative interpretations.
Where the written terms of the contract are not ambiguous and can only be
read one way, the court will interpret the contract as a matter of law. x x x
Then till now the pronouncement has been that if the language used is as
clear as day and readily understandable by any ordinary reader, there is no
need for construction.52
The case at bar is covered by the rule.
18
The plain language and literal interpretation of the MTIs must be applied.
The petitioner, other creditor banks and Paper City intended from the very
first execution of the indentures that the machineries and equipments
enumerated in Annexes "A" and "B" are included. Obviously, with the
continued increase in the amount of the loan, totaling hundreds of millions
of pesos, Paper City had to offer all valuable properties acceptable to the
creditor banks.
The plain and obvious inclusion in the mortgage of the machineries and
equipments of Paper City escaped the attention of the CA which, instead,
turned to another "plain language of the MTI" that "described the same as
personal properties." It was error for the CA to deduce from the
"description" exclusion from the mortgage.
1. The MTIs did not describe the equipments and machineries as personal
property. Had the CA looked into Annexes "A" and "B" which were
referred to by the phrase "real and personal properties," it could have easily
noted that the captions describing the listed properties were "Buildings,"
Machinery and Equipment." No mention in any manner was made in the
annexes about "personal property." Notably, while "personal" appeared in
the granting clause of the original MTI, the subsequent Deed of
Amendment specifically stated that:
x x x The machineries and equipment listed in Annexes "A" and "B" form
part of the improvements listed above and located on the parcels of land
subject of the Mortgage Trust Indenture and the Real Estate Mortgage.
The word "personal" was deleted in the corresponding granting clauses in
the Deed of Amendment and in the First, Second and Third Supplemental
Indentures.
2. Law and jurisprudence provide and guide that even if not expressly so
stated, the mortgage extends to the improvements.
Article 2127 of the Civil Code provides:
Art. 2127. The mortgage extends to the natural accessions, to the
improvements, growing fruits, and the rents or income not yet received
when the obligation becomes due, and to the amount of the indemnity
granted or owing to the proprietor from the insurers of the property
mortgaged, or in virtue of expropriation for public use, with the
declarations, amplifications and limitations established by law, whether the
estate remains in the possession of the mortgagor, or it passes into the hands
of a third person. (Underlining ours)
JALALON, JEANINE VANESSA R.
In the early case of Bischoff v. Pomar and Cia. General de Tabacos, 53 the
Court ruled that even if the machinery in question was not included in the
mortgage expressly, Article 111 of the old Mortgage Law provides that
chattels permanently located in a building, either useful or ornamental, or
for the service of some industry even though they were placed there after
the creation of the mortgage shall be considered as mortgaged with the
estate, provided they belong to the owner of said estate. The provision of
the old Civil Code was cited. Thus:
Article 1877 provides that a mortgage includes the natural accessions,
improvements, growing fruits, and rents not collected when the obligation
is due, and the amount of the indemnities granted or due the owner by the
underwriters of the property mortgaged or by virtue of the exercise of
eminent domain by reason of public utility, with the declarations,
amplifications, and limitations established by law, in case the estate
continues in the possession of the person who mortgaged it, as well as when
it passes into the hands of a third person.54
The case of Cu Unjieng e Hijos v. Mabalacat Sugar Co. 55 relied on this
provision. The issue was whether the machineries and accessories were
included in the mortgage and the subsequent sale during public auction.
This was answered in the affirmative by the Court when it ruled that the
machineries were integral parts of said sugar central hence included
following the principle of law that the accessory follows the principal.
Further, in the case of Manahan v. Hon. Cruz, 56 this Court denied the prayer
of Manahan to nullify the order of the trial court including the building in
question in the writ of possession following the public auction of the
parcels of land mortgaged to the bank. It upheld the inclusion by relying on
the principles laid upon in Bischoff v. Pomar and Cia. General de
Tabacos57 and Cu Unjieng e Hijos v. Mabalacat Sugar Co.58
In Spouses Paderes v. Court of Appeals,59 we reiterated once more the Cu
Unjieng e Hijos ruling and approved the inclusion of machineries and
accessories installed at the time the mortgage, as well as all the buildings,
machinery and accessories belonging to the mortgagor, installed after the
constitution thereof.
3. Contrary to the finding of the CA, the Extra-Judicial Foreclosure of
Mortgage includes the machineries and equipments of respondent. While
captioned as a "Petition for Extra-Judicial Foreclosure of Real Estate
Mortgage Under Act No. 3135 As Amended," the averments state that the
petition is based on "x x x the Mortgage Trust Indenture, the Deed of
Amendment to the Mortgage Trust Indenture, the Second Supplemental
Indenture to the Mortgage Trust Indenture, and the Third Supplemental
PROPERTY
Indenture to the Mortgage Trust Indenture (hereinafter collectively referred motion of respondent to remove or dispose of machinery is hereby
to as the Indenture) duly notarized and entered as x x x." 60 Noting that REINSTATED.
herein respondent has an outstanding obligation in the total amount of Nine
Hundred One Million Eight Hundred One Thousand Four Hundred Eighty SO ORDERED.
Four and 10/100 Pesos (P901,801,484.10), the petition for foreclosure
prayed that a foreclosure proceedings "x x x on the aforesaid real
properties, including all improvements thereon covered by the real estate
mortgage be undertaken and the appropriate auction sale be conducted x x
x."61
Considering that the Indenture which is the instrument of the mortgage that
was foreclosed exactly states through the Deed of Amendment that the
machineries and equipments listed in Annexes "A" and "B" form part of the
improvements listed and located on the parcels of land subject of the
mortgage, such machineries and equipments are surely part of the
foreclosure of the "real estate properties, including all improvements
thereon" as prayed for in the petition.
Indeed, the lower courts ought to have noticed the fact that the chattel
mortgages adverted to were dated 8 January 1990, 19 July 1990, 28 June
1991 and 28 November 1991. The real estate mortgages which specifically
included the machineries and equipments were subsequent to the chattel
mortgages dated 26 August 1992, 20 November 1992, 7 June 1994 and 24
January 1995. Without doubt, the real estate mortgages superseded the
earlier chattel mortgages.1wphi1
The real estate mortgage over the machineries and equipments is even in
full accord with the classification of such properties by the Civil Code of
the Philippines as immovable property. Thus:
Article 415. The following are immovable property:
G.R. No. L-64261 December 26, 1984
(1) Land, buildings, roads and constructions of all kinds adhered to the soil;
JOSE BURGOS, SR., JOSE BURGOS, JR., BAYANI SORIANO and J.
xxxx BURGOS MEDIA SERVICES, INC., petitioners,
vs.
(5) Machinery, receptacles, instruments or implements intended by the
THE CHIEF OF STAFF, ARMED FORCES OF THE PHILIPPINES,
owner of the tenement for an industry or works which may be carried on in
THE CHIEF, PHILIPPINE CONSTABULARY, THE CHIEF LEGAL
a building or on a piece of land, and which tend directly to meet the needs
OFFICER, PRESIDENTIAL SECURITY COMMAND, THE JUDGE
of the said industry or works;
ADVOCATE GENERAL, ET AL., respondents.
WHEREFORE, the petition is GRANTED. Accordingly, the Decision and
Lorenzo M. Taada, Wigberto E. Taada, Martiniano Vivo, Augusto
Resolution of the Court of Appeals dated 8 March 2005 and 8 August 2005
Sanchez, Joker P. Arroyo, Jejomar Binay and Rene Saguisag for
upholding the 15 August 2003 and 1 December 2003 Orders of the
petitioners.
Valenzuela Regional Trial Court are hereby REVERSED and SET ASIDE
and the original Order of the trial court dated 28 February 2003 denying the The Solicitor General for respondents.
19
JALALON, JEANINE VANESSA R.
ESCOLIN, J.:
Assailed in this petition for certiorari prohibition and mandamus with
preliminary mandatory and prohibitory injunction is the validity of two [2]
search warrants issued on December 7, 1982 by respondent Judge Ernani
Cruz-Pano, Executive Judge of the then Court of First Instance of Rizal
[Quezon City], under which the premises known as No. 19, Road 3, Project
6, Quezon City, and 784 Units C & D, RMS Building, Quezon Avenue,
Quezon City, business addresses of the "Metropolitan Mail" and "We
Forum" newspapers, respectively, were searched, and office and printing
machines, equipment, paraphernalia, motor vehicles and other articles used
in the printing, publication and distribution of the said newspapers, as well
as numerous papers, documents, books and other written literature alleged
to be in the possession and control of petitioner Jose Burgos, Jr. publisher-
editor of the "We Forum" newspaper, were seized.
Petitioners further pray that a writ of preliminary mandatory and
prohibitory injunction be issued for the return of the seized articles, and that
respondents, "particularly the Chief Legal Officer, Presidential Security
Command, the Judge Advocate General, AFP, the City Fiscal of Quezon
City, their representatives, assistants, subalterns, subordinates, substitute or
successors" be enjoined from using the articles thus seized as evidence
against petitioner Jose Burgos, Jr. and the other accused in Criminal Case
No. Q- 022782 of the Regional Trial Court of Quezon City, entitled People
v. Jose Burgos, Jr. et al. 1
In our Resolution dated June 21, 1983, respondents were required to answer
the petition. The plea for preliminary mandatory and prohibitory injunction
was set for hearing on June 28, 1983, later reset to July 7, 1983, on motion
of the Solicitor General in behalf of respondents.
At the hearing on July 7, 1983, the Solicitor General, while opposing
petitioners' prayer for a writ of preliminary mandatory injunction,
manifested that respondents "will not use the aforementioned articles as
evidence in the aforementioned case until final resolution of the legality of
the seizure of the aforementioned articles. ..." 2 With this manifestation, the
prayer for preliminary prohibitory injunction was rendered moot and
academic.
Respondents would have this Court dismiss the petition on the ground that
petitioners had come to this Court without having previously sought the
quashal of the search warrants before respondent judge. Indeed, petitioners,
before impugning the validity of the warrants before this Court, should have
filed a motion to quash said warrants in the court that issued them. 3 But this
PROPERTY
procedural flaw notwithstanding, we take cognizance of this petition in
view of the seriousness and urgency of the constitutional issues raised not
to mention the public interest generated by the search of the "We Forum"
offices, which was televised in Channel 7 and widely publicized in all
metropolitan dailies. The existence of this special circumstance justifies this
Court to exercise its inherent power to suspend its rules. In the words of the
revered Mr. Justice Abad Santos in the case of C. Vda. de Ordoveza v.
Raymundo, 4 "it is always in the power of the court [Supreme Court] to
suspend its rules or to except a particular case from its operation, whenever
the purposes of justice require it...".
Respondents likewise urge dismissal of the petition on ground of laches.
Considerable stress is laid on the fact that while said search warrants were
issued on December 7, 1982, the instant petition impugning the same was
filed only on June 16, 1983 or after the lapse of a period of more than six
[6] months.
Laches is failure or negligence for an unreasonable and unexplained length
of time to do that which, by exercising due diligence, could or should have
been done earlier. It is negligence or omission to assert a right within a
reasonable time, warranting a presumption that the party entitled to assert it
either has abandoned it or declined to assert it. 5
Petitioners, in their Consolidated Reply, explained the reason for the delay
in the filing of the petition thus:
Respondents should not find fault, as they now do [p. 1, Answer, p. 3,
Manifestation] with the fact that the Petition was filed on June 16, 1983,
more than half a year after the petitioners' premises had been raided.
The climate of the times has given petitioners no other choice. If they had
waited this long to bring their case to court, it was because they tried at first
to exhaust other remedies. The events of the past eleven fill years had
taught them that everything in this country, from release of public funds to
release of detained persons from custody, has become a matter of executive
benevolence or largesse
Hence, as soon as they could, petitioners, upon suggestion of persons close
to the President, like Fiscal Flaminiano, sent a letter to President Marcos,
through counsel Antonio Coronet asking the return at least of the printing
equipment and vehicles. And after such a letter had been sent, through Col.
Balbino V. Diego, Chief Intelligence and Legal Officer of the Presidential
Security Command, they were further encouraged to hope that the latter
would yield the desired results.
20
After waiting in vain for five [5] months, petitioners finally decided to
come to Court. [pp. 123-124, Rollo]
Although the reason given by petitioners may not be flattering to our
judicial system, We find no ground to punish or chastise them for an error
in judgment. On the contrary, the extrajudicial efforts exerted by petitioners
quite evidently negate the presumption that they had abandoned their right
to the possession of the seized property, thereby refuting the charge of
laches against them.
Respondents also submit the theory that since petitioner Jose Burgos, Jr.
had used and marked as evidence some of the seized documents in Criminal
Case No. Q- 022872, he is now estopped from challenging the validity of
the search warrants. We do not follow the logic of respondents. These
documents lawfully belong to petitioner Jose Burgos, Jr. and he can do
whatever he pleases with them, within legal bounds. The fact that he has
used them as evidence does not and cannot in any way affect the validity or
invalidity of the search warrants assailed in this petition.
Several and diverse reasons have been advanced by petitioners to nullify the
search warrants in question.
1. Petitioners fault respondent judge for his alleged failure to conduct an
examination under oath or affirmation of the applicant and his witnesses, as
mandated by the above-quoted constitutional provision as wen as Sec. 4,
Rule 126 of the Rules of Court . 6 This objection, however, may properly be
considered moot and academic, as petitioners themselves conceded during
the hearing on August 9, 1983, that an examination had indeed been
conducted by respondent judge of Col. Abadilla and his witnesses.
2. Search Warrants No. 20-82[a] and No. 20- 82[b] were used to search two
distinct places: No. 19, Road 3, Project 6, Quezon City and 784 Units C &
D, RMS Building, Quezon Avenue, Quezon City, respectively. Objection is
interposed to the execution of Search Warrant No. 20-82[b] at the latter
address on the ground that the two search warrants pinpointed only one
place where petitioner Jose Burgos, Jr. was allegedly keeping and
concealing the articles listed therein, i.e., No. 19, Road 3, Project 6, Quezon
City. This assertion is based on that portion of Search Warrant No. 20- 82[b]
which states:
Which have been used, and are being used as instruments and means of
committing the crime of subversion penalized under P.D. 885 as amended
and he is keeping and concealing the same at 19 Road 3, Project 6, Quezon
City.
JALALON, JEANINE VANESSA R.
The defect pointed out is obviously a typographical error. Precisely, two
search warrants were applied for and issued because the purpose and intent
were to search two distinct premises. It would be quite absurd and illogical
for respondent judge to have issued two warrants intended for one and the
same place. Besides, the addresses of the places sought to be searched were
specifically set forth in the application, and since it was Col. Abadilla
himself who headed the team which executed the search warrants, the
ambiguity that might have arisen by reason of the typographical error is
more apparent than real. The fact is that the place for which Search Warrant
No. 20- 82[b] was applied for was 728 Units C & D, RMS Building,
Quezon Avenue, Quezon City, which address appeared in the opening
paragraph of the said warrant. 7 Obviously this is the same place that
respondent judge had in mind when he issued Warrant No. 20-82 [b].
In the determination of whether a search warrant describes the premises to
be searched with sufficient particularity, it has been held "that the executing
officer's prior knowledge as to the place intended in the warrant is relevant.
This would seem to be especially true where the executing officer is the
affiant on whose affidavit the warrant had issued, and when he knows that
the judge who issued the warrant intended the building described in the
affidavit, And it has also been said that the executing officer may look to
the affidavit in the official court file to resolve an ambiguity in the warrant
as to the place to be searched." 8
3. Another ground relied upon to annul the search warrants is the fact that
although the warrants were directed against Jose Burgos, Jr. alone, articles b
belonging to his co-petitioners Jose Burgos, Sr., Bayani Soriano and the J.
Burgos Media Services, Inc. were seized.
Section 2, Rule 126 of the Rules of Court, enumerates the personal
properties that may be seized under a search warrant, to wit:
Sec. 2. Personal Property to be seized. A search warrant may be issued
for the search and seizure of the following personal property:
[a] Property subject of the offense;
[b] Property stolen or embezzled and other proceeds or fruits of the offense;
and
[c] Property used or intended to be used as the means of committing an
offense.
The above rule does not require that the property to be seized should be
owned by the person against whom the search warrant is directed. It may or
may not be owned by him. In fact, under subsection [b] of the above-quoted
PROPERTY
Section 2, one of the properties that may be seized is stolen property.
Necessarily, stolen property must be owned by one other than the person in
whose possession it may be at the time of the search and seizure.
Ownership, therefore, is of no consequence, and it is sufficient that the
person against whom the warrant is directed has control or possession of the
property sought to be seized, as petitioner Jose Burgos, Jr. was alleged to
have in relation to the articles and property seized under the warrants.
4. Neither is there merit in petitioners' assertion that real properties were
seized under the disputed warrants. Under Article 415[5] of the Civil Code
of the Philippines, "machinery, receptables, instruments or implements
intended by the owner of the tenement for an industry or works which may
be carried on in a building or on a piece of land and which tend directly to
meet the needs of the said industry or works" are considered immovable
property. In Davao Sawmill Co. v. Castillo 9 where this legal provision was
invoked, this Court ruled that machinery which is movable by nature
becomes immobilized when placed by the owner of the tenement, property
or plant, but not so when placed by a tenant, usufructuary, or any other
person having only a temporary right, unless such person acted as the agent
of the owner.
In the case at bar, petitioners do not claim to be the owners of the land
and/or building on which the machineries were placed. This being the case,
the machineries in question, while in fact bolted to the ground remain
movable property susceptible to seizure under a search warrant.
5. The questioned search warrants were issued by respondent judge upon
application of Col. Rolando N. Abadilla Intelligence Officer of the P.C.
Metrocom. 10 The application was accompanied by the Joint Affidavit of
Alejandro M. Gutierrez and Pedro U. Tango, 11 members of the Metrocom
Intelligence and Security Group under Col. Abadilla which conducted a
surveillance of the premises prior to the filing of the application for the
search warrants on December 7, 1982.
It is contended by petitioners, however, that the abovementioned documents
could not have provided sufficient basis for the finding of a probable cause
upon which a warrant may validly issue in accordance with Section 3,
Article IV of the 1973 Constitution which provides:
SEC. 3. ... and no search warrant or warrant of arrest shall issue except
upon probable cause to be determined by the judge, or such other
responsible officer as may be authorized by law, after examination under
oath or affirmation of the complainant and the witnesses he may produce,
and particularly describing the place to be searched and the persons or
things to be seized.
21
We find petitioners' thesis impressed with merit. Probable cause for a search
is defined as such facts and circumstances which would lead a reasonably
discreet and prudent man to believe that an offense has been committed and
that the objects sought in connection with the offense are in the place
sought to be searched. And when the search warrant applied for is directed
against a newspaper publisher or editor in connection with the publication
of subversive materials, as in the case at bar, the application and/or its
supporting affidavits must contain a specification, stating with particularity
the alleged subversive material he has published or is intending to publish.
Mere generalization will not suffice. Thus, the broad statement in Col.
Abadilla's application that petitioner "is in possession or has in his control
printing equipment and other paraphernalia, news publications and other
documents which were used and are all continuously being used as a means
of committing the offense of subversion punishable under Presidential
Decree 885, as amended ..." 12 is a mere conclusion of law and does not
satisfy the requirements of probable cause. Bereft of such particulars as
would justify a finding of the existence of probable cause, said allegation
cannot serve as basis for the issuance of a search warrant and it was a grave
error for respondent judge to have done so.
Equally insufficient as basis for the determination of probable cause is the
statement contained in the joint affidavit of Alejandro M. Gutierrez and
Pedro U. Tango, "that the evidence gathered and collated by our unit clearly
shows that the premises above- mentioned and the articles and things
above-described were used and are continuously being used for subversive
activities in conspiracy with, and to promote the objective of, illegal
organizations such as the Light-a-Fire Movement, Movement for Free
Philippines, and April 6 Movement." 13
In mandating that "no warrant shall issue except upon probable cause to be
determined by the judge, ... after examination under oath or affirmation of
the complainant and the witnesses he may produce; 14 the Constitution
requires no less than personal knowledge by the complainant or his
witnesses of the facts upon which the issuance of a search warrant may be
justified. In Alvarez v. Court of First Instance, 15 this Court ruled that "the
oath required must refer to the truth of the facts within the personal
knowledge of the petitioner or his witnesses, because the purpose thereof is
to convince the committing magistrate, not the individual making the
affidavit and seeking the issuance of the warrant, of the existence of
probable cause." As couched, the quoted averment in said joint affidavit
filed before respondent judge hardly meets the test of sufficiency
established by this Court in Alvarez case.
Another factor which makes the search warrants under consideration
constitutionally objectionable is that they are in the nature of general
JALALON, JEANINE VANESSA R.
warrants. The search warrants describe the articles sought to be seized in
this wise:
1] All printing equipment, paraphernalia, paper, ink, photo (equipment,
typewriters, cabinets, tables, communications/recording equipment, tape
recorders, dictaphone and the like used and/or connected in the printing of
the "WE FORUM" newspaper and any and all documents communication,
letters and facsimile of prints related to the "WE FORUM" newspaper.
2] Subversive documents, pamphlets, leaflets, books, and other publication
to promote the objectives and piurposes of the subversive organization
known as Movement for Free Philippines, Light-a-Fire Movement and
April 6 Movement; and,
3] Motor vehicles used in the distribution/circulation of the "WE FORUM"
and other subversive materials and propaganda, more particularly,
1] Toyota-Corolla, colored yellow with Plate No. NKA 892;
2] DATSUN pick-up colored white with Plate No. NKV 969
3] A delivery truck with Plate No. NBS 524;
4] TOYOTA-TAMARAW, colored white with Plate No. PBP 665; and,
5] TOYOTA Hi-Lux, pick-up truck with Plate No. NGV 427 with marking
"Bagong Silang."
In Stanford v. State of Texas 16 the search warrant which authorized the
search for "books, records, pamphlets, cards, receipts, lists, memoranda,
pictures, recordings and other written instruments concerning the
Communist Party in Texas," was declared void by the U.S. Supreme Court
for being too general. In like manner, directions to "seize any evidence in
connectionwith the violation of SDC 13-3703 or otherwise" have been held
too general, and that portion of a search warrant which authorized the
seizure of any "paraphernalia which could be used to violate Sec. 54-197 of
the Connecticut General Statutes [the statute dealing with the crime of
conspiracy]" was held to be a general warrant, and therefore invalid. 17 The
description of the articles sought to be seized under the search warrants in
question cannot be characterized differently.
In the Stanford case, the U.S. Supreme Courts calls to mind a notable
chapter in English history: the era of disaccord between the Tudor
Government and the English Press, when "Officers of the Crown were
given roving commissions to search where they pleased in order to suppress
and destroy the literature of dissent both Catholic and Puritan Reference
PROPERTY
herein to such historical episode would not be relevant for it is not the
policy of our government to suppress any newspaper or publication that
speaks with "the voice of non-conformity" but poses no clear and imminent
danger to state security.
As heretofore stated, the premises searched were the business and printing
offices of the "Metropolitan Mail" and the "We Forum newspapers. As a
consequence of the search and seizure, these premises were padlocked and
sealed, with the further result that the printing and publication of said
newspapers were discontinued.
Such closure is in the nature of previous restraint or censorship abhorrent to
the freedom of the press guaranteed under the fundamental law, 18 and
constitutes a virtual denial of petitioners' freedom to express themselves in
print. This state of being is patently anathematic to a democratic framework
where a free, alert and even militant press is essential for the political
enlightenment and growth of the citizenry.
Respondents would justify the continued sealing of the printing machines
on the ground that they have been sequestered under Section 8 of
Presidential Decree No. 885, as amended, which authorizes "the
sequestration of the property of any person, natural or artificial, engaged in
subversive activities against the government and its duly constituted
authorities ... in accordance with implementing rules and regulations as may
be issued by the Secretary of National Defense." It is doubtful however, if
sequestration could validly be effected in view of the absence of any
implementing rules and regulations promulgated by the Minister of
National Defense.
Besides, in the December 10, 1982 issue of the Daily Express, it was
reported that no less than President Marcos himself denied the request of
the military authorities to sequester the property seized from petitioners on
December 7, 1982. Thus:
The President denied a request flied by government prosecutors for
sequestration of the WE FORUM newspaper and its printing presses,
according to Information Minister Gregorio S. Cendana.
On the basis of court orders, government agents went to the We Forum
offices in Quezon City and took a detailed inventory of the equipment and
all materials in the premises.
Cendaa said that because of the denial the newspaper and its equipment
remain at the disposal of the owners, subject to the discretion of the
court. 19
22
That the property seized on December 7, 1982 had not been sequestered is
further confirmed by the reply of then Foreign Minister Carlos P. Romulo to
the letter dated February 10, 1983 of U.S. Congressman Tony P. Hall
addressed to President Marcos, expressing alarm over the "WE FORUM "
case. 20 In this reply dated February 11, 1983, Minister Romulo stated:
2. Contrary to reports, President Marcos turned down the recommendation
of our authorities to close the paper's printing facilities and confiscate the
equipment and materials it uses. 21
IN VIEW OF THE FOREGOING, Search Warrants Nos. 20-82[a] and 20-
82[b] issued by respondent judge on December 7, 1982 are hereby declared
null and void and are accordingly set aside. The prayer for a writ of
mandatory injunction for the return of the seized articles is hereby granted
and all articles seized thereunder are hereby ordered released to petitioners.
No costs.
SO ORDERED.
Fernando, C.J., Teehankee, Makasiar, Concepcion, Jr., Melencio-Herrera,
Plana, Relova, Gutierrez, Jr., De la Fuente and Cuevas, JJ., concur.
Aquino, J., took no part.
Separate Opinions
ABAD SANTOS, J., concurring
I am glad to give my concurrence to the ponencia of Mr. Justice Escolin At
the same time I wish to state my own reasons for holding that the search
warrants which are the subject of the petition are utterly void.
The action against "WE FORUM" was a naked suppression of press
freedom for the search warrants were issued in gross violation of the
Constitution.
The Constitutional requirement which is expressed in Section 3, Article IV,
stresses two points, namely: "(1) that no warrant shall issue but upon
probable cause, to be determined by the judge in the manner set forth in
said provision; and (2) that the warrant shall particularly describe the things
to be seized." (Stonehill vs. Diokno, 126 Phil. 738, 747: 20 SCRA 383
[1967].)
Any search warrant is conducted in disregard of the points mentioned above
will result in wiping "out completely one of the most fundamental rights
guaranteed in our Constitution, for it would place the sanctity of the
JALALON, JEANINE VANESSA R.
domicile and the privacy of communication and correspondence at the
mercy of the whims caprice or passion of peace officers." (Ibid, p. 748.)
The two search warrants were issued without probable cause. To satisfy the
requirement of probable cause a specific offense must be alleged in the
application; abstract averments will not suffice. In the case at bar nothing
specifically subversive has been alleged; stated only is the claim that certain
objects were being used as instruments and means of committing the
offense of subversion punishable under P.D. No. 885, as amended. There is
no mention of any specific provision of the decree. I n the words of Chief
Justice C Concepcion, " It would be legal heresy of the highest order, to
convict anybody" of violating the decree without reference to any
determinate provision thereof.
The search warrants are also void for lack of particularity. Both search
warrants authorize Col. Rolando Abadilla to seize and take possession,
among other things, of the following:
Subversive documents, pamphlets, leaflets, books and other publication to
promote the objectives and purposes of the subversive organizations known
as Movement for Free Philippines, Light-a-Fire Movement and April 6
Movement.
The obvious question is: Why were the documents, pamphlets, leaflets,
books, etc. subversive? What did they contain to make them subversive?
There is nothing in the applications nor in the warrants which answers the
questions. I must, therefore, conclude that the warrants are general warrants
which are obnoxious to the Constitution.
In point of fact, there was nothing subversive published in the WE FORUM
just as there is nothing subversive which has been published in MALAYA
which has replaced the former and has the same content but against which
no action has been taken.
Conformably with existing jurisprudence everything seized pursuant to the
warrants should be returned to the owners and all of the items are subject to
the exclusionary rule of evidence.
Teehankee, J., concur.
[G.R. No. 137705. August 22, 2000]
PROPERTY
SERGS PRODUCTS, INC., and SERGIO T.
GOQUIOLAY, petitioners, vs. PCI LEASING AND FINANCE,
INC., respondent.
DECISION
PANGANIBAN, J.:
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.
The Case
Before us is a Petition for Review on Certiorari assailing the January 6,
1999 Decision[1] of the Court of Appeals (CA)[2] in CA-GR SP No. 47332
and its February 26, 1999 Resolution [3] denying reconsideration. The
decretal portion of the CA Decision reads as follows:
WHEREFORE, premises considered, the assailed Order dated February 18,
1998 and Resolution dated March 31, 1998 in Civil Case No. Q-98-33500
are hereby AFFIRMED. The writ of preliminary injunction issued on June
15, 1998 is hereby LIFTED.[4]
In its February 18, 1998 Order,[5] the Regional Trial Court (RTC) of Quezon
City (Branch 218)[6] issued a Writ of Seizure. [7] The March 18, 1998
Resolution[8] denied petitioners Motion for Special Protective Order,
praying that the deputy sheriff be enjoined from seizing immobilized or
other real properties in (petitioners) factory in Cainta, Rizal and to return to
their original place whatever immobilized machineries or equipments he
may have removed.[9]
The Facts
The undisputed facts are summarized by the Court of Appeals as follows: [10]
On February 13, 1998, respondent PCI Leasing and Finance, Inc. (PCI
Leasing for short) filed with the RTC-QC a complaint for [a] sum of money
(Annex E), with an application for a writ of replevin docketed as Civil Case
No. Q-98-33500.
On March 6, 1998, 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.
23
On March 24, 1998, in implementation of said writ, the sheriff proceeded to
petitioners factory, seized one machinery with [the] word that he [would]
return for the other machineries.
On March 25, 1998, petitioners filed a motion for special protective order
(Annex C), invoking the power of the court to control the conduct of its
officers and amend and control its processes, praying for a directive for the
sheriff to defer enforcement of the writ of replevin.
This motion was opposed by PCI Leasing (Annex F), on the ground that the
properties [were] still personal and therefore still subject to seizure and a
writ of replevin.
In their Reply, petitioners asserted that the properties sought to be seized
[were] immovable as defined in Article 415 of the Civil Code, the parties
agreement to the contrary notwithstanding. They argued that to give effect
to the agreement would be prejudicial to innocent third parties. They further
stated that PCI Leasing [was] estopped from treating these machineries as
personal because the contracts in which the alleged agreement [were]
embodied [were] totally sham and farcical.
On April 6, 1998, the sheriff again sought to enforce the writ of seizure and
take possession of the remaining properties. He was able to take two more,
but was prevented by the workers from taking the rest.
On April 7, 1998, they went to [the CA] via an original action for certiorari.
Ruling of the Court of Appeals
Citing the Agreement of the parties, the appellate court held that the subject
machines were personal property, and that they had only been leased, not
owned, by petitioners. It also ruled that the words of the contract are clear
and leave no doubt upon the true intention of the contracting
parties. Observing that Petitioner Goquiolay was an experienced
businessman who was not unfamiliar with the ways of the trade, it ruled
that he should have realized the import of the document he signed. The CA
further held:
Furthermore, to accord merit to this petition would be to preempt the trial
court in ruling upon the case below, since the merits of the whole matter are
laid down before us via a petition whose sole purpose is to inquire upon the
existence of a grave abuse of discretion on the part of the [RTC] in issuing
the assailed Order and Resolution. The issues raised herein are proper
subjects of a full-blown trial, necessitating presentation of evidence by both
parties. The contract is being enforced by one, and [its] validity is attacked
JALALON, JEANINE VANESSA R.
by the other a matter x x x which respondent court is in the best position to
determine.
Hence, this Petition.[11]
The Issues
In their Memorandum, petitioners submit the following issues for our
consideration:
A. Whether or not the machineries purchased and imported by SERGS
became real property by virtue of immobilization.
B. Whether or not the contract between the parties is a loan or a lease. [12]
In the main, the Court will resolve whether the said machines are personal,
not immovable, property which may be a proper subject of a writ of
replevin. As a preliminary matter, the Court will also address briefly the
procedural points raised by respondent.
The Courts Ruling
The Petition is not meritorious.
Preliminary Matter:Procedural Questions
Respondent contends that the Petition failed to indicate expressly whether it
was being filed under Rule 45 or Rule 65 of the Rules of Court. It further
alleges that the Petition erroneously impleaded Judge Hilario Laqui as
respondent.
There is no question that the present recourse is under Rule 45. This
conclusion finds support in the very title of the Petition, which is Petition
for Review on Certiorari.[13]
While Judge Laqui should not have been impleaded as a respondent,
[14]
substantial justice requires that such lapse by itself should not warrant
the dismissal of the present Petition. In this light, the Court deems it proper
to remove, motu proprio, the name of Judge Laqui from the caption of the
present case.
Main Issue: Nature of the Subject Machinery
Petitioners contend that the subject machines used in their factory were not
proper subjects of the Writ issued by the RTC, because they were in fact
real property. Serious policy considerations, they argue, militate against a
contrary characterization.
PROPERTY
Rule 60 of the Rules of Court provides that writs of replevin are issued for
the recovery of personal property only.[15] Section 3 thereof reads:
SEC. 3. Order. -- Upon the filing of such affidavit and approval of the
bond, the court shall issue an order and the corresponding writ of replevin
describing the personal property alleged to be wrongfully detained and
requiring the sheriff forthwith to take such property into his custody.
On the other hand, Article 415 of the Civil Code enumerates immovable or
real property as follows:
ART. 415. The following are immovable property:
x x x....................................x x x....................................x x x
(5) Machinery, receptacles, instruments or implements intended by the
owner of the tenement for an industry or works which may be carried on in
a building or on a piece of land, and which tend directly to meet the needs
of the said industry or works;
x x x....................................x x x....................................x x x
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]
Be that as it may, we disagree with the submission of the petitioners that the
said machines are not proper subjects of the Writ of Seizure.
The Court has held that contracting parties may validly stipulate that a real
property be considered as personal.[18] After agreeing to such stipulation,
they are consequently estopped from claiming otherwise. Under the
principle of estoppel, a party to a contract is ordinarily precluded from
denying the truth of any material fact found therein.
Hence, in Tumalad v. Vicencio,[19] the Court upheld the intention of the
parties to treat a house as a personal property because it had been made the
subject of a chattel mortgage. The Court ruled:
x x x. Although there is no specific statement referring to the subject house
as personal property, yet by ceding, selling or transferring a property by
24
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.
Applying Tumalad, the Court in Makati Leasing and Finance Corp. v.
Wearever Textile Mills[20] also held that the machinery used in a factory and
essential to the industry, as in the present case, was a proper subject of a
writ of replevin because it was treated as personal property in a
contract. Pertinent portions of the Courts ruling are reproduced hereunder:
x x x. 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 the present case, the Lease Agreement clearly provides that the machines
in question are to be considered as personal property. Specifically, Section
12.1 of the Agreement reads as follows:[21]
12.1 The PROPERTY is, and shall at all times be and remain, personal
property notwithstanding that the PROPERTY or any part thereof may now
be, or hereafter become, in any manner affixed or attached to or embedded
in, or permanently resting upon, real property or any building thereon, or
attached in any manner to what is permanent.
Clearly then, petitioners are estopped from denying the characterization of
the subject machines as personal property. Under the circumstances, they
are proper subjects of the Writ of Seizure.
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.
Validity of the Lease Agreement
In their Memorandum, petitioners contend that the Agreement is a loan and
not a lease.[24] Submitting documents supposedly showing that they own the
JALALON, JEANINE VANESSA R.
subject machines, petitioners also argue in their Petition that the Agreement
suffers from intrinsic ambiguity which places in serious doubt the intention
of the parties and the validity of the lease agreement itself. [25] In their Reply
to respondents Comment, they further allege that the Agreement is invalid.
[26]
These arguments are unconvincing. The validity and the nature of the
contract are the lis mota of the civil action pending before the RTC. A
resolution of these questions, therefore, is effectively a resolution of the
merits of the case. Hence, they should be threshed out in the trial, not in the
proceedings involving the issuance of the Writ of Seizure.
Indeed, in La Tondea Distillers v. CA,[27] the Court explained that the policy
under Rule 60 was that questions involving title to the subject property
questions which petitioners are now raising -- should be determined in the
trial. In that case, the Court noted that the remedy of defendants under Rule
60 was either to post a counter-bond or to question the sufficiency of the
plaintiffs bond. They were not allowed, however, to invoke the title to the
subject property. The Court ruled:
In other words, the law does not allow the defendant to file a motion to
dissolve or discharge the writ of seizure (or delivery) on ground of
insufficiency of the complaint or of the grounds relied upon therefor, as in
proceedings on preliminary attachment or injunction, and thereby put at
issue the matter of the title or right of possession over the specific chattel
being replevied, the policy apparently being that said matter should be
ventilated and determined only at the trial on the merits. [28]
Besides, these questions require a determination of facts and a presentation
of evidence, both of which have no place in a petition for certiorari in the
CA under Rule 65 or in a petition for review in this Court under Rule 45. [29]
Reliance on the Lease Agreement
It should be pointed out that the Court in this case may rely on the Lease
Agreement, for nothing on record shows that it has been nullified or
annulled. In fact, petitioners assailed it first only in the RTC proceedings,
which had ironically been instituted by respondent. Accordingly, it must be
presumed valid and binding as the law between the parties.
Makati Leasing and Finance Corporation [30] is also instructive on this
point. In that case, the Deed of Chattel Mortgage, which characterized the
subject machinery as personal property, was also assailed because
respondent had allegedly been required to sign a printed form of chattel
mortgage which was in a blank form at the time of signing. The Court
rejected the argument and relied on the Deed, ruling as follows:
PROPERTY
x x x. Moreover, even granting that the charge is true, such fact alone does
not render a contract void ab initio, but can only be a ground for rendering
said contract voidable, or annullable pursuant to Article 1390 of the new
Civil Code, by a proper action in court. There is nothing on record to show
that the mortgage has been annulled. Neither is it disclosed that steps were
taken to nullify the same. x x x
Alleged Injustice Committed on the Part of Petitioners
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. [31] They
also allege that the seizure would nullify all efforts to rehabilitate the
corporation.
Petitioners arguments do not preclude the implementation of the Writ. As
earlier discussed, law and jurisprudence support its propriety. Verily, the
above-mentioned consequences, if they come true, should not be blamed on
this Court, but on the petitioners for failing to avail themselves of the
remedy under Section 5 of Rule 60, which allows the filing of a counter-
bond. The provision states:
SEC. 5. Return of property. -- If the adverse party objects to the sufficiency
of the applicants bond, or of the surety or sureties thereon, he cannot
immediately require the return of the property, but if he does not so object,
he may, at any time before the delivery of the property to the applicant,
require the return thereof, by filing with the court where the action is
pending a bond executed to the applicant, in double the value of the
property as stated in the applicants affidavit for the delivery thereof to the
applicant, if such delivery be adjudged, and for the payment of such sum to
him as may be recovered against the adverse party, and by serving a copy
bond on the applicant.
WHEREFORE, the Petition is DENIED and the assailed Decision of the
Court of Appeals AFFIRMED. Costs against petitioners.
SO ORDERED.
G.R. No. L-16218 November 29, 1962
ANTONIA BICERRA, DOMINGO BICERRA, BERNARDO
BICERRA, CAYETANO BICERRA, LINDA BICERRA, PIO
BICERRA and EUFRICINA BICERRA, plaintiffs-appellants,
vs.
TOMASA TENEZA and BENJAMIN BARBOSA, defendants-appellees.
25
Agripino Brillantes and Alberto B. Bravo for plaintiffs-appellants.
Ernesto Parol for defendants-appellees.
MAKALINTAL, J.:
This case is before us on appeal from the order of the Court of First
Instance of Abra dismissing the complaint filed by appellants, upon motion
of defendants-appellate on the ground that the action was within the
exclude (original) jurisdiction of the Justice of the Peace Court of
Lagangilang, of the same province.
The complaint alleges in substance that appellants were the owners of the
house, worth P200.00, built on and owned by them and situated in the said
municipality Lagangilang; that sometime in January 1957 appealed forcibly
demolished the house, claiming to be the owners thereof; that the materials
of the house, after it was dismantled, were placed in the custody of the
barrio lieutenant of the place; and that as a result of appellate's refusal to
restore the house or to deliver the material appellants the latter have
suffered actual damages the amount of P200.00, plus moral and
consequential damages in the amount of P600.00. The relief prayed for is
that "the plaintiffs be declared the owners of the house in question and/or
the materials that resulted in (sic) its dismantling; (and) that the defendants
be orders pay the sum of P200.00, plus P600.00 as damages, the costs."
The issue posed by the parties in this appeal is whether the action involves
title to real property, as appellants contend, and therefore is cognizable by
the Court of First Instance (Sec. 44, par. [b], R.A. 296, as amended),
whether it pertains to the jurisdiction of the Justice of the Peace Court, as
stated in the order appealed from, since there is no real property litigated,
the house having ceased to exist, and the amount of the demand does
exceed P2,000.00 (Sec. 88, id.)1
The dismissal of the complaint was proper. A house is classified as
immovable property by reason of its adherence to the soil on which it is
built (Art. 415, par. 1, Civil Code). This classification holds true regardless
of the fact that the house may be situated on land belonging to a different
owner. But once the house is demolished, as in this case, it ceases to exist as
such and hence its character as an immovable likewise ceases. It should be
noted that the complaint here is for recovery of damages. This is the only
positive relief prayed for by appellants. To be sure, they also asked that they
be declared owners of the dismantled house and/or of the materials.
However, such declaration in no wise constitutes the relief itself which if
granted by final judgment could be enforceable by execution, but is only
incidental to the real cause of action to recover damages.
JALALON, JEANINE VANESSA R.
The order appealed from is affirmed. The appeal having been admitted
in forma pauperis, no costs are adjudged.
Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes,
J.B.L., Barrera, Paredes, Dizon and Regala, JJ., concur.
G.R. No. 190106 January 15, 2014
MAGDALENA T. VILLASI, Petitioner,
vs.
FILOMENO GARCIA, substituted by his heirs, namely, ERMELINDA
H. GARCIA, LIZA GARCIA-GONZALEZ, THERESA GARCIA-
TIANGSON, MARIVIC H. GARCIA, MARLENE GARCIA-MOMIN,
GERARDO H. GARCIA, GIDEON H. GARCIA and GENEROSO H.
GARCIA, and ERMELINDA H. GARCIA, Respondents.
DECISION
PEREZ, J.:
This is a Petition for Review on Certiorari 1 filed pursuant to Rule 45 of the
Revised Rules of Court, assailing the 19 May 2009 Decision 2 rendered by
the Sixth Division of the Court of Appeals in CA-G.R. SP No. 92587. The
appellate court affirmed the Order3 of the Regional Trial Court R TC) of
Quezon City, Branch 77, directing the Deputy Sheriff to suspend the
conduct of the execution sale of the buildings levied upon by him.
The Facts
Sometime in 1990, petitioner Magdalena T Villasi (Villasi) engaged the
services of respondent Fil-Garcia Construction, Inc. (FGCI) to construct a
PROPERTY
seven-storey condominium building located at Aurora Boulevard corner N.
Domingo Street, Cubao, Quezon City. For failure of Villasi to fully pay the
contract price despite several demands, FGCI initiated a suit for collection
of sum of money before the RTC of Quezon City, Branch 77. In its action
docketed as Civil Case No. Q-91-8187, FGCI prayed, among others, for the
payment of the amount of P2,865,000.00, representing the unpaid
accomplishment billings. Served with summons, Villasi filed an answer
specifically denying the material allegations of the complaint. Contending
that FGCI has no cause of action against her, Villasi averred that she
delivered the total amount of P7,490,325.10 to FGCI but the latter
accomplished only 28% of the project. After the pre-trial conference was
terminated without the parties having reached an amicable settlement, trial
on the merits ensued.
Finding that FGCI was able to preponderantly establish by evidence its
right to the unpaid accomplishment billings, the RTC rendered a
Decision4 dated 26 June 1996 in FGCIs favor. While the trial court brushed
aside the allegation of Villasi that an excess payment was made, it upheld
the claim of FGCI to the unpaid amount of the contract price and, thus,
disposed:
WHEREFORE, judgment is hereby rendered:
1. Ordering [Villasi] to pay [FGCI] the sum of P2,865,000.00 as actual
damages and unpaid accomplishment billings;
2. Ordering [Villasi] to pay [FGCI] the amount of P500,000.00 representing
the value of unused building materials;
3. Ordering [Villasi] to pay [FGCI] the amount of P100,000.00, as moral
damages and P100,000.00 as attorneys fees.5
Elevated on appeal and docketed as CA-GR CV No. 54750, the Court of
Appeals reversed the disquisition of the RTC in its Decision 6 dated 20
November 2000. The appellate court ruled that an overpayment was made
by Villasi and thereby directed FGCI to return the amount that was paid in
excess, viz:
WHEREFORE, premises considered, the present appeal is hereby
GRANTED and the appealed decision in Civil Case No. Q-91-8187 is
hereby REVERSED and SET ASIDE and judgment is hereby rendered
ordering the [FGCI] to return to [Villasi] the sum of P1,244,543.33 as
overpayment under their contract, and the further sum of P425,004.00
representing unpaid construction materials obtained by it from [Villasi].
[FGCI] is likewise hereby declared liable for the payment of liquidated
26
damages in the sum equivalent to 1/10 of 1% of the contract price for each
day of delay computed from March 6, 1991.
No pronouncement as to costs.7
Unrelenting, FGCI filed a Petition for Review on Certiorari before this
Court, docketed as G.R. No. 147960, asseverating that the appellate court
erred in rendering the 20 November 2000 Decision. This Court, however, in
a Resolution dated 1 October 2001, denied the appeal for being filed out of
time. The said resolution became final and executory on 27 November
2001, as evidenced by the Entry of Judgment8 made herein.
To enforce her right as prevailing party, Villasi filed a Motion for Execution
of the 20 November 2000 Court of Appeals Decision, which was favorably
acted upon by the RTC. 9 A Writ of Execution was issued on 28 April 2004,
commanding the Sheriff to execute and make effective the 20 November
2000 Decision of the Court of Appeals.
To satisfy the judgment, the sheriff levied on a building located at No. 140
Kalayaan Avenue, Quezon City, covered by Tax Declaration No. D-021-
01458, and built in the lots registered under Transfer Certificates of Title
(TCT) Nos. 379193 and 379194. While the building was declared for
taxation purposes in the name of FGCI, the lots in which it was erected
were registered in the names of the Spouses Filomeno Garcia and
Ermelinda Halili-Garcia (Spouses Garcia). After the mandatory posting and
publication of notice of sale on execution of real property were complied
with, a public auction was scheduled on 25 January 2006.
To forestall the sale on execution, the Spouses Garcia filed an Affidavit of
Third Party Claim10 and a Motion to Set Aside Notice of Sale on
Execution,11 claiming that they are the lawful owners of the property which
was erroneously levied upon by the sheriff. To persuade the court a quo to
grant their motion, the Spouses Garcia argued that the building covered by
the levy was mistakenly assessed by the City Assessor in the name of FGCI.
The motion was opposed by Villasi who insisted that its ownership belongs
to FGCI and not to the Spouses Garcia as shown by the tax declaration.
After weighing the arguments of the opposing parties, the RTC issued on 24
February 2005 an Order12 directing the Sheriff to hold in abeyance the
conduct of the sale on execution, to wit:
WHEREFORE, premises considered, the Court hereby orders Deputy
Sheriff Angel Doroni to suspend or hold in abeyance the conduct of the sale
on execution of the buildings levied upon by him, until further orders from
the Court.13
JALALON, JEANINE VANESSA R.
The motion for reconsideration of Villasi was denied by the trial court in its
11 October 2005 Order.14
Arguing that the RTC gravely abused its discretion in ordering the
suspension of the sale on execution, Villasi timely filed a Petition for
Certiorari before the Court of Appeals. In a Decision 15 dated 19 May 2009,
the appellate court dismissed the petition. In a Resolution 16 dated 28
October 2009, the Court of Appeals refused to reconsider its decision.
Villasi is now before this Court via this instant Petition for Review on
Certiorariassailing the adverse Court of Appeals Decision and Resolution
and raising the following issues:
The Issues
I.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS
GRIEVOUSLY ERRED IN UPHOLDING THE DECISION OF THE
TRIAL COURT TO SUSPEND AND HOLD IN ABEYANCE THE SALE
ON EXECUTION OF THE BUILDINGS LEVIED UPON ON THE
BASIS OF RESPONDENTS AFFIDAVIT OF THIRD-PARTY CLAIM;
II.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS
GRIEVOUSLY ERRED WHEN IT HELD THAT THERE IS NO REASON
TO PIERCE THE VEIL OF [FGCIS] CORPORATE FICTION IN THE
CASE AT BAR; [AND]
III.
WHETHER OR NOT THE BRANCH SHERIFF OF THE REGIONAL
TRIAL COURT OF QUEZON CITY, BRANCH 77 SHOULD BE
DIRECTED TO FILE THE APPROPRIATE NOTICE OF LEVY WITH
THE REGISTER OF DEEDS OF QUEZON CITY.17
The Courts Ruling
It is a basic principle of law that money judgments are enforceable only
against the property incontrovertibly belonging to the judgment debtor, and
if the property belonging to any third person is mistakenly levied upon to
answer for another mans indebtedness, such person has all the right to
challenge the levy through any of the remedies provided for under the Rules
of Court. Section 16,18 Rule 39 specifically provides that a third person may
avail himself of the remedies of either terceria, to determine whether the
PROPERTY
sheriff has rightly or wrongly taken hold of the property not belonging to
the judgment debtor or obligor, or an independent "separate action" to
vindicate his claim of ownership and/or possession over the foreclosed
property. However, the person other than the judgment debtor who claims
ownership or right over levied properties is not precluded from taking other
legal remedies to prosecute his claim.19
Indeed, the power of the court in executing judgments extends only to
properties unquestionably belonging to the judgment debtor alone. An
execution can be issued only against a party and not against one who did
not have his day in court. The duty of the sheriff is to levy the property of
the judgment debtor not that of a third person. For, as the saying goes, one
man's goods shall not be sold for another man's debts.20
Claiming that the sheriff mistakenly levied the building that lawfully
belongs to them, the Spouses Garcia availed themselves of the remedy of
terceria under Section 16, Rule 39 of the Revised Rules of Court. To fortify
their position, the Spouses Garcia asserted that as the owners of the land,
they would be deemed under the law as owners of the building standing
thereon. The Spouses Garcia also asserted that the construction of the
building was financed thru a loan obtained from Metrobank in their
personal capacities, and they merely contracted FGCI to construct the
building. Finally, the Spouses Garcia argued that the tax declaration, based
on an erroneous assessment by the City Assessor, cannot be made as basis
of ownership.
For her part, Villasi insists that the levy effected by the sheriff was proper
since the subject property belongs to the judgment debtor and not to third
persons. To dispute the ownership of the Spouses Garcia, Villasi pointed out
that the levied property was declared for tax purposes in the name of FGCI.
A Certification issued by the Office of the City Engineering of Quezon City
likewise showed that the building permit of the subject property was
likewise issued in the name of FGCI. We grant the petition.
The right of a third-party claimant to file a terceria is founded on his title or
right of possession.1avvphi1 Corollary thereto, before the court can
exercise its supervisory power to direct the release of the property
mistakenly levied and the restoration thereof to its rightful owner, the
claimant must first unmistakably establish his ownership or right of
possession thereon. In Spouses Sy v. Hon. Discaya, 21 we declared that for a
third-party claim or a terceria to prosper, the claimant must first sufficiently
establish his right on the property:
[A] third person whose property was seized by a sheriff to answer for the
obligation of the judgment debtor may invoke the supervisory power of the
27
court which authorized such execution. Upon due application by the third
person and after summary hearing, the court may command that the
property be released from the mistaken levy and restored to the rightful
owner or possessor. What said court can do in these instances, however, is
limited to a determination of whether the sheriff has acted rightly or
wrongly in the performance of his duties in the execution of judgment,
more specifically, if he has indeed taken hold of property not belonging to
the judgment debtor. The court does not and cannot pass upon the question
of title to the property, with any character of finality. It can treat of the
matter only insofar as may be necessary to decide if the sheriff has acted
correctly or not. It can require the sheriff to restore the property to the
claimant's possession if warranted by the evidence. However, if the
claimant's proofs do not persuade the court of the validity of his title or
right of possession thereto, the claim will be denied. 22(Emphasis and
underscoring supplied).
Our perusal of the record shows that, as the party asserting their title, the
Spouses Garcia failed to prove that they have a bona fide title to the
building in question. Aside from their postulation that as title holders of the
land, the law presumes them to be owners of the improvements built
thereon, the Spouses Garcia were unable to adduce credible evidence to
prove their ownership of the property. In contrast, Villasi was able to
satisfactorily establish the ownership of FGCI thru the pieces of evidence
she appended to her opposition. Worthy to note is the fact that the building
in litigation was declared for taxation purposes in the name of FGCI and
not in the Spouses Garcias. While it is true that tax receipts and tax
declarations are not incontrovertible evidence of ownership, they constitute
credible proof of claim of title over the property. 23 In Buduhan v.
Pakurao,24 we underscored the significance of a tax declaration as proof that
a holder has claim of title, and, we gave weight to the demonstrable interest
of the claimant holding a tax receipt:
Although tax declarations or realty tax payment of property are not
conclusive evidence of ownership, nevertheless, they are good indicia of
possession in the concept of owner for no one in his right mind would be
paying taxes for a property that is not in his actual or at least constructive
possession. They constitute at least proof that the holder has a claim of title
over the property. The voluntary declaration of a piece of property for
taxation purposes manifests not only ones sincere and honest desire to
obtain title to the property and announces his adverse claim against the
State and all other interested parties, but also the intention to contribute
needed revenues to the Government. Such an act strengthens ones bona
fide claim of acquisition of ownership.25
JALALON, JEANINE VANESSA R.
It likewise failed to escape our attention that FGCI is in actual possession of
the building and as the payment of taxes coupled with actual possession of
the land covered by tax declaration strongly supports a claim of
ownership.26 Quite significantly, all the court processes in an earlier
collection suit between FGCI and Villasi were served, thru the formers
representative Filomeno Garcia, at No. 140 Kalayaan Avenue, Quezon City,
where the subject property is located. This circumstance is consistent with
the tax declaration in the name of FGCI.
The explanation proffered by the Spouses Garcia, that the City Assessor
merely committed an error when it declared the property for taxation
purposes in the name of FGCI, appears to be suspect in the absence of any
prompt and serious effort on their part to have it rectified before the onset
of the instant controversy. The correction of entry belatedly sought by the
Spouses Garcia is indicative of its intention to put the property beyond the
reach of the judgment creditor. Every prevailing party to a suit enjoys the
corollary right to the fruits of the judgment and, thus, court rules provide a
procedure to ensure that every favorable judgment is fully satisfied. 27 It is
almost trite to say that execution is the fruit and end of the suit. Hailing it as
the "life of the law,"
28
ratio legis est anima, this Court has zealously guarded against any attempt
to thwart the rigid rule and deny the prevailing litigant his right to savour
the fruit of his victory. 29 A judgment, if left unexecuted, would be nothing
but an empty triumph for the prevailing party.30
While it is a hornbook doctrine that the accessory follows the
principal,31 that is, the ownership of the property gives the right by
accession to everything which is produced thereby, or which is incorporated
or attached thereto, either naturally or artificially, 32 such rule is not without
exception. In cases where there is a clear and convincing evidence to prove
that the principal and the accessory are not owned by one and the same
person or entity, the presumption shall not be applied and the actual
ownership shall be upheld. In a number of cases, we recognized the
separate ownership of the land from the building and brushed aside the rule
that accessory follows the principal.
In Carbonilla v. Abiera, 33 we denied the claim of petitioner that, as the
owner of the land, he is likewise the owner of the building erected thereon,
for his failure to present evidence to buttress his position:
To set the record straight, while petitioner may have proven his ownership
of the land, as there can be no other piece of evidence more worthy of
credence than a Torrens certificate of title, he failed to present any evidence
to substantiate his claim of ownership or right to the possession of the
PROPERTY
building. Like the CA, we cannot accept the Deed of Extrajudicial hereby directed to proceed with the conduct of the sale on execution of the
Settlement of Estate (Residential Building) with Waiver and Quitclaim of levied building.
Ownership executed by the Garcianos as proof that petitioner acquired
ownership of the building. There is no showing that the Garcianos were the SO ORDERED.
owners of the building or that they had any proprietary right over it. Ranged
against respondents proof of possession of the building since 1977,
petitioners evidence pales in comparison and leaves us totally
unconvinced.34
In Caltex (Phil.) Inc. v. Felias, 35 we ruled that while the building is a
conjugal property and therefore liable for the debts of the conjugal
partnership, the lot on which the building was constructed is a paraphernal
property and could not be the subject of levy and sale:
x x x. In other words, when the lot was donated to Felisa by her parents, as
owners of the land on which the building was constructed, the lot became
her paraphernal property. The donation transmitted to her the rights of a
landowner over a building constructed on it. Therefore, at the time of the
levy and sale of the sheriff, Lot No. 107 did not belong to the conjugal G.R. No. L-40411 August 7, 1935
partnership, but it was paraphernal property of Felisa. As such, it was not
answerable for the obligations of her husband which resulted in the DAVAO SAW MILL CO., INC., plaintiff-appellant,
judgment against him in favor of Caltex.36 vs.
APRONIANO G. CASTILLO and DAVAO LIGHT & POWER CO.,
The rule on accession is not an iron-clad dictum. On instances where this INC., defendants-appellees.
Court was confronted with cases requiring judicial determination of the
ownership of the building separate from the lot, it never hesitated to Arsenio Suazo and Jose L. Palma Gil and Pablo Lorenzo and Delfin Joven
disregard such rule. The case at bar is of similar import. When there are for appellant.
factual and evidentiary evidence to prove that the building and the lot on J.W. Ferrier for appellees.
which it stands are owned by different persons, they shall be treated
MALCOLM, J.:
separately. As such, the building or the lot, as the case may be, can be made
liable to answer for the obligation of its respective owner.
The issue in this case, as announced in the opening sentence of the decision
in the trial court and as set forth by counsel for the parties on appeal,
Finally, the issue regarding the piercing of the veil of corporate fiction is
involves the determination of the nature of the properties described in the
irrelevant in this case. The Spouses Garcia are trying to protect FGCI from
complaint. The trial judge found that those properties were personal in
liability by asserting that they, not FGCI, own the levied property. The
nature, and as a consequence absolved the defendants from the complaint,
Spouses Garcia are asserting their separation from FGCI. FGCI, the
with costs against the plaintiff.
judgment debtor, is the proven owner of the building. Piercing FGCIs
corporate veil will not protect FGCI from its judgment debt. Piercing will
The Davao Saw Mill Co., Inc., is the holder of a lumber concession from
result in the identification of the Spouses Garcia as FGCI itself and will
the Government of the Philippine Islands. It has operated a sawmill in
make them liable for FGCIs judgment debt.
the sitio of Maa, barrio of Tigatu, municipality of Davao, Province of
Davao. However, the land upon which the business was conducted
WHEREFORE, premises considered, the petition is GRANTED. The
belonged to another person. On the land the sawmill company erected a
assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP
building which housed the machinery used by it. Some of the implements
No. 92587 are hereby REVERSED and SET ASIDE. The Deputy Sheriff is
thus used were clearly personal property, the conflict concerning machines
which were placed and mounted on foundations of cement. In the contract
28
JALALON, JEANINE VANESSA R.
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.
In another action, wherein the 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 in that action against the defendant in
that action; a writ of execution issued thereon, and the 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 sales thereof as is borne out
by the record made by the plaintiff herein. 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.
As connecting up with the facts, it should further be explained that the
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.
Article 334, paragraphs 1 and 5, of the Civil Code, is in point. According to
the Code, real property consists of
1. Land, buildings, roads and constructions of all kinds adhering to the soil;
xxx xxx xxx
5. Machinery, liquid containers, instruments or implements intended by the
owner of any building or land for use in connection with any industry or
trade being carried on therein and which are expressly adapted to meet the
requirements of such trade of industry.
PROPERTY
Appellant emphasizes the first paragraph, and appellees the last mentioned
paragraph. We entertain no doubt that the trial judge and appellees are right
in their appreciation of the legal doctrines flowing from the facts.
In the first place, it must again be pointed out that the appellant should have
registered its protest before or at the time of the sale of this property. It must
further be pointed out that while not conclusive, 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. In this
connection the decision of this court in the case of Standard Oil Co. of New
York vs. Jaramillo ( [1923], 44 Phil., 630), whether obiter dicta or not,
furnishes the key to such a situation.
It is, however not necessary to spend overly must time in the resolution of
this appeal on side issues. It is machinery which is involved; moreover,
machinery not intended by the owner of any building or land for use in
connection therewith, but intended by a lessee for use in a building erected
on the land by the latter to be returned to the lessee on the expiration or
abandonment of the lease.
A similar question arose in Puerto Rico, and on appeal being taken to the
United States Supreme Court, 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. In the opinion written by Chief
Justice White, whose knowledge of the Civil Law is well known, it was in
part said:
To determine this question involves fixing the nature and character of the
property from the point of view of the rights of Valdes and its nature and
character from the point of view of Nevers & Callaghan as a judgment
creditor of the Altagracia Company and the rights derived by them from the
execution levied on the machinery placed by the corporation in the plant.
Following the Code Napoleon, the Porto Rican Code treats as immovable
(real) property, not only land and buildings, but also attributes immovability
in some cases to property of a movable nature, that is, personal property,
because of the destination to which it is applied. "Things," says section 334
of the Porto Rican Code, "may be immovable either by their own nature or
by their destination or the object to which they are applicable." Numerous
illustrations are given in the fifth subdivision of section 335, which is as
follows: "Machinery, vessels, instruments or implements intended by the
owner of the tenements for the industrial or works that they may carry on in
any building or upon any land and which tend directly to meet the needs of
the said industry or works." (See also Code Nap., articles 516, 518 et seq. to
29
and inclusive of article 534, recapitulating the things which, though in
themselves movable, may be immobilized.) So far as the subject-matter
with which we are dealing machinery placed in the plant 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.
Such result would not be accomplished, therefore, by the placing of
machinery in a plant by a tenant or a usufructuary or any person having
only a temporary right. (Demolombe, Tit. 9, No. 203; Aubry et Rau, Tit. 2,
p. 12, Section 164; Laurent, Tit. 5, No. 447; and decisions quoted in Fuzier-
Herman ed. Code Napoleon under articles 522 et seq.) The distinction rests,
as pointed out by Demolombe, upon the fact that one only having a
temporary right to the possession or enjoyment of property is not presumed
by the law to have applied movable property belonging to him so as to
deprive him of it by causing it by an act of immobilization to become the
property of another. It follows that abstractly speaking the machinery put by
the Altagracia Company in the plant belonging to Sanchez did not lose its
character of movable property and become immovable by destination. But
in the concrete immobilization took place because of the express provisions
of the lease under which the Altagracia held, 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.
xxx xxx xxx
The machinery levied upon by Nevers & Callaghan, that is, that which was
placed in the plant by the Altagracia Company, being, as regards Nevers &
Callaghan, movable property, it follows that they had the right to levy on it
under the execution upon the judgment in their favor, and the exercise of
that right did not in a legal sense conflict with the claim of Valdes, since as
to him the property was a part of the realty which, as the result of his
obligations under the lease, he could not, for the purpose of collecting his
debt, proceed separately against. (Valdes vs. Central Altagracia [192], 225
U.S., 58.)
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.
JALALON, JEANINE VANESSA R.
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.
Loreto C. Baduan for petitioner.
Ramon D. Bagatsing & Assoc. (collaborating counsel) for petitioner.
Jose V. Mancella for respondent.
DE CASTRO, J.:
Petition for review on certiorari of the decision of the Court of Appeals
(now Intermediate Appellate Court) promulgated on August 27, 1981 in
CA-G.R. No. SP-12731, setting aside certain Orders later specified herein,
of Judge Ricardo J. Francisco, as Presiding Judge of the Court of First
instance of Rizal Branch VI, issued in Civil Case No. 36040, as wen as the
resolution dated September 22, 1981 of the said appellate court, denying
petitioner's motion for reconsideration.
It appears that in order to obtain financial accommodations from herein
petitioner Makati Leasing and Finance Corporation, the private respondent
Wearever Textile Mills, Inc., discounted and assigned several receivables
with the former under a Receivable Purchase Agreement. To secure the
PROPERTY
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 Court of First Instance of Rizal, Branch VI,
docketed as Civil Case No. 36040, the case before the lower court.
Acting on petitioner's application for replevin, 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. After
several incidents, the lower court finally issued on February 11, 1981, an
order 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. The lower court reaffirmed its stand upon private respondent's
filing of a further motion for reconsideration.
On July 13, 1981, the sheriff enforcing the seizure order, repaired to the
premises of private respondent and removed the main drive motor of the
subject machinery.
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 by the sheriff
pursuant to said Orders, 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 pursuant to Article 415 of the new Civil Code, 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 reason why all that the sheriff could do to enfore the writ was to take the
main drive motor of said machinery. 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.
A motion for reconsideration of this decision of the Court of Appeals
having been denied, petitioner has brought the case to this Court for review
by writ of certiorari. It is contended by private respondent, however, that
the instant petition was rendered moot and academic by petitioner's act of
returning the subject motor drive of respondent's machinery after the Court
of Appeals' decision was promulgated.
30
The contention of private respondent is without merit. When petitioner
returned the subject motor drive, it made itself unequivocably clear that said
action was without prejudice to a motion for reconsideration of the Court of
Appeals decision, as shown by the receipt duly signed by respondent's
representative. 1 Considering that petitioner has reserved its right to
question the propriety of the Court of Appeals' decision, the contention of
private respondent that this petition has been mooted by such return may
not be sustained.
The next and the more crucial question to be resolved in this Petition is
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, while the
respondent claiming the contrary, and was sustained by the appellate court,
which accordingly held that the chattel mortgage constituted thereon is null
and void, as contended by said respondent.
A similar, if not Identical issue was raised in Tumalad v. Vicencio, 41 SCRA
143 where this Court, speaking through Justice J.B.L. Reyes, ruled:
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. Finally, unlike in the Iya cases, Lopez vs. Orosa, Jr. & Plaza
Theatre, Inc. & Leung Yee vs. F.L. Strong Machinery &
Williamson, wherein third persons assailed the validity of the chattel
mortgage, it is the defendants-appellants themselves, as debtors-
mortgagors, who are attacking the validity of the chattel mortgage in this
case. The doctrine of estoppel therefore applies to the herein defendants-
appellants, having treated the subject house as personality.
Examining the records of the instant case, 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
JALALON, JEANINE VANESSA R.
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 stated
in Standard Oil Co. of New York v. Jaramillo, 44 Phil. 630, it is undeniable
that the parties to a contract may by agreement treat as personal property
that which by nature would be real property, as long as no interest of third
parties would be prejudiced thereby.
Private respondent contends that estoppel cannot apply against it because it
had never represented nor agreed that the machinery in suit be considered
as personal property but was merely required and dictated on by herein
petitioner to sign a printed form of chattel mortgage which was in a blank
form at the time of signing. This contention lacks persuasiveness. 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.
Moreover, even granting that the charge is true, such fact alone does not
render a contract void ab initio, but can only be a ground for rendering said
contract voidable, or annullable pursuant to Article 1390 of the new Civil
Code, by a proper action in court. There is nothing on record to show that
the mortgage has been annulled. Neither is it disclosed that steps were taken
to nullify the same. On the other hand, as pointed out by petitioner and
again not refuted by respondent, the latter has indubitably benefited from
said contract. Equity dictates that one should not benefit at the expense of
another. Private respondent could not now therefore, be allowed to impugn
the efficacy of the chattel mortgage after it has benefited therefrom,
From what has been said above, the error of the appellate court in ruling
that the questioned machinery is real, not personal property, becomes very
apparent. Moreover, the case of Machinery and Engineering Supplies, Inc.
v. CA, 96 Phil. 70, heavily relied upon by said court is not applicable to the
case at bar, the nature of the machinery and equipment involved therein as
real properties never having been disputed nor in issue, and they were not
PROPERTY
the subject of a Chattel Mortgage. Undoubtedly, the Tumalad case bears
more nearly perfect parity with the instant case to be the more controlling
jurisprudential authority.
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, with costs against the private respondent.
SO ORDERED.
G.R. No. L-30173 September 30, 1971
GAVINO A. TUMALAD and GENEROSA R. TUMALAD, plaintiffs-
appellees,
vs.
ALBERTA VICENCIO and EMILIANO SIMEON, defendants-
appellants.
Castillo & Suck for plaintiffs-appellees.
Jose Q. Calingo for defendants-appellants.
REYES, J.B.L., J.:
Case certified to this Court by the Court of Appeals (CA-G.R. No. 27824-
R) for the reason that only questions of law are involved.
This case was originally commenced by defendants-appellants in the
municipal court of Manila in Civil Case No. 43073, for ejectment. Having
lost therein, defendants-appellants appealed to the court a quo (Civil Case
No. 30993) which also rendered a decision against them, the dispositive
portion of which follows:
WHEREFORE, the court hereby renders judgment in favor of the plaintiffs
and against the defendants, ordering the latter to pay jointly and severally
the former a monthly rent of P200.00 on the house, subject-matter of this
action, from March 27, 1956, to January 14, 1967, with interest at the legal
31
rate from April 18, 1956, the filing of the complaint, until fully paid, plus
attorney's fees in the sum of P300.00 and to pay the costs.
It appears on the records that on 1 September 1955 defendants-appellants
executed a chattel mortgage in favor of plaintiffs-appellees over their house
of strong materials located at No. 550 Int. 3, Quezon Boulevard, Quiapo,
Manila, over Lot Nos. 6-B and 7-B, Block No. 2554, which were being
rented from Madrigal & Company, Inc. The mortgage was registered in the
Registry of Deeds of Manila on 2 September 1955. The herein mortgage
was executed to guarantee a loan of P4,800.00 received from plaintiffs-
appellees, payable within one year at 12% per annum. The mode of
payment was P150.00 monthly, starting September, 1955, up to July 1956,
and the lump sum of P3,150 was payable on or before August, 1956. It was
also agreed that default in the payment of any of the amortizations, would
cause the remaining unpaid balance to becomeimmediately due and Payable
and
the Chattel Mortgage will be enforceable in accordance with the provisions
of Special Act No. 3135, and for this purpose, the Sheriff of the City of
Manila or any of his deputies is hereby empowered and authorized to sell
all the Mortgagor's property after the necessary publication in order to settle
the financial debts of P4,800.00, plus 12% yearly interest, and attorney's
fees... 2
When defendants-appellants defaulted in paying, the mortgage was
extrajudicially foreclosed, and on 27 March 1956, the house was sold at
public auction pursuant to the said contract. As highest bidder, plaintiffs-
appellees were issued the corresponding certificate of sale. 3 Thereafter, on
18 April 1956, plaintiffs-appellant commenced Civil Case No. 43073 in the
municipal court of Manila, praying, among other things, that the house be
vacated and its possession surrendered to them, and for defendants-
appellants to pay rent of P200.00 monthly from 27 March 1956 up to the
time the possession is surrendered. 4 On 21 September 1956, the municipal
court rendered its decision
... ordering the defendants to vacate the premises described in the
complaint; ordering further to pay monthly the amount of P200.00 from
March 27, 1956, until such (time that) the premises is (sic) completely
vacated; plus attorney's fees of P100.00 and the costs of the suit. 5
Defendants-appellants, in their answers in both the municipal court and
court a quo impugned the legality of the chattel mortgage, claiming that
they are still the owners of the house; but they waived the right to introduce
evidence, oral or documentary. Instead, they relied on their memoranda in
support of their motion to dismiss, predicated mainly on the grounds that:
JALALON, JEANINE VANESSA R.
(a) the municipal court did not have jurisdiction to try and decide the case
because (1) the issue involved, is ownership, and (2) there was no allegation
of prior possession; and (b) failure to prove prior demand pursuant to
Section 2, Rule 72, of the Rules of Court. 6
During the pendency of the appeal to the Court of First Instance,
defendants-appellants failed to deposit the rent for November, 1956 within
the first 10 days of December, 1956 as ordered in the decision of the
municipal court. As a result, the court granted plaintiffs-appellees' motion
for execution, and it was actually issued on 24 January 1957. However, the
judgment regarding the surrender of possession to plaintiffs-appellees could
not be executed because the subject house had been already demolished on
14 January 1957 pursuant to the order of the court in a separate civil case
(No. 25816) for ejectment against the present defendants for non-payment
of rentals on the land on which the house was constructed.
The motion of plaintiffs for dismissal of the appeal, execution of the
supersedeas bond and withdrawal of deposited rentals was denied for the
reason that the liability therefor was disclaimed and was still being litigated,
and under Section 8, Rule 72, rentals deposited had to be held until final
disposition of the appeal. 7
On 7 October 1957, the appellate court of First Instance rendered its
decision, the dispositive portion of which is quoted earlier. The said
decision was appealed by defendants to the Court of Appeals which, in turn,
certified the appeal to this Court. Plaintiffs-appellees failed to file a brief
and this appeal was submitted for decision without it.
Defendants-appellants submitted numerous assignments of error which can
be condensed into two questions, namely: .
(a) Whether the municipal court from which the case originated had
jurisdiction to adjudicate the same;
(b) Whether the defendants are, under the law, legally bound to pay rentals
to the plaintiffs during the period of one (1) year provided by law for the
redemption of the extrajudicially foreclosed house.
We will consider these questions seriatim.
(a) Defendants-appellants mortgagors question the jurisdiction of the
municipal court from which the case originated, and consequently, the
appellate jurisdiction of the Court of First Instance a quo, on the theory that
the chattel mortgage is void ab initio; whence it would follow that the
extrajudicial foreclosure, and necessarily the consequent auction sale, are
also void. Thus, the ownership of the house still remained with defendants-
PROPERTY
appellants who are entitled to possession and not plaintiffs-appellees.
Therefore, it is argued by defendants-appellants, the issue of ownership will
have to be adjudicated first in order to determine possession. lt is contended
further that ownership being in issue, it is the Court of First Instance which
has jurisdiction and not the municipal court.
Defendants-appellants predicate their theory of nullity of the chattel
mortgage on two grounds, which are: (a) that, their signatures on the chattel
mortgage were obtained through fraud, deceit, or trickery; and (b) that the
subject matter of the mortgage is a house of strong materials, and, being an
immovable, it can only be the subject of a real estate mortgage and not a
chattel mortgage.
On the charge of fraud, deceit or trickery, the Court of First Instance found
defendants-appellants' contentions as not supported by evidence and
accordingly dismissed the charge, 8 confirming the earlier finding of the
municipal court that "the defense of ownership as well as the allegations of
fraud and deceit ... are mere allegations." 9
It has been held in Supia and Batiaco vs. Quintero and Ayala 10 that "the
answer is a mere statement of the facts which the party filing it expects to
prove, but it is not evidence; 11 and further, that when the question to be
determined is one of title, the Court is given the authority to proceed with
the hearing of the cause until this fact is clearly established. In the case
of Sy vs. Dalman, 12 wherein the defendant was also a successful bidder in
an auction sale, it was likewise held by this Court that in detainer cases the
aim of ownership "is a matter of defense and raises an issue of fact which
should be determined from the evidence at the trial." What determines
jurisdiction are the allegations or averments in the complaint and the relief
asked for. 13
Moreover, even granting that the charge is true, fraud or deceit does not
render a contract void ab initio, and can only be a ground for rendering the
contract voidable or annullable pursuant to Article 1390 of the New Civil
Code, by a proper action in court. 14 There is nothing on record to show that
the mortgage has been annulled. Neither is it disclosed that steps were taken
to nullify the same. Hence, defendants-appellants' claim of ownership on
the basis of a voidable contract which has not been voided fails.
It is claimed in the alternative by defendants-appellants that even if there
was no fraud, deceit or trickery, the chattel mortgage was still null and
void ab initio because only personal properties can be subject of a chattel
mortgage. The rule about the status of buildings as immovable property is
stated in Lopez vs. Orosa, Jr. and Plaza Theatre Inc., 15 cited in Associated
Insurance Surety Co., Inc. vs. Iya, et al. 16 to the effect that
32
... it is obvious that the inclusion of the building, separate and distinct from
the land, in the enumeration of what may constitute real properties (art. 415,
New Civil Code) could only mean one thing that a building is by itself
an immovable property irrespective of whether or not said structure and the
land on which it is adhered to belong to the same owner.
Certain deviations, however, have been allowed for various reasons. In the
case of Manarang and Manarang vs. Ofilada, 17 this Court stated that "it is
undeniable that the parties to a contract may by agreement treat as personal
property that which by nature would be real property", citing Standard Oil
Company of New York vs. Jaramillo. 18 In the latter case, the mortgagor
conveyed and transferred to the mortgagee by way of mortgage "the
following described personal property." 19The "personal property" consisted
of leasehold rights and a building. Again, in the case of Luna vs.
Encarnacion, 20 the subject of the contract designated as Chattel Mortgage
was a house of mixed materials, and this Court hold therein that it was a
valid Chattel mortgage because it was so expressly designated and
specifically that the property given as security "is a house of mixed
materials, which by its very nature is considered personal property." In the
later case of Navarro vs. Pineda, 21 this Court stated that
The view that parties to a deed of chattel mortgage may agree to consider a
house as personal property for the purposes of said contract, "is good only
insofar as the contracting parties are concerned. It is based, partly, upon the
principle of estoppel" (Evangelista vs. Alto Surety, No. L-11139, 23 April
1958). In a case, a mortgaged house built on a rented land was held to be a
personal property, not only because the deed of mortgage considered it as
such, but also because it did not form part of the land (Evangelists vs. Abad,
[CA]; 36 O.G. 2913), for it is now settled that an object placed on land by
one who had only a temporary right to the same, such as the lessee or
usufructuary, does not become immobilized by attachment (Valdez vs.
Central Altagracia, 222 U.S. 58, cited in Davao Sawmill Co., Inc. vs.
Castillo, et al., 61 Phil. 709). Hence, if a house belonging to a person stands
on a rented land belonging to another person, it may be mortgaged as a
personal property as so stipulated in the document of mortgage.
(Evangelista vs. Abad, Supra.) It should be noted, however that the
principle is predicated on statements by the owner declaring his house to
be a chattel, a conduct that may conceivably estop him from subsequently
claiming otherwise. (Ladera vs. C.N. Hodges, [CA] 48 O.G. 5374): 22
In the contract now before Us, the house on rented land is not only
expressly designated as Chattel Mortgage; it specifically provides that "the
mortgagor ... voluntarily CEDES, SELLS and TRANSFERS by way of
Chattel Mortgage 23 the property together with its leasehold rights over the
lot on which it is constructed and participation ..." 24Although there is no
JALALON, JEANINE VANESSA R.
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 defendats-
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 personalty.
Finally unlike in the Iya cases, Lopez vs. Orosa, Jr. and Plaza Theatre,
Inc. 25 and Leung Yee vs. F. L. Strong Machinery and
Williamson, 26 wherein third persons assailed the validity of the chattel
mortgage, 27 it is the defendants-appellants themselves, as debtors-
mortgagors, who are attacking the validity of the chattel mortgage in this
case. The doctrine of estoppel therefore applies to the herein defendants-
appellants, having treated the subject house as personalty.
(b) Turning to the question of possession and rentals of the premises in
question. The Court of First Instance noted in its decision that nearly a year
after the foreclosure sale the mortgaged house had been demolished on 14
and 15 January 1957 by virtue of a decision obtained by the lessor of the
land on which the house stood. For this reason, the said court limited itself
to sentencing the erstwhile mortgagors to pay plaintiffs a monthly rent of
P200.00 from 27 March 1956 (when the chattel mortgage was foreclosed
and the house sold) until 14 January 1957 (when it was torn down by the
Sheriff), plus P300.00 attorney's fees.
Appellants mortgagors question this award, claiming that they were entitled
to remain in possession without any obligation to pay rent during the one
year redemption period after the foreclosure sale, i.e., until 27 March 1957.
On this issue, We must rule for the appellants.
Chattel mortgages are covered and regulated by the Chattel Mortgage Law,
Act No. 1508. 28 Section 14 of this Act allows the mortgagee to have the
property mortgaged sold at public auction through a public officer in almost
the same manner as that allowed by Act No. 3135, as amended by Act No.
4118, provided that the requirements of the law relative to notice and
registration are complied with. 29 In the instant case, the parties specifically
stipulated that "the chattel mortgage will be enforceable in accordance with
the provisions of Special Act No. 3135 ... ." 30 (Emphasis supplied).
Section 6 of the Act referred to 31 provides that the debtor-mortgagor
(defendants-appellants herein) may, at any time within one year from and
after the date of the auction sale, redeem the property sold at the extra
PROPERTY
judicial foreclosure sale. Section 7 of the same Act 32 allows the purchaser
of the property to obtain from the court the possession during the period of
redemption: but the same provision expressly requires the filing of a
petition with the proper Court of First Instance and the furnishing of a bond.
It is only upon filing of the proper motion and the approval of the
corresponding bond that the order for a writ of possession issues as a matter
of course. No discretion is left to the court. 33 In the absence of such a
compliance, as in the instant case, the purchaser can not claim possession
during the period of redemption as a matter of right. In such a case, the
governing provision is Section 34, Rule 39, of the Revised Rules of
Court 34 which also applies to properties purchased in extrajudicial
foreclosure proceedings. 35 Construing the said section, this Court stated in
the aforestated case of Reyes vs. Hamada.
In other words, before the expiration of the 1-year period within which the
judgment-debtor or mortgagor may redeem the property, the purchaser
thereof is not entitled, as a matter of right, to possession of the same. Thus,
while it is true that the Rules of Court allow the purchaser to receive the
rentals if the purchased property is occupied by tenants, he is, nevertheless,
accountable to the judgment-debtor or mortgagor as the case may be, for
the amount so received and the same will be duly credited against the
redemption price when the said debtor or mortgagor effects the
redemption. Differently stated, the rentals receivable from tenants, although
they may be collected by the purchaser during the redemption period, do
not belong to the latter but still pertain to the debtor of mortgagor. The
rationale for the Rule, it seems, is to secure for the benefit of the debtor or
mortgagor, the payment of the redemption amount and the consequent
return to him of his properties sold at public auction. (Emphasis supplied)
The Hamada case reiterates the previous ruling in Chan vs. Espe. 36
Since the defendants-appellants were occupying the house at the time of the
auction sale, they are entitled to remain in possession during the period of
redemption or within one year from and after 27 March 1956, the date of
the auction sale, and to collect the rents or profits during the said period.
It will be noted further that in the case at bar the period of redemption had
not yet expired when action was instituted in the court of origin, and that
plaintiffs-appellees did not choose to take possession under Section 7, Act
No. 3135, as amended, which is the law selected by the parties to govern
the extrajudicial foreclosure of the chattel mortgage. Neither was there an
allegation to that effect. Since plaintiffs-appellees' right to possess was not
yet born at the filing of the complaint, there could be no violation or breach
thereof. Wherefore, the original complaint stated no cause of action and was
prematurely filed. For this reason, the same should be ordered dismissed,
33
even if there was no assignment of error to that effect. The Supreme Court
is clothed with ample authority to review palpable errors not assigned as
such if it finds that their consideration is necessary in arriving at a just
decision of the cases. 37
It follows that the court below erred in requiring the mortgagors to pay
rents for the year following the foreclosure sale, as well as attorney's fees.
FOR THE FOREGOING REASONS, the decision appealed from is
reversed and another one entered, dismissing the complaint. With costs
against plaintiffs-appellees.
G.R. No. L-17500 May 16, 1967
PEOPLE'S BANK AND TRUST CO. and ATLANTIC GULF AND
PACIFIC CO. OF MANILA, plaintiffs-appellants,
vs.
DAHICAN LUMBER COMPANY, DAHICAN AMERICAN LUMBER
CORPORATION and CONNELL BROS. CO. (PHIL.), defendants-
appellants.
Angel S. Gamboa for defendants-appellants.
Laurel Law Offices for plaintiffs-appellants.
DIZON, J.:
On September 8, 1948, Atlantic Gulf & Pacific Company of Manila, a West
Virginia corporation licensed to do business in the Philippines
hereinafter referred to as ATLANTIC sold and assigned all its rights in
the Dahican Lumber concession to Dahican Lumber Company
hereinafter referred to as DALCO for the total sum of $500,000.00, of
which only the amount of $50,000.00 was paid. Thereafter, to develop the
concession, DALCO obtained various loans from the People's Bank & Trust
Company hereinafter referred to as the BANK amounting, as of July
13, 1950, to P200,000.00. In addition, DALCO obtained, through the
BANK, a loan of $250,000.00 from the Export-Import Bank of Washington
D.C., evidenced by five promissory notes of $50,000.00 each, maturing on
different dates, executed by both DALCO and the Dahican America
Lumber Corporation, a foreign corporation and a stockholder of DALCO,
hereinafter referred to as DAMCO, all payable to the BANK or its order.
As security for the payment of the abovementioned loans, on July 13, 1950
DALCO executed in favor of the BANK the latter acting for itself and as
trustee for the Export-Import Bank of Washington D.C. a deed of
JALALON, JEANINE VANESSA R.
mortgage covering five parcels of land situated in the province of
Camarines Norte together with all the buildings and other improvements
existing thereon and all the personal properties of the mortgagor located in
its place of business in the municipalities of Mambulao and Capalonga,
Camarines Norte (Exhibit D). On the same date, DALCO executed a
second mortgage on the same properties in favor of ATLANTIC to secure
payment of the unpaid balance of the sale price of the lumber concession
amounting to the sum of $450,000.00 (Exhibit G). Both deeds contained the
following provision extending the mortgage lien to properties to be
subsequently acquired referred to hereafter as "after acquired properties"
by the mortgagor:
All property of every nature and description taken in exchange or
replacement, and all buildings, machinery, fixtures, tools equipment and
other property which the Mortgagor may hereafter acquire, construct,
install, attach, or use in, to, upon, or in connection with the premises, shall
immediately be and become subject to the lien of this mortgage in the same
manner and to the same extent as if now included therein, and the
Mortgagor shall from time to time during the existence of this mortgage
furnish the Mortgagee with an accurate inventory of such substituted and
subsequently acquired property.
Both mortgages were registered in the Office of the Register of Deeds of
Camarines Norte. In addition thereto DALCO and DAMCO pledged to the
BANK 7,296 shares of stock of DALCO and 9,286 shares of DAMCO to
secure the same obligations.
Upon DALCO's and DAMCO's failure to pay the fifth promissory note
upon its maturity, the BANK paid the same to the Export-Import Bank of
Washington D.C., and the latter assigned to the former its credit and the
first mortgage securing it. Subsequently, the BANK gave DALCO and
DAMCO up to April 1, 1953 to pay the overdue promissory note.
After July 13, 1950 the date of execution of the mortgages mentioned
above DALCO purchased various machineries, equipment, spare parts
and supplies in addition to, or in replacement of some of those already
owned and used by it on the date aforesaid. Pursuant to the provision of the
mortgage deeds quoted theretofore regarding "after acquired properties,"
the BANK requested DALCO to submit complete lists of said properties
but the latter failed to do so. In connection with these purchases, there
appeared in the books of DALCO as due to Connell Bros. Company
(Philippines) a domestic corporation who was acting as the general
purchasing agent of DALCO thereinafter called CONNELL the sum
of P452,860.55 and to DAMCO, the sum of P2,151,678.34.
PROPERTY
On December 16, 1952, the Board of Directors of DALCO, in a special
meeting called for the purpose, passed a resolution agreeing to rescind the
alleged sales of equipment, spare parts and supplies by CONNELL and
DAMCO to it. Thereafter, the corresponding agreements of rescission of
sale were executed between DALCO and DAMCO, on the one hand and
between DALCO and CONNELL, on the other.
On January 13, 1953, the BANK, in its own behalf and that of ATLANTIC,
demanded that said agreements be cancelled but CONNELL and DAMCO
refused to do so. As a result, on February 12, 1953; ATLANTIC and the
BANK, commenced foreclosure proceedings in the Court of First Instance
of Camarines Norte against DALCO and DAMCO. On the same date they
filed an ex-parte application for the appointment of a Receiver and/or for
the issuance of a writ of preliminary injunction to restrain DALCO from
removing its properties. The court granted both remedies and appointed
George H. Evans as Receiver. Upon defendants' motion, however, the court,
in its order of February 21, 1953, discharged the Receiver.
On March 2, 1953, defendants filed their answer denying the material
allegations of the complaint and alleging several affirmative defenses and a
counterclaim.
On March 4 of the same year, CONNELL, filed a motion for intervention
alleging that it was the owner and possessor of some of the equipments,
spare parts and supplies which DALCO had acquired subsequent to the
execution of the mortgages sought to be foreclosed and which plaintiffs
claimed were covered by the lien. In its order of March 18,1953 the Court
granted the motion, as well as plaintiffs' motion to set aside the order
discharging the Receiver. Consequently, Evans was reinstated.
On April 1, 1953, CONNELL filed its answer denying the material
averment of the complaint, and asserting affirmative defenses and a
counterclaim.
Upon motion of the parties the Court, on September 30, 1953, issued an
order transferring the venue of the action to the Court of First Instance of
Manila where it was docketed as Civil Case No. 20987.
On August 30, 1958, upon motion of all the parties, the Court ordered the
sale of all the machineries, equipment and supplies of DALCO, and the
same were subsequently sold for a total consideration of P175,000.00 which
was deposited in court pending final determination of the action. By a
similar agreement one-half (P87,500.00) of this amount was considered as
representing the proceeds obtained from the sale of the "undebated
properties" (those not claimed by DAMCO and CONNELL), and the other
34
half as representing those obtained from the sale of the "after acquired
properties".
After due trial, the Court, on July 15, 1960, rendered judgment as follows:
IN VIEW WHEREFORE, the Court:
1. Condemns Dahican Lumber Co. to pay unto People's Bank the sum of
P200,000,00 with 7% interest per annum from July 13, 1950, Plus another
sum of P100,000.00 with 5% interest per annum from July 13, 1950; plus
10% on both principal sums as attorney's fees;
2. Condemns Dahican Lumber Co. to pay unto Atlantic Gulf the sum of
P900,000.00 with 4% interest per annum from July 3, 1950, plus 10% on
both principal as attorney's fees;
3. Condemns Dahican Lumber Co. to pay unto Connell Bros, the sum of
P425,860.55, and to pay unto Dahican American Lumber Co. the sum of
P2,151,678.24 both with legal interest from the date of the filing of the
respective answers of those parties, 10% of the principals as attorney's fees;
4. Orders that of the sum realized from the sale of the properties of
P175,000.00, after deducting the recognized expenses, one-half thereof be
adjudicated unto plaintiffs, the court no longer specifying the share of each
because of that announced intention under the stipulation of facts to "pool
their resources"; as to the other one-half, the same should be adjudicated
unto both plaintiffs, and defendant Dahican American and Connell Bros. in
the proportion already set forth on page 9, lines 21, 22 and 23 of the body
of this decision; but with the understanding that whatever plaintiffs and
Dahican American and Connell Bros. should receive from the P175,000.00
deposited in the Court shall be applied to the judgments particularly
rendered in favor of each;
5. No other pronouncement as to costs; but the costs of the receivership as
to the debated properties shall be borne by People's Bank, Atlantic Gulf,
Connell Bros., and Dahican American Lumber Co., pro-rata.
On the following day, the Court issued the following supplementary
decision:
IN VIEW WHEREOF, the dispositive part of the decision is hereby
amended in order to add the following paragraph 6:
6. If the sums mentioned in paragraphs 1 and 2 are not paid within ninety
(90) days, the Court orders the sale at public auction of the lands object of
the mortgages to satisfy the said mortgages and costs of foreclosure.
JALALON, JEANINE VANESSA R.
From the above-quoted decision, all the parties appealed.
Main contentions of plaintiffs as appellants are the following: that the "after
acquired properties" were subject to the deeds of mortgage mentioned
heretofore; that said properties were acquired from suppliers other than
DAMCO and CONNELL; that even granting that DAMCO and CONNELL
were the real suppliers, the rescission of the sales to DALCO could not
prejudice the mortgage lien in favor of plaintiffs; that considering the
foregoing, the proceeds obtained from the sale of the "after acquired
properties" as well as those obtained from the sale of the "undebated
properties" in the total sum of P175,000.00 should have been awarded
exclusively to plaintiffs by reason of the mortgage lien they had thereon;
that damages should have been awarded to plaintiffs against defendants, all
of them being guilty of an attempt to defraud the former when they sought
to rescind the sales already mentioned for the purpose of defeating their
mortgage lien, and finally, that defendants should have been made to bear
all the expenses of the receivership, costs and attorney's fees.
On the other hand, defendants-appellants contend that the trial court erred:
firstly, in not holding that plaintiffs had no cause of action against them
because the promissory note sued upon was not yet due when the action to
foreclose the mortgages was commenced; secondly, in not holding that the
mortgages aforesaid were null and void as regards the "after acquired
properties" of DALCO because they were not registered in accordance with
the Chattel Mortgage Law, the court erring, as a consequence, in holding
that said properties were subject to the mortgage lien in favor of plaintiffs;
thirdly, in not holding that the provision of the fourth paragraph of each of
said mortgages did not automatically make subject to such mortgages the
"after acquired properties", the only meaning thereof being that the
mortgagor was willing to constitute a lien over such properties; fourthly, in
not ruling that said stipulation was void as against DAMCO and
CONNELL and in not awarding the proceeds obtained from the sale of the
"after acquired properties" to the latter exclusively; fifthly, in appointing a
Receiver and in holding that the damages suffered by DAMCO and
CONNELL by reason of the depreciation or loss in value of the "after
acquired properties" placed under receivership was damnum absque
injuria and, consequently, in not awarding, to said parties the corresponding
damages claimed in their counterclaim; lastly, in sentencing DALCO and
DAMCO to pay attorney's fees and in requiring DAMCO and CONNELL
to pay the costs of the Receivership, instead of sentencing plaintiffs to pay
attorney's fees.
Plaintiffs' brief as appellants submit six assignments of error, while that of
defendants also as appellants submit a total of seventeen. However, the
PROPERTY
multifarious issues thus before Us may be resolved, directly or indirectly,
by deciding the following issues:
Firstly, are the so-called "after acquired properties" covered by and subject
to the deeds of mortgage subject of foreclosure?; secondly, assuming that
they are subject thereto, are the mortgages valid and binding on the
properties aforesaid inspite of the fact that they were not registered in
accordance with the provisions of the Chattel Mortgage Law?; thirdly,
assuming again that the mortgages are valid and binding upon the "after
acquired properties", what is the effect thereon, if any, of the rescission of
sales entered into, on the one hand, between DAMCO and DALCO, and
between DALCO and CONNELL, on the other?; and lastly, was the action
to foreclose the mortgages premature?
A. Under the fourth paragraph of both deeds of mortgage, it is crystal clear
that all property of every nature and description taken in exchange or
replacement, as well as all buildings, machineries, fixtures, tools,
equipments, and other property that the mortgagor may acquire, construct,
install, attach; or use in, to upon, or in connection with the premises that
is, its lumber concession "shall immediately be and become subject to
the lien" of both mortgages in the same manner and to the same extent as if
already included therein at the time of their execution. As the language thus
used leaves no room for doubt as to the intention of the parties, We see no
useful purpose in discussing the matter extensively. Suffice it to say that the
stipulation referred to is common, and We might say logical, in all cases
where the properties given as collateral are perishable or subject to
inevitable wear and tear or were intended to be sold, or to be used thus
becoming subject to the inevitable wear and tear but with the
understanding express or implied that they shall be replaced with
others to be thereafter acquired by the mortgagor. Such stipulation is neither
unlawful nor immoral, its obvious purpose being to maintain, to the extent
allowed by circumstances, the original value of the properties given as
security. Indeed, if such properties were of the nature already referred to, it
would be poor judgment on the part of the creditor who does not see to it
that a similar provision is included in the contract.
B. But defendants contend that, granting without admitting, that the deeds
of mortgage in question cover the "after acquired properties" of DALCO,
the same are void and ineffectual because they were not registered in
accordance with the Chattel Mortgage Law. In support of this and of the
proposition that, even if said mortgages were valid, they should not
prejudice them, the defendants argue (1) that the deeds do not describe the
mortgaged chattels specifically, nor were they registered in accordance with
the Chattel Mortgage Law; (2) that the stipulation contained in the fourth
paragraph thereof constitutes "mere executory agreements to give a lien"
35
over the "after acquired properties" upon their acquisition; and (3) that any
mortgage stipulation concerning "after acquired properties" should not
prejudice creditors and other third persons such as DAMCO and
CONNELL.
The stipulation under consideration strongly belies defendants contention.
As adverted to hereinbefore, it states that all property of every nature,
building, machinery etc. taken in exchange or replacement by the
mortgagor "shall immediately be and become subject to the lien of this
mortgage in the same manner and to the same extent as if now included
therein". No clearer language could have been chosen.
Conceding, on the other hand, that it is the law in this jurisdiction that, to
affect third persons, a chattel mortgage must be registered and must
describe the mortgaged chattels or personal properties sufficiently to enable
the parties and any other person to identify them, We say that such law does
not apply to this case.
As the mortgages in question were executed on July 13, 1950 with the old
Civil Code still in force, there can be no doubt that the provisions of said
code must govern their interpretation and the question of their validity. It
happens however, that Articles 334 and 1877 of the old Civil Code are
substantially reproduced in Articles 415 and 2127, respectively, of the new
Civil Code. It is, therefore, immaterial in this case whether we take the
former or the latter as guide in deciding the point under consideration.
Article 415 does not define real property but enumerates what are
considered as such, among them being machinery, receptacles, instruments
or replacements intended by owner of the tenement for an industry or works
which may be carried on in a building or on a piece of land, and shall tend
directly to meet the needs of the said industry or works.
On the strength of the above-quoted legal provisions, the lower court held
that inasmuch as "the chattels were placed in the real properties mortgaged
to plaintiffs, they came within the operation of Art. 415, paragraph 5 and
Art. 2127 of the New Civil Code".
We find the above ruling in agreement with our decisions on the subject:
(1) In Berkenkotter vs. Cu Unjieng, 61 Phil. 663, We held that Article 334,
paragraph 5 of the Civil Code (old) gives the character of real property to
machinery, liquid containers, instruments or replacements intended by the
owner of any building or land for use in connection with any industry or
trade being carried on therein and which are expressly adapted to meet the
requirements of such trade or industry.
JALALON, JEANINE VANESSA R.
(2) In Cu Unjieng e Hijos vs. Mabalacat Sugar Co., 58 Phil. 439, We held
that a mortgage constituted on a sugar central includes not only the land on
which it is built but also the buildings, machinery and accessories installed
at the time the mortgage was constituted as well as the buildings,
machinery and accessories belonging to the mortgagor, installed after the
constitution thereof .
It is not disputed in the case at bar that the "after acquired properties" were
purchased by DALCO in connection with, and for use in the development
of its lumber concession and that they were purchased in addition to, or in
replacement of those already existing in the premises on July 13, 1950. In
Law, therefore, they must be deemed to have been immobilized, with the
result that the real estate mortgages involved herein which were
registered as such did not have to be registered a second time as chattel
mortgages in order to bind the "after acquired properties" and affect third
parties.
But defendants, invoking the case of Davao Sawmill Company vs. Castillo,
61 Phil. 709, claim that the "after acquired properties" did not
become immobilized because DALCO did not own the whole area of its
lumber concession all over which said properties were scattered.
The facts in the Davao Sawmill case, however, are not on all fours with the
ones obtaining in the present. In the former, the Davao Sawmill Company,
Inc., had repeatedly treated the machinery therein involved as personal
property by executing chattel mortgages thereon in favor of third parties,
while in the present case the parties had treated the "after acquired
properties" as real properties by expressly and unequivocally agreeing that
they shall automatically become subject to the lien of the real estate
mortgages executed by them. In the Davao Sawmill decision it was, in fact,
stated that "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" (61 Phil. 112, emphasis supplied). In the present
case, the characterization of the "after acquired properties" as real property
was made not only by one but by both interested parties. There is, therefore,
more reason to hold that such consensus impresses upon the properties the
character determined by the parties who must now be held in estoppel to
question it.
Moreover, quoted in the Davao Sawmill case was that of Valdez vs. Central
Altagracia, Inc. (225 U.S. 58) where it was held that while under the
general law of Puerto Rico, machinery placed on property by a tenant does
not become immobilized, yet, when the tenant places it there pursuant to
contract that it shall belong to the owner, it then becomes immobilized as to
that tenant and even as against his assignees and creditors who had
PROPERTY
sufficient notice of such stipulation. In the case at bar it is not disputed that
DALCO purchased the "after acquired properties" to be placed on, and be
used in the development of its lumber concession, and agreed further that
the same shall become immediately subject to the lien constituted by the
questioned mortgages. There is also abundant evidence in the record that
DAMCO and CONNELL had full notice of such stipulation and had never
thought of disputed validity until the present case was filed. Consequently
all of them must be deemed barred from denying that the properties in
question had become immobilized.
What We have said heretofore sufficiently disposes all the arguments
adduced by defendants in support their contention that the mortgages under
foreclosure are void, and, that, even if valid, are ineffectual as against
DAMCO and CONNELL.
Now to the question of whether or not DAMCO CONNELL have rights
over the "after acquired properties" superior to the mortgage lien
constituted thereon in favor of plaintiffs. It is defendants' contention that in
relation to said properties they are "unpaid sellers"; that as such they had
not only a superior lien on the "after acquired properties" but also the right
to rescind the sales thereof to DALCO.
This contention it is obvious would have validity only if it were true
that DAMCO and CONNELL were the suppliers or vendors of the "after
acquired properties". According to the record, plaintiffs did not know their
exact identity and description prior to the filing of the case bar because
DALCO, in violation of its obligation under the mortgages, had failed and
refused theretofore to submit a complete list thereof. In the course of the
proceedings, however, when defendants moved to dissolve the order of
receivership and the writ of preliminary injunction issued by the lower
court, they attached to their motion the lists marked as Exhibits 1, 2 and 3
describing the properties aforesaid. Later on, the parties agreed to consider
said lists as identifying and describing the "after acquire properties," and
engaged the services of auditors to examine the books of DALCO so as to
bring out the details thereof. The report of the auditors and its annexes
(Exhibits V, V-1 V4) show that neither DAMCO nor CONNELL had
supplied any of the goods of which they respective claimed to be the unpaid
seller; that all items were supplied by different parties, neither of whom
appeared to be DAMCO or CONNELL that, in fact, CONNELL collected a
5% service charge on the net value of all items it claims to have sold to
DALCO and which, in truth, it had purchased for DALCO as the latter's
general agent; that CONNELL had to issue its own invoices in addition to
those o f the real suppliers in order to collect and justify such service
charge.
36
Taking into account the above circumstances together with the fact that
DAMCO was a stockholder and CONNELL was not only a stockholder but
the general agent of DALCO, their claim to be the suppliers of the "after
acquired required properties" would seem to be preposterous. The most that
can be claimed on the basis of the evidence is that DAMCO and
CONNELL probably financed some of the purchases. But if DALCO still
owes them any amount in this connection, it is clear that, as financiers, they
can not claim any right over the "after acquired properties" superior to the
lien constituted thereon by virtue of the deeds of mortgage under
foreclosure. Indeed, the execution of the rescission of sales mentioned
heretofore appears to be but a desperate attempt to better or improve
DAMCO and CONNELL's position by enabling them to assume the role of
"unpaid suppliers" and thus claim a vendor's lien over the "after acquired
properties". The attempt, of course, is utterly ineffectual, not only because
they are not the "unpaid sellers" they claim to be but also because there is
abundant evidence in the record showing that both DAMCO and
CONNELL had known and admitted from the beginning that the "after
acquired properties" of DALCO were meant to be included in the first and
second mortgages under foreclosure.
The claim that Belden, of ATLANTIC, had given his consent to the
rescission, expressly or otherwise, is of no consequence and does not make
the rescission valid and legally effective. It must be stated clearly, however,
in justice to Belden, that, as a member of the Board of Directors of
DALCO, he opposed the resolution of December 15, 1952 passed by said
Board and the subsequent rescission of the sales.
Finally, defendants claim that the action to foreclose the mortgages filed on
February 12, 1953 was premature because the promissory note sued upon
did not fall due until April 1 of the same year, concluding from this that,
when the action was commenced, the plaintiffs had no cause of action.
Upon this question the lower court says the following in the appealed
judgment;
The other is the defense of prematurity of the causes of action in that
plaintiffs, as a matter of grace, conceded an extension of time to pay up to 1
April, 1953 while the action was filed on 12 February, 1953, but, as to this,
the Court taking it that there is absolutely no debate that Dahican Lumber
Co., was insolvent as of the date of the filing of the complaint, it should
follow that the debtor thereby lost the benefit to the period.
x x x unless he gives a guaranty or security for the debt . . . (Art. 1198, New
Civil Code);
JALALON, JEANINE VANESSA R.
and as the guaranty was plainly inadequate since the claim of plaintiffs
reached in the aggregate, P1,200,000 excluding interest while the aggregate
price of the "after-acquired" chattels claimed by Connell under the
rescission contracts was P1,614,675.94, Exh. 1, Exh. V, report of auditors,
and as a matter of fact, almost all the properties were sold afterwards for
only P175,000.00, page 47, Vol. IV, and the Court understanding that when
the law permits the debtor to enjoy the benefits of the period
notwithstanding that he is insolvent by his giving a guaranty for the debt,
that must mean a new and efficient guaranty, must concede that the causes
of action for collection of the notes were not premature.
Very little need be added to the above. Defendants, however, contend that
the lower court had no basis for finding that, when the action was
commenced, DALCO was insolvent for purposes related to Article 1198,
paragraph 1 of the Civil Code. We find, however, that the finding of the trial
court is sufficiently supported by the evidence particularly the resolution
marked as Exhibit K, which shows that on December 16, 1952 in the
words of the Chairman of the Board DALCO was "without funds,
neither does it expect to have any funds in the foreseeable future." (p. 64,
record on appeal).
The remaining issues, namely, whether or not the proceeds obtained from
the sale of the "after acquired properties" should have been awarded
exclusively to the plaintiffs or to DAMCO and CONNELL, and if in law
they should be distributed among said parties, whether or not the
distribution should be pro-rata or otherwise; whether or not plaintiffs are
entitled to damages; and, lastly, whether or not the expenses incidental to
the Receivership should be borne by all the parties on a pro-rata basis or
exclusively by one or some of them are of a secondary nature as they are
already impliedly resolved by what has been said heretofore.
As regard the proceeds obtained from the sale of the of after acquired
properties" and the "undebated properties", it is clear, in view of our
opinion sustaining the validity of the mortgages in relation thereto, that said
proceeds should be awarded exclusively to the plaintiffs in payment of the
money obligations secured by the mortgages under foreclosure.
On the question of plaintiffs' right to recover damages from the defendants,
the law (Articles 1313 and 1314 of the New Civil Code) provides that
creditors are protected in cases of contracts intended to defraud them; and
that any third person who induces another to violate his contract shall be
liable for damages to the other contracting party. Similar liability is
demandable under Arts. 20 and 21 which may be given retroactive effect
(Arts. 225253) or under Arts. 1902 and 2176 of the Old Civil Code.
PROPERTY
The facts of this case, as stated heretofore, clearly show that DALCO and The information filed in this case is as follows:
DAMCO, after failing to pay the fifth promissory note upon its maturity,
conspired jointly with CONNELL to violate the provisions of the fourth The undersigned accuses Ignacio Carlos of the crime of theft, committed as
paragraph of the mortgages under foreclosure by attempting to defeat follows:
plaintiffs' mortgage lien on the "after acquired properties". As a result, the
plaintiffs had to go to court to protect their rights thus jeopardized. That on, during, and between the 13th day of February, 1909, and the 3d
Defendants' liability for damages is therefore clear. day of March, 1910, in the city of Manila, Philippine Islands, the said
Ignacio Carlos, with intent of gain and without violence or intimidation
However, the measure of the damages suffered by the plaintiffs is not what against the person or force against the thing, did then and there, willfully,
the latter claim, namely, the difference between the alleged total obligation unlawfully, and feloniously, take, steal , and carry away two thousand two
secured by the mortgages amounting to around P1,200,000.00, plus the hundred and seventy-three (2,273) kilowatts of electric current, of the value
stipulated interest and attorney's fees, on the one hand, and the proceeds of nine hundred and nine (909) pesos and twenty (20) cents Philippine
obtained from the sale of "after acquired properties", and of those that were currency, the property of the Manila Electric Railroad and Light Company,
not claimed neither by DAMCO nor CONNELL, on the other. Considering a corporation doing business in the Philippine Islands, without the consent
that the sale of the real properties subject to the mortgages under of the owner thereof; to the damage and prejudice of the said Manila
foreclosure has not been effected, and considering further the lack of Electric Railroad and Light Company in the said sum of nine hundred and
evidence showing that the true value of all the properties already sold was nine (909) pesos and twenty (20) cents Philippine currency, equal to and
not realized because their sale was under stress, We feel that We do not equivalent of 4,546 pesetas Philippine currency. All contrary to law.
have before Us the true elements or factors that should determine the
amount of damages that plaintiffs are entitled recover from defendants. It is, (Sgd.) L. M. SOUTWORTH,
however, our considered opinion that, upon the facts established, all the Prosecuting Attorney.
expenses of the Receivership, which was deemed necessary to safeguard
Subscribed and sworn to before me this 4th day of March, 1910, in the city
the rights of the plaintiffs, should be borne by the defendants, jointly and
of Manila, Philippine Islands, by L. M. Southworth, prosecuting attorney
severally, in the same manner that all of them should pay to the plaintiffs,
for the city of Manila.
jointly a severally, attorney's fees awarded in the appealed judgment.
(Sgd.) CHARLES S. LOBINGIER,
In consonance with the portion of this decision concerning the damages that
Judge, First Instance.
the plaintiffs are entitled to recover from the defendants, the record of this
case shall be remanded below for the corresponding proceedings. A preliminary investigation has heretofore been conducted in this case,
under my direction, having examined the witness under oath, in accordance
Modified as above indicated, the appealed judgment is affirmed in all other
with the provisions of section 39 of Act No. 183 of the Philippine
respects. With costs.
Commission, as amended by section 2 of Act No. 612 of the Philippine
Commission.
(Sgd) L. M. SOUTHWORTH,
G.R. No. 6295 September 1, 1911
Prosecuting Attorney.
THE UNITED STATES, plaintiff-appellee,
vs. Subscribed and sworn to before me this 4th day of March, 1910, in the city
of Manila, Philippine Islands, by L. M. Southworth, prosecuting attorney
IGNACIO CARLOS, defendant-appellant.
for the city of Manila.
A. D. Gibbs for appellant.
(Sgd.) CHARLES LOBINGIER,
Acting Attorney-General Harvey for appellee.
Judge, First Instance.
PER CURIAM:
37
JALALON, JEANINE VANESSA R.
A warrant for the arrest of the defendant was issued by the Honorable J. C.
Jenkins on the 4th of March and placed in the hands of the sheriff. The
sheriff's return shows that the defendant gave bond for his appearance. On
the 14th of the same month counsel for the defendant demurrer to the
complaint on the following grounds:
1 That the court has no jurisdiction over the person of the accused nor of the
offense charged because the accused has not been accorded a preliminary
investigation or examination as required by law and no court, magistrate, or
other competent authority has determined from a sworn complaint or
evidence adduced that there is probable cause to believe that a crime has
been committed, or that this defendant has committed any crime.
2 That the facts charged do not constitute a public offense.
The demurrer was overruled on the same day and the defendant having
refused to plead, a plea of not guilty was entered by direction of the court
for him and the trial proceeded.
After due consideration of all the proofs presented and the arguments of
counsel the 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. From
this judgment the defendant appealed and makes the following assignments
of error:
I.
The court erred in overruling the objection of the accused to the jurisdiction
of the court, because he was not given a preliminary investigation as
required by law, and in overruling his demurrer for the same reason.
II.
The court erred in declaring the accused to be guilty, in view of the
evidence submitted.
III.
The court erred in declaring that electrical energy may be stolen.
IV.
PROPERTY
The court erred in not declaring that the plaintiff consented to the taking of
the current.
V.
The court erred in finding the accused guilty of more than one offense.
VI.
The court erred in condemning the accused to pay P865.26 to the electric
company as damages.
Exactly the same question as that raised in the first assignment of error, was
after a through examination and due consideration, decided adversely to
appellant's contention in the case of U. S. vs. Grant and Kennedy (18 Phil.
Rep., 122). No sufficient reason is presented why we should not follow the
doctrine enunciated in that case.
The question raised in the second assignment of error is purely one fact.
Upon this point the trial court said:
For considerably more than a year previous to the filing of this complaint
the accused had been a consumer of electricity furnished by the Manila
Electric Railroad and Light Company for a building containing the
residence of the accused and three other residences, and which was
equipped, according to the defendant's testimony, with thirty electric lights.
On March 15, 1909, the representatives of the company, believing that more
light was being used than their meter showed, installed an additional meter
(Exhibit A) on a pole outside of defendant's house, and both it and the meter
(Exhibit B) which had been previously installed in the house were read on
said date. Exhibit A read 218 kilowatt hours; Exhibit B, 745 kilowatt hours.
On March 3, 1910 each was read again, Exhibit A showing 2,718 kilowatt
hours and Exhibit B, 968. It is undisputed that the current which supplied
the house passed through both meters and the city electrician testifies that
each meter was tested on the date of the last reading and was "in good
condition." The result of this registration therefore is that while the outsider
meter (Exhibit A) showed a consumption in defendant's building of 2,500
kilowatt hours of electricity, this inside meter (Exhibit B) showed but 223
kilowatt hours. In other words the actual consumption, according to the
outside meter, was more than ten times as great as that registered by the one
inside. Obviously this difference could not be due to normal causes, for
while the electrician called by the defense (Lanusa) testifies to the
possibility of a difference between two such meters, he places the extreme
limit of such difference between them 5 per cent. Here, as we have seen, the
difference is more than 900 per cent. Besides, according to the defendant's
electrician, the outside meter should normally run faster, while according to
38
the test made in this case the inside meter (Exhibit B) ran the faster. The
city electrician also testifies that the electric current could have been
deflected from the inside meter by placing thereon a device known as a
"jumper" connecting the two outside wires, and there is other testimony that
there were marks on the insulation of the meter Exhibit B which showed the
use of such a device. There is a further evidence that the consumption of
223 kilowatt hours, registered by the inside meter would not be a
reasonable amount for the number of lights installed in defendant's building
during the period in question, and the accused fails to explain why he
should have had thirty lights installed if he needed but four or five.
On the strength of this showing a search warrant was issued for the
examination of defendant's premises and was duly served by a police officer
(Hartpence). He was accompanied at the time by three employees of the
Manila Electric Railroad and Light Company, and he found there the
accused, his wife and son, and perhaps one or two others. There is a sharp
conflict between the several spectators on some points but on one there is
no dispute. All agree that the "jumper" (Exhibit C) was found in a drawer of
a small cabinet in the room of defendant's house where the meter was
installed and not more than 20 feet therefrom. In the absence of a
satisfactory explanation this constituted possession on defendant's part, and
such possession, under the Code of Civil Procedure, section 334 (10), raises
the presumption that the accused was the owner of a device whose only use
was to deflect the current from the meter.
Is there any other "satisfactory explanation" of the "jumper's" presence?
The only one sought to be offered is the statement by the son of the
accused, a boy of twelve years, that he saw the "jumper" placed there by the
witness Porter, an employee of the Light Company. The boy is the only
witness who so testifies and Porter himself squarely denies it. We can not
agree with counsel for the defense that the boy's interest in the outcome of
this case is less than that of the witness for the prosecution. It seems to us
that his natural desire to shield his father would far outweight any interest
such an employee like Porter would have and which, at most, would be
merely pecuniary.
There is, however, one witness whom so far as appears, has no interest in
the matter whatsoever. This is officer Hartpence, who executed the search
warrant. He testifies that after inspecting other articles and places in the
building as he and the other spectators, including the accused, approached
the cabinet in which the "jumper" was found, the officer's attention was
called to the defendant's appearance and the former noticed that the latter
was becoming nervous. Where the only two witnesses who are supposed to
know anything of the matter thus contradict each other this item of
testimony by the officer is of more than ordinary significance; for if, as the
JALALON, JEANINE VANESSA R.
accused claims, the "jumper" was placed in the cabinet for the first time by
Porter there would be no occasion for any change of demeanor on the part
of the accused. We do not think that the officer's declination to wait until
defendant should secure a notary public shows bias. The presence of such
an official was neither required nor authorized by law and the very efficacy
of a search depends upon its swiftness.
We must also agree with the prosecuting attorney that the attending
circumstances do not strengthen the story told by the boy; that the latter
would have been likely to call out at the time he saw the "jumper" being
placed in the drawer, or at least directed his father's attention to it
immediately instead of waiting, as he says, until the latter was called by the
officer. Finally, to accept the boy's story we must believe that this company
or its representatives deliberately conspired not merely to lure the defendant
into the commission of a crime but to fasten upon him a crime which he did
not commit and thus convict an innocent man by perjured evidence. This is
a much more serious charge than that contained in the complaint and should
be supported by very strong corroborating circumstances which we do not
find here. We are, accordingly, unable to consider as satisfactory
defendant's explanation of the "jumper's" presence.
The only alternative is the conclusion that the "jumper" was placed there by
the accused or by some one acting for him and that it was the instrument by
which the current was deflected from the matter Exhibit B and the Light
Company deprived of its lawful compensation.
After a careful examination of the entire record we are satisfied beyond
peradventure of a doubt that the proofs presented fully support the facts as
set forth in the foregoing finding.
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.
In the U. S. vs. Genato (15 Phi. Rep., 170) the defendant, the owner of the
store situated at No. 154 Escolta, Manila, was using a contrivance known as
a "jumper" on the electric meter installed by the Manila Electric Railroad
and the Light Company. As a result of the use of this "jumper" the meter,
instead of making one revolution in every four seconds, registered one in
seventy-seven seconds, thereby reducing the current approximately 95 per
cent. Genato was charged in the municipal court with a violation of a
PROPERTY
certain ordinance of the city of Manila, and was sentenced to pay a fine of
P200. He appealed to the Court of First Instance, was again tried and
sentenced to pay the same fine. An appeal was taken from the judgment of
the Court of First Instance to the Supreme Court on the ground that the
ordinance in question was null and void. It is true that the only question
directly presented was of the validity of the city ordinance. The court, after
holding that said ordinance was valid, said:
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 January 20, 1887, and April 1,
1897, construing and enforcing the provisions of articles 530 and 531 of the
penal code of that country, articles identical with articles 517 and 518 of the
code in force in these Islands.
Article 517 of the Penal Code above referred to reads as follows:
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.
It is well-settled that illuminating gas may be the subject of larceny, even in
the absence of a statute so providing. (Decisions of supreme court of Spain,
January 20, 1887, and April 1, 1897, supra; also (England) Queen vs. Firth,
L. R. 1 C. C., 172, 11 Cox C. C., 234; Queen vs. White, 3 C. & K., 363, 6
Cox C. C., 213; Woods vs. People, 222 III., 293, 7 L. R. A., 520;
Commonwealth vs. Shaw, 4 Allen (Mass), 308; State vs. Wellman, 34
Minn., 221, N. W. Rep., 385, and 25 Cyc., p. 12, note 10.)
In the case of Commonwealth vs. Shaw, supra, the court, speaking through
Chief Justice Bigelow, said:
39
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. All
this being proved to have been done by her secretly and with intent to
deprive the company of their property and to appropriate it to her own use,
clearly constitutes the crime of larceny.
Electricity, the same as gas, is a valuable article of merchandise, bought and
sold like other personal property and is capable of appropriation by another.
So no error was committed by the trial court in holding that electricity is a
subject of larceny.
It is urged in support of the fourth assignment of error that if it be true that
the appellant did appropriate to his own use the electricity as charged he can
not be held guilty of larceny for any part of the electricity thus appropriated,
after the first month, for the reason that the complaining party, the Manila
Electric Road and Light Company, knew of this misappropriation and
consented thereto.
The outside meter was installed on March 15, 1909, and read 218 kilowatt
hours. On the same day the inside meter was read and showed 745 kilowatt
hours. Both meters were again read on March 3, 1910, and the outside one
showed 2,718 kilowatt hours while the one on the inside only showed 968,
the difference in consumption during this time being 2,277 kilowatt hours.
The taking of this current continued over a period of one year, less twelve
days. Assuming that the company read both meters at the end of each
month; that it knew the defendant was misappropriating the current to that
extent; and that t continued to furnish the current, thereby giving the
defendant an opportunity to continue the misppropriation, still, we think,
that the defendant is criminally responsible for the taking of the whole
amount, 2,277 kilowatt hours. The company had a contract with the
defendant to furnish him with current for lighting purposes. It could not
stop the misappropriation without cutting off the current entirely. It could
not reduce the current so as to just furnish sufficient for the lighting of two,
three, or five lights, as claimed by the defendant that he used during the
most of this time, but the current must always be sufficiently strong to
furnish current for the thirty lights, at any time the defendant desired to use
them.
JALALON, JEANINE VANESSA R.
There is no pretense that the accused was solicited by the company or any
one else to commit the acts charged. At most there was a mere passive
submission on the part of the company that the current should be taken and
no indication that it wished it to be taken, and no knowledge by the
defendant that the company wished him to take the current, and no mutual
understanding between the company and the defendant, and no measures of
inducement of any kind were employed by the company for the purpose of
leading the defendant into temptation, and no preconcert whatever between
him and company. The original design to misappropriate this current was
formed by the defendant absolutely independent of any acts on the part of
the company or its agents. It is true, no doubt, as a general proposition, that
larceny is not committed when the property is taken with the consent of its
owner. It may be difficult in some instances to determine whether certain
acts constitute, in law, such "consent." But under the facts in the case at bar
it is not difficult to reach a conclusion that the acts performed by the
plaintiff company did not constitute a consent on its part the defendant take
its property. We have been unable to find a well considered case holding
contrary opinion under similar facts, but, there are numerous cases holding
that such acts do not constitute such consent as would relieve the taker of
criminal responsibility. The fourth assignment of error is, therefore, not well
founded.
It is also contended that since the "jumper" was not used continuously, the
defendant committed not a single offense but a series of offenses. It is, no
doubt, true that the defendant did not allow the "jumper" to remain in place
continuously for any number of days as the company inspected monthly the
inside meter. So the "jumper" was put on and taken off at least monthly, if
not daily, in order to avoid detection, and while the "jumper" was off the
defendant was not misappropriating the current. The complaint alleged that
the defendant did on, during, and between the 13th day of February, 1909,
and the 3d of March, 1910. willfully, unlawfully, and feloniously take, steal,
and carry away 2,277 kilowatts of electric current of the value of P909. No
demurrer was presented against this complaint on the ground that more than
one crime was charged. The Government had no opportunity to amend or
correct this error, if error at all. In the case of U. S. vs. Macaspac (12 Phil.
Rep., 26), the defendant received from one Joquina Punu the sum of
P31.50, with the request to deliver it to Marcelina Dy-Oco. The defendant
called upon Marcelina, but instead of delivering the said amount she asked
Marcelina for P30 in the name of Joaquina who had in no way authorized
her to do so. Marcelina gave her P30, believing that Joaquina had sent for
it. Counsel for the defendant insisted that the complaint charged his client
with two different crimes of estafa in violation of section 11 of General
Orders, No. 58. In disposing of this question this court said:
PROPERTY
The said defect constitutes one of the dilatory pleas indicated by section 21,
and the accused ought to have raised the point before the trial began. Had
this been done, the complaint might have been amended in time, because it
is merely a defect of form easily remedied. . . . Inasmuch as in the first
instance the accused did not make the corresponding dilatory plea to the
irregularity of the complaint, it must be understood that has waived such
objection, and is not now entitled to raise for the first time any question in
reference thereto when submitting to this court her assignment of errors.
Apart from the fact that the defense does not pretend that any of the
essential rights of the accused have been injured, the allegation of the defect
above alluded to, which in any case would only affect form of the
complaint, can not justify a reversal of the judgment appealed from,
according to the provisions of section 10 of General Orders, No. 58.
In the case at bar it is not pointed out wherein any of the essential rights of
the defendant have been prejudiced by reason of the fact that the complaint
covered the entire period. If twelve distinct and separate complaints had
been filed against the defendant, one for each month, the sum total of the
penalties imposed might have been very much greater than that imposed by
the court in this case. The covering of the entire period by one charge has
been beneficial, if anything, and not prejudicial to the rights of the
defendant. The prosecuting attorney elected to cover the entire period with
one charge and the accused having been convicted for this offense, he can
not again be prosecuted for the stealing of the current at any time within
that period. Then, again, we are of the opinion that the charge was properly
laid. The electricity was stolen from the same person, in the same manner,
and in the same place. It was substantially one continuous act, although the
"jumper" might have been removed and replaced daily or monthly. The
defendant was moved by one impulse to appropriate to his own use the
current, and the means adopted by him for the taking of the current were in
the execution of a general fraudulent plan.
A person stole gas for the use of a manufactory by means of pipe, which
drew off the gas from the main without allowing it to pass through the
meter. The gas from this pipe was burnt every day, and turned off at night.
The pipe was never closed at this junction with the main, and consequently
always remained full of gas. It was held, that if the pipe always remained
full, there was, in fact, a continuous taking of the gas and not a series of
separate talkings. It was held also that even if the pipe had not been kept
full, the taking would have been continuous, as it was substantially all one
transaction. (Regina vs. Firth, L. R., 1 C. C., 172; 11 Cox C. C., 234. Cited
on p. 758 of Wharton's Criminal Law, vol. 1, 10th ed.)
The value of the electricity taken by the defendant was found by the trial
court to be P865.26. This finding is fully in accordance with the evidence
40
presented. So no error was committed in sentencing the defendant to
indemnify the company in this amount, or to suffer the corresponding
subsidiary imprisonment in case of insolvency.
The judgment being strictly in accordance with the law and the merits of
the case, same is hereby affirmed, with costs against the appellant.
Arellano, C.J., Torres, Mapa and Carson, JJ.
Separate Opinions
MORELAND, J., dissenting:
I feel myself compelled to dissent because, in my judgment, there is no
evidence before this court, and there was none before the court below,
establishing the most essential element of the crime of larceny, namely, the
taking without the consent of the owner. As I read the record, there is no
evidence showing that the electricity alleged to have been stolen was taken
without the consent of the complaining company. The fact is that there was
not a witness who testified for the prosecution who was authorized in law,
or who claimed to be authorized in fact, to testify as to whether or not the
alleged taking of the electricity was without the consent of the company or,
even that said company had not been paid for all electricity taken. Not one
of them was, as a matter of law, competent to either of those facts. Not one
of them was an officer of the company. The leading witness for the people,
Kay, was only an inspector of electric lights. Another, McGeachim was an
electrical engineer in the employ of the company. Another, Garcia, was an
electrician of the company. These witness all confined their testimony to
technical descriptions of meters, their nature and function, of electric light
wires, the writing of defendant's house, the placing of a meter therein, the
placing of the meter outside of the house in order to detect, by comparing
the readings of the two, whether the accused was actually using more
electricity than the house meter registered, the discovery that more
electricity was being used than said meter registered, and of the finding of a
"jumper" in defendant's possession. One of these witnesses testified also
that he had suspected for a long time that the accused was "stealing"
electricity and that later he was "positive of it."
In order to sustain a charge of larceny under section 517 of Penal Code, it is
necessary to prove that there was a taking without the consent of the owner.
This is unquestioned. The question is: Has the prosecution proved that fact?
Has it proved that the electricity alleged to have been stolen was used
without the consent of the company? Has it proved that the accused did not
JALALON, JEANINE VANESSA R.
have a right to use electricity whether it went through the meter or not? Has
it proved, even, that the accused did not have a right to use a "jumper?" Has
it been proved that the company has not been fully paid for all the
electricity which defendant used, however obtained? Not one of these facts
has been proved. The only way to determine those questions was to
ascertain the relations which existed between the accused and the company
at the time the electricity alleged to have been stolen was used by the
accused. There was certainly some relation, some contract, either express or
implied, between the company and the accused or the company would not
have been supplying him the electric current. What was that relation, that
contract? No one can possibly tell by reading the record. There is not a
single word in all the evidence even referring to it. Not one of the people's
witnesses mentioned it. Not one of them, very likely, knew what it really
was. The relation which a corporation bears to private persons for whom
they are rendering service is determined by the corporation itself through
the acts of its officials, and not by its employees. While an employee might,
as the act of a servant, have caused the contract between the company and
the accused to be signed by the accused, it was nevertheless a contract
determined and prepared by the company through its officers and not one
made by the employee; and unless the employee actually knew the terms of
the contract signed by the accused, either by having read it, if in writing, or
by having heard it agreed upon, if verbal, he would not be competent to
testify to its terms except rendered so by admission of the party to be
charged by it. It nowhere appears that any of the witnesses for the
prosecution had any knowledge whatever of the terms of the contract
between the company and the accused. It does not appear that any of them
had ever seen it or heard it talked about by either party thereto. The
company has offered no testimony whatever on the matter. The record is
absolutely silent on that point.
This being true, how can we say that the accused committed a crime? How
can we say that a given act is criminal unless we know the relation of the
parties to whom the act refers? Are we to presume an act wrong when it
may be right? Are we to say that the accused committed a wrong when we
do not know whether he did or not? If we do not know the arrangements
under which the company undertook to furnish electricity to the defendant,
how do we know that the accused has not lived up to them? If we do not
know their contract, how do we know that the accused violated it?
It may be urged that the very fact that a meter was put in by the company is
evidence that it was for the company's protection. This may be true. But is it
not just as proper to presume that it was put in for defendant's protection
also? Besides, it does not appear that the company really put in the matter,
nor does not appear that the company really put in the meter, nor does it
even appear to whom it belonged. No more does it appear on whose
PROPERTY
application it was put in. The witness who installed the meter in defendant's
house did not say to whom it belonged and was unable to identify the one
presented by the prosecution on the trial as the one he installed. But
however these things may be, courts are not justified in "assuming" men
into state prison. The only inferences that courts are justified in drawing are
those springing from facts which are not only proved but which are of
themselves sufficient to warrant the inference. The mere fact, it is a fact,
that the company placed a meter in defendant's house is not sufficient to
sustain the conclusion in a criminal case that the defendant did not have the
right to use electricity which did not have the right to use electricity which
did not pass through the meter. Much less would it warrant the inference
that, in so using electricity, the defendant feloniously and criminally took,
sole, and carried it away without the consent of the company. An accused is
presumed innocent until contrary is proved. His guilt must be established
beyond a reasonable doubt. It is incumbent on the state to prove every fact
which is essential to the guilt of the accused, and to prove every such fact as
though the whole issue rested on it. The evidence of the prosecution must
exclude every reasonable hypothesis of innocence as with his guilt, he can
not be convicted.
But what was the necessity of all this uncertainty? What was the force
which prevented the company from proving clearly and explicitly the
contract between itself and the accused? What prevented it from proving
clearly, explicitly, and beyond all cavil that the electricity was taken (used)
without its consent? Why did not some competent official testify? Why did
the company stand by wholly silent? Why did it leave its case to be proved
by servants who were competent to testify, and who did actually testify, so
far as legal evidence goes, only in relation to technical matters relating to
meters and electric currents? Why did the prosecution place upon this court
the necessity of deducing and inferring and concluding relative to the lack
of consent of the company when a single word from the company itself
would have avoided that necessity? We have only one answer to all these
questions: We do not know.
In the case of Bubster vs. Nebraska (33 Neb., 663), the accused was charged
with the larceny of buggy of the value of $75. He was found guilty. On
appeal the judgment of conviction was reversed, the court saying:
There are two serious objections to this verdict. First, the owner of the
buggy, although apparently within reach of the process of the court, was not
called as a witness. Her son-in-law, who resided with her, testifies that he
did not give his consent, and very freely testifies that his mother-in-law did
not. She was within reach of the process of the court and should have been
called as a witness to prove her nonconsent.
41
The rule is very clearly stated in note 183, volume 1, Philips on Evidence
(4th Am. ed.). A conviction of larceny ought not to be permitted or
sustained unless it appears that the property was taken without the consent
of the owner, and the owner himself should be called, particularly in a case
like that under consideration, when the acts complained of may be
consistent with the utmost goodfaith. There is a failure of proof therefore on
this point.
In the case of State vs. Moon (41 Wis., 684), the accused was charged with
the larceny of a mare. He was convicted. On appeal the court reversed the
judgment of conviction, saying:
In State vs. Morey (2 Wis., 494) it was held that in prosecutions of lacerny,
if the owner of the property alleged to have been stolen is known, and his
attendance as a witness can be procured, his testimony that the property was
taken from him without his consent is indispensable to a conviction. This is
upon the principle that his testimony is the primary and the best evidence
that the property was taken without his consent, and hence, that secondary
evidence of the fact cannot be resorted to, until the prosecution shows it
inability, after due diligence, to procure the attendance of the owner.
In volume 1, Phillips on Evidence (5th Am., ed., note 183 sec. 635), the
author says:
In all cases, and especially in this, the lacerny itself must be proved by the
evidence the nature of the case admits. . . . This should be by the testimony
of the owner himself if the property was taken from his immediate
possession, or if from the actual possession of another, though a mere
servant or child of the owner, that the immediate possession was violated,
and this, too, without the consent of the person holding it. Where
nonconsent is an essential ingredient in the offense, as it is here, direct
proof alone, from the person whose nonconsent is necessary, can satisfy the
rule. You are to prove a negative, and the very person who can swear
directly to the necessary negative must, if possible, always be produced.
(Citing English authorities.) Other and inferior proof cannot be resorted to
till it be impossible to procure this best evidence. If one person be dead who
can swear directly to the negative, and another be alive who can yet swear
to the same thing, he must be produced. In such cases, mere presumption,
prima facie or circumstantial evidence is secondary in degree, and cannot
be used until all the sources of direct evidence are exhausted.
I quote these authorities not because I agree with the doctrine as therein set
forth. I quote them because there is a principle inherent in the doctrine laid
down which is recognized by all courts as having value and effect. It is this:
Failure to call an available witness possessing peculiar knowledge
JALALON, JEANINE VANESSA R.
concerning facts essential to a party's case, direct or rebutting, or to
examine such witness as to facts covered by his special knowledge,
especially if the witness be naturally favorable to the party's contention,
relying instead upon the evidence of witnesses less familiar with the matter,
gives rise to an inference, sometimes denominated a strong presumption of
law, that the testimony of such uninterrogated witness would not sustain the
contention of the party. Where the party himself is the one who fails to
appear or testify, the inference is still stronger. The nonappearance of a
litigant or his failure to testify as to facts material to his case and as to
which he has especially full knowledge creates an inference that he refrains
from appearing or testifying because the truth, if made to appear, would not
aid his contention; and, in connection with an equivocal statement on the
other side, which if untrue could be disapproved by his testimony, often
furnishes strong evidence of the facts asserted. As to this proposition the
authorities are substantially uniform. They differ only in the cases to which
the principles are applied. A substantially full list of the authorities is given
in 16 Cyclopedia of Law and Procedure (pp. 1062 to 1064, inclusive) from
which the rules as stated above are taken.
This court has recognized the value of this principle and has permitted it
strongly to influence its view of the evidence in certain cases. In the case of
United States vs. Magsipoc (20 Phil. Rep., 604) one of the vital facts which
the prosecution was required to establish in order to convict the accused
was that a certain letter which the accused alleged he mailed to his
daughter, who was attending a boarding school in Iloilo, and which the
daughter testified she had received, had not really been sent by the accused
and received by the daughter but, instead, had been purloined by him from
the post-office after he had duly placed it therein and after it had been taken
into custody and control of the postal authorities. It was conceded that the
directress of the boarding school which the daughter was at the time
attending knew positively whether the daughter was at the time attending
knew positively whether the daughter had received the letter in question or
not. This court held that, in weighing the evidence, it would take into
consideration the failure of the prosecution to produce the directress of the
school as a witness in the case, she being the only person, apart from the
daughter herself, who really knew the fact.
Another those cases was that of U. S. vs. Casipong (20 Phil. Rep., 178)
charged with maintaining a concubine outside his home with public
scandal. To prove the scandalous conduct charged and its publicity, the
prosecution introduced testimony, not of witnesses in the vicinity where the
accused resided and where the scandal was alleged to have occurred, but
those from another barrio. No Witness living in the locality where the
public scandal was alleged to have occurred was produced. This court, in
the decision of that case on appeal, allowed itself, in weighing the evidence
PROPERTY
of the prosecution, to be strongly influenced by the failure to produce as In the case of Belknap vs. Sleeth (77 Kan., 164), the court (p. 172) said:
witnesses persons who, if there had really been public scandal, would have
been the first, if not the only ones, to know it. The court said: What effect should such conduct have in the consideration of a case, where
the successful party thus living beyond the jurisdiction of the court has
In this case it would have been easy to have submitted abundant evidence refused to testify in a material matter in behalf of the opposing party? It
that Juan Casipong forsook his lawful wife and lived in concubinage in the must be conceded that the benefit of all reasonable presumptions arising
village of Bolocboc with his paramour Gregoria Hongoy, for there would from his refusal should be given to the other party. The conduct of a party
have been an excess of witnesses to testify regarding the actions performed in omitting to produce evidence peculiarly within his knowledge frequently
by the defendants, actions not of isolated occurrence but carried on for affords occasion for presumptions against him. (Kirby vs. Tallmadge, 160
many days in slight of numerous residents scandalized by their bad U. S., 379, 16 Sup. Ct., 349, 14 L. Ed., 463.) This rule has been often
example. But it is impossible to conclude from the result of the trial that the applied where a party withholds evidence within his exclusive possession
concubinage with scandal charged against the defendants has been proved, and the circumstances are such as to impel an honest man to produce the
and therefore conviction of the alleged concubine Gregoria Hongoy is not testimony. In this case the witness not only failed but refused to testify
according to law. concerning material matters that must have been within his knowledge.
In the case at bar the question of the consent of the company to the us of the In the case of Heath vs. Waters (40 Mich., 457), it was held that:
electricity was the essence of the charge. The defendant denied that he had
taken the electricity without the consent of the company. The prosecution It is to be presumed that when a witness refuses to explain what he can
did not present any officer of the corporation to offset this denial and the explain, the explanation would be to his prejudice.
company itself, although represented on the trial by its own private counsel,
did not produce a single witness upon that subject. In case of Frick vs. Barbour (64 Pa. St., 120, 121), the court said:
It has been more than once said that testimony in a case often consists in
In the case of Standard Oil Co. vs. State (117 Tenn., 618), the court (p.672)
said: what is not proved as well as in what is proved. Where withholding
testimony raises a violent presumption that a fact not clearly proved or
disproved exists, it is not error to allude to the fact of withholding, as a
But the best evidence of what his instructions to Holt were and the
circumstance strengthening the proof. That was all that was done here.
information he had of the transaction at the time was made were the letters
which he wrote to Holt directing him to go to Gallatin, and the daily and
In the case of Funda vs. St. Paul City Railway Co. (71 Minn., 438), the
semi-weekly reports made to him by Holt and Rutherford of what was done
court held:
there, which were not produced, although admitted to be then in his
possession. He was aware of the value of such evidence, as he produced a
The defendant having omitted to call its motorman as a witness, although
copy of his letter to Holt, condemning the transaction, as evidence in behalf
within reach and available, the court was, under the circumstances, justified
of the plaintiffs in error. The presumption always is that competent and
in instructing the jury that, in weighing the effect of the evidence actually
pertinent evidence within the knowledge or control of a party which he
introduced, they were at liberty to presume that the testimony of the
withholds is against his interest and insistence. (Dunlap vs. Haynes, 4
motorman, if introduced, would not have been favorable to the cause of
Heisk., 476; Kirby vs.Tallmadge, 160 U. S., 379, 16 Sup. Ct., 349, 40 L.
defendant.
ed., 463; Pacific Constr. Co. vs. B. W. Co., 94 Fed,, 180, 36 C. C. A., 153)
In the case of Gulf, C. & S. F. Ry. Co. vs. Ellis (54 Fed. Rep., 481), the
In the case of Succession of Drysdale (127 La., 890), the court held:
circuit court of appeals held that:
When a will presented for probate is attacked on the ground that it is a
Failure to produce the engineer as a witness to rebut the inferences raised
forgery, and there are pertinent facts relating to the will in the possession of
by the circumstancial evidence would justify the jury in assuming that his
the proponent, and he repeatedly fails to testify when his testimony could
evidence, instead of rebutting such inference, would support them.
clear up many clouded and doubtful things, his failure to testify casts
suspicion upon the will, especially when the one asking for the probate of
In Wigmore on Evidence (vol. 1, sec. 285), it is said:
the will is a principal legatee.
42
JALALON, JEANINE VANESSA R.
The consciousness indicated by the conduct may be, not an indefinite one
affecting the weakness of the cause at large, but a specific one concerning
the defects of a particular element in the cause. The failure to bring before
the tribunal some circumstances, document, or witness, when either the
party himself or his opponent claims that the facts would thereby be
elucidated, serves to indicate, as the most natural inference, that the party
fears to do so, and this fear is some evidence that circumstances or
document or witness, if brought, would have exposed facts unfavorable to
the party. These inferences, to be sure, cannot fairly be made except upon
certain conditions; and they are also open always to explanation by
circumstances which make some other hypothesis a more natural one than
the party's fear of exposure. But the propriety of such an inference in
general is not doubted. The nonproduction of evidence that would naturally
have been produced by an honest and therefore fearless claimant permits
the inference that its tenor is unfavorable to the party's cause. . . .
Continuing this same subject the same author says:
At common law the party-opponent in a civil case was ordinarily privileged
from taking the stand (post, sec. 2217); but he was also disqualified; and
hence the question could rarely arise whether his failure to testify could
justify any inference against him. But since the general abolition of both of
the privilege and the disqualification (post, secs. 2218, 577), the party has
become both competent and compellable like other witnesses; and the
question plainly arises whether his conduct is to be judged by the same
standards of inference. This question naturally be answered in the
affirmative. . . . (See Aragon Coffee Co., vs. Rogers, 105 Va., 51.)
As I stated at the outset, I have been unable to find in the record of this case
any proof of legal value showing or tending to show that the electricity
alleged to have been stolen was taken or used without the consent of the
company. The defendant, therefore, should be acquitted.
There are other reasons why I cannot agree to the conviction of the accused.
Even though the accused to be found to have committed the acts charged
against him, it stands conceded in this case that there is a special law passed
particularly and especially to meet cases of this very kind, in which the
offense is mentioned by name and described in detail and is therein made a
misdemeanor and punished as such. It is undisputed and admitted that
heretofore and ever since said act was passed cases such as the one at bar
have uniformly and invariably been cognized and punished under said act;
and that this is the first attempt ever made in these Islands to disregard
utterly the plain provisions of this act, and to punish this class of offenses
under the provisions of Penal Code relating to larceny. The applicability of
those provisions is, to say the very least, extremely doubtful, even admitting
PROPERTY
that they are still in force. Even though originally applicable, these
provisions must now be held to be repealed by implication, at least so far as
the city of Manila is concerned, by the passage of the subsequent act
defining the offense in question and punishing it altogether differently.
Moreover, I do not believe that electricity, in the for in which it was
delivered to the accused, is susceptible of being stolen under the definition
given by the law of these Islands to the crime of larceny.
Concisely, then, I dissent because (a) this court, by its decision in this case,
has, in my judgment, disregarded the purpose of the Legislature, clearly
expressed; because (b) it has applied a general law, of at least very doubtful
application, to a situation completely dealt with, and admittedly so by a
later statute conceived and enacted solely and expressly to cover that very
situation; because (c) the court makes such application in spite of the fact
that, under the general law, if it is applicable, the crime in hand is a felony
while under the later statute it is only a misdemeanor; because (d), in my
judgment, the court modifies the definition given by the Legislature to the
crime of lacerny, which has been the same and has received the same
interpretation in this country and in Spain for more than two centuries;
because (e) the decision disregards, giving no importance to a positive
statute which is not only the last expression of the legislative will on the
particular subject in hand, but was admittedly passed for the express
purpose of covering the very situation to which the court refuses to apply it.
While the statute referred to is an act of the Municipal Board of the city of
Manila, this court has held in a recent case that said board was authorized
by the legislature to pass it. Therefore it is an Act of the Legislature of the
Philippine Islands.
In this dissent I shall assert, and, I think, demonstrate three propositions, to
wit:
First. That an electric current is not a tangible thing, a chattel, but is
a condition, a state in which a thing or chattel finds itself; and that a
condition or state can not be stolen independently of the thing or chattel of
which it is a condition or state. That it is chattels which are subjects of
lacerny and not conditions.
Second. That, even if an electric current is a tangible thing, a chattel, and
capable of being stolen, in the case at bar no electric current was taken by
the defendant, and therefore none was stolen. The defendant simply made
use of the electric current, returning to the company exactly the
same amount that he received.
Third. That, even if an electric current is a tangible thing, a chattel, and
capable of being stolen, the contract between the company and the
43
defendant was one for use and not for consumption; and all the defendant is
shown to have done, which is all he could possibly have done, was to make
use of a current of electricity and not to take or consume electricity itself .
I shall therefore maintain that there is no lacerny even though the defendant
committed all the acts charged against him.
In discussing the question whether, under the law of the Philippine Islands,
an electric current is the subject of larceny, I shall proceed upon the theory,
universally accepted to-day, that electricity is nothing more or less
than energy. As Mr. Meadowcroft says in his A B C of Electricity, indorsed
by Mr. Edison, "electricity is a form of energy, or force, and is obtained by
transforming some other form of energy into electrical energy."
In this I do not forget the theory of the "Electron" which is now being
quietly investigated and studied, which seems to tend to the conclusion that
there is no difference between energy and matter, and that all matter is
simply a manifestation of energy. This theory is not established, has not
been announced by any scientist as proved, and would probably have no
effect on the present discussion if it were.
Based on this accepted theory I draw the conclusion in the following pages
that electricity is not the subject of larceny under the law of the Philippine
Islands.
Partida 3, title 29, law 4, thus defines "cosas muebles:"
The term muebles is applied to all the things that men can move from one
place to another, and all those that can naturally move themselves: those
that men can move from one place to another are such as cloths, books,
provisions, wine or oil, and all other things like them; and those that can
naturally move themselves are such as horses, mules, and the other beast,
and cattle, fowls and other similar things.
Partida 5 title 5, law 29, contains the following:
But all the other things which are muebles and are not annexed to the house
or do not appeartain thereto belong to the vendor and he can take them
away and do what he likes with them: such are the wardrobes, casks and the
jars not fixed in the ground, and other similar things.
Article 517 of the Penal Code, in that portion defining larceny, as charged
against the accused in the case at bar, reads:
ART. 517. The following are guilty of theft:
JALALON, JEANINE VANESSA R.
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 (cosas muebles) without the owner's consent.
This article of the Penal Code, as is seen, employs precisely the words
defined in the Partidas. The definition of the word is clear in the law as
written. It is also clear in the law as interpreted. I have not been able to find
a writer on Spanish or Roman criminal law who does not say clearly and
positively that the only property subject to lacerny is tangible movable
chattels, those which occupy space, have three dimensions, have a separate
and independent existence of their own apart from everything else, and can
be manually seized and carried from one place to another. This was the
unquestioned theory of the Roman criminal law and it is the undoubted and
unquestioned theory of the Spanish criminal law. Nor do I find a writer or
commentator on the Spanish or Roman Civil Law who does not define
a cosa mueble in the same way.
One of the leading commentators of Spain on criminal law writes thus
concerning the property subject to robbery and lacerny:
Personal property belonging to another. If robbery consists in the taking
of a thing for the purpose and by the means indicated in the article in
question, it follows from the very nature of this class of crimes, that only
personal or movable property can be the subject thereof, because none but
such property can be the subject of the correctatio of the Romans; " Furtum
since contrectatione non fiat," says Ulpian. The abstraction, the rapine, the
taking, and all the analogous terms and expressions used in the codes, imply
the necessity that the things abstracted or taken can be carried from one
place to another. Hence the legal maxim: Real property "non contractantur,
sed invaduntur." (6 Groizard, p. 47)
The act of taking is what constitutes the contrectatio and the invito
domino which all the great ancient and modern jurists consider as the
common ingredient (in addition to the fraudulent intention of gain), of the
crimes of robbery and theft. From what has been said it follows that
the taking, the act of taking without violence or intimidation to the persons,
or force upon the things, for the purpose of gain and against the will of the
owner, is what determines the nature of the crime of theft as defined in
paragraph 1 of this section. (6 Groizard, pp. 261, 262.)
The material act of taking is, therefore, an element of the crime which
cannot be replaced by any other equivalent element. From this principle
important consequences follow which we need not now stop to consider for
the reason that in speaking of the crime of robbery we have already
discussed the subject at great length. Immovable and incorporeal things
PROPERTY
cannot be the subject of the theft for the reason that in neither the one or the
other is it possible to effect the contrectatio, that is to say, the material act
of laying hands on them for the purpose of removing the same, taxing the
same or abstracting the same. Hence the legal maxims: "Furtum non
committitur in rebus immobilibus and Res incorporales nec tradi possideri
possunt, ita contectavit nec aufferri." (6 Groizard, p. 266.)
Criticising an opinion of the supreme court of Spain which held that
illuminating gas was a subject of lacerny, the same writer says:
The owner of a certain store who had entered into a contract with a gas
company whereby he substantially agreed to pay for the consumption of the
amount of gas which passed through a meter, surreptitiously placed a pipe
which he connected with the branch from the main pipe before it reached
the meter and used the same for burning more lights than those for which he
actually paid. The supreme court of Madrid convicted the defendant of the
crime of estafa but the supreme court of Spain reversed the judgment,
holding that he should be convicted of theft. The only reason which the
supreme court had for so deciding was that the owner of the store had taken
personal property belonging to another without the latter's consent, thereby
committing the crime not of estafa but of consummated theft. But in our
judgment, considering the sense and import of the section under
consideration, it cannot be properly said that the owner of the store took the
gas because in order to do this it would have been necessary that the said
fluid were capable of being taken or transported, in other words, that
the contrectatio, the meaning of which we have already sufficiently
explained, should have taken place.
Gas is not only intangible and therefore impossible of being the subject
of contrectatio, of being seized, removed, or transported from one place to
another by the exercise of the means purely natural which man employs in
taking possession of property belonging to another, but, by reason of its
nature, it is necessary that it be kept in tank, or that it be transmitted
through tubes or pipes which by reason of their construction, or by reason
of the building to which the same may be attached, partake of the nature of
immovable property. There is no means, therefore, of abstracting gas from a
tank, from a tunnel or from a pipe which conveys the fluid to a building, for
the purpose of being consumed therein, unless the receptacle containing the
same is broken, or the tank or pipe bored, and other tubes or pipes are
connected therewith at the point of the opening or fracture by means of
which the gas can conveyed to a place different from that for which it was
originally intended.
This exposition, interpretation, if you choose to call it such, has a further
foundation in our old laws which have not been changed but rather
44
preserved in the definition of movable an immovable property given by the
Civil Code. According to Law, I Title XVII, Partida II, personal property
means those things which live and move naturally by themselves, and those
which are neither living nor can naturally move, but which may be
removed; and Law IV, Title XXIX, Partida III, defines personal property as
that which man can move or take from one place to another, and those
things which naturally by themselves can move. Finally, corporeal things,
according to Law I, Title III, Partida III, are those which may be the subject
of possession with the assistance of the body, and incorporeal those which
cannot be physically seized, and cannot be properly possessed. From these
definitions it follows that unless we do violence to the plain language of
these definitions, it would be impossible to admit that gas is
a corporeal thing, and much less that it is movable property. (6 Groizard,
pp. 268, 269.)
If the holding that gas, which is unquestionably a physical entity having a
separate and independent existence and occupying space, has approached
the verge of unstealable property so closely that the ablest of Spain
commentators believes that there is grave danger of the complete
destruction of the ancient legislative definition of stealable property
by judicial interpretation, what would be said in regard to a decision
holding that an electric current is a subject of lacerny?
It may be well to add just here, although it may be somewhat out of its
regular order, what the author above quoted regards was the crime actually
committed in the case he was discussing. He says:
For us, for the reasons hereinbefore set out, it would be more in harmony
with the principles and legal texts which determine the nature of the crimes
of theft and estafa, to assign the latter designation to the fraudulent act
which he have heretofore examined and which substantially consists in the
alteration, by means of a fraudulent method, of the system established by an
agreement to supply a store with illuminating gas and to determine the
amount consumed for lighting and heating and pay its just value. We
respect, however, the reasons to the contrary advanced in the hope that the
supreme court in subsequent judgments will definitely fix the jurisprudence
on the subject.
Nor can the abusive use of a thing determine the existence of the crime
under consideration. A bailee or pledgee who disposes of the thing, bail or
pledge entrusted to his custody for his own benefit is not guilty of lacerny
for the reason that both contracts necessarily imply the voluntary delivery
of the thing by the owner thereof and a lawful possession of the same prior
to the abusive use of it.
JALALON, JEANINE VANESSA R.
Not even a denial of the existence of the bailment or contract of pledge with
of gain constitutes the crime of lacerny for the reason that the material act
of taking possession of the property without the consent of the owner is
lacking. (6 Groizard, p. 269.)
That under the Roman and Spanish law property to be the subject of lacerny
must be a tangible chattel which has a separate independent existence of its
own apart from everything else, which has three dimensions an occupies
space so that it may of itself be bodily seized and carried away, is not an
open question. That that was also the doctrine of the common law is equally
beyond question.
In the consideration of this case the great difficulty lies in confusing
the appearance with the thing, in confounding the analogy with
the things analogous. It is said that the analogy between electricity and real
liquids or gas is absolutely complete; that liquids and gases pass through
pipes from the place of manufacture to the place of use; and the electric
current, in apparently the same manner, passes through a wire from the
plant to the lamp; that it is measured by a meter like liquids and gas; that it
can be diverted or drawn from the wire in which the manufacturer has
placed it, to the light in the possession of another; that a designing and
unscrupulous person may, by means of a wire surreptiously and criminally
transfer from a wire owned by another all the electricity which it contains
precisely as he might draw molasses from a barrel for his personal use. And
the question is triumphantly put, "how can you escape the inevitable results
of this analogy?" The answer is that it is an analogy and nothing more. It is
an appearance. The wire from which the electricity was drawn has lost
nothing. It is exactly the same entity. It weighs the same, has just as many
atoms, arranged in exactly the same way, is just as hard and just as durable.
It exactly the same thing as it was before it received the electricity, at the
time it had it, and after it was withdrawn from it. The difference between a
wire before and after the removal of the electricity is simply a difference
of condition. Being charged with electricity it had
a quality or condition which was capable of being transferred to some other
body and, in the course of that transfer, of doing work or performing
service. A body in an elevated position is in a condition different from a
body at sea level or at the center of the earth. It has the quality of being able
to do something, to perform some service by the mere change of location. It
has potential energy, measured by the amount of work required to elevated
it. The weight or monkey of a pile driver is the same weight when elevated
50 feet in air as it is when it lies on top of the pile 50 feet below, but it has
altogether a different quality. When elevated it is capable of working for
man by driving a pile. When lying on top of the pile, or at sea level, it has
no such quality. The question is, "can you steal that quality?"
PROPERTY
Two pile drivers, owned by different persons, are located near each other.
The one owner has, by means of his engine and machinery, raised his
weight to its highest elevation, ready to deliver a blow. While this owner is
absent over night the owner of the other pile driver, surreptiously and with
evil design and intent, unlocks the weight and, by means of some
mechanical contrivance, takes advantage of its fall in such a way that the
energy thus produced raised the weight of his own pile driver to an
elevation of forty feet, where it remains ready, when released, to perform
service for him. What has happened? Exactly the same thing, essentially, as
happened when the electric charge of one battery is transferred to another.
The condition which was inherent in the elevated weight was transferred to
the weight which was not elevated; that is, the potential energy which was a
condition or quality of the elevated weight was by a wrongful act
transferred to another. But was that condition or quality stolen in the sense
that it was a subject of lacerny as that crime is defined the world over?
Would the one who stole the battery after it had been elevated to the ceiling,
or the weight of the pile driver after it had been elevated 50 feet in the air,
be guilty of a different offense than if he stole those chattels before such
elevation? Not at all. The weight elevated had more value, in a sense, than
one not elevated; and the quality of elevation is considered only in
fixing value. It has nothing whatever to do with the nature of the crime
committed. It is impossible to steal a quality or condition apart from
the thing or chattel of which it is a quality or condition of a thing affects
the value of the thing. It is impossible to steal value. The thing,
the chattel is that which is stolen. Its quality or condition is that which, with
other circumstances, goes to make the value.
A mill owner has collected a large amount of water in a dam at such an
elevation as to be capable of running his mill for a given time. A
neighboring mill owner secretly introduces a pipe in the dam and conveys
the water to his own mill, using it for his own benefit. He may have stolen
the water, but did he steal the head, the elevation of the water above the
wheel? The fact that the water had a head made it more valuable and that
fact would be taken into consideration in fixing the penalty which ought to
be imposed for the offense; but it has nothing whatever to do with
determining the nature of the offense of which the man would be charged.
Larceny cannot be committed against qualities or conditions. It is
committed solely against chattels, tangible things. A given chattel is a
compromise result of all its properties, qualities, or conditions. None of the
qualities which go make up the complete thing is the subject of larceny.
One cannot steal from a roof the quality of shedding rain, although he may
bore it full of holes and thus spoil that quality; and this, no matter how
much he might be benefit thereby himself. If, in a country where black
horses were very dear and white horses very cheap, one, by a subtle
45
process, took from a black horse the quality of being black and transferred
that quality to his own horse, which formerly was white, thereby greatly
increasing its value and correspondingly decreasing the value of the other
horse which by the process was made white, would he be guilty of larceny?
Would he be guilty of larceny who, with intent to gain, secretly and
furtively and with the purpose of depriving the true owner of his property,
took from a bar of steal belonging to another the quality of being hard, stiff
and unyielding and transferred that quality to a willow wand belonging to
himself? Is he guilty of larceny who, with intent to defraud and to benefit
himself correspondingly, takes from a copper wire belonging to another the
quality of being electrified and transfers that quality to an electric light? An
electric current is either a tangible thing, a chattel of and by itself, with a
perfect, separate and independent existence, or else it is a mere quality,
property or condition of some tangible thing or chattel which does have
such an existence. The accepted theory to-day is, and it is that which must
control, that electricity is not a tangible thing or chattel, that it has no
qualities of its own, that it has no dimensions, that it is imponderable,
impalpable, intangible, invisible, unweighable, weightless, colorless,
tasteless, odorless, has no form, no mass, cannot be measured, does not
occupy space, and has no separate existence. It is, must be, therefore,
simply a quality, a condition, a property of some tangible thing or chattel
which has all or most of those qualities which electricity has not. Being
merely the quality of a thing and not the thing itself , it cannot be the
subject of larceny.
To repeat" As we know it, electricity is nothing more or less than a
condition of matter. It has no existence apart from the thing of which it is
condition. In other words, it has no separate, independent existence. It is
immaterial, imponderable, impalpable, intangible, invisible, weightless and
immeasurable, is tasteless, odorless, and colorless. It has no dimensions and
occupies no space. It is the energy latent in a live herself is the power
potential in the arm of a laborer. It is the force stored in the wound-up
spring. It is an agency, not a "cosa mueble." It is a movement and not a
chattel. It is energy and not a body. It is what the laborer expends and not
what he produces. It is strength striped by an unknown process from arms
of men and atoms of coal, collected and marshalled at a given place under
the mysterious leash of metal, ready to spring like a living servant to the
work of its master. It is not a chattel, it is life. It is as incapable of being
stolen, by itself, as the energy latent in a live horse. It is as impossible to
steal an electric current as it is to steal the energy hidden in a wound-up
watch spring. One may steal the horse and with it the energy which is
a quality of the horse. One may steal a watch and with it the energy which
is a property of the wound-up. But can we say that one can steal the energy
in the watch spring separate from the spring itself, or electricity apart from
the wire of which it is a quality or condition?
JALALON, JEANINE VANESSA R.
A laborer was stored up in his muscles the capacity to do a day's work. He
has potential energy packed away in little cells or batteries all through his
body. With the proper mechanism he can enter a room which it is desired to
light with electricity and, by using the stored-up energy of his body on the
mechanism, light the room by transforming the energy of his muscles into
the electricity which illuminates the room. We have, then, a laborer who, by
moving his hands and arms in connection with the appropriate machinery, is
able to light the room in which he is at the time. What causes the light? The
energy in the laborer's muscles is transformed into light by means of the
intermediate phenomenon known as electricity. As a concrete result, we
have the energy in the laborer's muscles transmuted into light. Now, is the
energy passing through the wire, more capable of being stolen than the
energy in the muscles of the laborer? Or is the light or heat any more or less
a subject of larceny than the electric current of which they are a
manifestation? Could the energy which performed the day's work be stolen?
Could the electric current which lighted the room be stolen apart from the
wire of which it was a quality? One might kidnap the laborer and with him
the energy which constitutes his life; but can we say that the energy, of
itself, is the subject of separate larceny? But, it the laborer's energy cannot
be stolen while it resides in and is a quality of his arm, can the same energy
any more be stolen when it resides in and is a quality of a wire in the form
of electricity? If so, just where is the dividing line, where is the point at
which this kinetic energy ceases to be incapable of being separately stolen
and becomes a subject to theft? Is it at the crank by which the laborer turns
the machine? Is it at the armature, the conductor, the fields coils, the field
magnet, the commutator, the brushes, the driving pulley, or the belt
tightener? Is it where the current enters what is called the electric-light
wire, or is it where it enters the bulb or arc and produces the light? In other
words, at what point does the untealable laborer's energy become stealable
electric energy?
An electric-light wire placed in a house for the purpose of furnishing light
for the same has its precise counterpart in a laborer placed therein for the
same purpose. Like the laborer, it is filled with energy which will, when
released, perform the service intended. The wire is simply a means of
transmitting the energy of the laborer's muscles, and that stored in tons of
coal which he handles, from the electric plant or factory to the house where
the light is produced. The wire simply avoids the necessity of the laborer
being in the very house where he produces the light. Instead of being there,
he, by means of the so-called electric-light wire, is located at a distance, but
produces the light in exactly the same way, transmitting his energy for that
purpose. The wire stands in exactly the same relation to the person in whose
house it is put as would a laborer who had been sent to that house to render
services. The energy may be diverted from the purpose for which it was
intended, or a wrong account given of the amount of work performed by
PROPERTY
that energy; but it is impossible to steal, take and carry the energy away.
One cannot steal days' works; and that is all an electric current is. One may
use those days' works in hoeing corn when it has been agreed that they shall
be used in picking cotton; but that is not larceny of the days' works, as
larceny has been defined by the jurisprudence of every country, Or, one
may report to the owner of those days' works that he had used three of them
when in reality he used thirty and pay him accordingly, but that is not
larceny of the twenty-seven.
But, it is argued, the illustration is not a fair one; energy in a laborer's arm
or in the muscles of a horse or in a wound-up spring is, so far as its
capability of being stolen is concerned, quite different from energy which
has been separated from the arms of the laborer or the muscles of the horse
and driven through a wire; from such wire electricity may be drawn like
water from a barrel; and while it is impossible to steal the energy of a man
or a horse because it would destroy the life of the animal, an entirely
different question is presented when the energy has actually been
separated from those animals and confined in a wire.
This argument has several fundamental defects. In the first place, it assumes
the whole question at issue. By asserting that electricity is separable from
the object of which it is a quality or state is to assume that electricity is a
material thing, which the real question to be resolved. In the second place,
if electricity is in the real sense of that term, separable from the object to
which it belongs, then it must be admitted that it is capable of separate and
independent existence apart from any other object. This is not so. It is not
only admitted but contended by every scientist who has touched this subject
that electricity is incapable of an independent existence apart from some
given material object. In the third place, this argument overlooks the fact,
even if we assume that it can be separated, that the thing when separated is
not the same thing that it was before separation; in other words, when the
so-called separation occurs there is not only a transference of energy from
the horse to the battery but there is also a transformation. In the horse it is
muscular energy. In the wire it is electrical energy. In the horse it is
potential. In the wire kinetic. It is not the same thing in the wire that it was
in the horse. In the fourth place, the argument makes the stealability of a
thing depend not on its nature but on where it is located. This is an
assumption wholly unwarranted and impossible under the law. To say that
whether or not a thing is stealable depends not on its nature but on where it
is located is absurd. A diamond ring in a burglar-proof safe is as much a
subject of larceny, under the definition of the law, as if it lay in an open
showcase. If energy is stealable at all, and it must be remembered that I am
proceeding, as we must necessarily proceed upon the accepted theory that
electricity is nothing more or less than energy, it is so by reason of
its nature and by reason of its residing in a battery rather than in a horse;
46
and if it is stealable by virtue of its nature it can be stolen from the horse as
well as from the battery or wire. A thing is subject to larceny because, and
only because, it is a cosa mueble, not because it is inside a horse, a wire or a
safe. If it is a cosa mueble it is the subject of larceny although it be located
on the moon; and if it is not a cosa mueble it is not subject to lacerny
although it be placed in a den of thieves. The difficulty or ease of getting at
a thing has nothing whatever to do with its stealability. In the fifth place,
this argument overlooks the very important fact, to be dealt with more at
length later, that the electric current used by the accused was returned to the
company, after use, absolutely undiminished in quantity.
What, then, is the difference between corn, for example, and an electric
current? It is this. One is a cosa mueble while the other is not; one is
produced by a wholly different process from the other and from wholly
different materials, if we may call materials those changes which result in
the immaterial thing called an electric current; in the case of corn we deal
not with the quality or energy of corn, but with corn as a composite and
concrete result of all its qualities and uses; we deal with a tangible thing,
a chattel, and not with a condition or quality of a tangible thing; we deal
with things instead of ideas, with things which
exist separate and independent and which do not depend, as does
electricity, wholly upon some body not only for the capability of
manifesting its existence, but also for very existence itself ; because we deal
with something which changes its form but never its nature as a physical
entity. It is always a chattel, a tangible thing, a cosa mueble.
On the other hand, in the case of the electric current we deal not with a
thing, a chattel a cosa mueble, but with a condition or quality, a property of
a cosa mueble; with an idea which always, before it has any significance of
meaning whatever, associates itself with an entity, a body or chattel, as
a characteristic or quality of such body or chattel; with lines of force which
are merely and solely a quality, a property, a characteristic of the magnet,
instead of which grains of corn which are absolute entities, independent of
and apart from everything else, and not mere characteristic or qualities of
some entity of body which does not exist as an absolute physical entity in
itself; with the horse and the violet and not their perfume; with the lily and
not its beauty; with the clouds and not their color; with entities and not
accidents; with realities and not the imponderable,
impalpable ideas and qualities which make up the reality.
As he already been said, the difficulty in the elucidation of the question
comes from the confusion of qualities with things,
of appearances with realities. Apparently an electric current does things. It
produces phenomena. It, therefore, appears to be something. But it must not
be forgotten that many times appearances are deceitful. They do not always
JALALON, JEANINE VANESSA R.
insure realities. It is not judicial to say that, because a thing looks so,
it is so. It is not judicial to say that, simply because it looks as if one
committed larceny, therefore he is guilty of larceny. Before we
may legally convict one of larceny, we must know exactly what he did.
Justice is not founded on guess work nor on appearances. Men's right are
preserved by definitions, and definitions are founded on facts, not fancies,
on realities, not appearances. Because, when one taps an electrically
charged wire belonging to another and, by means of a contrivance, transfers
the charge to his own uses, it looks as if he was stealing something, is not
sufficient to convict him of larceny. We must first know what larceny is, as
well as what an electric current is, and what is meant by its use in producing
light. To know what larceny is we must know what legislators and judges
during the development of jurisprudence have always said and agreed it is.
In other words, we must know its definition. It approaches tyranny to
convict one of murder when is actually guilty of homicide only. Yet the
only thing which separates the two crimes is a definition. It is wrong to
convict one of robbery who is guilty only of larceny. Yet these two crimes
are distinguished only by a definition. If, as in the case at bar, whether or
not one is declared a felon and is sent to prison for one year eight months
and twenty-one days, is forever disqualified from holding public office and
of exercising the right of suffrage, or whether, instead, he is declared guilty
of a misdemeanor simply and punished lightly with no accompanying
disqualifications, depends upon whether he has committed larceny as
defined by the Penal Code or whether he has merely violated a city
ordinance, the question whether he actually committed larceny or not
begins to assume importance. It assumes importance not only to him but to
society as well. If a court to-day palpably modifies a definition in order to
convict an offender of larceny, how can society be assured that tomorrow
the same court will not modify some other definition to convict a citizen of
treason? When definitions are destroyed no man is secure in his person or
his property. When men act on appearances instead of realities justice will
be shortlived. A whale looks like a fish, acts like a fish, swims like a fish
and lives all its life in the water like a fish. But it is not a fish. It is an
animal. It is air-breathing, warm-blooded, and viviparous, and suckles its
young. Now, if whether or not a whale is a fish or an animal is the potent
factor determining whether a man goes to state prison as a felon with all the
deplorable consequences resulting, or whether he is lightly sentenced as a
mere misdemeanant, is it not of the supremest importance to determine
whether a whale is a fish or an animal? I am informed that it used to be a
common sight in The New York Zoological Gardens to see Mr. Crowley,
the large and extremely intelligent chimpanzee, dressed in faultless attire,
sit at the table and take his food and wine like a gentleman. Children
believed him to be a man; and many intelligent grown people honestly
believed that he was as much man as chimpanzee. But if the officials of the
city of New York had been indicted for kidnapping, based upon the seizure
PROPERTY
and forcible detention of Mr. Crowley, would it not have been of the most
solemn importance to them to throw away appearances and determine
accurately what Mr. Crowley really was? And in case of doubt as to what he
was, could they not justly have demanded the benefit of that doubt?
So, where one who diverted an electric current has been accused by reason
thereof of the crime of larceny, which crime, it being admitted, can be
committed only against tangible things, chattels, is it not of the very
greatest importance to determine what an electric current is, that is, whether
it is a tangible thing, a chattel, or not and what is the nature and meaning of
the process by which it transforms itself into electric light? And in case of
doubt as what it is, cannot the accused justly demand the benefit of that
doubt? To convict one of larceny it is not sufficient to show merely that a
wrongful act has been done; but it must appear that a wrongful act of a
particular kind has been committed. To constitute larceny it must be proved
that the wrongful act was committed against chattels, against tangible
things, which were seized upon and asported by the one accused. In the
case at bar it has not been shown that the accused laid unlawful hands upon
and asported a tangible thing, a chattel, una cosa mueble. The very least
that the prosecution must necessarily admit is that no one knows what
electricity really is. That being so, it seems to me to be a contradiction of
terms to say that larceny, which must admittedly be committed against
a known thing, can be committed against a thing absolutely unknown. At
least it would seem that there is a grave doubt about the definition of
larceny covering wrongful acts relative to an electric current; and by reason
of that doubt the conviction ought not to be sustained. And if it is true, as I
have herein attempted to show, that, under the prevailing and generally
accepted theory, electricity is nothing more or less than a condition, a
quality, a property of some tangible thing, some chattel or body, then,
certainly, the charge of larceny must fall, as that crime can be committed
only against the thing and not against a quality of the thing.
Although the only question in this case is whether electricity is such a
tangible thing, as can, under the definition of lacerny contained in the Penal
Code, be the subject of lacerny, nevertheless the court dismissed that
question substantially without discussion, the only reference thereto being
the following:
I is true that electricity is no longer, as formerly, regarded by electricians as
a fluid, but its manifestations and effects, like those of gas, may be seen and
felt. The true test of what is a proper subject of lacerny seems to be not
whether the subject is incorporeal, but whether it is capable of appropriation
by another than the owner.
xxx xxx xxx
47
Electricity, the same as gas, is a valuable article of merchandise, bought and
sold like other personal property and is capable of appropriation by another.
So no error was committed by the trial court in holding that electricity is a
subject of lacerny.
The statement fail to touch the essential question involved and is wholly
beside the point for the following reasons, lying aside for the moment the
nature of the act which the accused actually committed, assuming that he
committed the act described by the witnesses for the prosecution:
In the first place, as I understand the law , the statement is not quite correct
that, in the Philippine Islands, "the true test of what is a proper subject of
lacerny seems to be not whether the subject is corporeal or incorporeal, but
whether it is capable of appropriation," unless the word "appropriation"
has the same meaning as the word "taking"used in the article of the Penal
Code defining larceny. If the court intended to use the word "appropriation"
in the sense of "taking," then its use was unnecessary and may be
misleading. If it did not so intend, then the rule of law laid down by the
court is not as I understand the law to be. An appropriation in addition to or
different from the taking is not an essential of lacerny anywhere. Wharton
says that "lacerny id is the fraudulent taking and carrying away of a thing
without claim of right, with the intention of converting it to a use other than
that of the owner and without his consent." Article 517 of the Penal Code
provides that they shall be guilty of lacerny "who . . . take (toman) (not
appropriate) another's cosas muebles (movable chattels) without the owner's
consent." Unless, therefore, the word "appropriation" is used in the same
sense as "taking," the paragraph in the court's decision above quoted does
not contain a correct statement of the law. If it means the same thing then
the use of the word in no way enlightens the situation; for it is just as
difficult to determine whether a cosa mueble can be appropriated as it is to
determine whether it can be taken. The question before us is whether or not
electricity is such a cosa mueble that it can be taken under the law of
lacerny. To substitute in that problem the word "appropriation" for the word
"taking" does not laid in its solution in the slightest degree when it is
admitted that the word substituted means exactly the same thing as the word
in the place of which it was substituted.
An illustration will serve further to show the fallacy inherent in the
statement quoted: Let us suppose that the Penal Code defined larceny thus:
"Any person who, with intent to gain, takes from another his cake without
his consent shall be guilty of lacerny." Let us suppose that some one should
then defined the subject of lacerny as anything, corporeal or incorporeal,
which can be "appropriated." It would be obvious that such definition
would be erroneous, for the reason that, while pie is as capable of being
"appropriated" as cake, still, under the terms of the law, lacerny cannot be
JALALON, JEANINE VANESSA R.
committed against pie. So that where the statute prescribes that the only
thing subject to larceny is a cosa mueble and the definition of the subject of
larceny is claimed to be anything that can be "appropriated," the answer at
once is that such definition is inaccurate under the law as it may be too
broad. There may be some things which can be "appropriated" that are
not cosas muebles.
In the second place, the quoted paragraph from the court's decision contains
another error in the statement of the law. I am of the opinion that, under the
common law, and I am sure under the Spanish law, the statement that "the
true test of what is a proper subject of larceny seems to be not whether the
subject is corporeal or incorporeal . . ." is not accurate. Professor Beale, of
Harvard, says in his article on larceny that
At common law the only subjects of larceny were tangible, movable
chattels; something which could be taken in possession and carried away,
and which had some, although trifling, intrinsic value. Any substance which
has length, breadth, and thickness may be the subject of larceny. . . . A
chose in action being in its essence intangible could not be the subject of
larceny at common law and the paper evidence of the chose in action was
considered merged with it.
Wharton says:
Choses in action, including bonds and notes of all classes according to the
common law are not the subject of larceny, being mere rights of action,
having no corporeal existence; . . . .
I have already quoted at length from writers on the Spanish and Roman law
to show that only tangible, corporeal chattels can be the subject of larceny.
In the third place, by entirely begging the question, it leaves the whole
proposition of whether electricity is a subject of larceny not only unsolved
but wholly untouched. As we have already seen, the word "appropriation"
nowhere appears in subdivision 1 of the Penal Code in connection with
larceny. But if it were there used in connection with such crime, it would
necessarily refer entirely to a cosa mueble as that is the only thing under
that article which is the subject of larceny and, therefore of "appropriation."
So that, before we can possibly know whether a thing is capable of
appropriation or not under the Penal Code, we must know whether that
thing is or is not a cosa mueble, as that, as we have said, is the only thing
that can be taken or appropriated in committing the crime of larceny. But,
as is readily seen, that brings us right back to the question we started with,
What is a cosa mueble? It is more than apparent, therefore, that the quoted
paragraph adds nothing whatever to the discussion.
PROPERTY
In the fourth place, the word "appropriation" in the paragraph quoted is
there used with a complete misapprehension of its meaning as found in the
article of the Civil Code from which it is taken. Articles 334 and 335 of the
Civil Code seek to divide all property capable of appropriation into classes.
They read:
ART. 334. Son bienes immuebles:
1. Las tierras, edificios, caminos y construcciones de todo genero adheridas
al suelo.
xxx xxx xxx
This article has ten subdivision dealing with all kinds of real property. It is
not necessary to quote it all at this time.
The English of the part quoted is as follows:
ART. 334. Real property consists of
1. Lands, buildings, roads, and constructions of all kinds adherent to the
soil.
xxx xxx xxx
ART. 335. Se reputan bienes muebles los susceptibles de apropiacion no
comprendidos en el capitulo anterior, y en general todos los que se pueden
transportar de un punto a otro sin menoscabo de la cosa immueble a que
estuvieron unidos.
This article in English is as follows:
ART. 335. Personal property is considered anything susceptible of
appropriation and not included in the foregoing chapter, and, in general, all
that which can be carried from one place to another without damage to the
real estate to which it may be attached.
As is seen from the terms of the articles, two expressions are used in
defining "bienes muebles," one of elimination and other of description. The
clause of elimination provides that all property subject
to appropriation shall be personal property except that property described
in article 334. But this description was found to be too broad. It included
too much; and it was, therefore, necessary to make use of a limiting or
restricting clause in connection with the exclusion clause. To that the article
further provided that appropriable property shall be, "in general, all
property which can be carried from one place to another." Under this
48
restricting clause, then, property to bepersonal property must be not only
property not included in article 334 but also property which can be
transported from one place to another. It must fulfill two requirements
instead of one. Besides, under the Spanish law, real property is as much
subject to appropriation as personal property. The word in Spanish seems to
be broader than its legal use in English.
From the foregoing it is plain that property to be personal property must not
only be susceptible of appropriation, which the court in the quoted
paragraph claims is the only requirement, but it must also be capable of
being of itself manually seized and transported from one place to another.
This presents the fourth reason why I say that the proposition laid down by
the court in the quoted paragraph is laid down under a complete
misapprehension of the definition of una cosa mueble.
And finally, the word "appropriate" which the court has used is found in
subdivision 2 of article 517 of the Penal Code. It provides that those are
guilty of larceny, "who, finding a thing (una cosa mueble) lost and knowing
its owner, appropriate it with intent to gain." The signification which the
word here has is quite different from that of the word "take" (toman) used in
the first subdivision, being considerably limited in its reach. As used here it
is very like "convert." There is no removal from the possession of the
owner, as in the first paragraph. In the Penal Code the word "taking" means
something more than "appropriation." It means a removal from the
possession of the owner a transportation or asportation of the thing from
one place to another from the possession of the owner to the possession
of the theft; while "appropriation" means, rather, the making use of the
converting of the property after the taking is complete, or without any
"taking" at all. Under the Spanish law, while real estate is not, of course,
subject to asportation, to "taking," and, therefore, not the subject of larceny,
it is subject to "appropriation." In the same way while electricity is, under
the Spanish and Roman laws, wholly incapable of seizure and asportation,
of the manual "taking" the trespass essential to larceny, it may possibly, in
one or another sense of the word, be subject to appropriation." If at one
extreme of the scale of things, namely, real estate, the thing is too tangible
to be stolen, is it not logical to expect that at the opposite extreme the thing,
electricity, for example, may be found too intangible to be stolen?
We have seen that, in all the history of Roman and Spanish jurisprudence,
the crime of larceny has been confined to tangible things, to chattels, which
have an independent existence of their own; which have three dimensions;
which occupy space; which are capable of having a trespass committed
against themselves; which can be, of themselves and alone, taken physically
into possession and carried away (asported).
JALALON, JEANINE VANESSA R.
We have that the fact that electricity is not such a thing is admitted by all.
And we have asked the question, "How, then, can the charge of larceny be
sustained?"
But let as assume, for the sake of argument, that electricity is a tangible
thing, like water, for instance. Still the crime committed, if any, is not
lacerny. Let us modify the illustration already given of the surreptitious
removal by A of water stored in a dam by B for milling purposes. Let us
suppose that B has built a reservoir on an elevated portion of his farm for
the storage of water for irrigating purposes. He has built ditches or conduits
from the reservoir to every part of his farm to carry the water to the places
needed. During the dry season while B is engaged in irrigating his lands A
surreptitiously and with intent to gain, constructs a small mill upon one of
the conduits and utilizes the rapid fall and swift flow of the water to operate
his mill. For many months A thus takes advantages of B's conduit and water
and enriches himself by reason thereof. Did A commit the crime larceny?
The water, every drop of it, after being used by A, went to its work of
irrigating the lands of B, pausing only long enough to turn the water wheel
of A's mill. Certainly then, no water was stolen. A simply made use of the
"head," the fall of the water. If anything was stolen it was the "head," the
elevation of the water, the energy developed by its passage from high to low
ground. This is precisely what happens when an electric current passes
through an electric bulb or arc and produces light. Whether the current
operates one light of one hundred, the volume, the amperage, of the current,
that is, the quantity of it, if we may use the term (and it must be
remembered that I am assuming electricity to be a tangible thing and will
speak accordingly) remains exactly the same. The volume or quantity of the
electricity is just the same when it comes out of the hundredth light as it
was when it entered the first. While there is a difference between the current
as it comes from the last light and as it entered the first, it is simply one
of condition, or state. All of the electricity is still there. Like the water; it
has simply lost its "head," its energy. It has been deprived of its pressure, of
its electro-motive force; but it is the same old electricity, in the same old
quantity. So that, when the accused in the case at bar, by means of a
"jumper," burned thirty lights, instead of the three for which he paid the
company, he was not stealing electricity. Exactly as much electricity went
back into the company's wire after serving the twenty-seven lights for
which he did not pay as came out of that wire in the first place. The
defendant took nothing; he used something. In larceny there must be
a taking. Here there is only a use. Electricity is a utility, not a thing. The
company, in the cease at bar, lost no more than did the owner of the
irrigation system in the example heretofore given. As no water was taken,
so no electricity was taken. The same amount of water remained to the
PROPERTY
owner after its use by A. The same amount of electricity remained to the
company after its use by the defendant.
The well-known Italian author, Avv. Umberto Pipia, in his very able work
entitled "L' Electricita nel Diritto" puts the question thus (translation of Mr.
Percy R. Angell, Manila, 1911):
From the point of view of the jurist can electricity be stolen? A person
connects a deflecting wire to the main conduit of electricity; he thus makes
a secondary circuit in which he introduces a resistance and profits by the
electro-motive power which is developed, to supply his lamps or put his
motor in movement. In such case can we apply article 402 of the Penal
Code, which provides that whoever takes possession of movable property
of another in order to derive profit thereby, taking it from the place where
he finds it without the consent of the owner, is punished with reclusion up
to three years?
The author then refers to the decisions of certain course of Europe which
hold that electricity is stealable, and continues:
The Roman court of cassation has lost sight of that fundamental principle of
interpretation of law (a principle which it ought to have had well in mind
before applying to a new manifestations of force legislative provisions
enacted in view of totally different cases) by which penal laws do not
extend beyond the cases and the times in them expressed. Nulla poena sine
lege, is the rule in terms of penal law, unless we wish to bring about a
deplorable confusion of powers, and the judiciary desires to usurp the
authority of the legislator. If in the written laws gaps or breaks are
encountered, it is the duty of the court to point them out to the legislator, to
the end that he take the necessary measures; but it is not lawful for him by
analogous interpretation to apply a penal provision where such has not been
explicitly enacted.
In the unanimous opinion of jurist, two elements are necessary to constitute
the crime of theft, legally speaking; the first is the taking possession of the
personal (movable) property of another, contrectatio, and the taking away
of the thing from the place where it is found without the consent of the
person to whom it belongs, ablatio.
Now we have conclusively shown that electric current is not a thing, but a
state, a vibration following certain converging waves. It can not therefore
be taken possession of as the personal property of another. A person who
unlawfully uses electric current for his personal enjoyment places himself
in a state of unlawful enjoyment of a utility, but he does not take possession
of personal property. It was a grave error, that of the court of cassation, in
holding electric current to be a thing imprisoned in wires, and composed of
49
particles that can be subtracted. In connecting a second circuit one does not
subtract electric current; not a particle of electric energy enters into the
possession of the so-called thief ; the same amount in amperes that was
found and derived on connecting the second circuit, is found at the end of
this circuit. The current has only suffered a diminution of potential; while
continuing to be of the same volume, it becomes less adapted for the use
intended, because having overcome a resistance, it has lost in potential, its
electro-motive power.
. . . It leaves the circuit in the same amount in which it entered. Only its
power for work has diminished. Not a single particle or molecule of
electric current is taken by such abusive use, only the state of undulation.
The movement that first follows the principal, and then the second circuit,
and by these undulations the so-called thief illegally derives benefit. But the
extraordinary provisions of crime are not applicable to all illegal actions.
Another powerful argument in favor of my position is this: That in no case
of usurpation, the using of things protected by law (diritto) that are not
material things , do we speak of theft. To repress abuses the legislator has
been obliged to establish special provisions of law, but has explicitly
recognized those relating to theft to be inapplicable. A trade-mark, trade-
name, modello de fabrica, a scientific or artistic work, undoubtedly
constitute objects of law similar to things; form the contents of various
juridical relations; have more or less economic value; pertain to the
patrimony of the person who has produced them or brought them into
being. If a third person makes use of the trade-mark or trade-name, the
scientific work or artistic production of another, nobody denies that he takes
possession of a utility that does not belong to him; that by the very illegal
act he derives profit, and at the same time diminishes the patrimony of the
person having legitimate rights herein. But with all that, it has never
occurred to anyone to bring an action for theft against the usurper of the
firm name, the counterfeit of the trade-mark or the plagiarist. The legislator,
desiring to protect this new species of property, has provided special
repressive measures; but in their absence, the courts can not apply the actio
furti, because it is not applicable to cases and conditions other than those
provided for.
If this be so, why different conceptions on the score of electricity? Here
likewise, there is no subtraction of personal property, but the illegal use of
an advantage, of the right pertaining to another, which remain however
unchanged. Hence the legal solution should be the same.
The second and not less essential condition of theft is that of the ablatio, the
necessity of taking the thing from the place where it is found. But here we
have nothing of that; the current is deviated from its course, true, but it
JALALON, JEANINE VANESSA R.
returns to the place where it was undiminished. The statement in the
foregoing decision that there are particles transportable from place to place
is exact; the undulation is in itself, it has its own efficiency, but it is neither
taken away nor subtracted. It has been justly said that all that is done is to
erect a bridge over which the undulations of the particles are transported in
the wire attached, but nothing corporeal passes from one wire to another,
since not one of the vibrating particles moves with the current which flows
through the connected wire.
Consequently, in whatever aspect the question is considered the
presumption of theft grows less. In fine, although there be a usurpation of a
utility to the prejudice of another, it should not be held to constitute theft,
because that is the vulgar, not the legal conception. That in civil and
commercial law we may resort to analogous interpretation, and that, in the
absence of special provisions we should apply the rules which govern
similar matters and analogous cases, there is no doubt. The courts can not
refuse to say what the law is (dire ie diritto) nor dismiss the litigants on the
pretext that the law had made no provision for their case; and it is from this
concept that electricity, as a rule, in the various relations where it
constitutes the object, is considered to be a thing, with all the attributes of
such. But the penal law is restrictive; under certain aspects it is exceptional.
Here we have to do with limitations and restrictions on the most sacred
rights of persons, the right to liberty, the right to honor. And these rights can
not be abridged without definite and explicit provisions of the law. Where
these are lacking we can pray, as I do, that they be supplied, but a decision
in such case is an arbitrary act (arbitro), not justice: nulla poena sine lege.
xxx xxx xxx
So on the wrongful use of electric current; profit is derived from its high
potential which is produced by the work and expenditure of money on the
part of the furnishing company; the current is returned exactly as it was
delivered except it has lost a certain amount of electromotive power that
was illegally (antigiuridicamente) employed to overcome the resistance
introduced by the third party.
xxx xxx xxx
. . . Penal law must be strictly construed (e di interpretazione restrittiva). It
punishes the contractatio of a movable thing which is taken from the place
where it is found without the consent of the owner. In the proposition under
discussion, we have not to do with movable things, there is no true
transporting to another place; therefore the figura giuridica of theft is
wanting.
PROPERTY
It can not be doubted that by movable things is meant even liquids and
fluids, because these are material, concrete, and corporeal things, but their
physical external manifestations can not affect the juridical relation . But in
our case there is not a thing, fluid or liquid; there is a state of undulation, of
movement, which one uses illegally, assuming however the obligation to
indemnify for all the damages resulting from his illicit action, but there is
no theft, any more than there would be where a person applied a pulley to
the shaft of an engine in order to put his own machinery in motion, so far as
there would be no appropriation. The current which injuriously traverse the
lamp or electric motor is not appropriated or destroyed by the person who
uses it; it flows out from the lights and continues its course in the
circuit undiminished in intensity; it has only lost part of its power, because,
having encountered a resistance, it has developed certain energy to
overcome it, energy which has produced light, traction, or mechanical
work.
Nor may it be said that electricity would then be deprived of any legal
protection. Do we not have articles 1511 et seq. of the Civil Code that
provide for fraud? Is there not the civil crime and quasi crime? To protect
electric energy is it necessary to imprison one who uses
it antigiuridicamente, while the letter of the law does not consent? In any
case it is known that adducere inconveniens non est solvere argumentum.
As in the laws of our country provision is made for the illegal use of a firm
name, trade-mark and works of genius (l' ingegno); in England, where
provision has been made for the matter we are discussing they have enacted
a law imposing severe penalties upon persons who illegally use electric
energy, and I am of the first to applaud them. But let there be laws, not
merely judicial opinion (arbitria di interpretati).
Nor does it avail to urge that when we have to do with benefits that are
useful to man, which serve his ends, that he can appropriate, these benefits
are considered as things in the eyes of the law. But it is necessary to make a
distinction. From the standpoint of the civil law, they are, because a wide
and analogous construction is permissible and permitted; but from that of
the penal law, they are not, because such construction is expressly
forbidden by article 4 of the preliminary provisions of the Civil Code.
If a trade-mark is not a benefit to man, in what does it serve him? Is not a
literary or artistic production such? Does not the counterfeiter illegally
appropriate such benefits? But if it is required to inflict criminal penalties
upon him, a special law must be enacted; the provisions relative to theft can
be applied in his case.
xxx xxx xxx
50
Nor is it a conclusive argument to say that the manufacturer spends large
sums of money and erects costly machinery to generate the electricity, and
when others steal it from him, such action, according to juridical conscience
and social morals, constitutes theft.
Let us suppose an individual acquires a ticket of admission, and enters a
hall where there is being produced a play of some sort. He, on the strength
of the legal negotiation with the impresario and the acquisition of the ticket
has a right to the most ample enjoyment that his optical and acoustic senses
are able to realize. But he arranges a phonograph and a cinematograph, and
surreptitiously fixes and appropriates part of the acoustic and visual
enjoyment that does not belong to him, takes it outside of the theater and
later avails himself thereof to his benefit by reproducing the harmony of the
sounds and the optical illusion of the scene. Is he liable for theft?
From the standpoint of the doctrine I am combating, he is. The impresario
has sacrificed money or work to produce the spectacle. Our friend has the
right to enjoy it to the limit of the capacity of his organs of vision and
hearing, but beyond that. By means of suitable instruments he has caught up
the sounds, movements, and colors for the purpose of gain, and he commits
a theft because there enter the correctatio and the ablatio.
From the point of view of the law he is not. He would be held to reimburse
the impresario for all damages, but he can not be called a thieft, nor be
punished as such. The sounds and forms of light are states, not things;
therefore they can not form subjects of theft.
And if this is so, the same conclusion must be reached with respect to
electricity.
The supreme court of the German Empire, sitting at Leipsic, October 20,
1896, in a decision holding that electricity was not a subject of larceny,
said:
The court below found that the act did not constitute theft or unlawful
appropriation, because electricity is not to be considered a thing within the
meaning of paragraph 242 of the Penal Code, and because by things the law
means portions of material nature; that corporeal existence is an essential
ingredient of the thing. Even the Penal Code starts from this principle.
Incorporeal things, as for example rights, intellectual products and machine
power are not subjects of theft. The same must be said of electricity.
Experts say that the science is not yet determined. We well know what must
be done to produce electric energy, but we do not comprehend these vital
operations, any more than we understand what is that makes the muscles of
the human arm capable of exerting force. In the conclusions of the Court of
First Instance there is no error of law. That court starts from the principle
JALALON, JEANINE VANESSA R.
that the corporal existence of the thing must be the essential element to
come within the meaning of article 242. This assumption is not based upon
the precepts of the Civil Code, but, rather, upon the idea which is at the
bottom of the Penal Code, namely, the movable and independent thing,
which presupposes the corporeality of the object. If then, under articles 242
and 245, the condition precedent to the commission of larceny is that the
object of theft or unlawful appropriation be a piece or portion of material
substance in either a solid or liquid state, or in form of gas, the Court of
First Instance committed no error in finding there was neither theft nor
illegal appropriation. Whether or not the notation of a thing, in the sense of
the penal laws, requires something corporeal, is a question of law; but the
question whether electricity is a substance, a corporeal thing, or a force, a
movement of a minute particles, is a question of fact that can not be decided
by the rules of law, but by physical research alone. The consideration of the
great importance of electricity in commercial life and the place awaiting it
among the vital conveniences and the fact of its having commercial value,
is not an argument to prove that electricity is a corporeal thing, because the
quality of being a vital convenience and having commercial value does not
constitute a necessary standard of corporelity, since force, operations,
intellectual products are vital conveniences (beni) and have commercial
value. When, in the jurisprudence of the day the need for penal laws for
punishment of unjust appropriation of electric current becomes apparent,
the legislator should provide them. The courts can not be called upon to
supply the lack of legal provisions by analogous applications of rules not
made to fit the circumstance. In penal law the principle nulla poena sine is
supreme.
These authorities fully support my contention that electricity is not stealable
under the provisions of the Spanish Penal Code. They also support the
proposition that even if electricity is a tangible thing, like water, and
therefore stealable, the crime, if any, committed by the defendant in this
case is not larceny, because the company had just as much electricity after
the illegal act as it had before. In other words, it has lost no electricity.
Having lost no electricity it can not charge anyone with stealing it. If a
thousand lights were burned, no more electricity would be consumed than if
one light were burned, just as, no more water is consumed in running a
thousand water wheels placed one below another than in running one. Just
as much water flows over the thousandth wheel as flowed over the first. In
the same manner there is just as much electricity flowing out of the
thousandth light as flowed into the first. Just as in using the water, nothing
is consumed but the head, the quantity of water remaining the same, so, in
using electricity, nothing is consumed but the head (the pressure,
the potential, the electro-motive force), the electricity itself remaining
undiminished. No electricity was taken. It was used and then returned to its
owner.
PROPERTY
For a clear understanding of this problem, and a logical and philosophical,
as well as legal, solution thereof, we must never, for a moment, forget the
fact that the real contract between the company and the defendant was one
to furnish labor and services; a lease, if you please, of an agency, a contract
of precisely the same nature as one by which the company lets to the
defendant the use of one of the company's workmen to turn by hand, in the
defendant's own house, an electrical machine and thereby produce light for
defendant's use. This is the crux of the whole question. While no contract
was proved we know of necessity, from the principles which underlie and
govern electric lighting, that the contract must have been as above stated. If
the defendant should require the laborer thus placed in his house to work
overtime and should not pay the company therefor, thus taking advantage of
the situation, there would be no larceny. To be sure, the defendant would
return the workman to the company fatigued and reduced in strength by
reason of the overtime he had required him to put in, but it would be the
same workman which he had received. It is this which shows the absurdity
of the claim that the defendant in this case is guilty of larceny. The
company never intended to sell the workman to the defendant and the
defendant never expected to buy him. It was the use that was the basis of
the contract. In exactly the same manner the company never intended to sell
electricity to the defendant and the defendant never intended to buy
electricity. The basis of the contract was the use of electricity. Just as the
laborer was returned by defendant to the company fatigued and reduced in
strength by reason of the overtime which the defendant had wrongfully and
illegally required him to put in, so the current of electricity was returned by
the defendant to the company fatigued and reduced in strength by reason of
the lights which the defendant had wrongfully and illegally caused it to
supply; and just as, notwithstanding the reduction in strength, it was the
same identical workman returned that was sent out, so the electric current
returned to the company after the illegal use by defendant was the same
identical current which the company had furnished him. Where then, is the
foundation for the charge of larceny?
Let us now see what are the results of the holding of the court that
electricity is subject to larceny.
The Spanish Law of the Philippine Islands has not been changed by any
legislative enactment. A cosa mueble is the same now as it was in the days
of the Partidas. No legislature has changed the law of larceny as it came
from the jurisprudence of Rome and Spain. Nor has any legislature touched
the law of the personal chattel to give it a new definition or one which
changes its ancient signification. Its present definition is the same as that
given by Sanchez Roman, Pacheco, Scaevola, Manresa, and Groizard as
drawn form the decrees of kings and acts of legislatures. That definition
having been framed by the lawmaking power of Spain, from
51
the Partidas down to the Penal Code, it ought not to be changed by any
agency short of the lawmaking power of the United States. The substance
and nature of crime ought not to be changed by courts in a country where
crimes are purely statutory. It has the appearance of a usurpation of the
functions of the lawmaking body, an unwarrantable assumption of the
legislative attributes.
The holding of the court in this case is, in effect, an amendment to the Penal
Code. It has changed materially the definition of a cosa mueble and,
therefore, of the crime of larceny, as made by the lawmaking bodies of
Spain and the United States. I do not assert that the courts have not the right
to determine whether a given set of facts do or do not fulfill the definition
of a given crime. What I do say is that the very greatest care should be
exercised in cases which may involved as a consequence of their decision
the changing of the scope of the substantive law of crime. The fact,
admitted by all, that whether the phenomenon which we call electricity
really is a "cosa mueble," under the accepted definition of that word, is
open to doubt, should give us pause. Before holding that electricity is
a cosa mueble, the fact whether it is or not ought to be substantially free
from doubt, This is particularly true in a country where crimes are purely
statutory, and in which, therefore, the legislature is presumed to have had in
mind in framing its definition of "cosas muebles" only such chattels, or
those of the same nature, as were known to the legislature at the time it
acted. At the time the Penal Code became operative substantially nothing
was known by those who created if of the phenomenon, electricity. It is
more than clear that at the time of the enactment of the laws relating to
larceny, of which article 517 of the Penal Code is a reproduction, nothing
whatever was known of that phenomenon. We have, therefore, no means of
knowing what would have been the legislative action in relation thereto.
The legislative authorities of those times might have treated it as
substantially every other legislative body has treated it that has touched the
question; namely, as a thing separate and distinct from chattels, and
unlawful acts affecting it and its use as crimes distinct from the crimes
against tangible property, such as robbery and larceny. In this jurisdiction
the legislature is the only authority for the definition of the crime. Where a
new situation arises by virtue of discoveries which reveal agencies never
known before, and whose real nature is unknown even to the discoverers
the legislature is the body to take the initiative in determining the position
of such agencies among the affairs of men, unless they clearly fall within a
class already established and defined; and it appears that some legislative
bodies have done that very thing and have passed special laws touching the
place which should be given electricity in the civil and criminal law. This
was done here by the passage of the ordinance of the city of Manila. The
fact that legislatures in many jurisdictions have enacted special laws
relative to electricity is the very clearest proof that there was the gravest
JALALON, JEANINE VANESSA R.
doubt among learned men of the applicability of existing laws to acts
committed against the rights of producers of electricity. The legislature of
the Islands having acted through the council of the city of Manila and by
such action made illegal acts against the producers of electricity a special
crime wholly distinct from larceny, such act should be conclusive on this
court as to the legislative intent.
Section 649 of the Revised Ordinance of the city of Manila provides in part:
No person shall, for any purpose whatsoever, use or enjoy the benefits of
any device by means of which he may fraudulently obtain any current of
electricity or any telephone or telegraph service; and the existence in any
building or premises of any such device shall, in the absence of satisfactory
explanation, be deemed sufficient evidence of such use by the person
benefiting thereby.
This section was enacted under the authority of the Legislature of the
Philippine Islands, as was section 930 of said ordinances, by the terms of
which one was violates the provisions of section 649 "shall be punished by
a fine of not more than two hundred pesos or by imprisonment for not more
than six months, or both such fine and imprisonment, in the discretion of
the court, for each offense."
Articles 517 and 518 of the Penal Code read in part as follows:
ART. 517. The following are guilty of theft:
1. Those who, with intent of gain and without violence or intimidation
against the person or force against the things, shall take another's personal
property (cosa mueble) without the owner's consent.
xxx xxx xxx
ART. 518. Those guilty of theft shall be punished:
1. With the penalty of presidio correccional in its medium and maximum
degrees if the value of the stolen property should exceed 6,250 pesetas.
2. With the penalty of presidio correccional in its minimum and medium
degrees should it not exceed 6,250,pesetas and be more than 1,250 pesetas.
3. With arresto mayor in its medium degree to presidio correccional in its
minimum degree should it not exceed 1,250 pesetas and be more than
250 pesetas.
PROPERTY
4. With arresto mayor to its fullest extent should it be more than 25 but not
exceed 250 pesetas.
5. With arresto mayor in its minimum and medium degrees if it should not
exceed 25 pesetas; if exceeding 25 and not more than 65 pesetas, a theft of
nutritious grains, fruits, or wood shall be punished with a fine of room 325
to 500 pesetas.
Under subdivision 2 of the article last quoted, which is the paragraph under
which the accused is punished in the case at bar, the penalty prescribed is
from six months and one day to four years and two months. The accused in
this case was actually sentenced to one year eight months and twenty-one
days of presidio correccional, to indemnify the company in the sum of
P865.26, to the corresponding subsidiary imprisonment in case of failure to
pay said sum, and to the accessory penalties provided by law.
Having before us these two laws, we may now see to what untoward and
unfortunate results the majority opinion leads us in holding that a person
who commits a crime against an electric current can be punished under
either, or both, of two different statutes. As we have seen already there is,
relatively speaking, an enormous difference in the penalties prescribed by
said law. That imposed by the ordinance of the city of Manila can not in any
event exceed six months' imprisonment and a fine of P200; while that
provided in the Penal Code may be as severe as four years and two months
imprisonment, with indemnity equal to the value of the property stolen,
with corresponding subsidiary imprisonment in case of nonpayment. To this
must be added all those accessory penalties prescribed by the code, such as
suspension from any public office, profession or trade, and from the right
the suffrage. To me it is wholly unbelievable that, under the circumstances
of this case and the nature of the offense itself, it was the intention of the
legislative authority to permit the concurrent existence of two laws, both in
force, punishing the same crime with penalties which bear no relation to
each other and which are widely different in severity. Note what results
from such a holding. Prosecution under the ordinance must be in the
municipal court. Prosecution under the Penal Code may be in the municipal
court or it may be and generally must be, as in this case, in the Court of
First Instance. But it is certain that, under the ordinance, every case may be
prosecuted in the municipal court, whatever the value of the electricity
taken; or, if the value is sufficient, the prosecution may be brought in the
Court of First Instance. The selection of the court is left to the complaint.
This means that the complaint is able to say within certain limits what
punishment shall be inflicted; for, if he desires that the accused shall be
lightly punished he will bring the action in the municipal court, which he
always can do if he wish, and if he desires to punish him very severely he
will bring it in the Court of First Instance, which he can generally do if he
52
cares to. It is incoceivable that the legislature intended that such a condition
should exist. It is in violation of every sense of fairness, is against every
rule of statutory construction, and is clearly inimical to public policy. To
assert that the complaining in which he shall prosecute the accused but also,
in effect, the crime of which he shall be charged, as the decision in this case
holds in effect, is to assert a proposition, the bare statement of which is its
own completest refutation.
For these reasons the judgment of conviction should be reversed.
G.R. No. L-26278 August 4, 1927
LEON SIBAL , plaintiff-appellant,
vs.
EMILIANO J. VALDEZ ET AL., defendants.
EMILIANO J. VALDEZ, appellee.
J. E. Blanco for appellant.
Felix B. Bautista and Santos and Benitez for appellee.
JOHNSON, J.:
The action was commenced in the Court of First Instance of the Province of
Tarlac on the 14th day of December 1924. The facts are about as conflicting
as it is possible for facts to be, in the trial causes.
As a first cause of action the plaintiff alleged that the defendant Vitaliano
Mamawal, deputy sheriff of the Province of Tarlac, by virtue of a writ of
execution issued by the Court of First Instance of Pampanga, attached and
sold to the defendant Emiliano J. Valdez the sugar cane planted by the
plaintiff and his tenants on seven parcels of land described in the complaint
in the third paragraph of the first cause of action; that within one year from
the date of the attachment and sale the plaintiff offered to redeem said sugar
cane and tendered to the defendant Valdez the amount sufficient to cover
the price paid by the latter, the interest thereon and any assessments or taxes
which he may have paid thereon after the purchase, and the interest
corresponding thereto and that Valdez refused to accept the money and to
return the sugar cane to the plaintiff.
As a second cause of action, the plaintiff alleged that the defendant
Emiliano J. Valdez was attempting to harvest the palay planted in four of
the seven parcels mentioned in the first cause of action; that he had
harvested and taken possession of the palay in one of said seven parcels and
JALALON, JEANINE VANESSA R.
in another parcel described in the second cause of action, amounting to 300
cavans; and that all of said palay belonged to the plaintiff.
Plaintiff prayed that a writ of preliminary injunction be issued against the
defendant Emiliano J. Valdez his attorneys and agents, restraining them (1)
from distributing him in the possession of the parcels of land described in
the complaint; (2) from taking possession of, or harvesting the sugar cane in
question; and (3) from taking possession, or harvesting the palay in said
parcels of land. Plaintiff also prayed that a judgment be rendered in his
favor and against the defendants ordering them to consent to the redemption
of the sugar cane in question, and that the defendant Valdez be condemned
to pay to the plaintiff the sum of P1,056 the value of palay harvested by him
in the two parcels above-mentioned ,with interest and costs.
On December 27, 1924, the court, after hearing both parties and upon
approval of the bond for P6,000 filed by the plaintiff, issued the writ of
preliminary injunction prayed for in the complaint.
The defendant Emiliano J. Valdez, in his amended answer, denied generally
and specifically each and every allegation of the complaint and step up the
following defenses:
(a) That the sugar cane in question had the nature of personal property and
was not, therefore, subject to redemption;
(b) That he was the owner of parcels 1, 2 and 7 described in the first cause
of action of the complaint;
(c) That he was the owner of the palay in parcels 1, 2 and 7; and
(d) That he never attempted to harvest the palay in parcels 4 and 5.
The defendant Emiliano J. Valdez by way of counterclaim, alleged that by
reason of the preliminary injunction he was unable to gather the sugar cane,
sugar-cane shoots (puntas de cana dulce) palay in said parcels of land,
representing a loss to him of P8,375.20 and that, in addition thereto, he
suffered damages amounting to P3,458.56. He prayed, for a judgment (1)
absolving him from all liability under the complaint; (2) declaring him to be
the absolute owner of the sugar cane in question and of the palay in parcels
1, 2 and 7; and (3) ordering the plaintiff to pay to him the sum of
P11,833.76, representing the value of the sugar cane and palay in question,
including damages.
Upon the issues thus presented by the pleadings the cause was brought on
for trial. After hearing the evidence, and on April 28, 1926, the Honorable
PROPERTY
Cayetano Lukban, judge, rendered a judgment against the plaintiff and in (2) That on July 30, 1923, Macondray & Co., Inc., bought said eight parcels
favor of the defendants of land, at the auction held by the sheriff of the Province of Tarlac, for the
sum to P4,273.93, having paid for the said parcels separately as follows
(1) Holding that the sugar cane in question was personal property and, as (Exhibit C, and 2-A):
such, was not subject to redemption;
(2) Absolving the defendants from all liability under the complaint; and
Parcel
(3) Condemning the plaintiff and his sureties Cenon de la Cruz, Juan
Sangalang and Marcos Sibal to jointly and severally pay to the defendant
Emiliano J. Valdez the sum of P9,439.08 as follows: 1 ..............................................................
P1.00
.......
(a) P6,757.40, the value of the sugar cane;
2 ..............................................................
(b) 1,435.68, the value of the sugar-cane shoots; 2,000.00
.......
(c) 646.00, the value of palay harvested by plaintiff;
3 ..............................................................
(d) 600.00, the value of 150 cavans of palay which the defendant was not 120.93
.......
able to raise by reason of the injunction, at P4 cavan. 9,439.08 From that
judgment the plaintiff appealed and in his assignments of error contends
4 ..............................................................
that the lower court erred: (1) In holding that the sugar cane in question was 1,000.00
.......
personal property and, therefore, not subject to redemption;
(2) In holding that parcels 1 and 2 of the complaint belonged to Valdez, as 5 ..............................................................
1.00
well as parcels 7 and 8, and that the palay therein was planted by Valdez; .......
(3) In holding that Valdez, by reason of the preliminary injunction failed to
6 ..............................................................
realized P6,757.40 from the sugar cane and P1,435.68 from sugar-cane 1.00
.......
shoots (puntas de cana dulce);
(4) In holding that, for failure of plaintiff to gather the sugar cane on time, 7 with the house
150.00
the defendant was unable to raise palay on the land, which would have thereon ..........................
netted him the sum of P600; and.
(5) In condemning the plaintiff and his sureties to pay to the defendant the
sum of P9,439.08. 8 ..............................................................
1,000.00
.......
=========
It appears from the record:
=
(1) That on May 11, 1923, the deputy sheriff of the Province of Tarlac, by
virtue of writ of execution in civil case No. 20203 of the Court of First 4,273.93
Instance of Manila (Macondray & Co., Inc. vs. Leon Sibal),levied an
attachment on eight parcels of land belonging to said Leon Sibal, situated in (3) That within one year from the sale of said parcel of land, and on the
the Province of Tarlac, designated in the second of attachment as parcels 1, 24th day of September, 1923, the judgment debtor, Leon Sibal, paid P2,000
2, 3, 4, 5, 6, 7 and 8 (Exhibit B, Exhibit 2-A). to Macondray & Co., Inc., for the account of the redemption price of said
parcels of land, without specifying the particular parcels to which said
53
JALALON, JEANINE VANESSA R.
amount was to applied. The redemption price said eight parcels was
reduced, by virtue of said transaction, to P2,579.97 including interest
(Exhibit C and 2).
The record further shows:
(1) That on April 29, 1924, the defendant Vitaliano Mamawal, deputy
sheriff of the Province of Tarlac, by virtue of a writ of execution in civil
case No. 1301 of the Province of Pampanga (Emiliano J. Valdez vs. Leon
Sibal 1. the same parties in the present case), attached the personal
property of said Leon Sibal located in Tarlac, among which was included
the sugar cane now in question in the seven parcels of land described in the
complaint (Exhibit A).
(2) That on May 9 and 10, 1924, said deputy sheriff sold at public auction
said personal properties of Leon Sibal, including the sugar cane in question
to Emilio J. Valdez, who paid therefor the sum of P1,550, of which P600
was for the sugar cane (Exhibit A).
(3) That on April 29,1924, said deputy sheriff, by virtue of said writ of
execution, also attached the real property of said Leon Sibal in Tarlac,
including all of his rights, interest and participation therein, which real
property consisted of eleven parcels of land and a house and camarin
situated in one of said parcels (Exhibit A).
(4) That on June 25, 1924, eight of said eleven parcels, including the house
and the camarin, were bought by Emilio J. Valdez at the auction held by the
sheriff for the sum of P12,200. Said eight parcels were designated in the
certificate of sale as parcels 1, 3, 4, 5, 6, 7, 10 and 11. The house and
camarin were situated on parcel 7 (Exhibit A).
(5) That the remaining three parcels, indicated in the certificate of the
sheriff as parcels 2, 12, and 13, were released from the attachment by virtue
of claims presented by Agustin Cuyugan and Domiciano Tizon (Exhibit A).
(6) That on the same date, June 25, 1924, Macondray & Co. sold and
conveyed to Emilio J. Valdez for P2,579.97 all of its rights and interest in
the eight parcels of land acquired by it at public auction held by the deputy
sheriff of Tarlac in connection with civil case No. 20203 of the Court of
First Instance of Manila, as stated above. Said amount represented the
unpaid balance of the redemption price of said eight parcels, after payment
by Leon Sibal of P2,000 on September 24, 1923, fro the account of the
redemption price, as stated above. (Exhibit C and 2).
The foregoing statement of facts shows:
PROPERTY
(1) The Emilio J. Valdez bought the sugar cane in question, located in the
seven parcels of land described in the first cause of action of the complaint
at public auction on May 9 and 10, 1924, for P600.
(2) That on July 30, 1923, Macondray & Co. became the owner of eight
parcels of land situated in the Province of Tarlac belonging to Leon Sibal
and that on September 24, 1923, Leon Sibal paid to Macondray & Co.
P2,000 for the account of the redemption price of said parcels.
(3) That on June 25, 1924, Emilio J. Valdez acquired from Macondray &
Co. all of its rights and interest in the said eight parcels of land.
(4) That on June 25, 1924, Emilio J. Valdez also acquired all of the rights
and interest which Leon Sibal had or might have had on said eight parcels
by virtue of the P2,000 paid by the latter to Macondray.
(5) That Emilio J. Valdez became the absolute owner of said eight parcels
of land.
The first question raised by the appeal is, whether the sugar cane in
question is personal or real property. It is contended that sugar cane comes
under the classification of real property as "ungathered products" in
paragraph 2 of article 334 of the Civil Code. Said paragraph 2 of article 334
enumerates as real property the following: Trees, plants, and ungathered
products, while they are annexed to the land or form an integral part of any
immovable property." That article, however, has received in recent years an
interpretation by the Tribunal Supremo de Espaa, which holds that, under
certain conditions, growing crops may be considered as personal property.
(Decision of March 18, 1904, vol. 97, Civil Jurisprudence of Spain.)
Manresa, the eminent commentator of the Spanish Civil Code, in discussing
section 334 of the Civil Code, in view of the recent decisions of the
supreme Court of Spain, admits that growing crops are sometimes
considered and treated as personal property. He says:
No creemos, sin embargo, que esto excluya la excepcionque muchos
autores hacen tocante a la venta de toda cosecha o de parte de ella cuando
aun no esta cogida (cosa frecuente con la uvay y la naranja), y a la de lenas,
considerando ambas como muebles. El Tribunal Supremo, en sentencia de
18 de marzo de 1904, al entender sobre un contrato de arrendamiento de un
predio rustico, resuelve que su terminacion por desahucio no extingue los
derechos del arrendario, para recolectar o percibir los frutos
correspondientes al ao agricola, dentro del que nacieron aquellos derechos,
cuando el arrendor ha percibido a su vez el importe de la renta integra
correspondiente, aun cuando lo haya sido por precepto legal durante el
curso del juicio, fundandose para ello, no solo en que de otra suerte se daria
54
al desahucio un alcance que no tiene, sino en que, y esto es lo interesante a
nuestro proposito, la consideracion de inmuebles que el articulo 334 del
Codigo Civil atribuge a los frutos pendientes, no les priva del caracter de
productos pertenecientes, como tales, a quienes a ellos tenga derecho,
Ilegado el momento de su recoleccion.
xxx xxx xxx
Mas actualmente y por virtud de la nueva edicion de la Ley Hipotecaria,
publicada en 16 de diciembre de 1909, con las reformas introducidas por la
de 21 de abril anterior, la hipoteca, salvo pacto expreso que disponga lo
contrario, y cualquiera que sea la naturaleza y forma de la obligacion que
garantice, no comprende los frutos cualquiera que sea la situacion en que se
encuentre. (3 Manresa, 5. edicion, pags. 22, 23.)
From the foregoing it appears (1) that, under Spanish authorities, pending
fruits and ungathered products may be sold and transferred as personal
property; (2) that the Supreme Court of Spain, in a case of ejectment of a
lessee of an agricultural land, held that the lessee was entitled to gather the
products corresponding to the agricultural year, because said fruits did not
go with the land but belonged separately to the lessee; and (3) that under the
Spanish Mortgage Law of 1909, as amended, the mortgage of a piece of
land does not include the fruits and products existing thereon, unless the
contract expressly provides otherwise.
An examination of the decisions of the Supreme Court of Louisiana may
give us some light on the question which we are discussing. Article 465 of
the Civil Code of Louisiana, which corresponds to paragraph 2 of article
334 of our Civil Code, provides: "Standing crops and the fruits of trees not
gathered, and trees before they are cut down, are likewise immovable, and
are considered as part of the land to which they are attached."
The Supreme Court of Louisiana having occasion to interpret that
provision, held that in some cases "standing crops" may be considered and
dealt with as personal property. In the case of Lumber Co. vs. Sheriff and
Tax Collector (106 La., 418) the Supreme Court said: "True, by article 465
of the Civil Code it is provided that 'standing crops and the fruits of trees
not gathered and trees before they are cut down . . . are considered as part of
the land to which they are attached, but the immovability provided for is
only one in abstracto and without reference to rights on or to the crop
acquired by others than the owners of the property to which the crop is
attached. . . . The existence of a right on the growing crop is a mobilization
by anticipation, a gathering as it were in advance, rendering the crop
movable quoad the right acquired therein. Our jurisprudence recognizes the
possible mobilization of the growing crop." (Citizens' Bank vs. Wiltz, 31
JALALON, JEANINE VANESSA R.
La. Ann., 244; Porche vs. Bodin, 28 La., Ann., 761; Sandel vs. Douglass, 27
La. Ann., 629; Lewis vs. Klotz, 39 La. Ann., 267.)
"It is true," as the Supreme Court of Louisiana said in the case of Porche vs.
Bodin (28 La. An., 761) that "article 465 of the Revised Code says that
standing crops are considered as immovable and as part of the land to
which they are attached, and article 466 declares that the fruits of an
immovable gathered or produced while it is under seizure are considered as
making part thereof, and incurred to the benefit of the person making the
seizure. But the evident meaning of these articles, is where the crops belong
to the owner of the plantation they form part of the immovable, and where
it is seized, the fruits gathered or produced inure to the benefit of the
seizing creditor.
A crop raised on leased premises in no sense forms part of the immovable.
It belongs to the lessee, and may be sold by him, whether it be gathered or
not, and it may be sold by his judgment creditors. If it necessarily forms
part of the leased premises the result would be that it could not be sold
under execution separate and apart from the land. If a lessee obtain supplies
to make his crop, the factor's lien would not attach to the crop as a separate
thing belonging to his debtor, but the land belonging to the lessor would be
affected with the recorded privilege. The law cannot be construed so as to
result in such absurd consequences.
In the case of Citizen's Bank vs. Wiltz (31 La. Ann., 244)the court said:
If the crop quoad the pledge thereof under the act of 1874 was an
immovable, it would be destructive of the very objects of the act, it would
render the pledge of the crop objects of the act, it would render the pledge
of the crop impossible, for if the crop was an inseparable part of the realty
possession of the latter would be necessary to that of the former; but such is
not the case. True, by article 465 C. C. it is provided that "standing crops
and the fruits of trees not gathered and trees before they are cut down are
likewise immovable and are considered as part of the land to which they are
attached;" but the immovability provided for is only one in abstracto and
without reference to rights on or to the crop acquired by other than the
owners of the property to which the crop was attached. The immovability of
a growing crop is in the order of things temporary, for the crop passes from
the state of a growing to that of a gathered one, from an immovable to a
movable. The existence of a right on the growing crop is a mobilization by
anticipation, a gathering as it were in advance, rendering the crop
movable quoad the right acquired thereon. The provision of our Code is
identical with the Napoleon Code 520, and we may therefore obtain light by
an examination of the jurisprudence of France.
PROPERTY
The rule above announced, not only by the Tribunal Supremo de
Espaa but by the Supreme Court of Louisiana, is followed in practically
every state of the Union.
From an examination of the reports and codes of the State of California and
other states we find that the settle doctrine followed in said states in
connection with the attachment of property and execution of judgment is,
that growing crops raised by yearly labor and cultivation are considered
personal property. (6 Corpuz Juris, p. 197; 17 Corpus Juris, p. 379; 23
Corpus Juris, p. 329: Raventas vs. Green, 57 Cal., 254; Norris vs. Watson,
55 Am. Dec., 161; Whipple vs. Foot, 3 Am. Dec., 442; 1 Benjamin on
Sales, sec. 126; McKenzie vs. Lampley, 31 Ala., 526; Crine vs. Tifts and
Co., 65 Ga., 644; Gillitt vs. Truax, 27 Minn., 528; Preston vs. Ryan, 45
Mich., 174; Freeman on Execution, vol. 1, p. 438; Drake on Attachment,
sec. 249; Mechem on Sales, sec. 200 and 763.)
Mr. Mechem says that a valid sale may be made of a thing, which though
not yet actually in existence, is reasonably certain to come into existence as
the natural increment or usual incident of something already in existence,
and then belonging to the vendor, and then title will vest in the buyer the
moment the thing comes into existence. (Emerson vs. European Railway
Co., 67 Me., 387; Cutting vs. Packers Exchange, 21 Am. St. Rep., 63.)
Things of this nature are said to have a potential existence. A man may sell
property of which he is potentially and not actually possessed. He may
make a valid sale of the wine that a vineyard is expected to produce; or the
gain a field may grow in a given time; or the milk a cow may yield during
the coming year; or the wool that shall thereafter grow upon sheep; or what
may be taken at the next cast of a fisherman's net; or fruits to grow; or
young animals not yet in existence; or the good will of a trade and the like.
The thing sold, however, must be specific and identified. They must be also
owned at the time by the vendor. (Hull vs. Hull, 48 Conn., 250 [40 Am.
Rep., 165].)
It is contended on the part of the appellee that paragraph 2 of article 334 of
the Civil Code has been modified by section 450 of the Code of Civil
Procedure as well as by Act No. 1508, the Chattel Mortgage Law. Said
section 450 enumerates the property of a judgment debtor which may be
subjected to execution. The pertinent portion of said section reads as
follows: "All goods, chattels, moneys, and other property, both real and
personal, * * * shall be liable to execution. Said section 450 and most of the
other sections of the Code of Civil Procedure relating to the execution of
judgment were taken from the Code of Civil Procedure of California. The
Supreme Court of California, under section 688 of the Code of Civil
Procedure of that state (Pomeroy, p. 424) has held, without variation, that
growing crops were personal property and subject to execution.
55
Act No. 1508, the Chattel Mortgage Law, fully recognized that growing
crops are personal property. Section 2 of said Act provides: "All personal
property shall be subject to mortgage, agreeably to the provisions of this
Act, and a mortgage executed in pursuance thereof shall be termed a chattel
mortgage." Section 7 in part provides: "If growing crops be mortgaged the
mortgage may contain an agreement stipulating that the mortgagor binds
himself properly to tend, care for and protect the crop while growing.
It is clear from the foregoing provisions that Act No. 1508 was enacted on
the assumption that "growing crops" are personal property. This
consideration tends to support the conclusion hereinbefore stated, that
paragraph 2 of article 334 of the Civil Code has been modified by section
450 of Act No. 190 and by Act No. 1508 in the sense that "ungathered
products" as mentioned in said article of the Civil Code have the nature of
personal property. In other words, the phrase "personal property" should be
understood to include "ungathered products."
At common law, and generally in the United States, all annual crops which
are raised by yearly manurance and labor, and essentially owe their annual
existence to cultivation by man, . may be levied on as personal property."
(23 C. J., p. 329.) On this question Freeman, in his treatise on the Law of
Executions, says: "Crops, whether growing or standing in the field ready to
be harvested, are, when produced by annual cultivation, no part of the
realty. They are, therefore, liable to voluntary transfer as chattels. It is
equally well settled that they may be seized and sold under execution.
(Freeman on Executions, vol. p. 438.)
We may, therefore, conclude that paragraph 2 of article 334 of the Civil
Code has been modified by section 450 of the Code of Civil Procedure and
by Act No. 1508, in the sense that, for the purpose of attachment and
execution, and for the purposes of the Chattel Mortgage Law, "ungathered
products" have the nature of personal property. The lower court, therefore,
committed no error in holding that the sugar cane in question was personal
property and, as such, was not subject to redemption.
All the other assignments of error made by the appellant, as above stated,
relate to questions of fact only. Before entering upon a discussion of said
assignments of error, we deem it opportune to take special notice of the
failure of the plaintiff to appear at the trial during the presentation of
evidence by the defendant. His absence from the trial and his failure to
cross-examine the defendant have lent considerable weight to the evidence
then presented for the defense.
Coming not to the ownership of parcels 1 and 2 described in the first cause
of action of the complaint, the plaintiff made a futile attempt to show that
JALALON, JEANINE VANESSA R.
said two parcels belonged to Agustin Cuyugan and were the identical parcel
2 which was excluded from the attachment and sale of real property of
Sibal to Valdez on June 25, 1924, as stated above. A comparison of the
description of parcel 2 in the certificate of sale by the sheriff (Exhibit A)
and the description of parcels 1 and 2 of the complaint will readily show
that they are not the same.
The description of the parcels in the complaint is as follows:
1. La caa dulce sembrada por los inquilinos del ejecutado Leon Sibal 1.
en una parcela de terreno de la pertenencia del citado ejecutado, situada en
Libutad, Culubasa, Bamban, Tarlac, de unas dos hectareas poco mas o
menos de superficie.
2. La caa dulce sembrada por el inquilino del ejecutado Leon Sibal 1.,
Ilamado Alejandro Policarpio, en una parcela de terreno de la pertenencia
del ejecutado, situada en Dalayap, Culubasa, Bamban, Tarlac de unas dos
hectareas de superficie poco mas o menos." The description of parcel 2
given in the certificate of sale (Exhibit A) is as follows:
2a. Terreno palayero situado en Culubasa, Bamban, Tarlac, de 177,090
metros cuadrados de superficie, linda al N. con Canuto Sibal, Esteban
Lazatin and Alejandro Dayrit; al E. con Francisco Dizon, Felipe Mau and
others; al S. con Alejandro Dayrit, Isidro Santos and Melecio Mau; y al O.
con Alejandro Dayrit and Paulino Vergara. Tax No. 2854, vador amillarado
P4,200 pesos.
On the other hand the evidence for the defendant purported to show that
parcels 1 and 2 of the complaint were included among the parcels bought
by Valdez from Macondray on June 25, 1924, and corresponded to parcel 4
in the deed of sale (Exhibit B and 2), and were also included among the
parcels bought by Valdez at the auction of the real property of Leon Sibal
on June 25, 1924, and corresponded to parcel 3 in the certificate of sale
made by the sheriff (Exhibit A). The description of parcel 4 (Exhibit 2) and
parcel 3 (Exhibit A) is as follows:
Parcels No. 4. Terreno palayero, ubicado en el barrio de
Culubasa,Bamban, Tarlac, I. F. de 145,000 metros cuadrados de superficie,
lindante al Norte con Road of the barrio of Culubasa that goes to
Concepcion; al Este con Juan Dizon; al Sur con Lucio Mao y Canuto Sibal
y al Oeste con Esteban Lazatin, su valor amillarado asciende a la suma de
P2,990. Tax No. 2856.
As will be noticed, there is hardly any relation between parcels 1 and 2 of
the complaint and parcel 4 (Exhibit 2 and B) and parcel 3 (Exhibit A). But,
inasmuch as the plaintiff did not care to appear at the trial when the
PROPERTY
defendant offered his evidence, we are inclined to give more weight to the
evidence adduced by him that to the evidence adduced by the plaintiff, with
respect to the ownership of parcels 1 and 2 of the compliant. We, therefore,
conclude that parcels 1 and 2 of the complaint belong to the defendant,
having acquired the same from Macondray & Co. on June 25, 1924, and
from the plaintiff Leon Sibal on the same date.
It appears, however, that the plaintiff planted the palay in said parcels and
harvested therefrom 190 cavans. There being no evidence of bad faith on
his part, he is therefore entitled to one-half of the crop, or 95 cavans. He
should therefore be condemned to pay to the defendant for 95 cavans only,
at P3.40 a cavan, or the sum of P323, and not for the total of 190 cavans as
held by the lower court.
As to the ownership of parcel 7 of the complaint, the evidence shows that
said parcel corresponds to parcel 1 of the deed of sale of Macondray & Co,
to Valdez (Exhibit B and 2), and to parcel 4 in the certificate of sale to
Valdez of real property belonging to Sibal, executed by the sheriff as above
stated (Exhibit A). Valdez is therefore the absolute owner of said parcel,
having acquired the interest of both Macondray and Sibal in said parcel.
With reference to the parcel of land in Pacalcal, Tarlac, described in
paragraph 3 of the second cause of action, it appears from the testimony of
the plaintiff himself that said parcel corresponds to parcel 8 of the deed of
sale of Macondray to Valdez (Exhibit B and 2) and to parcel 10 in the deed
of sale executed by the sheriff in favor of Valdez (Exhibit A). Valdez is
therefore the absolute owner of said parcel, having acquired the interest of
both Macondray and Sibal therein.
In this connection the following facts are worthy of mention:
Execution in favor of Macondray & Co., May 11, 1923. Eight parcels of
land were attached under said execution. Said parcels of land were sold to
Macondray & Co. on the 30th day of July, 1923. Rice paid P4,273.93. On
September 24, 1923, Leon Sibal paid to Macondray & Co. P2,000 on the
redemption of said parcels of land. (See Exhibits B and C ).
Attachment, April 29, 1924, in favor of Valdez. Personal property of Sibal
was attached, including the sugar cane in question. (Exhibit A) The said
personal property so attached, sold at public auction May 9 and 10, 1924.
April 29, 1924, the real property was attached under the execution in favor
of Valdez (Exhibit A). June 25, 1924, said real property was sold and
purchased by Valdez (Exhibit A).
June 25, 1924, Macondray & Co. sold all of the land which they had
purchased at public auction on the 30th day of July, 1923, to Valdez.
56
As to the loss of the defendant in sugar cane by reason of the injunction, the
evidence shows that the sugar cane in question covered an area of 22
hectares and 60 ares (Exhibits 8, 8-b and 8-c); that said area would have
yielded an average crop of 1039 picos and 60 cates; that one-half of the
quantity, or 519 picos and 80 cates would have corresponded to the
defendant, as owner; that during the season the sugar was selling at P13 a
pico (Exhibit 5 and 5-A). Therefore, the defendant, as owner, would have
netted P 6,757.40 from the sugar cane in question. The evidence also shows
that the defendant could have taken from the sugar cane 1,017,000 sugar-
cane shoots (puntas de cana) and not 1,170,000 as computed by the lower
court. During the season the shoots were selling at P1.20 a thousand
(Exhibits 6 and 7). The defendant therefore would have netted P1,220.40
from sugar-cane shoots and not P1,435.68 as allowed by the lower court.
As to the palay harvested by the plaintiff in parcels 1 and 2 of the
complaint, amounting to 190 cavans, one-half of said quantity should
belong to the plaintiff, as stated above, and the other half to the defendant.
The court erred in awarding the whole crop to the defendant. The plaintiff
should therefore pay the defendant for 95 cavans only, at P3.40 a cavan, or
P323 instead of P646 as allowed by the lower court.
The evidence also shows that the defendant was prevented by the acts of the
plaintiff from cultivating about 10 hectares of the land involved in the
litigation. He expected to have raised about 600 cavans of palay, 300 cavans
of which would have corresponded to him as owner. The lower court has
wisely reduced his share to 150 cavans only. At P4 a cavan, the palay would
have netted him P600.
In view of the foregoing, the judgment appealed from is
hereby modified. The plaintiff and his sureties Cenon de la
Cruz, Juan Sangalang and Marcos Sibal are hereby ordered to
pay to the defendant jointly and severally the sum of
P8,900.80, instead of P9,439.08 allowed by the lower court,
as follows:
P6,757.40 for the sugar cane;
1,220.40 for the sugar cane shoots;
for the palay harvested by plaintiff in parcels 1
323.00
and 2;
JALALON, JEANINE VANESSA R. PROPERTY
for the palay which defendant could have This is a petition for certiorari under Rule 65 of the Rules of Court seeking
600.00 the annulment of the decision of the Regional Trial Court of Makati, Branch
raised.
62, which granted the writ of preliminary injunction applied for by
respondents Municipality of Paraaque and Palanyag Kilusang Bayan for
Service (Palanyag for brevity) against petitioner herein.
8,900.80 The antecedent facts are as follows:
============
On June 13, 1990, the respondent municipality passed Ordinance No. 86,
In all other respects, the judgment appealed from is hereby affirmed, with Series of 1990 which authorized the closure of J. Gabriel, G.G. Cruz,
costs. So ordered. Bayanihan, Lt. Garcia Extension and Opena Streets located at Baclaran,
Paraaque, Metro Manila and the establishment of a flea market thereon.
The said ordinance was approved by the municipal council pursuant to
MMC Ordinance No. 2, Series of 1979, authorizing and regulating the use
of certain city and/or municipal streets, roads and open spaces within
Metropolitan Manila as sites for flea market and/or vending areas, under
certain terms and conditions.
On July 20, 1990, the Metropolitan Manila Authority approved Ordinance
No. 86, s. 1990 of the municipal council of respondent municipality subject
to the following conditions:
1. That the aforenamed streets are not used for vehicular traffic, and that the
majority of the residents do not oppose the establishment of the flea
market/vending areas thereon;
2. That the 2-meter middle road to be used as flea market/vending area shall
G.R. No. 97764 August 10, 1992 be marked distinctly, and that the 2 meters on both sides of the road shall be
used by pedestrians;
LEVY D. MACASIANO, Brigadier General/PNP Superintendent,
Metropolitan Traffic Command, petitioner, 3. That the time during which the vending area is to be used shall be clearly
vs. designated;
HONORABLE ROBERTO C. DIOKNO, Presiding Judge, Branch 62,
Regional Trial Court of Makati, Metro Manila, MUNICIPALITY OF 4. That the use of the vending areas shall be temporary and shall be closed
PARAAQUE, METRO MANILA, PALANYAG KILUSANG BAYAN once the reclaimed areas are developed and donated by the Public Estate
FOR SERVICE, respondents. Authority.
Ceferino, Padua Law Office for Palanyag Kilusang Bayan for service. On June 20, 1990, the municipal council of Paraaque issued a resolution
authorizing Paraaque Mayor Walfrido N. Ferrer to enter into contract with
Manuel de Guia for Municipality of Paraaque. any service cooperative for the establishment, operation, maintenance and
management of flea markets and/or vending areas.
On August 8, 1990, respondent municipality and respondent Palanyag, a
MEDIALDEA, J.: service cooperative, entered into an agreement whereby the latter shall
operate, maintain and manage the flea market in the aforementioned streets
with the obligation to remit dues to the treasury of the municipal
57
government of Paraaque. Consequently, market stalls were put up by
respondent Palanyag on the said streets.
On September 13, 1990, petitioner Brig. Gen. Macasiano, PNP
Superintendent of the Metropolitan Traffic Command, ordered the
destruction and confiscation of stalls along G.G. Cruz and J. Gabriel St. in
Baclaran. These stalls were later returned to respondent Palanyag.
On October 16, 1990, petitioner Brig. General Macasiano wrote a letter to
respondent Palanyag giving the latter ten (10) days to discontinue the flea
market; otherwise, the market stalls shall be dismantled.
Hence, on October 23, 1990, respondents municipality and Palanyag filed
with the trial court a joint petition for prohibition and mandamus with
damages and prayer for preliminary injunction, to which the petitioner filed
his memorandum/opposition to the issuance of the writ of preliminary
injunction.
On October 24, 1990, the trial court issued a temporary restraining order to
enjoin petitioner from enforcing his letter-order of October 16, 1990
pending the hearing on the motion for writ of preliminary injunction.
On December 17, 1990, the trial court issued an order upholding the
validity of Ordinance No. 86 s. 1990 of the Municipality' of Paraaque and
enjoining petitioner Brig. Gen. Macasiano from enforcing his letter-order
against respondent Palanyag.
Hence, this petition was filed by the petitioner thru the Office of the
Solicitor General alleging grave abuse of discretion tantamount to lack or
excess of jurisdiction on the part of the trial judge in issuing the assailed
order.
The sole issue to be resolved in this case is whether or not an ordinance or
resolution issued by the municipal council of Paraaque authorizing the
lease and use of public streets or thoroughfares as sites for flea markets is
valid.
The Solicitor General, in behalf of petitioner, contends that municipal roads
are used for public service and are therefore public properties; that as such,
they cannot be subject to private appropriation or private contract by any
person, even by the respondent Municipality of Paraaque. Petitioner
submits that a property already dedicated to public use cannot be used for
another public purpose and that absent a clear showing that the
Municipality of Paraaque has been granted by the legislature specific
authority to convert a property already in public use to another public use,
respondent municipality is, therefore, bereft of any authority to close
JALALON, JEANINE VANESSA R.
municipal roads for the establishment of a flea market. Petitioner also
submits that assuming that the respondent municipality is authorized to
close streets, it failed to comply with the conditions set forth by the
Metropolitan Manila Authority for the approval of the ordinance providing
for the establishment of flea markets on public streets. Lastly, petitioner
contends that by allowing the municipal streets to be used by market
vendors the municipal council of respondent municipality violated its duty
under the Local Government Code to promote the general welfare of the
residents of the municipality.
In upholding the legality of the disputed ordinance, the trial court ruled:
. . . that Chanter II Section 10 of the Local Government Code is a statutory
grant of power given to local government units, the Municipality of
Paraaque as such, is empowered under that law to close its roads, streets or
alley subject to limitations stated therein (i.e., that it is in accordance with
existing laws and the provisions of this code).
xxx xxx xxx
The actuation of the respondent Brig. Gen. Levi Macasiano, though
apparently within its power is in fact an encroachment of power legally
vested to the municipality, precisely because when the municipality enacted
the ordinance in question the authority of the respondent as Police
Superintendent ceases to be operative on the ground that the streets covered
by the ordinance ceases to be a public thoroughfare. (pp. 33-34, Rollo)
We find the petition meritorious. In resolving the question of whether the
disputed municipal ordinance authorizing the flea market on the public
streets is valid, it is necessary to examine the laws in force during the time
the said ordinance was enacted, namely, Batas Pambansa Blg. 337,
otherwise known as Local Government Code, in connection with
established principles embodied in the Civil Code an property and settled
jurisprudence on the matter.
The property of provinces, cities and municipalities is divided into property
for public use and patrimonial property (Art. 423, Civil Code). As to what
consists of property for public use, Article 424 of Civil Code states:
Art. 424. Property for public use, in the provinces, cities and municipalities,
consists of the provincial roads, city streets, the squares, fountains, public
waters, promenades, and public works for public service paid for by said
provinces, cities or municipalities.
All other property possessed by any of them is patrimonial and shall be
governed by this Code, without prejudice to the provisions of special laws.
PROPERTY
Based on the foregoing, J. Gabriel G.G. Cruz, Bayanihan, Lt. Garcia
Extension and Opena streets are local roads used for public service and are
therefore considered public properties of respondent municipality.
Properties of the local government which are devoted to public service are
deemed public and are under the absolute control of Congress (Province of
Zamboanga del Norte v. City of Zamboanga, L-24440, March 28, 1968, 22
SCRA 1334). Hence, local governments have no authority whatsoever to
control or regulate the use of public properties unless specific authority is
vested upon them by Congress. One such example of this authority given
by Congress to the local governments is the power to close roads as
provided in Section 10, Chapter II of the Local Government Code, which
states:
Sec. 10. Closure of roads. A local government unit may likewise,
through its head acting pursuant to a resolution of its sangguniang and in
accordance with existing law and the provisions of this Code, close any
barangay, municipal, city or provincial road, street, alley, park or
square. No such way or place or any part of thereof shall be close without
indemnifying any person prejudiced thereby. A property thus withdrawn
from public use may be used or conveyed for any purpose for which other
real property belonging to the local unit concerned might be lawfully used
or conveyed. (Emphasis ours).
However, the aforestated legal provision which gives authority to local
government units to close roads and other similar public places should be
read and interpreted in accordance with basic principles already established
by law. These basic principles have the effect of limiting such authority of
the province, city or municipality to close a public street or thoroughfare.
Article 424 of the Civil Code lays down the basic principle that properties
of public dominion devoted to public use and made available to the public
in general are outside the commerce of man and cannot be disposed of or
leased by the local government unit to private persons. Aside from the
requirement of due process which should be complied with before closing a
road, street or park, the closure should be for the sole purpose of
withdrawing the road or other public property from public use when
circumstances show that such property is no longer intended or necessary
for public use or public service. When it is already withdrawn from public
use, the property then becomes patrimonial property of the local
government unit concerned (Article 422, Civil Code; Cebu Oxygen, etc. et
al. v. Bercilles, et al., G.R. No. L-40474, August 29, 1975, 66 SCRA 481).
It is only then that the respondent municipality can "use or convey them for
any purpose for which other real property belonging to the local unit
concerned might be lawfully used or conveyed" in accordance with the last
sentence of Section 10, Chapter II of Blg. 337, known as Local Government
Code. In one case, the City Council of Cebu, through a resolution, declared
58
the terminal road of M. Borces Street, Mabolo, Cebu City as an abandoned
road, the same not being included in the City Development Plan. Thereafter,
the City Council passes another resolution authorizing the sale of the said
abandoned road through public bidding. We held therein that the City of
Cebu is empowered to close a city street and to vacate or withdraw the
same from public use. Such withdrawn portion becomes patrimonial
property which can be the object of an ordinary contract (Cebu Oxygen and
Acetylene Co., Inc. v. Bercilles, et al., G.R. No.
L-40474, August 29, 1975, 66 SCRA 481). However, those roads and
streets which are available to the public in general and ordinarily used for
vehicular traffic are still considered public property devoted to public use.
In such case, the local government has no power to use it for another
purpose or to dispose of or lease it to private persons. This limitation on the
authority of the local government over public properties has been discussed
and settled by this Court en banc in "Francisco V. Dacanay, petitioner v.
Mayor Macaria Asistio, Jr., et al., respondents, G.R. No. 93654, May 6,
1992." This Court ruled:
There is no doubt that the disputed areas from which the private
respondents' market stalls are sought to be evicted are public streets, as
found by the trial court in Civil Case No. C-12921. A public street is
property for public use hence outside the commerce of man (Arts. 420, 424,
Civil Code). Being outside the commerce of man, it may not be the subject
of lease or others contract (Villanueva, et al. v. Castaeda and Macalino, 15
SCRA 142 citing the Municipality of Cavite v. Rojas, 30 SCRA 602;
Espiritu v. Municipal Council of Pozorrubio, 102 Phil. 869; And Muyot v.
De la Fuente, 48 O.G. 4860).
As the stallholders pay fees to the City Government for the right to occupy
portions of the public street, the City Government, contrary to law, has been
leasing portions of the streets to them. Such leases or licenses are null and
void for being contrary to law. The right of the public to use the city streets
may not be bargained away through contract. The interests of a few should
not prevail over the good of the greater number in the community whose
health, peace, safety, good order and general welfare, the respondent city
officials are under legal obligation to protect.
The Executive Order issued by acting Mayor Robles authorizing the use of
Heroes del '96 Street as a vending area for stallholders who were granted
licenses by the city government contravenes the general law that reserves
city streets and roads for public use. Mayor Robles' Executive Order may
not infringe upon the vested right of the public to use city streets for the
purpose they were intended to serve: i.e., as arteries of travel for vehicles
and pedestrians.
JALALON, JEANINE VANESSA R.
Even assuming, in gratia argumenti, that respondent municipality has the
authority to pass the disputed ordinance, the same cannot be validly
implemented because it cannot be considered approved by the Metropolitan
Manila Authority due to non-compliance by respondent municipality of the
conditions imposed by the former for the approval of the ordinance, to wit:
1. That the aforenamed streets are not used for vehicular traffic, and that the
majority of the residents do(es) not oppose the establishment of the flea
market/vending areas thereon;
2. That the 2-meter middle road to be used as flea market/vending area shall
be marked distinctly, and that the 2 meters on both sides of the road shall be
used by pedestrians;
3. That the time during which the vending area is to be used shall be clearly
designated;
4. That the use of the vending areas shall be temporary and shall be closed
once the reclaimed areas are developed and donated by the Public Estate
Authority. (p. 38, Rollo)
Respondent municipality has not shown any iota of proof that it has
complied with the foregoing conditions precedent to the approval of the
ordinance. The allegations of respondent municipality that the closed streets
were not used for vehicular traffic and that the majority of the residents do
not oppose the establishment of a flea market on said streets are
unsupported by any evidence that will show that this first condition has
been met. Likewise, the designation by respondents of a time schedule
during which the flea market shall operate is absent.
Further, it is of public notice that the streets along Baclaran area are
congested with people, houses and traffic brought about by the proliferation
of vendors occupying the streets. To license and allow the establishment of
a flea market along J. Gabriel, G.G. Cruz, Bayanihan, Lt. Garcia Extension
and Opena streets in Baclaran would not help in solving the problem of
congestion. We take note of the other observations of the Solicitor General
when he said:
. . . There have been many instances of emergencies and fires where
ambulances and fire engines, instead of using the roads for a more direct
access to the fire area, have to maneuver and look for other streets which
are not occupied by stalls and vendors thereby losing valuable time which
could, otherwise, have been spent in saving properties and lives.
Along G.G. Cruz Street is a hospital, the St. Rita Hospital. However, its
ambulances and the people rushing their patients to the hospital cannot pass
PROPERTY
through G.G. Cruz because of the stalls and the vendors. One can only and conditions of the said contracts or the law in force at the time such
imagine the tragedy of losing a life just because of a few seconds delay rights were vested.
brought about by the inaccessibility of the streets leading to the hospital.
ACCORDINGLY, the petition is GRANTED and the decision of the
The children, too, suffer. In view of the occupancy of the roads by stalls and respondent Regional Trial Court dated December 17, 1990 which granted
vendors, normal transportation flow is disrupted and school children have the writ of preliminary injunction enjoining petitioner as PNP
to get off at a distance still far from their schools and walk, rain or shine. Superintendent, Metropolitan Traffic Command from enforcing the
demolition of market stalls along J. Gabriel, G.G. Cruz, Bayanihan, Lt.
Indeed one can only imagine the garbage and litter left by vendors on the Garcia Extension and Opena streets is hereby RESERVED and SET
streets at the end of the day. Needless to say, these cause further pollution, ASIDE.
sickness and deterioration of health of the residents therein. (pp. 21-
22, Rollo) SO ORDERED.
Respondents do not refute the truth of the foregoing findings and
observations of petitioners. Instead, respondents want this Court to focus its
attention solely on the argument that the use of public spaces for the
establishment of a flea market is well within the powers granted by law to a
local government which should not be interfered with by the courts.
Verily, the powers of a local government unit are not absolute. They are
subject to limitations laid down by toe Constitution and the laws such as
our Civil Code. Moreover, the exercise of such powers should be
subservient to paramount considerations of health and well-being of the
members of the community. Every local government unit has the sworn
obligation to enact measures that will enhance the public health, safety and G.R. No. 192896 July 24, 2013
convenience, maintain peace and order, and promote the general prosperity
of the inhabitants of the local units. Based on this objective, the local DREAM VILLAGE NEIGHBORHOOD ASSOCIATION, INC.,
government should refrain from acting towards that which might prejudice represented by its Incumbent President, GREG SERIEGO, Petitioner,
or adversely affect the general welfare. vs.
BASES DEVELOPMENT AUTHORITY, Respondent.
As what we have said in the Dacanay case, the general public have a legal
right to demand the demolition of the illegally constructed stalls in public DECISION
roads and streets and the officials of respondent municipality have the
corresponding duty arising from public office to clear the city streets and REYES, J.:
restore them to their specific public purpose.
Before us on Petition for Review1 under Rule 45 of the Rules of Court is the
The instant case as well as the Dacanay case, involves an ordinance which Decision2 dated September 10, 2009 and Resolution3 dated July 13, 2010 of
is void and illegal for lack of basis and authority in laws applicable during the Court of Appeals (CA) in CA-G.R. SP No. 85228 nullifying and setting
its time. However, at this point, We find it worthy to note that Batas aside for lack of jurisdiction the Resolution 4 dated April 28, 2004 of the
Pambansa Blg. 337, known as Local Government Lode, has already been Commission on the Settlement of Land Problems (COSLAP) in COS LAP
repealed by Republic Act No. 7160 known as Local Government Code of Case No. 99-500. The fallo of the assailed COS LAP Resolution reads, as
1991 which took effect on January 1, 1992. Section 5(d) of the new Code follows:
provides that rights and obligations existing on the date of effectivity of the
new Code and arising out of contracts or any other source of prestation WHEREFORE, premises considered, judgment is hereby rendered as
involving a local government unit shall be governed by the original terms follows:
59
JALALON, JEANINE VANESSA R.
1. Declaring the subject property, covering an area of 78,466 square meters,
now being occupied by the members of the Dream Village Neighborhood
Association, Inc. to be outside of Swo-00-0001302 BCDA property.
2. In accordance with the tenets of social justice, members of said
association are advised to apply for sales patent on their respective
occupied lots with the Land Management Bureau, DENR-NCR, pursuant to
R.A. Nos. 274 and 730.
3. Directing the Land Management Bureau-DENR-NCR to process the
sales patent application of complainants pursuant to existing laws and
regulation.
4. The peaceful possession of actual occupants be respected by the
respondents.
5
SO ORDERED.
Antecedent Facts
Petitioner Dream Village Neighborhood Association, Inc. (Dream Village)
claims to represent more than 2,000 families who have been occupying a
78,466-square meter lot in Western Bicutan, Taguig City since 1985 "in the
concept of owners continuously, exclusively and notoriously." 6 The lot used
to be part of the Hacienda de Maricaban (Maricaban), owned by Dolores
Casal y Ochoa and registered under a Torrens title, 7 Original Certificate of
Title (OCT) No. 291, issued on October 17, 1906 by the Registry of Deeds
of Rizal.8 Maricaban covered several parcels of land with a total area of
over 2,544 hectares spread out over Makati, Pasig, Taguig, Pasay, and
Paraaque.9
Following the purchase of Maricaban by the government of the United
States of America (USA) early in the American colonial period, to be
converted into the military reservation known as Fort William Mckinley,
Transfer Certificate of Title (TCT) No. 192 was issued in the name of the
USA to cancel OCT No. 291.10 The US government later transferred 30 has.
of Maricaban to the Manila Railroad Company, for which TCT No. 192 was
cancelled by TCT Nos. 1218 and 1219, the first in the name of the Manila
Railroad Company for 30 has., and the second in the name of the USA for
the rest of the Maricaban property.11
On January 29, 1914, TCT No. 1219 was cancelled and replaced by TCT
No. 1688, and later that year, on September 15, 1914, TCT No. 1688 was
cancelled and replaced by TCT No. 2288, both times in the name of the
USA.12 On December 6, 1956, the USA formally ceded Fort William
Mckinley to the Republic of the Philippines (Republic), and on September
PROPERTY
11, 1958, TCT No. 2288 was cancelled and replaced by TCT No. 61524,
this time in the name of the Republic. 13 On July 12, 1957, President Carlos
P. Garcia issued Proclamation No. 423 withdrawing from sale or settlement
the tracts of land within Fort William Mckinley, now renamed Fort
Bonifacio, and reserving them for military purposes. 14
On January 7, 1986, President Ferdinand E. Marcos issued Proclamation
No. 2476 declaring certain portions of Fort Bonifacio alienable and
disposable15 in the manner provided under Republic Act (R.A.) Nos. 274
and 730, in relation to the Public Land Act, 16 thus allowing the sale to the
settlers of home lots in Upper Bicutan, Lower Bicutan, Signal Village, and
Western Bicutan.17
On October 16, 1987, President Corazon C. Aquino issued Proclamation
No. 172 amending Proclamation No. 2476 by limiting to Lots 1 and 2 of the
survey Swo-13-000298 the areas in Western Bicutan open for disposition. 18
On March 13, 1992, R.A. No. 7227 was passed 19 creating the Bases
Conversion and Development Authority (BCDA) to oversee and accelerate
the conversion of Clark and Subic military reservations and their extension
camps (John Hay Station, Wallace Air Station, ODonnell Transmitter
Station, San Miguel Naval Communications Station and Capas Relay
Station) to productive civilian uses. Section 820 of the said law provides that
the capital of the BCDA will be provided from sales proceeds or transfers
of lots in nine (9) military camps in Metro Manila, including 723 has. of
Fort Bonifacio. The law, thus, expressly authorized the President of the
Philippines "to sell the above lands, in whole or in part, which are hereby
declared alienable and disposable pursuant to the provisions of existing
laws and regulations governing sales of government
properties,"21 specifically to raise capital for the BCDA. Titles to the camps
were transferred to the BCDA for this purpose, 22 and TCT No. 61524 was
cancelled on January 3, 1995 by TCT Nos. 23888, 23887, 23886, 22460,
23889, 23890, and 23891, now in the name of the BCDA.23
Excepted from disposition by the BCDA are: a) approximately 148.80 has.
reserved for the National Capital Region (NCR) Security Brigade,
Philippine Army officers housing area, and Philippine National Police jails
and support services (presently known as Camp Bagong Diwa); b)
approximately 99.91 has. in Villamor Air Base for the Presidential Airlift
Wing, one squadron of helicopters for the NCR and respective security
units; c) twenty one (21) areas segregated by various presidential
proclamations; and d) a proposed 30.15 has. as relocation site for families
to be affected by the construction of Circumferential Road 5 and Radial
Road 4, provided that the boundaries and technical description of these
exempt areas shall be determined by an actual ground survey. 24
60
Now charging the BCDA of wrongfully asserting title to Dream Village and
unlawfully subjecting its members to summary demolition, resulting in
unrest and tensions among the residents,25 on November 22, 1999, the latter
filed a letter-complaint with the COSLAP to seek its assistance in the
verification survey of the subject 78,466-sq m property, which they claimed
is within Lot 1 of Swo-13-000298 and thus is covered by Proclamation No.
172. They claim that they have been occupying the area for thirty (30) years
"in the concept of owners continuously, exclusively and notoriously for
several years," and have built their houses of sturdy materials thereon and
introduced paved roads, drainage and recreational and religious facilities.
Dream Village, thus, asserts that the lot is not among those transferred to
the BCDA under R.A. No. 7227, and therefore patent applications by the
occupants should be processed by the Land Management Bureau (LMB).
On August 15, 2000, Dream Village formalized its complaint by filing an
Amended Petition26 in the COSLAP. Among the reliefs it sought were:
d. DECLARING the subject property as alienable and disposable by virtue
of applicable laws;
e. Declaring the portion of Lot 1 of subdivision Plan SWO-13-000298,
situated in the barrio of Western Bicutan, Taguig, Metro Manila, which is
presently being occupied by herein petitioner as within the coverage of
Proclamation Nos. 2476 and 172 and outside the claim of AFP-RSBS
INDUSTRIAL PARK COMPLEX and/or BASES CONVESION
DEVELOPMENT AUTHORITY.
f. ORDERING the Land Management Bureau to process the application of
the ASSOCIATION members for the purchase of their respective lots under
the provisions of Acts Nos. 274 and 730. (Underscoring supplied)
Respondent BCDA in its Answer28 dated November 23, 2000 questioned the
jurisdiction of the COSLAP to hear Dream Villages complaint, while
asserting its title to the subject property pursuant to R.A. No. 7227. It
argued that under Executive Order (E.O.) No. 561 which created the
COSLAP, its task is merely to coordinate the various government offices
and agencies involved in the settlement of land problems or disputes,
adding that BCDA does not fall in the enumeration in Section 3 of E.O. No.
561, it being neither a pastureland-lease holder, a timber concessionaire, or
a government reservation grantee, but the holder of patrimonial government
property which cannot be the subject of a petition for classification, release
or subdivision by the occupants of Dream Village.
In its Resolution29 dated April 28, 2004, the COSLAP narrated that it called
a mediation conference on March 22, 2001, during which the parties agreed
to have a relocation/verification survey conducted of the subject lot. On
JALALON, JEANINE VANESSA R.
April 4, 2001, the COSLAP wrote to the Department of Environment and
Natural Resources (DENR)-Community Environment and Natural
Resources Office-NCR requesting the survey, which would also include
Swo-00-0001302, covering the adjacent AFP-RSBS Industrial Park
established by Proclamation No. 1218 on May 8, 1998 as well as the
abandoned Circumferential Road 5 (C-5 Road).30
On April 1, 2004, the COSLAP received the final report of the verification
survey and a blueprint copy of the survey plan from Atty. Rizaldy Barcelo,
Regional Technical Director for Lands of DENR. Specifically, Item No. 3
of the DENR report states:
3. Lot-1, Swo-000298 is inside Proclamation 172. Dream Village
Neighborhood Association, Inc. is outside Lot-1, Swo-13-000298 and
inside Lot-10, 11 & Portion of Lot 13, Swo-00-0001302 with an actual area
of 78,466 square meters. Likewise, the area actually is outside Swo-00-
0001302 of BCDA.31 (Emphasis ours and underscoring supplied)
COSLAP Ruling
On the basis of the DENRs verification survey report, the COSLAP
resolved that Dream Village lies outside of BCDA, and particularly, outside
of Swo-00-0001302, and thus directed the LMB of the DENR to process
the applications of Dream Villages members for sales patent, noting that in
view of the length of time that they "have been openly, continuously and
notoriously occupying the subject property in the concept of an owner, x x
x they are qualified to apply for sales patent on their respective occupied
lots pursuant to R.A. Nos. 274 and 730 in relation to the provisions of the
Public Land Act."32
On the question of its jurisdiction over the complaint, the COSLAP cited
the likelihood that the summary eviction by the BCDA of more than 2,000
families in Dream Village could stir up serious social unrest, and
maintained that Section 3(2) of E.O. No. 561 authorizes it to "assume
jurisdiction and resolve land problems or disputes which are critical and
explosive in nature considering, for instance, the large number of parties
involved, the presence or emergence of social tension or unrest, or other
similar critical situations requiring immediate action," even as Section 3(2)
(d) of E.O. No. 561 also allows it to take cognizance of "petitions for
classification, release and/or subdivision of lands of the public domain,"
exactly the ultimate relief sought by Dream Village. Rationalizing that it
was created precisely to provide a more effective mechanism for the
expeditious settlement of land problems "in general," the COSLAP invoked
as its authority the 1990 case of Baaga v. COSLAP, 33 where this Court
said:
PROPERTY
It is true that Executive Order No. 561 provides that the COSLAP may take
cognizance of cases which are "critical and explosive in nature considering,
for instance, the large number of parties involved, the presence or
emergence of social tension or unrest, or other similar critical situations
requiring immediate action." However, the use of the word "may" does not
mean that the COSLAPs jurisdiction is merely confined to the above
mentioned cases. The provisions of the said Executive Order are clear that
the COSLAP was created as a means of providing a more effective
mechanism for the expeditious settlement of land problems in general,
which are frequently the source of conflicts among settlers, landowners and
cultural minorities. Besides, the COSLAP merely took over from the
abolished PACLAP whose functions, including its jurisdiction, power and
authority to act on, decide and resolve land disputes (Sec. 2, P.D. No. 832)
were all assumed by it. The said Executive Order No. 561 containing said
provision, being enacted only on September 21, 1979, cannot affect the
exercise of jurisdiction of the PACLAP Provincial Committee of Koronadal
on September 20, 1978. Neither can it affect the decision of the COSLAP
which merely affirmed said exercise of jurisdiction. 34
In its Motion for Reconsideration35 filed on May 20, 2004, the BCDA
questioned the validity of the survey results since it was conducted without
its representatives present, at the same time denying that it received a
notification of the DENR verification survey. 36 It maintained that there is no
basis for the COSLAPs finding that the members of Dream Village were in
open, continuous, and adverse possession in the concept of owner, because
not only is the property not among those declared alienable and disposable,
but it is a titled patrimonial property of the State. 37
In the Order38 dated June 17, 2004, the COSLAP denied BCDAs Motion
for Reconsideration, insisting that it had due notice of the verification
survey, while also noting that although the BCDA wanted to postpone the
verification survey due to its tight schedule, it actually stalled the survey
when it failed to suggest an alternative survey date to ensure its presence.
CA Ruling
On Petition for Review39 to the CA, the BCDA argued that the dispute is
outside the jurisdiction of the COSLAP because of the lands history of
private ownership and because it is registered under an indefeasible Torrens
title40; that Proclamation No. 172 covers only Lots 1 and 2 of Swo-13-
000298 in Western Bicutan, whereas Dream Village occupies Lots 10, 11
and part of 13 of Swo-00-0001302, which also belongs to the BCDA 41; that
the COSLAP resolution is based on an erroneous DENR report stating that
Dream Village is outside of BCDA, because Lots 10, 11, and portion of Lot
13 of Swo-00-0001302 are within the DA42; that the COSLAP was not
61
justified in ignoring BCDAs request to postpone the survey to the
succeeding year because the presence of its representatives in such an
important verification survey was indispensable for the impartiality of the
survey aimed at resolving a highly volatile situation 43; that the COSLAP is a
mere coordinating administrative agency with limited jurisdiction 44; and,
that the present case is not among those enumerated in Section 3 of E.O.
No. 56145.
The COSLAP, on the other hand, maintained that Section 3(2)(e) of E.O.
No. 561 provides that it may assume jurisdiction and resolve land problems
or disputes in "other similar land problems of grave urgency and
magnitude,"46 and the present case is one such problem.
The CA in its Decision47 dated September 10, 2009 ruled that the COSLAP
has no jurisdiction over the complaint because the question of whether
Dream Village is within the areas declared as available for disposition in
Proclamation No. 172 is beyond its competence to determine, even as the
land in dispute has been under a private title since 1906, and presently its
title is held by a government agency, the BCDA, in contrast to the case of
Baaga relied upon by Dream Village, where the disputed land was part of
the public domain and the disputants were applicants for sales patent
thereto.
Dream Villages motion for reconsideration was denied in the appellate
courts Order48 of July 13, 2010.
Petition for Review in the Supreme Court
On petition for review on certiorari to this Court, Dream Village interposes
the following issues:
A
IN ANNULLING THE RESOLUTION OF COSLAP IN COSLAP CASE
NO. 99-500, THE HONORABLE CA DECIDED THE CASE IN A
MANNER NOT CONSISTENT WITH LAW AND APPLICABLE
DECISIONS OF THIS HONORABLE COURT;
B
THE HONORABLE CA ERRED IN RULING THAT COSLAP HAD NO
JURISDICTION OVER THE CONTROVERSY BETWEEN THE
PARTIES HEREIN.49
The Courts Ruling
JALALON, JEANINE VANESSA R.
We find no merit in the petition.
The BCDA holds title to Fort Bonifacio.
That the BCDA has title to Fort Bonifacio has long been decided with
finality. In Samahan ng Masang Pilipino sa Makati, Inc. v. BCDA, 50 it was
categorically ruled as follows:
First, it is unequivocal that the Philippine Government, and now the BCDA,
has title and ownership over Fort Bonifacio. The case of Acting Registrars
of Land Titles and Deeds of Pasay City, Pasig and Makati is final and
conclusive on the ownership of the then Hacienda de Maricaban estate by
the Republic of the Philippines. Clearly, the issue on the ownership of the
subject lands in Fort Bonifacio is laid to rest. Other than their view that the
USA is still the owner of the subject lots, petitioner has not put forward any
claim of ownership or interest in them.51
The facts in Samahan ng Masang Pilipino sa Makati are essentially not
much different from the controversy below. There, 20,000 families were
long-time residents occupying 98 has. of Fort Bonifacio in Makati City,
who vainly sought to avert their eviction and the demolition of their houses
by the BCDA upon a claim that the land was owned by the USA under TCT
No. 2288. The Supreme Court found that TCT No. 2288 had in fact been
cancelled by TCT No. 61524 in the name of the Republic, which title was
in turn cancelled on January 3, 1995 by TCT Nos. 23888, 23887, 23886,
22460, 23889, 23890, and 23891, all in the name of the BCDA. The Court
ruled that the BCDAs aforesaid titles over Fort Bonifacio are valid,
indefeasible and beyond question, since TCT No. 61524 was cancelled in
favor of BCDA pursuant to an explicit authority under R.A. No. 7227, the
legal basis for BCDAs takeover and management of the subject lots. 52
Dream Village sits on the
abandoned C-5 Road, which lies
outside the area declared in
Proclamation Nos. 2476 and 172 as
alienable and disposable.
Pursuant to Proclamation No. 2476, the following surveys were conducted
by the Bureau of Lands to delimit the boundaries of the areas excluded
from the coverage of Proclamation No. 423:
Barangay Survey Plan Date Approved
1. Lower Bicutan SWO-13-000253 October 21, 1986
2. Signal Village SWO-13-000258 May 13, 1986
PROPERTY
3. Upper Bicutan SWO-13-000258 May 13, 1986 some public service or for the
development of the national
4. Western Bicutan SWO-13-000298 January 15, 198753 wealth" are considered property of
public dominion and therefore not
However, the survey plan for Western Bicutan, Swo-13-000298, shows that susceptible to acquisition by
Lots 3, 4, 5 and 6 thereof are inside the area segregated for the Libingan ng prescription.
mga Bayani under Proclamation No. 208, which then leaves only Lots 1
and 2 of Swo-13-000298 as available for disposition. For this reason, it was Article 1113 of the Civil Code provides that "property of the State or any of
necessary to amend Proclamation No. 2476. Thus, in Proclamation No. 172 its subdivisions not patrimonial in character shall not be the object of
only Lots 1 and 2 of Swo-13-000298 are declared alienable and prescription." Articles 420 and 421 identify what is property of public
disposable.54 dominion and what is patrimonial property:
The DENR verification survey report states that Dream Village is not Art. 420. The following things are property of public dominion:
situated in Lot 1 of Swo-13-000298 but actually occupies Lots 10, 11 and
part of 13 of Swo-00-0001302: "x x x Dream Village is outside Lot1, SWO- (1) Those intended for public use, such as roads, canals, rivers, torrents,
13-000298 and inside Lot 10, 11 & portion of Lot 13, SWO-00-0001302 ports and bridges constructed by the State, banks, shores, roadsteads, and
with an actual area of 78466 square meters. The area is actually is [sic] others of similar character;
outside SWO-00-0001302 of BCDA."55 Inexplicably and gratuitously, the
DENR also states that the area is outside of BCDA, completely oblivious (2) Those which belong to the State, without being for public use, and are
that the BCDA holds title over the entire Fort Bonifacio, even as the BCDA intended for some public service or for the development of the national
asserts that Lots 10, 11 and 13 of SWO-00-0001302 are part of the wealth.
abandoned right-of-way of C-5 Road. This area is described as lying north
of Lot 1 of Swo-13-000298 and of Lots 3, 4, 5 and 6 of Swo-13-000298 Art. 421. All other property of the State, which is not of the character stated
(Western Bicutan) inside the Libingan ng mga Bayani, and the boundary in the preceding article, is patrimonial property.
line of Lot 1 mentioned as C-5 Road is really the proposed alignment of C-
One question laid before us is whether the area occupied by Dream Village
5 Road, which was abandoned when, as constructed, it was made to
is susceptible of acquisition by prescription. In Heirs of Mario Malabanan v.
traverse northward into the Libingan ng mga Bayani. Dream Village has not
Republic,57 it was pointed out that from the moment R.A. No. 7227 was
disputed this assertion.
enacted, the subject military lands in Metro Manila
The mere fact that the original plan for C-5 Road to cross Swo-00-0001302
became alienable and disposable. However, it was also clarified that the
was abandoned by deviating it northward to traverse the southern part of
said lands did not thereby become patrimonial, since the BCDA law makes
Libingan ng mga Bayani does not signify abandonment by the government
the express reservation that they are to be sold in order to raise funds for the
of the bypassed lots, nor that these lots would then become alienable and
conversion of the former American bases in Clark and Subic. The Court
disposable. They remain under the title of the BCDA, even as it is
noted that the purpose of the law can be tied to either "public service" or
significant that under Section 8(d) of R.A. No. 7227, a relocation site of
"the development of national wealth" under Article 420(2) of the Civil
30.5 has. was to be reserved for families affected by the construction of C-5
Code, such that the lands remain property of the public dominion, albeit
Road. It is nowhere claimed that Lots 10, 11 and 13 of Swo-00-0001302 are
their status is now alienable and disposable. The Court then explained that it
part of the said relocation site. These lots border C-5 Road in the
is only upon their sale to a private person or entity as authorized by the
south,56making them commercially valuable to BCDA, a farther argument
BCDA law that they become private property and cease to be property of
against a claim that the government has abandoned them to Dream Village.
the public dominion:58
While property of the State or any
For as long as the property belongs to the State, although already classified
of its subdivisions patrimonial in
as alienable or disposable, it remains property of the public dominion if
character may be the object of
when it is "intended for some public service or for the development of the
prescription, those "intended for
national wealth."59
62
JALALON, JEANINE VANESSA R.
Thus, under Article 422 of the Civil Code, public domain lands become
patrimonial property only if there is a declaration that these are alienable or
disposable, together with an express government manifestation that the
property is already patrimonial or no longer retained for public service or
the development of national wealth. Only when the property has become
patrimonial can the prescriptive period for the acquisition of property of the
public dominion begin to run. Also under Section 14(2) of Presidential
Decree (P.D.) No. 1529, it is provided that before acquisitive prescription
can commence, the property sought to be registered must not only be
classified as alienable and disposable, it must also be expressly declared by
the State that it is no longer intended for public service or the development
of the national wealth, or that the property has been converted into
patrimonial. Absent such an express declaration by the State, the land
remains to be property of public dominion.60
Since the issuance of Proclamation No. 423 in 1957, vast portions of the
former Maricaban have been legally disposed to settlers, besides those
segregated for public or government use. Proclamation No. 1217 (1973)
established the Maharlika Village in Bicutan, Taguig to serve the needs of
resident Muslims of Metro Manila; Proclamation No. 2476 (1986), as
amended by Proclamation No. 172 (1987), declared more than 400 has. of
Maricaban in Upper and Lower Bicutan, Signal Village, and Western
Bicutan as alienable and disposable; Proclamation No. 518 (1990) formally
exempted from Proclamation No. 423 the Barangays of Cembo, South
Cembo, West Rembo, East Rembo, Comembo, Pembo and Pitogo,
comprising 314 has., and declared them open for disposition.
The above proclamations notwithstanding, Fort Bonifacio remains property
of public dominion of the State, because although declared alienable and
disposable, it is reserved for some public service or for the development of
the national wealth, in this case, for the conversion of military reservations
in the country to productive civilian uses. 61 Needless to say, the acquisitive
prescription asserted by Dream Village has not even begun to run.
Ownership of a land registered
under a Torrens title cannot be lost
by prescription or adverse
possession.
Dream Village has been unable to dispute BCDAs claim that Lots 10, 11
and part of 13 of Swo-00-0001302 are the abandoned right-of-way of C-5
Road, which is within the vast titled territory of Fort Bonifacio. We have
already established that these lots have not been declared alienable and
disposable under Proclamation Nos. 2476 or 172.
PROPERTY
Moreover, it is a settled rule that lands under a Torrens title cannot be
acquired by prescription or adverse possession. 62 Section 47 of P.D. No.
1529, the Property Registration Decree, expressly provides that no title to
registered land in derogation of the title of the registered owner shall be
acquired by prescription or adverse possession. And, although the registered
landowner may still lose his right to recover the possession of his registered
property by reason of laches, 63 nowhere has Dream Village alleged or
proved laches, which has been defined as such neglect or omission to assert
a right, taken in conjunction with lapse of time and other circumstances
causing prejudice to an adverse party, as will operate as a bar in equity. Put
any way, it is a delay in the assertion of a right which works disadvantage to
another because of the inequity founded on some change in the condition or
relations of the property or parties. It is based on public policy which, for
the peace of society, ordains that relief will be denied to a stale demand
which otherwise could be a valid claim.64
The subject property having been
expressly reserved for a specific
public purpose, the COSLAP
cannot exercise jurisdiction over the
complaint of the Dream Village
settlers.
BCDA has repeatedly asserted that the COSLAP has no jurisdiction to hear
Dream Villages complaint. Concurring, the CA has ruled that questions as
to the physical identity of Dream Village and whether it lies in Lots 10, 11
and 13 of Swo-00-0001302, or whether Proclamation No. 172 has released
the disputed area for disposition are issues which are "manifestly beyond
the scope of the COSLAPs jurisdiction vis--vis Paragraph 2, Section 3 of
E.O. No. 561,"65 rendering its Resolution a patent nullity and its
pronouncements void. Thus, the CA said, under Section 3 of E.O. No. 561,
the COSLAPs duty would have been to refer the conflict to another
tribunal or agency of government in view of the serious ramifications of the
disputed claims:
In fine, it is apparent that the COSLAP acted outside its jurisdiction in
taking cognizance of the case. It would have been more prudent if the
COSLAP has [sic] just referred the controversy to the proper forum in order
to fully thresh out the ramifications of the dispute at bar. As it is, the
impugned Resolution is a patent nullity since the tribunal which rendered it
lacks jurisdiction. Thus, the pronouncements contained therein are void.
"We have consistently ruled that a judgment for want of jurisdiction is no
judgment at all. It cannot be the source of any right or the creator of any
obligation. All acts performed pursuant to it and all claims emanating from
it have no legal effect."66 (Citation omitted)
63
We add that Fort Bonifacio has been reserved for a declared specific public
purpose under R.A. No. 7227, which unfortunately for Dream Village does
not encompass the present demands of its members. Indeed, this purpose
was the very reason why title to Fort Bonifacio has been transferred to the
BCDA, and it is this very purpose which takes the dispute out of the direct
jurisdiction of the COSLAP. A review of the history of the COSLAP will
readily clarify that its jurisdiction is limited to disputes over public lands
not reserved or declared for a public use or purpose.
On July 31, 1970, President Marcos issued E.O. No. 251 creating the
Presidential Action Committee on Land Problems (PACLAP) to expedite
and coordinate the investigation and resolution of all kinds of land disputes
between settlers, streamline and shorten administrative procedures, adopt
bold and decisive measures to solve land problems, or recommend other
solutions.67 E.O. No. 305, issued on March 19, 1971, reconstituted the
PACLAP and gave it exclusive jurisdiction over all cases involving public
lands and other lands of the public domain, 68 as well as adjudicatory powers
phrased in broad terms: "To investigate, coordinate, and resolve
expeditiously land disputes, streamline administrative proceedings, and, in
general, to adopt bold and decisive measures to solve problems involving
public lands and lands of the public domain."69
On November 27, 1975, P.D. No. 832 reorganized the PACLAP and
enlarged its functions and duties. Section 2 thereof even granted it quasi
judicial functions, to wit:
Sec. 2. Functions and duties of the PACLAP. The PACLAP shall have the
following functions and duties:
1. Direct and coordinate the activities, particularly the investigation work,
of the various government agencies and agencies involved in land problems
or disputes, and streamline administrative procedures to relieve small
settlers and landholders and members of cultural minorities of the expense
and time-consuming delay attendant to the solution of such problems or
disputes;
2. Refer for immediate action any land problem or dispute brought to the
attention of the PACLAP, to any member agency having jurisdiction
thereof: Provided, That when the Executive Committee decides to act on a
case, its resolution, order or decision thereon shall have the force and effect
of a regular administrative resolution, order or decision, and shall be
binding upon the parties therein involved and upon the member agency
having jurisdiction thereof;
xxxx
JALALON, JEANINE VANESSA R.
4. Evolve and implement a system of procedure for the speedy investigation
and resolution of land disputes or problems at provincial level, if possible.
(Underscoring supplied)
On September 21, 1979, E.O. No. 561 abolished the PACLAP and created
the COSLAP to be a more effective administrative body to provide a
mechanism for the expeditious settlement of land problems among small
settlers, landowners and members of the cultural minorities to avoid social
unrest.70 Paragraph 2, Section 3 of E.O No. 561 now specifically
enumerates the instances when the COSLAP can exercise its adjudicatory
functions:
Sec. 3. Powers and Functions. The Commission shall have the following
powers and functions:
1. Coordinate the activities, particularly the investigation work, of the
various government offices and agencies involved in the settlement of land
problems or disputes, and streamline administrative procedures to relieve
small settlers and landholders and members of cultural minorities of the
expense and time consuming delay attendant to the solution of such
problems or disputes;
2. Refer and follow-up for immediate action by the agency having
appropriate jurisdiction any land problem or dispute referred to the
Commission: Provided, That the Commission may, in the following cases,
assume jurisdiction and resolve land problems or disputes which are critical
and explosive in nature considering, for instance, the large number of the
parties involved, the presence or emergence of social tension or unrest, or
other similar critical situations requiring immediate action:
(a) Between occupants/squatters and pasture lease agreement holders or
timber concessionaires;
(b) Between occupants/squatters and government reservation grantees;
(c) Between occupants/squatters and public land claimants or applicants;
(d) Petitions for classification, release and/or subdivision of lands of the
public domain; and
(e) Other similar land problems of grave urgency and magnitude.
xxxx
Citing the constant threat of summary eviction and demolition by the
BCDA and the seriousness and urgency of the reliefs sought in its Amended
PROPERTY
Petition, Dream Village insists that the COSLAP was justified in assuming
jurisdiction of COSLAP Case No. 99-500. But in Longino v. Atty.
General,71 it was held that as an administrative agency, COSLAPs
jurisdiction is limited to cases specifically mentioned in its enabling statute,
E.O. No. 561. The Supreme Court said:
Administrative agencies, like the COSLAP, are tribunals of limited
jurisdiction and, as such, could wield only such as are specifically granted
to them by the enabling statutes. x x x.
xxxx
Under the law, E.O. No. 561, the COSLAP has two options in acting on a
land dispute or problem lodged before it, namely, (a) refer the matter to the
agency having appropriate jurisdiction for settlement/resolution; or (b)
assume jurisdiction if the matter is one of those enumerated in paragraph
2(a) to (e) of the law, if such case is critical and explosive in nature, taking
into account the large number of the parties involved, the presence or
emergence of social tension or unrest, or other similar critical situations
requiring immediate action. In resolving whether to assume jurisdiction
over a case or to refer the same to the particular agency concerned, the
COSLAP has to consider the nature or classification of the land involved,
the parties to the case, the nature of the questions raised, and the need for
immediate and urgent action thereon to prevent injuries to persons and
damage or destruction to property. The law does not vest jurisdiction on the
COSLAP over any land dispute or problem.72(Citation omitted)
The Longino ruling has been consistently cited in subsequent COSLAP
cases, among them Davao New Town Development Corp. v.
COSLAP,73 Barranco v. COSLAP,74 NHA v. COSLAP,75 Cayabyab v. de
Aquino,76 Ga, Jr. v. Tubungan,77 Machado v. Gatdula,78 and Vda. de Herrera
v. Bernardo.79
Thus, in Machado, it was held that the COSLAP cannot invoke Section 3(2)
(e) of E.O. No. 561 to assume jurisdiction over "other similar land problems
of grave urgency," since the statutory construction principle of ejusdem
generis prescribes that where general words follow an enumeration of
persons or things, by words of a particular and specific meaning, such
general words are not to be construed in their widest extent but are to be
held as applying only to persons or things of the same kind as those
specifically mentioned.80 Following this rule, COSLAPs jurisdiction is
limited to disputes involving lands in which the government has a
proprietary or regulatory interest,81 or public lands covered with a specific
license from the government such as a pasture lease agreements, a timber
concessions, or a reservation grants, 82 and where moreover, the dispute is
64
between occupants/squatters and pasture lease agreement holders or timber
concessionaires; between occupants/squatters and government reservation
grantees; and between occupants/squatters and public land claimants or
applicants.
In Longino, the parties competed to lease a property of the Philippine
National Railways. The high court rejected COSLAPs jurisdiction, noting
that the disputed lot is not public land, and neither party was a squatter,
patent lease agreement holder, government reservation grantee, public land
claimant or occupant, or a member of any cultural minority, nor was the
dispute critical and explosive in nature so as to generate social tension or
unrest, or a critical situation which required immediate action. 83
In Davao New Town Development Corp., it was held that the COSLAP has
no concurrent jurisdiction with the Department of Agrarian Reform (DAR)
in respect of disputes concerning the implementation of agrarian reform
laws, since "the grant of exclusive and primary jurisdiction over agrarian
reform matters on the DAR implies that no other court, tribunal, or agency
is authorized to resolve disputes properly cognizable by the DAR." 84 Thus,
instead of hearing and resolving the case, COSLAP should have simply
referred private respondents complaint to the DAR or DARAB. According
to the Court:
The abovementioned proviso Section (3)(2) of E.O. No. 561, which vests
COSLAP the power to resolve land disputes, does not confer upon
COSLAP blanket authority to assume every matter referred to it. Its
jurisdiction is confined only to disputes over lands in which the government
has proprietary or regulatory interest. Moreover, the land dispute in Baaga
involved parties with conflicting free patent applications which was within
the authority of PACLAP to resolve, unlike that of the instant case which is
exclusively cognizable by the DAR.85
In Barranco, COSLAP issued a writ to demolish structures encroaching into
private property.1wphi1 The Supreme court ruled that COSLAP may
resolve only land disputes "involving public lands or lands of the public
domain or those covered with a specific license from the government such
as a pasture lease agreement, a timber concession, or a reservation grant." 86
In NHA, it was held that COSLAP has no jurisdiction over a boundary
dispute between two local government units, that its decision is an utter
nullity correctible by certiorari, that it can never become final and any writ
of execution based on it is void, and all acts performed pursuant to it and all
claims emanating from it have no legal effect. 87
In Cayabyab, it was held that "the jurisdiction of COSLAP does not extend
to disputes involving the ownership of private lands, or those already
JALALON, JEANINE VANESSA R.
covered by a certificate of title, as these fall exactly within the jurisdiction
of the courts and other administrative agencies." 88
In Ga, Jr., it was reiterated that the COSLAP has no jurisdiction over
controversies relating to ownership and possession of private lands, and
thus, the failure of respondents to properly appeal from the COSLAP
decision before the appropriate court was held not fatal to the petition for
certiorari that they eventually filed with the CA. The latter remedy
remained available despite the lapse of the period to appeal from the void
COSLAP decision.89
In Machado, the high court ruled that COSLAP has no jurisdiction in
disputes over private lands between private parties, reiterating the essential
rules contained in Section 3 of E.O. No. 561 governing the exercise by
COSLAP of its jurisdiction, to wit:
Under these terms, the COSLAP has two different rules in acting on a land
dispute or problem lodged before it, e.g., COSLAP can assume jurisdiction
only if the matter is one of those enumerated in paragraph 2(a) to (e) of the
law. Otherwise, it should refer the case to the agency having appropriate
jurisdiction for settlement or resolution. In resolving whether to assume
jurisdiction over a case or to refer it to the particular agency concerned, the
COSLAP considers: (a) the nature or classification of the land involved; (b)
the parties to the case; (c) the nature of the questions raised; and (d) the
need for immediate and urgent action thereon to prevent injury to persons
and damage or destruction to property. The terms of the law clearly do not
vest on the COSLAP the general power to assume jurisdiction over any
land dispute or problem. Thus, under EO 561, the instances when the
COSLAP may resolve land disputes are limited only to those involving
public lands or those covered by a specific license from the government,
such as pasture lease agreements, timber concessions, or reservation
grants.90 (Citations omitted)
In Vda. de Herrera, the COSLAP assumed jurisdiction over a complaint for
"interference, disturbance, unlawful claim, harassment and trespassing"
over a private parcel of land. The CA ruled that the parties were estopped to
question COSLAPs jurisdiction since they participated actively in the
proceedings. The Supreme Court, noting from the complaint that the case
actually involved a claim of title and possession of private land, ruled that
the RTC or the MTC has jurisdiction since the dispute did not fall under
Section 3, paragraph 2 (a) to (e) of E.O. No. 561, was not critical and
explosive in nature, did not involve a large number of parties, nor was there
social tension or unrest present or emergent.91
PROPERTY
In the case at bar, COSLAP has invoked Baaga to assert its jurisdiction.
There, Guillermo Baaga had filed a free patent application with the Bureau
of Lands over a public land with an area of 30 has. Gregorio Daproza
(Daproza) also filed a patent application for the same property. The
opposing claims and protests of the claimants remained unresolved by the
Bureau of Lands, and neither did it conduct an investigation. Daproza wrote
to the COSLAP, which then opted to exercise jurisdiction over the
controversy. The high court sustained COSLAP, declaring that its
jurisdiction is not confined to the cases mentioned in paragraph 2(a) to (e)
of E.O. No. 561, but includes land problems in general, which are
frequently the source of conflicts among settlers, landowners and cultural
minorities.
But as the Court has since clarified in Longino and in the other cases
aforecited, the land dispute in Baaga was between private individuals who
were free patent applicants over unregistered public lands. In contrast, the
present petition involves land titled to and managed by a government
agency which has been expressly reserved by law for a specific public
purpose other than for settlement. Thus, as we have advised in Longino, the
law does not vest jurisdiction on the COSLAP over any land dispute or
problem, but it has to consider the nature or classification of the land
involved, the parties to the case, the nature of the questions raised, and the
need for immediate and urgent action thereon to prevent injuries to persons
and damage or destruction to property.
WHEREFORE, premises considered, the petition is DENIED.
SO ORDERED.
65