Beruflich Dokumente
Kultur Dokumente
L-16513
ISSUE: 1. Whether the taking of gas may constitute larceny (theft or robberry) though it
has never been the subject of adjudication in court.
2. whether the quantity of gas appropriated in the two months, during which the
accused admitted having used the same, has been established with sufficient
certainty to enable the court to fix an appropriate penalty.
HELD: YES.
Gas has character of personal property, thus, it may be subject of theft or robbery.
o 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. Likewise water which is confined
in pipes and electricity which is conveyed by wires are subjects of larceny.
2. The trial court was justified in fixing the value of the gas at P2 per month,
which is the minimum charge for gas made by the gas company, however
small the amount consumed.
i. There was evidence before the court showing that the general
average of the monthly bills paid by consumers throughout the
city for the use of gas in a kitchen equipped like that used by the
accused is from P18 to 20, while the average minimum is about
P8 per month. We think that the facts above stated are competent
evidence; and the conclusion is inevitable that the accused is at
least liable to the extent of the minimum charge of P2 per month.
and his co-accused of PLDT services was with intent to gain and
without the latters consent.
The prosecution pointed out that the accused, as well as the movant,
were paid in exchange for their illegal appropriation and use of
PLDTs telephone services and facilities; on the other hand, the
accused did not pay a single centavo for their illegal ISR operations.
Thus, the acts of the accused were akin to the use of a "jumper" by a
consumer to deflect the current from the house electric meter, thereby
enabling one to steal electricity. The prosecution emphasized that its
position is fortified by the Resolutions of the Department of Justice in
PLDT v. Tiongson, et al. (I.S. No. 97-0925) and in PAOCTF-PLDT v.
Elton John Tuason, et al. (I.S. No. 2000-370) which were issued on
August 14, 2000 finding probable cause for theft against the
respondents therein.
On September 14, 2001, the RTC issued an Order 16 denying the
Motion to Quash the Amended Information. The court declared that,
although there is no law that expressly prohibits the use of ISR, the
facts alleged in the Amended Information "will show how the alleged
crime was committed by conducting ISR," to the damage and
prejudice of PLDT.
Laurel filed a Motion for Reconsideration 17 of the Order, alleging that
international long distance calls are not personal property, and are
not capable of appropriation. He maintained that business or revenue
is not considered personal property, and that the prosecution failed to
adduce proof of its existence and the subsequent loss of personal
property belonging to another. Citing the ruling of the Court in United
States v. De Guzman,18 Laurel averred that the case is not one with
telephone calls which originate with a particular caller and terminates
with the called party. He insisted that telephone calls are considered
privileged communications under the Constitution and cannot be
considered as "the property of PLDT." He further argued that there is
no kinship between telephone calls and electricity or gas, as the latter
are forms of energy which are generated and consumable, and may
be considered as personal property because of such characteristic.
On the other hand, the movant argued, the telephone business is not
a form of energy but is an activity.
In its Order19 dated December 11, 2001, the RTC denied the movants
Motion for Reconsideration. This time, it ruled that what was stolen
from PLDT was its "business" because, as alleged in the Amended
Information, the international long distance calls made through the
facilities of PLDT formed part of its business. The RTC noted that the
movant was charged with stealing the business of PLDT. To support
its ruling, it cited Strochecker v. Ramirez,20 where the Court ruled that
interest in business is personal property capable of appropriation. It
further declared that, through their ISR operations, the movant and
his co-accused deprived PLDT of fees for international long distance
calls, and that the ISR used by the movant and his co-accused was
no different from the "jumper" used for stealing electricity.
Laurel then filed a Petition for Certiorari with the CA, assailing the
Order of the RTC. He alleged that the respondent judge gravely
abused his discretion in denying his Motion to Quash the Amended
Information.21 As gleaned from the material averments of the
amended information, he was charged with stealing the international
long distance calls belonging to PLDT, not its business. Moreover, the
RTC failed to distinguish between the business of PLDT (providing
services for international long distance calls) and the revenues
derived therefrom. He opined that a "business" or its revenues cannot
be considered as personal property under Article 308 of the Revised
Penal Code, since a "business" is "(1) a commercial or mercantile
activity customarily engaged in as a means of livelihood and typically
involving some independence of judgment and power of decision; (2)
a commercial or industrial enterprise; and (3) refers to transactions,
dealings or intercourse of any nature." On the other hand, the term
"revenue" is defined as "the income that comes back from an
investment (as in real or personal property); the annual or periodical
rents, profits, interests, or issues of any species of real or personal
property."22
Laurel further posited that an electric companys business is the
production and distribution of electricity; a gas companys business is
the production and/or distribution of gas (as fuel); while a water
companys business is the production and distribution of potable
water. He argued that the "business" in all these cases is the
commercial activity, while the goods and merchandise are the
products of such activity. Thus, in prosecutions for theft of certain
that: (a) the trial court issued the order with grave abuse of discretion
amounting to lack of or in excess of jurisdiction; (b) appeal would not
prove to be a speedy and adequate remedy; (c) where the order is a
patent nullity; (d) the decision in the present case will arrest future
litigations; and (e) for certain considerations such as public welfare
and public policy.37
In his petition for certiorari in the CA, petitioner averred that the trial
court committed grave abuse of its discretion amounting to excess or
lack of jurisdiction when it denied his motion to quash the Amended
Information despite his claim that the material allegations in the
Amended Information do not charge theft under Article 308 of the
Revised Penal Code, or any offense for that matter. By so doing, the
trial court deprived him of his constitutional right to be informed of the
nature of the charge against him. He further averred that the order of
the trial court is contrary to the constitution and is, thus, null and void.
He insists that he should not be compelled to undergo the rigors and
tribulations of a protracted trial and incur expenses to defend himself
against a non-existent charge.
Petitioner is correct.
An information or complaint must state explicitly and directly every act
or omission constituting an offense38 and must allege facts
establishing conduct that a penal statute makes criminal; 39 and
describes the property which is the subject of theft to advise the
accused with reasonable certainty of the accusation he is called upon
to meet at the trial and to enable him to rely on the judgment
thereunder of a subsequent prosecution for the same offense. 40 It
must show, on its face, that if the alleged facts are true, an offense
has been committed. The rule is rooted on the constitutional right of
the accused to be informed of the nature of the crime or cause of the
accusation against him. He cannot be convicted of an offense even if
proven unless it is alleged or necessarily included in the Information
filed against him.
As a general prerequisite, a motion to quash on the ground that the
Information does not constitute the offense charged, or any offense
for that matter, should be resolved on the basis of said allegations
whose truth and veracity are hypothetically committed; 41 and on
under the Revised Penal Code. But the words "Personal property"
under the Revised Penal Code must be considered in tandem with
the word "take" in the law. The statutory definition of "taking" and
movable property indicates that, clearly, not all personal properties
may be the proper subjects of theft. The general rule is that, only
movable properties which have physical or material existence and
susceptible of occupation by another are proper objects of theft. 52 As
explained by Cuelo Callon: "Cosa juridicamente es toda sustancia
corporal, material, susceptible de ser aprehendida que tenga un valor
cualquiera."53
According to Cuello Callon, in the context of the Penal Code, only
those movable properties which can be taken and carried from the
place they are found are proper subjects of theft. Intangible properties
such as rights and ideas are not subject of theft because the same
cannot be "taken" from the place it is found and is occupied or
appropriated.
Solamente las cosas muebles y corporales pueden ser objeto de
hurto. La sustraccin de cosas inmuebles y la cosas incorporales (v.
gr., los derechos, las ideas) no puede integrar este delito, pues no es
posible asirlas, tomarlas, para conseguir su apropiacin. El Codigo
emplea la expresin "cosas mueble" en el sentido de cosa que es
susceptible de ser llevada del lugar donde se encuentra, como
dinero, joyas, ropas, etctera, asi que su concepto no coincide por
completo con el formulado por el Codigo civil (arts. 335 y 336). 54
Thus, movable properties under Article 308 of the Revised Penal
Code should be distinguished from the rights or interests to which
they relate. A naked right existing merely in contemplation of law,
although it may be very valuable to the person who is entitled to
exercise it, is not the subject of theft or larceny.55 Such rights or
interests are intangible and cannot be "taken" by another. Thus, right
to produce oil, good will or an interest in business, or the right to
engage in business, credit or franchise are properties. So is the credit
line represented by a credit card. However, they are not proper
subjects of theft or larceny because they are without form or
substance, the mere "breath" of the Congress. On the other hand,
goods, wares and merchandise of businessmen and credit cards
issued to them are movable properties with physical and material
18.2-178.
In the State of Alabama, Section 13A-8-10(a)(1) of the Penal Code of
Alabama of 1975 penalizes theft of services:
"A person commits the crime of theft of services if: (a) He intentionally
obtains services known by him to be available only for compensation
by deception, threat, false token or other means to avoid payment for
the services "
In the Philippines, Congress has not amended the Revised Penal
Code to include theft of services or theft of business as felonies.
Instead, it approved a law, Republic Act No. 8484, otherwise known
as the Access Devices Regulation Act of 1998, on February 11, 1998.
Under the law, an access device means any card, plate, code,
account number, electronic serial number, personal identification
number and other telecommunication services, equipment or
instrumentalities-identifier or other means of account access that can
be used to obtain money, goods, services or any other thing of value
or to initiate a transfer of funds other than a transfer originated solely
by paper instrument. Among the prohibited acts enumerated in
Section 9 of the law are the acts of obtaining money or anything of
value through the use of an access device, with intent to defraud or
intent to gain and fleeing thereafter; and of effecting transactions with
one or more access devices issued to another person or persons to
receive payment or any other thing of value. Under Section 11 of the
law, conspiracy to commit access devices fraud is a crime. However,
the petitioner is not charged of violation of R.A. 8484.
Significantly, a prosecution under the law shall be without prejudice to
any liability for violation of any provisions of the Revised Penal Code
inclusive of theft under Rule 308 of the Revised Penal Code and
estafa under Article 315 of the Revised Penal Code. Thus, if an
individual steals a credit card and uses the same to obtain services,
he is liable of the following: theft of the credit card under Article 308 of
the Revised Penal Code; violation of Republic Act No. 8484; and
estafa under Article 315(2)(a) of the Revised Penal Code with the
service provider as the private complainant. The petitioner is not
charged of estafa before the RTC in the Amended Information.
constituted, are also included. (Arts. 110 and 111 of the Mortgage
Law, and 1877 of the Civil Code; decision of U.S. Supreme Court in
the matter of Royal Insurance Co. vs. R. Miller, liquidator, and
Amadeo [26 Sup. Ct. Rep., 46; 199 U.S., 353].)
2. ID.; ID.; INCLUSION OR EXCLUSION OF MACHINERY, ETC.
In order that it may be understood that the machinery and other
objects placed upon and used in connection with a mortgaged estate
are excluded from the mortgage, when it was stated in the mortgage
that the improvements, buildings, and machinery that existed thereon
were also comprehended, it is indispensable that the exclusion
thereof be stipulated between the contracting parties.
The appellant contends that the installation of the machinery and
equipment claimed by him in the sugar central of the Mabalacat
Sugar Company, Inc., was not permanent in character inasmuch as
B.A. Green, in proposing to him to advance the money for the
purchase thereof, made it appear in the letter, Exhibit E, that in case
B.A. Green should fail to obtain an additional loan from the
defendants Cu Unjieng e Hijos, said machinery and equipment would
become security therefor, said B.A. Green binding himself not to
mortgage nor encumber them to anybody until said plaintiff be fully
reimbursed for the corporation's indebtedness to him.
Upon acquiring the machinery and equipment in question with money
obtained as loan from the plaintiff-appellant by B.A. Green, as
president of the Mabalacat Sugar Co., Inc., the latter became owner
of said machinery and equipment, otherwise B.A. Green, as such
president, could not have offered them to the plaintiff as security for
the payment of his credit.
Article 334, paragraph 5, of the Civil Code gives the character of real
property to "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 or industry.
If the installation of the machinery and equipment in question in the
central of the Mabalacat Sugar Co., Inc., in lieu of the other of less
capacity existing therein, for its sugar industry, converted them into
Article 1877 of the Civil Code provides that mortgage includes all natural accessions,
improvements, growing fruits, and rents not collected when the obligation falls due, and the
amount of any indemnities paid or due the owner by the insurers of the mortgaged property or by
virtue of the exercise of the power of eminent domain, with the declarations, amplifications, and
limitations established by law, whether the state continues in the possession of the person who
mortgaged it or whether it passes into the hands of a third person.
It is a rule, that in a mortgage of real estate, the improvements on the same are included;
therefore, all objects permanently attached to a mortgaged building or land, although they may
have been placed there after the mortgage was constituted, are also included.
Article 334, paragraph 5, of the Civil Code gives the character of real property to 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 or industry. The installation of a machinery and equipment in
a mortgaged sugar central, in lieu of another of less capacity, for the purpose of carrying out the
industrial functions of the latter and increasing production, constitutes a permanent improvement
on said sugar central and subjects said machinery and equipment to the mortgage constituted
thereon.
First of all the reason why the case has been decided by the court in
banc needs explanation. A motion was presented by counsel for the
appellant in which it was asked that the case be heard and
determined by the court sitting in banc because the admiralty
jurisdiction of the court was involved, and this motion was granted in
regular course. On further investigation it appears that this was error.
The mere mortgage of a ship is a contract entered into by the parties
to it without reference to navigation or perils of the sea, and does not,
therefore, confer admiralty jurisdiction. (Bogart vs. Steamboat John
Jay [1854], 17 How., 399.)
Coming now to the merits, it appears that on varying dates the
Philippine Refining Co., Inc., and Francisco Jarque executed three
mortgages on the motor vessels Pandan and Zaragoza. These
documents were recorded in the record of transfers and
incumbrances of vessels for the port of Cebu and each was therein
denominated a "chattel mortgage". Neither of the first two mortgages
had appended an affidavit of good faith. The third mortgage
contained such an affidavit, but this mortgage was not registered in
the customs house until May 17, 1932, or within the period of thirty
days prior to the commencement of insolvency proceedings against
Francisco Jarque; also, while the last mentioned mortgage was
subscribed by Francisco Jarque and M. N. Brink, there was nothing to
disclose in what capacity the said M. N. Brink signed. A fourth
mortgage was executed by Francisco Jarque and Ramon Aboitiz on
the motorship Zaragoza and was entered in the chattel mortgage
registry of the register of deeds on May 12, 1932, or again within the
thirty-day period before the institution of insolvency proceedings.
These proceedings were begun on June 2, 1932, when a petition was
filed with the Court of First Instance of Cebu in which it was prayed
that Francisco Jarque be declared an insolvent debtor, which soon
thereafter was granted, with the result that an assignment of all the
properties of the insolvent was executed in favor of Jose Corominas.
On these facts, Judge Jose M. Hontiveros declined to order the
foreclosure of the mortgages, but on the contrary sustained the
special defenses of fatal defectiveness of the mortgages. In so doing
we believe that the trial judge acted advisedly.
Vessels are considered personal property under the civil law. (Code
FACTS:
Plaintiff Philippine Refining Co. and defendant Jarque
executed three mortgages on the motor vessels Pandan and
Zargazo. The documents were recorded as transfer and
encumbrances of the vessels for the port of Cebu and each
was denominated a chattel mortgage.
ISSUE:
6.
7.
RULING:
Yes. Personal property includes vessels. They are subject to
the provisions of the Chattel Mortgage Law. The Chattel
Mortgage Law says that a good chattel mortgage includes an
affidavit of good faith. The absence of such affidavit makes
mortgage unenforceable against creditors and subsequent
encumbrances. The judge was correct.
Note: A mortgage on a vessel is generally like other chattel
mortgages. The only difference between a chattel mortgage
of a vessel and a chattel mortgage of other personalty is that
the first must be noted in the registry of the register of
deeds.
appearing
in
the
attached
xxx
xxx
on, as petitioner has carried on, without such equipments, before the
war. The transportation business could be carried on without the
repair or service shop if its rolling equipment is repaired or serviced in
another shop belonging to another.
The law that governs the determination of the question at issue is as
follows:
Art. 415. The following are immovable property:
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xxx
xxx
Without costs.
So ordered.
DIGEST:
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.
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
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:
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
August 7, 1935
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
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.
DIGEST:
PARAS, J.:
This is a petition for review on certiorari of the November 13, 1978
Decision * of the then Court of First Instance of Zambales and Olongapo City in Civil Case
No. 2443-0 entitled "Spouses Fernando A. Magcale and Teodula Baluyut-Magcale vs. Hon.
Ramon Y. Pardo and Prudential Bank" declaring that the deeds of real estate mortgage executed
by respondent spouses in favor of petitioner bank are null and void.
DEEDS
OF
REAL ESTATE
FACTS:
Spouses Magcale secured a loan from Prudential Bank.
To secure payment, they executed a real estate mortgage
over a residential building. The mortgage included also the
right to occupy the lot and the information about the sales
patent applied for by the spouses for the lot to which the
building stood. After securing the first loan, the spouses
secured another from the same bank. To secure
payment, another real estate mortgage was executed
over the same properties.
The Secretary of Agriculture then issued a Miscellaneous
Sales Patent over the land which was later on mortgaged to
the bank.
The spouses then failed to pay for the loan and the REM was
extrajudicially foreclosed and sold in public auction despite
opposition from the spouses. The respondent court held that
the REM was null and void.
HELD:
A real estate mortgage can be constituted on the building
erected on the land belonging to another.
The inclusion of building distinct and separate from the
land in the Civil Code can only mean that the building itself
is an immovable property.
While it is true that a mortgage of land necessarily includes
in the absence of stipulation of the improvements
thereon, buildings, still a building in itself may be
mortgaged by itself apart from the land on which it is built.
Such a mortgage would still be considered as a REM for the
building would
AQUINO, J.:
This case is about the realty tax on machinery and equipment
installed by Caltex (Philippines) Inc. in its gas stations located on
leased land.
The machines and equipment consists of underground tanks,
elevated tank, elevated water tanks, water tanks, gasoline pumps,
computing pumps, water pumps, car washer, car hoists, truck hoists,
air compressors and tireflators. The city assessor described the said
equipment and machinery in this manner:
A gasoline service station is a piece of lot where a building or shed is
erected, a water tank if there is any is placed in one corner of the lot,
car hoists are placed in an adjacent shed, an air compressor is
attached in the wall of the shed or at the concrete wall fence.
The controversial underground tank, depository of gasoline or crude
oil, is dug deep about six feet more or less, a few meters away from
the shed. This is done to prevent conflagration because gasoline and
other combustible oil are very inflammable.
This underground tank is connected with a steel pipe to the gasoline
pump and the gasoline pump is commonly placed or constructed
under the shed. The footing of the pump is a cement pad and this
cement pad is imbedded in the pavement under the shed, and
evidence that the gasoline underground tank is attached and
connected to the shed or building through the pipe to the pump and
the pump is attached and affixed to the cement pad and pavement
covered by the roof of the building or shed.
The building or shed, the elevated water tank, the car hoist under a
separate shed, the air compressor, the underground gasoline tank,
neon lights signboard, concrete fence and pavement and the lot
where they are all placed or erected, all of them used in the
pursuance of the gasoline service station business formed the entire
gasoline service-station.
As to whether the subject properties are attached and affixed to the
tenement, it is clear they are, for the tenement we consider in this
particular case are (is) the pavement covering the entire lot which
CRUZ, J.:
The realty tax assessment involved in this case amounts to
P11,319,304.00. It has been imposed on the petitioner's tailings dam
and the land thereunder over its protest.
The controversy arose in 1985 when the Provincial Assessor of
Zambales assessed the said properties as taxable improvements.
The assessment was appealed to the Board of Assessment Appeals
of the Province of Zambales. On August 24, 1988, the appeal was
dismissed mainly on the ground of the petitioner's "failure to pay the
realty taxes that fell due during the pendency of the appeal."
The petitioner seasonably elevated the matter to the Central Board of
Assessment Appeals, 1 one of the herein respondents. In its decision
dated March 22, 1990, the Board reversed the dismissal of the appeal but,
on the merits, agreed that "the tailings dam and the lands submerged
thereunder (were) subject to realty tax."
The Court notes that in the Ontario case the plaintiff admitted that the
mine involved therein could not be operated without the aid of the
drain tunnels, which were indispensable to the successful
development and extraction of the minerals therein. This is not true in
the present case.
Even without the tailings dam, the petitioner's mining operation can
still be carried out because the primary function of the dam is merely
to receive and retain the wastes and water coming from the mine.
There is no allegation that the water coming from the dam is the sole
source of water for the mining operation so as to make the dam an
integral part of the mine. In fact, as a result of the construction of the
dam, the petitioner can now impound and recycle water without
having to spend for the building of a water reservoir. And as the
petitioner itself points out, even if the petitioner's mine is shut down or
ceases operation, the dam may still be used for irrigation of the
surrounding areas, again unlike in the Ontario case.
As correctly observed by the CBAA, the Kendrick case is also not
applicable because it involved water reservoir dams used for different
purposes and for the benefit of the surrounding areas. By contrast,
the tailings dam in question is being used exclusively for the benefit
of the petitioner.
Curiously, the petitioner, while vigorously arguing that the tailings dam
has no separate existence, just as vigorously contends that at the
end of the mining operation the tailings dam will serve the local
community as an irrigation facility, thereby implying that it can exist
independently of the mine.
From the definitions and the cases cited above, it would appear that
whether a structure constitutes an improvement so as to partake of
the status of realty would depend upon the degree of permanence
intended in its construction and use. The expression "permanent" as
applied to an improvement does not imply that the improvement must
be used perpetually but only until the purpose to which the principal
realty is devoted has been accomplished. It is sufficient that the
improvement is intended to remain as long as the land to which it is
annexed is still used for the said purpose.
The Court is convinced that the subject dam falls within the definition
of an "improvement" because it is permanent in character and it
enhances both the value and utility of petitioner's mine. Moreover, the
immovable nature of the dam defines its character as real property
under Article 415 of the Civil Code and thus makes it taxable under
Section 38 of the Real Property Tax Code.
The Court will also reject the contention that the appraisal at P50.00
per square meter made by the Provincial Assessor is excessive and
that his use of the "residual value formula" is arbitrary and erroneous.
Respondent Provincial Assessor explained the use of the "residual
value formula" as follows:
A 50% residual value is applied in the computation because, while it
is true that when slime fills the dike, it will then be covered by another
dike or stage, the stage covered is still there and still exists and since
only one face of the dike is filled, 50% or the other face is unutilized.
In sustaining this formula, the CBAA gave the following justification:
We find the appraisal on the land submerged as a result of the
construction of the tailings dam, covered by Tax Declaration Nos.0020260 and 002-0266, to be in accordance with the Schedule of Market
Values for San Marcelino, Zambales, which is fifty (50.00) pesos per
square meter for third class industrial land (TSN, page 17, July 5,
1989) and Schedule of Market Values for Zambales which was
reviewed and allowed for use by the Ministry (Department) of Finance
in the 1981-1982 general revision. No serious attempt was made by
Petitioner-Appellant
Benguet
Corporation
to
impugn
its
reasonableness, i.e, that the P50.00 per square meter applied by
Respondent-Appellee Provincial Assessor is indeed excessive and
unconscionable. Hence, we find no cause to disturb the market value
applied by Respondent-Appellee Provincial Assessor of Zambales on
the properties of Petitioner-Appellant Benguet Corporation covered
by Tax Declaration Nos. 002-0260 and 002-0266.
It has been the long-standing policy of this Court to respect the
conclusions of quasi-judicial agencies like the CBAA, which, because
of the nature of its functions and its frequent exercise thereof, has
developed expertise in the resolution of assessment problems. The