Property First 15 Cases FULL Text

Lopez vs Orosa

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. Nos. L-10817-18 February 28, 1958

ENRIQUE LOPEZ, petitioner, vs.VICENTE OROSA, JR., and PLAZA THEATRE, INC., respondents.

Nicolas Belmonte and Benjamin T. de Peralta for petitioner.Tolentino & Garcia and D. R. Cruz for respondent Luzon Surety Co., Inc. Jose B. Macatangay for respondent Plaza Theatre, Inc.

FELIX, J.:

Enrique Lopez is a resident of Balayan, Batangas, doing business under the trade name of Lopez-Castelo Sawmill. Sometime in May, 1946, Vicente Orosa, Jr., also a resident of the same province, dropped at Lopez' house and invited him to make an investment in the theatre business. It was intimated that Orosa, his family and close friends were organizing a corporation to be known as Plaza Theatre, Inc., that would engage in such venture. Although Lopez expressed his unwillingness to invest of the same, he agreed to supply the lumber necessary for the construction of the proposed theatre, and at Orosa's behest and assurance that the latter would be personally liable for any account that the said construction might incur, Lopez further agreed that payment therefor would be on demand and not cash on delivery basis. Pursuant to said verbal agreement, Lopez delivered the lumber which was used for the construction of the Plaza Theatre on May 17, 1946, up to December 4 of the same year. But of the total cost of the materials amounting to P62,255.85, Lopez was paid only P20,848.50, thus leaving a balance of P41,771.35.

We may state at this juncture that the Plaza Theatre was erected on a piece of land with an area of 679.17 square meters formerly owned by Vicente Orosa, Jr., and was acquired by the corporation on September 25, 1946, for P6,000. As Lopez was pressing Orosa for payment of the remaining unpaid obligation, the latter and Belarmino Rustia, the president of the corporation, promised to obtain a bank loan by mortgaging the properties of the Plaza Theatre., out of which said amount of P41,771.35 would be satisfied, to 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 Philippine National Bank with the Luzon Surety Company as surety, and 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.

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 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:

ART. 1923. With respect to determinate real property and real rights of the debtor, the following are preferred:

x x x x x x x x x

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 properties1 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.

Punzalan vs Lacsamana


Manila

FIRST DIVISION

G.R. No. L-55729 March 28, 1983

ANTONIO PUNSALAN, JR., petitioner, vs.REMEDIOS VDA. DE LACSAMANA and THE HONORABLE JUDGE RODOLFO A. ORTIZ, respondents.

Benjamin S. Benito & Associates for petitioner.

Expedito Yummul for private respondent.

MELENCIO-HERRERA, J.:

The sole issue presented by petitioner for resolution is whether or not respondent Court erred in denying the Motion to Set Case for Pre-trial with respect to respondent Remedios Vda. de Lacsamana as the case had been dismissed on the ground of improper venue upon motion of co-respondent Philippine National Bank (PNB).

It appears that petitioner, Antonio Punsalan, Jr., was the former registered owner of a parcel of land consisting of 340 square meters situated in Bamban, Tarlac. In 1963, petitioner mortgaged said land to respondent PNB (Tarlac Branch) in the amount of P10,000.00, but for failure to pay said amount, the property was foreclosed on December 16, 1970. Respondent PNB (Tarlac Branch) was the highest bidder in said foreclosure proceedings. However, the bank secured title thereto only on December 14, 1977.

In the meantime, in 1974, while the properly was still in the alleged possession of petitioner and with the alleged acquiescence of respondent PNB (Tarlac Branch), and upon securing a permit from the Municipal Mayor, petitioner constructed a warehouse on said property. Petitioner declared said warehouse for tax purposes for which he was issued Tax Declaration No. 5619. Petitioner then leased the warehouse to one Hermogenes Sibal for a period of 10 years starting January 1975.

On July 26, 1978, a Deed of Sale was executed between respondent PNB (Tarlac Branch) and respondent Lacsamana over the property. This contract was amended on July 31, 1978, particularly to include in the sale, the building and improvement thereon. By virtue of said instruments, respondent - Lacsamana secured title over the property in her name (TCT No. 173744) as well as separate tax declarations for the land and building. 1

On November 22, 1979, petitioner commenced suit for "Annulment of Deed of Sale with Damages" against herein respondents PNB and Lacsamana before respondent Court of First Instance of Rizal, Branch XXXI, Quezon City, essentially impugning the validity of the sale of the building as embodied in the Amended Deed of Sale. In this connection, petitioner alleged:

xxx xxx xxx

22. That defendant, Philippine National Bank, through its Branch Manager ... by virtue of the request of defendant ... executed a document dated July 31, 1978, entitled Amendment to Deed of Absolute Sale ... wherein said defendant bank as Vendor sold to defendant Lacsamana the building owned by the plaintiff under Tax Declaration No. 5619, notwithstanding the fact that said building is not owned by the bank either by virtue of the public auction sale conducted by the Sheriff and sold to the Philippine National Bank or by virtue of the Deed of Sale executed by the bank itself in its favor on September 21, 1977 ...;

23. That said defendant bank fraudulently mentioned ... that the sale in its favor should likewise have included the building, notwithstanding no legal basis for the same and despite full knowledge that the Certificate of Sale executed by the sheriff in its favor ... only limited the sale to the land, hence, by selling

the building which never became the property of defendant, they have violated the principle against 'pactum commisorium'.

Petitioner prayed that the Deed of Sale of the building in favor of respondent Lacsamana be declared null and void and that damages in the total sum of P230,000.00, more or less, be awarded to him. 2

In her Answer filed on March 4, 1980,-respondent Lacsamana averred the affirmative defense of lack of cause of action in that she was a purchaser for value and invoked the principle in Civil Law that the "accessory follows the principal". 3

On March 14, 1980, respondent PNB filed a Motion to Dismiss on the ground that venue was improperly laid considering that the building was real property under article 415 (1) of the New Civil Code and therefore section 2(a) of Rule 4 should apply. 4

Opposing said Motion to Dismiss, petitioner contended that the action for annulment of deed of sale with damages is in the nature of a personal action, which seeks to recover not the title nor possession of the property but to compel payment of damages, which is not an action affecting title to real property.

On April 25, 1980, respondent Court granted respondent PNB's Motion to Dismiss as follows:

Acting upon the 'Motion to Dismiss' of the defendant Philippine National Bank dated March 13, 1980, considered against the plaintiff's opposition thereto dated April 1, 1980, including the reply therewith of said defendant, this Court resolves to DISMISS the plaintiff's complaint for improper venue considering that the plaintiff's complaint which seeks for the declaration as null and void, the amendment to Deed of Absolute Sale executed by the defendant Philippine National Bank in favor of the defendant Remedios T. Vda. de Lacsamana, on July 31, 1978, involves a warehouse allegedly owned and constructed by the plaintiff on the land of the defendant Philippine National Bank situated in the Municipality of Bamban, Province of Tarlac, which warehouse is an immovable property pursuant to Article 415, No. 1 of the New Civil Code; and, as such the action of the plaintiff is a real action affecting title to real property which, under Section 2, Rule 4 of the New Rules of Court, must be tried in the province where the property or any part thereof lies. 5

In his Motion for Reconsideration of the aforestated Order, petitioner reiterated the argument that the action to annul does not involve ownership or title to property but is limited to the validity of the deed of sale and emphasized that the case should proceed with or without respondent PNB as respondent Lacsamana had already filed her Answer to the Complaint and no issue on venue had been raised by the latter.

On September 1, 1980,.respondent Court denied reconsideration for lack of merit.

Petitioner then filed a Motion to Set Case for Pre-trial, in so far as respondent Lacsamana was concerned, as the issues had already been joined with the filing of respondent Lacsamana's Answer.

In the Order of November 10, 1980 respondent Court denied said Motion to Set Case for Pre-trial as the case was already dismissed in the previous Orders of April 25, 1980 and September 1, 1980.

Hence, this Petition for Certiorari, to which we gave due course.

We affirm respondent Court's Order denying the setting for pre-trial.

The warehouse claimed to be owned by petitioner is an immovable or real property as provided in article 415(l) of the Civil Code. 6 Buildings are always immovable under the Code. 7 A building treated separately from the land on which it stood is immovable property and the mere fact that the parties to a contract seem to have dealt with it separate and apart from the land on which it stood in no wise changed its character as immovable property. 8

While it is true that petitioner does not directly seek the recovery of title or possession of the property in question, his action for annulment of sale and his claim for damages are closely intertwined with the issue of ownership of the building which, under the law, is considered immovable property, the recovery of which is petitioner's primary objective. The prevalent doctrine is that an action for the annulment or rescission of a sale of real property does not operate to efface the fundamental and prime objective and nature of the case, which is to recover said real property. It is a real action. 9

Respondent Court, therefore, did not err in dismissing the case on the ground of improper venue (Section 2, Rule 4) 10, which was timely raised (Section 1, Rule 16) 11.

Petitioner's other contention that the case should proceed in so far as respondent Lacsamana is concerned as she had already filed an Answer, which did not allege improper venue and, therefore, issues had already been joined, is likewise untenable. Respondent PNB is an indispensable party as the validity of the Amended Contract of Sale between the former and respondent Lacsamana is in issue. It would, indeed, be futile to proceed with the case against respondent Lacsamana alone.

WHEREFORE, the petition is hereby denied without prejudice to the refiling of the case by petitioner Antonio Punsalan, Jr. in the proper forum.

Costs against petitioner.

SO ORDERED.

Teehankee (Chairman), Plana, Vasquez, Relova and Gutierrez, Jr., JJ., concur.

Associated vs Iya


Manila

EN BANC

G.R. Nos. L-10837-38 May 30, 1958

ASSOCIATED INSURANCE and SURETY COMPANY, INC., plaintiff, vs.ISABEL IYA, ADRIANO VALINO and LUCIA VALINO, defendants.

ISABEL IYA, plaintiff, vs.ADRIANO VALINO, LUCIA VALINO and ASSOCIATED INSURANCE and SURETY COMPANY. INC., defendants.

Jovita L. de Dios for defendant Isabel Iya.M. Perez Cardenas and Apolonio Abola for defendant Associated Insurance and Surety Co., Inc.

FELIX, J.:

Adriano Valino and Lucia A. Valino, husband and wife, were the owners and possessors of a house of strong materials constructed on Lot No. 3, Block No. 80 of the Grace Park Subdivision in Caloocan, Rizal, which they purchased on installment basis from the Philippine Realty Corporation. On November 6, 1951, to enable her to purchase on credit rice from the NARIC, Lucia A. Valino filed a bond in the sum of P11,000.00 (AISCO Bond No. G-971) subscribed by the Associated Insurance and Surety Co., Inc., and as counter-guaranty therefor, the spouses Valino executed an alleged chattel mortgage on the aforementioned house in favor of the surety company, which encumbrance was duly registered with the Chattel Mortgage Register of Rizal on December 6, 1951. It is admitted that at the time said undertaking took place, the parcel of land on which the house is erected was still registered in the name of the Philippine Realty Corporation. Having completed payment on the purchase price of the lot, the Valinos were able to secure on October 18, 1958, a certificate of title in their name (T.C.T. No. 27884). Subsequently, however, or on October 24, 1952, the Valinos, to secure payment of an indebtedness in the amount of P12,000.00, executed a real estate mortgage over the lot and the house in favor of Isabel Iya, which was duly registered and annotated at the back of the certificate of title.

On the other hand, as Lucia A. Valino, failed to satisfy her obligation to the NARIC, the surety company was compelled to pay the same pursuant to the undertaking of the bond. In turn, the surety company demanded reimbursement from the spouses Valino, and as the latter likewise failed to do so, the company foreclosed the chattel mortgage over the house. As a result thereof, a public sale was conducted by the Provincial Sheriff of Rizal on December 26, 1952, wherein the property was awarded to the surety company for P8,000.00, the highest bid received therefor. The surety company then caused the said house to be declared in its name for tax purposes (Tax Declaration No. 25128).

Sometime in July, 1953, the surety company learned of the existence of the real estate mortgage over the lot covered by T.C.T. No. 26884 together with the improvements thereon; thus, said surety company instituted Civil Case No. 2162 of the Court of First Instance of Manila naming Adriano and Lucia Valino and Isabel Iya, the mortgagee, as defendants. The complaint prayed for the exclusion of the residential house from the real estate mortgage in favor of defendant Iya and the declaration and recognition of plaintiff's right to ownership over the same in virtue of the award given by the Provincial Sheriff of Rizal during the public auction held on December 26, 1952. Plaintiff likewise asked the Court to sentence the spouses Valino to pay said surety moral and exemplary damages, attorney's fees and costs. Defendant Isabel Iya filed her answer to the complaint alleging among other things, that in virtue of the real estate mortgage executed by her co-defendants, she acquired a real right over the lot and the house constructed thereon; that the auction sale allegedly conducted by the Provincial Sheriff of Rizal as a result of the foreclosure of the chattel mortgage on the house was null and void for non-compliance with the form required by law. She, therefore, prayed for the dismissal of the complaint and anullment of the sale made by the Provincial Sheriff. She also demanded the amount of P5,000.00 from plaintiff as counterclaim, the sum of P5,000.00 from her co-defendants as crossclaim, for attorney's fees and costs.

Defendants spouses in their answer admitted some of the averments of the complaint and denied the others. They, however, prayed for the dismissal of the action for lack of cause of action, it being alleged that plaintiff was already the owner of the house in question, and as said defendants admitted this fact, the claim of the former was already satisfied.

On October 29, 1953, Isabel Iya filed another civil action against the Valinos and the surety company (Civil Case No. 2504 of the Court of First Instance of Manila) stating that pursuant to the contract of mortgage executed by the spouses Valino on October 24, 1952, the latter undertook to pay a loan of P12,000.00 with interest at 12% per annum or P120.00 a month, which indebtedness was payable in 4 years, extendible for only one year; that to secure payment thereof, said defendants mortgaged the house and lot covered by T.C.T. No. 27884 located at No. 67 Baltazar St., Grace Park Subdivision, Caloocan, Rizal; that the Associated Insurance and Surety Co., Inc., was included as a party defendant because it claimed to have an interest on the residential house also covered by said mortgage; that it was stipulated in the aforesaid real estate mortgage that default in the payment of the interest agreed upon would entitle the mortgagee to foreclose the same even before the lapse of the 4-year period; and as defendant spouses had allegedly failed to pay the interest for more than 6 months, plaintiff prayed the Court to order said defendants to pay the sum of P12,000.00 with interest thereon at 12% per annum from March 25, 1953, until fully paid; for an additional sum equivalent to 20% of the total obligation as damages, and for costs. As an alternative in case such demand may not be met and satisfied plaintiff prayed for a decree of foreclosure of the land, building and other improvements thereon to be sold at public auction and the proceeds thereof applied to satisfy the demands of plaintiff; that the Valinos, the surety company and any other person claiming interest on the mortgaged properties be barred and foreclosed of all rights, claims or equity of redemption in said properties; and for deficiency judgment in case the proceeds of the sale of the mortgaged property would be insufficient to satisfy the claim of plaintiff.

Defendant surety company, in answer to this complaint insisted on its right over the building, arguing that as the lot on which the house was constructed did not belong to the spouses at the time the chattel mortgage was executed, the house might be considered only as a personal property and that the encumbrance thereof and the subsequent foreclosure proceedings made pursuant to the provisions of the Chattel Mortgage Law were proper and legal. Defendant therefore prayed that said building be excluded from the real estate mortgage and its right over the same be declared superior to that of plaintiff, for damages, attorney's fees and costs.

Taking side with the surety company, defendant spouses admitted the due execution of the mortgage upon the land but assailed the allegation that the building was included thereon, it being contended that it was already encumbered in favor of the surety company before the real estate mortgage was executed, a fact made known to plaintiff during the preparation of said contract and to which the latter offered no objection. As a special defense, it was asserted that the action was premature because the contract was for a period of 4 years, which had not yet elapsed.

The two cases were jointly heard upon agreement of the parties, who submitted the same on a stipulation of facts, after which the Court rendered judgment dated March 8, 1956, holding that the chattel mortgage in favor of the Associated Insurance and Surety Co., Inc., was preferred and superior over the real estate mortgage subsequently executed in favor of Isabel Iya. It was ruled that as the Valinos were not yet the registered owner of the land on which the building in question was constructed at the time the first encumbrance was made, the building then was still a personality and a chattel mortgage over the same was proper. However, as the mortgagors were already the owner of the land at the time the contract with Isabel Iya was entered into, the building was transformed into a real property and the real estate mortgage created thereon was likewise adjudged as proper. It is to be noted in this connection that there is no evidence on record to sustain the allegation of the spouses Valino that at the time they mortgaged their house and lot to Isabel Iya, the latter was told or knew that part of the mortgaged property, i.e., the house, had previously been mortgaged to the surety company.

The residential building was, therefore, ordered excluded from the foreclosure prayed for by Isabel Iya, although the latter could exercise the right of a junior encumbrance. So the spouses Valino were ordered to pay the amount demanded by said mortgagee or in their default to have the parcel of land subject of the mortgage sold at public auction for the satisfaction of Iya's claim.

There is no question as to appellant's right over the land covered by the real estate mortgage; however, as the building constructed thereon has been the subject of 2 mortgages; controversy arise as to which of these encumbrances should receive preference over the other. The decisive factor in resolving the issue presented by this appeal is the determination of the nature of the structure litigated upon, for where it be considered a personality, the foreclosure of the chattel mortgage and the subsequent sale thereof at public auction, made in accordance with the Chattel Mortgage Law would be valid and the right acquired by the surety company therefrom would certainly deserve prior recognition; otherwise, appellant's claim for preference must be granted. The lower Court, deciding in favor of the surety company, based its ruling on the premise that as the mortgagors were not the owners of the land on which the building is erected at the time the first encumbrance was made, said structure partook of the nature of a personal property and could properly be the subject of a chattel mortgage. We find reason to hold otherwise, for as this Court, defining the nature or character of a building, has said:

. . . 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 (Art. 415, new Civil Code) could only mean one thing — that a building is byitself an immovable property . . . Moreover, and in view of the absence of any specific provision 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. (Lopez vs. Orosa, G.R. Nos. supra, p. 98).

A building certainly cannot be divested of its character of a realty by the fact that the land on which it is constructed belongs to another. To hold it the other way, the possibility is not remote that it would result in confusion, for to cloak the building with an uncertain status made dependent on the ownership of the land, would create a situation where a permanent fixture changes its nature or character as the ownership of the land changes hands. In the case at bar, as personal properties could only be the subject of a chattel mortgage (Section 1, Act 3952) and as obviously the structure in question is not one, the execution of the chattel mortgage covering said building is clearly invalid and a nullity. While it is true that said document was correspondingly registered in the Chattel Mortgage Register of Rizal, this act produced no effect whatsoever for where the interest conveyed is in the nature of a real property, the registration of the document in the registry of chattels is merely a futile act. Thus, the registration of the chattel mortgage of a building of strong materials produce no effect as far as the building is concerned (Leung Yee vs. Strong Machinery Co., 37 Phil., 644). Nor can we give any consideration to the contention of the surety that it has acquired ownership over the property in question by reason of the sale conducted by the Provincial Sheriff of Rizal, for as this Court has aptly pronounced:

A mortgage creditor who purchases real properties at an extrajudicial foreclosure sale thereof by virtue of a chattel mortgage constituted in his favor, which mortgage has been declared null and void with respect to said real properties, acquires no right thereto by virtue of said sale (De la Riva vs. Ah Keo, 60 Phil., 899).

Wherefore the portion of the decision of the lower Court in these two cases appealed from holding the rights of the surety company, over the building superior to that of Isabel Iya and excluding the building from the foreclosure prayed for by the latter is reversed and appellant Isabel Iya's right to foreclose not only the land but also the building erected thereon is hereby recognized, and the proceeds of the sale thereof at public auction (if the land has not yet been sold), shall be applied to the unsatisfied judgment in favor of Isabel Iya. This decision however is without prejudice to any right that the Associated Insurance and Surety Co., Inc., may have against the spouses Adriano and Lucia Valino on account of the mortgage of said building they executed in favor of said surety company. Without pronouncement as to costs. It is so ordered.

Paras, C.J., Bengzon, Montemayor, Reyes, A., Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., and Endencia, JJ., concur.

Tumalad vs Vicencio


Manila

EN BANC

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 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: (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-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 —

... 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 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 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, 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.

Concepcion, C.J., Dizon, Makalintal, Zaldivar, Castro, Fernando, Teehankee, Barredo, Villamor and Makasiar, JJ., concur.

Meralco v CBAA 114 scra 273


Manila

SECOND DIVISION

G.R. No. L-47943 May 31, 1982

MANILA ELECTRIC COMPANY, petitioner, vs.CENTRAL BOARD OF ASSESSMENT APPEALS, BOARD OF ASSESSMENT APPEALS OF BATANGAS and PROVINCIAL ASSESSOR OF BATANGAS, respondents.

AQUINO, J.:

This case is about the imposition of the realty tax on two oil storage tanks installed in 1969 by Manila Electric Company on a lot in San Pascual, Batangas which it leased in 1968 from Caltex (Phil.), Inc. The tanks are within the Caltex refinery compound. They have a total capacity of 566,000 barrels. They are used for storing fuel oil for Meralco's power plants.

According to Meralco, the storage tanks are made of steel plates welded and assembled on the spot. Their bottoms rest on a foundation consisting of compacted earth as the outermost layer, a sand pad as the intermediate layer and a two-inch thick bituminous asphalt stratum as the top layer. The bottom of each tank is in contact with the asphalt layer,

The steel sides of the tank are directly supported underneath by a circular wall made of concrete, eighteen inches thick, to prevent the tank from sliding. Hence, according to Meralco, the tank is not attached to its foundation. It is not anchored or welded to the concrete circular wall. Its bottom plate is not attached to any part of the foundation by bolts, screws or similar devices. The tank merely sits on its foundation. Each empty tank can be floated by flooding its dike-inclosed location with water four feet deep. (pp. 29-30, Rollo.)

On the other hand, according to the hearing commissioners of the Central Board of Assessment Appeals, the area where the two tanks are located is enclosed with earthen dikes with electric steel poles on top thereof and is divided into two parts as the site of each tank. The foundation of the tanks is elevated from the remaining area. On both sides of the earthen dikes are two separate concrete steps leading to the foundation of each tank.

Tank No. 2 is supported by a concrete foundation with an asphalt lining about an inch thick. Pipelines were installed on the sides of each tank and are connected to the pipelines of the Manila Enterprises Industrial Corporation whose buildings and pumping station are near Tank No. 2.

The Board concludes that while the tanks rest or sit on their foundation, the foundation itself and the walls, dikes and steps, which are integral parts of the tanks, are affixed to the land while the pipelines are attached to the tanks. (pp. 60-61, Rollo.) In 1970, the municipal treasurer of Bauan, Batangas, on the basis of an assessment made by the provincial assessor, required Meralco to pay realty taxes on the two tanks. For the five-year period from 1970 to 1974, the tax and penalties amounted to P431,703.96 (p. 27, Rollo). The Board required Meralco to pay the tax and penalties as a condition for entertaining its appeal from the adverse decision of the Batangas board of assessment appeals.

The Central Board of Assessment Appeals (composed of Acting Secretary of Finance Pedro M. Almanzor as chairman and Secretary of Justice Vicente Abad Santos and Secretary of Local Government and Community Development Jose Roño as members) in its decision dated November 5, 1976 ruled that the tanks together with the foundation, walls, dikes, steps, pipelines and other appurtenances constitute taxable improvements.

Meralco received a copy of that decision on February 28, 1977. On the fifteenth day, it filed a motion for reconsideration which the Board denied in its resolution of November 25, 1977, a copy of which was received by Meralco on February 28, 1978.

On March 15, 1978, Meralco filed this special civil action of certiorari to annul the Board's decision and resolution. It contends that the Board acted without jurisdiction and committed a grave error of law in holding that its storage tanks are taxable real property.

Meralco contends that the said oil storage tanks do not fall within any of the kinds of real property enumerated in article 415 of the Civil Code and, therefore, they cannot be categorized as realty by nature, by incorporation, by destination nor by analogy. Stress is laid on the fact that the tanks are not attached to the land and that they were placed on leased land, not on the land owned by Meralco.

This is one of those highly controversial, borderline or penumbral cases on the classification of property where strong divergent opinions are inevitable. The issue raised by Meralco has to be resolved in the light of the provisions of the Assessment Law, Commonwealth Act No. 470, and the Real Property Tax Code, Presidential Decree No. 464 which took effect on June 1, 1974.

Section 2 of the Assessment Law provides that the realty tax is due "on real property, including land, buildings, machinery, and other improvements" not specifically exempted in section 3 thereof. This provision is reproduced with some modification in the Real Property Tax Code which provides:

Sec. 38. Incidence of Real Property Tax. — They shall be levied, assessed and collected in all provinces, cities and municipalities an annual ad valorem tax on real property, such as land, buildings, machinery and other improvements affixed or attached to real property not hereinafter specifically exempted.

The Code contains the following definition in its section 3:

k) Improvements — is a valuable addition made to property or an amelioration in its condition, amounting to more than mere repairs or replacement of waste, costing labor or capital and intended to enhance its value, beauty or utility or to adapt it for new or further purposes.

We hold that while the two storage tanks are not embedded in the land, they may, nevertheless, be considered as improvements on the land, enhancing its utility and rendering it useful to the oil industry. It is undeniable that the two tanks have been installed with some degree of permanence as receptacles for the considerable quantities of oil needed by Meralco for its operations.

Oil storage tanks were held to be taxable realty in Standard Oil Co. of New Jersey vs. Atlantic City, 15 Atl. 2nd 271.

For purposes of taxation, the term "real property" may include things which should generally be regarded as personal property(84 C.J.S. 171, Note 8). It is a familiar phenomenon to see things classed as real property for purposes of taxation which on general principle might be considered personal property (Standard Oil Co. of New York vs. Jaramillo, 44 Phil. 630, 633).

The case of Board of Assessment Appeals vs. Manila Electric Company, 119 Phil. 328, wherein Meralco's steel towers were held not to be subject to realty tax, is not in point because in that case the steel towers were regarded as poles and under its franchise Meralco's poles are exempt from taxation. Moreover, the steel towers were not attached to any land or building. They were removable from their metal frames.

Nor is there any parallelism between this case and Mindanao Bus Co. vs. City Assessor, 116 Phil. 501, where the tools and equipment in the repair, carpentry and blacksmith shops of a transportation company were held not subject to realty tax because they were personal property.

WHEREFORE, the petition is dismissed. The Board's questioned decision and resolution are affirmed. No costs.

SO ORDERED.

Barredo (Chairman), Guerrero, De Castro and Escolin, JJ., concur.

Concepcion, Jr., J., is on leave.

Justice Abad Santos, J., took no part.

Meralco vs CBAA 114 scra 260


Manila

SECOND DIVISION

G.R. No. L-46245 May 31, 1982

MERALCO SECURITIES INDUSTRIAL CORPORATION, petitioner, vs.CENTRAL BOARD OF ASSESSMENT APPEALS, BOARD OF ASSESSMENT APPEALS OF LAGUNA and PROVINCIAL ASSESSOR OF LAGUNA, respondents.

AQUINO, J.:

In this special civil action of certiorari, Meralco Securities Industrial Corporation assails the decision of the Central Board of Assessment Appeals (composed of the Secretary of Finance as chairman and the Secretaries of Justice and Local Government and Community Development as members) dated May 6, 1976, holding that Meralco Securities' oil pipeline is subject to realty tax.

The record reveals that pursuant to a pipeline concession issued under the Petroleum Act of 1949, Republic Act No. 387, Meralco Securities installed from Batangas to Manila a pipeline system consisting of cylindrical steel pipes joined together and buried not less than one meter below the surface along the shoulder of the public highway. The portion passing through Laguna is about thirty kilometers long.

The pipes for white oil products measure fourteen inches in diameter by thirty-six feet with a maximum capacity of 75,000 barrels daily. The pipes for fuel and black oil measure sixteen inches by forty-eight feet with a maximum capacity of 100,000 barrels daily.

The pipes are embedded in the soil and are firmly and solidly welded together so as to preclude breakage or damage thereto and prevent leakage or seepage of the oil. The valves are welded to the pipes so as to make the pipeline system one single piece of property from end to end.

In order to repair, replace, remove or transfer segments of the pipeline, the pipes have to be cold-cut by means of a rotary hard-metal pipe-cutter after digging or excavating them out of the ground where they are buried. In points where the pipeline traversed rivers or creeks, the pipes were laid beneath the bed thereof. Hence, the pipes are permanently attached to the land.

However, Meralco Securities notes that segments of the pipeline can be moved from one place to another as shown in the permit issued by the Secretary of Public Works and Communications which permit provides that the government reserves the right to require the removal or transfer of the pipes by and at the concessionaire's expense should they be affected by any road repair or improvement.

Pursuant to the Assessment Law, Commonwealth Act No. 470, the provincial assessor of Laguna treated the pipeline as real property and issued Tax Declarations Nos. 6535-6537, San Pedro; 7473-7478, Cabuyao; 7967-7971, Sta. Rosa; 9882-9885, Biñan and 15806-15810, Calamba, containing the assessed values of portions of the pipeline.

Meralco Securities appealed the assessments to the Board of Assessment Appeals of Laguna composed of the register of deeds as chairman and the provincial auditor as member. That board in its decision of June 18, 1975 upheld the assessments (pp. 47-49, Rollo).

Meralco Securities brought the case to the Central Board of Assessment Appeals. As already stated, that Board, composed of Acting Secretary of Finance Pedro M. Almanzor as chairman and Secretary of Justice Vicente Abad

Santos and Secretary of Local Government and Community Development Jose Roño as members, ruled that the pipeline is subject to realty tax (p. 40, Rollo).

A copy of that decision was served on Meralco Securities' counsel on August 27, 1976. Section 36 of the Real Property Tax Code, Presidential Decree No. 464, which took effect on June 1, 1974, provides that the Board's decision becomes final and executory after the lapse of fifteen days from the date of receipt of a copy of the decision by the appellant.

Under Rule III of the amended rules of procedure of the Central Board of Assessment Appeals (70 O.G. 10085), a party may ask for the reconsideration of the Board's decision within fifteen days after receipt. On September 7, 1976 (the eleventh day), Meralco Securities filed its motion for reconsideration.

Secretary of Finance Cesar Virata and Secretary Roño (Secretary Abad Santos abstained) denied the motion in a resolution dated December 2, 1976, a copy of which was received by appellant's counsel on May 24, 1977 (p. 4, Rollo). On June 6, 1977, Meralco Securities filed the instant petition for certiorari.

The Solicitor General contends that certiorari is not proper in this case because the Board acted within its jurisdiction and did not gravely abuse its discretion and Meralco Securities was not denied due process of law.

Meralco Securities explains that because the Court of Tax Appeals has no jurisdiction to review the decision of the Central Board of Assessment Appeals and because no judicial review of the Board's decision is provided for in the Real Property Tax Code, Meralco Securities' recourse is to file a petition for certiorari.

We hold that certiorari was properly availed of in this case. It is a writ issued by a superior court to an inferior court, board or officer exercising judicial or quasi-judicial functions whereby the record of a particular case is ordered to be elevated for review and correction in matters of law (14 C.J.S. 121-122; 14 Am Jur. 2nd 777).

The rule is that as to administrative agencies exercising quasi-judicial power there is an underlying power in the courts to scrutinize the acts of such agencies on questions of law and jurisdiction even though no right of review is given by the statute (73 C.J.S. 506, note 56).

"The purpose of judicial review is to keep the administrative agency within its jurisdiction and protect substantial rights of parties affected by its decisions" (73 C.J.S. 507, See. 165). The review is a part of the system of checks and balances which is a limitation on the separation of powers and which forestalls arbitrary and unjust adjudications.

Judicial review of the decision of an official or administrative agency exercising quasi-judicial functions is proper in cases of lack of jurisdiction, error of law, grave abuse of discretion, fraud or collusion or in case the administrative decision is corrupt, arbitrary or capricious (Mafinco Trading Corporation vs. Ople, L-37790, March 25, 1976, 70 SCRA 139, 158; San Miguel Corporation vs. Secretary of Labor, L-39195, May 16, 1975, 64 SCRA 56, 60, Mun. Council of Lemery vs. Prov. Board of Batangas, 56 Phil. 260, 268).

The Central Board of Assessment Appeals, in confirming the ruling of the provincial assessor and the provincial board of assessment appeals that Meralco Securities' pipeline is subject to realty tax, reasoned out that the pipes are machinery or improvements, as contemplated in the Assessment Law and the Real Property Tax Code; that they do not fall within the category of property exempt from realty tax under those laws; that articles 415 and 416 of the Civil Code, defining real and personal property, have no application to this case; that even under article 415, the steel pipes can be regarded as realty because they are constructions adhered to the soil and things attached to the land in a fixed manner and that Meralco Securities is not exempt from realty tax under the Petroleum Law (pp. 36-40).

Meralco Securities insists that its pipeline is not subject to realty tax because it is not real property within the meaning of article 415. This contention is not sustainable under the provisions of the Assessment Law, the Real Property Tax Code and the Civil Code.


SEC. 38. Incidence of Real Property Tax.— There shall be levied, assessed and collected in all provinces, cities and municipalities an annual ad valorem tax on real property, such as land, buildings, machinery and other improvements affixed or attached to real property not hereinafter specifically exempted. *

It is incontestable that the pipeline of Meralco Securities does not fall within any of the classes of exempt real property enumerated in section 3 of the Assessment Law and section 40 of the Real Property Tax Code.

Pipeline means a line of pipe connected to pumps, valves and control devices for conveying liquids, gases or finely divided solids. It is a line of pipe running upon or in the earth, carrying with it the right to the use of the soil in which it is placed (Note 21[10],54 C.J.S. 561).

Article 415[l] and [3] provides that real property may consist of constructions of all kinds adhered to the soil and everything attached to an immovable in a fixed manner, in such a way that it cannot be separated therefrom without breaking the material or deterioration of the object.

The pipeline system in question is indubitably a construction adhering to the soil (Exh. B, p. 39, Rollo). It is attached to the land in such a way that it cannot be separated therefrom without dismantling the steel pipes which were welded to form the pipeline.

Insofar as the pipeline uses valves, pumps and control devices to maintain the flow of oil, it is in a sense machinery within the meaning of the Real Property Tax Code.

It should be borne in mind that what are being characterized as real property are not the steel pipes but the pipeline system as a whole. Meralco Securities has apparently two pipeline systems.

A pipeline for conveying petroleum has been regarded as real property for tax purposes (Miller County Highway, etc., Dist. vs. Standard Pipe Line Co., 19 Fed. 2nd 3; Board of Directors of Red River Levee Dist. No. 1 of Lafayette County, Ark vs. R. F. C., 170 Fed. 2nd 430; 50 C. J. 750, note 86).

The other contention of Meralco Securities is that the Petroleum Law exempts it from the payment of realty taxes. The alleged exemption is predicated on the following provisions of that law which exempt Meralco Securities from local taxes and make it liable for taxes of general application:

ART. 102. Work obligations, taxes, royalties not to be changed.— Work obligations, special taxes and royalties which are fixed by the provisions of this Act or by the concession for any of the kinds of concessions to which this Act relates, are considered as inherent on such concessions after they are granted, and shall not be increased or decreased during the life of the concession to which they apply; nor shall any other special taxes or levies be applied to such concessions, nor shall 0concessionaires under this Act be subject to any provincial, municipal or other local taxes or levies;nor shall any sales tax be charged on any petroleum produced from the concession or portion thereof, manufactured by the concessionaire and used in the working of his concession. All such concessionaires, however, shall be subject to such taxes as are of general application in addition to taxes and other levies specifically provided in this Act.

Meralco Securities argues that the realty tax is a local tax or levy and not a tax of general application. This argument is untenable because the realty tax has always been imposed by the lawmaking body and later by the President of the Philippines in the exercise of his lawmaking powers, as shown in section 342 et seq. of the Revised Administrative Code, Act No. 3995, Commonwealth Act No. 470 and Presidential Decree No. 464.

The realty tax is enforced throughout the Philippines and not merely in a particular municipality or city but the proceeds of the tax accrue to the province, city, municipality and barrio where the realty taxed is situated (Sec. 86, P.D. No. 464). In contrast, a local tax is imposed by the municipal or city council by virtue of the Local Tax Code, Presidential Decree No. 231, which took effect on July 1, 1973 (69 O.G. 6197).

We hold that the Central Board of Assessment Appeals did not act with grave abuse of discretion, did not commit any error of law and acted within its jurisdiction in sustaining the holding of the provincial assessor and the local board of assessment appeals that Meralco Securities' pipeline system in Laguna is subject to realty tax.

WHEREFORE, the questioned decision and resolution are affirmed. The petition is dismissed. No costs.

SO ORDERED.


Justice Abad Santos, Concepcion, Jr., JJ., took no part.

Footnotes

* The Real Property Tax Code contains the following definitions in its section 3:

"k) Improvements - is a valuable addition made to property or an amelioration in its condition, amounting to more than mere repairs or replacement of waste, costing labor or capital and intended to enhance its value, beauty or utility or to adapt it for new or further purposes. "

"m) Machinery - shall embrace machines, mechanical contrivances, instruments, appliances and apparatus attached to the real estate. It includes the physical facilities available for production, as well as the installations and appurtenant service facilities, together with all other equipment designed for or essential to its manufacturing, industrial or agricultural purposes." (See sec. 3[f], Assessment Law).

Board of Assessment vs MERALCO


Manila

EN BANC

G.R. No. L-15334 January 31, 1964

BOARD OF ASSESSMENT APPEALS, CITY ASSESSOR and CITY TREASURER OF QUEZON CITY, petitioners, vs.MANILA ELECTRIC COMPANY, respondent.

Assistant City Attorney Jaime R. Agloro for petitioners.Ross, Selph and Carrascoso for respondent.

PAREDES, J.:

From the stipulation of facts and evidence adduced during the hearing, the following appear:

On October 20, 1902, the Philippine Commission enacted Act No. 484 which authorized the Municipal Board of Manila to grant a franchise to construct, maintain and operate an electric street railway and electric light, heat and power system in the City of Manila and its suburbs to the person or persons making the most favorable bid. Charles M. Swift was awarded the said franchise on March 1903, the terms and conditions of which were embodied in Ordinance No. 44 approved on March 24, 1903. Respondent Manila Electric Co. (Meralco for short), became the transferee and owner of the franchise.

Meralco's electric power is generated by its hydro-electric plant located at Botocan Falls, Laguna and is transmitted to the City of Manila by means of electric transmission wires, running from the province of Laguna to the said City. These electric transmission wires which carry high voltage current, are fastened to insulators attached on steel towers constructed by respondent at intervals, from its hydro-electric plant in the province of Laguna to the City of Manila. The respondent Meralco has constructed 40 of these steel towers within Quezon City, on land belonging to it. A photograph of one of these steel towers is attached to the petition for review, marked Annex A. Three steel towers were inspected by the lower court and parties and the following were the descriptions given there of by said court:

The first steel tower is located in South Tatalon, España Extension, Quezon City. The findings were as follows: the ground around one of the four posts was excavated to a depth of about eight (8) feet, with an opening of about one (1) meter in diameter, decreased to about a quarter of a meter as it we deeper until it reached the bottom of the post; at the bottom of the post were two parallel steel bars attached to the leg means of bolts; the tower proper was attached to the leg three bolts; with two cross metals to prevent mobility; there was no concrete foundation but there was adobe stone underneath; as the bottom of the excavation was covered with water about three inches high, it could not be determined with certainty to whether said adobe stone was placed purposely or not, as the place abounds with this kind of stone; and the tower carried five high voltage wires without cover or any insulating materials.

The second tower inspected was located in Kamuning Road, K-F, Quezon City, on land owned by the petitioner approximate more than one kilometer from the first tower. As in the first tower, the ground around one of the four legs was excavate from seven to eight (8) feet deep and one and a half (1-½) meters wide. There being very little water at the bottom, it was seen that there was no concrete foundation, but there soft adobe beneath. The leg was likewise provided with two parallel steel bars bolted to a square metal frame also bolted to each corner. Like the first one, the second tower is made up of metal rods joined together by means of bolts, so that by unscrewing the bolts, the tower could be dismantled and reassembled.

The third tower examined is located along Kamias Road, Quezon City. As in the first two towers given above, the ground around the two legs of the third tower was excavated to a depth about two or three inches beyond the outside level of the steel bar foundation. It was found that there was no concrete foundation. Like the two previous ones, the bottom arrangement of the legs thereof were found to be resting on soft adobe, which, probably due to high humidity, looks like mud or clay. It was also found that the square metal frame supporting the legs were not attached to any material or foundation.

On November 15, 1955, petitioner City Assessor of Quezon City declared the aforesaid steel towers for real property tax under Tax declaration Nos. 31992 and 15549. After denying respondent's petition to cancel these declarations, an

appeal was taken by respondent to the Board of Assessment Appeals of Quezon City, which required respondent to pay the amount of P11,651.86 as real property tax on the said steel towers for the years 1952 to 1956. Respondent paid the amount under protest, and filed a petition for review in the Court of Tax Appeals (CTA for short) which rendered a decision on December 29, 1958, ordering the cancellation of the said tax declarations and the petitioner City Treasurer of Quezon City to refund to the respondent the sum of P11,651.86. The motion for reconsideration having been denied, on April 22, 1959, the instant petition for review was filed.

In upholding the cause of respondents, the CTA held that: (1) the steel towers come within the term "poles" which are declared exempt from taxes under part II paragraph 9 of respondent's franchise; (2) the steel towers are personal properties and are not subject to real property tax; and (3) the City Treasurer of Quezon City is held responsible for the refund of the amount paid. These are assigned as errors by the petitioner in the brief.

The tax exemption privilege of the petitioner is quoted hereunder:

PAR 9. The grantee shall be liable to pay the same taxes upon its real estate, buildings, plant (not including poles, wires, transformers, and insulators), machinery and personal property as other persons are or may be hereafter required by law to pay ... Said percentage shall be due and payable at the time stated in paragraph nineteen of Part One hereof, ... and shall be in lieu of all taxes and assessments of whatsoever nature and by whatsoever authority upon the privileges, earnings, income, franchise, and poles, wires, transformers, and insulators of the grantee from which taxes and assessments the grantee is hereby expressly exempted. (Par. 9, Part Two, Act No. 484 Respondent's Franchise; emphasis supplied.)

The word "pole" means "a long, comparatively slender usually cylindrical piece of wood or timber, as typically the stem of a small tree stripped of its branches; also by extension, a similar typically cylindrical piece or object of metal or the like". The term also refers to "an upright standard to the top of which something is affixed or by which something is supported; as a dovecote set on a pole; telegraph poles; a tent pole; sometimes, specifically a vessel's master (Webster's New International Dictionary 2nd Ed., p. 1907.) Along the streets, in the City of Manila, may be seen cylindrical metal poles, cubical concrete poles, and poles of the PLDT Co. which are made of two steel bars joined together by an interlacing metal rod. They are called "poles" notwithstanding the fact that they are no made of wood. It must be noted from paragraph 9, above quoted, that the concept of the "poles" for which exemption is granted, is not determined by their place or location, nor by the character of the electric current it carries, nor the material or form of which it is made, but the use to which they are dedicated. In accordance with the definitions, pole is not restricted to a long cylindrical piece of wood or metal, but includes "upright standards to the top of which something is affixed or by which something is supported. As heretofore described, respondent's steel supports consists of a framework of four steel bars or strips which are bound by steel cross-arms atop of which are cross-arms supporting five high voltage transmission wires (See Annex A) and their sole function is to support or carry such wires.

The conclusion of the CTA that the steel supports in question are embraced in the term "poles" is not a novelty. Several courts of last resort in the United States have called these steel supports "steel towers", and they denominated these supports or towers, as electric poles. In their decisions the words "towers" and "poles" were used interchangeably, and it is well understood in that jurisdiction that a transmission tower or pole means the same thing.

In a proceeding to condemn land for the use of electric power wires, in which the law provided that wires shall be constructed upon suitable poles, this term was construed to mean either wood or metal poles and in view of the land being subject to overflow, and the necessary carrying of numerous wires and the distance between poles, the statute was interpreted to include towers or poles. (Stemmons and Dallas Light Co. (Tex) 212 S.W. 222, 224; 32-A Words and Phrases, p. 365.)

The term "poles" was also used to denominate the steel supports or towers used by an association used to convey its electric power furnished to subscribers and members, constructed for the purpose of fastening high voltage and dangerous electric wires alongside public highways. The steel supports or towers were made of iron or other metals consisting of two pieces running from the ground up some thirty feet high, being wider at the bottom than at the top, the said two metal pieces being connected with criss-cross iron running from the bottom to the top, constructed like ladders and loaded with high voltage electricity. In form and structure, they are like the steel towers in question. (Salt River Valley Users' Ass'n v. Compton, 8 P. 2nd, 249-250.)

The term "poles" was used to denote the steel towers of an electric company engaged in the generation of hydro-electric power generated from its plant to the Tower of Oxford and City of Waterbury. These steel towers are about 15 feet square at the base and extended to a height of about 35 feet to a point, and are embedded in the cement foundations sunk in the earth, the top of which extends above the surface of the soil in the tower of Oxford, and to the towers are attached insulators, arms, and other equipment capable of carrying wires for the transmission of electric power (Connecticut Light and Power Co. v. Oxford, 101 Conn. 383, 126 Atl. p. 1).

In a case, the defendant admitted that the structure on which a certain person met his death was built for the purpose of supporting a transmission wire used for carrying high-tension electric power, but claimed that the steel towers on which it is carried were so large that their wire took their structure out of the definition of a pole line. It was held that in defining the word pole, one should not be governed by the wire or material of the support used, but was considering the danger from any elevated wire carrying electric current, and that regardless of the size or material wire of its individual members, any continuous series of structures intended and used solely or primarily for the purpose of supporting wires carrying electric currents is a pole line (Inspiration Consolidation Cooper Co. v. Bryan 252 P. 1016).

It is evident, therefore, that the word "poles", as used in Act No. 484 and incorporated in the petitioner's franchise, should not be given a restrictive and narrow interpretation, as to defeat the very object for which the franchise was granted. The poles as contemplated thereon, should be understood and taken as a part of the electric power system of the respondent Meralco, for the conveyance of electric current from the source thereof to its consumers. If the respondent would be required to employ "wooden poles", or "rounded poles" as it used to do fifty years back, then one should admit that the Philippines is one century behind the age of space. It should also be conceded by now that steel towers, like the ones in question, for obvious reasons, can better effectuate the purpose for which the respondent's franchise was granted.

Granting for the purpose of argument that the steel supports or towers in question are not embraced within the term poles, the logical question posited is whether they constitute real properties, so that they can be subject to a real property tax. The tax law does not provide for a definition of real property; but Article 415 of the Civil Code does, by stating the following are immovable property:

(1) Land, buildings, roads, and constructions of all kinds adhered to the soil;

x x x x x x x x x

(3) Everything attached to an immovable in a fixed manner, in such a way that it cannot be separated therefrom without breaking the material or deterioration of the object;

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 in a building or on a piece of land, and which tends directly to meet the needs of the said industry or works;

x x x x x x x x x

The steel towers or supports in question, do not come within the objects mentioned in paragraph 1, because they do not constitute buildings or constructions adhered to the soil. They are not construction analogous to buildings nor adhering to the soil. As per description, given by the lower court, they are removable and merely attached to a square metal frame by means of bolts, which when unscrewed could easily be dismantled and moved from place to place. They can not be included under paragraph 3, as they are not attached to an immovable in a fixed manner, and they can be separated without breaking the material or causing deterioration upon the object to which they are attached. Each of these steel towers or supports consists of steel bars or metal strips, joined together by means of bolts, which can be disassembled by unscrewing the bolts and reassembled by screwing the same. These steel towers or supports do not also fall under paragraph 5, for they are not machineries, receptacles, instruments or implements, and even if they were, they are not intended for industry or works on the land. Petitioner is not engaged in an industry or works in the land in which the steel supports or towers are constructed.

It is finally contended that the CTA erred in ordering the City Treasurer of Quezon City to refund the sum of P11,651.86, despite the fact that Quezon City is not a party to the case. It is argued that as the City Treasurer is not the real party in interest, but Quezon City, which was not a party to the suit, notwithstanding its capacity to sue and be sued, he should not be ordered to effect the refund. This question has not been raised in the court below, and, therefore, it cannot be properly raised for the first time on appeal. The herein petitioner is indulging in legal technicalities and niceties which do not help him any; for factually, it was he (City Treasurer) whom had insisted that respondent herein pay the real estate taxes, which respondent paid under protest. Having acted in his official capacity as City Treasurer of Quezon City, he would surely know what to do, under the circumstances.

IN VIEW HEREOF, the decision appealed from is hereby affirmed, with costs against the petitioners.

Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera and Regala, JJ., concur.Makalintal, J., concurs in the result.Dizon, J., took no part.

CALTEX vs CBAA


Manila

SECOND DIVISION

G.R. No. L-50466 May 31, 1982

CALTEX (PHILIPPINES) INC., petitioner, vs.CENTRAL BOARD OF ASSESSMENT APPEALS and CITY ASSESSOR OF PASAY, respondents.

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 was constructed by the owner of the gasoline station and the improvement which holds all the properties under question, they are attached and affixed to the pavement and to the improvement.

The pavement covering the entire lot of the gasoline service station, as well as all the improvements, machines, equipments and apparatus are allowed by Caltex (Philippines) Inc. ...

The underground gasoline tank is attached to the shed by the steel pipe to the pump, so with the water tank it is connected also by a steel pipe to the pavement, then to the electric motor which electric motor is placed under the shed. So to say that the gasoline pumps, water pumps and underground tanks are outside of the service station, and to consider only the building as the service station is grossly erroneous. (pp. 58-60, Rollo).

The said machines and equipment are loaned by Caltex to gas station operators under an appropriate lease agreement or receipt. It is stipulated in the lease contract that the operators, upon demand, shall return to Caltex the machines and equipment in good condition as when received, ordinary wear and tear excepted.

The lessor of the land, where the gas station is located, does not become the owner of the machines and equipment installed therein. Caltex retains the ownership thereof during the term of the lease.

The city assessor of Pasay City characterized the said items of gas station equipment and machinery as taxable realty. The realty tax on said equipment amounts to P4,541.10 annually (p. 52, Rollo). The city board of tax appeals ruled that they are personalty. The assessor appealed to the Central Board of Assessment Appeals.

The Board, which was composed of Secretary of Finance Cesar Virata as chairman, Acting Secretary of Justice Catalino Macaraig, Jr. and Secretary of Local Government and Community Development Jose Roño, held in its decision of June 3, 1977 that the said machines and equipment are real property within the meaning of sections 3(k) & (m) and 38 of the Real Property Tax Code, Presidential Decree No. 464, which took effect on June 1, 1974, and that the definitions of real property and personal property in articles 415 and 416 of the Civil Code are not applicable to this case.

The decision was reiterated by the Board (Minister Vicente Abad Santos took Macaraig's place) in its resolution of January 12, 1978, denying Caltex's motion for reconsideration, a copy of which was received by its lawyer on April 2, 1979.

On May 2, 1979 Caltex filed this certiorari petition wherein it prayed for the setting aside of the Board's decision and for a declaration that t he said machines and equipment are personal property not subject to realty tax (p. 16, Rollo).

The Solicitor General's contention that the Court of Tax Appeals has exclusive appellate jurisdiction over this case is not correct. When Republic act No. 1125 created the Tax Court in 1954, there was as yet no Central Board of Assessment Appeals. Section 7(3) of that law in providing that the Tax Court had jurisdiction to review by appeal decisions of provincial or city boards of assessment appeals had in mind the local boards of assessment appeals but not the Central Board of Assessment Appeals which under the Real Property Tax Code has appellate jurisdiction over decisions of the said local boards of assessment appeals and is, therefore, in the same category as the Tax Court.

Section 36 of the Real Property Tax Code provides that the decision of the Central Board of Assessment Appeals shall become final and executory after the lapse of fifteen days from the receipt of its decision by the appellant. Within that fifteen-day period, a petition for reconsideration may be filed. The Code does not provide for the review of the Board's decision by this Court.

Consequently, the only remedy available for seeking a review by this Court of the decision of the Central Board of Assessment Appeals is the special civil action of certiorari, the recourse resorted to herein by Caltex (Philippines), Inc.

The issue is whether the pieces of gas station equipment and machinery already enumerated are subject to realty tax. This issue has to be resolved primarily under the provisions of the Assessment Law and the Real Property Tax Code.


SEC. 38. Incidence of Real Property Tax.— There shall be levied, assessed and collected in all provinces, cities and municipalities an annual ad valorem tax on real property, such as land, buildings, machinery and other improvements affixed or attached to real property not hereinafter specifically exempted.

The Code contains the following definitions in its section 3:

k) Improvements — is a valuable addition made to property or an amelioration in its condition, amounting to more than mere repairs or replacement of waste, costing labor or capital and intended to enhance its value, beauty or utility or to adapt it for new or further purposes.

m) Machinery — shall embrace machines, mechanical contrivances, instruments, appliances and apparatus attached to the real estate. It includes the physical facilities available for production, as well as the installations and appurtenant service facilities, together with all other equipment designed for or essential to its manufacturing, industrial or agricultural purposes (See sec. 3[f], Assessment Law).

We hold that the said equipment and machinery, as appurtenances to the gas station building or shed owned by Caltex (as to which it is subject to realty tax) and which fixtures are necessary to the operation of the gas station, for without them the gas station would be useless, and which have been attached or affixed permanently to the gas station site or

embedded therein, are taxable improvements and machinery within the meaning of the Assessment Law and the Real Property Tax Code.

Caltex invokes the rule 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 (Davao Saw Mill Co. vs. Castillo, 61 Phil 709).

That ruling is an interpretation of paragraph 5 of article 415 of the Civil Code regarding machinery that becomes real property by destination. In the Davao Saw Mills case the question was whether the machinery mounted on foundations of cement and installed by the lessee on leased land should be regarded as real property forpurposes of execution of a judgment against the lessee. The sheriff treated the machinery as personal property. This Court sustained the sheriff's action. (Compare with Machinery & Engineering Supplies, Inc. vs. Court of Appeals, 96 Phil. 70, where in a replevin case machinery was treated as realty).

Here, the question is whether the gas station equipment and machinery permanently affixed by Caltex to its gas station and pavement (which are indubitably taxable realty) should be subject to the realty tax. This question is different from the issue raised in the Davao Saw Mill case.

Improvements on land are commonly taxed as realty even though for some purposes they might be considered personalty (84 C.J.S. 181-2, Notes 40 and 41). "It is a familiar phenomenon to see things classed as real property for purposes of taxation which on general principle might be considered personal property" (Standard Oil Co. of New York vs. Jaramillo, 44 Phil. 630, 633).

This case is also easily distinguishable from Board of Assessment Appeals vs. Manila Electric Co., 119 Phil. 328, where Meralco's steel towers were considered poles within the meaning of paragraph 9 of its franchise which exempts its poles from taxation. The steel towers were considered personalty because they were attached to square metal frames by means of bolts and could be moved from place to place when unscrewed and dismantled.

Nor are Caltex's gas station equipment and machinery the same as tools and equipment in the repair shop of a bus company which were held to be personal property not subject to realty tax (Mindanao Bus Co. vs. City Assessor, 116 Phil. 501).

The Central Board of Assessment Appeals did not commit a grave abuse of discretion in upholding the city assessor's is imposition of the realty tax on Caltex's gas station and equipment.

WHEREFORE, the questioned decision and resolution of the Central Board of Assessment Appeals are affirmed. The petition for certiorari is dismissed for lack of merit. No costs.

SO ORDERED.


Concepcion, Jr. and Abad Santos, JJ., took no part.

US vs CARLOS


Manila

EN BANC

G.R. No. 6295 September 1, 1911

THE UNITED STATES, plaintiff-appellee, vs.IGNACIO CARLOS, defendant-appellant.

A. D. Gibbs for appellant. Acting Attorney-General Harvey for appellee.

PER CURIAM:

The information filed in this case is as follows:

The undersigned accuses Ignacio Carlos of the crime of theft, committed as follows:

That on, during, and between the 13th day of February, 1909, and the 3d day of March, 1910, in the city of Manila, Philippine Islands, the said Ignacio Carlos, with intent of gain and without violence or intimidation against the person or force against the thing, did then and there, willfully, unlawfully, and feloniously, take, steal , and carry away two thousand two hundred and seventy-three (2,273) kilowatts of electric current, of the value of nine hundred and nine (909) pesos and twenty (20) cents Philippine currency, the property of the Manila Electric Railroad and Light Company, a corporation doing business in the Philippine Islands, without the consent of the owner thereof; to the damage and prejudice of the said Manila Electric Railroad and Light Company in the said sum of nine hundred and nine (909) pesos and twenty (20) cents Philippine currency, equal to and equivalent of 4,546 pesetas Philippine currency. All contrary to law.

(Sgd.) L. M. SOUTWORTH, Prosecuting Attorney.

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 for the city of Manila.

(Sgd.) CHARLES S. LOBINGIER, Judge, First Instance.

A preliminary investigation has heretofore been conducted in this case, under my direction, having examined the witness under oath, in accordance with the provisions of section 39 of Act No. 183 of the Philippine Commission, as amended by section 2 of Act No. 612 of the Philippine Commission.

(Sgd) L. M. SOUTHWORTH, Prosecuting Attorney.

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 for the city of Manila.

(Sgd.) CHARLES LOBINGIER, Judge, First Instance.

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.

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 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 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 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:

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.

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 ofestafa in violation of section 11 of General Orders, No. 58. In disposing of this question this court said:

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 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 takingwithout 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 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 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 awaywithout 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.

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 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 of the prosecution, to be strongly influenced by the failure to produce as 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:

In this case it would have been easy to have submitted abundant evidence that Juan Casipong forsook his lawful wife and lived in concubinage in the village of Bolocboc with his paramour Gregoria Hongoy, for there would have been an excess of witnesses to testify regarding the actions performed by the defendants, actions not of isolated occurrence but carried on for many days in slight of numerous residents scandalized by their bad example. But it is impossible to conclude from the result of the trial that the concubinage with scandal charged against the defendants has been proved, and therefore conviction of the alleged concubine Gregoria Hongoy is not according to law.

In the case at bar the question of the consent of the company to the us of the electricity was the essence of the charge. The defendant denied that he had taken the electricity without the consent of the company. The prosecution did not present any officer of the corporation to offset this denial and the company itself, although represented on the trial by its own private counsel, did not produce a single witness upon that subject.

In the case of Standard Oil Co. vs. State (117 Tenn., 618), the court (p.672) said:

But the best evidence of what his instructions to Holt were and the 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 semi-weekly reports made to him by Holt and Rutherford of what was done 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 copy of his letter to Holt, condemning the transaction, as evidence in behalf of the plaintiffs in error. The presumption always is that competent and pertinent evidence within the knowledge or control of a party which he withholds is against his interest and insistence. (Dunlap vs. Haynes, 4 Heisk., 476; Kirby vs.Tallmadge, 160 U. S., 379, 16 Sup. Ct., 349, 40 L. ed., 463; Pacific Constr. Co. vs. B. W. Co., 94 Fed,, 180, 36 C. C. A., 153)

In the case of Succession of Drysdale (127 La., 890), the court held:

When a will presented for probate is attacked on the ground that it is a forgery, and there are pertinent facts relating to the will in the possession of the proponent, and he repeatedly fails to testify when his testimony could 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 the will is a principal legatee.

In the case of Belknap vs. Sleeth (77 Kan., 164), the court (p. 172) 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 refused to testify in a material matter in behalf of the opposing party? It

must be conceded that the benefit of all reasonable presumptions arising from his refusal should be given to the other party. The conduct of a party in omitting to produce evidence peculiarly within his knowledge frequently affords occasion for presumptions against him. (Kirby vs. Tallmadge, 160 U. S., 379, 16 Sup. Ct., 349, 14 L. Ed., 463.) This rule has been often applied where a party withholds evidence within his exclusive possession and the circumstances are such as to impel an honest man to produce the testimony. In this case the witness not only failed but refused to testify concerning material matters that must have been within his knowledge.

In the case of Heath vs. Waters (40 Mich., 457), it was held that:

It is to be presumed that when a witness refuses to explain what he can explain, the explanation would be to his prejudice.

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 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 circumstance strengthening the proof. That was all that was done here.

In the case of Funda vs. St. Paul City Railway Co. (71 Minn., 438), the court held:

The defendant having omitted to call its motorman as a witness, although within reach and available, the court was, under the circumstances, justified in instructing the jury that, in weighing the effect of the evidence actually introduced, they were at liberty to presume that the testimony of the motorman, if introduced, would not have been favorable to the cause of defendant.

In the case of Gulf, C. & S. F. Ry. Co. vs. Ellis (54 Fed. Rep., 481), the circuit court of appeals held that:

Failure to produce the engineer as a witness to rebut the inferences raised by the circumstancial evidence would justify the jury in assuming that his evidence, instead of rebutting such inference, would support them.

In Wigmore on Evidence (vol. 1, sec. 285), it is said:

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 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 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 thanenergy. 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:

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 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 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.

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 ofcondition. 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?"

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 conditionapart 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 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 orchattel 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?

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 theamount of work performed by 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; 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 mueblewhile 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 acondition 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 merecharacteristic 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 withthings, 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 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 legallyconvict 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 itsdefinition. 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 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.

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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 thetaking 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 appropriatedas 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 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, corporealchattels 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.

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.º Las tierras, edificios, caminos y construcciones de todo genero adheridas al suelo.

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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.

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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 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).

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 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 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 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.

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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.

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. . . 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.

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.

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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 theablatio.

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 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), theelectricity itself remaining undiminished. No electricity was taken. It was used and then returned to its owner.

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 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 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.

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 thecomplaint 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 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.

Vda de Tan Toco vs Municipal


Manila

EN BANC

G.R. No. L-24950 March 25, 1926

VIUDA DE TAN TOCO, plaintiff-appellant, vs.THE MUNICIPAL COUNCIL OF ILOILO, defendant-appellee.

Arroyo & Evangelista for appellant.Provincial Fiscal Borromeo Veloso for appelle.

VILLAMOR, J.:

It appears from the record that the widow of Tan Toco had sued the municipal council of Iloilo for the amount of P42,966.40, being the purchase price of two strips of land, one on Calle J. M. Basa consisting of 592 square meters, and the other on Calle Aldiguer consisting of 59 square meters, which the municipality of Iloilo had appropriated for widening said street. The Court of First Instance of Iloilo sentenced the said municipality to pay the plaintiff the amount so claimed, plus the interest, and the said judgment was on appeal affirmed by this court.1

On account of lack of funds the municipality of Iloilo was unable to pay the said judgment, wherefore plaintiff had a writ of execution issue against the property of the said municipality, by virtue of which the sheriff attached two auto trucks used for street sprinkling, one police patrol automobile, the police stations on Mabini street, and in Molo and Mandurriao and the concrete structures, with the corresponding lots, used as markets by Iloilo, Molo, and Mandurriao.

After notice of the sale of said property had been made, and a few days before the sale, the provincial fiscal of Iloilo filed a motion which the Court of First Instance praying that the attachment on the said property be dissolved, that the said attachment be declared null and void as being illegal and violative of the rights of the defendant municipality.

Plaintiffs counsel objected o the fiscal's motion but the court, by order of August 12, 1925, declared the attachment levied upon the aforementioned property of the defendant municipality null and void, thereby dissolving the said attachment.

From this order the plaintiff has appealed by bill of exceptions. The fundamental question raised by appellant in her four assignments of error is whether or not the property levied upon is exempt from execution.

The municipal law, section 2165 of the Administrative Code, provides that:

Municipalities are political bodies corporate, and as such are endowed with the faculties of municipal corporations, to be exercised by and through their respective municipal government in conformity with law.

It shall be competent for them, in their proper corporate name, to sue and be sued, to contract and be contracted with, to acquire and hold real and personal property for municipal purposes, and generally to exercise the powers hereinafter specified or otherwise conferred upon them by law.

For the purposes of the matter here in question, the Administrative Code does not specify the kind of property that a municipality may acquire. However, article 343 of the Civil Code divides the property of provinces and towns (municipalities) into property for public use and patrimonial property. According to article 344 of the same Code, provincial roads and foot-path, squares, streets, fountains and public waters, drives and public improvements of general benefit built at the expense of the said towns or provinces, are property for public use.

All other property possessed by the said towns and provinces is patrimonial and shall be subject to the provisions of the Civil Code except as provided by special laws.

Commenting upon article 344, Mr. Manresa says that "In accordance with administrative legislation" (Spanish) we must distinguish, as to the patrimonial property of the towns, "between that a common benefit and that which is private property of the town. The first differs from property for public use in that generally its enjoyment is less, as it is limited to

neighbors or to a group or class thereof; and, furthermore, such use, more or less general, is not intrinsic with this kind of property, for by its very nature it may be enjoyed as though it were private property. The third group, that is, private property, is used in the name of the town or province by the entities representing it and, like and private property, giving a source of revenue."

Such distinction, however, is of little practical importance in this jurisdiction in view of the different principles underlying the functions of a municipality under the American rule. Notwithstanding this, we believe that the principle governing property of the public domain of the State is applicable to property for public use of the municipalities as said municipal is similar in character. The principle is that the property for public use of the State is not within the commerce of man and, consequently, is inalienable and not subject to prescription. Likewise, property for public of the municipality is not within the commerce of man so long as it is used by the public and, consequently, said property is also inalienable.

The American Law is more explicit about this matter as expounded by Mcquilin in Municipal Corporations, volume 3, paragraph 1160, where he says that:

States statutes often provide the court houses, jails and other buildings owned by municipalities and the lots on which they stand shall be exempt from attachment and execution. But independent of express statutory exemption, as a general proposition, property, real and personal, held by municipal corporations, in trust for the benefit of their inhabitants, and used for public purposes, is exempt.

For example, public buildings, school houses, streets, squares, parks, wharves, engines and engine houses, and the like, are not subject to execution. So city waterworks, and a stock of liquors carried in a town dispensary, are exempt. The reason for the exemption is obvious. Municipal corporations are created for public purposes and for the good of the citizens in their aggregate or public capacity. That they may properly discharge such public functions corporate property and revenues are essential, and to deny them these means the very purpose of their creation would be materially impeded, and in some instances practically destroy it. Respecting this subject the Supreme Court of Louisiana remarked: "On the first view of this question there is something very repugnant to the moral sense in the idea that a municipal corporation should contract debts, and that, having no resources but the taxes which are due to it, these should not be subjected by legal process to the satisfaction of its creditors. This consideration, deduced from the principles of moral equity has only given way to the more enlarged contemplation of the great and paramount interests of public order and the principles of government."

It is generally held that property owned by a municipality, where not used for a public purpose but for quasi private purposes, is subject to execution on a judgment against the municipality, and may be sold. This rule applies to shares of stock owned by a municipal corporation, and the like. But the mere fact that corporate property held for public uses is being temporarily used for private purposes does not make it subject execution.

If municipal property exempt from execution is destroyed, the insurance money stands in lieu thereof and is also exempt.

The members or inhabitants of a municipal corporation proper are not personally liable for the debts of the municipality, except that in the New England States the individual liability of the inhabitant is generally maintained.

In Corpus Juris, vol 23, page 355, the following is found:

Where property of a municipal or other public corporation is sough to be subjected to execution to satisfy judgments recovered against such corporation, the question as to whether such property is leviable or not is to be determined by the usage and purposes for which it is held. The rule is that property held for public uses, such as public buildings, streets, squares parks, promenades, wharves, landing places fire engines, hose and hose carriages, engine houses, public markets, hospitals, cemeteries, and generally everything held for governmental purposes, is not subject to levy and sale under execution against such corporation. The rule also applies to funds in the hands of a public officer. Likewise it has been held that taxes due to a municipal corporation or country cannot be seized under execution by a creditor of such corporation. But where a municipal corporation or country owns in its proprietary, as distinguished from its public or governmental capacity, property not useful or used for a public purpose but for quasi private purposes, the general rule is that such property may be seized and sold under execution against the corporation, precisely as similar property of individuals is seized and sold. But property held for public purposes is not subject to execution merely because it is temporarily used for private purposes, although if the public use is wholly abandoned it becomes subject to execution. Whether or not property held as public property is necessary for the public use is a political, rather than a judicial question.

In the case of City of New Orleans vs. Louisiana Construction Co., Ltd. (140 U. S., 654; 35 Law. ed., 556), it was held that a wharf for unloading sugar and molasses, open to the public, was property for the public use of the City of New Orleans and was not subject to attachment for the payment of the debts of the said city.

In that case it was proven that the said wharf was a parcel of land adjacent to the Mississippi River where all shipments of sugar and molasses taken to New Orleans were unloaded.

That city leased the said wharf to the Louisiana Construction Company, Ltd., in order that it might erect warehouses so that the merchandise upon discharge might not be spoiled by the elements. The said company was given the privilege of charging certain fees for storing merchandise in the said warehouses and the public in general had the right to unload sugar and molasses there by paying the required fees, 10 per cent of which was turned over to the city treasury.

The United States Supreme Court on an appeal held that the wharf was public property, that it never ceased to be such in order to become private property of the city; wherefore the company could not levy execution upon the wharf in order to collect the amount of the judgment rendered in favor thereof.

In the case of Klein vs. City of New Orleans (98 U. S., 149; 25 Law. ed., 430), the Supreme Court of the United States that a public wharf on the banks of the Mississippi River was public property and not subject to execution for the payment of a debt of the City of New Orleans where said wharf was located.

In this case a parcel of land adjacent to the Mississippi River, which formerly was the shore of the river and which later enlarged itself by accession, was converted into a wharf by the city for public use, who charged a certain fee for its use.

It was held that the land was public property as necessary as a public street and was not subject to execution on account of the debts of the city. It was further held that the fees collected where also exempt from execution because they were a part of the income of the city.

In the case of Tufexis vs. Olaguera and Municipal Council of Guinobatan (32 Phil., 654), the question raised was whether for the payment of a debt to a third person by the concessionaire of a public market, the said public market could be attached and sold at public auction. The Supreme Court held that:

Even though a creditor is unquestionably entitled to recover out of his debtor's property, yet when among such property there is included the special right granted by the Government of usufruct in a building intended for a public service, and when this privilege is closely related to a service of a public character, such right of the creditor to the collection of a debt owed him by the debtor who enjoys the said special privilege of usufruct in a public market is not absolute and may be exercised only through the action of court of justice with respect to the profits or revenue obtained under the special right of usufruct enjoyed by debtor.

The special concession of the right of usufruct in a public market cannot be attached like any ordinary right, because that would be to permit a person who has contracted with the state or with the administrative officials thereof to conduct and manage a service of a public character, to be substituted, without the knowledge and consent of the administrative authorities, by one who took no part in the contract, thus giving rise to the possibility of the regular course of a public service being disturbed by the more or less legal action of a grantee, to the prejudice of the state and the public interests.

The privilege or franchise granted to a private person to enjoy the usufruct of a public market cannot lawfully be attached and sold, and a creditor of such person can recover his debt only out of the income or revenue obtained by the debtor from the enjoyment or usufruct of the said privilege, in the same manner that the rights of such creditors of a railroad company can be exercised and their credit collected only out of the gross receipts remaining after deduction has been made therefrom of the operating expenses of the road. (Law of November 12, 1896, extended to the overseas provinces by the royal order of August 3, 1886.)

For the reasons contained in the authorities above quoted we believe that this court would have reached the same conclusion if the debtor had been municipality of Guinobatan and the public market had been levied upon by virtue of the execution.

It is evident that the movable and immovable property of a municipality, necessary for governmental purpose, may not be attached and sold for the payment of a judgment against the municipality. The supreme reason for this rule is the character of the public use to which such kind of property is devoted. The necessity for government service justifies that the property of public of the municipality be exempt from execution just as it is necessary to exempt certain property of private individuals in accordance with section 452 of the Code of Civil Procedure.

Even the municipal income, according to the above quoted authorities, is exempt from levy and execution. In volume 1, page 467, Municipal Corporations by Dillon we find that:

Municipal corporations are instituted by the supreme authority of a state for the public good. They exercise, by delegation from the legislature, a portion of the sovereign power. The main object of their creation is to act as administrative agencies for the state, and to provide for the police and local government of certain designated civil divisions of its territory. To this end they are invested with certain governmental powers and charged with civil, political, and municipal duties. To enable them beneficially to exercise these powers and discharge these duties, they are clothed with the authority to raise revenues, chiefly by taxation, and subordinately by other modes as by licenses, fines, and penalties. The revenue of the public corporation is the essential means by which it is enabled to perform its appointed work. Deprived of its regular and adequate supply of revenue, such a corporation is practically destroyed and the ends of its erection thwarted. Based upon considerations of this character, it is the settled doctrine of the law that only the public property but also the taxes and public revenues of such corporations cannot be seized under execution against them, either in the treasury or when in transit to it. Judgments rendered for taxes, and the proceeds of such judgments in the hands of officers of the law, are not subject to execution unless so declared by statute. The doctrine of the inviolability of the public revenues by the creditor is maintained, although the corporation is in debt, and has no means of payment but the taxes which it is authorized to collect.

Another error assigned by counsel for appellant is the holding of the court a quo that the proper remedy for collecting the judgment in favor of the plaintiff was by way or mandamus.

While this question is not necessarily included in the one which is the subject of this appeal, yet we believe that the holding of the court, assigned as error by appellant's counsel, is true when, after a judgment is rendered against a municipality, it has no property subject to execution. This doctrine is maintained by Dillon (Municipal Corporations, vol. 4, par. 1507, 5th ed.) based upon the decisions of several States of the Union upholding the same principle and which are cited on page 2679 of the aforesaid work. In this sense this assignment of error, we believe, is groundless.

By virtue of all the foregoing, the judgment appealed from should be and is hereby affirmed with costs against the appellant. So ordered.

Avanceña, C. J., Street, Malcolm, Ostrand, Johns, Romualdez and Villa-Real., JJ., concur.

Footnotes

1R. G. No. L-22617, promulgated November 28, 1924, not reported.

Zamboanga Del Norte vs Zamboanga


Manila

EN BANC

G.R. No. L-24440 March 28, 1968

THE PROVINCE OF ZAMBOANGA DEL NORTE, plaintiff-appellee, vs.CITY OF ZAMBOANGA, SECRETARY OF FINANCE and COMMISSIONER OF INTERNAL REVENUE,defendants-appellants.

Fortugaleza, Lood, Sarmiento, M. T. Yap & Associates for plaintiff-appellee.Office of the Solicitor General for defendants-appellants.

BENGZON, J.P., J.:

Prior to its incorporation as a chartered city, the Municipality of Zamboanga used to be the provincial capital of the then Zamboanga Province. On October 12, 1936, Commonwealth Act 39 was approved converting the Municipality of Zamboanga into Zamboanga City. Sec. 50 of the Act also provided that —

Buildings and properties which the province shall abandon upon the transfer of the capital to another place will be acquired and paid for by the City of Zamboanga at a price to be fixed by the Auditor General.

The properties and buildings referred to consisted of 50 lots and some buildings constructed thereon, located in the City of Zamboanga and covered individually by Torrens certificates of title in the name of Zamboanga Province. As far as can be gleaned from the records, 1 said properties were being utilized as follows —

No. of Lots Use1 ................................................ Capitol Site3 ................................................ School Site3 ................................................ Hospital Site3 ................................................ Leprosarium1 ................................................ Curuan School1 ................................................ Trade School2 ................................................ Burleigh School2 ................................................ High School Playground9 ................................................ Burleighs1 ................................................ Hydro-Electric Site (Magay)1 ................................................ San Roque

23 ................................................ vacant

It appears that in 1945, the capital of Zamboanga Province was transferred to Dipolog. 2 Subsequently, or on June 16, 1948, Republic Act 286 was approved creating the municipality of Molave and making it the capital of Zamboanga Province.

On May 26, 1949, the Appraisal Committee formed by the Auditor General, pursuant to Commonwealth Act 39, fixed the value of the properties and buildings in question left by Zamboanga Province in Zamboanga City at P1,294,244.00. 3

On June 6, 1952, Republic Act 711 was approved dividing the province of Zamboanga into two (2): Zamboanga del Norte and Zamboanga del Sur. As to how the assets and obligations of the old province were to be divided between the two new ones, Sec. 6 of that law provided:

Upon the approval of this Act, the funds, assets and other properties and the obligations of the province of Zamboanga shall be divided equitably between the Province of Zamboanga del Norte and the Province of Zamboanga del Sur by the President of the Philippines, upon the recommendation of the Auditor General.

Pursuant thereto, the Auditor General, on January 11, 1955, apportioned the assets and obligations of the defunct Province of Zamboanga as follows: 54.39% for Zamboanga del Norte and 45.61% for Zamboanga del Sur. Zamboanga del Norte therefore became entitled to 54.39% of P1,294,244.00, the total value of the lots and buildings in question, or P704,220.05 payable by Zamboanga City.

On March 17, 1959, the Executive Secretary, by order of the President, issued a ruling 4 holding that Zamboanga del Norte had a vested right as owner (should be co-owner pro-indiviso) of the properties mentioned in Sec. 50 of Commonwealth Act 39, and is entitled to the price thereof, payable by Zamboanga City. This ruling revoked the previous Cabinet Resolution of July 13, 1951 conveying all the said 50 lots and buildings thereon to Zamboanga City for P1.00, effective as of 1945, when the provincial capital of the then Zamboanga Province was transferred to Dipolog.

The Secretary of Finance then authorized the Commissioner of Internal Revenue to deduct an amount equal to 25% of the regular internal revenue allotment for the City of Zamboanga for the quarter ending March 31, 1960, then for the quarter ending June 30, 1960, and again for the first quarter of the fiscal year 1960-1961. The deductions, all aggregating P57,373.46, was credited to the province of Zamboanga del Norte, in partial payment of the P764,220.05 due it.

However, on June 17, 1961, Republic Act 3039 was approved amending Sec. 50 of Commonwealth Act 39 by providing that —

All buildings, properties and assets belonging to the former province of Zamboanga and located within the City of Zamboanga are hereby transferred, free of charge, in favor of the said City of Zamboanga. (Stressed for emphasis).

Consequently, the Secretary of Finance, on July 12, 1961, ordered the Commissioner of Internal Revenue to stop from effecting further payments to Zamboanga del Norte and to return to Zamboanga City the sum of P57,373.46 taken from it out of the internal revenue allotment of Zamboanga del Norte. Zamboanga City admits that since the enactment of Republic Act 3039, P43,030.11 of the P57,373.46 has already been returned to it.

This constrained plaintiff-appellee Zamboanga del Norte to file on March 5, 1962, a complaint entitled "Declaratory Relief with Preliminary Mandatory Injunction" in the Court of First Instance of Zamboanga del Norte against defendants-appellants Zamboanga City, the Secretary of Finance and the Commissioner of Internal Revenue. It was prayed that: (a) Republic Act 3039 be declared unconstitutional for depriving plaintiff province of property without due process and just compensation; (b) Plaintiff's rights and obligations under said law be declared; (c) The Secretary of Finance and the Internal Revenue Commissioner be enjoined from reimbursing the sum of P57,373.46 to defendant City; and (d) The latter be ordered to continue paying the balance of P704,220.05 in quarterly installments of 25% of its internal revenue allotments.

On June 4, 1962, the lower court ordered the issuance of preliminary injunction as prayed for. After defendants filed their respective answers, trial was held. On August 12, 1963, judgment was rendered, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered declaring Republic Act No. 3039 unconstitutional insofar as it deprives plaintiff Zamboanga del Norte of its private properties, consisting of 50 parcels of land and the improvements thereon under certificates of title (Exhibits "A" to "A-49") in the name of the defunct province of Zamboanga; ordering defendant City of Zamboanga to pay to the plaintiff the sum of P704,220.05 payment thereof to be deducted from its regular quarterly internal revenue allotment equivalent to 25% thereof every quarter until said amount shall have been fully paid; ordering defendant Secretary of Finance to direct defendant Commissioner of Internal Revenue to deduct 25% from the regular quarterly internal revenue allotment for defendant City of Zamboanga and to remit the same to plaintiff Zamboanga del Norte until said sum of P704,220.05 shall have been fully paid; ordering plaintiff Zamboanga del Norte to execute through its proper officials the corresponding public instrument deeding to defendant City of Zamboanga the 50 parcels of land and the improvements thereon under the certificates of title (Exhibits "A" to "A-49") upon payment by the latter of the aforesaid sum of P704,220.05 in full; dismissing the counterclaim of defendant City of Zamboanga; and

declaring permanent the preliminary mandatory injunction issued on June 8, 1962, pursuant to the order of the Court dated June 4, 1962. No costs are assessed against the defendants.

It is SO ORDERED.

Subsequently, but prior to the perfection of defendants' appeal, plaintiff province filed a motion to reconsider praying that Zamboanga City be ordered instead to pay the P704,220.05 in lump sum with 6% interest per annum. Over defendants' opposition, the lower court granted plaintiff province's motion.

The defendants then brought the case before Us on appeal.

Brushing aside the procedural point concerning the property of declaratory relief filed in the lower court on the assertion that the law had already been violated and that plaintiff sought to give it coercive effect, since assuming the same to be true, the Rules anyway authorize the conversion of the proceedings to an ordinary action, 5 We proceed to the more important and principal question of the validity of Republic Act 3039.

The validity of the law ultimately depends on the nature of the 50 lots and buildings thereon in question. For, the matter involved here is the extent of legislative control over the properties of a municipal corporation, of which a province is one. The principle itself is simple: If the property is owned by the municipality (meaning municipal corporation) in its public and governmental capacity, the property is public and Congress has absolute control over it. But if the property is owned in its private or proprietary capacity, then it is patrimonial and Congress has no absolute control. The municipality cannot be deprived of it without due process and payment of just compensation. 6

The capacity in which the property is held is, however, dependent on the use to which it is intended and devoted. Now, which of two norms, i.e., that of the Civil Code or that obtaining under the law of Municipal Corporations, must be used in classifying the properties in question?

The Civil Code classification is embodied in its Arts. 423 and 424 which provide: 1äwphï1.ñët

ART. 423. The property of provinces, cities, and municipalities is divided into property for public use and patrimonial property.

ART. 424. Property for public use, in the provinces, cities, and municipalities, consists of the provincial roads, city streets, municipal 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. (Stressed for emphasis).

Applying the above cited norm, all the properties in question, except the two (2) lots used as High School playgrounds, could be considered as patrimonial properties of the former Zamboanga province. Even the capital site, the hospital and leprosarium sites, and the school sites will be considered patrimonial for they are not for public use. They would fall under the phrase "public works for public service" for it has been held that under theejusdem generis rule, such public works must be for free and indiscriminate use by anyone, just like the preceding enumerated properties in the first paragraph of Art 424. 7 The playgrounds, however, would fit into this category.

This was the norm applied by the lower court. And it cannot be said that its actuation was without jurisprudential precedent for in Municipality of Catbalogan v. Director of Lands, 8 and in Municipality of Tacloban v. Director of Lands, 9 it was held that the capitol site and the school sites in municipalities constitute their patrimonial properties. This result is understandable because, unlike in the classification regarding State properties, properties for public service in the municipalities are not classified as public. Assuming then the Civil Code classification to be the chosen norm, the lower court must be affirmed except with regard to the two (2) lots used as playgrounds.

On the other hand, applying the norm obtaining under the principles constituting the law of Municipal Corporations, all those of the 50 properties in question which are devoted to public service are deemed public; the rest remain patrimonial. Under this norm, to be considered public, it is enough that the property be held and, devoted for governmental purposes like local administration, public education, public health, etc. 10

Supporting jurisprudence are found in the following cases: (1) HINUNANGAN V. DIRECTOR OF LANDS, 11where it was stated that "... where the municipality has occupied lands distinctly for public purposes, such as for the municipal court house, the public school, the public market, or other necessary municipal building, we will, in the absence of proof to the contrary, presume a grant from the States in favor of the municipality; but, as indicated by the wording, that rule may be invoked only as to property which is used distinctly for public purposes...." (2) VIUDA DE TANTOCO V.

MUNICIPAL COUNCIL OF ILOILO 12 held that municipal properties necessary for governmental purposes are public in nature. Thus, the auto trucks used by the municipality for street sprinkling, the police patrol automobile, police stations and concrete structures with the corresponding lots used as markets were declared exempt from execution and attachment since they were not patrimonial properties. (3) MUNICIPALITY OF BATANGAS VS. CANTOS 13 held squarely that a municipal lot which had always been devoted to school purposes is one dedicated to public use and is not patrimonial property of a municipality.

Following this classification, Republic Act 3039 is valid insofar as it affects the lots used as capitol site, school sites and its grounds, hospital and leprosarium sites and the high school playground sites — a total of 24 lots — since these were held by the former Zamboanga province in its governmental capacity and therefore are subject to the absolute control of Congress. Said lots considered as public property are the following:

TCT Number Lot Number U s e2200 ...................................... 4-B ...................................... Capitol Site2816 ...................................... 149 ...................................... School Site3281 ...................................... 1224 ...................................... Hospital Site3282 ...................................... 1226 ...................................... Hospital Site3283 ...................................... 1225 ...................................... Hospital Site3748 ...................................... 434-A-1 ...................................... School Site5406 ...................................... 171 ...................................... School Site5564 ...................................... 168 ...................................... High School Play-ground5567 ...................................... 157 & 158 ...................................... Trade School5583 ...................................... 167 ...................................... High School Play-ground6181 ...................................... (O.C.T.) ...................................... Curuan School11942 ...................................... 926 ...................................... Leprosarium11943 ...................................... 927 ...................................... Leprosarium11944 ...................................... 925 ...................................... Leprosarium5557 ...................................... 170 ...................................... Burleigh School5562 ...................................... 180 ...................................... Burleigh School5565 ...................................... 172-B ...................................... Burleigh5570 ...................................... 171-A ...................................... Burleigh5571 ...................................... 172-C ...................................... Burleigh5572 ...................................... 174 ...................................... Burleigh5573 ...................................... 178 ...................................... Burleigh5585 ...................................... 171-B ...................................... Burleigh5586 ...................................... 173 ...................................... Burleigh5587 ...................................... 172-A ...................................... Burleigh

We noticed that the eight Burleigh lots above described are adjoining each other and in turn are between the two lots wherein the Burleigh schools are built, as per records appearing herein and in the Bureau of Lands. Hence, there is sufficient basis for holding that said eight lots constitute the appurtenant grounds of the Burleigh schools, and partake of the nature of the same.

Regarding the several buildings existing on the lots above-mentioned, the records do not disclose whether they were constructed at the expense of the former Province of Zamboanga. Considering however the fact that said buildings must have been erected even before 1936 when Commonwealth Act 39 was enacted and the further fact that provinces then had no power to authorize construction of buildings such as those in the case at bar at their own expense, 14 it can be assumed that said buildings were erected by the National Government, using national funds. Hence, Congress could very well dispose of said buildings in the same manner that it did with the lots in question.

But even assuming that provincial funds were used, still the buildings constitute mere accessories to the lands, which are public in nature, and so, they follow the nature of said lands, i.e., public. Moreover, said buildings, though located in the city, will not be for the exclusive use and benefit of city residents for they could be availed of also by the provincial residents. The province then — and its successors-in-interest — are not really deprived of the benefits thereof.

But Republic Act 3039 cannot be applied to deprive Zamboanga del Norte of its share in the value of the rest of the 26 remaining lots which are patrimonial properties since they are not being utilized for distinctly, governmental purposes. Said lots are:

TCT Number Lot Number U s e

5577 ...................................... 177 ...................................... Mydro, Magay13198 ...................................... 127-0 ...................................... San Roque5569 ...................................... 169 ...................................... Burleigh 15

5558 ...................................... 175 ...................................... Vacant5559 ...................................... 188 ...................................... "5560 ...................................... 183 ...................................... "5561 ...................................... 186 ...................................... "5563 ...................................... 191 ...................................... "5566 ...................................... 176 ...................................... "5568 ...................................... 179 ...................................... "5574 ...................................... 196 ...................................... "5575 ...................................... 181-A ...................................... "5576 ...................................... 181-B ...................................... "5578 ...................................... 182 ...................................... "5579 ...................................... 197 ...................................... "5580 ...................................... 195 ...................................... "5581 ...................................... 159-B ...................................... "5582 ...................................... 194 ...................................... "5584 ...................................... 190 ...................................... "5588 ...................................... 184 ...................................... "5589 ...................................... 187 ...................................... "5590 ...................................... 189 ...................................... "5591 ...................................... 192 ...................................... "5592 ...................................... 193 ...................................... "5593 ...................................... 185 ...................................... "7379 ...................................... 4147 ...................................... "

Moreover, the fact that these 26 lots are registered strengthens the proposition that they are truly private in nature. On the other hand, that the 24 lots used for governmental purposes are also registered is of no significance since registration cannot convert public property to private. 16

We are more inclined to uphold this latter view. The controversy here is more along the domains of the Law of Municipal Corporations — State vs. Province — than along that of Civil Law. Moreover, this Court is not inclined to hold that municipal property held and devoted to public service is in the same category as ordinary private property. The consequences are dire. As ordinary private properties, they can be levied upon and attached. They can even be acquired thru adverse possession — all these to the detriment of the local community. Lastly, the classification of properties other than those for public use in the municipalities as patrimonial under Art. 424 of the Civil Code — is "... without prejudice to the provisions of special laws." For purpose of this article, the principles, obtaining under the Law of Municipal Corporations can be considered as "special laws". Hence, the classification of municipal property devoted for distinctly governmental purposes as public should prevail over the Civil Code classification in this particular case.

Defendants' claim that plaintiff and its predecessor-in-interest are "guilty of laches is without merit. Under Commonwealth Act 39, Sec. 50, the cause of action in favor of the defunct Zamboanga Province arose only in 1949 after the Auditor General fixed the value of the properties in question. While in 1951, the Cabinet resolved transfer said properties practically for free to Zamboanga City, a reconsideration thereof was seasonably sought. In 1952, the old province was dissolved. As successor-in-interest to more than half of the properties involved, Zamboanga del Norte was able to get a reconsideration of the Cabinet Resolution in 1959. In fact, partial payments were effected subsequently and it was only after the passage of Republic Act 3039 in 1961 that the present controversy arose. Plaintiff brought suit in 1962. All the foregoing, negative laches.

It results then that Zamboanga del Norte is still entitled to collect from the City of Zamboanga the former's 54.39% share in the 26 properties which are patrimonial in nature, said share to computed on the basis of the valuation of said 26 properties as contained in Resolution No. 7, dated March 26, 1949, of the Appraisal Committee formed by the Auditor General.

Plaintiff's share, however, cannot be paid in lump sum, except as to the P43,030.11 already returned to defendant City. The return of said amount to defendant was without legal basis. Republic Act 3039 took effect only on June 17, 1961 after a partial payment of P57,373.46 had already been made. Since the law did not provide for retroactivity, it could not have validly affected a completed act. Hence, the amount of P43,030.11 should be immediately returned by defendant City to plaintiff province. The remaining balance, if any, in the amount of plaintiff's 54.39% share in the 26 lots should then be paid by defendant City in the same manner originally adopted by the Secretary of Finance and the

Commissioner of Internal Revenue, and not in lump sum. Plaintiff's prayer, particularly pars. 5 and 6, read together with pars. 10 and 11 of the first cause of action recited in the complaint 17 clearly shows that the relief sought was merely the continuance of the quarterly payments from the internal revenue allotments of defendant City. Art. 1169 of the Civil Code on reciprocal obligations invoked by plaintiff to justify lump sum payment is inapplicable since there has been so far in legal contemplation no complete delivery of the lots in question. The titles to the registered lots are not yet in the name of defendant Zamboanga City.

WHEREFORE, the decision appealed from is hereby set aside and another judgment is hereby entered as follows:.

(1) Defendant Zamboanga City is hereby ordered to return to plaintiff Zamboanga del Norte in lump sum the amount of P43,030.11 which the former took back from the latter out of the sum of P57,373.46 previously paid to the latter; and

(2) Defendants are hereby ordered to effect payments in favor of plaintiff of whatever balance remains of plaintiff's 54.39% share in the 26 patrimonial properties, after deducting therefrom the sum of P57,373.46, on the basis of Resolution No. 7 dated March 26, 1949 of the Appraisal Committee formed by the Auditor General, by way of quarterly payments from the allotments of defendant City, in the manner originally adopted by the Secretary of Finance and the Commissioner of Internal Revenue. No costs. So ordered.

Reyes, J.B.L., Actg. C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur.Concepcion, C.J., is on leave.

Salas vs Jarencio


Manila

EN BANC

G.R. No. L-29788 August 30, 1972

RAFAEL S. SALAS, in his capacity as Executive Secretary; CONRADO F. ESTRELLA, in his capacity as Governor of the Land Authority; and LORENZO GELLA, in his capacity as Register of Deeds of Manila,petitioners-appellants, vs.HON. HILARION U. JARENCIO, as Presiding Judge of Branch XXIII, Court of First Instance of Manila; ANTONIO J. VILLEGAS, in his capacity as Mayor of the City of Manila; and the CITY OF MANILA,respondents-appellees.

Office of the Solicitor General Felix V. Makasiar, Assistant Solicitor-General Antonio A. Torres, Solicitor Raul I. Goco and Magno B. Pablo & Cipriano A. Tan, Legal Staff, Land Authority for petitioners-appellants.

Gregorio A. Ejercito and Felix C. Chavez for respondents-appellees.

ESGUERRA, J.:p

This is a petition for review of the decision of the Court of First Instance of Manila, Branch XXIII, in Civil Case No. 67946, dated September 23, 1968, the dispositive portion of which is as follows:

WHEREFORE, the Court renders judgment declaring Republic Act No. 4118 unconstitutional and invalid in that it deprived the City of Manila of its property without due process and payment of just compensation. Respondent Executive Secretary and Governor of the Land Authority are hereby restrained and enjoined from implementing the provisions of said law. Respondent Register of Deeds of the City of Manila is ordered to cancel Transfer Certificate of Title No. 80876 which he had issued in the name of the Land Tenure Administration and reinstate Transfer Certificate of Title No. 22547 in the name of the City of Manila which he cancelled, if that is feasible, or issue a new certificate of title for the same parcel of land in the name of the City of Manila. 1

The facts necessary for a clear understanding of this case are as follows:

On February 24, 1919, the 4th Branch of the Court of First Instance of Manila, acting as a land registration court, rendered judgment in Case No. 18, G.L.R.O. Record No. 111, declaring the City of Manila the owner in fee simple of a parcel of land known as Lot No. 1, Block 557 of the Cadastral Survey of the City of Mani1a, containing an area of 9,689.8 square meters, more or less. Pursuant to said judgment the Register of Deeds of Manila on August 21, 1920, issued in favor of the City of Manila, Original Certificate of Title No. 4329 covering the aforementioned parcel of land. On various dates in 1924, the City of Manila sold portions of the aforementioned parcel of land in favor of Pura Villanueva. As a consequence of the transactions Original Certificate of Title No. 4329 was cancelled and transfer certificates of title were issued in favor of Pura Villanueva for the portions purchased by her. When the last sale to Pura Villanueva was effected on August 22, 1924, Transfer Certificate of Title No. 21974 in the name of the City of Manila was cancelled and in lieu thereof Transfer Certificate of Title (TCT) No. 22547 covering the residue thereof known as Lot 1-B-2-B of Block 557, with an area of 7,490.10 square meters, was issued in the name of the City of Manila.

On September 21, 1960, the Municipal Board of Manila, presided by then Vice-Mayor Antono J. Villegas, adopted a resolution requesting His Excellency, the President of the Philippines to consider the feasibility of declaring the City property bounded by Florida, San Andres, and Nebraska Streets, under Transfer Certificate of Title Nos. 25545 and 22547, containing a total area of 7,450 square meters as a patrimonial property of the City of Manila for the purpose of reselling these lots to the actual occupants thereof. 2

The said resolution of the Municipil Board of the City of Manila was officially transmitted to the President of the Philippines by then Vice-Mayor Antonio J. Villegas on September 21, 1960, with the information that the same resolution was, on the same date, transmitted to the Senate and House of Representatives of the Congress of the Philippines. 3

During the First Session of the Fifth Congress of the Philippines, House Bill No. 191 was filed in the House of Representatives by then Congressman Bartolome Cabangbang seeking to declare the property in question as patrimonial property of the City of Manila, and for other purposes. The explanatory note of the Bill gave the grounds for its enactment, to wit:

In the particular case of the property subject of this bill, the City of Manila does not seem to have use thereof as a public communal property. As a matter of fact, a resolution was adopted by the Municipal Board of Manila at its regular session held on September 21, 1960, to request the feasibility of declaring the city property bounded by Florida, San Andres and Nebraska Streets as a patrimonial property of the City of Manila for the purpose of reselling these lots to the actual occupants thereof. Therefore, it will be to the best interest of society that the said property be used in one way or another. Since this property has been occupied for a long time by the present occupants thereof and since said occupants have expressed their willingness to buy the said property, it is but proper that the same be sold to them. 4

Subsequently, a revised version of the Bill was introduced in the House of Representatives by Congressmen Manuel Cases, Antonio Raquiza and Nicanor Yñiguez as House Bill No. 1453, with the following explanatory note:

The accompanying bill seeks to convert one (1) parcel of land in the district of Malate, which is reserved as communal property into a disposable or alienable property of the State and to provide its subdivision and sale to bona fide occupants or tenants.

This parcel of land in question was originally an aggregate part of a piece of land with an area of 9,689.8 square meters, more or less. ... On September 21, 1960, the Municipal Board of Manila in its regular session unanimously adopted a resolution requesting the President of the Philippines and Congress of the Philippines the feasibility of declaring this property into disposable or alienable property of the State. There is therefore a precedent that this parcel of land could be subdivided and sold to bona fide occupants. This parcel of land will not serve any useful public project because it is bounded on all sides by private properties which were formerly parts of this lot in question.

Approval of this bill will implement the policy of the Administration of land for the landless and the Fifth Declaration of Principles of the Constitution, which states that the promotion of Social Justice to insure the well-being and economic security of all people should be the concern of the State. We are ready and willing to enact legislation promoting the social and economic well-being of the people whenever an opportunity for enacting such kind of legislation arises.

In view of the foregoing consideration and to insure fairness and justice to the present bona fide occupants thereof, approval of this Bill is strongly urged. 5

The Bill having been passed by the House of Representatives, the same was thereafter sent to the Senate where it was thoroughly discussed, as evidenced by the Congressional Records for May 20, 1964, pertinent portion of which is as follows:

SENATOR FERNANDEZ: Mr. President, it will be re called that when the late Mayor Lacson was still alive, we approved a similar bill. But afterwards, the late Mayor Lacson came here and protested against the approval, and the approval was reconsidered. May I know whether the defect in the bill which we approved, has already been eliminated in this present bill?

SENATOR TOLENTINO: I understand Mr. President, that that has already been eliminated and that is why the City of Manila has no more objection to this bill.

SENATOR FERNANDEZ: Mr. President, in view of that manifestation and considering that Mayor Villegas and Congressman Albert of the Fourth District of Manila are in favor of the bill. I would not want to pretend to know more what is good for the City of Manila.

SENATOR TOLENTINO: Mr. President, there being no objection, I move that we approve this bill on second reading.

PRESIDENT PRO-TEMPORE: The biII is approved on second reading after several Senetors said aye and nobody said nay.

The bill was passed by the Senate, approved by the President on June 20, 1964, and became Republic Act No. 4118. It reads as follows:

Lot I-B-2-B of Block 557 of the cadastral survey of the City of Manila, situated in the District of Malate, City of Manila, which is reserved as communal property, is hereby converted into disposal or alienable land of the State, to be placed under the disposal of the Land Tenure Administration. The Land Tenure Administration shall subdivide the property into small lots, none of which shall exceed one hundred and twenty square meters in area and sell the same on installment basis to the tenants or bona fide occupants thereof and to individuals, in the order mentioned: Provided, That no down payment shall be required of tenants or bona fide occupants who cannot afford to pay such down payment: Provided, further, That no person can purchase more than one lot: Provided, furthermore, That if the tenant or bona fide occupant of any given lot is not able to purchase the same, he shall be given a lease from month to month until such time that he is able to purchase the lot: Provided, still further, That in the event of lease the rentals which may be charged shall not exceed eight per cent per annum of the assessed value of the property leased: And provided, finally, That in fixing the price of each lot, which shall not exceed twenty pesos per square meter, the cost of subdivision and survey shall not be included.

Sec. 2. Upon approval of this Act no ejectment proceedings against any tenant or bona fide occupant of the above lots shall be instituted and any ejectment proceedings pending in court against any such tenant or bona fide occupant shall be dismissed upon motion of the defendant: Provided, That any demolition order directed against any tenant or bona fide occupant shall be lifted.

Sec. 3. Upon approval of this Act, if the tenant or bona fide occupant is in arrears in the payment of any rentals, the amount legally due shall be liquidated and shall be payable in twenty-four equal monthly installments from the date of liquidation.

Sec. 4. No property acquired by virtue of this Act shall be transferred, sold, mortgaged, or otherwise disposed of within a period of five years from the date full ownership thereof has been vested in the purchaser without the consent of the Land Tenure Administration.

Sec. 5. In the event of the death of the purchaser prior to the complete payment of the price of the lot purchased by him, his widow and children shall succeed in all his rights and obligations with respect to his lot.

Sec. 6. The Chairman of the Land Tenure Administration shall implement and issue such rules and regulations as may be necessary to carry out the provisions of this Act.

Sec. 7. The sum of one hundred fifty thousand pesos is appropriated out of any funds in the National Treasury not otherwise appropriated, to carry out the purposes of this Act.

Sec. 8. All laws or parts of laws inconsistent with this Act are repealed or modified accordingly.

Sec. 9. This Act shall take effect upon its approval.

Approved, June 20, 1964.

To implement the provisions of Republic Act No. 4118, and pursuant to the request of the occupants of the property involved, then Deputy Governor Jose V. Yap of the Land Authority (which succeeded the Land Tenure Administration) addressed a letter, dated February 18, 1965, to Mayor Antonio Villegas, furnishing him with a copy of the proposed subdivision plan of said lot as prepared for the Republic of the Philippines for resale of the subdivision lots by the Land Authority to bona fide applicants. 6

On March 2, 1965, the City Mayor of Manila, through his Executive and Technical Adviser, acknowledged receipt of the proposed subdivision plan of the property in question and informed the Land Authority that his office would interpose no objection to the implementation of said law, provided that its provisions be strictly complied with. 7

With the above-mentioned written conformity of the City of Manila for the implementation of Republic Act No. 4118, the Land Authority, thru then Deputy Governor Jose V. Yap, requested the City Treasurer of Manila, thru the City Mayor, for the surrender and delivery to the former of the owner's duplicate of Transfer Certificate of Title No. 22547 in order to obtain title thereto in the name of the Land Authority. The request was duly granted with the knowledge and consent of the Office of the City Mayor. 8

With the presentation of Transfer Certificate of Title No. 22547, which had been yielded as above stated by the, City authorities to the Land Authority, Transfer Certificate of Title (T.C.T. No. 22547) was cancelled by the Register of Deeds of Manila and in lieu thereof Transfer Certificate of Title No. 80876 was issued in the name of the Land Tenure

Administration (now Land Authority) pursuant to the provisions of Republic Act No. 4118. 9

But due to reasons which do not appear in the record, the City of Manila made a complete turn-about, for on December 20, 1966, Antonio J. Villegas, in his capacity as the City Mayor of Manila and the City of Manila as a duly organized public corporation, brought an action for injunction and/or prohibition with preliminary injunction to restrain, prohibit and enjoin the herein appellants, particularly the Governor of the Land Authority and the Register of Deeds of Manila, from further implementing Republic Act No. 4118, and praying for the declaration of Republic Act No. 4118 as unconstitutional.

With the foregoing antecedent facts, which are all contained in the partial stipulation of facts submitted to the trial court and approved by respondent Judge, the parties waived the presentation of further evidence and submitted the case for decision. On September 23, 1968, judgment was rendered by the trial court declaring Republic Act No. 4118 unconstitutional and invalid on the ground that it deprived the City of Manila of its property without due process of law and payment of just compensation. The respondents were ordered to undo all that had been done to carry out the provisions of said Act and were restrained from further implementing the same.

Two issues are presented for determination, on the resolution of which the decision in this case hinges, to wit:

I. Is the property involved private or patrimonial property of the City of Manila?

II. Is Republic Act No. 4118 valid and not repugnant to the Constitution?

I.

As regards the first issue, appellants maintain that the land involved is a communal land or "legua comunal" which is a portion of the public domain owned by the State; that it came into existence as such when the City of Manila, or any pueblo or town in the Philippines for that matter, was founded under the laws of Spain, the former sovereign; that upon the establishment of a pueblo, the administrative authority was required to allot and set aside portions of the public domain for a public plaza, a church site, a site for public buildings, lands to serve as common pastures and for streets and roads; that in assigning these lands some lots were earmarked for strictly public purposes, and ownership of these lots (for public purposes) immediately passed to the new municipality; that in the case of common lands or "legua comunal", there was no such immediate acquisition of ownership by the pueblo, and the land though administered thereby, did not automatically become its property in the absence of an express grant from the Central Government, and that the reason for this arrangement is that this class of land was not absolutely needed for the discharge of the municipality's governmental functions.

It is argued that the parcel of land involved herein has not been used by the City of Manila for any public purpose and had not been officially earmarked as a site for the erection of some public buildings; that this circumstance confirms the fact that it was originally "communal" land alloted to the City of Manila by the Central Government not because it was needed in connection with its organization as a municipality but simply for the common use of its inhabitants; that the present City of Manila as successor of the Ayuntamiento de Manila under the former Spanish sovereign merely enjoys the usufruct over said land, and its exercise of acts of ownership by selling parts thereof did not necessarily convert the land into a patrimonial property of the City of Manila nor divest the State of its paramount title.

Appellants further argue that a municipal corporation, like a city is a governmental agent of the State with authority to govern a limited portion of its territory or to administer purely local affairs in a given political subdivision, and the extent of its authority is strictly delimited by the grant of power conferred by the State; that Congress has the exclusive power to create, change or destroy municipal corporations; that even if We admit that legislative control over municipal corporations is not absolute and even if it is true that the City of Manila has a registered title over the property in question, the mere transfer of such land by an act of the legislature from one class of public land to another, without compensation, does not invade the vested rights of the City.

Appellants finally argue that Republic Act No. 4118 has treated the land involved as one reserved for communal use, and this classification is conclusive upon the courts; that if the City of Manila feels that this is wrong and its interests have been thereby prejudiced, the matter should be brought to the attention of Congress for correction; and that since Congress, in the exercise of its wide discretionary powers has seen fit to classify the land in question as communal, the Courts certainly owe it to a coordinate branch of the Government to respect such determination and should not interfere with the enforcement of the law.

Upon the other hand, appellees argue by simply quoting portions of the appealed decision of the trial court, which read thus:

The respondents (petitioners-appellants herein) contend, among other defenses, that the property in question is communal property. This contention is, however, disproved by Original Certificate of Title No. 4329 issued on August 21, 1920 in favor of the City of Manila after the land in question was registered in the City's favor. The Torrens Title expressly states that the City of Manila was the owner in 'fee simple' of the said land. Under Sec. 38 of the Land Registration Act, as amended, the decree of confirmation and registration in favor of the City of Manila ... shall be conclusive upon and against all persons including the Insular Government and all the branches there ... There is nothing in the said certificate of title indicating that the land was 'communal' land as contended by the respondents. The erroneous assumption by the Municipal Board of Manila that the land in question was communal land did not make it so. The Municipal Board had no authority to do that.

The respondents, however, contend that Congress had the power and authority to declare that the land in question was 'communal' land and the courts have no power or authority to make a contrary finding. This contention is not entirely correct or accurate. Congress has the power to classify 'land of the public domain', transfer them from one classification to another and declare them disposable or not. Such power does not, however, extend to properties which are owned by cities, provinces and municipalities in their 'patrimonial' capacity.

Art. 324 of the Civil Code provides that properties of provinces, cities and municipalities are divided into properties for public use and patrimonial property. Art. 424 of the same code provides that properties for public use consist of provincial roads, city streets, municipal streets, the squares, fountains, public waters, promenades and public works for public service paid for by said province, cities or municipalities. All other property possessed by any of them is patrimonial. Tested by this criterion the Court finds and holds that the land in question is patrimonial property of the City of Manila.

Respondents contend that Congress has declared the land in question to be 'communal' and, therefore, such designation is conclusive upon the courts. The Courts holds otherwise. When a statute is assailed as unconstitutional the Courts have the power and authority to inquire into the question and pass upon it. This has long ago been settled in Marbury vs. Madison, 2 L. ed. 60, when the United States Supreme Court speaking thru Chief Justice Marshall held:

... If an act of the legislature, repugnant to the constitution, is void, does it, notwithstanding its validity, bind the courts, and oblige them to give effect? It is emphatically the province and duty of the judicial department to say what the law is ... So if a law be in opposition to the constitution; if both the law and the constitution apply to a particular case, so that the court must either decide that case conformable to the constitution, disregarding the law, the court must determine which of these conflicting rules governs the case. This is of the very essence of unconstitutional judicial duty.

Appellees finally concluded that when the courts declare a law unconstitutional it does not mean that the judicial power is superior to the legislative power. It simply means that the power of the people is superior to both and that when the will of the legislature, declared in statutes, stands in opposition to that of the people, declared in the Constitution, the judges ought to be governed by the Constitution rather than by the statutes.

There is one outstanding factor that should be borne in mind in resolving the character of the land involved, and it is that the City of Manila, although declared by the Cadastral Court as owner in fee simple, has not shown by any shred of evidence in what manner it acquired said land as its private or patrimonial property. It is true that the City of Manila as well as its predecessor, the Ayuntamiento de Manila, could validly acquire property in its corporate or private capacity, following the accepted doctrine on the dual character — public and private — of a municipal corporation. And when it acquires property in its private capacity, it acts like an ordinary person capable of entering into contracts or making transactions for the transmission of title or other real rights. When it comes to acquisition of land, it must have done so under any of the modes established by law for the acquisition of ownership and other real rights. In the absence of a title deed to any land claimed by the City of Manila as its own, showing that it was acquired with its private or corporate funds, the presumption is that such land came from the State upon the creation of the municipality (Unson vs. Lacson, et al., 100 Phil. 695). Originally the municipality owned no patrimonial property except those that were granted by the State not for its public but for private use. Other properties it owns are acquired in the course of the exercise of its corporate powers as a juridical entity to which category a municipal corporation pertains.

Communal lands or "legua comunal" came into existence when a town or pueblo was established in this country under the laws of Spain (Law VII, Title III, Book VI, Recopilacion de las Leyes de Indios). The municipalities of the Philippines were not entitled, as a matter of right, to any part of the public domain for use as communal lands. The Spanish law provided that the usufruct of a portion of the public domain adjoining municipal territory might be granted by the Government for communal purposes, upon proper petition, but, until granted, no rights therein passed to the

municipalities, and, in any event, the ultimate title remained in the sovereign (City of Manila vs. Insular Government, 10 Phil. 327).

For the establishment, then, of new pueblos the administrative authority of the province, in representation of the Governor General, designated the territory for their location and extension and the metes and bounds of the same; and before alloting the lands among the new settlers, a special demarcation was made of the places which were to serve as the public square of the pueblo, for the erection of the church, and as sites for the public buildings, among others, the municipal building or the casa real, as well as of the lands whick were to constitute the common pastures, and propios of the municipality and the streets and roads which were to intersect the new town were laid out, ... . (Municipality of Catbalogan vs. Director of Lands, 17 Phil. 216, 220) (Emphasis supplied)

It may, therefore, be laid down as a general rule that regardless of the source or classification of land in the possession of a municipality, excepting those acquired with its own funds in its private or corporate capacity, such property is held in trust for the State for the benefit of its inhabitants, whether it be for governmental or proprietary purposes. It holds such lands subject to the paramount power of the legislature to dispose of the same, for after all it owes its creation to it as an agent for the performance of a part of its public work, the municipality being but a subdivision or instrumentality thereof for purposes of local administration. Accordingly, the legal situation is the same as if the State itself holds the property and puts it to a different use (2 McQuilin,Municipal Corporations, 3rd Ed., p. 197, citing Monagham vs. Armatage, 218 Minn. 27, 15 N. W. 2nd 241).

True it is that the legislative control over a municipal corporation is not absolute even when it comes to its property devoted to public use, for such control must not be exercised to the extent of depriving persons of their property or rights without due process of law, or in a manner impairing the obligations of contracts. Nevertheless, when it comes to property of the municipality which it did not acquire in its private or corporate capacity with its own funds, the legislature can transfer its administration and disposition to an agency of the National Government to be disposed of according to its discretion. Here it did so in obedience to the constitutional mandate of promoting social justice to insure the well-being and economic security of the people.

It has been held that a statute authorizing the transfer of a Municipal airport to an Airport Commission created by the legislature, even without compensation to the city, was not violative of the due process clause of the American Federal Constitution. The Supreme Court of Minnessota in Monagham vs. Armatage, supra, said:

... The case is controlled by the further rule that the legislature, having plenary control of the local municipality, of its creation and of all its affairs, has the right to authorize or direct the expenditures of money in its treasury, though raised, for a particular purpose, for any legitimate municipal purpose, or to order and direct a distribution thereof upon a division of the territory into separate municipalities ... . The local municipality has no such vested right in or to its public funds, like that which the Constitution protects in the individual as precludes legislative interferences. People vs. Power, 25 Ill. 187; State Board (of Education) vs. City, 56 Miss. 518. As remarked by the supreme court of Maryland in Mayor vs. Sehner, 37 Md. 180: "It is of the essence of such a corporation, that the government has the sole right as trustee of the public interest, at its own good will and pleasure, to inspect, regulate, control, and direct the corporation, its funds, and franchises."

We therefore hold that c.500, in authorizing the transfer of the use and possession of the municipal airport to the commission without compensation to the city or to the park board, does not violate the Fourteenth Amendment to the Constitution of the United States.

The Congress has dealt with the land involved as one reserved for communal use (terreno comunal). The act of classifying State property calls for the exercise of wide discretionary legislative power and it should not be interfered with by the courts.

This brings Us to the second question as regards the validity of Republic Act No. 4118, viewed in the light of Article III, Sections 1, subsection (1) and (2) of the Constitution which ordain that no person shall be deprived of his property without due process of law and that no private property shall be taken for public use without just compensation.

II .

The trial court declared Republic Act No. 4118 unconstitutional for allegedly depriving the City of Manila of its property without due process of law and without payment of just compensation. It is now well established that the presumption is always in favor of the constitutionality of a law (U S. vs. Ten Yu, 24 Phil. 1; Go Ching, et al. vs. Dinglasan, et al., 45 O.G. No. 2, pp. 703, 705). To declare a law unconstitutional, the repugnancy of that law to the Constitution must be clear and unequivocal, for even if a law is aimed at the attainment of some public good, no infringement of constitutional rights is

allowed. To strike down a law there must be a clear showing that what the fundamental law condemns or prohibits, the statute allows it to be done (Morfe vs. Mutuc, et al., G.R. No. L-20387, Jan. 31, 1968; 22 SCRA 424). That situation does not obtain in this case as the law assailed does not in any manner trench upon the constitution as will hereafter be shown. Republic Act No. 4118 was intended to implement the social justice policy of the Constitution and the Government program of "Land for the Landless". The explanatory note of House Bill No. 1453 which became Republic Act No. 4118, reads in part as follows:

Approval of this bill will implement the policy of the administration of "land for the landless" and the Fifth Declaration of Principles of the Constitution which states that "the promotion of social justice to insure the well-being and economic security of all people should be the concern of the State." We are ready and willing to enact legislation promoting the social and economic well-being of the people whenever an opportunity for enacting such kind of legislation arises.

The respondent Court held that Republic Act No. 4118, "by converting the land in question — which is the patrimonial property of the City of Manila into disposable alienable land of the State and placing it under the disposal of the Land Tenure Administration — violates the provisions of Article III (Secs. 1 and 2) of the Constitution which ordain that "private property shall not be taken for public use without just compensation, and that no person shall be deprived of life, liberty or property without due process of law". In support thereof reliance is placed on the ruling in Province of Zamboanga del Norte vs. City of Zamboanga, G.R. No. 2440, March 28, 1968; 22 SCRA 1334, which holds that Congress cannot deprive a municipality of its private or patrimonial property without due process of law and without payment of just compensation since it has no absolute control thereof. There is no quarrel over this rule if it is undisputed that the property sought to be taken is in reality a private or patrimonial property of the municipality or city. But it would be simply begging the question to classify the land in question as such. The property, as has been previously shown, was not acquired by the City of Manila with its own funds in its private or proprietary capacity. That it has in its name a registered title is not questioned, but this title should be deemed to be held in trust for the State as the land covered thereby was part of the territory of the City of Manila granted by the sovereign upon its creation. That the National Government, through the Director of Lands, represented by the Solicitor General, in the cadastral proceedings did not contest the claim of the City of Manila that the land is its property, does not detract from its character as State property and in no way divests the legislature of its power to deal with it as such, the state not being bound by the mistakes and/or negligence of its officers.

One decisive fact that should be noted is that the City of Manila expressly recognized the paramount title of the State over said land when by its resolution of September 20, 1960, the Municipal Board, presided by then Vice-Mayor Antonio Villegas, requested "His Excellency the President of the Philippines to consider the feasibility of declaring the city property bounded by Florida, San Andres and Nebraska Streets, under Transfer Certificate of Title Nos. 25545 and 25547, containing an area of 7,450 square meters, as patrimonial property of the City of Manila for the purpose of reselling these lots to the actual occupants thereof." (See Annex E, Partial Stipulation of Facts, Civil Case No. 67945, CFI, Manila, p. 121, Record of the Case) [Emphasis Supplied]

The alleged patrimonial character of the land under the ownership of the City of Manila is totally belied by the City's own official act, which is fatal to its claim since the Congress did not do as bidden. If it were its patrimonial property why should the City of Manila be requesting the President to make representation to the legislature to declare it as such so it can be disposed of in favor of the actual occupants? There could be no more blatant recognition of the fact that said land belongs to the State and was simply granted in usufruct to the City of Manila for municipal purposes. But since the City did not actually use said land for any recognized public purpose and allowed it to remain idle and unoccupied for a long time until it was overrun by squatters, no presumption of State grant of ownership in favor of the City of Manila may be acquiesced in to justify the claim that it is its own private or patrimonial property (Municipality of Tigbauan vs. Director of Lands, 35 Phil. 798; City of Manila vs. Insular Government, 10 Phil. 327; Municipality of Luzuriaga vs. Director of Lands, 24 Phil. 193). The conclusion of the respondent court that Republic Act No. 4118 converted a patrimonial property of the City of Manila into a parcel of disposable land of the State and took it away from the City without compensation is, therefore, unfounded. In the last analysis the land in question pertains to the State and the City of Manila merely acted as trustee for the benefit of the people therein for whom the State can legislate in the exercise of its legitimate powers.

Republic Act No. 4118 was never intended to expropriate the property involved but merely to confirm its character as communal land of the State and to make it available for disposition by the National Government: And this was done at the instance or upon the request of the City of Manila itself. The subdivision of the land and conveyance of the resulting subdivision lots to the occupants by Congressional authorization does not operate as an exercise of the power of eminent domain without just compensation in violation of Section 1, subsection (2), Article III of the Constitution, but simply as a manifestation of its right and power to deal with state property.

It should be emphasized that the law assailed was enacted upon formal written petition of the Municipal Board of Manila in the form of a legally approved resolution. The certificate of title over the property in the name of the City of Manila was accordingly cancelled and another issued to the Land Tenure Administration after the voluntary surrender of the

City's duplicate certificate of title by the City Treasurer with the knowledge and consent of the City Mayor. To implement the provisions of Republic Act No. 4118, the then Deputy Governor of the Land Authority sent a letter, dated February 18, 1965, to the City Mayor furnishing him with a copy of the "proposed subdivision plan of the said lot as prepared for the Republic of the Philippines for subdivision and resale by the Land Authority to bona fide applicants." On March 2, 1965, the Mayor of Manila, through his Executive and Technical Adviser, acknowledged receipt of the subdivision plan and informed the Land Authority that his Office "will interpose no objection to the implementation of said law provided that its provisions are strictly complied with." The foregoing sequence of events, clearly indicate a pattern of regularity and observance of due process in the reversion of the property to the National Government. All such acts were done in recognition by the City of Manila of the right and power of the Congress to dispose of the land involved.

Consequently, the City of Manila was not deprived of anything it owns, either under the due process clause or under the eminent domain provisions of the Constitution. If it failed to get from the Congress the concession it sought of having the land involved given to it as its patrimonial property, the Courts possess no power to grant that relief. Republic Act No. 4118 does not, therefore, suffer from any constitutional infirmity.

WHEREFORE, the appealed decision is hereby reversed, and petitioners shall proceed with the free and untrammeled implementation of Republic Act No. 4118 without any obstacle from the respondents. Without costs.

Concepcion, C.J., Makalintal, Zaldivar, Castro, Fernando, Teehankee and Antonio, JJ., concur.

Barredo and Makasiar, JJ., took no part.

Amunategui vs Director

FIRST DIVISION

[G.R. No. L-27873. November 29, 1983.]

HEIRS OF JOSE AMUNATEGUI, Petitioners, v. DIRECTOR OF FORESTRY, Respondent.

[G.R. No. L-30035. November 29, 1983.]

ROQUE BORRE and ENCARNACION DELFIN, Petitioners, v. ANGEL ALPASAN, HEIRS OF MELQUIADES BORRE, EMETERIO BEREBER and HEIRS OF JOSE AMUNATEGUI and THE CAPIZ COURT OF FIRST INSTANCE, Respondents.

SYLLABUS

1. CIVIL LAW; PUBLIC LAND ACT; FOREST LAND; CLASSIFICATION NOT LOST EVEN IF IT HAS BEEN STRIPPED OF FOREST COVER; UNLESS RELEASED IN AN OFFICIAL PROCLAMATION AS DISPOSABLE LANDS, RULES ON CONFIRMATION OF IMPERFECT TITLE DO NOT APPLY. — A forested area classified as forest land of the public domain does not lose such classification simply because loggers or settlers may have stripped it of its forest cover. Parcels of land classified as forest land may actually be covered with grass or planted to crops by kaingin cultivators or other farmers. "Forest lands" do not have to be on mountains or in out of the way places. Swampy areas covered by mangrove trees, nipa palms, and other tress growing in brackish or sea water may also be classified as forest land. The classification is descriptive of its legal nature or status and does not have to be descriptive of what the land actually looks like. Unless and until the land classified as "forest" is released in an official proclamation to that effect so that it may form part of the disposable agricultural lands of the public domain, the rules on confirmation of imperfect title do not apply.

2. ID.; ID.; FOREST LANDS; ACQUISITIVE OWNERSHIP NOT ACQUIRED. — This Court ruled in the leading case of Director of Forestry v. Muñoz (23 SCRA 1184) that possession of forest lands, no matter how long, cannot ripen into private ownership. And in Republic v. Animas (56 SCRA 499), we granted the petition on the ground that the ares covered by the patent and title was not disposable public land, it being a part of the forest zone and any patent and title to said area is void ab initio. It bears emphasizing that a positive act of Government is needed to declassify land which is classified as forest and to convert it into alienable or disposable land for agricultural or other purposes.

3. ID.; ID.; CONFIRMATION, OF IMPERFECT TITLE CASES; BURDEN OF PROVING THAT THE REQUIREMENTS OF THE LAW HAVE BEEN MET, RESTS ON THE APPLICANT. — In confirmation of imperfect title cases, the applicant shoulders the burden of proving that he meets the requirements of Section 48, Commonwealth Act No. 141, as amended by Republic Act No. 1942. He must overcome the presumption that the land he is applying for is part of the public domain but that he has an interest therein sufficient to warrant registration in his name because of an imperfect title such as those derived from old Spanish grants or that he has had continuous, open, and notorious possession and occupation of agricultural lands of the public domain under a bona fide claim of acquisition of ownership for at least thirty (30) years preceding the filing of his application.

D E C I S I O N

GUTIERREZ, JR., J.:

The two petitions for review on certiorari before us question the decision of the Court of Appeals which declared the disputed property as forest land, not subject to titling in favor of private persons.

These two petitions have their genesis in an application for confirmation of imperfect title and its registration filed with the Court of First Instance of Capiz. The parcel of land sought to be registered is known as Lot No. 885 of the Cadastral Survey of Pilar, Capiz, and has an area of 645,703 square meters. cralawnad

Roque Borre, petitioner in G.R. No, L-30035, and Melquiades Borre, filed the application for registration. In due time, the heirs of Jose Amunategui, petitioners in G.R. No. L-27873 filed an opposition to the application of Roque and Melquiades Borre. At the same time, they prayed that the title to a portion of Lot No. 885 of Pilar Cadastre containing 527,747 square meters be confirmed and registered in the names of said Heirs of Jose Amunategui.

The Director of Forestry, through the Provincial Fiscal of Capiz, also filed an opposition to the application for registration of title claiming that the land was mangrove swamp which was still classified as forest land and part of the public domain.

Another oppositor, Emeterio Bereber filed his opposition insofar as a portion of Lot No. 885 containing 117,956 square meters was concerned and prayed that title to said portion be confirmed and registered in his name.

During the progress of the trial, applicant-petitioner Roque Borre sold whatever rights and interests he may have on Lot No. 885 to Angel Alpasan. The latter also filed an opposition, claiming that he is entitled to have said lot registered in his name.

After trial, the Court of First Instance of Capiz adjudicated 117,956 square meters to Emeterio Bereber and the rest of the land containing 527,747 square meters was adjudicated in the proportion of 5/6 share to Angel Alpasan and 1/6 share to Melquiades Borre.

Only the Heirs of Jose Amunategui and the Director of Forestry filed their respective appeals with the Court of Appeals, The case was docketed as CA-G.R. No. 34190-R.

In its decision, the Court of Appeals held: jgc:chanrobles.com.ph

". . . the conclusion so far must have to be that as to the private litigants that have been shown to have a better right over Lot 885 are, as to the northeastern portion of a little less than 117,956 square meters, it was Emeterio Bereber and as to the rest of 527,747 square meters, it was the heirs of Jose Amunategui; but the last question that must have to be considered is whether after all, the title that these two (2) private litigants have shown did not amount to a registerable one in view of the opposition and evidence of the Director of Forestry; . . .

". . . turning back the clock thirty (30) years from 1955 when the application was filed which would place it at 1925, the fact must have to be accepted that during that period, the land was a classified forest land so much so that timber licenses had to be issued to certain licensee before 1926 and after that; that even Jose Amunategui himself took the trouble to ask for a license to cut timber within the area; and this can only mean that the Bureau of Forestry had stood and maintained its ground that it was a forest land as indeed the testimonial evidence referred to above persuasively indicates, and the only time when the property was converted into a fishpond was sometime after 1950; or a bare five (5) years before the filing of the application; but only after there had been a previous warning by the District Forester that that could not be done because it was classified as a public forest; so that having these in mind and remembering that even under Republic Act 1942 which came into effect in 1957, two (2) years after this case had already been filed in the lower Court, in order for applicant to be able to demonstrate a registerable title he must have shown.

"‘open, continuous, exclusive and notorious possession and occupation of agricultural lands of the public domain under a bona fide claim of acquisition of ownership for at least thirty (30) years, preceding the filing of the application;’

the foregoing details cannot but justify the conclusion that not one of the applicants or oppositors had shown that during the required period of thirty (30) years prescribed by Republic Act 1942 in order for him to have shown a registerable title for the entire period of thirty (30) years before filing of the application, he had been in

"‘open, continuous, exclusive and notorious possession and occupation of agricultural lands of the public domain’,

it is evident that the Bureau of Forestry had insisted on its claim all throughout that period of thirty (30) years and even before and applicants and their predecessors had made implicit recognition of that; the result must be to deny all these applications; this Court stating that it had felt impelled notwithstanding, just the same to resolve the conflicting positions of the private litigants among themselves as to who of them had demonstrated a better right to possess because this Court foresees that this litigation will go all the way to the Supreme Court and it is always better that the findings be as complete as possible to enable the Highest Court to pass final judgment;

"IN VIEW WHEREOF, the decision must have to be as it is hereby reversed; the application as well as all the oppositions with the exception of that of the Director of Forestry which is hereby sustained are dismissed; no more pronouncement as to costs." cralaw virtua1aw library

A petition for review on certiorari was filed by the Heirs of Jose Amunategui contending that the disputed lot had been in the possession of private persons for over thirty years and therefore in accordance with Republic Act No. 1942, said lot could still be the subject of registration and confirmation of title in the name of a private person in accordance with Act No. 496 known as the Land Registration Act. On the other hand, another petition for review on certiorari was filed by Roque Borre and Encarnacion Delfin, contending that the trial court committed grave abuse of discretion in dismissing their complaint against the Heirs of Jose Amunategui. The Borre complaint was for the annulment of the deed of absolute sale of Lot No. 885 executed by them in favor of the Heirs of Amunategui. The complaint was dismissed on the basis of the Court of Appeals’ decision that the disputed lot is part of the public domain. The petitioners also question the jurisdiction of the Court of Appeals in passing upon the relative rights of the parties over the disputed lot when its final decision after all is to declare said lot a part of the public domain classified as forest land.chanrobles law library : red

The need for resolving the questions raised by Roque Borre and Encarnacion Delfin in their petition depends on the issue raised by the Heirs of Jose Amunategui, that is, whether or not Lot No. 885 is public forest land, not capable of registration in the names of the private applicants.

The Heirs of Jose Amunategui maintain that Lot No. 885 cannot be classified as forest land because it is not thickly forested but is a "mangrove swamp." Although conceding that a "mangrove swamp" is included in the classification of forest land in accordance with Section 1820 of the Revised Administrative Code, the petitioners argue that no big trees classified in Section 1821 of said Code as first, second and third groups are found on the land in question. Furthermore, they contend that Lot 885, even if it is a mangrove swamp, is still subject to land registration proceedings because the property had been in actual possession of private persons for many years, and therefore, said land was already "private land" better adapted and more valuable for agricultural than for forest purposes and not required by the public interests to be kept under forest classification.

The petition is without merit.

A forested area classified as forest land of the public domain does not lose such classification simply because loggers or settlers may have stripped it of its forest cover. Parcels of land classified as forest land may actually be covered with grass or planted to crops by kaingin cultivators or other farmers. "Forest lands" do not have to be on mountains or in out of the way places. Swampy areas covered by mangrove trees, nipa palms, and other trees growing in brackish or sea water may also be classified as forest land. The classification is descriptive of its legal nature or status and does not have to be descriptive of what the land actually looks like. Unless and until the land classified as "forest" is released in an official proclamation to that effect so that it may form part of the disposable agricultural lands of the public domain, the rules on confirmation of imperfect title do not apply.

This Court ruled in the leading case of Director of Forestry v. Muñoz (23 SCRA 1184) that possession of forest lands, no matter how long, cannot ripen into private ownership. And in Republic v. Animas (56 SCRA 499), we granted the petition on the ground that the area covered by the patent and title was not disposable public land, it being a part of the forest zone and any patent and title to said area is void ab initio. It bears emphasizing that a positive act of Government is needed to declassify land which is classified as forest and to convert it into alienable or disposable land for agricultural or other purposes.

The findings of the Court of Appeals are particularly well-grounded in the instant petition.

The fact that no trees enumerated in Section 1821 of the Revised Administrative Code are found in Lot No. 885 does not divest such land of its being classified as forest land, much less as land of the public domain. The appellate court found that in 1912, the land must have been a virgin forest as stated by Emeterio Bereber’s witness Deogracias Gavacao, and that as late as 1926, it must have been a thickly forested area as testified by Jaime Bertolde. The opposition of the Director of Forestry was strengthened by the appellate court’s finding that timber licenses had to be issued to certain licensees and even Jose Amunategui himself took the trouble to ask for a license to cut timber within the area. It was only sometime in 1950 that the property was converted into fishpond but only after a previous warning from the District Forester that the same could not be done because it was classified as "public forest." chanrobles.com:cralaw:red

In confirmation of imperfect title cases, the applicant shoulders the burden of proving that he meets the requirements of Section 48, Commonwealth Act No. 141, as amended by Republic Act No. 1942. He must overcome the presumption that the land he is applying for is part of the public domain but that he has an interest therein sufficient to warrant registration in his name because of an imperfect title such as those derived from old Spanish grants or that he has had continuous, open, and notorious possession and occupation of agricultural lands of the public domain under a bona fide claim of acquisition of ownership for at least thirty (30) years preceding the filing of his application.

The decision of the appellate court is not based merely on the presumptions implicit in Commonwealth Act No. 141 as amended. The records show that Lot No. 88S never ceased to be classified as forest land of the public domain.

In Republic v. Gonong (118 SCRA 729) we ruled: jgc:chanrobles.com.ph

"As held in Oh Cho v. Director of Lands, 75 Phil. 890, all lands that were not acquired from the Government, either by purchase or by grant, belong to the public domain. An exception to the rule would be any land that should have been in the possession of an occupant and of his predecessors in-interests since time immemorial, for such possession would justify the presumption that the land had never been part of the public domain or that it had been a private property even before the Spanish conquest." cralaw virtua1aw library

In the instant petitions, the exception in the Oh Cho case does not apply. The evidence is clear that Lot No. 885 had always been public land classified as forest.

Similarly, in Republic v. Vera (120 SCRA 210), we ruled: jgc:chanrobles.com.ph

". . . The possession of public land however long the period thereof may have extended, never confers title thereto upon the possessor because the statute of limitations with regard to public land does not operate against the State, unless the occupant can prove possession and occupation of the same under claim of ownership for the required number of years to constitute a grant from the State. (Director of Lands v. Reyes, 68 SCRA 177, 195)." cralaw virtua1aw library

We, therefore, affirm the finding that the disputed property Lot No. 885 is part of the public domain, classified as public forest land. There is no need for us to pass upon the other issues raised by petitioners Roque Borre and Encarnacion Delfin, as such issues are rendered moot by this finding. chanrobles virtual lawlibrary

WHEREFORE, the petitions in G. R. No. L-30035 and G. R. No. L-27873 are DISMISSED for lack of merit. Costs against the petitioners.

SO ORDERED.

Melencio-Herrera, Plana and Relova, JJ., concur.

Teehankee, J., concurs in the result.

Lanzar vs Director of Lands


Manila

FIRST DIVISION

G.R. No. L-31934 July 29, 1977

RAMON LANZAR, petitioner vs.DIRECTOR OF LANDS and CITY OF ILOILO, respondents.

Ramon A. Gonzales for petitioner.

Solicitor General Felix Q. Antonio, Assistant Solicitor General Bernardo P. Pardo and Solicitor Jose A. Janolo for respondents.

FERNANDEZ, J.:

This is a petition to review on certiorari the decision of the Court of Appeals in CA-G. R. No. 34333-R entitled "Ramon Lanzar, Applicant-Appellee, versus The Director of Lands and The City of Iloilo, Oppositors-Appellants", declaring the property sought to be registered as the property of the public domain devoted to public use not susceptible of private appropriation.

In May 1960, the petitioner, Ramon Lanzar, filed an application for registration of title to a parcel of land located in the District of Molo, Iloilo City in the Court of First Instance of Iloilo alleging that he is the owner in fee simple of the land in question and asking that the title thereto be registered in his name.

In August 1961, the Director of Lands and the City of Iloilo filed an opposition to the application on the ground that the land in question a foreshore land which forms part of the public domain and is needed by the City of Iloilo as a road right of way of the Molo Arevalo Boulevard, and that the applicant had not possessed the property in such a manner as to warrant an implied grant entitled him to confirmation of his title thereto.

After trial, the Court of First Instance of Iloilo rendered a decision in March 1963 holding that the property in question, having been possessed by the applicant and his predecessors-in-interest, publicly, continuously and adversely for more than 30 years, the same was adjudicated to the petitioner, it appearing that no proof had been adduced that the said land is necessary for public utility or establishment of special industries (Record on Appeal, pp. 30-37).

The Director of Lands and the City of Iloilo appealed to the Court of Appeals which on March 24, 1970 reversed the decision of the Court of First Instance of Iloilo and held that the land in question, being an accretion formed by the action of the sea, is property of the public domain and not susceptible of private appropriation.

Hence, the applicant-appellee, Ramon Lanzar, filed this petition for certiorari to review the aforesaid decision of the Court of Appeals. The petitioner assigns the following errors:

I

THE COURT OF APPEALS ERRED IN HOLDING THAT LANDS FORMED BY ACTION OF THE SEA AS ACCRETION TO THE SHORES ARE PROPERTY OF PUBLIC DOMINION, ON THE AUTHORITY OF ART. 4, LAW OF WATERS, KER & CO. VS GAUDEN AND GOVERNMENT VS. ALDECOA.

II

THE COURT OF APPEALS ERRED IN RELYING ON MONTEVERDE VS. DIRECTOR OF LANDS, 93 PHIL. 134 HOLDING THAT ONLY THE EXECUTIVE OR LEGISLATURE CAN DECLARE THE LAND AS NO LONGER INTENDED FOR PUBLIC USE AND SO SHALL BELONG TO THE ADJACENT OWNER.

III

THE COURT OF APPEALS ERRED IN HOLDING THAT SINCE ART. 422 OF THE NEW CIVIL CODE PROVIDES THAT PROPERTY OF PUBLIC DOMAIN WHEN NO LONGER INTENDED FOR PUBLIC USE, SUCH INTENTION CAN ONLY BE SPELLED OUT BY THE EXECUTIVE OR LEGISLATURE, NOT BY THE COURTS.

IV

THE COURT OF APPEALS ERRED IN NOT HOLDING THAT PETITIONER HAS ACQUIRED THE PROPERTY THRU ACQUISITIVE PRESCRIPTION.

(Petitioner's Brief, pp. 1-2)

The pertinent facts are not disputed.

The petitioner has applied for the registration of his title to a parcel of land which is admittedly an accretion of Lot No. 1899 of the Cadastral Survey of Iloilo, it having been formed by the gradual action of the sea before 1,922. Ignacio Arroyo, the registered owner of Lot 1899, leased in 19M the property to Maximo Tonogbanua who possessed the whole of Lot 1899 and its accretion. In 1927, Ignacio Arroyo donated Lot 1899 of the Cadastral Survey of Iloilo, together with its accretion, to Beaterio de Santissimo Rosario de Molo, which in turn the property to the applicant, Ramon Lanzar. The lessee planted coconuts and bananas on the land and a portion thereof was devoted to palay. A verification of Lot 1899 by the Bureau of Lands disclosed that the portion of land applied for and described in the plan, Exhibit A, and in its technical description, is outside of Lot 1899, the same being an accretion thereto formed by the action of the sea. Beaterio de Santissimo Rosario de Molo and the applicant entered into an agreement, Exhibit 1, on August 13,1959, under which Beaterio de Santissimo Rosario de Molo assigned all its rights to the accretion, the title to which is sought to be registered by the applicant. Beaterio de Santissimo Rosario de Molo had possessed Lot 1899 and its accretion through its lessee, openly, publicly, uninterruptedly and adversely to all claimants and under claim of ownership. The Beaterio had declared Lot 1899 for taxation and when it assigned the rights to the applicant, he caused the tax declaration to be transferred to his name in May 1960, Exhibit J.

During the Cadastral Survey of 1911-1912, the lot in question was non-existent (Exhibit 2, Director of Lands). Hence, said land as an accretion to Lot 1899 must have gradually developed from 1912 to 1922 and thereafter. It is now separated by the Arevalo-Molo Boulevard from the sea.

The only issue to be resolved is whether or not the title to the land in question which was formed by action of the sea as an accretion to Lot 1899 may be registered in the name of the applicant on the basis of adverse possession for over 30 years.

Article 4 of the Law of Waters provides:

ART. 4. Lands added to the shores by accretions and alluvium deposits caused by the action of the sea, form part of the public domain. When they are no longer washed by the waters of the sea, and are not necessary for the purposes of public utility, or for the establishment of special industries, or for the coastguard service, the Government shall declare them to be the property of the owners of the estates adjacent thereto and as an increment thereof.

In Ker & Co. vs. Cauden, 6 Phil. 732, this Court said:

This case is directly covered by the first part of said article 4. There is therein an express declaration that land formed in the way this land was formed is public property. Nothing could be more explicit and the effect of this declaration is not in any way limited by the subsequent provisions of the same article. The claim of the appellants that these subsequent provisions indicate that the ownership of such land is in the private persons who own the adjoining property, and that the declaration which is spoken of is simply proof of that ownership, can not be sustained. It is in direct conflict with the statement made in the first part of the article. The true construction of the article is that when these lands which belong to the State are not needed for the purposes mentioned therein, then the State shall grant them to the adjoining owners. No attempt was made by the appellants to prove any such grant or concession in this case and, in fact, it is apparent from the evidence that the conditions upon which the adjoining owners would be entitled to such a grant have never existed because for a long time the property was by the Spanish navy and it is now occupied by the present government as a naval station, and works costing more than $500,000, money of the United States, have been erected thereon. (Idem. p. 736)

It is contended by the petitioner that:

As found by the Court of Appeals, the accretion began before 1922, but after 1912, as shown by the undisputed evidence, hence, during the regime of the Spanish Civil Code, which became effective on December 8, 1889, and consequently, its nature shall be determined by the said code. Now, the said code provides:

ARTICLE 399. The following are property of public domain:

l. Those things intended for public use, as roads, canals, rivers, torrents, ports and bridges constructed by the State, riverbanks, shores, roadsteads and others of a like nature.

(Brief for Petitioner-Appellant, pp. 10-11)

However, in Insular Government vs. Aldecoa and Company, 19 Phil. 505, this Court held:

The Civil Code, which went into effect in these Islands on December 7, 1889, the twentieth day of its publication in the Gaceta de Manila of the 17th of November of the same year, confirms the provisions of the said Law of Waters, since, in its article 339, it prescribes that:

Property of public ownership is —

l. That destined to the public use, such as roads, canals, rivers, torrents, ports, and bridges constructed by the State, and banks, shores, roadsteads, and that of a similar character.

Article 341 of the same code provides:

Property of public ownership, when no longer devoted to general uses or to the requirements of the defense of the territory, shall become a part of the State property.

The shores and the lands reclaimed from the sea, while they continue to be devoted to public uses and no grant whatever has been made of any portion of them to private persons, remain a part of the public domain and are for public uses, and, until they are converted into patrimonial property of the State, such lands, thrown up by the action of the sea, and the shores adjacent thereto, are not susceptible of prescription, inasmuch as, being dedicated to the public uses, they are not subject of commerce among men, in accordance with the provision of article 1936 of the Civil Code.

The occupation or material possession of any land formed upon the shore by accretions and alluvium deposits occasioned by the sea, where the occupant or possessor is a private person and holds without previous permission or authorization from the Government, granted in due form, although he may have had the intention to hold it for the purpose of making it his own, is illegal possession on his part and amounts to nothing more than a mere detainer of the land, which is out of the sphere of the commerce of men, as belonging to the public domain and being alloted to public uses and for the use of all persons who live at the place where it is situated. (Idem, pp. 514-515)

It is thus seen that the petitioner could not acquire the land in question by prescription.

The contention of the petitioner-appellant that by "thus expanding the meaning of shores to include inland property formed by the action of the sea, Government vs. Aldecoa is guilty of judicial legislation ..." (Brief of Petitioner-Appellant, p. 15) has no merit.

Articles 339 and 340 of the Spanish Civil Code are not repugnant to Article 4 of the Spanish Law of Waters of 1866. The said provisions of the said Spanish Code did not provide that lands added to the shores by action of the sea form part of the patrimonial property of the State.

As stated by this Court in Insular Government vs. Aldecoa, supra, p. 541, the Civil Code of Spain confirms the provisions of Article 4 of the Law of Waters, citing Article 339 of said code. This Court has been consistent in ruling that lands formed by the action of the sea belong to the public domain. Thus in Monteverde vs. Director of Lands, 93 Phil. 134, it was held:

Lots Nos. 1 and 2 were admittedly formed and added to the shores by the natural. action of the sea, and the petitioners herein have claimed title thereto as accretion to their adjoining lots, in accordance with article 4 of the Law of Waters of August 3, 1966, which provides as follows:

'Lands added to the shores by accretion and alluvial deposits caused by action of the sea, form part of the public domain. When they are no longer washed by the water of the sea and are not necessary for purposes of public utility, or for the establishment of

special industries, or for coast-guard service, the Government shall declare them to be property of the owners of the estates adjacent thereto and as increment thereof.'

(Idem. pp. 135-136)

In view of the foregoing, the Court of Appeals did not err in declaring the property sought to be registered as part of the public domain devoted to public use not susceptible of private appropriation. The land in question is needed by the City of Iloilo for the expansion of the Arevalo-Molo Boulevard.

WHEREFORE, the petition for review is hereby dismissed and the decision of the Court of Appeals sought to be reviewed is affirmed, without pronouncement as to costs.

SO ORDERED.

Teehankee (Chairman), Makasiar, Muñoz Palma, Martin and Guerrero, JJ., concur.

Yap Vs Grageda


Manila

FIRST DIVISION

G.R. No. L-31606 March 28, 1983

DONATO REYES YAP and MELITONA MARAVILLAS, petitioners, vs.HON. EZEKIEL S. GRAGEDA, as Judge of the Court of First Instance of Albay and JOSE A. RICO,respondents.

Jose P. Oira for petitioners.

Rodolfo A. Madrid for respondents.

GUTIERREZ, JR., J.:

We are asked in this petition to review the amended decision of the respondent court which declared as absolutely null and void the sale of a residential lot in Guinobatan, Albay to a Chinese national and ordered its reconveyance to the vendors thirty years after the sale inspite of the fact that the vendee had been a naturalized Filipino citizen for fifteen years at the time.

We grant the petition. The questioned decision and the order amending it are reversed and set aside.

The facts are not disputed.

On April 12, 1939, Maximino Rico, for and in his own behalf and that of the minors Maria Rico, Filomeno Rico, Prisco Rico, and Lourdes' Rico, executed a Deed of Absolute Sale (Annex 'A' to the complaint) over Lot 339 and a portion of Lot 327 in favor of the petitioner Donato Reyes Yap who was then a Chinese national. Respondent Jose A. Rico is the eldest son of Maximino Rico, one of the vendors in Annex 'A'.

Subsequently, the petitioner as vendee caused the registration of the instrument of sale and the cancellation of Original Certificates of Title Nos. 29332 and 29410 and the consequent issuance in his favor of Transfer Certificate of Title No. T-2433 covering the two lots subject matter of the Contract of Sale.

After the lapse of nearly fifteen years from and after the execution of the deed of absolute sale, Donato Reyes Yap was admitted as a Filipino citizen and allowed to take his oath of allegiance to the Republic of the Philippines. He was, thereafter, issued Certificate of Naturalization No. 7, File No. 19 of the Court of First Instance of Albay.

On December 1, 1967, the petitioner ceded the major portion of Lot No. 327 consisting of 1,078 square meters which he acquired by purchase under the deed of sale in favor of his engineer son, Felix Yap, who was also a Filipino citizen because of the Filipino citizenship of his mother and the naturalization of his father Donato Reyes Yap.

Subsequently, Lourdes Rico, aunt and co-heir of respondent Jose A. Rico. sold the remaining portion of Lot 327 to the petitioner who had his rights thereon duly registered under Act 496. Petitioner, Donato Reyes Yap, has been in possession of the lots in question since 1939, openly, publicly, continuously, and adversely in the concept of owner until the present time. The petitioner has one surviving son by his first marriage to a Filipino wife. He has five children by his second marriage also to a Filipina and has a total of 23 grandchildren all of whom are Filipino citizens.

The respondent court considered Section 5, Article XIII of the 1935 Constitution that "no private agricultural land shall be transferred or assigned except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain in the Philippines" to be an absolute and unqualified prohibition and, therefore, ruled that a conveyance contrary to it would not be validated nor its void nature altered by the subsequent naturalization of the vendee.

The dispositive portion of the amended decision reads:

WHEREFORE, in view of all the foregoing, the Contract of Sale embodied in the 'Escritura de Compra Venta' which is attached to the Complaint as Annex 'A', is hereby declared null and void ab initio and without any legal force and effect.

The action to recover Lot 339 of the Cadastral Survey of Guinobatan, Albay, covered by Transfer Certificate of Title No. T2433. and Lot 327 covered by the same Transfer Certificate of Title, is hereby

granted to plaintiff, upon payment of the consideration price of P150.00 and declaring plaintiff as the lawful owner and entitled to the possession thereof.

Defendant Donato Reyes Yap is hereby ordered to produce his Transfer Certificate of Title No. T-2433 to the Register of Deeds of Albay, so as to enable said office to make the due and proper annotations on said title as well as in the original of the declaration of nullity as herein adjudged. Let Transfer Certificate of Title issued to plaintiff, concerning said Lots 339 and 327 of the Cadastral Survey of Guinobatan, Albay.

COSTS AGAINST DEFENDANTS.

The rulings in Vasquez v.Leng Seng Giap et al. (96 Phil. 447) and Sarosa Vda. de Bersabia v. Cuenco (113 SCRA 547) sustain the petitioner's contentions. We stated in Sarosa Vda de Bersabia:

There should be no question that the sale of the land in question in 1936 by Epifania to Ong King Po was inexistent and void from the beginning (Art. 1409 [7], Civil Code) because it was a contract executed against the mandatory provision of the 1935 Constitution, which is an expression of public policy to conserve lands for the Filipinos. Said provision reads:

Save in cases of hereditary succession, no private agricultural land shall be transferred or assigned except to in. individuals, corporations, or associations, qualified to acquire or hold lands of the public domain.

Had this been a suit between Epifania and Ong King Po she could have been declared entitled to the litigated land on the basis, as claimed, of the ruling in Philippine Banking Corporation vs. Lui She, reading:

... For another thing, and this is not only cogent but also important. Article 1416 of the Civil Code provides as an exception to the rule on pari delicto that when the agreement is not illegal per se but is merely prohibited, and the prohibition by the law is designed for the protection of the plaintiff, he may, if public policy is thereby enhanced, recover what he has sold or delivered. ...

But the factual set-up has changed. The litigated property is now in the hands of a naturalized Filipino. It is no longer owned by a disqualified vendee. Respondent, as a naturalized citizen, was constitutionally qualified to own the subject property. There would be no more public policy to be served in allowing petitioner Epifania to recover the land as it is already in the hands of a qualified person. Applying by analogy the ruling of this Court in Vasquez vs. Giap and Leng Seng Giap & Sons:

... if the ban on aliens from acquiring not only agricultural but also urban lands, as construed by this Court in the Krivenko case, is to preserve the nation's lands for future generations of Filipinos, that aim or purpose would not be thwarted but achieved by making lawful the acquisition of real estate by aliens who became Filipino citizens by naturalization.

Only recently, we had occasion to reiterate the above rulings in Vicente Godines v. Fong Pak Luen, et al. (G.R. No. L-36731, January 27, 1983).

WHEREFORE, the amended judgment of the respondent court is hereby REVERSED and SET ASIDE. The complaint is DISMISSED.

SO ORDERED.

Teehankee (Chairman), Melencio-Herrera, Plana, Vasquez and Relova, JJ., concur.

MERALCO vs Castro-Bartolome


Manila

EN BANC

G.R. No. L-49623 June 29, 1982 MANILA ELECTRIC COMPANY, petitioner-appellant, vs.JUDGE FLORENLIANA CASTRO-BARTOLOME of the Court of First Instance of Rizal, Makati Branch XV, and REPUBLIC OF THE PHILIPPINES, respondent-appellees.

AQUINO, J.:p

This case involves the prohibition in section 11, Article XIV of the Constitution that "no private coporation or associaiton may hold alienable lands of the public domain except by lease not to exceed on ethousand hectares in area". * That prohibition is not found in the 1935 Constitution.

The Manila Electric Company, a domestic corporation organized under Philippine laws, more than sixty percent of whose capital stock is owned by Filipino citizens, in its application filed on December 1, 1976 in the Makati branch of the Court of First Instance of Rizal, prayed for the confirmation of its title to two lots with a total area of one hundred sixty-five square meters, located at Tanay, Rizal with an assessed value of P3,270 (LRC Case No. N-9485, LRC No. N-50801).

The Republic of the Philippines opposed theh application on the grounds that the applicant, as a private corporation,is disqualified to hold alienable public lands and that the applicant and its prredecessors-in-interest have not been in the open, continuous, exclusive and notorious possession and occupation of the land for at least thirty years immediately preceding the filing of the application (pp. 65-66, Rollo).

After the trial had commenced, the Province of rizal and the Municipality of Tanay filed a joint opposition to the application on the ground that one of the lots, Lot No. 1165 of the Tanay cadastre, would be needed for the widening and improvement of Jose Abad Santos and E.Quirino Streetsin the town of Tanay.

The land was possessed by Olimpia ramos before the Pacific war which broke out in 1941. On July 3, 1947, Ramos sold the land to the spouses Rafael Piguing and MInerva Inocencio (Exh. K). The Piguing sapouses constructed a house therereon. Because the Meralco had installed the "anchor guy" of its steel post on the land, the Piguing spouses sold the lot to the Meralco on August 13, 1976.

The said land was included in the1968 cadastral survey made in Tanacy by the Bureau of Lands, Plan AP-04-000902 (Exh. F and H) and was divided into two lots, Lots Nos. 1164 and 1165, so as to segregate Lot No. 1165 which would be used to widen the two street serving as the land's eastern and southern boundaries.

The land was declared for realty tax purposes since 1945 and taxes had been paid thereon up to 1977. It is residential in character as distinguished from a strictly agricultural land. It is not included in any military reservation. Since 1927, it has formed part of the alienable portion of the public domain.

After trial, the lowre court rendered a decision dismissing the application because in its opinion the Meralco is not qualified to apply for the registration of the said land since under section 48(b) of the Public Land Law only Filipino citizens or natural persons can apply for judicial confirmationof their imperfect titles to public land. The Meralco is a juridical person. The trial court assumed that the land which it seeks to register is public land.

From that decision, the Meralco appealed to this Court under Republic Act No. 5440.

In contends that the said land, after having been possessed in the concept of owner by Olimpia Ramos and the Piguing spouses for more than thirty years, had become private land in the hands of the latter, and, therefore, the constitutional prohibition, banning a private corporation from acquiring alienable public land, is not applicable to the said land.

The Meralco further contends that it has invoke section 48(b) of the Public Land Law, not for itself, but for the Piguing spouses who, as Filipino citizens, could secure a judicial confirmation of their imperfect title to the land.

In reply to these contentions, the Solicitor General counters that the said land is not private land because the Meralco and its predecessors-in-interest have no composition title from the Spanish government nor possessory information title or any other means for the acquisition of public lands such as grants or patents (Republic vs. Court of Appeals and De Jesus, L-40912, September 30, 1976, 73 SCRA 146, 157; Director of Lands vs. Reyes, L-27594, November 28, 1975, and Alinsunurin vs. Director of Lands, L-28144, November 28, 1975; 68 SCRA 177; 195; Lee Hong Hok vs. David, L-30389, December 27, 1972, 48 SCRA 372, 378-9; Director of Lands vs. Court of Appeals and Raymundo, L-29575, April 30, 1971, 38 SCRA 634, 639; Padilla vs. Reyes and Director of Lands, 60 Phil. 967, 969; Heirs of Datu Pendatun vs. Director of Lands, 59 Phil. 600, 603).

The Public Land Law provides:

CHAPTER VIII. — Judicial confirmation of imperfect or incomplete titles.

xxx xxx xxx

SEC. 48. The following described citizens of the Philippines, occupying lands of the public domain or claiming to own any such lands or an interest therein, but whose titles have not been perfected or completed, may apply to the Court of First Instance of the province where the land is located for confirmation of their claims and the issuance of a certificate of title therefor, under the Land Registration Act, to wit:

xxx xxx xxx

(b) Those who by themselves or through their predecessors in interest have been in open, continuous, exclusive, and notorious possession and occupation of agricultural lands of the public domain, under a bona fide claim of acquisition of ownership, for at least thirty years immediately preceding the filing of the application for confirmation of title except when prevented by war or force majeure. These shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a certificate of title under the provisions of this chapter. (As amended by Republic Act No. 1942, approved on June 22, 1957.)

xxx xxx xxx

SEC. 49. No person claiming title to lands of the public domain not in possession of the qualifications specified in the last preceding section may apply for the benefits of this chapter.

We hold that, as between the State and the Meralco, the said land is still public land. It would cease to be public land only upon the issuance of the certificate of title to any Filipino citizen claiming it under section 48(b). Because it is still public land and the Meralco, as a juridical person, is disqualified to apply for its registration under section 48(b), Meralco's application cannot be given due course or has to be dismissed.

This conclusion is supported by the rule announced in Oh Cho vs. Director of Lands, 75 Phil. 890, 892, which rule is a compendious or quintessential precis of a pervasive principle of public land law and land registration law, that"all lands that were not acquired from the Government, either by purchase or by grant, belong to the public domain. An exception to the rule would be any land that should have been in the possession of an occupant and of his predecessors-in-interest since time immemorial, for such possession would justify the presumption that the land had never been part of the public domain or that it had been a private property even before the Spanish conquest." (Cariño vs. Insular Government, 212 U. S. 449, 53 L. ed. 594, 41 Phil. 935 and 7 Phil. 132).

The Meralco relies on the ruling in Susi vs. Razon and Director of Lands, 48 Phil. 424, that "an open, continuous, adverse and public possession of a land of the public domain from time immemorial by a private individual personally and through his predecessors confers an effective title on said possessor, whereby the land ceases to be public" and becomes private property.

That ruling is based on the Cariño case which is about the possession of land by an Igorot and his ancestors since time immemorial or even before the Spanish conquest. The land involved in the Susi case was possessed before 1880 or since a period of time "beyond the reach of memory". That is not the situation in this case. The Meralco does not pretend that the Piguing spouses and their predecessor had been in possession of the land since time immemorial.

In the Susi case, this Court applied section 45(b) of Act No. 2874 which corresponds to what is now section 48(b). It was held that the long possession of the land under a bona fide claim of ownership since July 26, 1894 gave rise to the conclusive presumption that the occupant had complied with all the conditions essential to a Government grant and was thus entitled to a certificate of title.

On the other hand, in Uy Un vs. Perez, 71 Phil. 508, 510-11, it was held that while occupants of public land, who have applied for the confirmation of their title, "teian asimismo a su favor la presuncion juris et de jure de que habian cumplido con todas las condiciones necesarias para la concesion del titulo; pero hasta que el titulo se expida no tenian el concepto juridico de ser los verdaderos dueños del terreno in este dejo de pertenecer a los terrenos publico del Estado susceptibles de enajenacion."

That means that until the certificate of title is issued, a pice of land, over which an imperfect title is sought to be confirmed, remains public land. For that reason in the Uy Un case, it was held that if that land was attached by a judgment creditor of the applicant, while his application for confirmation of his imperfect title was pending in the Bureau of Lands, the levy and execution sald of the land were void.

For that same reason, lands over which an imperfect title is sought to be confirmed are governed by the Public Land Law. Such lands would not be covered by the Public Land Law if they were already private lands. The occupants' right to the said lands is characterized in the Uy Un case, not as ownership in fee simple, but asderecho dominical incoativo.

The Meralco in its concluding argument contends that if the Piguing spouses could ask for the confirmation of their imperfect title to the said lands, then why should the Meralco, as their transferee, be denied the same right to register the said land in its name, there being no legal prohibition for the Piguing spouses from selling the land to the Meralco? This Court is disposing of that same contention in the Oh Cho case said:

The benefits provided in the Public Land Act (meaning the confirmation of an imperfect title under section 48[b]) for applicant's immediate predecessors-in-interest are or constitute a grant or concession by the State; and before they could acquire any right under such benefits, the applicant's immediate predecessors-in-interest should comply with the condition precedent for the grant of such benefits.

The condition precedent is to apply for the registration of the land of which they had been in possession at least since July 26, 1894. This the applicant's immediate predecessors-in-interest (meaning the Piguing spouses in the instant case) failed to do.

They did not have any vested right in the lot amounting to title which was transmissible to the applicant. The only right, if it may thus be called, is their possession of the lot which, tacked to that of their predecessors-in-interest, may be availed of by a qualified person to apply for its registration but not by a person as the applicant who is disqualified. (75 Phil. 890, 893.)

Finally, it may be observed that the constitutional prohibition makes no distinction between (on one hand) alienable agricultural public lands as to which no occupant has an imperfect title and (on the other hand) alienable lands of the public domain as to which an occupant has an imperfect title subject to judicial confirmation.

Since section 11 of Article XIV does not distinguish, we should not make any distinction or qualification. The prohibition applies to alienable public lands as to which a Torrens title may be secured under section 48(b). The proceeding under section 48(b) "presupposes that the land is public" (Mindanao vs. Director of Lands, L-19535, July 30, 1967, 20 SCRA 641, 644).

The lower court;s judgment dismissing Meralco's application is affirmed. Costs against the petitioner-appellant.

SO ORDERED.

Barredo, Makasiar, Guerrero, Melencio-Herrera, Plana, Escolin, Vasquez, Relova and Gutierrez, Jr., JJ., concur.

Concepcion, Jr., J., is on leave.

Separate Opinions

ABAD SANTOS, J.: concurring:

I concur in the result. I am of the opinion that the lots which are sought to be registered have ceased to be lands of the public domain at the time they were acquired by the petitioner corporation. They are already private lands because of acquisitive prescription by the predecessors of the petitioner and all that is needed is the confirmation of the title. Accordingly, the constitutional provision that no private corporation or association may hold alienable lands of the public domain is inapplicable. However, the petitioner is relying on Sec. 48 of the Public Land Act for the confirmation of its title and Mr. Justice Aquino is correct in holding that said provision cannot be availed by juridical entities.

FERNANDO, C.J., concurring and dissenting:

I concur in the ruling of the Court that Meralco "as a juridical person" is disqualified to apply for its registration under Section 48(b).. 1 I dissent insofar as the opinion of the Court would characterize such jurisdictional defect, under the particular circumstances of this case, as an insurmountable obstacle to the relief sought. I would apply by analogy, although the facts could be distinguished, the approach followed by us in Francisco v. City of

Davao, 2 where the legal question raised, instead of being deferred and possibly taken up in another case, was resolved. By legal fiction 3 and in the exercise of our equitable jurisdiction, I feel that the realistic solutionwould be to decide the matter as if the application under Section 48(b) were filed by the Piguing spouses, who I assume suffer from no such disability.

DE CASTRO, J., dissenting:

Justice Teehankee cites in his dissenting opinion the case of herico vs. Dar, 1 the decision in which I am the ponente, as reiterating a supposedly well-established doctrine that lands of the public domain which, by reason of possession and cultivation for such a length of time, a grant by the State to the occupant is presumed, and the land thereby ceases to form part of the public domain, but is segregated therefrom as to be no longer subject to the authority of the Director of Lands to dispose under the public lands laws or statutes. He would thus consider said land as no longer public land but "private" lands and therefore, not within the prohibition of the New Constitution against corporations from acquiring public lands which provides that "no private corporation or association may hold alienable lands of the public domain except by lease not to exceed one thousand hectares." 2

I cannot subscribe to the view that the land as above described has become private land, even before title thereto, which is, as of this stage, said to be still "an incomplete or imperfect title," has been fully vested on the occupant, through the prescribed procedure known as judicial confirmation of incomplete or imperfect title. 3 This is the only legal method by which full and absolute title to the land may be granted, to convert the land into a truly private land. To secure such judicial title, only the courts can be resorted to. The Director of Lands has lost authority over the land, insofar as its disposition is concerned. His authority is limited to another form of disposition of public land, referred to as administrative legalization, resulting in the issuance of free patents, also based on possession, in which case, as in the issuance of homestead and sales patents, the land involved is undoubtedly public land. The possessor of a piece of public land would have the option to acquire title thereto through judicial confirmation or administrative legalization. The difference is that in the latter case, the area disposable to a citizen-applicant by the Director of Lands is limited to 24 hectares. There is no limit to the area subject to judicial confirmation of incomplete or imperfect title, except possibly the limit fixed for a State grant under old Spanish laws and decrees, which certainly is much larger than that set for free patents.

It is because of the divestiture of authority of the Director of Lands to dispose of the land subject to judicial confirmation of incomplete and imperfect title that some statements are found in many cases, such as those cited by Justice Teehankee, to the effect that such land has ceased to be a public land. What these statements, however, really mean is that the land referred to no longer forms part of the mass of public domain still disposable by the Director of Lands, under the authority granted him by the public land statutes. It, however, would not follow that the land covered by Section 48 of the Public Land Act has itself become private land. The fact that its disposition is provided for in the aforecited Act which deals with "public land" gives rise to the very strong implication, if not a positive conclusion, that the land referred to is still public land. Only when the court adjudicates the land to the applicant for confirmation of title would the land become privately owned land, for in the same proceeding, the court may declare it public land, depending on the evidence.

The discussion of the question of whether the land involved is still public or already private land is, however, entirely pointless, or an idle exercise, if We consider the provision of Section 14, Article XIV of the Constitution which appears to have been lost sight of, which provides that 'save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain." As previously stated, by express provisions of the Constitution, no corporation or association may hold alienable lands of the public domain except by lease, not to exceed, 1,000 hectares in area.4 Hence, even if the land involved in the present case is considered private land, the cited section prohibits its acquisition by the Meralco or Iglesia which admittedly are "corporations or association" within the meaning of the aforecited provision of the New Constitution. This observation should end all arguments on the issue of whether the land in question is public or private land. Although it may further be observed that supposing a corporation has been in possession of a piece of public land from the very beginning, may it apply for judicial confirmation of the land in question to acquire title to its owner after possessing the land for the requisite length of time? The answer is believed obvious — it may not. If its possession is not from the beginning but has commenced only upon the transfer to it by the prior possessor, may the corporation apply? The answer is just as obvious — with more reason, it may not.

This separate opinion should have had no need to be written because the majority opinion written by Justice Aquino is already well-reasoned out and supported by applicable authorities. I was impelled to write it only because in the dissenting opinion of Justice Teehankee, the case of Herico vs. Dar (supra) which is my ponenciawas cited in support of his position. This separate opinion then is more to show and explain that whatever has been stated by me in the Dar case should be interpreted in the light of what I have said in this separate opinion, which I believe, does not strengthen Justice Teehankee's position a bit.

TEEHANKEE, J., dissenting:

Involved in these two cases are the applications of petitioner Meralco, a nationalized domestic corporation, in the first case and respondent Iglesia in Cristo, a religious corporation sole, in the second case (both admittedly Filipino corporations qualified to hold and own private lands), for judicial confirmation of their titles to small parcels of land, residential in character as distinguished from strictly agricultural land, acquired by them by purchase or exchange from private persons publicly recognized as the private owners (who have been in the open, continuous, exclusive and notorious possession and occupation of the lands under a bona fide claim of ownership for at least thirty [30] years immediately preceding the filing of the applications).

This dissent is based on the failure of the majority to adhere to established doctrine since the 1909 case of Cariñoand the 1925 case of Susi down to the 1980 case of Herico, infra, pursuant to the Public Land Act, as amended, that where a possessor has held the open, exclusive and unchallenged possession of alienable public land for the statutory period provided by law (30 years now under amendatory Rep. Act No. 1942 approved on June 22, 1957), the law itself mandates that the possessor "shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a certificate of title" and "by legal fiction [the land] has already ceased to be of the public domain and has become private property." Accordingly, the prohibition of the 1973 Constitution and of the Public Land Act against private corporation holding lands of the public domain has no applicability in the present cases. What Meralco and Iglesia have acquired from their predecessors-in-interest had already ceased to be of the public domain and had become private property at the time of the sale to them and therefore their applicatins for confirmation of title by virtue of their predecessors-in-interest' vested right and title may be duly granted.

The land covered by the Meralco application of November 26, 1976 consists of two (1) small lots with a total area of 165 square meters located at Tanay, Rizal with an assessed value of P3,270.00. This land was possessed by Olimpia Ramos before World Warr II which broke out in the Pacific in 1941. Olimpia Ramos sold the land on July 3, 1947 to the spouses Rafael Piguing and Minerva Inocencio who constructed a house thereon. But because the Meralco had instealled the "anchor guy" of its stell posts on the land, the Piguing spouses sold the land to the Meralco on August 13, 1976. The land had been declared for realty tax purposes since 1945 and realty taxes were regularly paid thereon. It is residential in character as distinguished from strictly agricultural land. It is likewise established that it is not included in any military reservation and that since 1927 it had been certified as part of the alienable or disposable portion of the public domain.

The land covered by the Iglesia application of September 3, 1977 likewise consists of two (2) small lots located in Barrio Dampol, Plaridel, Bulacan with a total area of 313 square meters and with an assessed value of P1,350.00. The land was acquired by the Iglesia on January 9, 1953 from Andres Perez in exchange for a lot owned by the Iglesia with an area of 247 square meters. The land was already possessed by Perez in 1933. Admittedly also it is not included in any military reservation and is inside an area which was certified since 1927 as part of the alienable or disposable portion of the public domain. A chapel of the Iglesia stands on the said land. It had beenduly declared for realty tax purposes in the name of the Iglesia and realty taxes were regularly paid thereon.

Respondent judge in the Meralco case sustained the Republic's opposition and dismissed the application, holding that under both the provisions of the new Constitution and the Public Land Act, Meralco, being a corporation and not a natural person, is not qualified to apply for the registration of title over the public land.

On the other hand, in the Iglesia case, the Republic presented no evidence in support of its opposition but expressly "submitted the case for decision on the basis of the evidence submitted by the applicant." Respondent judge in the case accordingly granted the application for registration of the land in the name of the Iglesia, holding that it had been "satisfactorily established that applicant ]Iglesia] and its predecessors-in-interest have been in open, continuous, public and adverse possession of the land . . . under a bona fide claim of ownership for more than thirty (30) years prior to the filing of the application" and is therefore entitled to the registration applied for under the Public Land Act, as amended.

Both decisions are now with the Court for review. I hold that both applications for registration should be granted by virtue of the prevailing principle as enunciated since the 1925 case of Susi vs. Razon and Director of Lands 1 and reaffirmed in a long line of cases down to the 1980 case of Herico vs. Dar 2 that the lands in question ceased, ipso jure, or by operation of law, to be lands of the public domain upon completion of the statutory period of open, continuous, exclusive, notorious and unchallenged possession thereof by the applicants' predecessors-in-interest who were qualified natural persons and entitled to registration by right of acquisitive prescription under the provisions of the Public Land Act, and that accordingly

the judgment in the Meralco case should be reversed and a new judgment entered granting Meralco's application, while the judgment in the Iglesia case should stand affirmed.

The principal issue at bar may thus be stated:

It is expressly provided in section 48, par. (b) of the Public Land Act (Commonwealth Act No. 141, as amended by Rep. Act No. 1942, approved on June 22, 1957) that citizens of the Philippines who are natural persons who have occupied lands of the public domain but whose titles have not been perfected or completed may apply to the corresponding court of first instance for confirmation of their claims and the issuance of the certificate of title therefor under the Land Registration Act in cases where they "by themselves or through their predecessors-in-interest have been in the open, continuous, exclusive, and notorious possession and occupation of agricultural lands of the public domain, under a bona fide claim of acquisition of ownership, for at least thirty years immediately preceding the filing of the application for confirmation of title except when prevented by war or force majeure. These shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a certificate of title under the provisions of this chapter." 3 In such cases, is the land ipso jure or by operation of law converted into private land upon completion of the 30th year of continuous and unchallenged occupation of the land such that thereafter as such private land, it may be duly transferred to and owned by private corporations or does such land, as held by respondent judge in the Meralco case, remain part of the public domain and does not become private land until after actual judicial confirmation proceedings and the formal court order for the issuance of the certificate of title?

1. This issue has been squarely resolved by this Court since the 1925 case of Susi vs. Razon (and a long line of cases, infra). It is established doctrine as first held therein that an open, continuous, adverse and public possession of a land of the public domain for the period provided in the Public Land Act provision in force at the time (from July 26, 1894 in Susi under the old law) by a private individual personally and through his predecessors confers an effective title on said possessor, whereby the land ceases to be land of the public domain and becomes private property.

(At that time in 1925 in the Susi case, such possession was required "from July 26, 1894" as then provided for in section 45(b) of the old Public Land Act No. 2874, amending Act No. 926; whereas at present, as provided for in the corresponding section 48, par.(b) of the later and subsisting Public Land Act, Commonwealth Act No. 141, as amended by Rep. Act No. 1942 approved on June 22, 1957, in force since 1957, the period of open and unchallenged possession was reduced to "at least thirty years immediately preceding the filing of the application for confirmation of title, equivalent to the period of acquisitive prescription. This is admitted in the main opinion of Mr. Justice Aquino, wherein it is stated that "(I)n the Susi case, this Court applied section 45 (b) of Act No. 2874 which corresponds to what is now section 48(b). It was held that the long possession of the land under a bona fide claim of ownership since July 26, 1894 gave rise to the conclusive presumption that the occupant had complied with all the conditions essential to a Government grant and was thus entitled to a certificate of title." 4 The text of the corresponding section 48(b), as amended by Rep. Act 1942 referred to is reproduced verbatim in Mr. Justice Aquino's opinion 5 and quotes the reduced statutory period of open and unchallenged possession of "at least thirty years immediately preceding the filing of the application.")

Accordingly, the Court held that Susi, as the rightful possessor of the public land for the statutory period, acquired the same by operation of law as a grant from the Government, "not only a right to a grant," and the land thereby "already ceased to be of the public domain and had become private property at least by presumption" as expressly provided in the Act. Therefore, any supposed sale by the Director of Lands of the same land to another person was void and of no effect and Susi as the rightful possessor could recover the land as his private propertyfrom the supposed vendee who did not acquire any right thereto since it had ceased to be land of the public domain. The Court thus specifically held therein, as applied to the specific facts of the case, that:

. . . In favor of Valentin Susi, there is, moreover, the presumption juris et de jure, established in paragraph (b) of section 45 of Act No. 2874, amending Act No. 926, that all the necessary requirements for a grant by the Government were complied with for he has been in actual and physical possession, personally and through his predecessors, of an agricultural land of the public domain, openly continuously, exclusively and publicly since July 26, 1894, with a right to a certificate of title to said land under the provisions of Chapter VIII of said Act. So that when Angela Razon applied for the grant in her favor, Valentin Susi had already acquired, by operation of law, not only a right to a grant, but a grant of the Government, for it is not necessary that certificate of title should be issued in order that said grant may be sanctioned by the courts, an application therefor is sufficient, under the provisions of section 47 of Act No. 2874. If by a legal function, Valentin Susi had acquired the land in question by a grant of the State, it had already ceased to be of the public domain and had become private property, at least by presumption, of Valentin Susi, beyond the control of the Director of Lands. Consequently, in selling the land in question to Angela Razon, the Director of Lands disposed of a land over which he had no longer any title or control, and the sake thus made was void and of no effect, and Angela Razon did not thereby acquire any right." 6

2. The above-quoted ruling in Susi has been affirmed and reaffirmed by this Court in a long unbroken line of cases, as follows:

In Mesina vs. Vda. de Sonza, 7 the Court held that "(I)n the case of Susi vs. Razon, et al., 48 Phil. 424, it was observed that where all the necessary requirements for a grant by the Government are complied with through actual physical possession openly, continuously, and publicly, with a right to a certificate of title to said land under the provisions of Chapter VIII of Act No. 2874, amending Act No. 926 (carried over as Chapter VIII of Commonwealth Act No. 141), the possessor is deemed to have already acquired by operation of law not only a right to a grant, but a grant of the Government, for it is not necessary that a certificate of title be issued in order that said grant may be sanctioned by the courts — an application therefor being sufficient under the provisions of Section 47 of Act No. 2874 (reproduced as Section 50, Commonwealth Act No. 141)." and "(C)onsidering that this case was dismissed by the trial court merely on a motion to dismiss on the ground that plaintiff's action is already barred by the statute of limitations, which apparently is predicated on the theory that a decree of registration can no longer be impugned on the ground of fraud one year after the issuance and entry of the decree, which theory does not apply here because the property involved is allegedly private in natural and has ceased to be part of the public domain, we are of the opinion that the trial court erred in dismissing the case outright without giving plaintiff a chance to prove his claim."

In Lacaste vs. Director of Lands, 8 the Court stressed that by force of possession, the land in question became private property on the strength of the Susi doctrine.

In Manarpaac vs. Cabanatan, 9 the Court quoted with favor the text of the above-quoted ruling of Susi, and its ratio decidendi thus:

The Director of Lands contends that the land in question being of the public domain, the plaintiff-appellee cannot maintain an action to recover possession thereof.

If, as above stated, that land, the possession of which is in dispute, had already become, operation of law, private property, there is lacking only the judicial sanction of his title, Valentin Susi has the right to bring an action to recover the possession thereof and hold it.

In Miguel vs. Court of Appeals, 10 the Court again held that where possession has been continuous, uninterrupted, open, adverse and in the concept of an owner, there is a presumption juris et de jure that all necessary conditions for a grant by the State have been complied with and he would have been by force of law entitled to the registration of his title to the land (citing Pamintuan vs. Insular Government, 8 Phil. 485 and Susi vs. Razon, 48 Phil. 424).

In the latest 1980 case of Herico vs. Dar, 11 the Court once more reiterated the Susi doctrine that "(A)nother obvious error of the respondent Court is in holding that after one year from the issuance of the Torrens Title, the same can no longer be reopened to be declared and void, and has become absolute and indefeasible. . . . Secondly, under the provisions of Republic Act No. 1942, which the respondent court held to be inapplicable to the petitioner's case, with the latter's proven occupation and cultivation for more than 30 years since 1914, by himself and by his predecessors-in-interest, title over the land has vested on petitioner as to segregate the land from the mass of public land. Thereafter, it is no longer disposable under the Public Land Act as by free patent. This is as provided in Republic Act No. 1942, which took effect on June 22, 1957, amending Section 48-b of Commonwealth Act No. 141 which provides: . . . As interpreted in several cases when the conditions as specified in the foregoing provision are complied with, the possessor is deemed to have acquired, by operation of law, a right to a grant, a government grant, without the necessity of a certificate of title being issued. The land, therefore, ceases to be of the public domain, and beyond the authority of the Director of Lands to dispose of. The application for confirmation is a mere formality, the lack of which does not affect the legal sufficiency of the title as would be evidenced by the patent and the Torrens title to be issued upon the strength of said patent."

3. In fine, since under the Court's settled doctrine, the acquisitive prescription of alienable or disposable public lands provided for now in section 48, par. (b) of the Public Land Act takes place by operation of law and the public land is converted to and becomes private property upon a showing of open and unchallenged possession underbona fide claim of ownership by the applicants' predecessors-in-interest for the statutory period of thirty yearsimmediately preceding the filing of the application and "it is not necessary that a certificate of title should be issued in order that said grant may be sanctioned by the court" which right is expressly backed up by the conclusive presumption or presumption juris et de jure of the statute that the possessor has "performed all the conditions essential to a Government grant," the applicant Meralco cannot be said to be barred as a corporation from filing the application for registration of the private property duly acquired by it.

4. It should be noted that respondent judge's decision in the Meralco case expressly finds as established facts that the Meralco's predecessors-in-interest had possessed and occupied as owners the land in question for at least over 35 years; Olimpia Ramos having possessed the same since the last world war in 1941 and then having sold the same on July 3, 1947 to the Piguing spouses who built a house thereon and continuously possessed the same until they sold the same in turn to the Meralco on August 13, 1976, 12 Meralco's predecessors-in-interest had therefore acquired by operation of the Public Land Act a Government grant to the property, as well as acquired ownership thereof by right of acquisitive prescription over the land which thereby became private property. The very definition of prescription as a mode of acquiring ownership as set forth in Art. 1106 of the Civil Code provides that "By prescription one acquires ownership and other real rights through lapse of time in the manner and under the conditions laid down by law." The law does not provide that one

acquires ownership of a land by prescription only after his title thereto is judicially confirmed. To this same effect is the ruling in Cariño vs. Insular Government 13, wherein the U.S. Supreme Court speaking through Justice Holmes held that

It is true that the language of Articles 4 and 5 attributes title to those 'who may prove' possession for the necessary time and we do not overlook the argument that this means may prove in registration proceedings. It may be that an English conveyancer would have recommended an application under the foregoing decree, but certainly it was not calculated to convey to the mind of an Igorot chief the notion that ancient family possessions were in danger, if he had read every word of it. The words"may prove" (acrediten), as well, or better, in view of the other provisions, might be taken to mean when called upon to do so in any litigation. There are indications that registration was expected from all, but none sufficient to show that, for want of it, ownership actually gained would be lost. The effect of the proof, whenever made, was not to confer title, but simply to establish it, as already conferred by the decree, if not by earlier law.

To the same effect is the Court's ruling in Legarda and Prieto vs. Saleeby, 31 Phil. 590, that "an owner does not obtain title by virtue of certificate but rather obtains his certificate by virtue of the fact that he has a fee simple title."

5. Since the public land because private property upon completion of the 30th year of continuous, exclusive, and unchallenged possession of the applicant Meralco's predecessors-in-interest, particularly the Piguing spouses who sold the private land to the Meralco, there is no justification for denying the Meralco's application for registration of its duly acquired title to the land. Meralco's predecessors-in-interest had acquired ownership of the land by acquisitive prescription as provided by the Public Land Act and by the Civil Code. The land became private property and Meralco duly acquired it by right of purchase. To deny Meralco's application to register the property because it is not a natural person is unjustified because neither the new constitutional ban under the 1973 Constitution against private corporations owning lands of the public domain or the Public Land Act's limitation on the right of application for confirmation of imperfect title to lands of the public domain can be invoked any longer as the land had long ceased to be public land but had become private property. Meralco's application in effect seeks confirmation of the acquisition of ownership of the land which had become private property of its predecessors-in-interest, the Piguing spouses who thru their open and unchallenged possession of the land for over thirty years acquired title thereto by acquisitive prescription and by conclusive presumption of the Public Land Act itself. There is no legal nor constitutional obstacle to such title being transferred to the Meralco by right of purchase and traditio — for it is not claimed that there is any legal prohibition against the Piguing spouses transferring the ownership of the land to others (whether natural persons or corporations) such as the applicant Meralco, even before the formal issuance of the certificate of title to them.

6. To uphold respondent judge's denial of Meralco's application on the technicality that the Public Land Act allows only citizens of the Philippines who are natural persons to apply for confirmation of their title would be impractical and would just give rise to multiplicity of court actions. Assuming that there was a technical error in not having filed the application for registration in the name of the Piguing spouses as the original owners and vendors, still it is conceded that there is no prohibition against their sale of the land to the applicant Meralco and neither is there any prohibition against the application being refiled with retroactive effect in the name of the original owners and vendors (as such natural persons) with the end result of their application being granted, because of their indisputable acquisition of ownership by operation of law and the conclusive presumption therein provided in their favor. It should not be necessary to go through all the rituals as the great cost of refiling of all such applications in their names and adding to the overcrowded court dockets when the Court can after all these years dispose of it here and now. (See Francisco vs. City of Davao 14)

The ends of justice would best be served, therefore, by considering the applications for confirmation as amended to conform to the evidence, i.e. as filed in the names of the original persons who as natural persons are duly qualified to apply for formal confirmation of the title that they had acquired by conclusive presumption and mandate of the Public Land Act and who thereafter duly sold to the herein corporations (both admittedly Filipino corporations duly qualified to hold and own private lands) and granting the application for confirmation of title to the private lands so acquired and sold or exchanged.

7. All that has been said here applies of course with equal force to the Iglesia case, save that as already stated at the beginning hereof, the Iglesia application was granted because the Republic presented no evidence in support of its opposition and respondent judge held in effect that the property had ceased to be land of the public domain and had become private property, the title to which could be duly issued in the name of the Iglesia as the transferee of its predecessors-in-interest.

8. It should bear emphasis that what are involved here are small parcels of land, of 165 square meters in the Meralco case used for installation of an "anchor guy" for its steel posts in connection with its tasks as a nationalized domestic corporation to furnish electrical service to the consumer public, and of 313 square meters in the Iglesia case used as the site of its church built thereon to minister to the religious needs of its members. In no way, may the letter, intent and spirit of the prohibition of the 1973 Constitution against corporations "holding alienable lands of the public domain except by lease not to exceed one thousand hectares in area" (which is beamed against the undue control and

exploitation of our public lands and natural resources by corporations, Filipino and foreign-controlled) be deemed violated or disregarded by the granting of the applications at bar. The two corporations in truth and in fact do not hold the small parcels of land at bar for their own use or benefit but for the sole use and benefit of the public.

9. With reference to the separate concurring opinion of Mr. Justice De Castro wherein he would blunt the "supposedly (sic) well-established doctrine" (at page 1) from the 1909 case of Cariño and the 1925 case of Susidown to the 1980 case of Herico (supra, at pages 5 to 11) and support the contrary pronouncement in Mr. Justice Aquino's main opinion that "as between the State and the Meralco, the said land is still public land. It would cease to be public land only upon the issuance of the certificate of title to any Filipino citizen claiming it under section 48(b) [of the Public Land Act]" (at page 5), suffice it to cite his own pronouncement in Herico (reiterating the well-established and prevailing doctrine which this Court has not overturned, as it cannot overturn the mandate of the statute that the unchallenged possessor for at least 30 years is "conclusively presumed to have performed all the conditions essential to a government grant") wherein Mr. Justice De Castro categorically reiterated for the Court that "As interpretated in several cases . . . the possessor is deemed to have acquired, by operation of law, a right to a grant, a government grant, without the necessity of a certificate of title being issued. The and, therefore, ceases to be of the public domain, and beyond the authority of the Director of Lands to dispose of. The application for confirmation is a mere formality, the lack of which does not affect the legal sufficiency of the title as would be evidenced by the patent and the Torrens title to be issued upon the strength of said patent."

In only remains to point out, in order to avoid misapprehension or confusion, that Mr. Justice De Castro's seemingly querulous statement that "the discussion of the question of whether the land involved is still public oralready private land, is, however, entirely pointless or an idle exercise, if We consider the provision of Section 14, Article XIV of the Constitution which appears to have been lost sight of, which provides that 'save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain'" (at page 2) that "hence, even if the land involved in the present case is considered private land, the cited section prohibits its acquisition by the Meralco or Iglesia which admittedly are 'corporations or associations' within the meaning of the aforecited provisions of the New Constitution. This observation should end all arguments of the issue of whether the land in question is public or private land" (idem) might mislead one to the wrong conclusion that corporations with 60% Filipino ownership may not own private lands when the express provisions of Art. XIV, section 9 15 and section 14 as quoted by himself as well as the counterpart provisions of the 1935 Constitution have always expressly permitted Filipino-owned corporations to own private lands, and the only change effected in the 1973 Constitution is section 11 which now prohibits even such Filipino corporations to own or hold lands of the public domain except by lease not to exceed 1,000 hectares in area.

ACCORDINGLY, I vote for reversal of respondent court's judgment in the Meralco case and for the entry of a new judgment granting Meralco's application and for affirmance of judgment in the second case granting the Iglesia application.

Separate Opinions

ABAD SANTOS, J.: concurring:

I concur in the result. I am of the opinion that the lots which are sought to be registered have ceased to be lands of the public domain at the time they were acquired by the petitioner corporation. They are already private lands because of acquisitive prescription by the predecessors of the petitioner and all that is needed is the confirmation of the title. Accordingly, the constitutional provision that no private corporation or association may hold alienable lands of the public domain is inapplicable. However, the petitioner is relying on Sec. 48 of the Public Land Act for the confirmation of its title and Mr. Justice Aquino is correct in holding that said provision cannot be availed by juridical entities.

FERNANDO, C.J., concurring and dissenting:

I concur in the ruling of the Court that Meralco "as a juridical person" is disqualified to apply for its registration under Section 48(b).. 1 I dissent insofar as the opinion of the Court would characterize such jurisdictional defect, under the particular circumstances of this case, as an insurmountable obstacle to the relief sought. I would apply by analogy, although the facts could be distinguished, the approach followed by us in Francisco v. City of

Davao, 2 where the legal question raised, instead of being deferred and possibly taken up in another case, was resolved. By legal fiction 3 and in the exercise of our equitable jurisdiction, I feel that the realistic solutionwould be to decide the matter as if the application under Section 48(b) were filed by the Piguing spouses, who I assume suffer from no such disability.

DE CASTRO, J., dissenting:

Justice Teehankee cites in his dissenting opinion the case of herico vs. Dar, 1 the decision in which I am the ponente, as reiterating a supposedly well-established doctrine that lands of the public domain which, by reason of possession and cultivation for such a length of time, a grant by the State to the occupant is presumed, and the land thereby ceases to form part of the public domain, but is segregated therefrom as to be no longer subject to the authority of the Director of Lands to dispose under the public lands laws or statutes. He would thus consider said land as no longer public land but "private" lands and therefore, not within the prohibition of the New Constitution against corporations from acquiring public lands which provides that "no private corporation or association may hold alienable lands of the public domain except by lease not to exceed one thousand hectares." 2

I cannot subscribe to the view that the land as above described has become private land, even before title thereto, which is, as of this stage, said to be still "an incomplete or imperfect title," has been fully vested on the occupant, through the prescribed procedure known as judicial confirmation of incomplete or imperfect title. 3 This is the only legal method by which full and absolute title to the land may be granted, to convert the land into a truly private land. To secure such judicial title, only the courts can be resorted to. The Director of Lands has lost authority over the land, insofar as its disposition is concerned. His authority is limited to another form of disposition of public land, referred to as administrative legalization, resulting in the issuance of free patents, also based on possession, in which case, as in the issuance of homestead and sales patents, the land involved is undoubtedly public land. The possessor of a piece of public land would have the option to acquire title thereto through judicial confirmation or administrative legalization. The difference is that in the latter case, the area disposable to a citizen-applicant by the Director of Lands is limited to 24 hectares. There is no limit to the area subject to judicial confirmation of incomplete or imperfect title, except possibly the limit fixed for a State grant under old Spanish laws and decrees, which certainly is much larger than that set for free patents.

It is because of the divestiture of authority of the Director of Lands to dispose of the land subject to judicial confirmation of incomplete and imperfect title that some statements are found in many cases, such as those cited by Justice Teehankee, to the effect that such land has ceased to be a public land. What these statements, however, really mean is that the land referred to no longer forms part of the mass of public domain still disposable by the Director of Lands, under the authority granted him by the public land statutes. It, however, would not follow that the land covered by Section 48 of the Public Land Act has itself become private land. The fact that its disposition is provided for in the aforecited Act which deals with "public land" gives rise to the very strong implication, if not a positive conclusion, that the land referred to is still public land. Only when the court adjudicates the land to the applicant for confirmation of title would the land become privately owned land, for in the same proceeding, the court may declare it public land, depending on the evidence.

The discussion of the question of whether the land involved is still public or already private land is, however, entirely pointless, or an idle exercise, if We consider the provision of Section 14, Article XIV of the Constitution which appears to have been lost sight of, which provides that 'save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain." As previously stated, by express provisions of the Constitution, no corporation or association may hold alienable lands of the public domain except by lease, not to exceed, 1,000 hectares in area.4 Hence, even if the land involved in the present case is considered private land, the cited section prohibits its acquisition by the Meralco or Iglesia which admittedly are "corporations or association" within the meaning of the aforecited provision of the New Constitution. This observation should end all arguments on the issue of whether the land in question is public or private land. Although it may further be observed that supposing a corporation has been in possession of a piece of public land from the very beginning, may it apply for judicial confirmation of the land in question to acquire title to its owner after possessing the land for the requisite length of time? The answer is believed obvious — it may not. If its possession is not from the beginning but has commenced only upon the transfer to it by the prior possessor, may the corporation apply? The answer is just as obvious — with more reason, it may not.

This separate opinion should have had no need to be written because the majority opinion written by Justice Aquino is already well-reasoned out and supported by applicable authorities. I was impelled to write it only because in the dissenting opinion of Justice Teehankee, the case of Herico vs. Dar (supra) which is my ponenciawas cited in support of his position. This separate opinion then is more to show and explain that whatever has been stated by me in the Dar case should be interpreted in the light of what I have said in this separate opinion, which I believe, does not strengthen Justice Teehankee's position a bit.

TEEHANKEE, J., dissenting:

Involved in these two cases are the applications of petitioner Meralco, a nationalized domestic corporation, in the first case and respondent Iglesia in Cristo, a religious corporation sole, in the second case (both admittedly Filipino corporations qualified to hold and own private lands), for judicial confirmation of their titles to small parcels of land, residential in character as distinguished from strictly agricultural land, acquired by them by purchase or exchange from private persons publicly recognized as the private owners (who have been in the open, continuous, exclusive and notorious possession and occupation of the lands under a bona fide claim of ownership for at least thirty [30] years immediately preceding the filing of the applications).

This dissent is based on the failure of the majority to adhere to established doctrine since the 1909 case of Cariñoand the 1925 case of Susi down to the 1980 case of Herico, infra, pursuant to the Public Land Act, as amended, that where a possessor has held the open, exclusive and unchallenged possession of alienable public land for the statutory period provided by law (30 years now under amendatory Rep. Act No. 1942 approved on June 22, 1957), the law itself mandates that the possessor "shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a certificate of title" and "by legal fiction [the land] has already ceased to be of the public domain and has become private property." Accordingly, the prohibition of the 1973 Constitution and of the Public Land Act against private corporation holding lands of the public domain has no applicability in the present cases. What Meralco and Iglesia have acquired from their predecessors-in-interest had already ceased to be of the public domain and had become private property at the time of the sale to them and therefore their applicatins for confirmation of title by virtue of their predecessors-in-interest' vested right and title may be duly granted.

The land covered by the Meralco application of November 26, 1976 consists of two (1) small lots with a total area of 165 square meters located at Tanay, Rizal with an assessed value of P3,270.00. This land was possessed by Olimpia Ramos before World Warr II which broke out in the Pacific in 1941. Olimpia Ramos sold the land on July 3, 1947 to the spouses Rafael Piguing and Minerva Inocencio who constructed a house thereon. But because the Meralco had instealled the "anchor guy" of its stell posts on the land, the Piguing spouses sold the land to the Meralco on August 13, 1976. The land had been declared for realty tax purposes since 1945 and realty taxes were regularly paid thereon. It is residential in character as distinguished from strictly agricultural land. It is likewise established that it is not included in any military reservation and that since 1927 it had been certified as part of the alienable or disposable portion of the public domain.

The land covered by the Iglesia application of September 3, 1977 likewise consists of two (2) small lots located in Barrio Dampol, Plaridel, Bulacan with a total area of 313 square meters and with an assessed value of P1,350.00. The land was acquired by the Iglesia on January 9, 1953 from Andres Perez in exchange for a lot owned by the Iglesia with an area of 247 square meters. The land was already possessed by Perez in 1933. Admittedly also it is not included in any military reservation and is inside an area which was certified since 1927 as part of the alienable or disposable portion of the public domain. A chapel of the Iglesia stands on the said land. It had beenduly declared for realty tax purposes in the name of the Iglesia and realty taxes were regularly paid thereon.

Respondent judge in the Meralco case sustained the Republic's opposition and dismissed the application, holding that under both the provisions of the new Constitution and the Public Land Act, Meralco, being a corporation and not a natural person, is not qualified to apply for the registration of title over the public land.

On the other hand, in the Iglesia case, the Republic presented no evidence in support of its opposition but expressly "submitted the case for decision on the basis of the evidence submitted by the applicant." Respondent judge in the case accordingly granted the application for registration of the land in the name of the Iglesia, holding that it had been "satisfactorily established that applicant ]Iglesia] and its predecessors-in-interest have been in open, continuous, public and adverse possession of the land . . . under a bona fide claim of ownership for more than thirty (30) years prior to the filing of the application" and is therefore entitled to the registration applied for under the Public Land Act, as amended.

Both decisions are now with the Court for review. I hold that both applications for registration should be granted by virtue of the prevailing principle as enunciated since the 1925 case of Susi vs. Razon and Director of Lands 1 and reaffirmed in a long line of cases down to the 1980 case of Herico vs. Dar 2 that the lands in question ceased, ipso jure, or by operation of law, to be lands of the public domain upon completion of the statutory period of open, continuous, exclusive, notorious and unchallenged possession thereof by the applicants' predecessors-in-interest who were qualified natural persons and entitled to registration by right of acquisitive prescription under the provisions of the Public Land Act, and that accordingly the judgment in the Meralco case should be reversed and a new judgment entered granting Meralco's application, while the judgment in the Iglesia case should stand affirmed.

The principal issue at bar may thus be stated:

It is expressly provided in section 48, par. (b) of the Public Land Act (Commonwealth Act No. 141, as amended by Rep. Act No. 1942, approved on June 22, 1957) that citizens of the Philippines who are natural persons who have occupied lands of the public domain but whose titles have not been perfected or completed may apply to the corresponding court of first instance for confirmation of their claims and the issuance of the certificate of title therefor under the Land Registration Act in cases where they "by themselves or through their predecessors-in-interest have been in the open, continuous, exclusive, and notorious possession and occupation of agricultural lands of the public domain, under a bona fide claim of acquisition of ownership, for at least thirty years immediately preceding the filing of the application for confirmation of title except when prevented by war or force majeure. These shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a certificate of title under the provisions of this chapter." 3 In such cases, is the land ipso jure or by operation of law converted into private land upon completion of the 30th year of continuous and unchallenged occupation of the land such that thereafter as such private land, it may be duly transferred to and owned by private corporations or does such land, as held by respondent judge in the Meralco

case, remain part of the public domain and does not become private land until after actual judicial confirmation proceedings and the formal court order for the issuance of the certificate of title?

1. This issue has been squarely resolved by this Court since the 1925 case of Susi vs. Razon (and a long line of cases, infra). It is established doctrine as first held therein that an open, continuous, adverse and public possession of a land of the public domain for the period provided in the Public Land Act provision in force at the time (from July 26, 1894 in Susi under the old law) by a private individual personally and through his predecessors confers an effective title on said possessor, whereby the land ceases to be land of the public domain and becomes private property.

(At that time in 1925 in the Susi case, such possession was required "from July 26, 1894" as then provided for in section 45(b) of the old Public Land Act No. 2874, amending Act No. 926; whereas at present, as provided for in the corresponding section 48, par.(b) of the later and subsisting Public Land Act, Commonwealth Act No. 141, as amended by Rep. Act No. 1942 approved on June 22, 1957, in force since 1957, the period of open and unchallenged possession was reduced to "at least thirty years immediately preceding the filing of the application for confirmation of title, equivalent to the period of acquisitive prescription. This is admitted in the main opinion of Mr. Justice Aquino, wherein it is stated that "(I)n the Susi case, this Court applied section 45 (b) of Act No. 2874 which corresponds to what is now section 48(b). It was held that the long possession of the land under a bona fide claim of ownership since July 26, 1894 gave rise to the conclusive presumption that the occupant had complied with all the conditions essential to a Government grant and was thus entitled to a certificate of title." 4 The text of the corresponding section 48(b), as amended by Rep. Act 1942 referred to is reproduced verbatim in Mr. Justice Aquino's opinion 5 and quotes the reduced statutory period of open and unchallenged possession of "at least thirty years immediately preceding the filing of the application.")

Accordingly, the Court held that Susi, as the rightful possessor of the public land for the statutory period, acquired the same by operation of law as a grant from the Government, "not only a right to a grant," and the land thereby "already ceased to be of the public domain and had become private property at least by presumption" as expressly provided in the Act. Therefore, any supposed sale by the Director of Lands of the same land to another person was void and of no effect and Susi as the rightful possessor could recover the land as his private propertyfrom the supposed vendee who did not acquire any right thereto since it had ceased to be land of the public domain. The Court thus specifically held therein, as applied to the specific facts of the case, that:

. . . In favor of Valentin Susi, there is, moreover, the presumption juris et de jure, established in paragraph (b) of section 45 of Act No. 2874, amending Act No. 926, that all the necessary requirements for a grant by the Government were complied with for he has been in actual and physical possession, personally and through his predecessors, of an agricultural land of the public domain, openly continuously, exclusively and publicly since July 26, 1894, with a right to a certificate of title to said land under the provisions of Chapter VIII of said Act. So that when Angela Razon applied for the grant in her favor, Valentin Susi had already acquired, by operation of law, not only a right to a grant, but a grant of the Government, for it is not necessary that certificate of title should be issued in order that said grant may be sanctioned by the courts, an application therefor is sufficient, under the provisions of section 47 of Act No. 2874. If by a legal function, Valentin Susi had acquired the land in question by a grant of the State, it had already ceased to be of the public domain and had become private property, at least by presumption, of Valentin Susi, beyond the control of the Director of Lands. Consequently, in selling the land in question to Angela Razon, the Director of Lands disposed of a land over which he had no longer any title or control, and the sake thus made was void and of no effect, and Angela Razon did not thereby acquire any right." 6

2. The above-quoted ruling in Susi has been affirmed and reaffirmed by this Court in a long unbroken line of cases, as follows:

In Mesina vs. Vda. de Sonza, 7 the Court held that "(I)n the case of Susi vs. Razon, et al., 48 Phil. 424, it was observed that where all the necessary requirements for a grant by the Government are complied with through actual physical possession openly, continuously, and publicly, with a right to a certificate of title to said land under the provisions of Chapter VIII of Act No. 2874, amending Act No. 926 (carried over as Chapter VIII of Commonwealth Act No. 141), the possessor is deemed to have already acquired by operation of law not only a right to a grant, but a grant of the Government, for it is not necessary that a certificate of title be issued in order that said grant may be sanctioned by the courts — an application therefor being sufficient under the provisions of Section 47 of Act No. 2874 (reproduced as Section 50, Commonwealth Act No. 141)." and "(C)onsidering that this case was dismissed by the trial court merely on a motion to dismiss on the ground that plaintiff's action is already barred by the statute of limitations, which apparently is predicated on the theory that a decree of registration can no longer be impugned on the ground of fraud one year after the issuance and entry of the decree, which theory does not apply here because the property involved is allegedly private in natural and has ceased to be part of the public domain, we are of the opinion that the trial court erred in dismissing the case outright without giving plaintiff a chance to prove his claim."

In Lacaste vs. Director of Lands, 8 the Court stressed that by force of possession, the land in question became private property on the strength of the Susi doctrine.

In Manarpaac vs. Cabanatan, 9 the Court quoted with favor the text of the above-quoted ruling of Susi, and its ratio decidendi thus:

The Director of Lands contends that the land in question being of the public domain, the plaintiff-appellee cannot maintain an action to recover possession thereof.

If, as above stated, that land, the possession of which is in dispute, had already become, operation of law, private property, there is lacking only the judicial sanction of his title, Valentin Susi has the right to bring an action to recover the possession thereof and hold it.

In Miguel vs. Court of Appeals, 10 the Court again held that where possession has been continuous, uninterrupted, open, adverse and in the concept of an owner, there is a presumption juris et de jure that all necessary conditions for a grant by the State have been complied with and he would have been by force of law entitled to the registration of his title to the land (citing Pamintuan vs. Insular Government, 8 Phil. 485 and Susi vs. Razon, 48 Phil. 424).

In the latest 1980 case of Herico vs. Dar, 11 the Court once more reiterated the Susi doctrine that "(A)nother obvious error of the respondent Court is in holding that after one year from the issuance of the Torrens Title, the same can no longer be reopened to be declared and void, and has become absolute and indefeasible. . . . Secondly, under the provisions of Republic Act No. 1942, which the respondent court held to be inapplicable to the petitioner's case, with the latter's proven occupation and cultivation for more than 30 years since 1914, by himself and by his predecessors-in-interest, title over the land has vested on petitioner as to segregate the land from the mass of public land. Thereafter, it is no longer disposable under the Public Land Act as by free patent. This is as provided in Republic Act No. 1942, which took effect on June 22, 1957, amending Section 48-b of Commonwealth Act No. 141 which provides: . . . As interpreted in several cases when the conditions as specified in the foregoing provision are complied with, the possessor is deemed to have acquired, by operation of law, a right to a grant, a government grant, without the necessity of a certificate of title being issued. The land, therefore, ceases to be of the public domain, and beyond the authority of the Director of Lands to dispose of. The application for confirmation is a mere formality, the lack of which does not affect the legal sufficiency of the title as would be evidenced by the patent and the Torrens title to be issued upon the strength of said patent."

3. In fine, since under the Court's settled doctrine, the acquisitive prescription of alienable or disposable public lands provided for now in section 48, par. (b) of the Public Land Act takes place by operation of law and the public land is converted to and becomes private property upon a showing of open and unchallenged possession underbona fide claim of ownership by the applicants' predecessors-in-interest for the statutory period of thirty yearsimmediately preceding the filing of the application and "it is not necessary that a certificate of title should be issued in order that said grant may be sanctioned by the court" which right is expressly backed up by the conclusive presumption or presumption juris et de jure of the statute that the possessor has "performed all the conditions essential to a Government grant," the applicant Meralco cannot be said to be barred as a corporation from filing the application for registration of the private property duly acquired by it.

4. It should be noted that respondent judge's decision in the Meralco case expressly finds as established facts that the Meralco's predecessors-in-interest had possessed and occupied as owners the land in question for at least over 35 years; Olimpia Ramos having possessed the same since the last world war in 1941 and then having sold the same on July 3, 1947 to the Piguing spouses who built a house thereon and continuously possessed the same until they sold the same in turn to the Meralco on August 13, 1976, 12 Meralco's predecessors-in-interest had therefore acquired by operation of the Public Land Act a Government grant to the property, as well as acquired ownership thereof by right of acquisitive prescription over the land which thereby became private property. The very definition of prescription as a mode of acquiring ownership as set forth in Art. 1106 of the Civil Code provides that "By prescription one acquires ownership and other real rights through lapse of time in the manner and under the conditions laid down by law." The law does not provide that one acquires ownership of a land by prescription only after his title thereto is judicially confirmed. To this same effect is the ruling in Cariño vs. Insular Government 13, wherein the U.S. Supreme Court speaking through Justice Holmes held that

It is true that the language of Articles 4 and 5 attributes title to those 'who may prove' possession for the necessary time and we do not overlook the argument that this means may prove in registration proceedings. It may be that an English conveyancer would have recommended an application under the foregoing decree, but certainly it was not calculated to convey to the mind of an Igorot chief the notion that ancient family possessions were in danger, if he had read every word of it. The words"may prove" (acrediten), as well, or better, in view of the other provisions, might be taken to mean when called upon to do so in any litigation. There are indications that registration was expected from all, but none sufficient to show that, for want of it, ownership actually gained would be lost. The effect of the proof, whenever made, was not to confer title, but simply to establish it, as already conferred by the decree, if not by earlier law.

To the same effect is the Court's ruling in Legarda and Prieto vs. Saleeby, 31 Phil. 590, that "an owner does not obtain title by virtue of certificate but rather obtains his certificate by virtue of the fact that he has a fee simple title."

5. Since the public land because private property upon completion of the 30th year of continuous, exclusive, and unchallenged possession of the applicant Meralco's predecessors-in-interest, particularly the Piguing spouses who sold the private land to the Meralco, there is no justification for denying the Meralco's application for registration of its duly

acquired title to the land. Meralco's predecessors-in-interest had acquired ownership of the land by acquisitive prescription as provided by the Public Land Act and by the Civil Code. The land became private property and Meralco duly acquired it by right of purchase. To deny Meralco's application to register the property because it is not a natural person is unjustified because neither the new constitutional ban under the 1973 Constitution against private corporations owning lands of the public domain or the Public Land Act's limitation on the right of application for confirmation of imperfect title to lands of the public domain can be invoked any longer as the land had long ceased to be public land but had become private property. Meralco's application in effect seeks confirmation of the acquisition of ownership of the land which had become private property of its predecessors-in-interest, the Piguing spouses who thru their open and unchallenged possession of the land for over thirty years acquired title thereto by acquisitive prescription and by conclusive presumption of the Public Land Act itself. There is no legal nor constitutional obstacle to such title being transferred to the Meralco by right of purchase and traditio — for it is not claimed that there is any legal prohibition against the Piguing spouses transferring the ownership of the land to others (whether natural persons or corporations) such as the applicant Meralco, even before the formal issuance of the certificate of title to them.

6. To uphold respondent judge's denial of Meralco's application on the technicality that the Public Land Act allows only citizens of the Philippines who are natural persons to apply for confirmation of their title would be impractical and would just give rise to multiplicity of court actions. Assuming that there was a technical error in not having filed the application for registration in the name of the Piguing spouses as the original owners and vendors, still it is conceded that there is no prohibition against their sale of the land to the applicant Meralco and neither is there any prohibition against the application being refiled with retroactive effect in the name of the original owners and vendors (as such natural persons) with the end result of their application being granted, because of their indisputable acquisition of ownership by operation of law and the conclusive presumption therein provided in their favor. It should not be necessary to go through all the rituals as the great cost of refiling of all such applications in their names and adding to the overcrowded court dockets when the Court can after all these years dispose of it here and now. (See Francisco vs. City of Davao 14)

The ends of justice would best be served, therefore, by considering the applications for confirmation as amended to conform to the evidence, i.e. as filed in the names of the original persons who as natural persons are duly qualified to apply for formal confirmation of the title that they had acquired by conclusive presumption and mandate of the Public Land Act and who thereafter duly sold to the herein corporations (both admittedly Filipino corporations duly qualified to hold and own private lands) and granting the application for confirmation of title to the private lands so acquired and sold or exchanged.

7. All that has been said here applies of course with equal force to the Iglesia case, save that as already stated at the beginning hereof, the Iglesia application was granted because the Republic presented no evidence in support of its opposition and respondent judge held in effect that the property had ceased to be land of the public domain and had become private property, the title to which could be duly issued in the name of the Iglesia as the transferee of its predecessors-in-interest.

8. It should bear emphasis that what are involved here are small parcels of land, of 165 square meters in the Meralco case used for installation of an "anchor guy" for its steel posts in connection with its tasks as a nationalized domestic corporation to furnish electrical service to the consumer public, and of 313 square meters in the Iglesia case used as the site of its church built thereon to minister to the religious needs of its members. In no way, may the letter, intent and spirit of the prohibition of the 1973 Constitution against corporations "holding alienable lands of the public domain except by lease not to exceed one thousand hectares in area" (which is beamed against the undue control and exploitation of our public lands and natural resources by corporations, Filipino and foreign-controlled) be deemed violated or disregarded by the granting of the applications at bar. The two corporations in truth and in fact do not hold the small parcels of land at bar for their own use or benefit but for the sole use and benefit of the public.

9. With reference to the separate concurring opinion of Mr. Justice De Castro wherein he would blunt the "supposedly (sic) well-established doctrine" (at page 1) from the 1909 case of Cariño and the 1925 case of Susidown to the 1980 case of Herico (supra, at pages 5 to 11) and support the contrary pronouncement in Mr. Justice Aquino's main opinion that "as between the State and the Meralco, the said land is still public land. It would cease to be public land only upon the issuance of the certificate of title to any Filipino citizen claiming it under section 48(b) [of the Public Land Act]" (at page 5), suffice it to cite his own pronouncement in Herico (reiterating the well-established and prevailing doctrine which this Court has not overturned, as it cannot overturn the mandate of the statute that the unchallenged possessor for at least 30 years is "conclusively presumed to have performed all the conditions essential to a government grant") wherein Mr. Justice De Castro categorically reiterated for the Court that "As interpretated in several cases . . . the possessor is deemed to have acquired, by operation of law, a right to a grant, a government grant, without the necessity of a certificate of title being issued. The and, therefore, ceases to be of the public domain, and beyond the authority of the Director of Lands to dispose of. The application for confirmation is a mere formality, the lack of which does not affect the legal sufficiency of the title as would be evidenced by the patent and the Torrens title to be issued upon the strength of said patent."

In only remains to point out, in order to avoid misapprehension or confusion, that Mr. Justice De Castro's seemingly querulous statement that "the discussion of the question of whether the land involved is still public oralready private land, is, however, entirely pointless or an idle exercise, if We consider the provision of Section 14, Article XIV of the Constitution which appears to have been lost sight of, which provides that 'save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain'" (at page 2) that "hence, even if the land involved in the present case is considered private land, the cited section prohibits its acquisition by the Meralco or Iglesia which admittedly are 'corporations or associations' within the meaning of the aforecited provisions of the New Constitution. This observation should end all arguments of the issue of whether the land in question is public or private land" (idem) might mislead one to the wrong conclusion that corporations with 60% Filipino ownership may not own private lands when the express provisions of Art. XIV, section 9 15 and section 14 as quoted by himself as well as the counterpart provisions of the 1935 Constitution have always expressly permitted Filipino-owned corporations to own private lands, and the only change effected in the 1973 Constitution is section 11 which now prohibits even such Filipino corporations to own or hold lands of the public domain except by lease not to exceed 1,000 hectares in area.

ACCORDINGLY, I vote for reversal of respondent court's judgment in the Meralco case and for the entry of a new judgment granting Meralco's application and for affirmance of judgment in the second case granting the Iglesia application.

Director of Lands vs Bengzon


Manila

FIRST DIVISION

G.R. No. L-54045 July 28, 1987

THE DIRECTOR OF LANDS, petitioner, vs.HON. EDUARDO R. BENGZON, CFI of BATANGAS and DYNAMARINE CORPORATION substituted by ENGINEERING EQUIPMENT, INC. (EEI), respondents.

GANCAYCO, J.:

This is a petition for review on certiorari filed by the Director of Lands from a decision dated May 7, 1980 of the Court of First Instance of Batangas, Branch I in Land Registration Case No. N-900, LRC, Rec. No. N-46755 entitled "Dynamarine Corporation substituted by Engineering Equipment, Inc., (EEI), Applicant, versus The Director of Lands, et al., Oppositors."

The facts of the case are as follows:

On February 10, 1975, Dynamarine Corporation filed an application with the lower court for the registration and confirmation of its title to the following properties:

Ten (10) parcels of land, situated in the Barrio of Sta. Maria, Municipality of Bauan, Province of Batangas. The boundaries of said parcels are as follows:

1. A parcel of land (Lot 1, plan PSU-238719-Amd). Bounded on the NE, by the Sta. Maria River and property of the Heirs of Pedro Corona; on the SE., by the Batangas Bay; on the SW. by property of the Heirs of Herbert M. Peterson, Jr., and on the NW. by Lot 3. Point "1" is S. 69 deg. 28" W., 4145.24 M. from BLLM 1, Bauan, Batangas. Area: ONE THOUSAND TWO HUNDRED SIXTY ONE (1,261) SQUARE METERS, more or less.

2. A parcel of land (Lot 2, plan Psu-238719-Amd.). Bounded on the NE. by property of Angel Aguila; and on the SE. W. and NW. by the Sta. Maria River: Point "1" is S. 69 deg. 07'W., 4107.64 m. from BLLM 1, Bauan, Batangas, Area: TWO THOUSAND TWO HUNDRED FOURTEEN (2,214) SQUARE METERS, more or less.

3. A parcel of land (Lot 3, plan Psu-238719-Amd.). Bounded on the SW. by the Sta. Maria River and Lot 1; on the SW. by property of the Heirs of Herbert M. Peterson, and on the NW. by Lot 4, Point "I", Bauan, Batangas. Area: ONE THOUSAND FIFTEEN (1,015) SQUARE METERS, more or less.

4. A parcel of land (Lot 1, plan Psu-04-001036). Bounded on the N. by Lot 2; on the E. by property of Dynamarine Corporation; on the S. by the Batangas Bay; on the W. by property of Pedro Manage; and on the NW. by property of Basilia Arevalo. Point "1" is S. 69 deg. 92'W., 4274.20 m. from BLLM 1, Bauan, Batangas. Area: EIGHT HUNDRED SIX (806) SQUARE METERS, more or less.

5. A parcel of land (Lot 3, plan Psu-04-001036). Bounded on the S. by property of Dynamarine Corporation; on the S. by Lot 2; on the SW., by property of Basilia Arevalo; and on the NW. by Lot 4. Point "l" is S. 69 deg. 36'W., 4295.60 m. from BLLM 1, Bauan, Batangas, Area: FOUR HUNDRED SIXTY ONE (461) SQUARE METERS, more or less.

6. A parcel of land (Lot 4 plan Psu-04-001036). Bounded on the NE. by properties of Aurora P. Silang and Dynamarine Corporation; on the SE. by Lot 3; on the SW. by properties of Basilia Arevalo, Pedro Silang and Felipe Marquez; and on the NW. by property of Lolita Panopio. Point "I" is S. 69 deg. 44'N., 4265.30 m. from BLLM 1, Bauan, Batangas. Area: ONE THOUSAND SEVEN HUNDRED TWENTY SIX (1,726) SQUARE METERS, more or less.

7. A parcel of land (plan Psu-239681). Bounded on the NE. by properties of Filomino Hernandez, Emilio Medrano and Pedro Corona; on the S. by the Batangas Bay; on the SW. by properties of the Heirs of Rose Panopio and Pascual Silang & Maria Panopio; and on the NW. by the Provincial Road. Point "1" is S. 71 deg. 05'W., 4166.50 m. from BLLM 1, Bauan, Batangas. Area: FIVE THOUSAND (5,000) SQUARE METERS, more or less.

8. A parcel of land (Lot 2, plan Psu-04-000989). Bounded on the NE. by property of the Heirs of Herbert M. Peterson, Jr., on the S. by the Batangas Bay; on the SW. by property of Encarnacion, Maria and Vicente Panopio; and on the NW. by Lot 1. Point "1" is S. 70 deg. 29'W., 4194.60 m. from BLLM 1, Bauan, Batangas. Area: THREE THOUSAND EIGHT HUNDRED NINETY THREE (3,893) SQUARE METERS, more or less.

9. A parcel of land (Lot 1, plan Psu-239680 Amd.). Bounded on the NE. by property of the Heirs of Rose Panopio (before) Dynamarine Corporation (now); on the SE. by lot 1; on the SW. by properties of the Heirs of Teodora Ilagan, Aniceto Panopio, Heirs of Ambrosio Panopio and Maximo Panopio, and on the SW. by property of Aurora Silang. Point "1" is S. 70 deg. 29'W., 4256.89 m. from BLLM 1, Bauan, Batangas. Area: FIVE THOUSAND THREE HUNDRED TWENTY SEVEN (5,327) SQUARE METERS, more or less; and

10. A parcel of land(lot 2,plan Psu-23968O-Amd.).Bounded on the NE. by property of the Heirs of Rose Panopio (before) Dynamarine Corporation (now); on the S. by Batangas Bay; on the SW. by property of the Heirs of Teodoro Aniceto and Melchor Panopio and Heirs of Teodora Ilagan and on the NW. by Lot 1. Point "1" is S., 70 deg. 29'W., 4256.89 m. from BLLM 1, Bauan, Batangas. Area: FOUR THOUSAND FIVE HUNDRED FORTY SIX (4,546) SQUARE METERS, more or less. 1

Except for one lot which was acquired by exchange, the above-described properties were acquired by Dynamarine Corporation by purchase on the following dates:

Description of Lot

Lot 1 (Plan Psu-239689)


Lot 2 (Plan Psu-04-000989)

Lots 1 & 3 (Plan Psu-04-00136)

Lot 4 (Plan Psu-04-00136)


Lots 1 & 2 (Plan Psu-238719)


Date of Acquisition

December 8, 1973

November 11, 1973

October 30, 1973

December 3, 1974

December 3, 1974

November 13, 1973

October 30, 1973

December 6, 19732 2

Before acquisition by the Dynamarine Corporation, all the lots in question have been in the possession of the corporation's predecessors-in-interest for more than thirty years, to wit:

Description of Lot Predecessor-in-Interest

Date of Possession


Cirilo Panopio 1927


Jose Panopio 1927

lot 2 (Plan Psu-04-000989)

Cirilo Panopio 1929

Lot 1 (Plan Psu-04-001036)

Hilarion Marquez

1907

Lot 3 (Plan Psu-04-001036)

Ambrosio Panopio

1907

Lot 4 (Plan Psu-04-001036)

Teodoro Ilagan

1907


Cirilo Panopio 1927

Lots 1, 2, 3 (Plan Psu-

238719) Cirilo Panopio 19323

On April 3, 1978, as security for banking and credit facilities granted to it, a "Real Estate Chattel Mortgages" covering the lots in question was executed by Dynamarine Corporation in favor of Citibank, N.A. and the Manila Banking Corporation. Later, these Mortgages were foreclosed and the properties were sold at public auction wherein the Manila Banking Corporation was the highest bidder.4

On October 10, 1978, Dynamarine Corporation, for valuable consideration, executed a Deed of Assignment of Redemption Rights5 in favor of Engineering Equipment, Inc. (heretofore called respondent corporation), covering its redemption rights over the lots. Subsequently, the Manila Banking Corporation executed a Deed of Assignment6 covering the same lots in favor of respondent corporation.

On August 2, 1979, the lower court issued an order allowing the substitution by respondent corporation of Dynamarine Corporation as applicant in the case.

After hearing the witnesses and reception of evidence, the lower court on May 7, 1980 rendered the questioned decision decreeing the registration of the ten parcels of land in favor of respondent corporation. The dispositive portion is as follows:

IN VIEW OF THE FOREGOING CONSIDERATIONS, and finding the application for registration and grant of title under Act 496 as amended, to be well-founded and fully substantiated by evidence sufficient and requisite under the law, the Court hereby decrees the registration of the aforementioned ten (10) parcels of land, shown in the plans Psu-239681 (Exh. "H"); Psu-04-000989 (Exh. "N"), Psu-04-001036 (Exh. "T"); Psu-239680 (Exh. "JJ"); and Psu-238719 (Exh. "MM"), and more particularly described in the Technical Descriptions (Exhs. "K", "R", "W", "X", "Y", "NN", "00", "00-l", and "00-2"), an situated in the barrio of Sta. Maria, Municipality of Bauan, Province of Batangas, Philippines, in favor of herein applicant ENGINEERING EQUIPMENT, INC., (EEI), with principal office address at 391 J. Rizal Street, Mandaluyong, Metro Manila.

Once this decision shall have become final, let an order be issued directing the Commissioner of Land Registration Commission, Quezon City, to issue the corresponding decree.

SO ORDERED.

The said decision was based on the following findings of the lower court: that the subject properties are ancestral properties transferred hereditarily from ancestors to descendants;7 that respondent corporation owned and possessed the subject properties under a bona-fide claim of ownership;8 and, that by itself and through predecessors-in-interest, respondent corporation had been in open, peaceful, continuous, public and uninterrupted possession of the properties as owner in fee simple for no less than fifty years.9

In this petition, the Director of Lands assails the lower court's decision as being violative of Article XIV, Section 11 of the 1973 Constitution which reads:

The National Assembly, taking into account conservation, ecological, and developmental requirements of the natural resources, shall determine by law the size of lands of the public domain which may be developed, held or acquired by, or leased to, any qualified individual, corporation, or association, and the conditions therefor. No private corporation or association may hold alienable lands of the public domain except by lease not to exceed one thousand hectares in area; ... (Emphasis supplied.)

Petitioner contends that under the above constitutional provision, respondent corporation, being a private corporation, may not acquire the ten parcels of land as they are part of public domain. In this regard, it is maintained by petitioner that mere possession for more than thirty (30) years did not vest in respondent corporation's predecessors-in-interest any title which could be transmitted to respondent corporation.10 According to him, until public lands are actually registered, they retain their public character11 and it is only after a possessor has been issued a certificate of title that the land can be considered private land.12

To support the above-mentioned arguments, petitioner cites sections 48(b) and 50 of the Public Land Act, the pertinent provisions of which read:

Sec. 48. The following-described citizens of the Philippines, occupying lands of the public domain or claiming to own any such lands or an interest therein, but whose titles have not been perfected or completed, may apply to the Court of First Instance of the province where the land is located for confirmation of their claims and the issuance of a certificate of title therefor, under the Land Registration Act, to wit: . . .

(b) Those who by themselves or through their predecessors-in-interest have been in open, continuous, exclusive, and notorious possession and occupation of agricultural lands of the public domain, under a bona fide claim of acquisition or ownership, for at least thirty years immediately preceding the filing of the application for confirmation of title except when prevented by war or force majeure. These shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a certificate of title under the provisions of this chapter.

SEC. 50. Any person or persons, or their legal representatives or successors in right, claiming any lands or interest in lands under the provisions of this chapter, must in every case present an application to the proper Court of First Instance, praying that the validity of the alleged title or claim be inquired into and that a certificate of title be issued to them under the provisions of the Land. Registration Act. ...

Petitioner claims that under the cited laws, respondent corporation may not apply for judicial confirmation of title to the lands.

Clearly, this petition raises two basic issues, to wit: (1) whether the lands in question are part of the public domain; and (2) whether respondent corporation may apply for judicial confirmation of said lands. Both are hereby resolved in favor of respondent corporation.

The ten parcels of land, contrary to petitioner's advancements, are private lands. In the lower court, it was clearly proven that respondent corporation's predecessors-in-interest have been in continuous and uninterrupted possession of the properties for more than thirty years before they were acquired by respondent corporation. By virtue of such possession, said properties were automatically segregated from the mass of public domain. Hence, the constitutional prohibition does not apply.

Petitioner's position that the properties in question are lands of the public domain must be rejected as it is directly opposed to the doctrine laid down in The Director of Lands vs. Intermediate Appellate Court and Acme Plywood & Veneer Co., Inc.,13 a case squarely in point. Mr. Justice Andres R. Narvasa who wrote the opinion stated:

... that alienable public land held by a possessor, personally or through his predecessors-in-interest, openly, continuously and exclusively for the prescribed statutory period (30 years under the Public Land Act, as amended) is converted to private property by the mere lapse or completion of said period, ipso jure.

The above is a reaffirmation of the principle established in the earlier cases of Carino vs. Insular Government,14Suzi vs. Razon,15 and Herico vs. Dar,16 that open, exclusive and undisputed possession of alienable public land for the period prescribed by law creates the legal fiction whereby the land, upon completion of the requisite periodipso jure and without the need of judicial or other sanction, ceases to be public land and becomes private property.

We cannot subscribe to the view of petitioner that it is only after a possessor has been issued a certificate of title that the land can be considered private land. In interpreting the provisions of Section 48 (b) of Commonwealth Act No. 1, this Court said in Herico vs. Dar,17 "... when the conditions as specified in the foregoing provision are complied with, the possessor is deemed to have acquired, by operation of law, a right to a grant, a government grant, without the necessity of a certificate of title being issued. The land, therefore, ceases to be of the public domain, and beyond the authority of the Direc tor of Lands to dispose of. The application for confirmation is a mere formality, the lack of which does not affect the legal sufficiency of the title as would be evidenced by the patent and the Torrens title to be issued upon the strength of said patent."

This was well-explained in the case of Suzi vs. Razon wherein it was emphasized that it is not necessary that a certificate of title should be issued in order that said grant may be sustained by the Courts, an application therefor being sufficient.

As in The Director of Lands vs. Intermediate Appellate Court and Acme Plywood & Veneer Co., Inc., We hereby incorporate in this decision the dissent (which became the majority opinion in the aforementioned case) of then Justice now Chief Justice Claudio Teehankee in the case of Manila Electric Company vs. Castro-Bartolome18 to repudiate

petitioner's contention that under the Public Land Act respondent corporation, being a corporate entity, may not apply for judicial confirmation of title. Thus,

6. To uphold respondent judge's denial of Meralco's application on the technicality that the Public Land Act allows only citizens of the Philippines who are natural persons to apply for confirmation of their title would be impractical and would just give rise to multiplicity of court actions. Assuming that there was a technical error in not having filed the application for registration in the name of the Piguing spouses as the original owners and vendors, still it is conceded that there is no prohibition against their sale of the land to the applicant Meralco and neither is there any prohibition against the application being refiled with retroactive effect in the name of the original owners and vendors (as such natural persons) with the end result of their application being granted, because of their indisputable acquisition of ownership by operation of law and the conclusive presumption therein provided in their favor, It should not be necessary to go through all the rituals at the great cost of refiling of all such applications in their names and adding to the overcrowded court dockets when the Court can after all these years dispose of it here and now. (See Francisco vs. City of Davao)

The ends of justice would best be served, therefore, by considering the applications for confirmation as amended to conform to the evidence, i.e. as filed in the names of the original persons who as natural persons are duly qualified to apply for formal confirmation of the title that they had acquired by conclusive presumption and mandate of the Public Land Act and who thereafter duly sold to the herein corporations (both admittedly Filipino corporations duly qualified to hold and own private lands) and granting the applications for confirmation of title to the private lands so acquired and sold or exchanged.

WHEREFORE, in the light of the above, the petition is DENIED for lack of merit. No costs.

SO ORDERED.

Teehankee, C.J., Narvasa, Cruz and Paras, JJ., concur.

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