Homework Help

https://www.homeworkping.com/

Research Paper help

https://www.homeworkping.com/

Online Tutoring

https://www.homeworkping.com/

click here for freelancing tutoring sites

G.R. No. 155076 February 27, 2006

LUIS MARCOS P. LAUREL, Petitioner,

vs. HON. ZEUS C. ABROGAR, Presiding Judge of the Regional Trial Court, Makati City, Branch 150, PEOPLE OF THE PHILIPPINES& PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, Respondents.

D E C I S I O N

CALLEJO, SR., J.:

Before us is a Petition for Review on Certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 68841 affirming the Order issued by Judge Zeus C. Abrogar, Regional Trial Court (RTC), Makati City, Branch 150, which denied the "Motion to Quash (With Motion to Defer Arraignment)" in Criminal Case No. 99-2425 for theft.

Philippine Long Distance Telephone Company (PLDT) is the holder of a legislative franchise to render local and international telecommunication services under Republic Act No. 7082.2 Under said law, PLDT is authorized to establish, operate, manage, lease, maintain and purchase telecommunication systems, including transmitting, receiving and switching stations, for both domestic and international calls. For this purpose, it has installed an estimated 1.7 million telephone lines nationwide. PLDT also offers other services as authorized by Certificates of Public Convenience and Necessity (CPCN) duly issued by the National Telecommunications Commission (NTC), and operates and maintains an International Gateway Facility (IGF). The

PLDT network is thus principally composed of the Public Switch Telephone Network (PSTN), telephone handsets and/or telecommunications equipment used by its subscribers, the wires and cables linking said telephone handsets and/or telecommunications equipment, antenna, the IGF, and other telecommunications equipment which provide interconnections.3 1avvphil.net

PLDT alleges that one of the alternative calling patterns that constitute network fraud and violate its network integrity is that which is known as International Simple Resale (ISR). ISR is a method of routing and completing international long distance calls using International Private Leased Lines (IPL), cables, antenna or air wave or frequency, which connect directly to the local or domestic exchange facilities of the terminating country (the country where the call is destined). The IPL is linked to switching equipment which is connected to a PLDT telephone line/number. In the process, the calls bypass the IGF found at the terminating country, or in some instances, even those from the originating country.4

One such alternative calling service is that offered by Baynet Co., Ltd. (Baynet) which sells "Bay Super Orient Card" phone cards to people who call their friends and relatives in the Philippines. With said card, one is entitled to a 27-minute call to the Philippines for about ¥37.03 per minute. After dialing the ISR access number indicated in the phone card, the ISR operator requests the subscriber to give the PIN number also indicated in the phone card. Once the caller’s identity (as purchaser of the phone card) is confirmed, the ISR operator will then provide a Philippine local line to the requesting caller via the IPL. According to PLDT, calls made through the IPL never pass the toll center of IGF operators in the Philippines. Using the local line, the Baynet card user is able to place a call to any point in the Philippines, provided the local line is National Direct Dial (NDD) capable.5

PLDT asserts that Baynet conducts its ISR activities by utilizing an IPL to course its incoming international long distance calls from Japan. The IPL is linked to switching equipment, which is then connected to PLDT telephone lines/numbers and equipment, with Baynet as subscriber. Through the use of the telephone lines and other auxiliary equipment, Baynet is able to connect an international long distance call from Japan to any part of the Philippines, and make it appear as a call originating from Metro Manila. Consequently, the operator of an ISR is able to evade payment of access, termination or bypass charges and accounting rates, as well as compliance with the regulatory requirements of the NTC. Thus, the ISR operator offers international telecommunication services at a lower rate, to the damage and prejudice of legitimate operators like PLDT.6

PLDT pointed out that Baynet utilized the following equipment for its ISR activities: lines, cables, and antennas or equipment or device capable of transmitting air waves or frequency, such as an IPL and telephone lines and equipment; computers or any equipment or device capable of accepting information applying the prescribed process of the information and supplying the result of this process; modems or any equipment or device that enables a data terminal equipment such as computers to communicate with other data terminal equipment via a telephone line; multiplexers or any equipment or device that enables two or more signals from different sources to pass through a common cable or transmission line; switching equipment, or equipment or device capable of connecting telephone lines; and software, diskettes, tapes or equipment or device used for recording and storing information.7

PLDT also discovered that Baynet subscribed to a total of 123 PLDT telephone lines/numbers.8 Based on the Traffic Study conducted on the volume of calls passing through Baynet’s ISR network which bypass the IGF toll center, PLDT incurred an estimated monthly

loss of P10,185,325.96.9 Records at the Securities and Exchange Commission (SEC) also revealed that Baynet was not authorized to provide international or domestic long distance telephone service in the country. The following are its officers: Yuji Hijioka, a Japanese national (chairman of the board of directors); Gina C. Mukaida, a Filipina (board member and president); Luis Marcos P. Laurel, a Filipino (board member and corporate secretary); Ricky Chan Pe, a Filipino (board member and treasurer); and Yasushi Ueshima, also a Japanese national (board member).

Upon complaint of PLDT against Baynet for network fraud, and on the strength of two search warrants10 issued by the RTC of Makati, Branch 147, National Bureau of Investigation (NBI) agents searched its office at the 7th Floor, SJG Building, Kalayaan Avenue, Makati City on November 8, 1999. Atsushi Matsuura, Nobuyoshi Miyake, Edourd D. Lacson and Rolando J. Villegas were arrested by NBI agents while in the act of manning the operations of Baynet. Seized in the premises during the search were numerous equipment and devices used in its ISR activities, such as multiplexers, modems, computer monitors, CPUs, antenna, assorted computer peripheral cords and microprocessors, cables/wires, assorted PLDT statement of accounts, parabolic antennae and voltage regulators.

State Prosecutor Ofelia L. Calo conducted an inquest investigation and issued a Resolution11 on January 28, 2000, finding probable cause for theft under Article 308 of the Revised Penal Code and Presidential Decree No. 40112 against the respondents therein, including Laurel.

On February 8, 2000, State Prosecutor Calo filed an Information with the RTC of Makati City charging Matsuura, Miyake, Lacson and Villegas with theft under Article 308 of the Revised Penal Code. After conducting the requisite preliminary investigation, the State Prosecutor filed an Amended Information impleading Laurel (a partner in the law firm of Ingles, Laurel, Salinas, and, until November 19, 1999, a member of the board of directors and corporate secretary of Baynet), and the other members of the board of directors of said corporation, namely, Yuji Hijioka, Yasushi Ueshima, Mukaida, Lacson and Villegas, as accused for theft under Article 308 of the Revised Penal Code. The inculpatory portion of the Amended Information reads:

On or about September 10-19, 1999, or prior thereto, in Makati City, and within the jurisdiction of this Honorable Court, the accused, conspiring and confederating together and all of them mutually helping and aiding one another, with intent to gain and without the knowledge and consent of the Philippine Long Distance Telephone (PLDT), did then and there willfully, unlawfully and feloniously take, steal and use the international long distance calls belonging to PLDT by conducting International Simple Resale (ISR), which is a method of routing and completing international long distance calls using lines, cables, antennae, and/or air wave frequency which connect directly to the local or domestic exchange facilities of the country where the call is destined, effectively stealing this business from PLDT while using its facilities in the estimated amount of P20,370,651.92 to the damage and prejudice of PLDT, in the said amount.

CONTRARY TO LAW.13

Accused Laurel filed a "Motion to Quash (with Motion to Defer Arraignment)" on the ground that the factual allegations in the Amended Information do not constitute the felony of theft under Article 308 of the Revised Penal Code. He averred that the Revised Penal Code, or any other special penal law for that matter, does not prohibit ISR operations. He claimed that telephone calls with the use of PLDT telephone lines, whether domestic or international, belong to the

persons making the call, not to PLDT. He argued that the caller merely uses the facilities of PLDT, and what the latter owns are the telecommunication infrastructures or facilities through which the call is made. He also asserted that PLDT is compensated for the caller’s use of its facilities by way of rental; for an outgoing overseas call, PLDT charges the caller per minute, based on the duration of the call. Thus, no personal property was stolen from PLDT. According to Laurel, the P20,370,651.92 stated in the Information, if anything, represents the rental for the use of PLDT facilities, and not the value of anything owned by it. Finally, he averred that the allegations in the Amended Information are already subsumed under the Information for violation of Presidential Decree (P.D.) No. 401 filed and pending in the Metropolitan Trial Court of Makati City, docketed as Criminal Case No. 276766.

The prosecution, through private complainant PLDT, opposed the motion,14 contending that the movant unlawfully took personal property belonging to it, as follows: 1) intangible telephone services that are being offered by PLDT and other telecommunication companies, i.e., the connection and interconnection to their telephone lines/facilities; 2) the use of those facilities over a period of time; and 3) the revenues derived in connection with the rendition of such services and the use of such facilities.15

The prosecution asserted that the use of PLDT’s intangible telephone services/facilities allows electronic voice signals to pass through the same, and ultimately to the called party’s number. It averred that such service/facility is akin to electricity which, although an intangible property, may, nevertheless, be appropriated and be the subject of theft. Such service over a period of time for a consideration is the business that PLDT provides to its customers, which enables the latter to send various messages to installed recipients. The service rendered by PLDT is akin to merchandise which has specific value, and therefore, capable of appropriation by another, as in this case, through the ISR operations conducted by the movant and his co-accused.

The prosecution further alleged that "international business calls and revenues constitute personal property envisaged in Article 308 of the Revised Penal Code." Moreover, the intangible telephone services/facilities belong to PLDT and not to the movant and the other accused, because they have no telephone services and facilities of their own duly authorized by the NTC; thus, the taking by the movant and his co-accused of PLDT services was with intent to gain and without the latter’s consent.

The prosecution pointed out that the accused, as well as the movant, were paid in exchange for their illegal appropriation and use of PLDT’s telephone services and facilities; on the other hand, the accused did not pay a single centavo for their illegal ISR operations. Thus, the acts of the accused were akin to the use of a "jumper" by a consumer to deflect the current from the house electric meter, thereby enabling one to steal electricity. The prosecution emphasized that its position is fortified by the Resolutions of the Department of Justice in PLDT v. Tiongson, et al. (I.S. No. 97-0925) and in PAOCTF-PLDT v. Elton John Tuason, et al. (I.S. No. 2000-370) which were issued on August 14, 2000 finding probable cause for theft against the respondents therein.

On September 14, 2001, the RTC issued an Order16 denying the Motion to Quash the Amended Information. The court declared that, although there is no law that expressly prohibits the use of ISR, the facts alleged in the Amended Information "will show how the alleged crime was committed by conducting ISR," to the damage and prejudice of PLDT.

Laurel filed a Motion for Reconsideration17 of the Order, alleging that international long distance calls are not personal property, and are not capable of appropriation. He maintained that business or revenue is not considered personal property, and that the prosecution failed to adduce proof of its existence and the subsequent loss of personal property belonging to another. Citing the ruling of the Court in United States v. De Guzman,18Laurel averred that the case is not one with telephone calls which originate with a particular caller and terminates with the called party. He insisted that telephone calls are considered privileged communications under the Constitution and cannot be considered as "the property of PLDT." He further argued that there is no kinship between telephone calls and electricity or gas, as the latter are forms of energy which are generated and consumable, and may be considered as personal property because of such characteristic. On the other hand, the movant argued, the telephone business is not a form of energy but is an activity.

In its Order19 dated December 11, 2001, the RTC denied the movant’s Motion for Reconsideration. This time, it ruled that what was stolen from PLDT was its "business" because, as alleged in the Amended Information, the international long distance calls made through the facilities of PLDT formed part of its business. The RTC noted that the movant was charged with stealing the business of PLDT. To support its ruling, it cited Strochecker v. Ramirez,20 where the Court ruled that interest in business is personal property capable of appropriation. It further declared that, through their ISR operations, the movant and his co-accused deprived PLDT of fees for international long distance calls, and that the ISR used by the movant and his co-accused was no different from the "jumper" used for stealing electricity.

Laurel then filed a Petition for Certiorari with the CA, assailing the Order of the RTC. He alleged that the respondent judge gravely abused his discretion in denying his Motion to Quash the Amended Information.21 As gleaned from the material averments of the amended information, he was charged with stealing the international long distance calls belonging to PLDT, not its business. Moreover, the RTC failed to distinguish between the business of PLDT (providing services for international long distance calls) and the revenues derived therefrom. He opined that a "business" or its revenues cannot be considered as personal property under Article 308 of the Revised Penal Code, since a "business" is "(1) a commercial or mercantile activity customarily engaged in as a means of livelihood and typically involving some independence of judgment and power of decision; (2) a commercial or industrial enterprise; and (3) refers to transactions, dealings or intercourse of any nature." On the other hand, the term "revenue" is defined as "the income that comes back from an investment (as in real or personal property); the annual or periodical rents, profits, interests, or issues of any species of real or personal property."22

Laurel further posited that an electric company’s business is the production and distribution of electricity; a gas company’s business is the production and/or distribution of gas (as fuel); while a water company’s business is the production and distribution of potable water. He argued that the "business" in all these cases is the commercial activity, while the goods and merchandise are the products of such activity. Thus, in prosecutions for theft of certain forms of energy, it is the electricity or gas which is alleged to be stolen and not the "business" of providing electricity or gas. However, since a telephone company does not produce any energy, goods or merchandise and merely renders a service or, in the words of PLDT, "the connection and interconnection to their telephone lines/facilities," such service cannot be the subject of theft as defined in Article 308 of the Revised Penal Code.23

He further declared that to categorize "business" as personal property under Article 308 of the Revised Penal Code would lead to absurd consequences; in prosecutions for theft of gas, electricity or water, it would then be permissible to allege in the Information that it is the gas business, the electric business or the water business which has been stolen, and no longer the merchandise produced by such enterprise.24

Laurel further cited the Resolution of the Secretary of Justice in Piltel v. Mendoza,25 where it was ruled that the Revised Penal Code, legislated as it was before present technological advances were even conceived, is not adequate to address the novel means of "stealing" airwaves or airtime. In said resolution, it was noted that the inadequacy prompted the filing of Senate Bill 2379 (sic) entitled "The Anti-Telecommunications Fraud of 1997" to deter cloning of cellular phones and other forms of communications fraud. The said bill "aims to protect in number (ESN) (sic) or Capcode, mobile identification number (MIN), electronic-international mobile equipment identity (EMEI/IMEI), or subscriber identity module" and "any attempt to duplicate the data on another cellular phone without the consent of a public telecommunications entity would be punishable by law."26 Thus, Laurel concluded, "there is no crime if there is no law punishing the crime."

On August 30, 2002, the CA rendered judgment dismissing the petition.27 The appellate court ruled that a petition for certiorari under Rule 65 of the Rules of Court was not the proper remedy of the petitioner. On the merits of the petition, it held that while business is generally an activity

which is abstract and intangible in form, it is nevertheless considered "property" under Article 308 of the Revised Penal Code. The CA opined that PLDT’s business of providing international calls is personal property which may be the object of theft, and cited United States v. Carlos28 to support such conclusion. The tribunal also cited Strochecker v. Ramirez,29 where this Court ruled that one-half interest in a day’s business is personal property under Section 2 of Act No. 3952, otherwise known as the Bulk Sales Law. The appellate court held that the operations of the ISR are not subsumed in the charge for violation of P.D. No. 401.

Laurel, now the petitioner, assails the decision of the CA, contending that -

THE COURT OF APPEALS ERRED IN RULING THAT THE PERSONAL PROPERTY ALLEGEDLY STOLEN PER THE INFORMATION IS NOT THE "INTERNATIONAL LONG DISTANCE CALLS" BUT THE "BUSINESS OF PLDT."

THE COURT OF APPEALS ERRED IN RULING THAT THE TERM "BUSINESS" IS PERSONAL PROPERTY WITHIN THE MEANING OF ART. 308 OF THE REVISED PENAL CODE.30

Petitioner avers that the petition for a writ of certiorari may be filed to nullify an interlocutory order of the trial court which was issued with grave abuse of discretion amounting to excess or lack of jurisdiction. In support of his petition before the Court, he reiterates the arguments in his pleadings filed before the CA. He further claims that while the right to carry on a business or an interest or participation in business is considered property under the New Civil Code, the term "business," however, is not. He asserts that the Philippine Legislature, which approved the Revised Penal Code way back in January 1, 1932, could not have contemplated to include international long distance calls and "business" as personal property under Article 308 thereof.

In its comment on the petition, the Office of the Solicitor General (OSG) maintains that the amended information clearly states all the essential elements of the crime of theft. Petitioner’s interpretation as to whether an "international long distance call" is personal property under the law is inconsequential, as a reading of the amended information readily reveals that specific acts and circumstances were alleged charging Baynet, through its officers, including petitioner, of feloniously taking, stealing and illegally using international long distance calls belonging to respondent PLDT by conducting ISR operations, thus, "routing and completing international long distance calls using lines, cables, antenna and/or airwave frequency which connect directly to the local or domestic exchange facilities of the country where the call is destined." The OSG maintains that the international long distance calls alleged in the amended information should be construed to mean "business" of PLDT, which, while abstract and intangible in form, is personal property susceptible of appropriation.31 The OSG avers that what was stolen by petitioner and his co-accused is the business of PLDT providing international long distance calls which, though intangible, is personal property of the PLDT.32

For its part, respondent PLDT asserts that personal property under Article 308 of the Revised Penal Code comprehends intangible property such as electricity and gas which are valuable articles for merchandise, brought and sold like other personal property, and are capable of appropriation. It insists that the business of international calls and revenues constitute personal property because the same are valuable articles of merchandise. The respondent reiterates that international calls involve (a) the intangible telephone services that are being offered by it, that is, the connection and interconnection to the telephone network, lines or facilities; (b) the use of its telephone network, lines or facilities over a period of time; and (c) the income derived in connection therewith.33

PLDT further posits that business revenues or the income derived in connection with the rendition of such services and the use of its telephone network, lines or facilities are personal properties under Article 308 of the Revised Penal Code; so is the use of said telephone services/telephone network, lines or facilities which allow electronic voice signals to pass through the same and ultimately to the called party’s number. It is akin to electricity which, though intangible property, may nevertheless be appropriated and can be the object of theft. The use of respondent PLDT’s telephone network, lines, or facilities over a period of time for consideration is the business that it provides to its customers, which enables the latter to send various messages to intended recipients. Such use over a period of time is akin to merchandise which has value and, therefore, can be appropriated by another. According to respondent PLDT, this is what actually happened when petitioner Laurel and the other accused below conducted illegal ISR operations.34

The petition is meritorious.

The issues for resolution are as follows: (a) whether or not the petition for certiorari is the proper remedy of the petitioner in the Court of Appeals; (b) whether or not international telephone calls using Bay Super Orient Cards through the telecommunication services provided by PLDT for such calls, or, in short, PLDT’s business of providing said telecommunication services, are proper subjects of theft under Article 308 of the Revised Penal Code; and (c) whether or not the trial court committed grave abuse of discretion amounting to excess or lack of jurisdiction in denying the motion of the petitioner to quash the amended information.

On the issue of whether or not the petition for certiorari instituted by the petitioner in the CA is proper, the general rule is that a petition for certiorari under Rule 65 of the Rules of Court, as

amended, to nullify an order denying a motion to quash the Information is inappropriate because the aggrieved party has a remedy of appeal in the ordinary course of law. Appeal and certiorari are mutually exclusive of each other. The remedy of the aggrieved party is to continue with the case in due course and, when an unfavorable judgment is rendered, assail the order and the decision on appeal. However, if the trial court issues the order denying the motion to quash the Amended Information with grave abuse of discretion amounting to excess or lack of jurisdiction, or if such order is patently erroneous, or null and void for being contrary to the Constitution, and the remedy of appeal would not afford adequate and expeditious relief, the accused may resort to the extraordinary remedy of certiorari.35 A special civil action for certiorari is also available where there are special circumstances clearly demonstrating the inadequacy of an appeal. As this Court held in Bristol Myers Squibb (Phils.), Inc. v. Viloria:36

Nonetheless, the settled rule is that a writ of certiorari may be granted in cases where, despite availability of appeal after trial, there is at least a prima facie showing on the face of the petition and its annexes that: (a) the trial court issued the order with grave abuse of discretion amounting to lack of or in excess of jurisdiction; (b) appeal would not prove to be a speedy and adequate remedy; (c) where the order is a patent nullity; (d) the decision in the present case will arrest future litigations; and (e) for certain considerations such as public welfare and public policy.37

In his petition for certiorari in the CA, petitioner averred that the trial court committed grave abuse of its discretion amounting to excess or lack of jurisdiction when it denied his motion to quash the Amended Information despite his claim that the material allegations in the Amended Information do not charge theft under Article 308 of the Revised Penal Code, or any offense for that matter. By so doing, the trial court deprived him of his constitutional right to be informed of the nature of the charge against him. He further averred that the order of the trial court is contrary to the constitution and is, thus, null and void. He insists that he should not be compelled to undergo the rigors and tribulations of a protracted trial and incur expenses to defend himself against a non-existent charge.

Petitioner is correct.

An information or complaint must state explicitly and directly every act or omission constituting an offense38 and must allege facts establishing conduct that a penal statute makes criminal;39 and describes the property which is the subject of theft to advise the accused with reasonable certainty of the accusation he is called upon to meet at the trial and to enable him to rely on the judgment thereunder of a subsequent prosecution for the same offense.40 It must show, on its face, that if the alleged facts are true, an offense has been committed. The rule is rooted on the constitutional right of the accused to be informed of the nature of the crime or cause of the accusation against him. He cannot be convicted of an offense even if proven unless it is alleged or necessarily included in the Information filed against him.

As a general prerequisite, a motion to quash on the ground that the Information does not constitute the offense charged, or any offense for that matter, should be resolved on the basis of said allegations whose truth and veracity are hypothetically committed;41 and on additional facts admitted or not denied by the prosecution.42 If the facts alleged in the Information do not constitute an offense, the complaint or information should be quashed by the court.43

We have reviewed the Amended Information and find that, as mentioned by the petitioner, it does not contain material allegations charging the petitioner of theft of personal property under

Article 308 of the Revised Penal Code. It, thus, behooved the trial court to quash the Amended Information. The Order of the trial court denying the motion of the petitioner to quash the Amended Information is a patent nullity.

On the second issue, we find and so hold that the international telephone calls placed by Bay Super Orient Card holders, the telecommunication services provided by PLDT and its business of providing said services are not personal properties under Article 308 of the Revised Penal Code. The construction by the respondents of Article 308 of the said Code to include, within its coverage, the aforesaid international telephone calls, telecommunication services and business is contrary to the letter and intent of the law.

The rule is that, penal laws are to be construed strictly. Such rule is founded on the tenderness of the law for the rights of individuals and on the plain principle that the power of punishment is vested in Congress, not in the judicial department. It is Congress, not the Court, which is to define a crime, and ordain its punishment.44 Due respect for the prerogative of Congress in defining crimes/felonies constrains the Court to refrain from a broad interpretation of penal laws where a "narrow interpretation" is appropriate. The Court must take heed to language, legislative history and purpose, in order to strictly determine the wrath and breath of the conduct the law forbids.45However, when the congressional purpose is unclear, the court must apply the rule of lenity, that is, ambiguity concerning the ambit of criminal statutes should be resolved in favor of lenity.46

Penal statutes may not be enlarged by implication or intent beyond the fair meaning of the language used; and may not be held to include offenses other than those which are clearly described, notwithstanding that the Court may think that Congress should have made them more comprehensive.47 Words and phrases in a statute are to be construed according to their common meaning and accepted usage.

As Chief Justice John Marshall declared, "it would be dangerous, indeed, to carry the principle that a case which is within the reason or

mischief of a statute is within its provision, so far as to punish a crime not enumerated in the statute because it is of equal atrocity, or of kindred character with those which are enumerated.48 When interpreting a criminal statute that does not explicitly reach the conduct in question, the Court should not base an expansive reading on inferences from subjective and variable understanding.49

Article 308 of the Revised Penal Code defines theft as follows:

Art. 308. Who are liable for theft.– Theft is committed by any person who, with intent to gain but without violence, against or intimidation of persons nor force upon things, shall take personal property of another without the latter’s consent.

The provision was taken from Article 530 of the Spanish Penal Code which reads:

1. Los que con ánimo de lucrarse, y sin violencia o intimidación en las personas ni fuerza en las cosas, toman las cosas muebles ajenas sin la voluntad de su dueño.50

For one to be guilty of theft, the accused must have an intent to steal (animus furandi) personal property, meaning the intent to deprive another of his ownership/lawful possession of personal

property which intent is apart from and concurrently with the general criminal intent which is an essential element of a felony of dolo (dolus malus).

An information or complaint for simple theft must allege the following elements: (a) the taking of personal property; (b) the said property belongs to another; (c) the taking be done with intent to gain; and (d) the taking be accomplished without the use of violence or intimidation of person/s or force upon things.51

One is apt to conclude that "personal property" standing alone, covers both tangible and intangible properties and are subject of theft under the Revised Penal Code. But the words "Personal property" under the Revised Penal Code must be considered in tandem with the word "take" in the law. The statutory definition of "taking" and movable property indicates that, clearly, not all personal properties may be the proper subjects of theft. The general rule is that, only movable properties which have physical or material existence and susceptible of occupation by another are proper objects of theft.52 As explained by Cuelo Callon: "Cosa juridicamente es toda sustancia corporal, material, susceptible de ser aprehendida que tenga un valor cualquiera."53

According to Cuello Callon, in the context of the Penal Code, only those movable properties which can be taken and carried from the place they are found are proper subjects of theft. Intangible properties such as rights and ideas are not subject of theft because the same cannot be "taken" from the place it is found and is occupied or appropriated.

Solamente las cosas muebles y corporales pueden ser objeto de hurto. La sustracción de cosas inmuebles y la cosas incorporales (v. gr., los derechos, las ideas) no puede integrar este delito, pues no es posible asirlas, tomarlas, para conseguir su apropiación. El Codigo emplea la expresión "cosas mueble" en el sentido de cosa que es susceptible de ser llevada del lugar donde se encuentra, como dinero, joyas, ropas, etcétera, asi que su concepto no coincide por completo con el formulado por el Codigo civil (arts. 335 y 336).54

Thus, movable properties under Article 308 of the Revised Penal Code should be distinguished from the rights or interests to which they relate. A naked right existing merely in contemplation of law, although it may be very valuable to the person who is entitled to exercise it, is not the subject of theft or larceny.55 Such rights or interests are intangible and cannot be "taken" by another. Thus, right to produce oil, good will or an interest in business, or the right to engage in business, credit or franchise are properties. So is the credit line represented by a credit card. However, they are not proper subjects of theft or larceny because they are without form or substance, the mere "breath" of the Congress. On the other hand, goods, wares and merchandise of businessmen and credit cards issued to them are movable properties with physical and material existence and may be taken by another; hence, proper subjects of theft.

There is "taking" of personal property, and theft is consummated when the offender unlawfully acquires possession of personal property even if for a short time; or if such property is under the dominion and control of the thief. The taker, at some particular amount, must have obtained complete and absolute possession and control of the property adverse to the rights of the owner or the lawful possessor thereof.56 It is not necessary that the property be actually carried away out of the physical possession of the lawful possessor or that he should have made his escape with it.57 Neither asportation nor actual manual possession of property is required. Constructive possession of the thief of the property is enough.58

The essence of the element is the taking of a thing out of the possession of the owner without his privity and consent and without animus revertendi.59

Taking may be by the offender’s own hands, by his use of innocent persons without any felonious intent, as well as any mechanical device, such as an access device or card, or any agency, animate or inanimate, with intent to gain. Intent to gain includes the unlawful taking of personal property for the purpose of deriving utility, satisfaction, enjoyment and pleasure.60

We agree with the contention of the respondents that intangible properties such as electrical energy and gas are proper subjects of theft. The reason for this is that, as explained by this Court in United States v. Carlos61 and United States v. Tambunting,62 based on decisions of the Supreme Court of Spain and of the courts in England and the United States of America, gas or electricity are capable of appropriation by another other than the owner. Gas and electrical energy may be taken, carried away and appropriated. In People v. Menagas,63 the Illinois State Supreme Court declared that electricity, like gas, may be seen and felt. 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. 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. Electrical energy may, likewise, be taken and carried away. It is a valuable commodity, bought and sold like other personal property. It may be transported from place to place. There is nothing in the nature of gas used for illuminating purposes which renders it incapable of being feloniously taken and carried away.

In People ex rel Brush Electric Illuminating Co. v. Wemple,64 the Court of Appeals of New York held that electric energy is manufactured and sold in determinate quantities at a fixed price, precisely as are coal, kerosene oil, and gas. It may be conveyed to the premises of the consumer, stored in cells of different capacity known as an accumulator; or it may be sent through a wire, just as gas or oil may be transported either in a close tank or forced through a pipe. Having reached the premises of the consumer, it may be used in any way he may desire, being, like illuminating gas, capable of being transformed either into heat, light, or power, at the option of the purchaser. In Woods v. People,65 the Supreme Court of Illinois declared that 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.

Gas and electrical energy should not be equated with business or services provided by business entrepreneurs to the public. Business does not have an exact definition. Business is referred as that which occupies the time, attention and labor of men for the purpose of livelihood or profit. It embraces everything that which a person can be employed.66 Business may also mean employment, occupation or profession. Business is also defined as a commercial activity for gain benefit or advantage.67 Business, like services in business, although are properties, are not proper subjects of theft under the Revised Penal Code because the same cannot be "taken" or "occupied." If it were otherwise, as claimed by the respondents, there would be no juridical difference between the taking of the business of a person or the services provided by him for gain, vis-à-vis, the taking of goods, wares or merchandise, or equipment comprising his business.68 If it was its intention to include "business" as personal property under Article 308 of the Revised Penal Code, the Philippine Legislature should have spoken in language that is clear and definite: that business is personal property under Article 308 of the Revised Penal Code.69

We agree with the contention of the petitioner that, as gleaned from the material averments of the Amended Information, he is charged of "stealing the international long distance calls belonging to PLDT" and the use thereof, through the ISR. Contrary to the claims of the OSG and respondent PLDT, the petitioner is not charged of stealing P20,370,651.95 from said respondent. Said amount of P20,370,651.95 alleged in the Amended Information is the aggregate amount of access, transmission or termination charges which the PLDT expected from the international long distance calls of the callers with the use of Baynet Super Orient Cards sold by Baynet Co. Ltd.

In defining theft, under Article 308 of the Revised Penal Code, as the taking of personal property without the consent of the owner thereof, the Philippine legislature could not have contemplated the human voice which is converted into electronic impulses or electrical current which are transmitted to the party called through the PSTN of respondent PLDT and the ISR of Baynet Card Ltd. within its coverage. When the Revised Penal Code was approved, on December 8, 1930, international telephone calls and the transmission and routing of electronic voice signals or impulses emanating from said calls, through the PSTN, IPL and ISR, were still non-existent. Case law is that, where a legislative history fails to evidence congressional awareness of the scope of the statute claimed by the respondents, a narrow interpretation of the law is more consistent with the usual approach to the construction of the statute. Penal responsibility cannot be extended beyond the fair scope of the statutory mandate.70

Respondent PLDT does not acquire possession, much less, ownership of the voices of the telephone callers or of the electronic voice signals or current emanating from said calls. The human voice and the electronic voice signals or current caused thereby are intangible and not susceptible of possession, occupation or appropriation by the respondent PLDT or even the petitioner, for that matter. PLDT merely transmits the electronic voice signals through its facilities and equipment. Baynet Card Ltd., through its operator, merely intercepts, reroutes the calls and passes them to its toll center. Indeed, the parties called receive the telephone calls from Japan.

In this modern age of technology, telecommunications systems have become so tightly merged with computer systems that it is difficult to know where one starts and the other finishes. The telephone set is highly computerized and allows computers to communicate across long distances.71 The instrumentality at issue in this case is not merely a telephone but a telephone inexplicably linked to a computerized communications system with the use of Baynet Cards sold by the Baynet Card Ltd. The corporation uses computers, modems and software, among others, for its ISR.72

The conduct complained of by respondent PLDT is reminiscent of "phreaking" (a slang term for the action of making a telephone system to do something that it normally should not allow by "making the phone company bend over and grab its ankles"). A "phreaker" is one who engages in the act of manipulating phones and illegally markets telephone services.73 Unless the phone company replaces all its hardware, phreaking would be impossible to stop. The phone companies in North America were impelled to replace all their hardware and adopted full digital switching system known as the Common Channel Inter Office Signaling. Phreaking occurred only during the 1960’s and 1970’s, decades after the Revised Penal Code took effect.

The petitioner is not charged, under the Amended Information, for theft of telecommunication or telephone services offered by PLDT. Even if he is, the term "personal property" under Article 308 of the Revised Penal Code cannot be interpreted beyond its seams so as to include

"telecommunication or telephone services" or computer services for that matter. The word "service" has a variety of meanings dependent upon the context, or the sense in which it is used; and, in some instances, it may include a sale. For instance, the sale of food by restaurants is usually referred to as "service," although an actual sale is involved.74 It may also mean the duty or labor to be rendered by one person to another; performance of labor for the benefit of another.75 In the case of PLDT, it is to render local and international telecommunications services and such other services as authorized by the CPCA issued by the NTC. Even at common law, neither time nor services may be taken and occupied or appropriated.76A service is generally not considered property and a theft of service would not, therefore, constitute theft since there can be no caption or asportation.77 Neither is the unauthorized use of the equipment and facilities of PLDT by the petitioner theft under the aforequoted provision of the Revised Penal Code.78

If it was the intent of the Philippine Legislature, in 1930, to include services to be the subject of theft, it should have incorporated the same in Article 308 of the Revised Penal Code. The Legislature did not. In fact, the Revised Penal Code does not even contain a definition of services.

If taking of telecommunication services or the business of a person, is to be proscribed, it must be by special statute79 or an amendment of the Revised Penal Code. Several states in the United States, such as New York, New Jersey, California and Virginia, realized that their criminal statutes did not contain any provisions penalizing the theft of services and passed laws defining and penalizing theft of telephone and computer services. The Pennsylvania Criminal Statute now penalizes theft of services, thus:

(a) Acquisition of services. --

(1) A person is guilty of theft if he intentionally obtains services for himself or for another which he knows are available only for compensation, by deception or threat, by altering or tampering with the public utility meter or measuring device by which such services are delivered or by causing or permitting such altering or tampering, by making or maintaining any unauthorized connection, whether physically, electrically or inductively, to a distribution or transmission line, by attaching or maintaining the attachment of any unauthorized device to any cable, wire or other component of an electric, telephone or cable television system or to a television receiving set connected to a cable television system, by making or maintaining any unauthorized modification or alteration to any device installed by a cable television system, or by false token or other trick or artifice to avoid payment for the service.

In the State of Illinois in the United States of America, theft of labor or services or use of property is penalized:

(a) A person commits theft when he obtains the temporary use of property, labor or services of another which are available only for hire, by means of threat or deception or knowing that such use is without the consent of the person providing the property, labor or services.

In 1980, the drafters of the Model Penal Code in the United States of America arrived at the conclusion that labor and services, including professional services, have not been included within the traditional scope of the term "property" in ordinary theft statutes. Hence, they decided to incorporate in the Code Section 223.7, which defines and penalizes theft of services, thus:

(1) A person is guilty of theft if he purposely obtains services which he knows are available only for compensation, by deception or threat, or by false token or other means to avoid payment for the service. "Services" include labor, professional service, transportation, telephone or other public service, accommodation in hotels, restaurants or elsewhere, admission to exhibitions, use of vehicles or other movable property. Where compensation for service is ordinarily paid immediately upon the rendering of such service, as in the case of hotels and restaurants, refusal to pay or absconding without payment or offer to pay gives rise to a presumption that the service was obtained by deception as to intention to pay; (2) A person commits theft if, having control over the disposition of services of others, to which he is not entitled, he knowingly diverts such services to his own benefit or to the benefit of another not entitled thereto.

Interestingly, after the State Supreme Court of Virginia promulgated its decision in Lund v. Commonwealth,80declaring that neither time nor services may be taken and carried away and are not proper subjects of larceny, the General Assembly of Virginia enacted Code No. 18-2-98 which reads:

Computer time or services or data processing services or information or data stored in connection therewith is hereby defined to be property which may be the subject of larceny under § § 18.2-95 or 18.2-96, or embezzlement under § 18.2-111, or false pretenses under § 18.2-178.

In the State of Alabama, Section 13A-8-10(a)(1) of the Penal Code of Alabama of 1975 penalizes theft of services:

"A person commits the crime of theft of services if: (a) He intentionally obtains services known by him to be available only for compensation by deception, threat, false token or other means to avoid payment for the services …"

In the Philippines, Congress has not amended the Revised Penal Code to include theft of services or theft of business as felonies. Instead, it approved a law, Republic Act No. 8484, otherwise known as the Access Devices Regulation Act of 1998, on February 11, 1998. Under the law, an access device means any card, plate, code, account number, electronic serial number, personal identification number and other telecommunication services, equipment or instrumentalities-identifier or other means of account access that can be used to obtain money, goods, services or any other thing of value or to initiate a transfer of funds other than a transfer originated solely by paper instrument. Among the prohibited acts enumerated in Section 9 of the law are the acts of obtaining money or anything of value through the use of an access device, with intent to defraud or intent to gain and fleeing thereafter; and of effecting transactions with one or more access devices issued to another person or persons to receive payment or any other thing of value. Under Section 11 of the law, conspiracy to commit access devices fraud is a crime. However, the petitioner is not charged of violation of R.A. 8484.

Significantly, a prosecution under the law shall be without prejudice to any liability for violation of any provisions of the Revised Penal Code inclusive of theft under Rule 308 of the Revised Penal Code and estafa under Article 315 of the Revised Penal Code. Thus, if an individual steals a credit card and uses the same to obtain services, he is liable of the following: theft of the credit card under Article 308 of the Revised Penal Code; violation of Republic Act No. 8484; and estafa under Article 315(2)(a) of the Revised Penal Code with the service provider as the private complainant. The petitioner is not charged of estafa before the RTC in the Amended Information.

Section 33 of Republic Act No. 8792, Electronic Commerce Act of 2000 provides:

Sec. 33. Penalties.— The following Acts shall be penalized by fine and/or imprisonment, as follows:

a) Hacking or cracking which refers to unauthorized access into or interference in a computer system/server or information and communication system; or any access in order to corrupt, alter, steal, or destroy using a computer or other similar information and communication devices, without the knowledge and consent of the owner of the computer or information and communications system, including the introduction of computer viruses and the like, resulting on the corruption, destruction, alteration, theft or loss of electronic data messages or electronic documents shall be punished by a minimum fine of One hundred thousand pesos (P100,000.00) and a maximum commensurate to the damage incurred and a mandatory imprisonment of six (6) months to three (3) years.

IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The assailed Orders of the Regional Trial Court and the Decision of the Court of Appeals are REVERSED and SET ASIDE. The Regional Trial Court is directed to issue an order granting the motion of the petitioner to quash the Amended Information.

SO ORDERED.

Case Analysis

Tile: Laurel v. Abrogar (483 SCRA 243) G.R. No. 155076, February 27, 2006I-PARTIES

Philippine Long Distance Telephone Company (PLDT)-Private respondent(the petitioner in theinitial

proceeding)HON. ZEUS C. ABROGAR, Presiding Judge of the Regional Trial Court, Makati City, Branch

150whose decision is sought to be reversed in the case.

-Respondent Luis Marcos P. Laurel board member and corporate secretary of Baynet Co., Ltd. (Baynet) -

now Petitioner(one of the respondent or co-accused in the case filed by PLDT)

II-PRIOR PROCEEDINGS

An information was filed by the state prosecutor impleading Laurel and other respondents of theft

under Article 308 of RPC. Accused Laurel filed a "Motion to Quash (with Motion to Defer Arraignment)".

The RTC issued an Order denying the Motion to Quash the Amended Information.RTC also denied his

Motion for Reconsideration. Laurel then filed a Petition for Certiorari with the CA, assailing the Order of

the RTC. The CA dismissed the petition. Laurel, now the petitioner, assails the decision of the CA before

the SC.

III-THEORIES OF THE PARTIES

PLDT claims that herein petitioner together with his co-accused conspired together in order to steal and

use the international long distance calls belonging to PLDT by conducting International Simple Resale

(ISR), which is a method of routing and completing international long distance calls using lines, cables,

antennae, and/or air wave frequency which connect directly to the local or domestic exchange facilities

of the country where the call is destined, effectively stealing this business from PLDT while using its

facilities in the estimated amount of P20,370,651.92 to the damage and prejudice of PLDT, in the said

amount with out the priors consent. Laurel however alleged that the telephone calls with the use of

PLDT telephone lines, whether domestic or international, belong to the persons making the call, not to

PLDT. He argued that the caller merely uses the facilities of PLDT, and what the latter owns are the

telecommunication infrastructures or facilities through which the call is made. He also asserted that

PLDT is compensated for the caller’s use of its facilities by way of rental; for an outgoing overseas call,

PLDT charges the caller per minute, based on the duration of the call. Thus, no personal property was

stolen from PLDT. According to Laurel, the P20,370,651.92 stated in the Information, if anything,

represents the rental for the use of PLDT facilities, and not the value of anything owned by it.

IV-OBJECTIVE OF THE PARTIES

PLDT wishes for the petitioner to be impleaded for committing theft and the loss they've suffered be

respectively reimbursed or returned to them. Laurel on the other hand, prays that the motion to quash

be granted as the factual basis of herein private repondent as stated in their complaint does not fall

within the ambit of Art. 308 of the RPC.

V-KEY FACTS

>Philippine Long Distance Telephone Company (PLDT) is the holder of a legislative franchise to render

local and international telecommunication services under Republic Act No. 7082. Under said law, PLDT is

authorized to establish, operate, manage, lease, maintain and purchase telecommunication systems,

including transmitting, receiving and switching stations, for both domestic and international calls.>PLDT

alleges that one of the alternative calling patterns that constitute network fraud and violate its network

integrity is that which is known as International Simple Resale (ISR). ISR is a method of routing and

completing international long distance calls using International Private Leased Lines(IPL), cables,

antenna or air wave or frequency, which connect directly to the local or domestic exchange facilities of

the terminating country (the country where the call is destined). The IPL is linked to switching

equipment which is connected to a PLDT telephone line/number. In the process, the calls bypass the IGF

found at the terminating country, or in some instances, even those from the originating country

>One such alternative calling service is that offered by Baynet Co., Ltd. (Baynet) which sells "Bay Super

Orient Card" phone cards to people who call their friends and relatives in the Philippines. PLDT asserts

that Baynet conducts its ISR activities by utilizing an IPL to course its incoming international long

distance calls from Japan. The IPL is linked to switching equipment, which is then connected to PLDT

telephone lines/numbers and equipment, with Baynet as subscriber. Through the use of the telephone

lines and other auxiliary equipment, Baynet is able to connect an international long distance call from

Japan to any part of the Philippines, and make it appear as a call originating from Metro Manila.

Consequently, the operator of an ISR is able to evade payment of access, termination or bypass charges

and accounting rates, as well as compliance with the regulatory requirements of the NTC. Thus, the ISR

operator offers international telecommunication services at a lower rate, to the damage and prejudice

of legitimate operators like PLDT.

>After conducting the requisite preliminary investigation, the State Prosecutor filed an Amended

Information impleading Laurel (a partner in the law firm of Ingles, Laurel, Salinas, and, until November

19, 1999, a member of the board of directors and corporate secretary of Baynet), and the other

members of the board of directors of said corporation, namely, Yuji Hijioka, Yasushi Ueshima, Mukaida,

Lacson and Villegas, as accused for theft under Article 308 of the Revised Penal Code.

>Laurel moved to quash said complaint as the property (service/business)contemplated by herein

private respondent is not the one embraced in ART 308 of RPC nor any special law for that matter.

Laurel further cited the Resolution of the Secretary of Justice in Piltel v. Mendoza, where it was ruled

that the Revised Penal Code, legislated as it was before present technological advances were even

conceived, is not adequate to address the novel means of "stealing" airwaves or airtime. In said

resolution, it was noted that the inadequacy prompted the filing of Senate Bill 2379 (sic) entitled "The

Anti-Telecommunications Fraud of 1997" to deter cloning of cellular phones and other forms of

communications fraud. The said bill "aims to protect in number (ESN) (sic) or Capcode, mobile

identification number (MIN), electronic-international mobile equipment identity (EMEI/IMEI), or

subscriber identity module" and "any attempt to duplicate the data on another cellular phone without

the consent of a public telecommunications entity would be punishable by law." Thus, Laurel concluded,

"there is no crime if there is no law punishing the crime.">The RTC as well as the CA however dismissed

his motion. Thus he filed a motion for certiorari before the SC alleging the following: the respondent

judge gravely abused his discretion in denying his Motion to Quash the Amended Information. As

gleaned from the material averments of the amended information, he was charged with stealing the

international long distance calls belonging to PLDT, not its business. Moreover, the RTC failed to

distinguish between the business of PLDT(providing services for international long distance calls) and the

revenues derived therefrom. He opined that a "business" or its revenues cannot be considered as

personal property under Article308 of the Revised Penal Code, since a "business" is "(1) a commercial or

mercantile activity customarily engaged in as a means of livelihood and typically involving some

independence of judgment and power of decision; (2) a commercial or industrial enterprise; and (3)

refers to transactions, dealings or intercourse of any nature." On the other hand, the term "revenue" is

defined as "the income that comes back from an investment (as in real or personal property); the annual

or periodical rents, profits, interests, or issues of any species of real or personal property."

VI-ISSUE

WHETHER OR NOT THE PROPERTY CONTEMPLATED BY HEREIN PRIVATE RESPONDENT FALLSWITHIN THE

AMBIT OF ART. 308 OF RPC, thus no network fraud exist.

VII-HOLDING

NO, THE KIND OF PERSONAL PROPERTY CONTEMPLATED BY SAID ARTICLE DOES NOT COVER THE

'BUSINESS OR SERVICE' RENDERED BY PRIVATE RESPONDENT.

VIII-RATIODECIDENDI

The court finds that the international telephone calls placed by Bay Super Orient Cardholders, the

telecommunication services provided by PLDT and its business of providing said services are not

personal properties under Article 308 of the Revised Penal Code. The rule is that, penal laws are to be

construed strictly.

It is Congress, not the Court, which is to define a crime, and ordain its punishment. Due respect for the

prerogative of Congress in defining crimes/felonies constrains the Court to refrain from a broad

interpretation of penal laws whereas "narrow interpretation" is appropriate. And only when the

congressional purpose is unclear that court my rule on its lenity.

Article 308 of the Revised Penal Code defines theft as follows:

Art. 308. Who are liable for theft.– Theft is committed by any person who, with intent to gain but

without violence, against or intimidation of persons nor force upon things, shall take personal property

of another without the latter’s consent. For one to be guilty of theft, the accused must have an intent to

steal (animus furandi) personal property, meaning the intent to deprive another of his ownership/lawful

possession of personal property which intent is apart from and concurrently with the general criminal

intent which is an essential element of a felony of dolo (dolus malus).An information or complaint for

simple theft must allege the following elements: (a) the taking of personal property; (b) the said

property belongs to another; (c) the taking be done with intent to gain; and (d) the taking be

accomplished without the use of violence or intimidation of person/s or force upon things. One is apt to

conclude that "personal property" standing alone, covers both tangible and intangible properties and

are subject of theft under the Revised Penal Code. But the words "Personal property" under the Revised

Penal Code must be considered in tandem with the word "take" in the law. The statutory definition of

"taking" and movable property indicates that, clearly, not all personal properties may be the proper

subjects of theft. The general rule is that, only movable properties which have physical or material

existence and susceptible of occupation by another are proper objects of theft. According to Cuello

Callon, in the context of the Penal Code, only those movable properties which can be taken and carried

from the place they are found are proper subjects of theft. Intangible properties such as rights and ideas

are not subject of theft because the same cannot be "taken” from the place it is found and is occupied

or appropriated.

A naked right existing merely in contemplation of law, although it may be very valuable to the person

who is entitled to exercise it, is not the subject of theft or larceny. Such rights or interests are intangible

and cannot be "taken" by another. Thus, right to produce oil, good will or an interest in business, or the

right to engage in business, credit or franchise are properties. So is the credit line represented by a

credit card. However, they are not proper subjects of theft or larceny because they are without form or

substance, the mere "breath" of the Congress. There is "taking" of personal property, and theft is

consummated when the offender unlawfully acquires possession of personal property even if for a short

time; or if such property is under the dominion and control of the thief. The taker, at some particular

amount, must have obtained complete and absolute possession and control of the property adverse to

the rights of the owner or the lawful possessor thereof. It is not necessary that the property be actually

carried a way out of the physical possession of the lawful possessor or that he should have made his

escape with it. Neither asportation nor actual manual possession of property is required. Constructive

possession of the thief of the property is enough. Taking may be by the offender’s own hands, by his use

of innocent persons without any felonious intent, as well as any mechanical device, such as an access

device or card, or any agency, animate or inanimate, with intent to gain. Intent to gain includes the

unlawful taking of personal property for the purpose of deriving utility, satisfaction, enjoyment and

pleasure.

Gas and electrical energy should not be equated with business or services provided by business

entrepreneurs to the public. Business does not have an exact definition. Business is referred as that

which occupies the time, attention and labor of men for the purpose of livelihood or profit. It embraces

everything that which a person can be employed. Business may also mean employment, occupation or

profession. Business is also defined as a commercial activity for gain benefit or advantage. Business, like

services in business, although are properties, are not proper subjects of theft under the Revised Penal

Code because the same cannot be "taken" or "occupied."If it were otherwise, as claimed by the

respondents, there would be no juridical difference between the taking of the business of a person or

the services provided by him for gain, vis-à-vis, the taking of goods, wares or merchandise, or equipment

comprising his business. If it was its intention to include "business" as personal property under Article

308 of the Revised Penal Code, the Philippine Legislature should have spoken in language that is clear

and definite: that business is personal property under Article 308 of the Revised Penal Code.

Respondent PLDT does not acquire possession, much less, ownership of the voices of the telephone

callers or of the electronic voice signals or current emanating from said calls. The human voice and the

electronic voice signals or current caused thereby are intangible and not susceptible of possession,

occupation or appropriation by the respondent PLDT or even the petitioner, for that matter.

PLDT merely transmits the electronic voice signals through its facilities and equipment. Baynet Card Ltd.,

through its operator, merely intercepts, reroutes the calls and passes them to its toll center.

OBITERDICTUM?

In Examining foreign statutes, the courts found that other states specifically included

“business/services” to be one of a “personal property” as implemented therein. In the Philippines,

Congress has not amended the Revised Penal Code to include theft of services or theft of business as

felonies. Instead, it approved a law, Republic Act No. 8484,otherwise known as the Access Devices

Regulation Act of 1998, on February 11, 1998. Under the law, an access device means any card, plate,

code, account number, electronic serial number, personal identification number and other

telecommunication services, equipment or instrumentalities-identifier or other means of account access

that can be used to obtain money, goods, services or any other thing of value or to initiate a transfer of

funds other than a transfer originated solely by paper instrument. Among the prohibited acts

enumerated in Section 9 of the law are the acts of obtaining money or anything of value through the use

of an access device, with intent to defraud or intent to gain and fleeing thereafter; and of effecting

transactions with one or more access devices issued to another person or persons to receive payment or

any other thing of value. Under Section 11 of the law, conspiracy to commit access devices fraud is a

crime. However, the petitioner is not charged of violation of R.A. 8484.

IX-DISPOSITION

Petition is granted. The assailed decision of RTC and CA is hereby reversed and ser aside. The Regional

Trial Court is directed to issue an order granting the motion of the petitioner to quashthe Amended

Information.

Case digest Laurel vs. Abrogar

Laurel was charged with engaging in International Simple Resale (ISR) or the unauthorized routing and

completing of international long distance calls using lines, cables, antennae, and/or air wave frequency

and connecting these calls directly to the local or domestic exchange facilities of the country where

destined. These calls, in effect, reached various parts of the country and even Japan without passing

through the information gateway of PLDT. According to PLDT, it had lost billions of pesos in profit

because of this unauthorized activities.

In the original case (G.R. No. 155076, February 27, 2006), the issue was whether or not PLDT’s business

may be the subject of theft. In answering this, it is necessary to clarify some things first. What

constitutes the “business” of PLDT? W/N PLDT’s business is considered “personal property” that may

be stolen by another?

What really constitutes the business of PLDT?

PLDT accused Baynet of stealing its international long distance calls. Laurel argued that PLDT does not

own these calls. It owns only the facilities and infrastructures by which these calls are made; the calls

belong to the person making the call.

The Supreme Court settled that PLDT’s business is that of providing telephone facilities and services. But

PLDT does not acquire possession and ownership of the voices of the telephone callers or of the

electronic voice signals generated by such calls. These are intangible and not susceptible of possession,

occupation or appropriation by PLDT or even by Baynet. PLDT merely transmits the electronic voice

signals through its facilities and equipment. Baynet Card Ltd., through its operator, merely intercepts,

reroutes the calls and passes them to its toll center.

Since PLDT was not the owner of the calls, it is not correct to say that these calls were taken without its

consent. But this does not altogether exonerate Laurel from liability because it used PLDT’s facilities to

allow the Baynet card purchasers to make the calls. It is the use of these communications facilities

without the consent of PLDT that constitutes the crime of theft, which is the unlawful taking of the

telephone services and business.

Is PLDT’s business a personal property within the coverage of Art 308, RPC (theft)?

The Supreme Court division which decided the 2006 case said “no” to this question. It said that

“personal property” under the Revised Penal Code must be understood together with the word “take” in

the same law. Only movable properties with physical or material existence and susceptible of

occupation by another, are proper objects of theft. Thus, the human voice or the electric impulses it

generates cannot be included as personal property within the meaning of Art 308.

The 2006 decision therefore required that, for theft to be committed, there must be asportation or the

carrying away of the personal property. However, the SC discarded this ruling in its 2009 en banc

resolution. It said that “personal property” should be understood in the context of the Civil Code’s

definition of real and personal property. Under Art 416 of the Civil Code, movable properties susceptible

of appropriation which are not included in the enumeration of real properties are considered personal

properties. Business, services and interest in business are not found in the list of real properties.

Therefore, these are personal properties.

The SC also clarified the meaning of taking in the crime of theft. Any personal property, tangible or

intangible, corporeal or incorporeal, capable of appropriation can be the object of theft. The law only

speaks of “appropriation.” Taking does not mean the physical act of transporting a thing from one place

to another. Taking means depriving the lawful owner or possessor of the property. It does not always

mean that the property must be carried from one place to another. It could be done with the use of the

offenders’ own hands or by controlling its destination by means of some device or equipment, just like

what happened in this case. The act of Baynet was like tampering the water meter or using a jumper to

steal water and electricity.

Besides, under the Bulk Sales Law (Sec 2, Act No. 3952), business may be appropriated. Thus, business

could be object of theft.

Guilty or not?

The business of providing telecommunication and the telephone service are personal property under

Article 308 of the Revised Penal Code, and the act of engaging in ISR is an act of “subtraction” penalized

under said article. Laurel is guilty of theft of PLDT’s business and service, committed by means of the

unlawful use of the latter’s facilities. However, the Amended Information accused Laurel of stealing

international long distance telephone calls, rather than theft of PLDT’s business. So, the Supreme Court

decided to remand the case to the lower court and the prosecution was directed to amend the

Information.

G.R. No. L-58469 May 16, 1983

MAKATI LEASING and FINANCE CORPORATION, petitioner,

vs.

WEAREVER TEXTILE MILLS, INC., and HONORABLE COURT OF APPEALS, respondents.

Loreto C. Baduan for petitioner.

Ramon D. Bagatsing & Assoc. (collaborating counsel) for petitioner.

Jose V. Mancella for respondent.

DE CASTRO, J.:

Petition for review on certiorari of the decision of the Court of Appeals (now Intermediate Appellate

Court) promulgated on August 27, 1981 in CA-G.R. No. SP-12731, setting aside certain Orders later

specified herein, of Judge Ricardo J. Francisco, as Presiding Judge of the Court of First instance of Rizal

Branch VI, issued in Civil Case No. 36040, as wen as the resolution dated September 22, 1981 of the said

appellate court, denying petitioner's motion for reconsideration.

It appears that in order to obtain financial accommodations from herein petitioner Makati Leasing and

Finance Corporation, the private respondent Wearever Textile Mills, Inc., discounted and assigned

several receivables with the former under a Receivable Purchase Agreement. To secure the collection of

the receivables assigned, private respondent executed a Chattel Mortgage over certain raw materials

inventory as well as a machinery described as an Artos Aero Dryer Stentering Range.

Upon private respondent's default, petitioner filed a petition for extrajudicial foreclosure of the

properties mortgage to it. However, the Deputy Sheriff assigned to implement the foreclosure failed to

gain entry into private respondent's premises and was not able to effect the seizure of the

aforedescribed machinery. Petitioner thereafter filed a complaint for judicial foreclosure with the Court

of First Instance of Rizal, Branch VI, docketed as Civil Case No. 36040, the case before the lower court.

Acting on petitioner's application for replevin, the lower court issued a writ of seizure, the enforcement

of which was however subsequently restrained upon private respondent's filing of a motion for

reconsideration. After several incidents, the lower court finally issued on February 11, 1981, an order

lifting the restraining order for the enforcement of the writ of seizure and an order to break open the

premises of private respondent to enforce said writ. The lower court reaffirmed its stand upon private

respondent's filing of a further motion for reconsideration.

On July 13, 1981, the sheriff enforcing the seizure order, repaired to the premises of private respondent

and removed the main drive motor of the subject machinery.

The Court of Appeals, in certiorari and prohibition proceedings subsequently filed by herein private

respondent, set aside the Orders of the lower court and ordered the return of the drive motor seized by

the sheriff pursuant to said Orders, after ruling that the machinery in suit cannot be the subject of

replevin, much less of a chattel mortgage, because it is a real property pursuant to Article 415 of the

new Civil Code, the same being attached to the ground by means of bolts and the only way to remove it

from respondent's plant would be to drill out or destroy the concre te floor, the reason why all that the

sheriff could do to enfore the writ was to take the main drive motor of said machinery. The appellate

court rejected petitioner's argument that private respondent is estopped from claiming that the

machine is real property by constituting a chattel mortgage thereon.

A motion for reconsideration of this decision of the Court of Appeals having been denied, petitioner has

brought the case to this Court for review by writ of certiorari. It is contended by private responden t,

however, that the instant petition was rendered moot and academic by petitioner's act of returning the

subject motor drive of respondent's machinery after the Court of Appeals' decision was promulgated.

The contention of private respondent is without merit. When petitioner returned the subject motor

drive, it made itself unequivocably clear that said action was without prejudice to a motion for

reconsideration of the Court of Appeals decision, as shown by the receipt duly signed by respondent's

representative. 1 Considering that petitioner has reserved its right to question the propriety of the Court

of Appeals' decision, the contention of private respondent that this petition has been mooted by such

return may not be sustained.

The next and the more crucial question to be resolved in this Petition is whether the machinery in suit is

real or personal property from the point of view of the parties, with petitioner arguing that it is a

personality, while the respondent claiming the contrary, and was sustained by the appellate court,

which accordingly held that the chattel mortgage constituted thereon is null and void, as contended by

said respondent.

A similar, if not Identical issue was raised in Tumalad v. Vicencio, 41 SCRA 143 where this Court,

speaking through Justice J.B.L. Reyes, ruled:

Although there is no specific statement referring to the subject house as personal property, yet by

ceding, selling or transferring a property by way of chattel mortgage defendants-appellants could only

have meant to convey the house as chattel, or at least, intended to treat the same as such, so that they

should not now be allowed to make an inconsistent stand by claiming otherwise. Moreover, the subject

house stood on a rented lot to which defendants-appellants merely had a temporary right as lessee, and

although this can not in itself alone determine the status of the property, it does so when combined

with other factors to sustain the interpretation that the parties, particularly the mortgagors, intended to

treat the house as personality. Finally, unlike in the Iya cases, Lopez vs. Orosa, Jr. & Plaza Theatre, Inc. &

Leung Yee vs. F.L. Strong Machinery & Williamson, wherein third persons assailed the validity of the

chattel mortgage, it is the defendants-appellants themselves, as debtors-mortgagors, who are attacking

the validity of the chattel mortgage in this case. The doctrine of estoppel therefore applies to the herein

defendants-appellants, having treated the subject house as personality.

Examining the records of the instant case, We find no logical justification to exclude the rule out, as the

appellate court did, the present case from the application of the abovequoted pronouncement. If a

house of strong materials, like what was involved in the above Tumalad case, may be considered as

personal property for purposes of executing a chattel mortgage thereon as long as the parties to the

contract so agree and no innocent third party will be prejudiced thereby, there is absolutely no reason

why a machinery, which is movable in its nature and becomes immobilized only by destination or

purpose, may not be likewise treated as such. This is really because one who has so agreed is estopped

from denying the existence of the chattel mortgage.

In rejecting petitioner's assertion on the applicability of the Tumalad doctrine, the Court of Appeals lays

stress on the fact that the house involved therein was built on a land that did not belong to the owner of

such house. But the law makes no distinction with respect to the ownership of the land on which the

house is built and We should not lay down distinctions not contemplated by law.

It must be pointed out that the characterization of the subject machinery as chattel by the private

respondent is indicative of intention and impresses upon the property the character determined by the

parties. As stated in Standard Oil Co. of New York v. Jaramillo, 44 Phil. 630, it is undeniable that the

parties to a contract may by agreement treat as personal property that which by nature woul d be real

property, as long as no interest of third parties would be prejudiced thereby.

Private respondent contends that estoppel cannot apply against it because it had never represented nor

agreed that the machinery in suit be considered as personal property but was merely required and

dictated on by herein petitioner to sign a printed form of chattel mortgage which was in a blank form at

the time of signing. This contention lacks persuasiveness. As aptly pointed out by petitioner and not

denied by the respondent, the status of the subject machinery as movable or immovable was never

placed in issue before the lower court and the Court of Appeals except in a supplemental memorandum

in support of the petition filed in the appellate court. Moreover, even granting that the charge is true,

such fact alone does not render a contract void ab initio, but can only be a ground for rendering said

contract voidable, or annullable pursuant to Article 1390 of the new Civil Code, by a proper action in

court. There is nothing on record to show that the mortgage has been annulled. Neither is it disclosed

that steps were taken to nullify the same. On the other hand, as pointed out by petitioner and again not

refuted by respondent, the latter has indubitably benefited from said contract. Equity dictates that one

should not benefit at the expense of another. Private respondent could not now therefore, be allowed

to impugn the efficacy of the chattel mortgage after it has benefited therefrom,

From what has been said above, the error of the appellate court in ruling that the questioned machinery

is real, not personal property, becomes very apparent. Moreover, the case of Machinery and

Engineering Supplies, Inc. v. CA, 96 Phil. 70, heavily relied upon by said court is not applicab le to the case

at bar, the nature of the machinery and equipment involved therein as real properties never having

been disputed nor in issue, and they were not the subject of a Chattel Mortgage. Undoubtedly, the

Tumalad case bears more nearly perfect parity with the instant case to be the more controlling

jurisprudential authority.

WHEREFORE, the questioned decision and resolution of the Court of Appeals are hereby reversed and

set aside, and the Orders of the lower court are hereby reinstated, with costs against the private

respondent.

SO ORDERED.

Makasiar (Chairman), Aquino, Concepcion Jr., Guerrero and Escolin JJ., concur.

Abad Santos, J., concurs in the result.

Makati Leasing vs. Wearever Textile Facts:

Wearever Textile in order to obtain a financial accommodation from Makati Leasing, discounted and

assigned several receivables with the former under a Receivable Purchase Agreement. To secure the

collection of the receivables assigned, Waerever executed a Chattel Mortgage over certain raw materials

inventory as well as a machinery described as an Artos Aero Dryer Stentering Range.

Upon Wearever's default, Makati Leasing filed a petition for extrajudicial foreclosure of the properties

mortgage to it. However, the Deputy Sheriff assigned to implement the foreclosure failed to gain entry

into Wearever's premises and was not able to effect the seizure of the machinery. Makati Leasing

thereafter filed a complaint for judicial foreclosure with the CFI Rizal.

RTC then issued a writ of seizure, the enforcement of which was restrained upon Wearever's filing of a

motion for reconsideration. finally issued on 11 February 1981, an order to break open the premises of

Wearever to enforce said writ.

The sheriff enforcing the seizure order, repaired to the premises of Wearever and removed the main

drive motor of the subject machinery.

CA set aside the orders of the RTC and ordered the return of the drive motor seized by the sheriff after

ruling that the machinery in suit cannot be the subject of replevin, much less of a chattel mortgage,

because it is a real property pursuant to Article 415 of the new Civil Code. CA also rejected the argument

that Wearever is estopped from claiming that the machine is real property by constituting a chattel

mortgage thereon. A motion for reconsideration was filed by Makati Leasing, but it was denied. Hence

this petition.

Claims:

Makati Leasing says it is personal property.

Weaever says it is real property.

Issue:

Whether the machinery in suit is real or personal property?

Held:

If a house of strong materials, like what was involved in the above Tumalad case, may be considered as

personal property for purposes of executing a chattel mortgage thereon as long as the parties to the

contract so agree and no innocent third party will be prejudiced thereby, there is absolutely no reason

why a machinery, which is movable in its nature and becomes immobilized only by destination or

purpose, may not be likewise treated as such. This is really because one who has so agreed is estopped

from denying the existence of the chattel mortgage.

It must be pointed out that the characterization of the subject machinery as chattel by the private

respondent is indicative of intention and impresses upon the property the character determined by the

parties. As stated in Standard Oil Co. of New York vs. Jaramillo, 44 Phil. 630, it is undeniable that the

parties to a contract may by agreement treat as personal property that which by nature would be real

property, as long as no interest of third parties would be pre judiced thereby.

Makati Leasing vs. Wearever Textile

Makati Leasing and Financial Corporation vs. Wearever Textile Mills, Inc.

G.R. No. L-58469. May 16, 1983.

De Castro, J.

Doctrine: Where a chattel mortgage is constituted on a machinery permanently attached to the ground,

the machinery is to be considered as personal property.

Facts: Wearever Textile Mills, Inc. discounted and assigned several receivables with Makati Leasing and

Financial Corp. under a Receivable Purchase Agreement so that the latter would lend money to the

former. In order to secure the collection of the receivables assigned, Wearever executed a Chattel

Mortgage over certain raw materials inventory as well as a machinery (Artos Aero Dryer Stentering

Range). Upon default of Wearever in paying what is due, Makati Leasing filed a petition for extrajudicial

foreclosure of the properties mortgaged to it. The Sheriff assigned to execute such foreclosure,

however, failed to enter the premises of Wearever to effect the seizure of the machinery. Afterwhich,

petitioner filed a complaint for a judicial foreclosure with the RTC of Rizal which was granted even after

the motion for reconsideration filed by the private respondent. Enforcing then the writ of seizure issued

by the lower court, the Sheriff removed the main drive motor of the machinery. Upon appeal, CA

reversed the ruling of the RTC and ordered the return of the motor to Wearever since the said

machinery cannot be the subject of a replevin and chattel mortgage for it is a real property pursuant to

Art. 415 (3) of the NCC. CA argued that the machinery is attached to the ground by means of bolts and

the only way to remove it from the respondent’s plant would be to drill out or destroy the concrete floor

– which is why all that the sheriff could do to enforce the writ was to take the main drive motor of the

machinery. Hence, this petition for certiorari.

Claims:

Makati Leasing says it is personal property.

Weaever says it is real property.

Issue: Whether the machinery is a personal property.

Held: Yes. By destination, it is a real property but by virtue of the intention of the parties stipulated in

their chattel mortgage contract, the machinery was intended to be a personal property. The Court made

reference to its ruling in Tumalad v. Vicencio and Standard Oil Co. of New York v. Jaramillo where it held

that a real property may be considered as a personal property for purposes of executing a chattel

mortgage thereon as long as the parties to the contract so agree and no innocent third party will be

prejudiced thereby, and once the parties so agreed, they are already stopped from claiming otherwise.

Private respondent contended that its characterization of the subject machinery as chattel in their

agreement should not be appreciated against it because it had never represented nor agreed in such as

it was merely required and dictated on by the petitioner to sign a chattel mortgage in blank form. The

Court was not persuaded by its contention as the said issue was not duly raised in the lower an d

appellate courts nor will the said signing in blank by the respondent make the contract void but merely

voidable by a proper action in court. Furthermore as it was undeniable that it benefited from the chattel

mortgage, it cannot be allowed to impugn its efficacy for equity reasons.

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 rece ived, 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.

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.— 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 for purposes 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.

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

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

CALTEX PHILS. V. CENTRAL BOARD OF ASSESSMENT APPEALS

114 SCRA 296

FACTS:

The City Assessor characterized the items in gas stations of petitioner as taxable realty. These items

included underground tanks, elevated tank, elevated water tanks, water tanks, gasoline pumps,

computing pumps, etc. These items are not owned by the lessor of the land wherein the

equipment are installed. Upon expiration of the lease agreement, the equipment should be

returned in good condition.

HELD:

The equipment and machinery as appurtenances to the gas station building or shed owned by Caltex

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 and fixed 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 (Phil.) Inc. vs. Central Board of Assessment Appeals, 114 SCRA 296 , May 31, 1982

Gasoline station equipments and machineries are subject to the real property tax.—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.

Gasoline station equipments and machineries are permanent fixtures for purposes of realty taxation.—

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 pe rsonalty (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).

G.R. No. L-19527 March 30, 1963

RICARDO PRESBITERO, in his capacity as Executor of the Testate Estate of EPERIDION PRESBITERO,

petitioner,

vs.

THE HON. JOSE F. FERNANDEZ, HELEN CARAM NAVA, and the PROVINCIAL SHERIFF OF NEGROS

OCCIDENTAL, respondents.

San Juan, Africa and Benedicto and Hilado and Hilado for petitioner.

Paredes, Poblador, Cruz and Nazareno and Manuel Soriano for respondents.

REYES, J.B.L., J.:

Petition for a writ of certiorari against the Court of First Instance of Negros Occidental.

It appears that during the lifetime of Esperidion Presbitero, judgment was rendered against him by the

Court of Appeals on October 14, 1959, in CA-G.R. No. 20879,

... to execute in favor of the plaintiff, within 30 days from the time this judgment becomes final, a deed

of reconveyance of Lot No. 788 of the cadastral survey of Valladolid, free from all liens and

encumbrances, and another deed of reconveyance of a 7-hectare portion of Lot No. 608 of the same

cadastral survey, also free from all liens and encumbrances, or, upon failure to do so, to pay to the

plaintiff the value of each of the said properties, as may be determined by the Court a quo upon

evidence to be presented by the parties before it. The defendant is further adjudge d to pay to the

plaintiff the value of the products received by him from the 5-hectare portion equivalent to 20 cavans of

palay per hectare every year, or 125 cavans yearly, at the rate of P10.00 per cavan, from 1951 until

possession of the said 5-hectare portion is finally delivered to the plaintiff with legal interest thereon

from the time the complaint was filed; and to pay to the plaintiff the sum of P1,000.00 by way of

attorney's fees, plus costs.

This judgment, which became final, was a modification of a decision of the Court of First Instance of

Negros Occidental, in its Civil Case No. 3492, entitled "Helen Caram Nava, plaintiff, versus Esperidion

Presbitero, defendant."

Thereafter, plaintiff's counsel, in a letter dated December 8, 1959, sought in vain to amicably settle the

case through petitioner's son, Ricardo Presbitero. When no response was forthcoming, said counsel

asked for, and the court a quo ordered on June 9, 1960, the issuance of a partial writ of execution for

the sum of P12,250.00. On the following day, June 10, 1960, said counsel, in another friendly letter,

reiterated his previous suggestion for an amicable settlement, but the same produced no fruitful result.

Thereupon, on June 21, 1960, the sheriff levied upon and garnished the sugar quotas allotted to

plantation audit Nos. 26-237, 26-238, 26-239, 26-240 and 26-241 adhered to the Ma-ao Mill District and

"registered in the name of Esperidion Presbitero as the original plantation-owner", furnishing copies of

the writ of execution and the notice of garnishment to the manager of the Ma-ao Sugar Central

Company, Bago, Negros Occidental, and the Sugar Quota Administration at Bacolod City, but without

presenting for registration copies thereof to the Register of Deeds.

Plaintiff Helen Caram Nava (herein respondent) then moved the court, on June 22, 1960, to hear

evidence on the market value of the lots; and after some hearings, occasionally protracted by

postponements, the trial court, on manifestation of defendant's willingness to cede the properties in

litigation, suspended the proceedings and ordered him to segregate the portion of Lot 608 pertaining to

the plaintiff from the mass of properties belonging to the defendant within a period to expire on August

24, 1960, and to effect the final conveyance of the said portion of Lot 608 and the whole of Lot 788 free

from any lien and encumbrance whatsoever. Because of Presbitero's failure to comply with this order

within the time set forth by the court, the plaintiff again moved on August 25, 1960 to declare the

market value of the lots in question to be P2,500.00 per hectare, based on uncontradicted evidence

previously adduced. But the court, acting on a prayer of defendant Presbitero, in an order dated August

27, 1960, granted him twenty (20) days to finalize the survey of Lot 608, and ordered him to execute a

reconveyance of Lot 788 not later than August 31, 1960. Defendant again defaulted; and so plaintiff, on

September 21, 1960, moved the court for payment by the defendant of the sum of P35,000.00 for the

14 hectares of land at P2,500.00 to the hectare, and the court, in its order dated September 24, 1960,

gave the defendant until October 15, 1960 either to pay the value of the 14 hectares at the rate given or

to deliver the clean titles of the lots. On October 15, 1960, the defendant finally delivered Certificate of

Title No. T-28046 covering Lot 788, but not the title covering Lot 608 because of an existing

encumbrance in favor of the Philippine National Bank. In view thereof, Helen Caram Nava moved for,

and secured on October 19, 1960, a writ of execution for P17,500.00, and on the day following wrote

the sheriff to proceed with the auction sale of the sugar quotas previously scheduled for November 5,

1960. The sheriff issued the notice of auction sale on October 20, 1960.

On October 22, 1960, death overtook the defendant Esperidion Presbitero.

Proceedings for the settlement of his estate were commenced in Special Proceedings No. 2936 of the

Court of First Instance of Negros Occidental; and on November 4, 1960, the special administrator,

Ricardo Presbitero, filed an urgent motion, in Case No. 3492, to set aside the writs of execution, and to

order the sheriff to desist from holding the auction sale on the grounds that the levy on the sugar quo tas

was invalid because the notice thereof was not registered with the Register of Deeds, as for real

property, and that the writs, being for sums of money, are unenforceable since Esperidion Presbitero

died on October 22, 1960, and, therefore, could only be enforced as a money claim against his estate.

This urgent motion was heard on November 5, 1960, but the auction sale proceeded on the same date,

ending in the plaintiff's putting up the highest bid for P34,970.11; thus, the sheriff sold 21,640 piculs o f

sugar quota to her.

On November 10, 1960, plaintiff Nava filed her opposition to Presbitero's urgent motion of November 4,

1960; the latter filed on May 4, 1961 a supplement to his urgent motion; and on May 8 and 23, 1961,

the court continued hearings on the motion, and ultimately denied it on November 18, 1961.

On January 11, 1962, plaintiff Nava also filed an urgent motion to order the Ma-ao Sugar Central to

register the sugar quotas in her name and to deliver the rentals of these quotas corresponding to the

crop year 1960-61 and succeeding years to her. The court granted this motion in its order dated

February 3, 1962. A motion for reconsideration by Presbitero was denied in a subsequent order under

date of March 5, 1962. Wherefore, Presbitero instituted the present proceedings for certiorari.

A preliminary restraining writ was thereafter issued by the court against the respondents from

implementing the aforesaid orders of the respondent Judge, dated February 3, 1960 and March 5, 1962,

respectively. The petition further seeks the setting aside of the sheriff's certificate of sale of the sugar

quotas made out in favor of Helen Caram Nava, and that she be directed to file the judgment credit in

her favor in Civil Case No. 3492 as a money claim in the proceedings to settle the Estate of Esperidion

Presbitero.

The petitioner denies having been personally served with notice of the garnishment of the sugar quotas,

but this disclaimer cannot be seriously considered since it appears that he was sent a copy of the notice

through the chief of police of Valladolid on June 21, 1960, as certified to by the sheriff, and that he had

actual knowledge of the garnishment, as shown by his motion of November 4, 1960 to set aside the

writs of execution and to order the sheriff to desist from holding the auction sale.

Squarely at issue in this case is whether sugar quotas are real (immovable) or personal properties. If

they be realty, then the levy upon them by the sheriff is null and void for lack of compliance with the

procedure prescribed in Section 14, Rule 39, in relation with Section 7, Rule 59, of the Rules of Court

requiring "the filing with the register of deeds a copy of the orders together with a description of the

property . . . ."

In contending that sugar quotas are personal property, the respondent, Helen Caram Nava, invoked the

test formulated by Manresa (3 Manresa, 6th Ed. 43), and opined that sugar quotas can be carried from

place to place without injury to the land to which they are attached, and are not one of those included

in Article 415 of the Civil Code; and not being thus included, they fall under the category of personal

properties:

ART. 416. The following are deemed to be personal property:

x x x x x x x x x

4. In general, all things which can be transported from place to place without impairment of the real

property to which they are fixed.

Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted and

approved by this Honorable Court, without prejudice to the parties adducing other evidence to prove

their case not covered by this stipulation of facts. 1äwphï1.ñët

Respondent likewise points to evidence she submitted that sugar quotas are, in fact, transferred apart

from the plantations to which they are attached, without impairing, destroying, or diminishing the

potentiality of either quota or plantation. She was sustained by the lower court when it stated that "it is

a matter of public knowledge and it is universal practice in this province, whose principal industry is

sugar, to transfer by sale, lease, or otherwise, sugar quota allocations from one plantation to any other"

and that it is "specious to insist that quotas are improvements attaching to one plantation when in truth

and in fact they are no longer attached thereto for having been sold or leased away to be used in

another plantation". Respondent would add weight to her argument by invoking the role that sugar

quotas play in our modern social and economic life, and cites that the Sugar Office does not require any

registration with the Register of Deeds for the validity of the sale of these quotas; and, in fact, those

here in question were not noted down in the certificate of title of the land to which they pertain; and

that Ricardo Presbitero had leased sugar quotas independently of the land. The respondent cites further

that the U.S.-Philippine Trade Relations Act, approved by the United States Congress in 1946, limiting

the production of unrefined sugar in the Philippines did not allocate the quotas for said unrefined sugar

among lands planted to sugarcane but among "the sugar producing mills and plantation OWNERS", and

for this reason Section 3 of Executive Order No. 873, issued by Governor General Murphy, authorizes the

lifting of sugar allotments from one land to another by means only of notarized deeds.

While respondent's arguments are thought-provoking, they cannot stand against the positive mandate

of the pertinent statute. The Sugar Limitation Law (Act 4166, as amended) provides —

SEC. 9. The allotment corresponding to each piece of land under the provisions of this Act shall be

deemed to be an improvement attaching to the land entitled thereto ....

and Republic Act No. 1825 similarly provides —

SEC. 4. The production allowance or quotas corresponding to each piece of land under the provisions of

this Act shall be deemed to be an improvement attaching to the land entitled thereto ....

And Executive Order No. 873 defines "plantation" as follows:

(a) The term 'plantation' means any specific area of land under sole or undivided ownership to which is

attached an allotment of centrifugal sugar.

Thus, under express provisions of law, the sugar quota allocations are accessories to land, and can not

have independent existence away from a plantation, although the latter may vary. Indeed, this Court

held in the case of Abelarde vs. Lopez, 74 Phil. 344, that even if a contract of sale of haciendas omitted

"the right, title, interest, participation, action (and) rent" which the grantors had or might have in

relation to the parcels of land sold, the sale would include the quotas, it being provided in Section 9, Act

4166, that the allotment is deemed an improvement attached to the land, and that at the time the

contract of sale was signed the land devoted to sugar were practically of no use without the sugar

allotment.

As an improvement attached to land, by express provision of law, though not physically so united, the

sugar quotas are inseparable therefrom, just like servitudes and other real rights over an immovable.

Article 415 of the Civil Code, in enumerating what are immovable properties, names —

10. Contracts for public works, and servitudes and other real rights over immovable property. (Emphasis

supplied)

It is by law, therefore, that these properties are immovable or real, Article 416 of the Civil Code being

made to apply only when the thing (res) sought to be classified is not included in Article 415.

The fact that the Philippine Trade Act of 1946 (U.S. Public Law 371-79th Congress) allows transfers of

sugar quotas does not militate against their immovability. Neither does the fact that the Sugar Quota

Office does not require registration of sales of quotas with the Register of Deeds for their validity, nor

the fact that allocation of unrefined sugar quotas is not made among lands planted to sugarcane but

among "the sugar producing mills and plantation OWNERS", since the lease or sale of quotas are

voluntary transactions, the regime of which, is not necessarily identical to involuntary transfers or levies;

and there cannot be a sugar plantation owner without land to which the quota is attached; and there

can exist no quota without there being first a corresponding plantation.

Since the levy is invalid for non-compliance with law, it is impertinent to discuss the survival or non-

survival of claims after the death of the judgment debtor, gauged from the moment of actual levy.

Suffice it to state that, as the case presently stands, the writs of execution are not in question, but the

levy on the quotas, and, because of its invalidity, the levy amount to no levy at all. Neither is it

necessary, or desirable, to pass upon the conscionableness or unconscionableness of the amount

produced in the auction sale as compared with the actual value of the quotas inasmuch as the sale must

necessarily be also illegal.

As to the remedial issue that the respondents have presented: that certiorari does not lie in this case

because the petitioner had a remedy in the lower court to "suspend" the auction sale , but did not avail

thereof, it may be stated that the latter's urgent motion of November 4, 1960, a day before the

scheduled sale (though unresolved by the court on time), did ask for desistance from holding the sale.

WHEREFORE, the preliminary injunction heretofore granted is hereby made permanent, and the sheriff's

certificate of sale of the sugar quotas in question declared null and void. Costs against respondent Nava.

Bengzon, C.J., Padilla, Labrador, Barrera, Paredes, Dizon and Regala, JJ., concur.

Makalintal, J., took no part.

RICARDO PRESBITERO vs, FERNANDEZ

Facts:1) ESPERIDION Presbitero failed to furnish Nava the value of the properties under litigation.2)

Presbitero was ordered by the lower court to pay Nava to settle his debts.3) Nava's counsel still tried to

settle this case with Presbitero, out of court. But to no avail.4) Thereafter, the sheriff levied upon and

garnished the sugar quotas allotted to the plantation and adhered to the Ma-ao Mill District and

registered in the name of Presbitero as the original plantation owner.5) The sheriff was not able to

present for registration thererof to the Registry of Deeds.6) The court then ordered Presbitero to

segregate the portion of Lot 608 pertaining to Nava from the mass of properties belonging to the

defendant within a period to expire on August 1960.7) Bottom line, Presbitero did not meet his

obligations, and the auction sale was scheduled.8) Presbitero died after.9) RICARDO Presbitero, the

estate administrator, then petitioned that the sheriff desist in holding the auction sale on the ground

that the levy on the sugar quotas was invalid because the notice thereof was not registered with the

Registry of Deeds.

Issue: W/N the sugar quotas are real (immovable) or personal properties.

Held:1) They are real properties.2) Legal bases :a) The Sugar Limitation Lawxxx attaching to the land xxx

(p 631)b) RA 1825xxx to be an improvement attaching to the land xxx (p 631)c) EO # 873"plantation" xxx

to which is attached an allotment of centrifugal sugar.3) Under the express provisions of law, the sugar

quota allocations are accessories to the land, and cannot have independent existence away from a

plantation.4) Since the levy is invalid for non-compliance with law, xxx the levy amount to no levy at all.

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 f ranchise 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 vol tage 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 "wo oden

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 attache d. 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.

BOARD OF ASSESSMENT APPEALS V. MANILA ELECTRIC COMPANY

10 SCRA 68

FACTS:

City Assessor of QC declared the steel towers for real property tax under Tax Declarations. After

denying the respondent’s petition to cancel these declarations, an appeal was taken with the CTA which

held that the steel towers come under the exception of “poles” under the franchise given to

MERALCO; the steel towers are personal properties; and the City Treasurer is liable for the refund of the

amount paid.

HELD:

The steel towers of an electric company don’t constitute real property for the purposes of real property

tax.