Capital Wireless Inc. V.

Provincial Treasurer of Batangas

G.R. NO. 180110, MAY 30, 2016

FACTS:

Petitioner Capitol Wireless Inc. (Capwire) is a Philippine corporation in the business of

providing international telecommunications services. As such provider, Capwire has signed
agreements with other local and foreign telecommunications companies covering an international
network of submarine cable systems such as the Asia Pacific Cable Network System (APCN)
(which connects Australia, Thailand, Malaysia, Singapore, Hong Kong, Taiwan, Korea, Japan,
Indonesia and the Philippines) ); the Brunei-Malaysia-Philippines Cable Network System (BMP-
CNS), the Philippines-Italy (SEA-ME-WE-3 CNS), and the Guam Philippines (GP-CNS) systems.
The agreements provide for co-ownership and other rights among the parties over the network.

Petitioner Capwire claims that it is a co-owner only of the so-called “Wet Segment” of the
APCN. As a co-owner, Capwire claims that it does not own any particular physical part of the
cable system but, consistent with its financial contributions, it owns the right to use a certain
capacity of the said system. Meanwhile, the landing stations or terminals and Segment E of
APCN located in Nasugbu, Batangas are allegedly owned by the Philippine Long Distance
Telephone Corporation (PLDT). Moreover, it alleges that the Wet Segment is laid in
international, and not Philippine waters.

In essence, the Provincial Assessor had determined that the submarine cable systems described
are taxable real property, a determination that was contested by Capwire. Capwire contented that
the cable system lies outside of Philippine territory, i.e., on international waters.

On February 7, 2003 and March 4, 2003, Capwire received a Warrant of Levy and a Notice of
Auction Sale, respectively, from the respondent Provincial Treasurer of Batangas (Provincial
Treasurer). Capwire filed a Motion for Reconsideration, but the same was likewise dismissed by
the RTC. It then filed an appeal to the Court of Appeals and was likewise dismissed. Hence, this
petition.

ISSUE: Whether or not submarine communications cables be classified as taxable real

property by the local governments

HELD:

The Court held in the affirmative.

Submarine or undersea communications cables are akin to electric transmission lines which this
Court has recently declared in Manila Electric Company v. City Assessor and City Treasurer of
Lucena City, as “no longer exempted from real property tax” and may qualify as “machinery”
subject to real property tax under the Local Government Code.

Moreover, both electric lines and communications cables, in the strictest sense, are not directly
adhered to the soil but pass through posts, relays or landing stations, but both may be classified
under the term “machinery” as real property under Article 415(5)of the Civil Code for the simple
reason that such pieces of equipment serve the owner’s business or tend to meet the needs of his
industry or works that are on real estate. Even objects in or on a body of water may be classified
as such, as “waters” is classified as an immovable under Article 415(8)of the Code. A classic
example is a boathouse which, by its nature, is a vessel and, therefore, a personal property but, if
it is tied to the shore and used as a residence, and since it floats on waters which is immovable, is
considered real property.

It is settled in the Local Government Code, “municipal waters” includes “not only streams, lakes,
and tidal waters within the municipality, not being the subject of private ownership and not
comprised within the national parks, public forest, timber lands, forest reserves or fishery
reserves, but also marine waters included between two lines drawn perpendicularly to the general
coastline from points where the boundary lines of the municipality or city touch the sea at low
tide and a third line parallel with the general coastline and fifteen (15) kilometers from it.
Although the term “municipal waters” appears in the Code in the context of the grant of
quarrying and fisheries privileges for a fee by local governments, its inclusion in the Code’s
Book II which covers local taxation means that it may also apply as guide in determining the
territorial extent of the local authorities’ power to levy real property taxation.

Thus, the jurisdiction or authority over such part of the subject submarine cable system lying
within Philippine jurisdiction includes the authority to tax the same, for taxation is one of the
three basic and necessary attributes of sovereignty, and such authority has been delegated by the
national legislature to the local governments with respect to real property taxation.

As earlier stated, a way for Capwire to claim that its cable system is not covered by such
authority is by showing a domestic enactment or even contract, or an international agreement or
treaty exempting the same from real property taxation. It failed to do so as such had been
expressly withdrawn by the Local Government Code, which took effect on January 1, 1992,
Sections 193 and 234 of which provide:

Section 193. Withdrawal of Tax Exemption Privileges. – Unless otherwise provided in this
Code, tax exemptions or incentives granted to, or presently enjoyed by all persons, whether
natural or juridical, including government-owned or controlled corporations, except local water
districts, cooperatives duly registered under R.A. No. 6938, nonstock and nonprofit hospitals and
educational institutions, are hereby withdrawn.
Philippine Refining CO vs. Jargue

FACTS:
Plaintiff Philippine Refining Co. and defendant Jarque executed three mortgages on the motor
vessels Pandan and Zargazo. The documents were recorded as transfer and encumbrances of the
vessels for the port of Cebu and each was denominated a chattel mortgage.

The first two mortgages did not have an affidavit of good faith. A fourth mortgage was executed
by Jarque and Ramon Aboitiz over motorship Zaragoza and was entered in the Chattel Mortgage
Registry on May 12, 1932, within the period of 30 days prior to the foreclosure/institution of the
insolvency proceedings.

Jose Curaminas filed with the CFI of Cebu a petition praying that Francisco Jarque be declared
an insolvent debtor. This was granted and Jarque’s properties were then assigned to Curaminas.

A problem arose when Judge Jose Hontiveros declined to order the foreclosure of the mortgages,
and instead, ruled that they were defective because they did not have affidavits of good faith.

ISSUE:
1. Whether or not the mortgages of the vessels are governed by the Chattel Mortgage Law
2. Whether or not an affidavit of good faith is needed to enforce achattel mortgage on a
vessel

RULING:
Yes. “Personal property” includes vessels. They are subject to the provisions of the Chattel
Mortgage Law. The Chattel Mortgage Law says that a good chattel mortgage includes an
affidavit of good faith. The absence of such affidavit makes mortgage unenforceable against
creditors and subsequent encumbrances. The judge was correct.

Note: A mortgage on a vessel is generally like other chattel mortgages. The only difference
between a chattel mortgage of a vessel and a chattel mortgage of other personalty is that the first
must be noted in the registry of the register of deeds.

Arroyo v Yu

FACTS:
1. This case involves mortgage of two lorchas, China and Cuylim which were owned by
Lim Ponzo Navigation Co.
2. Lim Ponzo Navigation Co. obtained a loan from J.M. Po Pauco, a mortgage (1 st
mortgage) was executed on the two Iorchas to secure the loan of P20,000. Two days
later, the mortgage was duly registered in the office of the register of deeds of Iloilo.
3. On November 28, 1919, J. M. Po Pauco executed a mortgage (2 nd mortgage) in favor of
the Philippine National Bank to secure a loan of P50,000, and covering, among other
things, the titles, rights, and interests which Po Pauco had in the lorchas China and
Cuylim. Subsequently, the credit of Po Pauco from PNB was increased to P90,000 and
later on to P131,995.95. it was only recorded in the office of the collector of customs of
Iloilo on March 5, 1929.
4. Meanwhile, Maria Corazon Yu de Sane secured a judgment against the Lim Ponzo
Navigation Co. for P7,179.65. In due course, a writ of attachment and an execution on
Dec. 6,1928, on which date the records disclosed that the vessels as free from
encumbrances.
5. Mariano Arroyo, the sheriff of Iloilo instituted an action with the CFI for the purpose of
protecting himself from any claim that might arise from the sale of said lorchas; and this
protection thus invoked covered not only the person of the sheriff, but also the lorchas in
his possession which were the object of contradictory claims filed by several persons.
6. CFI: mortgage of the lorchas China and Cuylim executed in favor of J. M. Po Pauco, and
the transfer of said mortgage by J. M. Po Pauco, the mortgagee, to the Philippine
National Bank are valid and legal.
7. Maria Corazon Yun de Sane filed an appeal. She contends that she has preference on the
two Iorchas between herself and PNB.
ISSUE: Whether Maria has a better right as against PNB over the two Iorchas?

HELD: NO. The registration of vessels is now governed by the Administrative Code. Section
1171 thereof provides:
"Record of documents affecting title.—In the record of transfers and incumbrances of vessels, to
be kept at each principal port of entry, shall be recorded at length all transfers, bills of sale,
mortgages, liens, or other documents which evidence ownership or directly or indirectly affect
the title of registered vessels, and therein shall be recorded all receipts, certificates, or
acknowledgments canceling or satisfying, in whole or in part, any such obligation. No other
record of any such document or paper shall be required than such as is affected hereunder."

It is clear that section 1171 of the Administrative Code has modified the provisions of the Chattel
Mortgage Law, Act No. 1508, particularly section 4 thereof. It is now not necessary for a chattel
mortgage of a vessel to be noted in the registry of the register of deeds. On the other hand, it is
essential that a record of documents affecting the title of a vessel be entered in the office of the
collector of customs at a port of entry. The law as now existing is designed to protect persons
who deal with a vessel on the strength of the record title. Mortgages on vessels, although not
recorded, are good as between the parties. But as against creditors of the mortgagor, an
unrecorded mortgage is invalid

Consolidating the facts, we find the mortgage of the Philippine National Bank dated November
28, 1919, but not recorded in the office of the collector of customs until March 5, 1929. The
execution. sued out by Maria Corazon Yu de Sane was dated December 6, 1928, and noted at the
port of entry two days prior thereto. Under these facts, the execution holder would have a prior
right over the unrecorded mortgage. However, in the decision of the trial court, we find an
explanation of the delay which appears to have been proved at the trial, and which we must
accept since there is nothing in the record to the contrary. His Honor states that the fact that the
mortgage was not registered in the office of the collector of customs of Iloilo until March, 5,
1929, was because of the doubts entertained by the collector relative to the applicability of Act
No. 3324 to a mortgage executed in 1918 in favor of a Chinese subject. This uncontradicted fact
must be taken as curing the bank's defective title. That the collector of customs did not perform
his duty was no fault of the bank. Constructive registration of the mortgage must, therefore, be
accepted.

We rule that as between the appellant, Maria Corazon Yu de Sane, and the appellee, the
Philippine National Bank, the latter has a superior claim in the amount of P20,000, the amount of
the mortgage of Po Pauco which was transferred to the Philippine National Bank.
THE HONGKONG & SHANGHAI BANKING CORPORATION vs. ALDECOA & CO., March
23, 1915

TRENT, J.

FACTS (Focused on Industrial Partnership)

Joaquin, Zoilo, and Cecilia Ibañez de Aldecoa were the legitimate children of Zoilo
Ibañez de Aldecoa and Isabel Palet. The father was a member and managing director
of a partnership known as Adecoa and Co. Isabel Palet, exercising the patria
potestad, entered into a new contract with various persons whereby the property and
good will, together with the liabilities of the firm of which her husband was a partner,
were taken over. The new firm was also an ordinary general mercantile partnership
and likewise denominated Aldecoa and Co. Although having the same name, the new
firm was entirely distinct from the old one and was, in fact, a new enterprise. The
widow entered into the new partnership as a capitalistic partner and caused her
three children to appear in the articles of partnership as industrial partners. At the
time of the execution of this new contract Joaquin was twelve years of age, Zoilo
eleven, and Cecilia nine.

Aldecoa and Co. obtained a credit worth P450,000 from HSBC secured by a mortgage
of shares and real properties of Aldecoa and Co. and of Joaquin, Zoilo, and Cecilia.
The Aldecoa and Co. went into liquidation and obtained another P50,000 from the
bank upon the condition that this would be covered by the previous mortgage.
Joaquin and Zoilo Ibañez de Aldecoa instituted an action against the bank for the
purpose of obtaining a judgment annulling the mortgages created by them upon their
interest in the properties upon the ground that the emancipation by their mother was
void and of no effect, and that, therefore, they were minors incapable of creating a
valid mortgage upon their real property.

The CFI dismissed the complaint as to Joaquin upon the ground that he had ratified
those mortgages after becoming of age, but entered a judgment annulling said
mortgages with respect to Zoilo. Both parties appealed from this decision and the
case was still pending when HSBC filed an action against Aldecoa and Co. and its
partners for the collection of a sum of money and foreclosure of the mortgaged
properties.

Judgment was entered in favor of the bank and against the defendants for the sum of
P344,924.23 and for the foreclosure of mortgages. This amount was based on the
liquidation of interest charged to Aldecoa and Co., and the actual amount of the
indebtedness. The court decreed that in the event of there being a deficiency, after
the foreclosure of the mortgages, the plaintiff must resort to and exhaust the
property of the principal defendant before taking out execution against the individual
defendants held to be liable in solidum with the principal defendant, but
subsidiarily. All of the defendants have appealed.

ISSUE
Whether or not Joaquin, Zoilo, and Cecilia Ibañez de Aldecoa, are subsidiarily liable
to the bank as industrial partners of Aldecoa and Co. for the debts of the latter

RULING
No. A parent exercising the parental authority in accordance with the provisions of
the Civil Code is forbidden to encumber the real property of a minor child without
approval of the court. Making the child an industrial partner of a mercantile
partnership en comandita creates an encumbrance of the latter character and is
therefore prohibited.

Conceding that such a contract may be ratified by the child after it has been
emancipated by the parent's concession, it still creates an encumbrance upon the
child's real property, and therefore requires the express consent of the parent.

Industrial partners of a partnership en comandita are liable subsidiarily for the debts
of the firm with all their property, both real and personal, articles of the contract of
partnership to the contrary notwithstanding.

A partner alienates what he contributes to the firm as capital by transferring its

ownership to the firm. But this, in the case of an industrial partner, is nothing. An
industrial partner does not alienate any portion of his property by becoming a
member of such a firm.

Prior to judgment on the principal obligation or judgment against the partnership, the
property is not specifically liable, and the creditor has n preferred lien thereon or
right thereto by reason of the bond or partnership contract, as the case may be. After
judgment, the property of the surety or of the industrial partner, both real and
personal, is subsidiarily subject to execution.

There can be only two kinds or classes of partners in a firm of this kind, capitalistic
and industrial. Both are personally liable to third persons for the debts of such a firm.
To say that the children are industrial partners, but liable only to the extent of their
personal property, would be to place them in a different class of partners. As the
mother did not secure judicial approval, the contract wherein she attempted to make
her children industrial partners, with all the consequences flowing therefrom, was,
therefore, defective and that act of itself in no way made the children liable for the
debts of the new firm.

The question remains, did any of the children validly ratify the contract after
acquiring capacity to do so? Cecilia was never emancipated and there is no evidence
indicating that she has ever ratified the contract by word or deed. She is, therefore,
completely exonerated from liability for the debts of Aldecoa and Co.

The other two children, Joaquin and Zoilo, were emancipated by their mother after
they had reached the age of eighteen and prior to seeking annullment of the contract
of partnership had participated by vote and otherwise in the management of the firm.
These various acts sufficiently show a ratification of the partnership contract and
would have the effect of making the two children industrial partners if they had been
of age at that time. Ratification is in the nature of the contract. It is the adoption of,
and assent to be bound by, the act of another. (Words and safaPhrases, vol. 7, p.
5930.) From the effect of emancipation it cannot be doubted that the two children
had capacity, with their mother's consent, to enter into a contract of partnership,
and, by so doing, make themselves industrial partners, thereby encumbering their
property. Conceding that the children under these circumstances could enter into
such a contract with their mother, her express consent to the ratification of the
contract by the two children does not appear of record. The result flowing from the
ratification being the encumbrance of their property, their mother's express consent
was necessary.

Other issues
A. Doña Isabel Palet alleged that:
1. That the court erred in failing to hold that her obligation as surety had been
extinguished in accordance with the provisions of article 1851 of the Civil Code;
Ans: Untenable. The extension of the term which, in accordance with the provisions
of article 1851 of the Civil Code produces the extinction of the liability of the surety
must be based on new agreement between the creditor and principal debtor, by
virtue of which the creditor deprives himself of his right to immediately bring an
action to enforce his claim. The mere failure to bring an action upon a credit, as soon
as it matures, does not constitute an extension of the term of the obligation, as in
this case.

There is nothing in the record showing that the bank has granted any extension in
favor of Aldecoa and Co. for the performance of its obligations. The liquidator of
Aldecoa and Co. (Urquhart) authorized the bank to grant certain extensions to some
of the provincial debtors of Aldecoa and Co. whose debts were to be paid to the bank
under the authority conferred upon the bank by Aldecoa and Co. There is a marked
difference between the extension of time within which Aldecoa and Co.'s debtors
might pay their respective debts, and the extension of time for the payment of
Aldecoa and Co.'s own obligations to the bank.

2. That the court erred in refusing to order that the property of Aldecoa and Co.
should be exhausted before the plaintiff firm should be entitled to have recourse to
the property of this defendant and appellant
Ans: Untenable. Doña Isabel Palet is a personal debtor jointly and severally with
Aldecoa and Co. for the whole indebtedness of the latter firm to the bank, and not a
mere surety of the performance of the obligations of Aldecoa and Co. without any
solidary liability. The properties mortgaged by Doña Isabel Palet were so
mortgaged not merely as security for the performance of her own solidary subsidiary
obligation as a partner bound for all the debts of Aldecoa and Co., but for the purpose
of securing the direct obligation of the firm itself to the bank.

If two or more persons are in solidum, the debtors mortgage any of their real
property situate in the jurisdiction of the court, the creditor, in case of the solidary
debtors in the same suit and secure a joint and several judgment against them, as
well as judgments of foreclosure upon the respective mortgages.

B. Aldecoa and Co. insist that:

1. The court erred in ruling that there was no competent evidence that the plaintiff
bank had induced Aldecoa and Co.'s provincial debtors to cease making
consignments to that firm
Ans: Untenable. The real reason which caused the defendant's provincial customers
to cease making shipments was due to the fact that the defendant, being out of
funds, could not give its customers any further credit. It is therefore clear that the
bank, having exercised the authority conferred upon it by the company in a legal
manner, is not responsible for any damages which might have resulted from the
failure of the defendant's provincial customers to continue doing business with that
firm.

C. Urquhart, the liquidator of Aldecoa and Co. and is now the intervener, is seeking to
have himself declared a preferred creditor over the bank as he is a mere creditor of
Aldecoa and Co. for the sum of P21,000, loaned that firm before it went into
liquidation
Ans: Untenable. This amount is not evidenced by a public document, or any
document for that matter, nor secured by pledge or mortgage, while the amount due
the bank appears in a public instrument and is also secured by pledges and
mortgages on the property of Aldecoa and Co., out of which the intervener seeks to
have his indebtedness satisfied. It is, therefore, clear that the intervener is not
entitled to the relief sought, in so far as the P21,000 is concerned.

Urquhart had been liquidator twenty-eight days when the credits ( 16 shares of the
stock of Banco-Español-Filipino; 450 shares of the stock of the Compañia Maritima;
330 shares of the stock of the Pasay Estate Co., Ltd; and certain claims against
debtors of Aldecoa and Co., mentioned in Exhibit G ) were assigned to the bank. He
could not be declared a preferred creditor over the bank for the P14,000 salary for
the reason that, according to his own showing, he had been paid for his services as
liquidator up to January, 1910. The only property of Aldecoa and Co. which the
liquidator had anything to do with after 1910 was the real estate mortgages on real
property. This cannot be regarded as personal property, and since Art. 1922 only
speaks of personal property, this article is not applicable to him.

D. Joaquin and Zoilo alleged that court erred in not sustaining the plea of lis pendens with
respect to the validity of mortgages claimed by the plaintiff
Ans: No. A plea of the pendency of a prior action is not available unless the prior action is of such a
character that, had a judgment been rendered therein on the merits, such a judgment would be
conclusive between the parties and could be pleaded in bar of the second action.

In this case, the former suit is to annul the mortgages while the other one is for the foreclosure. If the
final judgment in the former action is that the mortgages be annulled, such an adjudication will deny
the right of the bank to foreclose the mortgages. But a valid decree will not prevent the bank from
foreclosing them. In such an event, the judgment would not be a bar to the prosecution of the
present action. The rule is not predicated upon such a contingency. It is applicable, between the
same parties, only when the judgment to be rendered in the action first instituted will be such that,
regardless of which party is successful, it will amount to res adjudicata against the second action.

DOCTRINES
1. PARTNERSHIPS “EN COMANDITA;” INDUSTRIAL PARTNER; LIABILITY FORDEBITS
OF FIRM. Industrial partners of a partnership on comandita are liable subsidiarily for
the debts of the firm with all their property, both real and personal articles of the
contract of partnership to the contrary notwithstanding.

2. GUARDIANSHIP; PARENTAL AUTHORITY; ENCUMBRANCE OF REAL PROPERTY;

CHILD AS INDUSTRIAL PARTNER OF PARTNERSHIP "EN COMANDITA."- A parent
exercising the parental authority in accordance with the provisions of the Civil Code
is forbidden to encumber the real property of a minor child without approval of the
court. This prohibition includes not only specific liens, such as mortgages,
easements, etc., but indirect encumbrances by which the child's real property
becomes subject to execution on the happening of a contingent event. Making the
child an industrial partner of a mercantile partnership en comandita creates an
encumbrance of the latter character and is therefore prohibited.

3. RATIFICATION BY EMANCIPATED CHILD.-Conceding that such a contract may be

ratified by the child after it has been emancipated by the parent's concession, it
still creates an encumbrance upon the child's real property, and therefore requires
the express consent of the parent.

4. MORTGAGES; JOINDER OF PARTIES DEFENDANT. —A plaintiff may make parties

defendant in one action all debtors bound to him in solidum and request the
foreclosure of mortgages executed by the latter as security for their debts upon real
property situate within the jurisdiction of the court.

5. PRINCIPAL AND SURETY; FAILURE TO MAKE PAYMENTS WHEN DUE.—The fact that
the principal debtor failed to meet the partial payments when due and the fact that
the creditor did not immediately bring an action to enforce the obligation does not
constitute an extension or modification of the principal obligation so as to relieve the
surety.
THE HONGKONG & SHANGHAI BANKING CORP. vs. ALDECOA & CO.
G.R. No. L-8437 March 23, 1915

FACTS:
Aldecoa and Co. obtained a credit worth P450,000 from HSBC secured by a mortgage of shares
and real properties. On Dec. of 1906, the firm of Aldecoa and Co. went into liquidation and
obtained another P50,000 from the bank upon the condition that this would be covered by the
previous mortgage. In October 1908, Joaquin and Zoilo Ibañez de Aldecoa filed an action against
the bank for the purpose of annulling the mortgages executed by them on the grounds that
they were minors at the time incapable of creating a valid mortgage upon their real property.
The Court of First Instance dismissed the complaint as to Joaquin upon the ground that he had
ratified those mortgages after becoming of age, but entered a judgment annulling said
mortgages with respect to Zoilo. Both parties appealed from this decision and the case was still
pending in the Supreme Court when HSBC filed an action against Aldecoa and Co. and its
partners for the collection of a sum of money and foreclosure of the mortgaged properties.
Judgement was entered in favor of the bank.

ISSUE:
Whether or not the action filed by the bank should be dismissed on the ground of lis pendens.

RULING:
No. A plea of the pendency of a prior action is not available unless the prior action is of such a
character that, had a judgment been rendered therein on the merits, such a judgment would be
conclusive between the parties and could be pleaded in bar of the second action.

In the instant case, the former suit is to annul the mortgages while the other one is for the
foreclosure. If the final judgment in the former action is that the mortgages be annulled, such
an adjudication will deny the right of the bank to foreclose the mortgages. But a valid decree
will not prevent the bank from foreclosing them. In such an event, the judgment would not be a
bar to the prosecution of the present action. The rule is not predicated upon such a
contingency. It is applicable, between the same parties, only when the judgment to be rendered
in the action first instituted will be such that, regardless of which party is successful, it will
amount to res adjudicata against the second action.
U.S. v. Tambunting, 41 Phil 364 [1921]
Concept of things and property

Facts:

On January of the year 1918, the accused and his wife became occupants of the upper floor of
the house situated at No. 443, Calle Evangelista, in the city of Manila. In this house the Manila
Gas Corporation had previously installed apparatus for the delivery of gas on both the upper and
lower floors, consisting of the necessary piping and a gas meter, which last mentioned apparatus
was installed below. When the occupants at whose request this installation had been made
vacated the premises, the gas company disconnected the gas pipe and removed the meter, thus
cutting off the supply of gas from said premises.
Upon June 2, 1919, one of the inspectors of the gas company visited the house in question and
found that gas was being used, without the knowledge and consent of the gas company, for
cooking in the quarters occupied by the defendant and his wife: to effect which a short piece of
iron pipe had been inserted in the gap where the gas meter had formerly been placed, and piece
of rubber tubing had been used to connect the gas pipe of rubber tubing had been used to connect
the gas pipe in kitchen with the gas stove, or plate, used for cooking.

Issue:

Whether gas can be the subject of larceny (larceny involves the trespassory taking (caption) and
carrying away (asportation, removal) of the tangible PERSONAL PROPERTY of another with
the intent to permanently deprive the owner of its possession.)

Ruling:

YES. There is nothing in the nature of gas used for illuminating purposes which renders it
incapable of being feloniously taken and carried away. It is a valuable article of merchandise,
bought and sold like other personal property, susceptible of being severed from a mass or larger
quantity and of being transported from place to place. Likewise water which is confined in pipes
and electricity which is conveyed by wires are subjects of larceny."

HEMNANI VS EXPORT CONTROL COMMITTEE

FACTS:

On August 28, 1952, petitioner requested permission from the Export Control Committee, to ship
to his Hudson Sedan, Model 1949, Motor No. 48149039, valued at P4,500, to Osaka, Japan, on
board the S. S. President Wilson, "to be used in connection with his business thereat." The
respondent Committee approved the request on the same day, on condition that petitioner would
file a bond equal to the value of the car, to guarantee the return of the same in the Philippines
within six months from the date of its shipment.

On August 29, 1952, petitioner posted with the Filipinas Compañia de Seguros a surety bond
(Annex A) in the sum of P4,500 in favor of the Republic of the Philippines (Bureau of Customs),
guaranteeing that the Hudson Sedan car would be re-exported back to the Philippines from Japan
within six months from the execution of the bond. Accordingly, petitioner took the car in
question to Osaka, Japan, on August 29, 1952, but failed to bring it back to the Philippines as
promised. Instead petitioner filed two requests for extension of six months each to be followed to
re-export the car back to the Philippines until March 1, 1954, alleging that he was still on a
business tour and it would be impracticable to return the car on time. Notwithstanding the two
extensions given him by the respondent the car in question was not brought back in the
Philippines.

On February 24, 1954, Atty. Teotimo A. Roja, requested the respondent to order the cancellation
of the surety bond of P4,500 that he and the Filipinas Compañia de Seguros (Bond No. 27914)
had executed, alleging that it would be impracticable and expensive to return the car to Manila,
considering its dilapidated condition and utility in Japan, but the respondent denied said request,
though at its meeting held on February 24, 1954 it decided to reduce the liability under the bond
to P2,250.00 for the reason that this was the value that the car would have at the state it was then
if it were brought back in the Philippines, thus allowing a depreciation of 15 per cent each year.
ISSUE: WON the appellants car in question is personal effect and therefore not subject to
statutory or reglementary prohibition against exportation.

HELD: The word "personal" used with "effects" much restrict its meaning, and certainly (that
meaning, cannot be understanding without any qualifying words Includes only such tangible
property as attends the person.

Among the articles the exportation of which is prohibited according to said Executive Order are:

IV. Imported Machinery (light and heavy), mechanical, electrical, agricultural,

construction, engineering, andtransportation equipment of all types, including surplus
equipment, spare parts, accessories, wires and other allied articles, except those already
approved by the Bureau of Customs or NICA or order Government agencies as well as
licenses covered in section 2 herein.

It is undisputed that petitioner's car is covered with the term "transportation equipment of
all types" and not as "personal effects", as counsel would want to classify it. Petitioner's
car was admittedly brought by him to Osaka, Japan, "to be used in connection with his
business" (p. 16, Record on Appeal) , and that when he asked for extension of time to re-
export the motor vehicle back to the Philippines, his reason was that he was still on a
business tour, (p. 17, Record on Appeal).

If by personal effects of passengers in transit transportation equipment used in one's

business were included, then it would be a simple matter to defeat the intention of the
law, that is, to promote the economic and industrial development of the country. To seal
any possible loophole, the Executive Order made it clear that exportation of all articles
included in the list is prohibited irrespective of the use for which they were intended.

The cardinal rule in the interpretation of law is to ascertain and give effect to the legislative
intent and the intention of the Legislature in enacting a law is part of the law itself, and is to be
followed and applied, where ascertainable, in construing apparently conflicting provisions. These
principles of statutory construction are more true in the case at bar because the wording of the
law is too plain and clear.

212 GONZALO CHUA GUAN vs.SAMAHANG MAGSASAKA, INC., and SIMPLICIO

OCAMPO, ADRIANO G. SOTTO, and EMILIO VERGARA, as president, secretary and
treasurer respectively of the same
G.R. No. L-42091, November 2, 1935

BUTTE, J.:
Topic: Transfer of shares; collateral transfers FACTS:
1. Samahang Magsasaka, Inc., is a corporation duly organized under the laws of the Philippine
Islands with principal office in Cabanatuan, Nueva Ecija, and that the individual defendants are
the president, secretary and treasurer respectively of the same
2. Gonzalo H. Co Toco was the owner of 5,894 shares of the capital stock of the said corporation
represented by nine certificates having a par value of P5 per share
3. Toco was a resident of Manila who mortgaged 5,894 shares to Chua Chiu to guarantee the
payment of a debt of P20,000
4. The certificates of stock were delivered with the mortgage to the mortgagee, Chua Chiu
5. It was was duly registered in the ROD Manila, and in the office of the corporation
6. Chiu assigned all his right and interest in the said mortgage to the Gonzalo Chua Guan
and
the assignment was registered in the ROD Manila, and in the office of the corporation
7. The debtor, Gonzalo H. Co Toco, defaulted in the payment of said debt at maturity, so
Guan
foreclosed said mortgage and delivered the certificates of stock and copies of the mortgage
and assignment to the sheriff of Manila in order to sell the said shares at public auction.
8. The sheriff auctioned said 5,894 shares of stock, Guan was the highest bidder for the sum
of
P14,390, the sheriff executed in his favor a certificate of sale of said shares.
 9. Guan tendered the certificates of stock standing in the name of Gonzalo H. Co Toco to
the
proper officers of the corporation for cancellation and demanded that they issue new certificates
but the officers refused and still refuse to issue said new shares in the name of the Guan
10. CFI Nueva Ecija : The attaching creditors are entitled to priority over the defectively
registered mortgage of Guan
11. Appealed to SC for a writ of mandamus: requiring Samahan to transfer the shares of
stock
12. Samahan refuse to cancel the said certificates because prior to the date when the plaintiff
made his demand, nine attachments had been issued and served and noted on the books of
the corporation against the shares of Toco
13. It is not alleged that the said attaching creditors had actual notice of the said mortgage
and the question therefore narrows itself down to this:

ISSUE: Which takes priority, the mortgage or the writs of attachment?

CFI Affirmed. The attaching creditors are entitled to priority over the defectively registered
mortgage of Guan. The registration in the register of deeds must be done both at the place where
the owner is domiciled and at the place where the principal office of the corporation is located.
The purpose of this is to give sufficient constructive notice of any claim or encumbrance over the
recorded shares to third persons

HELD:
The registration of the chattel mortgage in the office of the corporation was not necessary and
had no legal effect. (Monserrat vs. Ceron, 58 Phil., 469.)
Section 4 of the Chattel Mortgage Law, Act No. 1508, provides two ways which shall be
effective against third persons: (1) the possession of the property mortgage must be delivered to
and retained by the mortgagee; and, (2) without such delivery the mortgage must be recorded in
the proper office or offices of the register or registers of deeds.
Section 4 provides that in such a case the mortgage resides at the time of making the same or, if
he is a non-resident, in the province in which the property is situated; and it also provides that if
the property is situated in a different province from that in which the mortgagor resides the
mortgage shall be recorded both in the province of the mortgagor's residence and in the province
where the property is situated.
It is a common but not accurate generalization that the situs of shares of stock is at the domicile
of the owner. The term situs is not one of fixed of invariable meaning or usage. Nor should we
lose sight of the difference between the situs of the shares and the situs of the certificates of
shares. The situs of shares of stock for some purposes may be at the domicile of the owner and
for others at the domicile of the corporation; and even elsewhere. It is a general rule that for
purposes of execution, attachment and garnishment, it is not the domicile of the owner of a
certificate but the domicile of the

corporation which is decisive.

Section 4 of Act No. 1508 seems to hold that the property in the shares may be deemed to be
situated in the province in which the corporation has its principal office or place of business. If
this

province is also the province of the owner's domicile, a single registration sufficient. If not, the
chattel
mortgage should be registered both at the owner's domicile and in the province where the
corporation has its principal office or place of business. In this sense the property mortgaged is
not the certificate but the participation and share of the owner in the assets of the corporation.
In view of the premises, the attaching creditors are entitled to priority over the defectively
registered mortgage of Guan.

CHUA GUAN VS. SAMAHANG MAGSASAKA

FACTS: Gonzalo H. Co Toco was the owner of 5,894 shares of the capital stock of the said corporation
represented by nine certificates. He then mortgaged said shares to Chua Chiu to guarantee the payment
of a debt. The said certificates of stock were delivered with the mortgage to the mortgagee, Chua Chiu.
The said mortgage was duly registered in the office of the register of deeds of Manila and in the office of
the said corporation. Subsequently, Chua Chiu assigned all his right and interest in said mortgage to the
plaintiff and the assignment was registered in the office of the register of deeds in the City of Manila on
December 28, 1931, and in the office of the said corporation on January 4, 1932. The debtor, Gonzalo H.
Co Toco, having defaulted in the payment of said debt at maturity, the plaintiff foreclosed said mortgage
and delivered the certificates of stock and copies of the mortgage and assignment to the sheriff in order
to sell the said shares at public auction. The sheriff auctioned said 5,894 shares of stock and the plaintiff
having been the highest bidder. The sheriff executed in his favor a certificate of sale of said shares. The
plaintiff tendered the certificates of stock standing in the name of Gonzalo H. Co Toco to the proper
officers of the corporation for cancellation and demanded that they issue new certificates in the name of
the plaintiff. The said officers (the individual defendants) refused and still refuse to issue said new shares
in the name of the plaintiff. Their reason is that the chattel mortgage was not properly registered since it
was not registered in place of the principal business of the corporation.

ISSUE: Did the registration of said chattel mortgage in the registry of chattel mortgages in the office
of the register of deeds of Manila, under date of July 23, 1931, give constructive notice to the said
attaching creditors?

HELD: The attaching creditors are entitled to priority over the defectively registered mortgage of the
appellant

RATIO: The property in the shares maybe deemed to be situated in the province in which the
corporation has its principal office or place of business. If this province is also the province of the
owner's domicile, a single registration is sufficient. If not, the chattel mortgage should be registered both
at the owner's domicile and in the province where the corporation has its principal office or place of
business. In this sense the property mortgaged is not the certificate but the participation and share of
the owner in the assets of the corporation.

It is a common but not accurate generalization that the situs of shares of stock is at the domicile of the
owner. The term situs is not one of fixed or invariable meaning or usage. Nor should one lose sight of the
difference between the situs of the shares and the situs of the certificate of shares. The situs of shares of
stock for some purposes may be at the domicile of the owner and for others at the domicile of the
corporation; and even elsewhere. It is a general rule that for purposes of execution, attachment and
garnishment, it is not the domicile of the owner of a certificate but the domicile of the corporation which
is decisive.

By analogy with the foregoing and considering the ownership of shares in a corporation as property
distinct from the certificates which are merely the evidence of such ownership, it seems to be a
reasonable construction of section 4 of Act 1508 to hold that the property in the shares may be deemed
to be situated in the province in which the corporation has its principal office or place of business. If this
province is also the province of the owner’s domicile, a single registration is sufficient. If not, the chattel
mortgage should be registered both at the owner’s domicile and in the province where the corporation
has its principal office or place of business. In this sense the property mortgaged is not the certificate but
the participation and share of the owner in the assets of the corporation.

Property rule in conflict in this case

The situs of the shares is the principal office of the corporation.