Chuaquico Jett I.
context of the Civil Code, may be the subject of
Laurel vs. Abrogar: PROPERTY
CLASSIFICATION OF TELEPHONE
CONVERSATION
FACTS: petitioner is one of the accused in
Criminal Case No. 99-2425, filed with the
Regional Trial Court of Makati City, Branch
150. The Amended Information charged the
accused with theft under Article 308 of the
Revised Penal Code
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, antenae, 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
Petitioner 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. The trial
court denied the Motion to Quash the
Amended Information, as well petitioners
subsequent Motion for Reconsideration.
ISSUE: W/N accused can be charged of theft
RULING: NO, he cannot be charged with theft
In the above-quoted Decision, this Court held
that the Amended Information does not
contain material allegations charging petitioner
with theft of personal property since
international long distance calls and the
business of providing telecommunication or
telephone services are not personal properties
under Article 308 of the Revised Penal Code.
PLDT further insists that the Revised Penal
Code should be interpreted in the context of the
Civil Codes definition of real and personal
property. The enumeration of real properties in
Article 415 of the Civil Code is exclusive such
that all those not included therein are personal
properties. Since Article 308 of the Revised
Penal Code used the words personal property
without qualification, it follows that all
personal properties as understood in the
theft under Article 308 of the Revised Penal
Code. PLDT alleges that the international calls
and business of providing telecommunication
or telephone service are personal properties
capable of appropriation and can be objects of
theft.
According to respondent, the international
phone calls which are electric currents or sets of
electric impulses transmitted through a
medium, and carry a pattern representing the
human voice to a receiver, are personal
properties which may be subject of theft.
Article 416(3) of the Civil Code deems forces of
nature (which includes electricity) which are
brought under the control by science, are
personal property.
The Office of the Solicitor General (OSG) agrees
with respondent PLDT that international
phone calls and the business or service of
providing international phone calls are
subsumed in the enumeration and definition of
personal property under the Civil Code hence,
may be proper subjects of theft. It noted that the
cases of United States v. Genato, United States
v. Carlos and United States v. Tambunting,
which recognized intangible properties like gas
and electricity as personal properties, are
deemed incorporated in our penal laws.
Moreover, the theft provision in the Revised
Penal Code was deliberately couched in broad
terms precisely to be all-encompassing and
embracing even such scenario that could not
have been easily anticipated.
In his Comment to PLDTs motion for
reconsideration, petitioner Laurel claims that a
telephone call is a conversation on the phone or
a communication carried out using the
telephone. It is not synonymous to electric
current or impulses. Hence, it may not be
considered as personal property susceptible of
appropriation. Petitioner claims that the
analogy between generated electricity and
telephone calls is misplaced. PLDT does not
produce or generate telephone calls. It only
provides the facilities or services for the
transmission and switching of the calls. He also
insists that business is not personal property. It
is not the business that is protected but the right
to carry on a business. This right is what is
considered as property. Since the services of
PLDT cannot be considered as property, the
same may not be subject of theft.
Prior to the passage of the Revised Penal Code
on December 8, 1930, the definition of the term
personal property in the penal code provision
on theft had been established in Philippine
jurisprudence. This Court, in United States v.
Genato, United States v. Carlos, and United
States v. Tambunting, consistently ruled that
any personal property, tangible or intangible,
corporeal or incorporeal, capable of
appropriation can be the object of theft.
Moreover, since the passage of the Revised
Penal Code on December 8, 1930, the term
personal property has had a generally accepted
definition in civil law. In Article 335 of the Civil
Code of Spain, personal property is defined as
anything susceptible of appropriation and not
included in the foregoing chapter (not real
property). Thus, the term personal property in
the Revised Penal Code should be interpreted
in the context of the Civil Code provisions in
accordance with the rule on statutory
construction that where words have been long
used in a technical sense and have been
judicially construed to have a certain meaning,
and have been adopted by the legislature as
having a certain meaning prior to a particular
statute, in which they are used, the words used
in such statute should be construed according
to the sense in which they have been previously
used.
Cognizant of the definition given by
jurisprudence and the Civil Code of Spain to
the term personal property at the time the old
Penal Code was being revised, still the
legislature did not limit or qualify the
definition of personal property in the Revised
Penal Code. Neither did it provide a restrictive
definition or an exclusive enumeration of
personal property in the Revised Penal Code,
thereby showing its intent to retain for the term
an extensive and unqualified interpretation.
Consequently, any property which is not
included in the enumeration of real properties
under the Civil Code and capable of
appropriation can be the subject of theft under
the Revised Penal Code.
As illustrated in the above cases, appropriation
of forces of nature which are brought under
control by science such as electrical energy can
be achieved by tampering with any apparatus
used for generating or measuring such forces of
nature, wrongfully redirecting such forces of
nature from such apparatus, or using any
device to fraudulently obtain such forces of
nature. In the instant case, petitioner 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.
As early as 1910, the Court declared in Genato
that ownership over electricity (which an
international long distance call consists of), as
well as telephone service, is protected by the
provisions on theft of the Penal Code.
As illustrated in the above cases, appropriation
of forces of nature which are brought under
control by science such as electrical energy can
be achieved by tampering with any apparatus
used for generating or measuring such forces of
nature, wrongfully redirecting such forces of
nature from such apparatus, or using any
device to fraudulently obtain such forces of
nature. In the instant case, petitioner 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.
As early as 1910, the Court declared in Genato
that ownership over electricity (which an
international long distance call consists of), as
well as telephone service, is protected by the
provisions on theft of the Penal Code.
Interest in business was not specifically
enumerated as personal property in the Civil
Code in force at the time the above decision was
rendered. Yet, interest in business was declared
to be personal property since it is capable of
appropriation and not included in the
enumeration of real properties. Article 414 of
the Civil Code provides that all things which
are or may be the object of appropriation are
considered either real property or personal
property. Business is likewise not enumerated
as personal property under the Civil Code. Just
like interest in business, however, it may be
appropriated. Following the ruling in
Strochecker v. Ramirez, business should also be
classified as personal property. Since it is not
included in the exclusive enumeration of real
properties under Article 415, it is therefore
personal property.
Indeed, while it may be conceded that
international long distance calls, the matter
alleged to be stolen in the instant case, take the
form of electrical energy, it cannot be said that
such international long distance calls were
personal properties belonging to PLDT since
the latter could not have acquired ownership
over such calls. PLDT merely encodes,
augments, enhances, decodes and transmits
said calls using its complex communications
infrastructure and facilities. PLDT not being the
owner of said telephone calls, then it could not
validly claim that such telephone calls were
taken without its consent. 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.
Therefore, 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. However, the Amended
Information describes the thing taken as,
international long distance calls, and only later
mentions stealing the business from PLDT as
the manner by which the gain was derived by
the accused. In order to correct this inaccuracy
of description, this case must be remanded to
the trial court and the prosecution directed to
amend the Amended Information, to clearly
state that the property subject of the theft are
the services and business of respondent PLDT.
Leung Yee vs. Strong Machinery Co.:
PURCHASER IN GOOD FAITH
FACTS: The "Compaia Agricola Filipina"
bought a considerable quantity of rice-cleaning
machinery company from the defendant
machinery company, and executed a chattel
mortgage thereon to secure payment of the
purchase price. It included in the mortgage
deed the building of strong materials in which
the machinery was installed, without any
reference to the land on which it stood. The
indebtedness secured by this instrument not
having been paid when it fell due, the
mortgaged property was sold by the sheriff, in
pursuance of the terms of the mortgage
instrument, and was bought in by the
machinery company.
A few weeks thereafter, on or about the 14th of
January, 1914, the "Compaia Agricola
Filipina" executed a deed of sale of the land
upon which the building stood to the
machinery company, but this deed of sale,
although executed in a public document, was
not registered. This deed makes no reference to
the building erected on the land and would
appear to have been executed for the purpose
of curing any defects which might be found to
exist in the machinery company's title to the
building under the sheriff's certificate of sale.
The machinery company went into possession
of the building at or about the time when this
sale took place, that is to say, the month of
December, 1913, and it has continued in
possession ever since.
At or about the time when the chattel mortgage
was executed in favor of the machinery
company, the mortgagor, the "Compaia
Agricola Filipina" executed another mortgage
to the plaintiff upon the building, separate and
apart from the land on which it stood, to secure
payment of the balance of its indebtedness to
the plaintiff under a contract for the
construction of the building. Upon the failure
of the mortgagor to pay the amount of the
indebtedness secured by the mortgage, the
plaintiff secured judgment for that amount,
levied execution upon the building, bought it in
at the sheriff's sale on or about the 18th of
December, 1914, and had the sheriff's certificate
of the sale duly registered in the land registry
of the Province of Cavite.
At the time when the execution was levied
upon the building, the defendant machinery
company, which was in possession, filed with
the sheriff a sworn statement setting up its
claim of title and demanding the release of the
property from the levy. Thereafter, upon
demand of the sheriff, the plaintiff executed an
indemnity bond in favor of the sheriff in the
sum of P12,000, in reliance upon which the
sheriff sold the property at public auction to the
plaintiff, who was the highest bidder at the
sheriff's sale.
The trial judge, relying upon the terms of article
1473 of the Civil Code, gave judgment in favor
of the machinery company, on the ground that
the company had its title to the building
registered prior to the date of registry of the
plaintiff's certificate.
Article 1473 of the Civil Code is as follows:
If the same thing should have been sold to
different vendees, the ownership shall be
transfer to the person who may have the first
taken possession thereof in good faith, if it
should be personal property.
ISSUE: W/N Respondent is the owner
RULING: YES, respondent is the owner
because petitioner is in bad faith
Should it be real property, it shall belong to the
person acquiring it who first recorded it in the
registry.
Should there be no entry, the property shall
belong to the person who first took possession
of it in good faith, and, in the absence thereof,
to the person who presents the oldest title,
provided there is good faith.
The building of strong materials in which the
rice-cleaning machinery was installed by the
"Compaia Agricola Filipina" was real
property, and the mere fact that the parties
seem to have dealt with it separate and apart
from the land on which it stood in no wise
changed its character as real property. It
follows that neither the original registry in the
chattel mortgage of the building and the
machinery installed therein, not the annotation
in that registry of the sale of the mortgaged
property, had any effect whatever so far as the
building was concerned.
We are of opinion, however, that the judgment
must be sustained on the ground that the
agreed statement of facts in the court below
discloses that neither the purchase of the
building by the plaintiff nor his inscription of
the sheriff's certificate of sale in his favor was
made in good faith, and that the machinery
company must be held to be the owner of the
property under the third paragraph of the
above cited article of the code, it appearing that
the company first took possession of the
property; and further, that the building and the
land were sold to the machinery company long
prior to the date of the sheriff's sale to the
plaintiff.
The force and effect given by law to an
inscription in a public record presupposes the
good faith of him who enters such inscription;
and rights created by statute, which are
predicated upon an inscription in a public
registry, do not and cannot accrue under an
inscription "in bad faith," to the benefit of the
person who thus makes the inscription.
The agreed statement of facts clearly discloses
that the plaintiff, when he bought the building
at the sheriff's sale and inscribed his title in the
land registry, was duly notified that the
machinery company had bought the building
from plaintiff's judgment debtor; that it had
gone into possession long prior to the sheriff's
sale; and that it was in possession at the time
when the sheriff executed his levy. The
execution of an indemnity bond by the plaintiff
in favor of the sheriff, after the machinery
company had filed its sworn claim of
ownership, leaves no room for doubt in this
regard. Having bought in the building at the
sheriff's sale with full knowledge that at the
time of the levy and sale the building had
already been sold to the machinery company
by the judgment debtor, the plaintiff cannot be
said to have been a purchaser in good faith; and
of course, the subsequent inscription of the
sheriff's certificate of title must be held to have
been tainted with the same defect.
There was no collusion on his part with the
common debtor, and no thought of the
perpetration of a fraud upon the rights of
another, in the ordinary sense of the word. He
may have hoped, and doubtless he did hope,
that the title of the machinery company would
not stand the test of an action in a court of law;
and if later developments had confirmed his
unfounded hopes, no one could question the
legality of the propriety of the course he
adopted.
But it appearing that he had full knowledge of
the machinery company's claim of ownership
when he executed the indemnity bond and
bought in the property at the sheriff's sale, and
it appearing further that the machinery
company's claim of ownership was well
founded, he cannot be said to have been an
innocent purchaser for value. He took the risk
and must stand by the consequences; and it is
in this sense that we find that he was not a
purchaser in good faith.
One who purchases real estate with knowledge
of a defect or lack of title in his vendor cannot
claim that he has acquired title thereto in good
faith as against the true owner of the land or of
an interest therein; and the same rule must be
applied to one who has knowledge of facts
which should have put him upon such inquiry
and investigation as might be necessary to
acquaint him with the defects in the title of his
vendor.
Davao Sawmill vs. Castillo:
TRANSMUTATION OF MACHINERY
FROM MOVABLE TO IMMOVABLE
FACTS: The Davao Saw Mill Co., Inc., is the
holder of a lumber concession from the
Government of the Philippine Islands. It has
operated a sawmill in the sitio of Maa, barrio of
Tigatu, municipality of Davao, Province of
Davao. However, the land upon which the
business was conducted belonged to another
person. On the land the sawmill company
erected a building which housed the machinery
used by it. Some of the implements thus used
were clearly personal property, the conflict
concerning machines which were placed and
mounted on foundations of cement.
That on the expiration of the period agreed
upon, all the improvements and buildings
introduced and erected by the party of the
second part shall pass to the exclusive
ownership of the party of the first part without
any obligation on its part to pay any amount for
said improvements and buildings; also, in the
event the party of the second part should leave
or abandon the land leased before the time
herein stipulated, the improvements and
buildings shall likewise pass to the ownership
of the party of the first part as though the time
agreed upon had expired: Provided, however,
That the machineries and accessories are not
included in the improvements which will pass
to the party of the first part on the expiration or
abandonment of the land leased.
In another action, wherein the Davao Light &
Power Co., Inc., was the plaintiff and the
Davao, Saw, Mill Co., Inc., was the defendant,
a judgment was rendered in favor of the
plaintiff in that action against the defendant in
that action; a writ of execution issued thereon,
and the properties now in question were levied
upon as personalty by the sheriff. No third
party claim was filed for such properties at the
time of the sales thereof as is borne out by the
record made by the plaintiff herein. Indeed the
bidder, which was the plaintiff in that action,
and the defendant herein having consummated
the sale, proceeded to take possession of the
machinery and other properties described in
the corresponding certificates of sale executed
in its favor by the sheriff of Davao.
ISSUE: W/N the machinery erected in the
leased building constituted as immovable
property
RULING: NO, the machinery did not become
immovable according to the stipulation in the
lease agreement and treatment of petitioner
As connecting up with the facts, it should
further be explained that the Davao Saw Mill
Co., Inc., has on a number of occasions treated
the machinery as personal property by
executing chattel mortgages in favor of third
persons. One of such persons is the appellee by
assignment from the original mortgages.
Article 334, paragraphs 1 and 5, of the Civil
Code, is in point. According to the Code, real
property consists of
1. Land, buildings, roads and constructions of
all kinds adhering to the soil;
5. Machinery, liquid containers, instruments or
implements intended by the owner of any
building or land for use in connection with any
industry or trade being carried on therein and
which are expressly adapted to meet the
requirements of such trade of industry.
In the first place, it must again be pointed out
that the appellant should have registered its
protest before or at the time of the sale of this
property. It must further be pointed out that
while not conclusive, the characterization of the
property as chattels by the appellant is
indicative of intention and impresses upon the
property the character determined by the
parties
It is machinery which is involved; moreover,
machinery not intended by the owner of any
building or land for use in connection
therewith, but intended by a lessee for use in a
building erected on the land by the latter to be
returned to the lessee on the expiration or
abandonment of the lease.
A similar question arose in Puerto Rico, and on
appeal being taken to the United States
Supreme Court, it was held that machinery
which is movable in its nature only becomes
immobilized when placed in a plant by the
owner of the property or plant, but not when so
placed by a tenant, a usufructuary, or any
person having only a temporary right, unless
such person acted as the agent of the owner.
So far as the subject-matter with which we are
dealing machinery placed in the plant it is
plain, both under the provisions of the Porto
Rican Law and of the Code Napoleon, that
machinery which is movable in its nature only
becomes immobilized when placed in a plant
by the owner of the property or plant. Such
result would not be accomplished, therefore, by
the placing of machinery in a plant by a tenant
or a usufructuary or any person having only a
temporary right.
The distinction rests, as pointed out by
Demolombe, upon the fact that one only having
a temporary right to the possession or
enjoyment of property is not presumed by the
law to have applied movable property
belonging to him so as to deprive him of it by
causing it by an act of immobilization to
become the property of another. It follows that
abstractly speaking the machinery put by the
Altagracia Company in the plant belonging to
Sanchez did not lose its character of movable
property and become immovable by
destination. But in the concrete immobilization
took place because of the express provisions of
the lease under which the Altagracia held, since
the lease in substance required the putting in of
improved machinery, deprived the tenant of
any right to charge against the lessor the cost
such machinery, and it was expressly
stipulated that the machinery so put in should
become a part of the plant belonging to the
owner without compensation to the lessee.
Under such conditions the tenant in putting in
the machinery was acting but as the agent of the
owner in compliance with the obligations
resting upon him, and the immobilization of
the machinery which resulted arose in legal
effect from the act of the owner in giving by
contract a permanent destination to the
machinery.
Oposa vs. Factoran : CONSTITUTIONAL
RIGHT TO BALANCED AND HEALTHFUL
ECOLOGY
FACTS: The present case before us has its
inception at Makati RTC branch 66, the
principal plaintiffs therein, now the principal
petitioners, are all minors duly represented and
joined by their respective parents. Additional
plaintiff is the Philippine Ecological Network
Inc. (PENI) a non-stock, non-profit
organization organized for the purpose
engaging in concerted action geared for the
protection of our environment and natural
resources.
The original defendant was the Honorable
Fulgencio S. Factoran, Jr., then Secretary of the
Department of Environment and Natural
Resources (DENR). His substitution in this
petition by the new Secretary, the Honorable
Angel C. Alcala, was subsequently ordered
upon proper motion by the petitioners.
The complaint was instituted as a taxpayers
class suit and alleges that they are all citizens
of the Republic of the Philippines, taxpayers,
and entitled to the full benefit, use and
enjoyment of the natural resource treasure that
is the country's virgin tropical forests." The
minors further asseverate that they "represent
their generation as well as generations yet
unborn."
They pray for: (1) Cancellation of all existing
timber licensing agreements in the country. (2)
Cease and desist from receiving, accepting,
processing, renewing or approving new timber
license agreements.
They allege that due to the licensing
agreements issued and approved by DENR it
will result into massive deforestation 200k
hectares per annum , increase in pollution,
massive calamities, extinction of unique and
rare flora and fauna, increase in global
warming and drought, water shortages and
salinization. It will result into parched earth
incapable of sustaining life.
The basis of their cause of action is Section 16,
Article II of the 1987 Constitution explicitly
provides: Sec. 16. The State shall protect and
advance the right of the people to a balanced
and healthful ecology in accord with the
rhythm and harmony of nature.
Defendant move the case to be dismissed on the
grounds that: (1) the plaintiffs have no cause of
action against him and (2) the issue raised by
the plaintiffs is a political question which
properly pertains to the legislative or executive
branches of Government.
On 18 July 1991, respondent Judge issued an
order granting the aforementioned motion to
dismiss. 7 In the said order, not only was the
defendant's claim that the complaint states no
cause of action against him and that it raises a
political question sustained, the respondent
Judge further ruled that the granting of the
relief prayed for would result in the
impairment of contracts which is prohibited by
the fundamental law of the land.
ISSUE: W/N TLA can be cancelled
RULING: YES, it can be cancelled
The complaint focuses on one specific
fundamental legal right the right to a balanced
and healthful ecology which, for the first time
in our nation's constitutional history, is
solemnly incorporated in the fundamental law.
Section 16, Article II of the 1987 Constitution.
While the right to a balanced and healthful
ecology is to be found under the Declaration of
Principles and State Policies and not under the
Bill of Rights, it does not follow that it is less
important than any of the civil and political
rights enumerated in the latter. If they are now
explicitly mentioned in the fundamental
charter, it is because of the well-founded fear of
its framers that unless the rights to a balanced
and healthful ecology and to health are
mandated as state policies by the Constitution
itself, thereby highlighting their continuing
importance and imposing upon the state a
solemn obligation to preserve the first and
protect and advance the second, the day would
not be too far when all else would be lost not
only for the present generation, but also for
those to come generations which stand to
inherit nothing but parched earth incapable of
sustaining life.
President Corazon C. Aquino promulgated on
10 June 1987 E.O. No. 192, Section 4 of which
expressly mandates that the Department of
Environment and Natural Resources "shall be
the primary government agency responsible
for the conservation, management,
development and proper use of the country's
environment and natural resources, specifically
forest and grazing lands, mineral, resources,
including those in reservation and watershed
areas, and lands of the public domain, as well
as the licensing and regulation of all natural
resources as may be provided for by law in
order to ensure equitable sharing of the benefits
derived therefrom for the welfare of the present
and future generations of Filipinos."
This policy declaration is substantially re-
stated it Title XIV, Book IV of the
Administrative Code of 1987: Sec. 1.
Declaration of Policy. (1) The State shall
ensure, for the benefit of the Filipino people,
the full exploration and development as well as
the judicious disposition, utilization,
management, renewal and conservation of the
country's forest, mineral, land, waters,
fisheries, wildlife, off-shore areas and other
natural resources, consistent with the necessity Even if it is to be assumed that the same are
of maintaining a sound ecological balance and contracts, the instant case does not involve a
protecting and enhancing the quality of the law or even an executive issuance declaring the
environment and the objective of making the cancellation or modification of existing timber
exploration, development and utilization of licenses. Hence, the non-impairment clause
such natural resources equitably accessible to cannot as yet be invoked. Nevertheless,
the different segments of the present as well as granting further that a law has actually been
future generations. passed mandating cancellations or
modifications, the same cannot still be
DENR is mandated to be primarily responsible
stigmatized as a violation of the non-
for the implementation of the foregoing policy.
impairment clause. This is because by its very
It shall, subject to law and higher authority, be
nature and purpose, such as law could have
in charge of carrying out the State's
only been passed in the exercise of the police
constitutional mandate to control and
power of the state for the purpose of advancing
supervise the exploration, development,
the right of the people to a balanced and
utilization, and conservation of the country's
healthful ecology, promoting their health and
natural resources (Sec. 2 of the Admin Code).
enhancing the general welfare.
Thus, the right of the petitioners (and all those
However, they need to implead the grantees of
they represent) to a balanced and healthful
the TLA because they are indispensable parties.
ecology is as clear as the DENR's duty under its
mandate and by virtue of its powers and Tan vs. Director of Forestry:
functions under E.O. No. 192 and the
FACTS: Sometime in April 1961, the Bureau of
Administrative Code of 1987 to protect and
Forestry issued Notice No. 2087, advertising for
advance the said right.
public bidding a certain tract of public forest
A denial or violation of that right by the other land situated in Olongapo, Zambales, provided
who has the correlative duty or obligation to tenders were received on or before May 22,
respect or protect the same gives rise to a cause 1961
of action. Petitioners maintain that the granting
On May 5, 1961, petitioner-appellant
of the TLAs, which they claim was done with
Wenceslao Vinzons Tan submitted his
grave abuse of discretion, violated their right to
application in due form after paying the
a balanced and healthful ecology; hence, the
necessary fees and posting tile required bond
full protection thereof requires that no further
therefor. Nine other applicants submitted their
TLAs should be renewed or granted.
offers before the deadline (p. 29, rec.).
In Tan vs. Director of Forestry, this Court held:
Thereafter, questions arose as to the wisdom of
A timber license is an instrument by which the
having the area declared as a forest reserve or
State regulates the utilization and disposition
allow the same to be awarded to the most
of forest resources to the end that public
qualified bidder. On June 7, 1961, then
welfare is promoted. A timber license is not a
President Carlos P. Garcia issued a directive to
contract within the purview of the due process
the Director of the Bureau of Forestry, which
clause; it is only a license or privilege, which
read as follows:
can be validly withdrawn whenever dictated
by public interest or public welfare as in this It is desired that the area formerly covered by
case. the Naval Reservation be made a forest reserve
for watershed purposes. Prepare and submit
Felipe Ysmael, Jr. & Co., Inc. vs. Deputy
immediately a draft of a proclamation
Executive Secretary: [TLA] may be validly
establishing the said area as a watershed forest
amended, modified, replaced or rescinded by
reserve for Olongapo, Zambales. It is also
the Chief Executive when national interests so
desired that the bids received by the Bureau of
require. Thus, they are not deemed contracts
Forestry for the issuance of the timber license in
within the purview of the due process of law
the area during the public bidding conducted
clause.
last May 22, 1961 be rejected in order that the On March 9, 1964, acting on the said
area may be reserved as above stated representation made by Ravago Commercial
Company, the Secretary of Agriculture and
On August 3, 1961, Secretary Cesar M. Fortich
Natural Resources promulgated an order
of Agriculture and Natural Resources
declaring Ordinary Timber License No. 20-'64
sustained the findings and re comendations of
issued in the name of Wenceslao Vinzons Tan,
the Director of Forestry who concluded that "it
as having been issued by the Director of
would be beneficial to the public interest if the
Forestry without authority, and is therefore
area is made available for exploitation under
void ab initio.
certain conditions
Trial court denies the appeal of the petitioner
The Office of the President in its 4th
and sustained the decision of the Secretary of
Indorsement dated February 2, 1962, signed by
Agriculture in denying Tans TLAs approval
Atty. Juan Cancio, Acting Legal Officer,
"respectfully returned to the Honorable ISSUE: W/N the TLA of Tan is in accordance
Secretary of the Department of Agriculture and with law hence should be approved
Natural Resources for appropriate action," the
RULING: NO, TLA OF TAN IS VOID AB
papers subject of Forestry Notice No. 2087
INITIO HENCE HE HAS NO RIGHT TO
which was referred to the Bureau of Forestry
OPERATE IN THE DISPUTED LAND
for decision
It is of public knowledge that watersheds
Finally, of the ten persons who submitted
serves as a defense against soil erosion and
proposed the area was awarded to herein
guarantees the steady supply of water. As a
petitioner-appellant Wenceslao Vinzons Tan,
matter of general policy, the Philippine
on April 15, 1963 by the Bureau of Forestry (p.
Constitution expressly mandated the
17, CFI rec.). Against this award, bidders
conservation and proper utilization of natural
Ravago Commercial Company and Jorge Lao
resources, which includes the country's
Happick filed motions for reconsideration
watershed. Watersheds in the Philippines had
which were denied by the Director of Forestry
been subjected to rampant abusive treatment
on December 6, 1963.
due to various unscientific and destructive land
Thereafter, Jose Y. Feliciano was appointed as use practices. Once lush watersheds were
Acting secretary of Agriculture and Natural wantonly deforested due to uncontrolled
Resources, replacing secretary Benjamin M. timber cutting by licensed concessionaries and
Gozon. Upon assumption of office he illegal loggers.
Immediately promulgate on December 19, 1963
Considering the overriding public interest
General memorandum Order No. 60, revoking
involved in the instant case, We therefore take
the authority delegated to the Director of
judicial notice of the fact that, on April 30, 1964,
Forestry, under General Memorandum order
the area covered by petitioner-appellant's
No. 46, to grant ordinary timber licenses, which
timber license has been established as the
order took effect on the same day
Olongapo Watershed Forest Reserve by virtue
On the same date that the above-quoted of Executive Proclamation No. 238 by then
memorandum took effect, December 19, 1963, President Diosdado Macapagal
Ordinary Timber License No. 20-'64 (NEW)
WE fully concur with the findings of the trial
dated April 22, 1963, in the name of Wenceslao
court that petitioner- appellant's timber license
Vinzons Tan, was signed by then Acting
was signed and released without authority by
Director of Forestry Estanislao R. Bernal
then Acting Director Estanislao R. Bernal of
without the approval of the Secretary of
Forestry, and is therefore void ab initio.
Agriculture and Natural Resources. On
January 6, 1964, the license was released by the The release of the license on January 6, 1964,
Office of the Director of Forestry gives rise to the impression that it was ante-
dated to December 19, 1963 on which date the
authority of the Director of Forestry was
revoked. But, what is of greatest importance is withdrawn whenever dictated by public
the date of the release or issuance, and not the interest or public welfare
date of the signing of the license. While
As provided in the aforecited provision, timber
petitioner-appellant's timber license might
licenses are subject to the authority of the
have been signed on December 19, 1963 it was
Director of Forestry. The utilization and
released only on January 6, 1964. Before its
disposition of forest resources is directly under
release, no right is acquired by the licensee. As
the control and supervision of the Director of
pointed out by the trial court, the Director of
Forestry. However, "while Section 1831 of the
Forestry had no longer any authority to release
Revised Administrative Code provides that
the license on January 6, 1964. Therefore,
forest products shall be cut, gathered and
petitioner-appellant had not acquired any legal
removed from any forest only upon license
right under such void license. This is evident on
from the Director of Forestry, it is no less true
the face of his petition as supplemented by its
that as a subordinate officer, the Director of
annexes which includes Ordinary Timber
Forestry is subject to the control of the
License No. 20-'64 (NEW). Thus, in the case of
Department Head or the Secretary of
World Wide Insurance & Surety Co., Inc. vs.
Agriculture and Natural Resources (See. 79[c],
Macrohon, et al. (105 Phil. 250, Feb. 28, 1959),
Rev. Adm. Code), who, therefore, may impose
this Court held that if from the face of the
reasonable regulations in the exercise of the
complaint, as supplemented by its annexes,
powers of the subordinate officer" (Director of
plaintiff is not the owner, or entitled to the
Forestry vs. Benedicto, 104 SCRA 309, May 5,
properties it claims to have been levied upon
1981). The power of control of the Department
and sold at public auction by the defendants
Head over bureaus and offices includes the
and for which it now seeks indemnity, the said
power to modify, reverse or set aside acts of
complaint does not give plaintiff any right of
subordinate officials (Province of Pangasinan
action against the defendants. In the same case,
vs. Secretary of Public Works and
this Court further held that, in acting on a
Communications, 30 SCRA 134, Oct. 31, 1969;
motion to dismiss, the court cannot separate the
Montano vs. Silvosa, 97 Phil. 143, 144, 147-148).
complaint from its annexes where it clearly
Accordingly, respondent-appellee Secretary of
appears that the claim of the plaintiff to be the
Agriculture and Natural Resources has the
A owner of the properties in question is
authority to revoke, on valid grounds, timber
predicated on said annexes. Accordingly,
licenses issued by the Director of Forestry.
petitioner-appellant's petition must be
There being supporting evidence, the
dismissed due to lack of cause of action.
revocation of petitioner-appellant's timber
Granting arguendo, that petitioner-appellant's license was a wise exercise of the power of the
timber license is valid, still respondents- respondent- appellee (Secretary of Agriculture
appellees can validly revoke his timber license. and Natural Resources) and therefore, valid.
As pointed out earlier, paragraph 27 of the
China Banking Corp. vs. CA: FRAUDULENT
rules and regulations included in the ordinary
ASSIGNMENT
timber license states: "The terms and conditions
of this license are subject to change at the
discretion of the Director of Forestry, and that FACTS: Alfonso Roxas Chua and his wife
this license may be made to expire at an earlier Kiang Ming Chu Chua were the owners of a
date, when public interests so require" (Exh. D, residential land in San Juan, Metro Manila,
p. 22, CFI rec.). A timber license is an covered by Transfer Certificate of Title No.
instrument by which the State regulates the 410603. On February 2, 1984, a notice of levy
utilization and disposition of forest resources to affecting the property was issued in connection
the end that public welfare is promoted. A with Civil Case No. 82-14134 entitled,
timber license is not a contract within the "Metropolitan Bank and Trust Company,
purview of the due process clause; it is only a Plaintiff versus Pacific Multi Commercial
license or privilege, which can be validly Corporation and Alfonso Roxas Chua,
Defendants," before the Regional Trial Court,
Branch XLVI of Manila. The notice of levy was
inscribed and annotated at the back of TCT
410603. Subsequently, Kiang Ming Chu Chua
filed a complaint against the City Sheriff of
Manila and Metropolitan Bank and Trust
Company, questioning the levy of the
abovementioned property. She alleged that the
judgment of the court in Civil Case No. 82-
14134 against Alfonso Roxas Chua could not be
enforced against TCT 410603 inasmuch as the
land subject thereof was the conjugal property
of the spouses.
The parties thereafter entered into a
compromise agreement to the effect that the
levy on TCT 410603 was valid and enforceable
only to the extent of the 1/2 undivided portion
of the property pertaining to the conjugal share
of Alfonso Roxas Chua.
Meanwhile, on June 19, 1985, petitioner China
Bank filed with the Regional Trial Court of
Manila, Branch 29, an action for collection of
sum of money against Pacific Multi Agro-
Industrial Corporation and Alfonso Roxas
Chua which was docketed as Civil Case No. 85-
31257. The court favors China bank ordering
the defendants to pay petitioners.
On September 8, 1986, an alias notice of levy on
execution on the one-half (1/2) undivided
portion of TCT 410603 belonging to Alfonso
Chua was issued in connection with Civil Case
82-14134. The notice was inscribed and
annotated at the back of TCT 410603 on
September 15, 1986 and a certificate of sale
covering the one-half undivided portion of the
property was executed in favor of Metropolitan
Bank and Trust Company. The certificate of
sale was inscribed at the back of said TCT on
December 22, 1987.
On November 21, 1988, Alfonso Roxas Chua
executed a public instrument denominated as
"Assignment of Rights to Redeem," whereby he
assigned his rights to redeem the one-half
undivided portion of the property to his son,
private respondent Paulino Roxas Chua.
On the other hand, in connection with Civil
Case No. 85-31257, another notice of levy on
execution was issued on February 4, 1991 by
the Deputy Sheriff of Manila against the right
and interest of Alfonso Roxas Chua in TCT
410603. Thereafter, a certificate of sale on
execution dated April 13, 1992 was issued by
the Sheriff of Branch 39, RTC Manila in Civil
Case No. 85-31257, in favor of China Bank and
inscribed at the back of TCT 410603 as Entry
No. 01896 on May 4, 1992.
On May 20, 1993, Paulino Roxas Chua and
Kiang Ming Chu Chua instituted Civil Case
No. 63199 before the RTC of Pasig, Metro
Manila against China Bank, averring that
Paulino has a prior and better right over the
rights, title, interest and participation of China
Banking Corporation in TCT 410603; that
Alfonso Roxas Chua sold his right to redeem
one-half (1/2) of the aforesaid conjugal
property in his favor on November 21, 1988
while China Banking Corporation acquired its
right from the notice of levy of execution dated
January 30, 1991; that the assignment of rights
in his favor was annotated at the back of TCT
410603 on March 14, 1989 and inscribed as
Entry No. 7629, and his redemption of the
property was effected in an instrument dated
January 11, 1989 and inscribed and annotated
at the back of TCT 410603 on March 14, 1989,
two years before the annotation of the rights of
China Banking Corporation on TCT 410603 on
February 4, 1991.
The trial court ruled that the assignment was
made for a valuable consideration and was
executed two years before petitioner China
Bank levied the conjugal share of Alfonso
Roxas Chua on TCT 410603. The trial court
found that Paulino redeemed the one-half
portion of the property, using therefor the
amount of P100,000.00 which he withdrew
from his savings account as evidenced by his
bankbook and the receipts of Metrobank for his
payment of the redemption price. The court
noted that Paulino at that time was already of
age and had his own source of income.
On appeal, the Court of Appeals affirmed the
ruling of the trial court. It held that petitioner
China Bank had been remiss in the exercise of
its rights as creditor; and that it should have
exercised its right of redemption under
Sections 29 and 30, Rule 39 of the Rules of
Court.
ISSUE: W/N the assignment of the right of
redemption made by Alfonso Roxas Chua in
favor of private respondent Paulino was done
to defraud his creditors and may be rescinded
under Article 1387 of the Civil Code.
RULING: YES, the assignment of rights was
fraudulent
The existence of fraud or intent to defraud
creditors may either be presumed in
accordance with Article 1387 of the Civil Code
or duly proved in accordance with the ordinary
rules of evidence. Article 1387 reads:
Art. 1387. All contracts by virtue of which the
debtor alienates property by gratuitous title are
presumed to have been entered into in fraud of
creditors, when the donor did not reserve
sufficient property to pay all debts contracted
before the donation.
Alienation by onerous title are also presumed
fraudulent when made by persons against
whom some judgment has been rendered in
any instance or some writ of attachment has
been issued. The decision or attachment need
not refer to the property alienated, and need
not have been obtained by the party seeking
rescission.
In addition to these presumptions, the design
to defraud creditors may be proved in any
other manner recognized by the law of
evidence.
Hence, the law presumes that there is fraud of
creditors when:
a) There is alienation of property by gratuitous
title by the debtor who has not reserved
sufficient property to pay his debts contracted
before such alienation; or
b) There is alienation of property by onerous
title made by a debtor against whom some
judgment has been rendered in any instance or
some writ of attachment has been issued. The
decision or attachment need not refer to the
property alienated and need not have been
obtained by the party seeking rescission.
After his conjugal share in TCT 410603 was
foreclosed by Metrobank, the only property
that Alfonso Roxas Chua had was his right to
redeem the same, it forming part of his
patrimony. "Property" under civil law
comprehends every species of title, inchoate or
complete, legal or equitable.
Alfonso Roxas Chua sold his right of
redemption to his son, Paulino Roxas Chua, in
1988. Thereafter, Paulino redeemed the
property and caused the annotation thereof at
the back of TCT 410603. This preceded the
annotation of the levy of execution in favor of
China Bank by two (2) years and the certificate
of sale in favor of China Bank by more than
three (3) years. On this basis, the Court of
Appeals concluded that the allegation of fraud
made by petitioner China Bank is vague and
unsubstantiated.
Such conclusion, however, runs counter to the
law applicable in the case at bar. Inasmuch as
the judgment of the trial court in favor of China
Bank against Alfonso Roxas Chua was
rendered as early as 1985, there is a
presumption that the 1988 sale of his property,
in this case the right of redemption, is
fraudulent under Article 1387 of the Civil Code.
The fact that private respondent Paulino Roxas
Chua redeemed the property and caused its
annotation on the TCT more than two years
ahead of petitioner China Bank is of no
moment. As stated in the case of Cabaliw vs.
Sadorra, 7 "the parties here do not stand in
equipoise, for the petitioners have in their
favor, by a specific provision of law, the
presumption of fraudulent transaction which is
not overcome by the mere fact that the deeds of
sale were in the nature of public instruments."
This presumption is strengthened by the fact
that the conveyance has virtually left Alfonso's
other creditors with no other property to attach.
It should be noted that the presumption of
fraud or intention to defraud creditors is not
just limited to the two instances set forth in the
first and second paragraphs of Article 1387 of
the Civil Code.
Before China Bank obtained judgment against
Pacific Multi Agro-Industrial Corporation and
Alfonso Roxas Chua on November 7, 1985,
Alfonso Roxas Chua had only his one-half
share of the conjugal property in question to
pay his previous creditor, Metrobank. Even his
son, private respondent Paulino Roxas Chua
himself, knew this as shown by the following
excerpts of his testimony during the trial
Despite Alfonso Roxas Chua's knowledge that
it is the only property he had which his other
creditors could levy, he still assigned his right
to redeem his one-half share of the conjugal
property in question from Metrobank in favor
of his son, Paulino. Alfonso's intent to defraud
his other creditors, specifically, China Bank,
becomes even more apparent when we take
into consideration the fact that immediately
after the Court of Appeals rendered its
Resolution dated September 29, 1988,
dismissing the appeal of Pacific Multi-Agro
and Alfonso Roxas Chua in CA-G.R. No. CV-
14681 entitled, "China Banking Corporation,
Plaintiff-Appellee versus Pacific Multi Agro-
Industrial Corporation, et al., Defendants-
Appellants, 10 "he assigned his right to redeem
one-half of the conjugal property to his son on
November 21, 1988.
It bears emphasis that it is not sufficient that the
conveyance is founded on a valuable
consideration. In the case of Oria vs.
Mcmicking, 11 we had occasion to state that "In
determining whether or not a certain
conveyance is fraudulent the question in every
case is whether the conveyance was a bona fide
transaction or a trick and contrivance to defeat
creditors, or whether it conserves to the debtor
a special right. It is not sufficient that it is
founded on good considerations or is made
with bona fide intent: it must have both
elements. If defective; in either of these,
although good between the parties, it is
voidable as to creditors. . . . The test as to
whether or not a conveyance is fraudulent is,
does it prejudice the rights of creditors?"
The mere fact that the conveyance was founded
on valuable consideration does not necessarily
negate the presumption of fraud under Article
1387 of the Civil Code. There has to be a
valuable consideration and the transaction
must have been made bona fide.
In the case at bar, the presumption that the
conveyance is fraudulent has not been
overcome.
Adorable vs. CA: RECISSION, REMEDY OF
LAST RESORT
FACTS: Private respondent Saturnino Bareng
was the registered owner of two parcels of land,
one identified as Lot No. 661-D-5-A, with an
area of 20,000 sq. m., covered by TCT No. T-
162837, and the other known as Lot No. 661-E,
with an area of 4.0628 hectares, covered by TCT
No. T-60814, both of which are in San Fabian,
Echague, Isabela. Petitioners were lessees of a
200 sq.m. portion of Lot No. 661-D-5-A.
On April 29, 1985, Saturnino Bareng and his
son, private respondent Francisco Bareng,
obtained a loan from petitioners amounting to
twenty six thousand pesos (P26,000), in
consideration of which they promised to
transfer the possession and enjoyment of the
fruits of Lot No. 661-E.
n August 3, 1986, Saturnino sold to his son
Francisco 18,500 sq.m. of Lot No. 661-D-5-A.
The conveyance was annotated on the back of
TCT No. T-162873. In turn, Francisco sold on
August 27, 1986 to private respondent Jose
Ramos 3,000 sq.m. of the lot. The portion of
land being rented to petitioners was included
in the portion sold to Jose Ramos. The deeds of
sale evidencing the conveyances were not
registered in the office of the register of deeds.
As the Barengs failed to pay their loan,
petitioners complained to Police Captain
Rodolfo Saet of the Integrated National Police
(INP) of Echague through whose mediation a
Compromise Agreement was executed
between Francisco Bareng and the Adorables
whereby the former acknowledged his
indebtedness of P56,385.00 which he promised
to pay on or before July 15, 1987. When the
maturity date arrived, however, Francisco
Bareng failed to pay. A demand letter was sent
to Francisco Bareng, but he refused to pay.
Petitioners, learning of the sale made by
Francisco Bareng to Jose Ramos, then filed a
complaint with the Regional Trial Court,
Branch 24, Echague, Isabela for the annulment
or rescission of the sale on the ground that the
sale was fraudulently prepared and executed.
Trial court declared that the sale made to
Francisco was valid and affirmed by CA
ISSUE: W/N the sale is rescissible
RULING: NO, it is only a remedy of last
resort, petitioners failed to adduce such
evidence
The creditors, after having pursued the
property in possession of the debtor to satisfy
their claims, may exercise all the rights and
bring all the actions of the latter for the same
purpose, save those which are inherent in his
person; they may also impugn the actions
which the debtor may have done to defraud
them.
Thus, the following successive measures must
be taken by a creditor before he may bring an
action for rescission of an allegedly fraudulent
sale: (1) exhaust the properties of the debtor
through levying by attachment and execution
upon all the property of the debtor, except such
as are exempt by law from execution; (2)
exercise all the rights and actions of the debtor,
save those personal to him (accion
subrogatoria); and (3) seek rescission of the
contracts executed by the debtor in fraud of
their rights (accion pauliana). Without availing
of the first and second remedies, i.e.,
exhausting the properties of the debtor or
subrogating themselves in Francisco Barengs
transmissible rights and actions, petitioners
simply undertook the third measure and filed
an action for annulment of the sale. This cannot
be done.
Indeed, an action for rescission is a subsidiary
remedy; it cannot be instituted except when the
party suffering damage has no other legal
means to obtain reparation for the same.Thus,
Art. 1380 of the Civil Code provides
Petitioners have not shown that they have no
other means of enforcing their credit. As the
Court of Appeals pointed out in its decision:
In this case, plaintiffs-appellants had not even
commenced an action against defendants-
appellees Bareng for the collection of the
alleged indebtedness. Plaintiffs-appellants had
not even tried to exhaust the property of
defendants-appellees Bareng. Plaintiffs-
appellants, in seeking for the rescission of the
contracts of sale entered into between
defendants-appellees, failed to show and prove
that defendants-appellees Bareng had no other
property, either at the time of the sale or at the
time this action was filed, out of which they
could have collected this (sic) debts.
Second. Nor do petitioners enjoy any
preference to buy the questioned property. In
Aldecoa v. Hongkong and Shanghai Banking
Corporation,[7] it was held that in order that
one who is not obligated in a contract either
principally or subsidiarily may maintain an
action for nullifying the same, his complaint
must show the injury that would positively
result to him from the contract in which he has
not intervened, with regard at least to one of the
contracting parties.
Petitioners attempt to establish such legal
injury through a claim of preference created
under C.A. No. 539, the pertinent provision of
which provides:
SEC. 1. The President of the Philippines is
authorized to acquire private lands or any
interest therein, through purchase or
expropriation, and to subdivide the same into
home lots or small farms for resale at
reasonable prices and under such conditions as
he may fix to their bona fide tenants or
occupants or to private individuals who will
work the lands themselves and who are
qualified to acquire and own lands in the
Philippines.
This statute was passed to implement Art. XIII,
4 of the 1935 Constitution which provided that
The Congress may authorize, upon payment of
just compensation, the expropriation of lands
to be subdivided into small lots and conveyed
at cost to individuals. It is obvious that neither
under this provision of the former Constitution
nor that of C.A. No. 539 can petitioners claim
any right since the grant of preference therein
applies only to bona fide tenants, after the
expropriation or purchase by the government
of the land they are occupying. Petitioners are
not tenants of the land in question in this case.
Nor has the land been acquired by the
government for their benefit.