Capitol Wireless Inc. vs.

Provincial Government of Batangas It is settled in the Local Government Code, “municipal waters”
G.R. NO. 180110, MAY 30, 2016 includes “not only streams, lakes, and tidal waters within the
municipality, not being the subject of private ownership and
FACTS: not comprised within the national parks, public forest, timber
Petitioner Capitol Wireless Inc. (Capwire) is a Philippine lands, forest reserves or fishery reserves, but also marine
corporation in the business of providing international waters included between two lines drawn perpendicularly to
telecommunications services. As such provider, Capwire has the general coastline from points where the boundary lines of
signed agreements with other local and foreign the municipality or city touch the sea at low tide and a third
telecommunications companies covering an international line parallel with the general coastline and fifteen (15)
network of submarine cable systems such as the Asia Pacific kilometers from it. Although the term “municipal waters”
Cable Network System (APCN) (which connects Australia, appears in the Code in the context of the grant of quarrying
Thailand, Malaysia, Singapore, Hong Kong, Taiwan, Korea, and fisheries privileges for a fee by local governments, its
Japan, Indonesia and the Philippines) ); the Brunei-Malaysia- inclusion in the Code’s Book II which covers local taxation
Philippines Cable Network System (BMP-CNS), the Philippines- means that it may also apply as guide in determining the
Italy (SEA-ME-WE-3 CNS), and the Guam Philippines (GP-CNS) territorial extent of the local authorities’ power to levy real
systems. The agreements provide for co-ownership and other property taxation.
rights among the parties over the network.
Thus, the jurisdiction or authority over such part of the subject
Petitioner Capwire claims that it is a co-owner only of the so- submarine cable system lying within Philippine jurisdiction
called “Wet Segment” of the APCN. As a co-owner, Capwire includes the authority to tax the same, for taxation is one of the
claims that it does not own any particular physical part of the three basic and necessary attributes of sovereignty, and such
cable system but, consistent with its financial contributions, it authority has been delegated by the national legislature to the
owns the right to use a certain capacity of the said system. local governments with respect to real property taxation.
Meanwhile, the landing stations or terminals and Segment E of
APCN located in Nasugbu, Batangas are allegedly owned by the As earlier stated, a way for Capwire to claim that its cable
Philippine Long Distance Telephone Corporation (PLDT). system is not covered by such authority is by showing a
Moreover, it alleges that the Wet Segment is laid in domestic enactment or even contract, or an international
international, and not Philippine waters. agreement or treaty exempting the same from real property
taxation. It failed to do so as such had been expressly
In essence, the Provincial Assessor had determined that the withdrawn by the Local Government Code, which took effect
submarine cable systems described are taxable real property, a on January 1, 1992, Sections 193 and 234 of which provide:
determination that was contested by Capwire. Capwire
contented that the cable system lies outside of Philippine Section 193. Withdrawal of Tax Exemption Privileges. – Unless
territory, i.e., on international waters. otherwise provided in this Code, tax exemptions or incentives
granted to, or presently enjoyed by all persons, whether
On February 7, 2003 and March 4, 2003, Capwire received a natural or juridical, including government-owned or controlled
Warrant of Levy and a Notice of Auction Sale, respectively, corporations, except local water districts, cooperatives duly
from the respondent Provincial Treasurer of Batangas registered under R.A. No. 6938, nonstock and nonprofit
(Provincial Treasurer). Capwire filed a Motion for hospitals and educational institutions, are hereby withdrawn.
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. Philippine Refining Co. v. Jarque, 61 Phil 229

ISSUE: Whether or not submarine communications cables be Facts:

Submarine or undersea communications cables are akin to Coming now to the merits, it appears that on varying dates the
electric transmission lines which this Court has recently Philippine Refining Co., Inc., and Francisco Jarque executed
declared in Manila Electric Company v. City Assessor and City three mortgages on the motor vessels Pandan and Zaragoza.
Treasurer of Lucena City, as “no longer exempted from real These documents were recorded in the record of transfers and
property tax” and may qualify as “machinery” subject to real incumbrances of vessels for the port of Cebu and each was
property tax under the Local Government Code. therein denominated a "chattel mortgage". Neither of the first
two mortgages had appended an affidavit of good faith. The
Moreover, both electric lines and communications cables, in third mortgage contained such an affidavit, but this mortgage
the strictest sense, are not directly adhered to the soil but pass was not registered in the customs house until May 17, 1932, or
through posts, relays or landing stations, but both may be within the period of thirty days prior to the commencement of
classified under the term “machinery” as real property under insolvency proceedings against Francisco Jarque; also, while the
Article 415(5)of the Civil Code for the simple reason that such last mentioned mortgage was subscribed by Francisco Jarque
pieces of equipment serve the owner’s business or tend to and M. N. Brink, there was nothing to disclose in what capacity
meet the needs of his industry or works that are on real estate. the said M. N. Brink signed. A fourth mortgage was executed by
Even objects in or on a body of water may be classified as such, Francisco Jarque and Ramon Aboitiz on the motorship Zaragoza
as “waters” is classified as an immovable under Article 415(8)of and was entered in the chattel mortgage registry of the register
the Code. A classic example is a boathouse which, by its nature, of deeds on May 12, 1932, or again within the thirty-day period
is a vessel and, therefore, a personal property but, if it is tied to before the institution of insolvency proceedings. These
the shore and used as a residence, and since it floats on waters proceedings were begun on June 2, 1932, when a petition was
which is immovable, is considered real property. filed with the Court of First Instance of Cebu in which it was
prayed that Francisco Jarque be declared an insolvent debtor,
which soon thereafter was granted, with the result that an judgment been rendered therein on the merits, such a
assignment of all the properties of the insolvent was executed judgment would be conclusive between the parties and could
in favor of Jose Corominas. be pleaded in bar of the second action.

On these facts, Judge Jose M. Hontiveros declined to order the In the instant case, the former suit is to annul the mortgages
foreclosure of the mortgages, but on the contrary sustained the while the other one is for the foreclosure. If the final judgment
special defenses of fatal defectiveness of the mortgages. In so in the former action is that the mortgages be annulled, such an
doing we believe that the trial judge acted advisedly. adjudication will deny the right of the bank to foreclose the
mortgages. But a valid decree will not prevent the bank from
Issue: WON vessels are personal property? foreclosing them. In such an event, the judgment would not be
a bar to the prosecution of the present action. The rule is not
Rulings: predicated upon such a contingency. It is applicable, between
Yes, vessels are personal property. the same parties, only when the judgment to be rendered in
the action first instituted will be such that, regardless of which
Vessels are considered personal property under the civil law. party is successful, it will amount to res adjudicata against the
(Code of Commerce, article 585.) Similarly under the common second action.
law, vessels are personal property although occasionally
referred to as a peculiar kind of personal property. (Reynolds 25. Presbitero v. Fernandez, G.R. No . L-19527, March 30, 1963
vs. Nielson [1903], 96 Am. Rep., 1000; Atlantic Maritime Co vs. 26. US v. MANUEL TAMBUNTING, GR No. 16513, 1921-01-18
City of Gloucester [1917], 117 N. E., 924.) Since the term
"personal property" includes vessels, they are subject to GONZALO CHUA GUAN v. SAMAHANG MAGSASAKA, GR No.
mortgage agreeably to the provisions of the Chattel Mortgage 42091, 1935-11-02
Law. (Act No. 1508, section 2.) Indeed, it has heretofore been
accepted without discussion that a mortgage on a vessel is in Facts:
nature a chattel mortgage. (McMicking vs. Banco Español- The complaint alleges that the defendant Samahang
Filipino [1909], 13 Phil., 429; Arroyo vs. Yu de Sane [1930], 54 Magsasaka, Inc., is a corporation duly organized under the laws
Phil., 511.) The only difference between a chattel mortgage of a of the Philippine Islands with principal office in Cabanatuan,
vessel and a chattel mortgage of other personalty is that it is Nueva Ecija, and that the individual defendants are the
not now necessary for a chattel mortgage of a vessel to be president, secretary and treasurer... respectively of the same;
noted n the registry of the register of deeds, but it is essential that on June 18, 1931, Gonzalo H. Co Toco was the owner of
that a record of documents affecting the title to a vessel be 5,894 shares of the capital stock of the said corporation
entered in the record of the Collector of Customs at the port of represented by nine certificates having a par value of P5 per
entry. (Rubiso and Gelito vs. Rivera [1917], 37 Phil., 72; Arroyo share; that on said date Gonzalo H. Co Toco, a resident of
vs. Yu de Sane, supra.) Otherwise a mortgage on a vessel is Manila,... mortgaged said 5,894 shares to Chua ChiU' to
generally like other chattel mortgages as to its requisites and guarantee the payment of a debt of P20,000 due on or before
validity. (58 C.J., 92.) June 19, 1932. The said certificates of stock were delivered with
the mortgage to the mortgagee, Chu Chiu. The said mortgage
21.Arroyo v. Yu De Sane, G.R. No. L-31865, Feb. 28, 1930 was duly registered inihe office of the register... of deeds of
22.Aleman v. De Catera, G.R. No. L-13693, March 25, 1961 Manila on June 23, 19B1, and in the office of the said
23.Rubiso v. Rivera, G.R. No. L-11407, October 30, 1917 corporation on September 30, 1931.

THE HONGKONG & SHANGHAI BANKING CORP. vs. ALDECOA On November 28, 1931, Chua Chiu assigned sal his right and
& CO. G.R. No. L-8437 March 23, 1915 interest in said mortgage to the plaintiff 4nd the assignment
was registered in the office of the register of deeds in the City
FACTS: of Manila on December 28, 1931, and in the office of the said
Aldecoa and Co. obtained a credit worth P450,000 from HSBC corporation on January 4,... 1932.
secured by a mortgage of shares and real properties. On Dec. of
1906, the firm of Aldecoa and Co. went into liquidation and The debtor, Gonzalo H. Co Toco, having defaulted in the
obtained another P50,000 from the bank upon the condition payment of said debt at maturity, the plaintiff foreclosed said
that this would be covered by the previous mortgage. In mortgage and delivered the certificates o^/sxock and copies of
October 1908, Joaquin and Zoilo Ibañez de Aldecoa filed an the mortgage and assignment to the sheriff of tho City of
action against the bank for the purpose of annulling the Manila in order to sell the said... shares at public auc tion. The
mortgages executed by them on the grounds that they were sheriff auctioned said 5,894 shares of stock on December
minors at the time incapable of creating a valid mortgage upon 22,1932. and the plaintiff having been tWe highest bidder for
their real property. The Court of First Instance dismissed the the sum of P14,390, the sheriff executed in his favor a
complaint as to Joaquin upon the ground that he had ratified certificate of sale of said shares.
those mortgages after becoming of age, but entered a
judgment annulling said mortgages with respect to Zoilo. Both The plaintiff tendered the certificates of stock standing in the
parties appealed from this decision and the case was still name of Gonzalo H. Co Toco to the proper officers of the
pending in the Supreme Court when HSBC filed an action corporation for cancellation and demanded that they issue new
against Aldecoa and Co. and its partners for the collection of a certificates in the name of the plaintiff.
sum of money and foreclosure of the mortgaged properties.
Judgement was entered in favor of the bank. The said officers (the individual defendants)... refused and still
refuse to issue said new shares in the name of the plaintiff.
ISSUE: Whether or not the action filed by the bank should be
dismissed on the ground of lis pendens. The prayer is that a writ of mandamus be issued requiring the
defendants to transfer the said 5,894 shares of stock to the
RULING: plaintiff by cancelling the old certificates and issuing new ones
No. A plea of the pendency of a prior action is not available in their stead.
unless the prior action is of such a character that, had a
The special defenses set up in the answer are as follows. that January 2, 1929: PNB amended its complaint by including the
the defendants refuse to cancel the said certificates standing in Bachrach Motor Co., Inc., as party defendant because they
the name of Gonzalo H. Co Toco on the books of the claim to have rights to some of the subject matters of this
corporation and to issue new ones in the name of the plaintiff complaint
because prior to the date when the... plaintiff made his January 30, 1929: Bachrach field a gen. denial
demand, to wit, February 4, 1933, nine attachments had been CFI: favored PNB
issued and served and noted on the books of the corporation December 20, 1929: Bachrach brought an action in the CFI
against the shares of Goip^lo H. Co Toco and the plaintiff against the Talisay-Silay Milling Co., Inc., to recover P13,850
objected to having these attachments noted on the new against the bonus or dividend w/c, by virtue of the resolution of
certificates which he... demanded. December 22, 1923, Central Talisay-Silay Milling Co., Inc., had
declared in favor of Ledesma as one of the owners of the
Issues: whether or not shares of a corporation could be... hacienda which had been mortgaged to the PNB to secure the
hypothecated by placing a chattel mortgage on the certificate obligation of the Talisay-Silay Milling Co., Inc. in favor of said
representing such shares bank
CFI: favored Bachrach
Ruling:
Apart from the cumbersome and unusual method of ISSUE: W/N shares of stock are personal property and therefore
hypothecating shares of stock by chattel mortgage, it appears can be subject to pledge or chattel mortgage
that in the present state of our law, the only safe way to
accomplish the hypothecation of share of stock of a Philippine HELD: YES. AFIRMED
corporation is for the creditor to insist on... the assignment and section 4 of the Chattel Mortgage Law, in so far as it provides
delivery of the certificate and to obtain the transfer of the legal that a chattel mortgage shall not be valid against any person
title to him on the books of the corporation by the cancellation except the mortgagor, his executors or administrators, unless
of the certificate and the issuance of a new one to him. From the possession of the property is delivered to and retained by
the standpoint of the debtor this may be unsatisfactory the mortgagee or unless the mortgage is recorded in the office
because... it leaves the creditor as the ostensible owner of the of the register of deeds of the province in which the mortgagor
shares and the debtor is forced to rely upon the honesty and resides.
solvency of the creditor. Of course, the mere possession and pledge of the 6,300 stock dividends is valid against the
retention of the debtor's certificate by the creditor gives some Bachrach because the certificate was delivered to the creditor
security to the creditor against an... attempted voluntary bank, notwithstanding the fact that the contract does not
transfer by the debtor, provided the by-laws of the corporation appear in a public instrument
expressly enact that transfers may be made only upon the
surrender of the certificate. It is to be noted, however, that Certificates of stock or of stock dividends, under the
section 35 of the Corporation Law (Act No. 1459) enacts that Corporation Law, are quasi negotiable instruments in the sense
shares of... stock "may be transferred by delivery of the that they may be given in pledge or mortgage to secure an
certificate endorsed by the owner or his attorney in fact or obligation
other person legally authorized to make the transfer." The use
of the verb "may" does not exclude the possibility that a certificates of stock, while not negotiable in the sense of the
transfer may be made in a different manner, thus... leaving the law merchant, like bills and notes, are so framed and dealt with
creditor in an insecure position even though he has the as to be transferable, when property endorsed, by mere
certificate in his possession. Moreover, the shares still standing delivery, and as they frequently convey, by estoppel against the
in the name of the debtor on the books of the corporation will corporation or against prior holders, as good a title to the
be liable to seizure by attachment or levy on execution at the transferee as if they were negotiable, and inasmuch as a large
instance of other... creditors. (Cf. Uy Piaoco vs. McMicking, 10 commercial use is made of such certificates as collateral
Phil., 286, and Uson vs. Diosomito, 61 Phil., 535.) This security, and it is to the public interest that such use should be
unsatisfactory state of our law is well known to the bench and simplify and facilitated by placing them as nearly as possible on
bar. (Cf. Fisher, The Philippine Law of Stock Corporations, pages the plane of commercial paper, they are often spoken of and
163-168.) Loans upon stock securities should be... facilitated in treated as quasi negotiable, that is as having some of the
order to foster economic development. The transfer by attributes and partaking of the character of negotiable
endorsement and delivery of a certificate with intention to instruments, in passing from hand to hand, especially where
pledge the shares covered thereby should be sufficient to give they are accompanied by an assignment and power of attorney,
legal effect to that intention and to consummate the juristic act executed in blank, to transfer them to anyone who may obtain
without necessity for... registration. possession as holders, even though such assignment and power
are under seal.
In view of the premises, the attaching creditors are entitled to
priority over the defectively registered mortgage of the 30.Laurel v. Abrogar, G.R. No. 155076, January 13, 2009
appellant and the judgment appealed from must be affirmed
without special pronouncement as to/costs in this instance.

Corporate Law Case Digest: Bachrach Motor Co V. Lacson

FACTS:
June 30, 1927: CFI favored Bachrach Motor Co., Inc (Bachrach)
against Mariano Lacson Ledesma
Ledesma mortgaged to the Philippine National Bank (PNB)
Talisay-Silay Milling Co., Inc shares
September 29, 1928: PNB brought an action against Ledesma
and his wife Concepcion Diaz for the recovery of a mortgage
credit