ONG vs IAC

Facts:

Madrigal Shipping Co., Inc. was granted a loan by Solidbank, and the former pledged its barge and
tugboat to secure the fulfillment of its obligation. When it failed to pay, the bank had to sell the pledged
properties. However, the tugboat and the barge had surreptitiously been taken without the knowledge and
consent of Solidbank. Meanwhile, petitioner Ong bought the barge which was subject of the pledge from
Santiago S. Ocampo, a successful bidder in a public auction by virtue of a writ of execution issued by
NLRC against Madrigal Shipping Co., Inc.

Issue: Whether or not the contract of pledge is binding on petitioner Ong

Held:

Undoubtedly, petitioners rely heavily on the fact that the contract of pledge by and between Solidbank
and Madrigal Shipping Co., Inc. was not recorded under Sections 804 and 809 of the Tariff and Customs
Code and argue that it is not binding on third persons like the petitioners.

It is, however, stated under Article 2096 of the Civil Code that for a pledge to take effect against third
persons, it should be in a public instrument which must contain the description of the thing pledged and
the date of the pledge.

In the case of Bachrach Motor Co. v. Lacson Ledesma, 64 Phil. 681 (1937), Art. 2096 has been
interpreted in the sense that for the contract to affect third persons, apart from being in a public
instrument, possession of the thing pledged must in addition be delivered to the pledgee.

All these requirements have been complied with, in the case at bar. The pledge agreement is a public
instrument, the same having been notarized and under the notarial seal of Vicente A. Casim, as Doc. No.
1487; Page No. 179; Book V and Series of 1978. Subject of the pledge (MSC Barge No. 601) was
delivered to the Solidbank which had it moored at Tanque Bodega, Pasig River, Manila, where it was
guarded by a security guard. (Rollo, pp. 69-70).

Undeniably, Madrigal Shipping co., Inc., owner of MSC Barge No. 601, pledged said vessel and tugboat
to secure the shipping company's obligation to the creditor bank (Solidbank) in the amount of
P2,094,000.00, and no payment was made by Madrigal Shipping Co., Inc., as pledgor. Therefore the
Solidbank has the light of retention of the barge in question pledged to it until it is paid. The Civil Code
expressly provides;

Art. 2090. The contract of pledge gives right to the creditor to retain the thing in his possession or
in that of a third person to whom it has been delivered, until the debt is paid.

Applying these concepts in the case at bar, the pledgee is obviously a lawful and rightful possessor of the
personal property pledged.

TAMBUNTING PAWNSHOP, INC. v. COMMISSIONER OF INTERNAL REVENUE

FACTS:

Petitioner was issued an assessment for deficiency VAT for the taxable year of 1999. Petitioner, after his
protest with the CIR merited no response, it filed a Petition for Review with the CTA raising that
pawnshops are not subject to VAT under the NIRC and that pawn tickers are not subject to documentary
stamp tax.

The CTA ruled that petitioner is liable for the deficiency VAT and the documentary stamp tax.

The petitioner argues that a pawnshop is not enumerated as one of those engaged in sale or exchange
of services in Section 108 of the National Internal Revenue Code and citing the case of Commissioner of
Internal Revenue v. Michel J. Lhuillier Pawnshops, Inc. as basis.

ISSUE: Whether petitioner is liable for the deficiency VAT.

Whether the petitioner is liable for the documentary stamp tax.

RULING:

YES. The Court cited the case of First Planters Pawnshop, Inc. v. Commissioner of Internal Revenue. In
the foregoing case, since the imposition of VAT on pawnshops, which are non-bank financial
intermediaries, was deferred for the tax years 1996 to 2002, petitioner is not liable for VAT for the tax
year 1999.

NO. Sections 195 of the NIRC provides that on the pledge of personal property, there shall be collected a
documentary stamp tax. The Court held in Michel J. Lhuillier Pawnshop, Inc. v. Commissioner of Internal
Revenue that the documentary stamp tax is an excise tax on the exercise of a right or privilege and that
pledge is among the privileges, the exercise of which is subject to documentary stamp taxes. For
purposes of taxation, pawn tickets are proof of an exercise of a taxable privilege of concluding a contract
of pledge.

ESTATE OF GEORGE LITTON vs CIRIACO B. MENDOZA and COURT OF APPEALS

Facts:

Bernal spouses are engaged in the manufacture of embroidery, garments and cotton materials.
Sometime in September 1963, C.B.M. Products, with Mendoza as president, offered to sell to the
Bernals textile cotton materials and, for this purpose, Mendoza introduced the Bernals to Alfonso Tan.
Thus, the Bernals purchased on credit from Tan some cotton materials worth P 80,796.62, payment of
which was guaranteed by Mendoza. Thereupon, Tan delivered the said cotton materials to the Bernals.
In view of the said arrangement, on November 1963, C.B.M. Products, through Mendoza, asked and
received from the Bernals PBTC Check No. 626405 for P 80,796.62 dated February 20, 1964 with the
understanding that the said check will remain in the possession of Mendoza until the cotton materials
are finally manufactured into garments after which time Mendoza will sell the finished products for the
Bernals. Meanwhile, the said check matured without having been cashed and Mendoza demanded the
issuance of another check 4 in the same amount without a date.

On the other hand, on February 28, 1964, defendant Mendoza issued two (2) PNB checks5 in favor of
Tan in the total amount of P 80,796.62. He informed the Bernals of the same and told them that they
are indebted to him and asked the latter to sign an instrument whereby Mendoza assigned the said
amount to Insular Products Inc. Tan had the two checks issued by Mendoza discounted in a bank.
However, the said checks were later returned to Tan with the words stamped "stop payment" which
appears to have been ordered by Mendoza for failure of the Bernals to deposit sufficient funds for the
check that the Bernals issued in favor of Mendoza.

Hence, as adverted to above, Tan brought an action against Mendoza while the Bernals brought an
action for interpleader