Bank of the Philippine Islands v. Wenceslao Trinidad

Summary

The Bank of the Philippine Islands sued the Collector of Internal Revenue to recover P2,159.79 paid under protest when the collector seized mortgaged sawmill machinery to collect forestry charges from Pujalte & Co. The bank held a valid chattel mortgage on the property registered in 1912. The trial court dismissed the case, finding the bank voluntarily paid a third party's debt. The Supreme Court reversed, establishing that: (1) payment under protest to protect mortgaged property is not voluntary payment of another's debt; (2) a registered chattel mortgagee becomes the legal owner of mortgaged property; (3) tax collection provisions allowing seizure of property 'used in business' apply only to property owned by the taxpayer, not property belonging to innocent third parties. This case clarifies the relationship between tax collection powers and secured creditor rights.