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US vs Carlos

G.R. No. 6295, 21 Phil 543


September 1, 1911
FACTS: Ignacio Carlo ha been a con!mer o" electricit# "!rnihe$ b# the %anila &lectric Railroa$ an$ 'ight
Compan# "or a b!il$ing containing the rei$ence o" the acc!e$ an$ 3 other rei$ence. (elie)ing that more light i
con!me$ than *hat i ho*n in the meter intalle$, the compan# intalle$ an a$$itional meter on the pole o!ti$e
Carlo+ ho!e to compare the act!al con!mption. ,he# "o!n$ o!t that Carlo !e$ a -!mper. .!rther, a -!mper *a
"o!n$ in a $ra*er o" a mall cabinet in the room o" the $e"en$ant+ ho!e *here the meter *a intalle$. In the
abence o" an# e/planation "or hi poeion o" ai$ $e)ice, the pre!mption raie$ *a that Carlo *a the o*ner
o" the $e)ice *hoe onl# !e *a to $e"lect the "lo* o" electricit#, ca!ing lo to the %eralco o" o)er 2000 1ilo*att
o" c!rrent.

2cc!e$ o" the"t, Carlo+ $e"ene *a that electricit# *a an !n1no*n "orce, not a "l!i$, an$ being intangible, co!l$
not be the ob-ect o" the"t.
ISSUE: 3hether the co!rt erre$ in $eclaring that electricit# can be the ob-ect o" the"t.
HELD: 3hile electric c!rrent i not a "l!i$, till, it mani"etation an$ e""ect li1e thoe o" ga ma# be een an$ "elt.
,he tr!e tet o" *hat ma# be tolen i not *hether it i corporeal or incorporeal, b!t *hether, being poee$ o"
)al!e, a peron other than the o*ner ma# appropriate the ame. &lectricit#, li1e ga, i a )al!able merchan$ie an$
ma# th! be tolen. 4See alo 5.S. ). ,amb!nting, 41 Phil. 3646.
,he co!rt "!rther r!le$ that electricit#, the ame a ga, i a )al!able article o" merchan$ie, bo!ght an$ ol$ li1e
other peronal propert# an$ i capable o" appropriation b# another. It i alo !ceptible o" being e)ere$ "rom a
ma or larger 7!antit# an$ o" being tranporte$ "rom place to place. 8ence, no error *a committe$ b# the trial co!rt
in hol$ing that electricit# i a !b-ect o" larcen#.
US V. TAMBUNTING
FACTS:
The Manila Gas Company installed equipment for the transmission of gas in a house at Evangelista. After
the original subscriber left, the apparatus was sealed and the services discontinued.
Later Mr Tambunting moved in. He was a cheapskate and spliced the tubing to leech free gas for
household use. Alas, the crime was discovered by the gas company. The prosecutor fled charges and
hailed Mr. Tambunting to court
ISSUE:
Whether or not gas can be the subject of larceny.
HELD:
Yes. Gas is a substance which lends itself to felonious appropriation. It is a valuable merchandise that can
be bought and sold like other personal property, susceptible of being siphoned from a larger mass and
transported from place to place. Articles 517 and 518 sets parameters for the theft of gas and it is a valid
ordinance.
US V. TAMBUNTING
41 PHIL 364
FACTS:
Accused and his wife were accused and later found guilty of stealing gas from the Manila Gas
Corporation. It was found out that during their occupancy of the upper portion of a house
wherein the corporation was supplying gas, the spouses made an illegal connection so that they could
beneft from the supply.

HELD:
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.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-42091 No!"#!$ 2% 193&
GON'ALO CHUA GUAN% plaintiff-appellant,
vs.
SAMAHANG MAGSASA(A% INC.% )*+ SIMPLICIO OCAMPO% ADRIANO G. SOTTO% )*+ EMILIO
VERGARA% ), -$!,.+!*/% ,!0$!/)$1 )*+ /$!),2$!$ $!,-!0/.!31 o4 /5! ,)"!% defendants-
appellees.
Buenaventura C. Lopez for appellant.
Domingo L. Vergara for appellees.

BUTTE% J.:
This is an appeal from a ud!ment of the Court of "irst #nstance of Nueva Ecia in an action for a $rit
of mandamus. The case is remar%able for the follo$in! reason& that the parties entered into a
stipulation in $hich the defendants admitted all of the alle!ations of the complaint and the plaintiff
admitted all of the special defenses in the ans$er of the defendants, and on this stipulation the'
submitted the case for decision.
The complaint alle!es that the defendant (amahan! Ma!sasa%a, #nc., is a corporation dul'
or!ani)ed under the la$s of the Philippine #slands $ith principal office in Cabanatuan, Nueva Ecia,
and that the individual defendants are the president, secretar' and treasurer respectivel' of the
same* that on +une ,-, ,./,, 0on)alo 1. Co Toco $as the o$ner of 2,-.3 shares of the capital
stoc% of the said corporation represented b' nine certificates havin! a par value of P2 per share* that
on said date 0on)alo 1. Co Toco, a resident of Manila, mort!a!ed said 2,-.3 shares to Chua Chiu
to !uarantee the pa'ment of a debt of P45,555 due on or before +une ,., ,./4. The said certificates
of stoc% $ere delivered $ith the mort!a!e to the mort!a!ee, Chua Chiu. The said mort!a!e $as
dul' re!istered in the office of the re!ister of deeds of Manila on +une 4/, ,./,, and in the office of
the said corporation on (eptember /5, ,./,.
6n November 4-, ,./,, Chua Chiu assi!ned all his ri!ht and interest in the said mort!a!e to the
plaintiff and the assi!nment $as re!istered in the office of the re!ister of deeds in the Cit' of Manila
on 7ecember 4-, ,./,, and in the office of the said corporation on +anuar' 3, ,./4.
The debtor, 0on)alo 1. Co Toco, havin! defaulted in the pa'ment of said debt at maturit', the
plaintiff foreclosed said mort!a!e and delivered the certificates of stoc% and copies of the mort!a!e
and assi!nment to the sheriff of the Cit' of Manila in order to sell the said shares at public auction.
The sheriff auctioned said 2,-.3 shares of stoc% on 7ecember 44, ,./4, and the plaintiff havin!
been the hi!hest bidder for the sum of P,3,/.5, the sheriff e8ecuted in his favor a certificate of sale
of said shares.
The plaintiff tendered the certificates of stoc% standin! in the name of 0on)alo 1. Co Toco to the
proper officers of the corporation for cancellation and demanded that the' issue ne$ certificates in
the name of the plaintiff. The said officers 9the individual defendants: refused and still refuse to issue
said ne$ shares in the name of the plaintiff.
The pra'er is that a $rit of mandamus be issued re;uirin! the defendants to transfer the said 2,-.3
shares of stoc% to the plaintiff b' cancellin! the old certificates and issuin! ne$ ones in their stead.
The special defenses set up in the ans$er are as follo$s& that the defendants refuse to cancel the
said certificates standin! in the name of 0on)alo 1. Co Toco on the boo%s of the corporation and to
issue ne$ ones in the name of the plaintiff because prior to the date $hen the plaintiff made his
demand, to $it, "ebruar' 3, ,.//, nine attachments had been issued and served and noted on the
boo%s of the corporation a!ainst the shares of 0on)alo 1. Co Toco and the plaintiff obected to
havin! these attachments noted on the ne$ certificates $hich he demanded. These attachments
noted on the boo%s of the corporation a!ainst the shares of 0on)alo 1. Co Toco are as follo$s&
MISSING PAGES: 46&-466.
#t $ill be noted that the first ei!ht of the said $rits of attachment $ere served on the corporation and
noted on its records before the corporation received notice from the mort!a!ee Chua Chiu of the
mort!a!e of said shares dated +une ,-, ,./,. No ;uestion is raised as to the validit' of said
mort!a!e or of said $rits of attachment and the sole ;uestion presented for decision is $hether the
said mort!a!e ta%es priorit' over the said $rits of attachment.
#t is not alle!ed that the said attachin! creditors had actual notice of the said mort!a!e and the
;uestion therefore narro$s itself do$n to this& 7id the re!istration of said chattel mort!a!e in the
re!istr' of chattel mort!a!es in the office of the re!ister of deeds of Manila, under date of +ul' 4/,
,./,, !ive constructive notice to the said attachin! creditors<
#n passin!, let it be noted that the re!istration of the said chattel mort!a!e in the office of the
corporation $as not necessar' and had no le!al effect. 9Monserrat vs. Ceron, 2- Phil., 3=..: The
lon! mooted ;uestion as to $hether or not shares of a corporation could be h'pothecated b' placin!
a chattel mort!a!e on the certificate representin! such shares $e no$ re!ard as settled b' the case
of Monserrat vs. Ceron, supra. But that case did not deal $ith an' ;uestion relatin! to the
re!istration of such a mort!a!e or the effect of such re!istration. Nothin! appears in the record of
that case even tendin! to sho$ that the chattel mort!a!e there involved $as ever re!istered
an'$here e8cept in the office of the corporation, and there $as no ;uestion involved there as to the
ri!ht of priorit' amon! conflictin! claims of creditors of the o$ner of the shares.
The Chattel Mort!a!e >a$, Act No. ,25-, as amended b' Act No. 43.=, contains the follo$in!
provision&
(EC. 3. A chattel mort!a!e shall not be valid a!ainst an' person e8cept the mort!a!or, his
e8ecutors or administrators, unless the possession of the propert' is delivered to and
retained b' the mort!a!ee or unless the mort!a!e is recorded in the office of the re!ister of
deeds of the province in $hich the mort!a!or resides at the time of ma%in! the same, or, if
he resides the Philippine #slands, in the province in $hich the propert' is situated& Provided,
however, That if the propert' is situated in a different province from that in $hich the
mort!a!or resides, the mort!a!e shall be recorded in the office of the re!ister of deeds of
both the province in $hich the mort!a!or resides and that in $hich the propert' is situated,
and for the purposes of this Act the Cit' of Manila (hall be deemed to be a province.
The practical application of the Chattel Mort!a!e >a$ to shares of stoc% of a corporation presents
considerable difficult' and $e have obtained little aid from the decisions of other urisdictions
because that form of mort!a!e is ill suited to the h'pothecation of shares of stoc% and has been
rarel' used else$here. #n fact, it has been doubted $hether shares of stoc% in a corporation are
chattels in the sense in $hich that $ord is used chattel mort!a!e statutes. This doubt is reflected in
our o$n decision in the case of Fua Cun vs. Summers and China Baning Corporation 933 Phil.,
?52:, in $hich $e said&
@. . . an e;uit' in shares of stoc% is of such an intan!ible character that it is some$hat difficult to see
ho$ it can be treated as a chattel and mort!a!ed in such a manner that the recordin! of the
mort!a!e $ill furnish constructive notice to third parties. . . .@And $e held that the chattel mort!a!e
there involved& @at least operated as a conditional e;uitable assi!nment.@ #n that case $e ;uoted the
follo$in! from (paldin! vs. PaineAs AdmAr. 9-, B'., 3,=:, $ith re!ard to a chattel mort!a!e of shares
of stoc%&
@These certificates of stoc% are in the poc%ets of the o$ner, and !o $ith him $here he ma'
happen to locate, as choses in action, or evidence of his ri!ht, $ithout an' means on the part
of those $ith $hom he proposes to deal on the faith of such a securit' of ascertainin!
$hether or not this stoc% is in pled!e or mort!a!ed to others. 1e finds the name of the o$ner
on the boo%s of the compan' as a subscriber of paid-up stoc%, amountin! to ,-5 shares,
$ith the certificates in his possession, pa's for these certificates their full value, and has the
transfer to him made on the boo%s of the compan', thereb' obtainin! a perfect title. Chat
other in;uir' is he to ma%e, so as to ma%e his investment certain and secure< Chere is he to
loo%, in order to ascertain $hether or not this stoc% has been mort!a!ed< The chief office of
the compan' ma' be at one place toda' and at another tomorro$. The o$ner ma' have no
fi8ed or permanent abode, and $ith his notes in one poc%et and his certificates of stoc% in
the other D the one evidencin! the e8tent of his interest in the stoc% of the corporation, the
other his ri!ht to mone' o$in! him b' his debtor, $e are as%ed to sa' that the mort!a!e is
effectual as to the one and inoperative as to the other.@
But the case of Fua Cun vs. Summers and China Baning Corporation, supra, did not decide the
;uestion here presented and !ave no li!ht as to the re!istration of a chattel mort!a!e of shares of
stoc% of a corporation under the provisions of section 3 of the Chattel Mort!a!e >a$, supra.
(ection 3 of Act No. ,25- provides t$o $a's for e8ecutin! a valid chattel mort!a!e $hich shall be
effective a!ainst third persons. "irst, the possession of the propert' mort!a!e must be delivered to
and retained b' the mort!a!ee* and, second, $ithout such deliver' the mort!a!e must be recorded
in the proper office or offices of the re!ister or re!isters of deeds. #f a chattel mort!a!e of shares of
stoc% of a corporation ma' validl' be made $ithout the deliver' of possession of the propert' to the
mort!a!ee and the mere re!istration of the mort!a!e is sufficient to constructive notice to third
parties, $e are confronted $ith the ;uestion as to the proper place of re!istration of such a
mort!a!e. (ection 3 provides that in such a case the mort!a!e resides at the time of ma%in! the
same or, if he is a non-resident, in the province in $hich the propert' is situated* and it also provides
that if the propert' is situated in a different province from that in $hich the mort!a!or resides the
mort!a!e shall be recorded both in the province of the mort!a!orAs residence and in the province
$here the propert' is situated.
#f $ith respect to a chattel mort!a!e of shares of stoc% of a corporation, re!istration in the province
of the o$nerAs domicile should be sufficient, those $ho lend on such securit' $ould be confronted
$ith the practical difficult' of bein! compelled not onl' to search the records of ever' province in
$hich the mort!a!or mi!ht have been domiciled but also ever' province in $hich a chattel mort!a!e
b' an' former o$ner of such shares mi!ht be re!istered. Ce cannot thin% that it $as the intention of
the le!islature to put this almost prohibitive impediment upon the h'pothecation of shares of stoc% in
vie$ of the !reat volume of business that is done on the faith of the pled!e of shares of stoc% as
collateral.
#t is a common but not accurate !enerali)ation that the situs of shares of stoc% is at the domicile of
the o$ner. The term situs is not one of fi8ed of invariable meanin! or usa!e. Nor should $e lose
si!ht of the difference bet$een the situs of the shares and the situs of the certificates of shares. The
situs of shares of stoc% for some purposes ma' be at the domicile of the o$ner and for others at the
domicile of the corporation* and even else$here. 9Cf. Eidal vs. (outh American (ecurities Co., 4?=
"ed., -22* Blac% Ea!le Min. Co. vs. Conro', .3 6%la., ,..* 44, Pac,, 342 Norrie vs. Bansas Cit'
(outhern R'. Co., ? "ed. F4dG. ,2-.: #t is a !eneral rule that for purposes of e8ecution, attachment
and !arnishment, it is not the domicile of the o$ner of a certificate but the domicile of the corporation
$hich is decisive. 9"letcher, C'clopedia of the >a$ of Private Corporations, vol. ,,, para!raph 2,5=.
Cf. sections 3/5 and 325, Code of Civil Procedure.:
B' analo!' $ith the fore!oin! and considerin! the o$nership of shares in a corporation as propert'
distinct from the certificates $hich are merel' the evidence of such o$nership, it seems to us a
reasonable construction of section 3 of Act No. ,25- to hold that the propert' in the shares ma' be
deemed to be situated in the province in $hich the corporation has its principal office or place of
business. #f this province is also the province of the o$nerAs domicile, a sin!le re!istration sufficient.
#f not, the chattel mort!a!e should be re!istered both at the o$nerAs domicile and in the province
$here the corporation has its principal office or place of business. #n this sense the propert'
mort!a!ed is not the certificate but the participation and share of the o$ner in the assets of the
corporation.
Apart from the cumbersome and unusual method of h'pothecatin! shares of stoc% b' chattel
mort!a!e, it appears that in the present state of our la$, the onl' safe $a' to accomplish the
h'pothecation of share of stoc% of a Philippine corporation is for the creditor to insist on the
assi!nment and deliver' of the certificate and to obtain the transfer of the le!al title to him on the
boo%s of the corporation b' the cancellation of the certificate and the issuance of a ne$ one to him.
"rom the standpoint of the debtor this ma' be unsatisfactor' because it leaves the creditor as the
ostensible o$ner of the shares and the debtor is forced to rel' upon the honest' and solvenc' of the
creditor. 6f course, the mere possession and retention of the debtorAs certificate b' the creditor !ives
some securit' to the creditor a!ainst an attempted voluntar' transfer b' the debtor, provided the b'-
la$s of the corporation e8pressl' enact that transfers ma' be made onl' upon the surrender of the
certificate. #t is to be noted, ho$ever, that section /2 of the Corporation >a$ 9Act No. ,32.: enacts
that shares of stoc% @ma' be transferred b' deliver' of the certificate endorsed b' the o$ner or his
attorne' in fact or other person le!all' authori)ed to ma%e the transfer.@ The use of the verb @ma'@
does not e8clude the possibilit' that a transfer ma' be made in a different manner, thus leavin! the
creditor in an insecure position even thou!h he has the certificate in his possession. Moreover, the
shares still standin! in the name of the debtor on the boo%s of the corporation $ill be liable to sei)ure
b' attachment or lev' on e8ecution at the instance of other creditors. 9Cf. H' Piaoco vs.McMic%in!,
,5 Phil., 4-=, and Hson vs. 7iosomito, =, Phil., 2/2.: This unsatisfactor' state of our la$ is $ell
%no$n to the bench and bar. 9Cf. "isher, The Philippine >a$ of (toc% Corporations, pa!es ,=/-,=-.:
>oans upon stoc% securities should be facilitated in order to foster economic development. The
transfer b' endorsement and deliver' of a certificate $ith intention to pled!e the shares covered
thereb' should be sufficient to !ive le!al effect to that intention and to consummate the uristic act
$ithout necessit' for re!istration.lawphi l.net
Ce are full' conscious of the fact that our decisions in the case of Monserrat vs. Ceron, supra, and
in the present case have done little perhaps to ameliorate the present uncertain and unsatisfactor'
state of our la$ applicable to pled!es and chattel mort!a!es of shares of stoc% of Philippine
corporations. The remed' lies $ith the le!islature.
#n vie$ of the premises, the attachin! creditors are entitled to priorit' over the defectivel' re!istered
mort!a!e of the appellant and the ud!ment appealed from must be affirmed $ithout special
pronouncement as to costs in this instance.
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