1

G.R. Nos. L-10817-18

February 28, 1958

ENRIQUE LOPEZ, petitioner,

vs.
VICENTE OROSA, JR., and PLAZA THEATRE, INC., respondents.
Nicolas Belmonte and Benjamin T. de Peralta for petitioner.
Tolentino & Garcia and D. R. Cruz for respondent Luzon Surety Co., Inc. Jose B. Macatangay for
respondent Plaza Theatre, Inc.
FELIX, J.:
Enrique Lopez is a resident of Balayan, Batangas, doing business under the trade name of LopezCastelo Sawmill. Sometime in May, 1946, Vicente Orosa, Jr., also a resident of the same province,
dropped at Lopez' house and invited him to make an investment in the theatre business. It was
intimated that Orosa, his family and close friends were organizing a corporation to be known as Plaza
Theatre, Inc., that would engage in such venture. Although Lopez expressed his unwillingness to
invest of the same, he agreed to supply the lumber necessary for the construction of the proposed
theatre, and at Orosa's behest and assurance that the latter would be personally liable for any
account that the said construction might incur, Lopez further agreed that payment therefor would be
on demand and not cash on delivery basis. Pursuant to said verbal agreement, Lopez delivered the
lumber which was used for the construction of the Plaza Theatre on May 17, 1946, up to December 4
of the same year. But of the total cost of the materials amounting to P62,255.85, Lopez was paid only
P20,848.50, thus leaving a balance of P41,771.35.
We may state at this juncture that the Plaza Theatre was erected on a piece of land with an area of
679.17 square meters formerly owned by Vicente Orosa, Jr., and was acquired by the corporation on
September 25, 1946, for P6,000. As Lopez was pressing Orosa for payment of the remaining unpaid
obligation, the latter and Belarmino Rustia, the president of the corporation, promised to obtain a
bank loan by mortgaging the properties of the Plaza Theatre., out of which said amount of P41,771.35
would be satisfied, to which assurance Lopez had to accede. Unknown to him, however, as early as
November, 1946, the corporation already got a loan for P30,000 from the Philippine National Bank
with the Luzon Surety Company as surety, and the corporation in turn executed a mortgage on the
land and building in favor of said company as counter-security. As the land at that time was not yet
brought under the operation of the Torrens System, the mortgage on the same was registered on
November 16, 1946, under Act No. 3344. Subsequently, when the corporation applied for the
registration of the land under Act 496, such mortgage was not revealed and thus Original Certificate
of Title No. O-391 was correspondingly issued on October 25, 1947, without any encumbrance
appearing thereon.
Persistent demand from Lopez for the payment of the amount due him caused Vicente Orosa, Jr. to
execute on March 17, 1947, an alleged "deed of assignment" of his 420 shares of stock of the Plaza
Theater, Inc., at P100 per share or with a total value of P42,000 in favor of the creditor, and as the
obligation still remained unsettled, Lopez filed on November 12, 1947, a complaint with the Court of
First Instance of Batangas (Civil Case No. 4501 which later became R-57) against Vicente Orosa, Jr.
and Plaza Theater, Inc., praying that defendants be sentenced to pay him jointly and severally the
sum of P41,771.35, with legal interest from the firing of the action; that in case defendants fail to pay
the same, that the building and the land covered by OCT No. O-391 owned by the corporation be sold
at public auction and the proceeds thereof be applied to said indebtedness; or that the 420 shares of
the capital stock of the Plaza Theatre, Inc., assigned by Vicente Orosa, Jr., to said plaintiff be sold at
public auction for the same purpose; and for such other remedies as may be warranted by the

2
circumstances. Plaintiff also caused the annotation of a notice of lis pendens on said properties with
the Register of Deeds.
Defendants Vicente Orosa, Jr. and Plaza Theatre, Inc., filed separate answers, the first denying that
the materials were delivered to him as a promoter and later treasurer of the corporation, because he
had purchased and received the same on his personal account; that the land on which the movie
house was constructed was not charged with a lien to secure the payment of the aforementioned
unpaid obligation; and that the 420 shares of stock of the Plaza Theatre, Inc., was not assigned to
plaintiff as collaterals but as direct security for the payment of his indebtedness. As special defense,
this defendant contended that as the 420 shares of stock assigned and conveyed by the assignor and
accepted by Lopez as direct security for the payment of the amount of P41,771.35 were personal
properties, plaintiff was barred from recovering any deficiency if the proceeds of the sale thereof at
public auction would not be sufficient to cover and satisfy the obligation. It was thus prayed that he
be declared exempted from the payment of any deficiency in case the proceeds from the sale of said
personal properties would not be enough to cover the amount sought to be collected.
Defendant Plaza Theatre, Inc., on the other hand, practically set up the same line of defense by
alleging that the building materials delivered to Orosa were on the latter's personal account; and that
there was no understanding that said materials would be paid jointly and severally by Orosa and the
corporation, nor was a lien charged on the properties of the latter to secure payment of the same
obligation. As special defense, defendant corporation averred that while it was true that the materials
purchased by Orosa were sold by the latter to the corporation, such transactions were in good faith
and for valuable consideration thus when plaintiff failed to claim said materials within 30 days from
the time of removal thereof from Orosa, lumber became a different and distinct specie and plaintiff
lost whatever rights he might have in the same and consequently had no recourse against the Plaza
Theatre, Inc., that the claim could not have been refectionary credit, for such kind of obligation
referred to an indebtedness incurred in the repair or reconstruction of something already existing and
this concept did not include an entirely new work; and that the Plaza Theatre, Inc., having been
incorporated on October 14, 1946, it could not have contracted any obligation prior to said date. It
was, therefore, prayed that the complaint be dismissed; that said defendant be awarded the sum P
5,000 for damages, and such other relief as may be just and proper in the premises.
The surety company, in the meantime, upon discovery that the land was already registered under the
Torrens System and that there was a notice of lis pendens thereon, filed on August 17, 1948, or within
the 1-year period after the issuance of the certificate of title, a petition for review of the decree of the
land registration court dated October 18, 1947, which was made the basis of OCT No. O-319, in order
to annotate the rights and interests of the surety company over said properties (Land Registration
Case No. 17 GLRO Rec. No. 296). Opposition thereto was offered by Enrique Lopez, asserting that the
amount demanded by him constituted a preferred lien over the properties of the obligors; that the
surety company was guilty of negligence when it failed to present an opposition to the application for
registration of the property; and that if any violation of the rights and interest of said surety would
ever be made, same must be subject to the lien in his favor.
The two cases were heard jointly and in a decision dated October 30, 1952, the lower Court, after
making an exhaustive and detailed analysis of the respective stands of the parties and the evidence
adduced at the trial, held that defendants Vicente Orosa, Jr., and the Plaza Theatre, Inc.,
were jointly liable for the unpaid balance of the cost of lumber used in the construction of
the building and the plaintiff thus acquired the materialman's lien over the same. In making the
pronouncement that the lien was merely confined to the building and did not extend to the land on
which the construction was made, the trial judge took into consideration the fact that when plaintiff
started the delivery of lumber in May, 1946, the land was not yet owned by the corporation; that the
mortgage in favor of Luzon Surety Company was previously registered under Act No. 3344; that the

3
codal provision (Art. 1923 of the old Spanish Civil Code) specifying that refection credits are preferred
could refer only to buildings which are also classified as real properties, upon which said refection was
made. It was, however, declared that plaintiff's lien on the building was superior to the right of the
surety company. And finding that the Plaza Theatre, Inc., had no objection to the review of the decree
issued in its favor by the land registration court and the inclusion in the title of the encumbrance in
favor of the surety company, the court a quo granted the petition filed by the latter company.
Defendants Orosa and the Plaza Theatre, Inc., were thus required to pay jointly the amount of
P41,771.35 with legal interest and costs within 90 days from notice of said decision; that in case of
default, the 420 shares of stock assigned by Orosa to plaintiff be sold at public auction and the
proceeds thereof be applied to the payment of the amount due the plaintiff, plus interest and costs;
and that the encumbrance in favor of the surety company be endorsed at the back of OCT No. O-391,
with notation I that with respect to the building, said mortgage was subject to the materialman's lien
in favor of Enrique Lopez.
Plaintiff tried to secure a modification of the decision in so far as it declared that the obligation of
therein defendants was joint instead of solidary, and that the lien did not extend to the land, but
same was denied by order the court of December 23, 1952. The matter was thus appealed to the
Court of appeals, which affirmed the lower court's ruling, and then to this Tribunal. In this instance,
plaintiff-appellant raises 2 issues: (1) whether a materialman's lien for the value of the materials used
in the construction of a building attaches to said structure alone and does not extend to the land on
which the building is adhered to; and (2) whether the lower court and the Court of Appeals erred in
not providing that the material mans liens is superior to the mortgage executed in favor surety
company not only on the building but also on the land.
It is to be noted in this appeal that Enrique Lopez has not raised any question against the part of the
decision sentencing defendants Orosa and Plaza Theatre, Inc., to pay jointly the sum of P41,771.35,
so We will not take up or consider anything on that point. Appellant, however, contends that the lien
created in favor of the furnisher of the materials used for the construction, repair or refection of a
building, is also extended to the land which the construction was made, and in support thereof he
relies on Article 1923 of the Spanish Civil Code, pertinent law on the matter, which reads as follows:
ART. 1923. With respect to determinate real property and real rights of the debtor, the
following are preferred:
xxx

xxx

xxx

5. Credits for refection, not entered or recorded, with respect to the estate upon which the
refection was made, and only with respect to other credits different from those mentioned in
four preceding paragraphs.
It is argued that in view of the employment of the phrase real estate, or immovable property, and
inasmuch as said provision does not contain any specification delimiting the lien to the building, said
article must be construed as to embrace both the land and the building or structure adhering thereto.
We cannot subscribe to this view, for while it is true that generally, real estate connotes the land and
the building constructed thereon, it is obvious that the inclusion of the building, separate and distinct
from the land, in the enumeration of what may constitute real properties 1 could mean only one thing
that a building is by itself an immovable property, a doctrine already pronounced by this Court in
the case of Leung Yee vs. Strong Machinery Co., 37 Phil., 644. Moreover, and in view of the absence
of any specific provision of law to the contrary, a building is an immovable property, irrespective of
whether or not said structure and the land on which it is adhered to belong to the same owner.

4
A close examination of the provision of the Civil Code invoked by appellant reveals that the law gives
preference to unregistered refectionary credits only with respect to the real estate upon which the
refection or work was made. This being so, the inevitable conclusion must be that the lien so created
attaches merely to the immovable property for the construction or repair of which the obligation was
incurred. Evidently, therefore, the lien in favor of appellant for the unpaid value of the lumber used in
the construction of the building attaches only to said structure and to no other property of the
obligors.
Considering the conclusion thus arrived at, i.e., that the materialman's lien could be charged only to
the building for which the credit was made or which received the benefit of refection, the lower court
was right in, holding at the interest of the mortgagee over the land is superior and cannot be made
subject to the said materialman's lien.
Wherefore, and on the strength of the foregoing considerations, the decision appealed from is hereby
affirmed, with costs against appellant. It is so ordered.

G.R. Nos. L-10837-38

May 30, 1958

ASSOCIATED INSURANCE and SURETY COMPANY, INC., plaintiff,

vs.
ISABEL IYA, ADRIANO VALINO and LUCIA VALINO, defendants.
ISABEL IYA, plaintiff,
vs.
ADRIANO VALINO, LUCIA VALINO and ASSOCIATED INSURANCE and SURETY COMPANY.
INC.,defendants.
Jovita L. de Dios for defendant Isabel Iya.
M. Perez Cardenas and Apolonio Abola for defendant Associated Insurance and Surety Co., Inc.
FELIX, J.:
Adriano Valino and Lucia A. Valino, husband and wife, were the owners and possessors of a house of
strong materials constructed on Lot No. 3, Block No. 80 of the Grace Park Subdivision in Caloocan,
Rizal, which they purchased on installment basis from the Philippine Realty Corporation. On
November 6, 1951, to enable her to purchase on credit rice from the NARIC, Lucia A. Valino filed a
bond in the sum of P11,000.00 (AISCO Bond No. G-971) subscribed by the Associated Insurance and
Surety Co., Inc., and as counter-guaranty therefor, the spouses Valino executed an
alleged chattel mortgage on the aforementioned house in favor of the surety company, which
encumbrance was duly registered with the Chattel Mortgage Register of Rizal on December 6, 1951.
It is admitted that at the time said undertaking took place, the parcel of land on which the house is
erected was still registered in the name of the Philippine Realty Corporation. Having completed
payment on the purchase price of the lot, the Valinos were able to secure on October 18, 1958, a
certificate of title in their name (T.C.T. No. 27884). Subsequently, however, or on October 24, 1952,
the Valinos, to secure payment of an indebtedness in the amount of P12,000.00, executed a real
estate mortgage over the lot and the house in favor of Isabel Iya, which was duly registered and
annotated at the back of the certificate of title.
On the other hand, as Lucia A. Valino, failed to satisfy her obligation to the NARIC, the surety
company was compelled to pay the same pursuant to the undertaking of the bond. In turn, the surety

5
company demanded reimbursement from the spouses Valino, and as the latter likewise failed to do
so, the company foreclosed the chattel mortgage over the house. As a result thereof, a public sale
was conducted by the Provincial Sheriff of Rizal on December 26, 1952, wherein the property was
awarded to the surety company for P8,000.00, the highest bid received therefor. The surety company
then caused the said house to be declared in its name for tax purposes (Tax Declaration No. 25128).
Sometime in July, 1953, the surety company learned of the existence of the real estate mortgage over
the lot covered by T.C.T. No. 26884 together with the improvements thereon; thus, said surety
company instituted Civil Case No. 2162 of the Court of First Instance of Manila naming Adriano and
Lucia Valino and Isabel Iya, the mortgagee, as defendants. The complaint prayed for the exclusion of
the residential house from the real estate mortgage in favor of defendant Iya and the declaration and
recognition of plaintiff's right to ownership over the same in virtue of the award given by the
Provincial Sheriff of Rizal during the public auction held on December 26, 1952. Plaintiff likewise
asked the Court to sentence the spouses Valino to pay said surety moral and exemplary damages,
attorney's fees and costs. Defendant Isabel Iya filed her answer to the complaint alleging among
other things, that in virtue of the real estate mortgage executed by her co-defendants, she acquired a
real right over the lot and the house constructed thereon; that the auction sale allegedly conducted
by the Provincial Sheriff of Rizal as a result of the foreclosure of the chattel mortgage on the house
was null and void for non-compliance with the form required by law. She, therefore, prayed for the
dismissal of the complaint and anullment of the sale made by the Provincial Sheriff. She also
demanded the amount of P5,000.00 from plaintiff as counterclaim, the sum of P5,000.00 from her codefendants as crossclaim, for attorney's fees and costs.
Defendants spouses in their answer admitted some of the averments of the complaint and denied the
others. They, however, prayed for the dismissal of the action for lack of cause of action, it being
alleged that plaintiff was already the owner of the house in question, and as said defendants admitted
this fact, the claim of the former was already satisfied.
On October 29, 1953, Isabel Iya filed another civil action against the Valinos and the surety company
(Civil Case No. 2504 of the Court of First Instance of Manila) stating that pursuant to the contract of
mortgage executed by the spouses Valino on October 24, 1952, the latter undertook to pay a loan of
P12,000.00 with interest at 12% per annum or P120.00 a month, which indebtedness was payable in
4 years, extendible for only one year; that to secure payment thereof, said defendants mortgaged the
house and lot covered by T.C.T. No. 27884 located at No. 67 Baltazar St., Grace Park Subdivision,
Caloocan, Rizal; that the Associated Insurance and Surety Co., Inc., was included as a party defendant
because it claimed to have an interest on the residential house also covered by said mortgage; that it
was stipulated in the aforesaid real estate mortgage that default in the payment of the interest
agreed upon would entitle the mortgagee to foreclose the same even before the lapse of the 4-year
period; and as defendant spouses had allegedly failed to pay the interest for more than 6 months,
plaintiff prayed the Court to order said defendants to pay the sum of P12,000.00 with interest thereon
at 12% per annum from March 25, 1953, until fully paid; for an additional sum equivalent to 20% of
the total obligation as damages, and for costs. As an alternative in case such demand may not be met
and satisfied plaintiff prayed for a decree of foreclosure of the land, building and other improvements
thereon to be sold at public auction and the proceeds thereof applied to satisfy the demands of
plaintiff; that the Valinos, the surety company and any other person claiming interest on the
mortgaged properties be barred and foreclosed of all rights, claims or equity of redemption in said
properties; and for deficiency judgment in case the proceeds of the sale of the mortgaged property
would be insufficient to satisfy the claim of plaintiff.
Defendant surety company, in answer to this complaint insisted on its right over the building, arguing
that as the lot on which the house was constructed did not belong to the spouses at the time the
chattel mortgage was executed, the house might be considered only as a personal property and that

6
the encumbrance thereof and the subsequent foreclosure proceedings made pursuant to the
provisions of the Chattel Mortgage Law were proper and legal. Defendant therefore prayed that said
building be excluded from the real estate mortgage and its right over the same be declared superior
to that of plaintiff, for damages, attorney's fees and costs.
Taking side with the surety company, defendant spouses admitted the due execution of the mortgage
upon the land but assailed the allegation that the building was included thereon, it being contended
that it was already encumbered in favor of the surety company before the real estate mortgage was
executed, a fact made known to plaintiff during the preparation of said contract and to which the
latter offered no objection. As a special defense, it was asserted that the action was premature
because the contract was for a period of 4 years, which had not yet elapsed.
The two cases were jointly heard upon agreement of the parties, who submitted the same on a
stipulation of facts, after which the Court rendered judgment dated March 8, 1956, holding that the
chattel mortgage in favor of the Associated Insurance and Surety Co., Inc., was preferred and superior
over the real estate mortgage subsequently executed in favor of Isabel Iya. It was ruled that as the
Valinos were not yet the registered owner of the land on which the building in question was
constructed at the time the first encumbrance was made, the building then was still a personality and
a chattel mortgage over the same was proper. However, as the mortgagors were already the owner of
the land at the time the contract with Isabel Iya was entered into, the building was transformed into a
real property and the real estate mortgage created thereon was likewise adjudged as proper. It is to
be noted in this connection that there is no evidence on record to sustain the allegation of the
spouses Valino that at the time they mortgaged their house and lot to Isabel Iya, the latter was told or
knew that part of the mortgaged property, i.e., the house, had previously been mortgaged to the
surety company.
The residential building was, therefore, ordered excluded from the foreclosure prayed for by Isabel
Iya, although the latter could exercise the right of a junior encumbrance. So the spouses Valino were
ordered to pay the amount demanded by said mortgagee or in their default to have the parcel of land
subject of the mortgage sold at public auction for the satisfaction of Iya's claim.
There is no question as to appellant's right over the land covered by the real estate mortgage;
however, as the building constructed thereon has been the subject of 2 mortgages; controversy arise
as to which of these encumbrances should receive preference over the other. The decisive factor in
resolving the issue presented by this appeal is the determination of the nature of the structure
litigated upon, for where it be considered a personality, the foreclosure of the chattel mortgage and
the subsequent sale thereof at public auction, made in accordance with the Chattel Mortgage Law
would be valid and the right acquired by the surety company therefrom would certainly deserve prior
recognition; otherwise, appellant's claim for preference must be granted. The lower Court, deciding in
favor of the surety company, based its ruling on the premise that as the mortgagors were not the
owners of the land on which the building is erected at the time the first encumbrance was made, said
structure partook of the nature of a personal property and could properly be the subject of a chattel
mortgage. We find reason to hold otherwise, for as this Court, defining the nature or character of a
building, has said:
. . . while it is true that generally, real estate connotes the land and the building constructed
thereon, it is obvious that the inclusion of the building, separate and distinct from the land, in
the enumeration of what may constitute real properties (Art. 415, new Civil Code) could only
mean one thing that a building is byitself an immovable property . . . Moreover, and in view
of the absence of any specific provision to the contrary, a building is an immovable property
irrespective of whether or not said structure and the land on which it is adhered to belong to
the same owner. (Lopez vs. Orosa, G.R. Nos. supra, p. 98).

7
A building certainly cannot be divested of its character of a realty by the fact that the land on which it
is constructed belongs to another. To hold it the other way, the possibility is not remote that it would
result in confusion, for to cloak the building with an uncertain status made dependent on the
ownership of the land, would create a situation where a permanent fixture changes its nature or
character as the ownership of the land changes hands. In the case at bar, as personal properties
could only be the subject of a chattel mortgage (Section 1, Act 3952) and as obviously the structure
in question is not one, the execution of the chattel mortgage covering said building is clearly invalid
and a nullity. While it is true that said document was correspondingly registered in the Chattel
Mortgage Register of Rizal, this act produced no effect whatsoever for where the interest conveyed is
in the nature of a real property, the registration of the document in the registry of chattels is merely a
futile act. Thus, the registration of the chattel mortgage of a building of strong materials produce no
effect as far as the building is concerned (Leung Yee vs. Strong Machinery Co., 37 Phil., 644). Nor can
we give any consideration to the contention of the surety that it has acquired ownership over the
property in question by reason of the sale conducted by the Provincial Sheriff of Rizal, for as this
Court has aptly pronounced:
A mortgage creditor who purchases real properties at an extrajudicial foreclosure sale thereof
by virtue of a chattel mortgage constituted in his favor, which mortgage has been declared null
and void with respect to said real properties, acquires no right thereto by virtue of said sale
(De la Riva vs. Ah Keo, 60 Phil., 899).
Wherefore the portion of the decision of the lower Court in these two cases appealed from holding the
rights of the surety company, over the building superior to that of Isabel Iya and excluding the
building from the foreclosure prayed for by the latter is reversed and appellant Isabel Iya's right to
foreclose not only the land but also the building erected thereon is hereby recognized, and the
proceeds of the sale thereof at public auction (if the land has not yet been sold), shall be applied to
the unsatisfied judgment in favor of Isabel Iya. This decision however is without prejudice to any right
that the Associated Insurance and Surety Co., Inc., may have against the spouses Adriano and Lucia
Valino on account of the mortgage of said building they executed in favor of said surety company.
Without pronouncement as to costs. It is so ordered.

G.R. No. L-15334

January 31, 1964

BOARD OF ASSESSMENT APPEALS, CITY ASSESSOR and CITY TREASURER OF QUEZON

CITY,petitioners,
vs.
MANILA ELECTRIC COMPANY, respondent.
Assistant City Attorney Jaime R. Agloro for petitioners.
Ross, Selph and Carrascoso for respondent.
PAREDES, J.:
From the stipulation of facts and evidence adduced during the hearing, the following appear:
On October 20, 1902, the Philippine Commission enacted Act No. 484 which authorized the Municipal
Board of Manila to grant a franchise to construct, maintain and operate an electric street railway and
electric light, heat and power system in the City of Manila and its suburbs to the person or persons
making the most favorable bid. Charles M. Swift was awarded the said franchise on March 1903, the

8
terms and conditions of which were embodied in Ordinance No. 44 approved on March 24, 1903.
Respondent Manila Electric Co. (Meralco for short), became the transferee and owner of the franchise.
Meralco's electric power is generated by its hydro-electric plant located at Botocan Falls, Laguna and
is transmitted to the City of Manila by means of electric transmission wires, running from the province
of Laguna to the said City. These electric transmission wires which carry high voltage current, are
fastened to insulators attached on steel towers constructed by respondent at intervals, from its
hydro-electric plant in the province of Laguna to the City of Manila. The respondent Meralco has
constructed 40 of these steel towers within Quezon City, on land belonging to it. A photograph of one
of these steel towers is attached to the petition for review, marked Annex A. Three steel towers were
inspected by the lower court and parties and the following were the descriptions given there of by
said court:
The first steel tower is located in South Tatalon, Espaa Extension, Quezon City. The findings
were as follows: the ground around one of the four posts was excavated to a depth of about
eight (8) feet, with an opening of about one (1) meter in diameter, decreased to about a
quarter of a meter as it we deeper until it reached the bottom of the post; at the bottom of the
post were two parallel steel bars attached to the leg means of bolts; the tower proper was
attached to the leg three bolts; with two cross metals to prevent mobility; there was no
concrete foundation but there was adobe stone underneath; as the bottom of the excavation
was covered with water about three inches high, it could not be determined with certainty to
whether said adobe stone was placed purposely or not, as the place abounds with this kind of
stone; and the tower carried five high voltage wires without cover or any insulating materials.
The second tower inspected was located in Kamuning Road, K-F, Quezon City, on land owned
by the petitioner approximate more than one kilometer from the first tower. As in the first
tower, the ground around one of the four legs was excavate from seven to eight (8) feet deep
and one and a half (1-) meters wide. There being very little water at the bottom, it was seen
that there was no concrete foundation, but there soft adobe beneath. The leg was likewise
provided with two parallel steel bars bolted to a square metal frame also bolted to each corner.
Like the first one, the second tower is made up of metal rods joined together by means of
bolts, so that by unscrewing the bolts, the tower could be dismantled and reassembled.
The third tower examined is located along Kamias Road, Quezon City. As in the first two towers
given above, the ground around the two legs of the third tower was excavated to a depth
about two or three inches beyond the outside level of the steel bar foundation. It was found
that there was no concrete foundation. Like the two previous ones, the bottom arrangement of
the legs thereof were found to be resting on soft adobe, which, probably due to high humidity,
looks like mud or clay. It was also found that the square metal frame supporting the legs were
not attached to any material or foundation.
On November 15, 1955, petitioner City Assessor of Quezon City declared the aforesaid steel towers
for real property tax under Tax declaration Nos. 31992 and 15549. After denying respondent's petition
to cancel these declarations, an appeal was taken by respondent to the Board of Assessment Appeals
of Quezon City, which required respondent to pay the amount of P11,651.86 as real property tax on
the said steel towers for the years 1952 to 1956. Respondent paid the amount under protest, and
filed a petition for review in the Court of Tax Appeals (CTA for short) which rendered a decision on
December 29, 1958, ordering the cancellation of the said tax declarations and the petitioner City
Treasurer of Quezon City to refund to the respondent the sum of P11,651.86. The motion for
reconsideration having been denied, on April 22, 1959, the instant petition for review was filed.

9
In upholding the cause of respondents, the CTA held that: (1) the steel towers come within the term
"poles" which are declared exempt from taxes under part II paragraph 9 of respondent's franchise; (2)
the steel towers are personal properties and are not subject to real property tax; and (3) the City
Treasurer of Quezon City is held responsible for the refund of the amount paid. These are assigned as
errors by the petitioner in the brief.
The tax exemption privilege of the petitioner is quoted hereunder:
PAR 9. The grantee shall be liable to pay the same taxes upon its real estate, buildings, plant
(not including poles, wires, transformers, and insulators), machinery and personal property as
other persons are or may be hereafter required by law to pay ... Said percentage shall be due
and payable at the time stated in paragraph nineteen of Part One hereof, ... and shall be in lieu
of all taxes and assessments of whatsoever nature and by whatsoever authority upon the
privileges, earnings, income, franchise, and poles, wires, transformers, and insulators of the
grantee from which taxes and assessments the grantee is hereby expressly exempted. (Par. 9,
Part Two, Act No. 484 Respondent's Franchise; emphasis supplied.)
The word "pole" means "a long, comparatively slender usually cylindrical piece of wood or timber, as
typically the stem of a small tree stripped of its branches; also by extension, a similar typically
cylindrical piece or object of metal or the like". The term also refers to "an upright standard to the top
of which something is affixed or by which something is supported; as a dovecote set on a pole;
telegraph poles; a tent pole; sometimes, specifically a vessel's master (Webster's New International
Dictionary 2nd Ed., p. 1907.) Along the streets, in the City of Manila, may be seen cylindrical metal
poles, cubical concrete poles, and poles of the PLDT Co. which are made of two steel bars joined
together by an interlacing metal rod. They are called "poles" notwithstanding the fact that they are no
made of wood. It must be noted from paragraph 9, above quoted, that the concept of the "poles" for
which exemption is granted, is not determined by their place or location, nor by the character of the
electric current it carries, nor the material or form of which it is made, but the use to which they are
dedicated. In accordance with the definitions, pole is not restricted to a long cylindrical piece of wood
or metal, but includes "upright standards to the top of which something is affixed or by which
something is supported. As heretofore described, respondent's steel supports consists of a framework
of four steel bars or strips which are bound by steel cross-arms atop of which are cross-arms
supporting five high voltage transmission wires (See Annex A) and their sole function is to support or
carry such wires.
The conclusion of the CTA that the steel supports in question are embraced in the term "poles" is not
a novelty. Several courts of last resort in the United States have called these steel supports "steel
towers", and they denominated these supports or towers, as electric poles. In their decisions the
words "towers" and "poles" were used interchangeably, and it is well understood in that jurisdiction
that a transmission tower or pole means the same thing.
In a proceeding to condemn land for the use of electric power wires, in which the law provided that
wires shall be constructed upon suitable poles, this term was construed to mean either wood or metal
poles and in view of the land being subject to overflow, and the necessary carrying of numerous wires
and the distance between poles, the statute was interpreted to include towers or poles. (Stemmons
and Dallas Light Co. (Tex) 212 S.W. 222, 224; 32-A Words and Phrases, p. 365.)
The term "poles" was also used to denominate the steel supports or towers used by an association
used to convey its electric power furnished to subscribers and members, constructed for the purpose
of fastening high voltage and dangerous electric wires alongside public highways. The steel supports
or towers were made of iron or other metals consisting of two pieces running from the ground up
some thirty feet high, being wider at the bottom than at the top, the said two metal pieces being

10
connected with criss-cross iron running from the bottom to the top, constructed like ladders and
loaded with high voltage electricity. In form and structure, they are like the steel towers in question.
(Salt River Valley Users' Ass'n v. Compton, 8 P. 2nd, 249-250.)
The term "poles" was used to denote the steel towers of an electric company engaged in the
generation of hydro-electric power generated from its plant to the Tower of Oxford and City of
Waterbury. These steel towers are about 15 feet square at the base and extended to a height of about
35 feet to a point, and are embedded in the cement foundations sunk in the earth, the top of which
extends above the surface of the soil in the tower of Oxford, and to the towers are attached
insulators, arms, and other equipment capable of carrying wires for the transmission of electric power
(Connecticut Light and Power Co. v. Oxford, 101 Conn. 383, 126 Atl. p. 1).
In a case, the defendant admitted that the structure on which a certain person met his death was
built for the purpose of supporting a transmission wire used for carrying high-tension electric power,
but claimed that the steel towers on which it is carried were so large that their wire took their
structure out of the definition of a pole line. It was held that in defining the word pole, one should not
be governed by the wire or material of the support used, but was considering the danger from any
elevated wire carrying electric current, and that regardless of the size or material wire of its individual
members, any continuous series of structures intended and used solely or primarily for the purpose of
supporting wires carrying electric currents is a pole line (Inspiration Consolidation Cooper Co. v. Bryan
252 P. 1016).
It is evident, therefore, that the word "poles", as used in Act No. 484 and incorporated in the
petitioner's franchise, should not be given a restrictive and narrow interpretation, as to defeat the
very object for which the franchise was granted. The poles as contemplated thereon, should be
understood and taken as a part of the electric power system of the respondent Meralco, for the
conveyance of electric current from the source thereof to its consumers. If the respondent would be
required to employ "wooden poles", or "rounded poles" as it used to do fifty years back, then one
should admit that the Philippines is one century behind the age of space. It should also be conceded
by now that steel towers, like the ones in question, for obvious reasons, can better effectuate the
purpose for which the respondent's franchise was granted.
Granting for the purpose of argument that the steel supports or towers in question are not embraced
within the term poles, the logical question posited is whether they constitute real properties, so that
they can be subject to a real property tax. The tax law does not provide for a definition of real
property; but Article 415 of the Civil Code does, by stating the following are immovable property:
(1) Land, buildings, roads, and constructions of all kinds adhered to the soil;
xxx

xxx

xxx

(3) Everything attached to an immovable in a fixed manner, in such a way that it cannot be
separated therefrom without breaking the material or deterioration of the object;
xxx

xxx

xxx

(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement
for an industry or works which may be carried in a building or on a piece of land, and which
tends directly to meet the needs of the said industry or works;
xxx

xxx

xxx

11
The steel towers or supports in question, do not come within the objects mentioned in paragraph 1,
because they do not constitute buildings or constructions adhered to the soil. They are not
construction analogous to buildings nor adhering to the soil. As per description, given by the lower
court, they are removable and merely attached to a square metal frame by means of bolts, which
when unscrewed could easily be dismantled and moved from place to place. They can not be included
under paragraph 3, as they are not attached to an immovable in a fixed manner, and they can be
separated without breaking the material or causing deterioration upon the object to which they are
attached. Each of these steel towers or supports consists of steel bars or metal strips, joined together
by means of bolts, which can be disassembled by unscrewing the bolts and reassembled by screwing
the same. These steel towers or supports do not also fall under paragraph 5, for they are not
machineries, receptacles, instruments or implements, and even if they were, they are not intended
for industry or works on the land. Petitioner is not engaged in an industry or works in the land in
which the steel supports or towers are constructed.
It is finally contended that the CTA erred in ordering the City Treasurer of Quezon City to refund the
sum of P11,651.86, despite the fact that Quezon City is not a party to the case. It is argued that as
the City Treasurer is not the real party in interest, but Quezon City, which was not a party to the suit,
notwithstanding its capacity to sue and be sued, he should not be ordered to effect the refund. This
question has not been raised in the court below, and, therefore, it cannot be properly raised for the
first time on appeal. The herein petitioner is indulging in legal technicalities and niceties which do not
help him any; for factually, it was he (City Treasurer) whom had insisted that respondent herein pay
the real estate taxes, which respondent paid under protest. Having acted in his official capacity as
City Treasurer of Quezon City, he would surely know what to do, under the circumstances.
IN VIEW HEREOF, the decision appealed from is hereby affirmed, with costs against the petitioners.

G.R. No. L-46245 May 31, 1982

MERALCO SECURITIES INDUSTRIAL CORPORATION, petitioner,
vs.
CENTRAL BOARD OF ASSESSMENT APPEALS, BOARD OF ASSESSMENT APPEALS OF LAGUNA
and PROVINCIAL ASSESSOR OF LAGUNA, respondents.

AQUINO, J.:
In this special civil action of certiorari, Meralco Securities Industrial Corporation assails the decision of
the Central Board of Assessment Appeals (composed of the Secretary of Finance as chairman and the
Secretaries of Justice and Local Government and Community Development as members) dated May 6,
1976, holding that Meralco Securities' oil pipeline is subject to realty tax.
The record reveals that pursuant to a pipeline concession issued under the Petroleum Act of 1949,
Republic Act No. 387, Meralco Securities installed from Batangas to Manila a pipeline system
consisting of cylindrical steel pipes joined together and buried not less than one meter below the
surface along the shoulder of the public highway. The portion passing through Laguna is about thirty
kilometers long.

12
The pipes for white oil products measure fourteen inches in diameter by thirty-six feet with a
maximum capacity of 75,000 barrels daily. The pipes for fuel and black oil measure sixteen inches by
forty-eight feet with a maximum capacity of 100,000 barrels daily.
The pipes are embedded in the soil and are firmly and solidly welded together so as to preclude
breakage or damage thereto and prevent leakage or seepage of the oil. The valves are welded to the
pipes so as to make the pipeline system one single piece of property from end to end.
In order to repair, replace, remove or transfer segments of the pipeline, the pipes have to be cold-cut
by means of a rotary hard-metal pipe-cutter after digging or excavating them out of the ground where
they are buried. In points where the pipeline traversed rivers or creeks, the pipes were laid beneath
the bed thereof. Hence, the pipes are permanently attached to the land.
However, Meralco Securities notes that segments of the pipeline can be moved from one place to
another as shown in the permit issued by the Secretary of Public Works and Communications which
permit provides that the government reserves the right to require the removal or transfer of the pipes
by and at the concessionaire's expense should they be affected by any road repair or improvement.
Pursuant to the Assessment Law, Commonwealth Act No. 470, the provincial assessor of Laguna
treated the pipeline as real property and issued Tax Declarations Nos. 6535-6537, San Pedro; 74737478, Cabuyao; 7967-7971, Sta. Rosa; 9882-9885, Bian and 15806-15810, Calamba, containing the
assessed values of portions of the pipeline.
Meralco Securities appealed the assessments to the Board of Assessment Appeals of Laguna
composed of the register of deeds as chairman and the provincial auditor as member. That board in
its decision of June 18, 1975 upheld the assessments (pp. 47-49, Rollo).
Meralco Securities brought the case to the Central Board of Assessment Appeals. As already stated,
that Board, composed of Acting Secretary of Finance Pedro M. Almanzor as chairman and Secretary of
Justice Vicente Abad Santos and Secretary of Local Government and Community Development Jose
Roo as members, ruled that the pipeline is subject to realty tax (p. 40, Rollo).
A copy of that decision was served on Meralco Securities' counsel on August 27, 1976. Section 36 of
the Real Property Tax Code, Presidential Decree No. 464, which took effect on June 1, 1974, provides
that the Board's decision becomes final and executory after the lapse of fifteen days from the date of
receipt of a copy of the decision by the appellant.
Under Rule III of the amended rules of procedure of the Central Board of Assessment Appeals (70 O.G.
10085), a party may ask for the reconsideration of the Board's decision within fifteen days after
receipt. On September 7, 1976 (the eleventh day), Meralco Securities filed its motion for
reconsideration.
Secretary of Finance Cesar Virata and Secretary Roo (Secretary Abad Santos abstained) denied the
motion in a resolution dated December 2, 1976, a copy of which was received by appellant's counsel
on May 24, 1977 (p. 4, Rollo). On June 6, 1977, Meralco Securities filed the instant petition for
certiorari.
The Solicitor General contends that certiorari is not proper in this case because the Board acted
within its jurisdiction and did not gravely abuse its discretion and Meralco Securities was not denied
due process of law.

13
Meralco Securities explains that because the Court of Tax Appeals has no jurisdiction to review the
decision of the Central Board of Assessment Appeals and because no judicial review of the Board's
decision is provided for in the Real Property Tax Code, Meralco Securities' recourse is to file a petition
for certiorari.
We hold that certiorari was properly availed of in this case. It is a writ issued by a superior court to an
inferior court, board or officer exercising judicial or quasi-judicial functions whereby the record of a
particular case is ordered to be elevated for review and correction in matters of law (14 C.J.S. 121122; 14 Am Jur. 2nd 777).
The rule is that as to administrative agencies exercising quasi-judicial power there is an underlying
power in the courts to scrutinize the acts of such agencies on questions of law and jurisdiction even
though no right of review is given by the statute (73 C.J.S. 506, note 56).
"The purpose of judicial review is to keep the administrative agency within its jurisdiction and protect
substantial rights of parties affected by its decisions" (73 C.J.S. 507, See. 165). The review is a part of
the system of checks and balances which is a limitation on the separation of powers and which
forestalls arbitrary and unjust adjudications.
Judicial review of the decision of an official or administrative agency exercising quasi-judicial functions
is proper in cases of lack of jurisdiction, error of law, grave abuse of discretion, fraud or collusion or in
case the administrative decision is corrupt, arbitrary or capricious (Mafinco Trading Corporation vs.
Ople, L-37790, March 25, 1976, 70 SCRA 139, 158; San Miguel Corporation vs. Secretary of Labor, L39195, May 16, 1975, 64 SCRA 56, 60, Mun. Council of Lemery vs. Prov. Board of Batangas, 56 Phil.
260, 268).
The Central Board of Assessment Appeals, in confirming the ruling of the provincial assessor and the
provincial board of assessment appeals that Meralco Securities' pipeline is subject to realty tax,
reasoned out that the pipes are machinery or improvements, as contemplated in the Assessment Law
and the Real Property Tax Code; that they do not fall within the category of property exempt from
realty tax under those laws; that articles 415 and 416 of the Civil Code, defining real and personal
property, have no application to this case; that even under article 415, the steel pipes can be
regarded as realty because they are constructions adhered to the soil and things attached to the land
in a fixed manner and that Meralco Securities is not exempt from realty tax under the Petroleum Law
(pp. 36-40).
Meralco Securities insists that its pipeline is not subject to realty tax because it is not real property
within the meaning of article 415. This contention is not sustainable under the provisions of the
Assessment Law, the Real Property Tax Code and the Civil Code.
Section 2 of the Assessment Law provides that the realty tax is due "on real property, including land,
buildings, machinery, and other improvements" not specifically exempted in section 3 thereof. This
provision is reproduced with some modification in the Real Property Tax Code which provides:
SEC. 38. Incidence of Real Property Tax. There shall be levied, assessed and collected
in all provinces, cities and municipalities an annual ad valorem tax on real property,
such as land, buildings, machinery and other improvements affixed or attached to real
property not hereinafter specifically exempted. *
It is incontestable that the pipeline of Meralco Securities does not fall within any of the classes of
exempt real property enumerated in section 3 of the Assessment Law and section 40 of the Real
Property Tax Code.

14
Pipeline means a line of pipe connected to pumps, valves and control devices for conveying liquids,
gases or finely divided solids. It is a line of pipe running upon or in the earth, carrying with it the right
to the use of the soil in which it is placed (Note 21[10],54 C.J.S. 561).
Article 415[l] and [3] provides that real property may consist of constructions of all kinds adhered to
the soil and everything attached to an immovable in a fixed manner, in such a way that it cannot be
separated therefrom without breaking the material or deterioration of the object.
The pipeline system in question is indubitably a construction adhering to the soil (Exh. B, p. 39, Rollo).
It is attached to the land in such a way that it cannot be separated therefrom without dismantling the
steel pipes which were welded to form the pipeline.
Insofar as the pipeline uses valves, pumps and control devices to maintain the flow of oil, it is in a
sense machinery within the meaning of the Real Property Tax Code.
It should be borne in mind that what are being characterized as real property are not the steel pipes
but the pipeline system as a whole. Meralco Securities has apparently two pipeline systems.
A pipeline for conveying petroleum has been regarded as real property for tax purposes (Miller County
Highway, etc., Dist. vs. Standard Pipe Line Co., 19 Fed. 2nd 3; Board of Directors of Red River Levee
Dist. No. 1 of Lafayette County, Ark vs. R. F. C., 170 Fed. 2nd 430; 50 C. J. 750, note 86).
The other contention of Meralco Securities is that the Petroleum Law exempts it from the payment of
realty taxes. The alleged exemption is predicated on the following provisions of that law which
exempt Meralco Securities from local taxes and make it liable for taxes of general application:
ART. 102. Work obligations, taxes, royalties not to be changed. Work obligations,
special taxes and royalties which are fixed by the provisions of this Act or by the
concession for any of the kinds of concessions to which this Act relates, are considered
as inherent on such concessions after they are granted, and shall not be increased or
decreased during the life of the concession to which they apply; nor shall any
other special taxes or levies be applied to such concessions, nor shall 0concessionaires
under this Act be subject to any provincial, municipal or other local taxes or levies;nor
shall any sales tax be charged on any petroleum produced from the concession or
portion thereof, manufactured by the concessionaire and used in the working of his
concession. All such concessionaires, however, shall be subject to such taxes as are of
general application in addition to taxes and other levies specifically provided in this Act.
Meralco Securities argues that the realty tax is a local tax or levy and not a tax of general application.
This argument is untenable because the realty tax has always been imposed by the lawmaking body
and later by the President of the Philippines in the exercise of his lawmaking powers, as shown in
section 342 et seq. of the Revised Administrative Code, Act No. 3995, Commonwealth Act No. 470 and
Presidential Decree No. 464.
The realty tax is enforced throughout the Philippines and not merely in a particular municipality or
city but the proceeds of the tax accrue to the province, city, municipality and barrio where the realty
taxed is situated (Sec. 86, P.D. No. 464). In contrast, a local tax is imposed by the municipal or city
council by virtue of the Local Tax Code, Presidential Decree No. 231, which took effect on July 1, 1973
(69 O.G. 6197).
We hold that the Central Board of Assessment Appeals did not act with grave abuse of discretion, did
not commit any error of law and acted within its jurisdiction in sustaining the holding of the provincial

15
assessor and the local board of assessment appeals that Meralco Securities' pipeline system in
Laguna is subject to realty tax.
WHEREFORE, the questioned decision and resolution are affirmed. The petition is dismissed. No costs.
SO ORDERED.

G.R. No. L-50466 May 31, 1982

CALTEX (PHILIPPINES) INC., petitioner,
vs.
CENTRAL BOARD OF ASSESSMENT APPEALS and CITY ASSESSOR OF PASAY, respondents.

AQUINO, J.:
This case is about the realty tax on machinery and equipment installed by Caltex (Philippines) Inc. in
its gas stations located on leased land.
The machines and equipment consists of underground tanks, elevated tank, elevated water tanks,
water tanks, gasoline pumps, computing pumps, water pumps, car washer, car hoists, truck hoists, air
compressors and tireflators. The city assessor described the said equipment and machinery in this
manner:
A gasoline service station is a piece of lot where a building or shed is erected, a water
tank if there is any is placed in one corner of the lot, car hoists are placed in an adjacent
shed, an air compressor is attached in the wall of the shed or at the concrete wall fence.
The controversial underground tank, depository of gasoline or crude oil, is dug deep
about six feet more or less, a few meters away from the shed. This is done to prevent
conflagration because gasoline and other combustible oil are very inflammable.
This underground tank is connected with a steel pipe to the gasoline pump and the
gasoline pump is commonly placed or constructed under the shed. The footing of the
pump is a cement pad and this cement pad is imbedded in the pavement under the
shed, and evidence that the gasoline underground tank is attached and connected to
the shed or building through the pipe to the pump and the pump is attached and affixed
to the cement pad and pavement covered by the roof of the building or shed.
The building or shed, the elevated water tank, the car hoist under a separate shed, the
air compressor, the underground gasoline tank, neon lights signboard, concrete fence
and pavement and the lot where they are all placed or erected, all of them used in the
pursuance of the gasoline service station business formed the entire gasoline servicestation.
As to whether the subject properties are attached and affixed to the tenement, it is
clear they are, for the tenement we consider in this particular case are (is) the
pavement covering the entire lot which was constructed by the owner of the gasoline

16
station and the improvement which holds all the properties under question, they are
attached and affixed to the pavement and to the improvement.
The pavement covering the entire lot of the gasoline service station, as well as all the
improvements, machines, equipments and apparatus are allowed by Caltex (Philippines)
Inc. ...
The underground gasoline tank is attached to the shed by the steel pipe to the pump, so
with the water tank it is connected also by a steel pipe to the pavement, then to the
electric motor which electric motor is placed under the shed. So to say that the gasoline
pumps, water pumps and underground tanks are outside of the service station, and to
consider only the building as the service station is grossly erroneous. (pp. 58-60, Rollo).
The said machines and equipment are loaned by Caltex to gas station operators under an appropriate
lease agreement or receipt. It is stipulated in the lease contract that the operators, upon demand,
shall return to Caltex the machines and equipment in good condition as when received, ordinary wear
and tear excepted.
The lessor of the land, where the gas station is located, does not become the owner of the machines
and equipment installed therein. Caltex retains the ownership thereof during the term of the lease.
The city assessor of Pasay City characterized the said items of gas station equipment and machinery
as taxable realty. The realty tax on said equipment amounts to P4,541.10 annually (p. 52, Rollo). The
city board of tax appeals ruled that they are personalty. The assessor appealed to the Central Board
of Assessment Appeals.
The Board, which was composed of Secretary of Finance Cesar Virata as chairman, Acting Secretary of
Justice Catalino Macaraig, Jr. and Secretary of Local Government and Community Development Jose
Roo, held in its decision of June 3, 1977 that the said machines and equipment are real property
within the meaning of sections 3(k) & (m) and 38 of the Real Property Tax Code, Presidential Decree
No. 464, which took effect on June 1, 1974, and that the definitions of real property and personal
property in articles 415 and 416 of the Civil Code are not applicable to this case.
The decision was reiterated by the Board (Minister Vicente Abad Santos took Macaraig's place) in its
resolution of January 12, 1978, denying Caltex's motion for reconsideration, a copy of which was
received by its lawyer on April 2, 1979.
On May 2, 1979 Caltex filed this certiorari petition wherein it prayed for the setting aside of the
Board's decision and for a declaration that t he said machines and equipment are personal property
not subject to realty tax (p. 16, Rollo).
The Solicitor General's contention that the Court of Tax Appeals has exclusive appellate jurisdiction
over this case is not correct. When Republic act No. 1125 created the Tax Court in 1954, there was as
yet no Central Board of Assessment Appeals. Section 7(3) of that law in providing that the Tax Court
had jurisdiction to review by appeal decisions of provincial or city boards of assessment appeals had
in mind the local boards of assessment appeals but not the Central Board of Assessment Appeals
which under the Real Property Tax Code has appellate jurisdiction over decisions of the said local
boards of assessment appeals and is, therefore, in the same category as the Tax Court.
Section 36 of the Real Property Tax Code provides that the decision of the Central Board of
Assessment Appeals shall become final and executory after the lapse of fifteen days from the receipt

17
of its decision by the appellant. Within that fifteen-day period, a petition for reconsideration may be
filed. The Code does not provide for the review of the Board's decision by this Court.
Consequently, the only remedy available for seeking a review by this Court of the decision of the
Central Board of Assessment Appeals is the special civil action of certiorari, the recourse resorted to
herein by Caltex (Philippines), Inc.
The issue is whether the pieces of gas station equipment and machinery already enumerated are
subject to realty tax. This issue has to be resolved primarily under the provisions of the Assessment
Law and the Real Property Tax Code.
Section 2 of the Assessment Law provides that the realty tax is due "on real property, including land,
buildings, machinery, and other improvements" not specifically exempted in section 3 thereof. This
provision is reproduced with some modification in the Real Property Tax Code which provides:
SEC. 38. Incidence of Real Property Tax. There shall be levied, assessed and collected
in all provinces, cities and municipalities an annual ad valorem tax on real property,
such as land, buildings, machinery and other improvements affixed or attached to real
property not hereinafter specifically exempted.
The Code contains the following definitions in its section 3:
k) Improvements is a valuable addition made to property or an amelioration in its
condition, amounting to more than mere repairs or replacement of waste, costing labor
or capital and intended to enhance its value, beauty or utility or to adapt it for new or
further purposes.
m) Machinery shall embrace machines, mechanical contrivances, instruments,
appliances and apparatus attached to the real estate. It includes the physical facilities
available for production, as well as the installations and appurtenant service facilities,
together with all other equipment designed for or essential to its manufacturing,
industrial or agricultural purposes (See sec. 3[f], Assessment Law).
We hold that the said equipment and machinery, as appurtenances to the gas station building or shed
owned by Caltex (as to which it is subject to realty tax) and which fixtures are necessary to the
operation of the gas station, for without them the gas station would be useless, and which have been
attached or affixed permanently to the gas station site or embedded therein, are taxable
improvements and machinery within the meaning of the Assessment Law and the Real Property Tax
Code.
Caltex invokes the rule 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 (Davao Saw Mill Co. vs. Castillo, 61 Phil 709).
That ruling is an interpretation of paragraph 5 of article 415 of the Civil Code regarding machinery
that becomes real property by destination. In the Davao Saw Mills case the question was whether the
machinery mounted on foundations of cement and installed by the lessee on leased land should be
regarded as real property forpurposes of execution of a judgment against the lessee. The sheriff
treated the machinery as personal property. This Court sustained the sheriff's action. (Compare with
Machinery & Engineering Supplies, Inc. vs. Court of Appeals, 96 Phil. 70, where in a replevin case
machinery was treated as realty).

18
Here, the question is whether the gas station equipment and machinery permanently affixed by
Caltex to its gas station and pavement (which are indubitably taxable realty) should be subject to the
realty tax. This question is different from the issue raised in the Davao Saw Mill case.
Improvements on land are commonly taxed as realty even though for some purposes they might be
considered personalty (84 C.J.S. 181-2, Notes 40 and 41). "It is a familiar phenomenon to see things
classed as real property for purposes of taxation which on general principle might be considered
personal property" (Standard Oil Co. of New York vs. Jaramillo, 44 Phil. 630, 633).
This case is also easily distinguishable from Board of Assessment Appeals vs. Manila Electric Co., 119
Phil. 328, where Meralco's steel towers were considered poles within the meaning of paragraph 9 of
its franchise which exempts its poles from taxation. The steel towers were considered personalty
because they were attached to square metal frames by means of bolts and could be moved from
place to place when unscrewed and dismantled.
Nor are Caltex's gas station equipment and machinery the same as tools and equipment in the repair
shop of a bus company which were held to be personal property not subject to realty tax (Mindanao
Bus Co. vs. City Assessor, 116 Phil. 501).
The Central Board of Assessment Appeals did not commit a grave abuse of discretion in upholding the
city assessor's is imposition of the realty tax on Caltex's gas station and equipment.
WHEREFORE, the questioned decision and resolution of the Central Board of Assessment Appeals are
affirmed. The petition for certiorari is dismissed for lack of merit. No costs.
SO ORDERED.

G.R. No. L-26278

August 4, 1927

LEON SIBAL , plaintiff-appellant,

vs.
EMILIANO J. VALDEZ ET AL., defendants.
EMILIANO J. VALDEZ, appellee.
J. E. Blanco for appellant.
Felix B. Bautista and Santos and Benitez for appellee.
JOHNSON, J.:
The action was commenced in the Court of First Instance of the Province of Tarlac on the 14th day of
December 1924. The facts are about as conflicting as it is possible for facts to be, in the trial causes.
As a first cause of action the plaintiff alleged that the defendant Vitaliano Mamawal, deputy sheriff of
the Province of Tarlac, by virtue of a writ of execution issued by the Court of First Instance of
Pampanga, attached and sold to the defendant Emiliano J. Valdez the sugar cane planted by the
plaintiff and his tenants on seven parcels of land described in the complaint in the third paragraph of
the first cause of action; that within one year from the date of the attachment and sale the plaintiff
offered to redeem said sugar cane and tendered to the defendant Valdez the amount sufficient to
cover the price paid by the latter, the interest thereon and any assessments or taxes which he may
have paid thereon after the purchase, and the interest corresponding thereto and that Valdez refused
to accept the money and to return the sugar cane to the plaintiff.

19
As a second cause of action, the plaintiff alleged that the defendant Emiliano J. Valdez was attempting
to harvest the palay planted in four of the seven parcels mentioned in the first cause of action; that
he had harvested and taken possession of the palay in one of said seven parcels and in another
parcel described in the second cause of action, amounting to 300 cavans; and that all of said palay
belonged to the plaintiff.
Plaintiff prayed that a writ of preliminary injunction be issued against the defendant Emiliano J. Valdez
his attorneys and agents, restraining them (1) from distributing him in the possession of the parcels
of land described in the complaint; (2) from taking possession of, or harvesting the sugar cane in
question; and (3) from taking possession, or harvesting the palay in said parcels of land. Plaintiff also
prayed that a judgment be rendered in his favor and against the defendants ordering them to consent
to the redemption of the sugar cane in question, and that the defendant Valdez be condemned to pay
to the plaintiff the sum of P1,056 the value of palay harvested by him in the two parcels abovementioned ,with interest and costs.
On December 27, 1924, the court, after hearing both parties and upon approval of the bond for
P6,000 filed by the plaintiff, issued the writ of preliminary injunction prayed for in the complaint.
The defendant Emiliano J. Valdez, in his amended answer, denied generally and specifically each and
every allegation of the complaint and step up the following defenses:
(a) That the sugar cane in question had the nature of personal property and was not, therefore,
subject to redemption;
(b) That he was the owner of parcels 1, 2 and 7 described in the first cause of action of the
complaint;
(c) That he was the owner of the palay in parcels 1, 2 and 7; and
(d) That he never attempted to harvest the palay in parcels 4 and 5.
The defendant Emiliano J. Valdez by way of counterclaim, alleged that by reason of the preliminary
injunction he was unable to gather the sugar cane, sugar-cane shoots (puntas de cana dulce) palay in
said parcels of land, representing a loss to him of P8,375.20 and that, in addition thereto, he suffered
damages amounting to P3,458.56. He prayed, for a judgment (1) absolving him from all liability under
the complaint; (2) declaring him to be the absolute owner of the sugar cane in question and of the
palay in parcels 1, 2 and 7; and (3) ordering the plaintiff to pay to him the sum of P11,833.76,
representing the value of the sugar cane and palay in question, including damages.
Upon the issues thus presented by the pleadings the cause was brought on for trial. After hearing the
evidence, and on April 28, 1926, the Honorable Cayetano Lukban, judge, rendered a judgment
against the plaintiff and in favor of the defendants
(1) Holding that the sugar cane in question was personal property and, as such, was not
subject to redemption;
(2) Absolving the defendants from all liability under the complaint; and
(3) Condemning the plaintiff and his sureties Cenon de la Cruz, Juan Sangalang and Marcos
Sibal to jointly and severally pay to the defendant Emiliano J. Valdez the sum of P9,439.08 as
follows:
(a) P6,757.40, the value of the sugar cane;

20
(b) 1,435.68, the value of the sugar-cane shoots;
(c) 646.00, the value of palay harvested by plaintiff;
(d) 600.00, the value of 150 cavans of palay which the defendant was not able to raise
by reason of the injunction, at P4 cavan. 9,439.08 From that judgment the plaintiff
appealed and in his assignments of error contends that the lower court erred: (1) In
holding that the sugar cane in question was personal property and, therefore, not
subject to redemption;
(2) In holding that parcels 1 and 2 of the complaint belonged to Valdez, as well as parcels 7
and 8, and that the palay therein was planted by Valdez;
(3) In holding that Valdez, by reason of the preliminary injunction failed to realized P6,757.40
from the sugar cane and P1,435.68 from sugar-cane shoots (puntas de cana dulce);
(4) In holding that, for failure of plaintiff to gather the sugar cane on time, the defendant was
unable to raise palay on the land, which would have netted him the sum of P600; and.
(5) In condemning the plaintiff and his sureties to pay to the defendant the sum of P9,439.08.
It appears from the record:
(1) That on May 11, 1923, the deputy sheriff of the Province of Tarlac, by virtue of writ of
execution in civil case No. 20203 of the Court of First Instance of Manila (Macondray & Co.,
Inc. vs. Leon Sibal),levied an attachment on eight parcels of land belonging to said Leon Sibal,
situated in the Province of Tarlac, designated in the second of attachment as parcels 1, 2, 3, 4,
5, 6, 7 and 8 (Exhibit B, Exhibit 2-A).
(2) That on July 30, 1923, Macondray & Co., Inc., bought said eight parcels of land, at the
auction held by the sheriff of the Province of Tarlac, for the sum to P4,273.93, having paid for
the said parcels separately as follows (Exhibit C, and 2-A):

Parcel
1 .....................................................................

2 .....................................................................

2,00

3 .....................................................................

12

4 .....................................................................

1,00

5 .....................................................................
6 .....................................................................
7 with the house thereon ..........................
8 .....................................................................

15

1,00
=======

4,27

21
(3) That within one year from the sale of said parcel of land, and on the 24th day of
September, 1923, the judgment debtor, Leon Sibal, paid P2,000 to Macondray & Co., Inc., for
the account of the redemption price of said parcels of land, without specifying the particular
parcels to which said amount was to applied. The redemption price said eight parcels was
reduced, by virtue of said transaction, to P2,579.97 including interest (Exhibit C and 2).
The record further shows:
(1) That on April 29, 1924, the defendant Vitaliano Mamawal, deputy sheriff of the Province of
Tarlac, by virtue of a writ of execution in civil case No. 1301 of the Province of Pampanga
(Emiliano J. Valdez vs. Leon Sibal 1. the same parties in the present case), attached the
personal property of said Leon Sibal located in Tarlac, among which was included the sugar
cane now in question in the seven parcels of land described in the complaint (Exhibit A).
(2) That on May 9 and 10, 1924, said deputy sheriff sold at public auction said personal
properties of Leon Sibal, including the sugar cane in question to Emilio J. Valdez, who paid
therefor the sum of P1,550, of which P600 was for the sugar cane (Exhibit A).
(3) That on April 29,1924, said deputy sheriff, by virtue of said writ of execution, also attached
the real property of said Leon Sibal in Tarlac, including all of his rights, interest and
participation therein, which real property consisted of eleven parcels of land and a house and
camarin situated in one of said parcels (Exhibit A).
(4) That on June 25, 1924, eight of said eleven parcels, including the house and the camarin,
were bought by Emilio J. Valdez at the auction held by the sheriff for the sum of P12,200. Said
eight parcels were designated in the certificate of sale as parcels 1, 3, 4, 5, 6, 7, 10 and 11.
The house and camarin were situated on parcel 7 (Exhibit A).
(5) That the remaining three parcels, indicated in the certificate of the sheriff as parcels 2, 12,
and 13, were released from the attachment by virtue of claims presented by Agustin Cuyugan
and Domiciano Tizon (Exhibit A).
(6) That on the same date, June 25, 1924, Macondray & Co. sold and conveyed to Emilio J.
Valdez for P2,579.97 all of its rights and interest in the eight parcels of land acquired by it at
public auction held by the deputy sheriff of Tarlac in connection with civil case No. 20203 of the
Court of First Instance of Manila, as stated above. Said amount represented the unpaid balance
of the redemption price of said eight parcels, after payment by Leon Sibal of P2,000 on
September 24, 1923, fro the account of the redemption price, as stated above. (Exhibit C and
2).
The foregoing statement of facts shows:
(1) The Emilio J. Valdez bought the sugar cane in question, located in the seven parcels of land
described in the first cause of action of the complaint at public auction on May 9 and 10, 1924,
for P600.
(2) That on July 30, 1923, Macondray & Co. became the owner of eight parcels of land situated
in the Province of Tarlac belonging to Leon Sibal and that on September 24, 1923, Leon Sibal
paid to Macondray & Co. P2,000 for the account of the redemption price of said parcels.
(3) That on June 25, 1924, Emilio J. Valdez acquired from Macondray & Co. all of its rights and
interest in the said eight parcels of land.

22
(4) That on June 25, 1924, Emilio J. Valdez also acquired all of the rights and interest which
Leon Sibal had or might have had on said eight parcels by virtue of the P2,000 paid by the
latter to Macondray.
(5) That Emilio J. Valdez became the absolute owner of said eight parcels of land.
The first question raised by the appeal is, whether the sugar cane in question is personal or real
property. It is contended that sugar cane comes under the classification of real property as
"ungathered products" in paragraph 2 of article 334 of the Civil Code. Said paragraph 2 of article 334
enumerates as real property the following: Trees, plants, and ungathered products, while they are
annexed to the land or form an integral part of any immovable property." That article, however, has
received in recent years an interpretation by the Tribunal Supremo de Espaa, which holds that,
under certain conditions, growing crops may be considered as personal property. (Decision of March
18, 1904, vol. 97, Civil Jurisprudence of Spain.)
Manresa, the eminent commentator of the Spanish Civil Code, in discussing section 334 of the Civil
Code, in view of the recent decisions of the supreme Court of Spain, admits that growing crops are
sometimes considered and treated as personal property. He says:
No creemos, sin embargo, que esto excluya la excepcionque muchos autores hacen tocante a
la venta de toda cosecha o de parte de ella cuando aun no esta cogida (cosa frecuente con la
uvay y la naranja), y a la de lenas, considerando ambas como muebles. El Tribunal Supremo,
en sentencia de 18 de marzo de 1904, al entender sobre un contrato de arrendamiento de un
predio rustico, resuelve que su terminacion por desahucio no extingue los derechos del
arrendario, para recolectar o percibir los frutos correspondientes al ao agricola, dentro del
que nacieron aquellos derechos, cuando el arrendor ha percibido a su vez el importe de la
renta integra correspondiente, aun cuando lo haya sido por precepto legal durante el curso del
juicio, fundandose para ello, no solo en que de otra suerte se daria al desahucio un alcance
que no tiene, sino en que, y esto es lo interesante a nuestro proposito, la consideracion de
inmuebles que el articulo 334 del Codigo Civil atribuge a los frutos pendientes, no les priva del
caracter de productos pertenecientes, como tales, a quienes a ellos tenga derecho, Ilegado el
momento de su recoleccion.
xxx

xxx

xxx

Mas actualmente y por virtud de la nueva edicion de la Ley Hipotecaria, publicada en 16 de

diciembre de 1909, con las reformas introducidas por la de 21 de abril anterior, la hipoteca,
salvo pacto expreso que disponga lo contrario, y cualquiera que sea la naturaleza y forma de
la obligacion que garantice, no comprende los frutos cualquiera que sea la situacion en que se
encuentre. (3 Manresa, 5. edicion, pags. 22, 23.)
From the foregoing it appears (1) that, under Spanish authorities, pending fruits and ungathered
products may be sold and transferred as personal property; (2) that the Supreme Court of Spain, in a
case of ejectment of a lessee of an agricultural land, held that the lessee was entitled to gather the
products corresponding to the agricultural year, because said fruits did not go with the land but
belonged separately to the lessee; and (3) that under the Spanish Mortgage Law of 1909, as
amended, the mortgage of a piece of land does not include the fruits and products existing thereon,
unless the contract expressly provides otherwise.
An examination of the decisions of the Supreme Court of Louisiana may give us some light on the
question which we are discussing. Article 465 of the Civil Code of Louisiana, which corresponds to
paragraph 2 of article 334 of our Civil Code, provides: "Standing crops and the fruits of trees not
gathered, and trees before they are cut down, are likewise immovable, and are considered as part of
the land to which they are attached."

23
The Supreme Court of Louisiana having occasion to interpret that provision, held that in some cases
"standing crops" may be considered and dealt with as personal property. In the case of Lumber Co.
vs. Sheriff and Tax Collector (106 La., 418) the Supreme Court said: "True, by article 465 of the Civil
Code it is provided that 'standing crops and the fruits of trees not gathered and trees before they are
cut down . . . are considered as part of the land to which they are attached, but the immovability
provided for is only one in abstracto and without reference to rights on or to the crop acquired by
others than the owners of the property to which the crop is attached. . . . The existence of a right on
the growing crop is a mobilization by anticipation, a gathering as it were in advance, rendering the
crop movable quoad the right acquired therein. Our jurisprudence recognizes the possible
mobilization of the growing crop." (Citizens' Bank vs. Wiltz, 31 La. Ann., 244; Porche vs. Bodin, 28 La.,
Ann., 761; Sandel vs. Douglass, 27 La. Ann., 629; Lewis vs. Klotz, 39 La. Ann., 267.)
"It is true," as the Supreme Court of Louisiana said in the case of Porche vs. Bodin (28 La. An., 761)
that "article 465 of the Revised Code says that standing crops are considered as immovable and as
part of the land to which they are attached, and article 466 declares that the fruits of an immovable
gathered or produced while it is under seizure are considered as making part thereof, and incurred to
the benefit of the person making the seizure. But the evident meaning of these articles, is where the
crops belong to the owner of the plantation they form part of the immovable, and where it is seized,
the fruits gathered or produced inure to the benefit of the seizing creditor.
A crop raised on leased premises in no sense forms part of the immovable. It belongs to the
lessee, and may be sold by him, whether it be gathered or not, and it may be sold by his
judgment creditors. If it necessarily forms part of the leased premises the result would be that
it could not be sold under execution separate and apart from the land. If a lessee obtain
supplies to make his crop, the factor's lien would not attach to the crop as a separate thing
belonging to his debtor, but the land belonging to the lessor would be affected with the
recorded privilege. The law cannot be construed so as to result in such absurd consequences.
In the case of Citizen's Bank vs. Wiltz (31 La. Ann., 244)the court said:
If the crop quoad the pledge thereof under the act of 1874 was an immovable, it would be
destructive of the very objects of the act, it would render the pledge of the crop objects of the
act, it would render the pledge of the crop impossible, for if the crop was an inseparable part of
the realty possession of the latter would be necessary to that of the former; but such is not the
case. True, by article 465 C. C. it is provided that "standing crops and the fruits of trees not
gathered and trees before they are cut down are likewise immovable and are considered as
part of the land to which they are attached;" but the immovability provided for is only one in
abstracto and without reference to rights on or to the crop acquired by other than the owners
of the property to which the crop was attached. The immovability of a growing crop is in the
order of things temporary, for the crop passes from the state of a growing to that of a gathered
one, from an immovable to a movable. The existence of a right on the growing crop is a
mobilization by anticipation, a gathering as it were in advance, rendering the crop
movable quoad the right acquired thereon. The provision of our Code is identical with the
Napoleon Code 520, and we may therefore obtain light by an examination of the jurisprudence
of France.
The rule above announced, not only by the Tribunal Supremo de Espaa but by the Supreme Court of
Louisiana, is followed in practically every state of the Union.
From an examination of the reports and codes of the State of California and other states we find that
the settle doctrine followed in said states in connection with the attachment of property and
execution of judgment is, that growing crops raised by yearly labor and cultivation are considered
personal property. (6 Corpuz Juris, p. 197; 17 Corpus Juris, p. 379; 23 Corpus Juris, p. 329:
Raventas vs. Green, 57 Cal., 254; Norris vs. Watson, 55 Am. Dec., 161; Whipple vs. Foot, 3 Am. Dec.,
442; 1 Benjamin on Sales, sec. 126; McKenzie vs. Lampley, 31 Ala., 526; Crine vs. Tifts and Co., 65

24
Ga., 644; Gillitt vs. Truax, 27 Minn., 528; Preston vs. Ryan, 45 Mich., 174; Freeman on Execution, vol.
1, p. 438; Drake on Attachment, sec. 249; Mechem on Sales, sec. 200 and 763.)
Mr. Mechem says that a valid sale may be made of a thing, which though not yet actually in
existence, is reasonably certain to come into existence as the natural increment or usual incident of
something already in existence, and then belonging to the vendor, and then title will vest in the buyer
the moment the thing comes into existence. (Emerson vs. European Railway Co., 67 Me., 387;
Cutting vs. Packers Exchange, 21 Am. St. Rep., 63.) Things of this nature are said to have a potential
existence. A man may sell property of which he is potentially and not actually possessed. He may
make a valid sale of the wine that a vineyard is expected to produce; or the gain a field may grow in a
given time; or the milk a cow may yield during the coming year; or the wool that shall thereafter grow
upon sheep; or what may be taken at the next cast of a fisherman's net; or fruits to grow; or young
animals not yet in existence; or the good will of a trade and the like. The thing sold, however, must be
specific and identified. They must be also owned at the time by the vendor. (Hull vs. Hull, 48 Conn.,
250 [40 Am. Rep., 165].)
It is contended on the part of the appellee that paragraph 2 of article 334 of the Civil Code has been
modified by section 450 of the Code of Civil Procedure as well as by Act No. 1508, the Chattel
Mortgage Law. Said section 450 enumerates the property of a judgment debtor which may be
subjected to execution. The pertinent portion of said section reads as follows: "All goods, chattels,
moneys, and other property, both real and personal, * * * shall be liable to execution. Said section
450 and most of the other sections of the Code of Civil Procedure relating to the execution of
judgment were taken from the Code of Civil Procedure of California. The Supreme Court of California,
under section 688 of the Code of Civil Procedure of that state (Pomeroy, p. 424) has held, without
variation, that growing crops were personal property and subject to execution.
Act No. 1508, the Chattel Mortgage Law, fully recognized that growing crops are personal property.
Section 2 of said Act provides: "All personal property shall be subject to mortgage, agreeably to the
provisions of this Act, and a mortgage executed in pursuance thereof shall be termed a chattel
mortgage." Section 7 in part provides: "If growing crops be mortgaged the mortgage may contain an
agreement stipulating that the mortgagor binds himself properly to tend, care for and protect the
crop while growing.
It is clear from the foregoing provisions that Act No. 1508 was enacted on the assumption that
"growing crops" are personal property. This consideration tends to support the conclusion
hereinbefore stated, that paragraph 2 of article 334 of the Civil Code has been modified by section
450 of Act No. 190 and by Act No. 1508 in the sense that "ungathered products" as mentioned in said
article of the Civil Code have the nature of personal property. In other words, the phrase "personal
property" should be understood to include "ungathered products."
At common law, and generally in the United States, all annual crops which are raised by yearly
manurance and labor, and essentially owe their annual existence to cultivation by man, . may
be levied on as personal property." (23 C. J., p. 329.) On this question Freeman, in his treatise
on the Law of Executions, says: "Crops, whether growing or standing in the field ready to be
harvested, are, when produced by annual cultivation, no part of the realty. They are, therefore,
liable to voluntary transfer as chattels. It is equally well settled that they may be seized and
sold under execution. (Freeman on Executions, vol. p. 438.)
We may, therefore, conclude that paragraph 2 of article 334 of the Civil Code has been modified by
section 450 of the Code of Civil Procedure and by Act No. 1508, in the sense that, for the purpose of
attachment and execution, and for the purposes of the Chattel Mortgage Law, "ungathered products"
have the nature of personal property. The lower court, therefore, committed no error in holding that
the sugar cane in question was personal property and, as such, was not subject to redemption.

25
All the other assignments of error made by the appellant, as above stated, relate to questions of fact
only. Before entering upon a discussion of said assignments of error, we deem it opportune to take
special notice of the failure of the plaintiff to appear at the trial during the presentation of evidence
by the defendant. His absence from the trial and his failure to cross-examine the defendant have lent
considerable weight to the evidence then presented for the defense.
Coming not to the ownership of parcels 1 and 2 described in the first cause of action of the complaint,
the plaintiff made a futile attempt to show that said two parcels belonged to Agustin Cuyugan and
were the identical parcel 2 which was excluded from the attachment and sale of real property of Sibal
to Valdez on June 25, 1924, as stated above. A comparison of the description of parcel 2 in the
certificate of sale by the sheriff (Exhibit A) and the description of parcels 1 and 2 of the complaint will
readily show that they are not the same.
The description of the parcels in the complaint is as follows:
1. La caa dulce sembrada por los inquilinos del ejecutado Leon Sibal 1. en una parcela de
terreno de la pertenencia del citado ejecutado, situada en Libutad, Culubasa, Bamban, Tarlac,
de unas dos hectareas poco mas o menos de superficie.
2. La caa dulce sembrada por el inquilino del ejecutado Leon Sibal 1., Ilamado Alejandro
Policarpio, en una parcela de terreno de la pertenencia del ejecutado, situada en Dalayap,
Culubasa, Bamban, Tarlac de unas dos hectareas de superficie poco mas o menos." The
description of parcel 2 given in the certificate of sale (Exhibit A) is as follows:
2a. Terreno palayero situado en Culubasa, Bamban, Tarlac, de 177,090 metros cuadrados de
superficie, linda al N. con Canuto Sibal, Esteban Lazatin and Alejandro Dayrit; al E. con
Francisco Dizon, Felipe Mau and others; al S. con Alejandro Dayrit, Isidro Santos and Melecio
Mau; y al O. con Alejandro Dayrit and Paulino Vergara. Tax No. 2854, vador amillarado P4,200
pesos.
On the other hand the evidence for the defendant purported to show that parcels 1 and 2 of the
complaint were included among the parcels bought by Valdez from Macondray on June 25, 1924, and
corresponded to parcel 4 in the deed of sale (Exhibit B and 2), and were also included among the
parcels bought by Valdez at the auction of the real property of Leon Sibal on June 25, 1924, and
corresponded to parcel 3 in the certificate of sale made by the sheriff (Exhibit A). The description of
parcel 4 (Exhibit 2) and parcel 3 (Exhibit A) is as follows:
Parcels No. 4. Terreno palayero, ubicado en el barrio de Culubasa,Bamban, Tarlac, I. F. de
145,000 metros cuadrados de superficie, lindante al Norte con Road of the barrio of Culubasa
that goes to Concepcion; al Este con Juan Dizon; al Sur con Lucio Mao y Canuto Sibal y al
Oeste con Esteban Lazatin, su valor amillarado asciende a la suma de P2,990. Tax No. 2856.
As will be noticed, there is hardly any relation between parcels 1 and 2 of the complaint and parcel 4
(Exhibit 2 and B) and parcel 3 (Exhibit A). But, inasmuch as the plaintiff did not care to appear at the
trial when the defendant offered his evidence, we are inclined to give more weight to the evidence
adduced by him that to the evidence adduced by the plaintiff, with respect to the ownership of
parcels 1 and 2 of the compliant. We, therefore, conclude that parcels 1 and 2 of the complaint
belong to the defendant, having acquired the same from Macondray & Co. on June 25, 1924, and from
the plaintiff Leon Sibal on the same date.
It appears, however, that the plaintiff planted the palay in said parcels and harvested therefrom 190
cavans. There being no evidence of bad faith on his part, he is therefore entitled to one-half of the
crop, or 95 cavans. He should therefore be condemned to pay to the defendant for 95 cavans only, at
P3.40 a cavan, or the sum of P323, and not for the total of 190 cavans as held by the lower court.

26
As to the ownership of parcel 7 of the complaint, the evidence shows that said parcel corresponds to
parcel 1 of the deed of sale of Macondray & Co, to Valdez (Exhibit B and 2), and to parcel 4 in the
certificate of sale to Valdez of real property belonging to Sibal, executed by the sheriff as above
stated (Exhibit A). Valdez is therefore the absolute owner of said parcel, having acquired the interest
of both Macondray and Sibal in said parcel.
With reference to the parcel of land in Pacalcal, Tarlac, described in paragraph 3 of the second cause
of action, it appears from the testimony of the plaintiff himself that said parcel corresponds to parcel
8 of the deed of sale of Macondray to Valdez (Exhibit B and 2) and to parcel 10 in the deed of sale
executed by the sheriff in favor of Valdez (Exhibit A). Valdez is therefore the absolute owner of said
parcel, having acquired the interest of both Macondray and Sibal therein.
In this connection the following facts are worthy of mention:
Execution in favor of Macondray & Co., May 11, 1923. Eight parcels of land were attached under said
execution. Said parcels of land were sold to Macondray & Co. on the 30th day of July, 1923. Rice paid
P4,273.93. On September 24, 1923, Leon Sibal paid to Macondray & Co. P2,000 on the redemption of
said parcels of land. (See Exhibits B and C ).
Attachment, April 29, 1924, in favor of Valdez. Personal property of Sibal was attached, including the
sugar cane in question. (Exhibit A) The said personal property so attached, sold at public auction May
9 and 10, 1924. April 29, 1924, the real property was attached under the execution in favor of Valdez
(Exhibit A). June 25, 1924, said real property was sold and purchased by Valdez (Exhibit A).
June 25, 1924, Macondray & Co. sold all of the land which they had purchased at public auction on
the 30th day of July, 1923, to Valdez.
As to the loss of the defendant in sugar cane by reason of the injunction, the evidence shows that the
sugar cane in question covered an area of 22 hectares and 60 ares (Exhibits 8, 8-b and 8-c); that said
area would have yielded an average crop of 1039 picos and 60 cates; that one-half of the quantity, or
519 picos and 80 cates would have corresponded to the defendant, as owner; that during the season
the sugar was selling at P13 a pico (Exhibit 5 and 5-A). Therefore, the defendant, as owner, would
have netted P 6,757.40 from the sugar cane in question. The evidence also shows that the defendant
could have taken from the sugar cane 1,017,000 sugar-cane shoots (puntas de cana) and not
1,170,000 as computed by the lower court. During the season the shoots were selling at P1.20 a
thousand (Exhibits 6 and 7). The defendant therefore would have netted P1,220.40 from sugar-cane
shoots and not P1,435.68 as allowed by the lower court.
As to the palay harvested by the plaintiff in parcels 1 and 2 of the complaint, amounting to 190
cavans, one-half of said quantity should belong to the plaintiff, as stated above, and the other half to
the defendant. The court erred in awarding the whole crop to the defendant. The plaintiff should
therefore pay the defendant for 95 cavans only, at P3.40 a cavan, or P323 instead of P646 as allowed
by the lower court.
The evidence also shows that the defendant was prevented by the acts of the plaintiff from
cultivating about 10 hectares of the land involved in the litigation. He expected to have raised about
600 cavans of palay, 300 cavans of which would have corresponded to him as owner. The lower court
has wisely reduced his share to 150 cavans only. At P4 a cavan, the palay would have netted him
P600.
In view of the foregoing, the judgment appealed from is hereby modified. The plaintiff and his sureties
Cenon de la Cruz, Juan Sangalang and Marcos Sibal are hereby ordered to pay to the defendant jointly
and severally the sum of P8,900.80, instead of P9,439.08 allowed by the lower court, as follows:

27
P6,757.40 for the sugar cane;
1,220.40 for the sugar cane shoots;
323.00 for the palay harvested by plaintiff in parcels 1 and 2;
600.00 for the palay which defendant could have raised.
8,900.80
============
In all other respects, the judgment appealed from is hereby affirmed, with costs. So ordered.

G.R. No. 6295

September 1, 1911

THE UNITED STATES, plaintiff-appellee,

vs.
IGNACIO CARLOS, defendant-appellant.
A. D. Gibbs for appellant.
Acting Attorney-General Harvey for appellee.
PER CURIAM:
The information filed in this case is as follows:
The undersigned accuses Ignacio Carlos of the crime of theft, committed as follows:
That on, during, and between the 13th day of February, 1909, and the 3d day of March, 1910,
in the city of Manila, Philippine Islands, the said Ignacio Carlos, with intent of gain and without
violence or intimidation against the person or force against the thing, did then and there,
willfully, unlawfully, and feloniously, take, steal , and carry away two thousand two hundred
and seventy-three (2,273) kilowatts of electric current, of the value of nine hundred and nine
(909) pesos and twenty (20) cents Philippine currency, the property of the Manila Electric
Railroad and Light Company, a corporation doing business in the Philippine Islands, without the
consent of the owner thereof; to the damage and prejudice of the said Manila Electric Railroad
and Light Company in the said sum of nine hundred and nine (909) pesos and twenty (20)
cents Philippine currency, equal to and equivalent of 4,546 pesetas Philippine currency. All
contrary to law.
(Sgd.) L. M. SOUTWORTH,
Prosecuting Attorney.
Subscribed and sworn to before me this 4th day of March, 1910, in the city of Manila, Philippine
Islands, by L. M. Southworth, prosecuting attorney for the city of Manila.
(Sgd.) CHARLES S. LOBINGIER,
Judge, First Instance.
A preliminary investigation has heretofore been conducted in this case, under my direction,
having examined the witness under oath, in accordance with the provisions of section 39 of Act

28
No. 183 of the Philippine Commission, as amended by section 2 of Act No. 612 of the Philippine
Commission.
(Sgd) L. M. SOUTHWORTH,
Prosecuting Attorney.
Subscribed and sworn to before me this 4th day of March, 1910, in the city of Manila, Philippine
Islands, by L. M. Southworth, prosecuting attorney for the city of Manila.
(Sgd.) CHARLES LOBINGIER,
Judge, First Instance.
A warrant for the arrest of the defendant was issued by the Honorable J. C. Jenkins on the 4th of
March and placed in the hands of the sheriff. The sheriff's return shows that the defendant gave bond
for his appearance. On the 14th of the same month counsel for the defendant demurrer to the
complaint on the following grounds:
1 That the court has no jurisdiction over the person of the accused nor of the offense charged
because the accused has not been accorded a preliminary investigation or examination as
required by law and no court, magistrate, or other competent authority has determined from a
sworn complaint or evidence adduced that there is probable cause to believe that a crime has
been committed, or that this defendant has committed any crime.
2 That the facts charged do not constitute a public offense.
The demurrer was overruled on the same day and the defendant having refused to plead, a plea of
not guilty was entered by direction of the court for him and the trial proceeded.
After due consideration of all the proofs presented and the arguments of counsel the trial court found
the defendant guilty of the crime charged and sentenced him to one year eight months and twentyone days' presidio correccional, to indemnify the offended party, The Manila Electric Railroad and
Light Company, in the sum of P865.26, to the corresponding subsidiary imprisonment in case of
insolvency and to the payment of the costs. From this judgment the defendant appealed and makes
the following assignments of error:
I.
The court erred in overruling the objection of the accused to the jurisdiction of the court,
because he was not given a preliminary investigation as required by law, and in overruling his
demurrer for the same reason.
II.
The court erred in declaring the accused to be guilty, in view of the evidence submitted.
III.
The court erred in declaring that electrical energy may be stolen.
IV.
The court erred in not declaring that the plaintiff consented to the taking of the current.
V.

29
The court erred in finding the accused guilty of more than one offense.
VI.
The court erred in condemning the accused to pay P865.26 to the electric company as
damages.
Exactly the same question as that raised in the first assignment of error, was after a through
examination and due consideration, decided adversely to appellant's contention in the case of U.
S. vs. Grant and Kennedy (18 Phil. Rep., 122). No sufficient reason is presented why we should not
follow the doctrine enunciated in that case.
The question raised in the second assignment of error is purely one fact. Upon this point the trial
court said:
For considerably more than a year previous to the filing of this complaint the accused had
been a consumer of electricity furnished by the Manila Electric Railroad and Light Company for
a building containing the residence of the accused and three other residences, and which was
equipped, according to the defendant's testimony, with thirty electric lights. On March 15,
1909, the representatives of the company, believing that more light was being used than their
meter showed, installed an additional meter (Exhibit A) on a pole outside of defendant's house,
and both it and the meter (Exhibit B) which had been previously installed in the house were
read on said date. Exhibit A read 218 kilowatt hours; Exhibit B, 745 kilowatt hours. On March 3,
1910 each was read again, Exhibit A showing 2,718 kilowatt hours and Exhibit B, 968. It is
undisputed that the current which supplied the house passed through both meters and the city
electrician testifies that each meter was tested on the date of the last reading and was "in
good condition." The result of this registration therefore is that while the outsider meter
(Exhibit A) showed a consumption in defendant's building of 2,500 kilowatt hours of electricity,
this inside meter (Exhibit B) showed but 223 kilowatt hours. In other words the actual
consumption, according to the outside meter, was more than ten times as great as that
registered by the one inside. Obviously this difference could not be due to normal causes, for
while the electrician called by the defense (Lanusa) testifies to the possibility of a difference
between two such meters, he places the extreme limit of such difference between them 5 per
cent. Here, as we have seen, the difference is more than 900 per cent. Besides, according to
the defendant's electrician, the outside meter should normally run faster, while according to
the test made in this case the inside meter (Exhibit B) ran the faster. The city electrician also
testifies that the electric current could have been deflected from the inside meter by placing
thereon a device known as a "jumper" connecting the two outside wires, and there is other
testimony that there were marks on the insulation of the meter Exhibit B which showed the use
of such a device. There is a further evidence that the consumption of 223 kilowatt hours,
registered by the inside meter would not be a reasonable amount for the number of lights
installed in defendant's building during the period in question, and the accused fails to explain
why he should have had thirty lights installed if he needed but four or five.
On the strength of this showing a search warrant was issued for the examination of
defendant's premises and was duly served by a police officer (Hartpence). He was
accompanied at the time by three employees of the Manila Electric Railroad and Light
Company, and he found there the accused, his wife and son, and perhaps one or two others.
There is a sharp conflict between the several spectators on some points but on one there is no
dispute. All agree that the "jumper" (Exhibit C) was found in a drawer of a small cabinet in the
room of defendant's house where the meter was installed and not more than 20 feet
therefrom. In the absence of a satisfactory explanation this constituted possession on
defendant's part, and such possession, under the Code of Civil Procedure, section 334 (10),
raises the presumption that the accused was the owner of a device whose only use was to
deflect the current from the meter.

30
Is there any other "satisfactory explanation" of the "jumper's" presence? The only one sought
to be offered is the statement by the son of the accused, a boy of twelve years, that he saw
the "jumper" placed there by the witness Porter, an employee of the Light Company. The boy is
the only witness who so testifies and Porter himself squarely denies it. We can not agree with
counsel for the defense that the boy's interest in the outcome of this case is less than that of
the witness for the prosecution. It seems to us that his natural desire to shield his father would
far outweight any interest such an employee like Porter would have and which, at most, would
be merely pecuniary.
There is, however, one witness whom so far as appears, has no interest in the matter
whatsoever. This is officer Hartpence, who executed the search warrant. He testifies that after
inspecting other articles and places in the building as he and the other spectators, including
the accused, approached the cabinet in which the "jumper" was found, the officer's attention
was called to the defendant's appearance and the former noticed that the latter was becoming
nervous. Where the only two witnesses who are supposed to know anything of the matter thus
contradict each other this item of testimony by the officer is of more than ordinary
significance; for if, as the accused claims, the "jumper" was placed in the cabinet for the first
time by Porter there would be no occasion for any change of demeanor on the part of the
accused. We do not think that the officer's declination to wait until defendant should secure a
notary public shows bias. The presence of such an official was neither required nor authorized
by law and the very efficacy of a search depends upon its swiftness.
We must also agree with the prosecuting attorney that the attending circumstances do not
strengthen the story told by the boy; that the latter would have been likely to call out at the
time he saw the "jumper" being placed in the drawer, or at least directed his father's attention
to it immediately instead of waiting, as he says, until the latter was called by the officer.
Finally, to accept the boy's story we must believe that this company or its representatives
deliberately conspired not merely to lure the defendant into the commission of a crime but to
fasten upon him a crime which he did not commit and thus convict an innocent man by
perjured evidence. This is a much more serious charge than that contained in the complaint
and should be supported by very strong corroborating circumstances which we do not find
here. We are, accordingly, unable to consider as satisfactory defendant's explanation of the
"jumper's" presence.
The only alternative is the conclusion that the "jumper" was placed there by the accused or by
some one acting for him and that it was the instrument by which the current was deflected
from the matter Exhibit B and the Light Company deprived of its lawful compensation.
After a careful examination of the entire record we are satisfied beyond peradventure of a doubt that
the proofs presented fully support the facts as set forth in the foregoing finding.
Counsel for the appellant insists that the only corporeal property can be the subject of the crime of
larceny, and in the support of this proposition cites several authorities for the purpose of showing that
the only subjects of larceny are tangible, movable, chattels, something which could be taken in
possession and carried away, and which had some, although trifling, intrinsic value, and also to show
that electricity is an unknown force and can not be a subject of larceny.
In the U. S. vs. Genato (15 Phi. Rep., 170) the defendant, the owner of the store situated at No. 154
Escolta, Manila, was using a contrivance known as a "jumper" on the electric meter installed by the
Manila Electric Railroad and the Light Company. As a result of the use of this "jumper" the meter,
instead of making one revolution in every four seconds, registered one in seventy-seven seconds,
thereby reducing the current approximately 95 per cent. Genato was charged in the municipal court
with a violation of a certain ordinance of the city of Manila, and was sentenced to pay a fine of P200.
He appealed to the Court of First Instance, was again tried and sentenced to pay the same fine. An
appeal was taken from the judgment of the Court of First Instance to the Supreme Court on the

31
ground that the ordinance in question was null and void. It is true that the only question directly
presented was of the validity of the city ordinance. The court, after holding that said ordinance was
valid, said:
Even without them (ordinances), the right of ownership of electric current is secured by articles
517 and 518 of the Penal Code; the application of these articles in case of subtraction of gas, a
fluid used for lighting, and in some respects resembling electricity, is confirmed by the rule laid
down in the decisions of the supreme court of Spain January 20, 1887, and April 1, 1897,
construing and enforcing the provisions of articles 530 and 531 of the penal code of that
country, articles identical with articles 517 and 518 of the code in force in these Islands.
Article 517 of the Penal Code above referred to reads as follows:
The following are guilty of larceny:
(1) Those who with intent of gain and without violence or intimidation against the person, or
force against things, shall take another's personal property without the owner's consent.
And article 518 fixes the penalty for larceny in proportion to the value of the personal property stolen.
It is true that electricity is no longer, as formerly, regarded by electricians as a fluid, but its
manifestation and effects, like those of gas, may be seen and felt. The true test of what is a proper
subject of larceny seems to be not whether the subject is corporeal, but whether it is capable of
appropriation by another than the owner.
It is well-settled that illuminating gas may be the subject of larceny, even in the absence of a statute
so providing. (Decisions of supreme court of Spain, January 20, 1887, and April 1, 1897, supra; also
(England) Queen vs. Firth, L. R. 1 C. C., 172, 11 Cox C. C., 234; Queen vs. White, 3 C. & K., 363, 6 Cox
C. C., 213; Woods vs. People, 222 III., 293, 7 L. R. A., 520; Commonwealth vs. Shaw, 4 Allen (Mass),
308; State vs. Wellman, 34 Minn., 221, N. W. Rep., 385, and 25 Cyc., p. 12, note 10.)
In the case of Commonwealth vs. Shaw, supra, the court, speaking through Chief Justice Bigelow,
said:
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. In the present case it appears that it was the
property of the Boston Gas Light Company; that it was in their possession by being confined in
conduits and tubes which belonged to them, and that the defendant severed a portion of that
which was in the pipes of the company by taking it into her house and there consuming it. All
this being proved to have been done by her secretly and with intent to deprive the company of
their property and to appropriate it to her own use, clearly constitutes the crime of larceny.
Electricity, the same as gas, is a valuable article of merchandise, bought and sold like other personal
property and is capable of appropriation by another. So no error was committed by the trial court in
holding that electricity is a subject of larceny.
It is urged in support of the fourth assignment of error that if it be true that the appellant did
appropriate to his own use the electricity as charged he can not be held guilty of larceny for any part
of the electricity thus appropriated, after the first month, for the reason that the complaining party,
the Manila Electric Road and Light Company, knew of this misappropriation and consented thereto.

32
The outside meter was installed on March 15, 1909, and read 218 kilowatt hours. On the same day
the inside meter was read and showed 745 kilowatt hours. Both meters were again read on March 3,
1910, and the outside one showed 2,718 kilowatt hours while the one on the inside only showed 968,
the difference in consumption during this time being 2,277 kilowatt hours. The taking of this current
continued over a period of one year, less twelve days. Assuming that the company read both meters
at the end of each month; that it knew the defendant was misappropriating the current to that extent;
and that t continued to furnish the current, thereby giving the defendant an opportunity to continue
the misppropriation, still, we think, that the defendant is criminally responsible for the taking of the
whole amount, 2,277 kilowatt hours. The company had a contract with the defendant to furnish him
with current for lighting purposes. It could not stop the misappropriation without cutting off the
current entirely. It could not reduce the current so as to just furnish sufficient for the lighting of two,
three, or five lights, as claimed by the defendant that he used during the most of this time, but the
current must always be sufficiently strong to furnish current for the thirty lights, at any time the
defendant desired to use them.
There is no pretense that the accused was solicited by the company or any one else to commit the
acts charged. At most there was a mere passive submission on the part of the company that the
current should be taken and no indication that it wished it to be taken, and no knowledge by the
defendant that the company wished him to take the current, and no mutual understanding between
the company and the defendant, and no measures of inducement of any kind were employed by the
company for the purpose of leading the defendant into temptation, and no preconcert whatever
between him and company. The original design to misappropriate this current was formed by the
defendant absolutely independent of any acts on the part of the company or its agents. It is true, no
doubt, as a general proposition, that larceny is not committed when the property is taken with the
consent of its owner. It may be difficult in some instances to determine whether certain acts
constitute, in law, such "consent." But under the facts in the case at bar it is not difficult to reach a
conclusion that the acts performed by the plaintiff company did not constitute a consent on its part
the defendant take its property. We have been unable to find a well considered case holding contrary
opinion under similar facts, but, there are numerous cases holding that such acts do not constitute
such consent as would relieve the taker of criminal responsibility. The fourth assignment of error is,
therefore, not well founded.
It is also contended that since the "jumper" was not used continuously, the defendant committed not
a single offense but a series of offenses. It is, no doubt, true that the defendant did not allow the
"jumper" to remain in place continuously for any number of days as the company inspected monthly
the inside meter. So the "jumper" was put on and taken off at least monthly, if not daily, in order to
avoid detection, and while the "jumper" was off the defendant was not misappropriating the current.
The complaint alleged that the defendant did on, during, and between the 13th day of February,
1909, and the 3d of March, 1910. willfully, unlawfully, and feloniously take, steal, and carry away
2,277 kilowatts of electric current of the value of P909. No demurrer was presented against this
complaint on the ground that more than one crime was charged. The Government had no opportunity
to amend or correct this error, if error at all. In the case of U. S. vs. Macaspac (12 Phil. Rep., 26), the
defendant received from one Joquina Punu the sum of P31.50, with the request to deliver it to
Marcelina Dy-Oco. The defendant called upon Marcelina, but instead of delivering the said amount
she asked Marcelina for P30 in the name of Joaquina who had in no way authorized her to do so.
Marcelina gave her P30, believing that Joaquina had sent for it. Counsel for the defendant insisted
that the complaint charged his client with two different crimes ofestafa in violation of section 11 of
General Orders, No. 58. In disposing of this question this court said:
The said defect constitutes one of the dilatory pleas indicated by section 21, and the accused
ought to have raised the point before the trial began. Had this been done, the complaint might
have been amended in time, because it is merely a defect of form easily remedied. . . .
Inasmuch as in the first instance the accused did not make the corresponding dilatory plea to
the irregularity of the complaint, it must be understood that has waived such objection, and is
not now entitled to raise for the first time any question in reference thereto when submitting to
this court her assignment of errors. Apart from the fact that the defense does not pretend that

33
any of the essential rights of the accused have been injured, the allegation of the defect above
alluded to, which in any case would only affect form of the complaint, can not justify a reversal
of the judgment appealed from, according to the provisions of section 10 of General Orders,
No. 58.
In the case at bar it is not pointed out wherein any of the essential rights of the defendant have been
prejudiced by reason of the fact that the complaint covered the entire period. If twelve distinct and
separate complaints had been filed against the defendant, one for each month, the sum total of the
penalties imposed might have been very much greater than that imposed by the court in this case.
The covering of the entire period by one charge has been beneficial, if anything, and not prejudicial to
the rights of the defendant. The prosecuting attorney elected to cover the entire period with one
charge and the accused having been convicted for this offense, he can not again be prosecuted for
the stealing of the current at any time within that period. Then, again, we are of the opinion that the
charge was properly laid. The electricity was stolen from the same person, in the same manner, and
in the same place. It was substantially one continuous act, although the "jumper" might have been
removed and replaced daily or monthly. The defendant was moved by one impulse to appropriate to
his own use the current, and the means adopted by him for the taking of the current were in the
execution of a general fraudulent plan.
A person stole gas for the use of a manufactory by means of pipe, which drew off the gas from
the main without allowing it to pass through the meter. The gas from this pipe was burnt every
day, and turned off at night. The pipe was never closed at this junction with the main, and
consequently always remained full of gas. It was held, that if the pipe always remained full,
there was, in fact, a continuous taking of the gas and not a series of separate talkings. It was
held also that even if the pipe had not been kept full, the taking would have been continuous,
as it was substantially all one transaction. (Regina vs. Firth, L. R., 1 C. C., 172; 11 Cox C. C.,
234. Cited on p. 758 of Wharton's Criminal Law, vol. 1, 10th ed.)
The value of the electricity taken by the defendant was found by the trial court to be P865.26. This
finding is fully in accordance with the evidence presented. So no error was committed in sentencing
the defendant to indemnify the company in this amount, or to suffer the corresponding subsidiary
imprisonment in case of insolvency.
The judgment being strictly in accordance with the law and the merits of the case, same is hereby
affirmed, with costs against the appellant.
Arellano, C.J., Torres, Mapa and Carson, JJ.

G.R. No. L-8437

March 23, 1915

THE HONGKONG & SHANGHAI BANKING CORPORATION, plaintiff-appellee,

vs.
ALDECOA & CO., in liquidation, JOAQUIN IBAEZ DE ALDECOA Y PALET, ZOILO IBAEZ DE
ALDECOA Y PALET, CECILIA IBAEZ DE ALDECOA Y PALET, and ISABEL PALET DE
GABARRO, defendants-appellants.
WILLIAM URQUHART, intervener-appellant.
Antonio Sanz and Chicote and Miranda for appellants.
Hausermann, Cohn and Fisher for appellee.
TRENT, J.:

34
This action was brought on January 31, 1911, by the plaintiff bank against the above-named
defendants for the purpose of recovering from the principal defendant, Aldecoa & Co., an amount due
from the latter as the balance to its debit in an account current with the plaintiff, and to enforce the
subsidiary liability of the other defendants for the payment of this indebtedness, as partners of
Aldecoa & Co., and to foreclose certain mortgages executed by the defendants to secure the
indebtedness sued upon.
Judgment was entered on the 10th of August, 1912, in favor of the plaintiff and against the
defendants for the sum of P344,924.23, together with interest thereon at the rate of 7 per cent per
annum from the date of the judgment until paid, and for costs, and for the foreclosure of the
mortgages. The court decreed that in the event of there being a deficiency, after the foreclosure of
the mortgages, the plaintiff must resort to and exhaust the property of the principal defendant before
taking out execution against the individual defendants held to be liablein solidum with the principal
defendant, but subsidiarily. Judgment was also entered denying the relief sought by the intervener. All
of the defendants and the intervener have appealed.
The defendants, Joaquin Ibaez de Alcoa, Zoilo Ibaez de Alcoa, and Cecilia Ibaez de Alcoa, were
born in the Philippine Islands on March 27, 1884, July 4, 1885, and . . . , 1887, respectively, the
legitimate children of Zoilo Ibaez de Alcoa and the defendant, Isabel Palet. Both parents were native
of Spain. The father's domicile was in Manila, and he died here on October 4, 1895. The widow, still
retaining her Manila domicile, left the Philippine Islands and went to Spain in 1897 because of her
health, and did not return until the latter part of 1902. the firm of Aldecoa & Co., of which Zoilo Ibaez
de Aldecoa, deceased, had been a member and managing director, was reorganized in December,
1896, and the widow became one of the general or "capitalistic" partners of the firm. The three
children, above mentioned, appear in the articles of agreement as industrial partners.
On July 31, 1903, Isabel Palet, the widowed mother of Joaquin Ibaez de Aldecoa and Zoilo Ibaez de
Aldecoa, who were then over the age of 18 years, went before a notary public and executed two
instruments (Exhibits T and U), wherein and whereby she emancipated her two sons, with their
consent and acceptance. No guardian of the person or property of these two sons had ever been
applied for or appointed under or by virtue of the provisions of the Code of Civil Procedure since the
promulgation of the Code in 1901. After the execution of Exhibit T and U, both Joaquin Ibaez de
Aldecoa and Zoilo Ibaez de Aldecoa participated in the management of Aldecoa and Co, as partners
by being present and voting at meetings of the partners of the company upon matters connected
with its affairs.
On the 23rd of February, 1906, the defendant firm of Aldeco and Co. obtained from the bank a credit
in account current up to the sum of P450,000 upon the terms and conditions set forth in the
instrument executed on that date (Exhibit A). Later it was agreed that the defendants, Isabel Palet
and her two sons, Joaquin and Zoilo, should mortgage, in addition to certain securities of Aldecoa and
Co., as set forth in Exhibit A, certain of their real properties as additional security for the obligations of
Aldecoa and Co. So, on March 23, 1906, the mortgage, Exhibit B, was executed wherein certain
corrections in the description of some of the real property mortgaged to the bank by Exhibit A were
made and the amount for which each of the mortgaged properties should be liable was set forth.
These two mortgages, Exhibits A and B, were duly recorded in the registry of property of the city of
Manila on March 23, 1906.
On the 31st day of December, 1906, the firm of Aldecoa and Co. went into liquidation on account of
the expiration of the term for which it had been organized, and the intervener, Urquhart, was duly
elected by the parties as liquidator, and be resolution dated January 24, 1907, he was granted the
authority expressed in that resolution (Exhibit G).
On June 30, 1907, Aldeco and Co. in liquidation, for the purposes of certain litigation about to be
commenced in its behalf, required an injunction bond in the sum of P50,000, which was furnished by
the bank upon the condition that any liability incurred on the part of the bank upon this injunction

35
bond would be covered by the mortgage of February 23, 1906. An agreement to this effect was
executed by Aldecoa and Co. in liquidation, by Isabel Palet, by Joaquin Ibaez de Aldecoa, who had
then attained his full majority, and by Zoilo Ibaez de Aldecoa, who was not yet twenty-three years of
age. In 1908, Joaquin Ibaez de Aldecoa, Zoilo Ibaez de Aldecoa, and Cecilia Ibaez de Aldecoa
commenced an action against their mother, Isabel Palet, and Aldecoa and Co., in which the bank was
not a party, and in September of that year procured a judgment of the Court of First Instance
annulling the articles of copartnership of Aldecoa and Co., in so far as they were concerned, and
decreeing that they were creditors and not partners of that firm.
The real property of the defendant Isabel Palet, mortgaged to the plaintiff, corporation by the
instrument of March 23, 1906 (Exhibit B), was, at the instance of the defendant, registered under the
provisions of the Land Registration Act, subject to the mortgage thereon in favor of the plaintiff, by
decree, of the land court dated March 8, 1907.
On the 6th of November, 1906, the defendants, Isabel Palet and her three children, Joaquin Ibaez de
Aldecoa, Zoilo Ibaez de Aldecoa, and Cecilia Ibaez de Aldecoa, applied to the land court for the
registration of their title to the real property described in paragraph 4 of the instrument of March 23,
1906 (Exhibit B), in which application they stated that the undivided three-fourths of said properties
belonging to the defendants, Isabel Palet, Joaquin Ibaez de Aldecoa, and Zoilo Ibaez de Aldecoa,
were subject to the mortgage in favor of the plaintiff to secure the sum of P203,985.97 under the
terms of the instrument dated March 22, 1906. Pursuant to this petition the Court of Land
Registration, by decree dated September 8, 1907, registered the title to the undivided three-fourths
interest therein pertaining to the defendants, Isabel Palet and her two sons, Joaquin and Zoilo, to the
mortgage in favor of the plaintiff to secure the sun of P203,985.97.
On December 22, 1906, Aldecoa and Co., by a public instrument executed before a notary public, as
additional security for the performance of the obligations in favor of the plaintiff under the terms of
the contracts Exhibits A and B, mortgaged to the bank the right of mortgage pertaining to Aldecoa
and Co. upon certain real property in the Province of Albay, mortgaged to said company by one
Zubeldia to secure an indebtedness to that firm. Subsequent to the execution of this instrument,
Zubeldia caused his title to the mortgaged property to be registered under the provisions of the Land
Registration Act, subject to a mortgage of Aldecoa and Co. to secure the sum of P103,943.84 and to
the mortgage of the mortgage right of Aldecoa and Co. to the plaintiff.
As the result of the litigation Aldecoa and Co. and A. S. Macleod, wherein the injunction bond for
P50,000 was made by the bank in the manner and for the purpose above set forth, Aldecoa and Co.
became the owner, through a compromise agreement executed in Manila on the 14th of August,
1907, of the shares of the Pasay Estate Company Limited (referred to in the contract of March 13,
1907, Exhibit V), and on the 30th day of August of that year Urquhart, as liquidator, under the
authority vested in him as such, and in compliance with the terms of the contract of June 13, 1907,
mortgaged to the plaintiff, by way of additional security for the performance of the obligations set
forth in Exhibits A and B, the 312 shares of the Pasay Estate Company, Limited, acquired by Aldecoa
and Co.
On the 31st day of March, 1907, Aldecoa and Co. mortgaged, as additional security for the
performance of those obligations, to the plaintiff the right of mortgage, pertaining to the firm of
Aldecoa and Co., upon certain real estate in that Province of Ambos Camarines, mortgaged to Aldecoa
and Co. by one Andres Garchitorena to secure a balance of indebtedness to that firm of the sum of
P20,280.19. The mortgage thus created in favor of the bank was duly recorded in the registry of
deeds f that province. On the 31st day of March, 1907, Aldecoa and Co. mortgaged as further
additional security for the performance of the obligations set forth in Exhibits A and B, the right of
mortgage pertaining to the firm of Aldecoa and Co. upon other real property in the same province,
mortgaged by the firm of Tremoya Hermanos and Liborio Tremoya, to secure the indebtedness of that
firm to the firm of Aldecoa and Co. of P43,117.40 and the personal debt of the latter of P75,463.54.

36
the mortgage thus created in favor of the bank was filed for record with the registrar of deeds of that
province.
On the 30th day of January, 1907, Aldecoa and Co. duly authorized the bank to collect from certain
persons and firms, named in the instrument granting this authority, any and all debts owing by them
to Aldecoa and Co. and to apply all amounts so collected to the satisfaction, pro tanto, of any
indebtedness of Aldecoa and Co. to the bank.
By a public instrument dated February 18, 1907, Aldecoa and Co. acknowledged as indebtedness to
Joaquin Ibaez de Aldecoa in the sum of P154,589.20, a like indebtedness to Zoilo Ibaez de Aldecoa
in the sum of P89,177.07. On September 30, 1908, Joaquin, Zoilo, and Cecilia recovered a judgment
in the Court of First Instance of Manila for the payment to them f the sum of P155,127.31, as the
balance due them upon the indebtedness acknowledged in the public instrument dated February 18,
1907.
On November 30, 1907, Joaquin, Zoilo, and Cecilia instituted an action in the Court of First Instance of
the city of the Manila against the plaintiff bank for the purpose of obtaining a judicial declaration to
the effect that the contract whereby Aldecoa and Co. mortgaged to the bank the shares of the Pasay
Estate Company recovered from Alejandro S. Macleod, was null and void, and for a judgment of that
these shares be sold and applied to the satisfaction of their judgment obtained on September 30,
1908. Judgment was rendered by the lower court in favor of the plaintiffs in that action in accordance
with their prayer, but upon appeal this court reversed that judgment and declared that the mortgage
of the shares of stock in the Pasay Estate Co. to the bank was valid.
In October, 1908, Joaquin and Zoilo Ibaez de Aldecoa instituted an action against the plaintiff bank
for the purpose of obtaining a judgment annulling the mortgages created by them upon their interest
in the properties described in Exhibits A and B, upon the ground that the emancipation buy their
mother was void and of no effect, and that, therefore, they were minors incapable of creating a valid
mortgage upon their real property. The Court of First Instance dismissed the complaint as to Joaquin
upon the ground that he had ratified those mortgages after becoming of age, but entered a judgment
annulling said mortgages with respect to Zoilo. Both parties appealed from this decision and the case
was given registry No. 6889 in the Supreme Court. 1
On the 31st day of December, 1906, on which date the defendant Aldecoa and Co. went into
liquidation, the amount of indebtedness to the bank upon the overdraft created by the terms of the
contract, Exhibit A, was P516,517.98. Neither the defendant Aldecoa and Co., nor any of the
defendants herein, have paid or caused to be paid to the bank the yearly partial payments due under
the terms of the contract, Exhibit A. But from time to time the bank has collected and received from
provincial debtors of Aldecoa and Co. the various sums shown in Exhibit Q, all of which sums so
received have been placed to the credit of Aldecoa and Co. and notice duty given. Also, the bank,
from time to time, since the date upon which Aldecoa and Co. went into liquidation, has received
various other sums from, or for the account of, Aldecoa and Co., all of which have been duly placed to
the credit of that firm, including the sum of P22,552.63, the amount of the credit against one Achaval,
assigned to the bank by Aldecoa and Co. The balance to the credit of the bank on the 31st day of
December, 1911, as shown on the books of Aldecoa and Co., was for the sum of P416.853.46. It
appeared that an error had been committed by the bank in liquidating the interest charged to Aldecoa
and Co., and this error was corrected so that the actual amount of the indebtedness of Aldecoa and
Co. to the plaintiff on the 15th of February, 1912, with interest to December 10, 1912, the date of the
judgment, the amount was P344,924.23.
The trial court found that there was no competent evidence that the bank induced, or attempted to
induce, any customer of Aldecoa and Co. to discontinue business relations with that company. The
court further found that Urquhart had failed to show that he had any legal interest in the matter in
litigation between plaintiff and defendants, or in the success of either of the parties, or an interest

37
against both, as required by section 121 of the Code of Civil Procedure. No further findings, with
respect to the facts alleged in the complaint of the intervener, were made.
Aldecoa and Co. insist that the court erred:
1. In overruling the defendant's demurrer based upon the alleged ambiguity and vagueness of
the complaint.
2. In ruling that there was no competent evidence that the plaintiff had induced Aldecoa and
Co.'s provincial debtors to cease making consignments to that firm.
3. In rendering a judgment in a special proceeding for the foreclosure of a mortgage, Aldecoa
and Co. not having mortgaged any real estate of any kind within the jurisdiction of the trial
court, and the obligation of the persons who had signed the contract of suretyship in favor of
the bank having been extinguished by operation of law.
The argument on behalf of the defendant in support of its first assignment of error from the complaint
that Aldecoa and Co. authorized the plaintiff bank, by the instrument Exhibit G, to make collections on
behalf of this defendant, and that the complaint failed to specify the amount obtained by the bank in
the exercise of the authority conferred upon it, the complaint was thereby rendered vague and
indefinite. Upon this point it is sufficient to say that the complaint alleges that a certain specific
amount was due from the defendant firm as a balance of its indebtedness to the plaintiff, and this
necessarily implies that there were no credits in favor of the defendant firm of any kind whatsoever
which had not already been deducted from the original obligation.
With respect to the contention set forth in the second assignment of error to the effect that the bank
has prejudiced Aldecoa and Co. by having induced customers of the latter to cease their commercial
relations with this defendant, the ruling of the court that there is no evidence to show that there was
any such inducement is fully supported by the record. It may be possible that some of Aldecoa and
Co.'s customers ceased doing business with that firm after it went into liquidation. This is the ordinary
effect of a commercial firm going consideration, for the reason that it was a well known fact that
Aldecoa and Co. was insolvent. It is hardly probable that the bank, with so large a claim against
Aldecoa and Co. and with unsatisfactory security for the payment of its claim, would have taken any
action whatever which might have had the effect of diminishing Aldecoa and Co.'s ability to discharge
their claim. The contention that the customers of Aldecoa and Co. included in the list of debtors
ceased to make consignments to the firm because they had been advised by the bank that Aldecoa
and Co. had authorized the bank to collect these credits from the defendant's provincial customers
and apply the amounts so collected to the partial discharge of the indebtedness of the defendant to
the bank. Furthermore, the bank was expressly empowered to take any steps which might be
necessary, judicially or extrajudicially, for the collection of these credits. The real reason which
caused the defendant's provincial customers to cease making shipments was due to the fact that the
defendant, being out of funds, could not give its customers any further credit. It is therefore clear that
the bank, having exercised the authority conferred upon it by the company in a legal manner, is not
responsible for any damages which might have resulted from the failure of the defendant's provincial
customers to continue doing business with that firm.
In the third assignments of errors two propositions are insisted upon: (1) that in these foreclosure
proceedings the court was without jurisdiction to render judgment against Aldecoa and Co. for the
reason that firm had mortgaged no real property within the city of Manila to the plaintiff; and (2) that
the mortgages given by this defendant have been extinguished by reason of the fact that the bank
extended the time within which the defendant's provincial debtors might make their payments.
We understand that the bank is not seeking to exercise its mortgages rights upon the mortgages
which the defendant firm holds upon certain real properties in the Provinces of Albay and Ambros
Camarines and to sell these properties at public auction in these proceedings. Nor do we understand

38
that the judgment of the trial courts directs that this be done. Before that property can be sold the
original mortgagors will have to be made parties. The banks is not trying to foreclose, in this section,
any mortgages on real property executed by Aldecoa and Co. It is true that the bank sought and
obtained a money judgment against that firm, and at the same time and in the same action obtained
a foreclosure judgment against the other defendants. If two or more persons are in solidumthe
debtors mortgage any of their real property situate in the jurisdiction of the court, the creditor, in
case of the solidary debtors in the same suit and secure a joint and several judgment against them,
as well as judgments of foreclosure upon the respective mortgages.
The contention that the extensions granted to Aldecoa and Co.'s debtors, with the consent and
authority of that firm itself, has resulted in extinguishment of the mortgages created by Aldecoa and
Co. or of the mortgages created by partners of that company to secure its liabilities to the bank, is not
tenable. The record shows that all the sureties were represented by Urquhart, the person elected by
them as liquidator of the firm, when he agreed with the bank upon the extensions granted to those
debtors. The authority to grant these extensions was conferred upon the bank by the liquidator, and
he was given authority by all the sureties to authorized the bank to proceed in this manner.
With respect to the contention that the bank should be required to render an account of collections
made under authority of Exhibit G, it is sufficient to say that the bank has properly accounted for all
amounts collected from the defendant's debtors, and has applied all such amounts to the partial
liquidation of the defendant's debt die to the bank. It is true that the sum for which judgment was
rendered against Aldecoa and Co. is less than the amount originally demanded in the complaint, but
this difference is due to the fact that certain amounts which had been collected from Aldecoa and
Co.'s provincial debtors by the bank were credited to the latter between the date on which the
complaint was filed and the date when the case came on for trial, and the further fact that it was
necessary to correct an entry concerning one of the claims inasmuch as it appears that this claim had
been assigned to the bank absolutely, and not merely for the purposes of collection, as the
bookkeeper of the bank supposed, the result being that instead of crediting Aldecoa and Co. with the
full face value of this claim, the bookkeeper had merely credited from time to time the amounts
collected from this debtor. We, therefore, find no error prejudicial to the rights of this defendant.
Doa Isabel Palt makes the following assignment of errors:
1. That the court erred in failing to hold that her obligation as surety had been extinguished in
accordance with the provisions of article 1851 of the Civil Code.
2. That the court erred in refusing to order for the benefit of this appellant that the property of
Aldecoa and Co. should be exhausted before the plaintiff firm should be entitled to have
recourse to the property of this defendant and appellant for the satisfaction of its judgment.
This appellant does not contend that she is not personally liable in solidum with Aldecoa and Co. for
the liability of the latter firm to the plaintiff in the event that the appeal taken by Aldecoa and Co.
should unsuccessful. We have just held that the judgment appealed from by Aldecoa and Co. should
be affirmed. But Doa Isabel Palet does not contend that her liability as a partner for the obligations
of Aldecoa and Co., although solidary, is subsidiary, and that she is entitled to insist that the property
of Aldecoa and Co. be first applied in its entirety to the satisfaction of the firm's obligations before the
bank shall proceed against her in the execution of its judgment.
The trial court directed that the mortgaged properties, including the properties mortgaged in the
event that Aldecoa and Co. should fail to pay into court the amount of the judgment within the time
designated for that purpose. the court recognized the subsidiary character of the personal liability of
Doa Isabel Palet as a member of the firm of Aldecoa and Co. and decreed that as to any deficiency
which might result after the sale of the mortgaged properties, execution should not issue against the
properties of Doa Isabel Palet until all the property of Aldecoa and Co. shall have been exhausted.
The properties mortgaged by Doa Isabel Palet were so mortgaged not merely as security for the

39
performance of her own solidary subsidiary obligation as a partner bound for all the debts of Aldecoa
and Co., but for the purpose of securing the direct obligation of the firm itself to the bank. We are,
therefore, of the opinion that the trial court committed no error upon this point.
It is urged on behalf of Doa Isabel Palet that the mortgages executed by her upon her individual
property have been canceled. The ground for this contention is that Aldecoa and Co. undertook by the
contract of February 23, 1906, to discharge its liability to the plaintiff bank at the rate of not less than
P50,000 per annum, and that therefore it was the duty of the bank to sue Aldecoa and Co. as soon as
that firm failed to pay at maturity any one of the partial payments which it had promised to make,
and to apply the proceeds, from the sale of the property of Aldecoa and Co. to the satisfaction of this
indebtedness, and that the fact that the bank failed to do so is equivalent to an extension of the term
of the principal debtor, and that the effect of this extension has been to extinguish the obligation of
this defendant as a surety of Aldecoa and Co. It is also contended that the bank expressly extended
the term within which Aldecoa and Co. was to satisfy its obligation by allowing Aldecoa and Co. to
furnish additional security. Doa Isabel Palet alleges that all these acts were done without her
knowledge or consent.
The extension of the term which, in accordance with the provisions of article 1851 of the Civil Code
produces the extinction of the liability of the surety must of necessity be based on some new
agreement between the creditor and principal debtor, by virtue of which the creditor deprives himself
of his right to immediately bring an action for the enforcement of his claim. The mere failure to bring
an action upon a credit, as soon as the same or any part of its matures, does not constitute an
extension of the term of the obligation.
Doa Isabel Palet is a personal debtor jointly and severally with Aldecoa and Co. for the whole
indebtedness of the latter firm to the bank, and not a mere surety of the performance of the
obligations of Aldecoa and Co. without any solidary liability. It is true that certain additional deeds of
mortgage and pledge were executed by Aldecoa and Co. in favor of the bank as additional security
after Aldecoa and Co. had failed to meet its obligation to pay the first installment due under the
agreement of February 23, 1906, but there is no stipulation whatever in any of these documents or
deeds which can in any way be interpreted in the sense of constituting an extension which would bind
the bank to waiter for the expiration of any new term before suing upon its claim against Aldecoa and
Co. We find nothing in the record showing either directly or indirectly that the bank at any time has
granted any extension in favor of Aldecoa and Co. for the performance of its obligations. The
liquidator of Aldecoa and Co. authorized the bank to grant certain extensions to some of the
provincial debtors of Aldecoa and Co. whose debts were to be paid to the bank under the authority
conferred upon the bank by Aldecoa and Co. There is a marked difference between the extension of
time within which Aldecoa and Co.'s debtors might pay their respective debts, and the extension of
time for the payment of Aldecoa and Co.'s own obligations to the bank. If the bank was had brought
suit on its credit against Aldecoa and Co., for the amount then due, on the day following the extension
of the time of Aldecoa and Co.'s debtors for the payments of their debts, it is evident that the fact of
such extension having been granted could not served in any sense as a defense in favor of Aldecoa
and Co. against the bank's action, although this extension would have been available to Aldecoa and
Co.'s debtors if suit had been brought to enforce their liabilities to Aldecoa and Co. We must,
therefore, conclude that the judgment appealed from, in so far as it relates to Doa Isabel Palet, must
likewise be affirmed.
The intervener, William Urquhart, assigns these errors:
1. The court erred in holding that the proof fails to show a case for intervention within the
meaning of section 121 of the Code of Civil Procedure.
2. The court erred in failing to give preference to the credit of the liquidator Urquhart for his
salary.

40
The trial court found, as we have said, that Urquhart had failed to show that he had any legal interest
in the matter in litigation between the plaintiffs and the defendants, or in the success of any of the
parties, or any interest against both. The proof upon this branch of the case consists of the following
agreed statement of facts:
Mr. Urquhart is a creditor of Aldecoa and Co. in the sum of P21,000 due him for money loaned
by him to Aldecoa and Co. before they went into liquidation.
Aldecoa and Co., in liquidation, owe Mr. Urquhart the liquidator P14,000 as salary.
Section 121 of the Code of civil Procedure provides that:
A person may, at any period of a trial, upon motion, be permitted by the court to intervene in
an action or proceeding, if he has legal interest in the matter in litigation, or in the success of
either of the parties, or an interest against both.
The intervener is seeking to have himself declared a preferred creditor over the bank. According to
the above- quoted agreed statement of facts, he is a mere creditor of Aldecoa and Co. for the sum of
P21,000, loaned that firm before it went into liquidation. This amount is not evidenced by a public
document, or any document for that matter, nor secured by pledge or mortgage, while the amount
due the bank appears in a public instrument and is also secured by pledges and mortgages on the
property of Aldecoa and Co., out of which the intervener seeks to have his indebtedness satisfied. It
is, therefore, clear that the intervener is not entitled to the relief sought, in so far as the P21,000 is
concerned.
The bank insists that, as the intervener had been in the employ of Aldecoa and Co. for several years
prior to the time that the latter went into liquidation, it cannot be determined what part of the
P14,000 is for salary as such employee and what part is for salary as liquidator. We find no trouble in
reaching the conclusion that all of the P14,000 represents Urquhart's salary as liquidator of the firm of
Aldecoa and Co. The agreed statement of facts clearly supports this view. It is there stated that
Aldecoa and Co. in liquidation owed the liquidator P14,000 as salary. The agreement does not say, nor
can it be even inferred from the same, that Aldecoa and Co. owed Urquhart P14,000, or any other
sum for salary as an employee of that firm before it went into liquidation. Under these facts, is the
intervener a preferred creditor over the bank for this amount?
In support of his contention that he should be declared a preferred creditor over the bank for the
P14,000, the appellant cites the decision of the supreme court of Spain of March 16, 1897, and quotes
the following from the syllabus of that case:
That the expense of maintenance of property is bound to affect such persons as have an
interest therein, whether they be the owners or creditors of the property; therefore payment
for this object has preference over any other debt, since such other debts are recoverable to
the extent that the property is preserved and maintained.
There can be no question about the correctness of this ruling of the supreme court of Spain to the
effect that the fees of a receiver, appointed by the court to preserve property in litigation, must be
paid in preference to the claims of creditors. But this is not at all the case under consideration, for the
reason that Urquhart was elected liquidator by the members of the firm of Aldecoa and Co. Neither do
we believe that the contention of the appellant can be sustained under article 1922 of the Civil Code,
which provides that, with regard to specified personal property of the debtor, the following are
preferred:
1. Credits for the construction, repair, preservation, or for the amount of the sale of personal
property which may be in the possession of the debtor to the extent of the value of the same.

41
The only personal property of Aldecoa and Co. is 16 shares of the stock of the Banco-Espaol-Filipino;
450 shares of the stock of the Compaia Maritima; 330 shares of the stock of the Pasay Estate Co.,
Ltd; and certain claims against debtors of Aldecoa and Co., mentioned in Exhibit G.
The shares of stock in the Banco Espaol-Filipino and the Compaia Maritima were pledged to the
bank before Aldecoa and Co. went into liquidation, so Urquhart had nothing to do with the
preservation of these. The stock of the Pasay Estate co., Ltd., was pledged to the bank on August 30,
1907, on the same day that it came into the possession of Aldecoa and Co. and by the terms of the
pledge the bank was authorized to collect all dividends on the stock and apply the proceeds to the
satisfaction of its claim against Aldecoa and Co. The credits set forth in Exhibit G were assigned to the
bank on January 30, 1907, so, it will be seen, that the Pasay Estate shares were in the possession of
Aldecoa and Co., or its liquidator, only one day. Urquhart had been liquidator twenty-eight days when
the credits, mentioned in Exhibit G, were assigned to the bank. If it could be held that these two items
bring him within the above quoted provisions of article 1922, he could not be declared a preferred
creditor over the bank for the P14,000 salary for the reason that, according to his own showing, he
had been paid for his services as liquidator up to January, 1910. It is the salary since that date which
is now in question. The only property of Aldecoa and Co. which the liquidator had anything to do with
after 1910 was the real estate mortgages on real property cannot be regarded as personal property,
and it is only of personal property that article 1922 speaks.
The judgment appealed from, in so far as it relates to Urquhart, being in accordance with the law and
the merits of the case, is hereby affirmed.
The appellants, Joaquin and Zoilo Ibaez de Aldecoa, make the following assignments of error:
1. The court erred in not sustaining the plea of lis pendens with respect to the validity of
mortgages claimed by the plaintiff, which plea was set up as a special defense by the
defendants Joaquin and Zoilo Ibaez de Aldecoa, and in taking jurisdiction of the case and in
deciding therein a matter already submitted for adjudication and not yet finally disposed of.
2. The court erred in hot sustaining the plea of res adjudicata set up as a special defense by
these defendants with respect to the contention of plaintiff that these defendants are industrial
and general partners of the firm of Aldecoa and Co.
3. The court erred in holding that the defendants Joaquin and Zoilo Ibaez de Aldecoa were
general partners (socios colectivos) of the firm of Aldecoa and Co., and is rendering judgment
against them subsidiarily for the payment of the amount claimed in the complaint.
The basis of the first alleged error is the pendency of an action instituted by the appellants, Joaquin
and Zoilo, in 1908, to have the mortgages which the bank seeks to foreclose in the present action
annulled in so far as their liability thereon is concerned. That action was pending in this Supreme
Court on appeal when the present action was instituted (1911), tried, and decided in the court below.
The principle upon which plea of another action pending is sustained is that the latter action is
deemed unnecessary and vexatious. (Williams vs. Gaston, 148 Ala., 214; 42 Sou., 552; 1 Cyc. 21; 1 R.
C. L., sec. 1.) A statement of the rule to which the litigant to its benefits, and which has often met
with approval, is found in Watson vs. Jones (13 Wall., 679, 715; 20 L. ed., 666):
But when the pendency of such a suit is set up to defeat another, the case must be the same.
There must be the same parties, or at least such as represent the same interest, there must be
the same rights asserted, and the same relief prayed for. This relief must be founded on the
same facts, and the title or essential basis of the relief sought must be the same. The identity
in these particulars should be such that if the pending case has already been disposed of, it
could be pleaded in bar as a former adjudication of the same matter between the same
parties.

42
It will be noted that the cases must be identical in a number of ways. It will be conceded that in so far
as the plea is concerned, the parties are the same in the case at bar as they were in the action to
have the mortgages annulled. Their position is simple reversed, the defendants there being the
plaintiffs here, and vice versa. This fact does not affect the application of the rule. The inquiry must
therefore proceed to the other requisites demanded by the rule. Are the same rights asserted? Is the
same relief prayed for?
The test of identity in these respects is thus stated in 1 Cyc., 28:
A plea of the pendency of a prior action is not available unless the prior action is of such a
character that, had a judgment been rendered therein on the merits, such a judgment would
be conclusive between the parties and could be pleaded in bar of the second action.
This test has been approved, citing the quotation, in Williams vs. Gaston (148 Ala., 214; 42 Sou.,
552); Van Vleck vs. Anderson (136 Iowa, 366; 113 N. W., 853); Wetzstein vs. Mining Co. (28 Mont.,
451; 72 P., 865). It seems to us that unless the pending action, which the appellants refer to, can be
shown to approach the action at bar to this extent, the plea ought to fail.
The former suit is one to annul the mortgages. The present suit is one for the foreclosure of the
mortgages. It may be conceded that if the final judgment in the former action is that the mortgages
be annulled, such an adjudication will deny the right of the bank to foreclose the mortgages. But will
a decree holding them valid prevent the bank from foreclosing them. Most certainly not. In such an
event, the judgment would not be a bar to the prosecution of the present action. The rule is not
predicated upon such a contingency. It is applicable, between the same parties, only when the
judgment to be rendered in the action first instituted will be such that, regardless of which party is
successful, it will amount to res adjudicata against the second action. It has often been held that a
pending action upon an insurance policy to recover its value is not a bar to the commencement of an
action to have the policy reformed. The effect is quite different after final judgment has been
rendered in an action upon the policy. Such a judgment may be pleaded in bar to an action seeking to
reform the policy. The case are collected in the note to National Fire Insurance Co. vs. Hughes (12 L.
R. A., [N. S.], 907). So, it was held in the famous case of Sharon vs. Hill (26 Fed., 337), that the action
brought by Miss hill for the purpose of establishing the genuineness of a writing purporting to be a
declaration of marriage and thereby establishing the relation of husband and wife between the
parties could not be pleaded in abatement of Senator Sharon's action seeking to have the writing
declared false and forged. The court said:
This suit and the action of Sharon vs. Sharon are not brought on the same claim or demand.
The subject matter and the relief sought are not identical. This suit is brought to cancel and
annul an alleged false and forged writing, and enjoin the use of it by the defendant to the
prejudice and injury of the plaintiff, while the other is brought to establish the validity of said
writing as a declaration of marriage, as well as the marriage itself, and also to procure a
dissolution thereof, and for a division of the common property, and for alimony.
Incidentally, it was held in this case that a judgment of the trial court declaring the writing genuine
was not res adjudicata after an appeal had been taken from the judgment of the Supreme Court. So,
in the case ta bar, the fact that the trial court in the former action holds the mortgages invalid as to
one of the herein appellants is not final by reason of the appeal entered by the bank from that
judgment.
Cases are also numerous in which an action for separation has been held not to be a bar to an action
for divorce or vice versa. (Cook vs. Cook, [N. C.], 40 L. R. S., [N. S.], 83, and cases collected in the
note.) In Cook vs. Cook it was held that a pending action for absolute divorce was not a bar to the
commencement of an action for separation. The above authorities are so analogous in principle to the
case at bar that we deem the conclusion irresistible, that the pending action to annul the liability of
the two appellant children on the mortgages cannot operates as a plea in abatement in the case in

43
hand which seeks to foreclose these mortgages. The subject matter and the relief asked for are
entirely different. The facts do not conform to the rule and it is therefore not applicable.
With reference to the second alleged error, it appears that a certified copy of the judgment entered in
the former case, wherein it was declared that these two appellants, together with their sister Cecilia,
were creditors and partners of Aldecoa and Co., was offered in evidence and marked Exhibit 5. This
evidence was objected to by the plaintiff on the ground that it was res inter alios acta and not
competent evidence against the plaintiff or binding upon it in any way because it was not a party to
that action. This objection was sustained and the proffered evidence excluded. If the evidence had
been admitted, what would be its legal effect? That was an action inpersonam and the bank was not a
party. The judgment is, therefore, binding only upon the parties to the suit and their successors in
interest (sec. 306, Code of Civil Procedure, No. 2).
The question raised by the third assignment of errors will be dealt with in a separate opinion wherein
the appeal of Cecilia Ibaez de Aldecoa will be disposed of.
The appellants whose appeals are herein determined will pay their respective portions of the cost. So
ordered.