Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-4637

June 30, 1952

JOSE A. LUNA, petitioner,

vs.
DEMETRIO B. ENCARNACION, Judge of First Instance of Rizal, TRINIDAD REYES and THE
PROVINCIAL SHERIFF OF RIZAL, respondents.
BAUTISTA ANGELO, J.:
On September 25, 1948, a deed designated as chattel mortgage was executed by Jose A. Luna in
favor of Trinidad Reyes whereby the former conveyed by way of first mortgage to the latter a certain
house of mixed materials stated in barrio San Nicolas, municipality of Pasig, Province of Rizal, to
secure the payment of a promissory note in the amount of P1,500, with interest at 12 per cent per
annum. The document was registered in the office of the register of deeds for the Province of Rizal.
The mortgagor having filed to pay the promissory note when it fell due, the mortgage requested the
sheriff of said province to sell the house at public auction so that with its proceeds the amount
indebted may be paid notifying the mortgagor in writing of the time and place of the sale as required
by law. The sheriff acceded to the request and sold the property to the mortgagee for the amount
covering the whole indebtedness with interest and costs. The certificate of sale was issued by the
sheriff on May 28, 1949. After the period for the redemption of the property had expired without the
mortgagor having exercised his right to repurchase, the mortgagee demanded from the mortgagor
the surrender of the possession of the property, but the later refused and so on October 13, 1950,
she filed a petition in the Court of First Instance of Rizal praying that the provincial sheriff be
authorized to place her in possession of the property invoking in her favor the provisions of Act No.
3135, as amended by Act No. 4118.
When the petition came up for hearing before the court on October 25, 1950, Jose A. Luna, the
mortgagor, opposed the petition on the following grounds: (1) that Act No. 3135 as amended by Act
No. 4118 is applicable only to a real estate mortgage; (2) that the mortgage involved herein is a
chattel mortgage; and (3) that even if the mortgage executed by the parties herein be considered as
real estate mortgage, the extra-judicial sale made by the sheriff of the property in question was valid
because the mortgage does not contain an express stipulation authorizing the extra-judicial sale of
the property. After hearing, at which both parties have expressed their views in support of their
respective contentions, respondent judge, then presiding the court, overruled the opposition and
granted the petition ordering the provincial sheriff of Rizal, or any of this disputives, to immediately
place petitioner in possession of the property in question while at the same time directing the
mortgagor Jose A. Luna to vacate it and relinquish it in favor of petitioner. It is from this order that
Jose A. Luna desires now to obtain relief by filing this petition for certiorari contending that the
respondent judge has acted in excess of his jurisdiction.
The first question which petitioner poses in his petition for certiorari is that which relates to the
validity of the extra-judicial sale made by the provincial sheriff of Rizal of the property in question in
line with the request of the mortgagee Trinidad Reyes. It is contended that said extra-judicial sale
having been conducted under the provisions of Act No. 3135, as amended by Act No. 4118, is

invalid because the mortgage in question is not a real estate mortgage and, besides, it does not
contain an express stipulation authorizing the mortgagee to foreclose the mortgage extra-judicially.
There is merit in this claim. As may be gleaned from a perusal of the deed signed by the parties
(Annex "C"), the understanding executed by them is a chattel mortgage, as the parties have so
expressly designated, and not a real estate mortgage, specially when it is considered that the
property given as security is a house of mixed materials which by its very nature is considered as
personal property. Such being the case, it is indeed a mistake for the mortgagee to consider this
transaction in the light of Act No. 3135, as amended by Act No. 4118, as was so considered by her
when she requested to provincial sheriff to sell it extra-judicially in order to secure full satisfaction of
the indebtedness still owed her by the mortgagor. It is clear that Act No. 3135, as amended, only
covers real estate mortgages and is intended merely to regulate the extra-judicial sale of the
property mortgaged if and when the mortgagee is given a special power or express authority to do
so in the deed itself, or in a document annexed thereto. These conditions do not here obtain. The
mortgage before us is not a real estate mortgage nor does it contain an express authority or power
to sell the property extra-judicially.
But regardless of what we have heretofore stated, we find that the validity of the sale in question
may be maintained, it appearing that the mortgage in question is a chattel mortgage and as such it is
covered and regulated by the Chattel Mortgage Law, Act No. 1508. Section 14 of this Act allows the
mortgagee through a public officer in almost the same manner as that allowed by Act No. 3135, as
amended by Act No. 4118, provided that the requirements of the law relative to notice and
registration are complied with. We are not prepared to state if these requirements of the law had
been complied with in the case for the record before us is not complete and there is no showing to
that effect. At any rate, this issue is not how important because the same can be treshed out when
the opportunity comes for its determination, nor is it necessary for us to consider it in reaching a
decision in the present case. Suffice it to state that for the present we are not expressing any opinion
on this matter which concerns the validity of the sale in question for the reason that this opinion will
only be limited to a matter of procedure relative to the step taken by the mortgagee in securing the
possession of the property involved.
In the supposition that the sale of the property made by the sheriff has been made in accordance
with law, and the question he is confronted is how to deliver the possession of the property to the
purchaser in case of refusal to surrender its possession on the part of the debtor or mortgagor, the
remedy of the purchaser according to the authorities, is to bring an ordinary action for recovery of
possession (Continental Gin Co. vs. Pannell, 160 P., 598; 61 Okl., 102; 14 C.J.S., pp. 1027, 1028).
The purchaser cannot take possession of the property by force either directly or through the sheriff.
And the reason for this is "that the creditor's right of possession is conditioned upon the fact of
default, and the existence of this fact may naturally be the subject of controversy" (Bachrah Motor
Co. vs. Summers, 42 Phil., 3, 6). The creditor cannot merely file a petition for a writ of possession as
was done by Trinidad Reyes in this case. Her remedy is to file an ordinary action for recovery of
possession in ordered that the debtor may be given an opportunity to be heard not only in regarding
possession but also regarding the obligation covered by the mortgage. The petition she has filed in
the lower court, which was not even docketed, is therefore improper and should be regarded.
Wherefore, the order subject of the present petition for certiorari is hereby set aside, with costs
against respondent Trinidad Reyes.
Bengzon, Tuason, Padilla and Pablo, JJ., concur in the result.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
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.
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 above-mentioned ,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;
(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 .....................................................................

P1.00

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

2,000.00

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

120.93

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

1,000.00

5 .....................................................................

1.00

6 .....................................................................

1.00

7 with the house thereon ..........................

8 .....................................................................

150.00
1,000.00
==========
4,273.93

(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.
(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."
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 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.
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.
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:
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.
Street, Malcolm, Villamor, Romualdez and Villa-Real., JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
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 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.
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 crossarms 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
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
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.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-47943 May 31, 1982
MANILA ELECTRIC COMPANY, petitioner,
vs.
CENTRAL BOARD OF ASSESSMENT APPEALS, BOARD OF ASSESSMENT APPEALS OF
BATANGAS and PROVINCIAL ASSESSOR OF BATANGAS, respondents.

AQUINO, J.:
This case is about the imposition of the realty tax on two oil storage tanks installed in 1969 by Manila
Electric Company on a lot in San Pascual, Batangas which it leased in 1968 from Caltex (Phil.), Inc.
The tanks are within the Caltex refinery compound. They have a total capacity of 566,000 barrels.
They are used for storing fuel oil for Meralco's power plants.
According to Meralco, the storage tanks are made of steel plates welded and assembled on the
spot. Their bottoms rest on a foundation consisting of compacted earth as the outermost layer, a
sand pad as the intermediate layer and a two-inch thick bituminous asphalt stratum as the top layer.
The bottom of each tank is in contact with the asphalt layer,
The steel sides of the tank are directly supported underneath by a circular wall made of concrete,
eighteen inches thick, to prevent the tank from sliding. Hence, according to Meralco, the tank is not
attached to its foundation. It is not anchored or welded to the concrete circular wall. Its bottom plate
is not attached to any part of the foundation by bolts, screws or similar devices. The tank merely sits
on its foundation. Each empty tank can be floated by flooding its dike-inclosed location with water
four feet deep. (pp. 29-30, Rollo.)
On the other hand, according to the hearing commissioners of the Central Board of Assessment
Appeals, the area where the two tanks are located is enclosed with earthen dikes with electric steel
poles on top thereof and is divided into two parts as the site of each tank. The foundation of the
tanks is elevated from the remaining area. On both sides of the earthen dikes are two separate
concrete steps leading to the foundation of each tank.
Tank No. 2 is supported by a concrete foundation with an asphalt lining about an inch thick.
Pipelines were installed on the sides of each tank and are connected to the pipelines of the Manila
Enterprises Industrial Corporation whose buildings and pumping station are near Tank No. 2.
The Board concludes that while the tanks rest or sit on their foundation, the foundation itself and the
walls, dikes and steps, which are integral parts of the tanks, are affixed to the land while the
pipelines are attached to the tanks. (pp. 60-61, Rollo.) In 1970, the municipal treasurer of Bauan,
Batangas, on the basis of an assessment made by the provincial assessor, required Meralco to pay
realty taxes on the two tanks. For the five-year period from 1970 to 1974, the tax and penalties
amounted to P431,703.96 (p. 27, Rollo). The Board required Meralco to pay the tax and penalties as

a condition for entertaining its appeal from the adverse decision of the Batangas board of
assessment appeals.
The Central Board of Assessment Appeals (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) in its decision dated November
5, 1976 ruled that the tanks together with the foundation, walls, dikes, steps, pipelines and other
appurtenances constitute taxable improvements.
Meralco received a copy of that decision on February 28, 1977. On the fifteenth day, it filed a motion
for reconsideration which the Board denied in its resolution of November 25, 1977, a copy of which
was received by Meralco on February 28, 1978.
On March 15, 1978, Meralco filed this special civil action of certiorari to annul the Board's decision
and resolution. It contends that the Board acted without jurisdiction and committed a grave error of
law in holding that its storage tanks are taxable real property.
Meralco contends that the said oil storage tanks do not fall within any of the kinds of real property
enumerated in article 415 of the Civil Code and, therefore, they cannot be categorized as realty by
nature, by incorporation, by destination nor by analogy. Stress is laid on the fact that the tanks are
not attached to the land and that they were placed on leased land, not on the land owned by
Meralco.
This is one of those highly controversial, borderline or penumbral cases on the classification of
property where strong divergent opinions are inevitable. The issue raised by Meralco has to be
resolved in the light of the provisions of the Assessment Law, Commonwealth Act No. 470, and the
Real Property Tax Code, Presidential Decree No. 464 which took effect on June 1, 1974.
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. They 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 definition 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.
We hold that while the two storage tanks are not embedded in the land, they may, nevertheless, be
considered as improvements on the land, enhancing its utility and rendering it useful to the oil
industry. It is undeniable that the two tanks have been installed with some degree of permanence as
receptacles for the considerable quantities of oil needed by Meralco for its operations.
Oil storage tanks were held to be taxable realty in Standard Oil Co. of New Jersey vs. Atlantic City,
15 Atl. 2nd 271.

For purposes of taxation, the term "real property" may include things which should generally be
regarded as personal property(84 C.J.S. 171, Note 8). 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).
The case of Board of Assessment Appeals vs. Manila Electric Company, 119 Phil. 328, wherein
Meralco's steel towers were held not to be subject to realty tax, is not in point because in that case
the steel towers were regarded as poles and under its franchise Meralco's poles are exempt from
taxation. Moreover, the steel towers were not attached to any land or building. They were removable
from their metal frames.
Nor is there any parallelism between this case and Mindanao Bus Co. vs. City Assessor, 116 Phil.
501, where the tools and equipment in the repair, carpentry and blacksmith shops of a transportation
company were held not subject to realty tax because they were personal property.
WHEREFORE, the petition is dismissed. The Board's questioned decision and resolution are
affirmed. No costs.
SO ORDERED.
Barredo (Chairman), Guerrero, De Castro and Escolin, JJ., concur.
Concepcion, Jr., J., is on leave.
Justice Abad Santos, J., took no part.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-40411

August 7, 1935

DAVAO SAW MILL CO., INC., plaintiff-appellant,

vs.
APRONIANO G. CASTILLO and DAVAO LIGHT & POWER CO., INC., defendants-appellees.
Arsenio Suazo and Jose L. Palma Gil and Pablo Lorenzo and Delfin Joven for appellant.
J.W. Ferrier for appellees.
MALCOLM, J.:
The issue in this case, as announced in the opening sentence of the decision in the trial court and as
set forth by counsel for the parties on appeal, involves the determination of the nature of the
properties described in the complaint. The trial judge found that those properties were personal in
nature, and as a consequence absolved the defendants from the complaint, with costs against the
plaintiff.
The Davao Saw Mill Co., Inc., is the holder of a lumber concession from the Government of the
Philippine Islands. It has operated a sawmill in the sitio of Maa, barrio of Tigatu, municipality of
Davao, Province of Davao. However, the land upon which the business was conducted belonged to
another person. On the land the sawmill company erected a building which housed the machinery
used by it. Some of the implements thus used were clearly personal property, the conflict concerning
machines which were placed and mounted on foundations of cement. In the contract of lease
between the sawmill company and the owner of the land there appeared the following provision:
That on the expiration of the period agreed upon, all the improvements and buildings
introduced and erected by the party of the second part shall pass to the exclusive ownership
of the party of the first part without any obligation on its part to pay any amount for said
improvements and buildings; also, in the event the party of the second part should leave or
abandon the land leased before the time herein stipulated, the improvements and buildings
shall likewise pass to the ownership of the party of the first part as though the time agreed
upon had expired: Provided, however, That the machineries and accessories are not
included in the improvements which will pass to the party of the first part on the expiration or
abandonment of the land leased.
In another action, wherein the Davao Light & Power Co., Inc., was the plaintiff and the Davao, Saw,
Mill Co., Inc., was the defendant, a judgment was rendered in favor of the plaintiff in that action
against the defendant in that action; a writ of execution issued thereon, and the properties now in
question were levied upon as personalty by the sheriff. No third party claim was filed for such
properties at the time of the sales thereof as is borne out by the record made by the plaintiff herein.
Indeed the bidder, which was the plaintiff in that action, and the defendant herein having
consummated the sale, proceeded to take possession of the machinery and other properties
described in the corresponding certificates of sale executed in its favor by the sheriff of Davao.
As connecting up with the facts, it should further be explained that the Davao Saw Mill Co., Inc., has
on a number of occasions treated the machinery as personal property by executing chattel

mortgages in favor of third persons. One of such persons is the appellee by assignment from the
original mortgages.
Article 334, paragraphs 1 and 5, of the Civil Code, is in point. According to the Code, real property
consists of
1. Land, buildings, roads and constructions of all kinds adhering to the soil;
xxx
xxx
xxx
5. Machinery, liquid containers, instruments or implements intended by the owner of any
building or land for use in connection with any industry or trade being carried on therein and
which are expressly adapted to meet the requirements of such trade of industry.
Appellant emphasizes the first paragraph, and appellees the last mentioned paragraph. We entertain
no doubt that the trial judge and appellees are right in their appreciation of the legal doctrines flowing
from the facts.
In the first place, it must again be pointed out that the appellant should have registered its protest
before or at the time of the sale of this property. It must further be pointed out that while not
conclusive, the characterization of the property as chattels by the appellant is indicative of intention
and impresses upon the property the character determined by the parties. In this connection the
decision of this court in the case of Standard Oil Co. of New Yorkvs. Jaramillo ( [1923], 44 Phil.,
630), whether obiter dicta or not, furnishes the key to such a situation.
It is, however not necessary to spend overly must time in the resolution of this appeal on side issues.
It is machinery which is involved; moreover, machinery not intended by the owner of any building or
land for use in connection therewith, but intended by a lessee for use in a building erected on the
land by the latter to be returned to the lessee on the expiration or abandonment of the lease.
A similar question arose in Puerto Rico, and on appeal being taken to the United States Supreme
Court, it was held 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. In the opinion written by Chief Justice White, whose knowledge of the Civil Law is well
known, it was in part said:
To determine this question involves fixing the nature and character of the property from the
point of view of the rights of Valdes and its nature and character from the point of view of
Nevers & Callaghan as a judgment creditor of the Altagracia Company and the rights derived
by them from the execution levied on the machinery placed by the corporation in the plant.
Following the Code Napoleon, the Porto Rican Code treats as immovable (real) property, not
only land and buildings, but also attributes immovability in some cases to property of a
movable nature, that is, personal property, because of the destination to which it is applied.
"Things," says section 334 of the Porto Rican Code, "may be immovable either by their own
nature or by their destination or the object to which they are applicable." Numerous
illustrations are given in the fifth subdivision of section 335, which is as follows: "Machinery,
vessels, instruments or implements intended by the owner of the tenements for the industrial
or works that they may carry on in any building or upon any land and which tend directly to
meet the needs of the said industry or works." (See also Code Nap., articles 516, 518 et seq.
to and inclusive of article 534, recapitulating the things which, though in themselves
movable, may be immobilized.) So far as the subject-matter with which we are dealing
machinery placed in the plant it is plain, both under the provisions of the Porto Rican Law

and of the Code Napoleon, that machinery which is movable in its nature only becomes
immobilized when placed in a plant by the owner of the property or plant. Such result would
not be accomplished, therefore, by the placing of machinery in a plant by a tenant or a
usufructuary or any person having only a temporary right. (Demolombe, Tit. 9, No. 203;
Aubry et Rau, Tit. 2, p. 12, Section 164; Laurent, Tit. 5, No. 447; and decisions quoted in
Fuzier-Herman ed. Code Napoleon under articles 522 et seq.) The distinction rests, as
pointed out by Demolombe, upon the fact that one only having a temporary right to the
possession or enjoyment of property is not presumed by the law to have applied movable
property belonging to him so as to deprive him of it by causing it by an act of immobilization
to become the property of another. It follows that abstractly speaking the machinery put by
the Altagracia Company in the plant belonging to Sanchez did not lose its character of
movable property and become immovable by destination. But in the concrete immobilization
took place because of the express provisions of the lease under which the Altagracia held,
since the lease in substance required the putting in of improved machinery, deprived the
tenant of any right to charge against the lessor the cost such machinery, and it was
expressly stipulated that the machinery so put in should become a part of the plant belonging
to the owner without compensation to the lessee. Under such conditions the tenant in putting
in the machinery was acting but as the agent of the owner in compliance with the obligations
resting upon him, and the immobilization of the machinery which resulted arose in legal
effect from the act of the owner in giving by contract a permanent destination to the
machinery.
xxx

xxx

xxx

The machinery levied upon by Nevers & Callaghan, that is, that which was placed in the
plant by the Altagracia Company, being, as regards Nevers & Callaghan, movable property,
it follows that they had the right to levy on it under the execution upon the judgment in their
favor, and the exercise of that right did not in a legal sense conflict with the claim of Valdes,
since as to him the property was a part of the realty which, as the result of his obligations
under the lease, he could not, for the purpose of collecting his debt, proceed separately
against. (Valdes vs. Central Altagracia [192], 225 U.S., 58.)
Finding no reversible error in the record, the judgment appealed from will be affirmed, the costs of
this instance to be paid by the appellant.
Villa-Real, Imperial, Butte, and Goddard, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-17898

October 31, 1962

PASTOR D. AGO, petitioner,

vs.
THE HON. COURT OF APPEALS, HON. MONTANO A. ORTIZ, Judge of the Court of First
Instance of Agusan, THE PROVINCIAL SHERIFF OF SURIGAO and GRACE PARK
ENGINEERING, INC., respondents.
Jose M. Luison for petitioner.
Norberto J. Quisumbing for respondent Grace Park Engineering, Inc.
The Provincial Fiscal of Surigao for respondent Sheriff of Surigao.
LABRABOR, J.:
Appeal by certiorari to review the decision of respondent Court of Appeals in CA-G.R. No. 26723-R
entitled "Pastor D. Ago vs. The Provincial Sheriff of Surigao, et al." which in part reads:
In this case for certiorari and prohibition with preliminary injunction, it appears from the
records that the respondent Judge of the Court of First Instance of Agusan rendered
judgment (Annex "A") in open court on January 28, 1959, basing said judgment on a
compromise agreement between the parties.
On August 15, 1959, upon petition, the Court of First Instance issued a writ of execution.
Petitioner's motion for reconsideration dated October 12, 1959 alleges that he, or his
counsel, did not receive a formal and valid notice of said decision, which motion for
reconsideration was denied by the court below in the order of November 14, 1959.
Petitioner now contends that the respondent Judge exceeded in his jurisdiction in rendering
the execution without valid and formal notice of the decision.
A compromise agreement is binding between the parties and becomes the law between
them. (Gonzales vs. Gonzales G.R. No. L-1254, May 21, 1948, 81 Phil. 38; Martin vs. Martin,
G.R. No. L-12439, May 22, 1959) .
It is a general rule in this jurisdiction that a judgment based on a compromise agreement is
not appealable and is immediately executory, unless a motion is filed on the ground fraud,
mistake or duress. (De los Reyes vs. Ugarte, 75 Phil. 505; Lapena vs. Morfe, G.R. No. L10089, July 31, 1957)
Petitioner's claim that he was not notified or served notice of the decision is untenable. The
judgment on the compromise agreement rendered by the court below dated January 28,
1959, was given in open court. This alone is a substantial compliance as to notice. (De los
Reyes vs. Ugarte, supra)

IN VIEW THEREOF, we believe that the lower court did not exceed nor abuse its jurisdiction
in ordering the execution of the judgment. The petition for certiorari is hereby dismissed and
the writ of preliminary injunction heretofore dissolved, with costs against the petitioner.
IT IS SO ORDERED.
The facts of the case may be briefly stated as follows: In 1957, petitioner Pastor D. Ago bought
sawmill machineries and equipments from respondent Grace Park Engineer domineering, Inc.,
executing a chattel mortgage over said machineries and equipments to secure the payment of
balance of the price remaining unpaid of P32,000.00, which petitioner agreed to pay on installment
basis.
Petitioner Ago defaulted in his payment and so, in 1958 respondent Grace Park Engineering, Inc.
instituted extra-judicial foreclosure proceedings of the mortgage. To enjoin said foreclosure,
petitioner herein instituted Special Civil Case No. 53 in the Court of First Instance of Agusan. The
parties to the case arrived at a compromise agreement and submitted the same in court in writing,
signed by Pastor D. Ago and the Grace Park Engineering, Inc. The Hon. Montano A. Ortiz, Judge of
the Court of First Instance of Agusan, then presiding, dictated a decision in open court on January
28, 1959.
Petitioner continued to default in his payments as provided in the judgment by compromise, so
Grace Park Engineering, Inc. filed with the lower court a motion for execution, which was granted by
the court on August 15, 1959. A writ of execution, dated September 23, 1959, later followed.
The herein respondent, Provincial Sheriff of Surigao, acting upon the writ of execution issued by the
lower court, levied upon and ordered the sale of the sawmill machineries and equipments in
question. These machineries and equipments had been taken to and installed in a sawmill building
located in Lianga, Surigao del Sur, and owned by the Golden Pacific Sawmill, Inc., to whom,
petitioner alleges, he had sold them on February 16, 1959 (a date after the decision of the lower
court but before levy by the Sheriff).
Having been advised by the sheriff that the public auction sale was set for December 4, 1959,
petitioner, on December 1, 1959, filed the petition for certiorari and prohibition with preliminary
injunction with respondent Court of Appeals, alleging that a copy of the aforementioned judgment
given in open court on January 28, 1959 was served upon counsel for petitioner only on September
25, 1959 (writ of execution is dated September 23, 1959); that the order and writ of execution having
been issued by the lower court before counsel for petitioner received a copy of the judgment, its
resultant last order that the "sheriff may now proceed with the sale of the properties levied
constituted a grave abuse of discretion and was in excess of its jurisdiction; and that the respondent
Provincial Sheriff of Surigao was acting illegally upon the allegedly void writ of execution by levying
the same upon the sawmill machineries and equipments which have become real properties of the
Golden Pacific sawmill, Inc., and is about to proceed in selling the same without prior publication of
the notice of sale thereof in some newspaper of general circulation as required by the Rules of
Court.
The Court of Appeals, on December 8, 1959, issued a writ of preliminary injunction against the
sheriff but it turned out that the latter had already sold at public auction the machineries in question,
on December 4, 1959, as scheduled. The respondent Grace Park Engineering, Inc. was the only
bidder for P15,000.00, although the certificate sale was not yet executed. The Court of Appeals
constructed the sheriff to suspend the issuance of a certificate of sale of the said sawmill
machineries and equipment sold by him on December 4, 1959 until the final decision of the case. On
November 9, 1960 the Court of Appeals rendered the aforequoted decision.

Before this Court, petitioner alleges that the Court of Appeals erred (1) in holding that the rendition of
judgment on compromise in open court on January 1959 was a sufficient notice; and (2) in not
resolving the other issues raised before it, namely, (a) the legality of the public auction sale made by
the sheriff, and (b) the nature of the machineries in question, whether they are movables or
immovables.
The Court of Appeals held that as a judgment was entered by the court below in open court upon the
submission of the compromise agreement, the parties may be considered as having been notified of
said judgment and this fact constitutes due notice of said judgment. This raises the following legal
question: Is the order dictated in open court of the judgment of the court, and is the fact the petitioner
herein was present in open court was the judgment was dictated, sufficient notice thereof? The
provisions of the Rules of Court decree otherwise. Section 1 of Rule 35 describes the manner in
which judgment shall be rendered, thus:
SECTION 1. How judgment rendered. All judgments determining the merits of cases shall
be in writing personally and directly prepared by the judge, and signed by him, stating clearly
and distinctly the facts and the law on which it is based, filed with the clerk of the court.
The court of first instance being a court of record, in order that a judgment may be considered as
rendered, must not only be in writing, signed by the judge, but it must also be filed with the clerk of
court. The mere pronouncement of the judgment in open court with the stenographer taking note
thereof does not, therefore, constitute a rendition of the judgment. It is the filing of the signed
decision with the clerk of court that constitutes rendition. While it is to be presumed that the
judgment that was dictated in open court will be the judgment of the court, the court may still modify
said order as the same is being put into writing. And even if the order or judgment has already been
put into writing and signed, while it has not yet been delivered to the clerk for filing it is still subject to
amendment or change by the judge. It is only when the judgment signed by the judge is actually filed
with the clerk of court that it becomes a valid and binding judgment. Prior thereto, it could still be
subject to amendment and change and may not, therefore, constitute the real judgment of the court.
Regarding the notice of judgment, the mere fact that a party heard the judge dictating the judgment
in open court, is not a valid notice of said judgment. If rendition thereof is constituted by the filing
with the clerk of court of a signed copy (of the judgment), it is evident that the fact that a party or an
attorney heard the order or judgment being dictated in court cannot be considered as notice of the
real judgment. No judgment can be notified to the parties unless it has previously been rendered.
The notice, therefore, that a party has of a judgment that was being dictated is of no effect because
at the time no judgment has as yet been signed by the judge and filed with the clerk.
Besides, the Rules expressly require that final orders or judgments be served personally or by
registered mail. Section 7 of Rule 27 provides as follows:
SEC. 7. Service of final orders or judgments. Final orders or judgments shall be served
either personally or by registered mail.
In accordance with this provision, a party is not considered as having been served with the judgment
merely because he heard the judgment dictating the said judgment in open court; it is necessary that
he be served with a copy of the signed judgment that has been filed with the clerk in order that he
may legally be considered as having been served with the judgment.
For all the foregoing, the fact that the petitioner herein heard the trial judge dictating the judgment in
open court, is not sufficient to constitute the service of judgement as required by the above-quoted
section 7 of Rule 2 the signed judgment not having been served upon the petitioner, said judgment

could not be effective upon him (petitioner) who had not received it. It follows as a consequence that
the issuance of the writ of execution null and void, having been issued before petitioner her was
served, personally or by registered mail, a copy of the decision.
The second question raised in this appeal, which has been passed upon by the Court of Appeals,
concerns the validity of the proceedings of the sheriff in selling the sawmill machineries and
equipments at public auction with a notice of the sale having been previously published.
The record shows that after petitioner herein Pastor D. Ago had purchased the sawmill machineries
and equipments he assigned the same to the Golden Pacific Sawmill, Inc. in payment of his
subscription to the shares of stock of said corporation. Thereafter the sawmill machinery and
equipments were installed in a building and permanently attached to the ground. By reason of such
installment in a building, the said sawmill machineries and equipment became real estate properties
in accordance with the provision of Art. 415 (5) of the Civil Code, thus:
ART. 415. The following are immovable property:
xxx

xxx

xxx

(5) Machinery, receptacles, instruments or implements tended by the owner of the tenement
for an industry or works which may be carried on in a building or on a piece of land, and
which tend directly to meet the needs of the said industry or works;
This Court in interpreting a similar question raised before it in the case of Berkenkotter vs. Cu
Unjieng e Hijos, 61 Phil. 683, held that the installation of the machine and equipment in the central of
the Mabalacat Sugar Co., Inc. for use in connection with the industry carried by the company,
converted the said machinery and equipment into real estate by reason of their purpose.
Paraphrasing language of said decision we hold that by the installment of the sawmill machineries in
the building of the Gold Pacific Sawmill, Inc., for use in the sawing of logs carried on in said building,
the same became a necessary and permanent part of the building or real estate on which the same
was constructed, converting the said machineries and equipments into real estate within the
meaning of Article 415(5) above-quoted of the Civil Code of the Philippines.
Considering that the machineries and equipments in question valued at more than P15,000.00
appear to have been sold without the necessary advertisement of sale by publication in a
newspaper, as required in Sec. 16 of Rule 39 of the Rules of Court, which is as follows:
SEC. 16. Notice of sale of property on execution. Before the sale of property on
execution, notice thereof must be given as follows:
xxx

xxx

xxx

(c) In case of real property, by posting a similar notice particularly describing the property for
twenty days in three public places in the municipality or city where the property is situated,
and also where the property is to be sold, and, if the assessed value of the property exceeds
four hundred pesos, by publishing a copy of the notice once a week, for the same period, in
some newspaper published or having general circulation in the province, if there be one. If
there are newspapers published in the province in both the English and Spanish languages,
then a like publication for a like period shall be made in one newspaper published in the
English language, and in one published in the Spanish language.

the sale made by the sheriff must be declared null and void.
WHEREFORE, the decision of the Court of Appeals sought to be reviewed is hereby set aside and
We declare that the issuance of the writ of execution in this case against the sawmill machineries
and equipments purchased by petitioner Pastor D. Ago from the Grace Park Engineering, Inc., as
well as the sale of the same by the Sheriff of Surigao, are null and void. Costs shall be against the
respondent Grace Park Engineering, Inc.
Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon, Regala and
Makalintal, JJ.,concur.
Padilla, J., took no part.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-19527

March 30, 1963

RICARDO PRESBITERO, in his capacity as Executor of the Testate Estate of EPERIDION

PRESBITERO,petitioner,
vs.
THE HON. JOSE F. FERNANDEZ, HELEN CARAM NAVA, and the PROVINCIAL SHERIFF OF
NEGROS OCCIDENTAL, respondents.
San Juan, Africa and Benedicto and Hilado and Hilado for petitioner.
Paredes, Poblador, Cruz and Nazareno and Manuel Soriano for respondents.
REYES, J.B.L., J.:
Petition for a writ of certiorari against the Court of First Instance of Negros Occidental.
It appears that during the lifetime of Esperidion Presbitero, judgment was rendered against him by
the Court of Appeals on October 14, 1959, in CA-G.R. No. 20879,
... to execute in favor of the plaintiff, within 30 days from the time this judgment becomes
final, a deed of reconveyance of Lot No. 788 of the cadastral survey of Valladolid, free from
all liens and encumbrances, and another deed of reconveyance of a 7-hectare portion of Lot
No. 608 of the same cadastral survey, also free from all liens and encumbrances, or, upon
failure to do so, to pay to the plaintiff the value of each of the said properties, as may be
determined by the Court a quo upon evidence to be presented by the parties before it. The
defendant is further adjudged to pay to the plaintiff the value of the products received by him
from the 5-hectare portion equivalent to 20 cavans of palay per hectare every year, or 125
cavans yearly, at the rate of P10.00 per cavan, from 1951 until possession of the said 5hectare portion is finally delivered to the plaintiff with legal interest thereon from the time the
complaint was filed; and to pay to the plaintiff the sum of P1,000.00 by way of attorney's
fees, plus costs.
This judgment, which became final, was a modification of a decision of the Court of First Instance of
Negros Occidental, in its Civil Case No. 3492, entitled "Helen Caram Nava, plaintiff, versus
Esperidion Presbitero, defendant."
Thereafter, plaintiff's counsel, in a letter dated December 8, 1959, sought in vain to amicably settle
the case through petitioner's son, Ricardo Presbitero. When no response was forthcoming, said
counsel asked for, and the court a quo ordered on June 9, 1960, the issuance of a partial writ of
execution for the sum of P12,250.00. On the following day, June 10, 1960, said counsel, in another
friendly letter, reiterated his previous suggestion for an amicable settlement, but the same produced
no fruitful result. Thereupon, on June 21, 1960, the sheriff levied upon and garnished the sugar
quotas allotted to plantation audit Nos. 26-237, 26-238, 26-239, 26-240 and 26-241 adhered to the
Ma-ao Mill District and "registered in the name of Esperidion Presbitero as the original plantationowner", furnishing copies of the writ of execution and the notice of garnishment to the manager of
the Ma-ao Sugar Central Company, Bago, Negros Occidental, and the Sugar Quota Administration
at Bacolod City, but without presenting for registration copies thereof to the Register of Deeds.

Plaintiff Helen Caram Nava (herein respondent) then moved the court, on June 22, 1960, to hear
evidence on the market value of the lots; and after some hearings, occasionally protracted by
postponements, the trial court, on manifestation of defendant's willingness to cede the properties in
litigation, suspended the proceedings and ordered him to segregate the portion of Lot 608 pertaining
to the plaintiff from the mass of properties belonging to the defendant within a period to expire on
August 24, 1960, and to effect the final conveyance of the said portion of Lot 608 and the whole of
Lot 788 free from any lien and encumbrance whatsoever. Because of Presbitero's failure to comply
with this order within the time set forth by the court, the plaintiff again moved on August 25, 1960 to
declare the market value of the lots in question to be P2,500.00 per hectare, based on
uncontradicted evidence previously adduced. But the court, acting on a prayer of defendant
Presbitero, in an order dated August 27, 1960, granted him twenty (20) days to finalize the survey of
Lot 608, and ordered him to execute a reconveyance of Lot 788 not later than August 31, 1960.
Defendant again defaulted; and so plaintiff, on September 21, 1960, moved the court for payment by
the defendant of the sum of P35,000.00 for the 14 hectares of land at P2,500.00 to the hectare, and
the court, in its order dated September 24, 1960, gave the defendant until October 15, 1960 either to
pay the value of the 14 hectares at the rate given or to deliver the clean titles of the lots. On October
15, 1960, the defendant finally delivered Certificate of Title No. T-28046 covering Lot 788, but not
the title covering Lot 608 because of an existing encumbrance in favor of the Philippine National
Bank. In view thereof, Helen Caram Nava moved for, and secured on October 19, 1960, a writ of
execution for P17,500.00, and on the day following wrote the sheriff to proceed with the auction sale
of the sugar quotas previously scheduled for November 5, 1960. The sheriff issued the notice of
auction sale on October 20, 1960.
On October 22, 1960, death overtook the defendant Esperidion Presbitero.
Proceedings for the settlement of his estate were commenced in Special Proceedings No. 2936 of
the Court of First Instance of Negros Occidental; and on November 4, 1960, the special
administrator, Ricardo Presbitero, filed an urgent motion, in Case No. 3492, to set aside the writs of
execution, and to order the sheriff to desist from holding the auction sale on the grounds that the
levy on the sugar quotas was invalid because the notice thereof was not registered with the Register
of Deeds, as for real property, and that the writs, being for sums of money, are unenforceable since
Esperidion Presbitero died on October 22, 1960, and, therefore, could only be enforced as a money
claim against his estate.
This urgent motion was heard on November 5, 1960, but the auction sale proceeded on the same
date, ending in the plaintiff's putting up the highest bid for P34,970.11; thus, the sheriff sold 21,640
piculs of sugar quota to her.
On November 10, 1960, plaintiff Nava filed her opposition to Presbitero's urgent motion of November
4, 1960; the latter filed on May 4, 1961 a supplement to his urgent motion; and on May 8 and 23,
1961, the court continued hearings on the motion, and ultimately denied it on November 18, 1961.
On January 11, 1962, plaintiff Nava also filed an urgent motion to order the Ma-ao Sugar Central to
register the sugar quotas in her name and to deliver the rentals of these quotas corresponding to the
crop year 1960-61 and succeeding years to her. The court granted this motion in its order dated
February 3, 1962. A motion for reconsideration by Presbitero was denied in a subsequent order
under date of March 5, 1962. Wherefore, Presbitero instituted the present proceedings for certiorari.
A preliminary restraining writ was thereafter issued by the court against the respondents from
implementing the aforesaid orders of the respondent Judge, dated February 3, 1960 and March 5,
1962, respectively. The petition further seeks the setting aside of the sheriff's certificate of sale of the
sugar quotas made out in favor of Helen Caram Nava, and that she be directed to file the judgment

credit in her favor in Civil Case No. 3492 as a money claim in the proceedings to settle the Estate of
Esperidion Presbitero.
The petitioner denies having been personally served with notice of the garnishment of the sugar
quotas, but this disclaimer cannot be seriously considered since it appears that he was sent a copy
of the notice through the chief of police of Valladolid on June 21, 1960, as certified to by the sheriff,
and that he had actual knowledge of the garnishment, as shown by his motion of November 4, 1960
to set aside the writs of execution and to order the sheriff to desist from holding the auction sale.
Squarely at issue in this case is whether sugar quotas are real (immovable) or personal properties. If
they be realty, then the levy upon them by the sheriff is null and void for lack of compliance with the
procedure prescribed in Section 14, Rule 39, in relation with Section 7, Rule 59, of the Rules of
Court requiring "the filing with the register of deeds a copy of the orders together with a description
of the property . . . ."
In contending that sugar quotas are personal property, the respondent, Helen Caram Nava, invoked
the test formulated by Manresa (3 Manresa, 6th Ed. 43), and opined that sugar quotas can be
carried from place to place without injury to the land to which they are attached, and are not one of
those included in Article 415 of the Civil Code; and not being thus included, they fall under the
category of personal properties:
ART. 416. The following are deemed to be personal property:
xxx

xxx

xxx

4. In general, all things which can be transported from place to place without impairment of
the real property to which they are fixed.
Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted
and approved by this Honorable Court, without prejudice to the parties adducing other
evidence to prove their case not covered by this stipulation of facts.
1w ph1.t

Respondent likewise points to evidence she submitted that sugar quotas are, in fact, transferred
apart from the plantations to which they are attached, without impairing, destroying, or diminishing
the potentiality of either quota or plantation. She was sustained by the lower court when it stated that
"it is a matter of public knowledge and it is universal practice in this province, whose principal
industry is sugar, to transfer by sale, lease, or otherwise, sugar quota allocations from one plantation
to any other" and that it is "specious to insist that quotas are improvements attaching to one
plantation when in truth and in fact they are no longer attached thereto for having been sold or
leased away to be used in another plantation". Respondent would add weight to her argument by
invoking the role that sugar quotas play in our modern social and economic life, and cites that the
Sugar Office does not require any registration with the Register of Deeds for the validity of the sale
of these quotas; and, in fact, those here in question were not noted down in the certificate of title of
the land to which they pertain; and that Ricardo Presbitero had leased sugar quotas independently
of the land. The respondent cites further that the U.S.-Philippine Trade Relations Act, approved by
the United States Congress in 1946, limiting the production of unrefined sugar in the Philippines did
not allocate the quotas for said unrefined sugar among lands planted to sugarcane but among "the
sugar producing mills and plantation OWNERS", and for this reason Section 3 of Executive Order
No. 873, issued by Governor General Murphy, authorizes the lifting of sugar allotments from one
land to another by means only of notarized deeds.

While respondent's arguments are thought-provoking, they cannot stand against the positive
mandate of the pertinent statute. The Sugar Limitation Law (Act 4166, as amended) provides
SEC. 9. The allotment corresponding to each piece of land under the provisions of this Act
shall be deemed to be an improvement attaching to the land entitled thereto ....
and Republic Act No. 1825 similarly provides
SEC. 4. The production allowance or quotas corresponding to each piece of land under the
provisions of this Act shall be deemed to be an improvement attaching to the land entitled thereto ....
And Executive Order No. 873 defines "plantation" as follows:
(a) The term 'plantation' means any specific area of land under sole or undivided ownership
to which is attached an allotment of centrifugal sugar.
Thus, under express provisions of law, the sugar quota allocations are accessories to land, and can
not have independent existence away from a plantation, although the latter may vary. Indeed, this
Court held in the case ofAbelarde vs. Lopez, 74 Phil. 344, that even if a contract of sale
of haciendas omitted "the right, title, interest, participation, action (and) rent" which the grantors had
or might have in relation to the parcels of land sold, the sale would include the quotas, it being
provided in Section 9, Act 4166, that the allotment is deemed an improvement attached to the land,
and that at the time the contract of sale was signed the land devoted to sugar were practically of no
use without the sugar allotment.
As an improvement attached to land, by express provision of law, though not physically so united,
the sugar quotas are inseparable therefrom, just like servitudes and other real rights over an
immovable. Article 415 of the Civil Code, in enumerating what are immovable properties, names
10. Contracts for public works, and servitudes and other real rights over immovable property.
(Emphasis supplied)
It is by law, therefore, that these properties are immovable or real, Article 416 of the Civil Code being
made to apply only when the thing (res) sought to be classified is not included in Article 415.
The fact that the Philippine Trade Act of 1946 (U.S. Public Law 371-79th Congress) allows transfers
of sugar quotas does not militate against their immovability. Neither does the fact that the Sugar
Quota Office does not require registration of sales of quotas with the Register of Deeds for their
validity, nor the fact that allocation of unrefined sugar quotas is not made among lands planted to
sugarcane but among "the sugar producing mills and plantation OWNERS", since the lease or sale
of quotas are voluntary transactions, the regime of which, is not necessarily identical
to involuntary transfers or levies; and there cannot be a sugar plantation owner without land to which
the quota is attached; and there can exist no quota without there being first a corresponding
plantation.
Since the levy is invalid for non-compliance with law, it is impertinent to discuss the survival or nonsurvival of claims after the death of the judgment debtor, gauged from the moment of actual levy.
Suffice it to state that, as the case presently stands, the writs of execution are not in question, but
the levy on the quotas, and, because of its invalidity, the levy amount to no levy at all. Neither is it
necessary, or desirable, to pass upon the conscionableness or unconscionableness of the amount

produced in the auction sale as compared with the actual value of the quotas inasmuch as the sale
must necessarily be also illegal.
As to the remedial issue that the respondents have presented: that certiorari does not lie in this case
because the petitioner had a remedy in the lower court to "suspend" the auction sale, but did not
avail thereof, it may be stated that the latter's urgent motion of November 4, 1960, a day before the
scheduled sale (though unresolved by the court on time), did ask for desistance from holding the
sale.
WHEREFORE, the preliminary injunction heretofore granted is hereby made permanent, and the
sheriff's certificate of sale of the sugar quotas in question declared null and void. Costs against
respondent Nava.
Bengzon, C.J., Padilla, Labrador, Barrera, Paredes, Dizon and Regala, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-13646

July 26, 1960

BENITO MANALANSAN, plaintiff-appellant,

vs.
LUIS MANALANG, JULIO CUBA and JOSE SY, defendants-appellees.
Macapagal, Alafriz and Mutuc for appellant.
L. Manalang and Ass. for appellees.
REYES, J.B.L., J.:
This is an appeal taken directly to this Court on questions of law.
The undisputed facts as found by the trial court may be summarized as follows:
The spouses Augusto Manalang and Victoria Dabu were the original owners of the two-story building
located at 2268-2270 Espaa Street. On August 14, 1951, they executed a deed of chattel mortgage
over this property in favor of Benito Manalansan to secure the payment of the loan. Because of their
failure to pay the loan on the date of maturity, the mortgage was foreclosed and on May 14, 1956,
the sheriff of Manila sold the building at public auction to the mortgage Manalansan as the highest
bidder.
Thereafter, Manalansan went to the premises in question to take possession thereof. There he found
Jose Sy and Julio Cuba occupying the building as tenants of Luis Manalang. Manalansan
consequently asked his lawyer to formally notify Luis Manalang and his tenants to vacate the
premises, and eventually filed this case against them for the recovery of possession thereof.
At the trial, defendant Luis Manalang established that the building in question was sold to him on
September 24, 1949, by spouses Augusto Manalang and Victoria Dabu with the right to repurchase
within one year; that the vendors failed to redeem the property within the period stipulated; that the
property had been assessed for taxation purposes in his name for the years 1950-57, and he had
paid the corresponding taxes thereon for that period; that on January 25, 1955, he obtained a
judgment from the Municipal Court in Civil Case No. 34346 against Augusto Manalang, et al.,
ordering the latter to vacate the building in question; and that since the finality of the aforesaid
judgment, he has been in the possession of said building, which he leased to his co-defendants Jose
Sy and Julio Cuba.
Convinced that defendant Luis Manalang had acquired full ownership of the building in question
before the execution of the deed of chattel mortgage relied upon by plaintiff for his cause of action,
the lower court rendered judgment dismissing the complaint with costs. Unable to obtain
reconsideration of this judgment, plaintiff Manalansan appealed directly to this Court.
It is urged by appellant that a building, although standing on the land belonging to another, is an
immovable property, as held by us in Evangelista vs. Alto Surety & Insurance Co., 103 Phil., 401; 55
Off. Gaz. (20) 3672;Lopez vs. Luzon Surety Co., Inc., 103 Phil., 98; 56 Off. Gaz. (13) 2820; and
other cases; and that as the expiration of the period of redemption under appellee's contract of sale

over the building in question with the former owners Manalang and Dabu occurred after the New
Civil Code had already come into effect, the consolidation of this title over said building should be
governed by, and follow the procedure laid down in Art. 1607 thereof, a new provision not found in
the Old Code, to wit:
ART. 1607. In case of real property, the consolidation of ownership in the vendee by virtue of
the failure of the vendor to comply with the provisions of article 1676 shall not be recorded in
the Registry of Property without a judicial order, after the vendor has been duly heard.
We see no merit in the contention.
Assuming that the building here in question is such kind of real property as is included within the
scope of Art. 1607, a question that we need not decide here, said Article can not apply to the
contract of sale con pacto de retro between appellee and the spouses Manalang and Dabu for the
reason that said contract was executed before the New Civil Code came into effect. The nature of
the sale with right of redemption is such that ownership over the thing sold in transferred to the
vendee upon execution of the contract, subject only to the resolutory condition that the vendor
exercise his right of repurchase within the period agreed upon (Aquino vs. Deala, 63 Phil., 582;
Lichauco vs. Berenguer, 20 Phil., 12; Aldereto vs. Amandoron, 46 Phil., 488). Consequently, this
contract is covered by Art. 2255 of the transitional provisions of the New Code, providing:
(5) ART. 2255. The former laws shall regulate acts and contracts with a condition or period,
which were executed or entered into before the effectivity of this Code, even though the
condition or period may still be pending at the time this body of laws goes into effect.
Furthermore, Art. 2252 of the New Code likewise provides that:
Changes and new provisions and rules laid down by this Code which may prejudice or impair
vested or acquired rights in accordance with the old legislation shall have no retroactive
effect.
Under Article 1509 of the Old Code, the vendee irrevocably acquires ownership over the thing sold
upon failure of the vendor to redeem i.e., ownership is consolidated in the vendee by operation of
law (Dorado vs. Viria, 34 Phil., 264; Rafols vs. Rafols, 22 Phil., 236; Gonzales vs. Salas, 49 Phil., 1;
Krapfenbauer vs. Orbeta, 52 Phil., 201). From the time appellee and his vendors executed their sale
with the right to repurchase, therefore, the former had already acquired the right to consolidate full
title over the building in question merely upon his vendor's failure to redeem, as well as the right to
sell or convey this acquired right for value, subject to no other condition than that the vendors could
repurchase within the period stipulated. To impose upon appellee the additional conditions found in
Article 1607 for the consolidation of his ownership would thus impair and diminish the rights that had
already vested in him under the Old Code.
Lastly, appellant contends that the sale with the right to repurchase between appellee and his
vendors should have been registered as a notice to third persons, and so with appellee's
consolidation of ownership; and that as appellant took the building in question without notice of its
former sale to or consolidation of ownership in appellee because they had not been registered, he is
not bound thereby. Unfortunately for appellant, there is no registry of buildings in this jurisdiction
apart from the lands on which they stand, so that there is no legal compulsion to register, as notice
to third persons, transactions over or dealings on buildings that do not belong to the owners of the
lands on which they stand. Appellant should have known this when he accepted a chattel mortgage
on the building in question and accordingly, he had a duty to conduct an investigation as to his
mortgagor's title. Had he made such as investigation, he would have discovered that as of 1950,

said building has already been assessed for taxation purposes in the name of appellee, and taxes
thereon paid by the latter. This fact alone would have placed appellant on his guard as to the
supposed title of his mortgagors over said building. Likewise, on January 25, 1955, before appellant
bought the same building at the public auction sale in foreclosure of his mortgage thereon (on May
14, 1956), appellee Manalang had obtained a final judgment in the Municipal Court of Manila against
appellant's mortgagors ejecting the latter from the premises, and in the records of said case may be
found an affidavit by Augusto Manalang recognizing appellee's ownership of said building and
stating that he was occupying the same only as mere tenant. Thus, whether on the basis of prior
possession or of earlier title, as required by Article 1544 of the Civil Code of the Philippines (Art.
1473 of the old Code) in case of double sale of unregistered property, appellee Luis Manalang is
entitled to priority.
Wherefore, the decision appealed from is affirmed, with costs against appellant Benito Manalansan.
Paras, C. J., Bengzon, Padilla, Montemayor, Bautista Angelo, Labrador, Concepcion, Endencia,
Barrera, and Gutierrez David, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-30173 September 30, 1971
GAVINO A. TUMALAD and GENEROSA R. TUMALAD, plaintiffs-appellees,
vs.
ALBERTA VICENCIO and EMILIANO SIMEON, defendants-appellants.
REYES, J.B.L., J.:
Case certified to this Court by the Court of Appeals (CA-G.R. No. 27824-R) for the reason that only
questions of law are involved.
This case was originally commenced by defendants-appellants in the municipal court of Manila in
Civil Case No. 43073, for ejectment. Having lost therein, defendants-appellants appealed to the
court a quo (Civil Case No. 30993) which also rendered a decision against them, the dispositive
portion of which follows:
WHEREFORE, the court hereby renders judgment in favor of the plaintiffs and
against the defendants, ordering the latter to pay jointly and severally the former a
monthly rent of P200.00 on the house, subject-matter of this action, from March 27,
1956, to January 14, 1967, with interest at the legal rate from April 18, 1956, the filing
of the complaint, until fully paid, plus attorney's fees in the sum of P300.00 and to
pay the costs.
It appears on the records that on 1 September 1955 defendants-appellants executed a chattel
mortgage in favor of plaintiffs-appellees over their house of strong materials located at No. 550 Int.
3, Quezon Boulevard, Quiapo, Manila, over Lot Nos. 6-B and 7-B, Block No. 2554, which were being
rented from Madrigal & Company, Inc. The mortgage was registered in the Registry of Deeds of
Manila on 2 September 1955. The herein mortgage was executed to guarantee a loan of P4,800.00
received from plaintiffs-appellees, payable within one year at 12% per annum. The mode of payment
was P150.00 monthly, starting September, 1955, up to July 1956, and the lump sum of P3,150 was
payable on or before August, 1956. It was also agreed that default in the payment of any of the
amortizations, would cause the remaining unpaid balance to becomeimmediately due and Payable
and
the Chattel Mortgage will be enforceable in accordance with the provisions of Special
Act No. 3135, and for this purpose, the Sheriff of the City of Manila or any of his
deputies is hereby empowered and authorized to sell all the Mortgagor's property
after the necessary publication in order to settle the financial debts of P4,800.00, plus
12% yearly interest, and attorney's fees... 2
When defendants-appellants defaulted in paying, the mortgage was extrajudicially foreclosed, and
on 27 March 1956, the house was sold at public auction pursuant to the said contract. As highest
bidder, plaintiffs-appellees were issued the corresponding certificate of sale. 3 Thereafter, on 18 April
1956, plaintiffs-appellant commenced Civil Case No. 43073 in the municipal court of Manila, praying,
among other things, that the house be vacated and its possession surrendered to them, and for

defendants-appellants to pay rent of P200.00 monthly from 27 March 1956 up to the time the possession
is surrendered. 4 On 21 September 1956, the municipal court rendered its decision

... ordering the defendants to vacate the premises described in the complaint;
ordering further to pay monthly the amount of P200.00 from March 27, 1956, until
such (time that) the premises is (sic) completely vacated; plus attorney's fees of
P100.00 and the costs of the suit. 5
Defendants-appellants, in their answers in both the municipal court and court a quo impugned the
legality of the chattel mortgage, claiming that they are still the owners of the house; but they waived
the right to introduce evidence, oral or documentary. Instead, they relied on their memoranda in
support of their motion to dismiss, predicated mainly on the grounds that: (a) the municipal court did
not have jurisdiction to try and decide the case because (1) the issue involved, is ownership, and (2)
there was no allegation of prior possession; and (b) failure to prove prior demand pursuant to
Section 2, Rule 72, of the Rules of Court. 6
During the pendency of the appeal to the Court of First Instance, defendants-appellants failed to
deposit the rent for November, 1956 within the first 10 days of December, 1956 as ordered in the
decision of the municipal court. As a result, the court granted plaintiffs-appellees' motion for
execution, and it was actually issued on 24 January 1957. However, the judgment regarding the
surrender of possession to plaintiffs-appellees could not be executed because the subject house had
been already demolished on 14 January 1957 pursuant to the order of the court in a separate civil
case (No. 25816) for ejectment against the present defendants for non-payment of rentals on the
land on which the house was constructed.
The motion of plaintiffs for dismissal of the appeal, execution of the supersedeas bond and
withdrawal of deposited rentals was denied for the reason that the liability therefor was disclaimed
and was still being litigated, and under Section 8, Rule 72, rentals deposited had to be held until final
disposition of the appeal. 7
On 7 October 1957, the appellate court of First Instance rendered its decision, the dispositive portion
of which is quoted earlier. The said decision was appealed by defendants to the Court of Appeals
which, in turn, certified the appeal to this Court. Plaintiffs-appellees failed to file a brief and this
appeal was submitted for decision without it.
Defendants-appellants submitted numerous assignments of error which can be condensed into two
questions, namely: .
(a) Whether the municipal court from which the case originated had jurisdiction to
adjudicate the same;
(b) Whether the defendants are, under the law, legally bound to pay rentals to the
plaintiffs during the period of one (1) year provided by law for the redemption of the
extrajudicially foreclosed house.
We will consider these questions seriatim.
(a) Defendants-appellants mortgagors question the jurisdiction of the municipal court from which the
case originated, and consequently, the appellate jurisdiction of the Court of First Instance a quo, on
the theory that the chattel mortgage is void ab initio; whence it would follow that the extrajudicial
foreclosure, and necessarily the consequent auction sale, are also void. Thus, the ownership of the
house still remained with defendants-appellants who are entitled to possession and not plaintiffs-

appellees. Therefore, it is argued by defendants-appellants, the issue of ownership will have to be

adjudicated first in order to determine possession. lt is contended further that ownership being in
issue, it is the Court of First Instance which has jurisdiction and not the municipal court.
Defendants-appellants predicate their theory of nullity of the chattel mortgage on two grounds, which
are: (a) that, their signatures on the chattel mortgage were obtained through fraud, deceit, or
trickery; and (b) that the subject matter of the mortgage is a house of strong materials, and, being an
immovable, it can only be the subject of a real estate mortgage and not a chattel mortgage.
On the charge of fraud, deceit or trickery, the Court of First Instance found defendants-appellants'
contentions as not supported by evidence and accordingly dismissed the charge, 8 confirming the
earlier finding of the municipal court that "the defense of ownership as well as the allegations of fraud and
deceit ... are mere allegations." 9

It has been held in Supia and Batiaco vs. Quintero and Ayala 10 that "the answer is a mere statement of
the facts which the party filing it expects to prove, but it is not evidence; 11 and further, that when the
question to be determined is one of title, the Court is given the authority to proceed with the hearing of the
cause until this fact is clearly established. In the case of Sy vs. Dalman, 12 wherein the defendant was also
a successful bidder in an auction sale, it was likewise held by this Court that in detainer cases the aim of
ownership "is a matter of defense and raises an issue of fact which should be determined from the
evidence at the trial." What determines jurisdiction are the allegations or averments in the complaint and
the relief asked for. 13

Moreover, even granting that the charge is true, fraud or deceit does not render a contract void ab
initio, and can only be a ground for rendering the contract voidable or annullable pursuant to Article
1390 of the New Civil Code, by a proper action in court. 14 There is nothing on record to show that the
mortgage has been annulled. Neither is it disclosed that steps were taken to nullify the same. Hence,
defendants-appellants' claim of ownership on the basis of a voidable contract which has not been voided
fails.

It is claimed in the alternative by defendants-appellants that even if there was no fraud, deceit or
trickery, the chattel mortgage was still null and void ab initio because only personal properties can
be subject of a chattel mortgage. The rule about the status of buildings as immovable property is
stated in Lopez vs. Orosa, Jr. and Plaza Theatre Inc., 15 cited in Associated Insurance Surety Co., Inc.
vs. Iya, et al. 16 to the effect that

... 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 by itself an immovable
property irrespective of whether or not said structure and the land on which it is
adhered to belong to the same owner.
Certain deviations, however, have been allowed for various reasons. In the case of Manarang and
Manarang vs. Ofilada, 17 this Court stated that "it is undeniable that the parties to a contract may by
agreement treat as personal property that which by nature would be real property", citing Standard Oil
Company of New York vs. Jaramillo. 18 In the latter case, the mortgagor conveyed and transferred to the
mortgagee by way of mortgage "the following described personal property."19 The "personal property"
consisted of leasehold rights and a building. Again, in the case of Luna vs. Encarnacion, 20 the subject of
the contract designated as Chattel Mortgage was a house of mixed materials, and this Court hold therein
that it was a valid Chattel mortgage because it was so expressly designated and specifically that the
property given as security "is a house of mixed materials, which by its very nature is considered personal
property." In the later case of Navarro vs. Pineda, 21 this Court stated that

The view that parties to a deed of chattel mortgage may agree to consider a house
as personal property for the purposes of said contract, "is good only insofar as the
contracting parties are concerned. It is based, partly, upon the principle of estoppel"
(Evangelista vs. Alto Surety, No. L-11139, 23 April 1958). In a case, a mortgaged
house built on a rented land was held to be a personal property, not only because
the deed of mortgage considered it as such, but also because it did not form part of
the land (Evangelists vs. Abad, [CA]; 36 O.G. 2913), for it is now settled that an
object placed on land by one who had only a temporary right to the same, such as
the lessee or usufructuary, does not become immobilized by attachment (Valdez vs.
Central Altagracia, 222 U.S. 58, cited in Davao Sawmill Co., Inc. vs. Castillo, et al.,
61 Phil. 709). Hence, if a house belonging to a person stands on a rented land
belonging to another person, it may be mortgaged as a personal property as so
stipulated in the document of mortgage. (Evangelista vs. Abad, Supra.) It should be
noted, however that the principle is predicated on statements by the owner declaring
his house to be a chattel, a conduct that may conceivably estop him from
subsequently claiming otherwise. (Ladera vs. C.N. Hodges, [CA] 48 O.G. 5374): 22
In the contract now before Us, the house on rented land is not only expressly designated as Chattel
Mortgage; it specifically provides that "the mortgagor ... voluntarily CEDES, SELLS and
TRANSFERS by way of Chattel Mortgage 23 the property together with its leasehold rights over the lot
on which it is constructed and participation ..." 24Although there is no specific statement referring to the
subject house as personal property, yet by ceding, selling or transferring a property by way of chattel
mortgage defendants-appellants could only have meant to convey the house as chattel, or at least,
intended to treat the same as such, so that they should not now be allowed to make an inconsistent stand
by claiming otherwise. Moreover, the subject house stood on a rented lot to which defendats-appellants
merely had a temporary right as lessee, and although this can not in itself alone determine the status of
the property, it does so when combined with other factors to sustain the interpretation that the parties,
particularly the mortgagors, intended to treat the house as personalty. Finally unlike in the Iya
cases, Lopez vs. Orosa, Jr. and Plaza Theatre, Inc. 25 and Leung Yee vs. F. L. Strong Machinery and
Williamson, 26 wherein third persons assailed the validity of the chattel mortgage, 27 it is the defendantsappellants themselves, as debtors-mortgagors, who are attacking the validity of the chattel mortgage in
this case. The doctrine of estoppel therefore applies to the herein defendants-appellants, having treated
the subject house as personalty.

(b) Turning to the question of possession and rentals of the premises in question. The Court of First
Instance noted in its decision that nearly a year after the foreclosure sale the mortgaged house had
been demolished on 14 and 15 January 1957 by virtue of a decision obtained by the lessor of the
land on which the house stood. For this reason, the said court limited itself to sentencing the
erstwhile mortgagors to pay plaintiffs a monthly rent of P200.00 from 27 March 1956 (when the
chattel mortgage was foreclosed and the house sold) until 14 January 1957 (when it was torn down
by the Sheriff), plus P300.00 attorney's fees.
Appellants mortgagors question this award, claiming that they were entitled to remain in possession
without any obligation to pay rent during the one year redemption period after the foreclosure sale,
i.e., until 27 March 1957. On this issue, We must rule for the appellants.
Chattel mortgages are covered and regulated by the Chattel Mortgage Law, Act No. 1508. 28 Section
14 of this Act allows the mortgagee to have the property mortgaged sold at public auction through a
public officer in almost the same manner as that allowed by Act No. 3135, as amended by Act No. 4118,
provided that the requirements of the law relative to notice and registration are complied with. 29 In the
instant case, the parties specifically stipulated that "the chattel mortgage will be enforceable in
accordance with the provisions of Special Act No. 3135 ... ." 30 (Emphasis supplied).

Section 6 of the Act referred to 31 provides that the debtor-mortgagor (defendants-appellants herein)
may, at any time within one year from and after the date of the auction sale, redeem the property sold at
the extra judicial foreclosure sale. Section 7 of the same Act 32 allows the purchaser of the property to
obtain from the court the possession during the period of redemption: but the same provision expressly
requires the filing of a petition with the proper Court of First Instance and the furnishing of a bond. It is
only upon filing of the proper motion and the approval of the corresponding bond that the order for a writ
of possession issues as a matter of course. No discretion is left to the court. 33 In the absence of such a
compliance, as in the instant case, the purchaser can not claim possession during the period of
redemption as a matter of right. In such a case, the governing provision is Section 34, Rule 39, of the
Revised Rules of Court 34 which also applies to properties purchased in extrajudicial foreclosure
proceedings. 35 Construing the said section, this Court stated in the aforestated case of Reyes vs.
Hamada.

In other words, before the expiration of the 1-year period within which the judgmentdebtor or mortgagor may redeem the property, the purchaser thereof is not entitled,
as a matter of right, to possession of the same. Thus, while it is true that the Rules of
Court allow the purchaser to receive the rentals if the purchased property is occupied
by tenants, he is, nevertheless, accountable to the judgment-debtor or mortgagor as
the case may be, for the amount so received and the same will be duly credited
against the redemption price when the said debtor or mortgagor effects the
redemption.Differently stated, the rentals receivable from tenants, although they may
be collected by the purchaser during the redemption period, do not belong to the
latter but still pertain to the debtor of mortgagor. The rationale for the Rule, it seems,
is to secure for the benefit of the debtor or mortgagor, the payment of the redemption
amount and the consequent return to him of his properties sold at public auction.
(Emphasis supplied)
The Hamada case reiterates the previous ruling in Chan vs. Espe. 36
Since the defendants-appellants were occupying the house at the time of the auction sale, they are
entitled to remain in possession during the period of redemption or within one year from and after 27
March 1956, the date of the auction sale, and to collect the rents or profits during the said period.
It will be noted further that in the case at bar the period of redemption had not yet expired when
action was instituted in the court of origin, and that plaintiffs-appellees did not choose to take
possession under Section 7, Act No. 3135, as amended, which is the law selected by the parties to
govern the extrajudicial foreclosure of the chattel mortgage. Neither was there an allegation to that
effect. Since plaintiffs-appellees' right to possess was not yet born at the filing of the complaint, there
could be no violation or breach thereof. Wherefore, the original complaint stated no cause of action
and was prematurely filed. For this reason, the same should be ordered dismissed, even if there was
no assignment of error to that effect. The Supreme Court is clothed with ample authority to review
palpable errors not assigned as such if it finds that their consideration is necessary in arriving at a
just decision of the cases. 37
It follows that the court below erred in requiring the mortgagors to pay rents for the year following the
foreclosure sale, as well as attorney's fees.
FOR THE FOREGOING REASONS, the decision appealed from is reversed and another one
entered, dismissing the complaint. With costs against plaintiffs-appellees.
Concepcion, C.J., Dizon, Makalintal, Zaldivar, Castro, Fernando, Teehankee, Barredo, Villamor and
Makasiar, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-58469 May 16, 1983
MAKATI LEASING and FINANCE CORPORATION, petitioner,
vs.
WEAREVER TEXTILE MILLS, INC., and HONORABLE COURT OF APPEALS, respondents.
DE CASTRO, J.:
Petition for review on certiorari of the decision of the Court of Appeals (now Intermediate Appellate
Court) promulgated on August 27, 1981 in CA-G.R. No. SP-12731, setting aside certain Orders later
specified herein, of Judge Ricardo J. Francisco, as Presiding Judge of the Court of First instance of
Rizal Branch VI, issued in Civil Case No. 36040, as wen as the resolution dated September 22, 1981
of the said appellate court, denying petitioner's motion for reconsideration.
It appears that in order to obtain financial accommodations from herein petitioner Makati Leasing
and Finance Corporation, the private respondent Wearever Textile Mills, Inc., discounted and
assigned several receivables with the former under a Receivable Purchase Agreement. To secure
the collection of the receivables assigned, private respondent executed a Chattel Mortgage over
certain raw materials inventory as well as a machinery described as an Artos Aero Dryer Stentering
Range.
Upon private respondent's default, petitioner filed a petition for extrajudicial foreclosure of the
properties mortgage to it. However, the Deputy Sheriff assigned to implement the foreclosure failed
to gain entry into private respondent's premises and was not able to effect the seizure of the
aforedescribed machinery. Petitioner thereafter filed a complaint for judicial foreclosure with the
Court of First Instance of Rizal, Branch VI, docketed as Civil Case No. 36040, the case before the
lower court.
Acting on petitioner's application for replevin, the lower court issued a writ of seizure, the
enforcement of which was however subsequently restrained upon private respondent's filing of a
motion for reconsideration. After several incidents, the lower court finally issued on February 11,
1981, an order lifting the restraining order for the enforcement of the writ of seizure and an order to
break open the premises of private respondent to enforce said writ. The lower court reaffirmed its
stand upon private respondent's filing of a further motion for reconsideration.
On July 13, 1981, the sheriff enforcing the seizure order, repaired to the premises of private
respondent and removed the main drive motor of the subject machinery.
The Court of Appeals, in certiorari and prohibition proceedings subsequently filed by herein private
respondent, set aside the Orders of the lower court and ordered the return of the drive motor seized
by the sheriff pursuant to said Orders, after ruling that the machinery in suit cannot be the subject of
replevin, much less of a chattel mortgage, because it is a real property pursuant to Article 415 of the
new Civil Code, the same being attached to the ground by means of bolts and the only way to
remove it from respondent's plant would be to drill out or destroy the concrete floor, the reason why
all that the sheriff could do to enfore the writ was to take the main drive motor of said machinery. The

appellate court rejected petitioner's argument that private respondent is estopped from claiming that
the machine is real property by constituting a chattel mortgage thereon.
A motion for reconsideration of this decision of the Court of Appeals having been denied, petitioner
has brought the case to this Court for review by writ of certiorari. It is contended by private
respondent, however, that the instant petition was rendered moot and academic by petitioner's act of
returning the subject motor drive of respondent's machinery after the Court of Appeals' decision was
promulgated.
The contention of private respondent is without merit. When petitioner returned the subject motor
drive, it made itself unequivocably clear that said action was without prejudice to a motion for
reconsideration of the Court of Appeals decision, as shown by the receipt duly signed by
respondent's representative. 1 Considering that petitioner has reserved its right to question the propriety
of the Court of Appeals' decision, the contention of private respondent that this petition has been mooted
by such return may not be sustained.

The next and the more crucial question to be resolved in this Petition is whether the machinery in
suit is real or personal property from the point of view of the parties, with petitioner arguing that it is a
personality, while the respondent claiming the contrary, and was sustained by the appellate court,
which accordingly held that the chattel mortgage constituted thereon is null and void, as contended
by said respondent.
A similar, if not Identical issue was raised in Tumalad v. Vicencio, 41 SCRA 143 where this Court,
speaking through Justice J.B.L. Reyes, ruled:
Although there is no specific statement referring to the subject house as personal
property, yet by ceding, selling or transferring a property by way of chattel mortgage
defendants-appellants could only have meant to convey the house as chattel, or at
least, intended to treat the same as such, so that they should not now be allowed to
make an inconsistent stand by claiming otherwise. Moreover, the subject house
stood on a rented lot to which defendants-appellants merely had a temporary right as
lessee, and although this can not in itself alone determine the status of the property,
it does so when combined with other factors to sustain the interpretation that the
parties, particularly the mortgagors, intended to treat the house as personality.
Finally, unlike in the Iya cases, Lopez vs. Orosa, Jr. & Plaza Theatre, Inc. & Leung
Yee vs. F.L. Strong Machinery & Williamson, wherein third persons assailed the
validity of the chattel mortgage, it is the defendants-appellants themselves, as
debtors-mortgagors, who are attacking the validity of the chattel mortgage in this
case. The doctrine of estoppel therefore applies to the herein defendants-appellants,
having treated the subject house as personality.
Examining the records of the instant case, We find no logical justification to exclude the rule out, as
the appellate court did, the present case from the application of the abovequoted pronouncement. If
a house of strong materials, like what was involved in the above Tumalad case, may be considered
as personal property for purposes of executing a chattel mortgage thereon as long as the parties to
the contract so agree and no innocent third party will be prejudiced thereby, there is absolutely no
reason why a machinery, which is movable in its nature and becomes immobilized only by
destination or purpose, may not be likewise treated as such. This is really because one who has so
agreed is estopped from denying the existence of the chattel mortgage.
In rejecting petitioner's assertion on the applicability of the Tumalad doctrine, the Court of Appeals
lays stress on the fact that the house involved therein was built on a land that did not belong to the

owner of such house. But the law makes no distinction with respect to the ownership of the land on
which the house is built and We should not lay down distinctions not contemplated by law.
It must be pointed out that the characterization of the subject machinery as chattel by the private
respondent is indicative of intention and impresses upon the property the character determined by
the parties. As stated inStandard Oil Co. of New York v. Jaramillo, 44 Phil. 630, it is undeniable that
the parties to a contract may by agreement treat as personal property that which by nature would be
real property, as long as no interest of third parties would be prejudiced thereby.
Private respondent contends that estoppel cannot apply against it because it had never represented
nor agreed that the machinery in suit be considered as personal property but was merely required
and dictated on by herein petitioner to sign a printed form of chattel mortgage which was in a blank
form at the time of signing. This contention lacks persuasiveness. As aptly pointed out by petitioner
and not denied by the respondent, the status of the subject machinery as movable or immovable
was never placed in issue before the lower court and the Court of Appeals except in a supplemental
memorandum in support of the petition filed in the appellate court. Moreover, even granting that the
charge is true, such fact alone does not render a contract void ab initio, but can only be a ground for
rendering said contract voidable, or annullable pursuant to Article 1390 of the new Civil Code, by a
proper action in court. There is nothing on record to show that the mortgage has been annulled.
Neither is it disclosed that steps were taken to nullify the same. On the other hand, as pointed out by
petitioner and again not refuted by respondent, the latter has indubitably benefited from said
contract. Equity dictates that one should not benefit at the expense of another. Private respondent
could not now therefore, be allowed to impugn the efficacy of the chattel mortgage after it has
benefited therefrom,
From what has been said above, the error of the appellate court in ruling that the questioned
machinery is real, not personal property, becomes very apparent. Moreover, the case of Machinery
and Engineering Supplies, Inc. v. CA, 96 Phil. 70, heavily relied upon by said court is not applicable
to the case at bar, the nature of the machinery and equipment involved therein as real properties
never having been disputed nor in issue, and they were not the subject of a Chattel Mortgage.
Undoubtedly, the Tumalad case bears more nearly perfect parity with the instant case to be the
more controlling jurisprudential authority.
WHEREFORE, the questioned decision and resolution of the Court of Appeals are hereby reversed
and set aside, and the Orders of the lower court are hereby reinstated, with costs against the private
respondent.
SO ORDERED.
Makasiar (Chairman), Aquino, Concepcion Jr., Guerrero and Escolin JJ., concur.
Abad Santos, J., concurs in the result.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. 6295

September 1, 1911

THE UNITED STATES, plaintiff-appellee,

vs.
IGNACIO CARLOS, defendant-appellant.
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 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.
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.

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
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.
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 of estafa 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 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.

Separate Opinions
MORELAND, J., dissenting:

I feel myself compelled to dissent because, in my judgment, there is no evidence before this court,
and there was none before the court below, establishing the most essential element of the crime of
larceny, namely, the takingwithout the consent of the owner. As I read the record, there is no
evidence showing that the electricity alleged to have been stolen was taken without the consent of
the complaining company. The fact is that there was not a witness who testified for the prosecution
who was authorized in law, or who claimed to be authorized in fact, to testify as to whether or not the
alleged taking of the electricity was without the consent of the company or, even that said company
had not been paid for all electricity taken. Not one of them was, as a matter of law, competent to
either of those facts. Not one of them was an officer of the company. The leading witness for the
people, Kay, was only an inspector of electric lights. Another, McGeachim was an electrical engineer
in the employ of the company. Another, Garcia, was an electrician of the company. These witness all
confined their testimony to technical descriptions of meters, their nature and function, of electric light
wires, the writing of defendant's house, the placing of a meter therein, the placing of the meter
outside of the house in order to detect, by comparing the readings of the two, whether the accused
was actually using more electricity than the house meter registered, the discovery that more
electricity was being used than said meter registered, and of the finding of a "jumper" in defendant's
possession. One of these witnesses testified also that he had suspected for a long time that the
accused was "stealing" electricity and that later he was "positive of it."
In order to sustain a charge of larceny under section 517 of Penal Code, it is necessary to prove that
there was a taking without the consent of the owner. This is unquestioned. The question is: Has the
prosecution proved that fact? Has it proved that the electricity alleged to have been stolen was used
without the consent of the company? Has it proved that the accused did not have a right to use
electricity whether it went through the meter or not? Has it proved, even, that the accused did not
have a right to use a "jumper?" Has it been proved that the company has not been fully paid for all
the electricity which defendant used, however obtained? Not one of these facts has been proved.
The only way to determine those questions was to ascertain the relations which existed between the
accused and the company at the time the electricity alleged to have been stolen was used by the
accused. There was certainly some relation, some contract, either express or implied, between the
company and the accused or the company would not have been supplying him the electric current.
What was that relation, that contract? No one can possibly tell by reading the record. There is not a
single word in all the evidence even referring to it. Not one of the people's witnesses mentioned it.
Not one of them, very likely, knew what it really was. The relation which a corporation bears to
private persons for whom they are rendering service is determined by the corporation itself through
the acts of its officials, and not by its employees. While an employee might, as the act of a servant,
have caused the contract between the company and the accused to be signed by the accused, it
was nevertheless a contract determined and prepared by the company through its officers and not
one made by the employee; and unless the employee actually knew the terms of the contract signed
by the accused, either by having read it, if in writing, or by having heard it agreed upon, if verbal, he
would not be competent to testify to its terms except rendered so by admission of the party to be
charged by it. It nowhere appears that any of the witnesses for the prosecution had any knowledge
whatever of the terms of the contract between the company and the accused. It does not appear that
any of them had ever seen it or heard it talked about by either party thereto. The company has
offered no testimony whatever on the matter. The record is absolutely silent on that point.
This being true, how can we say that the accused committed a crime? How can we say that a given
act is criminal unless we know the relation of the parties to whom the act refers? Are we
to presume an act wrong when it may be right? Are we to say that the accused committed a
wrong when we do not know whether he did or not? If we do not know the arrangements under
which the company undertook to furnish electricity to the defendant, how do we know that the
accused has not lived up to them? If we do not know their contract, how do we know that the
accused violated it?

It may be urged that the very fact that a meter was put in by the company is evidence that it was for
the company's protection. This may be true. But is it not just as proper to presume that it was put in
for defendant's protection also? Besides, it does not appear that the company really put in the
matter, nor does not appear that the company really put in the meter, nor does it even appear to
whom it belonged. No more does it appear on whose application it was put in. The witness who
installed the meter in defendant's house did not say to whom it belonged and was unable to identify
the one presented by the prosecution on the trial as the one he installed. But however these things
may be, courts are not justified in "assuming" men into state prison. The only inferences that courts
are justified in drawing are those springing from facts which are not only proved but which are of
themselves sufficient to warrant the inference. The mere fact, it is a fact, that the company placed a
meter in defendant's house is not sufficient to sustain the conclusion in a criminal case that the
defendant did not have the right to use electricity which did not have the right to use electricity which
did not pass through the meter. Much less would it warrant the inference that, in so using electricity,
the defendant feloniously and criminally took, sole, and carried it away without the consent of the
company. An accused is presumed innocent until contrary is proved. His guilt must be established
beyond a reasonable doubt. It is incumbent on the state to prove every fact which is essential to the
guilt of the accused, and to prove every such fact as though the whole issue rested on it. The
evidence of the prosecution must exclude every reasonable hypothesis of innocence as with his
guilt, he can not be convicted.
But what was the necessity of all this uncertainty? What was the force which prevented the company
from proving clearly and explicitly the contract between itself and the accused? What prevented it
from proving clearly, explicitly, and beyond all cavil that the electricity was taken (used) without its
consent? Why did not some competent official testify? Why did the company stand by wholly silent?
Why did it leave its case to be proved by servants who were competent to testify, and who did
actually testify, so far as legal evidence goes, only in relation to technical matters relating to meters
and electric currents? Why did the prosecution place upon this court the necessity of deducing and
inferring and concluding relative to the lack of consent of the company when a single word from the
company itself would have avoided that necessity? We have only one answer to all these questions:
We do not know.
In the case of Bubster vs. Nebraska (33 Neb., 663), the accused was charged with the larceny of
buggy of the value of $75. He was found guilty. On appeal the judgment of conviction was reversed,
the court saying:
There are two serious objections to this verdict. First, the owner of the buggy, although
apparently within reach of the process of the court, was not called as a witness. Her son-inlaw, who resided with her, testifies that he did not give his consent, and very freely testifies
that his mother-in-law did not. She was within reach of the process of the court and should
have been called as a witness to prove her nonconsent.
The rule is very clearly stated in note 183, volume 1, Philips on Evidence (4th Am. ed.). A
conviction of larceny ought not to be permitted or sustained unless it appears that the
property was taken without the consent of the owner, and the owner himself should be
called, particularly in a case like that under consideration, when the acts complained of may
be consistent with the utmost goodfaith. There is a failure of proof therefore on this point.
In the case of State vs. Moon (41 Wis., 684), the accused was charged with the larceny of a mare.
He was convicted. On appeal the court reversed the judgment of conviction, saying:
In State vs. Morey (2 Wis., 494) it was held that in prosecutions of lacerny, if the owner of the
property alleged to have been stolen is known, and his attendance as a witness can be

procured, his testimony that the property was taken from him without his consent is
indispensable to a conviction. This is upon the principle that his testimony is the primary and
the best evidence that the property was taken without his consent, and hence, that
secondary evidence of the fact cannot be resorted to, until the prosecution shows it inability,
after due diligence, to procure the attendance of the owner.
In volume 1, Phillips on Evidence (5th Am., ed., note 183 sec. 635), the author says:
In all cases, and especially in this, the lacerny itself must be proved by the evidence the
nature of the case admits. . . . This should be by the testimony of the owner himself if the
property was taken from his immediate possession, or if from the actual possession of
another, though a mere servant or child of the owner, that the immediate possession was
violated, and this, too, without the consent of the person holding it. Where nonconsent is an
essential ingredient in the offense, as it is here, direct proof alone, from the person whose
nonconsent is necessary, can satisfy the rule. You are to prove a negative, and the very
person who can swear directly to the necessary negative must, if possible, always be
produced. (Citing English authorities.) Other and inferior proof cannot be resorted to till it be
impossible to procure this best evidence. If one person be dead who can swear directly to
the negative, and another be alive who can yet swear to the same thing, he must be
produced. In such cases, mere presumption, prima facie or circumstantial evidence is
secondary in degree, and cannot be used until all the sources of direct evidence are
exhausted.
I quote these authorities not because I agree with the doctrine as therein set forth. I quote them
because there is a principle inherent in the doctrine laid down which is recognized by all courts as
having value and effect. It is this: Failure to call an available witness possessing peculiar knowledge
concerning facts essential to a party's case, direct or rebutting, or to examine such witness as to
facts covered by his special knowledge, especially if the witness be naturally favorable to the party's
contention, relying instead upon the evidence of witnesses less familiar with the matter, gives rise to
an inference, sometimes denominated a strong presumption of law, that the testimony of such
uninterrogated witness would not sustain the contention of the party. Where the party himself is the
one who fails to appear or testify, the inference is still stronger. The nonappearance of a litigant or
his failure to testify as to facts material to his case and as to which he has especially full knowledge
creates an inference that he refrains from appearing or testifying because the truth, if made to
appear, would not aid his contention; and, in connection with an equivocal statement on the other
side, which if untrue could be disapproved by his testimony, often furnishes strong evidence of the
facts asserted. As to this proposition the authorities are substantially uniform. They differ only in the
cases to which the principles are applied. A substantially full list of the authorities is given in 16
Cyclopedia of Law and Procedure (pp. 1062 to 1064, inclusive) from which the rules as stated above
are taken.
This court has recognized the value of this principle and has permitted it strongly to influence its view
of the evidence in certain cases. In the case of United States vs. Magsipoc (20 Phil. Rep., 604) one
of the vital facts which the prosecution was required to establish in order to convict the accused was
that a certain letter which the accused alleged he mailed to his daughter, who was attending a
boarding school in Iloilo, and which the daughter testified she had received, had not really been sent
by the accused and received by the daughter but, instead, had been purloined by him from the postoffice after he had duly placed it therein and after it had been taken into custody and control of the
postal authorities. It was conceded that the directress of the boarding school which the daughter was
at the time attending knew positively whether the daughter was at the time attending knew positively
whether the daughter had received the letter in question or not. This court held that, in weighing the
evidence, it would take into consideration the failure of the prosecution to produce the directress of

the school as a witness in the case, she being the only person, apart from the daughter herself, who
really knew the fact.
Another those cases was that of U. S. vs. Casipong (20 Phil. Rep., 178) charged with maintaining a
concubine outside his home with public scandal. To prove the scandalous conduct charged and its
publicity, the prosecution introduced testimony, not of witnesses in the vicinity where the accused
resided and where the scandal was alleged to have occurred, but those from another barrio. No
Witness living in the locality where the public scandal was alleged to have occurred was produced.
This court, in the decision of that case on appeal, allowed itself, in weighing the evidence of the
prosecution, to be strongly influenced by the failure to produce as witnesses persons who, if there
had really been public scandal, would have been the first, if not the only ones, to know it. The court
said:
In this case it would have been easy to have submitted abundant evidence that Juan
Casipong forsook his lawful wife and lived in concubinage in the village of Bolocboc with his
paramour Gregoria Hongoy, for there would have been an excess of witnesses to testify
regarding the actions performed by the defendants, actions not of isolated occurrence but
carried on for many days in slight of numerous residents scandalized by their bad example.
But it is impossible to conclude from the result of the trial that the concubinage with scandal
charged against the defendants has been proved, and therefore conviction of the alleged
concubine Gregoria Hongoy is not according to law.
In the case at bar the question of the consent of the company to the us of the electricity was the
essence of the charge. The defendant denied that he had taken the electricity without the consent of
the company. The prosecution did not present any officer of the corporation to offset this denial and
the company itself, although represented on the trial by its own private counsel, did not produce a
single witness upon that subject.
In the case of Standard Oil Co. vs. State (117 Tenn., 618), the court (p.672) said:
But the best evidence of what his instructions to Holt were and the information he had of the
transaction at the time was made were the letters which he wrote to Holt directing him to go
to Gallatin, and the daily and semi-weekly reports made to him by Holt and Rutherford of
what was done there, which were not produced, although admitted to be then in his
possession. He was aware of the value of such evidence, as he produced a copy of his letter
to Holt, condemning the transaction, as evidence in behalf of the plaintiffs in error. The
presumption always is that competent and pertinent evidence within the knowledge or control
of a party which he withholds is against his interest and insistence. (Dunlap vs. Haynes, 4
Heisk., 476; Kirbyvs. Tallmadge, 160 U. S., 379, 16 Sup. Ct., 349, 40 L. ed., 463; Pacific
Constr. Co. vs. B. W. Co., 94 Fed,, 180, 36 C. C. A., 153)
In the case of Succession of Drysdale (127 La., 890), the court held:
When a will presented for probate is attacked on the ground that it is a forgery, and there are
pertinent facts relating to the will in the possession of the proponent, and he repeatedly fails
to testify when his testimony could clear up many clouded and doubtful things, his failure to
testify casts suspicion upon the will, especially when the one asking for the probate of the will
is a principal legatee.
In the case of Belknap vs. Sleeth (77 Kan., 164), the court (p. 172) said:

What effect should such conduct have in the consideration of a case, where the successful
party thus living beyond the jurisdiction of the court has refused to testify in a material matter
in behalf of the opposing party? It must be conceded that the benefit of all reasonable
presumptions arising from his refusal should be given to the other party. The conduct of a
party in omitting to produce evidence peculiarly within his knowledge frequently affords
occasion for presumptions against him. (Kirby vs. Tallmadge, 160 U. S., 379, 16 Sup. Ct.,
349, 14 L. Ed., 463.) This rule has been often applied where a party withholds evidence
within his exclusive possession and the circumstances are such as to impel an honest man
to produce the testimony. In this case the witness not only failed but refused to testify
concerning material matters that must have been within his knowledge.
In the case of Heath vs. Waters (40 Mich., 457), it was held that:
It is to be presumed that when a witness refuses to explain what he can explain, the
explanation would be to his prejudice.
In case of Frick vs. Barbour (64 Pa. St., 120, 121), the court said:
It has been more than once said that testimony in a case often consists in what is not proved
as well as in what is proved. Where withholding testimony raises a violent presumption that a
fact not clearly proved or disproved exists, it is not error to allude to the fact of withholding,
as a circumstance strengthening the proof. That was all that was done here.
In the case of Funda vs. St. Paul City Railway Co. (71 Minn., 438), the court held:
The defendant having omitted to call its motorman as a witness, although within reach and
available, the court was, under the circumstances, justified in instructing the jury that, in
weighing the effect of the evidence actually introduced, they were at liberty to presume that
the testimony of the motorman, if introduced, would not have been favorable to the cause of
defendant.
In the case of Gulf, C. & S. F. Ry. Co. vs. Ellis (54 Fed. Rep., 481), the circuit court of appeals held
that:
Failure to produce the engineer as a witness to rebut the inferences raised by the
circumstancial evidence would justify the jury in assuming that his evidence, instead of
rebutting such inference, would support them.
In Wigmore on Evidence (vol. 1, sec. 285), it is said:
The consciousness indicated by the conduct may be, not an indefinite one affecting the
weakness of the cause at large, but a specific one concerning the defects of a particular
element in the cause. The failure to bring before the tribunal some circumstances, document,
or witness, when either the party himself or his opponent claims that the facts would thereby
be elucidated, serves to indicate, as the most natural inference, that the party fears to do so,
and this fear is some evidence that circumstances or document or witness, if brought, would
have exposed facts unfavorable to the party. These inferences, to be sure, cannot fairly be
made except upon certain conditions; and they are also open always to explanation by
circumstances which make some other hypothesis a more natural one than the party's fear
of exposure. But the propriety of such an inference in general is not doubted. The
nonproduction of evidence that would naturally have been produced by an honest and

therefore fearless claimant permits the inference that its tenor is unfavorable to the party's
cause. . . .
Continuing this same subject the same author says:
At common law the party-opponent in a civil case was ordinarily privileged from taking the
stand (post, sec. 2217); but he was also disqualified; and hence the question could rarely
arise whether his failure to testify could justify any inference against him. But since the
general abolition of both of the privilege and the disqualification (post, secs. 2218, 577), the
party has become both competent and compellable like other witnesses; and the question
plainly arises whether his conduct is to be judged by the same standards of inference. This
question naturally be answered in the affirmative. . . . (See Aragon Coffee Co., vs. Rogers,
105 Va., 51.)
As I stated at the outset, I have been unable to find in the record of this case any proof of legal value
showing or tending to show that the electricity alleged to have been stolen was taken or used without
the consent of the company. The defendant, therefore, should be acquitted.
There are other reasons why I cannot agree to the conviction of the accused. Even though the
accused to be found to have committed the acts charged against him, it stands conceded in this
case that there is a special law passed particularly and especially to meet cases of this very kind, in
which the offense is mentioned by name and described in detail and is therein made a misdemeanor
and punished as such. It is undisputed and admitted that heretofore and ever since said act was
passed cases such as the one at bar have uniformly and invariably been cognized and punished
under said act; and that this is the first attempt ever made in these Islands to disregard utterly the
plain provisions of this act, and to punish this class of offenses under the provisions of Penal Code
relating to larceny. The applicability of those provisions is, to say the very least, extremely doubtful,
even admitting that they are still in force. Even though originally applicable, these provisions must
now be held to be repealed by implication, at least so far as the city of Manila is concerned, by the
passage of the subsequent act defining the offense in question and punishing it altogether
differently.
Moreover, I do not believe that electricity, in the for in which it was delivered to the accused, is
susceptible of being stolen under the definition given by the law of these Islands to the crime of
larceny.
Concisely, then, I dissent because (a) this court, by its decision in this case, has, in my judgment,
disregarded the purpose of the Legislature, clearly expressed; because (b) it has applied a general
law, of at least very doubtful application, to a situation completely dealt with, and admittedly so by a
later statute conceived and enacted solely and expressly to cover that very situation; because (c) the
court makes such application in spite of the fact that, under the general law, if it is applicable, the
crime in hand is a felony while under the later statute it is only a misdemeanor; because (d), in my
judgment, the court modifies the definition given by the Legislature to the crime of lacerny, which has
been the same and has received the same interpretation in this country and in Spain for more than
two centuries; because (e) the decision disregards, giving no importance to a positive statute which
is not only the last expression of the legislative will on the particular subject in hand, but was
admittedly passed for the express purpose of covering the very situation to which the court refuses
to apply it. While the statute referred to is an act of the Municipal Board of the city of Manila, this
court has held in a recent case that said board was authorized by the legislature to pass it. Therefore
it is an Act of the Legislature of the Philippine Islands.
In this dissent I shall assert, and, I think, demonstrate three propositions, to wit:

First. That an electric current is not a tangible thing, a chattel, but is a condition, a state in which a
thing or chattel finds itself; and that a condition or state can not be stolen independently of the thing
or chattel of which it is a condition or state. That it is chattels which are subjects of lacerny and
not conditions.
Second. That, even if an electric current is a tangible thing, a chattel, and capable of being stolen, in
the case at bar no electric current was taken by the defendant, and therefore none was stolen. The
defendant simply made use of the electric current, returning to the company exactly the
same amount that he received.
Third. That, even if an electric current is a tangible thing, a chattel, and capable of being stolen, the
contract between the company and the defendant was one for use and not for consumption; and all
the defendant is shown to have done, which is all he could possibly have done, was to make use of
a current of electricity and not to take or consume electricity itself .
I shall therefore maintain that there is no lacerny even though the defendant committed all the acts
charged against him.
In discussing the question whether, under the law of the Philippine Islands, an electric current is the
subject of larceny, I shall proceed upon the theory, universally accepted to-day, that electricity is
nothing more or less thanenergy. As Mr. Meadowcroft says in his A B C of Electricity, indorsed by
Mr. Edison, "electricity is a form of energy, or force, and is obtained by transforming some other form
of energy into electrical energy."
In this I do not forget the theory of the "Electron" which is now being quietly investigated and studied,
which seems to tend to the conclusion that there is no difference between energy and matter, and
that all matter is simply a manifestation of energy. This theory is not established, has not been
announced by any scientist as proved, and would probably have no effect on the present discussion
if it were.
Based on this accepted theory I draw the conclusion in the following pages that electricity is not the
subject of larceny under the law of the Philippine Islands.
Partida 3, title 29, law 4, thus defines "cosas muebles:"
The term muebles is applied to all the things that men can move from one place to another,
and all those that can naturally move themselves: those that men can move from one place
to another are such as cloths, books, provisions, wine or oil, and all other things like them;
and those that can naturally move themselves are such as horses, mules, and the other
beast, and cattle, fowls and other similar things.
Partida 5 title 5, law 29, contains the following:
But all the other things which are muebles and are not annexed to the house or do not
appeartain thereto belong to the vendor and he can take them away and do what he likes
with them: such are the wardrobes, casks and the jars not fixed in the ground, and other
similar things.
Article 517 of the Penal Code, in that portion defining larceny, as charged against the accused in the
case at bar, reads:

ART. 517. The following are guilty of theft:

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 (cosas muebles) without the
owner's consent.
This article of the Penal Code, as is seen, employs precisely the words defined in the Partidas. The
definition of the word is clear in the law as written. It is also clear in the law as interpreted. I have not
been able to find a writer on Spanish or Roman criminal law who does not say clearly and positively
that the only property subject to lacerny is tangible movable chattels, those which occupy space,
have three dimensions, have a separate and independent existence of their own apart from
everything else, and can be manually seized and carried from one place to another. This was the
unquestioned theory of the Roman criminal law and it is the undoubted and unquestioned theory of
the Spanish criminal law. Nor do I find a writer or commentator on the Spanish or Roman Civil Law
who does not define a cosa mueble in the same way.
One of the leading commentators of Spain on criminal law writes thus concerning the property
subject to robbery and lacerny:
Personal property belonging to another. If robbery consists in the taking of a thing for the
purpose and by the means indicated in the article in question, it follows from the very nature
of this class of crimes, that only personal or movable property can be the subject thereof,
because none but such property can be the subject of the correctatio of the Romans;
"Furtum since contrectatione non fiat," says Ulpian. The abstraction, the rapine, the taking,
and all the analogous terms and expressions used in the codes, imply the necessity that the
things abstracted or taken can be carried from one place to another. Hence the legal maxim:
Real property "non contractantur, sed invaduntur." (6 Groizard, p. 47)
The act of taking is what constitutes the contrectatio and the invito domino which all the great
ancient and modern jurists consider as the common ingredient (in addition to the fraudulent
intention of gain), of the crimes of robbery and theft. From what has been said it follows that
the taking, the act of taking without violence or intimidation to the persons, or force upon the
things, for the purpose of gain and against the will of the owner, is what determines the
nature of the crime of theft as defined in paragraph 1 of this section. (6 Groizard, pp. 261,
262.)
The material act of taking is, therefore, an element of the crime which cannot be replaced by
any other equivalent element. From this principle important consequences follow which we
need not now stop to consider for the reason that in speaking of the crime of robbery we
have already discussed the subject at great length. Immovable and incorporeal things cannot
be the subject of the theft for the reason that in neither the one or the other is it possible to
effect the contrectatio, that is to say, the material act of laying hands on them for the purpose
of removing the same, taxing the same or abstracting the same. Hence the legal maxims:
"Furtum non committitur in rebus immobilibus and Res incorporales nec tradi possideri
possunt, ita contectavit nec aufferri." (6 Groizard, p. 266.)
Criticising an opinion of the supreme court of Spain which held that illuminating gas was a subject of
lacerny, the same writer says:
The owner of a certain store who had entered into a contract with a gas company whereby
he substantially agreed to pay for the consumption of the amount of gas which passed
through a meter, surreptitiously placed a pipe which he connected with the branch from the

main pipe before it reached the meter and used the same for burning more lights than those
for which he actually paid. The supreme court of Madrid convicted the defendant of the crime
of estafa but the supreme court of Spain reversed the judgment, holding that he should be
convicted of theft. The only reason which the supreme court had for so deciding was that the
owner of the store had taken personal property belonging to another without the latter's
consent, thereby committing the crime not of estafa but of consummated theft. But in our
judgment, considering the sense and import of the section under consideration, it cannot be
properly said that the owner of the store took the gas because in order to do this it would
have been necessary that the said fluid were capable of being taken or transported, in other
words, that the contrectatio, the meaning of which we have already sufficiently explained,
should have taken place.
Gas is not only intangible and therefore impossible of being the subject of contrectatio, of
being seized, removed, or transported from one place to another by the exercise of
the means purely natural which man employs in taking possession of property belonging to
another, but, by reason of its nature, it is necessary that it be kept in tank, or that it be
transmitted through tubes or pipes which by reason of their construction, or by reason of the
building to which the same may be attached, partake of the nature of immovable property.
There is no means, therefore, of abstracting gas from a tank, from a tunnel or from a pipe
which conveys the fluid to a building, for the purpose of being consumed therein, unless the
receptacle containing the same is broken, or the tank or pipe bored, and other tubes or pipes
are connected therewith at the point of the opening or fracture by means of which the gas
can conveyed to a place different from that for which it was originally intended.
This exposition, interpretation, if you choose to call it such, has a further foundation in our old
laws which have not been changed but rather preserved in the definition of movable an
immovable property given by the Civil Code. According to Law, I Title XVII, Partida II,
personal property means those things which live and move naturally by themselves, and
those which are neither living nor can naturally move, but which may be removed; and Law
IV, Title XXIX, Partida III, defines personal property as that which man can move or take
from one place to another, and those things which naturally by themselves can move.
Finally, corporeal things, according to Law I, Title III, Partida III, are those which may be the
subject of possessionwith the assistance of the body, and incorporeal those which cannot be
physically seized, and cannot be properly possessed. From these definitions it follows that
unless we do violence to the plain language of these definitions, it would be impossible to
admit that gas is a corporeal thing, and much less that it is movable property. (6 Groizard,
pp. 268, 269.)
If the holding that gas, which is unquestionably a physical entity having a separate and independent
existence and occupying space, has approached the verge of unstealable property so closely that
the ablest of Spain commentators believes that there is grave danger of the complete destruction of
the ancient legislative definition of stealable property by judicial interpretation, what would be said in
regard to a decision holding that an electric current is a subject of lacerny?
It may be well to add just here, although it may be somewhat out of its regular order, what the author
above quoted regards was the crime actually committed in the case he was discussing. He says:
For us, for the reasons hereinbefore set out, it would be more in harmony with the principles
and legal texts which determine the nature of the crimes of theft and estafa, to assign the
latter designation to the fraudulent act which he have heretofore examined and which
substantially consists in the alteration, by means of a fraudulent method, of the system
established by an agreement to supply a store with illuminating gas and to determine the

amount consumed for lighting and heating and pay its just value. We respect, however, the
reasons to the contrary advanced in the hope that the supreme court in subsequent
judgments will definitely fix the jurisprudence on the subject.
Nor can the abusive use of a thing determine the existence of the crime under consideration.
A bailee or pledgee who disposes of the thing, bail or pledge entrusted to his custody for his
own benefit is not guilty of lacerny for the reason that both contracts necessarily imply the
voluntary delivery of the thing by the owner thereof and a lawful possession of the same prior
to the abusive use of it.
Not even a denial of the existence of the bailment or contract of pledge with of gain
constitutes the crime of lacerny for the reason that the material act of taking possession of
the property without the consent of the owner is lacking. (6 Groizard, p. 269.)
That under the Roman and Spanish law property to be the subject of lacerny must be a tangible
chattel which has a separate independent existence of its own apart from everything else, which has
three dimensions an occupies space so that it may of itself be bodily seized and carried away, is not
an open question. That that was also the doctrine of the common law is equally beyond question.
In the consideration of this case the great difficulty lies in confusing the appearance with the thing, in
confounding the analogy with the things analogous. It is said that the analogy between electricity and
real liquids or gas is absolutely complete; that liquids and gases pass through pipes from the place
of manufacture to the place of use; and the electric current, in apparently the same manner, passes
through a wire from the plant to the lamp; that it is measured by a meter like liquids and gas; that it
can be diverted or drawn from the wire in which the manufacturer has placed it, to the light in the
possession of another; that a designing and unscrupulous person may, by means of a wire
surreptiously and criminally transfer from a wire owned by another all the electricity which it contains
precisely as he might draw molasses from a barrel for his personal use. And the question is
triumphantly put, "how can you escape the inevitable results of this analogy?" The answer is that
it is an analogyand nothing more. It is an appearance. The wire from which the electricity was drawn
has lost nothing. It is exactly the same entity. It weighs the same, has just as many atoms, arranged
in exactly the same way, is just as hard and just as durable. It exactly the same thing as it was
before it received the electricity, at the time it had it, and after it was withdrawn from it. The
difference between a wire before and after the removal of the electricity is simply a difference
of condition. Being charged with electricity it had a quality or condition which was capable of being
transferred to some other body and, in the course of that transfer, of doing work or performing
service. A body in an elevated position is in a condition different from a body at sea level or at the
center of the earth. It has the quality of being able to do something, to perform some service by the
mere change of location. It has potential energy, measured by the amount of work required to
elevated it. The weight or monkey of a pile driver is the same weight when elevated 50 feet in air as
it is when it lies on top of the pile 50 feet below, but it has altogether a different quality. When
elevated it is capable of working for man by driving a pile. When lying on top of the pile, or at sea
level, it has no such quality. The question is, "can you steal that quality?"
Two pile drivers, owned by different persons, are located near each other. The one owner has, by
means of his engine and machinery, raised his weight to its highest elevation, ready to deliver a
blow. While this owner is absent over night the owner of the other pile driver, surreptiously and with
evil design and intent, unlocks the weight and, by means of some mechanical contrivance, takes
advantage of its fall in such a way that the energy thus produced raised the weight of his own pile
driver to an elevation of forty feet, where it remains ready, when released, to perform service for him.
What has happened? Exactly the same thing, essentially, as happened when the electric charge of
one battery is transferred to another. The condition which was inherent in the elevated weight was

transferred to the weight which was not elevated; that is, the potential energy which was a condition
or quality of the elevated weight was by a wrongful act transferred to another. But was
that condition or quality stolen in the sense that it was a subject of lacerny as that crime is defined
the world over? Would the one who stole the battery after it had been elevated to the ceiling, or the
weight of the pile driver after it had been elevated 50 feet in the air, be guilty of a different offense
than if he stole those chattels before such elevation? Not at all. The weight elevated had more value,
in a sense, than one not elevated; and the quality of elevation is considered only in fixing value. It
has nothing whatever to do with the nature of the crime committed. It is impossible to steal
a qualityor condition apart from the thing or chattel of which it is a quality or condition of a thing
affects the value of the thing. It is impossible to steal value. The thing, the chattel is that which is
stolen. Its quality or condition is that which, with other circumstances, goes to make the value.
A mill owner has collected a large amount of water in a dam at such an elevation as to be capable of
running his mill for a given time. A neighboring mill owner secretly introduces a pipe in the dam and
conveys the water to his own mill, using it for his own benefit. He may have stolen the water, but did
he steal the head, the elevation of the water above the wheel? The fact that the water had a head
made it more valuable and that fact would be taken into consideration in fixing the penalty which
ought to be imposed for the offense; but it has nothing whatever to do with determining the nature of
the offense of which the man would be charged.
Larceny cannot be committed against qualities or conditions. It is committed solely against
chattels, tangible things. A given chattel is a compromise result of all its properties, qualities, or
conditions. None of the qualities which go make up the complete thing is the subject of larceny. One
cannot steal from a roof the quality of shedding rain, although he may bore it full of holes and thus
spoil that quality; and this, no matter how much he might be benefit thereby himself. If, in a country
where black horses were very dear and white horses very cheap, one, by a subtle process, took
from a black horse the quality of being black and transferred that quality to his own horse, which
formerly was white, thereby greatly increasing its value and correspondingly decreasing the value of
the other horse which by the process was made white, would he be guilty of larceny? Would he be
guilty of larceny who, with intent to gain, secretly and furtively and with the purpose of depriving the
true owner of his property, took from a bar of steal belonging to another the quality of being hard,
stiff and unyielding and transferred that quality to a willow wand belonging to himself? Is he guilty of
larceny who, with intent to defraud and to benefit himself correspondingly, takes from a copper wire
belonging to another the quality of being electrified and transfers that quality to an electric light? An
electric current is either a tangible thing, a chattel of and by itself, with a perfect, separate and
independent existence, or else it is a mere quality, property or conditionof some tangible
thing or chattel which does have such an existence. The accepted theory to-day is, and it is that
which must control, that electricity is not a tangible thing or chattel, that it has no qualities of its own,
that it has no dimensions, that it is imponderable, impalpable, intangible, invisible, unweighable,
weightless, colorless, tasteless, odorless, has no form, no mass, cannot be measured, does not
occupy space, and has no separate existence. It is, must be, therefore, simply a quality, a condition,
a property of some tangible thing or chattel which has all or most of those qualities which electricity
has not. Being merely the quality of a thing and not the thing itself , it cannot be the subject of
larceny.
To repeat" As we know it, electricity is nothing more or less than a condition of matter. It has no
existence apart from the thing of which it is condition. In other words, it has no separate,
independent existence. It is immaterial, imponderable, impalpable, intangible, invisible, weightless
and immeasurable, is tasteless, odorless, and colorless. It has no dimensions and occupies no
space. It is the energy latent in a live herself is the power potential in the arm of a laborer. It is the
force stored in the wound-up spring. It is an agency, not a "cosa mueble." It is a movement and not a
chattel. It is energy and not a body. It is what the laborer expends and not what he produces. It is
strength striped by an unknown process from arms of men and atoms of coal, collected and

marshalled at a given place under the mysterious leash of metal, ready to spring like a living servant
to the work of its master. It is not a chattel, it is life. It is as incapable of being stolen, by itself, as the
energy latent in a live horse. It is as impossible to steal an electric current as it is to steal the energy
hidden in a wound-up watch spring. One may steal the horse and with it the energy which is
a quality of the horse. One may steal a watch and with it the energy which is a property of the
wound-up. But can we say that one can steal the energy in the watch spring separate from the
spring itself, or electricity apart from the wire of which it is a quality or condition?
A laborer was stored up in his muscles the capacity to do a day's work. He has potential energy
packed away in little cells or batteries all through his body. With the proper mechanism he can enter
a room which it is desired to light with electricity and, by using the stored-up energy of his body on
the mechanism, light the room by transforming the energy of his muscles into the electricity which
illuminates the room. We have, then, a laborer who, by moving his hands and arms in connection
with the appropriate machinery, is able to light the room in which he is at the time. What causes the
light? The energy in the laborer's muscles is transformed into light by means of the intermediate
phenomenon known as electricity. As a concrete result, we have the energy in the laborer's muscles
transmuted into light. Now, is the energy passing through the wire, more capable of being stolen
than the energy in the muscles of the laborer? Or is the light or heat any more or less a subject of
larceny than the electric current of which they are a manifestation? Could the energy which
performed the day's work be stolen? Could the electric current which lighted the room be stolen
apart from the wire of which it was a quality? One might kidnap the laborer and with him the energy
which constitutes his life; but can we say that the energy, of itself, is the subject of separate larceny?
But, it the laborer's energy cannot be stolen while it resides in and is a quality of his arm, can the
same energy any more be stolen when it resides in and is a quality of a wire in the form of
electricity? If so, just where is the dividing line, where is the point at which this kinetic energy ceases
to be incapable of being separately stolen and becomes a subject to theft? Is it at the crank by which
the laborer turns the machine? Is it at the armature, the conductor, the fields coils, the field magnet,
the commutator, the brushes, the driving pulley, or the belt tightener? Is it where the current enters
what is called the electric-light wire, or is it where it enters the bulb or arc and produces the light? In
other words, at what point does the untealable laborer's energy become stealable electric energy?
An electric-light wire placed in a house for the purpose of furnishing light for the same has its precise
counterpart in a laborer placed therein for the same purpose. Like the laborer, it is filled with energy
which will, when released, perform the service intended. The wire is simply a means of transmitting
the energy of the laborer's muscles, and that stored in tons of coal which he handles, from the
electric plant or factory to the house where the light is produced. The wire simply avoids the
necessity of the laborer being in the very house where he produces the light. Instead of being there,
he, by means of the so-called electric-light wire, is located at a distance, but produces the light in
exactly the same way, transmitting his energy for that purpose. The wire stands in exactly the same
relation to the person in whose house it is put as would a laborer who had been sent to that house to
render services. The energy may be diverted from the purpose for which it was intended, or a wrong
accountgiven of the amount of work performed by that energy; but it is impossible to steal, take and
carry the energy away. One cannot steal days' works; and that is all an electric current is. One may
use those days' works in hoeing corn when it has been agreed that they shall be used in picking
cotton; but that is not larceny of the days' works, as larceny has been defined by the jurisprudence of
every country, Or, one may report to the owner of those days' works that he had used three of them
when in reality he used thirty and pay him accordingly, but that is not larceny of the twenty-seven.
But, it is argued, the illustration is not a fair one; energy in a laborer's arm or in the muscles of a
horse or in a wound-up spring is, so far as its capability of being stolen is concerned, quite different
from energy which has been separated from the arms of the laborer or the muscles of the horse and
driven through a wire; from such wire electricity may be drawn like water from a barrel; and while it is
impossible to steal the energy of a man or a horse because it would destroy the life of the animal, an

entirely different question is presented when the energyhas actually been separated from those
animals and confined in a wire.
This argument has several fundamental defects. In the first place, it assumes the whole question at
issue. By asserting that electricity is separable from the object of which it is a quality or state is to
assume that electricity is a material thing, which the real question to be resolved. In the second
place, if electricity is in the real sense of that term, separable from the object to which it belongs,
then it must be admitted that it is capable of separate and independent existence apart from any
other object. This is not so. It is not only admitted but contended by every scientist who has touched
this subject that electricity is incapable of an independent existence apart from some given material
object. In the third place, this argument overlooks the fact, even if we assume that it can be
separated, that the thing when separated is not the same thing that it was before separation; in other
words, when the so-called separation occurs there is not only a transference of energy from the
horse to the battery but there is also a transformation. In the horse it is muscular energy. In the wire
it is electrical energy. In the horse it is potential. In the wire kinetic. It is not the same thing in the wire
that it was in the horse. In the fourth place, the argument makes the stealability of a thing depend not
on its nature but on where it is located. This is an assumption wholly unwarranted and impossible
under the law. To say that whether or not a thing is stealable depends not on its nature but on where
it is located is absurd. A diamond ring in a burglar-proof safe is as much a subject of larceny, under
the definition of the law, as if it lay in an open showcase. If energy is stealable at all, and it must be
remembered that I am proceeding, as we must necessarily proceed upon the accepted theory that
electricity is nothing more or less than energy, it is so by reason of its nature and by reason of its
residing in a battery rather than in a horse; and if it is stealable by virtue of its nature it can be stolen
from the horse as well as from the battery or wire. A thing is subject to larceny because, and only
because, it is a cosa mueble, not because it is inside a horse, a wire or a safe. If it is a cosa
mueble it is the subject of larceny although it be located on the moon; and if it is not a cosa mueble it
is not subject to lacerny although it be placed in a den of thieves. The difficulty or ease of getting at a
thing has nothing whatever to do with its stealability. In the fifth place, this argument overlooks the
very important fact, to be dealt with more at length later, that the electric current used by the
accused was returned to the company, after use, absolutely undiminished in quantity.
What, then, is the difference between corn, for example, and an electric current? It is this. One is
a cosa mueblewhile the other is not; one is produced by a wholly different process from the other
and from wholly different materials, if we may call materials those changes which result in
the immaterial thing called an electric current; in the case of corn we deal not with
the quality or energy of corn, but with corn as a composite and concrete result of all its qualities and
uses; we deal with a tangible thing, a chattel, and not with a condition or quality of a tangible thing;
we deal with things instead of ideas, with things which exist separate and independent and which
do not depend, as does electricity, wholly upon some body not only for the capability of manifesting
its existence, but also for very existence itself ; because we deal with something which changes
its form but never its nature as a physical entity. It is always a chattel, a tangible thing, a cosa
mueble.
On the other hand, in the case of the electric current we deal not with a thing, a chattel a cosa
mueble, but with acondition or quality, a property of a cosa mueble; with an idea which always,
before it has any significance of meaning whatever, associates itself with an entity, a body or chattel,
as a characteristic or quality of such body or chattel; with lines of force which are merely and solely
a quality, a property, a characteristic of the magnet, instead of which grains of corn which are
absolute entities, independent of and apart from everything else, and not
merecharacteristic or qualities of some entity of body which does not exist as an absolute physical
entity in itself; with the horse and the violet and not their perfume; with the lily and not its beauty; with
the clouds and not their color; with entities and not accidents; with realities and not the
imponderable, impalpable ideas and qualities whichmake up the reality.

As he already been said, the difficulty in the elucidation of the question comes from the confusion
of qualities withthings, of appearances with realities. Apparently an electric current does things. It
produces phenomena. It, therefore, appears to be something. But it must not be forgotten that many
times appearances are deceitful. They do not always insure realities. It is not judicial to say that,
because a thing looks so, it is so. It is not judicial to say that, simply because it looks as if one
committed larceny, therefore he is guilty of larceny. Before we may legallyconvict one of larceny, we
must know exactly what he did. Justice is not founded on guess work nor on appearances. Men's
right are preserved by definitions, and definitions are founded on facts, not fancies, on realities, not
appearances. Because, when one taps an electrically charged wire belonging to another and, by
means of a contrivance, transfers the charge to his own uses, it looks as if he was stealing
something, is not sufficient to convict him of larceny. We must first know what larceny is, as well as
what an electric current is, and what is meant by its use in producing light. To know what larceny is
we must know what legislators and judges during the development of jurisprudence have
always said and agreed it is. In other words, we must know itsdefinition. It approaches tyranny to
convict one of murder when is actually guilty of homicide only. Yet the only thing which separates the
two crimes is a definition. It is wrong to convict one of robbery who is guilty only of larceny. Yet these
two crimes are distinguished only by a definition. If, as in the case at bar, whether or not one is
declared a felon and is sent to prison for one year eight months and twenty-one days, is forever
disqualified from holding public office and of exercising the right of suffrage, or whether, instead, he
is declared guilty of a misdemeanor simply and punished lightly with no accompanying
disqualifications, depends upon whether he has committed larceny as defined by the Penal Code or
whether he has merely violated a city ordinance, the question whether he actually committed
larceny or not begins to assume importance. It assumes importance not only to him but to society as
well. If a court to-day palpably modifies a definition in order to convict an offender of larceny, how
can society be assured that tomorrow the same court will not modify some other definition to convict
a citizen of treason? When definitions are destroyed no man is secure in his person or his property.
When men act on appearances instead of realities justice will be shortlived. A whale looks like a fish,
acts like a fish, swims like a fish and lives all its life in the water like a fish. But it is not a fish. It is an
animal. It is air-breathing, warm-blooded, and viviparous, and suckles its young. Now, if whether or
not a whale is a fish or an animal is the potent factor determining whether a man goes to state prison
as a felon with all the deplorable consequences resulting, or whether he is lightly sentenced as a
mere misdemeanant, is it not of the supremest importance to determine whether a whale is a fish or
an animal? I am informed that it used to be a common sight in The New York Zoological Gardens to
see Mr. Crowley, the large and extremely intelligent chimpanzee, dressed in faultless attire, sit at the
table and take his food and wine like a gentleman. Children believed him to be a man; and many
intelligent grown people honestly believed that he was as much man as chimpanzee. But if the
officials of the city of New York had been indicted for kidnapping, based upon the seizure and
forcible detention of Mr. Crowley, would it not have been of the most solemn importance to them to
throw away appearances and determine accurately what Mr. Crowley really was? And in case of
doubt as to what he was, could they not justly have demanded the benefit of that doubt?
So, where one who diverted an electric current has been accused by reason thereof of the crime of
larceny, which crime, it being admitted, can be committed only against tangible things, chattels, is it
not of the very greatest importance to determine what an electric current is, that is, whether it is
a tangible thing, a chattel, or not and what is the nature and meaning of the process by which it
transforms itself into electric light? And in case of doubt as what it is, cannot the accused justly
demand the benefit of that doubt? To convict one of larceny it is not sufficient to show merely that a
wrongful act has been done; but it must appear that a wrongful act of a particular kind has been
committed. To constitute larceny it must be proved that the wrongful act was committed against
chattels, against tangible things, which were seized upon and asported by the one accused. In the
case at bar it has not been shown that the accused laid unlawful hands upon and asported a
tangible thing, a chattel, una cosa mueble. The very least that the prosecution must necessarily
admit is that no one knows what electricity really is. That being so, it seems to me to be a

contradiction of terms to say that larceny, which must admittedly be committed against a known
thing, can be committed against a thing absolutely unknown. At least it would seem that there is a
grave doubt about the definition of larceny covering wrongful acts relative to an electric current;
andby reason of that doubt the conviction ought not to be sustained. And if it is true, as I have herein
attempted to show, that, under the prevailing and generally accepted theory, electricity is nothing
more or less than a condition, a quality, a property of some tangible thing, some chattel or body,
then, certainly, the charge of larceny must fall, as that crime can be committed only against
the thing and not against a quality of the thing.
Although the only question in this case is whether electricity is such a tangible thing, as can, under
the definition of lacerny contained in the Penal Code, be the subject of lacerny, nevertheless the
court dismissed that question substantially without discussion, the only reference thereto being the
following:
I is true that electricity is no longer, as formerly, regarded by electricians as a fluid, but its
manifestations and effects, like those of gas, may be seen and felt. The true test of what is a
proper subject of lacerny seems to be not whether the subject is incorporeal, but whether it is
capable of appropriation by another than the owner.
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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 lacerny.
The statement fail to touch the essential question involved and is wholly beside the point for the
following reasons, lying aside for the moment the nature of the act which the accused actually
committed, assuming that he committed the act described by the witnesses for the prosecution:
In the first place, as I understand the law , the statement is not quite correct that, in the Philippine
Islands, "the true test of what is a proper subject of lacerny seems to be not whether the subject is
corporeal or incorporeal, but whether it is capable of appropriation," unless the word "appropriation"
has the same meaning as the word "taking" used in the article of the Penal Code defining larceny. If
the court intended to use the word "appropriation" in the sense of "taking," then its use was
unnecessary and may be misleading. If it did not so intend, then the rule of law laid down by the
court is not as I understand the law to be. An appropriation in addition to or different from
the taking is not an essential of lacerny anywhere. Wharton says that "lacerny id is the fraudulent
taking and carrying away of a thing without claim of right, with the intention of converting it to a use
other than that of the owner and without his consent." Article 517 of the Penal Code provides that
they shall be guilty of lacerny "who . . . take (toman) (not appropriate) another's cosas
muebles (movable chattels) without the owner's consent." Unless, therefore, the word "appropriation"
is used in the same sense as "taking," the paragraph in the court's decision above quoted does not
contain a correct statement of the law. If it means the same thing then the use of the word in no way
enlightens the situation; for it is just as difficult to determine whether a cosa mueble can
be appropriated as it is to determine whether it can be taken. The question before us is whether or
not electricity is such a cosa mueble that it can be taken under the law of lacerny. To substitute in
that problem the word "appropriation" for the word "taking" does not laid in its solution in the slightest
degree when it is admitted that the word substituted means exactly the same thing as the word in the
place of which it was substituted.
An illustration will serve further to show the fallacy inherent in the statement quoted: Let us suppose
that the Penal Code defined larceny thus: "Any person who, with intent to gain, takes from another

his cake without his consent shall be guilty of lacerny." Let us suppose that some one should then
defined the subject of lacerny as anything, corporeal or incorporeal, which can be "appropriated." It
would be obvious that such definition would be erroneous, for the reason that, while pie is as
capable of being "appropriated" as cake, still, under the terms of the law, lacerny cannot be
committed against pie. So that where the statute prescribes that the only thing subject to larceny is
a cosa mueble and the definition of the subject of larceny is claimed to be anything that can be
"appropriated," the answer at once is that such definition is inaccurate under the law as it may be too
broad. There may be some things which can be "appropriated" that are not cosas muebles.
In the second place, the quoted paragraph from the court's decision contains another error in the
statement of the law. I am of the opinion that, under the common law, and I am sure under the
Spanish law, the statement that "the true test of what is a proper subject of larceny seems to be not
whether the subject is corporeal or incorporeal . . ." is not accurate. Professor Beale, of Harvard,
says in his article on larceny that
At common law the only subjects of larceny were tangible, movable chattels; something
which could be taken in possession and carried away, and which had some, although trifling,
intrinsic value. Any substance which has length, breadth, and thickness may be the subject
of larceny. . . . A chose in action being in its essence intangible could not be the subject of
larceny at common law and the paper evidence of the chose in action was considered
merged with it.
Wharton says:
Choses in action, including bonds and notes of all classes according to the common law are
not the subject of larceny, being mere rights of action, having no corporeal existence; . . . .
I have already quoted at length from writers on the Spanish and Roman law to show that
only tangible, corporealchattels can be the subject of larceny.
In the third place, by entirely begging the question, it leaves the whole proposition of whether
electricity is a subject of larceny not only unsolved but wholly untouched. As we have already seen,
the word "appropriation" nowhere appears in subdivision 1 of the Penal Code in connection with
larceny. But if it were there used in connection with such crime, it would necessarily refer entirely to
a cosa mueble as that is the only thing under that article which is the subject of larceny and,
therefore of "appropriation." So that, before we can possibly know whether a thing is capable of
appropriation or not under the Penal Code, we must know whether that thing is or is not a cosa
mueble, as that, as we have said, is the only thing that can be taken or appropriated in committing
the crime of larceny. But, as is readily seen, that brings us right back to the question we started with,
What is a cosa mueble? It is more than apparent, therefore, that the quoted paragraph adds nothing
whatever to the discussion.
In the fourth place, the word "appropriation" in the paragraph quoted is there used with a complete
misapprehension of its meaning as found in the article of the Civil Code from which it is taken.
Articles 334 and 335 of the Civil Code seek to divide all property capable of appropriation into
classes. They read:
ART. 334. Son bienes immuebles:
1. Las tierras, edificios, caminos y construcciones de todo genero adheridas al suelo.
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This article has ten subdivision dealing with all kinds of real property. It is not necessary to quote it
all at this time.
The English of the part quoted is as follows:
ART. 334. Real property consists of
1. Lands, buildings, roads, and constructions of all kinds adherent to the soil.
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ART. 335. Se reputan bienes muebles los susceptibles de apropiacion no comprendidos en

el capitulo anterior, y en general todos los que se pueden transportar de un punto a otro sin
menoscabo de la cosa immueble a que estuvieron unidos.
This article in English is as follows:
ART. 335. Personal property is considered anything susceptible of appropriation and not
included in the foregoing chapter, and, in general, all that which can be carried from one
place to another without damage to the real estate to which it may be attached.
As is seen from the terms of the articles, two expressions are used in defining "bienes muebles," one
of elimination and other of description. The clause of elimination provides that all property subject
to appropriationshall be personal property except that property described in article 334. But this
description was found to be too broad. It included too much; and it was, therefore, necessary to
make use of a limiting or restricting clause in connection with the exclusion clause. To that the article
further provided that appropriable property shall be, "in general, all property which can be carried
from one place to another." Under this restricting clause, then, property to be personal property must
be not only property not included in article 334 but also property which can be transported from one
place to another. It must fulfill two requirements instead of one. Besides, under the Spanish law, real
property is as much subject to appropriation as personal property. The word in Spanish seems to be
broader than its legal use in English.
From the foregoing it is plain that property to be personal property must not only be susceptible of
appropriation, which the court in the quoted paragraph claims is the only requirement, but it must
also be capable of being of itself manually seized and transported from one place to another.
This presents the fourth reason why I say that the proposition laid down by the court in the quoted
paragraph is laid down under a complete misapprehension of the definition of una cosa mueble.
And finally, the word "appropriate" which the court has used is found in subdivision 2 of article 517 of
the Penal Code. It provides that those are guilty of larceny, "who, finding a thing (una cosa mueble)
lost and knowing its owner, appropriate it with intent to gain." The signification which the word here
has is quite different from that of the word "take" (toman) used in the first subdivision, being
considerably limited in its reach. As used here it is very like "convert." There is no removal from the
possession of the owner, as in the first paragraph. In the Penal Code the word "taking" means
something more than "appropriation." It means a removal from the possession of the owner a
transportation or asportation of the thing from one place to another from the possession of the
owner to the possession of the theft; while "appropriation" means, rather, the making use of the
converting of the property after the taking is complete, or without any "taking" at all. Under the
Spanish law, while real estate is not, of course, subject to asportation, to "taking," and, therefore, not

the subject of larceny, it is subject to "appropriation." In the same way while electricity is, under the
Spanish and Roman laws, wholly incapable of seizure and asportation, of the manual "taking"
the trespass essential to larceny, it may possibly, in one or another sense of the word, be subject to
appropriation." If at one extreme of the scale of things, namely, real estate, the thing is too tangible
to be stolen, is it not logical to expect that at the opposite extreme the thing, electricity, for example,
may be found too intangible to be stolen?
We have seen that, in all the history of Roman and Spanish jurisprudence, the crime of larceny has
been confined to tangible things, to chattels, which have an independent existence of their own;
which have three dimensions; which occupy space; which are capable of having a trespass
committed against themselves; which can be, of themselves and alone, taken physically into
possession and carried away (asported).
We have that the fact that electricity is not such a thing is admitted by all.
And we have asked the question, "How, then, can the charge of larceny be sustained?"
But let as assume, for the sake of argument, that electricity is a tangible thing, like water, for
instance. Still the crime committed, if any, is not lacerny. Let us modify the illustration already given
of the surreptitious removal by A of water stored in a dam by B for milling purposes. Let us suppose
that B has built a reservoir on an elevated portion of his farm for the storage of water for irrigating
purposes. He has built ditches or conduits from the reservoir to every part of his farm to carry the
water to the places needed. During the dry season while B is engaged in irrigating his lands A
surreptitiously and with intent to gain, constructs a small mill upon one of the conduits and utilizes
the rapid fall and swift flow of the water to operate his mill. For many months A thus takes
advantages of B's conduit and water and enriches himself by reason thereof. Did A commit the crime
larceny? The water, every drop of it, after being used by A, went to its work of irrigating the lands of
B, pausing only long enough to turn the water wheel of A's mill. Certainly then, no water was stolen.
A simply made use of the "head," the fall of the water. If anything was stolen it was the "head," the
elevation of the water, the energy developed by its passage from high to low ground. This is
precisely what happens when an electric current passes through an electric bulb or arc and
produces light. Whether the current operates one light of one hundred, the volume, the amperage, of
the current, that is, the quantity of it, if we may use the term (and it must be remembered that I am
assuming electricity to be a tangible thing and will speak accordingly) remains exactly the same.
The volume or quantity of the electricity is just the same when it comes out of the hundredth light as
it was when it entered the first. While there is a difference between the current as it comes from the
last light and as it entered the first, it is simply one of condition, or state. All of the electricity is still
there. Like the water; it has simply lost its "head," its energy. It has been deprived of its pressure, of
its electro-motive force; but it is the same old electricity, in the same old quantity. So that, when the
accused in the case at bar, by means of a "jumper," burned thirty lights, instead of the three for
which he paid the company, he was not stealing electricity. Exactly as much electricity went back
into the company's wire after serving the twenty-seven lights for which he did not pay as came out of
that wire in the first place. The defendant took nothing; he used something. In larceny there must be
a taking. Here there is only a use. Electricity is a utility, not a thing. The company, in the cease at
bar, lost no more than did the owner of the irrigation system in the example heretofore given. As no
water was taken, so no electricity was taken. The same amount of water remained to the owner after
its use by A. The same amount of electricity remained to the company after its use by the defendant.
The well-known Italian author, Avv. Umberto Pipia, in his very able work entitled "L' Electricita nel
Diritto" puts the question thus (translation of Mr. Percy R. Angell, Manila, 1911):

From the point of view of the jurist can electricity be stolen? A person connects a deflecting
wire to the main conduit of electricity; he thus makes a secondary circuit in which he
introduces a resistance and profits by the electro-motive power which is developed, to supply
his lamps or put his motor in movement. In such case can we apply article 402 of the Penal
Code, which provides that whoever takes possession of movable property of another in order
to derive profit thereby, taking it from the place where he finds it without the consent of the
owner, is punished with reclusion up to three years?
The author then refers to the decisions of certain course of Europe which hold that electricity is
stealable, and continues:
The Roman court of cassation has lost sight of that fundamental principle of interpretation of
law (a principle which it ought to have had well in mind before applying to a new
manifestations of force legislative provisions enacted in view of totally different cases) by
which penal laws do not extend beyond the cases and the times in them expressed. Nulla
poena sine lege, is the rule in terms of penal law, unless we wish to bring about a deplorable
confusion of powers, and the judiciary desires to usurp the authority of the legislator. If in the
written laws gaps or breaks are encountered, it is the duty of the court to point them out to
the legislator, to the end that he take the necessary measures; but it is not lawful for him by
analogous interpretation to apply a penal provision where such has not been explicitly
enacted.
In the unanimous opinion of jurist, two elements are necessary to constitute the crime of
theft, legally speaking; the first is the taking possession of the personal (movable) property of
another, contrectatio, and the taking away of the thing from the place where it is found
without the consent of the person to whom it belongs, ablatio.
Now we have conclusively shown that electric current is not a thing, but a state, a vibration
following certain converging waves. It can not therefore be taken possession of as the
personal property of another. A person who unlawfully uses electric current for his personal
enjoyment places himself in a state of unlawful enjoyment of a utility, but he does not take
possession of personal property. It was a grave error, that of the court of cassation, in
holding electric current to be a thing imprisoned in wires, and composed of particles that can
be subtracted. In connecting a second circuit one does not subtract electric current; not a
particle of electric energy enters into the possession of the so-called thief ; the same amount
in amperes that was found and derived on connecting the second circuit, is found at the end
of this circuit. The current has only suffered a diminution of potential; while continuing to be
of the same volume, it becomes less adapted for the use intended, because having
overcome a resistance, it has lost in potential, its electro-motive power.
. . . It leaves the circuit in the same amount in which it entered. Only its power for work has
diminished. Not a single particle or molecule of electric current is taken by such abusive use,
only the state of undulation. The movement that first follows the principal, and then the
second circuit, and by these undulations the so-called thief illegally derives benefit. But the
extraordinary provisions of crime are not applicable to all illegal actions.
Another powerful argument in favor of my position is this: That in no case of usurpation, the
using of things protected by law (diritto) that are not material things , do we speak of theft. To
repress abuses the legislator has been obliged to establish special provisions of law, but has
explicitly recognized those relating to theft to be inapplicable. A trade-mark, tradename, modello de fabrica, a scientific or artistic work, undoubtedly constitute objects of law
similar to things; form the contents of various juridical relations; have more or less economic

value; pertain to the patrimony of the person who has produced them or brought them into
being. If a third person makes use of the trade-mark or trade-name, the scientific work or
artistic production of another, nobody denies that he takes possession of a utility that does
not belong to him; that by the very illegal act he derives profit, and at the same time
diminishes the patrimony of the person having legitimate rights herein. But with all that, it has
never occurred to anyone to bring an action for theft against the usurper of the firm name,
the counterfeit of the trade-mark or the plagiarist. The legislator, desiring to protect this new
species of property, has provided special repressive measures; but in their absence, the
courts can not apply the actio furti, because it is not applicable to cases and conditions other
than those provided for.
If this be so, why different conceptions on the score of electricity? Here likewise, there is no
subtraction of personal property, but the illegal use of an advantage, of the right pertaining to
another, which remain however unchanged. Hence the legal solution should be the same.
The second and not less essential condition of theft is that of the ablatio, the necessity of
taking the thing from the place where it is found. But here we have nothing of that; the
current is deviated from its course, true, but it returns to the place where it was undiminished.
The statement in the foregoing decision that there are particles transportable from place to
place is exact; the undulation is in itself, it has its own efficiency, but it is neither taken away
nor subtracted. It has been justly said that all that is done is to erect a bridge over which the
undulations of the particles are transported in the wire attached, but nothing corporeal
passes from one wire to another, since not one of the vibrating particles moves with the
current which flows through the connected wire.
Consequently, in whatever aspect the question is considered the presumption of theft grows
less. In fine, although there be a usurpation of a utility to the prejudice of another, it should
not be held to constitute theft, because that is the vulgar, not the legal conception. That in
civil and commercial law we may resort to analogous interpretation, and that, in the absence
of special provisions we should apply the rules which govern similar matters and analogous
cases, there is no doubt. The courts can not refuse to say what the law is (dire ie diritto) nor
dismiss the litigants on the pretext that the law had made no provision for their case; and it is
from this concept that electricity, as a rule, in the various relations where it constitutes the
object, is considered to be a thing, with all the attributes of such. But the penal law is
restrictive; under certain aspects it is exceptional. Here we have to do with limitations and
restrictions on the most sacred rights of persons, the right to liberty, the right to honor. And
these rights can not be abridged without definite and explicit provisions of the law. Where
these are lacking we can pray, as I do, that they be supplied, but a decision in such case is
an arbitrary act (arbitro), not justice: nulla poena sine lege.
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So on the wrongful use of electric current; profit is derived from its high potential which is
produced by the work and expenditure of money on the part of the furnishing company; the
current is returned exactly as it was delivered except it has lost a certain amount of
electromotive power that was illegally (antigiuridicamente) employed to overcome the
resistance introduced by the third party.
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. . . Penal law must be strictly construed (e di interpretazione restrittiva). It punishes the

contractatio of a movable thing which is taken from the place where it is found without the

consent of the owner. In the proposition under discussion, we have not to do with movable
things, there is no true transporting to another place; therefore the figura giuridica of theft is
wanting.
It can not be doubted that by movable things is meant even liquids and fluids, because these
are material, concrete, and corporeal things, but their physical external manifestations can
not affect the juridical relation . But in our case there is not a thing, fluid or liquid; there is a
state of undulation, of movement, which one uses illegally, assuming however the obligation
to indemnify for all the damages resulting from his illicit action, but there is no theft, any more
than there would be where a person applied a pulley to the shaft of an engine in order to put
his own machinery in motion, so far as there would be no appropriation. The current which
injuriously traverse the lamp or electric motor is not appropriated or destroyed by the person
who uses it; it flows out from the lights and continues its course in the circuit undiminished in
intensity; it has only lost part of its power, because, having encountered a resistance, it has
developed certain energy to overcome it, energy which has produced light, traction, or
mechanical work.
Nor may it be said that electricity would then be deprived of any legal protection. Do we not
have articles 1511 et seq. of the Civil Code that provide for fraud? Is there not the civil crime
and quasi crime? To protect electric energy is it necessary to imprison one who uses
it antigiuridicamente, while the letter of the law does not consent? In any case it is known
that adducere inconveniens non est solvere argumentum. As in the laws of our country
provision is made for the illegal use of a firm name, trade-mark and works of genius (l'
ingegno); in England, where provision has been made for the matter we are discussing they
have enacted a law imposing severe penalties upon persons who illegally use electric
energy, and I am of the first to applaud them. But let there be laws, not merely judicial
opinion (arbitria di interpretati).
Nor does it avail to urge that when we have to do with benefits that are useful to man, which
serve his ends, that he can appropriate, these benefits are considered as things in the eyes
of the law. But it is necessary to make a distinction. From the standpoint of the civil law, they
are, because a wide and analogous construction is permissible and permitted; but from that
of the penal law, they are not, because such construction is expressly forbidden by article 4
of the preliminary provisions of the Civil Code.
If a trade-mark is not a benefit to man, in what does it serve him? Is not a literary or artistic
production such? Does not the counterfeiter illegally appropriate such benefits? But if it is
required to inflict criminal penalties upon him, a special law must be enacted; the provisions
relative to theft can be applied in his case.
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Nor is it a conclusive argument to say that the manufacturer spends large sums of money
and erects costly machinery to generate the electricity, and when others steal it from him,
such action, according to juridical conscience and social morals, constitutes theft.
Let us suppose an individual acquires a ticket of admission, and enters a hall where there is
being produced a play of some sort. He, on the strength of the legal negotiation with the
impresario and the acquisition of the ticket has a right to the most ample enjoyment that his
optical and acoustic senses are able to realize. But he arranges a phonograph and a
cinematograph, and surreptitiously fixes and appropriates part of the acoustic and visual
enjoyment that does not belong to him, takes it outside of the theater and later avails himself

thereof to his benefit by reproducing the harmony of the sounds and the optical illusion of the
scene. Is he liable for theft?
From the standpoint of the doctrine I am combating, he is. The impresario has sacrificed
money or work to produce the spectacle. Our friend has the right to enjoy it to the limit of the
capacity of his organs of vision and hearing, but beyond that. By means of suitable
instruments he has caught up the sounds, movements, and colors for the purpose of gain,
and he commits a theft because there enter the correctatio and theablatio.
From the point of view of the law he is not. He would be held to reimburse the impresario for
all damages, but he can not be called a thieft, nor be punished as such. The sounds and
forms of light are states, not things; therefore they can not form subjects of theft.
And if this is so, the same conclusion must be reached with respect to electricity.
The supreme court of the German Empire, sitting at Leipsic, October 20, 1896, in a decision holding
that electricity was not a subject of larceny, said:
The court below found that the act did not constitute theft or unlawful appropriation, because
electricity is not to be considered a thing within the meaning of paragraph 242 of the Penal
Code, and because by things the law means portions of material nature; that corporeal
existence is an essential ingredient of the thing. Even the Penal Code starts from this
principle. Incorporeal things, as for example rights, intellectual products and machine power
are not subjects of theft. The same must be said of electricity. Experts say that the science is
not yet determined. We well know what must be done to produce electric energy, but we do
not comprehend these vital operations, any more than we understand what is that makes the
muscles of the human arm capable of exerting force. In the conclusions of the Court of First
Instance there is no error of law. That court starts from the principle that the corporal
existence of the thing must be the essential element to come within the meaning of article
242. This assumption is not based upon the precepts of the Civil Code, but, rather, upon the
idea which is at the bottom of the Penal Code, namely, the movable and independent thing,
which presupposes the corporeality of the object. If then, under articles 242 and 245, the
condition precedent to the commission of larceny is that the object of theft or unlawful
appropriation be a piece or portion of material substance in either a solid or liquid state, or in
form of gas, the Court of First Instance committed no error in finding there was neither theft
nor illegal appropriation. Whether or not the notation of a thing, in the sense of the penal
laws, requires something corporeal, is a question of law; but the question whether electricity
is a substance, a corporeal thing, or a force, a movement of a minute particles, is a question
of fact that can not be decided by the rules of law, but by physical research alone. The
consideration of the great importance of electricity in commercial life and the place awaiting it
among the vital conveniences and the fact of its having commercial value, is not an
argument to prove that electricity is a corporeal thing, because the quality of being a vital
convenience and having commercial value does not constitute a necessary standard of
corporelity, since force, operations, intellectual products are vital conveniences (beni) and
have commercial value. When, in the jurisprudence of the day the need for penal laws for
punishment of unjust appropriation of electric current becomes apparent, the legislator
should provide them. The courts can not be called upon to supply the lack of legal provisions
by analogous applications of rules not made to fit the circumstance. In penal law the
principle nulla poena sine is supreme.
These authorities fully support my contention that electricity is not stealable under the provisions of
the Spanish Penal Code. They also support the proposition that even if electricity is a tangible thing,

like water, and therefore stealable, the crime, if any, committed by the defendant in this case is not
larceny, because the company had just as much electricity after the illegal act as it had before. In
other words, it has lost no electricity. Having lost no electricity it can not charge anyone with stealing
it. If a thousand lights were burned, no more electricity would be consumed than if one light were
burned, just as, no more water is consumed in running a thousand water wheels placed one below
another than in running one. Just as much water flows over the thousandth wheel as flowed over the
first. In the same manner there is just as much electricity flowing out of the thousandth light as
flowed into the first. Just as in using the water, nothing is consumed but the head, the quantity of
water remaining the same, so, in using electricity, nothing is consumed but the head (the pressure,
the potential, the electro-motive force), the electricity itself remaining undiminished. No electricity
was taken. It was used and then returned to its owner.
For a clear understanding of this problem, and a logical and philosophical, as well as legal, solution
thereof, we must never, for a moment, forget the fact that the real contract between the company
and the defendant was one to furnish labor and services; a lease, if you please, of an agency, a
contract of precisely the same nature as one by which the company lets to the defendant the use of
one of the company's workmen to turn by hand, in the defendant's own house, an electrical machine
and thereby produce light for defendant's use. This is the crux of the whole question. While no
contract was proved we know of necessity, from the principles which underlie and govern electric
lighting, that the contract must have been as above stated. If the defendant should require the
laborer thus placed in his house to work overtime and should not pay the company therefor, thus
taking advantage of the situation, there would be no larceny. To be sure, the defendant would return
the workman to the company fatigued and reduced in strength by reason of the overtime he had
required him to put in, but it would be the same workman which he had received. It is this which
shows the absurdity of the claim that the defendant in this case is guilty of larceny. The company
never intended to sell the workman to the defendant and the defendant never expected to buy him. It
was the use that was the basis of the contract. In exactly the same manner the company never
intended to sell electricity to the defendant and the defendant never intended to buy electricity. The
basis of the contract was the use of electricity. Just as the laborer was returned by defendant to the
company fatigued and reduced in strength by reason of the overtime which the defendant had
wrongfully and illegally required him to put in, so the current of electricity was returned by the
defendant to the company fatigued and reduced in strength by reason of the lights which the
defendant had wrongfully and illegally caused it to supply; and just as, notwithstanding the reduction
in strength, it was the same identical workman returned that was sent out, so the electric current
returned to the company after the illegal use by defendant was the same identical current which the
company had furnished him. Where then, is the foundation for the charge of larceny?
Let us now see what are the results of the holding of the court that electricity is subject to larceny.
The Spanish Law of the Philippine Islands has not been changed by any legislative enactment.
A cosa mueble is the same now as it was in the days of the Partidas. No legislature has changed the
law of larceny as it came from the jurisprudence of Rome and Spain. Nor has any legislature
touched the law of the personal chattel to give it a new definition or one which changes its ancient
signification. Its present definition is the same as that given by Sanchez Roman, Pacheco, Scaevola,
Manresa, and Groizard as drawn form the decrees of kings and acts of legislatures. That definition
having been framed by the lawmaking power of Spain, from the Partidas down to the Penal Code, it
ought not to be changed by any agency short of the lawmaking power of the United States. The
substance and nature of crime ought not to be changed by courts in a country where crimes are
purely statutory. It has the appearance of a usurpation of the functions of the lawmaking body, an
unwarrantable assumption of the legislative attributes.
The holding of the court in this case is, in effect, an amendment to the Penal Code. It has changed
materially the definition of a cosa mueble and, therefore, of the crime of larceny, as made by the

lawmaking bodies of Spain and the United States. I do not assert that the courts have not the right to
determine whether a given set of facts do or do not fulfill the definition of a given crime. What I do
say is that the very greatest care should be exercised in cases which may involved as a
consequence of their decision the changing of the scope of the substantive law of crime. The fact,
admitted by all, that whether the phenomenon which we call electricity really is a "cosa mueble,"
under the accepted definition of that word, is open to doubt, should give us pause. Before holding
that electricity is a cosa mueble, the fact whether it is or not ought to be substantially free from
doubt, This is particularly true in a country where crimes are purely statutory, and in which, therefore,
the legislature is presumed to have had in mind in framing its definition of "cosas muebles" only such
chattels, or those of the same nature, as were known to the legislature at the time it acted. At the
time the Penal Code became operative substantially nothing was known by those who created if of
the phenomenon, electricity. It is more than clear that at the time of the enactment of the laws
relating to larceny, of which article 517 of the Penal Code is a reproduction, nothing whatever was
known of that phenomenon. We have, therefore, no means of knowing what would have been the
legislative action in relation thereto. The legislative authorities of those times might have treated it as
substantially every other legislative body has treated it that has touched the question; namely, as a
thing separate and distinct from chattels, and unlawful acts affecting it and its use as crimes distinct
from the crimes against tangible property, such as robbery and larceny. In this jurisdiction the
legislature is the only authority for the definition of the crime. Where a new situation arises by virtue
of discoveries which reveal agencies never known before, and whose real nature is unknown even
to the discoverers the legislature is the body to take the initiative in determining the position of such
agencies among the affairs of men, unless they clearly fall within a class already established and
defined; and it appears that some legislative bodies have done that very thing and have passed
special laws touching the place which should be given electricity in the civil and criminal law. This
was done here by the passage of the ordinance of the city of Manila. The fact that legislatures in
many jurisdictions have enacted special laws relative to electricity is the very clearest proof that
there was the gravest doubt among learned men of the applicability of existing laws to acts
committed against the rights of producers of electricity. The legislature of the Islands having acted
through the council of the city of Manila and by such action made illegal acts against the producers
of electricity a special crime wholly distinct from larceny, such act should be conclusive on this court
as to the legislative intent.
Section 649 of the Revised Ordinance of the city of Manila provides in part:
No person shall, for any purpose whatsoever, use or enjoy the benefits of any device by
means of which he may fraudulently obtain any current of electricity or any telephone or
telegraph service; and the existence in any building or premises of any such device shall, in
the absence of satisfactory explanation, be deemed sufficient evidence of such use by the
person benefiting thereby.
This section was enacted under the authority of the Legislature of the Philippine Islands, as was
section 930 of said ordinances, by the terms of which one was violates the provisions of section 649
"shall be punished by a fine of not more than two hundred pesos or by imprisonment for not more
than six months, or both such fine and imprisonment, in the discretion of the court, for each offense."
Articles 517 and 518 of the Penal Code read in part as follows:
ART. 517. The following are guilty of theft:
1. Those who, with intent of gain and without violence or intimidation against the person or
force against the things, shall take another's personal property (cosa mueble) without the
owner's consent.

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ART. 518. Those guilty of theft shall be punished:

1. With the penalty of presidio correccional in its medium and maximum degrees if the value
of the stolen property should exceed 6,250 pesetas.
2. With the penalty of presidio correccional in its minimum and medium degrees should it not
exceed 6,250,pesetas and be more than 1,250 pesetas.
3. With arresto mayor in its medium degree to presidio correccional in its minimum degree
should it not exceed 1,250 pesetas and be more than 250 pesetas.
4. With arresto mayor to its fullest extent should it be more than 25 but not exceed
250 pesetas.
5. With arresto mayor in its minimum and medium degrees if it should not exceed
25 pesetas; if exceeding 25 and not more than 65 pesetas, a theft of nutritious grains, fruits,
or wood shall be punished with a fine of room 325 to 500 pesetas.
Under subdivision 2 of the article last quoted, which is the paragraph under which the accused is
punished in the case at bar, the penalty prescribed is from six months and one day to four years and
two months. The accused in this case was actually sentenced to one year eight months and twentyone days of presidio correccional, to indemnify the company in the sum of P865.26, to the
corresponding subsidiary imprisonment in case of failure to pay said sum, and to the accessory
penalties provided by law.
Having before us these two laws, we may now see to what untoward and unfortunate results the
majority opinion leads us in holding that a person who commits a crime against an electric current
can be punished under either, or both, of two different statutes. As we have seen already there is,
relatively speaking, an enormous difference in the penalties prescribed by said law. That imposed by
the ordinance of the city of Manila can not in any event exceed six months' imprisonment and a fine
of P200; while that provided in the Penal Code may be as severe as four years and two months
imprisonment, with indemnity equal to the value of the property stolen, with corresponding subsidiary
imprisonment in case of nonpayment. To this must be added all those accessory penalties
prescribed by the code, such as suspension from any public office, profession or trade, and from the
right the suffrage. To me it is wholly unbelievable that, under the circumstances of this case and the
nature of the offense itself, it was the intention of the legislative authority to permit the concurrent
existence of two laws, both in force, punishing the same crime with penalties which bear no relation
to each other and which are widely different in severity. Note what results from such a holding.
Prosecution under the ordinance must be in the municipal court. Prosecution under the Penal
Code may be in the municipal court or it may be and generally must be, as in this case, in the Court
of First Instance. But it is certain that, under the ordinance, every case may be prosecuted in the
municipal court, whatever the value of the electricity taken; or, if the value is sufficient, the
prosecution may be brought in the Court of First Instance. The selection of the court is left to the
complaint. This means that thecomplaint is able to say within certain limits what punishment shall be
inflicted; for, if he desires that the accused shall be lightly punished he will bring the action in the
municipal court, which he always can do if he wish, and if he desires to punish him very severely he
will bring it in the Court of First Instance, which he can generally do if he cares to. It is inconceivable
that the legislature intended that such a condition should exist. It is in violation of every sense of
fairness, is against every rule of statutory construction, and is clearly inimical to public policy. To
assert that the complaining in which he shall prosecute the accused but also, in effect, the crime of
which he shall be charged, as the decision in this case holds in effect, is to assert a proposition, the
bare statement of which is its own completest refutation.
For these reasons the judgment of conviction should be reversed.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-7909

January 18, 1957

CIPRIANO E UNSON, petitioner-appellant,

vs.
HON. ARSENIO H. LACSON, as Mayor of the City of Manila, and GENATO COMMERCIAL
CORPORATION,respondents-appellees.
CONCEPCION, J.:
This is an action to annual a municipal ordinance and cancel a contract of lease of part of "Callejon
de Carmen," in the City of Manila. Its Mayor and the Genato Commercial Corporation hereinafter
referred to as Genato, for the sake of brevity lessor and lessee, respectively, under said contract,
are the respondents herein. After due trial, the Court of First Instance of Manila rendered a decision
dismissing the petition, with costs against the petitioner, who has appealed from said decision. The
case is before us the validity of a municipal ordinance is involved therein.
Petitioner, Cipriano E. Unson, is the owner of Lot No. 10, Block 2537, of the Cadastral Survey of the
City of Manila, with an area of 1,537.20 square meters, more or less. It is bounded, on the North, by
R. Hidalgo Streets; on the East or Northeast, by Lot No. 12, belonging to Genato, and, also, by a
narrow strip of land running eastward (from 1.68 to 2.87 meters in width and from 29.90 to 28.4
meters in lenght), known as Lot No. 11 (of about 123.7 squares meters), which the City of Manila
regards as its patrimonial property; on the West, by private property whose owner is not named in
the record; and on the South or Southeast, by a strip of land, narrower than Lot 11, running from
East to West (about 1.68 meters in which in width and 26.14 meters in lenght, or an area of about 45
square meters, more or less), known as Lot No. 9, which is also claimed by said City as its
patrimonial property. Immediately South of this Lot No. 9 is the Northern half of Callejon del Carmen,
which is separated from its Southern half by the Estro de San Sebastian. Several structures exist on
the lot of petitioner Unson. There is a sizeable building on the Northern part, adjoining R. Hidalgo
Street, and a small building known as "Commerce Building" on the Southern portion, which
adjoins the aforesaid Lot No. 9. Unson's lot is, and for several years has been leased to the National
Government, for use by the "Mapa High School", as "Rizal Annex" thereof, which has an enrollment
of over 1,500 students.
On or about September 28, 1951, the Municipal Board of Manila passed Ordinance No. 3470
withdrawing said Northern portion of Callejon del Carmen from public use, declaring it patrimonial
property of the City and authorizing its lease to Genato. The ordinance provides:
SECTION 1. Those portions of the Callejon del Carmen, Quiapo, having an aggregate area
of 709.27 square meters and adjacent to the premises of the Genato Commercial
Corporation, are hereby withdrawn from public use.
SEC. 2. The above piece of land described in Section 1 hereof is hereby declared as
patrimonial property of the government of the City of Manila.

SEC. 3. The lessee of the aforesaid city property with an aggregate area of 709.27 square
meters to Genato Commercial Corporation at a monthly rental of P0.20 per square meters is
hereby authorized.
SEC. 4. This Ordinance shall take effect upon its approval. (Exhibit 2-A, p. 10, Folder of
Exhs.)
Upon approval of this ordinance by the City Mayor, the lease contract therein mentioned (pp. 13-21,
Record on Appeal) was entered into and Genato constructed a building on said portion of Callejon
del Carmen, at a distance of about 0.765 meter from the Southern boundary of said Lot No. 9. This
strip of Callejon del Carmen and said Lot No. 9 thus form an open space of about 2.445 meters in
width, more or less, separating said building constructed by Genato and the "Commerce Building" on
Unson's lot. Prior thereto, the latter had, on its Southern boundary, two (2) exits on Callejon del
Carmen, which exits had to be closed upon the construction of said building by Genato. Hence,
alleging that Ordinance No. 3470 and the aforementioned contract of lease with Genato are illegal,
petitioner instituted this action, with the prayer
(a) That respondent Genato Commercial Corporation be immediately enjoined from doing
further work in the construction of a wall/or building on that portion of Callejon del Carmen
leased to them immediately upon the petitioner's filing a nominal bond of P500.00, in such
other amount as the court may fix;
(b) That, after trial, the injunction above-mentioned be made permanent, and ordering the
respondent Genato Commercial Corporation to remove whatever construction has been
done by them on said property;
(c) That, also after trial, the Hon. Arsenio H. Lacson, Mayor of the City of Manila, be ordered
to cancel or revoke the building permit and the lease granted to him over the Callejon del
Carmen to the Genato Commercial Corporation;
(d) That respondents be ordered to pay the costs of this suit: and for whatever equitable
relief this Honorable Court may deem just and proper under the premises. (Record on
Appeal, p. 5).
The respondents filed their respective answers maintaining the legality of the municipal ordinance
and the contract of lease in question, and, after due trial, the lower court rendered its
aforementioned decision dismissing the case, upon the ground that as owner of Callejon del
Carmen, the City of Manila "has full authority to withdraw such alley from public use and to convert it
into patrimonial property" and that
. . . The City of Manila as owner has the right to use and to dispose of such alley without
other limitations that those established by law (Article 428, New Civil Code), so that when the
city of Manila withdrew it from public use and converted it into patrimonial property, it simply
exercised its right of ownership. The fact that in the Manila Charter there is no provision
authorizing the Municipal Board to withdraw from public use a street and to convert it into
patrimonial property, can not be construed to mean that the Municipal Board has no right at
all to do so. That would be a negation of its right of ownership. Section 18, letter (x),of the
Manila Charter gives the Municipal Board power and authority to lay out, construct and
improve streets, avenues, alleys, sidewalks, etc. and as corollary to that right is the right to
close a street and to convert it into patrimonial property.

Furthermore, Ordinance No. 3470 of the Municipal Board was submitted to and approved by
the National Planning Commission. This body was created by an executive order of the
President of the Republic, and vested with the power and authority to lay out, construct,
vacate, and close streets, avenues, sidewalks, etc. Assuming that the power and authority to
vacate or close a street rest with the State, this power as delegated to the National Planning
Commission by the President in the exercise of his emergency power, and when this body
approved said ordinance, it did so in the exercise of the power delegated to it by the State.
Hence the validity of the ordinance is unquestionable. (Record on Appeal, pp. 27-29.)
Hence, this appeal taken by petitioner Unson, who insists that said Municipal Ordinance No. 3470 is
illegal and, accordingly, that the aforementioned contract of lease between Genato and the City of
Manila is null and void.
In this connection, respondents have been unable to cite any legal provision specifically vesting in
the City of Manila the power to close Callejon del Carmen. Indeed, section 18 (x) of Republic Act No.
409 upon which appellees rely authorizes the Municipal Board of Manila, "subject to the
provisions of existing laws, to provide for the laying out, construction and improvement . . . of streets,
avenues, alleys . . . and other public places," but it says nothing about the closing of any such
places. The significance of this silence becomes apparent when contrasted with section 2246 of the
Revised Administrative Code, explicitly vesting in municipal councils of regularly organized
municipalities the power to close any municipal road, street, alley, park or square, provided that
persons prejudiced thereby are duly indemnified, and that the previous approval of the Department
Head shall have been secured. The express grant of such power to the aforementioned
municipalities and the absence of said grant to the City of Manila lead to no other conclusion than
that the power was intended to be withheldfrom the latter.
Incidentally, said section 2246 refutes the view, set forth in the decision appealed from, to the effect
that the power to withdraw a public street from public use is incidental to the alleged right of
ownership of the City of Manila, and that the authority to close a thorough fare is a corollary to the
right to open the same. If the ownership of the public road carried with it necessarily the unqualified
right of a municipal corporation to close it, by withdrawing the same from public use, then Congress
would have no power to require, as a condition sine qua non, to the exercise of such right, either the
prior approval of the Department Head or the payment of indemnity to the persons injured thereby.
Again, pursuant to section 2243 of the Revised Administrative Code, the municipal council of regular
municipalities shall have authority, among others:
(a) To establish and maintain municipal roads, streets, alleys, sidewalks, plazas, parks,
playgrounds, levees, and canals.
If, as the lower court held, the power to "construct" an alley entailed the authority to "close" it, then
section 2246, above referred to, would have been unnecessary. To our mind, the main flaw in
appellees' pretense and in the position taken by his Honor, the trial Judge, is one of perspective.
They failed to note that municipal corporations in the Philippines are mere creatures of Congress;
that, as such, said corporations possess, and may exercise,only such power as Congress may deem
to fit to grant thereto; that charters of municipal corporations should not be construed in the same
manner as constitutions;1 and that doubts, on the powers of such corporations, must be resolved in
favor of the State, and against the grantee.2
Lastly, the authority of the local governments to enact municipal ordinances is subject to the general
limitation that the same shall not be "repugnant to law". This is so by specific provision of section
2238 of the Revised Administrative Code, as well as because Congress must be presumed to have
withheld from municipal corporations, as its agents or delegates, the authority to defeat, set at

naughty or nullify its own acts (of Congress)unless the contrary appears in the most explicit,
indubitable, and unequivocal manner and it does no so appear in the case at bar. What is more,
section 18(x) of Republic Act No. 409, positively declares that the power of the City of Manila to
provide for the construction of streets and alleys shall be "subject to the provisions of existing law. . .
.
However, the ordinance and the contract of the lease under consideration are inconsistent with
Article 638 of the Civil Code of the Philippines, the first paragraph of which reads:
The banks of rivers and streams, even in case they are of private ownership, are subject
throughout their entire length and within a zone of three meters along their margins, to the
easement of the public use in the general interest of navigation, float age, fishing and
salvage.
Obviously, the building constructed by Genato on the portion of Callejon del Carmen in dispute
renders it impossible for the public to use the zone of three meters along the Northern margin of the
Estero de San Sebastian for the purposes set forth in said Article 638. We are not unmindful of the
cases of Ayala de Roxas vs. City of Manila (6 Phil., 251) and Chang Hang Ling vs. City of Manila (9
Phil., 215), in which this Court refused to enforce a similar easement provided for in Article 553 of
the Civil Code of Spain upon private property adjoining the Estero de Sibacong and the Estero de
la Quinta, respectively. The decisions in said cases were predicated, however, upon the fact that,
under the Spanish Law of Waters, "the power of the administration do not extend to the
establishment of new easements upon private property but simply to preserve old ones," and that,
pursuant to the Philippine Bill (Act of Congress of July 1, 1902) and Article 349 of the Civil Code of
Spain, no one shall be deprived of his property, except by competent authority and with sufficient
cause of public utility, always after proper indemnity. These considerations are inapplicable to the
case at bar, for, as regards Callejon del Carmen, the aforementioned easement of public use is
not new. Besides, said alley is not private property. It belongs to the State.3 And, even if it were
for it is not patrimonial property of the City of Manila, the same as a creature of Congress,
which may abolish said municipal corporation and assume the power to administer directly the
patrimony of the City, for the benefit of its inhabitants cannot so use or dispose of said alley as to
defeat the policy set forth in the said Article 638 by the very legal creator of said political unit. (III
Dillon on Municipal Corporations, pp. 1769-1771, 1781-1783,1803-1804.)
It is urged, however, that the absence of authority of the Municipal Board of Manila has been cured
by the fact that Ordinance no. 3470 had been approved by the National Urban Planning
Commission. This pretense in untenable for:
1. In the case of the University of the East vs. The City of Manila (96 Phil., 316), decided on
December 23, 1954, we held, in effect, that the grant of powers to the National Urban Planning
Commission, under Executive Orders Nos. 98 and 367, amounted to an undue delegation of
legislative powers, for lack of "specific standards and limitations to guide the commission in the
exercise of the wide discretion granted to it."
2. Said Commission created by the Executive Order No. 98, dated March 11, 1946, pursuant to the
emergency powers of the President under Commonwealth Act No. 671, could not possibly confer
upon the City of Manila any power denied thereto by its New Charter Republic Act No. 409 not
only because said emergency powers became inoperative as soon as Congress met in regular
sessions after the liberation of the Philippines (Aranetavs. Dinglasan, Rodriguez vs. Treasurer of the
Philippines, Guerrero vs. Com. of Customs, and Barredo vs.Commission on Elections, 45 Off. Gaz.,
4411, 4419; Rodriguez vs. Gella, 49 Off. Gaz., 465), but, also, because in case of conflict between
said executive order, dated March 11, 1946, and the aforementioned Republic Act. No. 409, which

was approved, and became effective, on June 18, 1949, the latter must prevail, being posterior in
point of time, as well as act of the principal (in relation to the emergency powers delegated to the
President, by Commonwealth Act No. 671), which must prevail over that of the agent.
3. Pursuant to said executive order, the acts of the municipal corporations, relative to the
reconstruction and development of urban areas even if within the scope of the general authority
vested in said local governments by the charters thereof shall be ineffective unless approved by
the National Urban Planning Commission, or in accordance with the plans adopted or regulations
issued by the same. In other words, the purpose of said executive order was not to enlarge the
powers of local governments, but to qualify and limit the same, with a view to accomplishing a
coordinated, adjusted, harmonious reconstruction and development of said urban areas.
4. Properties devoted to public use, such as public streets, alleys and parks are presumed to belong
to the State. Municipal corporations may not acquire the same, as patrimonial property, without a
grant from the National Government, the title of which may not be divested by prescription
(Municipality of Tigbauan vs. Director of Lands, 35 Phil., 584). Hence, such corporations may not
register a public plaza (Nicolas vs. Jose, 6 Phil., 598). A local government may not even lease the
same (Municipality of Cavite vs. Rojas, 30 Phil., 602). Obviously, it may not establish title thereto,
adverse to the State, by withdrawing the plaza and, hence, an alley from public use and
declaring the same to be patrimonial property of the municipality or city concerned, without express,
or, at least, clear grant of authority therefor by Congress.
5. In fact, the Department of Engineering and Public Works of the City of Manila had objected to the
lease in question, upon the ground that Callejon del Carmen is communal property. In its 1st
indorsement of June 4, 1953, to the City of Mayor, said department used the following language:
1. Records in the present lease of Genato Commercial Corporation of a portion of City
property measuring 709.27 square meters, more or less, show that this Office had
consistently been strongly against the lessee of this City property. Even before the passage
of Ordinance No. 3470 (withdrawing from public use those portions of Callejon del Carmen,
Quiapo, adjacent to the premises of Genato Commercial Corporations; declaring the same
as patrimonial property of the government of the City of Manila and authorizing the lease of
said City property with an aggregate area of 709.27 square meters to Genato Commercial
Corporation at a monthly rental of P0.20 per square meter), this office had voiced its
vigorous protest to the lease of this City property to Genato Commercial Corporation several
times, in view of the fact that the lots applied for are communal property which can not be
leased or otherwise disposed of (Cavite vs. Roxas, 30 Phil., 602). This Office had registered
its strong objection to the lease of this property as per our 2nd Indorsement dated Aug. 2,
1951, 4th Indorsement dated August 7, 1951 and 3rd Indorsement dated August 27,
1951, all of which were submitted by this Office prior to the enactment of Ordinance 3470 on
September 28,1951 and its subsequent approval on October 3, 1951. . It can, therefore,
clearly be seen from the foregoing, that this Office had been strongly against the lease of this
City property in view of the fact that this is a communal property. The property herein applied
by Mr. Francisco G. Genato is also communal property of the City of Manila and disapproval
of the same is strongly recommended. (Exhibit C, pp. 4-5, par. 1, Folder of Exhibits;
emphasis supplied.)
Wherefore, the decision appealed from is hereby reversed and another one shall be entered
declaring Ordinance No. 3470, as well as the contract of the lease in dispute, null and void, with
costs against the respondents. It is so ordered.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-11964

April 28, 1962

REGISTER of DEEDS OF MANILA, petitioner-appellee,

vs.
CHINA BANKING CORPORATION, respondent-appellant.
DIZON, J.:
Appeal from a resolution of the Land Registration Commission holding "that the deed of transfer in
favor of an alien bank, subject of the present Consulta, is unregisterable for being in contravention of
the Constitution of the Philippines".
In an information filed on June 16, 1953 in the Court of First Instance of Manila (Criminal Case No.
22908) Alfonso Pangilinan and one Guillermo Chua were charged with qualified theft, the money
involved amounting to P275,000.00. On September 18, 1956, Pangilinan and his wife, Belen Sta.
Ana, executed a public instrument entitled DEED OF TRANSFER whereby, after admitting his civil
liability in favor of his employer, the China Banking Corporation, in relation to the offense aforesaid,
he ceded and transferred to the latter, in satisfaction thereof, a parcel of land located in the City of
Manila, registered in the name of "Belen Sta. Ana, married to Alfonso Pangilinan" (Transfer
Certificate of Title No. 32230). On October 24, 1956 the deed was presented for registration to the
Register of Deeds of the City of Manila, but because the transferee the China Banking
Corporation was alien-owned and, as such, barred from acquiring lands in the Philippines, in
accordance with the provisions of Section 5, Article XIII of the Constitution of the Philippines, said
officer submitted the matter of its registration to the Land Registration Commission for resolution.
After granting the parties concerned ample opportunity to submit their views upon the issue, the
Commission issued the resolution appealed from.
Plainly stated, the question before Us is whether appellant an alien-owned bank can acquire
ownership of the residential lot covered by Transfer Certificate of Title No. 32230 by virtue of the
deed of transfer mentioned heretofore (Vide pages 1-6 of the Record on Appeal).
Maintaining the affirmative, appellant argues that: (a) the temporary holding of land by an alienowned commercial bank under a public instrument such as the deed of transfer in question "bears
no reasonable connection with the constitutional purpose" underlying the provisions of Section 5,
Article XIII of the Constitution of the Philippines; hence, such holding or acquisition "was not within
the contemplation of the framers of the Constitution"; (b) by judicial as well as by executiveadministrative an legislative construction, the constitutional prohibition against alien landholding
does not preclude enjoyment by aliens of temporary rights and land; (c) under the provisions of
Section 25 of Republic Act No. 337 (General Banking Act) an alien or an alien-owned commercial
bank may acquire land in the Philippines subject to the obligation of disposing of it within 5 years
from the date of its acquisition.
1w ph1.t

Upon the other hand, the argument supporting the appealed resolution is that the privilege of
acquiring real estate granted to commercial banks under the provisions of Section 25 of Republic Act
No. 337 was not intended as an amendment, much less as a nullification of the constitutional
prohibition against alien acquisition of lands in the Philippines, the same being merely an exception

to the general rule, under existing banking and corporation laws, that banks and corporations can
engage only in the particular business for which they were specifically created; that a mere statute,
like the republic act relied upon by, appellant, cannot amend the Constitution; that in connection with
the particular constitutional prohibition involved herein, it is the character and nature of the
possession whether in strict ownership or otherwise and not the length of possession that is
material, the result being that, if real property is to be held in ownership, an alien may not legally do
so even for a single day.
After considering the arguments adduced by appellant in its brief, jointly with those expounded in the
briefs submitted by Alfonso Ponce Enrile and William H. Quasha and Associates, as amici curiae, on
the one hand, and on the other, those relied upon in the brief submitted by the Office of the Solicitor
General on behalf of the Commission, we are inclined to uphold, as we do uphold, the appealed
resolution.
To support its view appellant relies particularly upon paragraphs (c) and (d), Section 25 of Republic
Act 337 which read as follows: .
SEC. 25. Any commercial bank may purchase, hold, and convey real estate for the following
purposes:
xxx

xxx

xxx

(c) Such shall be conveyed to it in satisfaction of debts previously contracted in the course of
its dealings; .
(d) Such as it shall purchase at sales under judgments, decrees, mortgages, or trust deeds
held by it and such as it shall purchase to secure debts due to it.
But no such bank shall hold the possession of any real estate under mortgage or trust deed,
or the title and possession of any real estate purchased to secure any debt due to it, for a
longer period than five years.
Assuming, arguendo, that under the provisions of the aforesaid Act any commercial bank, whether
alien-owned or controlled or not, may purchase and hold real estate for the specific purposes and in
the particular cases enumerated in Section 25 thereof, we find that the case before Us does not fall
under anyone of them.
Paragraph (c), Section 25 of Republic Act 337 allows a commercial bank to purchase and hold such
real estate as shall be conveyed to it in satisfaction of debts previously contracted in the course of its
dealings, We deem it quite clear and free from doubt that the "debts" referred to in this provision are
only those resulting from previous loans and other similar transactions made or entered into by a
commercial bank in the ordinary course of its business as such. Obviously, whatever "civil liability"
arising from the criminal offense of qualified theft was admitted in favor of appellant bank by its
former employee, Alfonso Pangilinan, was not a debt resulting from a loan or a similar transaction
had between the two parties in the ordinary course of banking business.
Neither do the provisions of paragraph (d) of the Same section apply to the present case because
the deed of transfer in question can in no sense be considered as a sale made by virtue of a
judgment, decree, mortgage, or trust deed held by appellant bank. In the same manner it cannot be
said that the real property in question was purchased by appellant "to secure debts due to it",
considering that, as stated heretofore, the term debt employed in the pertinent legal provision can

logically refer only to such debts as may become payable to appellant bank as a result of a banking
transaction.
That the constitutional prohibition under consideration has for its purpose the preservation of the
patrimony of the nation can not be denied, but appellant and the amici curiae claim that it should be
liberally construed so that the prohibition be limited to the permanent acquisition of real estate by
aliens whether natural or juridical persons. This, of course, would make legal the ownership
acquired by appellant bank by virtue of the deed of transfer mentioned heretofore, subject to its
obligation to dispose of it in accordance with law, within 5 years from the date of its acquisition. We
can not give assent to this contention, in view of the fact that the constitutional prohibition in question
is absolute in terms. We have so held in Ong Sui Si Temple vs. The Register of Deeds of Manila (G.
R. No. L-6776, prom. May 21, 1955) where we said, inter alia, the following:
We are of the opinion that the Court below has correctly held that in view of the absolute
terms of section 5, Title XIII, of the Constitution, the provisions of Act 271 of the old
Philippine Commission must be deemed repealed since the Constitution was enacted, in so
far as incompatible therewith. In providing that
Save in cases of hereditary succession no private agricultural land shall be
transferred or assigned except to individuals, corporations or associations qualified to
acquire or hold lands of the public domain in the Philippines.
the Constitution makes no exception in favor of religious associations. Neither is there any
such saving found in Sections 1 and 2 of Article XIII, restricting the acquisition of public
agricultural lands and other natural resources to "corporations or associations at least sixty
per centum of the capital of which is owned by such citizens" (of the Philippines). (Emphasis
ours) .
Even in the case of Smith Bell & Co. vs. Register of Deeds of Davao (50 O.G., 5239) where a lease
of a parcel of land for a total period of 50 years in favor of an alien corporation was held to be
registerable, the reason we gave for such ruling was that a lease unlike a sale does not involve
the transfer of dominion over the land, the clear implication from this being that transfer of ownership
over land, even for a limited period of time, is not permissible in view of the constitutional prohibition.
The reason for this is manifestly the desire and purpose of the Constitution to place and keep in the
hands of the people the ownership over private lands in order not to endanger the integrity of the
nation. Inasmuch as when an alien buys land he acquires and will naturally exercise ownership over
the same, either permanently or temporarily, to that extent his acquisition jeopardizes the purpose of
the Constitution.
Some may say that this construction is too narrow and unwise; to this we answer that it is not our
privilege to determine the wisdom or lack of wisdom of this constitutional mandate. It is, rather, Our
sworn duty to enforce it free from qualifications and distinctions that tend to render futile the
constitutional intent.
WHEREFORE, the resolution appealed from is hereby affirmed, with costs.
Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera and Paredes, JJ., concur.
Padilla and Labrador, JJ., took no part.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-61311 September 2l, 1987
FELICIDAD VILLANUEVA, FERNANDO CAISIP, ANTONIO LIANG, FELINA MIRANDA,
RICARDO PUNO, FLORENCIO LAXA, and RENE OCAMPO, petitioners,
vs.
HON. MARIANO CASTAEDA, JR., Presiding Judge of the Court of First Instance of
Pampanga, Branch III, VICENTE A. MACALINO, Officer-in-Charge, Office of the Mayor, San
Fernando, Pampanga, respondents.

CRUZ, J.:
There is in the vicinity of the public market of San Fernando, Pampanga, along Mercado Street, a
strip of land measuring 12 by 77 meters on which stands a conglomeration of vendors stalls together
forming what is commonly known as a talipapa. This is the subject of the herein petition. The
petitioners claim they have a right to remain in and conduct business in this area by virtue of a
previous authorization granted to them by the municipal government. The respondents deny this and
justify the demolition of their stalls as illegal constructions on public property. At the petitioners'
behest, we have issued a temporary restraining order to preserve the status quobetween the parties
pending our decision. 1 Now we shall rule on the merits.
This dispute goes back to November 7, 1961, when the municipal council of San Fernando adopted
Resolution No. 218 authorizing some 24 members of the Fernandino United Merchants and Traders
Association to construct permanent stags and sell in the above-mentioned place. 2 The action was
protested on November 10, 1961, in Civil Case No. 2040, where the Court of First Instance of Pampanga,
Branch 2, issued a writ of preliminary injunction that prevented the defendants from constructing the said
stalls until final resolution of the controversy. 3 On January 18, 1964, while this case was pending, the
municipal council of San Fernando adopted Resolution G.R. No. 29, which declared the subject area as
"the parking place and as the public plaza of the municipality, 4 thereby impliedly revoking Resolution No.
218, series of 1961. Four years later, on November 2, 1968, Judge Andres C. Aguilar decided the
aforesaid case and held that the land occupied by the petitioners, being public in nature, was beyond the
commerce of man and therefore could not be the subject of private occupancy. 5 The writ of preliminary
injunction was made permanent. 6

The decision was apparently not enforced, for the petitioners were not evicted from the place; in fact,
according to then they and the 128 other persons were in 1971 assigned specific areas or space
allotments therein for which they paid daily fees to the municipal government. 7 The problem appears
to have festered for some more years under a presumably uneasy truce among the protagonists, none of
whom made any move, for some reason that does not appear in the record. Then, on January 12, 1982,
the Association of Concerned Citizens and Consumers of San Fernando filed a petition for the immediate
implementation of Resolution No. 29, to restore the subject property "to its original and customary use as
a public plaza. 8

Acting thereon after an investigation conducted by the municipal attorney, 9 respondent Vicente A.
Macalino, as officer-in-charge of the office of the mayor of San Fernando, issued on June 14, 1982, a

resolution requiring the municipal treasurer and the municipal engineer to demolish the stalls in the
subject place beginning July 1, 1982. 10 The reaction of the petitioners was to file a petition for prohibition with the Court of First
Instance of Pampanga, docketed as Civil Case No. 6470, on June 26, 1982. The respondent judge denied the petition on July 19,
1982, 11 and the motion for reconsideration on August 5, 1982, 12 prompting the petitioners to come to this Court on certiorari to challenge
his decision. 13

As required, respondent Macalino filed his comment 14 on the petition, and the petitioners countered with their
reply. 15 In compliance with our resolution of February 2, 1983, the petitioners submitted their memorandum 16 and respondent Macalino,
for his part, asked that his comment be considered his memorandum. 17 On July 28, 1986, the new officer-in-charge of the office of the
mayor of San Fernando, Paterno S. Guevarra, was impleaded in lieu of Virgilio Sanchez, who had himself earlier replaced the original
respondent Macalino. 18

After considering the issues and the arguments raised by the parties in their respective pleadings,
we rule for the respondents. The petition must be dismissed.
There is no question that the place occupied by the petitioners and from which they are sought to be
evicted is a public plaza, as found by the trial court in Civil Case No. 2040. This finding was made
after consideration of the antecedent facts as especially established by the testimony of former San
Fernando Mayor Rodolfo Hizon, who later became governor of Pampanga, that the National
Planning Commission had reserved the area for a public plaza as early as 1951. This intention was
reiterated in 1964 through the adoption of Resolution No. 29. 19
It does not appear that the decision in this case was appealed or has been reversed. In Civil Case
G.R. No. 6740, which is the subject of this petition, the respondent judge saw no reason to disturb
the finding in Civil Case No. 2040 and indeed used it as a basis for his own decision sustaining the
questioned order. 20
The basic contention of the petitioners is that the disputed area is under lease to them by virtue of
contracts they had entered into with the municipal government, first in 1961 insofar as the original
occupants were concerned, and later with them and the other petitioners by virtue of the space
allocations made in their favor in 1971 for which they saw they are paying daily fees. 21 The municipal
government has denied making such agreements. In any case, they argue, since the fees were collected
daily, the leases, assuming their validity, could be terminated at will, or any day, as the claimed rentals
indicated that the period of the leases was from day to day. 22

The parties belabor this argument needlessly.

A public plaza is beyond the commerce of man and so cannot be the subject of lease or any other
contractual undertaking. This is elementary. Indeed, this point was settled as early as in Municipality
of Cavite vs. Rojas, 23decided in 1915, where the Court declared as null and void the lease of a public
plaza of the said municipality in favor of a private person.

Justice Torres said in that case:

According to article 344 of the Civil Code: "Property for public use in provinces and in
towns comprises the provincial and town roads, the squares, streets, fountains, and
public waters, the promenades, and public works of general service supported by
said towns or provinces.
The said Plaza Soledad being a promenade for public use, the municipal council of
Cavite could not in 1907 withdraw or exclude from public use a portion thereof in
order to lease it for the sole benefit of the defendant Hilaria Rojas. In leasing a
portion of said plaza or public place to the defendant for private use the plaintiff

municipality exceeded its authority in the exercise of its powers by executing a

contract over a thing of which it could not dispose, nor is it empowered so to do.
The Civil Code, article 1271, prescribes that everything which is not outside the
commerce of man may be the object of a contract, and plazas and streets are
outside of this commerce, as was decided by the supreme court of Spain in its
decision of February 12, 1895, which says: "communal things that cannot be sold
because they are by their very nature outside of commerce are those for public use,
such as the plazas, streets, common lands, rivers, fountains, etc."
Therefore, it must be concluded that the contract, Exhibit C, whereby the municipality
of Cavite leased to Hilaria Rojas a portion of the Plaza Soledad is null and void and
of no force or effect, because it is contrary to the law and the thing leased cannot be
the object of a was held that the City of contract.
In Muyot vs. de la Fuente, 24 it was held that the City of Manila could not lease a portion of a public
sidewalk on Plaza Sta. Cruz, being likewise beyond the commerce of man.

Echoing Rojas, the decision said:

Appellants claim that they had obtained permit from the present of the City of Manila,
to connect booths Nos. 1 and 2, along the premises in question, and for the use of
spaces where the booths were constructed, they had paid and continued paying the
corresponding rentals. Granting this claim to be true, one should not entertain any
doubt that such permit was not legal, because the City of Manila does not have any
power or authority at all to lease a portion of a public sidewalk. The sidewalk in
question, forming part of the public plaza of Sta. Cruz, could not be a proper subject
matter of the contract, as it was not within the commerce of man (Article 1347, new
Civil Code, and article 1271, old Civil Code). Any contract entered into by the City of
Manila in connection with the sidewalk, is ipso facto null and ultra vires. (Municipality
of Cavite vs. Roxas, et a1, 30 Phil. 603.) The sidewalk in question was intended for
and was used by the public, in going from one place to another. "The streets and
public places of the city shall be kept free and clear for the use of the public, and the
sidewalks and crossings for the pedestrians, and the same shall only be used or
occupied for other purpose as provided by ordinance or regulation; ..." (Sec. 1119,
Revised Ordinances of the City of Manila.) The booths in question served as fruit
stands for their owners and often, if not always, blocked the fire passage of
pedestrians who had to take the plaza itself which used to be clogged with vehicular
traffic.
Exactly in point is Espiritu vs. Municipal Council of Pozorrubio, 25 where the Supreme Court declared:
There is absolutely no question that the town plaza cannot be used for the
construction of market stalls, specially of residences, and that such structures
constitute a nuisance subject to abatement according to law. Town plazas are
properties of public dominion, to be devoted to public use and to be made available
to the public in general They are outside the common of man and cannot be
disposed of or even leased by the municipality to private parties.
Applying this well-settled doctrine, we rule that the petitioners had no right in the first place to occupy
the disputed premises and cannot insist in remaining there now on the strength of their alleged lease
contracts. They should have realized and accepted this earlier, considering that even before Civil

Case No. 2040 was decided, the municipalcouncil of San Fernando had already adopted Resolution
No. 29, series of 1964, declaring the area as the parking place and public plaza of the municipality.
It is the decision in Civil Case No. 2040 and the said resolution of the municipal council of San
Fernando that respondent Macalino was seeking to enforce when he ordered the demolition of the
stags constructed in the disputed area. As officer-in-charge of the office of the mayor, he had the
duty to clear the area and restore it to its intended use as a parking place and public plaza of the
municipality of San Fernando, conformably to the aforementioned orders from the court and the
council. It is, therefore, not correct to say that he had acted without authority or taken the law into his
hands in issuing his order.
Neither can it be said that he acted whimsically in exercising his authority for it has been established
that he directed the demolition of the stalls only after, upon his instructions, the municipal attorney
had conducted an investigation, to look into the complaint filed by the Association of Concerned
Citizens and Consumers of San Fernando. 26 There is evidence that the petitioners were notified of this
hearing, 27which they chose to disregard. Photographs of the disputed area, 28 which does look congested
and ugly, show that the complaint was valid and that the area really needed to be cleared, as
recommended by the municipal attorney.

The Court observes that even without such investigation and recommendation, the respondent
mayor was justified in ordering the area cleared on the strength alone of its status as a public plaza
as declared by the judicial and legislative authorities. In calling first for the investigation (which the
petitioner saw fit to boycott), he was just scrupulously paying deference to the requirements of due
process, to remove an taint of arbitrariness in the action he was caged upon to take.
Since the occupation of the place in question in 1961 by the original 24 stallholders (whose number
later ballooned to almost 200), it has deteriorated increasingly to the great prejudice of the
community in general. The proliferation of stags therein, most of them makeshift and of flammable
materials, has converted it into a veritable fire trap, which, added to the fact that it obstructs access
to and from the public market itself, has seriously endangered public safety. The filthy condition of
the talipapa, where fish and other wet items are sold, has aggravated health and sanitation
problems, besides pervading the place with a foul odor that has spread into the surrounding areas.
The entire place is unsightly, to the dismay and embarrassment of the inhabitants, who want it
converted into a showcase of the town of which they can all be proud. The vendors in
the talipapa have also spilled into the street and obstruct the flow of traffic, thereby impairing the
convenience of motorists and pedestrians alike. The regular stallholders in the public market, who
pay substantial rentals to the municipality, are deprived of a sizable volume of business from
prospective customers who are intercepted by the talipapa vendors before they can reach the
market proper. On top of all these, the people are denied the proper use of the place as a public
plaza, where they may spend their leisure in a relaxed and even beautiful environment and civic and
other communal activities of the town can be held.
The problems caused by the usurpation of the place by the petitioners are covered by the police
power as delegated to the municipality under the general welfare clause. 29 This authorizes the
municipal council "to enact such ordinances and make such regulations, not repugnant to law, as may be
necessary to carry into effect and discharge the powers and duties conferred upon it by law and such as
shall seem necessary and proper to provide for the health and safety, promote the prosperity, improve the
morals, peace, good order, comfort, and convenience of the municipality and the inhabitants thereof, and
for the protection of property therein." This authority was validly exercised in this casethrough the
adoption of Resolution No. 29, series of 1964, by the municipal council of San Fernando.

Even assuming a valid lease of the property in dispute, the resolution could have effectively
terminated the agreement for it is settled that the police power cannot be surrendered or bargained

away through the medium of a contract. 30 In fact, every contract affecting the public interest suffers a
congenital infirmity in that it contains an implied reservation of the police power as a postulate of the
existing legal order. 31 This power can be activated at any time to change the provisions of the contract, or
even abrogate it entirely, for the promotion or protection of the general welfare. Such an act will not
militate against the impairment clause, which is subject to and limited by the paramount police power. 32

We hold that the respondent judge did not commit grave abuse of discretion in denying the petition
for prohibition. On the contrary, he acted correctly in sustaining the right and responsibility of the
mayor to evict the petitioners from the disputed area and clear it of an the structures illegally
constructed therein.
The Court feels that it would have been far more amiable if the petitioners themselves, recognizing
their own civic duty, had at the outset desisted from their original stance and withdrawn in good
grace from the disputed area to permit its peaceful restoration as a public plaza and parking place
for the benefit of the whole municipality. They owned this little sacrifice to the community in general
which has suffered all these many years because of their intransigence. Regrettably, they have
refused to recognize that in the truly democratic society, the interests of the few should yield to those
of the greater number in deference to the principles that the welfare of the people is the supreme law
and overriding purpose. We do not see any altruism here. The traditional ties of sharing are absent
here. What we find, sad to say, is a cynical disdaining of the spirit of "bayanihan," a selfish rejection
of the cordial virtues of "pakikisama " and "pagbibigayan" which are the hallmarks of our people.
WHEREFORE, the petition is DISMISSED. The decision dated July 19, 1982, and the order-dated
August 5, 1982, are AFFIRMED. The temporary restraining order dated August 9, 1982, is LIFTED.
This decision is immediately executory. Costs against the petitioners.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION

G.R. No. L-27876 April 22, 1992

ADELAIDA S. MANECLANG, in her capacity as Administrator of the Intestate Estate of the
late Margarita Suri Santos, plaintiff-appellee,
vs.
JUAN T. BAUN and AMPARO S. BAUN, ET AL., defendants. CITY OF DAGUPAN, defendantappellant.

DAVIDE, JR., J.:

The issue presented in this case is the validity of a sale of a parcel of land by the administrator of an
intestate estate made pursuant to a petition for authority to sell and an order granting it which were
filed and entered, respectively, without notice to the heirs of the decedents.
The records disclose that on 12 June 1947, Margarita Suri Santos died intestate. She was survived
by her husband Severo Maneclang and nine (9) children. On 30 July 1947, a petition for the
settlement of her estate was filed by Hector S. Maneclang, one of her legitimate children, with the
Court of First Instance at Dagupan City, Pangasinan; the case was docketed as Special Proc. No.
3028. At the time of the filing of the petition, the ages of her children were as follows:
Hector Maneclang 21 years old
Cesar Maneclang 19
Oscar Maneclang 17
Amanda Maneclang 16
Adelaida Meneclang 13
Linda Maneclang 7
Priscila Maneclang 6
Natividad Maneclang 3
Teresita Maneclang 2
No guardian ad litem was appointed by the court for the minor children.
Margarita left several parcels of land, among which is Lot No. 203 of the Cadastral Survey of
Dagupan City containing an area of 7, 401 square meters, more or less , and covered by Transfer
Certificate of Title No. 1393.
On 2 September 1949, Pedro M. Feliciano, the administrator of the intestate estate of Margarita,
filed a petition in SP Proc. No. 3028 asking the court to give him "the authority to dispose of so much
of the estate that is necessary to meet the debts enumerated" in the petition. While notice thereof
was given to the surviving spouse, Severo Maneclang, through his counsel, Atty. Teofilo Guadiz, no
such notice was sent to the heirs of Margarita.

On 9 September 1949, despite the absence of notice to the heirs, the intestate court issued an Order
"authorizing the administrator to mortgage or sell so much of the properties of the estate for the
purposes (sic) of paying off the obligations" referred to in the petition.
Pursuant to this Order, Oscar Maneclang, the new administrator of the intestate estate, executed on
4 October 1952 a deed of sale 1 in favor of the City of Dagupan, represented by its mayor, Angel B.
Fernandez, of a portion consisting of 4,415 square meters of the aforementioned Lot No. 203 for and in
consideration of P11,687.50. This sale was approved by the intestate court on 15 March 1954.

The City of Dagupan immediately took possession of the land and constructed thereon a public
market, known as the Perez Boulevard Public Market, at a cost of P100,00.00, more or less. It has
been in continuous and uninterrupted possession of the property since the construction of the
market. 2
Some other parcels of land belonging to the intestate estate were sold by the administrator pursuant
of the same authority granted by the 9 September 1949 Order. 3
On 28 September 1965, the new judicial administratrix of the intestate estate, Adelaida S.
Maneclang, daughter of the late Margarita Suri Santos, filed with the Court of First Instance of
Pangasinan an action for the annulment of the sales made by the previous administrator pursuant to
the order of 9 September 1949, cancellation of titles, recovery of possession and damages against
the vendees Juan T. Baun and Amparo Baun, Marcelo Operaa and Aurora Pagurayan, Crispino
Tandoc and Brigida Tandoc, Jose Infante and Mercedes Uy Santos, Roberto Cabugao, Basilisa
Callanta and Fe Callanta, Ricardo Bravo and Francisca Estrada, the City of Dagupan, and
Constantino Daroya and Marciana Caramat. 4 The complaint was docketed as Civil Case No. D-1785.
The cause of action against the City of Dagupan centers around the deed of sale executed in its favor on
4 October 1952 by former judicial administrator Oscar S. Maneclang. In its Answer filed on 5 November
1965, 5 the City of Dagupan interposed the following affirmative defenses: (a) the sale in its favor is valid,
legal and above board; (b) plaintiff has no cause of action against it, or that the same, if any, had
prescribed since the complaint was filed thirteen (13) years after the execution of the sale; (c) plaintiff is
barred by estoppel and laches; (d) it is a buyer in good faith; and (e) it has introduced necessary and
useful improvements and contructed a supermarket worth P200,000.00; hence, assuming arguendo that
the sale was illegal, it has the right to retain the land and the improvements until it is reimbursed for the
said improvements.

On 30 March 1966, plaintiff and the City of Dagupan entered into a Stipulation of Facts wherein they
agreed on the facts earlier adverted to. They, however, agreed: (a) to adduce evidence concerning
the reasonable rental of the property in question and other facts not embodied therein but which are
material and vital to the final determination of the case, and (b) to request the court to take judicial
notice of SP Proc. No. 3028.
The evidence adduced by plaintiff discloses that Oscar Maneclang was induced by its then
incumbent Mayor, Atty. Angel B. Fernandez, to sell the property to the City of Dagupan and that the
said City has been leasing the premises out to numerous tenants at the rate of P0.83 per square
meter per month, or a total monthly rental of P3,747.45, since 4 October 1952. 6
On 9 November 1966, the trial court rendered a partial decision in Civil Case No. D-1785 against the
City of Dagupan, the dispositive portion of which reads as follows:
IN VIEW OF THE FOREGOING CONSIDERATIONS, the Court hereby renders
judgment:

(a) Annulling (sic) the Deed of Sale executed by the Administrator on October 4,
1952 (Exh. F) being null and void ab initio;
(b) Ordering the cancellation of the Certificate of Title issued in favor of the defendant
City of Dagupan by virtue of said Deed of Sale, and directing the Register of Deeds
of said City to issue a new Certificate of Title in favor of the plaintiff as Administratrix
covering the property in question;
(c) Ordering the defendant City of Dagupan to restore the possession to the plaintiff
in her capacity as Judicial Administratrix of the Intestate Estate of Margarita Suri
Santos of the parcel of land in question, together with all the improvements thereon
existing;
(d) Ordering the defendant City of Dagupan City to pay the plaintiff the sum of
P584,602.20 as accumulated rentals or reasonable value of the use of the property
in question from October 4, 1952 up to the filing of the complaint in 1985, plus
interest thereon at the rate of 6% per annum from the later date;
(e) Ordering the defendant City of Dagupan to pay a monthly rental or reasonable
value of its occupation of the premises in the amount of P3,747.45 from October 9,
1985 up to the date the possession of the premises is delivered (sic) the plaintiff by
said defendant, and
(f) Ordering the plaintiff to reimburse the defendant City of Dagupan the sums of
P100,000.00 and P11,687.50 both amounts to be deducted from the amount due the
plaintiff from said defendant.
Defendant shall also pay the costs.
SO ORDERED. 7
In arriving at the said disposition, the trial court held that:
(a) Under Rule 90 of the Rules of Court, 8 which is similar to the provisions of Section 722 of the Code
of Civil Procedure, it is essential and mandatory that the interested parties be given notices of the application for
authority to sell the estate or any portion thereof which is pending settlement in a probate court. As held in the early
9
case of Estate of Gamboa vs. Floranza, an order issued by a probate court for the sale of real

property belonging to the estate of a deceased person would be void if no notice for the
hearing of the petition for such sale is given as required by said Section 722. Under this
section, when such a petition is made, the court shall designate a time and place for the
hearing and shall require notice of such hearing to be given in a newspaper of general
circulation; moreover, the court may require the giving of such further notice as it deems
proper.

In the instant case, no notice of the application was given to the heirs; hence, both
the order granting authority to sell and the deed of sale executed in favor of the City
of Dagupan pursuant thereto, are null and void.
(b) Estoppel does not lie against plaintiff as no estoppel can be predicated on an
illegal act and estoppel is founded on ignorance. In the instant case, the nullity is by
reason of the non-observance of the requirements of law regarding notice; this legal
defect or deficiency deprived the probate court of its jurisdiction to dispose of the

property of the estate. Besides, the City of Dagupan was represented in the
transaction by lawyers who are presumed to know the law. This being the case, they
should not be allowed to plead estoppel; finally, estoppel cannot give validity to an
act which is prohibited by law or is against public policy. 10
(c) Laches and prescription do not apply. The deed of sale being void ab initio, it is in
contemplation of law inexistent and therefore the right of the plaintiff to bring the
action for the declaration of inexistence of such contract does not prescribe. 11
(d) The City of Dagupan is not a purchaser in good faith and for value as the former
judicial administrator, Oscar Maneclang, testified that he was induced by then
incumbent Mayor of the City Councilor Atty. Teofilo Guadiz, Sr. to sell the property;
moreover, the City Fiscal signed as witness to the deed of sale. These lawyers are
presumed to know the law.
Not satisfied with the decision, the City of Dagupan appealed to this Court 12 alleging that said
decision is contrary to law, the facts and the evidence on record, and that the amount involved exceeds
P500,000.00.

In its Brief, the City of Dagupan submits the following assigned errors:
FIRST ERROR
THE LOWER COURT ERRED IN HOLDING THAT THE SALE EXECUTED BY THE
JUDICIAL ADMINISTRATOR TO THE CITY OF DAGUPAN IS NULL AND VOID AB
INITIO.
SECOND ERROR
THE LOWER COURT ERRED IN HOLDING THAT PLAINTIFF IS NOT IN
ESTOPPEL FROM ASSAILING THE LEGALITY OF THE SALE.
THIRD ERROR
THE LOWER COURT ERRED IN HOLDING THAT THE INSTANT ACTION IS NOT
BARRED BY LACHES AND PRESCRIPTION.
FOURTH ERROR
THE LOWER COURT ERRED IN DECLARING THAT DEFENDANT CITY OF
DAGUPAN IS NOT A PURCHASER IN GOOD FAITH AND FOR VALUE.
FIFTH ERROR
THE LOWER COURT ERRED IN ORDERING DEFENDANT CITY OF DAGUPAN
TO PAY THE PLAINTIFF THE SUM OF P584,602.20 AS ACCUMULATED
RENTALS OR REASONABLE VALUE OF (sic) THE USE OF THE PROPERTY IN
QUESTION FROM OCTOBER 4, 1952 UP TO THE FILING OF THE COMPLAINT
IN 1965, PLUS INTEREST THEREON AT THE RATE OF 6% PER ANNUM FROM
THE LATER DATE.

SIXTH ERROR
THE LOWER COURT ERRED IN ORDERING THE DEFENDANT CITY OF
DAGUPAN TO PAY A MONTHLY RENTAL OR REASONABLE VALUE OF (sic) ITS
OCCUPATION OF THE PREMISES IN THE AMOUNT OF P3,747,45 FROM
OCTOBER 9, 1965 UP TO THE DATE THE POSSESSION OF THE PREMISES IS
DELIVERED TO THE PLAINTIFF BY SAID DEFENDANT.
We shall consider these assigned errors sequentially.
1. In support of the first, appellant maintains that notice of the application for authority to sell was
given to Severo Maneclang, surviving spouse of Margarita. As the designated legal representative of
the minor children in accordance with Article 320 of the Civil Code, notice to him is deemed sufficient
notice to the latter; moreover, after Oscar Maneclang signed the deed of sale 13 in his capacity as
judicial administrator, he "sent copies of his annual report and the deed of sale to Severo Maneclang, and
his brothers Hector Maneclang and Oscar Maneclang and sister Amanda Maneclang, all of legal ages
(sic), while the other minor heirs received theirs through his lawyer." 14 Besides, perFlores vs. Ang
Bansing, 15 the sale of property by the judicial administrator cannot be set aside on the sole ground of lack
of notice.

These contentions are without merit.

Article 320 of the Civil Code does not apply. While the petition for authority to sell was filed on 2
September 1949, the Civil Code took effect only on 30 August 1950. 16 Thus, the governing law at the
time of the filing of the petition was Article 159 of the Civil Code of Spain which provides as follows:

The father, or in his default, the mother, shall be the legal administrator of the
property of the children who are subject to parental authority.
However, the provisions of the Code of Civil Procedure on guardianship impliedly repealed those of
the Civil Code relating to that portion of the patria potestad (parental authority) which gave to the
parents the administration and usufruct of their minor children's property; said parents were however
entitled, under normal conditions, to the custody and care of the persons of their minor children. 17
Article 320 of the present Civil Code, taken from the aforesaid Article 159, incorporates the
amendment that if the property under administration is worth more than two thousand pesos
(P2,000.00), the father or the mother shall give a bond subject to the approval of the Court of First
Instance. This provision then restores the old rule 18which made the father or mother, as such, the
administrator of the child's property. Be that as it may, it does not follow that for purposes of complying
with the requirement of notice under Rule 89 of the Rules of the Court, notice to the father is notice to the
children. Sections 2, 4 and 7 of said Rule state explicitly that the notice, which must be in be writing, must
be given to the heirs, devisees, and legatees and that the court shall fix a time and place for hearing such
petition and cause notice to be given to the interested parties.

There can be no dispute that if the heirs were duly represented by counsel or by a guardian ad
litem in the case of the minors, the notice may be given to such counsel or guardian ad litem. In this
case, however, only the surviving spouse, Severo Maneclang, was notified through his counsel. Two
of the heirs, Hector Maneclang and Oscar Maneclang, who were then of legal age, were not
represented by counsel. The remaining seven (7) children were still minors with no guardian ad
litem having been appointed to represent them. Obviously then, the requirement of notice was not
satisfied. The requisite set forth in the aforesaid sections of Rule 89 are mandatory and essential.
Without them, the authority to sell, the sale itself and the order approving it would be null and voidab

initio. 19 The reason behind this requirement is that the heirs, as the presumptive owners

20

since they
succeed to all the rights and obligations of the deceased from the moment of the latter's death, 21 are the
persons directly affected by the sale or mortage and therefore cannot be deprived of the property except
in the manner provided by law.

Consequently, for want of notice to the children, the Order of 9 September 1949 granting the
application, the sale in question of 4 October 1952 and the Order of 15 March 1954 approving the
sale are all void ab initio as against said children. Severo Maneclang, however, stands on different
ground altogether. Having been duly notified of the application, he was bound by the said order, sale
and approval of the latter. However, the only interest which Severino Maneclang would have over
the property is his right of usufruct which is equal to that corresponding by way of legitime pertaining
to each of the surviving children pursuant to Article 834 of the Civil Code of Spain, the governing law
at that time since Margarita Suri Santos died before the effectivity of the Civil Code of the
Philippines.
2 Estoppel is unavailable as an argument against the administratrix of the estate and against the
children.
As to the former, this Court, in Boaga vs. Soler, supra, reiterated the rule "that a decedent's
representative is not estopped to question the validity of his own void deed purporting to convey
land; 22 and if this be true of the administrator as to his own acts, a fortiori, his successor can not be
estopped to question the acts of his predecessor are not conformable to law." 23 Not being the party who
petitioned the court for authority to sell and who executed the sale, she cannot be held liable for any act
or omission which could give rise to estoppel. Under Article 1431 of the Civil Code, through estoppel an
admission or representation is rendered conclusive upon the person making it, and cannot be denied or
disproved as against the person relying thereon. In estoppel by pais, as related to the party sought to be
estopped, it is necessary that there be a concurrence of the following requisites: (a) conduct amounting to
false representation or concealment of material facts or at least calculated to convey the impression that
the facts are otherwise than, and inconsistent with, those which the party subsequently attempts to
assert; (b) intent, or at least expectation that this conduct shall be acted upon, or at least influenced by
the other party; and (c) knowledge, actual or constructive of the actual facts. 24 In estoppel by conduct, on
the other hand, (a) there must have been a representation or concealment of material facts; (c) the party
to whom it was made must have been ignorant of the truth of the matter; and (d) it must have been made
with the intention that the other party would act upon it. 25

As to the latter, considering that, except as to Oscar Maneclang who executed the deed of sale in
his capacity as judicial administrator, the rest of the heirs did not participate in such sale, and
considering further that the action was filed solely by the administratrix without the children being
impleaded as parties plaintiffs or intervenors, there is neither rhyme nor reason to hold these heirs in
estoppel. For having executed the deed of sale, Oscar Maneclang is deemed to have assented to
both the motion for and the actual order granting the authority to sell. Estoppel operates solely
against him.
3 As to prescription, this Court ruled in the Boaga case that "[a]ctions to declare the inexsistence of
contracts do not prescribe (Art. 1410, N.C.C.), a principle applied even before the effectivity of the
new Civil Code (Eugenio, et al. vs. Perdido, et al., supra, citing Tipton vs. Velasco, 6 Phil. 67, and
Sabas vs. Germa , 66 Phil. 471 )."
4. Laches is different from prescription. As the court held in Nielsen & Co. Inc . vs. Lepanto
Consolidated Mining Co., 26 the defense of laches applies independently of prescription. While
prescription is concerned with the fact of delay, laches is concerned with the effect of delay. Prescription
is a matter of time; laches is principally a question of inequity of permitting a claim to be enforced, this
inequity being founded on some change in the condition of the property or the relation of the parties.

Prescription is statutory; laches is not. Laches applies in equity, whereas prescription applies at law.
Prescription is based on fixed time, laches is not.

The essential elements of laches are the following: (1) conduct on the part of the defendant, or of
one under whom he claims, giving rise to the situation of which complaint is made and for which the
complaint seeks a remedy; (2) delay in asserting the complainant's rights, the complainant having
been afforded an opportunity to institute a suit; (3) lack of knowledge or notice on the part of the
defendant that the complainant would assert the right on which he bases his suit; and (4) injury or
prejudice to the defendant in the event relief is accorded to the complainant, or the suit is not held
barred. 27
In the instant case, from time the deed of sale in favor of the City of Dagupan was executed on 4
October 1952, up to the time of the filing of the complaint for annulment on 28 September 1965,
twelve (12) years, ten (10) months and twenty-four (24) days had elapsed.
The respective ages of the children of Margarita Suri Santos on these two dates were, more or less,
as follows:
Upon execution At the filing
of the deed of sale of the complaint
Hector Maneclang 26 39
Cesar Maneclang 24 37
Oscar Maneclang 22 35
Amanda Maneclang 21 34
Adelaida Maneclang 18 31
Linda Maneclang 12 25
Priscila Maneclang 11 24
Natividad Maneclang 8 20
Teresita Maneclang 7 20
It is an undisputed fact that the City of Dagupan immediately took possession of the property and
constructed thereon a public market; such possession was open, uninterrupted and continuous.
Obviously, Hector, Cesar, Oscar and Amanda were already of legal age when the deed of sale was
executed. As it was Oscar who executed the deed of sale, he cannot be expected to renounce his
own act. With respect to Hector, Cesar and Amanda, they should have taken immediate steps to
protect their rights. Their failure to do so for thirteen (13) years amounted to such inaction and delay
as to constitute laches. This conclusion, however, cannot apply to the rest of the children who
were then minors and not represented by any legal representative. They could not have filed an
action to protect their interests; hence, neither delay nor negligence could be attributed to them as a
basis for laches. Accordingly, the estate is entitled to recover 5/9 of the questioned property.
5. In ruling out good faith, the trial court took into account the testimony of Oscar Maneclang to the
effect that it was Mayor Fernandez of Dagupan City and Councilor Teofilo Guadiz, Sr., both lawyers,
who induced him to sell the property and that the execution of the sale was witnessed by the City
Fiscal.
We are unable to agree.
While the order granting the motion for authority to sell was actually issued on 9 September 1949,
the same was secured during the incumbency of the then judicial administrator Pedro Feliciano.
Even if it is to be assumed that Mayor Fernandez and Councilor Guadiz induced Oscar Maneclang

to sell the property, the fact remains that there was already the order authorizing the sale. Having
been issued by a Judge who was lawfully appointed to his position, he was disputably presumed to
have acted in the lawful exercise of jurisdiction and that his official duty was regularly performed. 28 It
was not incumbent upon them to go beyond the order to find out if indeed there was a valid motion for
authority to sell. Otherwise, no order of any court can be relied upon by the parties. Under Article 526 of
the Civil Code, a possessor in good faith is one who is not aware that there exists in his title or mode of
acquisition any flaw which invalidates it; furthermore, mistake upon a doubtful or difficult question of law
may be the basis of good faith. It implies freedom from knowledge and circumstances which ought to put
a person on inquiry. 29 We find no circumstance in this case to have alerted the vendee, the City of
Dagupan, to a possible flaw or defect in the authority of the judicial administrator to sell the property.
Since good faith is always presumed, and upon him who alleges bad faith on the part of the possessor
rests the burden of proof, 30 it was incumbent upon the administrator to established such proof, which We
find to be wanting. However, Article 528 of the Civil Code provides that: "Possession acquired in good
faith does not lose this character except in the case and from the moment facts exist which show that the
possessor is not unaware that he possesses the thing improperly or wrongfully." The filing of a case
alleging bad faith on the part of a vendee gives cause for cessation of good faith.

In Tacas vs. Tobon, 31 this Court held that if there are no other facts from which the interruption of good
faith may be determined, and an action is filed to recover possession, good faith ceases from the date of
receipt of the summons to appear at the trial and if such date does not appear in the record, that of the
filing of the answer would control. 32

The date of service of summons to the City of Dagupan in Civil Case No. D-1785 is not clear from
the record. Its Answer, however, was filed on 5 November 1965. Accordingly, its possession in good
faith must be considered to have lasted up to that date. As a possessor in good faith, it was entitled
to all the fruits of the property and was under no obligation to pay rental to the intestate of Margarita
for the use thereof. Under Article 544 of the Civil Code, a possessor in good faith is entitled to the
fruits received before the possession is legally interrupted. Thus, the trial court committed an error
when it ordered the City of Dagupan to pay accumulated rentals in the amount of P584,602.20 from
4 October 1952 up to the filing of the complaint.
6. However, upon the filing of the Answer, the City of Dagupan already became a possessor in bad
faith. This brings Us to the issue of reasonable rentals, which the trial court fixed at P3,747.45 a
month. The basis thereof is the monthly earnings of the city from the lessees of the market stalls
inside the Perez Boulevard Supermarket. The lesses were paying rental at the rate of P0.83 per
square meter. Appellant maintains that this is both unfair and unjust. The property in question is
located near the Chinese cemetery and at the time of the questioned sale, it had no access to the
national road, was located "in the hinterland" and, as admitted by the former judicial administrator,
Oscar Maneclang, the persons who built houses thereon prior to the sale paid only P6.00 to P8.00
as monthly rentals and the total income from them amounted only to P40.00 a month. Appellant
contends that it is this income which should be made the basis for determining the reasonable rental
for the use of the property.
There is merit in this contention since indeed, if the rental value of the property had increased, it
would be because of the construction by the City of Dagupan of the public market and not as a
consequence of any act imputable to the intestate estate. It cannot, however, be denied that
considering that the property is located within the city, its value would never decrease; neither can it
be asserted that its price remained constant. On the contrary, the land appreciated in value at least
annually, if not monthly. It is the opinion of this Court that the reasonable compensation for the use
of the property should be fixed at P1,000.00 a month. Taking into account the fact that Severo
Maneclang, insofar as his usufructuary right is concerned, but only until his death, is precluded from
assailing the sale, having been properly notified of the motion for authority to sell and considering
further that the heirs, Hector, Cesar, Oscar and Amanda, all surnamed Maneclang, are, as

discussed above, barred by laches, only those portions of the monthly rentals which correspond to
the presumptive shares of Adelaida, Linda, Priscila, Natividad and Teresita, all surnamed
Maneclang, to the extent untouched by the usufructuary right of Severo Maneclang, should be paid
by the City of Dagupan. There is no showing as to when Severo Maneclang died; this date of death
is necessary to be able to determine the cessation of his usufructuary right and the commencement
of the full enjoyment of the fruits of the property by the unaffected heirs. Under the circumstances,
and for facility of computation, We hereby fix the presumptive shares in the rentals of the
aforenamed unaffected heirs at P500.00 a month, or at P100.00 each, effective 5 November 1965
until the City of Dagupan shall have effectively delivered to the intestate estate 5/9 of the property in
question. The latter, however, shall reimburse the City of Dagupan of that portion of the real estate
taxes it had paid on the land corresponding to 5/9 of the lot commencing from taxable year 1965
until said 5/9 part is effectively delivered to the intestate estate.
Pursuant to Article 546 of the Civil Code, the City of Dagupan may retain possession of the property
until it shall have been fully reimbursed the value of the building in the amount of P100,000.00 and
5/9 of the purchase price amounting to P6,493.05
WHEREFORE, judgment is hereby rendered AFFIRMING the decision in all respects, except to the
extent as above modified. As modified, (a) the sale in favor of the City of Dagupan, executed on 4
October 1952 (Exhibit "F"), is hereby declared null and void; however, by reason of estoppel and
laches as abovestated, only 5/9 of the subject property representing the presumptive shares of
Adelaida, Linda, Priscila, Natividad and Teresita, all surnamed Maneclang, may be recovered; (b)
subject, however, to its right to retain the property until it shall have been refunded the amounts of
P100,000.00 and P6,493.05, the City of Dagupan is hereby ordered to reconvey to the intestate
estate of Margarita Suri Santos 5/9 of the property in question, for which purpose said parties shall
cause the appropriate partition thereof, expenses for which shall be borne by them proportionately;
and (c) the City of Dagupan is further ordered to pay reasonable compensation for the use of 5/9 of
the property in question at the rate of P500.00 a month from 5 November 1965 until it shall have
effectively delivered the possession of the property to the intestate estate of Margarita Suri Santos.
Upon the other hand, said intestate estate is hereby ordered to refund to the City of Dagupan that
portion of the real estate taxes the latter had paid for the lot corresponding to 5/9 thereof effective
taxable year 1965 and until the latter shall have delivered to said intestate estate.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. L-57461 September 11, 1987
THE DIRECTOR OF LANDS, petitioner,
vs.
MANILA ELECTRIC COMPANY and HON. RIZALINA BONIFACIO VERA, as Presiding Judge,
Court of First Instance of Rizal, Pasig, Branch XXIII, respondents.
CORTES, J.:
This is an appeal by certiorari of a decision of the respondent Judge in Land Registration Case No.
N-10317 LRC Record No. N-54803 entitled "In Re: Application for Registration of Title, Manila
Electric Company, applicant," dated May 29, 1981.
The facts are not disputed. Manila Electric Company filed an amended application for registration of
a parcel of land located in Taguig, Metro Manila on December 4, 1979. On August 17, 1976,
applicant acquired the land applied for registration by purchase from Ricardo Natividad (Exhibit E)
who in turn acquired the same from his father Gregorio Natividad as evidenced by a Deed of Original
Absolute Sale executed on December 28, 1970 (Exhibit E). Applicant's predecessors-in-interest
have possessed the property under the concept of an owner for more than 30 years. The property
was declared for taxation purposes under the name of the applicant (Exhibit 1) and the taxes due
thereon have been paid (Exhibits J and J-1).
On May 29, 1981 respondent Judge rendered a decision ordering the registration of the property in
the name of the private respondent. The Director of Lands interposed this petition raising the issue
of whether or not a corporation may apply for registration of title to land. After comments were filed
by the respondents, the Court gave the petition due course. The legal issue raised by the petitioner
Director of Lands has been squarely dealt with in two recent cases (The Director of Lands v.
Intermediate Appellate Court and Acme Plywood & Veneer Co., Inc., etc., No. L-73002 (December
29, 1986), 146 SCRA 509. The Director of Lands v. Hon. Bengzon and Dynamarine Corporation,
etc., No. 54045 (July 28, 1987)], and resolved in the affirmative. There can be no different answer in
the case at bar.
In the Acme decision, this Court upheld the doctrine that open, exclusive and undisputed possession
of alienable public land for the period prescribed by law creates the legal fiction whereby the land,
upon completion of the requisite period ipso jure and without the need of judicial or other sanction,
ceases to be public land and becomes private property.
As the Court said in that case:
Nothing can more clearly demonstrate the logical inevitability of considering
possession of public land which is of the character and duration prescribed by statute
as the equivalent of an express grant from the State than the dictum of the statute
itself that the possessor(s) "... shall be conclusively presumed to have performed all
the conditions essential to a Government grant and shall be entitled to a certificate of
title .... " No proof being admissible to overcome a conclusive presumption,
confirmation proceedings would in truth be little more than a formality, at the most

limited to ascertaining whether the possession claimed is of the required character

and length of time; and registration thereunder would not confer title, but simply
recognize a title already vested. The proceedings would not originally convert the
land from public to private land, but only confirm such a conversion already affected
(sic) from the moment the required period of possession became complete.
Coming to the case at bar, if the land was already private at the time Meralco bought it from
Natividad, then the prohibition in the 1973 Constitution against corporations holding alienable lands
of the public domain except by lease (1973 Const., Art. XIV, See. 11) does not apply.
Petitioner, however, contends that a corporation is not among those that may apply for confirmation
of title under Section 48 of Commonwealth Act No. 141, the Public Land Act.
As ruled in the Acme case, the fact that the confirmation proceedings were instituted by a
corporation is simply another accidental circumstance, "productive of a defect hardly more than
procedural and in nowise affecting the substance and merits of the right of ownership sought to be
confirmed in said proceedings." Considering that it is not disputed that the Natividads could have
had their title confirmed, only a rigid subservience to the letter of the law would deny private
respondent the right to register its property which was validly acquired.
WHEREFORE, the petition is DENIED. The questioned decision of the respondent Judge is
AFFIRMED.
SO ORDERED.
Fernan (Chairman), Feliciano and Bidin JJ., concur.
Separate Opinions
GUTIERREZ, JR., J.:, dissenting.
It is my view that Article XII, Section 3 of the Constitution which prohibits private corporations or
associations from holding alienable lands of the public domain except by lease is circumvented
when we allow corporations to apply for judicial confirmation of imperfect titles to public land. I,
therefore, reiterate my vote in Meralco v. Castro Bartolome, (114 SCRA 799), Republic v. Villanueva
and Iglesia ni Cristo (114 SCRA 875) and Director of Lands v. Intermediate Appellate Court (146
SCRA 509), and accordingly, dissent from the majority opinion in this case.
Separate Opinions
GUTIERREZ, JR., J.:, dissenting.
It is my view that Article XII, Section 3 of the Constitution which prohibits private corporations or
associations from holding alienable lands of the public domain except by lease is circumvented
when we allow corporations to apply for judicial confirmation of imperfect titles to public land. I,
therefore, reiterate my vote in Meralco v. Castro Bartolome, (114 SCRA 799), Republic v. Villanueva
and Iglesia ni Cristo (114 SCRA 875) and Director of Lands v. Intermediate Appellate Court (146
SCRA 509), and accordingly, dissent from the majority opinion in this case.