1. G.R. No.

L-11658            February 15, 1918
LEUNG YEE, plaintiff-appellant,
vs.
FRANK L. STRONG MACHINERY COMPANY and J.
G. WILLIAMSON, defendants-appellees.
upon which the sheriff sold the property at public auction
to the plaintiff, who was the highest bidder at the sheriff's
sale.
This action was instituted by the plaintiff to recover
possession of the building from the machinery company.

The "Compañia Agricola Filipina" bought a considerable
quantity of rice-cleaning machinery company from the
defendant machinery company, and executed a chattel
mortgage thereon to secure payment of the purchase
price. It included in the mortgage deed the building of
strong materials in which the machinery was installed,
without any reference to the land on which it stood. The
indebtedness secured by this instrument not having
been paid when it fell due, the mortgaged property was
sold by the sheriff, in pursuance of the terms of the
mortgage instrument, and was bought in by the
machinery company. The mortgage was registered in
the chattel mortgage registry, and the sale of the
property to the machinery company in satisfaction of the
mortgage was annotated in the same registry on
December 29, 1913.
A few weeks thereafter, on or about the 14th of January,
1914, the "Compañia Agricola Filipina" executed a deed
of sale of the land upon which the building stood to the
machinery company, but this deed of sale, although
executed in a public document, was not registered. This
deed makes no reference to the building erected on the
land and would appear to have been executed for the
purpose of curing any defects which might be found to
exist in the machinery company's title to the building
under the sheriff's certificate of sale. The machinery
company went into possession of the building at or about
the time when this sale took place, that is to say, the
month of December, 1913, and it has continued in
possession ever since.
At or about the time when the chattel mortgage was
executed in favor of the machinery company, the
mortgagor, the "Compañia Agricola Filipina" executed
another mortgage to the plaintiff upon the building,
separate and apart from the land on which it stood, to
secure payment of the balance of its indebtedness to the
plaintiff under a contract for the construction of the
building. Upon the failure of the mortgagor to pay the
amount of the indebtedness secured by the mortgage,
the plaintiff secured judgment for that amount, levied
execution upon the building, bought it in at the sheriff's
sale on or about the 18th of December, 1914, and had
the sheriff's certificate of the sale duly registered in the
land registry of the Province of Cavite.
The trial judge, relying upon the terms of article 1473 of
the Civil Code, gave judgment in favor of the machinery
company, on the ground that the company had its title to
the building registered prior to the date of registry of the
plaintiff's certificate.
Article 1473 of the Civil Code is as follows:
If the same thing should have been sold to
different vendees, the ownership shall be
transfer to the person who may have the first
taken possession thereof in good faith, if it
should be personal property.
Should it be real property, it shall belong to the
person acquiring it who first recorded it in the
registry.
Should there be no entry, the property shall
belong to the person who first took possession
of it in good faith, and, in the absence thereof, to
the person who presents the oldest title,
provided there is good faith.
The registry her referred to is of course the registry of
real property, and it must be apparent that the
annotation or inscription of a deed of sale of real
property in a chattel mortgage registry cannot be given
the legal effect of an inscription in the registry of real
property. By its express terms, the Chattel Mortgage
Law contemplates and makes provision for mortgages of
personal property; and the sole purpose and object of
the chattel mortgage registry is to provide for the registry
of "Chattel mortgages," that is to say, mortgages of
personal property executed in the manner and form
prescribed in the statute. The building of strong materials
in which the rice-cleaning machinery was installed by the
"Compañia Agricola Filipina" was real property, and the
mere fact that the parties seem to have dealt with it
separate and apart from the land on which it stood in no
wise changed its character as real property. It follows
that neither the original registry in the chattel mortgage
of the building and the machinery installed therein, not
the annotation in that registry of the sale of the
mortgaged property, had any effect whatever so far as
the building was concerned.

At the time when the execution was levied upon the
building, the defendant machinery company, which was
in possession, filed with the sheriff a sworn statement
setting up its claim of title and demanding the release of
the property from the levy. Thereafter, upon demand of
the sheriff, the plaintiff executed an indemnity bond in
favor of the sheriff in the sum of P12,000, in reliance
We conclude that the ruling in favor of the machinery
company cannot be sustained on the ground assigned
by the trial judge. We are of opinion, however, that the
judgment must be sustained on the ground that the
agreed statement of facts in the court below discloses
that neither the purchase of the building by the plaintiff
nor his inscription of the sheriff's certificate of sale in his
favor was made in good faith, and that the machinery
company must be held to be the owner of the property
under the third paragraph of the above cited article of the
code, it appearing that the company first took
possession of the property; and further, that the building
and the land were sold to the machinery company long
prior to the date of the sheriff's sale to the plaintiff.
It has been suggested that since the provisions of article
1473 of the Civil Code require "good faith," in express
terms, in relation to "possession" and "title," but contain
no express requirement as to "good faith" in relation to
the "inscription" of the property on the registry, it must be
presumed that good faith is not an essential requisite of
registration in order that it may have the effect
contemplated in this article. We cannot agree with this
contention. It could not have been the intention of the
legislator to base the preferential right secured under
this article of the code upon an inscription of title in bad
faith. Such an interpretation placed upon the language of
this section would open wide the door to fraud and
collusion. The public records cannot be converted into
instruments of fraud and oppression by one who secures
an inscription therein in bad faith. The force and effect
given by law to an inscription in a public record
presupposes the good faith of him who enters such
inscription; and rights created by statute, which are
predicated upon an inscription in a public registry, do not
and cannot accrue under an inscription "in bad faith," to
the benefit of the person who thus makes the inscription.
Construing the second paragraph of this article of the
code, the supreme court of Spain held in its sentencia of
the 13th of May, 1908, that:
This rule is always to be understood on the
basis of the good faith mentioned in the first
paragraph; therefore, it having been found that
the second purchasers who record their
purchase had knowledge of the previous sale,
the question is to be decided in accordance with
the following paragraph. (Note 2, art. 1473, Civ.
Code, Medina and Maranon [1911] edition.)
Although article 1473, in its second paragraph,
provides that the title of conveyance of
ownership of the real property that is first
recorded in the registry shall have preference,
this provision must always be understood on the
basis of the good faith mentioned in the first
paragraph; the legislator could not have wished
to strike it out and to sanction bad faith, just to
comply with a mere formality which, in given
cases, does not obtain even in real disputes
between third persons. (Note 2, art. 1473, Civ.
Code, issued by the publishers of the La Revista
de los Tribunales, 13th edition.)
The agreed statement of facts clearly discloses that the
plaintiff, when he bought the building at the sheriff's sale
and inscribed his title in the land registry, was duly
notified that the machinery company had bought the
building from plaintiff's judgment debtor; that it had gone
into possession long prior to the sheriff's sale; and that it
was in possession at the time when the sheriff executed
his levy. The execution of an indemnity bond by the
plaintiff in favor of the sheriff, after the machinery
company had filed its sworn claim of ownership, leaves
no room for doubt in this regard. Having bought in the
building at the sheriff's sale with full knowledge that at
the time of the levy and sale the building had already
been sold to the machinery company by the judgment
debtor, the plaintiff cannot be said to have been a
purchaser in good faith; and of course, the subsequent
inscription of the sheriff's certificate of title must be held
to have been tainted with the same defect.
Perhaps we should make it clear that in holding that the
inscription of the sheriff's certificate of sale to the plaintiff
was not made in good faith, we should not be
understood as questioning, in any way, the good faith
and genuineness of the plaintiff's claim against the
"Compañia Agricola Filipina." The truth is that both the
plaintiff and the defendant company appear to have had
just and righteous claims against their common debtor.
No criticism can properly be made of the exercise of the
utmost diligence by the plaintiff in asserting and
exercising his right to recover the amount of his claim
from the estate of the common debtor. We are strongly
inclined to believe that in procuring the levy of execution
upon the factory building and in buying it at the sheriff's
sale, he considered that he was doing no more than he
had a right to do under all the circumstances, and it is
highly possible and even probable that he thought at that
time that he would be able to maintain his position in a
contest with the machinery company. There was no
collusion on his part with the common debtor, and no
thought of the perpetration of a fraud upon the rights of
another, in the ordinary sense of the word. He may have
hoped, and doubtless he did hope, that the title of the
machinery company would not stand the test of an
action in a court of law; and if later developments had
confirmed his unfounded hopes, no one could question
the legality of the propriety of the course he adopted.
But it appearing that he had full knowledge of the
machinery company's claim of ownership when he
executed the indemnity bond and bought in the property
at the sheriff's sale, and it appearing further that the
machinery company's claim of ownership was well
founded, he cannot be said to have been an innocent
purchaser for value. He took the risk and must stand by
the consequences; and it is in this sense that we find
that he was not a purchaser in good faith.
One who purchases real estate with knowledge of a
defect or lack of title in his vendor cannot claim that he
has acquired title thereto in good faith as against the true
owner of the land or of an interest therein; and the same
rule must be applied to one who has knowledge of facts
which should have put him upon such inquiry and
investigation as might be necessary to acquaint him with
the defects in the title of his vendor. A purchaser cannot
close his eyes to facts which should put a reasonable
man upon his guard, and then claim that he acted in
good faith under the belief that there was no defect in
the title of the vendor. His mere refusal to believe that
such defect exists, or his willful closing of his eyes to the
possibility of the existence of a defect in his vendor's
title, will not make him an innocent purchaser for value, if
afterwards develops that the title was in fact defective,
and it appears that he had such notice of the defects as
would have led to its discovery had he acted with that
measure of precaution which may reasonably be
acquired of a prudent man in a like situation. Good faith,
or lack of it, is in its analysis a question of intention; but
in ascertaining the intention by which one is actuated on
a given occasion, we are necessarily controlled by the
evidence as to the conduct and outward acts by which
alone the inward motive may, with safety, be
determined. So it is that "the honesty of intention," "the
honest lawful intent," which constitutes good faith implies
a "freedom from knowledge and circumstances which
ought to put a person on inquiry," and so it is that proof
of such knowledge overcomes the presumption of good
faith in which the courts always indulge in the absence of
proof to the contrary. "Good faith, or the want of it, is not
a visible, tangible fact that can be seen or touched, but
rather a state or condition of mind which can only be
judged of by actual or fancied tokens or signs."
(Wilder vs. Gilman, 55 Vt., 504, 505; Cf. Cardenas
Lumber Co. vs. Shadel, 52 La. Ann., 2094-2098;
Pinkerton Bros. Co. vs. Bromley, 119 Mich., 8, 10, 17.)
We conclude that upon the grounds herein set forth the
disposing part of the decision and judgment entered in
the court below should be affirmed with costs of this
instance against the appellant. So ordered.
2. 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.
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,
España 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 (1-½) 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 cross-arms supporting five high voltage transmission
wires (See Annex A) and their sole function is to support
or carry such wires.
The conclusion of the CTA that the steel supports in
question are embraced in the term "poles" is not a
novelty. Several courts of last resort in the United States
have called these steel supports "steel towers", and they
denominated these supports or towers, as electric poles.
In their decisions the words "towers" and "poles" were
used interchangeably, and it is well understood in that
jurisdiction that a transmission tower or pole means the
same thing.
In a proceeding to condemn land for the use of electric
power wires, in which the law provided that wires shall
be constructed upon suitable poles, this term was
construed to mean either wood or metal poles and in
view of the land being subject to overflow, and the
necessary carrying of numerous wires and the distance
between poles, the statute was interpreted to
include towers or poles. (Stemmons and Dallas Light
Co. (Tex) 212 S.W. 222, 224; 32-A Words and Phrases,
p. 365.)
The term "poles" was also used to denominate the steel
supports or towers used by an association used to
convey its electric power furnished to subscribers and
members, constructed for the purpose of fastening high
voltage and dangerous electric wires alongside public
highways. The steel supports or towers were made of
iron or other metals consisting of two pieces running
from the ground up some thirty feet high, being wider at
the bottom than at the top, the said two metal pieces
being 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.
3. 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.
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 York vs. 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.
4. G.R. No. 137705               August 22, 2000
SERG'S PRODUCTS, INC., and SERGIO T.
GOQUIOLAY, petitioners,
vs.
PCI LEASING AND FINANCE, INC., respondent.
DECISION
After agreeing to a contract stipulating that a real or
immovable property be considered as personal or
movable, a party is estopped from subsequently claiming
otherwise. Hence, such property is a proper subject of a
writ of replevin obtained by the other contracting party.
The Case
Before us is a Petition for Review on Certiorari assailing
the January 6, 1999 Decision  of the Court of Appeals
(CA) in CA-GR SP No. 47332 and its February 26, 1999
Resolution denying reconsideration. The decretal portion
of the CA Decision reads as follows:
"WHEREFORE, premises considered, the assailed
Order dated February 18, 1998 and Resolution dated
March 31, 1998 in Civil Case No. Q-98-33500 are
hereby AFFIRMED. The writ of preliminary injunction
issued on June 15, 1998 is hereby LIFTED."
In its February 18, 1998 Order,  the Regional Trial Court
(RTC) of Quezon City (Branch 218) issued a Writ of
Seizure. The March 18, 1998 Resolution  denied
petitioners’ Motion for Special Protective Order, praying
that the deputy sheriff be enjoined "from seizing
immobilized or other real properties in (petitioners’)
factory in Cainta, Rizal and to return to their original
place whatever immobilized machineries or equipments
he may have removed."
The Facts
The undisputed facts are summarized by the Court of
Appeals as follows:
"On February 13, 1998, respondent PCI Leasing and
Finance, Inc. ("PCI Leasing" for short) filed with the
RTC-QC a complaint for [a] sum of money (Annex ‘E’),
with an application for a writ of replevin docketed as Civil
Case No. Q-98-33500.
"On March 6, 1998, upon an ex-parte application of PCI
Leasing, respondent judge issued a writ of replevin
(Annex ‘B’) directing its sheriff to seize and deliver the
machineries and equipment to PCI Leasing after 5 days
and upon the payment of the necessary expenses.
"On March 24, 1998, in implementation of said writ, the
sheriff proceeded to petitioner’s factory, seized one
machinery with [the] word that he [would] return for the
other machineries.
"On March 25, 1998, petitioners filed a motion for special
protective order (Annex ‘C’), invoking the power of the
court to control the conduct of its officers and amend and
control its processes, praying for a directive for the
sheriff to defer enforcement of the writ of replevin.
"This motion was opposed by PCI Leasing (Annex ‘F’),
on the ground that the properties [were] still personal
and therefore still subject to seizure and a writ of
replevin.
"In their Reply, petitioners asserted that the properties
sought to be seized [were] immovable as defined in
Article 415 of the Civil Code, the parties’ agreement to
the contrary notwithstanding. They argued that to give
effect to the agreement would be prejudicial to innocent
third parties. They further stated that PCI Leasing [was]
estopped from treating these machineries as personal
because the contracts in which the alleged agreement
[were] embodied [were] totally sham and farcical.
"On April 6, 1998, the sheriff again sought to enforce the
writ of seizure and take possession of the remaining
properties. He was able to take two more, but was
prevented by the workers from taking the rest.
"On April 7, 1998, they went to [the CA] via an original
action for certiorari."
Ruling of the Court of Appeals
Citing the Agreement of the parties, the appellate court
held that the subject machines were personal property,
and that they had only been leased, not owned, by
petitioners. It also ruled that the "words of the contract
are clear and leave no doubt upon the true intention of
the contracting parties." Observing that Petitioner
Goquiolay was an experienced businessman who was
"not unfamiliar with the ways of the trade," it ruled that
he "should have realized the import of the document he
signed." The CA further held:
"Furthermore, to accord merit to this petition would be to
preempt the trial court in ruling upon the case below,
since the merits of the whole matter are laid down before
us via a petition whose sole purpose is to inquire upon
the existence of a grave abuse of discretion on the part
of the [RTC] in issuing the assailed Order and
Resolution. The issues raised herein are proper subjects
of a full-blown trial, necessitating presentation of
evidence by both parties. The contract is being enforced
by one, and [its] validity is attacked by the other – a
matter x x x which respondent court is in the best
position to determine."
Hence, this Petition.
The Issues
In their Memorandum, petitioners submit the following
issues for our consideration:
"A. Whether or not the machineries purchased and
imported by SERG’S became real property by virtue of
immobilization.
B. Whether or not the contract between the parties is a
loan or a lease."
In the main, the Court will resolve whether the said
machines are personal, not immovable, property which
may be a proper subject of a writ of replevin. As a
preliminary matter, the Court will also address briefly the
procedural points raised by respondent.
The Court’s Ruling
The Petition is not meritorious.
Preliminary Matter: Procedural Questions
Respondent contends that the Petition failed to indicate
expressly whether it was being filed under Rule 45 or
Rule 65 of the Rules of Court. It further alleges that the
Petition erroneously impleaded Judge Hilario Laqui as
respondent.
There is no question that the present recourse is under
Rule 45. This conclusion finds support in the very title of
the Petition, which is "Petition for Review on Certiorari."
While Judge Laqui should not have been impleaded as a
respondent, substantial justice requires that such lapse
by itself should not warrant the dismissal of the present
Petition. In this light, the Court deems it proper to
remove, motu proprio, the name of Judge Laqui from the
caption of the present case.
Main Issue: Nature of the Subject Machinery
Petitioners contend that the subject machines used in
their factory were not proper subjects of the Writ issued
by the RTC, because they were in fact real property.
Serious policy considerations, they argue, militate
against a contrary characterization.
Rule 60 of the Rules of Court provides that writs of
replevin are issued for the recovery of personal property
only.  Section 3 thereof reads:
"SEC. 3. Order. -- Upon the filing of such affidavit and
approval of the bond, the court shall issue an order and
the corresponding writ of replevin describing the
personal property alleged to be wrongfully detained and
requiring the sheriff forthwith to take such property into
his custody."
On the other hand, Article 415 of the Civil Code
enumerates immovable or real property as follows:
"ART. 415. The following are immovable property:
x x x           x x x          x x x
(5) Machinery, receptacles, instruments or implements
intended 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;
x x x           x x x          x x x"
In the present case, the machines that were the subjects
of the Writ of Seizure were placed by petitioners in the
factory built on their own land. Indisputably, they were
essential and principal elements of their chocolate-
making industry. Hence, although each of them was
movable or personal property on its own, all of them
have become "immobilized by destination because they
are essential and principal elements in the industry." In
that sense, petitioners are correct in arguing that the
said machines are real, not personal, property pursuant
to Article 415 (5) of the Civil Code.
Be that as it may, we disagree with the submission of the
petitioners that the said machines are not proper
subjects of the Writ of Seizure.
The Court has held that contracting parties may validly
stipulate that a real property be considered as personal.
After agreeing to such stipulation, they are consequently
estopped from claiming otherwise. Under the principle of
estoppel, a party to a contract is ordinarily precluded
from denying the truth of any material fact found therein.
Hence, in Tumalad v. Vicencio, the Court upheld the
intention of the parties to treat a house as a personal
property because it had been made the subject of a
chattel mortgage. The Court ruled:
"x x x. 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."
Applying Tumalad, the Court in Makati Leasing and
Finance Corp. v. Wearever Textile Mills also held that
the machinery used in a factory and essential to the
industry, as in the present case, was a proper subject of
a writ of replevin because it was treated as personal
property in a contract. Pertinent portions of the Court’s
ruling are reproduced hereunder:
"x x x. 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 the present case, the Lease Agreement clearly
provides that the machines in question are to be
considered as personal property. Specifically, Section
12.1 of the Agreement reads as follows:
"12.1 The PROPERTY is, and shall at all times be and
remain, personal property notwithstanding that the
PROPERTY or any part thereof may now be, or
hereafter become, in any manner affixed or attached to
or embedded in, or permanently resting upon, real
property or any building thereon, or attached in any
manner to what is permanent."
Clearly then, petitioners are estopped from denying the
characterization of the subject machines as personal
property. Under the circumstances, they are proper
subjects of the Writ of Seizure.
It should be stressed, however, that our holding -- that
the machines should be deemed personal property
pursuant to the Lease Agreement – is good only insofar
as the contracting parties are concerned. Hence, while
the parties are bound by the Agreement, third persons
acting in good faith are not affected by its stipulation
characterizing the subject machinery as personal.  In any
event, there is no showing that any specific third party
would be adversely affected.
Validity of the Lease Agreement
In their Memorandum, petitioners contend that the
Agreement is a loan and not a lease. Submitting
documents supposedly showing that they own the
subject machines, petitioners also argue in their Petition
that the Agreement suffers from "intrinsic ambiguity
which places in serious doubt the intention of the parties
and the validity of the lease agreement itself."  In their
Reply to respondent’s Comment, they further allege that
the Agreement is invalid.
These arguments are unconvincing. The validity and the
nature of the contract are the lis mota of the civil action
pending before the RTC. A resolution of these questions,
therefore, is effectively a resolution of the merits of the
case. Hence, they should be threshed out in the trial, not
in the proceedings involving the issuance of the Writ of
Seizure.
Indeed, in La Tondeña Distillers v. CA, the Court
explained that the policy under Rule 60 was that
questions involving title to the subject property –
questions which petitioners are now raising -- should be
determined in the trial. In that case, the Court noted that
the remedy of defendants under Rule 60 was either to
post a counter-bond or to question the sufficiency of the
plaintiff’s bond. They were not allowed, however, to
invoke the title to the subject property. The Court ruled:
"In other words, the law does not allow the defendant to
file a motion to dissolve or discharge the writ of seizure
(or delivery) on ground of insufficiency of the complaint
or of the grounds relied upon therefor, as in proceedings
on preliminary attachment or injunction, and thereby put
at issue the matter of the title or right of possession over
the specific chattel being replevied, the policy apparently
being that said matter should be ventilated and
determined only at the trial on the merits."
Besides, these questions require a determination of facts
and a presentation of evidence, both of which have no
place in a petition for certiorari in the CA under Rule 65
or in a petition for review in this Court under Rule 45.
Reliance on the Lease Agreement
Petitioners’ arguments do not preclude the
implementation of the Writ.1âwphi1 As earlier discussed,
law and jurisprudence support its propriety. Verily, the
above-mentioned consequences, if they come true,
should not be blamed on this Court, but on the
petitioners for failing to avail themselves of the remedy
under Section 5 of Rule 60, which allows the filing of a
counter-bond. The provision states:
"SEC. 5. Return of property. -- If the adverse party
objects to the sufficiency of the applicant’s bond, or of
the surety or sureties thereon, he cannot immediately
require the return of the property, but if he does not so
object, he may, at any time before the delivery of the
property to the applicant, require the return thereof, by
filing with the court where the action is pending a bond
executed to the applicant, in double the value of the
property as stated in the applicant’s affidavit for the
delivery thereof to the applicant, if such delivery be
adjudged, and for the payment of such sum to him as
may be recovered against the adverse party, and by
serving a copy bond on the applicant."
WHEREFORE, the Petition is DENIED and the assailed
Decision of the Court of Appeals AFFIRMED. Costs
against petitioners.

It should be pointed out that the Court in this case may SO ORDERED.
rely on the Lease Agreement, for nothing on record
shows that it has been nullified or annulled. In fact,
petitioners assailed it first only in the RTC proceedings,
which had ironically been instituted by respondent.
Accordingly, it must be presumed valid and binding as
the law between the parties.

Makati Leasing and Finance Corporation is also

instructive on this point. In that case, the Deed of Chattel
Mortgage, which characterized the subject machinery as
personal property, was also assailed because
respondent had allegedly been required "to sign a
printed form of chattel mortgage which was in a blank
form at the time of signing." The Court rejected the
argument and relied on the Deed, ruling as follows:

"x x x. 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. x x x"

Alleged Injustice Committed on the Part of Petitioners

Petitioners contend that "if the Court allows these

machineries to be seized, then its workers would be out
of work and thrown into the streets."  They also allege
that the seizure would nullify all efforts to rehabilitate the
corporation.
5. G.R. No. 168557             February 16, 2007
FELS ENERGY, INC., Petitioner,
vs.
THE PROVINCE OF BATANGAS and
THE OFFICE OF THE PROVINCIAL ASSESSOR OF
BATANGAS, Respondents.
x----------------------------------------------------x
G.R. No. 170628            February 16, 2007
NATIONAL POWER CORPORATION, Petitioner,
vs.
LOCAL BOARD OF ASSESSMENT APPEALS OF
BATANGAS, LAURO C. ANDAYA, in his capacity as
the Assessor of the Province of Batangas, and the
PROVINCE OF BATANGAS represented by its
Provincial Assessor, Respondents.
DECISION
Before us are two consolidated cases docketed as G.R.
No. 168557 and G.R. No. 170628, which were filed by
petitioners FELS Energy, Inc. (FELS) and National
Power Corporation (NPC), respectively. The first is a
petition for review on certiorari assailing the August 25,
2004 Decision of the Court of Appeals (CA) in CA-G.R.
SP No. 67490 and its Resolution dated June 20, 2005;
the second, also a petition for review on certiorari,
challenges the February 9, 2005 Decision and
November 23, 2005 Resolution of the CA in CA-G.R. SP
No. 67491. Both petitions were dismissed on the ground
of prescription.
The pertinent facts are as follows:
On January 18, 1993, NPC entered into a lease contract
with Polar Energy, Inc. over 3x30 MW diesel engine
power barges moored at Balayan Bay in Calaca,
Batangas. The contract, denominated as an Energy
Conversion Agreement (Agreement), was for a period of
five years. Article 10 reads:
10.1 RESPONSIBILITY. NAPOCOR shall be responsible
for the payment of (a) all taxes, import duties, fees,
charges and other levies imposed by the National
Government of the Republic of the Philippines or any
agency or instrumentality thereof to which POLAR may
be or become subject to or in relation to the performance
of their obligations under this agreement (other than (i)
taxes imposed or calculated on the basis of the net
income of POLAR and Personal Income Taxes of its
employees and (ii) construction permit fees,
environmental permit fees and other similar fees and
charges) and (b) all real estate taxes and assessments,
rates and other charges in respect of the Power Barges.
Subsequently, Polar Energy, Inc. assigned its rights
under the Agreement to FELS. The NPC initially
opposed the assignment of rights, citing paragraph 17.2
of Article 17 of the Agreement.
On August 7, 1995, FELS received an assessment of
real property taxes on the power barges from Provincial
Assessor Lauro C. Andaya of Batangas City. The
assessed tax, which likewise covered those due for
1994, amounted to ₱56,184,088.40 per annum. FELS
referred the matter to NPC, reminding it of its obligation
under the Agreement to pay all real estate taxes. It then
gave NPC the full power and authority to represent it in
any conference regarding the real property assessment
of the Provincial Assessor.
In a letter dated September 7, 1995, NPC sought
reconsideration of the Provincial Assessor’s decision to
assess real property taxes on the power barges.
However, the motion was denied on September 22,
1995, and the Provincial Assessor advised NPC to pay
the assessment. This prompted NPC to file a petition
with the Local Board of Assessment Appeals (LBAA) for
the setting aside of the assessment and the declaration
of the barges as non-taxable items; it also prayed that
should LBAA find the barges to be taxable, the
Provincial Assessor be directed to make the necessary
corrections.
In its Answer to the petition, the Provincial Assessor
averred that the barges were real property for purposes
of taxation under Section 199(c) of Republic Act (R.A.)
No. 7160.
Before the case was decided by the LBAA, NPC filed a
Manifestation, informing the LBAA that the Department
of Finance (DOF) had rendered an opinion dated May
20, 1996, where it is clearly stated that power barges are
not real property subject to real property assessment.
On August 26, 1996, the LBAA rendered a
Resolution denying the petition. The fallo reads:
WHEREFORE, the Petition is DENIED. FELS is hereby
ordered to pay the real estate tax in the amount of
₱56,184,088.40, for the year 1994.
SO ORDERED.
The LBAA ruled that the power plant facilities, while they
may be classified as movable or personal property, are
nevertheless considered real property for taxation
purposes because they are installed at a specific
location with a character of permanency. The LBAA also
pointed out that the owner of the barges–FELS, a private
corporation–is the one being taxed, not NPC. A mere
agreement making NPC responsible for the payment of
all real estate taxes and assessments will not justify the
exemption of FELS; such a privilege can only be granted
to NPC and cannot be extended to FELS. Finally, the
LBAA also ruled that the petition was filed out of time.
Aggrieved, FELS appealed the LBAA’s ruling to the
Central Board of Assessment Appeals (CBAA).
On August 28, 1996, the Provincial Treasurer of
Batangas City issued a Notice of Levy and Warrant by
Distraint over the power barges, seeking to collect real
property taxes amounting to ₱232,602,125.91 as of July
31, 1996. The notice and warrant was officially served to
FELS on November 8, 1996. It then filed a Motion to Lift
Levy dated November 14, 1996, praying that the
Provincial Assessor be further restrained by the CBAA
from enforcing the disputed assessment during the
pendency of the appeal.
On November 15, 1996, the CBAA issued an
Order lifting the levy and distraint on the properties of
FELS in order not to preempt and render ineffectual,
nugatory and illusory any resolution or judgment which
the Board would issue.
Meantime, the NPC filed a Motion for Intervention dated
August 7, 1998 in the proceedings before the CBAA.
This was approved by the CBAA in an Order dated
September 22, 1998.
During the pendency of the case, both FELS and NPC
filed several motions to admit bond to guarantee the
payment of real property taxes assessed by the
Provincial Assessor (in the event that the judgment be
unfavorable to them). The bonds were duly approved by
the CBAA.
On April 6, 2000, the CBAA rendered a Decision finding
the power barges exempt from real property tax. The
dispositive portion reads:
WHEREFORE, the Resolution of the Local Board of
Assessment Appeals of the Province of Batangas is
hereby reversed. Respondent-appellee Provincial
Assessor of the Province of Batangas is hereby ordered
to drop subject property under ARP/Tax Declaration No.
018-00958 from the List of Taxable Properties in the
Assessment Roll. The Provincial Treasurer of Batangas
is hereby directed to act accordingly.
SO ORDERED.
Ruling in favor of FELS and NPC, the CBAA reasoned
that the power barges belong to NPC; since they are
actually, directly and exclusively used by it, the power
barges are covered by the exemptions under Section
234(c) of R.A. No. 7160. As to the other jurisdictional
issue, the CBAA ruled that prescription did not preclude
the NPC from pursuing its claim for tax exemption in
accordance with Section 206 of R.A. No. 7160. The
Provincial Assessor filed a motion for reconsideration,
which was opposed by FELS and NPC.
In a complete volte face, the CBAA issued a
Resolutionb on July 31, 2001 reversing its earlier
decision. The fallo of the resolution reads:
WHEREFORE, premises considered, it is the resolution
of this Board that:
(a) The decision of the Board dated 6 April 2000
is hereby reversed.
(b) The petition of FELS, as well as the
intervention of NPC, is dismissed.
(c) The resolution of the Local Board of
Assessment Appeals of Batangas is hereby
affirmed,
(d) The real property tax assessment on FELS
by the Provincial Assessor of Batangas is
likewise hereby affirmed.
SO ORDERED.
FELS and NPC filed separate motions for
reconsideration, which were timely opposed by the
Provincial Assessor. The CBAA denied the said motions
in a Resolution dated October 19, 2001.
Dissatisfied, FELS filed a petition for review before the
CA docketed as CA-G.R. SP No. 67490. Meanwhile,
NPC filed a separate petition, docketed as CA-G.R. SP
No. 67491.
On January 17, 2002, NPC filed a Manifestation/Motion
for Consolidation in CA-G.R. SP No. 67490 praying for
the consolidation of its petition with CA-G.R. SP No.
67491. In a Resolution dated February 12, 2002, the
appellate court directed NPC to re-file its motion for
consolidation with CA-G.R. SP No. 67491, since it is the
ponente of the latter petition who should resolve the
request for reconsideration.
NPC failed to comply with the aforesaid resolution. On
August 25, 2004, the Twelfth Division of the appellate
court rendered judgment in CA-G.R. SP No. 67490
denying the petition on the ground of prescription. The
decretal portion of the decision reads:
WHEREFORE, the petition for review is DENIED for lack
of merit and the assailed Resolutions dated July 31,
2001 and October 19, 2001 of the Central Board of
Assessment Appeals are AFFIRMED.
SO ORDERED.
On September 20, 2004, FELS timely filed a motion for
reconsideration seeking the reversal of the appellate
court’s decision in CA-G.R. SP No. 67490.
Thereafter, NPC filed a petition for review dated October
19, 2004 before this Court, docketed as G.R. No.
165113, assailing the appellate court’s decision in CA-
G.R. SP No. 67490. The petition was, however, denied
in this Court’s Resolution of November 8, 2004, for
NPC’s failure to sufficiently show that the CA committed
any reversible error in the challenged decision. NPC filed
a motion for reconsideration, which the Court denied
with finality in a Resolution dated January 19, 2005.
Meantime, the appellate court dismissed the petition in
CA-G.R. SP No. 67491. It held that the right to question
the assessment of the Provincial Assessor had already
prescribed upon the failure of FELS to appeal the
disputed assessment to the LBAA within the period
prescribed by law. Since FELS had lost the right to
question the assessment, the right of the Provincial
Government to collect the tax was already absolute.
NPC filed a motion for reconsideration dated March 8,
2005, seeking reconsideration of the February 5, 2005
ruling of the CA in CA-G.R. SP No. 67491. The motion
was denied in a Resolution dated November 23, 2005.
The motion for reconsideration filed by FELS in CA-G.R.
SP No. 67490 had been earlier denied for lack of merit in
a Resolution dated June 20, 2005.
On August 3, 2005, FELS filed the petition docketed as
G.R. No. 168557 before this Court, raising the following
issues:
A.
Whether power barges, which are floating and movable,
are personal properties and therefore, not subject to real
property tax.
B.
Assuming that the subject power barges are real
properties, whether they are exempt from real estate tax
under Section 234 of the Local Government Code
("LGC").
C.
Assuming arguendo that the subject power barges are
subject to real estate tax, whether or not it should be
NPC which should be made to pay the same under the
law.
D.
Assuming arguendo that the subject power barges are
real properties, whether or not the same is subject to
depreciation just like any other personal properties.
E.
Whether the right of the petitioner to question the
patently null and void real property tax assessment on
the petitioner’s personal properties is imprescriptible.
On January 13, 2006, NPC filed its own petition for
review before this Court (G.R. No. 170628), indicating
the following errors committed by the CA:
I
THE COURT OF APPEALS GRAVELY ERRED IN
HOLDING THAT THE APPEAL TO THE LBAA WAS
FILED OUT OF TIME.
II
THE COURT OF APPEALS GRAVELY ERRED IN NOT
HOLDING THAT THE POWER BARGES ARE NOT
SUBJECT TO REAL PROPERTY TAXES.
III
THE COURT OF APPEALS GRAVELY ERRED IN NOT
HOLDING THAT THE ASSESSMENT ON THE POWER
BARGES WAS NOT MADE IN ACCORDANCE WITH
LAW.
Considering that the factual antecedents of both cases
are similar, the Court ordered the consolidation of the
two cases in a Resolution dated March 8,
2006.1awphi1.net
In an earlier Resolution dated February 1, 2006, the
Court had required the parties to submit their respective
Memoranda within 30 days from notice. Almost a year
passed but the parties had not submitted their respective
memoranda. Considering that taxes—the lifeblood of our
economy—are involved in the present controversy, the
Court was prompted to dispense with the said pleadings,
with the end view of advancing the interests of justice
and avoiding further delay.
In both petitions, FELS and NPC maintain that the
appeal before the LBAA was not time-barred. FELS
argues that when NPC moved to have the assessment
reconsidered on September 7, 1995, the running of the
period to file an appeal with the LBAA was tolled. For its
part, NPC posits that the 60-day period for appealing to
the LBAA should be reckoned from its receipt of the
denial of its motion for reconsideration.
Petitioners’ contentions are bereft of merit.
Section 226 of R.A. No. 7160, otherwise known as the
Local Government Code of 1991, provides:
SECTION 226. Local Board of Assessment Appeals. –
Any owner or person having legal interest in the property
who is not satisfied with the action of the provincial, city
or municipal assessor in the assessment of his property
may, within sixty (60) days from the date of receipt of the
written notice of assessment, appeal to the Board of
Assessment Appeals of the province or city by filing a
petition under oath in the form prescribed for the
purpose, together with copies of the tax declarations and
such affidavits or documents submitted in support of the
appeal.
We note that the notice of assessment which the
Provincial Assessor sent to FELS on August 7, 1995,
contained the following statement:
If you are not satisfied with this assessment, you may,
within sixty (60) days from the date of receipt hereof,
appeal to the Board of Assessment Appeals of the
province by filing a petition under oath on the form
prescribed for the purpose, together with copies of
ARP/Tax Declaration and such affidavits or documents
submitted in support of the appeal.
Instead of appealing to the Board of Assessment
Appeals (as stated in the notice), NPC opted to file a
motion for reconsideration of the Provincial Assessor’s
decision, a remedy not sanctioned by law.
The remedy of appeal to the LBAA is available from an
adverse ruling or action of the provincial, city or
municipal assessor in the assessment of the property. It
follows then that the determination made by the
respondent Provincial Assessor with regard to the
taxability of the subject real properties falls within its
power to assess properties for taxation purposes subject
to appeal before the LBAA.
We fully agree with the rationalization of the CA in both
CA-G.R. SP No. 67490 and CA-G.R. SP No. 67491. The
two divisions of the appellate court cited the case of
Callanta v. Office of the Ombudsman, where we ruled
that under Section 226 of R.A. No 7160, the last action
of the local assessor on a particular assessment shall be
the notice of assessment; it is this last action which gives
the owner of the property the right to appeal to the
LBAA. The procedure likewise does not permit the
property owner the remedy of filing a motion for
reconsideration before the local assessor. The pertinent
holding of the Court in Callanta is as follows:
x x x [T]he same Code is equally clear that the aggrieved
owners should have brought their appeals before the
LBAA. Unfortunately, despite the advice to this effect
contained in their respective notices of assessment, the
owners chose to bring their requests for a
review/readjustment before the city assessor, a remedy
not sanctioned by the law. To allow this procedure would
indeed invite corruption in the system of appraisal and
assessment. It conveniently courts a graft-prone
situation where values of real property may be initially
set unreasonably high, and then subsequently reduced
upon the request of a property owner. In the latter
instance, allusions of a possible covert, illicit trade-off
cannot be avoided, and in fact can conveniently take
place. Such occasion for mischief must be prevented
and excised from our system.
For its part, the appellate court declared in CA-G.R. SP
No. 67491:
x x x. The Court announces: Henceforth, whenever the
local assessor sends a notice to the owner or lawful
possessor of real property of its revised assessed value,
the former shall no longer have any jurisdiction to
entertain any request for a review or readjustment. The
appropriate forum where the aggrieved party may bring
his appeal is the LBAA as provided by law. It follows
ineluctably that the 60-day period for making the appeal
to the LBAA runs without interruption. This is what We
held in SP 67490 and reaffirm today in SP 67491.
To reiterate, if the taxpayer fails to appeal in due course,
the right of the local government to collect the taxes due
with respect to the taxpayer’s property becomes
absolute upon the expiration of the period to appeal. It
also bears stressing that the taxpayer’s failure to
question the assessment in the LBAA renders the
assessment of the local assessor final, executory and
demandable, thus, precluding the taxpayer from
questioning the correctness of the assessment, or from
invoking any defense that would reopen the question of
its liability on the merits.
In fine, the LBAA acted correctly when it dismissed the
petitioners’ appeal for having been filed out of time; the
CBAA and the appellate court were likewise correct in
affirming the dismissal. Elementary is the rule that the
perfection of an appeal within the period therefor is both
mandatory and jurisdictional, and failure in this regard
renders the decision final and executory.
In the Comment filed by the Provincial Assessor, it is
asserted that the instant petition is barred by res
judicata; that the final and executory judgment in G.R.
No. 165113 (where there was a final determination on
the issue of prescription), effectively precludes the
claims herein; and that the filing of the instant petition
after an adverse judgment in G.R. No. 165113
constitutes forum shopping.
FELS maintains that the argument of the Provincial
Assessor is completely misplaced since it was not a
party to the erroneous petition which the NPC filed in
G.R. No. 165113. It avers that it did not participate in the
aforesaid proceeding, and the Supreme Court never
acquired jurisdiction over it. As to the issue of forum
shopping, petitioner claims that no forum shopping could
have been committed since the elements of litis
pendentia or res judicata are not present.
We do not agree.
Res judicata pervades every organized system of
jurisprudence and is founded upon two grounds
embodied in various maxims of common law, namely:
(1) public policy and necessity, which makes it to the
interest of the
State that there should be an end to litigation –
republicae ut sit litium; and (2) the hardship on the
individual of being vexed twice for the same cause –
nemo debet bis vexari et eadem causa. A conflicting
doctrine would subject the public peace and quiet to the
will and dereliction of individuals and prefer the
regalement of the litigious disposition on the part of
suitors to the preservation of the public tranquility and
happiness. As we ruled in Heirs of Trinidad De Leon
Vda. de Roxas v. Court of Appeals:
x x x An existing final judgment or decree – rendered
upon the merits, without fraud or collusion, by a court of
competent jurisdiction acting upon a matter within its
authority – is conclusive on the rights of the parties and
their privies. This ruling holds in all other actions or suits,
in the same or any other judicial tribunal of concurrent
jurisdiction, touching on the points or matters in issue in
the first suit.
xxx
Courts will simply refuse to reopen what has been
decided. They will not allow the same parties or their
privies to litigate anew a question once it has been
considered and decided with finality. Litigations must
end and terminate sometime and somewhere. The
effective and efficient administration of justice requires
that once a judgment has become final, the prevailing
party should not be deprived of the fruits of the verdict by
subsequent suits on the same issues filed by the same
parties.
This is in accordance with the doctrine of res judicata
which has the following elements: (1) the former
judgment must be final; (2) the court which rendered it
had jurisdiction over the subject matter and the parties;
(3) the judgment must be on the merits; and (4) there
must be between the first and the second actions,
identity of parties, subject matter and causes of action.
The application of the doctrine of res judicata does not
require absolute identity of parties but merely substantial
identity of parties. There is substantial identity of parties
when there is community of interest or privity of interest
between a party in the first and a party in the second
case even if the first case did not implead the latter.
To recall, FELS gave NPC the full power and authority to
represent it in any proceeding regarding real property
assessment. Therefore, when petitioner NPC filed its
petition for review docketed as G.R. No. 165113, it did
so not only on its behalf but also on behalf of FELS.
Moreover, the assailed decision in the earlier petition for
review filed in this Court was the decision of the
appellate court in CA-G.R. SP No. 67490, in which FELS
was the petitioner. Thus, the decision in G.R. No.
165116 is binding on petitioner FELS under the principle
of privity of interest. In fine, FELS and NPC are
substantially "identical parties" as to warrant the
application of res judicata. FELS’s argument that it is not
bound by the erroneous petition filed by NPC is thus
unavailing.
On the issue of forum shopping, we rule for the
Provincial Assessor. Forum shopping exists when, as a
result of an adverse judgment in one forum, a party
seeks another and possibly favorable judgment in
another forum other than by appeal or special civil action
or certiorari. There is also forum shopping when a party
institutes two or more actions or proceedings grounded
on the same cause, on the gamble that one or the other
court would make a favorable disposition.
Petitioner FELS alleges that there is no forum shopping
since the elements of res judicata are not present in the
cases at bar; however, as already discussed, res
judicata may be properly applied herein. Petitioners
engaged in forum shopping when they filed G.R. Nos.
168557 and 170628 after the petition for review in G.R.
No. 165116. Indeed, petitioners went from one court to
another trying to get a favorable decision from one of the
tribunals which allowed them to pursue their cases.
It must be stressed that an important factor in
determining the existence of forum shopping is the
vexation caused to the courts and the parties-litigants by
the filing of similar cases to claim substantially the same
reliefs. The rationale against forum shopping is that a
party should not be allowed to pursue simultaneous
remedies in two different fora. Filing multiple petitions or
complaints constitutes abuse of court processes, which
tends to degrade the administration of justice, wreaks
havoc upon orderly judicial procedure, and adds to the
congestion of the heavily burdened dockets of the
courts.
Thus, there is forum shopping when there exist: (a)
identity of parties, or at least such parties as represent
the same interests in both actions, (b) identity of rights
asserted and relief prayed for, the relief being founded
on the same facts, and (c) the identity of the two
preceding particulars is such that any judgment rendered
in the pending case, regardless of which party is
successful, would amount to res judicata in the other.
Having found that the elements of res judicata and forum
shopping are present in the consolidated cases, a
discussion of the other issues is no longer necessary.
Nevertheless, for the peace and contentment of
petitioners, we shall shed light on the merits of the case.
As found by the appellate court, the CBAA and LBAA
power barges are real property and are thus subject to
real property tax. This is also the inevitable conclusion,
considering that G.R. No. 165113 was dismissed for
failure to sufficiently show any reversible error. Tax
assessments by tax examiners are presumed correct
and made in good faith, with the taxpayer having the
burden of proving otherwise. Besides, factual findings of
administrative bodies, which have acquired expertise in
their field, are generally binding and conclusive upon the
Court; we will not assume to interfere with the sensible
exercise of the judgment of men especially trained in
appraising property. Where the judicial mind is left in
doubt, it is a sound policy to leave the assessment
undisturbed. We find no reason to depart from this rule
in this case.
In Consolidated Edison Company of New York, Inc., et
al. v. The City of New York, et al., a power company
brought an action to review property tax assessment. On
the city’s motion to dismiss, the Supreme Court of New
York held that the barges on which were mounted gas
turbine power plants designated to generate electrical
power, the fuel oil barges which supplied fuel oil to the
power plant barges, and the accessory equipment
mounted on the barges were subject to real property
taxation.
Moreover, Article 415 (9) of the New Civil Code provides
that "[d]ocks and structures which, though floating, are
intended by their nature and object to remain at a fixed
place on a river, lake, or coast" are considered
immovable property. Thus, power barges are
categorized as immovable property by destination, being
in the nature of machinery and other implements
intended by the owner for an industry or work which may
be carried on in a building or on a piece of land and
which tend directly to meet the needs of said industry or
work.
Petitioners maintain nevertheless that the power barges
are exempt from real estate tax under Section 234 (c) of
R.A. No. 7160 because they are actually, directly and
exclusively used by petitioner NPC, a government-
owned and controlled corporation engaged in the supply,
generation, and transmission of electric power.
We affirm the findings of the LBAA and CBAA that the
owner of the taxable properties is petitioner FELS, which
in fine, is the entity being taxed by the local government.
As stipulated under Section 2.11, Article 2 of the
Agreement:
OWNERSHIP OF POWER BARGES. POLAR shall own
the Power Barges and all the fixtures, fittings, machinery
and equipment on the Site used in connection with the
Power Barges which have been supplied by it at its own
cost. POLAR shall operate, manage and maintain the
Power Barges for the purpose of converting Fuel of
NAPOCOR into electricity.
It follows then that FELS cannot escape liability from the
payment of realty taxes by invoking its exemption in
Section 234 (c) of R.A. No. 7160, which reads:
SECTION 234. Exemptions from Real Property Tax. –
The following are exempted from payment of the real
property tax:
xxx
(c) All machineries and equipment that are actually,
directly and exclusively used by local water districts and
government-owned or controlled corporations engaged
in the supply and distribution of water and/or generation
and transmission of electric power; x x x
Indeed, the law states that the machinery must be
actually, directly and exclusively used by the government
owned or controlled corporation; nevertheless, petitioner
FELS still cannot find solace in this provision because
Section 5.5, Article 5 of the Agreement provides:
OPERATION. POLAR undertakes that until the end of
the Lease Period, subject to the supply of the necessary
Fuel pursuant to Article 6 and to the other provisions
hereof, it will operate the Power Barges to convert such
Fuel into electricity in accordance with Part A of Article 7.
It is a basic rule that obligations arising from a contract
have the force of law between the parties. Not being
contrary to law, morals, good customs, public order or
public policy, the parties to the contract are bound by its
terms and conditions.
Time and again, the Supreme Court has stated that
taxation is the rule and exemption is the exception. The
law does not look with favor on tax exemptions and the
entity that would seek to be thus privileged must justify it
by words too plain to be mistaken and too categorical to
be misinterpreted. Thus, applying the rule of strict
construction of laws granting tax exemptions, and the
rule that doubts should be resolved in favor of provincial
corporations, we hold that FELS is considered a taxable
entity.
The mere undertaking of petitioner NPC under Section
10.1 of the Agreement, that it shall be responsible for the
payment of all real estate taxes and assessments, does
not justify the exemption. The privilege granted to
petitioner NPC cannot be extended to FELS. The
covenant is between FELS and NPC and does not bind
a third person not privy thereto, in this case, the
Province of Batangas.
It must be pointed out that the protracted and circuitous
litigation has seriously resulted in the local government’s
deprivation of revenues. The power to tax is an incident
of sovereignty and is unlimited in its magnitude,
acknowledging in its very nature no perimeter so that
security against its abuse is to be found only in the
responsibility of the legislature which imposes the tax on
the constituency who are to pay for it. The right of local
government units to collect taxes due must always be
upheld to avoid severe tax erosion. This consideration is
consistent with the State policy to guarantee the
autonomy of local governments and the objective of the
Local Government Code that they enjoy genuine and
meaningful local autonomy to empower them to achieve
their fullest development as self-reliant communities and
make them effective partners in the attainment of
national goals.
In conclusion, we reiterate that the power to tax is the
most potent instrument to raise the needed revenues to
finance and support myriad activities of the local
government units for the delivery of basic services
essential to the promotion of the general welfare and the
enhancement of peace, progress, and prosperity of the
people.
WHEREFORE, the Petitions are DENIED and the
assailed Decisions and Resolutions AFFIRMED.
SO ORDERED.
6. 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 twenty-one 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.
7. G.R. No. L-26278             August 4, 1927
LEON SIBAL , plaintiff-appellant,
vs.
EMILIANO J. VALDEZ ET AL., defendants.
EMILIANO J. VALDEZ, appellee.
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 .............................................
........................
5 .............................................
........................
6 .............................................
........................
7 with the house
150.00
thereon ..........................
8 ............................................. 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.º — 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
1,000.00 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
1.00
house and camarin were situated on parcel 7
(Exhibit A).
1.00
(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 España, 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 año
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 España 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 caña dulce sembrada por los inquilinos del
ejecutado Leon Sibal 1.º 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 caña dulce sembrada por el inquilino del
ejecutado Leon Sibal 1.º, 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 Mañu and others; al S.
con Alejandro Dayrit, Isidro Santos and Melecio
Mañu; 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 Maño 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).
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;
for the palay harvested by
323.00
plaintiff in parcels 1 and 2;
for the palay which defendant
600.00
could have raised.
8,900.80
============

June 25, 1924, Macondray & Co. sold all of the land In all other respects, the judgment appealed from is
which they had purchased at public auction on the 30th hereby affirmed, with costs. So ordered.
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.