Hongkong and Shanghai Banking Corp.

v Aldecoa

Facts:

Aldecoa & Co. obtained a loan from the bank. Defendants mortgaged their real
properties as additional security for the obligations of Aldecoa & Co.

Aldecoa & Co. went into liquidation on account of the expiration of the term for
which it had been organized, and the intervener, Urquhart, was duly elected by the
parties as liquidator.

Aldecoa & Co. became the owner of the shares of the Pasay Estate Company
Limited. William Urquhart, as liquidator mortgaged to HSBC the 312 shares of the
Pasay Estate Company, Limited, acquired by Aldecoa & Co.

When Joaquin, Zoilo, and Cecilia Aldecoa (Aldecoa siblings) filed an action
against the bank to declare the mortgaged to the bank the shares of the Pasay Estate
Company, null and void. Urquhart filed as intervener to the case. He alleged that
Aldecoa & Co. owe him P14,000 as salary.

Judgment was rendered by the lower court in favor of the plaintiffs, but upon
appeal the SC reversed the judgment and declared that the mortgage of the shares of
stock in the Pasay Estate Co. to the bank was valid.

The court further found that Urquhart had failed to show that he had any legal
interest in the matter in litigation between plaintiff and defendants, or in the success of
either of the parties, or an interest against both.

Urquhart sought to be declared as preferred creditor over the bank.

Issue:

Whether Urquhart is a preferred creditor over the bank.

Ruling:

No.

Urquhart had been liquidator twenty-eight days when the credits were assigned
to the bank. He could not be declared a preferred creditor over the bank for the
P14,000 salary under article 1922 because he had been paid for his services as
liquidator up to January, 1910. The only property of Aldecoa & Co. which the liquidator
had anything to do with after 1910 was the real estate mortgages mortgaged to the
bank as additional security. These mortgages on real property cannot be regarded as
personal property, and it is only of personal property that article 1922 speaks.

Under Article 1922 of the Civil Code, which provides that, with regard to
specified personal property of the debtor, the following are preferred: jgc:chanrobles.com.ph

"1. Credits for the construction, repair, preservation, or for the amount of the sale of
personal property which may be in the possession of the debtor to the extent of the
value of the same." cralaw virtua1aw library

The only personal property of Aldecoa & Co. is 16 shares of the stock of the Banco
Español-Filipino; 450 shares of the stock of the Compañia Maritima; 330 shares of the
stock of the Pasay Estate Co., Ltd.; and certain claims against debtors of Aldecoa & Co.

The shares of stock in the Banco Español-Filipino and the Compañia Maritima
were pledged to the bank before Aldecoa & Co. went into liquidation, so Urquhart had
nothing to do with the preservation of these. The stock of the Pasay Estate Co., Ltd.,
was pledged to the bank, on the same day that it came into the possession of Aldecoa
& Co. The Pasay Estate shares were in the possession of Aldecoa & Co., or its liquidator,
only one day.