G.R. No.

L-8254 March 3, 1914

MARIANO GONZAGA, ET AL., plaintiffs-appellants,

vs.
FELISA GARCIA, ET AL., defendants-appellees.

Perfecto Gabriel for appellants.

Fernando Manikis for appellants.

TRENT, J.:

An appeal from a decision of the Court of Land Registration, denying the

registration, in the name of the appellants, of a parcel of land. The location
and identity of the land are undisputed.

The land admitted facts are these:

Rufino Francisco acquired the land in question by inheritance from the

registered owner. On August 20, 1909, he sold it with the right to repurchase
the same within one year and with the understanding that the time could be
extended one year more, to Vicente San Martin. This sale was registered on
August 26, 1909. On August 30, 1909, Francisco's right to repurchase was
attached by one Del Rosario. This right of repurchase was sold under
execution on December 29, 1909, at a sheriff's sale, Del Rosario being the
purchaser. The certificate of sale was registered January 6, 1910, and
Francisco having failed to exercise his right of redemption for the interest of
Francisco in the land thus sold at the execution sale. The deed was registered
January 27, 1911. In November or December, 1911, Del Rosario sold the land
to Mariano Gonzaga. In the meantime Martin appeared before the Court of
Land Registration and asked that the inscription in the registry of the sale to
him under pacto de retro be canceled for the reason that Francisco had paid
him the redemption price. This was done on August 22, 1910. On November
9, 1908, Francisco sold the same land to Jose de Lavengco. The document
evidencing this sale was never registered. The opponents are the widow and
minor children of Jose de Lavengco. Neither Jose nor the opponents ever
entered into the possession of the property. The appellants knew nothing of
the sale by Rufino Francisco to Jose de Lavengco. Did the appellants acquire
a registerable title?

Section 6, paragraph 5, of Act No. 1108, section 2283 (e), Compilation,

provides that: "Instruments known as pacto de retro, made under section
fifteen hundred and seven and fifteen hundred and twenty of the Spanish Civil
Code in force in these Islands, may be registered under this title, and
application for registration thereof may be made by the owner who executed
the pacto de retro sale under the same conditions and in the same manner as
mortgagors are authorized to make application for registration."

The right to repurchase real estate sold under pacto de retro is subject to
execution and be sold at public auction to satisfy a judgment against the
owner of such a right. By virtue of the sheriff's sale of December 29, 1909,
question from Martin. In November or December, 1911, Del Rosario sold all
his interest to the appellants. The was the right to repurchase from Martin
because this was the only interest the Francisco had at that time. Francisco
repurchased the land several months before Del Rosario sold his interest to
the appellants. It is therefore clear that the appellants acquired no interest
whatever in the land unless the repurchase made by Francisco vested the title
in Del Rosario, the then owner of the right to repurchase. We think that
Francisco's right to repurchase was sold at public auction the judgment
against him was completely satisfied, and he was therefore a stranger to the
proceedings. But it is said that under the provisions of article 1158 of the Civil
Code the repurchase by Francisco was a payment for Del Rosario and that
the former may recover from the latter the price paid.

This article reads: "Any person, whether he has an interest or not in the
fulfillment of the obligation, and whether the debtor knows and approves it or
is not aware thereof, can make a payment. The person paying for the account
of another may recover from the debtor what he may have paid, unless he
has done it against his express will. In such case he can only recover from the
debtor in so far as the payment has been useful to him."

Del Rosario was not a debtor. He was under no obligations to repurchase

the land from Martin. He had a right to do so but whether he exercised this
right or not depended upon his own violation. Article 1158 is not for these
reasons applicable.

The judgment appealed from is therefore affirmed, with costs against the
appellants.

Arellano, C.J., Carson Araullo, JJ., concur.

Moreland J., concurs in the result.

TUAZON V. HEIRS OF BARTOLOME RAMOS 463 SCRA 408 - Indorser,

contract of agency
Category: Mercantile Law Jurisprudence
TUAZON V. HEIRS OF BARTOLOME RAMOS
463 SCRA 408
FACTS:
Respondents alleged that on a relevant date, spouses Tuazon
purchased from their predecessor-in-interest cavans of rice. That on the total
number of cavans, only a certain portion has been paid for. In payment
thereof, checks have been issued but on presentment, the checks were
dishonored. Respondents alleged that since spouses anticipated the
forthcoming suit against them, they made fictitious sales over their properties.
As defense, the spouses averred that it was the wife of Bartolome who
effected the sale and that Maria was merely her agent in selling the rice. The
true buyer of the cavans was Santos. The spouses further averred that when
Ramos got the check from Santos, she took it in good faith and didn't knew
that the same were unfunded.
HELD:
First, there is no contract of agency.

If it was truly the intention of the parties to have a contract of agency,

then when the spouses sued Santos on a separate civil action, they should
have instituted the same on behalf and for the respondents. They didn't do
so. The filing in their own names negate their claim that they acted as
mere agents in selling the rice.

Second, the spouses are liable on the check.

As indorser, Tuazon warranted that upon due presentment, according to

their tenor, and that in case they were dishonored, she would pay the
corresponding amount. After the instrument is dishonored by non-
payment, indorsers cease to be merely secondarily liable. They
became
principal debtors whose liability becomes identical to that of the original
obligor. The holder of a negotiable instrument need not even proceed
against the maker before suing the indorser. Santos is not an
indispensable party to the suit against the spouses.

104 Phil. 36

[ GR No. L-10871, Jun 27, 1958 ]

FELIPE R. HIDALGO v. HEIRS OF D. TUAZON +

DECISION

BAUTISTA ANGELO, J.:

Plaintiffs brought this action in the Court of First Instance of Manila praying
that the defendant be ordered to execute a document releasing them from
their obligation and cancelling the mortgage executed by them to secure its
payment and to return to them the owner's certificates of title covering the
land from which the mortgage was constituted. The defendant in its answer
alleged that what was agreed upon between the parties was that,
notwithstanding the express provisions of the mortgage, said loan shall not be
paid except in genuine Philippine currency after the cessation of hostilities
between the United States and Japan, and that when in the month of
December, 1944 the plaintiffs sent the defendant two drafts, one for
P101,673.50 drawn on the Bank of Taiwan and the other for P101,505 drawn
on the Philippine National Bank for the purpose of paying the loan, the same
were rejected by defendant's president for the reason that: (1) they were not
legal tender, (2) even if they were so, the obligation which was purported to
be paid by the same had not become due, (3) the obligation sought to be paid
was joint and several and could not be split by the joint and several obligors
without the consent of the obligee, and (4) the banks upon whom said drafts
were purportedly drawn had been closed and did not have any funds with
which to meet the same. Defendant set up a cross-complaint praying that
plaintiffs be ordered to pay the loan of P101,000, with interest and damages,
and that, upon their failure to do so, the mortgage be ordered foreclosed in
accordance with law.

After trial, the court rendered judgment ordering defendant to execute in favor
of plaintiffs a deed releasing the latter from their obligation of P101,000, phis
interest, and cancelling the mortgage executed by plaintiffs to guarantee the
payment of the obligation, without pronouncement as to costs. The cross-
complaint of defendant was dismissed. On appeal taken by defendant, the
Court of Appeals certified the case to this Court on the ground that the
amount involved comes under its exclusive jurisdiction.

On August 31, 1943, plaintiffs entered into a contract with defendant whereby
the former acknowledged having received a loan of P101,000 from the latter
payable under the terms stipulated therein and to guarantee the payment of
said loan, plaintiffs constituted a mortgage on four parcels of land belonging to
them which are covered by certificates of title of the land records of the City of
Manila. The terms of payment stipulated in the contract are:
"6. Termino Que nos obligamos mancomunada y solidariamente a pagar y
devolver la expresada suma de ciento y un mil pesos (P101,000) en el
termino de diez (10) años, contados desde la fecha de esta escritura; pero, si
expirado ese termino de DIEZ (10) años, las presentes hostilidades entre
America y el Japon no hubiesen cesado aun, en ese caso el termino para
hacer el pago de dicho prestame sera hasta que la paz entre las citadas dos
naciones queda firmada: queda, sin embargo, especialmente convenido que
podremos pagar total o parcialmente nuestro citado debito de P101,000 en
cualquier tiempo y aun antes de la expiracion del termino de este contrato,
siempre y cuando que ese pago se efectue con sujecion a las condiciones
siguientes:

(a) Si ese pago total o parcial se hiciera antes del caso de las presentes
hostilidades entre America y el Japon, la condicion es que, ese pago total o
parcial se ha de realizar con un recargo o aumento de ciento por ciento
(100%) de su imparte:

(b) Si ese pago total o parcial se hiciera despues de firmada la paz entre las
citadas dos naciones, la condicion es que se tendra que dar aviso por escrito
a HEIRS OF D. TUAZON, INC. con treinta (30) dias de anticipacion."
On December 6, 1944, plaintiff Eduardo Paz E. Hidalgo sent a letter to Jose
M. Tuazon, president of defendant corporation, enclosing a check for the sum
of P101,673.50 drawn on the Bank of Taiwan payable to the Heirs of D.
Tuason, Inc. representing payment of his share in the obligation. The letter
was received by Tuason who on December 26, 1944 replied stating that he
could not accept the check for the reason that that mode of payment was
contrary to their agreement. On December 29, 1944, plaintiff Felipe R.
Hidalgo in turn deposited with the Philippine National Bank in Manila the
amount of P101,505 in cash and on the same date sent a letter to Jose M.
Tuason who was then residing in Baguio City enclosing a check for the same
amount payable to the Heirs of D. Tuason, Inc. drawn on the Philippine
National Bank, Baguio, Mt. Province, which letter was actually delivered on
December 30, 1944 by one Jose Sias to Nicasio A. Tuason, brother of Jose,
for the reason that the latter was not at home, and said Nicasio A. Tuason
actually received the letter and the draft and acknowledged receipt thereof in
a blank receipt already prepared for the purpose. From this date on
apparently no further action was taken, and when liberation came plaintiffs
instituted the present action.

The terms under which the obligation may be paid by the debtors have been
quoted elsewhere in this decision. It appears therein that the debtors may pay
totally or partially their indebtedness at any time before the expiration of the
term of the contract subject however to the following conditions: (1) if payment
is made before the termination of the hostilities between America and Japan,
the indebtedness should be paid with an increase of 100%; and (2) if payment
is made thereafter, thirty days notice in advance should be given to defendant
corporation. These terms are clear and admit of no ambiguity. The parties
seemed to have speculated on the incidence of war and on the fluctuation of
the Japanese currency. Apparently, defendant had imposed the condition of
100% increase in the payment of the indebtedness in the expectation that the
same would be enough to deter plaintiffs from paying the loan before the
termination of the war. That expectation betrayed defendant. It did not
materialize, and so it now tried to advance the theory that their agreement
was to pay the loan in genuine Philippine currency and after the termination of
the hostilities. The lower court was correct in not giving credence to this
pretense of defendant.

We believe, however, that the tender of payment made by plaintiffs of their

indebtedness through drafts drawn on local banks did not have the effect of
payment in contemplation of law that would release them from their obligation.
With regard to the draft tendered by plaintiff Eduardo Paz E. Hidalgo to
defendant on December 6, 1944, which was rejected by Jose M. Tuason as
president of defendant corporation on the ground that the same was not in
accordance with their agreement, the same did not ripen into payment
because of such rejection. The remedy of Hidalgo was to make a
consignation thereof as required by law and give notice thereof to defendant.
Such was not done and so the tender of payment became ineffective.

With regard to the draft which plaintiff Felipe R. Hidalgo tendered to Jose M.
Tuason on December 29, 1944, it is true that the same was accepted by
Nicasio A. Tuason in behalf of his brother Jose who was the legal
representative of the defendant and there is nothing to show that the draft was
rejected or returned. However, such tender cannot also have the effect of
payment that would extinguish the debtor's liability for under the law payment
made in check or draft has the effect of payment only when actually cashed
(Article 1170, old Civil Code). There is no showing that the draft has been
cashed. Nor is there a showing that it was impaired thru the fault of defendant
(Article 1170, Idem.). Verily it was not considering that at that time the
liberation forces were already hovering around the Island of Luzon. We
therefore conclude that plaintiff are still indebted to defendant for the amount
they had taken from it, or its equivalent, and unless they pay the same they
cannot ask for the cancellation of their mortgage.

Considering however that under the terms of their agreement plaintiffs were
allowed to pay the indebtedness either wholly or partially even before the
termination of hostilities between America and Japan, we are of the opinion
that they can only be made to pay the same subject to conversion under the
Ballantyne scale of values pursuant to a long line of decisions rendered by
this Court. Thus, in one case we held that "The Ballantyne schedule is
applicable to obligations contracted during the Japanese occupation where
said obligations are made payable on demand or during the said occupation
but not after the war or at a specified date or period which may indicate that
the parties were speculating on the continuation or cessation of the war at the
time the obligation was payable." (Wilson vs. Berkenkotter, 98 Phil., 918, 49
Official Gazette. No. 4, 1401 )[1] The conversion should be made taking as
basis the month of December, 1944 when plaintiffs tendered payment of their
obligation.

Wherefore, the decision appealed from is modified as follows: ordering

plaintiffs to pay defendant the sum of P202,000.00 converted into the
Philippine currency under the Ballantyne scale of values taking as basis the
month of December, 1944, and once payment is effected, defendant should
execute a deed of release of the indebtedness and of the mortgage executed
by plaintiffs as security of the obligation. No pronouncement as to costs.

Bengzon, Montemayor, Reyes, J. B. L., Endencia and Felix, JJ., concur.

Paras, C. J., and Reyes A. J., concur in the result.

Lapuz Sy vs. Eufemio Case Digest

Facts:

In 1953, Carmen O. Lapuz Sy filed a petition for legal separation against

Eufemio S. Eufemio, alleging that they were married civilly on September 21,
1934; that they had lived together as husband and wife continuously until
1943 when her husband abandoned her; that they had no child; that
they acquired properties during their marriage; and, that she discovered her
husband cohabiting with a Chinese woman named Go Hiok in 1949. She
prayed for the issuance of a decree of legal separation, which, among others,
would order that Eufemio should be deprived of his share of
the conjugal partnership profits.

In his Answer, Eufemio counter-claimed for the declaration of nullity ab initio

of his marriage with Carmen on the ground of his prior and subsisting
marriage, celebrated according to Chinese law and customs, with one Go
Hiok. In 1969, during the pendency of the case, Carmen died in a vehicular
accident. Eufemio moved to dismiss the case on the ground that the death
abated the action for legal separation.
Carmen's counsel moved to substitute the deceased Carmen by her father,
Macario Lapuz. Counsel for Eufemio opposed the motion. The trial
court dismissed the case.

Issues:

1.) Does the death of the plaintiff before final decree, in an action for legal
separation, abate the action?

2.) If it does, will abatement also apply if the action involves property rights?

Held:

1.) An action for legal separation which involves nothing more than the bed-
and-board separation of the spouses is purely personal. The Civil Code of the
Philippines recognizes this in its Article 100 (Art. 56, FC), by allowing only the
innocent spouse (and no one else) to claim legal separation; and in its Article
108 (Art. 66, FC), by providing that the spouses can, by their reconciliation,
stop or abate the proceedings and even rescind a decree of legal separation
already rendered. Being personal in character, it follows that the death of one
party to the action causes the death of the action itself — actio personalis
moritur cum persona.

.. When one of the spouses is dead, there is no need for divorce, because the
marriage is dissolved. The heirs cannot even continue the suit, if the death of
the spouse takes place during the course of the suit. The action
is absolutely dead (Cass., July 27, 1871, D. 71. 1. 81; Cass. req., May 8,
1933, D. H. 1933, 332.")

2.) Yes. A review of the resulting changes in property relations between

spouses shows that they are solely the effect of the decree of legal
separation; hence, they can not survive the death of the plaintiff if it occurs
prior to the decree.

From Article 106 (Art. 63, FC) it is apparent that the right to the dissolution of
the conjugal partnership of gains (or of the absolute community of property),
the loss of right by the offending spouse to any share of the profits earned by
the partnership or community, or his disqualification to inherit by intestacy
from the innocent spouse as well as the revocation of testamentary provisions
in favor of the offending spouse made by the innocent one, are all rights
and disabilities that, by the very terms of the Civil Code article, are vested
exclusively in the persons of the spouses; and by their nature and intent, such
claims and disabilities are difficult to conceive as assignable or transmissible.
Hence, a claim to said rights is not a claim that "is not thereby extinguished"
after a party dies, under Section 17, Rule 3, of the Rules of Court, to
warrant continuation of the action through a substitute of the deceased party.
A further reason why an action for legal separation is abated by the death of
the plaintiff, even if property rights are involved, is that these rights are mere
effects of decree of separation, their source being the decree itself; without
the decree such rights do not come into existence, so that before the finality of
a decree, these claims are merely rights in expectation. If death supervenes
during the pendency of the action, no decree can be forthcoming, death
producing a more radical and definitive separation; and the expected
consequential rights and claims would necessarily remain unborn. (Lapuz Sy
vs. Eufemio, G.R. No. L-30977, January 31, 1972)