Philippine Supreme Court Jurisprudence

1. DEBTS AND DEBTORS; PAYMENT; TRANSFER OF OWNERSHIP. — Plaintiff being indebted to A, after several intermediate contracts of guaranty, finally executed an agreement under which he delivered to his creditor certain property by which the balance of debt was to be paid in case of default. After the death of A, plaintiff brought an action against the administrator to recover the property and offered to pay the balance in cash. Defendant claimed that the property was delivered to his intestate in payment of the debt, and that the deceased became the owner thereof: Held, That the delivery of the property by the plaintiff was intended to operate as payment and as a transfer of the same to the creditor.

This is an appeal from a decision of the Court of First Instance of the Province of Iloilo. The undisputed facts in the case seem to be as follows:clubjuris

On the 13th day of May, 1887, the plaintiff was indebted to one Petronila Espino in the sum of P2,705. On that day the plaintiff executed and delivered to the defendant two contracts (Exhibits A and B), one denominated a special mortgage (Exhibit A) upon certain parcels of land mentioned in paragraph 4 of the complaint filed in this case, numbered 4, 5, 6, and 7 as subparagraphs of said paragraph 4, for the purpose of guaranteeing the payment of the sum of P745, with interest at 25 per cent.

On the same day the plaintiff executed and delivered to the defendant another contract, denominated una venta con pacto de retro de terrenos y bienes (a sale with right of repurchase of. lands and property), upon certain property mentioned in said paragraph 4 of the complaint filed in said cause, numbered 1, 2, 3, 8, and 9 in said paragraph 4, for the purpose of securing the payment of the sum of P1,960.

On the 20th day of July, 1894, the plaintiff and defendant had a settlement of their accounts and it was then found that the plaintiff was still indebted to the defendant in the sum of P2,000.

On this latter date the plaintiff executed and delivered to the defendant another contract (Exhibit 1) by the terms of which the plaintiff recognized his indebtedness to the defendant in the said sum of P2,000 therein, and promised to pay said indebtedness in four years as follows: P500 to be applied on the principal, and P200 interest in the month of June of each of the years 1895, 1896, 1897 and 1898. Said contract contained the further provision:ClubJuris

"2. In case that the four above-mentioned periods expire without his indebtedness of two thousand pesos to Petronila Espino having been paid by said Pasaporte, the sum hereinbefore paid by said Pasaporte on account of his debt shall not be applied in payment thereof but only as an amount delivered to the creditor as damages for not having complied with the promises above stated, and the mortgage existing upon the properties mentioned in the two instruments shall be executed in accordance with the stipulations therein made, and he will return, without any objection, all that has been enumerated with the single exception of one mill, it having been already sold and the price delivered to and acknowledged by said Petronila; he, the said Pasaporte, also promised that he would not participate in the improvements made by him on the land and on the mill, should he fail to comply with his promise above stated." clubjuris

On the 15th day of August, 1898, the indebtedness not having been fully paid in accordance with the terms of said contract of the 20th of July, 1894, the plaintiff executed and delivered the following contract, by which he delivered to the defendant Espino all of the property except a part of the personal property which was mentioned in paragraph 2 of said contract (the 15th of August, 1898)

"We, Don Juan Pasaporte, a native and resident of the town of Pototan, and Doña Petronila Espino, a native of the town of Dueñas and resident of this town, have made and executed this agreement, in duplicate, by virtue of the conditions stipulated in the private document executed in the town of Janiuay on the 20th day of July, of the year eighteen hundred and ninety-four, and of those two instruments executed in this town on the 13th day of May, of the year eighteen hundred and eighty-seven, under the following conditions:ClubJuris

"1. The said Pasaporte, from the date of this instrument, conveys and delivers to the said Espino the following-described properties:ClubJuris

"(a) A parcel of land situated in Guibuanngan del Bangac toward the River Suagne, jurisdiction of this pueblo, of an area of about 3 gantas corn seed, provincial measure; bounded on the north by the lands of Pantaleon Patanao and Gregorio Perdosa; on the south by the lands of Blas Borras, Juan Pasaporte, and Francisco Labrador; on the east by that of Nisario Patani; and on the west by that of the said Perdosa.

"(b) A parcel of land of an area of two and a half gantas of corn by the same measure, situated in Guimacas, jurisdiction of the pueblo of Pototan, bounded on the north by the River Suagne; on the south and the east by lands of Anastasio Pillo; and on the west by those of Agustin

"(c) A parcel of land of an area of about six gantas corn seed the same measure, situated in Bangac, jurisdiction of this pueblo, also bounded on the north by lands of Antonio Cordero; on the south by the River Suagne; on the east by lands of Gregorio Perdosa and Joaquin Magos; and on the west by those of Juan Magbanua.

"(d) A parcel of land of an area of two gantas of corn by the same measure, in the sitio of Bangac toward the River Suagne, jurisdiction of this pueblo, bounded on the north by lands of Gregoria Pangantijon; on the south by those of Rufo Fernandez; on the east by those of Benita Prieto; and on the west by those of Nisario Patani.

"(e) A parcel of land in the same sitio, of an area of one and a half gantas of corn, by the same measure, bounded on the north by lands of Francisco Pudadera; on the south by those of Patricio Jabalde; on the east by the River Suagne; and on the west by lands of Benita Prieto.

"(f) A parcel of land of an area of two cavanes of seed of paddy, provincial measure, toward the western part of this town, bounded by lands of Gregorio Pradas and Vicente Pelaez; on the south by those of Petronila Espino and of the deceased Marciano Gabalde; and on the west by those of Felipe Magos.

"(g) A parcel of land of an area of two cavanes of paddy, by provincial measure, situated at the head of the small River Salngan, jurisdiction of this pueblo, bounded on the north by lands of Camilo Quiamba; on the south by those of Patricio Gabalde, Raymundo Raquitizo, and Fernando Poblacion; on the east by those of Antonio Pelaez and the deceased Zerrudo; and on the west by those of Juana Periche.

"(h) A parcel of land occupied by an iron mill of third class, of an area of two gantas of paddy, bounded on the north, south and west by the roads; on the east by the land of the same Pasaporte.

"(i) Ten carabaos of second-class, two bulls, two camarines and four cauas with their tiajoys and further accessories required for the mill.

"‘2. The ten carabaos, one bull, and three carts will be delivered by the said Pasaporte as soon as the animals have recovered from their sickness and the carts are repaired." clubjuris

Sometime after the execution and delivery of the above contract, Petronila Espino died and Domingo Marin was duly appointed as administrator of the estate.

On the 8th of July, 1905, the plaintiff commenced an action in the Court of First Instance of the city of Iloilo against the said administrator, for the purpose of recovering the property mentioned in the contract of the 15th of August, 1898, offering at the same time to pay the sum of P2,000, the amount of the indebtedness which existed in favor of the defendant Petronila Espino. On the 6th of December, 1905, the defendant answered the complaint of the plaintiff and alleged that, by the terms of the contract of the 15th of August, 1898, all of the property mentioned in paragraph 4 of the complaint, described in the two contracts of May 13 (Exhibits A and B) was delivered to the defendant, except the property mentioned in paragraph 2 of said contract (August 15, 1898), for the purpose of paying in full the indebtedness existing between the plaintiff and defendant, and that, by such delivery, the defendant became the absolute owner of such property. The defendant further set up the counterclaim against the plaintiff, attempting to recover the value of the property which the plaintiff had failed to deliver and which he had promised to deliver, in accordance with paragraph 2 of the said contract of August 15, 1898.

The cause was duly submitted to the lower court, and, after a full consideration of the facts submitted during the trial, the court rendered a judgment against the plaintiff and in favor of the defendant for the sum of P95 and costs.

The lower court held that the delivery of the property mentioned in said contract of August 15, 1898, was in payment of the indebtedness existing between the parties, and it was intended and understood by the parties then that such property should become absolutely the property of Petronila Espino, and that said indebtedness should be all extinguished when the balance of the property mentioned in paragraph 2 of said contract should also be delivered.

The lower court also found that five of the carabaos mentioned in said paragraph 2 had been delivered by the plaintiff to the defendant in the year 1898, and that the other five had died without any fault on the part of the plaintiff. The court further found that the plaintiff had not delivered to the defendant, in accordance with the terms of the contract, los carros y el vacuno (the carts and the bull) mentioned in said paragraph 2 and that the value of the same was P95. From the judgment of the lower court the plaintiff appealed and made the following assignments of error:clubjuris

First. The court erred in admitting as proof Exhibits A and B, [of the appellee] after having admitted as proof, without opposition, Exhibits 1 and 2 [of the appellant].

Second. The court committed an error in holding that, by Exhibit 2 (contract of August 15, 1898), the plaintiff delivered the property mentioned therein in payment of his debt.

Third. The court committed an error in condemning the plaintiff to pay the sum of P95, the value de los carros y un vacuno (of the carts and one bull).

Fourth. The court committed an error in not declaring null the two contracts Exhibits A and B.

With reference to the first assignment of error, we are of the opinion, and so hold, that the lower court committed no error in allowing them to be admitted as proof, for the reason that they were introduced in evidence for the purpose of proving an express allegation made by the defendant in his answer. The defendant also makes reference to said contracts in the second paragraph of his complaint. The defendant having the right to allege the fact as a defense, had the right to prove it by any material and relevant evidence. These contracts being the best proof, they were admissible as evidence, and the court committed no error in admitting them, even though Exhibits 1 and 2 had been admitted before that time.

With reference to the second assignment of error, the parties themselves, in the prelude to the said contract, said that the same was made "by virtue of the conditions in the private document made by us . . . on the twentieth day of July, 1894 and of the two deeds made by us . . . on the thirteenth of May, 1887." clubjuris

By reference to paragraph 2 of the contract of July 20, 1894, it will be seen that the defendant, in case of a default of payment of the indebtedness mentioned therein, had a right to take possession of the property mentioned in this contract in payment of said indebtedness, which right was expressed in the following terms: "The mortgage existing upon the properties mentioned in the two instruments shall be executed in accordance with the stipulations therein made, and he will return, without any objection, all that has been enumerated." clubjuris

By reference to Exhibits A and B, the first a special mortgage and the second a pacto de retro, it will be seen that the defendant had a special claim upon the property in question. This claim was expressly recognized in the contract of July 20, 1894, and the plaintiff there expressly relinquished his right to said property in case the indebtedness was not paid, in accordance with the terms of that contract and in case the said property should be delivered to the defendant.

We are of the opinion, therefore, and so hold, that, when Exhibits A and B, and 1 and 2 were considered together, it was the intention of the plaintiff, at the time he delivered the property to the defendant, under the terms of the contract of August 15, 1898, that said property should be in absolute payment of his indebtedness and that the defendant should become the owner of the same.

Holding as we do that, by virtue of the contracts mentioned above, the defendant became the owner of said property, the plaintiff, under his promise to deliver the same to the defendant, became liable for his failure so to do. No objection has been made concerning the value which the lower court fixed upon said property. We are of the opinion, therefore, that the lower court made no error in rendering judgment against the plaintiff for the sum of P95.

With reference to the fourth assignment of error, it will be seen by a careful reading of the decision of the lower court, that the said court did not pass upon the question whether or not said contracts A and B had been annulled. This question was in no form presented to the court and there is nothing in the record which in any way tends to show that the defendant had waived his right to the possession of the property under and by the terms of said contracts A and B. The subsequent contracts of July 20, 1894, and August 15, 1898, were in recognition of the rights of the defendant created in the contracts A and B.

We are of the opinion that the lower court committed no error in his conclusions and therefore, the judgment and order of the lower court are hereby affirmed, with costs. So ordered.

Arellano, C.J., Torres, Mapa, Carson Willard and Tracey, JJ., concur.