2/4/2017 [G.R. No. L-7377. January 31, 1956.] GREGORIO ARANETA, INC., Plaintiff-Appellant, vs.

PAZ TUASON DE PATERNO and JOSE VIDAL, Defendants-Ap

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PhilippineSupremeCourtJurisprudence>Year1956>January1956Decisions>[G.R.No.L7377.January31,
1956.] GREGORIO ARANETA, INC., PlaintiffAppellant, vs. PAZ TUASON DE PATERNO and JOSE VIDAL,
DefendantsAppellees.:

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FIRSTDIVISION
ChanRoblesOnLineBarReview [G.R.No.L7377.January31,1956.]
GREGORIOARANETA,INC.,Plain Appellant,vs.PAZTUASONDEPATERNOandJOSEVIDAL,
DefendantsAppellees.

DECISION
CONCEPCION,J.:
ThisisanappealfromadecisionoftheCourtofFirstInstanceofManila,uponarehearingheldin
compliancewithourdecision,datedAugust22,1952,incaseG.R.No.L2886,en tledGregorio
Araneta,Inc.vs.PazTuasonVda.dePaternoandJoseVidal.Themainfactsaresetforthinour
aforemen oneddecision,fromwhichwequote: chanroblesvirtuallawlibrary

Thisisathreecorneredcontestbetweenthepurchaser,theseller,andthemortgageeofcertain
por ons(approximately40,703squaremeters)ofabigblockofresiden allandinthedistrictof
SantaMesa,Manila.ThePlain ,whichisthepurchaser,andthemortgageeelevatedthisappeal.
Though not an Appellant, the seller and mortgagor has made assignments of error in her brief,
sometostrengthenthejudgmentandothersforthepurposeofnewtrial.
Thecaseisextremelycomplicatedandmul pleissueswereraised.
Thesalientfactsinsofarastheyarenotcontrovertedarethese.PazTuasondePaternoisthe
registeredowneroftheaforesaidlandwhichwassubdividedintocitylots.Mostoftheselotswere
DebtKollectCompany,Inc.
occupiedbylesseeswhohadcontractsofleasewhichweretoexpireonDecember31,1953,and
carriedas pula ontotheeectthatintheeventtheownerandlessorshoulddecidetosellthe
property,thelesseesweretobegivenpriorityoverotherbuyersiftheyshoulddesiretobuytheir
leaseholds,allthingsbeingequal.Smallerlotswereoccupiedbytenantswithoutaformalcontract.
In 1940 and 1941 Paz Tuason obtained from Jose Vidal several loans totalling P90,098 and
cons tuted a rst mortgage on the aforesaid property to secure the debt. In January and April,
1943, she obtained addi onal loans of P30,000 and P20,000 upon the occasions the previous
contract of mortgage was renewed and the amounts received were consolidated. In the rst
novatedcontractthe meofpaymentwasxedattwoyearsandinthesecondandlastatfour
years.Newcondi onsnotrelevantherewerealsoincorporatedintothenewcontracts.
There was, besides, a separate wri en agreement en tled Penalidad del Documento de
NovaciondeEstaFechawhich,unliketheprincipalcontracts,wasnotregistered.Thetenorofthis
separate agreement, all copies, of which were alleged to have been destroyed or lost, was in
disputeandbecamethesubjectofconic ngevidence.Thelowercourtdidnotmakecategorical
ChanRoblesIntellectualProperty ndings on this point, however, and it will be our task to do so at the appropriate place in this
Division decision.

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2/4/2017 [G.R. No. L-7377. January 31, 1956.] GREGORIO ARANETA, INC., Plaintiff-Appellant, vs. PAZ TUASON DE PATERNO and JOSE VIDAL, Defendants-Ap
January-1956 Jurisprudence
[G.R. No. L7900. January 12, 1956.] CIRIACO
TIGLAO, ET AL., PlaintiffsAppellees, vs. THE MANILA
RAILROADCOMPANY,DefendantAppellant.
[G.R. No. L10030. January 18, 1956.] NAMARCO,
Petitioner, vs. HONORABLE JUDGE HIGINIO B.
MACADAEG,oftheCourtofFirstInstanceofManilaand
KHOKUNCOMMERCIAL,Respondents.
[G.R.No.L8324.January 19,1956.]JOSEBARADI
and SABINA BONITA, PlaintiffsAppellees, vs. MANUEL
IGNACIO, GERONIMA RESMAL, MARCELINO IGNACIO
andCOSMEIGNACIO,DefendantsAppellants.
[G.R. No. L7900. January 12, 1956.] CIRIACO
TIGLAO, ET AL., PlaintiffsAppellees, vs. THE MANILA
RAILROADCOMPANY,DefendantAppellant.
[G.R. No. L10030. January 18, 1956.] NAMARCO,
Petitioner, vs. HONORABLE JUDGE HIGINIO B.
MACADAEG,oftheCourtofFirstInstanceofManilaand
KHOKUNCOMMERCIAL,Respondents.
[G.R.No.L8324.January 19,1956.]JOSEBARADI
and SABINA BONITA, PlaintiffsAppellees, vs. MANUEL
IGNACIO, GERONIMA RESMAL, MARCELINO IGNACIO
andCOSMEIGNACIO,DefendantsAppellants.
[G.R. No. L9688. January 19, 1956.] RAFAEL J.
CASTRO, Petitioner, vs. VALERIANO M. GATUSLAO,
Acting Provincial Governor of Negros Occidental,
Respondent.
[G.R.No.L7086.January20,1956.]NGOSENG,ET
AL., Petitioners, vs. RAFAEL FERNANDEZ, ET AL.,
Respondents.
[G.R. No. L7280. January 20, 1956.] TAN LIAO,
PlaintiffAppellant, vs. AMERICAN PRESIDENT LINES,
LTD.,DefendantAppellee.
[G.R. No. L7974. January 20, 1956.] THE PEOPLE
OF THE PHILIPPINES, PlaintiffAppellee,
http://www.chanrobles.com/cralaw/1956januarydecisions.php?id=26
In 1943 Paz Tuason decided to sell the en re property for the net amount of P400,000 and
entered into nego a ons with Gregorio Araneta, Inc. for this purpose. The result of the
nego a onswastheexecu ononOctober19,1943,ofacontractcalledPromesadeCompray
Ventaandiden edasExhibit1.Thiscontractprovidedthatsubjecttothepreferredrightofthe
lesseesandthatofJoseVidalasmortgagee,PazTuasonwouldselltoGregorioAraneta,Inc.and
thela erwouldbuyforthesaidamountofP400,000theen reestateundertheseterms.
Elprecioserapagadocomosigue: un40porcientojuntamenteconlacartadeacceptaciondel
chanroblesvirtuallawlibrary
arrendatario, un 20 por ciento del precio al otorgarse la escritura de compromiso de venta, y el
remanente40porcientoalotorgarselaescrituradeventadeni va,lacualseraotorgadadespues
de que se hubiese cancelado la hipoteca a favor de Jose Vidal que pesa sobre dichos lotes. La
comisiondel5porcientoquecorrespondeaJoseAranetaserapagadaalotorgarselaescriturade
compromisodeventa.
Paz Tuason se obliga a entregar mediante un propio las cartas que dirigira a este efecto a los
arrendatarios,deconformidadconelformularioadjunto,quesemarcacomoApendiceA.
Expirado el plazo arriba mencionado, Paz Tuason otorgara las escrituras correspondientes de
ventaalosarrendatariosquehayandecididocomprarsusrespec voslotes.
9.Losalquilerescorrespondientesaesteaoseprorratearanentrelavendedorayelcomprador,
correspondiendoelcompradorlosalquilerescorrespondientesaNoviembreyDiciembredeeste
ao,yasimismoseraporcuentadelcompradorelamillaramientocorrespondienteadichosmeses.
10.PazTuason,reconocehaberrecibidoenesteactodeGregorioAraneta,Inc.,lasumadeCiento
Noventa Mil Pesos (P190,000) como adelanto del precio de venta que Gregorio Araneta, Inc.,
tuvierequepagaraPazTuason.
Lacan dadquePazTuasonrecibeenesteactoseraaplicadaporellaasaldarsudeudaconJose
Vidal,losamillaramientos,sobreelterrenocuyopagoyahanvencidoysoloelsaldoquequedare
serau lizadoporPazTuasonparaotrosnes.
11. Una vez determinado los lotes que Paz Tuason podra vender a Gregorio Araneta, Inc., Paz
Tuazonotorgaraunaescrituradeventadeni vasobredichoslotesafavordeGregorioAraneta,
Inc.
Gregorio Araneta, Inc., pagara el precio de venta como sigue: 90 por ciento del mismo al
chanroblesvirtuallawlibrary
otorgarselaescrituradeventadeni vadescontandosedelacan dadqueentoncessetengaque
pagar el adelanto de P190,000 que se entrega por virtud de esta escritura. El 10 por ciento
remanente se pagara a Paz Tuason, una vez que se haya cancelado la hipoteca que pesa
actualmentesobreelterreno.
Noobstantelodispuestoenelparrafo8,cualquierarrendatarioquedecidacomprarelloteque
ocupaconcontratodearrendamientopodraoptarporpedirelotorgamientoinmediatoasufavor
delaescrituradeventadeni vapagandoenelactoel50porcientodelprecio(ademasdel40
por ciento que debio incluir en su carta de aceptacion) y el remanente de 10 por ciento
inmediatamentedespuesdecancelarselahipotecaquepesasobreelterreno.
12. Si la mencionada can dad de P190,000 excediera del 90 por ciento de la can dad que
Gregorio Araneta, Inc., tuviere que pagar como precio de venta de los lotes que Paz Tuason
pudierevenderadichocomprador,elsaldoseradelascan dadesquerecibadeloserrendatarios
comopreciodeventa.
In furtherance of this promise to buy and sell, le ers were sent the lessees giving them un l
August 31, 1943, an op on to buy the lots they occupied at the price and terms stated in said
le ers.Mostofthetenantswhoheldcontractsofleasetookadvantageoftheopportunitythus
extendedanda ermakingthes pulatedpaymentsweregiventheirdeedsofconveyance.These
sales,asfarastherecordwouldshow,havebeenrespectedbytheseller.
Withtheelimina onofthelotssoldortobesoldtothetenantsthereremainedunencumbered
except for the mortgage to Jose Vidal, Lots 1, 816 and 18 which have an aggregate area of
14,810.20 square meters; and on December 2, 1943, Pas Tuason and Gregorio Araneta, Inc.,
chan roblesvirtualawlibrary
executed with regard to these lots an absolute deed of sale, the terms of which, except in two
respects,weresimilartothoseofthesalestothelessees.Thisdeed,copyofwhichisa achedto
thePlain scomplaintasExhibitA,provided,amongotherthings,asfollows:
chanroblesvirtuallawlibrary
TheaforesaidlotsarebeingsoldbytheVendortotheVendeeseparatelyatthepricesmen oned
in paragraph (6) of the aforesaid contract en tled Promesa de Compra y Venta, making a total
sum of One Hundred ThirtyNine Thousand EightyThree Pesos and Thirtytwo centavos
(P139,083.32),ninety(90%)percentofwhichamount,i.e.,thesumofOneHundredTwentyve
Thousand One Hundred Seventyfour Pesos and Ninetynine centavos (P125,174.99), the Vendor
acknowledges to have received by virtue of the advance of One Hundred Ninety Thousand
(P190,000)PesosmadebytheVendeetotheVendorupontheexecu onoftheaforesaidcontract
en tledPromesadeComprayVenta.ThebalanceofSixtyfourThousandEightHundredTwenty
vePesosandOnecentavo(P64,825.01)betweenthesumofP190,000advancedtotheVendor
and the aforesaid sum of P125,174.99, has been returned by the Vendor to the Vendee, which
amounttheVendeeacknowledgestohavereceivedbythesepresents;
The aforesaid sum of P190,000 was delivered by the Vendee to the Vendor by virtue of four
checksissuedbytheVendeeagainsttheBankofthePhilippineIslands,asfollows: chanroblesvirtuallawlibrary
vs. No.C286445infavorofPazTuasondePaternoP13,476.62
2/9
2/4/2017 [G.R. No. L-7377. January 31, 1956.] GREGORIO ARANETA, INC., Plaintiff-Appellant, vs. PAZ TUASON DE PATERNO and JOSE VIDAL, Defendants-Ap
BOANERJESM.VENTURANZA,ETAL.,Defendants.JOSE No.C286444infavoroftheCityTreasurer,
Y.TORRES,Appellant.

[G.R. No. L7260. January 21, 1956.] PHILIPPINE

Manila3,373.38
EXECUTIVE COMMISSION (now REPUBLIC OF THE
PHILIPPINES), PlaintiffAppellant, vs. PROCESO No.C286443infavorofJoseVidal30,000.00
ESTACIO,DefendantAppellee.
No.C286442infavorofJoseVidal143,150.00
[G.R. No. L9860. January 21, 1956.] BENITO
MONTINOLA, Petitioners, vs. THE HONORABLE TotalP190,000.00
COMMISSIONONELECTIONS,Respondent.
The return of the sum of P64,825.01 was made by the Vendor to the Vendee in a liquida on
[G.R. No.L6536.January 25, 1956.] EMILIANON.
RAMIREZ, Petitioner, vs. THE COURT OF APPEALS and whichreadsasfollows: chanroblesvirtuallawlibrary

OLGAMULLERNEASE,assistedbyherhusbandDARIUS
NEASE,Respondents. Hemos recibido de Da. Paz Tuazon de Paterno la can dad de Sesenta y Cuatro mil Ochocientos
Ven cincoPesosyunCen mo(P64,825.01)enconceptodedevolucionquenoshacedelexceso
[G.R.No.L8550.January 25,1956.]In thematter
of the petition of TIU PENG HONG to be admitted as delopagadoaelladeP190,000.00
citizen of the Philippines. TIU PENG HONG, Petitioner
Appellee, vs. REPUBLIC OF THE PHILIPPINES, Menosel90%deP139,083.32,importedeloslotes
OppositorAppellant.
quevamosacomprar125,174.90
[G.R. No. L9174. January 25, 1956.] JOAQUIN
LEDESMA, in his capacity as Mayor of Cadiz, Negros __________
Occidental, and the MUNICIPALITY OF CADIZ, Negros
Occidental, Petitioners, vs. HONORABLE JOSE
TEODORO, SR., Judge of the Court of First Instance of
ExcesoP64,825.01
NegrosOccidental,JOSEAZCONA,ProvincialSheriffEx
Officio of Negros Occidental, and JOSE AGAPUYAN, ChequeBIFNo.D442988deSimpliciodelRosario21,984.20
Respondents.
ChequePNBNo.177863KdeL.E.Dumas21,688.60
[G.R. No. L6587. January 27, 1956.] THE PEOPLE
OF THE PHILIPPINES, PlaintiffAppellee, vs. ChequePNBNo: 267682KdeAlfonsoSycip20,000.00
chanroblesvirtuallawlibrary

GAUDENCIO DE JOYA Y CAPACIA, ET AL., Defendants,

RICARDOHORNALESYYAMBAO,DefendantAppellant. ChequePNBNo.83940deJosenadePabalan4,847.45
[G.R. No. L7562. January 30, 1956.] THE PEOPLE BilletesrecibidosdeAlfonsoSycip42.96
OF THE PHILIPPINES, PlaintiffAppellee, vs.
VlCTORIANO FRANCISCO Y MARTIN, Defendant
Appellant.
__________

[G.R.Nos.L932223.January30,1956.]TEODORO P68,563.21
TANDA, PlaintiffAppellant, vs. NARCISO N. ALDAYA,
DefendantAppellee. Menoslascomisionesde5%recibidesde
[G.R. No. L5405. January 31, 1956.] ERNESTO M. JosenadePabalanP538.60
GUEVARA, Petitioner, vs. ROSARIO GUEVARA and
PEDROC.QUINTO,Respondents. L.E.Dumas1,084.43
[G.R. No. L6251. January 31, 1956.] LEONORA AngelaS.Tuason1,621.943,244.97
MANAOIS, ET AL., Petitioners, vs. JOSE ZAMORA, ET
AL.,Respondents.
__________
[G.R. No. L6423. January 31, 1956.] AYALA Y
COMPAIA, PlaintiffAppellee, vs. JOSEPH ARCACHE, P65,318.24
DefendantAppellant.
MenoschequeBIFNo.C288642afavordeD.Paz
[G.R. No. L6662. January 31, 1956.] PHILIPPINE
NATIONAL BANK, PlaintiffAppellee, vs. DALMACIO TuasondePaternoqueleentregamoscomoexceso493.23
CATIPON,DefendantAppellant.
___________
[G.R. No. L6741. January 31, 1956.]
INTERPROVINCIAL AUTOBUS CO., INC., Petitioner, vs. P64,825.01
COLLECTOROFINTERNALREVENUE,Respondent.

[G.R. No. L6843. January 31, 1956.] THE

___________
NATIONAL CITY BANK OF NEW YORK, Petitioner, vs.
NATIONAL CITY BANK EMPLOYEES UNION, Manila.Noviembre2,1943.
Respondent.
GREGORIOARANETA,INCORPORATED
[G.R. No. L6903. January 31, 1956.] LIBRADA
PROCESO DESPO, PetitionerAppellee, vs. HONORABLE Por:
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ANDRESSTA.MARIA,ETAL.,RespondentsAppellants.
(Fdo.)JOSEARANETA
[G.R. No. L7377. January 31, 1956.] GREGORIO
ARANETA,INC.,PlaintiffAppellant,vs.PAZTUASONDE Presidente
PATERNOandJOSEVIDAL,DefendantsAppellees.

[G.R.Nos.L74727477.January31,1956.]PEOPLE
RecibidochequeNo.C288642BIFP493.23
OF THE PHILIPPINES, PlaintiffAppellee, vs. SERGIO
VILLANUEVA, ET AL., accused. IGMIDIO CAMAGONG, Por:
chanroblesvirtuallawlibrary

MELECIO PAKINGAN, BIENVENIDO MOJICA, RICARDO

GONZALES, MARCIANO TIMBANG, and SERAFIN
TIMBANG,DefendantsAppellants.
[G.R. No. L7496. January 31, 1956.] CALTEX
(PHILIPPINES)INC.,Petitioner,vs.KATIPUNANLABOR
UNION,Respondent.
[G.R. No. L7663. January 31, 1956.] ENRIQUE
ZOBEL, Petitioner, vs. ELIGIO A. ABREU, as Justice of
the Peace of Calatagan, Batangas and GUILLERMO
MERCADO,Respondents.
[G.R. No. L8010. January 31, 1956.] LOPEZ INC.,
represented by DAVID DE LEON in his capacity as in
charge,PlaintiffAppellant,vs.PHILIPPINE&EASTERN
TRADINGCO.,INC.,DefendantAppellant.
[G.R. No. L8221. January 31, 1956.] EDUARDO
MANLAPAT, PlaintiffAppellant, vs. SIMEON SALAZAR,
DefendantAppellee.
[G.R. Nos. L9320 & L9321. January 31, 1956.]
ALIPIO N. CASILAN and RITA GALAGNARA, Plaintiffs
Appellants, vs. RAYMOND TOMASSI, ET AL.,
DefendantsAppellees.
[G.R. No. L9669. January 31, 1956.] NICANOR G.
SALAYSAY, Acting Municipal Mayor of San Juan del
(Fdo.)M.J.GONZALEZ
In view of the foregoing liquida on, the Vendor acknowledges fully and uncondi onally, having
receivedthesumofP125,174.99ofthepresentlegalcurrencyendherebyexpresslydeclaresthat
shewillnotholdtheVendeeresponsibleforanylossthatshemightsuerduetothefactthattwo
ofthecheckspaidtoherbytheVendeewereissuedinfavorofJoseVidalandthela erhas,upto
thepresent me,notyetcollectedthesame.
Theten(10%)percentbalanceofthepurchasepricenotyetpaidinthetotalsumofP13,908.33
willbepaidbytheVendeetotheVendorwhentheexis ngmortgageoverthepropertysoldby
theVendortotheVendeeisdulycancelledintheoceoftheRegisterofDeeds,orsooneratthe
op onoftheVendee.
ThisDeedofSaleisexecutedbytheVendorfreefromallliensandencumbrances,withtheonly
excep onoftheexis ngleasecontractsonparcelsNos.1,10,11,and16,whichleasecontracts
will expire on December 31, 1953, with the understanding, however, that this sale is being
executedfreefromanyop onorrightonthepartofthelesseestopurchasethelotsrespec vely
leasedbythem.
ItisthereforeclearlyunderstoodthattheVendorwillpaytheexis ngmortgageonherproperty
infavorofJoseVidal.

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2/4/2017 [G.R. No. L-7377. January 31, 1956.] GREGORIO ARANETA, INC., Plaintiff-Appellant, vs. PAZ TUASON DE PATERNO and JOSE VIDAL, Defendants-Ap
Monte, Rizal, Petitioner, vs. HONORABLE FRED RUIZ The liquida on of the amounts respec vely due between the Vendor and the Vendee in
CASTRO,ExecutiveSecretary,OfficeofthePresidentof
the Philippines, HONORABLE WENCESLAO PASCUAL, connec on with the rents and real estate taxes as s pulated in paragraph (9) of the contract
Provincial Governor of Rizal, and DOCTOR BRAULIO en tled Promesa de Compra y Venta will be adjusted between the par es in a separate
STO.DOMINGO,Respondents.
document.
Should any of the aforesaid lessees of lots Nos. 2, 3, 4, 5, 6, 7, 9 and 17 fail to carry out their
respec ve obliga ons under the op on to purchase exercised by them so that the rights of the
lesseetopurchasetherespec vepropertyleasedbyhimiscancelled,theVendorshallbebound
to sell the same to the herein Vendee, Gregorio Araneta, Incorporated, in conformity with the
termsandcondi onsprovidedintheaforesaidcontractofPromesadeComprayVenta;
ThedocumentarystampstobeaxedtothisdeedwillbefortheaccountoftheVendorwhilethe
expensesfortheregistra onofthisdocumentwillbefortheaccountoftheVendee.
The remaining area of the property of the Vendor subject to Transfer Cer cate of Title Nos.
60471and60472,arelotsNos.2,3,4,5,6,7,9,and17,alloftheConsolida onoflotsNos.20
Best VPN for Philippines and117ofplanII4755,G.L.R.O.RecordNo.768.
Before the execu on of the above deed, that is, on October 20, 1943, the day immediately
Unblock Any Site, Try it Risk followingthesigningoftheagreementtobuyandsell,PazTuasonhadoeredtoVidalthecheck
Free. 100% Secure, High- for P143,150 men oned in Exhibit A, in full se lement of her mortgage obliga on, but the
mortgagee had refused to receive that check or to cancel the Mortgage, contending that by the
Speed Guaranteed! separateagreementbeforemen onedpaymentofthemortgagewasnottobeeectedtotallyor
expressvpn.com par allybeforetheendoffouryearsfromApril,1943.

BecauseofthisrefusalofVidals,PazTuason,throughA y.AlfonsoPonceEnrile,commencedan
ac onagainstthemortgageeinOctoberortheearlypartofNovember,1943.Therecordofthat
case was destroyed and no copy of the complaint was presented in evidence. A ached to the
complaintordepositedwiththeclerkofcourtbyA orneyPonceEnrilesimultaneouslywiththe
docke ng of the suit were the check for P143,150 previously turned down by Vidal, another
cer ed check for P12,932.61, also drawn by Gregorio Araneta, Inc., in favor of Vidal, and one
ordinarycheckforP30,000issuedbyPazTuason.Thesethreechecksweresupposedtocoverthe
wholeindebtednesstoVidalincludingtheprincipalandinterestuptothat meandthepenalty
providedintheseparateagreement.
Buttheac onagainstVidalnevercameonfortrialandtherecordandthechecksweredestroyed
duringthewaropera onsinJanuaryorFebruary,1945; andneitherwasthecaserecons tuted chanroblesvirtualawlibrary

a erward. This failure of the suit for the cancella on of Vidals mortgage, coupled with the
destruc on of the checks tendered to the mortgagee, the nullica on of the bank deposit on
whichthosecheckshadbeendrawn,andthetremendousriseofrealestatevaluefollowingthe
termina onofthewar,gaveoccasiontothebreakingooftheschemesoutlinedinExhibits1and
A; PazTuasona erlibera onrepudiatedthemforthereasonstobeherea ersetforth.
chanroblesvirtualawlibrary

The instant ac on was the oshoot, begun by Gregorio Araneta, Inc., to compel Paz Tuason to
deliver to the Plain a clear tle to the lots described in Exhibit A free from all liens and
encumbrances,andadeedofcancella onofthemortgagetoVidal.Vidalcameintothecasein
virtue of a summon issued by order of the court, and led a crossclaim against Paz Tuason to
foreclosehismortgage.
Itshouldbestatedattheoutsetthatallthepar esareinagreementthatVidalsloansares ll
outstanding. Paz Tuasons counsel concede that the tender of payment to Vidal was legally
defec ve and did not operate to discharge the mortgage, while the Plain is apparently
uninterestedinthisfeatureofthecaseconsideringthema eronelargelybetweenthemortgagor
andthemortgagee,althoughtoacertaindegreethisno onisincorrect.Atanyrate,thepointsof
discord between Paz Tuason and Vidal concern only the accrual of interest on the loans, Vidals
claim to a orneys fees and the applica on of the debt moratorium law which the debtor now
invokes.Thesema erswillbetakenupinthediscussionofthecontroversybetweenPazTuason
andJoseVidal.(49O.Gaz.,pp.4752.)
Briey,theissuesthenraisedwere: (1)whetherthedeedofsale,ExhibitA,wasvalidornot;
chanroblesvirtuallawlibrary chan

(2) who shall bear the loss in connec on with the cer ed checks of the Plain , for
roblesvirtualawlibrary

P143,150.00andP12,932.61,payabletoJoseVidal,whichwerenotcollectedbythela er; and chan roblesvirtualawlibrary

(3)whethersaidVidalwasen tledtoajudgmentoftheforeclosure.Wedecidedtherstandthird
issuesinthearma ve,andheldthatPlain GregorioAraneta,Inc.,shallbearthelossresul ng
from the noncollec on of said checks. The disposi ve part of our aforemen oned decision
reads: chanroblesvirtuallawlibrary

ThecontractofsaleExhibitAwasvalidandenforceable,butthelossofthechecksforP143,150
and P12,932.61 and invalida on of the corresponding deposit is to be borne by the buyer,
Gregorio Araneta, Inc. The value of these checks as well as the several payments made by Paz
Tuason to Gregorio Araneta, Inc. shall be deducted from the sum of P190,000 which the buyer
advancedtothesellerontheexecu onofExhibit1.
Thebuyershallbeen tledtotherentsonthelandwhichwasthesubjectofthesale,rentswhich
mayhavebeencollectedbyPazTuasona erthedateofthesale.
Paz Tuason shall pay Jose Vidal the amount of the mortgage and the s pulated interest up to
October 20, 1943, plus the penalty of P30,000, provided that the loans obtained during the
Japaneseoccupa onshallbereducedaccordingtotheBallantynescaleofpayment,andprovided
that the date basis of the computa on as to penalty is the date of the ling of the suit against
Vidal.
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2/4/2017 [G.R. No. L-7377. January 31, 1956.] GREGORIO ARANETA, INC., Plaintiff-Appellant, vs. PAZ TUASON DE PATERNO and JOSE VIDAL, Defendants-Ap
PazTuazonshallpaytheamountthatshallhavebeenfounddueunderthecontractsofmortgage
within90daysfromthe methecourtsjudgmentupontheliquida onshallhavebecomenal,
otherwisethepropertymortgagedshallbeorderedsoldasprovidedbylaw.
Vidals mortgage is superior to the purchasers right under Exhibit A, which is hereby declared
subjecttosaidmortgage.ShouldGregorioAraneta,Inc.beforcedtopaythemortgage,itwillbe
subrogatedtotherightofthemortgagee.
This case will be remanded to the court of origin with instruc on to hold a rehearing for the
purpose of liquida on as herein provided. The court also shall hear and decide all other
controversies rela ve to the liquida on which may have been overlooked in this decision, in a
mannernotinconsistentwiththeabovendingsandjudgment.
The mortgagor is not en tled to suspension of payment under the debt moratorium law or
orders.Amongotherreasons: thebulkofthedebtwasaprewarobliga onandthemoratorium
chanroblesvirtuallawlibrary

as to such obliga ons has been abrogated unless the debtor has suered war damages and has
ledclaimforthem; thereisnoallega onorproofthatshehas.Inthesecondplace,thedebtor
chanroblesvirtualawlibrary

herselfcausedhercreditortobebroughtintothiscasewhichresultedinthelingofthecross
claim to foreclose the mortgage. In the third place, prompt se lement of the mortgage is
necessarytothese lementofthedisputeandliquida onbetweenGregorioAraneta,Inc.andPaz
Tuason.Iffornootherreason,PazTuasonwoulddowelltoforegothebenetsofthemoratorium
law.
Thereshallbenospecialjudgmentastocostsofeitherinstance.(49O.Gaz.pp.6566.)
Upon subsequent denial of two mo ons for reconsidera on of said decision, the records were
remandedtotheCourtofFirstInstanceofManilaforarehearing,a erwhichsaidcourtrendered
adecisiontheper nentpartofwhichfollows: chanroblesvirtuallawlibrary

(a)ThePlain ,GregorioAraneta,Inc.,isorderedtopaytheDefendant,PazTuason,thesumof
P165,526.67;
(b) TheDefendant, Paz Tuason, is, likewise, ordered to pay Jose Vidal the sum of P155,938.42
within ninety (90) days from the entry of this judgment; and in default thereof, the property chan roblesvirtualawlibrary

mortgagedshallbesoldatpublicauc oninaccordancewiththeexis nglaw; and chanroblesvirtualawlibrary

(c)Withoutpronouncementastocosts.(JointRecordonAppeal,pp.3536.)
Plain GregorioAraneta,Inc.andDefendantPazTuasonappealedfromthisdecision,but,later
on,saidDefendantwithdrewherappeal,leavingPlain astheonlyAppellant.
The ques ons raised by the la er in its present appeal are: (a) whether the aforemen oned chanroblesvirtuallawlibrary

sumsofP143,150.00andP12,932.61shouldbepaidinthePhilippinecurrency,pesoforpeso,orin
itsequivalentundertheBallantynescale; (b)whether,inaddi onthereto,Plain should pay chan roblesvirtualawlibrary

DefendantPazTuason,theequivalent,undersaidscale,ofthesumofP16,999.31inJapanesewar
notes; and(c)whatistheamountduetoJoseVidalfromPazTuason.
chanroblesvirtualawlibrary

(1) Plain maintains that, being payable during the occupa on, said sums of P143,150.00 and
P12,932.61 should now be sa sed in its equivalent in Philippine currency, pursuant to the
Ballantynescale,asofthedatewhendue.Ontheotherhand,PazTuasonalleges,andthedecision
appealed from held, that payment should be made, peso for peso, in Philippine currency, said
amountsbeingintendedforthesa sfac onofthecreditofJoseVidal,whichmaturedandbecame
payablea erlibera on.WebelievethatPlain sconten oniswelltakenandthatthetheoryof
DefendantPazTuason,adoptedbythelowercourt,isuntenablebecause: chanroblesvirtuallawlibrary

(a) Plain s obliga on matured during the occupa on. The promise to sell, Exhibit 1, provided
thatpaymentwouldbemadeasfollows: chanroblesvirtuallawlibrary

11. Una vez determinado los lotes que Paz Tuason podra vender a Gregorio Araneta, Inc., Paz
Tuasonotorgaraunaescrituradeventadeni vasobredichoslotesafavordeGregorioAraneta,
Inc.
Gregorio Araneta, Inc., pagara el precio de venta como sigue: 90 por ciento del mismo al chanroblesvirtuallawlibrary

otorgarselaescrituradeventadeni vadescontandosedelacan dadqueentoncessetengaque

pagareladelantodeP190,000queseentregaenvirtuddeestaescritura10porcientoremanente
se pagara a Paz Tuason, una vez se haya cancelado la hipoteca que pesa actualmente sobre el
terreno.(49O.Gaz.,p.48.)
Thedeedofsale,ExhibitA,executedonDecember2,1943s pulated: chanroblesvirtuallawlibrary

TheaforesaidlotsarebeingsoldbytheVendortotheVendeeseparatelyatthepricesmen oned
in paragraph (6) of the aforesaid contract en tled Promesa de Compra y Venta, making a total
sum of One Hundred ThirtyNine Thousand Eightythree Pesos and Thirtytwo centavos
(P139,083.32),ninety(90%)percentofwhichamount,i.e.,thesumofOneHundredTwentyve
Thousand One Hundred Seventyfour Pesos and Ninetynine centavos (P125,174.99), the Vendor
acknowledges to have received by virtue of the advance of One Hundred Ninety Thousand
(P190,000)PesosmadebytheVendeetotheVendorupontheexecu onoftheaforesaidcontract
en tledPromesadeComprayVenta.ThebalanceofSixtyfourThousandEightHundredTwenty
vePesosandOnecentavo(P64,825.01)betweenthesumofP190,000advancedtotheVendor
and the aforesaid sum of P125,174.99, has been returned by the Vendor to the Vendee, which
amounttheVendeeacknowledgestohavereceivedbythesepresents.(49O.Gaz.,p.29; italics chanroblesvirtualawlibrary

supplied.)

http://www.chanrobles.com/cralaw/1956januarydecisions.php?id=26 5/9
2/4/2017 [G.R. No. L-7377. January 31, 1956.] GREGORIO ARANETA, INC., Plaintiff-Appellant, vs. PAZ TUASON DE PATERNO and JOSE VIDAL, Defendants-Ap
Infact,thecheckforP143,150.00waspartofthesumofP190,000.00advancedbyPlain toPaz
TuasononOctober19,1943,simultaneouslywiththeexecu onofExhibit1.Theothercheck,for
P12,932.61, was part of the sum of P13,908.33, paid by Plain to Paz Tuason, on February 12,
1944,asbalanceoftheprices pulatedinExhibitA.Inasmuchastheobliga onsrepresentedby
saidchecksfelldueandbecamepayableduringtheoccupa on,theamountsthereingivenshould
now be paid, pursuant to a long line of decisions of this Court, in its equivalent in Philippine
currency,asxedintheBallantynescale.(SeeDelaCruzvs.DelRosario,G.R.No.L4859,decided
onJuly24,1951; Arevalovs.Barreto,89Phil.,633; Wilsonvs.Berkenko er,92Phil.,918)
chanroblesvirtualawlibrary chanroblesvirtualawlibrary

(b)TheargumentofPazTuasontotheeectthatthecreditofVidalmatureda erlibera onand,

as a consequence, should be fully sa sed in Philippine currency, might have been good only
againstherselfasVidalsdebtor.*ItmaynotbeavailedofagainstPlain herein, which has no
juridicalrela onwhatsoeverwithVidal.Plain s obliga ons spring exclusively from its contract
withPazTuason,ExhibitA,towhichVidalwasnotaparty.Plain neverassumedtheobliga ons
ofPazTuasonunderthedeedofmortgageexecutedbyherinfavorofJoseVidal.Whatismore,
her contract with the Plain , specically provided that she not Plain would se le her
obliga onwithVidal.Thus,Exhibit1declares
Lacan dadquePazTuazonrecibeenesteactoseraaplicadaporellaasaldarsudeudaonJose
Vidal,losamillaramientos,sobreelterrenocuyopagoyahanvencidoysoloelsaldoquequedare
serau lizadoporPazTuasonparaotrosnes.(49O.Gaz.p.48; italicssupplied.) chanroblesvirtualawlibrary

Similarly,itiss pulatedinExhibitA: chanroblesvirtuallawlibrary

ItisthereforeclearlyunderstoodthattheVendorwillpaytheexis ngmortgageonherproperty
infavorofJoseVidal.(Ibid.,p.51; italicssupplied.) chanroblesvirtualawlibrary

Indeed,ExhibitAwasexecuteda erthelingofthecomplaintofPazTuasonagainstJoseVidal,on
accountofhisrefusaltoreceive,amongothers,thetwo(2)checksinques on,tenderedbyherin
paymentofthedebtsecuredbythemortgageinfavorofVidal.Itwasexpresslyagreeduponin
saidExhibitA: chanroblesvirtuallawlibrary

TheVendoracknowledgesfullyanduncondi onally,havingreceivedthesumofP125,174.99of
cralaw

the present legal currency and hereby expressly declares that she will not hold the Vendee
responsibleforanylosethatshemightsuerduetothefactthattwoofthecheckspaidtoherby
theVendeewereissuedinfavorofJoseVidalandthela erhas,uptothepresent me,notyet
collectedthesame.(Italicssupplied.)
Thus,sheclearlyassumedtheriskforanylossthatmightresultfromthefailureandrefusalof
Jose Vidal to receive and collect said checks, and, moreover, relieved the Plain from any
responsibilityinconnec ontherewith.
The cer ed checks in ques on were issued on October 19, 1943, and on February 12, 1944,
respec vely.Thelife meofbothwasninety(90)days,whichexpiredinJanuaryandMay,1944,
respec vely.Atthat mePlain shouldhave,accordingtoourrstdecision,issuednewchecks,
ordepositedthecorrespondingamounts,infavorofeitherJoseVidalorPazTuason.Inasmuchas
inJanuaryandMay,1944,eachpeso,Philippinecurrency,wasequivalenttofourpesosandtwelve
pesos, respec vely, in Japanese war notes, pursuant to the Ballantyne scale, it results that said
checks for P143,150.00 and for P12,932.61 in Japanese war notes represent P35,787.50 and
P1,077.71,respec vely,ortheaggregatesumofP36,863.22,inPhilippinecurrency,whichPlain
shouldnowpayDefendantPazTuason.
(2)Onthesecondques on,thedecisionappealedfromhadthefollowingtosay: chanroblesvirtuallawlibrary

Itisadmi edbyGregorioAraneta,Inc.andPazTuasonthattheamountofP47,825.70waspaid
by the former to the la er between October 19, 1943 and February 12, 1944. Likewise, it is
admi edthattheamountofP64,825.01,represen ngtheallegedexcessoftheoriginalpurchase
priceofP190,000.00waspaidbyPazTuasontoGregorioAraneta,Inc.onNovember2,1943.The
overpayment, therefore, was P16,999.31, which is the dierence between P64,825.01 and
P47,825.70.ThevalueoftheamountofP16,999.31ifconvertedintoPhilippinecurrencyaccording
totheBallantyneScaleasofNovember2,1943wouldbeP9,444.06.(JointRecordonAppeal,pp.
2728.)
Plain contends that no overpayment had been made by Defendant Paz Tuason. In fact, the
nding of the lower court on this point is based upon the dierence between the sum of
P64,825.01, refunded by her to Plain on December 2, 1943, and the aggregate sum of
P47,825.70, actually collected by her from the Plain from October 19, 1943 to February 12,
1944. The lower court, thus, seemingly, assumed that Plain was bound to fully reimburse the
aforesaid sum of P64,825.01 to Paz Tuason. This assump on is, however, devoid of any
jus ca on. Said P64,825.01 was the sum overpaid, or over deposited by the Plain to Paz
Tuason, for the former had advanced P190,000.00 to the la er on October 19, 1943, when Paz
Tuason made the Promise to Sell, Exhibit 1, and on December 2, 1943, it appeared, upon the
execu on of Exhibit A, that Paz Tuason was en tled to collect only P125,174.99, represen ng
ninety per cent (90%) of P139,083.32, the agreed price of the land thereby sold by her to the
Plain ,whohadarighttorecoversaidamountofP64,825.01,withoutanyobliga ontorefund
thesameoranypartthereof.
ThesumofP47,825.10actuallycollectedbyPazTuasonfromthePlain ,fromOctober19,1943
to February 12, 1944, was absolutely independent thereof. It is the aggregate of two payments
madebythePlain ,oneonOctober19,1943,andanotheronFebruary12,1944.Therstwas
partoftheadvancepaymentofP190,000,whichconsistedofacheckforP143,150.00,payableto
http://www.chanrobles.com/cralaw/1956januarydecisions.php?id=26 6/9
2/4/2017 [G.R. No. L-7377. January 31, 1956.] GREGORIO ARANETA, INC., Plaintiff-Appellant, vs. PAZ TUASON DE PATERNO and JOSE VIDAL, Defendants-Ap
Vidal, and three checks aggrega ng P46,850.00. The second was part of the sum of P13,908.33
paid by the Plain on February 12, 1944, as balance of the purchase price of P139,083.32
s pulated in Exhibit A, a er deduc ng the sum of P125,174.99 paid on December 2, 1943. The
payment eected on February 12, 1944 consisted of a check for P12,932.63 one of those
involved in the present appeal and the aggregate sum of P975.70, represen ng documentary
stampsandotherexpensessetforthinExhibitM.Thissecondpaymentiscompletelyunrelatedto
theP190,000.00advancedbyPlain onOctober19,1943andtheP64,825.01refundedbyPaz
TuasononDecember2,1943.
Again,saidP190,000.00werepaidtoPazTuasonasfollows: chanroblesvirtuallawlibrary

One(1)checkpayabletoJoseVidalP143,150.00
Three(3)checksaggrega ng46,850.00
___________
TotalP190,000.00
ThecheckforP143,150.00wasnot,andcouldnotbecollectedforthereasonsadvertedtoabove.
Hence, of the sum of P190,000.00 thus advanced by Plain ,PazTuasonactuallycollectedonly
the sum of P46,850.00 Upon the execu on of Exhibit A on December 2, 1943, she refunded,
however,P64,825.01,whichexceedsbyP17,975.01whatshehadactuallycollectedpriorthereto,
However,shewillnowcollecttheequivalentofthecheckforP143,150.00,despitethefactthat,
underExhibitA,sheisen tledtonotmorethanP125,174.99.Thusshewilleventuallyreceivethe
equivalentofP17,975.01orexactlytheamountoftheexcessdisbursementabovemen oned
overandabovesaidsumofP125,174.99.Inotherwords,uponcollec onoftheequivalentof
saidcheckforP143,150.00,shewillbefullycompensatedfortheloss(notoverpayment)sustained
byherwhensherefundedP64,825.01onDecember2,1943.
(3)Thedecisionappealedfromdeclaresthattheobliga onofPazTuason,infavorofJoseVidal,
amountstoP155,958.42,computedasfollows: chanroblesvirtuallawlibrary

CapitaloutstandingP135,238.09
Interestattherateof9%perannum,
fromJuly21toOctober20,19533,042.84
Addi onalinterestpayments30.43
Penalty17,647.00
___________
TotalP155,958.42
(JointrecordonAppeal,p.6.)
In determining the capital outstanding, it would appear that the lower court ascertained the
equivalent,inPhilippinecurrency,pursuanttotheBallantynescale,ofthesumsofP30,000.00and
P20,000.00 loaned to Paz Tuason in January and April 1943, and then added thereto the
P90,098.00borrowedbyherbeforethewar.Therea er,theCourtcomputedtheinterestdueon
theresul ngaggregatesumofP135,238.09,attherateof9%perannum,amoun ngtoP3,042.84,
aswellasthecompoundedinterest,attherateof1%amonth,amoun ngtoP30.43,fromJuly21
toOctober20,1943.Addingtothesesumstheequivalentofthepenaltys pulatedinthecontract,
thereresultedagrandtotalofP155,598.42.
This computa on is assailed by the Plain as erroneous upon the following grounds: (a) chanroblesvirtuallawlibrary

Inasmuch as, upon receipt of each addi onal loan during the occupa on, the prewar contracts
between Paz Tuason and Jose Vidal were novated by subsequent contracts, executed in 1943,
renewing the original mortgage, consolida ng the amounts borrowed by her, and inser ng new
condi ons,theloanstoPazTuasonmustbetreatedasiffullymadeduringtheoccupa onandthe
lower court should have applied, therefore, the Ballantyne scale, not only to the sums of
P30,000.00orP20,000.00disbursedbyJoseVidalinJanuaryandApril1943,butalso,tohisprewar
credit of P90,098.00; (b) A er compu ng the interest on the sum of P140,000.00
chan roblesvirtualawlibrary

represen ngtheaggregatecapitalofthedebtofPazTuasonattherateof9%ayear,thelower
courtshouldhavedeterminedtheequivalent,inPhilippinecurrency,undertheBallantynescale,of
theamountdue,bywayofinterest,a ereach30days,fromJuly21toOctober20,1943; (c) chan roblesvirtualawlibrary

The lower court should have, likewise, applied the Ballantyne scale to be compounded interest.
Forthesereasons,Plain maintainsthatPazTuasonshouldpayJoseVidal,inPhilippinecurrency,
notmorethanthefollowing: chanroblesvirtuallawlibrary

CapitalP130,952.20
Aggregateinterest1,992.81
Penalty17,647.20
___________
TotalP150,592.21
It should be noted, however, that Paz Tuason has not appealed from the decision of the lower
courtsentencinghertopayP155,958.42toJoseVidal; thatsaiddecisioninfavorofJoseVidal chan roblesvirtualawlibrary

andagainstPazTuason(notagainstPlain )isalreadynalandexecutory; thatPlain isnota chanroblesvirtualawlibrary

party to the contract between Paz Tuason and Jose Vidal; that, although Plain would be chan roblesvirtualawlibrary

http://www.chanrobles.com/cralaw/1956januarydecisions.php?id=26 7/9
2/4/2017 [G.R. No. L-7377. January 31, 1956.] GREGORIO ARANETA, INC., Plaintiff-Appellant, vs. PAZ TUASON DE PATERNO and JOSE VIDAL, Defendants-Ap
subrogatedintotherightsofVidal,shouldtheformerpaytheobliga onofPazTuason,nosuch
paymenthas,asyet,beenmade; thatPlain isnotapartyinthecrossclaimledbyJoseVidal
chanroblesvirtualawlibrary

againstPazTuasonforforeclosureofmortgage; andthatPlain scauseofac onagainstPaz chan roblesvirtualawlibrary

Tuason,forperformanceofhercontractualobliga onunderExhibitA,isindependentofthecause
ofac onofJoseVidalagainstPazTuason,forforeclosureofthemortgagecons tutedbythela er
in, favor of Vidal. Obviously, therefore, Plain has no legal standing to seek a review of the
ndingsofthelowercourtrela vetotheliquida onoftheaccountsbetweenPazTuasonandJose
Vidal.
Atanyrate,themaincri cismofthePlain againstthispartofthedecisionappealedfromrefers
tothefailureofthelowercourttoapplytheBallantynescaletothesumofP90,098.00,borrowed
before the war. However, in doing what it did, said court merely complied with our decision of
August22,1952,theper nentpartofwhichsays: chanroblesvirtuallawlibrary

Paz Tuason shall pay Jose Vidal the amount of the mortgage and the s pulated interest up to
October20,1943,plusthepenaltyofP30,000.00; providedthattheloansobtainedduringthe chan roblesvirtualawlibrary

Japaneseoccupa onshallbereducedaccordingtotheBallantynescaleofpayment,andprovided
thatthedatebasisofthecomputa onasthepenaltyisthedateofthelingofthesuitagainst
Vidal.(Italicssupplied.)
Morespecically,theprovisionthereintotheeectthattheloansobtainedduringtheJapanese
occupa on shall be reduced according to the Ballantyne scale of payment, indicates that this
courthadnointen ontoapplysaidscaletotheamountsborrowedbyPazTuasonbeforethewar.
Indeed,ifthetheoryofnova on,uponwhichPlain spretenseisbased,hadbeenaccepted,the
en reobliga onofPazTuasoninfavorofJoseVidalwouldhavebeendeemedcontractedduring
theoccupa on,andsaiddecisionwouldhavedirectedtheapplica onoftheBallantynescale,not
merelytotheloansobtainedduringtheJapaneseoccupa on,buttothewholeobliga onofPaz
Tuason,regardlessofthe mewhencontracted.
In view of the foregoing, with the modica on that Plain Gregorio Araneta, Inc., shall pay
DefendantPazTuasonthesumsofP35,787.50andP1,077.71,inPhilippinecurrency,insteadofthe
sums of P143,150.00, P12,932.61 and P9,444.06, as decreed in the decision appealed from, the
sameisherebyarmed,inallotherrespects,withoutspecialpronouncementsastocosts.ItisSO
ORDERED.
Paras, C.J., Padilla, Montemayor, Reyes, A., Bau sta Angelo, Labrador and Reyes, J. B. L., JJ.,
concur.
Endnotes: chanroblesvirtuallawlibrary

*Thisisnotaltogetherlegallyaccurate,evenasregardsPazTuazon,forourdecisionofAugust
22, 1952, directs the applica on of the Ballantyne scale to the loans obtained by her during the
Japanese occupa on. (Consequently, if her conten on were sustained, she would collect from
Plain ,pesoforpeso,butwouldpayherdebttoVidalwiththebenet,partly,oftheBallantyne
scale.

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2/4/2017 [G.R. No. L-7377. January 31, 1956.] GREGORIO ARANETA, INC., Plaintiff-Appellant, vs. PAZ TUASON DE PATERNO and JOSE VIDAL, Defendants-Ap

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