Republic of the Philippines demand for an accounting upon him, which the defendant refused to render,
SUPREME COURT denying the existence of the partnership altogether.
Manila
EN BANC
G.R. No. 413 February 2, 1903
JOSE FERNANDEZ, plaintiff-appellant,
vs.
FRANCISCO DE LA ROSA, defendant-appellee.
Vicente Miranda, for appellant.
Simplicio del Rosario, for appellee.
LADD, J.:
The object of this action is to obtain from the court a declaration that a
partnership exists between the parties, that the plaintiff has a consequent
interested in certain cascoes which are alleged to be partnership property, and
that the defendant is bound to render an account of his administration of the
cascoes and the business carried on with them.
Judgment was rendered for the defendant in the court below and the plaintiff
appealed.
The respective claims of the parties as to the facts, so far as it is necessary to
state them in order to indicate the point in dispute, may be briefly summarized.
The plaintiff alleges that in January, 1900, he entered into a verbal agreement
with the defendant to form a partnership for the purchase of cascoes and the
carrying on of the business of letting the same for hire in Manila, the defendant to
buy the cascoes and each partner to furnish for that purpose such amount of
money as he could, the profits to be divided proportionately; that in the same
January the plaintiff furnished the defendant 300 pesos to purchase a casco
designated as No. 1515, which the defendant did purchase for 500 pesos of
Doña Isabel Vales, taking the title in his own name; that the plaintiff furnished
further sums aggregating about 300 pesos for repairs on this casco; that on the
fifth of the following March he furnished the defendant 825 pesos to purchase
another casco designated as No. 2089, which the defendant did purchase for
1,000 pesos of Luis R. Yangco, taking the title to this casco also in his own
name; that in April the parties undertook to draw up articles of partnership for the
purpose of embodying the same in an authentic document, but that the
defendant having proposed a draft of such articles which differed materially from
the terms of the earlier verbal agreement, and being unwillingly to include casco
No. 2089 in the partnership, they were unable to come to any understanding and
no written agreement was executed; that the defendant having in the meantime
had the control and management of the two cascoes, the plaintiff made a
The defendant admits that the project of forming a partnership in the casco
business in which he was already engaged to some extent individually was
discussed between himself and the plaintiff in January, 1900, and earlier, one
Marcos Angulo, who was a partner of the plaintiff in a bakery business, being
also a party to the negotiations, but he denies that any agreement was ever
consummated. He denies that the plaintiff furnished any money in January, 1900,
for the purchase of casco No. 1515, or for repairs on the same, but claims that he
borrowed 300 pesos on his individual account in January from the bakery firm,
consisting of the plaintiff, Marcos Angulo, and Antonio Angulo. The 825 pesos,
which he admits he received from the plaintiff March 5, he claims was for the
purchase of casco No. 1515, which he alleged was bought March 12, and he
alleges that he never received anything from the defendant toward the purchase
of casco No. 2089. He claims to have paid, exclusive of repairs, 1,200 pesos for
the first casco and 2,000 pesos for the second one.
The case comes to this court under the old procedure, and it is therefore
necessary for us the review the evidence and pass upon the facts. Our general
conclusions may be stated as follows:
(1) Doña Isabel Vales, from whom the defendant bought casco No. 1515,
testifies that the sale was made and the casco delivered in January, although the
public document of sale was not executed till some time afterwards. This witness
is apparently disinterested, and we think it is safe to rely upon the truth of her
testimony, especially as the defendant, while asserting that the sale was in
March, admits that he had the casco taken to the ways for repairs in January.
It is true that the public document of sale was executed March 10, and that the
vendor declares therein that she is the owner of the casco, but such declaration
does not exclude proof as to the actual date of the sale, at least as against the
plaintiff, who was not a party to the instrument. (Civil Code, sec. 1218.) It often
happens, of course, in such cases, that the actual sale precedes by a
considerable time the execution of the formal instrument of transfer, and this is
what we think occurred here.
(2) The plaintiff presented in evidence the following receipt: "I have this day
received from D. Jose Fernandez eight hundred and twenty-five pesos for the
cost of a casco which we are to purchase in company. Manila, March 5, 1900.
Francisco de la Rosa." The authenticity of this receipt is admitted by the
defendant. If casco No. 1515 was bought, as we think it was, in January, the
casco referred to in the receipt which the parties "are to purchase in company"
must be casco No. 2089, which was bought March 22. We find this to be the fact,
and that the plaintiff furnished and the defendant received 825 pesos toward the
purchase of this casco, with the understanding that it was to be purchased on
joint account.
(3) Antonio Fernandez testifies that in the early part of January, 1900, he saw
Antonio Angulo give the defendant, in the name of the plaintiff, a sum of money,
the amount of which he is unable to state, for the purchase of a casco to be used
in the plaintiff's and defendant's business. Antonio Angulo also testifies, but the
defendant claims that the fact that Angulo was a partner of the plaintiff rendered
him incompetent as a witness under the provisions of article 643 of the then
Code of Civil Procedure, and without deciding whether this point is well taken, we
have discarded his testimony altogether in considering the case. The defendant
admits the receipt of 300 pesos from Antonio Angulo in January, claiming, as has
been stated, that it was a loan from the firm. Yet he sets up the claim that the 825
pesos which he received from the plaintiff in March were furnished toward the
purchase of casco No. 1515, thereby virtually admitting that casco was
purchased in company with the plaintiff. We discover nothing in the evidence to
support the claim that the 300 pesos received in January was a loan, unless it
may be the fact that the defendant had on previous occasions borrowed money
from the bakery firm. We think all the probabilities of the case point to the truth of
the evidence of Antonio Fernandez as to this transaction, and we find the fact to
be that the sum in question was furnished by the plaintiff toward the purchase for
joint ownership of casco No. 1515, and that the defendant received it with the
understanding that it was to be used for this purposed. We also find that the
plaintiff furnished some further sums of money for the repair of casco.
(4) The balance of the purchase price of each of the two cascoes over and above
the amount contributed by the plaintiff was furnished by the defendant.
(5) We are unable to find upon the evidence before us that there was any specific
verbal agreement of partnership, except such as may be implied from the fact as
to the purchase of the casco.
(6) Although the evidence is somewhat unsatisfactory upon this point, we think it
more probable than otherwise that no attempt was made to agree upon articles
of partnership till about the middle of the April following the purchase of the
cascoes.
(7) At some time subsequently to the failure of the attempt to agree upon
partnership articles and after the defendant had been operating the cascoes for
some time, the defendant returned to the plaintiff 1,125 pesos, in two different
sums, one of 300 and one of 825 pesos. The only evidence in the record as to
the circumstances under which the plaintiff received these sums is contained in
his answer to the interrogatories proposed to him by the defendant, and the
whole of his statement on this point may properly be considered in determining
the fact as being in the nature of an indivisible admission. He states that both
sums were received with an express reservation on his part of all his rights as a
partner. We find this to be the fact.
Two questions of law are raised by the foregoing facts: (1) Did a partnership exist
between the parties? (2) If such partnership existed, was it terminated as a result
of the act of the defendant in receiving back the 1,125 pesos?
(1) "Partnership is a contract by which two or more persons bind themselves to
contribute money, property, or industry to a common fund, with the intention of
dividing the profits among themselves." (Civil Code, art. 1665.)
The essential points upon which the minds of the parties must meet in a contract
of partnership are, therefore, (1) mutual contribution to a common stock, and (2)
a joint interest in the profits. If the contract contains these two elements the
partnership relation results, and the law itself fixes the incidents of this relation if
the parties fail to do so. (Civil Code, secs. 1689, 1695.)
We have found as a fact that money was furnished by the plaintiff and received
by the defendant with the understanding that it was to be used for the purchase
of the cascoes in question. This establishes the first element of the contract,
namely, mutual contribution to a common stock. The second element, namely,
the intention to share profits, appears to be an unavoidable deduction from the
fact of the purchase of the cascoes in common, in the absence of any other
explanation of the object of the parties in making the purchase in that form, and,
it may be added, in view of the admitted fact that prior to the purchase of the first
casco the formation of a partnership had been a subject of negotiation between
them.
Under other circumstances the relation of joint ownership, a relation distinct
though perhaps not essentially different in its practical consequence from that of
partnership, might have been the result of the joint purchase. If, for instance, it
were shown that the object of the parties in purchasing in company had been to
make a more favorable bargain for the two cascoes that they could have done by
purchasing them separately, and that they had no ulterior object except to effect
a division of the common property when once they had acquired it, theaffectio
societatis would be lacking and the parties would have become joint tenants only;
but, as nothing of this sort appears in the case, we must assume that the object
of the purchase was active use and profit and not mere passive ownership in
common.
It is thus apparent that a complete and perfect contract of partnership was
entered into by the parties. This contract, it is true, might have been subject to a
suspensive condition, postponing its operation until an agreement was reached
as to the respective participation of the partners in the profits, the character of the
partnership as collective or en comandita, and other details, but although it is
asserted by counsel for the defendant that such was the case, there is little or
nothing in the record to support this claim, and that fact that the defendant did
actually go on and purchase the boat, as it would seem, before any attempt had
been made to formulate partnership articles, strongly discountenances the
theory.
The execution of a written agreement was not necessary in order to give efficacy
to the verbal contract of partnership as a civil contract, the contributions of the
partners not having been in the form of immovables or rights in immovables.
(Civil Code, art. 1667.) The special provision cited, requiring the execution of a
public writing in the single case mentioned and dispensing with all formal
requirements in other cases, renders inapplicable to this species of contract the
general provisions of article 1280 of the Civil Code.
(2) The remaining question is as to the legal effect of the acceptance by the
plaintiff of the money returned to him by the defendant after the definitive failure
of the attempt to agree upon partnership articles. The amount returned fell short,
in our view of the facts, of that which the plaintiff had contributed to the capital of
the partnership, since it did not include the sum which he had furnished for the
repairs of casco No. 1515. Moreover, it is quite possible, as claimed by the
plaintiff, that a profit may have been realized from the business during the period
in which the defendant have been administering it prior to the return of the
money, and if so he still retained that sum in his hands. For these reasons the
acceptance of the money by the plaintiff did not have the effect of terminating the
legal existence of the partnership by converting it into a societas leonina, as
claimed by counsel for the defendant.
Did the defendant waive his right to such interest as remained to him in the
partnership property by receiving the money? Did he by so doing waive his right
to an accounting of the profits already realized, if any, and a participation in them
in proportion to the amount he had originally contributed to the common fund?
Was the partnership dissolved by the "will or withdrawal of one of the partners"
under article 1705 of the Civil Code? We think these questions must be
answered in the negative.
There was no intention on the part of the plaintiff in accepting the money to
relinquish his rights as a partner, nor is there any evidence that by anything that
he said or by anything that he omitted to say he gave the defendant any ground
whatever to believe that he intended to relinquish them. On the contrary he
notified the defendant that he waived none of his rights in the partnership. Nor
was the acceptance of the money an act which was in itself inconsistent with the
continuance of the partnership relation, as would have been the case had the
plaintiff withdrawn his entire interest in the partnership. There is, therefore,
nothing upon which a waiver, either express or implied, can be predicated. The
defendant might have himself terminated the partnership relation at any time, if
he had chosen to do so, by recognizing the plaintiff's right in the partnership
property and in the profits. Having failed to do this he can not be permitted to
force a dissolution upon his co-partner upon terms which the latter is unwilling to
accept. We see nothing in the case which can give the transaction in question
any other aspect than that of the withdrawal by one partner with the consent of
the other of a portion of the common capital.
The result is that we hold and declare that a partnership was formed between the
parties in January, 1900, the existence of which the defendant is bound to
recognize; that cascoes No. 1515 and 2089 constitute partnership property, and
that the plaintiff is entitled to an accounting of the defendant's administration of
such property, and of the profits derived therefrom. This declaration does not
involve an adjudication as to any disputed items of the partnership account.
The judgment of the court below will be reversed without costs, and the record
returned for the execution of the judgment now rendered. So ordered.
Arellano, C.J., Torres, Cooper, and Mapa, JJ., concur.
Willard, J., dissenting.
ON MOTION FOR A REHEARING.
MAPA, J.:
This case has been decided on appeal in favor of the plaintiff, and the defendant
has moved for a rehearing upon the following grounds:
1. Because that part of the decision which refers to the existence of the
partnership which is the object of the complaint is not based upon clear and
decisive legal grounds; and
2. Because, upon the supposition of the existence of the partnership, the
decision does not clearly determine whether the juridical relation between the
partners suffered any modification in consequence of the withdrawal by the
plaintiff of the sum of 1,125 pesos from the funds of the partnership, or if it
continued as before, the parties being thereby deprived, he alleges, of one of the
principal bases for determining with exactness the amount due to each.
With respect to the first point, the appellant cites the fifth conclusion of the
decision, which is as follows: "We are unable to find from the evidence before us
that there was any specific verbal agreement of partnership, except such as may
be implied from the facts as to the purchase of the cascoes."
Discussing this part of the decision, the defendant says that, in the judgment of
the court, if on the one hand there is no direct evidence of a contract, on the
other its existence can only be inferred from certain facts, and the defendant
adds that the possibility of an inference is not sufficient ground upon which to
consider as existing what may be inferred to exist, and still less as sufficient
ground for declaring its efficacy to produce legal effects.
This reasoning rests upon a false basis. We have not taken into consideration
the mere possibility of an inference, as the appellant gratuitously stated, for the
purpose of arriving at a conclusion that a contract of partnership was entered into
between him and the plaintiff, but have considered the proof which is derived
from the facts connected with the purchase of the cascoes. It is stated in the
decision that with the exception of this evidence we find no other which shows
the making of the contract. But this does not mean (for it says exactly the
contrary) that this fact is not absolutely proven, as the defendant erroneously
appears to think. From this data we infer a fact which to our mind is certain and
positive, and not a mere possibility; we infer not that it is possible that the
contract may have existed, but that it actually did exist. The proofs constituted by
the facts referred to, although it is the only evidence, and in spite of the fact that it
is not direct, we consider, however, sufficient to produce such a conviction, which
may certainly be founded upon any of the various classes of evidence which the
law admits. There is all the more reason for its being so in this case, because a
civil partnership may be constituted in any form, according to article 1667 of the
Civil Code, unless real property or real rights are contributed to it — the only
case of exception in which it is necessary that the agreement be recorded in a
public instrument.
determine the condition of the legal relations of the partners inter se at the time of
the withdrawal of the sum mentioned. It was not, nor is it possible to determine
this status a priori without prejudging the result, as yet unknown, of the litigation.
Therefore it is that in the decision no direct statement has been made upon this
point. It is for the same reason that it was expressly stated in the decision that
it "does not involve an adjudication as to any disputed item of the partnership
account."
The contentions advanced by the moving party are so evidently unfounded that
we can not see the necessity or convenience of granting the rehearing prayed
for, and the motion is therefore denied.

It is of no importance that the parties have failed to reach an agreement with Arellano, C.J., Torres, Cooper, and Ladd, JJ., concur.
respect to the minor details of contract. These details pertain to the accidental Willard and McDonough, JJ., did not sit in this case.
and not to the essential part of the contract. We have already stated in the
opinion what are the essential requisites of a contract of partnership, according to
the definition of article 1665. Considering as a whole the probatory facts which
appears from the record, we have reached the conclusion that the plaintiff and
the defendant agreed to the essential parts of that contract, and did in fact
constitute a partnership, with the funds of which were purchased the cascoes
with which this litigation deals, although it is true that they did not take the
precaution to precisely establish and determine from the beginning the conditions
with respect to the participation of each partner in the profits or losses of the
partnership. The disagreements subsequently arising between them, when
endeavoring to fix these conditions, should not and can not produce the effect of
destroying that which has been done, to the prejudice of one of the partners, nor
could it divest his rights under the partnership which had accrued by the actual
contribution of capital which followed the agreement to enter into a partnership,
together with the transactions effected with partnership funds. The law has
foreseen the possibility of the constitution of a partnership without an express
stipulation by the partners upon those conditions, and has established rules
which may serve as a basis for the distribution of profits and losses among the
partners. (Art. 1689 of the Civil Code. ) We consider that the partnership entered
into by the plaintiff and the defendant falls within the provisions of this article.

With respect to the second point, it is obvious that upon declaring the existence
of a partnership and the right of the plaintiff to demand from the defendant an
itemized accounting of his management thereof, it was impossible at the same
time to determine the effects which might have been produced with respect to the
interest of the partnership by the withdrawal by the plaintiff of the sum of 1,125
pesos. This could only be determined after a liquidation of the partnership. Then,
and only then, can it be known if this sum is to be charged to the capital
contributed by the plaintiff, or to his share of the profits, or to both. It might well
be that the partnership has earned profits, and that the plaintiff's participation
therein is equivalent to or exceeds the sum mentioned. In this case it is evident
that, notwithstanding that payment, his interest in the partnership would still
continue. This is one case. It would be easy to imagine many others, as the
possible results of a liquidation are innumerable. The liquidation will finally
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 1786 August 12, 1905
MATTIE E. LEVY, administratrix of the estate of SAMUEL J. LEVY, plaintiff-
appellant,
vs.
L. M. JOHNSON, W. A. WHALEY, PAUL BLUM, and HENRY
BLUM, defendants-appellees.
Gibbs and Tutherly for appellant.
Chas. C. Cohn for appellees.
WILLARD, J.:
Prior to October 21, 1898, Thomas E. Evans and Walter Jackson were the
owners of an establishment known as "The Alhambra" situated in the Escolta,
Manila, consisting of a stock of goods, furniture, and fixtures, and a lease for a
term of years of the building in which the business was conducted. They carried
on there a drinking saloon and later the place was used also for a theater. They
were heavily in debt, and Evans attempted to secure a loan from the defendant
Paul Blum of 32,443.35 pesos. Blum agreed to make him the loan on the
condition that he (Evans) should buy the interest of his copartner, Jackson,
should convey to the defendant Whaley an undivided half of the property, and
should allow Whaley to manage the business as he (Whaley) saw fit. Evans
accepted these terms, acquired the interest of Jackson in the property, and on
October 21, 1898, conveyed to the defendant Whaley an undivided half of the
property, for the expressed consideration of $1. Whether this consideration of $1
was paid by Blum or Whaley we consider of no importance. It was not shown that
the business was worth more than the debt against it, and the evidence indicates
that it was not.
On the same day Evans and Whaley executed to the defendant Paul Blum a bill
of sale of the entire property for the expressed consideration of 32,443.35 pesos.
On the same day Evans and Whaley on the one part and Paul Blum on the other
part executed an agreement in which it was recited that the Alhambra had been
mortgaged to Blum to secure the payment of 32,443.35 pesos, it being further
provided in this agreement that Evans and Whaley should be equal partners in
the business, which Whaley should manage, and that the net receipts should be
duly deposited with the American Commercial Company. The copy of this
agreement in the bill of exceptions bears the date of the 2d of October, 1898, but
for the reason stated in the judgment of the Court of First Instance in the case of
Jackson vs. Blum, hereinafter referred to, we think the correct date was the 21st.
No question is made in the case but that Paul Blum actually advanced at this
time the 32,443.35 pesos in cash, all of which was received by Evans, and none
of it by Whaley.
The business was apparently carried on under the terms of this agreement up to
the 4th of December, 1899, when the defendant Henry Blum, acting for the
defendant Paul Blum and the American Commercial Company, notified Evans
and Whaley in writing that the amount then due upon the date aforesaid was
28,927.97 pesos, and that if this amount was not paid at the first of the ensuing
year they should take steps to collect it. Nothing was done by Evans on the 4th
day of January, 1900, Paul Blum took possession of the establishment under the
aforesaid two documents of the 21st of October, 1898. Whaley, who was in
possession at that time, surrendered the property to him in payment and
satisfaction of the debt, and then delivered the keys into his possession. On the
next day Whaley notified Evans in writing that Paul Blum, on the day before, had
made demand on him for the payment of the debt, but he was unable to pay it,
and that he had turned over the property to Blum in satisfaction thereof, and had
delivered him the keys.
Blum left Whaley in control and management of the business, and there was no
outward change in the appearance thereof. It is shown, however, that the keys
were delivered to Blum every night. This condition of things continued until the
26th of January, 1900. On that day four documents were executed and delivered.
One of them was a deed of the entire property by Paul Blum to Whaley; another
was a deed of an undivided half of the property by Whaley to the defendant
Johnson; a third was a mortgage by Whaley to Paul Blum of his undivided half of
the property, to secure 19,00 pesos; a fourth was a contract of partnership
between Whaley and Johnson for carrying on the said business, by the terms of
which it was provided that Whaley should continue to act as the manager of the
business, and exercise full control over it until the mortgage made by him to Blum
for 19,000 pesos had been paid.
In payment of the undivided half of the property conveyed by Whaley to Johnson,
Johnson paid to Whaley 15,000 pesos, and this money was paid to Paul Blum as
a part of the purchase price of the whole property conveyed to him by Blum on
the same day. The 15,000 pesos paid by Johnson for this undivided half was the
money of the deceased Samuel L. Levy. Fourteen thousand pesos of it had been
sent by Levy from Shanghai to Johnson at Manila some time prior to the 26th of
January, 1900, to be invested in the purchase of an interest in the Alhambra.
Some time prior to January 26, 1900, Levy himself arrived in Manila and paid to
Johnson 1,000 pesos more, which made up the sum of 15,000 pesos paid by
Johnson to Whaley and by Whaley to Blum.
Whaley and Johnson at once took possession of the property, and continued in
the management of it until the month of July, 1901. The business was then
closed by reason of a law of the Commission passed at that time prohibiting the
sale of liquor on the Escolta.
On the 22nd of March, 1900, Johnson being about to leave for Australia for the
purpose of securing attractions of the theater, Levy suggested to him that he
(Levy) should have some document in writing from Johnson showing his (Levy's)
interest in the Alhambra. Thereupon Levy drew up and Johnson promised to
convey, on January 26, 1901, to Levy, all his right and interest in an undivided
half of the property. Levy died in July, 1900 and the plaintiff was appointed
administratrix of his estate.
In August, 1900, Jackson commenced an action against Johnson, Whaley, Paul
Blum, and Henry Blum, in which he alleged that he had acquired the interest of
Evans in the property; that he was the owner, therefore, of an undivided half of it,
subject to the payment of the amount still due on the mortgage of 32,000 pesos,
made by Evans and Whaley to Blum. He asked for an accounting as to the
amount due on the mortgage, and a judgment that he was the owner of an
undivided half, subject to such balance. The defendants made a joint answer in
the case, and it was tried in the Court of First Instance of Manila, and decided on
the 11th of February, 1901, in favor of the plaintiff Jackson, the court declaring
that the attempted foreclosure of the pledge or mortgage made by Paul Blum on
January 4, 1900, was invalid; that it did not destroy the interest of Evans in the
property, and that his assignee, Jackson, was the owner of one-half of it, subject
to the amount due on the mortgage. The defendants appealed from this
judgment to the Supreme Court, and this court, on the 28th of August, 1901,
affirmed the judgment in all its parts. At the time this final judgment in the
Supreme Court was rendered, the place had been closed, as before stated, and
a receiver was appointed in that suit, to take possession of what assets there
were left belonging to the establishment, and dispose of them. This he did,
showing a net balance of 6,000 pesos. What disposition was made of this 6,000
pesos does not appear from the evidence.
On November 2, 1900, one of the present counsel for the plaintiff, acting for her,
notified the American Commercial Company in writing that she was the owner of
Johnson's half interest in the Alhambra, and that they should not permit the sale
or other disposition of the leasehold estate thereon to the prejudice of plaintiff's
interest.
On January 26, 1901, the same attorney, acting for the plaintiff, made a demand
upon Johnson for the possession of his half of the property, pursuant to the
agreement made between Levy and Johnson on the 22d of March, 1900, under
which Johnson had agreed to turn the property over to Levy on that date
(January 26, 1901). Johnson refused to make such delivery.
In December, 1901, plaintiff commenced this action against Johnson, Whaley,
Paul Blum, and Henry Blum. Three amended complaints were filed. In the last
complaint plaintiff seeks to recover the 15,000 pesos upon the ground that
defendants, in January, 1900, entered into a fraudulent conspiracy to cheat and
defraud Levy out of 15,000 pesos and for that purpose concocted this sale on the
26th of January, 1900, to Whaley by Blum, and the subsequent sale of one-half
by Whaley to Johnson, plaintiff alleging that at that time Blum did not own the
property, or at least only one-half of it, and that Johnson acquired nothing at all
by his deed from Whaley. Judgment was rendered in the Court of First Instance
on the 25th of July, 1903, in favor of the plaintiff and against the defendants
Johnson and Henry Blum and against the plaintiff. From the judgment, so far as it
held Paul Blum and Henry Blum not responsible to the plaintiff, plaintiff has
appealed.
Considerable time was devoted in the trial below in showing the relations
between Paul Blum and Henry Blum on the one part and the American
Commercial Company on the other. It appeared that Paul Blum was director and
manger of the American Commercial Company, which was engaged in selling
wines, liquors, and beers in Manila, and that Henry Blum was also interested in
the same enterprise, but we do not think it is of any importance to determine
exactly what their relations were. It is enough to say that all the documents
relating to this property were made in the name of Paul Blum, and that if the
plaintiff has any right of action against anyone connected with the company she
has it against him, and that if she has no right of action against him she has no
right of action against the company.
The claim of the plaintiff, reduced to its lowest terms, is that Johnson, by his deed
from Whaley of an undivided half of the property, acquired no interest whatever
therein, and that contract was made by the fraud of the defendants Paul and
Henry Blum. There is no evidence in the case that either Paul and Henry Blum
made any representations whatever, either to Johnson or Levy, as to the value of
the property or its condition. It appears affirmatively that Johnson knew the exact
condition of the title to the property prior to the 4th of January, 1900, and knew
that the only interest which Paul Blum had at that time was the interest which he
derived by virtue of this bill of sale and pledge, and he was waiting fort the
foreclosure by Paul Blum of his claims in order to make the purchase in behalf of
Levy. There is no doubt, under the evidence, but that Johnson had full authority
from Levy to invest the 15,000 pesos in this business, and there is nothing to
show that he had not the right to invest it on such terms and conditions as he
saw fit, and in any event there is no evidence to show that Paul or Henry Blum
knew of any limitations upon his authority in this respect. A great deal of time was
spent in the court below in attempting to show that Paul and Henry Blum knew
that the 15,000 pesos paid by Johnson was furnished by Levy, but we consider
this a matter of no importance. Under the evidence in the case the rights of the
parties are exactly the same whether they knew or did not know of this fact.
It further appears that Levy arrived here between the 1st and 15th of January,
1900; that he lived with Whaley and Johnson, and that he investigated the whole
matter and saw some if not all of the papers that were made. Immediately after
the purchase by Whaley and Johnson, Levy went into the business as cashier
and bookkeeper. He and his wife, the plaintiff, lived in the upper story of the
building occupied by the Alhambra for some time, and until his death, in July.
We see no evidence anywhere in the case showing any fraud whatever on the
part of Paul or Henry Blum. On the 4th of January, 1900, Blum held an absolute
deed of the property, given to him by the owners of it. For this deed he had paid
more than 28,000 pesos, for which he had not been reimbursed. Acting upon the
advice of counsel, and accompanied by counsel and witnesses, he went to the
establishment and formally demanded possession thereof under this document.
Whaley, one of the owners of the property, and the person who, under the terms
of the partnership between him and Evans, had the absolute control of it, being
unable to pay the debt, surrendered the property to Blum in satisfaction thereof.
Blum then took possession and retained possession. That he had a valid claim
against the property for over 28,000 pesos, which had not been paid; that he
acted in good faith in taking possession and in receiving the property in
satisfaction of the debt, and that he, on the 26th of January, 1900, believed that
he had good title to the property, is, we think, abundantly established by the
evidence. Whether or not he did thus acquire title to the property depended
altogether upon the decision of the Supreme Court. If that decision had been the
other way, and if this court had decided that the proceedings taken by Blum on
the 4th of January, 1900, were sufficient to vest him with the title to the property,
this case, of course, would never have been heard of. There would have been no
claim of conspiracy, or fraud, because Johnson would in any event have gotten
by his deed from Whaley what he paid for. That the legal question involved in
that suit of Jackson vs. Blum was not free from doubt, and that Blum was justified
in believing that his proceedings were sufficient to transfer the title to him, is
shown by an examination of the authorities presented by the appellants in the
argument of that case in this court, and in the petition for reargument. It is difficult
to maintain an action for fraud, when the question as to the existence or
nonexistence of the fraud depends on a decision by a court of a doubtful
question of law.
To our minds the case involved, if anything, nothing more than a breach of
warranty of title under articles 1461, 1474, and the following articles of the Civil
Code. In her brief of 131 pages in this court the appellant devotes less than two
pages to the discussion of this phase of the case, giving some reasons why she
did not commence such an action. it is not, of course, necessary to decide
whether, if she had commenced such an action, she could have prevailed or not.
It is said repeatedly in appellant's brief that Johnson got absolutely nothing by his
deed from Whaley of the undivided half, because the particular half which was
conveyed by Whaley was Jackson's half, which Blum did not own, and the
appellant assumes that the half which Blum did own went to Whaley, and was by
him mortgaged back to Blum. We see no ground whatever for this contention.
Blum conveyed the entire property to Whaley, without any distinction of parts,
claiming that the interest of Jackson, Evans, and Whaley had been extinguished.
Whaley conveyed an undivided half of the property to Johnson. This half was not
in any way identified. The title to an undivided half of the property having failed,
and it resulting that Johnson had an apparent title to one-half, and Blum, through
his mortgage, had an apparent title to the other half, and Blum being the
guarantor of the title to the whole, it would seem that his half would be the half
that was lost, and that Johnson would be protected in his half; but, as we have
said, there is no necessity for deciding that question, for, notwithstanding the
claim made by the appellant in her reply brief, this is not an action to recover on a
warranty, but an action for fraud, and such fraud has not been proved. Nor is
there anything in the other points made by the appellant in her reply brief. A
simple failure of title to property conveyed gives rise to an action under articles
1461 and 1474 of the Civil Code, but does not make a case of error under article
1265, nor a case of want of cause under article 1275. Moreover, there was no
want of cause in the contracts. Blum conveyed to Whaley and Whaley conveyed
to Johnson, and each promised to guarantee the title. This was sufficient. (Art.
1274.) Under these conveyance Johnson went into a remained in possession
nearly a year and a half.
The appellant devotes some attention to another transaction occurring at the time
of the sale on the 26th of January, 1900, which we think is of no importance. It
appears that when Blum on that day transferred the property to Whaley he gave
to Whaley a check of 30,000 pesos. Whaley, in payment for the property, gave to
Blum a check for 28,878.27 pesos, and some time after that (February 6) Whaley
gave to Blum another check for 1,121,73 pesos — the exact difference between
Blum's check for 30,000 pesos and Whaley's check for the purchase of the
property, 28,878.27 pesos. This shows that the transaction connected with this
30,000 pesos check was a mere form, and did not in any way affect the rights of
any of the parties. Why this course was pursued does not appear, although Blum
testifies that it was done under the advice of counsel. It will have been noticed
that when Whaley mortgaged his half to Blum on January 26, 1900, the mortgage
was made for 19,000 pesos, and not for one-half of the purchase price of
28,878.27 pesos, and a good deal of time was spent in trying to ascertain how
the difference was made up. We consider this a matter of no importance.
Johnson had no interest whatever in Whaley's one-half. Whaley was entitled to
encumber that in any way he saw it, and to any amount which would be
satisfactory to Blum. That the mortgage was for 19,000 pesos and not for 13,000
pesos did not any way prejudice the interests of Johnson, upon whose half this
mortgage, no matter what it was, was not a lien.
A great deal of space in the appellant's brief is devoted to the discussion of a
mortgage made by Whaley to Blum on May 12, 1900, which was satisfied and
discharged on August 28, 1900. The original mortgage was not produced in
evidence, but the satisfaction was. The appellant claims that Whaley and Blum
committed a criminal offense in executing this instrument, in view of the fact
claimed by the appellant to exist, that Whaley in the mortgage represented
himself to be the owner of the entire property. As this mortgage was afterwards
satisfied, we do not see how it has any bearing upon the case; and moreover, it
appears from the evidence, and is not disputed, that this mortgage was made
practically at the request of Johnson, who at that time was in Australia on
business of the company, and that from the proceeds of the mortgage (5,000
pesos) Whaley sent to Johnson in Australia 4,557.37 pesos. This was sent in two
amounts, and the entries therefor were made by Levy himself in the books of the
company. The statement in the appellant's brief that this mortgage was made
without Levy's knowledge or consent is not supported by the evidence. It will be
noticed, moreover, that under the terms of the partnership agreement between
Johnson and Whaley, Whaley had authority to mortgage the whole of the
property for the purposes of the partnership. Considerable fault was found by the
appellant with this provision of the articles of partnership, but we do not see how
that has any bearing upon the question of fraud. Blum had a right to sell the
property upon such terms as he saw fit. He had a right to insist at this time, as he
had insisted in his dealings with Evans, that Whaley should be the manager of
the business. Johnson, as has been said, had authority to invest this money of
Levy's on such terms as he (Johnson) saw fit, and Levy, according to the
evidence, was thoroughly informed as to the whole transaction.
It is said repeatedly in the appellant's brief that in the Jackson suit the defendants
Paul and Henry Blum made a joint answer for all the defendants, in which they
denied that Johnson and Whaley had any interest in the property, and that during
the trial of the case they concealed that fact, and that the Court of First Instance
rendered the judgment declaring that Blum was the sole owner of an undivided
half of the property, and Jackson of the other half. We find no evidence in the
record to sustain any one of these claims. Only a small part of the answer made
in that case appears in this record, and an examination of that part does not
support the contention of the appellant. It appears, moreover, from the decision
of the Court of First Instance in the Jackson case, that Johnson testified in that
case that when the summons was served upon him he was acting as a partner of
Whaley in the Alhambra, and Whaley testified in the same trial that during the
year 1900 he and Johnson announced themselves as proprietors of the
establishment. It is also to be noticed that the judgment of the court orders, not
that Blum should account to Jackson, but that all the defendants, Paul Blum,
Henry Blum, Whaley, and Johnson, should account, and that they should pay to
Jackson the value of his interest in the property, which was one-half. The
decision says nothing about the ownership of the other half.
The appellant attempted to show at the trial that when Johnson, on the 26th of
January, 1901, refused to deliver possession to the plaintiff of her half of the
property, his action was advised by the defendants Blum, or by their counsel.
The evidence does not show such advice, and if it did we do not see how that in
any way could affect the defendants Paul and Henry Blum. Johnson's refusal to
deliver in accordance with the terms of his contract of March 22, 19009, with
Levy, might have made him liable to some action on the part of Levy's
administratrix, but we do not see how it had any tendency to prove any fraud on
the part of Henry or Paul Blum. It is further to be noticed that such delivery by
Johnson might be claimed to be in violation of the contract between Johnson and
Whaley on the one part and Blum on the other, entered into on the 26th of
January, 1900, by the terms of which the property was not to be disposed by
either Whaley or Johnson until the mortgage of 19,000 pesos had been paid.
There is no evidence in the case that this sum ever has been paid. The appellant
admits that the evidence does not show whether the Alhambra made money or
lost money during the time that Johnson was connected with it, but it must be
apparent that when the place was closed by the operation of the Manila liquor
law of July, 1900, a great loss much have been suffered.
It is claimed repeatedly by the appellant in her brief that the business was
conducted in exactly the dame way after the 26th of January, 1900, as it was
before. There is no evidence to support this claim. On the contrary, the evidence
is conclusive that after January 26, 1900, the daily receipts of the business were
not paid either to the American Commercial Company or to the Blums, but that
the American Commercial Company submitted bills once a month for
merchandise sold to Whaley and Johnson, and these bills were some of them
paid. It also appears from the evidence, and is not contradicted, that neither of
the Blums nor the American Commercial Company, after the 26th of January,
1900, had any interest whatever in the theatrical part of the establishment.
That the question of liability on the part of Paul and Henry Blum rested entirely, in
the opinion of counsel for the appellant, upon the result of the Jackson suit, is
shown by his conduct of the affairs of the administratrix. In November, 1900, he
gave notice to the Amercial Commercial Company that the Levy estate was the
owner of one-half of the property. He did not at that time take any action looking
to a rescission of the contract of the 26th of January, 1900, either on the ground
of fraud or any other ground. On the 26th of January, 1901, when he made the
demand for the possession of the property, he gave no indication of a
disaffirmance in any way of the contracts made between Johnson and Whaley for
the benefit of Levy. He testified at the trial that he knew of the case between
Jackson and Blum just before judgment was rendered in the Court of First
Instance, and that he knew from Judge Rohde, counsel for the defendant in that
case, that he had obtained a judgment, but he took no action looking to the
rescission of the contract from the time of the decision in the Court of First
Instance, in February, until the decision of the Supreme Court in August. He
testified that he first knew of the relations between Levy and Johnson when he
discovered the document of March 22, 1900, which was some time before Mrs.
Levy was appointed administratrix.
The citation by the appellant of the cases relating to following trust funds in the
hands of third persons has no bearing upon this case. There was no
misapplication by Johnson of the 15,000 pesos in his possession. He applied it to
the very purpose for which it was given to him, viz, the purchase of an interest in
the Alhambra, and this application was made with the knowledge and consent of
Levy, and practically in his presence. The fact that the title to a part of the
property thus purchase may have failed does not make the case one of
misapplication of trust funds.
The appellant, in her brief, in speaking of the claim of the defendant Paul Blum to
the effect that he believed that at the time of executing these papers on the 26th
of January, 1900, he was the sole owner of the property and acted in good faith,
says that the evidence overwhelmingly discredits this statement. We do not
agree with this assertion. The evidence not only supports it but there is in our
opinion no evidence to show the contrary. Johnson, who was thoroughly
informed of the whole transaction, testified that he believed that Blum or the
Commercial Company was the owner.
The claim made on page 129 of the appellant's brief to the effect that Johnson
never took possession of the property purported to be conveyed to him by his
deed from Whaley, finds no evidence in the record to support it. The evidence is
conclusive that Johnson did take possession on the 26th of January, 1900, with
Whaley, and that he remained in such possession until the place was closed in
July, 1901. The judgment, so far as it relates to Paul Blum and Henry Blum, is
affirmed, with costs of this instance against the appellant, and after the expiration
of twenty days judgment will be entered in accordance herewith and the case
returned to the lower court for execution. So ordered.

Arellano, C.J., Torres, Mapa, Johnson and Carson, JJ., concur.

 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 873 February 10, 1903
THE UNITED STATES, complainant-appellant,
vs.
SECUNDINO MENDEZONA, defendant-appellee.
Office of the Solicitor-General Araneta, for appellant.
Francisco Ortigas and Jose Robles Lahesa, for private prosecutor.
Alfredo Chicote, for appellee.
TORRES, J.:
On the 14th of January, 1902, counsel for the bank (Spanish-Philippine Bank)
filed a complaint charging Don Secundino Mendezona with the crime
of estafa upon the ground that he, as manager of the firm of Mendezona & Co.,
on the 5th day of January, 1900, received from said Spanish-Philippine Bank the
sum of $300,000, offering as security among other property the building known
as the procuration house of the Franciscan Friars, this offer being contained in a
letter addressed to the management of the bank; that on the 19th of February
following, of the same year, Mendezona by another letter asked and obtained a
further credit of $300,000 as an extension of the former credit, offering as
security the same property, that demand having been made upon the accused
for the execution of the corresponding mortgage deed which he had verbally
undertaken to execute, he stated that the notary public, Mr. Barrera, had the title
deeds or papers of the property, and thus fraudulently succeeded in putting off
the execution of the mortgage deed up to the 6th day of August, 1902, on which
date Mendezona as such manager sold the said procuration building for the sum
of $400,000, subject to the right of redemption, to Messrs. Juan Martinez
Ybañes, Manuel Ybeas, Felipe Garcia, and Jorge Romanillos, the vendor having
declared in the deed of sale that the property was free from all charges and
incumbrances, these acts having been committed against the form of the statute
made and provided and to the damage of the bank in the sum of at least
$150,000.
The complaint was admitted and the Court of First Instance conducted the
corresponding preliminary investigation. The proof taken discloses that on the
22nd of November, 1899, a verbal contract of sale was entered into between the
representatives of the Franciscan Friars and Don Secundino Mendezona,
manager of the firm of Mendezona & Co., concerning the said city property
situated on Isla de Romero Street and known as the procuration building. The
consideration was $190,000, which sum, as a result of a subsequent agreement,
was to be left on deposit with the firm of Mendezona & Co., drawing interest at 8
per cent per annum, the purchaser being authorized to take immediate
possession of the property and to make such alterations therein as he might
deem necessary. This verbal contract appears to have been confirmed by letter.
(Record, p. 12.)
It also appears from the record of the preliminary investigation that toward the
end of November, 1899, Don Secundino Mendezona took possession of the
property sold, and commenced the work of making alterations in the same, and
that on the 21st of July, 1900, the corresponding deed of conveyance of the said
property was drawn.
It also appears that this procuration building stands on the books of Mendezona
& Co. as an asset valued at $250,000, and that the books show as a liability a
debit of $190,000 in favor of the Franciscan Friars on the 1st of January, 1900.
It also appears that several demands were made on the accused Mendezona
after the month of March of that year for the execution by him of a public deed of
mortgage but that this was not done, he simply replying that the papers or title
deeds of the property were being prepared for the purpose of delivering them to
the notary, Barrera. The contract of sale agreed upon in November, 1899, was
not formally executed before Sr. Barrera until the 21st of July, 1900. The notary
testifies under oath that the documents connected with the procuration building
were delivered to him by the father provincial of the Franciscan Friars on the
second or third month before the date of the execution of the deed of sale of the
said building, and that the father provincial also delivered to him the draft of the
instrument which stipulated that the consideration for the sale of the procuration
building to Mendezona & Co. was to remain in the possession of the firm as a
deposit.
From the text of the complaint upon which this preliminary investigation was
commenced, and which was finally terminated by the appealed order, it is evident
that the charge of estafa brought against Mendezona consists in the allegation
that he, acting fraudulently and in bad faith, delayed the performance of the offer
made by him to the Spanish-Philippine Bank to securing the two sums received
by him from the latter as a loan on the 5th of January and the 19th February,
1900, by eluding the execution of the mortgage of the so-called procuration
building of the Franciscans up to the 6th of August, 1900, on which day he sold
the same to the Augustinian Fathers for the sum of $400,000, having declared in
the instrument of conveyance executed to that effect that this property was free
from all incumbrance or gravamen.
So that the facts set forth in the complaint and alleged to constitute the crime
of estafa are two: (1) That of having failed to perform the promise to give a
mortgage on the said procuration building for the purpose of securing the
payment of the $600,000 received from the bank, he availing himself of
subterfuge and deceitful means to avoid the execution of the mortgage deed, and
(2) that of having declared in the deed of sale to the Augustinian Fathers that the
said building was free from all incumbrance or gravamen, when as a matter of
fact it had been offered in mortgage, and that these facts constituted a violation
of the Penal Law.
The complaint uses the generic terms of estafa as the classification of the crimes
with which the accused is charged but without determining the species of fraud
committed, or citing the article of the Penal Code violated, although this was
subsequently done in the printed briefs filed by the complainant, asking that
articles 535, section 1, and 537, and 541 of the Penal Code be applied.
The first of these two facts charged in the complaint, if proven, would fall within
article 541 as constituting anestafa not penalized by the preceding articles which
define and punish such crimes.
The second of the facts charged, if proven, would fall under the sanction of
section 2 of article 537 of the Code, because in such case the accused would
have disposed of the property, selling it as unencumbered, knowing at the time
that it was subject to a gravamen.
The mere fact of the nonperformance of the offer or promise to give a mortgage
as agreed upon between the contracting parties does not constitute the crime
of estafa or any other crime, unless the party bound has acted fraudulently and in
bad faith when contracting the principal obligation and when making the promise
to give security. Can it be concluded from an examination of the preliminary
investigation that when the two contracts of loan of $300,000 each were made
between the manager of the bank, Señor Balbas, and the accused Mendezona,
that the latter acted deceitfully and with the malicious intent to defraud the bank,
and with the intent to break his promise to give the said procuration building,
among other property, as security for the performance of the obligation? The
result of an examination of the record is a negative answer.
Article 1862 of the Civil Code provides that the promise to mortgage or pledge
only produces a personal action between the contracting parties, without
prejudice to the criminal liability incurred by him who defrauds another offering in
pledge or mortgage, as unencumbered, things which he knew to be encumbered
or pretending to be the owners of things which do not belong to him. It is evident,
therefore, that the promisor may be compelled by the proper personal action to
perform his promise; but the mere breach of the contract or non-performance of
the promise does not result in a violation of the Penal Law.
The article cited provides that criminal liability attaches to the defrauder in the
cases expressed, none of which are applicable to the accused because he has
not offered things which he knew to be encumbered, nor has he pretended to be
the owner of property which did not belong to him. Mendezona had a perfect right
to offer this building as security, inasmuch as it was not the property of another
nor was it encumbered; and the subsequent disappearance of the promised
security by the sale of the property to the Augustinian Friars does not constitute
the commission of the crime of estafa because it does not appear that a deceitful
intent existed at the time that the loan was made and the security was offered.
The obligations contracted were merely personal, subject to all the eventualities
which are common to those of its class, and which should be met by prudence
and foresight on the part of creditors.
The unusual facility with which the accused Mendezona obtained from the
management of the bank two sums of $300,000 on two different occasions at an
interval of forty-five days is a circumstance which should be explained not only by
the person to whom the money was lent but also by the management of the
bank.
In order to form a judgment as to the action of Mendezona with respect to the
offer of secure the money borrowed and in order to determine whether he
delayed the execution of the mortgage deed fraudulently and in bad faith, it is
necessary to hold in view that the deed of sale of the property was only executed
by the vendors on the 21st of July, 1900, and it is self-evident that without the
deed of sale it would have been impossible to have executed the mortgage or to
have had it recorded in the Registry of Property. The record shows that the title
deeds to the procuration building sold were in the possession of the Franciscan
friars, the former owners, as it was the father superior of the latter who delivered
them to the notary, Barrera. This was two or three months prior to the date of the
deed of sale, July 21. Hence it is evident that the delay which occurred in the
drafting and execution of the deed is not chargeable to the accused. This delay,
not imputable to him, can not be made to constitute evidence of fraudulent acts
committed by deceit on the part of the accused himself, who, according to his
testimony in the record, had not even seen the title deeds to the property sold by
him. The delay, if any, was doubtless on the part on the provincial of the
Franciscan friars and the notary, Barrera, who took two or three months to draw
the deed of sale of the property. The record contains no evidence whatsoever to
controvert or overcome this result of the preliminary investigation, and as it does
not appear that the Franciscan friars delivered the old title deeds of the building
to the purchaser after the verbal sale stipulated in November, 1899, it is to be
presumed that Mendezona's affirmation was true even though it be a fact that
demand was made on him for the execution of the deed by the agents of the
bank because in the ordinary course of events the vendor holds the title deeds of
the property until the execution of the deed of conveyance, and no evidence to
the contrary has been offered in this case to overcome the presumption.
Sixteen days after the execution of the deed of sale of the procuration building to
the accused, the latter sold it in turn to the Augustinian friars for $400,000,
subject to the right of redemption, and by this operation the accused put it
absolutely out of his power to secure the credit of the Spanish-Philippine Bank by
a mortgage on the said property.
Was the crime of estafa committed by this proceeding, by selling the property
which had been promised as security for the large amount loaned? We think not,
because the accused when he offered the property as security for the loan was in
possession thereof as owner, and therefore when he contracted the personal
obligation he did not act in bad faith nor did he practice deceit. The mere
nonperformance of this obligation does not constitute the crime of estafa. The
deceit, in cases of fraud, must be antecedent to the obligation in which it
originates, and be the cause of the latter and not supervenient thereto. This is the
doctrine established by the supreme court of Spain in its judgments of the 7th of
January, 14th of March, and 23rd of June, 1888, and the 18th of December,
1889, which we think proper to cite in the interpretation and application of the
precepts of the Penal Code of Spanish origin.
With reference to the status of the property sold it is unquestionable that it was
unencumbered on the 6th of August, 1900, and can not be regarded as having
been encumbered or mortgaged merely by its having been offered or promised
as security for the money loaned. The promise made by a borrower to give a
mortgage upon his property does not result in the attachment of the mortgage
offered.
In order that a mortgage may be regarded as existing and productive of legal
effects it is indispensable that the formalities prescribed by articles 1857 and
1874 et seq. of the Civil Code, and articles 105 et seq. of the Mortgage Law,
applicable to the case, be complied with.
The doctrine established by the supreme court of Spain with respect to the
interpretation and proper application of article 550 of the Penal Code of Spain,
which is the equivalent of article 537 of the Code now in force in these Islands,
confirms the doctrine above laid down and is not overruled by any subsequent
judgment. The judgment of October 29, 1888, among other things holds that the
simple promise to constitute a mortgage does not fall within any of the precepts
of article 550 of the Spanish Code — the equivalent of article 537 of the Code of
the Philippines — because it is not the same thing to make a promise as to
perform the act promised. The decisions of January 7, and March 14, 1888,
above cited among other things established the doctrine that for the application
of the provisions of the above-cited article of the Penal Code it is necessary that
the gravamen imposed on the property be legally constituted by means of the
essential formalities prescribed by the law, as otherwise the promise is
productive of nothing more than a mere personal obligation. Consequently,
unless real property is mortgaged by a public instrument recorded in the Property
Register in accordance with the prevailing law and gravamen referred to by
article 537 of the Penal Code for the purposes of the application of its precepts
can not be considered as existant. (Arts. 1875 and 1880 of the Civil Code.)
These rulings are directly applicable to the fact alleged by counsel for the
Spanish-Philippine Bank. In order to bring the case within paragraph 1 of article
537, or paragraph 1 of article 535 of the Penal Code it must appear by the record
(1) that Mendezona pretending to be owner of the property without being such
owner had offered it as security for the credit of the bank and had subsequently
sold in to the Augustinian friars, or (2) that Mendezona defrauded the bank by
pretending to be solvent in a higher degree and to own property which he did not
have for the purpose of obtaining the loan of the $600,000.
The preliminary investigation does not show that the accused when offering this
property to the bank as security and when selling it to the Augustinian friars was
not the owner thereof, or that he was without the right to dispose of it. On the
contrary, it appears fully therefrom that Mendezona when he offered the
procuration house of the Franciscans as security for the money received from the
bank, had purchased it more than a month before, was in possession of the
premises, and the consideration paid therefor was in the hands of Mendezona &
Co. as a deposit, drawing interest at the rate of 8 per cent in favor of the vendor
friars; and although the corresponding instrument was not drawn until six months
afterwards it is nevertheless true that the accused was in possession of the
house as owner by virtue of a perfectly valid verbal contract from which rights
and obligations of unquestionable legality doubtless arose, and therefore the
accused was in a position to transfer his right of ownership in the property to the
Augustinian friars, who, on their part, have not made any complaint whatsoever.
(Arts. 1450 and 1451 of the Civil Code and others applicable.)
Nor does it appear from the record of the preliminary investigation that the
second of the indicated acts has been committed so as to fall within the
provisions of article 535, No. 1, of the Penal Code — that is to say, that
Mendezona has defrauded the bank by pretending to be possessed of greater
means than he really had at his disposal at the dates of the loans.
Furthermore, it must not be forgotten that in a criminal prosecution the
investigation and proof is limited to the facts alleged, that is, to the acts or
omissions with which the accused is charged, as he is entitled to be informed of
the nature and cause of the accusation. (Arts. 6 and 15, G.O., 58.)
The two facts falling within the scope of article 535, No. 1, and article 537, No. 1,
of the Penal Code, and set up by the complainant in its brief are not alleged in
the complaint, and although they are designated in the criminal law as
constituting the crime of estafa they have not been properly charged, and the
complaint has not been amended so as to include them.
In view, therefore, of the negative result of the preliminary investigation we hold
that the appealed order must be affirmed inasmuch as it does not appear from
the record that the accused has committed the acts charged as constituting the
crime of estafa. The ruling of the court below is sustained and in accordance with
section 13 and 14 of General Orders, No. 58, the appealed order is hereby
affirmed with the costs of both instances de oficio. So ordered.
Arellano, C.J., Cooper, Willard, and Mapa, JJ., concur.
Ladd, J., disqualified.
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-1458 March 29, 1906
MAX L. FORNOW, plaintiff-appellant,
vs.
J. C. HOFFMEISTER, defendant-appellee.
Del-Pan and Ortigas, for appellant.
Joaquin R. Serra, for appellee.
ARELLANO, C.J.:
On the 27th of August, 1902, the plaintiff brought this action in the Court of First
Instance of Manila to recover from the defendant for the breach of a certain
contract, (a) the penalty of 10,000 marks provided for in said contract, or its
equivalent in Mexican currency; (b) the legal interest due upon this sum from the
time of the filing of the complaint until fully paid; (c) 363 pesos, Mexican currency,
which was refunded to him at Singapore by Behn, Meyer & Co., the said amount
representing the cost of transportation from Singapore to Genoa; (d) 35 pesos
paid to him for transportation from Genoa to Berlin; (e) 138.89 pesos paid to him
for traveling expenses; and (f) the costs of the proceedings. The plaintiff attempts
to recover the penalty of 10,000 marks on the ground that the defendant had
agreed to render his personal services to the plaintiff and that upon the
termination or rescission of the contract he would not enter the service of any
other firm in the Philippine Islands during the three years immediately thereafter,
either as a clerk or as a partner, and that he would not engage in business for
himself or conduct any business house or factory, and in case of any breach of
this agreement to pay to the plaintiff the stipulated penalty of 10,000 marks,
without prejudice to the right of the plaintiff to bring an action for damages
against him. But the defendant, upon his arrival at Singapore on his return home,
the plaintiff having paid his entire traveling expenses, secured a refund to the
purchase price of his ticket and returned to this city under a new contract with
another firm doing business in the city of Manila, and for which he was working at
the time the complaint in this case was filed. The other amounts which the
plaintiff seeks to recover, as above stated, and which make a total of 611.89
pesos, Mexican currency, are the sums delivered to him by the plaintiff for his trip
to Europe — from Manila to Singapore, from Singapore to Genoa, and from
thence to Berlin — under the terms of the aforesaid contract, and on condition
that the defendant should return to his country and not come back to the Islands
for a period of three years.
The contract upon which the complaint is based, and which appears on pages 8,
9, and 10 of the bill of exceptions, contains at the bottom thereof the following
statement: "This contract was executed in Manila on the 24th day of January,
1901, and signed in the presence of the German consul of this city, who certified
as to the authenticity of the signatures in the presence of two witnesses."
The defendant filed his answer on the 20th of November, 1902, denying
absolutely all the allegations contained in the complaint, except those which
related to the execution of the contract and the penalty clause above referred to;
but at the trial of this case on the 23rd of June, 1903, he admitted each and all of
the allegations of the complaint and the authenticity of the documents filed
therewith. The plaintiff therefore waived his right to present further proof. (Page
4, bill of exceptions.) The statements made by counsel in open court, which
appear on page 7 of the record, are as follows: "Present: Rafael Del-Pan,
attorney for plaintiff and Joaquin R. Serra, attorney for defendant. Attorney Del-
Pan insists upon the allegations of the complaint and offer to introduce evidence,
parol as well as documentary, in support thereof. Attorney Serra states that if the
defendant admitted all the allegations of the complaint. Attorney Del-Pan then
stated to the court that if the defendant admitted all the allegations of the
complaint, he would withhold the evidence which he intended to introduce at the
trial, but that he wished to file the documents numbered 1, 2, 3, 4, 5, 6, 7, 8 and
9. Attorney Serra stated that he had no objection to the admission of these
documents. The court then ordered that the said documents presented by
counsel for the plaintiff be admitted in evidence. Attorney Serra then stated that
the defendant did not admit that the contract in question could be enforced for
the reason that it was not drawn in accordance with the labor laws."
This is all that appears of record.
The court below entered judgment in favor of the defendant, dismissing the
complaint, with the costs of the proceedings.
The plaintiff was notified of this judgment on the 21st of the following July. On the
same day, he excepted to the judgment and presented a motion for a new trial.
The case has been submitted to this court, therefore, upon the said exception to
the judgment.
The complaint was dismissed by the court below on the ground that at the time
the contract in question was entered into between the plaintiff and the defendant
the contract-labor laws of the United States of America were in full force and
effect in the Philippine Islands; that the said contract was void ab initio, according
to the said law, and that the plaintiff could not recover any damages for breach
thereof.
It is true that on the 6th of June, 1899, it was ordered that there be enforced in
the Philippine Islands the laws then existing in the United States in regard to
contract labor.
The plaintiff assigns as the first error the finding of the court below to the effect
that "both parties agreed upon the following facts, to wit: That the plaintiff, a
resident of the Philippines, and the defendant, a resident of Europe, entered into
a contract on the 1st day of July, 1900, which was subsequently ratified in
Manila, Philippine Island, on the 24th of July, 1901 . . . ."
The plaintiff in his brief says: "An examination of the record, that is to say, of the
bill of exceptions, which contains all the essential facts of the case, will clearly
show (a) that there was no such stipulation as to the facts between the parties;
and (b) that the essential fact, which the court below presumes to have been
agreed upon by the parties, is not true." The stipulation had between the parties
appears on page 7 of the bill of exceptions with the stenographer's certificate
attached thereto. That stipulation was merely that the defendant "admitted all the
allegations of the complaint of the complaint." And since it was alleged in
paragraph 1 of the complaint, and was admitted in paragraph 1 of the answer,
that the contract was executed in Manila, it is evident that the finding of the court
below as to this point is erroneous.
We have been unable to find in the record brought to this court any evidence of
such agreement between the parties. Nor have we been able to find any proof of
the fact that the plaintiff, a resident of the Philippine Islands, and the defendant, a
resident of Europe, had entered into a contract on the 1st July, 1900, and
subsequently ratified the same in Manila on the 24th day of January, 1901. All
that we have been able to find is the contract executed on the 24th day of
January, 1901, above referred to.
The conclusion which may be drawn from the terms of the contract executed on
the 24th of January, 1901, is that the said contract was in full force and effect
from the 1st of July, 1900, since it is so stated in paragraph 10 of the same, and
because, under the sixth clause thereof, the defendant was to receive in payment
for his services, beginning with 1st day of July, 1900, the sum of 3,000 pesos,
Philippine currency, per annum, and 5 per cent of the net profits of the cigar
factory "Helios" from the 1st of January, 1900.
It might be inferred, however, that the parties, in order to avoid the prohibition
contained in the Contract Labor Law, entered into another contract prior to the
24th day of January, 1901, in Manila, under which the defendant could enter the
Islands, but there is nothing in the record which would authorize a finding as to
the existence of any other contract which may possibly have been entered into
between the parties. They might have entered into such a contract prior to the 1st
of July, 1900, at any time prior to that date.
There is nothing upon which to base a finding to the effect that prior to the date
upon which the Alien Contract Labor Laws of the United States went into effect in
the Philippine Islands the plaintiff and the defendant had made a contract on a
certain and specific date and place and under certain specified circumstances, of
which the one executed on the 24th of January, 1901, was a reproduction and
ratification.
Therefore it can not be held that the contract executed by the parties in Manila on
the 24th day of January, 1901, and by them admitted to the true and genuine,
should be considered as entered into in violation of the Act of Congress of
January 23, 1885, the "Contract Labor Law," which was extended to the
Philippines on the 6th of June, 1899.
And if the contract in question is not defective, as alleged, it can not be declared
null and void. On the contrary, it appears to be a perfect and valid contract. It
contains all of the necessary elements required by law and could properly be
admitted in evidence. The defendant did not question its authenticity, but
admitted the same in its entirely.
Therefore, the petition of the plaintiff which has for its object the enforcement of
the penalty stipulated in the contract in case of the breach thereof should be
granted.
The plaintiff, however, can not recover the money paid by him for the traveling
expenses of the defendant under another clause of the contract. The defendant
was entitled to this allowance without condition precedent of subsequent. The
plaintiff voluntarily complied with this obligation imposed upon him by the terms
of the contract. The plaintiff, when he parted with money paid to the defendant for
his expenses, did so irrevocably. It would amount to a revocation of such
payment if the plaintiff were allowed to recover the money as unduly paid,
particularly when it has not been proved why such payment was improperly
made.
We are of the opinion, therefore, that the judgment appealed from should be
reversed, and that the defendant, Hoffmeister, should pay the stipulated penalty
of 10,000 marks, or its equivalent in Philippine currency, with legal interest
thereon from the date of the filing of the complaint until fully paid, with the costs
of the first instance. The plaintiff, however, is not entitled to the additional 611
pesos, Mexican currency, or its equivalent in current money, which he seeks to
recover. We make no special provision as to the costs of this instance. After the
expiration herewith. So ordered.
Torres, Mapa, Carson, Willard and Tracey, JJ., concur.
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-1347 October 29, 1903
NICASIO VELOSO, plaintiff-appellee,
vs.
ANG SENG TENG, defendant-appellant.
Montagne and Dominguez for appellant.
Oscar Sutro and Francisco Ortigas for appellee.
WILLARD, J.:
This is an action to recover possession of real estate brought under
section 80 of the Code of Civil Procedure, before a justice of the peace of Manila
on November 5, 1902. From a judgment against him in that court, the defendant
appealed to the Court of First Instance. Judgment was there rendered against
him and he was brought the case here.
1. The first assignment of error relates to the defendant's plea of former
adjudication. On February 8, 1902, the plaintiff commenced against the
defendant, before a justice of the peace of Manila, an action similar to the
present one, for the recovery of the possession of the same real estate. In that
action the justice, on April 19, 1902, rendered judgment against the plaintiff. The
plaintiff appealed from the judgment, and after the case had been tried in the
Court of First Instance, but before judgment had been rendered therein, the
court, at the request of the plaintiff, on June 19, 1902, dismissed the action
without prejudice to the right of the plaintiff to commence another action for the
same cause. The court below held that these proceedings were no bar to the
present suit. In this there was no error. The decision of June 19 terminated that
case. It was the final judgment from which an appeal could have been taken. It
expressly reserved to the plaintiff the right to commence the action again. The
court had jurisdiction of the parties and the subject-matter of that suit. It had the
power to make the order. Whether the right or wrong, it can not be attacked in
this case, the defendant not having appealed therefrom.
2. The second assignment of error finds no support in the record. Not only does it
appear that any exception was taken to the order of the court allowing the plaintiff
to amend his complaint, but if affirmatively appears that such amendment was
made by agreement of the parties. (Bill of exceptions, p. 13.)
3. The claim of the appellant that the court should have granted this motion for a
continuance made on February 2, 1903, can not be sustained. Section 141 of the
Code of Civil Procedure is, in part, as follows: "Rulings of the court upon minor
matters such as adjournments, postponements of trials, the extension of time for
filing pleadings and motions and other matters addressed to the discretion of the
court in the performance of its duties, shall not subject to exception." This section
would ordinarily be a sufficient answer to the exception which the defendant took
the order of the court refusing the continuance. It is claimed, however, by the
defendant that there was an abuse of discretion and that an exception lies in
such cases. Admitting, without deciding, that this can be done, yet we see no
abuse of discretion in order. After trial had commenced on December 27, 1902,
the defendant went to China, not to return until May 1, 1903. After his departure,
the case was set for hearing on January 2, and five continuances were
afterwards obtained by the defendant, without and suggestion that the presence
of the defendant at the trial was necessary. For example: On January 27 Señor
Rodriguez, one of the attorneys for the defendant, filed a motion asking that the
case be not taken up that day, because he could not attend and that it be set for
hearing any day the next week. He then said nothing about the necessity of
having the defendant present as a witness. The continuance was asked also on
the ground that two of the defendant's attorneys were parties to a proceeding in
another court, then being heard, and that the third could not try the case alone.
The defendant had already obtained five continuances. The last were granted on
the understanding that the defendant would asked for no more. There was no
abuse of discretion for refusing to continue the case on this ground.
The parties at the beginning of the trial had agreed that the case should
tried in the English language. The failure of the defendant's attorneys to be
present in court during parts of the trial did not nullify this stipulation.
4. The signing by the judge of findings and of a decision prepared by the attorney
of the plaintiff was not error of law.
5. The third finding of fact, to wit, that the reasonable value of the rent of the
premises during the time in question was 1,000 pesos a month, is fully sustained
by competent evidence.
6. The fourth finding of fact is as follows:
Fourth. That during the defendant's occupation from the 9th day of
January, 1902, he has missed the houses, and has caused damage to
them in the sum of $4,000, money of the United States.
This finding is plainly and manifestly against the evidence. In fact, there
was no evidence in the case from which the court could say that any of these
damages were caused after January 9, 1902. The property had been occupied
by the defendant as a cigar factory since 1899. Neither one of the two architects
who at the request of the plaintiff's agent examined the property stated when the
damage was gone. The plaintiff's agent testified as to the condition of the
property in 1899, when the plaintiff acquired title, as compared with its condition
at the time of the trial. But no witness testified to its condition on January 9, 1902,
as compared to its present condition. The testimony of the witness Sim Kee Lim
only came down to January, 1900. Considering the nature of the damages, it is
more than probable that they were largely caused prior to January 9, 1902. They
consisted principally of injuries done to the building by its used as a cigar factory.
But, in the view which we take of the case, it is immaterial whether these
damages were caused before or after the said 9th day of January. This summary
action of forcible entry and detainer is defined in section 80 of the Code of Civil
Procedure. By the first part of the section, a landlord, as against a tenant whose
right to the possession has terminated is entitled to recover the possession and
damages. Under the last part of the section which relates only a tenant who was
failed to pay the rent for thirty days after notice, the landlord can recover the
possession, rent due, and damages. The case at bar falls under the first part and
not under the second, and the plaintiff in addition to the possession is entitled to
recover "damages." What is meant by the word "damages?" It certainly can not
refer to damages caused to the property while the tenant was in the lawful
possession of it. For such damages the landlord may have a right of action. But
such right of action must be exercised in an ordinary suit. It can not be made the
subject of a summary proceeding before a justice of the peace, under said
section 80. Damages caused to the property, after the possession has become
unlawful, stand upon a different footing. But event as to such damages we think
that there can be no recovery in this proceeding, in view of the provisions of our
law. While section 80, of it stood alone, might give rise to some doubt, this is
removed when section 84 is considered. This distinctly says that the judgment
shall be for "all arrears of rent or a reasonable compensation for the use and
occupation of the premises." This last clause is a definition of the word
"damages" found in section 80, and indicates that they are the only those
damages which are caused by loss of the use and occupation of the property.
This action has to do only with the right to the possession. The ownership of the
property is not necessarily involved. We should therefore not except to find any
provision allowing a recovery of damages for substantial injuries to buildings of
which the plaintiff might not be the owner.
7. It is suggested by the appellant that the finding by the court below, that a
certain document presented at the trial by the defendant was a forgery, was error
because the document was never offered in evidence. It is not claimed that the
finding itself was contrary to the evidence. This error, it if existed, could not
possibly have prejudiced the defendant.
We find no error in the record except as to the allowance of damages. 1awphil.net
By section 496 of the Code of Civil Procedure, we are authorized to modify
the judgment of the court below There is, therefore, no necessity for a new trial.
The judgment of the court below is modified by striking therefrom the
finding of fact above quoted as to the damages and that part thereof which
requires the defendant to pay the plaintiff $4,000, in money of the United States.
As so modified it is affirmed. This affirmance is without prejudice to the right of
the plaintiff to maintain an ordinary action in a court of competent jurisdiction to
recover such damages as he may show himself entitled to. Neither party is
entitled to recover of the other any costs in this court. Judgment will be entered
accordingly twenty days after the filing of this decision.
Arellano, C.J., Torres, Cooper, Mapa, and McDonough, JJ., concur.
Johnson, J., did not sit in this case.
DECISION OF MOTION FOR REHEARING.
WILLARD, J.:
The appellant has moved for a reargument, on the ground that the tenant
of the building was the cigar factory or its owner, and not the defendant; and that
the factory or its owner, and not the defendant, is liable in this suit.
No such point as this was made in the court below nor in the brief of the
appellant in this court; nor is it covered by any assignment of error. The
assignments of error 9 and 10 are too general to present this question. This
would be sufficient reason for denying the motion. It may be added, however,
that the following facts appear:
The title which the appellant has seen fit to give to the case in his motion,
now nowhere appears in any papers in the suit. The amended complaint names
Ang Seng Teng as defendant. The answer is entitled "Ang Seng Teng, Gerente
de la Fabrica Cataluña, defendant," and admits that the defendant is in
possession, and has been in possession for three years, by virtue of a contract of
lease executed by plaintiff to Palanca and duly assigned to the defendant
because he was the successor of Palanca in the management of the factory.
The judgment and decision follows this answer and judgment is entered
against "Ang Seng Teng, Gerente de la Fabrica Cataluña."
Arellano, C.J., Cooper, Mapa, McDonough, and Johnson, JJ., concur.
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-455 October 26, 1901
RAFAEL ENRIQUEZ, plaintiff-appellee,
vs.
A.S. WATSON & CO., defendants-appellants.
William J. Rohde, for appellant.
Felipe G. Calderon, for appellee.
WILLARD, J.:
It appears from the record that the appellants in this case occupied the
building at No. 14 Escolta Street, known by the name of the English Dispensary
and being a part of the property of the Enriquez estate, under a lease thereof,
from January, 1900, to May of 1901. The amount of the stipulated rent for that
period has been paid by them. The rent corresponding to the period from
January, 1900, to May, 1900, was paid twice; first to the administrator of the
estate and later deposited in court. The appellee seeks now to evict the
appellants from said property, alleging as his ground therefor the non-payment of
the amount of rent corresponding to said period.
The situation in which Messrs. Watson & Co. are found in this case is due
principally, in our opinion, to the litigation between the Enriquez brothers over the
estate of their deceased parents. During the first period above mentioned the
administration of said property passed three times from the hands of one to those
of the other of the brothers, Francisco and Rafael. The claim made by Don
Rafael does not refer to the failure to pay the said rents but to the fact that these
were paid improperly to his brother. It is not surprising that with these frequent
changes of administrators the tenants of the properties of the estate have
committed mistakes in the payments. lawphil.net
The judgment, whose execution is sought in this case, was rendered by
default on June 20, 1900. The summons was served upon the person in charge
of the establishment, who was denied an extension of some days which he
applied for by reason of the absence of the attorney in fact of the house. This
judgment became final, and although it is not proper for us, perhaps, to inquire
into the merits of said judgment for the purpose of determining its annulment, we
can take into consideration the antecedents of the case so far as they serve to
make clear the succeeding acts of Don Francisco as well as of Don Rafael. If the
rents whose alleged nonpayment gave rise to said action have been actually
received by the Enriquez estate the abandonment of the judgment could be more
readily deduced from the succeeding facts than if they had not been paid at any
time.
After the 1st day of September, 1900, it was Don Francisco who had
charge of the administration of the estate. The court notified the appellants that
they should recognize him as such. After the said date the said Francisco
recognized the appellants as the tenants of the estate and continued to receive
from them the amount of the rents until January 25, 1901, when a new lease for
twelve years was entered into. Although said lease may have been void it is true
that the contracting parties conformed to its terms, paying the amount of the
stipulated rent to Don Francisco from January 25, 1901, to April 1. The latter
likewise had previously received the rents corresponding to the months from
January to May, 1900, which, according to the allegations of Don Rafael, were
not paid. As a result of these allegations the judgment referred to was entered.
The facts related disclose to us conclusively that Don Francisco never intended
to ask the execution of this judgment nor considered Messrs. Watson & Co.
evicted, but rather as actual tenants.
As for Don Rafael, his attorney stated before this court that upon assuming
charge of the property in February, 1901, he demanded of the appellants the
amount of the rents. The statements of his attorney would contradict and be
inconsistent with any theory other than that the rents thus demanded were those
accrued under the new lease of January 25, 1901. The appellants paid to him the
rents from April, but refused to pay that corresponding to the month of March,
stating that they had already paid the same to Don Francisco. As a result of this
refusal proceedings were had for the purpose of reviving the old judgment of the
previous year. It appears to us that the true reason which prompted this action
was not the nonpayment of the rents from January to May, 1900, but the fact of
the nonpayment to Don Rafael of those corresponding to the month of March,
1901. The original judgment can not be utilized for such purpose. If there has
been such failure to pay the rent corresponding to the month last named, Don
Rafael ought to have presented the proper complaint, basing it upon the fact. It is
not the contract above referred to entered into with the administrator Don
Francisco which gives rise to the re-leasing of the property, but the successive
acts of administration of the latter, recognizing it in the name of the estate whose
representative he alone was — acts neither impugned nor declared void until
now, by virtue of which he has accepted the agreements of the tenant which until
now have likewise not been rejected by the estate or objected to in any way.
In view of the established facts above related we are of the opinion and
decide that there have been subsequent juridical acts between the appellants on
one side and on the other the Enriquez estate, represented either by Don
Francisco or by Don Rafael, by virtue of which the said appellants must have
continued as such tenants of the estate, notwithstanding the judgment given on
June 20, 1900, which by reason of the very acts of the plaintiff estate has
become ineffective and has lost its executory force.1awphil.net

Wherefore the judgment appealed from is reversed with costs taxed to the
appellee, and it is so ordered.

Arellano, C.J., Torres, Cooper, Mapa, and Ladd, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
 EN BANC
G.R. No. L-8883 October 20, 1916
FRANCISCA GONZALEZ and her husband FERNANDO FUSTER
FABRA, plaintiffs-appellants,
vs.
JOAQUIN GONZALEZ MONDRAGON, defendant-appellant.
Orense and Gonzales Diez for plaintiff-appellants.
W. A. Kincaid and Thomas L. Hartigan for defendant-appellant.
TORRES, J.:
An appeal raised by both plaintiff and defendant parties from the judgment
of March 17, 1910, whereby the trial judge reduced to P50 per month the
revenue and income which the plaintiffs should collect on account of the dowry
allowed Francisca Gonzales de Fuster by her father, the defendant Joaquin
Gonzales Mondragon, and in consequence thereof ordered the latter to pay to
the plaintiff spouses the sum of P800, corresponding to the revenue from the
dowry for the period of sixteen months, from May, 1910, to August, 1911, with
interest at the rate of 6 per cent per annum, and after this date to pay to the
plaintiff spouses P50 at the end of each month as revenue from the said dowry;
without special finding as to costs.
In the written complaint of August 29, 1910, filed in the Court of First
Instance of Manila, counsel for Francisca Gonzales, the latter assisted by her
husband Fernando Fuster y Fabra, set forth that, by reason of the plaintiff's
having contracted marriage with her present husband, Fustwer Fabra, on March
20, 1909, her father, the defendant Joaquin Gonzales, on December 24, 1909,
settled on her a dowry of P14,000, demandable at hi death; that the donor
agreed to pay to the said spouses during his lifetime, as revenue and interest
from the said dowry, an annual income of P1,200, payable in advance in monthly
installments of P100, from and after January 1, 1910; that the defendant had paid
the installments pertaining to the months of January, February, March, and April,
1910, but that he had failed to pay those which fell due thereafter and which on
the date of the complaint amounted to P1,600. Said counsel therefore prayed the
court to order the defendant to pay to the plaintiffs the sum of P1,600, with the
legal interest thereon, and, in addition, the monthly installments of P100, in
conformity with his agreement, and also to pay the costs of the trial.
The defendant answered the foregoing complaint, denying generally and
specifically each and all of the allegations therein contained. In special defense
he alleged that in allowing his daughter the dowry mentioned in the complaint he
had made the mistake of giving her a larger dowry than he should have given, to
the prejudice of his other children, wherefore the said dowry and pension were
inofficious, null and void, in so far as they were excessive; that for this reason, he
had proposed to his daughter and son-in-law to reduce the said dowry and
pension to an amount compatible with his fortune and equal to those he had
granted to his other daughter. Otherwise prejudice would be caused to the lawful
portions of his other fifteen children, five of whom, besides his daughter the
plaintiff, begotten by his first wife, were already married and the remaining ten,
born of his second wife, were all unmarried and he was obliged to support them.
After a trial at which evidence was introduced by both parties, the court
rendered the judgment aforementioned, to which both the plaintiffs and the
defendant excepted and in writing moved for a reopening of the case and a new
trial. These motions were overruled, exception was taken by the petitioners, and,
upon the filing of the bill of exceptions stipulated between the parties, the same
was approved and transmitted to the clerk of this court.
The question to be decided in these proceedings is whether the plaintiff
spouses are or are not entitled to compel their father-in-law, Joaquin Gonzales,
to pay them during his lifetime the stipulated income form or interest on the sum
of P14,000 which he gave them as dowry nine months after the plaintiffs'
marriage.
The record shows that on March 20, 1909, Francisca Gonzales, the
defendant's daughter by his first wife, married Fernando Fuster y Fabra
(complaint, par. 3), and that nine months afterwards, that is, on December 24 of
the same year, 1909, as the husband Fuster desired to show his relatives in
Spain that he had not made a bad choice in marrying Fany Gonzales, her father
Joaquin Gonzales Mondragon executed the following document, Exhibit A,
whereby he endowed his said daughter in the sum of P14,000: "Know all men by
these presents:.
That I, Joaquin Gonzales Mondragon, married in second wedlock
to Doña Nieves Balmori y Rivera and a property owner and resident of
the municipality of Bautista, Province of Pangasinan, Philippine Islands,
do hereby freely and voluntarily declare and set forth:.
First. That on March 20, 1909, my daughter Francisca, had by my
first marriage to Sra. Rosario Gonzales, contracted marriage with Sr. Dn.
Fernando Fuster Fabra, and that both said persons now reside on Calle
Herran of the district of Malate, city of Manila.
Second. This marriage was arranged and contracted with my
consent and approval, and as my personal fortune allows me to perform
an act of liberality in behalf of my said daughter without thereby causing
any detriment whatever to my own interests nor to those of my other
children or of my second wife, and without exceeding what I might by will
 give to or dispose of in favor of my said daughter, by these presents I
hereby solemnly declare:.
That, by reason of the said marriage, and as proof of the pleasure
with which I have witnessed and welcomed its celebration, and of the
fatherly affection which both husband and wife inspire in me, I give to my
said daughter Dona Francisca Gonzales, wife of Don Fernando Fuster
Fabra, the sum of Fourteen thousand pesos (P14,000) as a dowry, in
which sum I desire and it is my will to make her a participant, as a
legitimate daughter, in the property of my exclusive ownership which I
may leave at my death, in so far as it may be contained within the one-
third which, as a strict legal portion, the law provides for legitimate
children, and within the other one-third which, while also forming a part
of the legal portion of the legitimate children, is set aside for betterments;
and by this it shall not be understood that from the present time there
shall be any reduction or diminution in the share which by law should
pertain to her in the actual estate I may leave at my death.
The grant of this dowry is, however, subject to the condition that it
shall not be claimed or demanded until after my death; but meanwhile I
will pay to my said daughter, as revenue from or interest upon the said
capital of P14,000, an annual income of P1,200, payable in advance in
monthly installments from the first of January, 1900, at the rate of P100
per month; and as a guarantee of the conservation of the capital set
aside as dowry and of the payment of the income assigned, I shall place
an express and special mortgage on a part of the lands I possess in the
Provinces of Pangasinan and Nueva Ecija, as soon as the Court of Land
Registration issue the certificate of title which I have applied for.
In witness whereof I sign this document, in triplicate, each of the
same note, this 24th day of December, 1909.
(Sgd. Joaquin Gonzales. Signed in the presence of: (Sgd.) M.
Aman. (Sgd.) Petronilo Quibote.
.The donation made in the presented document was duly accepted by F.
Fuster and Fany G. de Fuster on January 11, 1910, by a notarial instrument
attached thereto.
Now then, Joaquin Gonzales Mondragon, testifying as a witness in his own
behalf, stated that he had not endowed his daughter on her marriage because it
was not the custom of his family to do so, but that after the marriage, his son-in-
law Fuster, through his wife (witness' daugther), induced him to grant her a dowry
on the ground that Fuster's father would be vexed at learning of his son's
marriage and could be appeased only by settling a dowry on the bride; that the
defendant at first objected to this, but in order that the recently married couple
might be well received by their relatives in Spain and afterwards as it became
urgently necessary to reply to a letter from Fuster's father in which information
was requested as to whether the marriage of his son to Francisca was an
advantageous one, the defendant endowed her in the amount stated in the
document Exhibit A, that subsequently, on thinking over the matter carefully, he
came to the conclusion that the monthly allowance was excessive, wherefore,
from May, 1910, he ceased to pay the agreed income of P100 per month and
tried to reduce the amount of the dowry; that when his first daughter Rosario
married, he did not settle any dowry on her, and did not do so until after the
marriage when he gave her as a dowry the sum of P2,150 (rec., p.18), this sum
being adequate in view of his income and other circumstances of his financial
status, for his income only amounted to eight or nine thousand pesos per annum
(rec., p. 14); moreover, he had to share this amount with his father who was still
living, and the remaining half thereof was insufficient fo the support of his family.
The defendant added that his property was worth all told about P170,000 (rec.,
p.26), with the revenue from which he was supporting ten children had by his
second wife, besides the children, now married, of his first wife, whom, with their
respective families, he was supporting and on this account had been spending
more than he derived from his revenues and was obliged to sell a parcel of land
for P60,000 to pay his debts.
lawphil.net
Finally, defendant presented in evidence the documents Exhibit 1, by
which on August 31, 1911, he bestowed a dowry of P2,150 upon his daughter
Rosario Gonzales, who, on October 27, 1906, had contracted marriage with
Joaquin Balmori, and he did this to show that in comparison with that given to
Rosario, the dowry of P14,000 granted to his daughter Francisca de Fuster in
1909 was excessive and disproportionate to his means.
In rebuttal the plaintiffs presented the 1912 tax receipts of the defendants'
properties, issued by the provincial treasurer of Pangasinan, marked as Exhibits
B to G, inclusive and which show that the property belonging to Joaquin
Gonzales situated in the Province of Pangasinan is assessed at P189,610 (rec.,
pp. 34-39), the defendant having, besides, two building lots in Manila which,
according to his statement, were worth only P10,000 (rec., p. 23).
Article 1339 of the Civil Code provides that a dowry created by the parents
after marriage shall be governed by the rules for ordinary gifts. This is because it
is not a dowry given by reason of the marriage, although the most important
source and the origin of the dowry is a gift. Therefore, the provision of the last
part of the said article does not imply that the rules of the chapter relating to
dowry are not applicable to the case of a dowry created subsequent to the
marriage.
The dowries created by the defendant Joaquin Gonzales, in the said
notarial instrument, are of two kinds, and for the very reason that the dowry
created subsequent to the marriage of the donee must be governed by the rules
of ordinary gifts, it is logical that the dowry of P14,000, which cannot be claimed
by the donee until after the death of the donor, should partake of the nature of
the provisions of a last will and be governed by the laws established for
testamentary succession, as prescribed by article 620 of the Civil; Code. We
shall not concern ourselves in this decision with this dowry, which is equivalent to
a gift that is to become effective after the donor's death.
The claim submitted to this court is restricted to the other kind of dowry
contained in the notarial instrument Exhibit A, the obligation on the part of the
donor to pay P100 per month, counting from January 1, 1910. This dowry is
equivalent to a gift that is to produce its effects during the lifetime of both the
donor and the donee, pursuant to article 621 of the Civil Code.
For this reason, and particularly as it is a matter of a dowry that is to be
paid out of the products or revenues from the donor's property, in order to
adjudicate the defendant's claim that the total pension should be reduced to an
amount proportionate to his income so as to avert prejudice to himself, to his
wife, and to his other fifteen children, account must be taken of the provisions
contained in the following article 634 of the Civil Code, notwithstanding the
obligation undertaken in Exhibit A:.
The trial judge fixed the amount which the donee is reasonably entitled to
collect, at P50 per month, and held the remainder of the sum of P100 to be
inofficious. The amount fixed is owing from the time of the expiration of the four
months when its payment was stopped, that is, from May, 1910, with legal
interest thereon at the rate of 6 per cent on the total amount yet unpaid.
Accepting the other grounds of the judgment appealed from, and deeming
the errors assigned thereto as having been refuted, the said judgment should be
affirmed. It is understood, however, that the defendant is obliged to pay to the
donee all the sums that he is owing her at the rate of P50 per month from the
month of May, 1910, with interest thereon at the rate of 6 per cent per annum. No
special finding is made with respect to costs. So ordered.
Johnson, Carson, and Trent, JJ., concur.
Moreland, J., dissents.

A gift may include all the actual property of the donor or a part
thereof, provided the latter reserves, by legal title or in usufruct, what is
required for his support in a condition corresponding to his
circumstances.

.It is not here a question of the gift of all or of a part of the defendant's
property, but only of the obligation contracted by him to pay to the donee as a
dowry after her marriage the sum of P100 per month. If this amount exceeds that
which corresponds to the donee as the donor's daughter and is a burden upon
the portion which the defendant needs for his own support and that of his
numerous family, as the trial court in the judgment appealed from opined that it
was, the provisions of the above-cited article 634 of the Civil Code should be
applied by recognizing the right that lies in behalf of the defendant donor, the
father of a numerous family, to reserve what is required for his support in a
condition corresponding to his circumstances, after taking due account of the net
revenue collected by him.

Considering the dowry of P100 per month as being equivalent to a

gift inter vivos, as it was created subsequent to the donee's marriage, it must be
regarded as an inofficious gift in so far as it exceeds the amount that
corresponds to her proportionate share, in view of the need which the defendant
had and has to meet his obligations with respect to himself, his wife, and his
fifteen children; and as the legal provisions which regulate gifts are also at the
same time applicable to the rules relative to dowry, the court in accordance with
its prudent judgment and in the use of its reasonable discretion is empowered to
fix the equitable amount which may and should be paid to the donee by her
father the donor in fulfillment of his obligation contained in the instrument Exhibit
A.
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-7519 December 6, 1912
GUILLERMO F. BOWLER, plaintiff-appellee,
vs.
THE INTESTATE ESTATE OF MATEA ALVAREZ Y RUBIO, defendant-
appellant.
TORRES, J.:
Appeal by counsel for the judicial administrator of the estate of the deceased
Matea Alvarez y Rubio, by means of a bill of exceptions, from the judgment of
September 22, 1911, wherein the Honorable Charles S. Lobingier, judge held
that claim based on the document submitted by the plaintiff on July 9, 1910, in
administrative proceedings No. 1024 and duplicated in case No. 7939,
constitutes a legal claim against the estate of the said deceased, thereby
admitting said claim and authorizing the administrator to pay it.
On October 20, 1910, counsel for the plaintiff, Guillermo F. Bowler, filed in the
Court of First Instance of this city an amended complaint against the intestate
estate of the deceased Matea Alvarez y Rubio, setting forth that the
administration of the estate of said intestate is pending in Sala II of the court of
this city under the old No. 1025; that at the time of her death, and for many years
prior thereto, the said Matea Alvarez y Rubio lived in the town of Capiz, province
of the same name; that she died a widow on May 26, 1897, intestate and leaving
no heir by force of law, and therefore the Court of First Instance of Capiz
immediately proceeded to provide for her intestate estate in accordance with
article 942 of the Ley de Enjucimiento Civil then in force; that the next day, that
is, May 27, Marcos Arcenas, legitimate son of Maria Geronimo Rubio, appeared
in the case and in the court with a power of attorney executed in his favor on that
date by his mother, proving the latter's relationship to the deceased Matea
Alvarez y Rubio within the fourth degree, as she was the aunt of the deceased
Matea; that the court held such relationship to be proven and, in conformity with
article 944 of the said Ley, ordered the delivery of all the property and effects,
including the business and stock, belonging to the deceased to the said Marcos
Geronimo Rubio, all legal intervention ceasing on May 31 of that year, 1897; that
in addition to Marcos Arcenas' mother there survived the deceased Matea
Alvarez, Victorina Rubio and Manuel Rubio, uncle and aunt of the deceased and
brother and sister of the said Maria Geronimo Rubio who then resided in the
Island of Cebu, and who, in the month of the death of Matea Alvarez, executed
powers of attorney in favor of the said Marcos Arcenas, so that he might
represent them and look after their interests as heirs of the deceased; that as
such representative of the three sole heirs of the deceased Matea Alvarez,
Marcos Arcenas took over the business belonging to her and assumed
possession of all the property real and personal, and the live stock, of the
intestate estate, until he was relieved in November 1900, by a judicial
administrator appointed by the Court of First Instance of this city; that at the
death of Matea Alvarez y Rubio her intestate succession had little ready cash
and, in consequence of the revolution which a little while after her death spread
to the Province of Capiz, Marcos Arcenas as administrator of the property and
business of the deceased had to ask for extensions of time for the payment of
the debts contracted by the deceased and to borrow various sum to carry on the
business she left, and to avert great damage to the interests of the three heirs he
represented; that among said debts of the deceased Matea Alvarez y Rubio
appears a note reading thus:
I hereby acknowledge that I owe Don Guillermo Bowler thirteen
thousand nine hundred and fifteen (pesos) (P13,915) which he has
furnished me in cash, as a loan without interest, and obligate myself with
all the property in two present and future, to return to him the said sum in
two years, reckoned from this date, that is, on January tenth eighteen
hundred and ninety-eight.
And to make his rights a matter of record I deliver the present to him in
the presence of Don Marcos Arcenas, Don Antonio Laserna and Don
Rafael Rodriguez, of this place.
Capiz, January 10, 1896
(Sgd.) MARCOS ARCENAS
ANTONIO LASERNA
MATEA ALVAREZ
RAFAEL RODRIGUEZ
This note does not express the true intention and agreement between the
parties, for the sum received by Matea Alvarez y Rubio was not P13,915, but
P11,500, with interest at 10 per cent compounded at the end of each year, as
shown by the accounts of the deceased. Instead of stating these facts in the
note, the contracting parties calculated the interest for two years and added it to
the amount borrowed, that is, the sum of P2,415, and entered the total amount,
P13,915 in said note, with the statement that it was without interest, then a very
general custom in these Islands. When the foregoing note became due on
January 10, 1898, Marcos Arcenas lacked funds with which to pay it, wherefore
he sought and obtained from the creditor an extension of one year, thereupon
executing in Bowler's favor the following document:
 In view of the circumstances that have not permitted nor permit the with full powers granted by them. The balance struck is shown in a
payment of the P13,915 called for in the preceding document, it has document, a copy whereof follows:
been agreed between the creditor Don Guillermo Bowler and Don
Marcos Arcenas, the latter as the representative of Doña Geronima Don Guillermo Bowler, according to current account and
Rubio, who is by judicial order now in possession of the property left by reciprocal interest at 10 per cent a year:
Doña Matea Alvarez y Rubio, to extend the time of settlement for one
year, reckoned from the date it became due that is, until January 10,
1899. DEBIT. | CREDIT.
|
lawphi1.net

1900. | 1898.
Capiz, July 1, 1898 |
July 12. Paid through | Jan. 10. Balance $13,915.00
G. BOWLER Doña Felisa F. de | 1899
MARCOS ARCENAS Viaplana $1,350.00 |
| Jan. 10. Interest for
When the extension agreed upon had elapsed, the intestate succession of the | one year 1,391.50
deceased was in a worse financial condition than before, on account of the | Dec. 31. Interest from
insurrection in the country, so Marcos Arcenas was obliged to ask the creditor for | Jan. 10 to date 1,488.13
another extension, and when he had secured it, Marcos Arcenas as | 1900
representative and agent of the heirs and also as an heir himself, for his mother | June 30. Interest from
Maria Geronimo Rubio had died in the meantime, executed the document | Jan. 10 to date 839.73
herewith reproduced: | ————
| 17,634.36
The undersigned, in his own name and as the general representative of
the heirs of Maria Geronimo Rubio, acknowledging to be true and Capiz, September 24, 1900
genuine the obligation of payment contracted by Doña Matea Alvarez y (Sgd.) PEDRO ARCENAS.
Rubio on January 10, 1896, in favor of Don Guillermo Bowler, to which
obligation the present document refers, will pay to the said Don Accepted:
Guillermo Bowler the sum of thirteen thousand nine hundred and fifteen (Sgd.) WM. F. BOWLER.
pesos on January 10, 1900, and in addition, as interest on the said sum, BACOLOD, NEGROS, October 8, 1900.
ten per cent thereof annually, reckoning from January 10, 1898, until the
date of payment, without prejudice to Don Guillermo Bowler's right, in Nor was any payment made when the second extension expired, but five
case of insolvency, to proceed against the intestate estate of the said months after that date Marcos Arcenas began to make payments as
Doña Matea Alvarez y Rubio for the amount stated. I will make payment interest, thus:
of the capital and interest stated in the city of Iloilo, to the order of Don
Guillermo Bowler or his duty authorized representative.
July 12, 1900. Paid through Doña Felisa J. de Viaplana, of
Silay, Occidental Negros $1,350.00
Capiz, March 5, 1899 Sept. 27, 1900. Idem, Messrs. Hoskyn and Co., of Iloilo
1,440.00
(Sgd.) MARCOS ARCENAS Oct. 20, 1900. Idem, Mr. Buchanan, of Iloilo 27.25
Nov. 28, 1900. Idem, the Chinaman Conclu 28.99
Neither does the foregoing document express the true intention and Nov. 28, 1900. Proceeds from firewood 91.77
agreement between the parties, because the interest, according to the Nov. 28, 1900. Paid through N. Azcona 182.50
agreement, was payable at the end of each year, while it was paid on ———— 3,120.51
September 26, 1900, by Pedro Arcenas Rubio, the successor of said
Marcos Arcenas Rubio, who on July 11, 1900, appointed the said Pedro On October 12 of the same year, 1900, the plaintiff sold and delivered to
Arcenas his successor in the office of representative and agent of the Pedro Arcenas 252 demijohns for his use in the nipa wine distillery
three heirs, Maria Geronimo Rubio, Victorina Rubio, and Manuel Rubio, belonging to the intestate estate, the operation of which was continued
after the death of Matea Alvarez y Rubio. The price stipulated for said
demijohns was 311.25 Mexocan pesos, so that on November 30, 1900,
the result of all said transactions between the intestate and the plaintiff
was a balance in the latter's books of said deceased, which were kept
up by Marcos and Pedro Arcenas, and from which the last-named took
and delivered to the plaintiff the following account: .
DEBIT
————–——————————–——————————–
—————————— Paid through J. Viaplana July 12
1,350.00 12 16200
Idem, on account to Hoskyn Sept. 27 1,440.00 89 128160
Received from Buchanan Oct. 20 27.25 112 3024
Idem, from Chinaman. V. Conclu Nov. 28 28.99 151 4228
Proceeds from firewood and nipas do 91.77 151 13741
Received from D.N. Azcona do 182.50 151 27482
$14.825 trial balance do 153 2461060
Balance in his favor on new account do 15,497.32
———— —— ———
18,617.83 2461060
————–——————————–——————————–
——————————
CREDIT
————–——————————–——————————–
—————————
Balance in his favor June 30 17,634.36
252 demijohns Nov. 9 311.25 132 41052
Interest, in his favor, 2420008/3600 672.22 2420008
———— ————
18,617.83 2461060
Nov. 30 15,497.32
————–——————————–——————————–
—————————
Not only did Marcos Arcenas seek extension for the debt to plaintiff but
he also, under the same authority and power, borrowed from various
persons sums that amounted to $20,000, which have been allowed and
paid by judicial order and wholly for the benefit of the entire estate and
its heirs, in order to avoid loss and damage to them. All the acts
executed by Marcos Arcenas and his successor in the management of
the estate and business of the intestate estate were performed with full
knowledge and approval of all the heirs. Since the appointment of the
judicial administrator in November, 1900, the plaintiff has tried by all
possible means, friendly and judicial to collect said debt, the validity
whereof the heirs have acknowledged, and they assured him of the
payment thereof, with the interest stipulated by Marcos Arcenas, as
soon as the property of the intestate estate should be adjudicated. In
spite of the fact that present administrator, appointed in 1903, knew
perfectly well that the intestate estate owed large sums, yet he did not
ask for the appointment of a commissioner until the close of 1906. In
May, 1907, the plaintiff presented his claim to said commissioners and it
was allowed to the extent of $23,971.80, without any objection by the
heirs, although the administrator appealed to the Court of First Instance;
but on the face of the evidence said court affirmed the decision of the
commissioners in the plaintiff's favor for the sum of $23,072.25, and
after the matter had been carried to this Supreme Court on appeal it was
decided, as appears in 13 Phil. Rep., 282. Since the appointment of the
judicial administrator in November, 1900, up to date, all the property of
the intestate estate has been in administration under the direction of the
Court of First Instance of Manila, with the exception of $9,000 in cash,
which have at various times been delivered to the heirs by the present
administrator without any authorization, although sufficient property
remains to settle all the debts of the intestate estate. Outside of their
respective shares in the intestate inheritance, the majority of the heirs is
composed of insolvent persons who are financially unable to answer
proportionally for the payment of the sum claimed in this suit, they
having unlawfully taken to meet their expenses said $9,000, as follows:
Victorina Rubio (original heir) P2,599.25
Francisco Rubio (heir of the original heir Manuel Rubio)
793.21
Heirs of the original heir, Maria Geronimo Rubio:
Maria Rubio 1,037.49
Candelario Arcenas 680.21
Cornelio Aldea 509.10
Roque Arcenas 496.19
Isidro Arcenas 764.42
Basilio Arcenas 169.00
Pedro Arsenas 1,156.41
Anastacia Batuigas 543.90
Esteban Arcenas 104.00
Agustin Aldea 74.00
Lucio Aldea 9.00
—————
8,936.77
On July 13, 1910, the plaintiff received on the principal debt in question
the sum of P8,000 Philippine currency without prejudice to the question
of interest pending, and has not to date received any amount as interest
on said debt; therefore he begs that judgment be rendered against said
intestate estate for the sum of 311.25 pesos Mexican, or its equivalent in
current money, as requested in paragraph 15 of the complaint; and also
for annual interest at the rate of 10 per cent, compounded at the end of
each year, from November 30, 1900, upon the balance of 15,497.35
pesos Mexican, according to the final statement quoted in said
paragraph 15 of the complaint, less the reciprocal interest for the sum of
3,120.59 Mexican pesos paid on account since the same date.
The demurrer interposed by counsel for the defendant having been
overruled by order of March 17, 1910, said defendant, as judicial
administrator of the property of the deceased Matea Alvarez Rubio,
excepted and in reply to the previous complaint generally and
specifically denied each and all of the facts therein alleged, with the
exception of those expressly admitted, and in special defense alleged
that, for the collection of the interest at 10 per cent a year on the
principal stipulated in the note signed by Matea Alvarez Rubio on
January 10, 1896, the plaintiff presented a claim to the commissioners
appointed, who saw fit to admit it and decide that the plaintiff was
entitled to collect said principal with interest at the rate of 10 per cent a
year, that is, the sum of 23,971.08 pesos Mexican. The plaintiff appealed
from this decision and the Court of First Instance held that the
administration of the property of said deceased was liable for the
settlement of said interest and therefore sentenced the administration to
the payment of the sum of 27,072.25 pesos Mexican with interest at 10
per cent a year from September 10, 1908; but the administrator
appealed and this court, reversing the judgment of the court below, held
that the intestate succession of said deceased was not obligated to pay
the interest claimed by the plaintiff and merely sentenced said
administration to pay 10,794.49 pesos Mexican with interest at the rate
of 6 per cent a year from the date when the claim was presented to the
commissioners. In view of this decision, the question regarding the
payment of interest of 10 per cent claimed by the plaintiff has already
been discussed and definitely decided in a final decision rendered by a
competent court and is res adjudicata. To carry out that decision of the
Supreme Court the defendant on July 9, 1910, deposited with the clerk
of the Court of First Instance the sum of P11,384.12 Philippine currency,
which represents the amount to which the plaintiff is entitled, with
interest at the rate of 6 per cent a year, according to that decision of the
Supreme Court, and it was necessary to make deposit because the
plaintiff refused to accept the amount offered by the defendant under
that decision, although subsequent to the date of the deposit counsel for
the plaintiff took from the clerk, on account of the claim, the sum of
P8,000 Philippine currency. In order to base his action for the collection
of interest at the rate of 10 per cent a year on the document dated March
5, 1899, signed by Marcos Arcenas in his own behalf and as
representative of the heirs of Maria Geronimo Rubio, the plaintiff should
proceed against the said Marcos Arcenas and the heirs of the said Maria
Geronimo Rubio, or against all the heirs of the deceased Matea Alvarez
Rubio and not against the latter. On the hypothesis that the extension for
the payment of the principal owed by the deceased Matea Alvarez y
Rubio has been beneficial to the administration of her property, a fact
which the defendant expressly denied, then the plaintiff should present a
petition to the Honorable A.S. Crossfield, judge who is familiar with the
orders of said administration, requesting that, after investigation of the
validity and admissibility of the claim for payment of interest of 10 per
cent and for the value of the 252 demijohns, he order the payment of
said interest and the value of the demijohns, which should be charged
as expenses of administration. Wherefore his action in the form
presented or a separate suit against the intestate estate of the deceased
Matea Alvarez y Rubio, would be improper, and therefore the defendant
begs that the administration of the property of this deceased be
absolved from the amended complaint presented in this case, with the
costs against the plaintiff.
itc@alf
After trial and examination of the evidence submitted by both parties, the
court on September 22, 1911, rendered judgment declaring that the
claim presented by the plaintiff against the property of the deceased
Matea Alvarez y Rubio was legal and therefore allowed and the
administrator authorized to pay it, with the costs.
The defendant excepted to this judgment and asked for a new hearing,
which motion was denied by the court, whereupon the defendant
excepted and filed the corresponding bill of exceptions, which was
approved, certified and forwarded with the evidence to the clerk of this
court.
The plaintiff sets up as the principal cause of action his claim for the
payment of interest at the rate of 10 per cent a year compounded at the
end of each year since November, 1900, on the balance of 15,497.35
pesos Mexican, according to the liquidation inserted in paragraph 15 of
the complaint.
The defendant objected, averring that said claim for the payment of
interest has already been discussed, adjudicated and finally decided by
judgment of this court rendered in the suit entered by the same plaintiff,
Guillermo F. Bowler, against the defendant Pastor Alcazar, as
administrator of the property of the deceased Matea Alvarez y Rubio,
which judgment appears in 13 Phil. Rep., 282. Therein this court
reversed the judgment appealed from and directed the Court of First
Instance to render judgment allowing the plaintiff's claim for the sum of
10,794.49 pesos Mexican, reduced to Philippine currency, with interest
at the rate of 6 per cent per annum from the date of the presentation of
the claim by said plaintiff to the commissioners.
In the judgment reversed, the administration of the property of the
deceased Alvarez was held to be liable for the payment of the principal
and interest at the rate of 10 per cent a year at 10 per cent a year from
September, 1908.
So the question submitted to the court for decision is this: The
contention between the plaintiff and counsel for the intestate succession
of the deceased Matea Alvarez concerning interest on a certain sum
which she owed at death having already been decided in its previous
judgment, can the same question again rise in the present litigation?
In the said decision of this court, the following grounds were assigned as
headnotes: 1awphil.net
The inclusion, in the amount for which a promissory note is
given, of interest in advance of the maturity of the note, is not of
itself sufficient evidence to prove an agreement to pay interest
after maturity.
Commissioners appointed to hear claims against an estate of a
deceased person have no authority to allow a claim which arose
after the death of such person, as for example interest due on a
promissory note by virtue of an agreement made by the creditor
with one of the heirs.
When no agreement as to interest is made, the interest does
not commence to run on loans not mercantile until some
demand for payment is made.
The plea of res adjudicata in a subsequent suit may be supported by a
judgment of execution in a preceding one, and is admissible, when
identity of persons, things, and grounds of action exists in both suits,
requisites that must be present in common between the first suit already
terminated by judgment of execution and the subsequent one in which
judgment is pending as a result of the presentation in the second
litigation of a complaint over the same thing, the allegation upon the
same ground and between the same parties.
Every question decided by final judgment in litigation before the courts is
held to be res adjudicata or, as rule 32, title 34, partida 7 says:
Furthermore, we hold that a matter which has been adjudicated
by a judgment that cannot be appealed from must be accepted
as truth.
Therefore, a question which is res adjudicata constitutes a legal truth,
and every judgment or judicial decision against which no appeal lies is
said to have become res adjudicata, as Law 19, title, 22, of the seventh
partida says:
A complete judgment, just rendered by the trial judge, has such
great force that thenceforth the parties and their heirs are bound
to submit thereto.
Article 1252 of the Civil Code, paragraph 1, provides:
In order that the presumption of the res adjudicata may be valid
in another suit, it is necessary that, between the case decided
by the sentence and that in which the same is invoked, there be
the mots perfect identity between the things, causes, and
persons of the litigants, and their capacity as such.
The effect of a judgment or final order in a suit, outside of the cases
enumerated in paragraph 1 of section 306 of the Code of Civil
Procedure, is conclusive, according to paragraph 2, with reference to the
subject matter of the litigation between the parties and their successors
in interest who may litigate for the same thing, under the same title and
in the same capacity.
The claim presented by the plaintiff to the commissioners appointed in
the proceedings for administration of the property of the deceased
intestate, Matea Alvarez, for collection not only of the principal owed,
which is set forth in the said document of January 10, 1896, but also for
interest at the rate of 10 per cent a year allowed by said commissioners
and affirmed by the Court of First Instance, has nevertheless been
corrected by this court in its said decision of March 23, 1909, since it
declared that, in addition to the principal, the defendant only showed
interest at the rate of 6 per cent. But, notwithstanding this final judgment,
the plaintiff, on October 20, 1910, again instituted the present litigation,
asking in his complaint that the court render judgment among others for
the payment of the same interest at the rate of 10 per cent a year
compounded at the end of each year from November 30, 1900, on
balance of 15,497.35 pesos Mexican. The suit having been tried and the
representative of the intestate succession of the deceased Matea
Alvarez having been heard, the Court of First Instance rendered
judgment on September 22, 1911, declaring that the plaintiff's claim is
legal and authorizing the administrator to pay the amount thereof.
There can be no doubt that there exists identity of person, things, and
rights of action between the present suit and the previous one which
finally decided by this court. The previous suit, like the present, was
instituted by the plaintiff, Guillermo F. Bowler, against the administrator
of the property of the intestate Matea Alvarez; and the complaint upon
which the present is based is directed against the same succession. In
that suit, as well as in this one now submitted to the decision of the
court, interest was claimed on the principal the intestate owed at the rate
of 10 per cent a year, and for the same reason, that payment of such
interest at 10 per cent had been stipulated in the note quoted.
It cannot be denied that the right of action exercised in the previous suit
is reproduced in the present, for each is based on the same cause and
reason, to wit, stipulation for payment of interest at the rate of 10 per
cent a year in the said note, so there can be no question that the
requisites of identity of persons, things, and rights of actions are present
in common between the former suit, already terminated, and the one
now pending in this second instance on appeal. Therefore, the question
now raised in this suit has already been decided by final judgment in the
former one and has acquired the authority of res adjudicata, and it would
be improper to present a new complaint for collection of the same
interest, already definitely decided, in order to be again tried and
determined in this suit.
So it cannot be denied that there exists, perfect identity of things, the
interest claimed, between this case and that decided by the said
judgment of this court; the causes, an alleged agreement for the
payment of said interest at the rate of 10 per cent a year; the litigants are
the same parties as creditor and debtor. The apparent difference
between the defendant in the said former suit decided by this court on
appeal and the defendant in this suit is not an obstacle to sustaining the
plea of res adjudicata herein; Pastor Alcazar was the defendant in that
former suit, as administrator of the intestate succession of the deceased
Matea Alvarez, and he represents said intestate succession herein as
such administrator, in such wise that, in case of judgment, the only party
responsible for the payment of the interest at 10 per cent, claimed by
Bowler, would be the same intestate succession of the deceased
Alvarez, especially when the principal debt was contracted by her when
alive and to her attributed, after her death, the agreement with the
creditor to pay the interest at 10 per cent a year on the principal set forth
in the said note, for it was not sustained in that suit terminated by a final
judgment of execution; and if in the said former suit Pastor Alcazar was
the defendant, he was such in the character of administrator of the
intestate estate of the deceased Matea Alvarez, which is the defendant
herein and represented by the same Alcazar as such administrator, for
collection of the same interest at 10 per cent a year, a point already
discussed and decided by this court in a final form.
On this hypothesis it is improper to repeat herein the reasons and legal
grounds in said case No. 5045 of the General Docket and reported in 13
Phil. Rep., 282.
The question of payment of the sum of 311.25 pesos Mexican, or its
equivalent in current money, for 252 demijohns for wine, which plaintiffs
sold to Pedro Arcenas, one for wine, which plaintiffs sold to Pedro
Arcenas, one of those who formerly acted as administrator of the
property of the deceased Alvarez, lies especially within the jurisdiction of
the court which heard the proceedings in said intestate succession and it
may determine the nature and conditions of the said debt and the person
or party liable for payment thereof. It was improper to add the action for
collection thereof to that exercised for collection of the interest with
which the value of said demijohns has no connection whatever, for if it
constitutes a debt it would be for administrator who contracted it; so no
legal grounds exist whereby, in this suit, said claim may be duly decided
with reference to the price of said demijohns against the intestate estate
of the deceased Matea Alvarez.
For all the foregoing reasons, we hold that the judgment appealed from
should be reversed and that we should absolve from the complaint, as
we hereby do, the intestate succession of the deceased Matea Alvarez,
represented by its administration, Pastor Alcazar; without special finding
as to costs in either instance.
Arellano, C.J., Mapa and Johnson, JJ., concur.
Separate Opinions
TRENT, J., dissenting:
I dissent. This court says:
So the question submitted to the court for decision is this: The
contention between the plaintiff and counsel for the intestate
succession of the deceased Matea Alvarez over interest to be
paid on a certain sum which she owed at death having already
been decided in its previous judgment, can the same question
again rise in the present litigation?
There can be no doubt that there exists identity of person,
things, and rights of action between the present suit and the
previous one which was finally decided by this court.
It cannot be denied that the right of action exercised in the
previous suit is reproduced in the present, for each is based on
the same cause and reason. . . .
I assert that this court did not decide in the former suit that the estate is
not liable for interest which the plaintiff is seeking to recover. In that case
(13 Phil. Rep., 282, 286) the court said;
 The question to be considered is, What class of demands
should be presented to the commissioners appointed to hear
claims against the estate, and had the commissioners any
authority to allow a claim for interest which claim did not exists
at the time of the death of the deceased, but arose from
dealings between the heirs and the creditor which took place
after such death. This question has already been considered
and decided in the case of Philippine Trading Company vs.
Crossfield (5 Phil. Rep., 400).
This claim for interest not existing prior to the death of the
deceased, and the cause of action therefor having arisen after
the death of Doña Matea, the commissioners erred in allowing
it.
assumption is true, the reasons advanced in support of the doctrine
of res adjudicata are well founded; but the court reasons from a false
premise. It assumes the whole controversy on this point. It has simply
taken for granted that the question was decided in the former suit, when,
as a matter of fact, it was not. Even the syllabus (which is never the
decision of the court), quoted in the majority opinion, does not support
the proposition upon which that opinion rests. The only question before
the court in the former suit was whether or not the commissioners had
the power to pass upon this claim for interest, and not whether the
estate was liable for said interest. That this is true there can be no doubt,
and the only way the court can get around this fact is by assuming the
contrary to be true. Such an assumption is wholly unwarranted. It is
contrary to the plain and positive holding in the former suit. The question
whether or not the estate is liable for the interest not having been
heretofore decided, the doctrine of res adjudicata is certainly not
applicable.

It is therefore clear that the court did not decide that the plaintiff could Carson, J., concurs.
not recover from the estate the interest on the original debt. The only
question decided was to the effect that the commissioners did not have
the power to pass upon this claim for the reason that the same did not
exist prior to the death of the death. This was the principal question in
the case and the only one decided. The court, in speaking of the
instrument sued upon, said:

It is not necessary to consider in this case the legal effect of this

document. It is not necessary to consider whether it made the
heirs of the deceased personally liable for the payment of this
debt.

The plaintiff contends and the trial court so found that it was necessary,
in order to maintain a business constituting a part of the estate to renew
this loan and to pay interest on the same, and that this being true it
should be a proper charge against the estate as a necessary expense of
administration. This is, I might say, the only question seriously discussed
in the present litigation; that is, whether or not the renewal of the note
and promise to pay interest were necessary to carry on the business of
the estate, and whether the same should be taxed as a necessary
expense of administration. This question is not touched upon in the
majority opinion. It is not even mentioned. The plaintiff contends that the
court expressly refrained from deciding whether or not the estate is liable
for the interest and that the only question decided related to the power of
the commissioners to pass upon the claim which arose after the death of
the deceased. In the face of these contentions, which are supported by
the judgment of the trial court, this court assumes without argument that
the plaintiff's right to recover interest from the estate was finally and
definitely decided adversely to him in the former suit, and then argues
that this question cannot again be litigated. Of course, if the court's
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-39871 August 30, 1934
Intestate estate of the deceased BENITO MARCELO.
EMILIA FRANCISCO and LUCILA MARCELO, petitioners-appellants,
vs.
ANTONINA JASON, RENATO MARCELO, BENITO MARCELO and CECILIA
MARCELO, respondents-appellees.
Roman de Jesus and Manuel C. Briones for appellants.
Engracio F. Clemeña for appellees.
VILLA-REAL, J.:
This is an appeal taken by the claimants and Lucila Marcelo from the order of the
Court of First Instance of Palawan, the dispositive part of which reads as follows:
Wherefore, the petition of Emilia Francisco and her duaghter Lucila is
denied and the widow Antonina Jason and her children Renato, Benito
and Cecilia, all surnamed Marcelo, are declared heirs of the deceased
Benito Marcelo. So ordered.
In support of their appeal the appellants assign fourteen alleged errors as
committed by the trial court in its said order, which will be discussed in the course
of this decision.
The pertinent facts which are necessary for the resolution of the questions raised
in this appeal, some of which have been admitted by the parties and the thers
proven by a preponderance of the evidence, are as follows:
On September 16, 1896, Benito Marcelo and Emilia Francisco contracted a
canonical marriage before the Reverend Father Jose Ibañez, then parish priest
of Puerto Princesa, Palawan. In view of said marriage, said spouses lived
together until the month of January, 1897, when Benito Marcelo was deported to
Spain. On March 9, 1900, while said Benito Marcelo was in exile, his wife Emilia
Francisco gave birth to a girl who, on October 6, 1901, was baptized in Puerto
Princesa, Paragua (now Palawan) and given the name of Lucila. (Exhibits I and I-
1.) In the month of December, 1902, Benito Marcelo returned for the first time to
Puerto Princesa from Spain. Having found his wife living with another man in
Iloilo, Iloilo, he returned to Puerto Princesa where, on November 1, 1904, he filed
a complaint against his wife praying for "the corresponding divorce and the return
to him of all the missing property with its usufruct." (Exhibit E.) On November 2,
1904, Emilia Francisco answered the complaint denying the allegations relative
to the property contained therein, and praying, in turn, for a divorce with acquittal
of said charges. When the case was called for hearing, the court, in the presence
of both parties, proceeded to take the evidence presented by them. After the
taking of the evidence, the plaintiff Benito Marcelo withdrew all the allegations
regarding property contained in his complaint and prayed that the case for
divorce alone be tried. The defedant Emilia Francisco having consented to the
motion, on November 3, 1904, the judge, in open court, entered judgment the
dispositive part of which reads as follows:
Wherefore, the court orders and decrees that the petition of said plaintiff
Benito Marcelo for an abslute divorce from his said wife Emilia Francisco
be, and the same is hereby, granted; and with regard to said plaintiff, the
marriage is hereby annulled and set aside and he is absolved and
relieved from all obligations to said Emilia Francisco as his wife, as if
said marriage had never been celebrated. The petition of said Emilia
Francisco, or Emilia Marcelo, for a divorce, is denied for the reason that
she has not presented sufficient grunds, and her cross-complaint
contained in her answer is hereby dismised, with costs of this instance in
favor of the plaintiff Benito Marcelo and against said defendant Emilia
Francisco.
Given in public session this third day of November, 1904.
On December 31, 1906, Benito Marcelo contracted a second marriage with
Antonina Jason, the herein oppositor and appellee, before the justice of the
peace of Arevalo, Iloilo, to whom he showed a copy of said decree of divorce,
after having shown it to said Antonina Jason. The newly-weds moved to Puerto
Princesa where they lived as husband and wife until June 3, 1929, when Benito
Marcelo died, leaving property which had been acquired by him with the aid of
Antonina Jason during his second marriage with her.
The first question to be decided in this appeal is whether or not the claimant
Lucila Marcelo is a daughter of the deceased Benito Marcelo.
It may be noted that said claimant Emilia Francisco was canonically married to
Benito Marcelo on September 16, 1896; that both had lived together as husband
and wife from their marriage until the month of January, 1897, when Benito
Marcelo was deported to Spain; that on March 9, 1900, while her husband was in
exile, Emilia Francisco gave birth to a girl who, on October 6, 1901, was baptized
in Puerto Princesa, Paragua (now Palawan), and given the name of Lucila
(Exhibits I and I-1); that in December, 1902, Benito Marcelo returned for the first
time to Puerto Princesa from Spain.
From January, 1897, to December, 1902, about four years and eleven months
had elapsed. If Benito Marcelo was absent from Philippines during that period
and the claimant Lucila Marcelo was born on March 9, 1900, that is, two years
and two moths after said Benito Marcelo had left his wife Emilia Francisco for
exile, said Lucila Marcelo could not have been conceived during the four months
when said spouses lived together as husband and wife, and therefore, cannot be
a daughter of said Benito Marcelo.
The second question to be decided in this appeal is whether or not the order of
the Court of First Instance of Palawan, dated November 3, 1904, granting Benito
Marcelo an absolute divorce from his wife, the herein claimant Emilia Francisco,
has dissolved the marriage contracted by them.
In order that a judgment may be valid, not only must the court rendering it have
jurisdiction over the parties, but it must also have jurisdiction to take cognizance
of the subject matter of the litigation and to grant the relief sought. The lack of
jurisdiction over them renders the judgment void and subject to collateral attack.
(33 C. J., p. 1076.) Failure to appeal therefrom does not give it validity inasmuch
as neither tacit nor express consent of the parties cnfers jurisdiction. (33 C. J., p.
1077.) In this case, although the Court of First Instance of Palawan had
jurisdiction to take cognizance of complaints for divorce, such jurisdiction was
limited to divorce "quoad thorum et mutuam habitationem", or relative divorce, on
the ground of adultery, because Law II, Title X, Partida IV, which was the only
divorce law then in force, did not autorize divorce "quoad vinculum", or absolute
divorce. (Benedicto vs. De la Rama, 3 Phil., 34; 50 Law. ed., 765; Ibañez vs.
Ortiz, 5 Phil., 325; Goitia vs. Campos Rueda, 35 Phil., 252; U. S. vs. Joanino, 27
Phil., 477; Del Prado vs. De la Fuente, 28 Phil., 23; De Jesus vs. Palma, 34 Phil.,
483; Garcia Valdezvs. Soteraña Tuason, 40 Phil., 943.) The Court of First
Instance of Palawan, therefore, had no jurisdiction to grant an absolute divorce,
not only because it lacked jurisdiction to take cognizance thereof but also
because it was not specifically prayed for in the complaint. Failure on the part of
Emilia Francisco to appeal from said decree with respect to said excess of
jurisdiction and relief, did not give it validity with regard to said excess because,
as stated, jurisdiction is conferred by law and and cannot be conferred by the
consent of the parties.
Inasmuch as the Court of First Instance of Palawan had jurisdiction to take
cognizance of a case for relative divorce, and this from of divorce is included
within the decree of absolute divorce, said decree is valid with respect to said
form which may be separated from that of absolute divorce. (I Black on
Judgments, 2d. ed., sec. 261; I Freeman on judgments, 5th ed., par. 324.)
It is clear therefore that although the decree of divorce under consideration is
void in so far as it dissolves the marriage bond, it is not so in so far as it only
affects the separation from bed and board and of property.
Having arrived at the conclusion that the decree of absolute divorce granted by
the Court of First Instance of Palawan is valid only with regard to the separation
of the spouses Benito Marcelo and Emilia Francisco from bed and board and of
their property, the question arises whether or not the civil marriage contracted on
December 31, 1906, during the lifetime of Emilia Francisco, by said Benito
Marcelo and the herein oppositor-appellee Antonina Jason before the justice of
the peace of Arevalo, Iloilo, was valid.
Section III of General Orders, No. 68, which was in force in the year 1906,
provides that "a susequent marriage contracted by any person during the life of a
former husband or wife of such person, with any person other than such former
husband or wife, is illegal and void from the beginning, unless:
1. The former marriage has been annulled or dissolved.
Inasmuch as the bond of Benito Marcelo's first marriage with the herein claimant-
appellant Emilia Francisco had not been dissolved, his marriage with the
oppositor-appellee Antonina Jason is illegal and void.
Now then, the civil marriage contracted by Benito Marcelo and Antonina Jason
being void from the beginning, what civil effects does the declaration of nullity
thereof produce?
Article 69 of the Civil Code provides as follows:
ART. 69. A marriage contracted in good faith produces civil effects,
although it may be declared void.
If good faith existed on the part of only one of the spouses it shall
produce civil effects only with regard to such spouse and to the cihldren.
Good faithh is presumed if the contrary is not shown.
When bad faith has existed on the part of both spouses, the marriage
shall produce civil effects only with relation to the children.
It will be noted that the above legal provision establish the presumption of good
faith on the part of all the contrading parties, if the contrary is not shown. It is he
who denies to prevent its effects who must prove that good faith did not exist. For
the good faith to be perfect, it is necessary: (1) That the spouses celebrated their
marriage with the prescribed formalities; (2) that they were ignorant of the defects
that rendered it void; and (3) that their ignorance is excusable. ([Law II, Title XV,
Partida IV] IV Escriche, page 49.)
In the case under consideration, the first requisite has been complied with, that
is, Benito Marcelo's marriage with Antonina Jason was celebrated witht the
formalities prescribed by law.
With regard to the second and third requisites, that is, that said contracting
parties were ignorant of the defect that rendered their marriage void, or the
existence of the first marriage, and that their ignorance was excusable, the
evidence shows that said contracting parties as well as the justice of the peace,
who married them, believed that said first marriage had been dissolved by virtue
of the decree of absolute divorce. Although they should have known that
absolute divorce was then not permissible, however, inasmuch as the divorce
law is not eternal and immutable and the courts of justice are the government
agencies wherein the faculty of interpreting the private civil laws reside; and their
decisions, although binding only on the parties, deserve to respected, said
contracting parties, in believing the decree of divorce absolute, acted in good
faith.
and innocently presented during the celebration of the marraige, is in good faith
and produces civil effects with regard to the wife and the children born prior to its
dissolution by the death of the husband, although it may be declared void.
Wherefore, and finding no error in the order appealed from, the same affirmed in
all its parts, with costs against the appellants. So ordered.
Malcolm, Imperial and Butte, JJ., concur.
Goddard, J., concurs in the result.

According to the above quoted article 69 of the Civil Code, a marriage contracted
in good faith, although it may be declared void, produces civil effects, among
them being the firmation of the conjugal partnership and the legitimacy of the
children born during the same and before it is declared void. Hence, from the
time Benito Marcelo and Antonina Jason were married on December 31, 1906,
until June 3, 1929, when the former died, all the property which both acquired by
their industry and at the expense of the common fund, the fruits of the
paraphernal property of either of them and those of the partnership property,
belong to said conjugal partnership. (Article 1401, Civil Code.)

Let us now determine the effects of the decree of absolute divorce in favor of
Benito Marcelo and against his first wife Emilia Francisco on the conjugal
partnership formed by their marriage.

The undersigned is of the opinion that the decree of absolute divorce, by itself
alone, does not produce the separation of property or the dissolution of the
conjugal partnership, but it is necessary that there be a judicial decree to that
effect (article 1432, Civil Code; 9 Manresa, page 782); and that the conjugal
partnership formed by the marriage of Benito Marcelo and Emilia Francisco
continued until the former's death on June 3, 1929, when it was ipso
facto dissolved (article 1417, Civil Code), said Emilia Francisco being entitled to
the property of the conjugal partnership formed by her marriage with Benito
Marcelo, in the proportion prescribed, however, do not agree with this opinion
and believe tha Emilia Francisco is now estopped from claiming the conjugal
property on the ground that she let more than twenty-five years elapse from the
granting of the decree of divorce until the death of her husband, and twenty-three
years from the date on which he contracted a second marraige.

In view of the foregoing considerations, we are of the opinion and should: (1)
That a decree of absolute divorce granted in 1904 does not produce the effect of
dissolving the marriage bond of the divorced spouses but only that of separating
them from bed and board, on the gound that the court granted it without
jurisdiction, it not being sanctioned by the law then in force; (2) that the
separation of property, not having been decreed together with or independently
of the separation from bed and board, that separation did not take place, nor was
the conjugal partnership dissolved; and (3) that a second marriage celebrated in
view of a decree of absolute divorce, which had been granted without jurisdiction
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-6 November 14, 1901
MANUEL GARCIA GAVIERES, plaintiff-appellant,
vs.
T.H. PARDO DE TAVERA, defendant-appellee.
E.M. Llanos, for appellant.
Simplicio del Rosario, for appellee.
COOPER, J.:
The present appeal has been interposed in the declarative action of greater
import filed in the Court of First Instance of Tondo, commenced on January 10,
1900, by Don Manuel Garcia Gavieres as plaintiff and successor in interest of the
deceased Doña Ignacia de Gorricho against Don Trinidad H. Pardo de Tavera as
universal heir of the deceased Don Felix Pardo de Tavera for the collection of a
balance of 1,423 pesos 75 cents, remaining due on an original obligation of
3,000 pesos which, as the plaintiff alleges, was the amount of a deposit delivered
by Doña Ignacia Gorricho, deceased, to Don Felix Pardo de Tavera, deceased,
on the 31st day of October, 1859. The agreement between the parties appears in
the following writing:
Received of Señorita Ignacia de Gorricho the sum of 3,000
pesos, gold (3,000 pesos), as a deposit payable on two months'
notice in advance, with interest at 6 per cent per annum with an
hypothecation of the goods now owned by me or which may be
owned hereafter, as security of the payment.
In witness whereof I sign in Binondo, January 31, 1859. lawphil.net
FELIX PARDO DE TAVERA.
The defendant answering complaint of plaintiff alleges among other things as a
defense, that the document upon which the complaint is based was not a
contract of deposit as alleged in the complaint, but a contract of loan, and setting
forth furthermore the payment of the original obligation as well as the prescription
of the action. The defendant contends that the document upon which the action
is based is not evidence of a deposit, as the plaintiff maintains, but of a contract
of loan, and that the prescription applicable to loans has extinguished the right of
action. Although in the document in question a deposit is spoken of, nevertheless
from an examination of the entire document it clearly appears that the contract
was a loan and that such was the intention of the parties. It is unnecessary to
recur to the canons of interpretation to arrive at this conclusion. The obligation of
the depositary to pay interest at the rate of 6 per cent to the depositor suffices to
cause the obligation to be considered as a loan and makes it likewise evident
that it was the intention of the parties that the depositary should have the right to
make use of the amount deposited, since it was stimulated that the amount could
be collected after notice of two months in advance. Such being the case, the
contract lost the character of a deposit and acquired that of a loan. (Art. 1768,
Civil Code.)
All personal actions, such as those which arise from a contract of loan, cease to
have legal effect after twenty years according to the former law and after fifteen
years according to the Civil Code now in force. The date of the document is
January 31, 1859. The proof of payment in support of the defense we consider
likewise sufficient to establish such defense. The document dated January 8,
1869, executed by Don Felix Garcia Gavieres, husband and legal representative
of Doña Ignacia Gorricho, acknowledges the receipt of 1,224 pesos from Don
Manuel Darvin, representative of the deceased Don Felix Pardo de Tavera. This
sum is declared in said document to be the balance due upon the debt of 2,000
pesos. This was slightly more or less the amount which remained as due upon
the original obligation after deducting the payment which are admitted to have
been made. In the absence of evidence disclosing that there were other claims in
favor of Gavieres it is reasonably to be supposed that this payment was made to
satisfy the balance due upon the original obligation.
The original contract between the parties was celebrated nearly a half century
ago; the contracting parties have ceased to exist long since; it may be that there
exists or may have existed documents proving a total payment between the
parties and that this document has some time ago suffered the common fate of
perishable things. He who by laches in the exercise of his rights has caused a
failure of proof has no right to complain if the court does not apply the strict rules
of evidence which are applicable in ordinary cases, and admits to a certain extent
the presumption to which the conduct of the interest party himself naturally gives
rise.
It is our opinion that the judgment of the Court of First Instance should be
affirmed, and it is so ordered, with costs of appeal taxed against the appellant.
Arellano, C.J., Torres, Willard, and Mapa, JJ., concur.
Ladd, J., did not sit in this case.