Velez vs. Balzarza and Mabilin.pdf

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  8/20/2019PHILIPPINE REPORTS ANNOTATED VOLUME 630PHILIPPINE REPORTS ANNOTATED Velez vs. Balzarza and Mabilin [No. 48389.   July 27, 1942] C LEOFE  V ELEZ , plaintiff and appellant, vs. M AXIMO  B ALZARZA  andF LAVIA  M ABI   LIN , defendants and appellees. 1.C ONTRACT   OF  L OAN ; O BLIGATION   OF  L ENDER   TO  R ETURN  E XCESS  P AYMENTS ; A RTICLE 1895 OF   THE  C IVIL  C ODE .—The liability of plaintiff to return the excess paymentsis in keeping with article 1895 of the Civil Code which provides that, Whensomething is received which there is no right to collect, and which by mis takehas been unduly delivered, the obliga tion to restore it arises. The two requisitesare present: (1) there is no right to collect these excess sums; and (2) theamounts have been paid through mistake by defendants. Such mistake is shownby the fact that the parties in their contracts never intended that either rents orinterest should be paid, and by the further fact that when these payments weremade, they were intended by defendants to be applied to the principal, but theyover paid the amounts loaned to them.2.I D .; I D .; I D .; Q UASI -C ONTRACT   OR   S OLUTIO  I NDEBITI ; E NRICHMENT   OF  O NE   AT   THE E XPENSE   OF  A NOTHER .—Article 1895 of the Civil Code, which determines thequasi-contract of solutio indebiti, is one of the concrete manifestations of theancient principle that no one shall en rich himself unjustly at the expense of another. In the Roman Law Digest the maxim was formulated thus: Jurenaturae acquum est, neminem cum alterius detrimento et injuria fierilocapletiorem. And the Partidas de clared: Ninguno non deue enriquecersetortizeramente con daño de otro. Such axiom has grown through the centuriesin legislation, in the science of law and in court decisions. The lawmaker hasfound it one of the help ful guides in framing statutes and codes. Thus, it isunfolded in many articles scat tered in the Spanish Civil Code. (See for example,articles 360, 361, 464, 647, 648, 797, 1158, 1163, 1295, 1303, 1304, 1893 and1895, Civil Code.) This time-honored aphorism has also been adopted by juristsin their study of the conflict of rights. It has been accepted by the courts, whichhave not hesi tated to apply it when the exigencies of right and equity demandedits assertion. It is a part of that affluent reservoir of justice upon which judicialdiscretion draws whenever the statutory laws are inadequate because they do notspeak or do so with a confused voice.3.I D .; P AYMENT   OF  I NTEREST  M UST   BE  E XPRESSLY  S TIPULATED .—No interest is due unlessit is ex pressly stipulated (article 1755, Civil Code). As under the contract thelender took pos session of the lands and reaped the fruits thereof, it must have been thought by the parties that it was unfair to make the bor rower payinterest in addition.  8/20/2019PHILIPPINE REPORTS ANNOTATED VOLUME APPEAL from a judgment of the Court of First Instance of MisamisOriental. Jose, J.The facts are stated in the opinion of the court.  Mariano H. de Joya, Domingo Veloso and Teogenes Velez forappellant.  Jose M. Espina and  Eufrosino Limbaco for appellees.B OCOBO ,    J.: On November 16, 1937, plaintiff in an amended complaintprayed for the return of certain parcels of land which she alleged hadbeen sold by defendants to plaintiff's de ceased husband, Ramon NeriSan Jose, with right of repurchase. She further alleged thatdefendants had remained in possession of said land under a contractof lease, but that for over two years defendants had not paid theagreed rentals. In paragraph 4 of the complaint, she stated that inthe dis tribution of the estate of the deceased Ramon Neri San Josewho died on November 7, 1932, duly approved by this HonorableCourt, the said lands were adjudicated as share of the hereinplaintiff. In their amended answer, defendants alleged that the realagreement was a loan secured by a mortgage of those lands; and thatwhereas the amount borrowed was only P2,400, defendants hadhowever already paid P4,420.88. Defend ants therefore prayed forthe return of the excess, or P2,029.88.At the trial, the parties agreed to the following stipulation of facts: that plain tiff has a right to bring this suit; that the real questioninvolved is the collection of a debt; that defendants admit having ex- ecuted Exhibits A to E; that plaintiff ad mits defendants have madethe payments according to the receipts marked as Exhib its 1 to 22;and that the lands described in the above-mentioned documents havebeen given as a security for the payment of the obligation of defendants.The trial court found that the total amount loaned on variousdates by the deceased Neri to the defendants, was P3,067; thatdefend ants paid P4,429.88, of which P3,997.25 was received byNeri and P432.63 by plaintiff; that these payments were not made byway of interests or rents, but as payment'; for the principal; thatdefendants overpaid the amount of P1,362.88. The court belowexonerated defendants from the complaint and ordered plaintiff toreturn to defendants 631 VOL. 73, JULY 27, 1942631 Velez vs. Balzarza and Mabilin the sum of P432.63 which she, plaintiff, had received fromdefendants although said amount was not due, applying article 1895of the Civil Code. As for the amount re ceived by deceased Neri, the  8/20/2019PHILIPPINE REPORTS ANNOTATED VOLUME court held that the same not having been presented before thecommittee on appraisal and claims dur ing the administration of theestate of said Neri, defendants are not entitled to its re turn. Plaintiff appealed from the judgment.It is necessary to inquire into the con tractual relations betweenNeri and de fendants. Exhibit A, dated December 24, 1927, purportsto be a sale of four parcels of land for the price of P600, with a rightof repurchase within three years. Exhib it D, dated March 16, 1928,likewise pur ports to be a sale of three parcels of land for P400, witha right of repurchase with in three years. Each of these two contractshas the following stipulation: El compra dor Ramon Neri San Josétoma posesión de las fincas vendidas, y el será quien cosechara todoslos productos que dan o puedan dar las fincas aquí vendidas duranteel plazo de retracto y puede hacer y ejercitar todos los actos dedominio con tal que no este en pugna con el derecho de recompra delos vendedores. (In Exhibit D the last words of this clause are delvendedor because only defendant Balzarza signed the contract.)Exhibits B, C, and E are contracts of loan, datea respectively,December 24, 1927; Feb ruary 2, 1928; and February 6, 1930, forvarious amounts, from Neri to defendants. Each of these threedocuments recites that defendants received a certain amount fromNeri; that on November 23, 1927, defend ants sold three parcels of land to Neri; and that defendants have promised to Neri that uponreturn of the amount mentioned in said document of November 23,1927, de fendants will return the sum borrowed by means of thepresent contract.Evidently all these five loans appearing in Exhibits A to E weresecured by the mortgage of the seven parcels of land men tioned inExhibits A and D. These trans actions being loans, according to thestipulation of facts, the question is whether the payments wereintended to be applied to the principal, as contended by defendants,or were considered as either rents or in terests, uponithe theoryadvanced by plain tiff.The payments could not have been in tended as rents because inaccordance with a clause in the contract, Neri took posses sion of thelands and collected the fruits thereof. The creditor having enjoyedthe beneficial use of the lands delivered as security for the loan, itappears to have been the intention of the parties that the creditorshould be compensated thereby. Further more, in none of thecontracts offered in evidence is there any promise made by de- fendants to pay rents. It would have been strange for such a clause toappear in Exhib its A and D wherein it was stipulated that thecreditor took possession of the lands and would reap the fruits of thesame. It is true that in the receipts signed by Neri and by plaintiff these payments are called rents. But these receipts have beenprepared by Neri and by plaintiff, and defendants in their ignorancedid not look into the word ing, being merely satisfied that they wereproofs of payment.  8/20/2019PHILIPPINE REPORTS ANNOTATED VOLUME If these payments were not rents, plain tiff-appellant maintainsthey must have been interests. Neither is this contention tenablebecause no interest is due unless it is ex pressly stipulated. (Article1755, Civil Code.) Moreover, as under the contract the lender tookpossession of the lands and reaped the fruits thereof, it must havebeen thought by the parties that it was unfair to make the borrowerpay interest in addi tion. It is also significant that the borrower paid atotal of P1,143.50 up to August 5, 1929 (a period of 1 year, 8 monthsand 13 days from the initial loan) when the debt up to that date wasonly P2,100. If such amount of P1,143.50 was collected as inter est,then out and out usury was committed by the lender, which cannotbe presumed.Counsel for appellant argues that as the deceased Ramon NeriSan Jose was pub licly known as a money lender the parties musthave had in mind the payment of in terests. However, the allegedoccupation of said Neri does not appear in the stipulation of facts oranywhere else in the evidence. But even if that fact appeared in therecord, it would not constitute sufficient compliance with therequisite of article 1755 of the Civil Code that interest must be expressly stipu lated. In Guzman vs.  Balarag (11 Phil., 503, 508-509 [year 1908]), theplaintiff therein loaned P1,500 to defendant who mortgaged hishouse and lot. Plaintiff took possession of the premises and collectedrents from third persons. It was claimed by the plaintiff that theserents received by him should be applied to the payment of interest.But this Court held otherwise, saying: If the debtor Pascual Balarag is only under the obligation to pay thecreditor, Guzman, the 1,500 pesos received as a loan, without interest, uponpermitting the latter to collect the rent of property owned by the debtor andkeep the amounts so col- 632 632PHILIPPINE REPORTS ANNOTATED Velez vs. Balzarza and Mabilin lected, it must be assumed that it was in order to provide for the refund of the debt arising from the loan. It is not possible to apply the money exceptin settlement of the debt, unless the allegations of the debtor be disproven;the record does not contain any proof of the contrary allegation to the effectthat it was stipulated that the rent collected should be applied to the paymentof interest, and the al legation of the defendant debtor is all the more con- vincing and irrefutable, inasmuch as it has not in any way beendemonstrated that interest on the loan was stipulated. Therefore, the trial court was right in finding that these paymentswere applied to the principal.
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