EN BANC
[G.R. No. L-822. September 30, 1949. ]
POTENCIANO ILUSORIO and SILVERIO R. VIOLA, Plaintiffs-Appellants, v. FERNANDO BUSUEGO, Defendant-Appellee.
Punzalan & Yabut for the Appellant.
Ramon Diokno and Jose W. Diokno for the appellee.
SYLLABUS
1. OBLIGATIONS AND CONTRACTS; PAYMENT MADE BEFORE PERIOD STIPULATED. — It being stipulated in the deed of mortgage that the mortgagors could not redeem the property mortgaged without the consent of the mortgagee before the expiration of the period of three years from May 3, 1943, the mortgagors have no right to compel the mortgagee to accept, before the expiration of that period, the payment for the debt; but the mortgage may be paid before the expiration of such period if the creditor consents to accept the payment.
D E C I S I O N
FERIA, J.:
On May 3, 1943, the plaintiff Silverio R. Viola obtained from the defendant Fernando Busuego a loan of P35,000.00, and to secure the payment of said amount the former executed a deed of mortgage (Exh. A) of fifteen parcels of land situated in Bulacan in favor of the latter, which provides in its paragraphs 3 and 4 the following:jgc:chanrobles.com.ph
"3. That the principal of P35,000.00 shall be repaid within the period of three (3) years from the date hereof with interest at the rate of eight per cent (8%) per annum payable annually in advance, the first payment of said interest to commence on the date of this instrument and the subsequent payments on the same date of every year thereafter.
"4. That the mortgagor binds himself, if the mortgagee so desires, not to redeem the mortgaged properties, during the continuance of this mortgage, but the mortgagee reserves his right to terminate the same and take steps for its foreclosure, judicially or extra-judicially in accordance with the provisions of Act 3135, as amended, upon default of the mortgagor to pay the stipulated annual interest on its maturity, and upon violation on the part of said mortgagor of any of the conditions herein stipulated." — Exhibit A. (italics ours).
Subsequently, on July 3, 1943, additional security and partial release of some of the properties mortgaged were agreed upon by the parties in another instrument (Exh. B), subject to the same terms and conditions stipulated in the deed of mortgage Exhibits A, part of which is quoted above.
On November 12, 1943, plaintiff Viola, without the knowledge and consent of the defendant Busuego, executed a deed of sale in favor of the other plaintiff-appellant Potenciano Ilusorio of five parcels of land, mortgaged to the defendant, and Ilusorio assumed the obligation to pay Viola’s obligation or debt to the defendant Busuego under the terms and conditions stipulated in the above quoted deed of mortgage.
On April 27 and July 5, 1944, the plaintiff Ilusorio tendered to defendant Busuego the sum of P40,638.58, in payments of the Viola’s debt with interest accrued and to accrue up to May 3, 1946; and as the latter refused to accept it on the ground that, according to paragraph 4 of the deed of mortgage, "the mortgagor binds himself, if the mortgagee so desires, not to redeem the mortgaged properties during the continuance of this mortgage," the plaintiffs deposited the money in the court and filed a complaint against the defendant to compel him to accept the payment.
The defendant alleged in his answer as special defense that, according to the deed of mortgage, the plaintiff Silverio R. Viola bound himself, if the mortgagee so desires, not to redeem the mortgage during the continuance of the mortgage, and filed a counterclaim against the plaintiffs to pay the sum of P2,800.00 as interest of the debt for one year from May 3, 1944, to May 3, 1945, with interest at the rate of 8 per cent per annum.
After trial, the Court of First Instance of Manila rendered judgment on August 30, 1944, dismissing the plaintiffs’ action on the ground that, according to paragraph 4 of the deed of mortgage, the plaintiffs could not redeem the property mortgaged without the consent of the defendant before the expiration of the period of three years from May 3, 1943 and sentencing the former to pay the latter the sum of P2,800.00 with interest at 8 per cent per annum from May 3, to July 5, 1944, with costs against the plaintiffs.
The plaintiffs appealed from the judgment of the lower court, and the question for us now to determine is whether, under the provisions of paragraphs 3 and 4 of the deed of mortgage, the plaintiffs- appellants have the right to compel the defendant-appellee to accept the payment of the debt before the expiration of the period of three years stipulated in the deed of mortgage.
We are of the considered opinion, and so hold, that the lower court is right in deciding that, according to paragraphs 3 and 4 of the mortgage, the appellants could not pay the debt and redeem the mortgage before the expiration of the period of three years, without the consent of the defendant appellee.
According to Section 59, Rule 123, of the Rules of Court, "In the construction of an instrument where there are several provisions or particulars, such a construction is, if possible, to be adopted as will give effect to all" ; and the only construction which may be adopted to give effect to the provisions of both paragraphs (3) and (4) of the deed of mortgage above quoted, is that the mortgage debt shall be payable at the expiration of three years, but it may be paid before the expiration of the period if the creditor consents to accept the payment; because otherwise, or to construe the deed in the sense that the mortgagor has the right to pay the debt within or before the expiration of the period of three years, would be to give no effect to the pertinent provision of paragraph 4 of the deed of mortgage.
In view of the foregoing, the appealed judgment is affirmed with costs against the appellants.
Moran, C.J., Ozaeta, Bengzon, Tuason, Montemayor, Reyes and Torres, JJ., concur.
PARAS, J., dissenting:chanrob1es virtual 1aw library
As correctly pointed out by the majority, in the construction of an instrument where there are several provisions or particulars, such a construction is, if possible, to be adopted as will give effect to all (Rule of Court No. 123, section 59). Under paragraph 3 of the mortgage in question, the debtor shall (not merely "may") repay the loan within a period of three years. Upon the other hand, it is provided in the succeeding paragraph 4 that "the mortgagor binds himself, if the mortgagee so desires, not to redeem the mortgaged properties, during the continuance of this mortgage." The majority have ruled that the mortgagor cannot pay the debt before the expiration of three years without the consent of the mortgagee, — a construction that obviously gives effect only to paragraph 4 in utter disregard of paragraph 3 and, hence, in contravention of the very rule invoked by them. In my opinion, a reverse interpretation is, under the facts of this case, not only fair and equitable but conformable to the rule of construction embodied in section 59 of Rule of Court No. 123. In other words, I hold that the mortgagor has the right to pay the indebtedness at any time within three years provided that, as in this case, he pays the interest for whole term of the mortgage. In the ordinary course of things, a loan is granted in consideration of interest, and if by the early payment of the obligation, the creditor would not lose any part of the stipulated interest, both paragraph 3 and 4 would practically be enforced. It cannot be alleged that the creditor herein, in addition to interest, wanted to have his money in the safekeeping of the debtor, because the contract is one of loan and not of deposit. It is to be remembered, moreover, that the debt was as being paid in the same currency loaned (Japanese money). The effect of inflation is one of the risks naturally incident to the money-lending business, and the lender should protect himself against it by plain covenants.
In view of the foregoing, I vote for the reversal of the appealed judgment.
PADILLA, J.:
"3. That the principal of P35,000.00 shall be repaid within the period of three (3) years from the date hereof with interest at the rate of eight per cent (8%) per annum payable annually in advance, the first payment of said interest to commence on the date of this instrument and the subsequent payments on the same date of every year thereafter.
"4. That the mortgagor binds himself, if the mortgagee so desires, not to redeem the mortgaged properties, during the continuance of this mortgage, but the mortgagee reserves his right to terminate the same and take steps for its foreclosure, judicially or extra-judicially in accordance with the provisions of Act 3135, as amended, upon default of the mortgagor to pay the stipulated annual interest on its maturity, and upon violation on the part of said mortgagor of any of the conditions herein stipulated." — Exhibit A. (italics ours).
Subsequently, on July 3, 1943, additional security and partial release of some of the properties mortgaged were agreed upon by the parties in another instrument (Exh. B), subject to the same terms and conditions stipulated in the deed of mortgage Exhibits A, part of which is quoted above.
On November 12, 1943, plaintiff Viola, without the knowledge and consent of the defendant Busuego, executed a deed of sale in favor of the other plaintiff-appellant Potenciano Ilusorio of five parcels of land, mortgaged to the defendant, and Ilusorio assumed the obligation to pay Viola’s obligation or debt to the defendant Busuego under the terms and conditions stipulated in the above quoted deed of mortgage.
On April 27 and July 5, 1944, the plaintiff Ilusorio tendered to defendant Busuego the sum of P40,638.58, in payments of the Viola’s debt with interest accrued and to accrue up to May 3, 1946; and as the latter refused to accept it on the ground that, according to paragraph 4 of the deed of mortgage, "the mortgagor binds himself, if the mortgagee so desires, not to redeem the mortgaged properties during the continuance of this mortgage," the plaintiffs deposited the money in the court and filed a complaint against the defendant to compel him to accept the payment.
The defendant alleged in his answer as special defense that, according to the deed of mortgage, the plaintiff Silverio R. Viola bound himself, if the mortgagee so desires, not to redeem the mortgage during the continuance of the mortgage, and filed a counterclaim against the plaintiffs to pay the sum of P2,800.00 as interest of the debt for one year from May 3, 1944, to May 3, 1945, with interest at the rate of 8 per cent per annum.
After trial, the Court of First Instance of Manila rendered judgment on August 30, 1944, dismissing the plaintiffs’ action on the ground that, according to paragraph 4 of the deed of mortgage, the plaintiffs could not redeem the property mortgaged without the consent of the defendant before the expiration of the period of three years from May 3, 1943 and sentencing the former to pay the latter the sum of P2,800.00 with interest at 8 per cent per annum from May 3, to July 5, 1944, with costs against the plaintiffs.
The plaintiffs appealed from the judgment of the lower court, and the question for us now to determine is whether, under the provisions of paragraphs 3 and 4 of the deed of mortgage, the plaintiffs- appellants have the right to compel the defendant-appellee to accept the payment of the debt before the expiration of the period of three years stipulated in the deed of mortgage.
We are of the considered opinion, and so hold, that the lower court is right in deciding that, according to paragraphs 3 and 4 of the mortgage, the appellants could not pay the debt and redeem the mortgage before the expiration of the period of three years, without the consent of the defendant appellee.
According to Section 59, Rule 123, of the Rules of Court, "In the construction of an instrument where there are several provisions or particulars, such a construction is, if possible, to be adopted as will give effect to all" ; and the only construction which may be adopted to give effect to the provisions of both paragraphs (3) and (4) of the deed of mortgage above quoted, is that the mortgage debt shall be payable at the expiration of three years, but it may be paid before the expiration of the period if the creditor consents to accept the payment; because otherwise, or to construe the deed in the sense that the mortgagor has the right to pay the debt within or before the expiration of the period of three years, would be to give no effect to the pertinent provision of paragraph 4 of the deed of mortgage.
In view of the foregoing, the appealed judgment is affirmed with costs against the appellants.
Moran, C.J., Ozaeta, Bengzon, Tuason, Montemayor, Reyes and Torres, JJ., concur.
Separate Opinions
PARAS, J., dissenting:chanrob1es virtual 1aw library
As correctly pointed out by the majority, in the construction of an instrument where there are several provisions or particulars, such a construction is, if possible, to be adopted as will give effect to all (Rule of Court No. 123, section 59). Under paragraph 3 of the mortgage in question, the debtor shall (not merely "may") repay the loan within a period of three years. Upon the other hand, it is provided in the succeeding paragraph 4 that "the mortgagor binds himself, if the mortgagee so desires, not to redeem the mortgaged properties, during the continuance of this mortgage." The majority have ruled that the mortgagor cannot pay the debt before the expiration of three years without the consent of the mortgagee, — a construction that obviously gives effect only to paragraph 4 in utter disregard of paragraph 3 and, hence, in contravention of the very rule invoked by them. In my opinion, a reverse interpretation is, under the facts of this case, not only fair and equitable but conformable to the rule of construction embodied in section 59 of Rule of Court No. 123. In other words, I hold that the mortgagor has the right to pay the indebtedness at any time within three years provided that, as in this case, he pays the interest for whole term of the mortgage. In the ordinary course of things, a loan is granted in consideration of interest, and if by the early payment of the obligation, the creditor would not lose any part of the stipulated interest, both paragraph 3 and 4 would practically be enforced. It cannot be alleged that the creditor herein, in addition to interest, wanted to have his money in the safekeeping of the debtor, because the contract is one of loan and not of deposit. It is to be remembered, moreover, that the debt was as being paid in the same currency loaned (Japanese money). The effect of inflation is one of the risks naturally incident to the money-lending business, and the lender should protect himself against it by plain covenants.
In view of the foregoing, I vote for the reversal of the appealed judgment.
PADILLA, J.:
I concur in this dissent.
EXCERPT FROM THE MINUTES OF
NOVEMBER 18, 1949 - "Acting upon the motion for reconsideration filed by attorneys for appellants in G. R. No. L-822, Potenciano Ilusorio Et. Al. v. Fernando Busuego, this Court ordered that said motion be as the same is hereby denied. Ozaeta, Paras, Padilla and Torres, JJ., dissented and voted to grant, for the reasons stated in the original dissenting opinion of Mr. Justice Paras and upon these additional observations: We quote with approval the following applicable passage in the opinion of Mr. Justice Montemayor (while still the Presiding Justice of the Court of Appeals) in the case of Matias v. Nicolas, Sept. 16, 1947, 44 O.G., page 275O:chanrob1es virtual 1aw library
‘As already stated, the trial court found that the term or period for payment fixed in the contract Exhibit A was made for the exclusive benefit of the plaintiffs, so that they could repay the loan at any time they wanted to. We cannot, wholly, agree to this finding. True, the contract stipulated that the loan was to be paid within the sixth year, and not before. And although it gave and was undoubtedly designed to give the plaintiffs sufficient time within which to accumulate funds with which to repay, said period may also reasonably be regarded as having been stipulated for the benefit of the defendants, so that they would have a relatively extended period of investment for their money with interest payable annually. In other words, the defendants may have desired to receive this income for five years from the interest of the loan. If this is so, as we find it to be, then, although the period stipulated was made for the benefit both of the plaintiffs and the defendants, the former may repay the loan even before the expiration of the period fixed as long as the repayment also satisfies the interests of the defendants, which period it was calculated to protect and to serve. Inasmuch as the plaintiffs offered to pay the loan and the interests for the full five years and since it satisfies and meets the ends of the law, the offer to pay was consequently valid.
‘In our search for authorities in support of our position, we have failed to find any, bearing directly on this point. However, in the case of Sarmiento and Villaseñor v. Javellana (43 Phil. 880), the only reason given by the court for not allowing the plaintiff therein to pay the loan before the lapse of one year, — the term fixed in the contract for the repayment of the loan, — without the consent of the defendant, was because such payment in advance would have deprived the latter of the benefit of the stipulated interest. We are confident that in said case, had the plaintiff offered to pay such interest in full, the repayment of the loan before the expiration of the period stipulated would have considered valid and just.’
"Assuming that the majority are correct with respect to the payment of the principal, we hold that appellants should at least be absolved from the payment of P2,800 as interest for one year from May 3, 1944, to May 3, 1945, with interest from May 3 to July 5, 1944. The majority have found that ’the plaintiff Ilusorio tendered to defendant Busuego the Sum of P40,638.58, in payment of the Viola’s debt with interest accrued and to accrue up to May 3, 1946,’ and upon refusal of the appellee to accept, ’the plaintiffs deposited the money in the court.’ If so, there is absolutely no reason why appellants should be made to pay said interest which, under the terms of the mortgage, was payable in advance."
EXCERPT FROM THE MINUTES OF
NOVEMBER 18, 1949 - "Acting upon the motion for reconsideration filed by attorneys for appellants in G. R. No. L-822, Potenciano Ilusorio Et. Al. v. Fernando Busuego, this Court ordered that said motion be as the same is hereby denied. Ozaeta, Paras, Padilla and Torres, JJ., dissented and voted to grant, for the reasons stated in the original dissenting opinion of Mr. Justice Paras and upon these additional observations: We quote with approval the following applicable passage in the opinion of Mr. Justice Montemayor (while still the Presiding Justice of the Court of Appeals) in the case of Matias v. Nicolas, Sept. 16, 1947, 44 O.G., page 275O:chanrob1es virtual 1aw library
‘As already stated, the trial court found that the term or period for payment fixed in the contract Exhibit A was made for the exclusive benefit of the plaintiffs, so that they could repay the loan at any time they wanted to. We cannot, wholly, agree to this finding. True, the contract stipulated that the loan was to be paid within the sixth year, and not before. And although it gave and was undoubtedly designed to give the plaintiffs sufficient time within which to accumulate funds with which to repay, said period may also reasonably be regarded as having been stipulated for the benefit of the defendants, so that they would have a relatively extended period of investment for their money with interest payable annually. In other words, the defendants may have desired to receive this income for five years from the interest of the loan. If this is so, as we find it to be, then, although the period stipulated was made for the benefit both of the plaintiffs and the defendants, the former may repay the loan even before the expiration of the period fixed as long as the repayment also satisfies the interests of the defendants, which period it was calculated to protect and to serve. Inasmuch as the plaintiffs offered to pay the loan and the interests for the full five years and since it satisfies and meets the ends of the law, the offer to pay was consequently valid.
‘In our search for authorities in support of our position, we have failed to find any, bearing directly on this point. However, in the case of Sarmiento and Villaseñor v. Javellana (43 Phil. 880), the only reason given by the court for not allowing the plaintiff therein to pay the loan before the lapse of one year, — the term fixed in the contract for the repayment of the loan, — without the consent of the defendant, was because such payment in advance would have deprived the latter of the benefit of the stipulated interest. We are confident that in said case, had the plaintiff offered to pay such interest in full, the repayment of the loan before the expiration of the period stipulated would have considered valid and just.’
"Assuming that the majority are correct with respect to the payment of the principal, we hold that appellants should at least be absolved from the payment of P2,800 as interest for one year from May 3, 1944, to May 3, 1945, with interest from May 3 to July 5, 1944. The majority have found that ’the plaintiff Ilusorio tendered to defendant Busuego the Sum of P40,638.58, in payment of the Viola’s debt with interest accrued and to accrue up to May 3, 1946,’ and upon refusal of the appellee to accept, ’the plaintiffs deposited the money in the court.’ If so, there is absolutely no reason why appellants should be made to pay said interest which, under the terms of the mortgage, was payable in advance."
