EN BANC
[G.R. No. 35926. November 17, 1932. ]
JESUS DE LA RAMA, Plaintiff-Appellee, v. ANTONIO RIVERO and BASILIO BORJA, Defendants-Appellees. THE PHILIPPINE GUARANTY CO., INC., Intervenor-Appellant.
Araneta, De Joya, Zaragoza & Araneta for Intervenor-Appellant.
Ramon Diokno and Manuel B. Villanueva for Plaintiff-Appellee.
No appearance for the defendants-appellees.
SYLLABUS
1. MORTGAGES; SALE OF MORTGAGED PROPERTY; ABANDONMENT OF SALE. — The contention of the intervenor in this case is based on the assumption that the defendant R sold the mortgaged property, which was subject to a second mortgage in its favor, to the plaintiff for a sum larger than the amount of the latter’s credit, and that, therefore, it is entitled to the difference. But the evidence fully sustains the finding that said sale was never consummated and that, by agreement, it was abandoned.
2. ID.; ID.; ID.; FRAUD. — The appellant’s contention that the abandonment of the proposed sale by the defendant R was is fraud of his creditors was not proved. It is a novel doctrine that because a man is indebted to two persons he cannot give up a proposed sale of his property to one of them because the sale would redound to the benefit of the other creditor.
3. ID.; ID.; GARNISHMENT. — The intervenor could not attach a judgment that did not exist. If there had been a credit balance in favor of the defendant R the intervenor could have garnished it; but there was no such credit balance. Even if it were true that the defendant R had a valid counterclaim against the plaintiff for usurious interest collected from him it would not be subject to garnishment so long as said defendant was indebted to the plaintiff in a sum greater than the amount of the counterclaim.
2. ID.; ID.; ID.; FRAUD. — The appellant’s contention that the abandonment of the proposed sale by the defendant R was is fraud of his creditors was not proved. It is a novel doctrine that because a man is indebted to two persons he cannot give up a proposed sale of his property to one of them because the sale would redound to the benefit of the other creditor.
3. ID.; ID.; GARNISHMENT. — The intervenor could not attach a judgment that did not exist. If there had been a credit balance in favor of the defendant R the intervenor could have garnished it; but there was no such credit balance. Even if it were true that the defendant R had a valid counterclaim against the plaintiff for usurious interest collected from him it would not be subject to garnishment so long as said defendant was indebted to the plaintiff in a sum greater than the amount of the counterclaim.
D E C I S I O N
VICKERS, J.:
The plaintiff Jesus de la Rama brought this action to foreclose a mortgage on the real and personal property described in Appendix B of the complaint, to recover from the defendants Antonio Rivero and Basilio Borja the sum of P99,826.94, with interest at 12 per cent per annum from May 1, 1929, and 10 per cent of said sum as attorney’s fees; and to foreclose six chattel mortgages, which had been assigned to the plaintiff by the Manila Trading & Supply Co., to recover from Antonio Rivero the sum of P30,574.23, with interest at 12 per cent per annum from April 1, 1929, and 33 1/3 per cent of said sum for costs, expenses, and liquidated damages.
The trial judge issued a writ of replevin for the automobiles and motor trucks mortgaged to the plaintiff, and with the consent of the defendant Antonio Rivero ordered the sheriff to sell them at public auction.
In their amended answer to the complaint, the defendants alleged as a special defense that although the defendant Antonio Rivero may have been indebted to the plaintiff in the sum of P125,510.46, said defendant, with the consent of the plaintiff, had executed on February 4, 1929 a document of sale for the purpose of paying all his debts to the plaintiff and delivering to the plaintiff the chattels that had been mortgaged to him; that if the defendant Antonio Rivero had any of the chattels in his possession, it was as a simple lessee.
As a cross-complaint and counterclaim, the defendant Antonio Rivero alleged as a first cause of action that he had sold all the mortgaged property to the plaintiff on February 4, 1929 for P150,000, and that after deducting the indebtedness of Antonio Rivero there was a balance due him of P20,490.54.
As a second cause of action, Antonio Rivero alleged that the plaintiff had collected from him usurious interest during the period from January, 1928 to February, 1929, amounting to P27,216.95; that the plaintiff should pay 10 per cent of said sum as attorney’s fees.
On August 28, 1929, the Philippine Guaranty Co. was granted leave to intervene in the case. On October 18, 1930 the intervenor filed herein a voluminous amended complaint, wherein it was alleged that on April 9, 1927 the defendant Antonio Rivero entered into a contract with the City of Manila to furnish certain transportation facilities; that to guarantee the performance of his obligations the intervenor executed a bond in favor of the City of Manila for P25,000; that Antonio Rivero and Mariano Gonzaga executed in favor of the intervenor two counterbonds, whereby they bound themselves to pay a premium of 2 per cent per annum on the actual amount of the bond, and to deposit P500 a month to answer for any liability the bonding company might incur; that Antonio Rivero mortgaged to the intervenor all the properties described in schedule A of Appendix B of plaintiff’s complaint, and all his interest in a house situated on the land of Benito Legarda on Santa Mesa Street, in Manila, as described in certificate of title No. 10227, and that the said Antonio Rivero also executed in favor of the intervenor a first mortgage on 19 trucks, 15 carabaos, and 15 carts; that Antonio Rivero and Mariano Gonzaga violated the conditions of said mortgages, and the intervenor filed an action against them (civil case No. 34153 of the Court of First Instance of Manila); that up to May 11, 1928 said mortgagors had deposited only P6,000, and that the balance of P19,000 had become due and demandable; that on February 18, 1928 the intervenor consented that the mortgage of the plaintiff herein on the aforementioned real property be registered as a first mortgage to guarantee an obligation not to exceed P4,5000; that on February 20, 1928 it was agreed by the plaintiff and Antonio Rivero that the Manila Trading & Supply Co. was the first mortgagee of the chattels described in schedule A of Appendix B of plaintiff’s complaint, the intervenor the second mortgagee, and the plaintiff the third mortgagee of said personal property; that on April 18, 1928 the Manila Trading & Supply Co., conveyed all its interest in said chattel mortgages to the plaintiff Jesus de la Rama for P45,566.88, thereby making the plaintiff the first mortgagee of said chattels; that on September 12, 1930 the Philippine Guaranty Co., by virtue of a writ of execution issued in case No. 34153, garnished and levied upon any right or interest which the defendant Antonio Rivero might have in any judgment rendered in his favor and against the plaintiff Jesus de la Rama in this case; that by virtue of contracts entered into between the plaintiff and the defendant Antonio Rivero the former collected from the latter during the period from January, 1928 to February, 1929 usurious interest amounting to P18,544.81; that on September 30, 1930 the plaintiff and the defendant Antonio Rivero entered into an agreement, whereby Jesus de la Rama waived his claim for P17, 470.76 as compensation for services rendered to defendant Antonio Rivero, who in turn waived his claim of P18,544.81 for alleged usurious interest; that said agreement was entered into by the plaintiff and the defendant Antonio Rivero to the damage and prejudice of the interest that the intervenor had or might have had in any judgment which the court might have rendered, condemning the plaintiff to pay the defendant Antonio Rivero the sum of P18,544.81 as usurious interest collected by the former from the latter.
In answer to the intervenor’s complaint the plaintiff alleged that the allegations therein did not constitute a cause of action against the plaintiff; that the intervenor was a second mortgagee of the real and personal property which had been first mortgaged to the plaintiff; that the sum of P17,470.76 mentioned in the agreement made by the plaintiff and the defendant Rivero in open court was deducted from the mortgage credit of the plaintiff, which was reduced to P112, 930.41, and that the plaintiff has continued to be a first mortgage creditor for said sum, plus interest and attorney’s fees, free from all counterclaims and cross-complaints against the plaintiff; that the motor trucks and automobiles which were in the possession of the defendant Antonio Rivero, and on which the plaintiff had a first mortgage, have already been sold by the sheriff of Manila by order of the court; that the plaintiff never collected any usurious interest from the defendant Rivero.
On November 7, 1930, the defendants in answer to the complaint of the intervenor denied all the allegations thereof, and as a special defense alleged that the facts set forth therein did not constitute a cause of action against the defendants; that the agreement mentioned in the amended complaint of the intervenor was the result of a transaction made in open court between the plaintiff and the defendants, and that said transaction was made by the defendants with the approval of the court as being to their best interest; that as a result of said transaction the amount owing by the defendant Rivero to the plaintiff De la Rama as first mortgagee was the sum of P112,930.41 and the interest thereon; that the sum of P17,470.76 mentioned in the agreement made in open court was compensated for by the mortgage credit of the plaintiff so that said mortgage credit was reduced to P112,930.41.
On January 13, 1931 the plaintiff and the defendants executed and filed in court the following agreement:jgc:chanrobles.com.ph
"El demandante Jesus de la Rama y los demandados Antonio Rivero y Basilio Borja convienen en lo siguiente:jgc:chanrobles.com.ph
"1.
The trial judge issued a writ of replevin for the automobiles and motor trucks mortgaged to the plaintiff, and with the consent of the defendant Antonio Rivero ordered the sheriff to sell them at public auction.
In their amended answer to the complaint, the defendants alleged as a special defense that although the defendant Antonio Rivero may have been indebted to the plaintiff in the sum of P125,510.46, said defendant, with the consent of the plaintiff, had executed on February 4, 1929 a document of sale for the purpose of paying all his debts to the plaintiff and delivering to the plaintiff the chattels that had been mortgaged to him; that if the defendant Antonio Rivero had any of the chattels in his possession, it was as a simple lessee.
As a cross-complaint and counterclaim, the defendant Antonio Rivero alleged as a first cause of action that he had sold all the mortgaged property to the plaintiff on February 4, 1929 for P150,000, and that after deducting the indebtedness of Antonio Rivero there was a balance due him of P20,490.54.
As a second cause of action, Antonio Rivero alleged that the plaintiff had collected from him usurious interest during the period from January, 1928 to February, 1929, amounting to P27,216.95; that the plaintiff should pay 10 per cent of said sum as attorney’s fees.
On August 28, 1929, the Philippine Guaranty Co. was granted leave to intervene in the case. On October 18, 1930 the intervenor filed herein a voluminous amended complaint, wherein it was alleged that on April 9, 1927 the defendant Antonio Rivero entered into a contract with the City of Manila to furnish certain transportation facilities; that to guarantee the performance of his obligations the intervenor executed a bond in favor of the City of Manila for P25,000; that Antonio Rivero and Mariano Gonzaga executed in favor of the intervenor two counterbonds, whereby they bound themselves to pay a premium of 2 per cent per annum on the actual amount of the bond, and to deposit P500 a month to answer for any liability the bonding company might incur; that Antonio Rivero mortgaged to the intervenor all the properties described in schedule A of Appendix B of plaintiff’s complaint, and all his interest in a house situated on the land of Benito Legarda on Santa Mesa Street, in Manila, as described in certificate of title No. 10227, and that the said Antonio Rivero also executed in favor of the intervenor a first mortgage on 19 trucks, 15 carabaos, and 15 carts; that Antonio Rivero and Mariano Gonzaga violated the conditions of said mortgages, and the intervenor filed an action against them (civil case No. 34153 of the Court of First Instance of Manila); that up to May 11, 1928 said mortgagors had deposited only P6,000, and that the balance of P19,000 had become due and demandable; that on February 18, 1928 the intervenor consented that the mortgage of the plaintiff herein on the aforementioned real property be registered as a first mortgage to guarantee an obligation not to exceed P4,5000; that on February 20, 1928 it was agreed by the plaintiff and Antonio Rivero that the Manila Trading & Supply Co. was the first mortgagee of the chattels described in schedule A of Appendix B of plaintiff’s complaint, the intervenor the second mortgagee, and the plaintiff the third mortgagee of said personal property; that on April 18, 1928 the Manila Trading & Supply Co., conveyed all its interest in said chattel mortgages to the plaintiff Jesus de la Rama for P45,566.88, thereby making the plaintiff the first mortgagee of said chattels; that on September 12, 1930 the Philippine Guaranty Co., by virtue of a writ of execution issued in case No. 34153, garnished and levied upon any right or interest which the defendant Antonio Rivero might have in any judgment rendered in his favor and against the plaintiff Jesus de la Rama in this case; that by virtue of contracts entered into between the plaintiff and the defendant Antonio Rivero the former collected from the latter during the period from January, 1928 to February, 1929 usurious interest amounting to P18,544.81; that on September 30, 1930 the plaintiff and the defendant Antonio Rivero entered into an agreement, whereby Jesus de la Rama waived his claim for P17, 470.76 as compensation for services rendered to defendant Antonio Rivero, who in turn waived his claim of P18,544.81 for alleged usurious interest; that said agreement was entered into by the plaintiff and the defendant Antonio Rivero to the damage and prejudice of the interest that the intervenor had or might have had in any judgment which the court might have rendered, condemning the plaintiff to pay the defendant Antonio Rivero the sum of P18,544.81 as usurious interest collected by the former from the latter.
In answer to the intervenor’s complaint the plaintiff alleged that the allegations therein did not constitute a cause of action against the plaintiff; that the intervenor was a second mortgagee of the real and personal property which had been first mortgaged to the plaintiff; that the sum of P17,470.76 mentioned in the agreement made by the plaintiff and the defendant Rivero in open court was deducted from the mortgage credit of the plaintiff, which was reduced to P112, 930.41, and that the plaintiff has continued to be a first mortgage creditor for said sum, plus interest and attorney’s fees, free from all counterclaims and cross-complaints against the plaintiff; that the motor trucks and automobiles which were in the possession of the defendant Antonio Rivero, and on which the plaintiff had a first mortgage, have already been sold by the sheriff of Manila by order of the court; that the plaintiff never collected any usurious interest from the defendant Rivero.
On November 7, 1930, the defendants in answer to the complaint of the intervenor denied all the allegations thereof, and as a special defense alleged that the facts set forth therein did not constitute a cause of action against the defendants; that the agreement mentioned in the amended complaint of the intervenor was the result of a transaction made in open court between the plaintiff and the defendants, and that said transaction was made by the defendants with the approval of the court as being to their best interest; that as a result of said transaction the amount owing by the defendant Rivero to the plaintiff De la Rama as first mortgagee was the sum of P112,930.41 and the interest thereon; that the sum of P17,470.76 mentioned in the agreement made in open court was compensated for by the mortgage credit of the plaintiff so that said mortgage credit was reduced to P112,930.41.
On January 13, 1931 the plaintiff and the defendants executed and filed in court the following agreement:jgc:chanrobles.com.ph
"El demandante Jesus de la Rama y los demandados Antonio Rivero y Basilio Borja convienen en lo siguiente:jgc:chanrobles.com.ph
"1.
