Case Digest: Agoncillo vs Javier, 30 Phil 124

Agoncillo vs Javier, 30 Phil 124

Subject: Obligations and Contracts

FACTS

On February 27, 1904, Anastacio Alano, Jose Alano and Florencio Alano executed in favor of the plaintiff, Dra. Marcela Marino a document stipulating that the Alanos as testamentary heirs of deceased Rev. Anastacio Criz, would pay the sum of P2,730.50 within one (1) year with interest of 12 percent per annum representing the amount of debt incurred by Cruz. Moreover, the agreement provided that the Alanos are to convey the house and lot bequeathed to them by Cruz in the event of failure to pay the debt in money at its maturity.

No part of interest or principal due has been paid except the sum of P200 paid in 1908 by Anastacio Alano. In 1912, Anastacio died intestate. On August 8, 1914, CFI of Batangas appointed Crisanto Javier as administrator of Anastacio’s estate. On March 17, 1916, the plaintiffs filed the complaint against Florencio, Jose and Crisanto praying that unless defendants pay the debt for the recovery of which the action was brought, they be required to convey to plaintiffs the house and lot described in the agreement, that the property be appraised and if its value is found to be less than the amount of the debt, with accrued interest at the stipulation rate, judgment be rendered in favor of the plaintiff for the balance.

ISSUE

Whether or not the stipulation is valid.

RULING

Yes, it is valid.

Under the law (Art. 1200), the right of choice belongs to the debtor, unless it has been expressly granted to the creditor. The debtor shall have no right to choose those prestation which are impossible, unlawful or which could not have been the object of the obligation.

In this case, the stipulation is valid because it is simply an alternative obligation, which is expressly allowed by law. The agreement to convey the house and lot on an appraised value in the event of failure to pay the debt in money at its maturity is valid. It is simply and undertaking that if debt is not paid in money, it will be paid in another way. The agreement is not open to the objection that the agreement is pacto comisorio. It is not an attempt to permit the creditor to declare the forfeiture of the security upon the failure of the debtor to pay its maturity. It is simply provided that if the debt paid in money, it shall be paid by transfer if the property at a valuation. Such an agreement unrecorded, creates no right in rem, but as between the parties, it is perfectly valid and specific performance by its term maybe enforced unless prevented by the creation of superior rights in favor of third persons. 

The contract is not susceptible of the interpretation that the title to the house and lot in question was to be transferred to the creditor ipso facto upon the mere failure of the debtors to pay the debt at its maturity. The obligation assumed by the debtors were in the alternative, and they had the right to elect which they would perform. The conduct of the parties shows that it was not their understanding that their right to discharge the obligation by the payment of the money was lost to the debtors by their failure to pay the debt at its maturity. The plaintiff accepted the payment from Anastacio in 1908, several years after the debt matured.

It is quite clear therefore that under the terms of the contract, and the parties themselves have interpreted it, the liability if the defendant as to the conveyance of the house and lot is subsidiary and conditional, being dependent upon their failure to pay the debt in money. It must follow therefore that if the action to recover the debt was prescribed, the action to compel a conveyance of the house and lot is likewise barred, as the agreement to make such conveyance was not an independent principal undertaking, but merely a subsidiary alternative pact relating to the method by which the debt must be paid.