Case Digest: Nicolas, et. al. vs Matias, et. al., 89 Phil 126

Nicolas, et. al. vs Matias, et. al., 89 Phil 126

Subject: Obligations and Contracts

FACTS

By an instrument dated June 29, 1944, Vicenta Matias Vda. de Cornejo, and her son, Amado Cornejo, Jr., mortgaged to the spouses Dominador Nicolas and Olimpia Matias, four (4) parcels of land, situated in San Roque, municipality of Gapan, Province of Nueva Ecija, to guarantee the payment of the sum of P30,000 — then lent by the mortgagees to the mortgagors and received by the latter, in Japanese military notes — one (1) year after the expiration of five (5) years from said date, with interest thereon, at the rate of six per cent (6%) per annum. On July 15, 1944, said mortgagors offered to pay the debt, with interest for five (5) years, but the mortgagees rejected the offer.

Whereupon, in August 1944, the mortgagors deposited judicially the sum of P39,000 — representing the principal (P30,000), plus interest for five (5) years, at the stipulated rate — and instituted Civil Case No. 156 of the Court of First Instance of Nueva Ecija for the purpose of compelling the mortgagees to accept said amount and to discharge the mortgage. Although holding that the mortgagees were not justified in rejecting the tender of payment made by the mortgagors, said court rendered judgment, on August 12, 1946, declaring the consignation invalid for failure of the mortgagors to give previous notice thereof, and sentencing the mortgagors to pay the mortgagees the sum of P2,000 — as the equivalent in Philippine currency, pursuant to the Ballantyne schedule, of P30,000 in Japanese military notes — with interest, at the legal rate, from June 29, 1944.

The CA held the consignation valid, and the obligation guaranteed by the mortgage fully discharged. The mortgagees, however, brought the case, for review by writ of certiorari, to this Court, which held that the mortgagors could not, without the mortgagees' consent, accelerate the date of maturity of the obligation in question, which is payable after the fifth year from June 29, 1944; that the mortgagees cannot be compelled to accept payment prior to the expiration of said fifth year; and that the judicial consignation made by the mortgagors is, consequently, invalid, except as regards the amount corresponding to the interest for one (1) year from June 29, 1944. Soon thereafter, or on August 22, 1951, the mortgagees instituted the present action for foreclosure of said mortgage. The only issue raised in the lower court was whether the sum of P30,000, lent by the mortgagees in Japanese war notes, should be paid by the mortgagors in Philippine currency, peso for peso, or in accordance with the Ballantyne schedule.

ISSUE

Whether or not Nicolas can be compelled to accept.

RULING

No, Nicolas cannot be compelled to accept.

Under the law (Art 1196), whenever in an obligation a period is designated, it is presumed to have been established for the benefit of both the creditor and the debtor, unless from the tenor of the same or other circumstances it should appear that the period has been established in favor of one or of the other.

In this case, the benefit of the term is for both Nicolas and Matias—for Matias, because he could use the money for the at least five years; and for Nicolas, because Nicolas has wisely calculated that after five years, the chances were that the Japanese as well as the Japanese currency would no longer be in the Philippines. Moreover, for Nicolas to accept five years’ interest would be for him to violate the Usury Law, which allows payment of advance interest for only one year.