8/4/2019 OneNote

4 RFC v CA (1954)
Tuesday, 30 July 2019 2:35 PM

DOCTRINE: When the makers of a PN promised to pay the obligation evidenced thereby "on or before
<date>" the makers are entitled to make a complete settlement of the obligation at any time before said
date
FACTS:
• Oct. 31, 1941: Quintana Cano and Jesus Anduiza executed a PN with the ff. terms:
• On or before October 31, 1951 for value received, I/we, jointly and severally, promise to pay the
AGRICULTURAL AND INDUSTRIAL BANK, or order, at its office at Manila or Agency at Legaspi, Albay,
Philippines, the sum of THIRTEEN THOUSAND EIGHT HUNDRED PESOS (P13,800.00), Philippine currency,
with interest at the rate of six per annum, (6%) per annum, from the date hereof until paid. Payments of the
principal and the corresponding interest are to be made in ten (10 yrs.) years equal annual installments of
P1,874.98 each in accordance with the following schedule of amortizations:
• "All unpaid installments shall bear interest at the rate of six per centum, (6%) per annum.
• Oct. 31, 1943: Anduiza and Cano failed to pay the yearly amortizations that fell due on Oct. 31, 1942 and 1943
• 1944: Estelito Madrid, who was temporarily living in the house of Anduiza, learned of Anduiza's failure to pay the
aforesaid amortization
• Oct. 30, 1944: Madrid went to the central office of Agricultural and Industrial Bank (now RFC) in Manila and
offered to pay P10K for the indebtedness of Anduiza
• Oct. 23, 1944: Madrid paid P7,373.83 for the principal and P2,625.17 for the interest
• Oct. 30, 1944: The balance of P6,425 was paid
• RFC refused to cancel the mortgage executed by Anduiza
• Alleged that Anduiza failed to pay RFC in the amount of P16,425.17 inspite of demands
• July 3, 1948: Madrid instituted the present action in the CFI of Manila praying for judgment:
• Declaring Anduiza's indebtedness as paid
• Ordering RFC to release the properties mortgaged to it
• Condemning Anduiza to pay Madrid P16,425.17
• July 14, 1948: RFC's Answer
• Alleged that the loan of P13,800 had not become due and demandable in Oct. 1944
• The loan was payable in ten years at P1,874.98 annually (1941-1951)
• Up to Oct. 1944, Madird delivered the sum of P16,425.17 to RFC, which it accepted as deposit
• Alleged that it was agreed that if Madrid could not prove Anduiza's authority and approval, the deposit will
be annulled
• Thus, RFC cannot release the properties mortgaged because Anduiza refused to approve, authorize
said deposit made by Madrid
• Alleged as special defense, that the amount of P16,425.17 was declared null and void by E.O. No. 49 of June
6, 1945
• June 4, 1948: Anduiza personally came to the office of RFC, apprising it that he did not authorize
Madrid to pay for his loan
• Anduiza paid the sum of P2,000 on account of his loan and interest in arrears
• Prayed to dismiss the complaint and declare Madrid's deposit null and void
• Aug. 9, 1948: Anduiza's Answer
• Alleged that when Madrid paid the amount of P16,425.17 to the RFC, his indebtedness was not yet due and
demandable
• Payment was made without his knowledge and consent
• June 20, 1949: TC ruled in favor of Madrid
• June 28, 1949: Earlier decision was set aside upon motion of counsel of RFC
• Aug. 11, 1949: TC dismissed Madrid's complaint
• Sept. 20, 1949: Anduiza's amended answer was denied admission. Anduiza and Madrid's motion for new trial was
likewise denied
• Madrid and Anduiza appealed to CA
• CA reversed the TC, and ruled in favor of the appellants
• Directed RFC to cancel the mortgage executed by Anduiza and Cano
• Ordered Anduiza to pay Madrid the amount of P16,425.17
• RFC filed a petition for review on certiorari with the SC
• Payments by Madrid had been made against the express will of Anduiza and over the objection of the bank
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• The payments by Madrid were made thru misrepresentation and without good faith --> not beneficial to
Anduiza
• The obligation was not fully due and demandable at the time of the payments (Oct. 1944)
ISSUE/HELD/RATIO:
1. W/N the obligation of Anduiza and Cano to RFC was fully due and demandable at the time of the payments made
by Madrid - YES
• The makers of the PN promised to pay the obligation evidenced thereby "on or before Oct. 31, 1951"
• The full amount of said obligation was not demandable prior to Oct. 31, 1951, in view of the provision of the
note relative to the payment of 10 annual installments
• However, the makers were entitled to make a complete settlement of the obligation at any time before said
date
2. W/N Madrid was entitled to pay the obligation of Anduiza irrespective of the latter's will or that of RFC, and even
over the objection of either or both - YES
• Art. 1158 of the CC of Spain reads:
• "Payment may be made by any person, whether he has an interest in the performance of the obligation or
not, and whether the payment is known and approved by the debtor or whether he is unaware of it.
• "One who makes a payment for the account of another may recover from the debtor the amount of the
payment, unless it was made against his express will.
• "In the latter case he can recover from the debtor only in so far as the payment has been beneficial to
him."
• Contrary to RFC's pretense, the payments by Madrid were not made against its objection nor of Anduiza
• Anduiza clearly acquiesced to the payments when he joined Madrid in the appeal from the TC decision to
CA
• The receipts issued by RFC acknowledging the payments without qualification belie its alleged objection to
said payments
• Merely demanded a signed statement from Anduiza acknowledging the payments as a condition
precedent to the execution to the deed of cancellation of the mortgage
• NOT to its acceptance of the payments, which had already been made
• Nevertheless, this condition was null and void since RFC as creditor, had no other right other than to
exact payment
• Two consequences:
• Good or bad faith of the payor is immaterial to the issue
• RFC cannot invoke the provision that the payor may only recover from the debtor insofar as the payment
has been beneficial to him when made against his will
• This is a defense that may be availed of by Anduiza, not the Bank (only affects the former's rights)
• In order that the rights of the payor may be subject to said limitation, the debtor must oppose the
payments before or at the same time they were made, not subsequently thereto
• Question of W/N the payments were beneficial depends upon the law, not upon the debtor's will
• Not affected by Anduiza's former anumosity toward Madrid and his sudden change of front
DISPOSITIVE
Being in conformity with law, the decision appealed from is hereby a rmed, therefore, in toto.

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