G.R. No.

L-5942             May 14, 1954

REHABILITATION FINANCE CORPORATION, petitioner,

vs.
THE HONORABLE COURT OF APPEALS, ESTELITO MADRID and JESUS
ANDUIZA, respondents.

FACTS

On or before October 31, 1951, Quintana Cano And Jesus De Anduiza, promise to pay the
Agricultural and Industrial Bank the sum of P13,800.00, with interest per annum. Payments
of the principal and the corresponding interest are to be made in ten years with equal annual
installments in accordance with scheduled amortization. Anduiza and Cano failed to pay the
yearly amortizations that fell due on October 31, 1942 and 1943. As plaintiff Estelito Madrid,
learned of the latters' failure to pay the aforesaid amortizations, then offered to pay the said
indebtedness due to the creditor.

Alleging that Anduiza has failed to pay the plaintiff inspite of demands, and that Agricultural
and Industrial Bank (now R.F.C.) refused to cancel the mortgage executed by said Anduiza,
Estelito Madrid instituted the present action in the Court of First Instance of Manila, praying
for judgment (a) declaring the indebtedness as paid; (b) ordering the R.F.C. to release the
properties mortgaged; and (c) condemning defendant Anduiza to pay the plaintiff the
P16,425.17 plus legal interest, damages and cost without prejudice.

On July 14, 1948, defendant R.F.C. filed its answer, alleging that the loan had not become
due and demandable in October, 1944, as the same was payable in ten years. Up to
October 30, 1944, plaintiff delivered the total sum of P16,425.17 to the Agricultural Bank
which accepted the same. However, Agricultural Bank and its successor the R.F.C. cannot
release the properties mortgaged because defendant Anduiza refused to approve, authorize
or recognize said deposit made by plaintiff. It is further averred, as special defense, in view
of the refusal of Anduiza to approve and authorize same for payment of his loan, said
payment was declared null and void by Executive Order No. 49.

Defendant Anduiza personally came to the office of the R.F.C. apprising it that he did not
authorize the plaintiff to pay for his loan with the Agricultural Bank. Defendant Agricultural
and Industrial Bank (now R. F. C.) therefore prayed (1) to dismiss the complaint and to
declare plaintiff's deposit to be null and void; (2) to concede to defendant Agricultural and
Industrial Bank; and (3) to order plaintiff to pay the costs.

Defendant Anduiza filed his answer, alleging that when plaintiff paid the total amount of
P16,425.17, his indebtedness was not yet due and demandable; that the payment was
made without his knowledge and consent; that the Agricultural Bank did not accept the said
amount from Madrid as payment of his loan but as mere deposit to be applied later as
payment in the event he would approve the same; that said deposit was declared null and
void by E.O. No. 49

On June 20, 1949, the trial court rendered in favor of the plaintiff. Consequently, Madrid and
Anduiza brought this case to the Court of Appeals. The Court of Appeals reversed the prior
judgement, directing the R.F.C. to cancel the mortgage executed by Anduiza and Cano in
favor of said bank; and ordering Anduiza to pay plaintiff Madrid the amount of P16,425.17,
without pronouncement as to costs.

The Bank assails said decision of the Court of Appeals upon the ground that payments by
respondent Madrid had been made against the express will of Anduiza and over the
objection of the Bank, hence not valid; that the obligation in question was not fully due and
demandable at the time of the payments.

ISSUE
1.) Whether the debtors were entitled to pay the obligation prior to Oct. 31, 1951
2.) Whether the payment by third person was valid

RULING
1.) Yes. At the outset, it should be noted that the makers of the promissory note quoted
above promised to pay the obligation evidenced thereby "on or before October 31, 1951."
Although the full amount of said obligation was not demandable prior to October 31, 1951, in
view of the provision of the note relative to the payment in ten (10) annual installments, it is
clear, therefore, that the makers or debtors were entitled to make a complete settlement of
the obligation at any time before said date.

2.) YES. Article 1158 of the Civil Code of Spain, which was in force in the Philippines at
the time of the payments under consideration and of the institution of the present case
provides: "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."
Madrid was entitled to pay the obligation of Anduiza irrespective of the latter's will or
that of the Bank, and even over the objection of either or both. Nevertheless, payments in
question were not made against the objection either of Anduiza or of the Bank. Anduiza
impliedly, but clearly, agreed in the validity of the payment when he joined Madrid in
appealing the decision.