G.R. No. 2091. October 18, 1905

In the months of November and December, 1895, the defendant,
Sebastian Victor Molina, was the owner of a tobacco store in Binondo,
in Manila. During these months the plaintiff, a manufacturer, sold to
the said defendant cigars and cigarettes, which the said defendant
resold in his store. After the month of December the parties, by mutual
agreement, determined that the amount due to the plaintiff from the
said defendant by reason of the previous sales was 3,319.74 pesos. On
January 23, 1896, the said defendant, Sebastian Victor Molina, executed
and deliv- ered to the plaintiff a written instrument, of which the
following is a copy:

“For $3,319.74 Three months after date I promise to
pay to the order of the Compania General de Tabacos de Filipinas three
thousand three hundred and nineteen pesos and seventy-four cents, value
received in merchandise to my entire satisfaction. Manila, January 23,
’96. S. Molina. There is a rubric. Surety. J. V. Molina. There is a
rubric. There is a regulation stamp, cancelled, of the value of two
pesos.”

The other defendant signed the instrument as surety for its payment,
as indicated thereon. When the note became due it was duly protested.
No part of it, or of the debt on account of which it was given, has
been paid, except the sum of 432.80 pesos. On the 17th day of July,
1903, the plaintiff commenced this action against both of the
defendants. Judgment in the court below was entered in favor of the
defendants on the ground that the note above described was a commercial
instrument, and that the cause of action thereon has prescribed by
virtue of the limitation of three years mentioned in article 950 of the
Code of Commerce. The plaintiff has brought the case here by bill of
exceptions.

Two questions are presented by the record: First, is the instrument
in question one of the instruments,mentioned in said article 950?
Second, if it is, can the plaintiff maintain an action against the
defendant, Sebastian Victor Molina, based upon the original sale of
merchandise to him?

(1) It is claimed by the plaintiff that the document
in question is not a commercial note, because it does not comply with
the requirements of article 531 of the Code of Commerce. He relies upon
the fact that the sixth requisite of that article, which requires the
promissory note to state the place where it is to be paid, has been
entirely omitted, and that the note in question does not fulfill the
requirements of the seventh paragraph, which says that the promissory
note must state the source and the kind of value which it represents.
We think the contention as to the sixth requisite can not be sustained.
This article 531, at the end thereof, provides that bills which are to
be paid in a different place from that of the residence of the payor
should indicate a domicile for their payment. Blanco, in his Treatise
on Commercial Law, makes the following statement;

“Bills or
notes must contain the same requisites as drafts already enumerated
(3), with the sole difference that in those bills in which the payment
is to be effected in a different place from that of the residence of
the payor, the place of payment should be stated therein. (2 Derecho
Mercantil, p. 274.)”

Estasen, in his work on Commercial Law, makes the following statement :

“Messrs. La Serna and Reus invite attention, that
although the supreme court of Spain (1) has determined that promissory
notes which do not contain the requisites prescribed in article 563 of
the old Code of Commerce are not commercial, it should not be
understood that said requisites are essential since the same code
provides for cases in which they are wanting.(4 Derecho Mercantil p. 95.)”

It will be observed that article 531 refers to drafts as well as to
bills and notes, and this sixth requisite was intended to be applied in
any event to drafts, but the addition to the article indicates that it
was not always to be applied to bills or notes.

Neither do we think that the contention of the plaintiff in regard
to the seventh requisite can be sustained. The origin of the debt is
sufficiently stated, for as the plaintiff itself says in its brief, the
receipt of merchandise in exchange for money necessarily supposes a
contract of purchase and sale. We think also the nature of the
consideration is sufficiently stated. It was not necessary to insert in
the document an inventory of the different articles that had been sold
by the plaintiff to the said defendant, Sebastain. As the appellees say
in their brief in this court, if this was required, an ordinary
commercial note would be more extensive than a government expediente.
In order to bring the document within the Code of Commerce it must
appear that it had its origin in commercial operations. It seems to be
the contention of the appellant that this fact must appear in the note
itself. This, in our opinion, can not be sustained. If the requirements
of article 531 are complied with, and, nevertheless, it does not appear
from the note itself that it had its origin in commercial operations,
this fact can be proved by other evidence. In other words, if the
origin and nature of the consideration is stated, and that statement
does not show that the note proceeded from commercial operations, the
document, nevertheless, is a commercial document, if it can be proved
by other evidence that it did proceed from such operations. (Judgment
of the supreme court of Spain of the 7th of November, 1870.)

We therefore hold that the action upon the note was barred by the
statute of limitations in the Code of Commerce. As the only obligation
which the defendant, Juan Victor Molina, assumed was the obligation
evidenced by this note the action against him is barred.

(2) It remains to be considered whether an action
can be maintained against the defendant, Sebastian, based upon the
original contract of purchase and sale of the articles in question.
This purchase and sale was undoubtedly a commercial transaction. (Art.
2, Code of Commerce.) This code says nothing concerning the way in
which obligations shall be extinguished. It is therefore necessary to
apply the rules of the common law. (Art. 50, Code of Commerce.) Article
1170 of the Civil Code provides in part as follows:

“The
delivery of promissory notes to order or bills of exchange or other
commercial paper shall only produce the effects of payment when
collected or when, by the fault of the creditor, their value has been
prejudiced.

In the meantime the action arising from the original obligation shall be suspended.”

We think that this article is applicable not only to those
instruments, executed by third persons, which the debtor delivers to
the creditor, but also to a note executed by the debtor himself and
delivered to the creditor. The clause relating to prejudice caused to
the instrument by the fault of the creditor is applicable only to the
first class of documents, and not to the second.

It is apparent also that there was no novation of the contract in
accordance with the provisions of article 1204 of the Civil Code.
(Eighth Commentaries on the Civil Code, Manresa, 397, 2 Derecho Mercantil, Blanco, 90.)

Our conclusion upon this branch of the case is that the plaintiff’s
cause of action against the defendant, Sebastian Victor Molina, growing
out of the sale of these articles, still exists and can be enforced.

The facts stated in paragraphs 1 to 5 of the amended complaint
(omitting the last seven lines of the fifth paragraph) are a sufficient
statement of this cause of action. In view of the fact that a demurrer
to the original complaint was sustained, on the ground that the
complaint was based upon the note alone, and that the note was
out-lawed, it is apparent that the plaintiff, when he presented his
amended complaint, which contained allegations in regard to the sale of
the articles in question, did not intend to rely solely upon the note
for a cause of action, but, on the contrary, did intend to rely upon
the original contract of sale. Otherwise the allegations relating to
this sale would have been entirely useless. The quotation which the
appellees make in the third page of their brief in this court is taken
from the original complaint, which was entirely superseded by the
amended complaint. The defendant, Sebastian, admitted in his answer
that on January 23, 1896, he owed the plaintiff 3,319.74 pesos for the
said merchandise.

The judgment of the court below is affirmed, in so far as it relates
to the defendant Juan Victor Molina. It is reversed in so far as it
relates to the defendant Sebastian Victor Molina, and the case is
remanded to the court below with instructions to enter a judgment in
favor of the plaintiff and against the defendant Sebastian, for the
equivalent in Philippine pesos of 3,319.74 pesos, Mexican currency,
less 432.80 pesos, Mexican currency with interest from the commencement
of the action, and costs. No costs will be allowed to either party in
this court, and after the expiration of twenty days judgment shall be
entered in accordance herewith. So ordered.

Arellano, C. J., Torres, Johnson, and Carson, JJ., concur.