GERONIMO G. ESGUERRA AND CRISTINA G. ESGUERRA, PETITIONERS-APPELLANTS, VS. THE HONORABLE FELIPE M. VILLANUEVA, MUNICIPAL JUDGE OF DAGUPAN CITY, THE PROVINCIAL SHERIFF OF PANGASI…

Esguerra versus Villanueva

The Case

This is a petition for certiorari, prohibition and mandamus, with preliminary injunction, brought by the spouses Geronimo Esguerra and Cristina Gueco against the Municipal Judge of Dagupan City, the Provincial Sheriff of Pangasinan, and the debtors Isidro de Guzman and his mother Segunda de Guzman. The Esguerras ask the Court to annul the judge's orders releasing the attached properties of their debtors, to restrain their enforcement, and to compel the issuance of an alias writ of execution for the unpaid balance of a judgment by compromise. The case matters because it fixes the meaning of acceptance under Article 1235 of the Civil Code: the mere receipt of a partial payment does not extinguish an obligation, and the creditor's objection need not be spoken in any particular form or at any particular time.

Procedural History

The Esguerras first sued in the Municipal Court of Dagupan City, in two separate collection cases, one against Segunda de Guzman on a promissory note and one against Isidro de Guzman on the lease. The parties settled, and the municipal judge, Judge Felipe Villanueva, approved the compromise agreement and rendered judgment in both cases. When the debtors failed to pay on time, the Esguerras moved for execution, and writs of execution were issued. The debtors later paid in two installments and moved for the release of the attached properties; the judge granted the motion, and denied reconsideration.

The Esguerras then filed an original action for certiorari, prohibition and mandamus, with preliminary injunction, in the Court of First Instance of Pangasinan, to annul those orders and to compel an alias writ of execution. The Court of First Instance dismissed the petition. The Esguerras brought a direct appeal to the Supreme Court on questions purely of law.

Facts

On July 13, 1961, Geronimo Esguerra leased a portion of the Esguerra-Gueco building in Dagupan City to Isidro de Guzman, who acted for himself and for a corporation he intended to organize but which was never organized. The lease ran for ten years from July 12, 1961, at a monthly rental of 300 pesos up to July 11, 1962, and 400 pesos thereafter, payable in advance within the first ten days of each month.

De Guzman failed to pay the rentals from February to August 1962, amounting to 1,800 pesos, plus a balance of 300 pesos on the purchase price of equipment. On August 6, 1962, his mother, Segunda de Guzman, executed in favor of the Esguerras a promissory note for 2,100 pesos, payable 1,000 pesos not later than August 12, 1962, and the balance of 1,100 pesos not later than August 31, 1962. The note provided that if the first payment was not made on its due date, the entire value became immediately due and demandable. No payment was made.

The Esguerras sued in the municipal court, and on October 22, 1962, the parties entered into a compromise agreement under which the debtors jointly and severally admitted liability of 2,260 pesos, payable on or before November 26, 1962, and agreed that upon default judgment would be rendered and immediately executed against their attached properties. The compromise was approved in a judgment dated November 27, 1962. The amount was not paid on or before November 26, 1962, so on motion of the Esguerras the municipal judge issued writs of execution on December 14, 1962. De Guzman then delivered 800 pesos on December 13, 1962, and 1,460 pesos on January 5, 1963. Claiming full satisfaction, the debtors moved for the release of the attached properties, and the judge granted the motion on February 11, 1963.

Issues

• Whether or not the receipt by the creditors of partial payments, without express protest, amounted to acceptance of incomplete and irregular performance that extinguished the judgment obligation under Article 1235 of the Civil Code.
• Whether or not the municipal judge gravely abused his discretion in releasing the attached properties and in refusing to issue an alias writ of execution for the unpaid balance.

Applicable Provisions

Article 1235 of the Civil Code provides:

When the obligee accepts the performance, knowing its incompleteness or irregularity, and without expressing any protest or objection, the obligation is deemed fully complied with.

This is the provision on which the debtors and the lower court relied, and the entire case turns on whether the Esguerras accepted the partial payments within its meaning.

Ruling

On the first issue, the Court held that the premise of the lower court was untenable. The verb accept, as used in Article 1235, means to take as satisfactory or sufficient, or to give assent to, or to agree or accede to an incomplete or irregular performance. The circumstances showed that the Esguerras neither acceded to the payment nor took it as satisfactory compliance. On the very day after the first payment of 800 pesos, they asked the municipal judge to issue the writs of execution, thereby manifesting dissatisfaction, which necessarily implied an objection or protest. The judge must have so understood, for he was present when the payment was made and still caused the writs to issue. The debtors evidently shared that impression, or they would not have paid the additional 1,460 pesos. And the Esguerras insisted on disposing of the attached properties despite the further payment.

On the second issue, the Court held that the law does not require the protest or objection of the creditor to be made in a particular manner or at a particular time. So long as the acts of the creditor, at the time of the incomplete or irregular payment or within a reasonable time thereafter, evince that he is not satisfied with or agreeable to the payment, the obligation is not deemed fully extinguished. The Esguerras acted within such time.

Doctrine

Under Article 1235 of the Civil Code, the obligation is deemed fully complied with only when the obligee accepts the performance knowing its incompleteness or irregularity and without expressing any protest or objection. Acceptance means taking the performance as satisfactory or sufficient, or giving assent or acceding to it; mere receipt of a partial payment is not acceptance. The protest or objection need not be express, nor made in any particular manner or at any particular time; conduct of the creditor at the time of payment or within a reasonable time thereafter that shows dissatisfaction suffices to prevent extinguishment. A creditor who receives partial payment and promptly sues out execution has not accepted the incomplete performance.

Disposition

The Court reversed the decision of the Court of First Instance and directed the respondent municipal judge to issue the corresponding alias writs of execution, with costs against Isidro de Guzman and Segunda de Guzman.

Remember This

Memorize the rule: receipt is not acceptance, and the creditor's objection may be shown by conduct, in no particular manner and at no particular time. Examiners use this case to test Article 1235 of the Civil Code and the distinction between mere receipt of a partial payment and true acceptance of incomplete performance.