ADRIANO GOLEZ, PLAINTIFF AND APPELLANT, VS. CARMELO S. CAMARA, DEFENDANT AND APPELLEE.

This
is an appeal by the plaintiff, Adriano Golez, from a judgment of the
Court of First Instance of Negros Occidental, the dispositive part of
which reads as follows: “Wherefore, the court renders judgment: 1.
Declaring that plaintiff Adriano Golez owes defendant Camara P76,725.90
up to September 30, 1950; 2. Entitling him to conveyance of the
undivided portions of Haciendas Buenavista and Aurelia which Camara
acquired by way of deed of purchase from the PNB, by virtue of the
contract Exhibit B of promise to sell upon his payment to Carmelo S.
Camara of the sum of P76,725.90 with interest of 12 per cent from
October 1, 1950 until the date of payment, within ninety (90) days from
the promulgation of this decision; 3. Requiring and ordering defendant
Carmelo S. Camara to issue a valid and registrable deed of conveyance
of the undivided portions of Haciendas Buenavista and Aurelia obtained
by him from the PNB, as per Exhibit B, upon the payment by plaintiff
Adriano Golez of the said sum of P76,725.90 in the manner stated
hereinabove; and 4. Declaring the contract of lease of the undivided
portions of Haciendas Buenavista and Aurelia belonging to Adriano
Golez, Jose J. Locsin and Augusto J. Locsin, as terminated within 90
days from the promulgation of this decision. The parties are to pay the
fees of the Commissioners pro rata, without any special pronouncement as to costs.”

Prior to the year 1930 the appellant owned several parcels of land
situated in the municipality of Isabela, Province of Negros Occidental,
jointly with Jose J. Locsin, Augusto J. Locsin, Vicente Jimenez Yanson,
Isidoro Jimenez, Filomena Jimenez and Aurelia Jimenez. Two of the
parcels are known as Hacienda Aurelia and Hacienda Buenavista. In civil
case No. 4512 of the Court of First Instance of Negros Occidental, the
Philippine National Bank obtained a money judgment against Vicente
Jimenez Yanson, Isidoro Jimenez and Aurelia Jimenez, and pursuant
thereto the provincial sheriff, on December 29, 1930, sold at public
auction the rights and interest of the three judgment debtors in
Hacienda Aurelia and Hacienda Buenavista, at which the Philippine
National Bank became the purchaser. Subsequently the judgment debtors
waived their right of redemption in favor of the appellant. In
December, 1931, the Philippine National Bank executed in favor of the
defendant-appellee, Carmelo S. Camara, a contract promising to sell its
rights over Hacienda Aurelia and Hacienda Buenavista for P55,160,
P5,516 to be paid in cash on or before March 31, 1932, and the balance
of P49,644 by means of annual delivery of 1,000 piculs of contrifugal
sugar beginning with the 1932-1933 harvest, the proceeds to be applied
first to the interest of eight per cent per annum and then to the
capital. In this contract the three judgment debtors ceded to the
appellee their right of redemption. On December 31, 1931, a contract of
lease was executed by the appellant, jointly with Jose J. Locsin and
Augusto J. Locsin, whereby they leased to the appellee their undivided
shares in Hacienda Aurelia and Hacienda Buenavista, the condition being
that 1,000 piculs of sugar produced therein should be delivered
annually to the Philippine National Bank in payment of the purchase
price of P55,160 stipulated in the contract between the bank and the
appellee. These sugar deliveries represented, on the one hand, the
rentals due from the appellee under the lease and, on the other, the
instalments to the bank “para la recompra de las fincas segun aqui se
conviene, estipula y otorga en esta escritura por y para el Sr. Adriano
Golez.” The contract of lease futher provided that the appellee shall
convey to the appellant the portions acquired by the bank under the
auction sale and which the latter promised to sell to the appellee,
after the latter shall have obtained title from the bank upon the
termination of the lease, and after the appellant shall have reimbursed
the appellee for what he may have paid upon account of the purchase
price.

The appellee admittedly made the down payment of
P5,516 and delivered annually, beginning with the crop year 1932-1933,
various quantities of centrifugal sugar to the Philippine National
Bank, except in the crop year 1940-1941 due to the outbreak of the last
war. The stipulated purchase price of P55,160 was not fully paid as
late as January, 1945, when the outstanding balance was still
P35,541.18. This was, however, paid by the appellee to the bank in
Japanese military notes on January 24, 1945. Subsequently the bank
executed the corresponding deed of sale in favor of the appellee.

The appellant seeks to recover from the appellee the rights over
Hacienda Aurelia and Hacienda Buenavista thus acquired by him from the
Philippine National Bank, under the theory that the stipulated purchase
price of P55,160 should have been fully covered by the 1,000 piculs of
sugar which the appellee covenanted under the contract of lease to
deliver to the bank out of the produce derived from the two farms
annually beginning with the crop year 1932-1933 and for eight
consecutive years thereafter, extendible for another two years; and the
appellant capitalizes the fact that the appellee had defaulted in his
agreement, because in the crop year 1934-1935, he delivered to the bank
only 485.27 and 270.95 piculs; in the crop year 1935-1936 only 961.03
piculs; in the year 1936-1937 only 880.52 piculs; in the year 1937-1938
only 925.22 piculs; in the year 1939-1940 only 944.55 piculs, and in
the year 1940-1941 none. There is no question that out of the P5,616
paid in cash by the appellee to the Philippine National Bank, the
appellant had returned only the sum of P3,560.

It is argued
by the appellant that, under his contract of lease with the appellee,
he is required to pay interest of twelve per cent, compounded annually,
only on the down payment of P5,516 and any other amount actually paid
in cash by the appellee to the bank over and above the 1,000 piculs of
sugar called for in the lease. On the other hand, the theory of the
appellee is that the appellant is bound to pay twelve per cent compound
interest not only on P5,516 but also on any unpaid balance of the
purchase price of P55,160.

The sum of P76,725.90, with
interest of twelve per cent from October 1, 1950, which the appellant
is required under the appealed decision to pay to the appellee before
being entitled to the conveyance of the undivided portions in question,
was arrived at by the trial judge in this wise: “As of December 31,
1941, Golez owed Camara P52,037.34 including interests, simple. The
capital on said date was P43,313.27 at 12 per cent interest. The simple
interests at 12 per cent from January 1, 1946 to September 30, 1950 is
P24,688.56, the corresponding1 simple interests from January 1, 1942 to
December 31, 1945 being condoned on equitable grounds on account of the
last World War. This sum of P24,688.56, added to the balance of
P52.037.34 as of December 31, 1941, gives a total of P76,725.25.”

From all the circumstances and equities of the case, we are led to the
conclusion that the relation between the appellant and the appellee was
in effect one whereby the appellee accommodated the appellant in the
sense that he assumed the obligation of paying the price necessary to
redeem the undivided portions of Haciendas Aurelia and Buenavista from
the Philippine National Bank, under the terms hereinbefore already
noted, namely, that P5,516 was the down payment and the balance was
payable by annual installments of 1,000 piculs of sugar to the bank.
The appellee, in return, was given by the appellant a lease-hold over
the latter’s undivided portions of the two farms, in addition to the
possession of the portions already acquired by the bank, with the right
of course to receive and enjoy the produce thereof, after deducting
only 1,000 piculs of sugar to be delivered to the bank yearly beginning
with the crop year 1932-1933. No other rental was paid to the owners.
Besides, the appellant admits his obligation to pay compound interest
of twelve per cent on the sum of P5,516, representing the down payment
made by the appellee to the bank, and on other amounts paid upon
account for the purchase price.

In the contract of lease
between the appellant and the appellee, the following stipulation is
contained: “Que del mismo modo, sera una deuda y obligacion del mismo
Sr. Adriano Golez a favor del Sr. Carmelo S. Camara toda otra cantidad
remanente y balance no cubierta despues por la aplicacion a los ingreso
de los mil picos (1,000 pp) y de los ochenta picos (80 pp) de azucar
centrifugado anuales provisto bajo la condicion 9.ª, en relacion con la
10.ª en de este contrato, tambien con intereses que correspondieron
bajo el mismo tipo de doce por ciento anual, y todo ello mientras la
deuda no fuese enteramente pagada o totalmente saldada por el Sr.
Adriano Golez a favor del Sr. Carmelo S. Camara.”

It is the
contention of the appellee, sustained by the trial court, that the
appellant is bound to pay twelve per cent interest on any unpaid
balance due to the Philippine National Bank, after deducting the
proceeds of the stipulated 1,000 piculs of sugar delivered every year
to the bank, in addition to the eight per cent interest (later reduced
to 6 per cent) charged by the bank on the balance of P49,644. Upon the
other hand it is argued by the appellant that he should not pay
interest on said balance because interest thereon was already collected
by the bank.

Our opinion is that the appellant should pay
interest of twelve per cent per annum compounded annually on the down
payment of P5,516 and on any amount actually paid by the appellee to
the bank over and above the proceeds of the 1,000 piculs of sugar. We
are influenced by the fact that the bank had already charged eight per
cent interest (subsequently reduced to 6 per cent) on the unpaid
balance of P49,644, and it would be quite unreasonable to collect from
the appellant another twelve per cent interest. This would not deprive
the appellee of his right to earn interest on his investment, since his
only actual cash disbursements to the bank, were, first, the down
payment of P5,516 and, secondly, the sum of P35,541.18 paid by him on
January 24, 1945, and the latter payment in fact enabled him to receive
a conveyance from the bank of the undivided portions of Haciendas
Aurelia and Buenavista, involved therein. Indeed, this amount of
P35,541.18 must be taken as the unpaid balance due to the bank,
including accumulated interest, after crediting the appellee with
whatever sugar he was able to deliver under the contract of lease.

There is now no question as to the right of the appellant to redeem the
properties in question from the appellee, the latter not having
appealed, and the only point that arises refers to the amount which the
appellant has to pay. From the foregoing observations we are inclined
to hold that the appellant should pay to the appellee the sum of
P5,516, less P3,560 already paid on said item, or P1,956, with 12 per
cent interest compounded annually from January, 1932, (it being
admitted under appellant’s evidence—transcript, pp. 37-388—that the sum
of P3,560 was paid at the commencement of the lease contract executed
on December 31, 1931), plus the sum of P55,541.18. The latter amount,
which was paid by the appellee on January 24, 1945, in Japanese
military notes must be reduced to actual Philippine currency under the
Ballantyne Scale, since said disbursement could have been repaid in the
same currency by the appellant during the Japanese occupation. After
being so reduced, it shall also bear compound interest of twelve per
cent per annum from January 24, 1945.

We cannot agree to
appellant’s contention that the payment of P35,541.18 paid by the
appellee to the bank on January 24, 1945, must be deemed compensated by
the appellee’s failure to deliver the 1,000 piculs of sugar
corresponding to the crop year 1941-1942, since as correctly found by
the trial court, said failure was due to the last war. Neither may the
appellee be charged with having partially defaulted in his yearly
deliveries of 1,000 piculs, because the record shows that although the
appellee had placed at the disposal of the bank the annual rental of
1,000 piculs of sugar, the bank was unable to get the proceeds of the
full quantity in view of the Sugar Limitation Act.

Appellant’s claim for damages in the sum of P1,000 and for attorney’s
fees in the sum of P5,000, is untenable, since the appellee cannot be
said, and has not in fact been proved, to have violated the contract of
lease. Neither may we sustain appellant’s prayer that said lease be
declared terminated after the crop year 1941-1942, especially because
there is evidence to the effect that appellant’s obligation in
connection with Hacienda San Luis in favor of Antero Mijares, Jr.
(subsequently acquired by the appellee) was merged in appellant’s
contract of lease with the appellee over Haciendas Aurelia and
Buenavista, and this extended said lease until all of appellant’s
obligation shall have been settled.

Wherefore, it being
understood that the appellant is indebted to the appellee upon account
of the repurchase price of the land in question only in the sums of
P1,956, with twelve per cent compound interest from January, 1932, and
P296.18 with compound interest of twelve per cent from January 24,
1945, which indebtedness should first be settled by the appellant
before he is entitled to a conveyance of the land in question, the
appealed judgment is in all other respects affirmed, except further
that the 90-day period fixed therein shall be computed from the date
this decision becomes final. So ordered without costs.

Pablo, Bengzon, Padilla, Tuason, Montemayor, Jugo, Reyes, Bautista Angelo and Labrador, JJ., concur.