GOTIAOCO HERMANOS, INC., PLAINTIFF AND APPELLANT, VS. FELICIANA ENRIQUEZ ET AL., DEFENDANTS AND APPELLANTS.

On May 26, 1926, the defendants, with the
exception of Concepcion Carratala, married to Luis Fernandez
Sidebotorn, signed a public document (Exhibit D) in favor of Gotiaoco y
Hermanos wherein they stated as follows: “That we have received to our
full satisfaction the sum of P6,000 from Messrs. Gotiaoco y Hermanos;
that we bind ourselves to pay interest thereon at the rate of 12 per
cent per annum from the date of the deed until the debt is fully paid,
and that we mortgage to said Gotiaoco y Hermanos a parcel of land
covered by original certificate of title No. 8696, binding ourselves,
furthermore, to the mortgagees for the eviction and warranty of this
property which has been given as security for our debt.” This document
was not registered.

The plaintiff is the successor of Gotiaoco y Hermanos and, as
such, filed the complaint in this case, seeking to recover from the
defendants the sum of P6,000 with interest at 12 per cent per annum
from May 26, 1926.

In their answer the defendants allege
that the indebtedness of P6,000 referred to in the complaint was
contracted personally by Gabino Veloso; that they did not receive any
part of said sum, and that, in signing Exhibit D, they merely tried to
secure the loan granted to Gabino Veloso with the mortgage on their
property.

The appealed judgment dismissed the complaint as to Concepcion
Carratala, married to Luis Fernandez Sidebotom, for not having signed
the document Exhibit D. It absolved the other defendants from paying
the sum of P6,000, declaring that said sum was a personal debt of
Gabino Veloso, but ordered them to pay to the plaintiff the interest
thereon at 12 per cent per annum from May 27, 1926, until fully paid.

Both the plaintiff and the defendants appealed.

The plaintiff appealed from that part of the judgment holding the
defendants not liable to pay to it the sum of P6,000. The defendants
appealed from so much of the judgment as ordered them to pay to the
plaintiff interest on the sum of P6,000 at 12 per cent per annum from
May 27, 1926, and particularly with respect to the defendant Consuelo
Carratala, on the ground that she, being married, signed the document
Exhibit D without the consent of her husband Gabino Veloso.

As to the plaintiff’s appeal we are of the opinion that the
defendants who signed Exhibit D are liable to pay to said plaintiff the
sum of P6,000. The terms of said document, the material parts of which
had been quoted hereinbefore, are explicit in the sense that the
defendants considered themselves indebted in said sum upon affirming
that they had received the same to their full satisfaction, binding
themselves to pay the interest thereon and, calling it, to be more
explicit, our debt.

However, the defendants allege that the said sum of P6,000 was
Gabino Veloso’s personal debt and that they signed the document Exhibit
D merely for the purpose of securing with the mortgaged property the
payment thereof by Gabino Veloso, and that it was not their intention
to assume the obligation to pay the sum in question. The only witness
presented in connection with said defense was Gabino Veloso. However,
although Veloso testified that the sum of P6,000 is his personal debt,
he did not state that the defendants signed the document Exhibit D
merely for the purpose of securing with the mortgage the payment
thereof and that they did not assume the obligation to pay the same. It
results from the foregoing that there is no evidence that the
defendants’ intention, which is clearly deducible from the terms of the
document, is not that which they had upon signing said document.

The fact that the debt in question was originally contracted by
Gabino Veloso alone, does not alter the defendants’ liability. The most
that can be inferred therefrom is that the original contract of loan
between Veloso and the plaintiff’s predecessor in interest was novated
under Exhibit D by the substitution of the persons who signed it as
debtors.

This conclusion likewise adversely decides the defendants’ appeal
with respect to the payment of interest. If they must pay the debt,
they should pay the stipulated interest, especially because they
expressly bound themselves to do so. Furthermore, this conclusion
relieves us from discussing the erroneous contention made in the
defendants’ brief, to the effect that in this case the mortgage is the
principal obligation, and the payment of interest an accessory.

As to Consuelo Carratala, we concur in the trial court’s opinion
that she cannot evade the effect of the document signed by her by
alleging that it is null and void for lack of her husband’s consent,
inasmuch as only the husband or his heirs can raise such question of
nullity.

In view of the foregoing considerations, the judgment appealed from
is modified, and the defendants, with the exception of Concepcion
Carratala and her husband, are ordered to pay to the plaintiff the sum
of P6,000. Said judgment is affirmed in all other respects, without
special pronouncement as to costs. So ordered.

Street, Malcolm, Vickers, Butte, Goddard, and Diaz, JJ., concur.

IMPERIAL, J., with whom concur VILLA-REAL, ABAD SANTOS, and HULL, JJ., dissenting:

On May 26, 1926, the defendants signed the document which reads as follows:

“Know all men by these presents; That we
Feliciana Enriquez, widow, Carmen Carratala, married to Mariano G.
Veloso, Concepcion Carratala, married to Luis Fernandez Sidebotom,
Manuel Carratala, married to Quintillana Samson, all of age, do hereby
declare that, in consideration of the sum of six thousand pesos
(P6,000), which we have received to our full satisfaction from Messrs.
Gotiaoco y Hermanos, do hereby mortgage to said Messrs. Gotiaoco y
Hermanos, their heirs and successors in interest, a parcel of land
known as lot number one thousand seven hundred fifty-six (lot No. 1756)
of the cadastre of Cebu, Cebu, and described in original certificate of
title number eight thousand six hundred and ninety-six (o. c. of title
No. 8696) of the registry of deeds of Cebu.

“We likewise
declare that the stipulated term of this mortgage is two (2) years from
the date of this deed, and we bind ourselves to pay interest thereon at
twelve per cent (12%) per annum until the debt is fully paid.

“We further declare that during the term of the mortgage the
assessments in favor of the municipality, by way of land taxes, as well
as the assessments in favor of the provincial or insular government,
will be paid by the mortgagors, binding ourselves, furthermore, to the
mortgagees for the eviction and warranty of the above described
property which has been given as security for our indebtedness.

“In witness whereof, we hereunto affix our signatures at Cebu, Cebu, P. I., this 26th day of May, 1926.

	“(Sgd.) FELICIANA ENRIQUEZ, CONSUELO CARRA-
	TALA, CARMEN CARRATALA, M. CARRA-
	TALA E.
“With my marital consent:
		“(Sgd.) V. GANDIONGO”

Inasmuch as the defendants refused to pay the sum of P6,000 and the
interest thereon and because, on the other hand, said mortgage deed was
not duly registered, the plaintiff entity brought a personal action for
the recovery of both.

The plaintiff appealed from that part of the judgment absolving the
defendants from the payment of the sum of P6,000. The defendants, in
turn, appealed in so far as the judgment ordered them to pay interest
thereon at 12 per cent per annum from May 27, 1926, with costs.

In their answer, the defendants alleged, among other defenses, that
the above quoted document, transcribed in the complaint, does not
express the true intention of the parties, and that the sum claimed was
an indebtedness of one Gabino Veloso, which they, without assuming it,
secured by the real property described in the document.

It has been established by means of preponderant and convincing
evidence that the sum of P6,000 was an obligation contracted by Gabino
M. Veloso from the plaintiff’s predecessor in interest, which the
defendants secured with the mortgage on their real property.

Such facts are shown by said Veloso’3 testimony to the effect that
he owed said sum; that he issued a promissory note for the accrued
interest thereon; and that said promissory note was presented in his
insolvency proceedings as evidence of the claim filed by the plaintiff,
and that the defendants merely secured his personal obligation with the
mortgage in question. Exhibit 1 corroborates Veloso’s statement that he
issued a promissory note for the accrued interest on his indebtedness
of P6,000 and that, in order to collect the same, the plaintiff
presented it as a claim in his insolvency proceedings.

It having been proven that the case involves an obligation or
indebtedness contracted by a third person and that the defendants by
means of the above quoted document merely secured it with the mortgage
executed by them, it is evident that the action brought for the
recovery of the principal obligation does not lie against the
defendants, and the same should have been instituted against Veloso.

The plaintiff’s claim that the defendants, by means of said
document, assumed Veloso’s obligation, is incompatible with the weight
of the evidence and is not supported by the terms of the document
which, it has also been proven, does not reflect the true intention of
the parties or the true facts of the case.

As to the defendants’ appeal, the same is unfounded. It is not
error to have ordered them to pay interest. Such obligation is clearly
disclosed by the terms of the document. The obligation which they
voluntarily bound themselves to perform is lawful and effective, for
the reason that a person may bind himself to pay the interest on the
debt of a third person, and that is precisely what the defendants did
in this case.

The judgment appealed from should be affirmed, with the costs of this instance against the plaintiff-appellant.