Title
Aldecoa y Palet vs. Hongkong and Shanghai Banking Corp.
Case
G.R. No. 6889
Decision Date
Mar 23, 1915
Plaintiffs, emancipated by their mother under Civil Code, validly executed a mortgage as creditors; Court upheld its validity, affirming capacity and consideration.
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Case Digest (G.R. No. 6889)

Facts:

1. Parties and Background
The plaintiffs, Joaquin Ibanez de Aldecoa and Zoilo Ibanez de Aldecoa, were legitimate children of Zoilo Ibanez de Aldecoa and Isabel Palet. Both parents were Spanish nationals, and the father died in 1895, leaving the mother, Isabel Palet, to manage the family’s affairs.

2. Mortgage in Question
In 1906, Isabel Palet, along with her two sons, executed a mortgage in favor of the Hongkong and Shanghai Banking Corporation to secure an overdraft of Aldecoa & Co., a firm in which Isabel was a partner. The mortgage covered properties owned by Aldecoa & Co., Isabel Palet, and the plaintiffs.

3. Emancipation of the Plaintiffs
In 1903, Isabel Palet formally emancipated her two sons, both over the age of 18, by executing public instruments before a notary public. No guardian was ever appointed for the plaintiffs under the Code of Civil Procedure, which took effect in 1901.

4. Legal Proceedings
In 1908, the plaintiffs filed an action to cancel the mortgage, arguing that they lacked the legal capacity to execute it. The trial court dismissed the action as to Joaquin but granted relief to Zoilo. Both Joaquin and the bank appealed.

Issue:

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Ruling:

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Ratio:

  1. The patria potestad under the Civil Code allowed parents to administer and control the property of their minor children. Emancipation by the parent conferred upon the child the capacity to manage their own property, subject to certain limitations.
  2. The new Code of Civil Procedure introduced a more stringent guardianship system but did not retroactively apply to cases where parents had already assumed control of their children’s property under the Civil Code.
  3. A mortgage executed by an emancipated minor with the consent of the parent is valid, provided there is sufficient consideration. The plaintiffs’ status as creditors of Aldecoa & Co. constituted valid consideration.

Additional Points

  • The Court emphasized that the patria potestad and the new guardianship laws under the Code of Civil Procedure were irreconcilable, with the latter repealing the former. However, this repeal did not affect cases already pending under the Civil Code.
  • The Court also addressed the argument that the plaintiffs acted under a mistaken belief about their partnership status, but held that their status as creditors provided sufficient consideration for the mortgage.

Conclusion:

The Court affirmed the validity of the mortgage as to Joaquin Ibanez de Aldecoa and reversed the lower court’s decision regarding Zoilo Ibanez de Aldecoa, holding the mortgage binding on both plaintiffs. No costs were awarded.


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