Case Digest (G.R. No. 45433)
Facts:
Rosario Gonzalez Castro Viuda de Azaola v. Gaston O'Farrell, G.R. No. 45433, May 12, 1939, the Supreme Court, Imperial, J., writing for the Court. The plaintiff-appellant, Rosario Gonzalez Castro Vda. de Azaola, executed a written guaranty on July 7, 1923 in favor of the Philippine National Bank guaranteeing P125,000 of the unpaid purchase price of eight vessels which Gaston O'Farrell had contracted to buy from the bank. The guaranty deposited Torrens title No. 3568 (properties Nos. 24 and 30 on Barraca Street) as security and expressly bound the plaintiff until full payment; it was notarized and written in Spanish.On May 19, 1923 the defendant bought the eight vessels for P300,000, paying P50,000 and undertaking to give additional security acceptable to the bank for the unpaid balance. On the same date defendant and others organized a partnership styled O'Farrell & Co. doing business as Malaysian Navigation Company; the deed reflected a conveyance of the vessels to the partnership, which assumed the obligation to the bank. Defendant failed to pay; the bank sued defendant and plaintiff in the Court of First Instance of Manila (Civil Case No. 28269) for the balance. Judgment was rendered against both for P125,000 plus interest; on appeal the judgment was affirmed. Plaintiff paid the bank P142,500 by transferring the Barraca Street property to satisfy the judgment.
While the bank's case was pending, certain creditors filed involuntary insolvency proceedings against O'Farrell & Co. and its partners (Civil Case No. 28284). The defendant was declared insolvent and, upon his petition, discharged by order of May 27, 1926 from all indebtedness existing on June 26, 1925, except approved or specially excepted debts under the Insolvency Law.
Plaintiff then sued the defendant to recover the P142,500 she had paid as guarantor, alleging she signed the guaranty because of defendant's fraud and false representations—namely, that the guaranty was a mere form, the bank would not enforce it, the partnership would assume the obligation, and that her gu...(Subscriber-Only)
Issues:
- Was the guaranty executed by the plaintiff procured by fraud such that it is voidable?
- Is the plaintiff's action to recover what she paid as guarantor barred by the defendant's discharge in the involuntary insolvency proceedings under the Insolvency Law?
- Did the contemporaneous organization of O'Farrell & Co. and the sale of the vessels to it render the defendant's sale to the bank fraudulent and t...(Subscriber-Only)
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)