Case Summary (G.R. No. 4437)
Factual Background
On November 15, 1890, Cenona Rama executed and delivered to Don Victoriano Osmena a written contract by which she acknowledged receipt of P200 in cash and promised to pay in sugar in January or February of the following year, to pay interest at the rate stated in the instrument, and to pledge all present and future property as general security and her house of tile and stone as special security. On October 27, 1891, she executed a second instrument acknowledging receipt of P70 in cash and stating that P50 of that sum had been loaned to Don Evaristo Penares, with payment in sugar under the former conditions.
Assignment of Obligations and Subsequent Transfer
After the loan instruments were executed, Don Victoriano Osmena died. The rights under the contracts passed in the settlement of his estate to his heir Agustina Rafols, who later ceded all her right and interest in the contracts to the present plaintiff, Tomas Osmena.
Acknowledgment of Debt in 1902
On March 15, 1902, Cenona Rama signed an indorsement upon the instruments in the words set forth in the record, stating that if the house of strong materials in which she lived in Pagina were sold, she would pay her indebtedness to Tomas Osmena as set forth in the document. That indorsement was admitted in evidence as Exhibit C.
Commencement of Action
On June 26, 1906, the plaintiff instituted the present action in the Court of First Instance of Cebu seeking judgment for the amounts due under the two instruments. The complaint alleged execution of the contracts, demand for payment, and failure to pay, and prayed for recovery of the indebtedness.
Trial Court Proceedings
At trial the plaintiff was the only witness called. The defendant filed an answer that contained a general denial and pleaded prescription as a special defense, but offered no evidence at trial. The lower court found for the plaintiff and entered judgment for P200 with interest at the rate of 1834 per cent per annum from November 15, 1890, and for P20 with interest at the same rate from October 27, 1891, until payment.
Trial Court Findings on the P70 Instrument
The Court of First Instance found that of the P70 recited in Exhibit B, P50 had not been borrowed by Cenona Rama but by Evaristo Penares; therefore the trial court held the defendant liable only for P20 under Exhibit B.
Issues on Appeal
The appeal raised questions of fact only. The appellant contended that the proof adduced at trial was insufficient to support the lower court's findings and that prescription barred the action unless the acknowledgment in 1902 had the legal effect claimed by the plaintiff.
Appellant’s Contentions
Cenona Rama argued that the evidence did not sustain the lower court’s factual findings, including the allocation of the P70 between herself and Evaristo Penares, and urged that the claim was barred by prescription absent a binding acknowledgment.
Legal Question Presented
The central legal question was whether the indorsement dated March 15, 1902, constituted a valid acknowledgment that would interrupt prescription, and whether any condition contained in that acknowledgment rendered it void under Art. 1115, Civil Code.
Supreme Court’s Analysis of the Acknowledgment
The Court observed that the indorsement contained the statement that if the house in which the defendant lived were sold she would pay her indebtedness to Tomas Osmena. The Court treated the matter of whether that language imposed a condition. The Court concluded that, if regarded as a condition, it would be a condition depending upon the exclusive will of the debtor and therefore void under Art. 1115, Civil Code. Consequently, the acknowledgment must be read as an absolute promise to pay.
Supreme Court’s Reasoning on Prescription
Because the March 15, 1902, indorsement constituted an absolute acknowledgment of the obligation, it had the legal effect of reviving or preventing the operation of prescription against the original contracts. The Court found that the acknowledgment was sufficien
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Case Syllabus (G.R. No. 4437)
Parties and Procedural Posture
- TOMAS OSMENA, Plaintiff and Appellee, held the rights to the contracts at issue and brought suit for payment.
- CENONA RAMA, Defendant and Appellant, executed the contracts and defended on the ground of prescription and denial of liability.
- The action originated in the Court of First Instance of the Province of Cebu and proceeded to final judgment and appeal.
Key Factual Allegations
- The defendant executed a written contract on November 15, 1890, stating she received P200 and promising to pay in sugar and to pay interest.
- The defendant executed a second written contract on October 27, 1891, acknowledging receipt of P70 and stating P50 was loaned to Evaristo Penares and P20 was her liability.
- The plaintiff presented the instruments for payment and obtained a written acknowledgement from the defendant on March 15, 1902, promising to pay if her house of strong materials in Pagina was sold.
Contracts and Documents
- Exhibit A dated November 15, 1890, evidenced a P200 cash loan repayable in sugar and provided a pledge of present and future property and a special mortgage on the defendant's house.
- Exhibit B dated October 27, 1891, evidenced a further loan of P70 and recorded that P50 was for Evaristo Penares and P20 was the defendant's portion.
- Exhibit C dated March 15, 1902, contained the defendant's written acknowledgement promising payment upon sale of her house of strong materials in Pagina.
Transfer of Rights
- The original payee, Don Victoriano Osmena, died after execution of the contracts.
- The contracts passed to his heir, Agustina Rafols, during estate settlement.
- Agustina Rafols later ceded all her right and interest in the contracts to TOMAS OSMENA, the plaintiff.
Proceedings Below
- The plaintiff filed suit on June 26, 1906, alleging execution of the contracts, demand for payment, and failure to pay.
- The defendant answered with a general denial and asserted the special defense of prescription.