NATURE
PETITION for review by
certiorari of a decision of the Court of Appeals
FACTS
Before 1933, defendant [Jose
A. Villamor] was a distributor of lumber belonging to Mr. Miller who was the
agent of the Insular Lumber Company in Cebu City. Defendant being a friend
and former classmate of plaintiff [Canuto O. Borromeo] used to borrow from
the latter certain amounts from time to time. On one occasion, defendant
borrowed from plaintiff a large sum of money for which he mortgaged his land
and house in Cebu City to pay some pressing obligation with Mr. Miller. Mr.
Miller filed a civil action against the defendant and attached his
properties including those mortgaged to plaintiff, inasmuch as the deed
of mortgage in favor of plaintiff could not be registered
because not properly drawn up. Plaintiff then pressed the defendant for
settlement of his obligation, but defendant instead offered to execute a
document promising to pay his indebtedness even after the lapse of ten years. Liquidation
was made and defendant was found to be indebted to plaintiff in the sum of
P7,220.00, for which defendant signed a promissory note therefor on November
29, 1933 with interest at the rate of 12% per annum, agreeing to pay as
soon as I have money'. The note further stipulate that defendant 'hereby relinquish, renounce, or
otherwise waive my rights to the prescriptions established by our Code
of Civil Procedure for the collection or recovery of the above sum of
P7,220.00. * * * at any time even after the lapse of ten years from the
date of this instrument'.
After the execution of
the document, plaintiff limited himself to verbally requesting defendant
to settle his indebtedness from time to time. Plaintiff did not file any
complaint against the defendant within ten years from the execution of the
document as there was no property registered in defendant's name, who furthermore
assured him that he could collect even after the lapse of ten years. After the
last war, plaintiff made various oral demands, but defendants failed to
settle his account. CFI: Villamor ordered to pay Borromeo (represented by
his heirs) the sum of P7,220.00 within ninety days from the date
of the receipt of such decision with interest at the rate of 12% per annum
from the xpiration of such ninety-day period. CA: reversed CFI ruling
ISSUE
Whether or not the CA erred
in reversing the ruling of the CFI in finding the lack of validity of the
stipulation amounting to a waiver in line with the principle "that a
person cannot renounce future prescription"
HELD
YES!
Between two possible interpretations, that which saves rather than destroys is
to be preferred.
It is a fundamental principle in the
interpretation of contracts that while ordinarily the literal sense of the
words employed is to be followed, such is not the case where they "appear
to be contrary to the evident intention of the contracting parties,"
which “intention shall prevail” (Art. 1370). The terms, clauses
and conditions contrary to law, morals and public order (in this
case the contested stipulation) should be separated from the valid and
legal contract when such separation can be made because they are independent
of the valid contract which expresses the will of the contracting
parties.
Reasoning
There is nothing
implausible in the view that such language renouncing the debtor's
right to the prescription established by the Code of Civil Procedure
should be given the meaning, as noted in the preceding sentence of the decision
of respondent Court, that the debtor could be trusted to pay even after
the termination of the ten-year prescriptive period. (so CA should have
interpreted the stipulation based on the context of the friendship between
the two parties)-'Where an agreement founded on a legal consideration contains
several promises, or a promise to do several things, and a part only of the things
to be done are illegal, the promises which, can be separated, or the
promise, so far as it can be separated, from the illegality, may be valid. The
rule is that a lawful promise made for a lawful consideration is not invalid
merely because an unlawful promise was made at the same time and for the same
consideration, and this rule applies, although the invalidity is due to
violation of a statutory provision, unless the statute expressly or by
necessary implication declares the entire contract void. The first
ten years after November 29, 1933 should not be counted
in determining when the action of creditor, now represented by
petitioners, could be filed. From the joint record on appeal, it is
undoubted that the complaint was filed on January 7, 1953. If the
first ten-year period was to be excluded, the creditor had until November
29, 1953 to start judicial proceedings. After deducting the first ten year
period which expired on November 29, 1943, there was the additional period of
still another ten years.29 Nor could there be any legal objection
to the complaint by the creditor Borromeo of January 7, 1953 embodying not
merely the fixing of the period within which the debtor Villamor was to pay
but likewise the collection of the amount that until then was not paid.
Disposition
Wherefore, the decision of
respondent Court of Appeals of March 7, 1964 is reversed, thus giving full
force and effect to the decision of the lower court of November 15, 1956.
With costs against private respondents.
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