Rehabilitation Finance Corp. v.

CA
94 Phil. 984

May 14, 1954

Justice Concepcion

petitioners REHABILITATION FINANCE CORPORATION

respondents COURT OF APPEALS, ESTELITO MADRID and JESUS ANDUIZA
summary Anduiza & Cano borrowed money from RFC. They failed to pay. Madrid

paid for their debt. Madrid instituted the present action asking the court
to (a) declare as paid the P16,425.17 Anduiza owed the AIB/RFC; (b) order
AIB/RFC to cancel the mortgage and release the properties; (c) condemn
Anduiza to pay Madrid the P16,425.17 with legal interest, etc. The bank
argued that Madrids payment was null and void since he was not
authorized to do so. Anduiza, on the other hand, alleged that when
Madrid paid his debt, the same was not yet due and demandable; hence,
he may not be compelled to pay the latter. Court held that Madrids
payment was valid since Article 1158 of the Civil Code of Spain, which
was in force in the Phils. at the time of the payments under consideration
and of the institution of the present case provides: "Payment may be
made by any person, whether he has an interest in the performance of
the obligation or not, and whether the payment is known and approved
by the debtor or whether he is unaware of it. One who makes a payment
for the account of another may recover from the debtor the amount of the
payment, unless it was made against his express will. In the latter case he
can recover from the debtor only in so far as the payment has been
beneficial to him." There was also no objection on the part of Anduiza.

facts of the case

Jesus de Anduiza & Quinatana Cano borrowed money from the Agricultural and Industrial
Bank (now RFC), as evidenced by a promissory note dated October 31, 1941. In said note,
they promised to pay the AIB, or order, on or before October 31, 1951, the sum of
P13,800.00, with interest at the rate of 6% p.a.. Said note also recited that payments were to
be made in ten equal annual installments in accordance with the given schedule of
amortizations.
Mortgagors Anduiza and Cano failed to pay the yearly amortizations that fell due on October
31, 1942 and 1943. Learning of this, Estelito Madrid (who temporarily lived in the house of
Anduiza) offered to pay and actually paid on October 30, 1944 the full amount of said
indebtedness to AIB/RFC.
July 30, 1948: Madrid instituted the present action asking the court to (a) declare as paid the
P16,425.17 Anduiza owed the AIB/RFC; (b) order AIB/RFC to cancel the mortgage and release
the properties; (c) condemn Anduiza to pay Madrid the P16,425.17 with legal interest, etc.
In answer, AIB/RFC prayed that the complaint be dismissed. The bank argued that in as much
as Madrids payment was unauthorized by Anduiza, Madrids deposit in the sum of P16,425.17
was null and void in accordance with EO No. 49, series of 1945. Anduiza, on the other hand,
alleged that when Madrid paid his debt, the same was not yet due and demandable; hence,
he may not be compelled to pay the latter.
RTC dismissed the complaint. On appeal, the CA reversed and directed AIB/RFC to cancel the
mortgage and Anduiza to pay Madrid the P16,425.17. Hence this appeal by certiorari.
AIB/RFCs Arguments: that payments by Madrid were made against the express will of
Anduiza and over the objection of the Bank, hence not valid; that the obligation in question
was not fully due and demandable at the time of the payments

issue + ratio
1. WON the debtors were entitled to pay the obligation prior to Oct. 15, 1951 (YES)
1

At the outset, it should be noted that the makers of the promissory note quoted above
promised to pay the obligation evidenced thereby "on or before October 31, 1951." Although
the full amount of said obligation was not demandable prior to October 31, 1951, in view of
the provision of the note relative to the payment in ten (10) annual installments, it is clear,
therefore, that the makers or debtors were entitled to make a complete settlement of the
obligation at any time before said date

2. WON payment by third person was valid (YES)

Madrid was entitled to pay the obligation of Anduiza irrespective of the latter's will or that of
the Bank, and even over the objection of either or both.

Article 1158 of the Civil Code of Spain, which was in force in the Phils. at the time of the
payments under consideration and of the institution of the present case provides: "Payment
may be made by any person, whether he has an interest in the performance of the obligation
or not, and whether the payment is known and approved by the debtor or whether he is
unaware of it. One who makes a payment for the account of another may recover from the
debtor the amount of the payment, unless it was made against his express will. In the latter
case he can recover from the debtor only in so far as the payment has been beneficial to
him."

Payments in question were not made against the objection either of Anduiza or of the Bank.
Anduiza impliedly, but clearly, acquiesced in the validity of the payment when he joined
Madrid in appealing the decision of CFI Manila. Also, AIB/RFC issued receipts acknowledging
payment w/out qualification and demanded a signed statement of Anduiza sanctioning said
payments merely as a condition precedent, not to its acceptance, which had already been
made, but to the execution of the deed of cancellation of the mortgage constituted in favor of
said institution.

This condition was null and void, for the creditor Bank had no other right than to exact
payment. After such payment, the obligation in question, as regards said creditor, and the
latters status and rights as such creditor, become automatically extinguished. Hence: (1) The
good or bad faith of the payor is immaterial. The exercise of a right, vested by law without
any qualification, can hardly be legally considered as tainted with bad faith. (2) The Bank
cannot invoke the provision that the payor "may only recover from the debtor insofar as the
payment has been beneficial to him," when made against his express will. This is a defense
that may be availed of by the debtor, not by the Bank, for it affects solely the rights of the
former.