[ G.R. No. 11583. February 08, 1918 ] 37 Phil. 584
[ G.R. No. 11583. February 08, 1918 ]
JOSE SISON AND EMILIO SISON, PLAINTIFFS AND APPELLANTS, VS. F. M. YAP TICO AND AMANDO AVANCEÑA, PROVINCIAL SHERIFF OF ILOILO, DEFENDANTS AND APPELLEES. D E C I S I O N
JOHNSON, J.:
The principal question presented by this appeal is whether or not the mortgagor of a chattel mortgage is relieved from liability by paying the mortgagee after the mortgage has been assigned to a third person, when he has no actual notice of said transfer.
The pertinent facts as they appear in the record are: That on the 11th day of April, 1912, the plaintiffs borrowed of Eugenio Kilayko the sum of P2,000; that to guarantee the payment of said sum they executed and delivered to the said Kilayko a chattel mortgage covering machinery, crops and a number of carabaos; that said debt was due and payable on or before the 30th day of May, 1913; that the mortgagors had to deliver to the mortgagee (Kilayko) in the city of Iloilo their entire crop of sugar for the years 1912-13; that in compliance with the mortgage the plaintiffs herein did deliver sugar for said years from time to time in the city of Iloilo at the bodega (warehouse) of the defendant Yap Tico at the request of the said Kilayko; that finally a liquidation was made and there was found to be still due the mortgagee (Kilayko) the sum of P650; that that sum was sent to the mortgagee by a representative of the mortgagors (Antonio Horrilleno) and was by him delivered to Kilayko; that upon the delivery of said sum (P650) the mortgagee (Kilayko) on the 14th day of May, 1914, executed and delivered a cancellation of said mortgage; that in the month of May, 1912, the mortgagee (Kilayko) assigned and transferred said mortgage to the defendant herein, F. M. Yap Tico; that said assignment and transfer were duly registered upon the 14th day of April, 1913, nearly one year after the transfer had been made; that the cancellation of said mortgage as above indicated was duly registered on the 19th day of December, 1914; that neither Kilayko nor Yap Tico gave any notice whatever to the plaintiffs herein that said mortgage had been transferred; that the plaintiffs had no notice that the mortgage had been transferred nor that said transfer had been registered; that at the time the last payment was made on said mortgage (14th day of May, 1914) the mortgagee (Kilayko) gave no notice to the mortgagors, or to their representative, that the mortgage had been transferred, but upon the contrary made a search among the papers of his office attempting to find it, and not being able to find it at that time, promised to return the same to the mortgagors as soon as he could find it; that later the assignee of said mortgagee (Yap Tico), in accordance with the provisions of the Chattel Mortgage Law (Act No. 1508), proceeded to foreclose said mortgage, and the sheriff attached and took possession of all the property which said mortgage covered. It is admitted that the sheriff, as well as Yap Tico, were notified by the plaintiffs, at the time of said attachment, that the mortgage had been paid and cancelled. Notwithstanding that notice the sheriff insisted upon enforcing the attachment, and the plaintiffs, after some delay, obtained the release of the property so attached by the execution and delivery of a bond. This action was brought for the purpose of recovering the property, together with damages caused by said alleged illegal attachment.
The defendants answered by a general denial. Upon the issue presented by the petition and answer, the cause was brought on for trial, and after hearing the respective parties, the Honorable J. S. Powell, judge, rendered a judgment relieving the defendants from all liability under the complaint and ordered that the defendants recover of the plaintiffs the sum of P2.000, with interest at 12 per cent from the 28th day of May, 1912, and the costs of the suit. From that judgment the plaintiffs appealed to this court.
The fact is not denied that while the mortgage in question was transferred by the mortgagee, Kilayko, to the defendant, Yap Tico, within less than two months after its execution and delivery, and that the plaintiffs had delivered sugar at the bodega of Yap Tico from time to time covering a period of nearly two years in partial payment of said mortgage, Yap Tico never gave notice or intimated to the plaintiffs that he was the owner of said mortgage. It is further established beyond question that the plaintiffs had no notice whatever of said transfer, unless the registration of said assignment had the effect of giving them notice, until long after the full amount of said mortgage had been paid to the original mortgagee, Kilayko, and said mortgage had been cancelled.
Unless the recording of the assignment operated as notice to the mortgagors their payment of the same, without actual notice of said transfer, relieved them from all liability under said mortgage. Article 1527 of the Civil Code provides that a debtor who, before having been informed of the assignment, pays the creditor, shall be free from the obligation. (See also, to the same effect, arts. 152 and 154 of the Mortgage Law.)
Manresa, in commenting upon the provisions of article 1527 of the Civil Qode, after discussing the articles of the Mortgage Law, says:
“We have said that article 1527 deals with the individual phase or aspect which presupposes the existence of a relationship with third parties, that is, with the person of the debtor. Let us see in what way.
“The above-mentioned article states that a debtor who, before having knowledge of the assignment, should pay the creditor shall be released from the obligation.
“In the first place, the necessity for the notice to the debtor in order that the assignment may fully produce its legal effects may be inferred from the above. It refers to a notice and not to a petition for the consent which is not necessary. We say that the notice is not necessary in order that the legal effects may be fully produced, because if it should be omitted, such omission will not imply that the assignment will not exist legally, but that its effects will be limited to the parties thereto; at least, they will not reach the debtor.
“* * * * * * *
“Let us go to the legal effects produced by the failure to give the notice. In the beginning, we have said that the contract does not lose its efficacy with respect to the parties who made it; but article 1527 determines specifically one of the consequences arising from the failure to give the notice, for it evidently takes for granted that the debtor who, before having knowledge of the assignment, should pay the creditor shall be released from the obligation. So that if the creditor assigned his credit, acting in bad faith and taking advantage of the fact that the debtor does not know anything about the assignment because the latter has not been notified, and collects its amount, the debtor shall be free from the obligation, inasmuch as it has been legally extinguished by a payment which fully redounds to his benefit. The assignee can take advantage of all civil and criminal actions against the assignor, but he can ask nothing from the debtor, because the latter did not know of the assignment, nor was he bound to know it; the assignor should blame himself for his failure to have the notice made.
“* * * * * * *
“Hence, there not having been any notice to the debtor, the existence of his knowledge of the assignment should be proved by him who is interested therein; and the debtor is not bound to prove his ignorance.” (10 Manresa, 384, 385, 387.)
The question, whether or not the registration of the assignment operated as notice, ipso facto, to the mortgagors, we are inclined to answer in the negative, for the reason that the law does not require such assignments to be recorded. While such assignments may be recorded,x the law is permissible and not mandatory. The filing and recording of an instrument in the office of the registrar, when the law does not require such filing and recording, does not constitute notice to the parties. (Burck vs. Taylor, 152 U. S., 634; 5 Corpus Juris, 934.)
The debtor or party liable on contracts like the one in question is not affected by the assignment, until he has notice thereof, and consequently he may set up against the claim of the assignee any defense acquired before notice that would avail him against the assignor had there been no assignment, and payment by the debtor to the assignor, or any compromise or release of the assigned claim by the latter before notice will be valid against the assignee and discharge the debtor. (Vanbuskirk vs. Hartford Fire Insurance Co., 14 Conn., 141; Clodfelter vs. Cox, 1 Sneed [Tenn.], 330; 60 Am. Dec., 157; Johnston vs. Allen, 22 Fla., 224; Shields vs. Taylor & Tarpley, 25 Miss., 13.)
In the case of Shields vs. Taylor & Tarpley, supra, the court said:
“No man is bound to remain a debtor; he may pay to him with whom he contracted to pay; and if he pay before notice that his debt has been assigned, the law holds him exonerated, for the reason that it is the duty of the person who has acquired a title by transfer to demand payment of the debt to give his debtor notice.
“Any act which a person may be compelled to perform by a proceeding at law may be done voluntarily, and he will be protected by the law.”
It is generally held that if the law does not require a particular instrument to be recorded or registered, the recording of that instrument will not be constructive notice of its existence to anyone. (Burck vs. Taylor, 152 U. S., 634; Stewart vs. Kirkland, 19 Ala., 162; Lambert vs. Morgan, 110 Md., 1; Dial vs. Inland Logging Co., 52 Wash., 81.)
The rule is very well stated in 4 Cyc. (pp. 33, 34) :
“Until notice of the assignment is given to the debtor, it will not bind him so as to deprive him of equities arising between the date of the assignment and the date when he received notice thereof. As to such equities, the assignment takes effect from the time the debtor receives notice and not from the time of the assignment.”
In the case of Dial vs. Inland Logging Co., supra, the court said:
“We are not aware of any statute,, and none has been called to our attention, requiring or authorizing the recording of an assignment of a lien of the character of the one in this case. In the absence of such a statute, the recording of the assignment to the respondent before the assignment to the appellant did not operate as constructive notice.”
It seems to be clear, then, that a debtor is protected if he pays his creditor without actual notice that the debt has been assigned. Such notice must be actual, and the recording of the assignment, there being no law requiring the same, will not operate as constructive notice to the debtor.
With reference to the question of damages, the proof shows that, by reason of the said attachment of the property included within the mortgage and the deprivation of the plaintiffs of the possession thereof, they were unable to grind certain sugar cane then already harvested and to reduce to sugar some juice already prepared, amounting to, as the record shows, 52 picos of sugar, which was worth P5 per pico. The damages resulting from the loss of sugar would be P260. The evidence relating to the other damages claimed is too indefinite upon which to base a finding.
It will be remembered that the defendants presented a general denial. They did not pray for affirmative relief. In view, however, of the conclusions which we have reached it is unnecessary to discuss the question whether a judgment for an affirmative relief can be based upon a general denial.
For the foregoing reasons, it is hereby ordered and decreed that the judgment of the lower court be reversed; that all the property which was taken possession of by the sheriff under the said foreclosure proceedings be returned to the plaintiffs if it has not already been done; that the bond theretofore given by the plaintiffs to secure possession of said property be cancelled; and that a judgment be rendered in favor of the plaintiffs and against the defendant Yap Tico in the sum of P260, with interest at the rate of 6 per cent from the 8th day of March, 1915, and costs. So ordered.
Arellano, C. J., Araullo, and Malcolm, JJ., concur.