Villamor was the distributor of lumber belonging to Mr. Miller and the plaintiff Borromeo being Villamor’s friend and former classmate borrow a large sum of money for which he mortgaged his property as a security because of his obligation to Mr. Miller. Miller then filed a civil action against Villamor and attached his properties including the mortgaged property to the plaintiff. Plaintiff then pressed the defendant to settle his obligation, but the defendant however offered to execute a document promising the plaintiff to pay his debt even after the lapse of 10 years. Defendant then signed a promissory note to pay his debt and with 12% interest per annum. Despite repeated demands from plaintiff, defendant still failed to settle his debt.
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, — hence the present complaint for collection.
Whether or not the CA was correct in their interpretation.
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. However, the above decision, had occasion to reiterate, under the view that such features of the obligation are added to it and do not go to its essence, a criterion based upon the stability of juridical relations should tend to consider the nullity as confined to the clause or pact suffering therefrom, except in cases where the latter, by an established connection or by manifest intention of the parties, is inseparable from the principal obligation, and is a condition, juridically speaking, of that the nullity of which it would also occasion.’ 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 necessary implication declares the entire contract void.
* Case digest by Lea Caipang, LLB-1, Andres Bonifacio Law School, SY 2017-2018