TUASON vs.
OROZCO
GR No. 2344 | Feb. 10, 1906 | Mapa |
Appeal
Plaintiff: Gonzalo Tuason
Defendant: Dolores Orozco
Quick Summary:
Facts: Juan de Vargas executed a power of attorney to
Enrique Grupe, authorizing him to dispose of all his
property, particularly his house and lot in Malate, Manila,
and to mortgage the house to secure the payment of any
amount advanced to his wife, Orozco. Grupe and Orozco
obtained a loan for P3,500 from Tuason. Grupe gave P2,200
to Orozco while he retained the P1,300 for himself, which he
will use for his business. Grupe assumed liability for the
loan and pledged his 18 shares of stock as special security.
Held: A debt thus incurred by the agent is binding directly
upon the principal, provided the agent acted within the
scope of his authority. The fact that the agent has also
bound himself to pay the debt does not relieve from liability
the principal for whose benefit the debt was incurred. The
individual liability of the agent constitutes a further security
in favor of the creditor and does not affect or preclude the
liability of the principal. The law does not provide that the
agent cannot bind himself personally to the fulfillment of an
obligation incurred by him in the name and on behalf of his
principal. On the contrary, it provides that such act on the
part of an agent would be valid.
Facts:
 Juan de Vargas, Dolores Orozco’s
husband, executed a power of attorney to
Enrique Grupe. Vargas authorized Grupe
to dispose of all his property, particularly
his house and lot in 24 Calle Nueva,
Malate, Manila for the price at which it
was actually sold.
 Grupe was also authorized to
mortgage the house for the purpose of
securing the payment of any amount
advanced to Orozco.
 Thereafter, Grupe and Orozco
obtained a loan from Gonzalo Tuason
secured by a mortgage on the said house.
In said instrument, Grupe appeared for
himself and in behalf of Juan de Vargas.
 As evidenced by the instrument1
1
1. Enrique Grupe acknowledges to have this day received
from Gonzalo Tuason as a loan, after deducting therefrom
the interest agreed upon, the sum of 3,500 pesos in cash,
to his entire satisfaction, which sum he promises to pay
within one year from the date hereof.
2. Grupe also declares that of the 3,500 pesos, he has
delivered to Dolores Orozco the sum of 2,200 pesos, having
retained the remaining 1,300 pesos for use in his business;
that notwithstanding this distribution of the amount
borrowed, he assumes liability for the whole sum of 3,500
pesos, which he promises to repay in current gold or silver
coin, without discount, in this city on the date of the
maturity of the loan, he otherwise to be liable for all
expenses incurred and damages suffered by his creditor by
reason of his failure to comply with any or all of the
conditions stipulated herein, and to pay further interest at
the rate of 1 per cent per month from the date of default
until the debt is fully paid.
3. Grupe pledges as special security for the payment of the
debt 13 shares of stock in the "Compañia de los Tranvias de
which was duly recorded in the Registry of
Property, Grupe received P3,500 in cash
which he promises to pay within 1 year.
Of said amount, he delivered 2,200 to
Orozco while retaining the 1,300 for his
use in his business.
 Grupe also assumed liability for
the whole sum of P3,500, which he
promises to pay in current gold or silver
coin, without discount. Aside from this, he
pledged as special security for the debt’s
payment his 18 shares of stock in the
Compania de los Tranvias de Filipinas.
 Tuason filed a case for the
recovery of the debt, which refers only to
the P2,200 delivered to Orozco. However,
she denied having received said amount.
 CFI: ordered Orozco to pay
Tuason the said amount
Issue:
WON the debt was incurred by Grupe for his
own benefit as evidenced by his assumption of
paying the whole loan and his act of pledging
his shares of stock as special security[NO]
Ratio:
 The mortgage agreement was
signed by Grupe as the attorney-in-fact of
Juan de Vargas.
 A debt thus incurred by the agent
is binding directly upon the principal,
provided the agent acted within the scope
of his authority.
 The fact that the agent has also
bound himself to pay the debt does not
relieve from liability the principal for
whose benefit the debt was incurred. The
individual liability of the agent constitutes
a further security in favor of the creditor
and does not affect or preclude the
liability of the principal.
 The law does not provide that the
agent cannot bind himself personally to
the fulfillment of an obligation incurred by
him in the name and on behalf of his
Filipinas," which shares he has delivered to his creditor duly
indorsed so that the latter in case of his insolvency may
dispose of the same without any further formalities.
4. To secure the payment of the 2,200 pesos delivered to
Dolores Orozco as aforesaid he specially mortgages the
house and lot No. 24, Calle Nueva, Malate, in the city of
Manila (the same house referred to in the power at attorney
executed by Vargas to Grupe).
5. Dolores Orozco states that, in accordance with the
requirement contained in the power of attorney executed
by Vargas to Grupe, she appears for the purpose of
confirming the mortgage created upon the property in
question.
6. Gonzalo Tuason does hereby accept all rights and actions
accruing to him under his contract.
 principal. On the contrary, it provides that Orozco to show that the debt had been
such act on the part of an agent would be paid with those shares. Payment is not
valid [Article 1725 CC]. presumed but must be proved. It is a
defense, which the Orozco may interpose.
On whether Orozco received the money It was therefore her duty to show this fact
 Orozco’s assertion that she did affirmatively.
not receive the money is belied by the  However, she failed to do so.
following:
 she was one of the parties to the Final Note
instrument and she correspondingly  Said debt having been incurred
signed it by Vargas during his marriage, it should
 she personally intervened in the not be paid out of property belonging to
execution of the mortgage Orozco exclusively but from that
 she stated in the deed that the pertaining to the conjugal partnership.
mortgage had been created with her
knowledge and consent Dispositive: Judgment affirmed.
 she wrote a letter to Tuason’s lawyers
promising to pay the debt on or before
November 5, which she admitted as
valid
 Thirteen years had elapsed since
she signed the mortgage deed. During all
this time she never denied having
received the money. On the contrary, she
promised to settle within a short time.

Validity of the Mortgage

 The fact that Orozco received the
money from Grupe and not from Tuason
does not affect the validity of the
mortgage in view of the conditions
contained in the power of attorney under
which the mortgage was created.
Nowhere does it appear in this power that
the money was to be delivered to her by
the creditor himself and not through the
agent or any other person. The important
thing was that she should have received
the money.
 The mortgage being valid and
having been duly recorded in the Register
of Property, directly subjects the property
thus encumbered, whoever its possessor
may be, to the fulfillment of the obligation
for the security of which it was created.
[Article 1876 CC & Article 105, Mortgage
Law]

Whether Grupe’s shares of stock that he

has pledged should be accounted for to
satisfy the debt before proceeding to
foreclose the mortgage
 A mortgage directly subjects the
property encumbered, whoever its
possessor may be, to the fulfillment of the
obligation for the security of which it was
created.
 Moreover, it was incumbent upon