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Republic of the Philippines

G.R. No. L-8926

July 24, 1915

PAULINA SOCHAYSENG, plaintiff-appellee,

ANDRES TRUJILLO, defendant-appellant.
Vicente Rodriguez for appellant.
Recaredo Ma. Calvo for appellee.
On November 14, 1911, Paulina Sochayseng filed a written complaint wherein she alleges that the
defendant is the widower of her daughter, Marcela Yatco y Sochayseng; that the later died on June
25, 1911, without leaving any legitimate heir other than the plaintiff; that her said daughter, five
months prior to her death and while sick, left her husband's house, with his knowledge and consent,
and removed to that of the plaintiff for the purpose of being attended by the latter during her
sickness; that the attendance, care, and subsistence of Marcela Yatco, during her stay in plaintiff's
house, cost the latter the sum of P410, and that upon her death, her burial expenses amounted to
P320, both of which were paid by plaintiff; that at the time of the death of Marcela Yatco, the conjugal
partnership between her and the defendant was the owner of a piece of real estate valued at
P1,000, which property is now in defendant's possession; that defendant was not paid plaintiff the
whole nor any part of the P730 which the latter expended for the purposes above specified; and that,
despite the time that has elapsed since the death of Marcela Yatco, the defendant has not liquidated
the affairs of the conjugal partnership. For the foregoing reasons plaintiff prayed that defendant be
sentenced to pay her the sum of P730, with the costs of the suit, and, furthermore, that he be
ordered to proceed with the settlement and partition of the conjugal partnership estate.
In his written answer defendant admitted all the facts alleged in the complaint, excepting those
expressly or tacitly denied in his special defense. In this latter he set forth that his wife left his house
without his knowledge or consent; that he requested her on several occasions to return and live with
him again, but did not succeed in persuading her so to do on account of plaintiff's opposition; and
that, during the time his wife was living in her mother's house, he sent her P12 a month for her
support. In a cross-complaint defendant demanded that plaintiff deliver to him certain articles
belonging to the conjugal partnership, valued at P615. Subsequently defendant filed an additional
answer wherein he alleged that the claim for P730, presented by plaintiff, should have been made to
the commissioners of appraisal appointed in the proceedings for the settlement of the intestate
estate of Marcela Yatco. He therefore prayed the court to dismiss the said claim.
At trial, evidence was introduced by both parties. Among the exhibits presented by the defense
appears defendant's appointment as administrator of the estate left by the deceased Marcela Yatco.

On March 11, 1912, the lower court rendered judgment in which it held that the causes of action
therein set forth should have been presented in the proceedings for the administration and
distribution of the estate of Marcela Yatco, and dismissed the complaint.
Plaintiff filed her exception to this ruling and moved for a new trial on the ground that the dismissal
was contrary to law.
By an order of April 20, 1912, the court quashed its aforesaid ruling and directed that the defendant
proceed with the settlement of the conjugal partnership affairs in accordance with section 7, title 3,
book 4 of the Civil Code. The defendant entered an exception to this order (p. 46 of the record).
On May 11, 1912, defendant filed with the court a copy of the inventory which, as administrator of
the intestate estate of Marcela Yatco, he had presented in the proceedings relative to the
administration and distribution of the said estate. This inventory appears on pages 12 and 13 of the
bill of exceptions.
On August 2 the court ordered defendant to file an inventory of the property of the conjugal
partnership in conformity with article 1419 of the Civil Code. To this ruling defendant excepted.
Complying with the aforementioned order, defendant presented the inventory and proposed
settlement of the property of the conjugal partnership that appear on pages 15 to 19 of the bill of
On December 14, 1912, the court rendered final judgment in the case wherein he held that the total
value of the conjugal partnership property amounted to P1,615, and said: "From this sum of P1,615
there must first be paid the value of the property brought into the partnership by Marcela Yatco at her
marriage, which, as we have seen, amount to P1,490. Once this sum of P1,490 has been paid, there
will remain of the property of the conjugal partnership only the sum of P125, and out of this the debt,
charges and obligation of the conjugal partnership will be paid, in accordance with article 1422 of the
Civil Code. After payment of the said debts, charges and obligations, should there still be anything
left, the capital brought in by the husband at marriage shall be paid, pursuance to article 1423 of the
same Code and what remains, if any, will be the conjugal property, which shall be divided in
accordance with the laws governing the subject."
Defendant excepted to this judgment and at the same time moved for a new trial on the ground that
the judgment was contrary to law and openly at variance with the evidence. This motion was
overruled by the court; defendant excepted thereto and, by bill of exceptions, has brought the case
before the Supreme Court.
In his brief the defendant makes the following and only assignment of error; "In view of the nature of
plaintiff's claim, the court erred in annulling its judgment of March 11, 1912, and in continuing the
hearing thereof after pronouncing final judgment on December 14 of the same year, 1912, entirely
excluding the proceedings relative to the administration of the estate left by the deceased Marcela
Yatco y Sochayseng, instituted by her widower, the defendant Andres Trujillo."
The lower court did not incur such error. The matter involved is a claim for expenditures to the
benefit of a married woman. During her lifetime a third person furnished her subsistence which
amounted to P410 in value, and at her death defrayed her funeral and brial expenses, amounting to
P320, both sums aggregating P730. The first of these debts is not a personal and exclusive one of

the said married woman; it pertains to the marriage or the conjugal partnership. The widower must
pay it out of the property of the conjugal partnership. Were this claim to be adjusted in the special
proceedings for the settlement of the estate of this married woman, which estate in composed of the
property she left at her death, her husband, now the widower-spouse, would be exempted from the
payment of this debt and this would not be just, because the debt is one that lies principally against
him as the legal administrator of the partnership property acquired during the a marriage.
The surviving spouse is obliged upon the death of the other to settle the conjugal partnership. In this
settlement a deduction should be made of the debts incurred during the marriage, and what remains
should be divided into two parts, the part corresponding to the deceased spouse, together with his
own property, being that which should be submitted to the probate court in the special proceedings
for the settlement of the wife's estate. The decision of this court in the case of Amancio vs. Pardo (13
Phil. Rep., 297) is based upon this principle. It say: "When a conjugal partnership is dissolved by the
death of the wife, the surviving husband, and not the judicial administrator appointed in the
proceedings for the settlement of the estate, is entitled to the possession of the property of the
conjugal partnership until he has liquidated its affairs.
It is an error to settle the affairs of a conjugal partnership, dissolved by the death of the wife,
in the special proceedings for the settlement of the wife's estate.
The record shows that the property acquired during the marriage amounts to P2,603, according to
the inventory presented by the husband, and to this plaintiff agrees (p. 76 of the record); that, in
accordance with the inventory, the wife's paraphernal property is valued at P1,490 (p. 73); that
plaintiff is willing that from this total a deduction be made of P615, "the value of the property which
the deceased Marcela Yatco took away with her upon leaving the conjugal home" (p. 113). Hence,
the paraphernal property whole estate, worth P2,603, there remains the sum of P1,728. The law
provides: "After the dowry and the paraphernal of the wife have been paid, the debts, charges, and
obligations of the partnership shall be paid." (Civil Code, art. 1422.)
The conjugal partnership shall be liable for:



5. The support of the family . . . (Civil Code, art. 1408.)

The amount claimed for the subsistence of the deceased, amounting to P410, is of the nature.
Deducting it, therefore, from the P1,728, there remains P1,318.
The law likewise provides that, with regard to the other property of the debtor, the following credits
are preferred:
2. Those due



(b) For the funeral expenses of the debtor ... and also those of his wife and of his children
under their parental authority should they have no property of their own. (Civil Code, art.

As the deceased left property of her own, it is improper to deduct the P320 demanded for funeral
expenses. So, as this sum cannot be paid out of the remaining funds, which amount to P1,318, this
remainder "shall constitute the assets of the conjugal partnership." (Civil Code, art .1424.)
It is this remainder that should be divided equally between the wife, now deceased, and the surviving
husband, the share of each spouse being P659.
The important feature of this case is the part thereof which relates to the other demand for the
settlement of the legal conjugal partnership and the collection of a debt owed by the same. The trial
court held that there was an amount payable for subsistence furnished by plaintiff to defendant's
deceased wife.
This credit, which is admitted in this decision, must be paid by the defendant.
But, by the settlement made, it has been shown that, out of the property acquired during marriage,
the estate of the deceased is entitled to P875 as paraphernal property and to P659 as community
property, that is, to a total amount of P1,534, which forms the assets of the estate of the deceased
Marcela Yatco.
This amount of P1,534 should have been claimed in the special proceedings which it appears have
been commenced in the same court, as case No. 9348. This is the only hereditary property of the
deceased Marcela Yatco. In these special proceedings there should be presented, if proper, the
claim of P320 for the funeral expenses of the deceased, to which preference should be given as
prescribed by section 735 of the Code of Civil Procedure: "1. The necessary funeral expenses.
But of course we must not lose sight of the provision of article 1192 of the Civil Code: "Whenever the
characters of creditor and debtor are merged in the same person, the obligation is extinguished."
However, as the matter involved pertains, not to probate proceedings, but to the settlement of an
intestate estate in which they is only one interested party of legal age, who is the herein plaintiff; and
the demand for the part of the community property to which the deceased was entitled, and for her
paraphernal property, being a matter which properly pertains to an action for the settlement of the
legal conjugal partnership, apparently such demand is not allowable and it must be held that the
estate of the deceased Marcela Yatco is entitled to P659, as community property, and P875, as
paraphernal property, or to the total sum of P1,534. From this must be deducted the other part of the
credit demanded, to wit, P320, for the funeral expenses of the said deceased, which must be paid,
not by the husband, but by the heir.
In the present action final judgment should be rendered decreeing that defendant pay to the plaintiff
(a) P875, as the paraphernal property of his deceased wife, Marcela Yatco; (b) P659, as her one-half
of the community property; and P410, as the debt owed by him as the legal administrator of the
community property for the cost of the subsistence to which the deceased was entitled, making a
total of P1,944.
Plaintiff will collect the P410 under her personal right as a creditor of the defendant, like any third
person who might have furnished that subsistence, and the remaining P1,534 as the legitimate heir
of the deceased Marcela Yatco.

The right, if to such he is entitled, is reserved to the defendant, in his capacity of surviving widower,
to bring the proper action for the share allowed him by law as legal usufructuary. As this action is not
one for the in partition of an inheritance, no finding can be made herein with respect to such a right.
We therefore conclude that we should, as we hereby do, sentence the defendant to pay to the
plaintiff P1,944, without special finding as to costs. The judgment appealed from is thus modified and
affirmed. So ordered.
Torres, Johnson, Carson, and Araullo, JJ., concur.

Republic of the Philippines

G.R. No. L-43191

November 13, 1935

PAULINO GULLAS, plaintiff-appellant,

THE PHILIPPINE NATIONAL BANK, defendant-appellant.
Gullas, Lopez, Tuao and Leuterio for plaintiff-appellant.
Jose Delgado for defendant-appellant.

Both parties to this case appealed from a judgment of the Court of First Instance of Cebu, which
sentenced the defendant to return to the account of the plaintiff the sum of P5098, with legal interest
and costs, the plaintiff to secure damages in the amount of P10,000 more or less, and the defendant
to be absolved totally from the amended complaint. As it is conceded that the plaintiff has already
received the sum represented by the United States treasury, warrant, which is in question, the
appeal will thus determine the amount, if any, which should be paid to the plaintiff by the defendant.
The parties to the case are Paulino Gullas and the Philippine National Bank. The first named is a
member of the Philippine Bar, resident in the City of Cebu. The second named is a banking
corporation with a branch in the same city. Attorney Gullas has had a current account with the bank.
It appears from the record that on August 2, 1933, the Treasurer of the United States for the United
States Veterans Bureau issued a Warrant in the amount of $361, payable to the order of Francisco
Sabectoria Bacos. Paulino Gullas and Pedro Lopez signed as endorsers of this check. Thereupon it
was cashed by the Philippine National Bank. Subsequently the treasury warrant was dishonored by
the Insular Treasurer.

At that time the outstanding balance of Attorney Gullas on the books of the bank was P509. Against
this balance he had issued certain cheeks which could not be paid when the money was
sequestered by the On August 20, 1933, Attorney Gullas left his residence for Manila.
The bank on learning of the dishonor of the treasury warrant sent notices by mail to Mr. Gullas which
could not be delivered to him at that time because he was in Manila. In the bank's letter of August
21, 1933, addressed to Messrs. Paulino Gulla and Pedro Lopez, they were informed that the United
States Treasury warrant No. 20175 in the name of Francisco Sabectoria Bacos for $361 or P722, the
payment for which had been received has been returned by our Manila office with the notation that
the payment of his check has been stopped by the Insular Treasurer. "In view of this therefore we
have applied the outstanding balances of your current accounts with us to the part payment of the
foregoing check", namely, Mr. Paulino Gullas P509. On the return of Attorney Gullas to Cebu on
August 31, 1933, notice of dishonor was received and the unpaid balance of the United States
Treasury warrant was immediately paid by him.
As a consequence of these happenings, two occurrences transpired which inconvenienced Attorney
Gullas. In the first place, as above indicated, checks including one for his insurance were not paid
because of the lack of funds standing to his credit in the bank. In the second place, periodicals in the
vicinity gave prominence to the news to the great mortification of Gullas.

A variety of incidental questions have been suggested on the record which it can be taken for
granted as having been adversely disposed of in this opinion. The main issues are two, namely, (1)
as to the right of Philippine National Bank, and to apply a deposit to the debt of depositor to the bank
and (2) as to the amount damages, if any, which should be awarded Gullas.
The Civil Code contains provisions regarding compensation (set off) and deposit. (Articles 1195 et
seq., 1758 et seq. The portions of Philippine law provide that compensation shall take place when
two persons are reciprocally creditor and debtor of each other (Civil Code, article 1195). In his
connection, it has been held that the relation existing between a depositor and a bank is that of
creditor and debtor. (Fulton Iron Works Co. vs. China Banking Corporation [1933], 59 Phil., 59.)
The Negotiable Instruments Law contains provisions establishing the liability of a general indorser
and giving the procedure for a notice of dishonor. The general indorser of negotiable instrument
engages that if he be dishonored and the, necessary proceedings of dishonor be duly taken, he will
pay the amount thereof to the holder. (Negotiable Instruments Law, sec. 66.) In this connection, it
has been held a long line of authorities that notice of dishonor is in order to charge all indorser and
that the right of action against him does not accrue until the notice is given. (Asia Banking
Corporation vs. Javier [1923] 44 Phil., 777; 5 Uniform Laws Annotated.)
As a general rule, a bank has a right of set off of the deposits in its hands for the payment of any
indebtedness to it on the part of a depositor. In Louisiana, however, a civil law jurisdiction, the rule is
denied, and it is held that a bank has no right, without an order from or special assent of the
depositor to retain out of his deposit an amount sufficient to meet his indebtedness. The basis of the
Louisiana doctrine is the theory of confidential contracts arising from irregular deposits, e. g., the
deposit of money with a banker. With freedom of selection and after full preference to the minority
rule as more in harmony with modern banking practice. (1 Morse on Banks and Banking, 5th ed.,
sec. 324; Garrison vs. Union Trust Company [1905], 111 A.S.R., 407; Louisiana Civil Code
Annotated, arts. 2207 et seq.; Gordon & Gomila vs. Muchler [1882], 34 L. Ann., 604; 8
Manresa, Comentarios al Codigo Civil Espaol, 4th ed., 359et seq., 11 Manresa pp. 694 et seq.)

Starting, therefore, from the premise that the Philippine National Bank had with respect to the
deposit of Gullas a right of set off, we next consider if that remedy was enforced properly. The fact
we believe is undeniable that prior to the mailing of notice of dishonor, and without waiting for any
action by Gullas, the bank made use of the money standing in his account to make good for the
treasury warrant. At this point recall that Gullas was merely an indorser and had issued in good faith.
As to a depositor who has funds sufficient to meet payment of a check drawn by him in favor of a
third party, it has been held that he has a right of action against the bank for its refusal to pay such a
check in the absence of notice to him that the bank has applied the funds so deposited in
extinguishment of past due claims held against him. (Callahan vs. Bank of Anderson [1904], 2 Ann.
Cas., 203.) The decision cited represents the minority doctrine, for on principle it would seem that
notice is not necessary to a maker because the right is based on the doctrine that the relationship is
that of creditor and debtor. However this may be, as to an indorser the situation is different, and
notice should actually have been given him in order that he might protect his interests.
We accordingly are of the opinion that the action of the bank was prejudicial to Gullas. But to follow
up that statement with others proving exact damages is not so easy. For instance, for alleged
libelous articles the bank would not be primarily liable. The same remark could be made relative to
the loss of business which Gullas claims but which could not be traced definitely to this occurrence.
Also Gullas having eventually been reimbursed lost little through the actual levy by the bank on his
funds. On the other hand, it was not agreeable for one to draw checks in all good faith, then, leave
for Manila, and on return find that those checks had not been cashed because of the action taken by
the bank. That caused a disturbance in Gullas' finances, especially with reference to his insurance,
which was injurious to him. All facts and circumstances considered, we are of the opinion that Gullas
should be awarded nominal damages because of the premature action of the bank against which
Gullas had no means of protection, and have finally determined that the amount should be P250.
Agreeable to the foregoing, the errors assigned by the parties will in the main be overruled, with the
result that the judgment of the trial court will be modified by sentencing the defendant to pay the
plaintiff the sum of P250, and the costs of both instances.
Villa-Real, Imperial, Butte, and Goddard, JJ., concur.