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I. SHORT TITLE: Dalay vs.

Aquiatin and Maximo

II. FULL TITLE: JUAN DALAY, plaintiff and appellant, vs. BERNARDO AQUIATIN and
PROCESO MAXIMO, defendants and appellees. No. 20132, 22 November 1923, Paredes, J.

III. TOPIC: Payment of debt with realty given as security; validity of stipulation


Ciriaco Villarin, being the owner of six parcels of land executed a document in favor of Eugenio
Gomez, acknowledging a debt. The document stated that upon failure by Villarin to pay the debt
within the agreed period, the lands he owns attached as security shall be used as payment thereof.
Villarin was not able to meet the deadline and Gomez in the belief that he was already entitled to the
lands subsequently conveyed the properties to Juan Dalay. While the latter was in possession of the
lands, an affidavit was made by Villarin acknowledging the title and transfer of the lands to Gomez.
Few days after, Villarin contracted a debt in favour of Bernardo Aquiatin and used the same
properties as security for payment.


Dalay then instituted this action against Bernardo Aquiatin and Proceso Maximo, as deputy sheriff,
to have himself declared as the owner of said lands. Aquiatin generally opposed the claim in his
answer and alleged that the sale upon which Dalay relies was simulated and fraudulent. Further,
Aquiatin argued that plaintiff never had an exclusive possession of neither title to the said lands. The
court denied the claim due to no cause of action. Hence, Dalay appealed.

VI. ISSUE: Whether or not by virtue of the transfer, Juan Dalay became the owner of the parcels of land
in dispute.

VII. RULING: Yes, Juan Dalay is the sole and absolute owner of the lands.

A stipulation to pay the debt with the property given as security does not violate Article 1859 of the
Civil Code, and is valid where, as in the instant case, such a stipulation does not authorize the
creditor to appropriate the property pledged or mortgaged, neither to dispose thereof, and
constitutes only a promise to assign said property in payment of the obligation if, upon its maturity, it
is not paid.

There is no doubt that a debtor may make an assignment of his properties in payment of a debt. And
the assignment is not made unlawful by the fact that said properties are mortgaged, because the title
thereto remains in the debtor; neither is a promise to make such an assignment in violation of the
law. Upon the expiration of the period for the payment of the debt without the same having been
paid, Eugenio did not wait neither require Villarin to make a formal assignment of the mortgaged
property in payment of the debt, nor transferred the same to Juan Dalay in the document. The
conveyance made by Gomez in favor of Dalay was defective, it having been made in advance of the
actual assignment of said property in his favour. However, such act is not void inasmuch as Villarin
executed a document acknowledging the title and possession of said lands were transferred to
Gomez in a real and absolute sale.


The judgment appealed from is reversed and the plaintiff Juan Dalay is adjudged the sole and
absolute owner of the lands described in his complained, and it is ordered that the defendants, their

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agents, and other persons acting in their behalf, abstain forever from performing any act whatsoever
tending to carry out the attachment and execution sale complained of, or to enforce either one in any
manner whatsoever. No special finding as to costs is made. So ordered.

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