Braganza v. Villa Abrille
REITERATIONFacts
The Antecedents: Petitioners Rosario L. de Braganza and her sons Rodolfo and Guillermo received P70,000 in Japanese war notes from respondent Fernando F. de Villa Abrille as a loan on October 30, 1944. They executed a written promise (Exhibit A) to pay P10,000 in legal Philippine currency two years after the cessation of hostilities or upon establishment of international exchange, plus 2% annual interest. Procedural History: Villa Abrille filed suit in March 1949 for non-payment. The defendants claimed they received only P40,000 and that Guillermo and Rodolfo were minors when they signed the promissory note. The Court of First Instance rendered judgment against them, which the Court of Appeals affirmed. The Petition: Petitioners seek review of the Court of Appeals' decision requiring them to solidarily pay P10,000 plus interest.
Issue(s)
Whether the minors Rodolfo and Guillermo Braganza are bound by the promissory note (Exhibit A) despite their minority. Whether the defense of minority was interposed too late, particularly for Rodolfo who reached majority in 1947. Whether the minors are liable for restitution to the extent they profited from the loan.
Ruling
The Supreme Court modified the appealed decision. Rosario L. de Braganza was ordered to pay 1/3 of P10,000 (P3,333.33) plus 2% interest from October 1944. Rodolfo and Guillermo Braganza were ordered to jointly pay P1,166.67 plus 6% interest from March 7, 1949.
Ratio Decidendi
On whether the minors Rodolfo and Guillermo Braganza are bound by the promissory note (Exhibit A) despite their minority: The Court held that the minors could not be legally bound by their signatures in Exhibit A. Unlike the Mercado case where the minor actively misrepresented his age by stating he was of legal age, in this case, the minors' failure to disclose their minority in the promissory note was considered passive or constructive misrepresentation. The Court cited authorities stating that mere silence as to age does not constitute fraud sufficient for an action of deceit, and that fraud must be actual, not constructive, to hold an infant liable. The minority that incapacitates them from contracting should also exempt them from the results of passive misrepresentation. On whether the defense of minority was interposed too late, particularly for Rodolfo who reached majority in 1947: The Court found that the defense was not interposed too late. Rodolfo was 18 in October 1944, making him 21 in October 1947 and 25 in October 1951. When the defense was interposed in June 1951, four years had not yet completely elapsed from October 1947. Furthermore, the Court expressed doubt about the applicability of the four-year period under Article 1301 of the Civil Code when minority is set up merely as a defense to an action, rather than as a basis for an action for annulment. The minors were not seeking positive relief but merely an excuse from liability. On whether the minors are liable for restitution to the extent they profited from the loan: The Court ruled that even if the contract is unenforceable due to non-age, the minors shall make restitution to the extent they have profited. Testimony indicated the funds were used for their support during the Japanese occupation. The Court applied the Ballantine Schedule, establishing that P40.00 in Japanese notes were equivalent to P1.00 in current Philippine money in October 1944. As the minors' share was 2/3 of P70,000 (P46,666.66), they were deemed to have profited to the extent of P1,166.67, which they must return. This liability is based on Article 1304 of the Civil Code, not on the unenforceable Exhibit A.
Main Doctrine
Minors who misrepresent their age by passive silence or failure to disclose their minority in a contract are not bound by the contract, but they are liable for restitution to the extent they have profited by the contract, particularly for their support.