Reyes v. Wells
REITERATIONFacts
The Antecedents: Plaintiffs filed a complaint against John E. Rader and John Northcott (later substituted by their administrators) seeking the cancellation of promissory notes and deeds of mortgage executed in favor of Rader and Northcott. Plaintiffs alleged that Rader and Northcott installed a maguey stripping machine and truck, offering to sell them to plaintiff Saturnino R. Guerrero for P23,000 payable in installments. Rader promised to furnish P12,000 for exploitation and delivered P400. Guerrero executed two promissory notes for P7,000 and P5,000 in favor of Rader, guaranteed by a mortgage on real property. Rader endorsed the P5,000 mortgage deed to Northcott. Plaintiffs averred that neither P5,000 nor any part thereof was delivered to them, and Rader and Northcott promised to pay when Northcott received money from San Francisco. Guerrero was later required to renew the P7,000 mortgage deed in favor of Northcott, receiving only P98 for land tax. Plaintiffs claimed damages due to the failure to deliver the P12,000. Procedural History: The trial court found that the sums of P5,000 and P7,000 were never delivered to the plaintiffs. Consequently, it ordered the cancellation of the two realty mortgage deeds and dismissed the counterclaim and cross-complaint of administrator Wells. Administrator E. C. Wells appealed. The Petition: The appellant's main contention was that the plaintiffs' allegation of non-payment was unsupported, citing the incompetency of Saturnino Guerrero to testify on transactions with the deceased under Section 383 of the Code of Civil Procedure. The Supreme Court considered the admissibility of testimony from other witnesses and the genuineness of Exhibit F, a letter purportedly from John E. Rader.
Issue(s)
Whether the testimony of Saturnino R. Guerrero, an interested party, is admissible concerning transactions with the deceased John E. Rader and John Northcott. Whether the sums of P5,000 and P7,000, represented by the promissory notes and secured by mortgage deeds, were actually delivered to the plaintiffs. Whether the trial court erred in ordering the cancellation of the mortgage deeds and dismissing the counterclaim and cross-complaint. Whether Exhibit F, a letter purportedly from John E. Rader, is genuine and admissible as evidence.
Ruling
The Supreme Court affirmed the judgment of the trial court. The appeal of E. C. Wells, administrator of the estate of John Northcott, was dismissed. The mortgage deeds were ordered cancelled, and the counterclaim and cross-complaint were dismissed.
Ratio Decidendi
On the admissibility of testimony: The Court held that while Saturnino Guerrero, as an interested party, is incompetent to testify on personal transactions with the deceased (under Section 383 of the Code of Civil Procedure), other witnesses, like Eduardo Bustamante, who are disinterested and merely heard conversations between the deceased and the plaintiff without active participation, are competent. The Court cited R.C.L. and Iowa cases to support the principle that the "dead man's statute" does not disqualify a witness from testifying to communications or transactions between a deceased and a third person had in his presence or within his hearing, if the witness took no active part therein. On the delivery of consideration: The Court found that the evidence supported the trial court's conclusion that the sums of P5,000 and P7,000 were never delivered to the plaintiffs. While the appellant presented evidence suggesting Northcott might have given P2,000 to Rader, this did not extinguish Guerrero's right to claim the P5,000 from Northcott, especially since Northcott had personal knowledge that the money had not been delivered to Guerrero. The Court also noted that the foreclosure of Guerrero's property by Macleod & Co. for non-payment indicated he did not have the expected funds from Rader or Northcott. On the cancellation of mortgage deeds and dismissal of counterclaim: Given the finding that the consideration for the promissory notes and mortgages was not delivered, the trial court correctly ordered the cancellation of the mortgage deeds. Consequently, the counterclaim and cross-complaint filed by administrator Wells, which sought to enforce these mortgages, were correctly dismissed as untenable. On the genuineness of Exhibit F: The Court acknowledged dissimilarities in the signature on Exhibit F compared to undisputed signatures. However, it deferred to the trial court's finding that it was "difficult to make sure that the disputed signature, Exhibit F, was not written by John E. Rader." Furthermore, even if written by John E. Rader, Jr., it was likely done with the knowledge of the deceased John E. Rader, giving the letter's contents the same effect. The letter's content, acknowledging the delay in delivering the P12,000 and the unpaid nature of the mortgage debts, further supported the plaintiffs' claim.
Main Doctrine
The Supreme Court affirmed the trial court's decision, ordering the cancellation of mortgage deeds due to the failure of the defendants' predecessors-in-interest to deliver the promised sums of money, which constituted the consideration for the promissory notes and mortgages. The Court also clarified the admissibility of testimony concerning transactions with deceased persons under the "dead man's statute."