Lichauco v. Martinez
REITERATIONFacts
The Antecedents: Francisco Martinez lost 22,000 pesos playing monte and burro in August 1902. He executed a promissory note for this amount payable to Mateo Alba. Subsequently, he executed a notarial document acknowledging the debt of 22,000 pesos as a simple loan, with no interest, payable within six months. This document replaced the promissory note, and its sole consideration was the money lost in the game. Later, on August 12, 1902, Martinez lost 16,000 pesos playing burro and monte and executed another promissory note for this amount to Mateo Alba, payable in six months. Martinez paid 150 pesos on this debt, for which he received receipts for 3,000 pesos each, indicating partial payments totaling 6,000 pesos. Procedural History: On June 12, 1903, Mateo Alba assigned both documents and his interest therein to Faustino Lichauco, stating that 6,000 pesos had been paid. Lichauco filed an action against Martinez to recover the amounts due. Martinez alleged that the documents were given for money lost at gaming and were therefore unrecoverable. The trial court rendered judgment in favor of the defendant. The plaintiff's motion for a new trial was denied, leading to the present appeal. The Petition: The plaintiff-appellant seeks to recover the amounts due on the two obligations, arguing that he, as an assignee, can recover even if his assignor could not, and that burro is not a prohibited game.
Issue(s)
Whether the plaintiff, as an assignee, can recover on documents whose consideration is money lost in prohibited games, even if the assignor could not. Whether burro is a prohibited game under the law. Whether the plaintiff sufficiently proved the amount lost in the game of burro to allow recovery for that portion. Whether the transactions constituted a loan of money by Alba to Martinez to pay other players, which would be recoverable.
Ruling
The Supreme Court affirmed the judgment of the lower court in favor of the defendant. The Court held that contracts based on money lost in prohibited games are void and unenforceable. The assignee of such a claim stands in no better position than the original claimant. The evidence was insufficient to establish that any specific amount was lost in the game of burro, and the transactions did not constitute a recoverable loan.
Ratio Decidendi
On the assignability of claims arising from prohibited games: The Court reiterated the settled doctrine that money lost at a prohibited game cannot be recovered, even if the loser executes a promissory note therefor. The plaintiff, as an assignee, cannot recover on these documents because the original assignor, Mateo Alba, could not have recovered. The documents were acquired by the plaintiff after they became due, and there is no provision in Spanish law that would allow an assignee to recover where the assignor could not. The decisions from the United States cited by the appellant relate to negotiable instruments transferred before maturity, which is not the case here as both documents were acquired after maturity. On whether burro is a prohibited game: The Court noted that it had previously decided in Reyes vs. Martinez that burro is not a game of chance (suerte, envite, o azar). However, monte is a prohibited game. For the plaintiff to recover any amount won at burro, it must be proven what that specific amount was. Article 1276 of the Civil Code states that a false consideration in contracts renders them void, unless a real and licit one is proven. In this case, the consideration expressed (loan) was false, and the actual consideration (money lost at gaming) was unlawful. The burden was on the plaintiff to prove a lawful consideration and the portion won at burro, which he failed to do. On the sufficiency of proof for amounts lost at burro: The evidence presented was insufficient to establish any specific sum lost at burro. Martinez himself could not quantify his losses at each game. While a witness testified that more time was spent playing burro than monte, he could not approximate the amounts lost at each. Another witness stated that the "mayor parte" (greater part) was lost at burro but could not recall or estimate the specific amounts lost at monte versus burro upon cross-examination. Therefore, the evidence did not meet the requirement to isolate recoverable amounts from unrecoverable ones. On whether the transaction was a loan: The Court rejected the claim that Alba loaned Martinez money to pay other players. The evidence indicated that Alba was a player in both games and that other players assigned their claims against Martinez to Alba. Alba's testimony suggested he was responsible for the debts of Martinez to other players and that Martinez would execute a document acknowledging the amount lost. There was no evidence that Alba loaned Martinez any money; Martinez testified he played on credit. The Court concluded that Alba was in no better position than the original winners who had assigned their claims to him, as the underlying consideration remained the money lost at prohibited games.
Main Doctrine
Contracts based on unlawful consideration, such as money lost in prohibited games, are void and unenforceable. The assignee of such a void claim stands in no better position than the original claimant.