G.R. No. L-6889 ; August 26, 1915

FACTS:
The plaintiffs, the children of the deceased Joaquin Ibañez de Aldecoa, appealed from a prior decision of the court. In the underlying case, the plaintiffs, who were formally emancipated minors, had executed a mortgage in favor of the defendant bank. The mortgage was related to the obligations of the commercial firm “Aldecoa & Co.,” in which their mother was a partner. A final judgment from the Court of First Instance had previously declared that the plaintiffs were not partners of the firm but were its creditors. The plaintiffs sought to invalidate the mortgage, arguing, among other points, that their emancipation was invalid for lack of a public document, that the mortgage was void due to a conflict of interest with their mother under Article 165 of the Civil Code, and that the mortgage lacked consideration because they executed it under the mistaken belief they were partners.

ISSUE:
1. Whether the formal emancipation of the plaintiffs was invalid for not being recorded in a public document.
2. Whether the mortgage contract is void as to the plaintiffs due to a conflict of interest with their mother under Article 165 of the Civil Code.
3. Whether the mortgage contract is void for lack of consideration.

RULING:
The Supreme Court denied the motion for rehearing and affirmed its prior decision.

1. On the Validity of Emancipation: The Court held that the point regarding the lack of a public document for emancipation had been raised and answered in the original decision. The motion presented no new argument to warrant a reversal.

2. On the Conflict of Interest (Article 165): The Court ruled that Article 165 of the Civil Code, which prohibits parents from representing children in cases of conflicting interest, applies only to unemancipated children. The plaintiffs were formally emancipated. Under Article 317, a formally emancipated child has full capacity to administer his property, subject to specific limitations (e.g., encumbering real property requires parental consent). The Court cited resolutions from the Dirección General de los Registros (November 4, 1896; January 7, 1907; and January 30, 1911) which held that a formally emancipated child may participate in the division of an inheritance with a parent, even with conflicting interests. The resolution of November 19, 1898, relied upon by commentators, was distinguished as dealing with emancipation by marriage, not formal emancipation. Therefore, Article 165 did not invalidate the mortgage.

3. On the Lack of Consideration: The Court found the mortgage was supported by a real and licit consideration. While the plaintiffs mistakenly believed they were partners, the final judgment established they were creditors of Aldecoa & Co. The desire to preserve the firm to recover their credits constituted a valid consideration under Article 1276 of the Civil Code. The object of saving the business was achieved regardless of whether they were partners or creditors.

The motion for rehearing was denied.