G.R. No. L-7454, August 16, 1912
PLACIDO LOZANO, plaintiff-appellant, vs. IGNACIO ALVARADO TAN SUICO, defendant-appellee.

FACTS

Placido Lozano filed an action in the Court of First Instance of Cagayan to recover ₱740 from Ignacio Alvarado Tan Suico. The claim consisted of two amounts: (1) ₱340, which the defendant allegedly borrowed on October 3, 1906, promising repayment within two months; and (2) ₱400, which the defendant allegedly guaranteed as the indebtedness of Doña Maria Ifurung. To secure both sums, the defendant executed a document (Exhibit A) before a notary public on October 3, 1906, described as a mortgage on certain property. The defendant admitted borrowing ₱340 but claimed it was paid on December 2, 1906, presenting a receipt (Exhibit 1) as proof. He denied liability for the ₱400. The trial court dismissed the case, finding that the defendant owed nothing, but allowed the plaintiff to file a separate proceeding for the ₱400 if not paid by Maria Ifurung or her guarantor. The plaintiff appealed, challenging the sufficiency of the evidence.

ISSUE

Whether the defendant is liable to pay the plaintiff (1) the ₱340 loan and (2) the ₱400 guaranteed indebtedness of Maria Ifurung.

RULING

The Supreme Court affirmed the trial court’s dismissal of the case.
1. Regarding the ₱340 loan: The defendant’s payment was substantiated by a receipt (Exhibit 1), and the plaintiff himself admitted during trial that this amount had been paid. Thus, no liability remained for this sum.
2. Regarding the ₱400 guarantee: The document (Exhibit A) was not a valid mortgage because it was not registered as required by Article 1875 of the Civil Code. The action was therefore treated as a simple money claim. While the defendant’s execution of Exhibit A was admitted (as its genuineness was not denied under oath under Section 103 of Act No. 190), the document only made the defendant liable for the ₱400 if Maria Ifurung failed to pay by the maturity date. The plaintiff presented no evidence that Maria Ifurung was in default or that the debt was due and unpaid. Consequently, the plaintiff failed to prove the defendant’s liability for the ₱400. The dismissal was affirmed, without prejudice to the plaintiff’s right to bring a separate action to recover the ₱400 upon proper proof of default. Costs were awarded against the plaintiff.