CHINCHILLA

FACTS:
1. March 29, 1915, Chinchilla filed a complaint against Rafel and Joaquin Verdaguer,
alleging that defendant Rafel executed a mortgage contract covering five automobiles
belonging to him in favor of Rosa Sanz as a security for the payment of a promissory note
for P2,625 which note was subscribed by said Julio Rafel in favor of the creditor Sanz.
Said mortgage was inscribed in the registry of mortgage on November 27, 1914, and was
later foreclosed in favor of the mortgagee Rosa Sanz.
2. Defendant sold to the plaintiff all his business known by the name of "Rafel’s Garage,"
situated in the city of Manila, for the sum of P11,500, executing therefor the corresponding
document which was signed by both parties, but by reason of causes independent of the
will of the plaintiff, said document was not ratified before a notary public.
3. The lower court rendered judgment sentencing Joaquin Verdaguer to deliver to the plaintiff
Chinchilla all the automobiles he had under his control in his capacity as depositary, and
ordering the sale at public auction of the automobiles Nos. 44340, 43487, 6795, 6747, and
103016, in order that the proceeds therefrom be applied in the discharge of Chinchilla’s
preferred credit, and to apply the balance together with the value of the other automobiles
in the payment, without preference.
4. Only the defendant Joaquin Verdaguer excepted and moved for a new trial. His motion for
a new trial having been denied, he excepted to the order of the court denying said motion
and presented the corresponding bill of exceptions which was approved, certified, and
transmitted to the clerk of this court.

ISSUE:
W MORTGAGE IS VALIDLY EXECUTED. YES
1. It appears that the mortgage document has been executed by the debtor Rafel in order to
guarantee the payment of a promissory note subscribed by said Rafel and payable on
December 23, 1914. It was stipulated in said-note that if it should not be paid on the day it
was due, said Julio Rafel bound himself to pay an interest of 5 per cent per month by way
of penalty, plus one hundred pesos (P100) by way also of penalty.
2. On January 28, 1915, the mortgage deed was delivered to the sheriff of Manila, together
with a petition for the execution of the said mortgage, by selling at public auction the
property mortgaged.
3. On the 29th of the same month, the sale at public auction was announced to take place on
February 10th, and the sheriff notified Julio Rafel that in accordance with the notice of sale
he would proceed to sell at public auction, on February 10, 1915, the property described in
the said notice and which was mortgaged in favor of Rosa Sanz Vda. de Bastida.
4. It was stipulated in the contract that if, within the period of thirty days extendible to another
thirty days, Julio Rafel should pay to the vendee Chinchilla the amount of eleven thousand
five hundred pesos (P11,500), the latter bound himself and promised to resell to the vendor
the things sold. This document is signed by the parties in the presence of two witnesses and
in the same paper wherein appear their signatures appears a ratification in blank.
5. This contract appears in a manner which is clear, evident, and unequivocal in the said
document Exhibit 1, whereby Julio Rafel sold to the defendant Verdaguer with right of
repurchase the eight automobiles and other chattels specified therein.
6. It also appears to have been stipulated in the same contract that the vendor Rafel might
redeem them within six months to be counted from April 17, 1914, the date of the contract,
which period would be extendible according to the will of the parties for another six
months. It was, moreover, agreed that during the period allowed for redemption the vendor
would remain in the possession of the automobiles and chattels sold by him, in the capacity
of lessee through the payment of a monthly rental of one hundred pesos, subject to the
condition that if the lessee Rafel should fail to pay two consecutive monthly rental by virtue
of the stipulated lease, the right of repurchase would ipso facto be considered as waived
and the sale would become absolute, irrevocable, and definite.
7. Notwithstanding the fact that the terms of the contract are definite and clear, oral evidence
was presented for the purpose of showing that the agreement entered into between the
parties is distinct from that stated in the said document Exhibit 1, and that the latter does
not express the true intention of the contracting parties.