Case Name: Heirs of Alfredo Ramírez de Arellano, etc., Petitioners, v. Superior Court of Mayagüez, Ángel Fiol Negrón, Judge, Defendant; and Livia del Moral Torrellas, Intervener
Court: Supreme Court of Puerto Rico
Jurisdiction: Puerto Rico
Decision Date: 1959-05-26
Citations: 81 P.R. 347
Docket Number: No. 2332
Parties: Heirs of Alfredo Ramírez de Arellano, etc., Petitioners, v. Superior Court of Mayagüez, Ángel Fiol Negrón, Judge, Defendant; and Livia del Moral Torrellas, Intervener.
Judges: Mr. Justice Belaval dissents for the reasons stated in a separate opinion.
Reporter: Puerto Rico Reports
Volume: 81
Pages: 347–368

Head Matter:
Heirs of Alfredo Ramírez de Arellano, etc., Petitioners, v. Superior Court of Mayagüez, Ángel Fiol Negrón, Judge, Defendant; and Livia del Moral Torrellas, Intervener.
No. 2332.
Submitted September 23, 1957.
Decided May 26, 1959.
José A. Poventud, Francisco Parra Toro, Carlos García Méndez, José Rosario Gelpi, and Amador Ramirez Silva for petitioners. Enrique Baez Garcia for intervener, plaintiff in the main action.

Opinion:
Mr. Justice Saldaña
delivered the opinion of the Court.
ON RECONSIDERATION
The facts of this case appear in our former opinion. 80 P.R.R. 147. There we construed the stipulation of interest that was set forth in the mortgage deed taking into account: (1) the literal sense of its clauses; (2) the connection between the phrase "the effectiveness of the loan" and the other clauses of the contract; (3) the term or period of three years essentially fixed for the maturity of the debt; and (4) the rules of construction of contracts contained in our Civil Code. With respect to said factors, considered isolatedly, we declared that the common intent of the parties upon the contract being perfected was the following: "to agree on the payment of interest solely for the duration of the contract" That is, we decided that "there was no express agreement as to interest at the rate of nine.per cent after maturity of the debt or on default" and that "it would const'tute a distortion of the normal sense of the words to say that effectiveness of the loan means here 'until its total reimbursement or until full payment of the loan' or 'until the indebtedness is fully settled,' for the obligation had a fixed maturity date." (At 151.)
In order to so fix the meaning and scope of the stipulation as to interest we only considered the afore-mentioned interpretative elements of the contract. We did not have before us evidence on the conduct of the parties at the execution and duration of the contract, since these standards of evaluation were not offered to the judge when the motion for summary judgment was submitted by the defendants (petitioners herein) in the Superior Court.
On reconsideration it is alleged in synthesis: (1) that the intent of the parties upon using the expression "the loan accruing interest during its effectiveness at the rate of nine per cent ." was to stipulate interest while it remained unpaid and that this is clearly seen from the literal terms of the contract; and (2) that in order to judge the intent of the contracting parties it is necessary to admit evidence on acts prior, contemporaneous and subsequent to the contract. For the reasons already stated in our first opinion in this case, we believe that the first ground for reconsideration is devoid of merit. And that suffices to reaffirm our decision that the lower court did not commit error in dismissing the motion for summary judgment filed by the defendants. As a question of law, no summary judgment could be entered dismissing the action for nullity of the foreclosure proceeding, since it does not appear from the face of the loan and mortgage contract that the foreclosing creditor was entitled to claim default interest at the rate of nine per cent from the stipulated date of maturity until full payment of the debt. See Piovanetti v. Vivaldi, 80 P.R.R. 108 (1957).
However, we believe that petitioners are right in alleging that in this certiorari proceeding it was inappropriate to give a final interpretation to the stipulation of interest set forth in the loan and mortgage contract between Francisco del Moral and Francisca Sánchez Chavarry. In the first place, it is unnecessary to make a pronouncement which is adverse to the defendants and favorable to the plaintiffs on the construction of the stipulation of interest, for the purpose of deciding the incident of summary judgment involved in this proceeding. In the second place, we cannot reach a final conclusion on the construction of the said contract — determining as a matter of fact that the mortgage foreclosure proceeding was void — without giving the defendants the opportunity to offer evidence at the trial on acts prior, contemporaneous and subsequent to the contract, and also on the other circumstances concerning the stipulation of interest, which can actually contribute to the correct investigation of the common intent of the executing parties.
In other words, upon affirming the decision of the Supe rior Court refusing to enter summary judgment in favor of the defendants, it was inappropriate to make a pronouncement, on appeal, which would be the equivalent to entering summary judgment in favor of the plaintiffs on the question of nullity of the foreclosure proceeding. This is so because there is a genuine controversy as to the material facts in the construction of the stipulation of interest that can only be decided in a plenary suit. Cf. Santiago v. Superior Court; Dexter, Int. 75 P.R.R. 213 (1953) and Ocasio v. San Juan Dock Co., 75 P.R.R. 873 (1954). See 6 Moore, Federal Practice (2d ed.), § 56.12.
In effect we have to recognize that the terms of the loan and mortgage contract in this case require construction because they are not clear and leave doubt as to "the common and evident intent" of the executing parties. The only terms which can be catalogued as clear are those which in themselves are lucid enough to be understood in •one sense alone, without leaving any room for doubt, controversies or difference of interpretation, and without necessitating for their understanding any reasoning or illustration susceptible to challenge. See the Judgment of February 20, 1940, of the Supreme Court of Spain, 24 Rev. de Derecho Privado 116. Hence, it is necessary to make clear what was the real common intent of the contracting parties as to the payment of interest on the principal of the loan. That question must be decided, in harmony with the doctrine laid down in Piovanetti v. Vivaldi, 80 P.R.R. 108 (1957), after the action of nullity of the summary foreclosure proceeding is litigated. At the trial both parties shall be able, by means of pertinent and admissible evidence, to offer to the judge all the elements of evaluation with respect to the conduct of the contracting parties and the other circumstances that might serve to determine what was the real "common and evident intent" of the executing parties. The Superior Court shall apply to the proven facts the rules of construction of contracts as fixed by the Civil Code and the applicable doctrine. Only then can it be determined whether or not there was a specific agreement in the mortgage as to the payment of interest at nine per cent after maturity of the debt or on default. See § § 1646 of the Civil Code (31 L.P.R.A. §4573) and 232 of the Code of Commerce (10 L.P.R.A. § 1654). Cf. 11 Manresa, Comentarios al Código Civil Español (5th ed. 1950), 628-31; 2 De Casso y Cervera, Diccionario de Derecho Privado 2371-72 (1954) ; Judgment of the Supreme Court of Spain, May 9, 1944, 6 Jur. Civ. (2d ser.) 645, 664-65.
Of course, no contract or verbal agreement reached by the creditor and debtor as to payment of interest at a higher rate than the legal interest, can have the same effect of a mortgage. As we said in Figueroa v. Boneta, 58 P.R.R. 811, 816 (1941) : "[it] must be executed by public deed and recorded in the registry before it can serve as the basis for a summary mortgage foreclosure."
It should be noted that in this ease the action exercised herein is not the action for damages based on § 169 of the Regulations (30 L.P.R.A. § 1090). What Livia del Moral requests in her action against the Heirs of Ramirez de Arellano is that: "the nullity of the summary foreclosure proceeding be decreed . . . and the property be returned . . . with the fruits yielded or that should have been yielded." In this respect it suffices to reiterate here the. standards established by our constant and uniform decisions: (1) it is necessary to adhere strictly to the procedures and requirements of the summary proceeding, and any departure therefrom shall render the action void; (2) the collection of excess interest or other amounts that are not secured by mortgage constitutes a substantial error to the prejudice of the debtor's rights which invalidates the foreclosure proceeding even when such illegality is due to a mere error of law or mere negligence in the investigation of the facts stated in the initial petition; and (3) the action seeking nullity of the foreclosure proceeding never prescribes because "prescription does not run against that which is nonexistent. The course of time cannot insufflate life to that which legally never had it." See, among others, Piovanetti v. Vivaldi, 80 P.R.R. 108 (1957) ; Gaztambide v. Heirs of Ortiz, 70 P.R.R. 388 (1949) ; Buil v. Banco Popular, 69 P.R.R. 237 (1948); F. Rodriguez Hnos. & Co. v. Aboy, 66 P.R.R. 498 (1946) ; Costas v. G. Llinás & Co., 66 P.R.R. 688 (1946) ; De Jesús v. Assad, 63 P.R.R. 131 (1944); Figueroa v. Boneta, 58 P.R.R. 811 (1941); Vázquez v. Gutiérrez, 52 P.R.R. 162 (1937); Martorell v. Crédito y Ahorro Ponceño, 42 P.R.R. 632 (1931) ; Santos v. Crédito y Ahorro Ponceño, 41 P.R.R. 934 (1931).
In view of the privileged situation of the foreclosing creditor in the mortgage proceeding, the Law and the Regulations impose on him an absolute duty of truth with respect to the facts and circumstances contained in the initial petition. Art. 38 of the Mortgage Law (30 L.P.R.A. § 63) and § 169 of the Regulations (30 L.P.R.A. § 1090). It is not incumbent on the judge to investigate or determine the accuracy or falsity of the acts alleged in the initial petition to authorize the summary proceeding. Such responsibility falls entirely on the foreclosing creditor. Nor is it necessary in order for the proceeding to be void that the conduct of the foreclosing creditor be equivalent to deceit. An error constituting negligence because the allegation is contrary to facts or to the juridical rules is sufficient. The contrary thesis upheld by Guasp in his work La Ejecución Procesal en la Ley Hipotecaria (1951), 71-73, does not find support in the Spanish case law or in the doctrine of the other authors. The reason is simple: in Spain the section corresponding to § 169 of our Mortgage Law Regulations only mentions the malice and omits the negligence. Hence, Guasp gives his very personal opinion on the meaning of the word "negligence" in the Mortgage Law for the Colonial Provinces (1893), which has never ruled in Spain. We do not believe that we should reject now the ruling laid down by our case law and sanctioned on this point and accept instead Guasp's interpretation. Besides, it is reasonable, and even necessary, to include in the concepts of negligence and nullity any error as to the facts which the foreclosing creditor sets forth in the initial petition, since his acts can, by means of the most summary proceeding, cause the debtor's ruin.
The opinion previously rendered by this Court (80 P.R.R. 147) in this case is modified as indicated herein. The writ issued will be quashed and the case remanded to the Superior Court for further proceedings compatible with the terms of this opinion.
Mr. Justice Belaval dissents for the reasons stated in a separate opinion.
Mr. Justice Santana Becerra agrees that the case be remanded to the lower court in order that it should make clear what was the real intention of the contracting parties with respect to the payment of interest and he expresses no view as to the other pronouncements of the opinion.
See § 1233 to 1240 of the Civil Code (1930 ed.), 31 L.P.R.A. § 3471 to 3478; § 390 of the Code of Civil Procedure, (1933 ed.), 32 L.P.R.A. § 1671; 3 Castán, Derecho Civil Español, Común y Foral (8th ed. 1954), 398-405; IV-2 Puig Peña, Tratado de Derecho Civil Español 42-48 (1951) ; II-l Puig Brutau, Fundamentos de Derecho Civil 291-305 (1954); and VIII-2 Manresa, Comentarios al Código Civil Español (5th ed. 1950), 492-539.
Aside from the authorities cited in footnote 1, see: Rutledge v. Gill, 78 P.R.R. 665 (1955); Caballero v. Kogan, 73 P.R.R. 617 (1952) ; Ramírez v. Ramírez, 65 P.R.R. 511 (1946); Paracchini v. Vilá et al., 23 P.R.R. 139 (1915); Matson v. Goyco, 18 P.R.R. 678 (1912); Solá v. Orcasitas, 11 P.R.R. 78 (1906); Judgments of the Supreme Court of Spain of April 20, 1944, (6 Jur. Civ. 2d ser., 516-32) and of December 9, 1944 (9 Jur. Civ., 2d ser., 633, 651-52).
Guasp's work was originally published in articles which appeared in volumes 14 and 15 of the Revista Crítica de Derecho Inmobiliario (1941 and 1942). See pp. 414, 478, 513 and 593 of volume 14 and pp. 9, 84, 225, 297, 383 and 505 of volume 15.