187 Rodriguez v. Martinez

TAXATION 2 1
Documentary Tax – Effect of Failure to Attach DST
RODRIGUEZ v. MARTINEZ
September 29, 1905 | J. Mapa
Plaintiff-Appellant: FRANCISCO RODRIGUEZ

Defendant-Appellee: FRANCISCO MARTINEZ
Doctrine: Internal revenue stamps. – The fact that a note made in October, 1902, was not stamped is no
defense to an action thereon.
CASE SUMMARY
Trigger Word(s): x x x
FACTS: Rodriguez sued Martinez on the promissory note executed by the latter in favor of one Montalvo
who subsequently indorsed the same to Rodriguez. However, the PN was presented to the court as
evidence without the stamp required by law. After the trial, the plaintiff offered to put the necessary stamp
on the note. The lower court however ruled in favor of defendant Martinez.
ISSUE #1: W/N the lack of stamp required by law invalidates the note – NO
HELD: Section 11 of the royal decree of the 29th of May, 1894 provides that: "Every note not stamped in
accordance with the provisions of the foregoing sections shall be null and void and will not be admitted in
any court or any Government office whatsoever, and will not have the efficacy inherent to commercial
instruments; this, however, will not bar a purely civil action which may be brought in the manner, provided
by law for the enforcement of civil obligations." Thus the note in question, not being stamped, did not give
the holder thereof the right to bring an executive action and could not, therefore, be the basis of such an
action; but it was a valid document in that it was proof of a purely civil obligation and could be
utilized as such in an ordinary action. The Court also found that there is no law which provides that the
lack of a stamp on an instrument cannot be supplied. The lower court should have allowed the plaintiff to
supply this deficiency when he tendered the stamp for that purpose.
FACTS
● Martinez executed a promissory note (October 17, 1902) for P 4,000 (Mexican currency) payable
to one Felipe Montalvo.
○ The note was delivered to Montalvo as payment of Martinez's gambling debt.
● Montalvo indorsed the said PN to plaintiff Rodriguez for value and before maturity. Rodriguez
received the PN without notice of any conditions existing against the note.
○ Rodriguez before accepting the note, went to the Martinez and asked him in respect
thereto, and was informed by him that the note was good.
● The PN was presented to the court as evidence of Martinez's debt without the stamp required by
law and no stamp had ever been attached thereto. After the trial, the plaintiff offered to put the
necessary stamp on the note, and tendered such stamp.
ISSUES + HELD
ISSUE #1: W/N the lack of stamp required by law invalidates the note – NO
 As to the omission of the stamp required by law upon such documents, this fact is not sufficient to
invalidate the note sued upon; there is no such provision of law.
 Under section 11 of the royal decree of the 29th of May, 1894, it is true, that such documents
would be null and void unless they were duly stamped.
o However, this does not mean that such documents would be absolutely null and void,
only that no executive action could be brought upon them in accordance with the laws
then in force regarding mercantile documents.
 The provision reads: "Every note not stamped in accordance with the provisions of the
foregoing sections shall be null and void and will not be admitted in any court or any Government
office whatsoever, and will not have the efficacy inherent to commercial instruments; this,
however, will not bar a purely civil action which may be brought in the manner, provided by law
for the enforcement of civil obligations."
Orjalo | A2022
April 20, 2021
TAXATION 2 2
Documentary Tax – Effect of Failure to Attach DST
o Thus the note in question, not being stamped, did not give the holder thereof the right to
bring an executive action and could not, therefore, be the basis of such an action; but it
was a valid document in that it was proof of a purely civil obligation and could be
utilized as such in an ordinary action.
o Executive actions have been abolished by the enactment of the present Code of Civil
Procedure.
 The Court also found that there is no law which provides that the lack of a stamp on an
instrument cannot be supplied. The lower court should have allowed the plaintiff to supply this
deficiency when he tendered the stamp for that purpose.
ISSUE #2: W/N Martinez can be relieved from his obligation in the PN he executed because it had
an unlawful consideration – NO
 Rodriguez bought the note for value from Montalvo on the assurance of Martinez that the same
was good. Rodriguez was a holder in good faith.
 In view of this, we are of the opinion that the defendant can not be relieved from the obligation of
paying the plaintiff the amount of the note alleged to have been executed for an unlawful
consideration. If such unlawful consideration did in fact exist, the defendant deliberately and
maliciously concealed it from the plaintiff.
o To relieve Martinez would be equivalent to permitting him to go against his own acts to
the prejudice of Rodriguez.
o Par. 1, Sec. 333, Code of Civil Procedure: Whenever a party has, by his own
declaration, act, or omission intentionally and deliberately led another to believe a
particular thing true, and to act upon such belief, he cannot, in any litigation arising out of
such declaration, act, or omission, be permitted to falsity it.
 Defendant Martinez contends that Sec. 333 is not applicable to the case at bar for the reason that
the same has for its object the recovery of a gambling debt as to which the defendant cannot
renounce any right because the law does not give him any.
o SC: This is not altogether true.
 Art. 198, Civil Code provides that "the person who loses at a game of chance,
luck, or hazard cannot recover what he has voluntarily paid."
 It can be deduced therefore that the law at least permits a person to pay
what he has actually lost.
 Also, the lower court contained no finding as to the name and nature of the
game. Article 1277, CC provides that the consideration of the contract must be
presumed to be lawful and valid until the contrary is proved. In this case, there
is no evidence that the note was incurred at a game prohibited by law.
RULING: The judgment of the court below is hereby reversed, and the defendant ordered to pay to the
plaintiff the sum of 4,000 pesos, Mexican currency, or its equivalent in Philippine currency, with legal
interest at the rate of 6 per cent per annum from the 22d day of April, 1903, when the complaint in this
action was filed, after first attaching to the said notice the necessary stamp.
Orjalo | A2022
April 20, 2021

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TAXATION 2 1

Documentary Tax – Effect of Failure to Attach DST

Plaintiff-Appellant: FRANCISCO RODRIGUEZ

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