guaranty and surety cases

8/19/2019 Guaranty and Surety Cases

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GUARANTY AND SURETY CASES

1. [G.R. No. 117660. December 18, 2000]

AGRO CONGLOMERATES, NC. !"# MARO SORANO, $e%&%&o"er', ('. T)E)ON. COURT O* A++EALS !"# REGENT SANGS !"# LOAN -AN, NC.,

re'$o"#e"%'.

D E C S O N

/USUM-NG, J .

This is a petition for review challenging the decision[1] dated October 17, 1994of the Court of Appeals in CA!"#" $o" %&9%%, which affir'ed in toto the (udg'entof the )anila #egional Trial Court, *ranch &7, in consolidated Cases $os" +%7%74,+%7%++, +%7-4%"

This petition springs fro' three co'plaints for su's of 'one. filed b.respondent ban/ against herein petitioners" 0n the decision of the Court of Appeals,petitioners were ordered to pa. respondent ban/, as follows

2herefore, (udg'ent is hereb. rendered in favor of plaintiff and against defendants,as follows

13 0n Civil Case $o" +%7%74, defendants [petitioners, herein] areordered (ointl. and severall., to pa. to plaintiff the a'ount of 7+,&1&"&9, together with interest and service charge thereon, at therates of 145 and %5 per annu', respectivel., co'puted fro'$ove'ber 16, 19+&, until full. paid, plus stipulated penalt. on unpaidprincipal at the rate of 5 per annu', co'puted fro' $ove'ber 16,19+&, plus 1-5 as liuidated da'age plus 165 of the total a'ountdue, as attorne.s fees, plus costs8

&3 0n Civil Case $o" +%7%++, defendant is ordered to pa. plaintiff thea'ount of %&,911"%9, together with interest and service charge

thereon at the rate of 145 and %5 per annu', respectivel.,co'puted fro' anuar. 1-, 19+%, until full. paid, plus stipulatedpenalt. on unpaid principal at the rate of 5 per annu', co'putedfro' anuar. 1-, 19+%, plus liuidated da'ages euivalent to 1-5 of the total a'ount due, plus attorne.s fees euivalent to 165 of thetotal a'ount due, plus costs8 and

%3 0n Civil Case $o" +%7-4%, defendant is ordered to pa. plaintiff, onthe first cause of action, the a'ount of -16,666"66, together withinterest and service charge thereon, at the rates of 145 and &5 perannu', respectivel., co'puted fro' )arch 1%, 19+%, until full. paid,plus a penalt. of 5 per annu', based on the outstanding principalof the loan, co'puted fro' )arch 1%, 19+%, until full. paid8 and onthe second cause of action, the a'ount of 494,9%"71, together withinterest and service charge thereon at the rates of 145 and &5, perannu', respectivel., co'puted fro' )arch %6, 19+%, until full. paid,plus a penalt. charge of 5 per annu', based on the unpaid

principal, co'puted fro' )arch %6, 19+%, until full. paid, plus :onboth causes of action3 an a'ount eual to 1-5 of the total a'ountsdue, as liuidated da'ages, plus attorne.s fees eual to 165 of thetotal a'ounts due, plus costs"[&]

*ased on the records, the following are the factual antecedents"

On ul. 17, 19+&, petitioner Agro Conglo'erates, 0nc" as vendor, sold twoparcels of land to 2onderland ;ood 0ndustries, 0nc" 0n their )e'orandu' of

Agree'ent,[%]

the parties covenanted that the purchase price of ;ive )illion:-,666,666"663 esos would be settled b. the vendee, under the following ter'sand conditions :13 One )illion :1,666,666"663 esos shall be paid in cash uponthe signing of the agree'ent8 :&3 Two )illion :&,666,666"663 esos worth of co''on shares of stoc/ of the 2onderland ;ood 0ndustries, 0nc"8 and :%3 Thebalance of &,666,666"66 shall be paid in four eual install'ents, the firstinstall'ent falling due, 1+6 da.s after the signing of the agree'ent and ever. si<'onths thereafter, with an interest rate of 1+5 per annu', to be advanced b. thevendee upon the signing of the agree'ent"

On ul. 19, 19+&, the vendor, the vendee, and the respondent ban/ #egent=avings > ?oan *an/ :for'erl. =u''a =avings > ?oan Association3, e


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of the F@$O#, the F@$@@ will be the one liable to pa. the entireproceeds thereof including interest and other charges"[-]

This addendu' was not notariGed"

Conseuentl., petitioner )ario =oriano signed as 'a/er several pro'issor.notes,[] pa.able to the respondent ban/"Thereafter, the ban/ released the proceedsof the loan to petitioners" owever, petitioners failed to 'eet their obligations asthe. fell due" uring that ti'e, the ban/ was e


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defendants failed to file a thirdpart. co'plaint against 2onderland, which showsthe wea/ness of its stand that 2onderland is answerable to 'a/e said pa.'ents" [7]

etitioners appealed to the Court of Appeals" The trial courts decision wasaffir'ed b. the appellate court"

ence, this recourse, wherein petitioners raise the sole issue of

2@T@# T@ COB#T O; A@A?= @##@ 0$ $OT ;0$0$! TAT T@ A@$B),

=0!$@ *E T@ @T0T0O$@#=, #@=O$@$T *A$H A$ 2O$@#?A$ 0$C",CO$=T0TBT@= A $OFAT0O$ O; T@ CO$T#ACT *E =B*=T0TBT0O$ O; @*TO#,20C @D@)T= T@ @T0T0O$@#= ;#O) A$E ?0A*0?0TE OF@# T@ #O)0==O#E$OT@="

#evealed b. the facts on record, the conflict a'ong the parties started fro' acontract of sale of a far'land between petitioners and 2onderland ;ood 0ndustries,0nc" As found b. the trial court, no such sale 'aterialiGed"

A contract of sale is a reciprocal transaction" The obligation or pro'ise of eachpart. is the cause or consideration for the obligation or pro'ise b. the other" Thevendee is obliged to pa. the price, while the vendor 'ust deliver actual possessionof the land" 0n the instant case the original plan was that the initial pa.'ents wouldbe paid in cash" =ubseuentl., the parties :with the participation of respondentban/3 e


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bound under the law to pa. the clai's of respondent ban/ fro' who' the. hadobtained the loan proceeds"

:)ERE*ORE, the petition is @$0@ for lac/ of 'erit" The assailed decisionof the Court of Appeals dated October 17, 1994 is A;;0#)@" Costs againstpetitioners"

SO ORDERED.

2. [G. R. No. 127261. Se$%ember 7, 2001]

SAYAN SURETY ; NSURANCE COR+ORATON, petitioner,

vs. T)E )ONORA-LE COURT O*A++EALS, S+OUSES


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On August %6, 199, the Court of Appeals pro'ulgated its decision affir'ingthe (udg'ent of the trial court"[9] On =epte'ber 19, 199, petitioner filed a 'otionfor reconsideration"[16] On ece'ber &, 199, the Court of Appeals denied the'otion for reconsideration for lac/ of 'erit"[11]

ence, this petition"[1&]

T>e ''e

The issue in this case is whether the suret. is liable to an intervenor on areplevin bond posted b. petitioner in favor of respondents"[1%]

#espondent o'inador 0ba(an asserts that as intervenor, he assu'ed thepersonalit. of the original defendants in relation to the plaintiffs bond for theissuance of a writ of replevin"

etitioner Fisa.an =uret. contends that it is not liable to the intervenor,o'inador 0ba(an, because the intervention of the intervenor 'a/es hi' a part. tothe suit, but not a beneficiar. to the plaintiffs bond" The intervenor was not a part.to the contract of suret., hence, he was not bound b. the contract"

T>e Cor%' R5&"?

The petition is 'eritorious"

An intervenor is a person, not originall. i'pleaded in a proceeding, who haslegal interest in the 'atter in litigation, or in the success of either of the parties, oran interest against both, or is so situated as to be adversel. affected b. adistribution or other disposition of propert. in the custod. of the court or of anofficer thereof"[14]

)a. an intervenor be considered a part. to a contract of suret. which he didnot sign and which was e 0nsurance, as suret., e


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faithful co'pliance b. )acapanga roducers of all ter's and conditions of the lease:cop. of bond attached as Anne< * to Co'plaint38 on ece'ber &1, 19-%, ?uGon=ugar assigned to plaintiff the pa.'ent due fro' )acapanga roducers in the su'of -6,666, representing ro.alt. for the lease of the sugar 'ill for the crop .ear19-&-% :deed of assign'ent attached as Anne< C to Co'plaint38 plaintiff notified)acapanga roducers and laridel =uret. > 0nsurance of said assign'ent8 plaintiffhad de'anded fro' )acapanga roducers pa.'ent of said ro.alt. of -6,666, butthe latter has refused and refuses to 'a/e pa.'ent8 and plaintiff also 'adede'and on laridel =uret. > 0nsurance for said pa.'ent, but the latter refused andrefuses to 'a/e pa.'ent"

laridel =uret. > 0nsurance 'oved to dis'iss the co'plaint for failure to statecause of action, alleging that it is a guarantor and as such is responsible onl. if)acapanga roducers has no propert. or assets to pa. its obligation as lessee"laintiff opposed the 'otion calling attention to the provision of the perfor'ancebond in which )acapanga roducers and laridel =uret. > 0nsurance, the for'er asprincipal and the latter as suret., agreed to be held and fir'l. bound unto ?uGon=ugar in the penal su' of -6,666, Lfor the pa.'ent of which, well and trul. be'ade, we bind ourselves, our heirs, e 0nsurance and

subseuentl. denied a 'otion to reconsider the order of dis'issal"The action (oining laridel =uret. > 0nsurance as part. defendant is (ustified b. thefollowing provisions and cases"

LA#T" &647" " " "

0f a person binds hi'self solidaril. with the principal debtor, the provisions ofsection 4, Charter %, Title 0 of this *oo/ shall be observed" 0n such case the contractis called a suret.ship"L :Civil Code"3

LThe sureties on the superedeas bond given in this particular case, were (ointl. andseverall. liable with principal debtor and that an e Co" vs" Eulo, %4 hil", 97+"3L :;errer vs" ?opeG and=antos, - hil", -9&"3

0t is also argued on behalf of laridel =uret. and 0nsurance that as it was not apart. to the assign'ent, and sa'e was 'ade without its consent, it is, therefore,

discharged fro' its obligation" An assign'ent without /nowledge or consent of thesuret. is not a 'aterial alteration of the contract, sufficient to discharge the suret.:=tearns ?aw of =uret.ship, @lder, fifth edition, p" 11%"3 There is, besides, noallegation in the co'plaint, or provision in the deed of assign'ent, or an. changetherein that 'a/es the obligation of laridel =uret. > 0nsurance 'ore onerous thanthat stated in the perfor'ance bond" =uch assign'ent did not, therefore, releasethe laridel =uret. > 0nsurance fro' its obligation under the suret. bond" :*an/ of" 0" vs" Albalade(o . Cia, -% hil", 1418 *an/ of " 0" vs" !ooch, et al", 4- hil", -148Fisa.an istributors, 0nc" vs" ;lores, et al", 9& hil", 14-, 4+ Off" !aG", 47+48 el#osario vs" $ava, 9- hil", %7, -6 Off" !aG", 41+9"3

0t is lastl. contended that as plaintiff or the lessor had a lien in the sugar produced,and failed to proceed against it or enforce such lien, laridel =uret. > 0nsurance wasreleased thereb." There is no allegation to this effect in the co'plaint, that lessor or

plaintiff ever had possession or control of the sugar, or ever waived or released thelien thereon" Appellee cannot raise the issue in a 'otion to dis'iss"

The order of dis'issal is hereb. reversed, and the appellee ordered to answer theco'plaint, with costs"

4" @=T#@??A A?)A#@=, petitioner, vs" COB#T O; A@A?= and )"*" ?@$0$!

CO#O#AT0O$, respondents"

!"#" $o" 1&496 K 199+6%%1

@ C 0 = 0 O $

#@!A?AO,

2here a part. signs a pro'issor. note as a co'a/er and binds herself to be (ointl.and severall. liable with the principal debtor in case the latter defaults in thepa.'ent of the loan, is such underta/ing of the for'er dee'ed to be that of asuret. as an insurer of the debt, or of a guarantor who warrants the solvenc. of thedebtorJ

ursuant to a pro'issor. note dated )arch 1%, 1996, private respondent )"*"?ending Corporation e


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be co'puted ever. %6 da.s fro' the date thereof" 1 On four occasions after thee


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and guarant." This case then affords us the opportunit. to 'a/e an e


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to fulfill the obligation of the principal debtor in case the latter should fail to do so"

0f a person binds hi'self solidaril. with the principal debtor, the provisions of=ection 4, Chapter %, Title 0 of this *oo/ shall be observed" 0n such case thecontract is called a suret.ship"

0t is a cardinal rule in the interpretation of contracts that if the ter's of a contractare clear and leave no doubt upon the intention of the contracting parties, the literal'eaning of its stipulation shall control" 1% 0n the case at bar, petitioner e


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onl. goes to show that, fro' the ver. start, petitioner considered herself euall.bound b. the contract of the principal 'a/ers"

0n this regard, we need onl. to reiterate the rule that a suret. is bound euall. andabsolutel. with the principal, & and as such is dee'ed an original pro'isor anddebtor fro' the beginning" &7 This is because in suret.ship there is but onecontract, and the suret. is bound b. the sa'e agree'ent which binds the principal"&+ 0n essence, the contract of a suret. starts with the agree'ent, &9 which isprecisel. the situation obtaining in this case before the Court"

0t will further be observed that petitionerMs underta/ing as co'a/er i''ediatel.follows the ter's and conditions stipulated between respondent corporation, ascreditor, and the principal obligors" A suret. is usuall. bound with his principal b.the sa'e instru'ent, e


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principal, 4 or the fact that the re'edies against the principal 'a. be lost b. lapseof ti'e, are i''aterial" 47

The raison dMPQRStre for the rule is that there is nothing to prevent the creditor fro'proceeding against the principal at an. ti'e" 4+ At an. rate, if the suret. isdissatisfied with the degree of activit. displa.ed b. the creditor in the pursuit of hisprincipal, he 'a. pa. the debt hi'self and beco'e subrogated to all the rights andre'edies of the creditor" 49

0t 'a. not be a'iss to add that lenienc. shown to a debtor in default, b. dela.per'itted b. the creditor without change in the ti'e when the debt 'ight bede'anded, does not constitute an e


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or service in which the obligation consists has been co'pletel. delivered orrendered, as the case 'a. be" - 0n other words, the prestation 'ust be fulfilledco'pletel." A person entering into a contract has a right to insist on its perfor'ancein all particulars" -7

etitioner cannot co'pel respondent corporation to accept the a'ount she is willingto pa. because the 'o'ent the latter accepts the perfor'ance, /nowing itsinco'pleteness or irregularit., and without e


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of reli'inar. Attach'ent be issued ordering the sheriff to attach the properties of FillaluG in accordance with the #ules"

On 6% ul. 19+9, the trial court issued an Order[4] for the issuance of a writ of preli'inar. attach'ent Lupon co'plainantMs posting of a bond which is hereb. fi


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be paid" This would 'a/e the aggregate a'ount paid to the private respondents&,-66,666"66"[&9] There was, however, a proviso in the )OB which states thatLthis contract shall not be construed as a waiver or abandon'ent of the appellatereview pending before the =upre'e Court and that it will be sub(ect to all suchinteri' orders and final outco'e of said case"L

On 1% August &661, the instant petition was given due course, and the parties wereobliged to sub'it their respective )e'oranda"[%6]

SSUES

The petitioner raises the following issues for the resolution of this Court

M!&" ''e 2@T@# O# $OT T@ COB#T O; Appeals co''itted reversible errorin affir'ing the %1 'arch &666 order of public respondent (udge which allowede


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'erel. waives its right of e


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attachment jointly and severally , binds itself with petitioner FillaluG for an. (udg'ent that 'a. be recovered b. private respondent AnGures against petitionerFillaluG"

The contract of suret. is onl. between petitioner FillaluG and petitioner corporation"The petitioner corporation cannot escape liabilit. b. stating that a court approval isneeded before it can be 'ade liable" This defense can onl. be availed b. petitionercorporation against petitioner FillaluG but not against third persons who are notparties to the contract of suret." The petitioners hold the'selves out as (ointl. and

severall. liable without an. conditions in the counterattach'ent bond" T>e$e%&%&o"er cor$or!%&o" c!""o% &m$o'e reB&'&%e' beore &% c!" be m!#e

5&!b5e >e" %>e 5! c5e!r53 #oe' "o% reB&re 'c> reB&'&%e' %o be 5&55e#"[4+] :@'phases supplied"3

Feril., a (udg'ent 'ust be read in its entiret., and it 'ust be construed as a wholeso as to bring all of its parts into har'on. as far as this can be done b. fair andreasonable interpretation and so as to give effect to ever. word and part, if possible, and to effectuate the intention and purpose of the Court, consistent withthe provisions of the organic law"[49]

0nsurance co'panies are prone to invent e


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6666+ b. =entinel 0nsurance Co'pan., 0nc" for 166,666"66 and -6,666"668 and$o" 1&1% b. the Travelers )ulti0nde'nit. Corporation for &&-,666"66"

ursuant to the dispositive portion of this decision, the court holds that thesebonding co'panies are (ointl. and severall. liable with )cAdore, to the e


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preli'inar. 'andator. in(unction"[7] 0ts sole purpose is not to correct a wrong of thepast, in the sense of redress for in(ur. alread. sustained, but to prevent furtherin(ur."[+]

A preli'inar. in(unction or te'porar. restraining order 'a. be granted onl.when, a'ong others, the applicant, unless e


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'anifested its desire to cancel its bond, it should have as/ed for a defer'ent ofhearing on @CO#s evidence but A#A)OB$T did not do an.thing of thissort" Onl. when an adverse (udg'ent was rendered b. the trial court against itsprincipal )cAdore did it whi'per a denial of procedural due process" [1-]

On the sa'e point, A#A)OB$T argues that contrar. to the ruling of the Courtof Appeals, there is a need for a separate hearing for the purpose of presentingevidence on the alleged da'ages clai'ed b. @CO# on petitioners in(unctionbond" A#A)OB$T contends that a separate hearing is needed as no evidence

dealing with @CO#s clai' for da'ages on petitioners bond was presented duringthe hearing wherein petitioners counsel attended nor in the ne


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in(unction in case the court finall. decides that the plaintiff was not entitled to it,and the bond is usuall. conditioned accordingl." Thus, the bonds'en are obligatedto account to the defendant in the in(unction suit for all da'ages, or costs andreasonable counsels fees, incurred or sustained b. the latter in case it is deter'inedthat the in(unction was wrongfull. issued"[&4]

The posting of a bond in connection with a preli'inar. in(unction :orattach'ent under #ule -7, or receivership under #ule -9, or seiGure or deliver. of personal propert. under #ule 63 does not operate to relieve the part. obtaining an

in(unction fro' an. and all responsibilit. for the da'ages that the writ 'a. thereb.cause" 0t 'erel. gives additional protection to the part. against who' thein(unction is directed" 0t gives the latter a right of recourse against either theapplicant or his suret., or against both" [&-] 0n the sa'e 'anner, when petitionerA#A)OB$T issued the bond in favor of its principal, it undertoo/ to assu'e all theda'ages that 'a. be suffered after finding that the principal is not entitled to therelief being sought"

:)ERE*ORE, based on the foregoing, the instant petition is @$0@" Thedecision of the Court of Appeals dated April %6, 199% in CA!"#" CF $o" 11976 isA;;0#)@" 2ith costs"

SO ORDERED.

7. G.R. No. L6698 M!3 1, 11

+)L++NE NATONAL -AN, petitioner,vs")ON. GREGORO G. +NEDA, &" >&' c!$!c&%3 !' +re'&"? e Cor%o *&r'% "'%!"ce o R&!5, -r!"c> HH !"# TAYA-AS CEMENT COM+ANY,NC., respondents"

The Chief "egal Counsel for petitioner.+rtille "a +ffice for private respondent.

*ERNAN, C.J.:

0n this petition for certiorari , petitioner hilippine $ational *an/ :$*3 see/s toannul and set aside the orders dated )arch 4, 1977 and )a. %1, 1977 rendered inCivil Case $o" &44&& 1 of the Court of ;irst 0nstance of #iGal, *ranch DD0,respectivel. granting private respondent Ta.abas Ce'ent Co'pan., 0nc"Msapplication for a writ of preli'inar. in(unction to en(oin the foreclosure sale ofcertain properties in ueGon Cit. and $egros Occidental and den.ing petitionerMs'otion for reconsideration thereof"

0n 19%, 0gnacio Arro.o, 'arried to ?ourdes Tuason Arro.o :the Arro.o =pouses3,obtained a loan of -+6,666"66 fro' petitioner ban/ to purchase 65 of the

subscribed capital stoc/, and thereb. acuire the controlling interest of privaterespondent Ta.abas Ce'ent Co'pan., 0nc" :TCC3" & As securit. for said loan, the

spouses Arro.o e


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On =epte'ber 1&, 197-, Acting Cler/ of Court and @


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absolutel. relieved of their obligation to pa. their loan because of theirinabilit. to dispose of the goods" The fact that the. were unable to sell theseashells in uestion does not affect 0*AAMs right to recover the advances ithad 'ade under the ?etter of Credit"

$*Ms possession of the sub(ect 'achiner. and euip'ent being precisel. as a for'of securit. for the advances given to TCC under the ?etter of Credit, said possessionb. itself cannot be considered pa.'ent of the loan secured thereb." a.'ent wouldlegall. result onl. after $* had foreclosed on said securities, sold the sa'e andapplied the proceeds thereof to TCCMs loan obligation" )ere possession does not

a'ount to foreclosure for foreclosure denotes the procedure adopted b. the'ortgagee to ter'inate the rights of the 'ortgagor on the propert. and includesthe sale itself" 1+

$either can said repossession a'ount to dacion en pago" ation in pa.'ent ta/esplace when propert. is alienated to the creditor in satisfaction of a debt in 'one.and the sa'e is governed b. sales" 19 ation in pa.'ent is the deliver. andtrans'ission of ownership of a thing b. the debtor to the creditor as an acceptedeuivalent of the perfor'ance of the obligation" &6 As aforesaid, the repossession ofthe 'achiner. and euip'ent in uestion was 'erel. to secure the pa.'ent ofTCCMs loan obligation and not for the purpose of transferring ownership thereof to$* in satisfaction of said loan" Thus, no dacion en pago was ever acco'plished"

roceeding fro' this finding, $* has the right to foreclose the 'ortgages e


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Cit., and as such was entrusted with and had under his custod. and control publicfunds, conspiring and confederating with his coaccused, )0?A!#O= T" A)0$TBA$and B?0A T" )A$0@!O, did then and there, unlawfull., willfull. and feloniousl., withintent of gain and without authorit. of law, and in pursuance of their conspirac.,ta/e, receive, and accept fro' his said coaccused several personal chec/s drawnagainst the hilippine $ational *an/ and the *an/ of the hilippine 0slands, of whichthe accused, )0?A!#O= T" A)0$TBA$ is the drawer and the accused, B?0A T")A$0@!O, is the indorser, in the total a'ount of ,4%4"-6, cashing said chec/sand using for this purpose the public funds entrusted to and placed under the

custod. and control of the said ?t" #iGalino )" Bba., all the said accused /nowingfull. well that the said chec/s are worthless and are not covered b. funds in theafore'entioned ban/s, for which reason the sa'e were dishonored and re(ected b.the said ban/s when presented for encash'ent, to the da'age and pre(udice of the#epublic of the hilippines, in the a'ount of ,4%4"-6, hilippine currenc."L 1

Onl. ?t" Bba. and )rs" )aniego were arraigned, )rs" a'intuan having apparentl.fled to the Bnited =tates in August, 19&" & *oth Bba. and )aniego entered a pleaof not guilt." %

After trial (udg'ent was rendered b. the Court of ;irst 0nstance, 4 the dispositivepart whereof reads

LThere being sufficient evidence be.ond reasonable doubt against the accused,#iGalino )" Bba., the Court hereb. convicts hi' of the cri'e of 'alversation andsentences hi' to suffer the penalt. of reclusion te'poral of T2@?F@ :1&3 E@A#=,O$@ :13 AE to ;OB#T@@$ :143 E@A#=, @0!T :+3 )O$T=, and a fine of-7,4%4"-6 which is the a'ount 'alversed, and to suffer perpetual specialdisualification"

L0n the absence of evidence against accused ulia T" )aniego, the Court hereb.acuits her, but both she and #iGal T" Bba. are hereb. ordered to pa. (ointl. andseverall. the a'ount of -7,4%4"-6 to the govern'ent"L -

)aniego sought reconsideration of the (udg'ent, pra.ing that she be absolved fro'

civil liabilit. or, at the ver. least, that her liabilit. be reduced to 4,9%4"-6" TheCourt declined to negate her civil liabilit., but did reduce the a'ount thereof to4,9%4"-6" 7 =he appealed to the Court of Appeals + as Bba. had earlier done" 9

Bba.Ms appeal was subseuentl. dis'issed b. the Appellate Court because of hisfailure to file brief" 16 On the other hand, )aniego sub'itted her brief in duecourse, and ascribed three :%3 errors to the Court a uo, to wit

13 The ?ower Court erred in holding her civill. liable to inde'nif. the !overn'entfor the value of the chec/s after she had been found not guilt. of the cri'e out ofwhich the civil liabilit. arises"

&3 @ven assu'ing arguendo that she could properl. be held civill. liable after heracuittal, it was error for the lower Court to ad(udge her liable as an indorser to

inde'nif. the govern'ent for the a'ount of the chec/s"

%3 The ?ower Court erred in declaring her civill. liable (ointl. and severall. with hercodefendant Bba., instead of absolving her altogether" 11

*ecause, in the Appellate CourtMs view, )aniegoMs brief raised onl. uestions of law,her appeal was later certified to this Court pursuant to =ection 17, in relation to=ection %1, of the udiciar. Act, as a'ended, and =ection %, #ule -6 of the #ules ofCourt" 1&

The verdict 'ust go against the appellant"

2ell /nown is the principle that Lan. person cri'inall. liable for felon. is also civill.liable"L 1% *ut a person ad(udged not cri'inall. responsible 'a. still be held to becivill. liable" A personMs acuittal of a cri'e on the ground that his guilt has notbeen proven be.ond reasonable doubt 14 does not bar a civil action for da'agesfounded on the sa'e acts involved in the offense" 1- L@


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to its tenor, and that if it be dishonored, and the necessar. proceedings on dishonorbe dul. ta/en, he will pa. the a'ount thereof to the holder, or to an. subseuentindorser who 'a. be co'pelled to pa. it"L &6 )aniego 'a. also be dee'ed anLacco''odation part.L in the light of the facts, i"e", a person Lwho has signed theinstru'ent as 'a/er, drawer, acceptor, or indorser, without receiving value therefor,and for the purpose of lending his na'e to so'e other person"L &1 As such, she isunder the law Lliable on the instru'ent to a holder for value, notwithstanding suchholder at the ti'e of ta/ing the instru'ent /new " " " :her3 to be onl. anacco''odation part.,L && although she has the right, after pa.ing the holder, to

obtain rei'burse'ent fro' the part. acco''odated, Lsince the relation betweenthe' is in effect that of principal and suret., the acco''odation part. being thesuret."L &%

One last word" The Trial Court acted correctl. in ad(udging )aniego to be civill.liable in the sa'e cri'inal action in which she had been acuitted of the felon. of)alversation ascribed to her, dispensing with the necessit. of having a separate civilaction subseuentl. instituted against her for the purpose" &4

2@#@;O#@, the (udg'ent of the Trial Court, being entirel. in accord with the factsand the law, is hereb. affir'ed in toto, with costs against the appellant"

=O O#@#@"

9" TO2@#= A==B#A$C@ CO#O#AT0O$, petitioner, vs" O#O#A)A =B@#)A#T, 0T=O2$@##O#0@TO#, =@@ O$! and B!@ *@$A)0$ H" !O#O=@, residingudge, Court of ;irst 0nstance of )isa'is Oriental, *ranch 0, respondents"

!"#" $o" ?4-+4+ K 19771169

@ C 0 = 0 O $

AB0$O,

This case is about the liabilit. of a suret. in a counterbond for the lifting of a writ of

preli'inar. attach'ent"

On ;ebruar. 17, 197 =ee ong, the proprietor of Orora'a =uper'art in Caga.ande Oro Cit., sued the spouses @rnesto Ong and Conching Ong in the Court of ;irst0nstance of )isa'is Oriental for the collection of the su' of -+,466 plus litigatione =uret. Co", 0nc" vs" on" iccio, 16- hil" 119&,1&668 ?uGon =uret. Co", 0nc" vs" *eson, ?&+-, anuar. %6, 1976, %1 =C#A%1%3

2@#@;O#@, the order and writ of e


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16" 0?00$@ @DO#T A$ ;O#@0!$ ?OA$ !BA#A$T@@ CO#O#AT0O$,petitioner, vs" F"" @B=@*0O CO$=T#BCT0O$, 0$C"8 %?@D 0$T@#$AT0O$A?, 0$C"8F0C@$T@ " @B=@*0O8 =O?@A C" @B=@*0O8 @BA#O @" =A$TO=8 0?B)0$AA=A$TO=8 A$ ;0#=T 0$T@!#AT@ *O$0$! A$ 0$=B#A$C@ CO)A$E, 0$C",respondents"

!"#" $o" 146647 K &664671%

@ C 0 = 0 O $AF0@, #", C""

This case is an offshoot of a service contract entered into b. a ;ilipino constructionfir' with the 0rai !overn'ent for the construction of the 0nstitute of h.sicalTherap.)edical Center, hase 00, in *aghdad, 0ra, at a ti'e when the 0ran0rawar was ongoing"

0n a co'plaint filed with the #egional Trial Court of )a/ati Cit., doc/eted as CivilCase $o" 91196 and assigned to *ranch -+, petitioner hilippine @


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euip'ent and 'aterials"[&&]

On & October 19+, Al Ahli *an/ of Huwait sent a tele< call to the petitionerde'anding full pa.'ent of its perfor'ance bond counterguarantee"

Bpon receiving a cop. of that tele< 'essage on &7 October 19+, respondent F@C0reuested 0ra Trade and @cono'ic evelop'ent )inister )oha''ad ;adhi usseinto recall the tele< call on the perfor'ance guarantee for being a drastic action incontravention of its 'utual agree'ent with the latter that :13 the i'position ofpenalt. would be held in abe.ance until the co'pletion of the pro(ect8 and :&3 the

ti'e e


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00

@T0T0O$@# CA$$OT C?A0) =B*#O!AT0O$"

000

0T 0= 0$0B0TOB= A$ B$B=T ;O# @T0T0O$@# TO O? #@=O$@$T= ?0A*?@B$@# T@0# @@ O; B$@#TAH0$!"[%]The 'ain issue in this case is whether the petitioner is entitled to rei'burse'ent ofwhat it paid under ?etter of !uarantee $o" +1194; it issued to Al Ahli *an/ ofHuwait based on the deed of underta/ing and suret. bond fro' the respondents"

The petitioner asserts that since the guarantee it issued was absolute,unconditional, and irrevocable the nature and e


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$o conflicts rule on essential validit. of contracts is e


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with the news clippings are hereto attached as Anne


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second la.er guarantor not onl. the full a'ount of the perfor'ance bond counterguarantee but also interests and penalt. charges"

This brings us to the ne


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166,666"66 ;ebruar. 14, 19166,666"66 ;ebruar. 14, 197166,666"66 ;ebruar. 14, 19+166,666"66 ;ebruar. 14, 1991%9 166,666"66 ul. %, 19166,666"66 ul. %, 197166,666"66 ul. %, 19+166,666"66 ul. %, 199166,666"66 ul. %, 1976

L-" That to guarantee the rede'ption of the stoc/s purchased b. the plaintiff, thepa.'ent of dividends, as well as the other obligations of the ?irag Te


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;or failure of ?irag Te


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suret."

As private respondent rightl. contends, if the parties intended it [===] to be 'erel.a stoc/holder of petitioner corporation, it would have been sufficient that referredCertificates $os" 1&+ and 1%9 were issued in its na'e as the preferred certificatescontained all the rights of a stoc/holder as well as certain obligations on the part ofpetitioner corporation" owever, the parties did in fact e


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=O O#@#@"

1&" A$TO$0O !A#C0A, #", petitioner, vs" COB#T O; A@A?=, ?A=A?

@F@?O)@$T CO#O#AT0O$, respondents"

!"#" $o" +6&61 K 199611&6

D E C S O N

C#B, "

On April 1-, 1977, the 2estern )inolco Corporation :2)C3 obtained fro' thehilippine 0nvest'ents =.ste's OrganiGation :0=O3 two loans for &,-66,666"66and 1,666,666"66 for which it issued the corresponding pro'issor. notes pa.ableon )a. %6, 1977" On the sa'e date, Antonio !arcia and @rnest Hahn e


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0t follows fro' the above principles that ?asal would not be un(ustl. enriched if thepetitioner were to be held liable for the obligation contracted b. 2)C" The creditorwould onl. be recovering the a'ount of its loan plus its incre'ents"

The petitioner, for his part, can still go against 2)C for the a'ount he 'a. have topa. ?asal as assignee of the 0=O credit"

#egarding the petitionerMs clai' that he is liable onl. as a corporate officer of 2)C,the suret. agree'ent shows that he signed the sa'e not in representation of 2)C

or as its president but in his personal capacit." e is therefore personall. bound"There is no law that prohibits a corporate officer fro' binding hi'self personall. toanswer for a corporate debt" 2hile the li'ited liabilit. doctrine is intended to protectthe stoc/holder b. i''uniGing hi' fro' personal liabilit. for the corporate debts,he 'a. nevertheless divest hi'self of this protection b. voluntaril. binding hi'selfto the pa.'ent of the corporate debts" The petitioner cannot therefore ta/e refugein this doctrine that he has b. his own acts effectivel. waived"

Concerning the issue of novation, we note first the following provisions of the'e'orandu' of agree'ent supposedl. entered into b. 2)C and its creditors whichthe petitioner argues had the effect of releasing hi' fro' the suret. agree'ent

0F" #elease of ==

The C#@0TO#= e


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alterations do not have that effect"

0t is a


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1%" 20??@D ?A=T0C 0$B=T#0@=, CO#O#AT0O$, petitioner,

vs" O$" COB#T O; A@A?= and 0$T@#$AT0O$A? CO#O#AT@ *A$H, respondents"

!"#" $o" 16%6 K 19964&-

)@$OA, "

This is a petition for review on certiorari of the decision 1 of the Court of Appeals in

C"A"!"#" CF $o" 19694, affir'ing the decision of the #egional Trial Court of the$ational Capital udicial #egion, *ranch D?F, )anila, which ordered petitioner 2ille<lastic 0ndustries Corporation and the 0nter#esin 0ndustrial Corporation, (ointl. andseverall., to pa. private respondent 0nternational Corporate *an/ certain su's of'one., and the appellate courtMs resolution of October 17, 19+9 den.ing petitionerMs'otion for reconsideration"

The facts are as follows

=o'eti'e in 197+, 0nter#esin 0ndustrial Corporation opened a letter of credit withthe )anila *an/ing Corporation" To secure pa.'ent of the credit acco'odation,0nter#esin 0ndustrial and the 0nvest'ent and Bnderwriting Corporation of thehilippines :0BC3 e


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The 'otion is denied for lac/ of 'erit" 2e denied defendantappellant 0nter#esin0ndustrialMs 'otion for reception of evidence because the situation or situations inwhich we could e


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purpose of having an additional capital for bu.ing and selling cocoshell charcoaland i'portation of activated carbon, the co'prehensive suret. agree'ent wasad'ittedl. in full force and effect" The loan was, therefore, covered b. the saidagree'ent, and private respondent, even if he did not sign the pro'issor. note, isliable b. virtue of the suret. agree'ent" The onl. condition that would 'a/e hi'liable thereunder is that the *orrower Lis or 'a. beco'e liable as 'a/er, endorser,acceptor or otherwise"L There is no doubt that aicor is liable on the pro'issor.note evidencing the indebtedness"

The suret. agree'ent which was earlier signed b. @nriue !o, =r" and privaterespondent, is an accessor. obligation, it being dependent upon a principal onewhich, in this case is the loan obtained b. aicor as evidenced b. a pro'issor.note"

[%] 2ille< lastic contends that the LContinuing !uarant.L cannot be retroactiveltapplied so as to secure pa.'ents 'ade b. 0nterban/ under the two LContinuing=uret. Agree'ents"L 2ille< lastic invo/es the ruling in @l Fencedor v" Canlas 11and iNo v" Court of Appeals 1& in support of its contention that a contract ofsuret.ship or guarant. should be applied prospectivel."

The cases cited are, however, distinguishable fro' the present case" 0n @l Fencedorv" Canlas we held that a contract of suret.ship Lis not retrospective and no liabilit.attaches for defaults occurring before it is entered into unless an intent to be soliable is indicated"L There we found nothing in the contract to show that the pariesintended the suret. bonds to answer for the debts contracted previous to the

e


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presenting an. evidence"

Bpon 'otion of 0nter#esin 0ndustrial, however, the trial court reconsidered its orderand set the hearing anew on ul. &%, 19+7" *ut 0nter#esin 0ndustrial again 'ovedfor the postpone'ent of the hearing be postponed to August 11, 19+7" The hearingwas, therefore, reset on =epte'ber + and &&, 19+7 but the hearings were reset onOctober 1%, 19+7, this ti'e upon 'otion of 0nterban/" To give 0nterban/ ti'e toco''ent on a 'otion filed b. 0nter#esin 0ndustrial, the reception of evidence for0nter#esin 0ndustrial was again reset on $ove'ber 17, & and ece'ber 11, 19+7"owever, 0nter#esin 0ndustrial again 'oved for the postpone'ent of the hearing"Accordingl. the hearing was reset on $ove'ber & and ece'ber 11, 19+7, withwarning that the hearings were intransferrable"

Again, the reception of evidence for 0nter#esin 0ndustrial was reset on anuar. &&,19++ and ;ebruar. -, 19++ upon 'otion of its counsel" As 0nter#esin 0ndustrial stillfailed to present its evidence, it was declared to have waived its evidence"

To give 0nter#esin 0ndustrial a last opportunit. to present its evidence, however,the hearing was postponed to )arch 4, 19++" Again 0nter#esin 0ndustrialMs counseldid not appear" The trial court, therefore, finall. declared 0nter#esin 0ndustrial tohave waived the right to present its evidence"

On the other hand, 2ille< lastic, as before, 'anifested that it was not presentingevidence and reuested instead for ti'e to file a 'e'orandu'"

There is therefore no basis for the plea 'ade b. 2ille< lastic that it be given theopportunit. of showing that 0nter#esin 0ndustrial has alread. paid its obligation to0nterban/"

2@#@;O#@, the decision of the Court of Appeals is A;;0#)@, with costs againstthe petitioner"

=O O#@#@"

14" AC0$TO BE 0$O and $O#*@#TO BE, petitioners, vs" O$" COB#T O; A@A?=

and )@T#OO?0TA$ *A$H A$ T#B=T CO)A$E, respondents"

!"#" $o" +977- K 199&11&

@ C 0 = 0 O $

AF0@, #",

Continuing =uret.ship Agree'ents signed b. the petitioners set off this presentcontrovers."

etitioners assail the && une 19+9 ecision of the Court of Appeals in CA!"#" CF$o" 177&9 1 which reversed the & ece'ber 19+7 ecision of *ranch 4- of the

#egional Trial Court :#TC3 of )anila in a collection suit entitled L)etropolitan *an/

and Trust Co'pan. vs" B. Tia' doing business under the na'e of MBE T0A)@$T@##0=@= > ;#@0!T =@#F0C@=,M acinto B. iNo and $orberto B.L anddoc/eted as Civil Case $o" +&9%6%" The. li/ewise challenge public respondentMs#esolution of &1 August 19+9 & den.ing their 'otion for the reconsideration of thefor'er"

The i'pugned decision of the respondent Court su''ariGes the antecedent facts asfollows

L0t appears that in 1977, B. Tia' @nterprises and ;reight =ervices :hereinafterreferred to as BT@;=3, thru its representative B. Tia', applied for and obtainedcredit acco''odations :letter of credit and trust receipt acco''odations3 fro' the)etropolitan *an/ and Trust Co'pan. :hereinafter referred to as )@T#O*A$H3 inthe su' of 766,666"66 :Original #ecords, p" %%%3" To secure the afore'entionedcredit acco''odations, $orberto B. and acinto B. iNo e


41/73

owever, BT@;= did not acuiesce to the obligator. stipulations in the trust receipt"As a conseuence, )@T#O*A$H sent letters to the said principal obligor and itssureties, $orberto B. and acinto B. iNo, de'anding pa.'ent of the a'ount due"0nfor'ed of the a'ount due, BT@;= 'ade partial pa.'ents to the *an/ which wereaccepted b. the latter"

Answering one of the de'and letters, iNo, thru counsel, denied his liabilit. for thea'ount de'anded and reuested )@T#O*A$H to send hi' copies of docu'entsshowing the source of his liabilit." 0n its repl., the ban/ infor'ed hi' that the

source of his liabilit. is the Continuing =uret.ship which he e


42/73

contract with the plaintiff" On the contrar., iNo and B. categoricall. testified thatthe. signed the blan/ for's in the office of B. Tia' at &% Asuncion =treet,*inondo, )anila, in obedience to the instruction of B. Tia', their for'er e'plo.er"The. denied having gone to the office of the p laintiff to subscribe to the docu'ents:October 1, 19+7, tsn, pp" -7, 148 October 1-, 19+7, tsn, pp" %+, 1%13":#ecords, pp" %%%%%43"ML %


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that the Continuing =uret.ship Agree'ents still subsisted and thereb. also securedthe 1979 obligations incurred b. B. Tia', the. cannot be held liable for 'ore thanwhat the. guaranteed to pa. because it is a


44/73

The foregoing stipulations uneuivocall. reveal that the suret.ship agree'ents inthe case at bar are continuing in nature" etitioners do not den. this8 in fact, the.candidl. ad'itted it" $either have the. denied the fact that the. had not revo/edthe suret.ship agree'ents" Accordingl., as correctl. held b. the public respondent

LBndoubtedl., the purpose of the e


45/73


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ecision of the Court of Appeals which reversed a decision of the trial court orderingprivate respondents to pa. (ointl. and severall. to petitioner Ato/ ;inance certainsu's of 'one."

On &7 ul. 1979, private respondents =an.u Che'ical Corporation :L=an.uChe'icalL3 as principal and =an.u Trading Corporation :L=an.u TradingL3 along withindividual private stoc/holders of =an.u Che'ical, na'el., private respondentsspouses anilo @" Arrieta and $enita *" Arrieta, ?eopoldo !" alili and ablito*er'undo as sureties, e


47/73

:d3 $o assigned Contract is represented b. an. note or other evidence ofindebtedness or other securit. docu'ent e


48/73

The 1-th ivision of the Court of Appeals nonetheless granted the etition for #elieffro' udg'ent Lin the para'ount interest of (ustice,L 7 set aside the resolution ofthe Third Civil Cases ivision of the then 0AC, and gave private respondents a none


49/73

and literal 'anner and carried to the li'it of its logic" This is clear fro' Article &6-&of the Civil Code itself

LArt" &6-&" A guarant. cannot e


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on Article 1&9 of the Civil Code which reads as follows

LArt" 1&9" 0n case the assignor in good faith should have 'ade hi'self responsiblefor the solvenc. of the debtor, and the contracting parties should not have agreedupon the duration of the liabilit., it shall last for one .ear onl., fro' the ti'e of theassign'ent if the period had alread. e


51/73

alili3, beca'e solidaril. liable for that obligation of =an.u Che'ical, b. virtue ofthe operation of the Continuing =uret.ship Agree'ent" ut a little differentl., theobligations of individual private respondent officers and stoc/holders of =an.uChe'ical under the Continuing =uret.ship Agree'ent, were activated b. theresulting obligations of =an.u Che'ical as solidar. obligor under each of theassigned receivables b. virtue of the operation of the eed of Assign'ent" Thatsolidar. liabilit. of =an.u Che'ical is not sub(ect to the li'iting period set out inArticle 1&9 of the Civil Code"

0t follows that at the ti'e the original co'plaint was filed b. Ato/ ;inance in thetrial court, it had a valid and enforceable cause of action against =an.u Che'icaland the other private respondents" 2e also agree with the Court of Appeals that theoriginal obligors under the receivables assigned to Ato/ ;inance re'ain liable underthe ter's of such receivables"

2@#@;O#@, for all the foregoing, the etition for #eview is hereb. !#A$T@ B@COB#=@, and the ecision of the Court of Appeals dated 1+ August 19+7 and its#esolution dated %6 =epte'ber 19+7 are hereb. #@F@#=@ and =@T A=0@" A new (udg'ent is hereb. entered #@0$=TAT0$! the ecision of the trial court in CivilCase $o" +4&&19+ dated 1 April 19+-, e


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ban/ charges as of =epte'ber &&, 19+7, plus interests, penalties and ban/ chargesthereafter until the whole obligation shall have been full. paid"

L&3 Attorne.Ms fees at the stipulated rate of ten :1653 percent co'puted fro' thetotal obligation8 and

L%3 The costs of suit"

LThe dis'issal of the case against defendant *A ;inance Corporation is hereb.ordered without pronounce'ent as to cost"

L=O O#@#@"L :p" %1, #ollo3

$ot satisfied with the decision, respondent ban/ appealed with the Court of Appeals"On )arch 1%, 1996, respondent appellate court rendered (udg'ent 'odif.ing thedecision of the trial court as follows

L0n view of the foregoing, the (udg'ent is hereb. rendered ordering the defendants!a.tano spouses and alternative defendant *A ;inance Corporation, (ointl. andseverall., to pa. the plaintiff the a'ount of +-,+67"&- as of =epte'ber +, 19+7,including interests, penalties and other bac/ :sic3 charges thereon, until the fullobligation shall have been full. paid" $o pronounce'ent as to costs"

L=O O#@#@"L :p" &7, #ollo3

ence this petition was filed with the petitioner assigning the following errorsco''itted b. respondent appellate court

L1" T@ O$O#A*?@ COB#T O; A@A?= !#AF@?E @##@ 0$ #B?0$! TAT@T0T0O$@# 0= O0$T?E A$ =@F@#A??E ?0A*?@ 20T !AETA$O =OB=@= @=0T@0T= ;0$0$!= TAT T@ ?@TT@# !BA#A$TE :@D" MCM3 0= Y0$FA?0 AT 0T=0$C@T0O$M8

L&" T@ O$O#A*?@ COB#T O; A@A?= !#AF@?E @##@ 0$ #B?0$! TAT T@

@T0T0O$@# 2A= !B0?TE O; @=TO@? @=0T@ T@ ;ACT TAT 0T $@F@# H$@2O; =BC A??@!@ ?@TT@#!BA#A$TE8

L%" T@ O$O#A*?@ COB#T O; A@A?= !#AF@?E @##@ 0$ $OT #B?0$! TAT=BC ?@TT@# !BA#A$TE :@D0*0T YCY3 *@0$! AT@$T?E B?T#A F0#@=, 0=B$@$;O#C@A*?@8

L4" T@ O$O#A*?@ COB#T O; A@A?= @##@ 0$ $OT A2A#0$! #@?0@; O$@T0T0O$@#M= COB$T@#C?A0) :p" 16, #ollo3"L

=ince the issues are interrelated, it would be well to discuss the' (ointl."

etitioner contends that the letter guarant. is ultra vires, and therefore

unenforceable8 that said letterguarant. was issued b. an e'plo.ee of petitioner

corporation be.ond the scope of his authorit. since the petitioner itself is not evene'powered b. its articles of incorporation and b.laws to issue guaranties"etitioner also sub'its that it is not guilt. of estoppel to 'a/e it liable under theletterguarant. because petitioner had no /nowledge or notice of such letterguarant.8 that the allegation of hilip 2ong, credit ad'inistrator, that there was anaudit was not supported b. evidence of an. audit report or record of suchtransaction in the office files"

2e find the petitionerMs contentions 'eritorious" 0t is a settled rule that personsdealing with an assu'ed agent, whether the assu'ed agenc. be a general orspecial one are bound at their peril, if the. would hold the principal liable, toascertain not onl. the fact of agenc. but also the nature and e


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?@F@?= O; A#OFA?"All transactions in e


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=i'ultaneous with the issuance of the letters of credit, petitioners signed trustreceipts in favor of respondent ban/" On %6 =epte'ber 19+1, petitioner ose C"TupaG 0F :Lpetitioner ose TupaGL3 signed, in his personal capacit., a trust receiptcorresponding to ?etter of Credit $o" &66+9% :for -4,+71"6-3" etitioner oseTupaG bound hi'self to sell the goods covered b. the letter of credit and to re'itthe proceeds to respondent ban/, if sold, or to return the goods, if not sold, on orbefore &9 ece'ber 19+1"

On 9 October 19+1, petitioners signed, in their capacities as officers of @l OroCorporation, a trust receipt corresponding to ?etter of Credit $o" &66914- :for&94,6663" etitioners bound the'selves to sell the goods covered b. that letter of credit and to re'it the proceeds to respondent ban/, if sold, or to return the goods,if not sold, on or before + ece'ber 19+1"

After Tanchaoco 0ncorporated and )aresco Corporation delivered the raw 'aterialsto @l Oro Corporation, respondent ban/ paid the for'er -4,+71"6- and &94,666,respectivel."

etitioners did not co'pl. with their underta/ing under the trust receipts"#espondent ban/ 'ade several de'ands for pa.'ents but @l Oro Corporation 'adepartial pa.'ents onl." On &7 une 19+% and &+ une 19+%, respondent ban/Ms

counsel[-] and its representative[] respectivel. sent final de'and letters to @l OroCorporation" @l Oro Corporation replied that it could not full. pa. its debt becausethe Ar'ed ;orces of the hilippines had dela.ed pa.ing for the survival bolos"

#espondent ban/ charged petitioners with estafa under =ection 1%, residentialecree $o" 11- :L=ection 1%L3[7] or Trust #eceipts ?aw :L 11-L3" Afterpreli'inar. investigation, the then )a/ati ;iscalMs Office found probable cause toindict petitioners" The )a/ati ;iscalMs Office filed the corresponding 0nfor'ations:doc/eted as Cri'inal Case $os" ++4+ and ++493 with the #egional Trial Court,)a/ati, on 17 anuar. 19+4 and the cases were raffled to *ranch 144 :Ltrial courtL3on &6 anuar. 19+4" etitioners pleaded not guilt. to the charges and trial ensued"uring the trial, respondent ban/ presented evidence on the civil aspect of the

cases"

T>e R5&"? o %>e Tr&!5 Cor%

On 1 ul. 199&, the trial court rendered (udg'ent acuitting petitioners of estafaon reasonable doubt" owever, the trial court found petitioners solidaril. liable with@l Oro Corporation for the balance of @l Oro CorporationMs principal debt under thetrust receipts" The dispositive portion of the trial courtMs ecision provides

2@#@;O#@, (udg'ent is hereb. rendered ACB0TT0$! both accused ose C"TupaG, 0F and etronila TupaG based upon reasonable doubt"

owever, @l Oro @ngraver Corporation, ose C" TupaG, 0F and etronila TupaG, are

hereb. ordered, (ointl. and solidaril., to pa. the *an/ of the hilippine 0slands the

outstanding principal obligation of &4,1&9"19 :as of anuar. &%, 199&3 with thestipulated interest at the rate of 1+5 per annu'8 plus 165 of the total a'ount dueas attorne.Ms fees8 -,666"66 as e


55/73

including the trust receipt agree'ents onl. in their capacit. as such corporateofficers" The. said that these instru'ents are 'ere profor'a and that the.e


56/73

words FiceresOperations" *. so signing that trust receipt, petitioners did notbind the'selves personall. liable for @l Oro CorporationMs obligation" 0n Ong v.Court of $ppeals,[1-] a corporate representative signed a solidar. guaranteeclause in two trust receipts in his capacit. as corporate representative" There, theCourt held that the corporate representative did not underta/e to guaranteepersonall. the pa.'ent of the corporationMs debts, thus

[]etitioner did not sign in his personal capacit. the solidar. guarantee clause foundon the dorsal portion of the trust receipts" etitioner placed his signature after thet.pewritten words LA#)CO 0$B=T#0A? CO#O#AT0O$L found at the end of thesolidar. guarantee clause" @videntl., petitioner did not underta/e to guarant.personall. the pa.'ent of the principal and interest of A#)A!#0Ms debt under thetwo trust receipts"

ence, for the trust receipt dated 9 October 19+1, we sustain petitionersM clai' thatthe. are not personall. liable for @l Oro CorporationMs obligation"

;or the trust receipt dated %6 =epte'ber 19+1, the dorsal portion of whichpetitioner ose TupaG signed alone, we find that he did so in his personal capacit."etitioner ose TupaG did not indicate that he was signing as @l Oro CorporationMsFiceresident for Operations" ence, petitioner ose TupaG bound hi'self personall. liable for @l Oro CorporationMs debts" $ot being a part. to the trust

receipt dated %6 =epte'ber 19+1, petitioner etronila TupaG is not liable under suchtrust receipt"

!he %ature of Petitioner Jose !upa&'s iability

Under the !rust "e#eipt (ated )* +eptember -

As stated, the dorsal side of the trust receipt dated %6 =epte'ber 19+1 provides

To the *an/ of the hilippine 0slands

0n consideration of .our releasing to """"""""""""""""""""""""""""""""""""""" under the ter's of this Trust #eceipt the goods described herein, 0I2e, (ointl. and severall., agree andpro'ise to pa. to .ou, on de'and, whatever su' or su's of 'one. which .ou 'a.call upon 'eIus to pa. to .ou, arising out of, pertaining to, andIor in an. wa.connected with, this Trust #eceipt, in the event of default andIor nonfulfill'ent inan. respect of this underta/ing on the part of thesaid """"""""""""""""""""""""""""""""""""""""""" 0Iwe further agree that '.Iour liabilit. inthis guarantee shall be 0#@CT A$ 0))@0AT@, without an. need whatsoever on.our part to ta/e an. steps or e


57/73

[of respondent ban/] to ta/e an. steps or e


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13 @l Oro @ngraver Corporation is principall. liable for the total a'ount due underthe trust receipts dated %6 =epte'ber 19+1 and 9 October 19+1, as co'puted b.the #egional Trial Court, )a/ati, *ranch 144, upon finalit. of this ecision, based onthe for'ula provided above8

&3 etitioner ose C" TupaG 0F is liable for @l Oro @ngraver CorporationMs total debtunder the trust receipt dated %6 =epte'ber 19+1 as thus co'puted b. the #egionalTrial Court, )a/ati, *ranch 1448 and

%3 etitioners ose C" TupaG 0F and etronila C" TupaG are not liable under the trustreceipt dated 9 October 19+1"

SO ORDERED.

1+" AC0O$A#0A C" *AE?O$, petitioner, vs" T@ O$O#A*?@ COB#T O; A@A?=

:;or'er $inth ivision3 and ?@O$0?A TO)AC#B, respondents"

!"#" $o" 169941 K 19996+17

D E C S O N

!O$A!A#@E@=, "

This is a petition for review b. wa. of certiorari under #ule 4- of the #evised #ules

of Court of the decision of the Court of Appeals[1] dated $ove'ber &9, 1991 in CA

!"#" CF $o" &7779 affir'ing the decision[&] of the #egional Trial Court of ueGon

Cit., *ranch ++, dated une 14, 1996 in Civil Case $o" +9&4+% and the

#esolution of the Court of Appeals dated April &7, 199% den.ing petitionerMs )otion

for #econsideration"

The pertinent facts, as found b. the trial court and affir'ed b. respondent court,

are briefl. narrated as follows

=o'eti'e in 19+, petitioner acionaria C" *a.lon introduced private respondent

?eonila To'acruG, the co'anager of her husband at ?T, to #osita *" ?uanGon"[%]

etitioner told private respondent that ?uanGon has been engaged in business as a

contractor for twent. .ears and she invited private respondent to lend ?uanGon

'one. at a 'onthl. interest rate of five percent :-53, to be used as capital for the

latterMs business" rivate respondent, persuaded b. the assurances of petitioner that

?uanGonMs business was stable and b. the high interest rate, agreed to lend ?uanGon

'one. in the a'ount of 1-6,666" On une &&, 19+7, ?uanGon issued and signed a

pro'issor. note ac/nowledging receipt of the 1-6,666 fro' private respondent

and obliging herself to pa. the for'er the said a'ount on or before August &&,

19+7"[4] etitioner signed the pro'issor. note, affi


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'onthl. interest and not an invest'ent" 0n fact the. all ad'itted in their

testi'onies that the. are not given an. stoc/ certificate but onl. pro'issor. notes

si'ilar to @ CO$=T#BCT0O$, 0$C"

00" !#A$T0$!, 20TOBT A)0TT0$!, TAT @T0T0O$@#A@??A$T *AE?O$ 2A=

A L!BA#A$TO#L A= A@A#0$! 0$ T@ $OT@ :@D" LAL3 T@ #@=O$@$T COB#T

@##@ 0$ #B?0$! TAT @T0T0O$@#A@??A$T *AE?O$ 0= ?0A*?@ TO T@

#0FAT@ #@=O$@$T *@CAB=@ T@ ?ATT@# A= $OT TAH@$ =T@= TO @DAB=T

T@ #O@#TE O; T@ #0$C0A? @*TO# A$ A= $OT #@=O#T@ TO A?? T@

?@!A? #@)@0@= #OF0@ *E ?A2 A!A0$=T T@ @*TO#, @;@$A$T

?BA$O$"

000" !#A$T0$!, 20TOBT A)0TT0$! TAT @T0T0O$@#A@??A$T *AE?O$ 2A=

A !BA#A$TO# B$@# TAT $OT@ :@D0*0T LAL3 AT@ B$@ &&, 19+7, T@

?O2@# COB#T @##@ 0$ #@=O?F0$! TAT =@ 2A= $OT #@?@A=@ ;#O) @#

!BA#A$TE *E T@ =B*=@B@$T T#A$=ACT0O$= *@T2@@$ T@ #@=O$@$T

A@??A$T A$ @;@$A$T ?BA$O$"

At the outset, we note that petitionerMs clai' that the factual findings of the lower

court, which were affir'ed b. the Court of Appeals, were based on a

'isapprehension of facts and contradicted b. the evidence on records[16] is a bare

allegation and devoid of 'erit" As a rule, the conclusions of fact of the trial court,

especiall. when affir'ed b. the Court of Appeals, are final and conclusive and

cannot be reviewed on appeal b. the =upre'e Court"[11] Although this rule ad'its

of several e


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To 2ho' 0t )a. Concern

;or value received, 0 hereb. pro'ise to pa. )rs" ?@O$0?A TO)AC#B the a'ount

of O$@ B$#@ ;0;TE TOB=A$ @=O= O$?E :1-6,666"663 on or before

August &&, 19+7"

The above a'ount is covered b. \\\\\ Chec/ $o" \\\\\ dated August &&, 19+7"

:signed3

#O=0TA *" ?BA$O$

! B # A # A $ T O #

:signed3

AC0O$A#0A O" *AE?O$

Tel" $o" +61&+66

1+ " )apa =t", * Fillage

Al'anGa, ?as inas, )")"[1-]

0f the ter's of a contract are clear and leave no doubt as to the intention of the

contracting parties, the literal 'eaning of its stipulation shall control"[1] #esort to

e


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0$ F0@2 O; T@ ;O#@!O0$!, the petition is granted and the uestioned ecision of

the Court of Appeals dated $ove'ber &9, 1991 and #esolution dated April &7, 199%

are =@T A=0@" $o pronounce'ent as to costs"

=O O#@#@"

19. ANTONIO R. BANZON and ROSA BALMACEDA, petitioners, vs.

HON. ERNANDO CR!Z, Spo"ses #EDRO CARDENAS and LEONILA

BAL!$OT and ASSOCIATED INS!RANCE % S!RET$ COM#AN$, INC.

represented &' INS!RANCE COMMISSIONER in (er )apa)it' as

LI*!IDATOR O ASSOCIATED INS!RAN

+.R. No. L-1/9 0 19239

D E C I S I O N TEEHANKEE, J.: An ori4ina5 a)tion to en6oin respondent )o"rt 7ro8 en7or)in4 a rito7 possession and order o7 de8o5ition over one o7 to Ca5oo)an Cit'5ots ori4ina55' oned &' petitionersspo"ses pendin4 t(e o"t)o8eo7 t(eir s"it 7or re)onve'an)e o7 said 5ots 7ro8 private respondents.

So8eti8e in 19:, Ma;i8o Sta. Maria o&tained )rop 5oans 7ro8 t(e#(i5ippine Nationa5 Ban< =(ereina7ter re7erred to as t(e &an.Respondent Asso)iated Ins"ran)e % S"ret' Co., In). =(ereina7terre7erred to as Asso)iated> a)ted as s"ret' o7 Sta. Maria, ?5in4 s"ret'

&onds in 7avor o7 t(e &an< to anser 7or pro8pt repa'8ent o7 t(e5oans. #etitioner Antonio R. Ban@on and E8i5io Ma. Nava5 in t"rna)ted as inde8nitors o7 Asso)iated and ere o&5i4ated to inde8ni7'and (o5d (ar85ess Asso)iated 7ro8 an' 5ia&i5it' 7or t("s a)tin4 ass"ret' o7 t(e 5oan. Sta. Maria 7ai5ed to pa' (is o&5i4ations to t(e&an


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, , petition for an or'er 'ire&tin4 %ntonio /. Banon to preent hioner '+pli&ate of !erti&ate of itle No. 39685 an' 53759 tothe /e4iter of ee' of /ial for &an&ellation, and 7or anot(erorder dire)tin4 t(e Re4ister o7 Deeds o7 Ri@a5 to )an)e5 saidd"p5i)ates and to iss"e ne trans7er )erti?)ates o7 tit5e )overin4t(e properties in t(e na8e o7 petitioner.

Ban@on ?5ed (is opposition to t(e petition )5ai8in4 8ain5' t(at =1>

t(e de)ision o7 t(e Co"rt o7 irst Instan)e o7 Mani5a in Civi5 Case No.-1- as void as 7ar as (e as )on)erned &e)a"se (e (ad never&een s"88oned in )onne)tion t(ereit(, and t(at => t(e 5ev' andsa5e o7 t(e properties )overed &' t(e petition ere 5i


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in t(e na8e o7 Antonio R. Ban@on. Moreover, t(ere is no s")ienteviden)e in t(e re)ord to s(o t(at t(e properties ere a)"iredd"rin4 appe55antsG 8arria4e.

IN QIE O ALL THE ORE+OIN+, t(e de)ision appea5ed 7ro8 is(ere&' ar8ed, it( )osts.:

It (as no &een e;posed t(at notit(standin4 t(e 6"d48ent

o7 e&ember , 957 o&tained 7ro8 t(e Mani5a )o"rt &'Asso)iated and e;e)"ted &' it a4ainst petitioner Ban@on asinde8nitor for the benet of the Philippine National Bank," and(i)( 6"d48ent it o&tained and e;e)"ted on t(e representation tot(e said )o"rt t(at t(e &an< as e;a)tin4 pa'8ent 7ro8 it as s"ret'o7 t(e de&tor Sta. MariaGs 5oans, and t(at it as t(ere7ore en7or)in4Ban@onGs "nderta (en t(e de&t (as&e)o8e de8anda&5e, &' reason o7 t(e e;piration o7 t(e period 7orpa'8ent and t(at t(e a)tion o7 t(e 4"arantor is to obtain releaefrom the 4+arant , or to 'eman' a e&+rit t(at s(a55 prote)t (i87ro8 an' pro)eedin4s &' t(e )reditor and 7ro8 t(e dan4er o7 inso5ven)' o7 t(e de&tor.

In 7a)t, sin)e the bank 7ai5ed to e;a)t pa'8ent 7ro8 Asso)iated as

s"ret' o7 t(e de&tor Ma;i8o Sta. MariaGs 8at"red o&5i4ations, t(e&an< itse57 ?5ed on 1ebr+ar 0, 96, it on &omplaint it( t(eCo"rt o7 irst Instan)e o7 #a8pan4a a4aint prin&ipal'ebtor Ma;i8o Sta. Maria, hi i< brother an' iter =(o (ade;e)"ted a spe)ia5 poer o7 attorne' in Sta. MariaGs 7avor to8ort4a4e a 13(e)tare par)e5 o7 5and 6oint5' oned &' a55 o7 t(e8as se)"rit' a5so 7or t(e &an, an' %o&iate' itelf, +ret,a 'efen'ant, 7or t(e &olle&tion o7 t(e o"tstandin4 o&5i4ations d"e7ro8 t(e prin)ipa5 de&tor, Ma;i8o Sta. Maria. A7ter tria5, t(e )o"rt ordered a55 t(e de7endants 6oint5' and severa55'to pa' t(e &an< t(e o"tstandin4 a8o"nts d"e on t(e )rop 5oans to

Sta. Maria, (i)( as o7 t(at 8")( 5ater date, %+4+t 20, 963,

'o7 P5,6., e;)5"sive o7 interests. It s(o"5d &e noted t(ere7ore,t(at t(e de&tor Sta. Maria (ad &een 8ae7endant Ma;i8o Sta.Maria and (is +ret, 'efen'ant %o&iate' (n+ran&e ) *+ret !o.,(n&. ho 'i' not reit the a&tion, 'i' not appeal the >+'4ment =senten)in4 a55 de7endants 6oint5' and severa55' to pa't(e &an< t(e a&ove re7erred to prin)ipa5 a8o"nt o7 #1:,3.,e;)5"din4 interests>.

T(is Co"rt s"stained t(e appea5 ta


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p ')(atte5 8ort4a4es e;e)"ted &' (i8 in (is on na8e )(atte5 a5one.

3. ina55', as to t(e 12F aard o7 attorne'Gs 7ees, t(is Co"rt&e5ieves t(at )onsiderin4 t(e reso"r)es o7 p5ainti &an< and t(e7a)t t(at t(e prin)ipa5 de&tor, Ma;i8o Sta. Maria, (ad not )ontestedt(e s"it, an aard o7 ?ve =:F> per )ent o7 t(e &a5an)e d"e on t(e

prin)ipa5, e;)5"sive o7 interests, i. e., a &a5an)e o7 P6,00.00 on t(e?rst )a"se o7 a)tion and a &a5an)e o7 P9,36. on t(e se)ond)a"se o7 a)tion, per the bank tatement of %+4+t 20, 963,=E;(s. *1 and BB1, respe)tive5'> s(o"5d &e s")ient. HEREORE, t(e 6"d48ent o7 t(e tria5 )o"rt a4ainst de7endantsappe55ants E8eteria, Teo?5o, *"intin, Rosario and Leoni5a, a55s"rna8ed Sta. Maria is (ere&' reversed and set aside, it( )osts in&ot( instan)es a4ainst p5ainti. T(e 6"d48ent a4ainst de7endantappe55ant Qa5eriana Sta. Maria is 8odi?ed in t(at (er 5ia&i5it' is (e5dto &e 6oint and not so5idar', and t(e aard o7 attorne'Gs 7ees isred")ed as set 7ort( in t(e pre)edin4 para4rap(, it(o"t )osts in

t(is instan)e. T(e &an< t("s )o55e)ted 'ire&tl 7ro8 its de&tor Sta. Maria t(ea8o"nts oin4 to it, it( Asso)iated never (avin4 p"t in one)entavo. #er t(e &an/ notit(standin4 t(at t(e propert' in "estionas ort( #1-2,222.22 8ore or 5ess, and 7"rt(er notit(standin4

t(e 7a)t t(at said respondent =Asso)iated>


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t(e trans7er o7 oners(ip o7 t(e propert' in "estion 7ro8 t(ep5ainti to t(e Asso)iated Ins"ran)e % S"ret' Co., In)., (as &een"p(e5d &' t(e S"pre8e Co"rt in its de)ision pro8"54ated onNove8&er 9, 193/, and )onse"ent5' t(e trans7er to t(e spo"ses#edro Cardenas and Leoni5a Ba5"'ot 8"st per7or)e &e )onsidereda5so as va5id and 5e4a5.

Conse"ent5', respondent Cardenas ?5ed a 8otion on O)to&er 1-,

1939, in Case No. C11 7or t(e iss"an)e o7 analia rit o7 possession t(is as 4ranted on O)to&er -, 1939. T(e alia ritas served on Ban@on, (o re7"sed to va)ate t(e pre8ises and tore8ove t(e i8prove8ents t(ereon. In vie o7 t(is, an order asiss"ed on De)e8&er 9, 1939, 7or t(e iss"an)e o7 a rit o7 de8o5ition, &"t its en7or)e8ent as (e5d in a&e'an)e &e)a"se ate8porar' restrainin4 order, 5ater )(an4ed to a rit o7 pre5i8inar'in6"n)tion, as iss"ed &' t(e Co"rt o7 Appea5s on e&ember 3,969, in vie o7 t(e ?5in4 &' t(e Ban@ons it( t(e said appe55ate)o"rt o7 a petition 7or in6"n)tion.12

On 1ebr+ar 28, 970 t(e Co"rt o7 Appea5s rendered 6"d48ent

dis8issin4 t(e petition &e)a"se it 7o"nd t(e sa8e to &e a55e4ed5'8ere5' a devi)e to prevent t(e e;e)"tion o7 a ?na5 6"d48ent &'t(e ?5in4 o7 a ne s"it &ased "pon t(e sa8e 4ro"nds (i)( (avea5read' &een interposed and passed "pon in t(e )ase (ere t(e?na5 6"d48ent (ad a5read' &een rendered . Cardenast(erea7ter ?5ed a 8otion 7or t(e en7or)e8ent o7 t(e order o7 de8o5ition and rit o7 possession previo"s5' iss"ed in Re4. CaseNo. C11. On Mar)( 1-, 192, K"d4e ernando A. Cr"@ o7 t(e Co"rto7 irst Instan)e o7 Ca5oo)an Cit' Bran)( II, iss"ed an order4rantin4 t(e 8otion.11

On Mar)( 1-, 192, t(e Ban@ons (avin4 5earned o7 t(e &an1a and t(at t(e &an (as a5read' a&so5"te5' andirrevo)a&5' vested in (erein respondent #edro Cardenas.1 Saidrespondents 7"rt(er averred t(at t(ere is no 5on4er an't(in4 t(at8a' &e restrained, sin)e per t(e s(eriGs ret"rn o7 Mar)( -, 192,(e en7or)ed on said date respondent )o"rtGs rit o7 possession andde8o5ition order and de8o5is(ed a55 t(e i8prove8ents ere)ted int(e pre8ises.1:

To t(is petitioners )o"ntered t(at t(e spe)ia5 dep"t' s(eri o7 Ri@a5did s"))eed in de8o5is(in4 t(e &"i5din4 ere)ted on t(e 5ot in

"estion. T(is (e did notithtan'in4 the fa&t that he ha been

'+l informe' b petitioner Banon of the e


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or'er in thi &ae. Hoever, a7ter a))o8p5is(in4 (is p"rpose, (eand (is 8en 5e7t t(e pre8ises.13

Most re5evant, (oever, as a p5eadin4 entit5ed E;p5anation andMani7estation dated Apri5 :, 192 ?5ed &' Att'. e5i&erto Casti55o,as 7or8er )o"nse5 7or Asso)iated, in t(e interest o7 6"sti)e and int(e na8e o7 tr"t( and as an o)er o7 t(e Co"rt, (erein it(

respe)t to t(e s"88ons 7or Asso)iated re)eived &' (is 5a o)e,(e 8ani7estsJ -. T(at (e is entertainin4 a serio"s do"&t (et(er (e )o"5d sti55represent t(e Asso)iated Ins"ran)e % S"ret' Co., In). in vie o7 t(e7a)t t(at in !ivil !ae No. 56995 of the !o+rt of 1irt (ntan&e of :anila, entitle' /ep+bli& of the Philippine, repreente' b the(n+ran&e !ommiioner v. %o&iate' (n+ran&e ) *+ret !o.,(n&. t(e said Co"rt o7 irst Instan)e o7 Mani5a or'ere' theli+i'ation an' 'iol+tion of thi +ret &ompan, (i)( asappea5ed to t(e Co"rt o7 Appea5s, CA+.R. No. -9/:R, &"tar8ed t(e de)ision o7 t(e Co"rt o7 irst Instan)e o7 Mani5a in a

de)ision pro8"54ated on Kan"ar' -, 193/, (i)( as appea5eda4ain &' t(e Asso)iated Ins"ran)e % S"ret' Co., In). to t(eHonora&5e Tri&"na5, ./. No. #$2893, alo a@rmin4 the 'e&iion of the !o+rt of %ppeal b 'enin4 the petition for a rit of &ertiorariin it reol+tion of A+ne 20, 968, and t(ere7ore, sin)e t(en, t(ede)ision o7 t(e Co"rt o7 irst Instan)e o7 Mani5a orderin4 t(e5i"idation and disso5"tion o7 t(e Asso)iated Ins"ran)e % S"ret'Co., In). &e)a8e ?na5 and e;e)"tor', and t(erea7ter, t(e Ins"ran)eCo88issioner de8anded t(e s"rrender o7 &oo+'i&e=" U T(at even after t(e pro8"54ation o7 t(e said S"pre8e Co"rtde)ision, (e never atte8pted to se)"re ne tit5es 7or (is )5ient,&e)a"se &' t(at ti8e Asso)iated (ad a5read' &een ordered

disso5ved and 5i"idated, (en)e, to &e represented in a55 instan)es&' t(e Ins"ran)e Co88issioner as 5i"idator

U T(at (e onders (o respondent #edro Cardenas as a&5e tose)"re T.C.T. No. /:3 =7or8er5' T.C.T. No. -93/:Ri@a5> in (is na8ein 193:, (en Asso)iated, (i)( rea55' oed Cardenas a )ertains"8, )o"5d on5' se)"re ne tit5es over t(e par)e5s o7 5and after not before Nove8&er 9, 193/, (en t(e S"pre8e Co"rtGs de)ision in+.R. No. L-91 as pro8"54ated and t(at in (is opinion, t(eiss"an)e to respondent Cardenas o7 T.C.T. No. /:3 as 7ra"d"5entand irre4"5ar 7or &ein4 it(o"t &asis (en t(e sa8e as iss"ed, sot(at t(e re4ister o7 deeds o7 Ca5oo)an Cit' )o88itted so8e sort o7

8ista


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U T(at an'&od' (o i55 atte8pt to oer t(e said par)e5 o7 5and 7orsa5e o"5d &e &ommittin4 a &rime as the 'ipoition of the amebelon4 e


68/73

dis8iss t(e petition.1 T(e )o88issioner5i"idator a7ter)o8p5ainin4 t(at s(e is sti55 de8andin4 7or t(e s"rrender o7 a55 t(e&oo as (i4(est &idder, 7or

t(e 6"d48ent de&t o7 de7endants in said a)tion, p5"s in)identa5e;penses 7or t(e s"8 o7 #:,122.22 on5' 19. T(at s"&se"ent5' t(erea7ter, said respondents Cardenas,t(r" so8e s)(e8e and devise, s"))eeded in (avin4 t(e tit5e o7 saidpar)e5 o7 5and trans7erred in t(eir na8es "nder T.C.T. No. /:3,Re4istr' o7 Deeds o7 Ca5oo)an Cit' on :a 5, 965, at a ti8e (ent(e Asso)iated Ins"ran)e % S"ret' Co., In). (ad not 'et earned t(ea"t(orit' to )onso5idate in its na8e said propert', as t(e )ase ast(en pendin4 it( t(is Honora&5e Tri&"na5. As a55e4ed in para4rap(1/ (ereo7, t(e "estion o7 )onso5idation as reso5ved &' t(isHonora&5e Tri&"na5 on1ebr+ar 28, 968=1a

2. T(at &' t(e nat"re o7 t(e de)ision in Civi5 Case No. -1-,CI, Mani5a, as a55e4ed in para4rap( 1: (ereo7, t(e propert' ors"8s o7 8one' re)overed 7ro8 de7endants t(erein hall bereerve' for the benet of the Philippine National Bank 7or t(ep"rpose o7 pa'in4 t(e prin)ipa5 de&torGs =Ma;i8o Sta. MariaGs>o&5i4ation t(erein, and )onse"ent5', t(e Asso)iated Ins"ran)e %S"ret' Co., In). s(a55 (o5d t(e propert' in "estion or t(e s"8sre)overed in said a)tion, in tr"st and 7or t(e p"rpose o7 pa'in4 t(ea7oresaid o&5i4ation o7 Ma;i8o Sta. Maria.

from it on f+n' +n'er it +ret +n'ertakin4, nor from f+n'realie' from the propert 5evied "pon &' virt"e o7 t(e de)ision inCivi5 Case No. -1-, CI, Mani5a, &"t on t(e ot(er (and,t(e prin&ipal 'ebtor *ta. :aria pai' hi on obli4ation ith thePhilippine National Bank t("s, releain4 it =Asso)iated Ins"ran)e %S"ret' Co., In).> from it obli4ation +n'er the +rethip+n'ertakin4 it( respe)t to said o&5i4ation o7 Ma;i8o Sta. Maria,and si8i5ar5' (erein petitioner %ntonio /. Banon a releae'

from hi obli4ation a &o$in'emnitor in said "nderta


69/73

1. T(e i88ediate o&6e)tives o7 t(is petition areJ =a> to en6oinrespondent K"d4e ernando Cr"@ o7 t(e Co"rt o7 irst Instan)e o7 Ri@a5, Ca5oo)an Cit' Bran)(, and respondents #edro Cardenas andLeoni5a Ba5"'ot, and t(eir representatives, 7ro8 en7or)in4 t(e rito7 e;e)"tion and order o7 de8o5ition iss"ed &' said respondent K"d4e in Re4. Case No. C11 in re5ation to t(e 5ot )overed &' T.C.T.No. /:3 and =&> to en6oin respondent Asso)iated 7ro8 disposin4its a55e4ed ri4(ts and interests in t(e to 5ots )overed &' T.C.T. No.

/:3 and T.C.T. No. :-:9, t(e in6"n)tion in &ot( )ases to &e 8adeee)tive d"rin4 t(e penden)' o7 t(e re)onve'an)e )ase, Civi5 CaseNo. 9, ?5ed &' petitioners as p5aintis &e7ore t(e Mani5a )o"rto7 ?rst instan)e. T(e rea5 and s"&stantive o&6e)tives o7 t(e petition are to see< t(eri4(t7"5 restoration and re)onve'an)e to petitioners Ban@ons o7 t(eir to Ca5oo)an )it' 5ots, )overed &' T.C.T. :-:9 =sti55 inBan@onGs na8e, &"t on t(e &a)< (ereo7 is annotated t(e s(eriGs?na5 deed o7 sa5e in 7avor o7 Asso)iated> and &' T.C.T. No. /:3 =int(e na8e o7 respondents Cardenases> on t(e 7"nda8enta5 4ro"ndt(at Asso)iatedGs 5ev' in e;e)"tion o7 said 5ots asin tr+t for the

benet of the Philippine National Bank for the p+rpoe of pain4the bank t(e 5oan o&5i4ation o7 Ma;i8o Sta. Maria (i)( Asso)iated(ad 4"aranteed as s"ret' and a4ainst (i)( 5ia&i5it' Ban@on in t"rnas inde8nitor (ad "nderta onl to o&tain releae 7ro8 t(e4"arant' or e&+rit a4ainst t(e dan4er o7 t(e de&torGs inso5ven)'.(ere t(e de&tor 'ire&tl dis)(ar4ed (is 5oan o&5i4ation to t(e&an< (i)( in t"rn re5eased Asso)iated 7ro8 its +rethip 5ia&i5it'it(o"t Asso)iated (avin4 in)"rred a )entavo o7 5ia&i5it', it isindisp"ta&5e t(at Asso)iated in t"rn o"5d ne)essari5' re5easeBan@on as in'emnitor and t(e &asi) 19: 6"d48ent o"5d

&e inoperable an' +nenfor&eable a4ainst Ban@on.

(en Asso)iated nevert(e5ess premat+rel and &ontrar to theintent an' &on'ition o7 t(e &asi) 19: 6"d48ent 5evied in e;e)"tionon t(e to Ca5oo)an Cit' 5ots o7 Ban@on, t(e interest it a)"iredas )5ear5' i8pressed it( atr+t &hara&ter . S")( a)"isition o7 Ban@onGs properties &' Asso)iated as ee)ted, i7 nott(ro"4( fra+'-a on Asso)iatedGs part, )ertain5't(ro"4( mitake-& and t(ere7ore, Asso)iated as &' 7or)e o7 5a,)onsidered a tr"stee o7 an implie' tr+t 7or t(e &ene?t o7 t(e

person 7ro8 (o8 t(e propert' )o8es &' virt"e o7 Arti)5e 1:3 o7 t(e Civi5 Code-) sin)e Asso)iated not (avin4 paid nor (avin4 &een)o8pe55ed to pa' t(e &an< (ad no ri4(t in 5a or e"it' to soe;e)"te t(e 6"d48ent a4ainst Ban@on as inde8nitor. Had t(ere&een no 7ra"d"5ent )on)ea58ent or s"ppression o7 t(e 7a)t o7 s")(nonpa'8ent &' Asso)iated or a 8ista


70/73

&an< si; =3> 'ears 5ater, a8o"nted 8ere5' to 1V t(e a8o"nt or#1:,3. as o7 A"4"st, 193-, e;)5"din4 interestsJ -7 As a5read'stated a&ove, Asso)iated did not pa' even t(is 8")( 5essera8o"nt, notit(standin4 t(e #a8pan4a )o"rtGs 6"d48ent a4ainst itin t(e s"it dire)t5' ?5ed &' t(e &an p5ainti =Asso)iated> b+t for thebenet of the Philippine National Bank" t(e severa5 a8o"ntsso"4(t &' Asso)iated, a +ret, tota55in4 #-2,:./3. As 7ar ast(eir on )5ai8 a4ainst Asso)iated is )on)erned, t(e' 5i+'4ment$'ebtor D%o&iate'Eover the propert ; ; ; Done of the propertie a&+ire' from %ntonioBanonE" and Asso)iatedGs ri4(ts, i7 t(e' )o"5d &e so deno8inated,

over Ban@onGs properties ere 8ere5' t(ose o7 a tr+tee,+pra and !ar'ena thereb a&+ire' no abol+te ri4ht, interet,&laim an' title" at all &"t Asso)iatedGs o&5i4ation as tr+tee torestore Ban@onGs 5a7"5 properties to (i8. -. As a point o7 5a, even t(o"4( "nder Asso)iatedGs s"ret's(ipa4ree8ent 4"aranteein4 Sta. MariaGs )rop 5oans it( t(e &an


71/73

an' pro)eedin4s &' t(e )reditor and 7ro8 t(e dan4er o7 inso5ven)'o7 t(e de&tor.

Asso)iated t("s did not even (ave an' va5id )a"se o7 a)tion a4ainstBan@on as its inde8nitor, &"t )o"5d pro)eed on5' a4ainst Sta. Mariaas t(e prin)ipa5 de&tor. And even as a4ainst s")( prin)ipa5 de&tor,it )o"5d not pre8at"re5' de8and pa'8ent even &e7ore it (ad paidt(e )reditor, its a)tion &ein4 5i8ited on5' 7or t(e p"rpose o7

o&tainin4releae 7ro8 t(e 4"arant' or a e&+rit a4ainst anevent"a5 inso5ven)' o7 t(e de&tor. As as e8p(asi@ed &' Mr. K"sti)e Re'es 7or t(e Co"rt in eneral (n'emnit !o. (n&.v. %lvare,3 (i5e a 4"arantor 8a' "nder Arti)5e 21 o7 t(eCivi5 Code pro)eed a4ainst t(e prin)ipa5 de&tor, even &e7ore (avin4paid, (en t(e de&t (as &e)o8e de8anda&5e, =T>(e 5astpara4rap( o7 t(is sa8e arti)5e, (oever, provides t(at in s")(instan)e, t(e on5' a)tion t(e 4"arantor )an ?5e a4ainst t(e de&toris to o&tain releae 7ro8 t(e 4"arant', or to de8anda e&+rit t(at s(a55 prote)t (i8 7ro8 an' pro)eedin4 &' t(e)reditor and 7ro8 t(e dan4er o7 inso5ven)' o7 t(e de&tor.G %na&tion &' t(e 4"arantor a4ainst t(e prin)ipa5, de&tor for pament,

before the former ha pai' the &re'itor, i premat+re." . T(e rea5i@ation o7 t(e Ban@onsG ri4(t7"5 o&6e)tives in 5a ande"it' as t("s restated (as so8e(at &een (a8pered and&e)5o"ded &' t(e ineptit"de and sorr' ne45e)t it( (i)( t(e'andVor t(eir )o"nse5 (ave p"rs"ed t(eir re8edies in t(e vario"ss"its &ro"4(t &' t(e8. To )ite t(e 5atest instan)e, t(e pendin4 s"it?5ed &' t(e8 in t(e Mani5a )o"rt o7 ?rst instan)e, Civi5 Case No.9, is 7ro8 t(e re)ord t(e rt real &ae that the have properl le' for re&onvean&e o7 t(eir to Ca5oo)an Cit' 5ots &ased ont(eir ne )a"se o7 a)tion t(at it( t(e de&torGs dire)t pa'8ent tot(e &an+'i&ial or'er of li+i'ation, and an' ale or 'ipoition o7 Asso)iatedGs properties or ri4(ts itho+t the knole'4e an'&onent of the in+ran&e &ommiioner a li+i'ator and itho+t the approval b the li+i'ation &o+rt i &ontrar to la an' n+ll an'voi'.

A))ordin45', petitioners Ban@ons are, as a4ainst t(eir and t(eir)o"nse5Gs ne45e)t and inattention, nevert(e5ess saved 7ro8 t(e

ot(erise 7ata5 )onse"en)es o7 t(e invo


72/73

, in'ipenable partie 8"st a5a's &e 6oined eit(er as p5aintis orde7endants, 7or t(e )o"rt )annot pro)eed it(o"t t(e8, and (en)ea55 6"d48ents and pro)eedin4s (e5d a7ter t(e 5i"idation anddisso5"tion order a4ainst Asso)iated &e)a8e voi' for la&k of anin'ipenable part in t(e person o7 t(e ins"ran)e )o88issioner5i"idator. T(e ins"ran)e )o88issioner as 5i"idator o7 Asso)iated&' a"t(orit' o7 5a as indisp"ta&5' an in'ipenable part it(s")( an interest in t(e )ontroversies ae)tin4 t(e

6"d48ent for Asso)iated =a4ainst Ban@on> and a4aint Asso)iated=in 7avor o7 Cardenas> t(at a ?na5 de)ree o"5d ne)essari5' ae)tits ri4(ts =ad8inistered &' t(e Co88issioner in t(e p"&5i) interestand 7or t(e p"&5i)Gs prote)tion> so t(at t(e )o"rts )o"5d not pro)eedt(erein it(o"t t(e )o88issioner5i"idatorGs o)ia5 presen)e. 3. T(e ron47"5 dis8issa5 &' t(e Mani5a )o"rt o7 t(e Ban@onsGre)onve'an)e s"it, Civi5 Case No. 9, as a4ainst t(e Cardenasest("s does not prod")e (at o"5d ot(erise (ave &een 7ata5)onse"en)es d"e to t(e Ban@onsG 7ai5"re to appea5 7ro8 s")(dis8issa5.

T(eir re)onve'an)e )ase as a4aint %o&iate' as prin)ipa5de7endant re8ains pendin4 in )o"rt. And t(ein+ran&e&ommiioner + li+i'ator of %o&iate', no t(at s(e is 7"55'aare o7 t(e stat"s o7 t(ese ante)edent )ases a7ter s(e ?na55're)eived on Mar)( 11, 191 t(e vo5"8ino"s re)ords t(ereo7 (i)((ad (it(erto not &een s"rrendered to (er o)e despite de8andst(ere7or, is )a55ed "pon to appear 7or Asso)iated in t(e said )ase, i7 s(e (as not as 'et &een d"5' i8p5eaded as s")( 5i"idator. Giththe in+ran&e &ommiioner, a li+i'ator of %o&iate' an' anin'ipenable part no in the &ae, t(e said re&onvean&e+it 8a' no pro&ee' ane andthe !ar'ena po+e &a+e' b the li+i'ator to be '+l implea'e' ane for t(e' are

a5so in'ipenable partieinso7ar as t(e ins"ran)e )o88issioner5i"idatorGs )5ai8 on &e(a57 o7 Asso)iated to t(e 5ot )overed &' T.C.T. No. /:3 iss"ed in t(eir na8e is )on)erned. Hereinpetitioners see< prin)ipa55' in t(e said )ase t(e re)onve'an)e tot(e8 &' Asso)iated o7 t(eir to par)e5s o7 5and )overed &' T.C.T.No. /:3 and T.C.T. No. :-:9, as a)"ired in e;e)"tion &'Asso)iated, and t(erea7ter, it( respe)t to t(e 5ot )overed &' T.C.T.No. /:3, &' t(e Cardenases, &' virt"e o7 t(e tr+t &hara&ter i8pressed "pon t(e8 and Asso)iatedGs d"t' as implie'tr+tee to restore said properties to t(e Ban@ons. Considerin4 t(at t(e in+ran&e &ommiioner herelf, (o no

5e4a55' )an a5one represent Asso)iated a li+i'ator, (as herein

t(at the ai' lot, no le than the other lot &overe' b .!.. No.8567, ho+l', in A+ti&e to petitioner, be re&onvee' to them ona))o"nt, a8on4 ot(ers, o7 petitioner Ban@onGs re5ease 7ro8 (iso&5i4ation as inde8nitor &' virt"e o7 t(e prin)ipa5 de&torGss"&se"ent pa'8ent o7 (is o&5i4ation it( t(e #(i5ippine Nationa5Ban< (i)( 5i


73/73

respondents Cardenases s(a55 7ort(it( pa to petitionerBanon the hole amo+nt of rental o re&eive' &' t(e8 to t(eti8e t(at possession o7 t(e 5ot is ee)tive5' restored to petitioners.B' t(e ver' nat"re o7 t(is 8andator' rit, t(e sa8e s(a55 &ei88ediate5' e;e)"tor' "pon pro8"54ation o7 t(is de)ision.

WHEREFORE, t(e petition 7or a per8anent in6"n)tion, d"rin4 t(ependen)' o7 Civi5 Case No. 9 o7 t(e Co"rt o7 irst Instan)e o7

Mani5a a4ainst t(e disposition in an' 8anner o7 t(e to par)e5s o7 5and s"&6e)t o7 said )ase ot(er t(an t(eir re)onve'an)e topetitioners as t(e tr"e and ri4(t7"5 oners t(ereo7 as e;press5're)o4ni@ed &' t(e ins"ran)e )o88issioner as 5i"idator o7 Asso)iated is (ere&' 4ranted. In 5ie" o7 t(e per8anent in6"n)tiona4ainst en7or)e8ent o7 respondent )o"rtGs order dated Mar)( 1-,192 in Case No. C11 t(ereo7 orderin4 t(e de5iver' o7 possessiono7 t(e propert' )overed &' T.C.T. No. /:3 to respondentsCardenases and de8o5ition o7 petitioners Ban@onsG i8prove8entst(ereon, =(i)( ere pre8at"re5' )arried o"t &' respondent )o"rtGss(eri on Mar)( -, 192> a rit o7 8andator' in6"n)tion)o88andin4 respondent )o"rt to 7ort(it( restore t(e tat+ ante

+o and to restore petitioners Ban@ons to 7"55 possession o7 t(e

ter8s and )onditions stated in t(e ne;t pre)edin4 para4rap( is(ere&' iss"ed, (i)( s(a55 &e imme'iatel e

guaranty and surety cases

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