G.R. No.

L-29139 November 15, 1974

CONSUELO P. PICZON, RUBEN O. PICZON and AIDA P. ALCANTARA, plaintiffs-appellants,

vs.
ESTEBAN PICZON and SOSING-LOBOS & CO., INC., defendants-appellees.

Vicente C. Santos for plaintiffs-appellants.

Jacinto R. Bohol for defendant-appellee Sosing-Lobos & Co., Inc.

Vicente M. Macabidang for defendant-appellee Esteban Piczon.

BARREDO, J.:p

Appeal from the decision of the Court of First Instance of Samar in its Civil Case No. 5156, entitled Consuelo P.
Piczon, et al. vs. Esteban Piczon, et al., sentencing defendants-appellees, Sosing Lobos and Co., Inc., as
principal, and Esteban Piczon, as guarantor, to pay plaintiffs-appellants "the sum of P12,500.00 with 12%
interest from August 6, 1964 until said principal amount of P12,500.00 shall have been duly paid, and the
costs."

After issues were joined and at the end of the pre-trial held on August 22, 1967, the trial court issued the
following order:

"When this case was called for pre-trial, plaintiffs and defendants through their lawyers,
appeared and entered into the following agreement:

1. That defendants admit the due execution of Annexes "A" and "B" of the complaint;

2. That consequently defendant Sosing-Lobos and Co., Inc. binds itself to the plaintiffs for
P12,500.00, the same to be paid on or before October 31, 1967 together with the interest
that this court may determine.

That the issues in this case are legal ones namely:

(a) Will the payment of twelve per cent interest of P12,500.00 commence to run from August
6, 1964 when plaintiffs made the first demand or from August 29, 1956 when the obligation
becomes due and demandable?

(b) Is defendant Esteban Piczon liable as a guarantor or a surety?

That the parties are hereby required to file their respective memorandum if they so desire
on or before September 15, 1967 to discuss the legal issues and therewith the case will be
considered submitted for decision.

WHEREFORE, the instant case is hereby considered submitted based on the aforesaid facts
agreed upon and upon submission of the parties of their respective memorandum on or
before September 15, 1967.

SO ORDERED.1 (Record on Appeal pp. 28-30.)

Annex "A", the actionable document of appellants reads thus:

AGREEMENT OF LOAN

KNOW YE ALL MEN BY THESE PRESENTS:

That I, ESTEBAN PICZON, of legal age, married, Filipino, and resident of and with postal
address in the municipality of Catbalogan, Province of Samar, Philippines, in my capacity as
the President of the corporation known as the "SOSING-LOBOS and CO., INC.," as controlling
stockholder, and at the same time as guarantor for the same, do by these presents contract a
loan of Twelve Thousand Five Hundred Pesos (P12,500.00), Philippine Currency, the receipt
 of which is hereby acknowledged, from the "Piczon and Co., Inc." another corporation, the
main offices of the two corporations being in Catbalogan, Samar, for which I undertake, bind
and agree to use the loan as surety cash deposit for registration with the Securities and
Exchange Commission of the incorporation papers relative to the "Sosing-Lobos and Co.,
Inc.," and to return or pay the same amount with Twelve Per Cent (12%) interest per annum,
commencing from the date of execution hereof, to the "Piczon and Co., Inc., as soon as the
said incorporation papers are duly registered and the Certificate of Incorporation issued by
the aforesaid Commission.

IN WITNESS WHEREOF, I hereunto signed my name in Catbalogan, Samar, Philippines, this

28th day of September, 1956.

(Sgd.) ESTEBAN PICZON

(Record on Appeal, pp. 6-7.)

The trial court having rendered judgment in the tenor aforequoted, appellants assign the following alleged
errors:

THE TRIAL COURT ERRED IN ORDERING THE PAYMENT OF 12% INTEREST ON THE
PRINCIPAL OF P12,500.00 FROM AUGUST 6, 1964, ONLY, INSTEAD OF FROM SEPTEMBER
28, 1956, WHEN ANNEX "A" WAS DULY EXECUTED.

II

THE TRIAL COURT ERRED IN CONSIDERING DEFENDANT ESTEBAN PICZON AS

GUARANTOR ONLY AND NOT AS SURETY.

III

THE TRIAL COURT ERRED IN NOT ADJUDICATING DAMAGES IN FAVOR OF THE

PLAINTIFFS-APPELLANTS. (Appellants' Brief, pp. a to b.)

Appellants' first assignment of error is well taken. Instead of requiring appellees to pay interest at 12% only
from August 6, 1964, the trial court should have adhered to the terms of the agreement which plainly
provides that Esteban Piczon had obligated Sosing-Lobos and Co., Inc. and himself to "return or pay (to Piczon
and Co., Inc.) the same amount (P12,500.00) with Twelve Per Cent (12%) interest per annum commencing
from the date of the execution hereof", Annex A, which was on September 28, 1956. Under Article 2209 of the
Civil Code "(i)f the obligation consists in the payment of a sum of money, and the debtor incurs in delay, the
indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest agreed
upon, and in the absence of stipulation, the legal interest, which is six per cent per annum." In the case at bar,
the "interest agreed upon" by the parties in Annex A was to commence from the execution of said document.

Appellees' contention that the reference in Article 2209 to delay incurred by the debtor which can serve as
the basis for liability for interest is to that defined in Article 1169 of the Civil Code reading thus:

Those obliged to deliver or to do something incur in delay from the time the obligee
judicially or extrajudicially demands from them the fulfillment of their obligation.

However, the demand by the creditor shall not be necessary in order that delay may exist:

(1) When the obligation or the law expressly so declares; or

(2) When from the nature and the circumstances of the obligation it appears that the
designation of the time when the thing is to be delivered or the service is to be rendered was
a controlling motive for the establishment of the contract; or

(3) When demand would be useless, as when the obligor has rendered it beyond his power
to perform.
 In reciprocal obligations, neither party incurs in delay if the other does not comply or is not
ready to comply in a proper manner with what is incumbent upon him. From the moment
one of the parties fulfills his obligation, delay by the other begins.

is untenable. In Quiroz vs. Tan Guinlay, 5 Phil. 675, it was held that the article cited by appellees (which was
Article 1100 of the Old Civil Code read in relation to Art. 1101) is applicable only when the obligation is to do
something other than the payment of money. And in Firestone Tire & Rubber Co. (P.I.) vs. Delgado, 104 Phil.
920, the Court squarely ruled that if the contract stipulates from what time interest will be counted, said
stipulated time controls, and, therefore interest is payable from such time, and not from the date of the filing
of the complaint (at p. 925). Were that not the law, there would be no basis for the provision of Article 2212
of the Civil Code providing that "(I)nterest due shall earn legal interest from the time it is judicially
demanded, although the obligation may be silent upon this point." Incidentally, appellants would have been
entitled to the benefit of this article, had they not failed to plead the same in their complaint. Their prayer for
it in their brief is much too late. Appellees had no opportunity to meet the issue squarely at the pre-trial.

As regards the other two assignments of error, appellants' pose cannot be sustained. Under the terms of the
contract, Annex A, Esteban Piczon expressly bound himself only as guarantor, and there are no circumstances
in the record from which it can be deduced that his liability could be that of a surety. A guaranty must be
express, (Article 2055, Civil Code) and it would be violative of the law to consider a party to be bound as a
surety when the very word used in the agreement is "guarantor."

Moreover, as well pointed out in appellees' brief, under the terms of the pre-trial order, appellants accepted
the express assumption of liability by Sosing-Lobos & Co., Inc. for the payment of the obligation in question,
thereby modifying their original posture that inasmuch as that corporation did not exist yet at the time of the
agreement, Piczon necessarily must have bound himself as insurer.

As already explained earlier, appellants' prayer for payment of legal interest upon interest due from the filing
of the complaint can no longer be entertained, the same not having been made an issue in the pleadings in the
court below. We do not believe that such a substantial matter can be deemed included in a general prayer for
"any other relief just and equitable in the premises", especially when, as in this case, the pre-trial order does
not mention it in the enumeration of the issues to be resolved by the court.

PREMISES CONSIDERED, the judgment of the trial court is modified so as to make appellees liable for the
stipulated interest of 12% per annum from September 28, 1956, instead of August 6, 1964. In all other
respects, said judgment is affirmed. Costs against appellees.

Fernando (Chairman), Antonio, Fernandez and Aquino, JJ., concur.

Footnotes

1 Annex "B" is a document entitled "Mutual Quit Claims. Cessions and Amicable Settlement"
under which the right of action of Piczon and Co., Inc. under Annex "A" was transferred to
the heirs of Alejandro Piczon who are the appellants.
[ GR No. 43486, Sep 30, 1936 ]

MUNICIPALITY OF GASAN v. MIGUEL MARASIGAN +

DECISION

63 Phil. 510

DIAZ, J.:
This  is an action brought  by the municipality of Gasan of the Province of Marinduque, against Miguel 
Marasigan, Angel  R. Sevilla and  Gonzalo L. Luna, to recover from them the sum  of P3,780, alleging that it
forms a part of the  license  fees which  Miguel  Marasigan  failed  to pay for the privilege granted him of
gathering whitefish spawn (semillas de bangus)  in the jurisdictional waters of  the plaintiff municipality
during the period from  January 1, 1931, to December 31 of said year.

The Court of First Instance of Marinduque, which tried the  case, rendered a decision adverse  to the
defendants, sentencing them to  pay jointly to the  plaintiff said sum of P3,780 with legal interest  thereon
from August 19, 1932, until fully paid, plus  the costs  of the suit.   From said judgment, the  defendants
appealed to  this court, attributing to the lower court the five alleged errors relied upon in their brief, as
follows:

"I. The court a  quo erred in holding and maintaining that,  notwithstanding the fact  that  resolution No. 161
of the municipal council of Gasan which gave rise to the contract and bond,  Exhibits  A and B, respectively, of
the complaint, has been declared null and void by the  provincial board and by the Executive Bureau, the 
contract and bond in question are valid and, consequently, enforceable on the ground that  said resolution No.
161 is within or had been adopted within the powers of the council.

"II. The court a quo erred in holding that even granting that the contract Exhibit A is not valid de jure, it  is
a de facto contract as to the defendants, particularly the defendant-grantee Miguel Marasigan.

"III. The court a quo erred in not absolving the  defendants Angel R.  Sevilla  and Gonzalo L.  Luna, sureties of
the defendant Miguel Marasigan, notwithstanding the fact that resolution No. 161, by  virtue of which  said 
defendants subscribed the bond  Exhibit B of the  complaint, had been  declared null  and void  by the
provincial board and by the Executive Bureau.

"IV. The court a quo erred in holding that the  herein defendant Miguel Marasigan had taken advantage  of the
privilege to catch or gather  whitefish spawn  in the jurisdictional waters of the municipality of Gasan, during
the period from January 1, to  December 31,  1931, notwithstanding the fact that counsel for the plaintiff
municipality failed to present evidence, either documentary or oral, to justify said fact.

"V.  The court a quo erred in not absolving each and every one of the herein defendants from the  complaint, 
and in not ordering the plaintiff municipality  to return  to the defendant  Miguel  Marasigan the sums of four
hundred twenty pesos  (P420)  "and  eight  hundred  forty pesos (P840) deposited with said plaintiff, with
interest thereon from the respective dates of their deposit,  until their return."nona
The  case was tried by the lower court  with no other evidence than the admissions made by the parties in the
stipulation of facts mentioned in the body of the decision, the pertinent parts of which will be discilssed later. 
Said stipulation and the attached papers forming a part thereof enables this court to narrate the material facts
of the case, as follows:

The plaintiff-appellee municipality, on December 9, 1930, put up at auction the privilege of gathering
whitefish spawn in its jurisdictional waters for the period of one year from January 1, 1931.  Two bidders,
Graciano  Napa and  Miguel Marasigan, appeared at the  auction.  Both attached to their respective bids the 
certificate of not being behind in the payment of any tax,  issued by the municipal treasurer of Gasan,
Marinduque, as required by the provisions of resolution  No.  42, series  of 1930, of the  council of  said
municipality.   Graciano Napa proposed to accept the privilege by paying P5,000  therefor,  and  Miguel 
Marasigan proposed to do likewise, but  by paying only  P4,200.

The council of  the plaintiff-appellee municipality, in its resolution  No. 161 (Exhibit 1) of  December  11,
1930, rejected Graciano Napa's bid and accepted that  of the appellant Miguel Marasigan,  granting and 
selling  to  the latter the privilege put up at auction for the sum of P4,200, payable quarterly in advance at the
rate of P1,050 a quarter (Exhibit A).  To secure his compliance with the terms of the contract which was
immediately formalized by him and the plaintiff, and pursuant to the provisions of section 8 of resolution  No.
128,  series of 1925, of the council of said plaintiff, Miguel Marasigan  filed the bond, Exhibit B, subscribed on
December 15, 1930, by the defendants-appellants Angel R. Sevilla and Gonzalo L. Luna, who bound
themselves in said document to pay to the plaintiff the sum of P8,400, if Miguel Marasigan failed to deposit
one-fourth of P4,200 quarterly in advance in the municipal treasury of Gasan, in violation of the terms  of the
contract executed and entered into by him and the plaintiff on December 11, 1930 (Exhibit A), for the
compliance with which they  became sureties.

Before the plaintiff municipality and Miguel  Marasigan entered into their contract, and also before the latter's
sureties executed the above-stated bond, Graciano Napa, whose bid was rejected for the  reason that he  had
not attached thereto the certificate that he is not behind in the payment of any tax which he should have
obtained from  the municipal treasurer of Lemery, his native town,  forwarded a protest (Exhibit 4)  to the
provincial board,  which protest was later indorsed by said  provincial board to the Chief of the Executive
Bureau,  alleging that the plaintiff municipality violated  the  provisions of section 2323 of the Administrative
Code in rejecting his bid.

The provincial board,  passing  upon  Graciano  Napa's protest and acting under  the authority which, in its
opinion, was granted to it by section 2233 of the Administrative Code, held that resolution  No. 161, series of
1930, by virtue of which the municipal  council of Gasan rejected Graciano Napa's  bid  and accepted  that of 
Miguel Marasigan, notwithstanding the fact  that  the latter offered to pay less, was invalid, and suggested 
that  the privilege should be awarded to Graciano Napa who, in its opinion, appeared to be the highest bidder
in accordance with the provisions of sections 2323 and 2319 of the Administrative  Code (Exhibit 9).  The
Executive Bureau, concurring with  the provincial board's points of view, declared, in turn, that  the
concession made to Marasigan was illegal in view of the  fact that Graciano Napa was the highest bidder
(Exhibit 13).

The plaintiff municipality, through its  municipal council, exerted efforts to obtain the reconsideration of the
decisions of the provincial board of  Marinduque and of the Executive Bureau but, as these two  entities 
maintained their decisions  (Exhibits 14, 15,  16,  17 and 18), it  decided, in its resolution No. 11, series of
1931 (Exhibit 19), to award the privilege of gathering whitefish spawn within its waters to Graciano  Napa,
giving him a period of six days,  which was later extended to seven days, from January 8, 1931 (Exhibit 19-A),
to deposit the sum of P500, equivalent to 10 per cent of his bid of P5,000, with the municipal treasurer of
Gasan, so  as to comply with the (Provisions of section 8  of the  conditions of the public auction at  which he
was a bidder,  warning him that if he failed to  do so, the contract entered into by the plaintiff, through its
president,  and the appellant  Miguel Marasigan (Exhibit A), would  automatically take effect.  Graciano Napa
not only failed to make the deposit required by the plaintiff in its two above-stated resolutions Nos. 11 and
12, series of 1931 (Exhibits 19 and 19-A), but he formally declared, through his duly authorized
representative, that he yielded the privilege granted him to Miguel  Marasigan or to any  other person
selected by the municipal authorities (Exhibit 20).
One day later, or on January 15, 1931, the president of the plaintiff-appellee  municipality  sent the letter
Exhibit 21 to Miguel Marasigan, which reads:

"Sir:

"By virtue of Res. No.  11, c. s.,  as  amended by Res. No. 12, same series, and the communication of Mr. J.
Zaguirre dated January  14, 1931,  copy of which is hereto attached, you are hereby advised that the contract
entered into  between you and the municipality of Gasan for the tease of the bangus fishery privilege for the
year 1931 becomes effective on January 14, 1931, to run until December 31,  1931.

"You are hereby requested to appear before the session of the Municipal  Council  to be held at the office of
the undersigned tomorrow, January 16,  1931, bringing with yourself the contract and bond executed in  your
favor for ratification.

"You are further informed that you are given 10 days from the date hereof, within which time you are to pay
the amount of P1,050, as per tax corresponding to the first quarter, 1931."
Prior to this, but after the adoption by the municipal council of Gasan of its resolution No. 163 (Exhibit 7) on
December 16, 1930, and two  days before the provincial board declared said council's resolutions Nos. 161
and 163 invalid, the  president of the plaintiff-appellee municipality notified the appellant Miguel Marasigan
that the contract whereby he was granted the privilege of gathering white-fish  spawn  during the year 1931,
upon his  offer to pay P4,200 a year therefor, was suspended and that he should consider it ineffective in the
meantime in view of the fact that the question whether he (Miguel Marasigan)  or Graciano Napa was the
highest  bidder still remained undecided by the provincial board of Marinduque and by the Executive Bureau. 
The English translation of the letter sent by the municipal president to Miguel Marasigan, which was written
in Tagalog  (Exhibit 8), reads:
"Sir:

"In view of the fact  that the  whitefish (bangus) case has not yet been decided or determined by the provincial
board and  is still pending action to date, and in view of the instructions given me by the representative of the
Executive Bureau,  Mr. Jose Zaguirre, I beg to inform you, with due respect,  that you  should refrain from
carrying out and giving efficacy to the contract signed by me in the name of the  municipality,  relative  to  the
privilege  of gathering whitefish in your favor, from this date until further notice, because this case is still
pending action."

Knowing  the above-stated facts, let us now turn to the consideration of the alleged errors attributed to the
lower court by the appellants.

The first and third errors should be considered jointly on account of the close relation existing  between
them.  The determination of one depends upon that of the other.

This court believes  that  there is no necessity of even discussing the first error because the plaintiff itself
accepted the conclusions  and decision of the provincial board and of the Executive Bureau, so much so that in
its resolution No. 11, series of 1931, it thereafter considered Graciano Napa as the highest  bidder, going to
the extent of requiring him, as it in fact required him, to make the deposit of P500 prescribed  by the
conditions  of the auction sale in which he had intervened, and granting him a period of seven days to comply
with said  requirement  (Exhibits 19 and 19-A).   Furthermore, when the plaintiff  received Graciano Napa's
notice informing it that he ceded the privilege just granted him to appellant Miguel Marasigan or to any  other
person that it  might choose, said  plaintiff, through its municipal president, required Miguel Marasigan to
appear before its  municipal  council to  present  his formerly prepared contract as well as  his bond in order
that both documents might be ratified  (Exhibit 21).  It should be added to the foregoing that  on December 
18, 1930, the plaintiff, also through its municipal president, notified appellant Marasigan that his contract
should, in the meantime, be considered ineffectual and  that he should do nothing to put it in execution
because the case was still  undecided by the provincial  board and  by the Executive Bureau  (Exhibit 8).  It is
clear that it may be  logically inferred from these facts  that the contract regarding fishing privilege entered
into between the plaintiff and appellant Marasigan on December 11, 1930  (Exhibit A), not only  was not
consummated but was  cancelled.  Consequently, it  now appears useless and futile to discuss whether or not
resolution No.  161 (Exhibit 1)  is valid and  legal.   In  either case, it is a fact that said contract ceased to have
life or force to bind each of  the  contracting parties.  It  ceased  to  be valid from the time it was  cancelled and
this being so, neither the appellant Marasigan  nor his sureties or the other appellants were bound to comply,
with  the terms of their respective contracts  of  fishing privilege and suretyship.   This is so, particularly with
respect to the sureties-appellants, because suretyship cannot exist without a valid obligation (art. 1824 of the
Civil Code).   The obligation whose compliance by the appellant Marasigan was guaran- teed by the  sureties-
appellants, was exclusively that appearing in Exhibit A, which should begin on  January 1, 1931, not on the
14th of said month and year, and end on December 31st  next.  They  intervened  in no  other subsequent
contract which the plaintiff and Miguel Marasigan might have  entered into on or  after January 14,  1331.
Guaranty is not presumed; it must be express  and cannot be extended  beyond its specified  limits  (art. 1827
of the Civil Code).  Therefore, after eliminating the obligation for which said sureties-appellants desired to
answer with their bond, the bond  necessarily ceased and it  ceases to have effects.  Consequently, said errors
I and III are true and well founded.
As to the second error, it must be known that among the stipulations contained in the stipulation of facts
submitted to the court  are the following:

"21. That on July 20, 1931, Miguel Marasigan paid the sum of P16.20 to the municipal treasurer of Gasan, as
internal  revenue tax  on  sales of whitefish (bangus) spawn amounting to P1,080 during the months of April,
May and June, 1931; and that on August 22,1931, said Miguel Marasigan presented  his sales book  to the
municipal treasurer of Gasan, Mr. Gregorio D. Chavez, it appearing therein that said Miguel Marasigan,  in the
month of July,  1931, sold  whitefish spawn amounting to P85; in the month of August, 1931, none, and in the 
month of September,  1931, none.

"22.  That Miguel Marasigan is the concessionaire of the privilege to gather whitefish spawn in the
jurisdictional waters of the municipality of Boac, Marinduque, during the period  from January 1, 1931, to
December 31 of said  year, and that during  said period of  time he had paid the sales tax on the whitefish
spawn in question only in  the municipality of Gasan, without having made any payment in the municipality of
Boac.

"23. That defendant Miguel Marasigan, as bidder at the auction of December 9, 1930, deposited  in  the
municipal treasury of Gasan the sum of P420, equivalent to 10 per cent of his bid at said auction, and that said
sum has not yet been returned to him to date.

"24. That on June 29, 1931, said Miguel Marasigan delivered another sum of P840 to the municipal treasurer
of Gasan, making the total amount delivered by him to said municipal treasurer 91,260, the corresponding
receipt having been issued to Miguel Marasigan to that effect."
The facts resulting from the stipulations in question warrant and justify the inference that the appellant
Miguel Marasigan practically enjoyed the  privilege of gathering whitefish spawn in the jurisdictional waters 
of the municipality of Gasan, under the terms of the contract executed by him on December 11,  1930, but
which  was cancelled later  by virtue of Graciano Napa's protest,  at least  from the  month  of  April  to the 
month  of  July,   1931, inclusive.   If this were not true, he would not have  paid, as he spontaneously  paid to 
the municipal treasurer of Gasan, the following sums: P840  on June 29,  1931, and 916.20 on  July  20 of said
year, nor presented,  as he in fact presented to said official for inspection, his sales book wherein it appears
that his sales of  whitefish  spawn during the month of July of said year amounted  to P85.  The stipulation of
facts, however, is silent as to whether or not he enjoyed the privilege in question during the rest of the year.  
On the contrary, it states that he sold no whitefish spawn in August or September.

The excuse now offered by appellant Marasigan in his brief  that the above-stated amounts  were on  account
of license  fees or taxes on the  privilege  of gathering whitefish spawn in the jurisdictional waters of Boac,
obtained by him from  said municipality, is not supported  by  the evidence. If the payments made by him
were as  he claims them to be, he would have so stated in the stipulation of facts.  Not having  done so and,
furthermore,  the  practice generally observed being  to pay an obligation  in the municipality where the
payment is due, the only conclusion possible is that said appellant made all such payments on account of the
tacit contract entered into by him and the plaintiff after he  had  received the letter of  January 15, 1931 
(Exhibit 21), sent to him  by said plaintiff  through its municipal president.  This conclusion is all the more
logical because appellant Marasigan insisted in his answer, and  still continues to insist in his brief, that the
plaintiff is obliged to refund to him the amount of P1,260 which he claims to have paid to it, and which is no
other than the amount of the two sums of P420 and P840 stated in the last two paragraphs of the above-
stated stipulation of facts.  If it were really true,  as said appellant  contends, that said sum of P840 was paid
by him on account of his contract  for privpilege of gathering whitefish spawn, executed in his favor by the
municipality of Boac, he  would not have insisted in his answer, nor would he now insist in his brief, that  said
sum be  refunded to him, because in the absence of evidence, to the contrary, it must be presumed that it was
transmitted by  the municipal treasurer of Gasan to that of Boac, inasmuch as, accepting his contention,  he
was obliged to  pay something to the latter municipality by virtue of his alleged contract with it.

For the foregoing reasons, the conclusion of this court with respect to the second  error attributed to the
lower court by appellant Marasigan is that said error is without merit.  The  truth is that between him and the 
plaintiff, there was a tacit contract for the privilege of gathering whitefish spawn in the jurisdictional waters
of the municipality of Gasan, based upon Exhibit A, but without the in- tervention of the sureties-appellants,
for  the above-stated period,  or from April to July, 1931,  inclusive,  which is equivalent to one and one-third
quarter.  Said contract was one which, by its nature, need not be in writing  (sec. 335 of Act No. 190); but it is
binding because it has all the essential requisites of a valid contract (art. 1278 of the Civil Code).

The fourth  error is practically disposed of by the same reasons stated in passing upon the second error.

As to the fifth error, it must be stated  that appellant Marasigan really deposited in  the  municipal treasury  of
Gasan, as stated in  paragraph 23 of  the  stipulation  of facts, the  sum of P420 on account of his cancelled
original contract   (Exhibit A),  and that said deposit has  not  as yet been returned to  him.   Therefore, he is
entitled to  be credited with  said sum.

Summarizing all that has  been stated  heretofore, this court holds that  appellant Miguel Marasigan owes  and
is bound to  pay  to  the plaintiff  municipality the proceeds  of one  and  one-third quarter, for the  privilege of
gathering whitensh  spawn  enjoyed by  him in 1931, at the rate  of P4,200 a year, or P1,400 (P1,050 for one
quarter and P for one-third of a quarter); but he is, in turn, entitled to be credited with the sum of P420
deposited by him on December 9, 1930, and P840 paid by him on June 29, 1931, or the total amouat of
P1,260.   In other words,  appellant Marasigan is bound to pay the sum of P140 to the plaintiff.

In view of  the foregoing considerations,  this court ab- solves the  defendants-appellants Angel  R. Sevilla and
Gonzalo L. Luna from the complaint and orders the defendant-appellant Miguel Marasigan to pay the sum of
P140 to the plaintiff municipality.

It is considered unnecessary to expressly mention appellant Miguel Marasigan's counterclaim because, as

may  be seen, he is credited in this judgment with the sum of 91,260 which is  all that he claims therein,
without special pronouncement as to costs.  So  ordered.

Avanceña, C. J., Villa-Real, Abad Santos, Imperial, and Laurel, JJ., concur.

G.R. Nos. L-18774 and L-18876             March 27, 1923

EL VENCEDOR, plaintiff-appellee,
vs.
JUAN S. CANLAS, JOSE S. GALANG, MELCHOR DULAY, ALFONSO ROSARIO, DOMINGO PAYAUAN, and
DOMINGO MATABANG, defendants-appellants.

Jose S. Galang in his own behalf.

L. Siguion Reyna for the other appellants.
Romualdez Brothers for appellee.

OSTRAND, J.:

It appears from the evidence that during the period from October, 1919, to November, 1920, the defendant,
Juan S. Canlas, was the agent of the plaintiff for the sale of merchandise in the Province of Pangasinan on a
commission basis. On June 30, 1920, an accounting was had between the plaintiff and Canlas from which it
resulted that the latter had failed to pay the plaintiff for merchandise of the value of P5,039.67. Canlas
maintained that his failure to pay was due to the fact that he had sold some of the goods on credit and had
been unable to collect the accounts from the customers, but the plaintiff company insisted that he had no
authority to sell on credit and therefore was indebted to them for the amount of the outstanding accounts.
The plaintiff thereupon refusing to continue to furnish Canlas merchandise for sale unless he gave a bond,
Canlas induced his codefendants to become his sureties and on September 10, 1920, the following bond was
executed:

Know all men by these presents, That we, Melchor Dulay, Ildefonso Rosario, Domingo Payauan and
Domingo Matabang, of age, married and residents of San Carlos, Pangasinan, hereby bind ourselves,
our heirs, executors and administrators, jointly and severally on this bond in the sum of Two
Thousand Five Hundred Pesos (P2,500), Philippine currency, in favor of El Vencedor, a corporation
whose corporate existence and right to sue are hereby admitted, which sum we, our heirs, executors
and administrators, hereby agree to pay to El Vencedor, its successors and assigns in due form.

The condition of this obligation is the following: Whereas the firm, El Vencedor, has appointed Juan S.
Canlas, of Dagupan, its agent in the Philippine Islands in its business of selling goods belonging to the
said establishment, now therefore, if the said Juan S. Canlas shall faithfully fulfill his duties as such
agent and render a true account, and make exact payment of all such funds, goods, documents and
any other things belonging to the said establishment, El Vencedor, as may on any occasion come into
his possession or under his control, then the foregoing obligation shall become null and void;
otherwise it shall have full force and effect.

It is hereby specially stipulated that the undersigned expressly waive all the benefits provided for by
law, and agree that in the event of the failure of the said Juan S. Canlas faithfully to fulfill his duties as
agent, or to render an exact account of all such funds, goods, documents and any other things
pertaining to the firm, El Vencedor, as may on any occasion have come into his possession or under
his control, the said firm, El Vencedor, may immediately proceed against them or each of them
indiscriminately without the necessity of first exhausting all the remedies provided by law or part
thereof against said agent.

It is also hereby stipulated that the undersigned bind themselves jointly and severally not to
withdraw this bond without giving three months' previous notice to El Vencedor at its office in
Manila, of their intention to withdraw and cancel the same, it being distinctly understood that unless
such notice is given, this bond shall have full force and effect.

In testimony whereof, we sign these presents in San Carlos, Pangasinan, this 10th day of September,
1920.

(Sgd) MELCHOR DULAY

F-1679155 — 4-29-20, San Carlos, Pangasinan

        (Marked.)     DOMINGO PAYAUAN

F-1672444 — 1-3-20, San Carlos, Pangasinan

            (Sgd.)         ILDEFONSO ROSARIO
 F-1672704 — 1-9-20, San Carlos, Pangasinan
            (Sgd.)         DOMINGO MATABANG

F-1672410 — 1-2-20, San Carlos, Pangasinan

(Signed by two witnesses and acknowledged before a notary public.)

On the 15th of the same month the defendant Galang executed the following document in favor of the
plaintiff:

Know all men by these presents;

Whereas Mr. Juan S. Canlas was appointed travelling agent of El Vencedor, a commercial house of this
city of Manila, to offer for sale the goods and merchandise of the said house;

Whereas the said Juan S. Canlas, in his capacity as travelling agent, will have to take with himself
some samples of the goods and merchandise of the aforesaid house;

Whereas the said house requires of said Juan S. Canlas the giving of a bond in the amount of P1,500 to
guarantee the return to said house of any such goods and merchandise which the said agent may
have in his possession;

Now, therefore, I, Jose S. Galang, attorney and notary practicing in this City of Manila, and owner of
the Galang Pharmacy of this same city, the value of which is estimated at P3,000, hereby bind myself
as surety and guarantor of the said Juan S. Canlas to become liable in case of his inability to pay any
such damages as the house may suffer by reason of his failure to return such goods and merchandise,
as the said principal, Juan S. Canlas, may be legally obliged to return.

In witness whereof, I sign these presents in this City of Manila this 15th day of September, 1920.

(Sgd.) JOSE S. GALANG

Attorney and Notary Public
1331 Misericordia, Manila

It does not appear from the evidence that at the time of executing the undertakings above quoted the sureties
had knowledge of the fact that Canlas was at that time indebted to the company in any sum whatever.
Subsequent to the execution of the bonds the plaintiff furnished Canlas merchandise to the value of P194.99
for which he has failed to account.

The present action was instituted February 25, 1921, and the sureties on both bonds were made defendants.
After trial, the court below rendered judgment against Juan S. Canlas for the sum of P5,039.67, with interest at
10 per cent per annum from the 26th day of February, 1921, and with the costs, holding the defendants
Melchor Dulay, Alfonso Rosario, Domingo Payauan and Domingo Matabang liable as sureties, jointly and
severally, for the sum of P2,500 and the defendant Galang, likewise as surety, for the sum of P1,500, the full
amount of his bond. From this judgment all of the defendant sureties appeal, two bills of exceptions being
presented, one by the appellant Galang and one by the other appellants and numbered R. G. 18876 and R. G.
18774, respectively, in this court.

The principal question involved in the two appeals is whether the bonds can be considered retrospective so
as to respond for the debts contracted by Juan S. Canlas previously to the execution of the bonds. The court
below held that they are retrospective; this court takes the opposite view.

The rule is well known that a bond or contract of suretyship is strictly construed and cannot be extended
beyond its specified limits. (Civil Code, art. 1827.) It is not retrospective and no liability attaches for defaults
occuring before it is entered into unless an intent to be so liable is indicated. (32 Cyc., 74, 75 and authorities
there cited; 21 R. C. L., 979.)

We find nothing in the bonds in question which indicates that they were intended to be retrospective. There
is nothing in the documents to show that Canlas had entered upon the performance of his agency previously
to their execution or that he was indebted to his principal at that time; and the sureties, as far as the
documents show, had a right to rely on the presumption that their suretyship was prospective and to assume
that the samples, merchandise, and accounts, for which they bound themselves to respond, related to future
transactions.
It appears from the record that practically all the samples delivered to Canlas have been returned to the
plaintiff and a minority of the court, including the writer, think that Galang's contract of suretyship relates
only to samples and does not embrace merchandise delivered to Canlas for sale. The majority of the court are,
however, of the opinion that the bond covers both samples and ordinary merchandise.

As stated above, the value of the merchandise furnished Canlas subsequent to the execution of the bonds, and
not accounted for by him, is P194.99, and we hold that this is the only amount for which the appellants are
liable as sureties on the bonds in question.

The judgment appealed from is therefore modified and it is ordered that the defendants-appellants Jose
Galang, Melchor Dulay, Alfonso Rosario, Domingo Payauan, and Domingo Matabang, jointly and severally, pay
to the plaintiff the sum of P194.99, with interest at the rate of 10 per cent per annum from February 25, 1921,
and with the costs, reserving to said defendants their rights of contribution and their recourse to the principal
Canlas. So ordered.

Araullo, C.J., Street, Malcolm, Avanceña, Villamor, and Johns, JJ., concur.
Romualdez, J., took no part.
G.R. No. L-47495             August 14, 1941

THE TEXAS COMPANY (PHIL.), INC., petitioner,

vs.
TOMAS ALONSO, respondent.

C. D. Johnston & A. P. Deen for petitioner.

Tomas Alonso in his own behalf.

LAUREL, J.:

On November 5, 1935 Leonor S. Bantug and Tomas Alonso were sued by the Texas Company (P.I.), Inc. in the
Court of First Instance of Cebu for the recovery of the sum of P629, unpaid balance of the account of Leonora
S. Bantug in connection with the agency contract with the Texas Company for the faithful performance of
which Tomas Alonso signed the following:

For value received, we jointly and severally do hereby bind ourselves and each of us, in solidum, with
Leonor S. Bantug the agent named in the within and foregoing agreement, for full and complete
performance of same hereby waiving notice of non-performance by or demand upon said agent, and
the consent to any and all extensions of time for performance. Liability under this undertaking,
however, shall not exceed the sum of P2,000, Philippine currency.

Witness the hand and seal of the undersigned affixed in the presence of two witness, this 12th day of
August, 1929.

Leonor S. Bantug was declared in default as a result of her failure to appear or answer, but Tomas Alonso filed
an answer setting up a general denial and the special defenses that Leonor S. Bantug made him believe that he
was merely a co-security of one Vicente Palanca and he was never notified of the acceptance of his bond by
the Texas Company. After trial, the Court of First Instance of Cebu rendered judgment on July 10, 1973, which
was amended on February 1, 1938, sentencing Leonor S. Bantug and Tomas Alonso to pay jointly and
severally to the Texas Company the sum of P629, with interest at the rate of six per cent (6%) from the date of
filing of the complaint, and with proportional costs. Upon appeal by Tomas Alonso, the Court of Appeals
modified the judgment of the Court of First Instance of Cebu in the sense that Leonor S. Bantug was held
solely liable for the payment of the aforesaid sum of P629 to the Texas Company, with the consequent
absolution of Tomas Alonso. This case is now before us on petition for review by certiorari of the decision of
the Court of Appeals. It is contended by the petitioner that the Court of Appeals erred in holding that there
was merely an offer of guaranty on the part of the respondent, Tomas Alonso, and that the latter cannot be
held liable thereunder because he was never notified by the Texas Company of its acceptance.

The Court of Appeals has placed reliance upon our decision in National Bank vs. Garcia (47 Phil., 662), while
the petitioner invokes the case of National Bank vs. Escueta, (50 Phil., 991). In the first case, it was held that
there was merely an offer to give bond and, as there was no acceptance of the offer, this court refused to give
effect to the bond. In the second case, the sureties were held liable under their surety agreement which was
found to have been accepted by the creditor, and it was therein ruled that an acceptance need not always be
express or in writing. For the purpose of this decision, it is not indispensable for us to invoke one or the other
case above cited. The Court of Appeals found as a fact, and this is conclusive in this instance, that the bond in
question was executed at the request of the petitioner by virtue of the following clause of the agency contract:

Additional Security. — The Agent shall whenever requested by the Company in addition to the
guaranty herewith provided, furnish further guaranty or bond, conditioned upon the Agent's faithful
performance of this contract, in such individuals of firms as joint and several sureties as shall be
satisfactory to the Company.

In view of the foregoing clause which should be the law between the parties, it is obvious that, before a bond
is accepted by the petitioner, it has to be in such form and amount and with such sureties as shall be
satisfactory hereto; in other words, the bond is subject to petitioner's approval. The logical implication arising
from this requirement is that, if the petitioner is satisfied with any such bond, notice of its acceptance or
approval should necessarily be given to the property party in interest, namely, the surety or guarantor. In this
connection, we are likewise bound by the finding of the Court of Appeals that there is no evidence in this case
tending to show that the respondent, Tomas Alonso, ever had knowledge of any act on the part of petitioner
amounting to an implied acceptance, so as to justify the application of our decision in National Bank vs.
Escueta (50 Phil., 991).
While unnecessary to this decision, we choose to add a few words explanatory of the rule regarding the
necessity of acceptance in case of bonds. Where there is merely an offer of, or proposition for, a guaranty, or
merely a conditional guaranty in the sense that it requires action by the creditor before the obligation
becomes fixed, it does not become a binding obligation until it is accepted and, unless there is a waiver of
notice of such acceptance is given to, or acquired by, the guarantor, or until he has notice or knowledge that
the creditor has performed the conditions and intends to act upon the guaranty. (National Bank vs. Garcia, 47
Phil., 662; C. J., sec. 21, p. 901; 24 Am. Jur., sec. 37, p. 899.) The acceptance need not necessarily be express or
in writing, but may be indicated by acts amounting to acceptance. (National Bank vs. Escueta, 50 Phil., 991.)
Where, upon the other hand, the transaction is not merely an offer of guaranty but amounts to direct or
unconditional promise of guaranty, unless notice of acceptance is made a condition of the guaranty, all that is
necessary to make the promise binding is that the promise should act upon it, and notice of acceptance is not
necessary (28 C. J., sec. 25, p. 904; 24 Am. Jur., sec 37, p. 899), the reason being that the contract of guaranty is
unilateral (Visayan Surety and Insurance Corporation vs. Laperal, G.R. No. 46515, promulgated June 14,
1940).

The decision appealed from will be, as the same is hereby, affirmed, with costs of this instance against the
petitioner. So ordered.

Avanceña, C.J., Abad Santos, and Diaz, JJ., concur.

Separate Opinions

OZAETA, J., with whom concur MORAN and HORRILENO, JJ., dissenting:

We concede that the statement of fact made by the Court of Appeals is conclusive upon this Court in a petition
for review on certiorari. But when it appears from the decision of the Court of Appeals itself that such a
statement is but a conclusion drawn by that Court from the facts found by it, and that such conclusion is
patently erroneous, we hold that this Court should disregard it.

Of the nature, we believe, is the following statement made by the Court of Appeals in the course of its
ratiocination:

La fianza prestada por el apelante se otorgo a requerimiento de la demandante en virtud de la

siguiente clausula (15) del contrato de agencia Exhibit A, que dice asi:

"ADDITIONAL SECURITY. — The Agent shall, whenever requested by the Company in

addition to the guaranty herewith provided, furnish further guaranty or bond, conditioned
upon the agent's faithful performance of this contract, in such form and amount and with
such bank as surety or with such individuals or firms as joint and several sureties as shall be
satisfactory to the Company." (Pages 8-9, appendix to petitioner's brief.)

It is important to note that the above-quoted statement forms part of the court's ratio decidendi and not of its
findings of fact. Its findings of fact appear in the first three paragraphs of its decision, which we quote as
follows:

El 12 de agosto de 1929 la demandante y el demandado Leonor S. Bantug celebraron un contrato,

(Exhibit A) por virtud del cual aquella nombro a este Agente vendedor de sus productos petroliferos
en el Municipio de Maasin, Provincia de Leyte, mediante pago de una comision sobre el valor de
todos los efectos que llegase a vender, obligandose por su parte Leonor S. Bantug como Agente, a
ingresar y pagar a la compañ ia el importe neto de las ventas realizadas, despues de deducir su
comision y los demas gastos de agencia que se estipularon en el referido contrato.

En el mismo documento Exhibit A, el otro demandado Tomas Alonso suscribio una fianza,
obligandose mancomunada y solidariamente con el Agente Leonor S. Bantug a cumplir fielmente las
condiciones del contrato de Agencia hasta la suma de P2,000.

El estado de cuentas de la agencia que se presento en el juicio como Exhibit B, demuestra que la
ultima liquidacion arroja un balance contra el Agente Leonor S. Bantug por la cantidad de P629; y
como esta suma no ha sido pagado ni por Leonor S. Bantug ni por su fiador Tomas Alonso, a pesar de
los requerimientos que se les ha hecho, de ahi que la demandante, el 18 de noviembre de 1938,
 dedujo accion en el Juzgado de Primera Instancia de Cebu para el cobro de dicha suma y sus intereses
legales desde la presentacion de la demanda. (Pages 1-3, appendix to petitioner's brief.)

Now if, as found by the Court of Appeals itself, the agency contract between the petitioner and Leonor S.
Bantug was Exhibit A, dated August 12, 1929, and that very same document was on the same date signed by
the respondent Tomas Alonso as bondsman or surety of the agent, how could the bond in question, which
formed part of Exhibit A, be held to have been executed by virtue of clause 15 of said document providing for
additional security? Indeed, that very clause says that the agent shall furnish further guaranty or bond "in
addition to the guaranty herewith provided," whenever requested by the company. The "guaranty herewith
provided" was obviously the bond or guaranty given by the respondent on the same date and in the same
document. It appears clear to us, therefore, that the bond Exhibit A, being the original guaranty, could not be
the "additional guaranty" mentioned in clause 15 of said Exhibit A. Moreover, it does not appear that any
bond or guaranty, other than that of the respondent, to secure the performance of the agency contract in
question was in force on and after August 12, 1929.

Another illogical conclusion drawn by the Court of Appeals is this:

"Por el requerimiento que contiene la clausula preinserta, de que el Agente puede prestar una garantia
adicional a satisfaccion de la compañ ia, debe entenderse que la fianza prestada por el apelante era una oferta
o proposicion de garantia, cuya efectividad dependia de la acceptacion de la compañ ia, comunicada al
garante." (Page 9, appendix to petitioner's brief.) .

If, as previously found by the Court of Appeals, the herein respondent executed the bond in question "a
requerimiento de la demandante," how could said bond be understood as an "offer or proposition of
guaranty" from Alonso to the plaintiff? .

Yet the judgment of the Court of Appeals, as well as the affirming decision of the majority of this court, is
based on the conclusion that the bond sued upon was an additional guaranty; that it constituted a mere offer
of guaranty and, therefore, had to be accepted by the petitioner; and that, not having been accepted, it is
inefficacious. We have shown that such conclusion is unwarranted.

Our vote is to reverse the decision of the Court of Appeals and to affirm that of Judge Felix Martinez of the
Court of First Instance of Cebu, who tried this case.