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

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 air 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 occurring
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., did not take part.