G.R. No. 20588. December 17, 1923

This
civil action was instituted in the Court of First Instance of the
Province of Pampanga by the Asiatic Petroleum Company (Philippine
Islands), Ltd., to recover of Justino A. David, as principal, and of
Francisco Hizon y Singian, as surety, the sum of P51,560.12, an alleged
balance due upon liquidation of accounts between the plaintiff and said
David, and for which Francisco Hizon y Singian is alleged to be
obligated as joint and several surety with the principal debtor. At the
hearing judgment was rendered in favor of the plaintiff to recover of
Justino A. David, as principal, the sum of P40,786.98, and of Francisco
Hizon y Singian, as surety, a portion of the same debt not to exceed
the sum of P5,000. From this judgment Justino A. David did not appeal,
and his obligation, as principal debtor, to the extent adjudged by the
trial court, is not now in question. As regards the liability declared
by the trial court against Francisco Hizon y Singian, an appeal was
taken both by the plaintiff and by said Hizon, the plaintiff contending
that the court should have held Hizon jointly and severally responsible
for the entire sum adjudged against the principal debtor, while Hizon
claims that he should have been wholly absolved.

It appears
in evidence that the plaintiff is a corporation lawfully engaged in the
selling of petroleum products in the Philippine Islands. In the year
1916 the plaintiff made a contract (Exhibit B) with Justino A. David,
whereby the latter became the selling agent of the plaintiff at San
Fernando, in the Province of Pampanga, with authority extending not
only over the municipality of San Fernando but over the neighboring
places of Guagua, Angeles, San Simon, Capas, Magalang, and Mabalakat,
in the same province. In accordance with this contract and in
conformity with the practices of the contracting parties thereunder,
the said Justino A. David from time to time over a period of about five
years received for sale and distribution at the places mentioned
various consignments of kerosene, gasoline, and similar petroleum
products, which were sold and disposed of by Justino A. David as
selling agent. The relation thus established was continued without
interruption until in the year 1921, when all the transactions between
the two parties were gone over, and it was found that David was
indebted to the plaintiff in the amount of nearly P60,000, a sum which,
by subsequent payments, was reduced to P40,786.98, as found and
adjudged by the trial court.

The alleged liability of the
appellant, Francisco Hizon y Singian, is planted upon a document
(Exhibit B-1), which, as appearing in evidence, is pasted to the
Exhibit B. By the said Exhibit B-1, Francisco Hizon y Singian obligates
himself to answer jointly and severally with the agent (Justino A.
David) for all the obligations contracted or to be contracted by the
latter in accordance with the terms of the contract of agency (Exhibit
B), and the said Francisco Hizon y Singian further agrees finally to
answer for any balance that should be due to the plaintiff from said
agent upon liquidation of the account, or accounts, between said two
parties.

The contract of suretyship (Exhibit B-1) consists
of a single sheet of paper and the agreement therein expressed consists
of a printed form completed by the interpolation, with pen and ink, of
the names of the parties and the date of the transaction. It purports
to have been signed on November 13, 1916, but the notarial
acknowledgment appended thereto bears date of November 17, 1916, which
is the same as the date upon which the contract Exhibit B was
acknowledged. As already stated the document B-1 is pasted to the
contract Exhibit B, also made upon a printed form, but the two
documents do not form integral parts of the same sheet, or sheets.
However, the document B-1 refers to the contract of agency to which it
is appended; and when the two are considered together, it would appear
that the contract Exhibit B is the identical instrument referred to in
Exhibit B-1 and that the former was executed in relation with the
latter. Upon this point, however, a question is made, which constitutes
in our opinion the decisive feature of the case.

As already
stated the contract Exhibit B declares that David shall serve the
plaintiff company as its only selling agent at San Fernando, Guagua,
Angeles, San Simon, Capas, Magalang, and Mabalakat, in the Province of
Pampanga; and the indebtedness which is the subject of this action was
incurred by said David as selling agent of the plaintiff at all the
places named.

From the time demand was first made upon the
present appellant, Hizon, for the satisfaction of the balance due to
the plaintiff upon liquidation of the account of David, the appellant
has insisted that he had obligated himself to answer for indebtedness
to be incurred by David as selling agent at and for the town of San
Fernando and that he had been given to understand, at the time he
contracted the obligation, that the indebtedness so incurred would not
be in excess of P5,000.

The representation as to the amount
into which the indebtedness would run—a representation which seems to
have come exclusively from David—we consider unimportant, since the
written contract places no limit upon the amount of the obligation; but
the defendant’s contention concerning the place, or places, over which
David’s agency extended is of a more serious character.

In
this connection it is important to note that in the principal contract
(Exhibit B), as submitted in evidence, the words “Guagua, Angeles, San
Simon, Capas, Magalang, Mabalakat” (after the words San Fernando), have
been inserted in the printed form by means of a typewriting machine,
and owing to lack of space in the printed form, it was necessary for
the typist to interline the words “Guagua, Angeles, and San Simon.”
Furthermore, the word “Mabalakat,” as written by the typist, overlaps
and obscures the succeeding printed words, “in the,” standing before
“Province of Pampanga.” There is of course nothing particularly
suspicious about this, but the situation thus revealed suggests the
possibility that the words Guagua, Angeles, San Simon, Capas, Magalang,
and Mabalakat may have been inserted after the contract of suretyship
had been signed and acknowledged by the appellant Hizon. Conclusive
proof on this point comes, however, from another quarter and from a
source not at all dependent upon the credibility of the oral testimony
of the appellant Hizon. Said proof consists in the fact now to be
stated.

It appears that at the time the appellant
acknowledged the contract of suretyship (Exhibit B-1), duplicate copies
of the principal contract were produced before the notary public and
were there present for the inspection of the parties. The notary who
acted in the matter was one A. E. Cuyugan, an attorney, who, at the
time of the incident now in question, was engaged in the exercise of
the legal profession, and at the time he was examined as a witness was
filling the office of assistant attorney of the Bureau of Justice. This
witness was introduced by the plaintiff, and his testimony has every
appearance of being candid and truthful. He states that the two copies
of the principal contract which were produced at the time the
acknowledgment of Hizon to the contract of suretyship was taken were
the same.

Now, after the principal contract had been
acknowledged by Justino A. David, as appears from the notarial
certificate appended thereto, and after the contract of suretyship had
been at the same time acknowledged by the appellant, as appears from
the contemporaneous notarial certificate appended thereto, the notary
public delivered to David one copy of the principal contract, together
with one copy of the contract of suretyship acknowledged by the
appellant; and these two documents went to the hands of the plaintiff
and have appeared in evidence as Exhibits B and B-1, as already stated.
The other copy of the principal contract was retained in the possession
of the notary, in accordance with notarial usage in such matters. It
thus became a part of his official records and, with other documents,
was afterwards delivered by the notary to the clerk of court, of the
Province of Pampanga, by whom it was transmitted to the division of
archives of the Philippine Library and Museum.

In the course
of the trial of this case, a duly authenticated copy of said contract,
as appearing in the official archives of said division, was introduced
in evidence in this case; and upon comparison of said copy with the
Exhibit B, the two documents are found to differ in the sole
circumstance that the words Guagua, Angeles, San Simon, Capas,
Magalang, and Mabalakat, are wanting in the instrument now preserved in
the division of archives.

Upon this circumstance, in
relation with the testimony of the notary public and the appellant, the
trial judge reached the conclusion that at the time the appellant
signed and acknowledged the contract of suretyship the principal
contract made no mention of other places than San Fernando; and that
the names of the other places, after San Fernando, had been
interpolated in the document Exhibit B after the contract of suretyship
had been acknowledged. We believe that there can be little doubt as to
the correctness of this conclusion, and it completely bears out the
contention of the appellant to the effect that he really obligated
himself only to answer for such indebtedness as might be incurred by
David as agent at San Fernando. We may add that no witness was produced
by the plaintiff for the purpose of explaining in any way the
discrepancy between the two documents above referred to.

The
circumstance should not pass unnoticed that the appellant’s contention
concerning the extent of the agency at the time he obligated himself
was formulated at a time when he did not know of the existence of a
copy of the contract of agency in the files of the division of
archives; and the subsequent discovery of this piece of evidence is
strongly suggestive of the appellant’s good faith in claiming that he
had obligated himself only for the results of an agency to be
established at San Fernando. Our conclusion upon a careful
consideration of the evidence is that, when the appellant acknowledged
the contract of suretyship, the principal contract was limited to the
agency at that place and that the document Exhibit B was subsequently
amended by agreement between the plaintiff and Justino A. David, but
without the knowledge or consent of the appellant, by the insertion
therein of the names of the other places mentioned in said exhibit.

It is fundamental in the law of suretyship that any agreement between
the creditor and the principal debtor which essentially varies the
terms of the principal contract, without the consent of the surety,
will release the surety from liability. (21 R. C. L., 1004.) This
principle is equally valid under the civil as under the common law; and
though not specifically expressed in the Civil Code, it may be deduced,
so far as its application to the facts of this case is concerned, from
the second paragraph of article 1822 in relation with article 1143 of
the same Code. It requires no argument to show that the increase of
liability incident to the extension of the agency to other places than
San Fernando was prejudicial to the interest of the appellant, and the
change could not be lawfully made without his consent.

The
trial judge was therefore not in error in holding that the appellant
was in effect discharged from liability under the contract of
suretyship (Exhibit B-1); but his Honor nevertheless gave judgment
against the defendant for the sum of P5,000. In doing so he proceeded
upon the idea that the defendant admitted that he had intended to
obligate himself to the extent of P5,000, and his Honor concluded that
by entering into the contract of suretyship the defendant had induced
the plaintiff to make the contract of agency—which appears to have been
signed by the representative of the plaintiff after it had been signed
and acknowledged by David; for which reason his Honor considered it
just to hold the defendant to the extent at least in which he had
intended to bind himself. The validity of this conclusion cannot be
admitted. The only obligation which was created on the part of the
defendant was the contract of suretyship (Exhibit B-1), and when that
obligation was nullified by the subsequent alteration of the principal
contract, the appellant was discharged in toto.

In
the course of this decision the fact has not escaped our attention that
the answer of the appellant does not specially plead the alteration of
the contract of agency. But this is sufficiently explained by the
circumstance that the document which conclusively proves the fact of
alteration had not been discovered in the division of archives at the
time the answer was filed. We note further that when a copy of said
document was finally produced, it was introduced in evidence and
admitted without question. Upon this state of facts it would be
permissible, if necessary, for this court to direct an amendment of the
answer, as was done in Harty vs. Macabuhay (39 Phil., 495). But
as the point is purely defensive and the right clear, we consider it
unnecessary to require the appellant to go through the form of this
technicality.

In the light of what has been said it becomes
necessary to reverse the appealed judgment in so far as it awards the
sum of P5,000 against the appellant Francisco Hizon y Singian, and he
will be completely absolved from the complaint.

So ordered, without special pronouncement as to costs.

Malcolm, Avanceña, Villamor, and Romualdez, JJ., concur.
Johns, J., dissenting: Upon the facts shown in the record and the pleadings the judgment should be affirmed.