C. N. HODGES, PLAINTIFF AND APPELLANT, VS. MATIAS C. REY, ET AL., DEFENDANTS. PHILIPPINE NATIONAL BANK, DEFENDANT AND APPELLEE.

On September 21, 1938 Matias C. Rey obtained a loan from appellant C.
N. Hodges in the sum of P3,000.00 payable on or before February 21,
1939, as evidence by the promissory note Exhibit “A”. Three days
thereafter Rey, by means of the letter Exhibit “B”, authorized the
Philippine National Bank (Iloilo Branch), hereinafter referred to as
appellee, to pay his indebtedness to appellant out of whatever crop
loan might be granted to him by said bank for the agricultural year
1939-40. On the same date appellee’s acting manager sent the letter
Exhibit “C” to appellant to “confirm (to) the arrangement mentioned” in
the letter Exhibit “B”.

The evidence discloses that on
January 18, 1939 appellee granted Rey an agricultural line of
P39,000.00 subject to several conditions, among them, that the amount
of P10,000.00 would be retained by the bank to meet milling expenses
and that “whatever balance unpaid of his 1938-39 agricultural line
after liquidating all the sugar assigned to the bank, shall be charged
against this 1939-40 agricultural line” (Exhibits 5, 5-A-5-D).
According to the evidence in this connection Rey’s agricultural line
for the agricultural year 1938-39 had an unpaid balance of more than
P55,000.00 (Exhibit 6), but this notwithstanding, on March 2, 1939, the
acting manager of appellee authorized the payment to appellant Hodges
of the sum of P2,000.00 on account of Rey’s indebtedness, thus leaving
an unpaid balance of P1,000.00. In 1952, in view of his unsuccessful
attempts to collect this amount from Rey and appellee, he commenced the
present action in the Municipal Court of Iloilo to collect the total
sum of P1,161.00, with interest at the rate of 1% per month from March
2, 1939 until full payment, plus attorney’s fees and costs of suit.
After due trial said court rendered judgment dismissing the complaint
against appellee, but sentencing Rey to pay appellant the sums prayed
for in the latter’s complaint. Rey did not appeal, but appellant did to
the Court of First Instance of Iloilo where, after due trial, the
decision appealed from dismissing the complaint, with costs, was
rendered.

Upon the facts of the case and the law thereto applicable, we find this appeal to be without merits.

According to the evidence, appellee did not assume the obligation to
pay Rey’s indebtedness to appellant, neither as co-principal, nor as a
surety or guarantor. Rey simply authorized appellee to pay the amount
he owed appellant out of whatever crop loan or agricultural line
appellee might grant him for the agricultural year 1939-40, and all
that appellee did was to confirm or accept said “arrangement”. It is
true that the agricultural line that Rey expected was granted by
appellee, but it was subject to several conditions, amongst them, that
whatever Rey owed appellee in connection with the agricultural line
granted him for the previous agricultural year would be charged against
whatever agricultural line or crop loan would be granted to him for the
agricultural year 1939-40. Inasmuch as, according to the evidence, he
owed appellee more than P55,000.00 in that connection, it seems clear
that, in reality, there were no funds to the credit of Rey and in the
possession of appellee that could be legitimately applied to the
payment of Rey’s obligation to appellant. Therefore, the action taken
by appellee’s acting manager in ordering the payment of the sum of
P2,000.00 to appellant was not in accordance with the agricultural line
agreement for the agricultural year 1939-40—for which mistake said
acting manager was precisely reprimanded by his employer. That the
error thus committed—to the advantage of appellant—cannot be construed
as binding his principal to pay the remainder of Rey’s obligation is
too obvious to require argument.

In view of the foregoing, the decision appealed from is affirmed, with costs.

Bengzon, Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J. B. L., Barrera, and Paredes, JJ., concur.