JOSE MA. ANSALDO, PETITIONER, VS. COURT OF APPEALS, AND PHILIPINE COMMERCIAL AND INDUSTRIAL BANK, RESPONDENTS.

A corporation known as Transoceanic
Factors Corporation (hereafter, TFC) executed six (6) promissory notes in favor
of Philippine Commercial & Industrial Bank (hereafter, PCIB).  The notes were signed for the firm by its
president, A.S. Moreno, over a span of some three (3) months, and were made out
in various amounts.  One was for
P50,000.00; two (2) were for P15,000.00 each; two (2), for P20,000.00 each; and
the sixth, for P30,000.00, or an aggregate of P150,000.00, exclusive of
interest.  The interest was fixed at the
rate of 10% per annum for all the notes except the first, as to which the
interest rate was set at 11% per annum. 
The notes all had the same maturity date.^[1]

At about the same time
and in separate transactions, TFC in its turn extended two (2) loans at
interest of 14% per annum:  one to Jose
M. Ansaldo, in the sum of P28,967.39, another, to Teofilo Reyes, Jr., in the amount of P26,000.00.  Each obligation was evidenced by a negotiable
promissory note^[2] in which, among other things, each promissor (1) waived “demand, presentment, protest and
notice of protest and non-payment” (of the note) and (2) undertook, in
case of default –

(a) ” ** to pay the
holder an additional sum of ten (10%) per centum of the balance due on ** (the)
note, as liquidated damages; ** (i)n case
extra-judicial collection is indorsed to an attorney,** an additional sum equal
to five (5%) per centum of the amount due, or twenty-five (25%) per centum of
the amount due in case of suit, and an additional sum in case of appeal, as
attorney’s fees in addition to the legal costs provided in the Rules of
Court;” and

(b) to waive “[i]n case of judicial execution*** all rights under the
provisions of Rule 39, Section 12 of the Rules of Court.”

TFC paid to PCIB — on account of its obligation to the latter in
the total amount of P150,000.00, as above stated — only P78,504.43, leaving a
balance of P71,495.57, exclusive of interest.^[3]

TFC also endorsed to PCIB
“for value,” the promissory notes of Ansaldo
and Reyes.^[4]

Alleging that despite the obligations having matured, and
notwithstanding repeated demands for payment thereof, TFC as well as Ansaldo and Reyes had failed to pay, PCIB subsequently
filed suit in the Court of First Instance of Manila to enforce said prestations in accordance with the terms of the corresponding
written agreements.^[5]
The suit ultimately resulted in a judgment in PCIB’s
favor,^[6]
ordering:

1) TFC “to pay the plaintiff (PCIB) the sum of P71,495.57,
with interest at the rate of 10% per annum from June 1, 1966 until full
payment, plus the further sum of 10% of the amount due for and as attorney’s
fees;”

2) Ansaldo “to pay the plaintiff the
sum of P28,967.39 under the promissory note Exhibit G, with interest at the
rate of 14% per annum, from December 29, 1964 until full payment minus the sum
of P3,011.42 previously paid by him to defendant (TFC) Transoceanic;” and

3) Reyes “to pay the plaintiff the sum of P26,000.00 under the
promissory note Exhibit H, with interest at the rate of 12% per annum from
August 2, 1965 until full payment.”

The Court declared, among other things, that:

1)  in an assignment of
credit, the consent of the debtor is not necessary to make him liable to the
assignee (adverting to Articles 1625, 1626 and 1627 of the Civil Code), what
the law requires being notice to the debtor and not consent of the latter;

2)  the promissory note,
being payable to order, may be negotiated by mere indorsement
(Sec. 184, Negotiable Instruments Law);

3)  the evidence
sufficiently established that Ansaldo had received
notice of the assignment of his promissory note; and

4)  the requirement that
the assignment be evidenced by a public instrument in Article 1625 of the Civil
Code “is only necessary to produce effects against third persons, and Reyes * *
(like Ansaldo) is not a third person, he being the
debtor of the credit which was assigned to the plaintiff.

Ansaldo and Reyes appealed to the Court
of Appeals.^[7]
That Court rendered judgment in due course, affirming that of the Trial
Court.  The affirming judgment has since
been appealed to this Court, but only by Ansaldo.

In its Decision, the First Division of the Appellate Tribunal,
speaking through the Presiding Justice at the time, Hon. Magno
S. Gatmaitan,^[8]
held as regards Arnaldo’s contentions, that –

1)  it was TFC’s right “to assign, in other words, sell” its
credits against Ansaldo and Reyes, to a third person;

2)  there was no need that
the assignment be in a public document, this being required only “to
produce** effect as against third persons” (Article 1625, Civil Code),
i.e., “to adversely affect 3rd persons,” i.e., “a 3rd person
with a right against original creditor, for example, an original creditor of
creditor, – against whom surely such an assignment by his debtor (creditor in
the credit assigned) would be prejudicial, because he, creditor of assigning
creditor, would thus be deprived of an attachable asset of his debtor **;”

3)  neither Ansaldo nor Reyes could complain against the assignment,
“for whether assigned or not, their obligations were not changed nor
enlarged; of course if they before notice of assignment, had paid unto
Transoceanic, they should not be prejudiced either, such payments made previous
to notice under the law, and in justice, should unto them be credited, – as
indeed, trial Judge credited Ansaldo with his
payments made of P3,011.42 previous to notice unto him **;“

4)  that it was the
assignee (PCIB), instead of the creditor-assignor (TFC), which notified Ansaldo of the assignment is of no moment:  “irrespective of who notified him, * *
what is important is that he be notified; * * it is assignee who is most
interested to notify, not creditor assignor who probably would have lost all
interest after he has assigned; if it be argued that if it is assignee who
notifies, that might be questionable, debtor might have his doubts, it is easy
for him; to inquire from his creditor **;“

5)  that the assignment of Ansaldo’s credit was made “after it had become long
overdue,” is also inconsequential, since this would not “mean that Ansaldo’s obligation had thereby disappeared * *, for the Negotiable
Instruments Law itself says that presentment for payment is not necessary in
order to charge the person primarily liable * *; indeed, it is most difficult
to understand that just because demand was not made with presentation of
evidence of the obligation within a reasonable time, the promissory note can
already be said to have become a dead obligation * * (and) original drawer,
primarily liable, should wait until lapse of prescriptive period for him to
claim that * *;” and

6)  the claim that the
assignment had not been made by an authorized
official of TFC was untenable not only because “for the first time
raised on appeal but also * * (because) absent any disautorization
from Transoceanic’s board of directors, the act of
its President of endorsing unto plaintiff Bank is not easy to see as outside of
the ordinary prerogative of an official in his position, more than this,
perhaps also that should be an intramural matter * * between Board and
President Moreno of Transoceanic, but when President endorsed to plaintiff
Bank, and Bank by that got possession of the promissory note, it already became
duty of debtor to pay unto Bank,- it would on the contrary have been rashness
if after notice of that, debtor should still pay unto Transoceanic, banking on
alleged lack of authority of President of Transoceanic to sign the assignment
**.”

Except for the question of the claimed lack of authority on the
part of TFC’s president to execute the assignment of
credit in favor of PCIB -­ improperly raised for the first time on appeal, as
observed by the Court of Appeals — the issues raised by Ansaldo
were set up by him in, and after analysis and assessment rejected by, both the
Trial Court and the Appellate Tribunal. 
This Court sees no error whatever in the appreciation of the facts by either Court or their application of the
relevant law and jurisprudence to those facts, inclusive of the question posed
anew by Ansaldo relative to the alleged absence of
authority on the part of TFC’s president to assign
the corporation’s credit to PCIB.

The only other issue set up by Ansaldo
in this Court is what he alleges to be the failure of PCIB to exhibit to him
his promissory note, invoking Section
74 of the Negotiable Instruments Law to the effect that “(t)he instrument
must be exhibited to the person from whom payment is demanded, and when it is
paid must be delivered up to the party paying it.” It suffices to dispose
of this issue by pointing out that it was never raised in either the Court of
Appeals or the Trial Court, and cannot be raised for the first time in this
Court.  In any case, it is on its face a
petty issue, for (1) if, according to him, such an exhibition was needful to
give him an opportunity to determine the genuineness of the instrument,^[9] this was rendered unnecessary not only by
his omission to contest it, but also by his admission of the authenticity of
the note implicit from his averment that he had made substantial payments
thereon;^[10] and (2) he had, moreover expressly waived
“demand, presentment, protest and notice of protest and non-payment”
of the note.

WHEREFORE, the appealed Decision of the Court of Appeals
is hereby AFFIRMED, with costs against the petitioner.

SO ORDERED.

Cruz, Gancayco, Griño-Aquino,
and Medialdea,
JJ., concur.

^[1]
Rollo, pp. 17-28

^[2]
Id., pp. 29-30, 31-32,
respectively

^[3]
Id., pp. 13-14

^[4]
Id., p. 13.  The Trial Court’s finding is that Ansaldo’s note “was assigned or indorsed by
Transoceanic, acting thru Moreno, in favor of plaintiff” (PCIB); and
Reyes’s note “was likewise assigned or indorsed by Transoceanic in favor
of the plaintiff acting thru Anselmo del Rosario who
succeeded Moreno as president of Transoceanic **” (Rollo,
p. 39).

^[5]
The case was docketed as Civil Case No. 74496, Rollo,
pp. 10 et seq.

^[6]
Rendered by then Judge (later Court of Appeals Justice, and then Associate
Justice of the Supreme Court) Conrado M. Vasquez (Rollo, pp. 38-45)

^[7]
The appeal was docketed as CA-G.R. No. 54003-R of the First Division

^[8]
With whom concurred de Castro and Reyes, JJ. (Rollo,
pp. 48-57)

^[9]
Rollo, p. 6

^[10]
Id., p. 36