THE PHILIPPINE NATIONAL BANK, PLAINTIFF AND APPELLANT, VS. JOAQUIN GARCIA, EUSEBIO RAMIREZ, RAFAEL LOPEZ, AND NIEVES CALLEJAS, DEFENDANTS AND APPELLEES.

The
judgment appealed from contains a statement of the pertinent facts in
this action and to make the case clear, the same is here inserted. It
reads thus:

“This is an action for the
recovery of the sum of P61,000, with legal interest thereon and costs.
It was instituted against Joaquin Garcia, Eusebio Ramirez, Rafael
Lopez, and Nieves Callejas, as follows: Against Joaquin Garcia, as
sheriff, for while he had in his hands the sum of P61,365.67, the
proceeds of an execution issued in cases Nos. 17547 and 17709 of this
court, entitled Vicente Sotelo y Matti and Manila Oil Refining Co.,
Inc., vs. Eduardo Campos, the Philippine National Bank, the
herein plaintiff, filed a written claim with said sheriff, asking for
the payment to it of said amount, on the ground therein alleged, to
wit, that the amount the plaintiffs in cases Nos. 17547 and 17709 had
the right to recover of the defendant Eduardo Campos was given as a
security for the debt owing from the Manila Oil Refining &
By-Products Co., Inc., to said Philippine National Bank; and that
notwithstanding said claim, the said sheriff paid the aforementioned
sum of P61,365.67 to the Manila Oil Refining & By-products Co.,
Inc., upon the giving of a bond by the latter corporation. And against
the defendants Eusebio Ramirez, Rafael Lopez, and Nieves Callejas, this
action was instituted because they were the sureties who executed the
bond given to secure the claim of the Philippine National Bank in an
amount equivalent to the said sum of P61,365.67.

“Subsequent
to said claim of the Philippine National Bank, a judgment was rendered
against the Manila Oil Refining & By-Products Co., Inc., for the
sum of P61,000, with interest thereon at 12 per cent per annum from
November 1, 1920, plus 10 per cent thereon as penalty and costs in case
No. 19774 of this court, brought by said Philippine National Bank
against the Manila Oil Refining and By-Products Co., Inc.

“Now
the question in this case is whether or not the bond given by the
defendants Eusebio Ramirez, Rafael Lopez, and Nieves Callejas is so
effective that a judgment can be rendered against them in the sum of
P61,000 claimed by said bank, in view of the fact that the execution
issued in said case No. 19774 against the Manila Oil Refining &
By-Products Co., Inc., was returned unsatisfied.

“The
Philippine National Bank has attempted to prove that the Manila Oil
Refining & By-Products Co., Inc., owed it the aforesaid sum of
P51,000, covered by the judgment in case No. 19774, which is the value
of the note marked Exhibit C signed May 8, 1920, by Vicente Sotelo and
Rafael Lopez, manager and treasurer, respectively, of the Manila Oil
Refining & By-Products Co., Inc., for the said sum of P61,000,
payable on demand. The bank has also attempted to prove that said note
was secured with the amount of the judgment rendered in said cases Nos.
17547 and 17709 against the defendant Eduardo Campos, who was sentenced
to pay Vicente Sotelo Matti and Manila Oil Refining & By-Products
Co., Inc., plaintiffs in said two cases, the sum of P69,436.24; that
the security aforementioned is stated in the letter dated April 21,
1920, which was sent by Sotelo Matti, manager of the Manila Oil
Refining & By-Products Co., Inc., to the president of the
Philippine National Bank; and that said security was accepted by the
president of said banking institution.

“The trial court,
after hearing the evidence of the bank and of the herein defendants,
finds that the note Exhibit C was executed in order to pay or
substitute the notes Exhibits 1 and 2, which had already matured and
which were for P16,000 and P45,000, respectively; that said note
Exhibit C was not secured with the amount of the judgment obtained
against Eduardo Campos, for, while said security was offered in the
letter marked Exhibit A in case No. 19774, it was not accepted by the
president of the bank, Mr. Venancio Concepcion, as was expressly
testified to by Mr. Vicente Sotelo Matti. Mr. Venancio Concepcion, on
the other hand, has testified that he does not remember having accepted
the aforesaid security and that he rather believes that it was not
accepted by him, because had it been approved by him he should have
placed his O. K. on the same letter Exhibit A, as it was his practice
to do, or attached thereto a note of the conditions by him imposed.

“No
document was executed, evidencing the security offered in Exhibit A,
nor does there exist any written evidence to show that said security
was accepted and approved.

“These being the facts, which
the court finds proven, the bank had no right to demand from the
sheriff the payment of the sum of P61,365.67, the proceeds of the
execution in the two cases Nos. 17709 and 17547, and therefore the bond
given by the herein defendants was entirely useless.

“The complaint is finally dismissed without special pronouncement as to costs.”

The appellant assigns seven errors as grounds for his appeal; but we do
not deem it necessary to discuss them one by one, for in our opinion
the decision of the case depends only upon whether or not the security
offered by the defendant Manila Oil Refining & By-Products Co.,
Inc., to the plaintiff bank was accepted.

We have examined
the record before us, and find that the testimony of Mr. Gaskell about
the acceptance of said security is insufficient to overthrow the
testimony of Messrs. Vicente Sotelo Matti and Venancio Concepcion, then
the president of the Philippine National Bank.

Outside of
the declaration of Mr. Gaskell, no evidence whatever was presented to
prove the acceptance of said security. In no document pertaining to the
appellant bank was any note or memorandum whatever made that the
president of the bank had accepted said security. Neither does Exhibit
A which is the letter from Mr. Vicente Sotelo Matti, president of the
defendant company, in which he offered said security, bear any mark
whatever of it having been accepted by the president of the bank.

Appellant argues that there was no valid reason for the renewal of the
two notes, Exhibits 1 and 2, and their merger into Exhibit C, which is
a note for P61,000, the total value of the two Exhibits 1 and 2,
payable upon demand of the bank, unless it is admitted that the
security offered by the defendant in Exhibit A has previously been
accepted by the bank; nor is there any sufficient reason why the bank
should have waived the security of the two persons who signed the notes
Exhibits 1 and 2, and accepted a new note without security of any kind
whatever. But we see nothing incredible in the explanation given by the
president of the Manila Oil Refining & By-Products Co., Inc., to
the effect that the president of the bank has preferred to have the
property of said company reappraised, for the reason that he considered
the property of the defendant company to be safer than the security
offered. This explanation not having been overthrown, we are inclined
to believe it, and the more so because the plaintiff bank, as above
stated, has not positively shown its acceptance, nor was any note
whatever of the acceptance of said security noted in its books.

In vol. 28, C. J., p. 900, we find the following:

“There
is some confusion in the cases in regard to the necessity for notice of
acceptance by the guarantee to the guarantor in order to show mutual
assent; but, subject to certain exceptions or modifications, it is a
well settled rule that, where there is merely an offer of, or
proposition for, a guaranty, or is merely a conditional guaranty in the
sense that it requires action by the guarantee before the obligation
becomes fixed, it does not become a binding obligation until it is
accepted by the guarantee, and unless there is a waiver of notice,
until notice of such acceptance is given to, or acquired by, the
guarantor, or until he has notice or knowledge that the guarantee has
performed the conditions and intends to act upon the guaranty; and in
some jurisdictions this rule is in effect prescribed by statute. It is
not sufficient that the person to whom the offer is made performs acts
in reliance upon the offer, but he must notify the one making the offer
of his acceptance thereof or of his intention to act upon it, the rule
differing from that applicable to contracts in general, which is, that
where a party offers to do a thing in a certain event which may become
known to him or with which he can make himself acquainted, he is not
entitled to notice of acceptance unless he specifically stipulates for
it.

* * * * * * *

“The
reason for requiring acceptance by the guarantee and notice thereof to
the guarantor is that it is essential to a meeting of the minds of the
parties and an inception of the contract. The guarantor is also
entitled to notice in order that, being secondarily liable, he may know
the nature and extent of his liability and have an opportunity of
taking indemnity from the principal obligor or of otherwise securing
himself against loss, and have a reasonable time in which to arrange
for the necessary funds to pay the amount of his guaranty, if the
principal defaults, and to avail himself of the appropriate means in
law and equity to compel the other parties to discharge him from future
responsibility. * * *”

Adhering to the
doctrine expounded in the foregoing citation, we find that the judgment
appealed from is in accordance with law, and must be, as is hereby,
affirmed with costs against the appellant. So ordered.

Johnson, Malcolm, Ostrand, and Johns, JJ., concur.

Romualdez, J.,
dissenting: With due respect, I dissent from the opinion of the
majority. I believe that the offer contained in Exhibit A was accepted
by the plaintiff bank. This acceptance was proven, in my judgment, by
the testimony of Mr. Gaskell.