PHILIPPINE TRUST CO., PLAINTIFF AND APPELLANT, VS. ANTIGUA BOTICA RAMIREZ, DANIEL BOQUER, AND J. J. DUNBAR, DEFENDANTS AND APPELLEES.

This is an appeal from the judgment of the Court of First Instance of Manila
in the above-entitled three cases which have been tried together and decided by
the court below as one case.

In case G. R. No. 34686, plaintiff-appellant seeks to collect from
defendants-appellees, Antigua Botica Ramirez, Daniel Boquer, and J. J. Dunbar,
the amount of P7.531.28 which represents the balance of an overdraft account of
the Antigua Botica Ramirez with the plaintiff as of December 17, 1928. J. J.
Dunbar and Daniel Boquer were guarantors for the overdraft.

In case G. R. No. 34687, plaintiff-appellant seeks to collect from
defendants, Daniel Boquer, Antigua Botica Ramirez, J. J. Dunbar, and Eduardo
Gutierrez Repide, the amount of P5,837.07, balance as of March 24, 1930, of a
promissory note for P6,000 executed by the defendants on June 7, 1927, in favor
of the plaintiff, whereby the defendants promised, jointly “and severally, to
pay the plaintiff 90 days after its execution.

In case G. R. No. 34688, plaintiff-appellant seeks to collect from defendants
J. J. Dunbar, Daniel Boquer, Eduardo Gutierrez Repide, and Manuela Reyes y
Almeida, the sum of P17,702.52, balance as of December 10, 1927, of a promissory
note for P30,000 executed by Dunbar, Boquer, and Gutierrez Repide, P10,000 of
which was guaranteed by Manuela Reyes y Almeida with a mortgage of a parcel of
land situated in the City of Manila in favor of the plaintiff.

For some time before the complaints were filed the Antigua Botica Ramirez was
under the control and management of the plaintiff, and a few months after
plaintiff’s complaints were filed, and upon plaintiff’s petition, a receiver of
the properties of the defendant Antigua Botica Ramirez was
appointed.

After trial, the court below rendered judgment, dismissing the
three complaints, ordering the cancellation of the mortgage of Manuela Reyes’
land, discharging the receiver and ordering him to turn over the properties of
the defendant Antigua Botica Ramirez to plaintiff.. From this judgment the
plaintiff appealed to this court and made the following assignments of
error:

“1. The trial court erred in permitting the defendant. Eduardo Gutierrez
Repide testify, over the objection and exception of counsel for the plaintiff,
that he signed the promissory notes marked Exhibits J’ and M in cases Nos.
34687-88, as a mere surety, and for no consideration.

“2. The trial court erred in not striking from the record defendant Eduardo
Gutierrez Repide’s testimony that his codefendant Daniel Boquer told him that
the plaintiff gave him several extensions for the payment of the promissory
notes marked Exhibits J and M in cases Nos. 34687-88, and in finding that such
extensions were in fact given by plaintiff.

“3. The trial court erred in permitting the defendants Eduardo Gutierrez
Repide, Daniel Boquer and J. J. Dunbar and the witness Rosario Boquer testify,
over the objection and exception of counsel for the plaintiff, that the shares
which they owned of the stock of the defendant corporation Antigua Botica
Ramirez were assigned by them to plaintiff in payment of their obligations and
in finding that such assignment, as claimed by the defendants, was in fact
made.

“4. The trial court erred in holding that the plaintiff administered the
business of the defendant corporation Antigua Botica Ramirez, without any
intervention on the latter’s part, and in not permitting plaintiff’s witness J.
M. Araullo testify as to the condition of the corporation in the month of April,
1929.

“5. The trial court erred in finding that plaintiff sold certain furniture
and other properties of the defendant Antigua Botica Ramirez at very reduced
prices.

“6. The trial court erred in admitting in evidence the documents marked
defendant’s Exhibits 3, 4, 7, 30, 45, 46 and 47.

“7. The trial court erred in not admitting in evidence the documents marked
plaintiff’s Exhibits CC, DD and EE, and in not permitting plaintiff’s witnesses
E. B. Ford and E. B. Velasquez testify on them.

“8. The trial court erred in finding that the preponderance of evidence was
in favor of the defendants and against the plaintiff.

“9. The trial court erred in rendering judgment in favor of the defendants,
and not in favor of the plaintiff, as prayed for in its complaints.

“10. The trial court erred in denying plaintiff’s motions for a new
trial.”

Under the first assignment of error, counsel for the plaintiff contend that
the defendant Eduardo Gutierrez Repide should not have been permitted by the
lower court to testify that he signed the promissory notes marked plaintiff’s
Exhibits J and M as a mere surety, and for no consideration.

We think that this point is well taken. It is admitted by the defendant
Eduardo Gutierrez Repide that he signed the promissory notes as a surety, and it
was immaterial, so far as the plaintiff was concerned, whether or not the said
Gutierrez Repide received anything in payment for the use of his signature.
(Clark vs. Sellner, 42 Phil., 384.)

The second assignment of error has reference to the action of the lower court
in not striking from the record the testimony of the defendant Eduardo Gutierrez
Repide that he was told by the defendant Daniel Boquer that the plaintiff bank
gave him (Boquer) several extensions for the payment of the promissory notes
Exhibits J and M, and in finding that plaintiff gave such extensions.

We have not found anything in the record to justify defendants’ contention.
The only witness for the defendants who testified on the alleged extensions
given by plaintiff was the defendant Gutierrez Repide himself, and his testimony
consisted only of hearsay evidence and general statements against the direct and
positive evidence introduced by plaintiff that no extension was ever given for
the payment of the promissory notes. But what convinces the court that plaintiff
did not extend the time for the payment of the promissory notes in question, is
the fact that the testimony of the defendant Eduardo Gutierrez Repide was not
corroborated by either the defendant Daniel Boquer, who imparted the information
to Gutierrez Repide, or by the defendant J. J. Dunbar. The latter, in fact,
admitted that no extension was given him for the payment of the promissory
notes. Dunbar testified as follows:

“Q. Mr. Dunbar, have you ever obtained an extension for the payment of the
indebtedness or obligations of the Antigua Botica Ramirez to the Philippine
Trust Company and Fidelity & Surety Company covered by some of the documents
here presented in evidence?—A. No, sir.”

Plaintiff might not have been prompt in proceeding against the principal
debtor, but mere delay is no defense at all for the surety.

We rule that the lower court erred in not striking from the record the
testimony of the defendant Eduardo Gutierrez Repide on the alleged extensions
given by plaintiff to the defendant Daniel Boquer for the payment of the
promissory notes marked plaintiff’s Exhibits J and M, and in finding that such
extensions were given by plaintiff.

The third assignment of error is directed towards the action of the lower
court in permitting the defendants Eduardo Gutierrez Repide, Daniel Boquer, and
J. J. Dunbar, and the witness Rosario Boquer to testify that the shares which
they owned of the stock of the corporation Antigua Botica Ramirez were assigned
by them to plaintiff in payment of the defendants’ obligations, and in finding
that such assignment was, in fact, made.

The defendants claim that they assigned to plaintiff the shares which they
owned of the stock of the corporation Antigua Botica Ramirez in payment of their
obligations. Plaintiff denies that such assignment was ever made, and claims
that the shares in question were assigned for the purpose of enabling plaintiff
to reorganize the corporation Antigua Botica Ramirez and sell its business at a
fair and reasonable price.

We have carefully examined the evidence, and are of the opinion that
plaintiff’s contention should be sustained. The defendants Eduardo Gutierrez
Repide and Daniel Boquer testified, in direct examination, that a deed of
assignment to plaintiff of the shares in question in payment of the obligations
of the defendants was to be executed, and the record shows that no such document
was ever executed.

It is claimed by the defendants that the assignment of their shares of the
stock of the corporation Antigua Botica Ramirez to the plaintiff bank was made
in payment of their obligations. Examining, however, the notice for the special
stockholders’ meeting on April 26, 1929, which notice was prepared by the
defendant Eduardo Gutierrez Repide himself, no mention is made therein of any
assignment of the shares in question in payment of the obligations of the
defendants to plaintiff. The notice simply says that the meeting was being
called “for the purpose of electing the new members of the Board of Directors
and determining the manner of liquidating with the Philippine Trust Company and
Fidelity & Surety Company of the Philippine Islands the obligations of the
corporation (Antigua Botica Ramirez) pending payment, and at the same time
resolve the indorsement of all the shares of the corporation to the creditor
corporations in order that the latter might reorganize the Antigua Botica
Ramirez (antes Zobel), Inc. in the manner most convenient to their interest.”
Had such an assignment as claimed by the defendants been made, it is but natural
to expect that the defendant Gutierrez Repide would have made some mention
thereof in the notice for the meeting prepared by him.

The fourth and fifth assignments of error relate to the action of the lower
court in holding that plaintiff administered the business of the defendant
corporation Antigua Botica Ramirez without any intervention on the latter’s
part; in not permitting the witness J. M. Araullo to testify as to the condition
of the corporation in the month of April, 1929; and in finding that plaintiff
sold certain properties of the defendant Antigua Botica Ramirez at very reduced
prices.

We think these points are well taken.

The defendants contend that plaintiff should not have sold for P5,000 a
credit of P18,539.25 which the defendant corporation Antigua Botica Ramirez had
against the Palma Rosa Manufacturing Company. The “record, however, shows that
the debtor, the said Palma Rosa Manufacturing Company, was insolvent and that
before the new board of directors of the corporation Antigua Botica Ramirez made
the sale, the defendants Daniel Boquer and J. J. Dunbar and the stockholders
Rosario Boquer and Jose V. Ramirez were asked by plaintiff to make their
comments and recommendations and that no attention was paid to plaintiff’s
request. The defendants should not be heard now to complain.

The defendant Daniel Boquer testified, in direct examination, that he
delivered to plaintiff’s witness J. M. Araullo all the assets of the defendant
corporation Antigua Botica Ramirez. On rebuttal, Araullo was not permitted to
controvert Boquer’s testimony.

The defendant Daniel Boquer was the manager of the business of the Antigua
Botica Ramirez before the plaintiff took possession thereof, and the defendants
claimed that the business was properly managed by Boquer. On rebuttal, Araullo
was not permitted to testify as to the condition of the business at the time
plaintiff took it over for the purpose of reorganization.

The rulings of the lower court were erroneous. The witness Araullo’ should
have been permitted to testify, on rebuttal, on the points covered by the
defendant Boquer in direct examination.

With reference to the sale of a motorcycle and certain shelves of the
corporation Antigua Botica Ramirez, we have examined the record and found
nothing therein to show that they were not sold for a reasonable price. It
appears that the party who once offered P500 for the motorcycle and later on
P150, had no money and claimed that the motorcycle was in bad condition, and
there is total lack of evidence as to the condition in which the shelves were at
the time of the sale.

The sixth and seventh assignments of error are concerned with certain
evidence offered by the defendants and admitted by the lower court over the
objection of counsel for the plaintiff, and with certain evidence offered by the
plaintiff and rejected by the lower court.

In view of the decision to be rendered by the court, we shall only discuss
the assignment of error in connection with the document marked Exhibit EE
offered by plaintiff in evidence and rejected by the lower court.

Plaintiff’s Exhibit EE is a copy of the minutes of a special meeting of the
stockholders of the corporation Antigua Botica Ramirez held on April 26, 1929,
wherein a transcript of the stenographic notes taken at the stockholders’
meeting of the same corporation ‘held on April 19, 1929, was incorporated. At
the said meeting of April 19, 1929, the defendants Eduardo Gutierrez Repide, J.
J. Dunbar and Daniel Boquer admitted their obligations to the plaintiff bank and
such admissions were inserted, without any objection on the part of the said
defendants, in the minutes of the special stockholders’ meeting of April 26,
1929.

Counsel for the defendants objected to the introduction of said Exhibit EE on
the ground that it contained certain statements made by the said defendants
Eduardo Gutierrez Repide, J. J. Dunbar, and Daniel Boquer; that the latter were
not given an opportunity to explain their statements before plaintiff offered
the document in evidence; and that the said document was therefore inadmissible
as evidence. This contention is without merit. Had plaintiff intended to impeach
statements made by the defendants Eduardo Gutierrez Repide, J. J. Dunbar, and
Daniel Boquer on another occasion, plaintiff, as claimed by counsel for the
defendants, should have laid a foundation for the introduction in evidence of
said Exhibit EE by calling the attention of the said defendants Eduardo
Gutierrez Repide, J. J. Dunbar, and Daniel Boquer to their former statements,
but apparently plaintiff had no such purpose. Plaintiff’s purpose in introducing
the said Exhibit EE was probably to show certain admissions against interest
made by the defendants, and said Exhibit EE might then be admissible without the
necessity of plaintiff’s first making the defendants Eduardo Gutierrez Repide,
J. J. Dunbar, and Daniel Boquer explain their statements.

“* * * In offering in evidence the testimony given by Mr. Hemady and the
Hashims in the earlier case, the defendant-appellant did not claim that said
testimony contained admissions against interest by the parties to the action of
their agents; if such had been the case, the testimony would have been
admissible without the laying of a foundation and without the witnesses having
testified in the case at bar. * * *” (Juan Ysmael & Co. vs. Hashim and
Gorayeb, 50 Phil., 132, 138.)

For all the foregoing considerations, the judgment of the lower court is
hereby reversed, and judgment is hereby rendered—

In case No. 34686, in favor of the plaintiff Philippine Trust Company and
against the defendants Antigua Botica Ramirez, Daniel Boquer, and J. J. Dunbar,
jointly, for the sum of seven thousand five hundred thirty-one pesos and
twenty-eight centavos (P7,531.28), with interest at the rate of nine per cent
(9%) per annum from December 17, 1928, until paid.

In case No. 34687, in favor of the plaintiff Philippine Trust Company and
against the defendants Antigua Botica Ramirez, Daniel Boquer, J. J. Dunbar, and
Eduardo Gutierrez Repide jointly and severally, for the sum of five thousand
eight hundred thirty-seven pesos and seven centavos (1N5,837.O7), with interest
at the rate of ten per cent (10%) per annum, from March 24, 1930, until paid;
and additional sum of five ‘hundred eighty-three pesos and seventy centavos
(P583.70) for and as attorneys’ fees and costs of collection.

In case No. 34688 in favor of the plaintiff Philippine Trust Company and
against the defendants J. J. Dunbar, Daniel Boquer, Eduardo Gutierrez Repide and
Manuela Reyes y Almeida, jointly and severally, for the sum of seventeen
thousand seven hundred and tWo pesos and fifty-two centavos (P17,702.52), with
interest at the rate of ten per cent (10%) per annum from December 10, 1927,
until paid, the liability of the defendant Manuela Reyes y Almeida being
limited, however, to the sum of ten thousand pesos (P10,000), which is the
amount of the obligations secured by ‘her mortgage of February 13, 1926.

The defendants J. J. Dunbar, Daniel Boquer, and Eduardo Gutierrez Repide are
further sentenced to pay plaintiff, jointly and severally, the additional sum of
one thousand seven hundred and two pesos and twenty-five centavos (P1,702.25)
for and as attorneys’ fees and costs of collection.

The defendant Manuela Reyes y Almeida is further sentenced to pay plaintiff
the additional sum of one thousand pesos (P1,000) for and as attorneys’ fees and
costs of collection.

The costs will be limited to the attorneys’ fees and costs of collection as
hereinbefore stated. So ordered.

Avanceña, C. J., Johnson, Street, Malcolm, Villa-Real, and
Imperial, JJ., concur.

ROMUALDEZ, J.:

I vote to affirm.