REYNALDO C. HONRADO, JR., PETITIONER, VS. COURT OF APPEALS AND JARDINE-MANILA FINANCE, INC., RESPONDENTS.

In this petition for review on certiorari, petitioner Reynaldo C. Honrado,
Jr. seeks the reversal of the decision of the Court of Appeals dated August 5, 1987^[1]
which affirmed the decision dated January
22, 1986 of the Regional Trial Court, Branch CXL at Makati, Metro Manila.  The dispositive
portion of the affirmed decision reads as follows:

“WHEREFORE, judgment is hereby rendered ordering defendant
Reynaldo C. Honrado, Jr., to pay plaintiff MB
Finance, formerly Jardine-Manila Finance Corporation,
as follows:

“1.  P81,325.05, of which P40,769.00 representing
balance of the principal amount due shall earn interest of 14% per annum from
January 1984;

“2.  P4,076.00 as
liquidated damages;

“3.  P6,115.35 as
attorney’s fees; and

“4.  The costs of suit.”^[2]

The factual background of this case as found by the trial court and affirmed by the Court of
Appeals is as follows:

On August 21, 1978, Hadd Construction
and Trading Corpora­tion (HCTC for brevity) purchased on installment basis a
Toyota Corolla Hardtop, 2-Door,
1978 Model with Engine No. 3K-7515608, Serial
No. KE 35-915409, Plate
No. B-YE-290 from Cressida Sales Corporation (Cressida for brevity), HCTC, represented by peti­tioner Reynaldo C. Honrado, Jr. as president,
executed a promissory note in favor of Cressida, in the amount of P49,120,20,
payable at the rate of P1,364.45 a month for thirty six (36) months beginning
September 25,1978 and every 25th day of the month thereafter until full
payment.  In said promissory note, HCTC
agreed to a waiver of formal demand and presentment as well as notices of protest and dishonor, among others. 
Petitioner Honrado signed the
promissory note a second time as co-maker of HCTC.^[3]
A chattel mortgage on the motor vehicle was also executed by HCTC in favor of
Cressida.

On September 4, 1978,
Cressida executed a deed of assignment of the promissory note with warranty of
soundness in favor of Jardine-Manila Finance, Inc.
for and in consideration of P30,985.54.  This was executed with HCTC’s
conformity, represented again by petitioner as its president.  Petitioner Honrado
likewise signed this deed of assignment as co-maker.^[4]

For failure of HCTC to pay the monthly amortization as stipulated
in the promissory note, private respondent Jardine-Manila
Finance, Inc. filed on May 22, 1979 an action for replevin
and damages with the Regional Trial Court of Makati,
Branch CXL, docketed as Civil Case No. 2096, praying for the seizure and
delivery of the questioned motor vehicle to private respondent, with
alternative prayer, that in the event the normal delivery of the motor vehicle
cannot be effected, judgment be rendered ordering HCTC to pay P41,011.34 with
14% interest per annum from the date the obligation became due and demandable
until fully paid.  Private respondent impleaded petitioner Reynaldo Honrado,
Jr. as party-defendant on the contention that he signed the documents as
co-maker.

After an answer with compulsory
counterclaim was filed on November
7, 1981 by herein petitioner as defendant therein, the case was
thereafter set for pre-trial conference.

On September 14, 1983, private respondent informed the trial court that it was waiving the
recovery of the motor vehicle and chose to pursue instead its alternative
prayer considering that since the filing of the complaint, it has not been able
to recover said motor vehicle,
and that even if recovered, its current value would not allegedly be
commensurate to the amount of P41,011.34.

On the same day, private respondent moved to dismiss the case
against HCTC without prejudice on the ground that summons could not be served
on said defendant corporation since it was no longer holding office at its
given address and its present ad­dress could
not be ascertained.  This motion was
granted by the trial court on October 3, 1983.

In due time, the trial court rendered the assailed decision
against petitioner who seasonably appealed to the Court of Appeals.  On August
5, 1987, the Court of Appeals promulgated its decision affirming
that of the trial court.

Hence the present recourse of petitioner.

To support his prayer for reversal of the appellate court’s
decision, petitioner argues that he signed the promissory note and deed of
chattel mortgage in his official capacity as president of HCTC only.  He never intended to sign these documents as
co-maker.  Thus, petitioner in his
Memorandum raises the following issues:

“1)  WAS PRIVATE RESPONDENT CORRECT IN ITS
CONTENTION THAT PETITIONER WAS A CO-MAKER OF HCTC IN THE EXECUTION OF THE
PROMISSORY NOTE AND DEED OF CHATTEL MORTGAGE IN QUESTION?

2)  WAS THE COURT OF APPEALS CORRECT IN
ITS INTERPRETATION OF SUBJECT PROMISSORY NOTE AND DEED OF CHATTEL MORTGAGE IN
FAVOR OF PRIVATE RESPONDENT AND AGAINST PETITIONER?”^[5]

On the first issue, petitioner Honrado
vehemently denies any liability as co-maker of HCTC on the ground that the body
of documents in question, namely, the promissory note and deed of chattel
mortgage, indicates that the contract was between HCTC and Cressida only.  In addition, petitioner cites the testimony
of Mr. George Caruncho, the sales agent of Cressida,
who stated that petitioner was asked to sign these documents in his official
capacity as president of HCTC.

We find no merit in the above contention.  Petitioner Honrado
cannot plead that he signed these documents in his official capacity only as
president of HCTC and not as co-maker with HCTC.  The documents in question, including the deed
of assignment which contains petitioner’s signature as co-maker, whose
genuineness and due execution were admitted by petitioner, clearly indicate
otherwise.  As stated by respondent Court
of Appeals:

“The promissory note (Exhibit
“A”) clearly shows on its face that the appellant signed the same in
his capacity as President of the Hadd Construction
& Trading Corp. and again as
co-maker in his private capacity (Exhibits “A-2” &
“A-3”).  Appellant also signed
the Deed of Chattel Mortgage and the Affidavit of Good Faith four (4) times;
twice as President and twice as co-maker (Exhibit “B”).  And the appellant lastly signed his
conformity to the Deed of Assignment (Exhibit “C”) as president and
again as co-maker.”

From the above facts, petitioner, by
signing these documents several times as
co-maker, is presumed to be aware of the consequences of his
actions.  Considering that petitioner Honrado is of age and a businessman, holding the highest
position in Hadd Construction Trading Corporation, he
is presumed to have acted with due care, and to have signed the documents in
question with full knowledge of its contents as well as the attendant
obligations and responsibilities.  As
aptly observed by the trial court:

“x x x defendant Honrado is presumed to have intended the ordinary
consequences of his voluntary act and taken ordinary care of his concerns.  When defendant signed eight times on three
documents, and always as president and as co-maker, it is presumed that he had
exercised care in verifying his involvement in the transaction, considering his
age, business life, intelligence and the fact that he occupied the highest
office in the corporation.”^[6]

Furthermore, there is no evidence of fraud.  Petitioner on cross-examination testified as
follows:

“Q
–   At the left handmargin
of the promisso­ry note there appears a signature over the name Reynaldo C. Honrado Jr., President, Hadd
Construction and Trading Corp.  Will you
kindly tell us if this is your signature?

A
–     Yes, sir.

x        x         x

Q
–    Also, at the right hand margin of
the promissory note there appears a signature above the typewritten name
Reynaldo C. Honrado, Jr., co-maker, is this your signature?

A
–     Yes, sir, that is my
signature.”^[7]

Since petitioner Honrado did not question and in fact admit­ted the
genuineness and due execution of
these documents, includ­ing the genuineness of his signatures, then these
documents must be given legal effects.

The testimony of the
sales agent, Mr. Caruncho, can not change the legal effect of these documents.  Granting that he told petitioner to sign these documents in his official capacity
as president of HCTC, the mere fact that petitioner also signed
voluntarily as co-maker proves his participation in the transactions as a co-maker. 
Furthermore, Mr. Caruncho testified that when
petitioner signed these documents, all the type-written words already appeared
therein.

On the matter of interpretation of contracts, it is basic and
fundamental that if the terms of the contract
are clear, the literal meaning of the stipulation shall control.^[8]
The intention of the parties to a contract
must be determined from the contract itself. 
When petitioner Honrado signed several times
on these documents as president of HCTC and as co-maker, there is no other
interpretation but to conclusively presume that he bound himself also as
co-maker.  He can not therefore renege on
the obligations and liabilities attached
to a co-maker.  When the terms of
a contract are clear and do not leave room for doubt as to the intention of the
contracting parties, it is not necessary to interpret the same, the literal
meaning of its clauses should be followed.^[9]

The promissory note clearly stipulates a solidary
obligation as shown by the following clause “For value received I/We jointly and severally
promised to pay Cressida Motor Sales
Corp. x x x.  Signed:  Hadd Construction
& Trading Corporation by Reynaldo C. Honrado,
Jr., President and Reynaldo C. Honrado, Jr.,
Co-maker”.  In the case of Parot
vs. Gemora,^[10]
this Court had occasion to state:

“Where a promissory note is signed by
two or more persons promising to pay the amount of the said note juntos o separadamente, such comakers are individually liable for the payment of the
full amount of the obligation of such contract.”

Therefore, petitioner Honrado is solidarily
liable to pay the full amount of
the obligation as stipulated in
the promissory note to which
private respondent is entitled.

However, the award of P81,325.00 based
or the Statement of Account as of December 10, 1983,^[11]
prepared by private respondent includes other charges aside from the principal
obligation.  These charges have not been
satisfactorily proved during the trial. 
Moreover, a careful examination of the records of the case failed to
support these charges.  The records are bereft of any evidence to show how these charges were
computed nor is there an adequate showing that private respondent is entitled
thereto.  A mere mention of the
outstanding obligation of petitioner in the amount of P81,747.05 as of December
10, 1985 in the testimony of Alfonso Flores, private respondent’s manager for
collection,^[12]
is not sufficient without proof presented before the court of the expenses and
other charges imputed to petitioner. 
Thus, in the interest of justice and equity, petitioner should be liable
only for the outstanding balance based on the promissory note in the amount of
P40,769.00. 
This is computed by deducting the total payments equivalent to four 4)
monthly installments made by HCTC in the amount of P8,351.20
from the principal amount of the promissory note of P49,120.20.  In addition, this amount of P40,769.00 shall earn interest at the rate of 14% per annum to
be computed from March 10, 1979 when the total amount of the principal
obligation became due and demandable^[13]
until actual payment.  The award of 10%
liquidated damages and 15% attorney’s fees based on the
principal obligation is found to be equitable.

WHEREFORE, the assailed decision is hereby AFFIRMED, with
modification as indicated below, ordering
petitioner Honrado to pay private respondent
MB Finance, formerly Jardine-Manila Finance Corporation as follows:

1)   P40,769.00 with 14%
interest per annum from March 10, 1979 until actual payment;

2)   P4,076.90 as
liquidated damages;

3)   P6,115.35 as attorney’s
fees; and

4)   The costs of the suit.

SO ORDERED.

Gutierrez, Jr., Feliciano, Bidin, and Davide, Jr., JJ., concur.

^[1]
pp. 12-18, Rollo.

^[2]
p. 12, Rollo.

^[3]
Rollo, p. 44.

^[4]
Rollo, p. 48.

^[5]
Rollo, p. 63.

^[6]
Rollo, p. 16.

^[7]
T.S.N., May 13, 1985, pp. 6 & 7.

^[8]
Pangilinan vs. Ramos, G.R. No. 75304, January 23, 1990.

^[9]
Bilang vs. Erlanger & Galinger,
Inc., G.R. No. 44931, November 29,
1938, 66 Phil. 627.

^[10]
G.R. No. 2242, December 1, 1906,
7 Phil. 94.

^[11]
Exhibit F, Original Record, p. 99.

^[12]
T.S.N., February 20, 1984,
pp. 12-13.

^[13]
Exhibit E, Original Record, p. 98.