REPUBLIC PLANTERS BANK, PETITIONER, VS. COURT OF APPEALS AND FERMIN CANLAS, RESPONDENTS.

This is an appeal by way of a Petition for Review on Certiorari
from the decision*
of the Court of Appeals in CA G.R. CV No. 07302, entitled “Republic
Planters Bank, Plaintiff-Appellee vs. Pinch Manufacturing Corporation, et al.,
Defendants, and Fermin Canlas, Defendant-Appellant”, which affirmed the
decision**
in Civil Case No. 82-5448 except that it completely absolved Fermin Canlas from
liability under the promissory notes and reduced the award for damages and
attorney’s fees. The RTC decision,
rendered on June 20, 1985, is quoted hereunder:

“WHEREFORE, premises considered, judgment is hereby rendered
in favor of the plaintiff Republic Planters Bank, ordering defendant Pinch
Manufacturing Corporation (formerly Worldwide Garment Manufacturing, Inc.) and
defendants Shozo Yamaguchi and Fermin Canlas to pay, jointly and severally, the
plaintiff bank the following sums with interest thereon at 16% per annum from
the dates indicated, to wit:

Under the promissory note (Exhibit “A”), the sum of
P300,000.00 with interest from January 29, 1981 until fully paid; under
promissory note (Exhibit “B”), the sum of P40,000.00 with interest
from November 27, 1980; under the promissory note (Exhibit “C”), the
sum of P166,466.00 with interest from January 29, 1981; under the promissory
note (Exhibit “E”), the sum of P86,130.31 with interest from January
29, 1981; under the promissory note (Exhibit “G”), the sum of
P12,703.70 with interest from November 27, 1980; under the promissory note
(Exhibit “H”), the sum of P281,875.91 with interest from January 29,
1981; and under the promissory note (Exhibit “I”), the sum of
P200,000.00 with interest from January 29, 1981.

Under the promissory note (Exhibit “D”) defendants Pinch
Manufacturing Corporation (formerly named Worldwide Garment Manufacturing,
Inc.) and Shozo Yamaguchi are ordered to pay, jointly and severally, the
plaintiff bank the sum of P367,000.00 with interest of 16% per annum from
January 29, 1981 until fully paid.

Under the promissory note (Exhibit “F”), defendant
corporation Pinch (formerly Worldwide) is ordered to pay the plaintiff bank the
sum of P140,000.00 with interest at 16% per annum from November 27, 1980 until
fully paid.

Defendant Pinch (formerly Worldwide) is hereby ordered to pay the
plaintiff the sum of P231,120.81 with interest at 12% per annum from July 1,
1981, until fully paid and the sum of P331,870.97 with interest from March 28,
1981, until fully paid.

All the defendants are also ordered to pay, jointly and severally,
the plaintiff the sum of P100,000.00 as and for reasonable attorney’s fee and
the further sum equivalent to 3% per annum of the respective principal sums
from the dates above stated as penalty charge until fully paid, plus one
percent (1%) of the principal sums as service charge.

With costs against the defendants.

SO ORDERED.”^[1]

From the above decision only defendant Fermin Canlas appealed to
the then Intermediate Appellate Court (now the Court of Appeals). His contention was that inasmuch as he
signed the promissory notes in his capacity as officer of the defunct Worldwide
Garment Manufacturing, Inc., he should not be held personally liable for such
authorized corporate acts that he performed. It is now the contention of the petitioner Republic Planters Bank that
having unconditionally signed the nine (9) promissory notes with Shozo
Yamaguchi, jointly and severally, defendant Fermin Canlas is solidarily liable
with Shozo Yamaguchi on each of the nine notes.

We find merit in this appeal.

From the records, these facts are established: Defendant Shozo Yamaguchi and private
respondent Fermin Canlas were President/Chief Operating Officer and Treasurer
respectively, of Worldwide Garment Manufacturing, Inc.. By virtue of Board Resolution No. 1 dated
August 1, 1979, defendant Shozo Yamaguchi and private respondent Fermin Canlas
were authorized to apply for credit facilities with the petitioner Republic
Planters Bank in the forms of export advances and letters of credit/trust
receipts accommodations. Petitioner
bank issued nine promissory notes, marked as Exhibits A to I inclusive, each of
which were uniformly worded in the following manner:

“__________, after date, for value received, I/we, jointly and
severally promise to pay to the ORDER of the REPUBLIC PLANTERS BANK, at its
office in Manila, Philippines, the sum of ________ PESOS (        ), Philippine Currency x x x.”

On the right bottom margin of the promissory notes appeared the
signatures of Shozo Yamaguchi and Fermin Canlas above their printed names with
the phrase “and (in) his personal capacity” typewritten below. At the bottom of the promissory notes appeared: “Please credit proceeds of this note to:

__________ Savings Account xx Current Account

No. 1372-00257-6

of WORLDWIDE GARMENT MFG. CORP.

These entries were separated from the
text of the notes with a bold line which ran horizontally across the pages.

In the promissory notes
marked as Exhibits C, D and F, the name Worldwide Garment Manufacturing,
Inc. was apparently rubber stamped above the signatures of defendant and
private respondent.

On December 20, 1982, Worldwide Garment Manufacturing, Inc. voted
to change its corporate name to Pinch Manufacturing Corporation.

On February 5, 1982, petitioner bank filed a complaint for the
recovery of sums of money
covered among others, by the nine
promissory notes with interest thereon, plus attorney’s fees and penalty
charges. The complaint was originally
brought against Worldwide Garment Manufacturing, Inc. inter alia, but it was later amended to drop Worldwide Manufacturing, Inc.
as defendant and substitute Pinch Manufacturing Corporation in its place. Defendants Pinch Manufacturing Corporation
and Shozo Yamaguchi did not file an Amended Answer and failed to appear at the
scheduled pre-trial conference despite due notice. Only private respondent Fermin Canlas filed an Amended Answer
wherein he denied having issued the promissory notes in question since
according to him, he was not an officer of Pinch Manufacturing Corporation, but
instead of Worldwide Garment Manufacturing, Inc., and that when he issued said
promissory notes in behalf of Worldwide Garment Manufacturing, Inc., the same were in blank, the
typewritten entries not appearing therein prior to the time he affixed his
signature.

In the mind of this Court, the only issue material to the resolution
of this appeal is whether private respondent Fermin Canlas is solidarily liable
with the other defendants, namely Pinch Manufacturing Corporation and Shozo
Yamaguchi, on the nine promissory notes.

We hold that
private respondent Fermin Canlas is solidarily liable on each of the promissory
notes bearing his signature for the following reasons:

The promissory notes are negotiable instruments and must be
governed by the Negotiable Instruments Law.^[2]

Under the Negotiable Instruments Law, persons who write their
names on the face of promissory notes are makers and are liable as such.^[3]
By signing the notes, the maker promises to pay to the order of the payee or
any holder^[4]
according to the tenor thereof.^[5] Based
on the above provisions of law, there is no denying that private respondent
Fermin Canlas is one of the co-makers of the promissory notes. As such, he cannot escape liability arising
therefrom.

Where an instrument containing the words “I promise to
pay” is signed by two or more persons, they are deemed to be jointly and severally liable
thereon.^[6]
An instrument which begins with “I”, “We”, or “Either
of us” promise to pay, when signed by two or more persons, makes them
solidarily liable.^[7]
The fact that the singular pronoun is used indicates that the promise is
individual as to each other; meaning that each of the co-signers is deemed to
have made an independent singular promise to pay the notes in full.

In the case at bar, the solidary liability of private respondent
Fermin Canlas is made clearer and certain, without reason for ambiguity, by the
presence of the phrase “joint and several” as describing the
unconditional promise to pay to the order of Republic Planters Bank. A joint and several note is one in which the
makers bind themselves both jointly and individually to the payee so that all
may be sued together for its enforcement, or the creditor may select one or
more as the object of the suit.^[8] A
joint and several obligation in common law corresponds to a civil law solidary
obligation; that is, one of several debtors bound in such wise that each is
liable for the entire amount, and not merely for his proportionate share.^[9]
By making a joint and several promise to pay to the order of Republic Planters
Bank, private respondent Fermin Canlas assumed the solidary liability of a
debtor and the payee may choose to enforce the notes against him alone or
jointly with Yamaguchi and Pinch Manufacturing Corporation as solidary debtors.

As to whether the interpolation of the phrase “and (in) his
personal capacity” below the signatures of the makers in the notes will affect the liability of the makers, We do not find it necessary to resolve
and decide, because it is immaterial and will not affect the liability of
private respondent Fermin Canlas as a joint and several debtor of the
notes. With or without the presence of said phrase, private
respondent Fermin Canlas is primarily liable as a co-maker of each of the notes
and his liability is that of a solidary debtor.

Finally, the respondent Court made a grave error in holding that
an amendment in a corporation’s Articles of Incorporation effecting a change of
corporate name, in this case from Worldwide Garment Manufacturing, Inc. to
Pinch Manufacturing Corporation, extinguished the personality of the original
corporation.

The corporation, upon such change in its name, is in no sense a
new corporation, nor the successor of the original corporation. It is the same corporation with a different
name, and its character is in no respect changed.^[10]

A change in the corporate name does not make a new corporation,
and whether effected by special act or under a general law, has no effect on
the identity of the corporation, or on its property, rights, or liabilities.^[11]

The corporation continues, as before, responsible in its new name
for all debts or other liabilities which it had previously contracted or
incurred.^[12]

As a general rule, officers or directors under the old corporate
name bear no personal liability for acts done or contracts entered into by
officers of the corporation, if duly authorized. Inasmuch as such officers acted in their
capacity as agent of the old corporation and the change of name meant only the
continuation of the old juridical entity, the corporation bearing the same name
is still bound by the acts of its agents if authorized by the Board. Under the Negotiable Instruments Law, the
liability of a person signing as an agent is specifically provided for as
follows:

Sec. 20. Liability of a
person signing as agent and so forth. Where the instrument contains or a person adds to his signature words
indicating that he signs for or on behalf of a principal, or in a
representative capacity, he is not liable on the instrument if he was duly
authorized; but the mere addition of words describing him as an agent, or as
filling a representative character, without disclosing his principal, does not
exempt him from personal liability.

Where the agent signs his name but nowhere in the instrument has
he disclosed the fact that he is acting in a representative capacity or the
name of the third party for whom he might have acted as agent, the agent is
personally liable to the holder of the instrument and cannot be permitted to
prove that he was merely acting as agent of another and parol or extrinsic
evidence is not admissible to avoid the agent’s personal liability.^[13]

On the private respondent’s contention that the promissory notes
were delivered to him in blank for his signature, we rule otherwise. A careful examination of the notes in
question shows that they are the stereotype printed form of promissory notes
generally used by commercial banking institutions to be signed by their clients
in obtaining loans. Such printed notes
are incomplete because there are blank spaces to be filled up on material
particulars such as payee’s name, amount of the loan, rate of interest, date of
issue and the maturity date. The terms
and conditions of the loan are printed on the note for the borrower-debtor’s
perusal. An incomplete instrument which
has been delivered to the borrower for his signature is governed by Section 14
of the Negotiable Instruments Law which provides, in so far as relevant to this
case, thus:

Sec. 14. Blanks; when
may be filled. — ­Where the
instrument is wanting in any material particular, the person in possession
thereof has a prima facie authority to complete it by filling up the
blanks therein. x x x x In order,
however, that any such instrument when completed may be enforced against any person
who became a party thereto prior to its completion, it must be filled up
strictly in accordance with the authority given and within a reasonable
time. x x x x.

Proof that the notes were signed in blank was only the
self-serving testimony of private respondent Fermin Canlas, as determined by
the trial court, so that the trial court “doubts that the defendant
(Canlas) signed in blank the promissory notes”. We chose to believe the bank’s testimony that the notes were
filled up before they were given to private respondent Fermin Canlas and
defendant Shozo Yamaguchi for their signatures as joint and several
promissors. For signing the notes above
their typewritten names, they bound themselves as unconditional makers. We take judicial notice of the customary
procedure of commercial banks of requiring their clientele to sign promissory
notes prepared by the banks in printed form with blank spaces already filled up
as per agreed terms of the loan, leaving the borrowers-debtors to do nothing
but read the terms and conditions therein printed and to sign as makers or
co-makers. When the notes were given to
private respondent Fermin Canlas for his signature, the notes were complete in
the sense that the spaces for the material particular had been filled up by the
bank as per agreement. The notes were
not incomplete instruments; neither were they given to private respondent
Fermin Canlas in blank as he claims. Thus, Section 14 of the Negotiable Instruments Law is not applicable.

This Court takes note that the respondent Court, relying on Reformina
vs. Tomol,^[14]
lowered the interest rate on the promissory notes from 16% to 12%.

The ruling in the case of Reformina vs. Tomol relied
upon by the appellate court in reducing the interest rate on the promissory
notes from 16% to 12% per annum does not squarely apply to the instant
petition. In the abovecited case, the
rate of 12% was applied to forebearances of money, goods or credit and court
judgments thereon, only in the absence of any stipulation between the parties.

In the case at bar however, it was found by the trial court that
the rate of interest is 9% per annum, which interest rate the plaintiff may at
any time without notice, raise within the limits allowed by law. And so, as of February 16, 1984, the
plaintiff had fixed the interest at 16% per annum.

This Court has held that the rates under the Usury Law, as
amended by Presidential Decree No. 116, are applicable only to interests by way
of compensation for the use or forebearance of money. Article 2209 of the Civil Code, on the other hand, governs
interests by way of damages.^[15] This
fine distinction was not taken into consideration by the appellate court, which instead made a general
statement that the interest rate be at 12% per annum.

Inasmuch as this Court had declared that increases in interest
rates are not subject to any ceiling prescribed by the Usury Law, the appellate
court erred in limiting the interest rate at 12% per annum. Central Bank Circular No. 905, Series of
1982 removed the Usury Law ceiling on interest rates.^[16]

In the light of the foregoing analysis and under the plain
language of the statute and jurisprudence on the matter, the decision of the
respondent Court of Appeals absolving private respondent Fermin Canlas is REVERSED
and SET ASIDE. Judgment is
hereby rendered declaring private respondent Fermin Canlas jointly and
severally liable on all the nine promissory notes with the following
sums and at 16% interest per annum from the dates indicated, to wit:

Under the promissory note
marked as Exhibit A, the sum of P300,000.00 with interest from January
29, 1981 until fully paid; under promissory note marked as Exhibit B, the sum
of P40,000.00 with interest from November 27, 1980; under the promissory note
denominated as Exhibit C, the amount of P166,466.00 with interest from January
29, 1981; under the promissory note denominated as Exhibit D, the amount of P367,000.00 with interest from
January 29, 1981 until fully paid; under the promissory note marked as Exhibit
E, the amount of P86,130.31 with interest from January 29, 1981; under the
promissory note marked as Exhibit F, the sum of P140,000.00 with interest from
November 27, 1980 until fully paid; under the promissory note marked as Exhibit
G, the amount of P12,703.70 with interest from November 27, 1980; the
promissory note marked as Exhibit H, the sum of P281,875.91 with interest from
January 29, 1981; and the promissory note marked as Exhibit I, the sum of
P200,000.00 with interest from January 29, 1981.

The liabilities of defendants Pinch Manufacturing Corporation
(formerly Worldwide Garment Manufacturing, Inc.) and Shozo Yamaguchi, for not
having appealed from the decision of the trial court, shall be adjudged in
accordance with the judgment rendered by the Court a quo.

With respect to attorney’s fees, and penalty and service charges,
the private respondent Fermin Canlas is hereby held jointly and solidarily
liable with defendants for the amounts found by the Court a quo. With
costs against private respondent.

SO ORDERED.

Narvasa, C.J., (Chairman), Feliciano, Regalado, and Nocon, JJ.,
concur.

*
Associate Justice Hector C. Fule, ponente, Associate Justices Lorna S.
Lombos-de la Fuente and Luis L. Victor, concurring.

**
Penned by Judge Daniel C. Macaraeg, RTC Manila, Branch LX.

^[1]
Rollo, pp. 49-50.

^[2]
Act 2031, enacted on February 3, 1911.

^[3]
Negotiable Instruments Law, Section 184; H.D. Lee Merchantile Co. vs.
Merchantile Co., 276 P. 807 (1929).

^[4]
Ibid., Section 1.

^[5]
Ibid., Section 60.

^[6]
Ibid., Section 17 (g).

^[7]
Powell vs. Mobley, 142 S.E. 678 (1928); Keenig vs. Curran’s
Restaurant, 159 Atl. 553 (1932).

^[8]
Rice vs. Gove, 22 Pick Mass 158; 33 AM Dec. 724.

^[9]
Black’s Law Dictionary, p. 1249 (5th ed., 1979).

^[10]
6 Fletcher, Cyclopedia of the
Law of Private Corporations, pp. 224-225 (Rev. ed., 1968).

^[11]
Mutual Building & Loan Association vs. Corum, 220 Cal. 282, citing
Corpus Juris; 30 P. 2d 509, 514 (1934); Pilsen Brewing Co. vs. Wallace,
291 ILL. 59, 125 N.E. 714, 8 A.L.R. 579 (1919).

^[12]
Ozan Lumber Co. vs. Davis Sewing Machine Co., 284 F. 161 (1922); 18
C.J.S. 572.

^[13]
Crocker National Bank vs. Say, 209 Cal. 436; 288 P. 69 (1930); Dayries vs.
Lindsly, 54 So. 791 (1911); Granada vs. PNB, 18 SCRA 1 (1966).

^[14]
139 SCRA 260 (1985).

^[15]
GSIS vs. Court of Appeals, 145 SCRA 311 (1986).

^[16]
Philippine National Bank vs. Court of Appeals, 196 SCRA 536 (1991).