To obligate the principal as a guarantor or surety. HELD: NO.
HELD: NO. The court first looks at the partial substitution of agency made by Manuel
G.R. No. L-24543 July 12, 1926
ROSA VILLA MONNA, plaintiff-appellee, vs. GUILLERMO GARCIA BOSQUE, ET
AL., defendants. GUILLERMO GARCIA BOSQUE, F. H. GOULETTE, and R. G.
FRANCE, appellants.
FACTS:
Rosa, widow of E. Bota, was the owner of a printing establishment in Escolta,
known as La Flor de Cataluna, Viuda de E. Bota. Rosa, acting through her attorney-in-fact,
Manuel Pirretas, sold the store to Guillermo Bosque and Jose Ruiz for P55,000.00, payable
in four installments of P15,000.00 upon execution of the contract, P10,000.00 one year after
the date of execution, P10,000.00 for the 2nd year and P15,000.00 on the 3rd year. Interest
rate is set to be 7% per annum. France and Goulette obligated themselves as solidary
sureties for Bosque. First installment was paid in order.
Manuel, the attorney-in-fact, went to a prolonged visit to Spain, and in
consideration of that trip, he made a document purporting to be a partial substitution of
agency, to Figueras Hermanos, a mercantile entity so that "they may be able to effect the
collection of money as may be due to the plaintiff by reason of the sale of the bookstore"
When the time to collect the 2nd year installment became due, Bosque was
unable to comply. After several negotiations with Alfredo Rocha, representative of Figueras
Hermanos, an agreement was reached Figueras will accept P5, 800.00 plus three
promissory notes payable each month from December 1920 to April 1921. The notes were
not paid promptly by Bosque but the balance due to them was paid in full on December 24,
1921.
About this time the owners of La Flor de Catalua appear to have converted it
into a limited partnership under the style of Guillermo Garcia Bosque, S. en C.;" and
presently a corporation was formed to take over the business under the name "Bota Printing
Company, Inc.". The partnership appears to have conveyed all its assets to this corporation
for the purported consideration of P15, 000.00. Meanwhile the seven notes representing the
unpaid balance of the second installment and interest were failing due without being paid.
A certain M. T. Figueras later enters into an agreement with Bosque, stating as follows: (a)
Guillermo was indebted to Rosa in the amount of P32, 000 for which R. G. France and F. H.
Goulette are bound as joint and several sureties, and that the partnership mentioned had
transferred all its assets to the Bota Printing Company, Inc., of which George Andrews was
a principal stockholder; (b) France and Goulette shall be relieved from all liability on their
contract as sureties and that in lieu of Guillermo, France and Goulette, the Bota Printing
Company, Inc., as debtor to the extent of P20, 000, which indebtedness was expressly
assumed by it, and George Andrews as debtor to the extent of P12, 000, will undertake to
pay Rosa.
Rosa is now alleging that Figueras had no authority to execute the contract
containing the release of Guillermo et al from their liability, and that she had not ratified the
same. Guillermo et al argue otherwise, using the agreement as a novation releasing him
from personal liability.
ISSUE: Whether the plaintiff is bound to the agreement by Figueras.
Pirretas, conferring on Figueras Hermanos or the person or persons exercising legal
representation of FH all of the powers that had been conferred on Pirretas by the plaintiff in
the original power of attorney.
It was argued that the original power of attorney included a wide range of powers
(including the general power of Pirretas to sell the business upon conditions fixed by
Pirretas, as well as the power of substitution to collect balance due to Rosa). However, the
Court has also said that the substitution agreement between Pirretas and FH were explicit
the sole purpose of the substitution was only to collect the balance of the selling price of
the Printing Establishment and Bookstore above-mentioned, which has been sold to Messrs.
Bosque and Pomar. Nothing can be construed to authorize Figueras to discharge debtors
or novate the contract. On the other hand, the substitution agreement is very much explicit
in limiting the powers of Figueras.
Furthermore, it was the mercantile entity Figueras Hermanos (or its legal
representatives) who were given the capacity to exercise the substituted power. M. T.
Figueras intervenes as purported attorney in fact without anything whatever to show that he
is in fact the legal representative of Figueras Hermanos or that he is there acting in such
capacity. The act of substitution conferred no authority whatever on M. T. Figueras as an
individual. The argument of Bosque that Rosa had ratified the novation of the contract
through acceptance of the amount was also disregarded by the Court, stating that the Bota
Printing Company became a primary debtor for Guillermo et al. Rosa could therefore accept
the payment of the debt despite Rosas refusal to be bound by the supposed novation of the
contract of debt of Guillermo.
France and Goulette, the appellant sureties, contended they were discharged by
the agreement between the principal debtor and Figueras Hermanos, as attorney in fact for
the plaintiff, whereby the period for the payment of the second installment was extended,
without the assent of the sureties, and new promissory notes for unpaid balance were
executed in the manner already mentioned. Such execution undoubtedly constituted an
extension of time as to the obligation included therein, such as would release a surety, even
though of the solidary type, under article 1851 of the Civil Code. Nevertheless, this court
held that the said extension and novation related only to the second installment of the
original obligation and interest accrued up to that time. Furthermore, the total amount of
these notes was afterwards paid in full, and they are not now the subject of controversy. It
results that the extension thus effected could not discharge the sureties from their liability as
to other installments upon which alone they have been sued in this action.
Finally, it is contended by the appellant sureties that they were discharged by a
fraud practiced upon them by the plaintiff in failing to require the debtor to execute a
mortgage upon the printing establishment to secure the debt which is the subject of this suit.
With this insistence we are unable to agree, for the reason that the proof does not show, in
our opinion, that the creditor, on her attorney in fact, was a party to any such agreement. On
the other hand it is to be collected from the evidence that the suggestion that a mortgage
would be executed on the plant to secure the purchase price and that this mortgage would
operate for the protection of the sureties came from the principal and not from any
representative of the plaintiff.
As a result of our examination of the case we find no error in the record
prejudicial to any of the appellants, and the judgment appealed from will be affirmed, So
ordered.