A.M. No. 1765-CFI - Borre vs. Moya

During 1911 and 1912, the plaintiff, Behn, Meyer & Co., delivered candles and petroleum valued at P25,556.86 to Ira L. Davis, who acted as its agent.
Davis failed to account for a sum of P3,097.23, which remained due with interest.

Prior to the establishment of business relations between Davis and the plaintiff, Francisco Gonzalez entered into a written contract with Behn, Meyer & Co.
Through this contract, Gonzalez undertook to act as guarantor for Davis’s account, ensuring payment for the value of goods received by Davis.
The guaranty was evidenced by a joint and several bond in the sum of P5,000, signed by both Davis and Gonzalez.

The action was instituted by the plaintiff upon the bond against both Davis and Gonzalez to recover the balance due from Davis.
There was no dispute regarding the account balance due from Davis.
Judgment was rendered by the Court of First Instance against both parties.
Only Gonzalez appealed from the judgment.
The bond, the foundation of Gonzalez’s liability as guarantor, was not produced at trial due to its apparent loss; no formal secondary evidence of its contents was introduced.
An agreed statement of facts admitted the execution and delivery of the bond, which became the key evidence dispelling the need for the original document.

The agreed statement of facts included the admission: “Previous to beginning business between the plaintiff Behn, Meyer & Co., Ltd., and the defendant Ira L. Davis, the defendant, Ira L. Davis, delivered to the plaintiff a joint and several bond, in the sum of P5,000, signed by Francisco Gonzalez and himself.”
Although this statement was criticized as vague and incomplete, it was held by the court to clearly imply that a written bond existed.
The acts of signing and delivering the bond by Gonzalez and its acceptance by the plaintiff underscored the existence and binding nature of the guaranty contract.

The cause or consideration for Gonzalez’s liability was not explicitly stated in the agreed statement.
However, the circumstances of the case suggested the guaranty was given in consideration of the goods delivered (or to be delivered) by the plaintiff to Davis.
Under Article 1277 of the Civil Code and Section 334 (subsection 35) of the Code of Civil Procedure, a licit cause and consideration are presumed when a contract is reduced to writing.
The testimony of Davis further supported that the guaranty was executed for monies received by him as an agent.

Whether the admission in the agreed statement of facts, acknowledging the execution and delivery of the bond, is sufficient evidence to establish the existence of the written guaranty despite the loss of the physical document.

Whether the failure to introduce the original bond or any formal secondary evidence, as mandated by Section 335 of the Code of Civil Procedure, undermines the validity of the guaranty against Gonzalez.

Whether the incompleteness and vagueness concerning the cause or consideration in the agreed statement adversely affect the enforceability of the guaranty contract.
The role of legal presumptions under Article 1277 of the Civil Code and Section 334 of the Code of Civil Procedure in affirming the existence of a sufficient consideration for the contract.

Whether the term “agreement” in Section 4 of the English Statute of Frauds requires a written statement of both the promise and the consideration, in light of debates in English and American jurisprudence.
How these interpretations compare and contrast with the requirements under Philippine law.