G.R. No. 18774 - Vencedor vs. Canlas

El Vencedor, a commercial establishment, employed Juan S. Canlas as its traveling agent for the sale of merchandise on a commission basis in the Province of Pangasinan.
The agency relationship was active during the period from October 1919 to November 1920.
Canlas was responsible for handling and selling the plaintiff’s goods, which involved both cash and, controversially, credit transactions, although the plaintiff did not authorize credit sales.

An accounting was held on June 30, 1920, which showed that Canlas had failed to pay the plaintiff the sum of P5,039.67 for the merchandise sold.
Canlas argued that his inability to settle the account derived from having sold some goods on credit and failing to collect the corresponding accounts from customers.
The plaintiff, however, maintained that Canlas had no authority to transact on credit and thus his debt for the outstanding accounts was valid and enforceable.

To secure Canlas’ performance, the plaintiff required him to give a bond before continuing to supply merchandise.
On September 10, 1920, Canlas induced his codefendants—Melchor Dulay, Ildefonso (Alfonso) Rosario, Domingo Payauan, and Domingo Matabang—to execute a surety bond.

The bond was for the sum of P2,500, binding the sureties jointly and severally.
The bond stipulated that if Canlas faithfully executed his duties, rendered a true account, and returned all items belonging to the plaintiff, the suretyship would become null and void.
It included an express waiver of any benefits provided by law, authorizing the plaintiff to directly proceed against the sureties without exhausting remedies against the agent first.
The obligation was conditioned on Canlas’ future conduct, with no indication that it was meant to cover debts incurred prior to its execution.

On September 15, 1920, Jose S. Galang executed a separate document in favor of the plaintiff.

Galang, a notary and owner of a pharmacy, guaranteed a bond of P1,500.
His instrument of suretyship pertained to guaranteeing the return of samples and merchandise that Canlas was required to take with him as part of his duties.

At the time these bonds were executed, the sureties had no knowledge of any indebtedness of Canlas; they relied on the presumption that the obligations were strictly prospective.

After the execution of the bonds, additional merchandise amounting to P194.99 was furnished to Canlas, for which he again failed to account.
The plaintiff initiated legal action on February 25, 1921, against Canlas and the sureties.
The trial court rendered judgment:

Holding Canlas liable for P5,039.67, with interest at 10% per annum from February 26, 1921, plus costs.
Confirming the liability of the sureties on the bonds: P2,500 for the four codefendants and P1,500 for Galang.

The appeal raised by the defendant sureties centered on the retrospective application of the bonds to preexisting debts.

Whether the surety bonds executed by the sureties were intended to be retrospective, thereby obliging them for debts incurred by Juan S. Canlas prior to the execution of the bonds.
Whether the language and stipulations in the bonds clearly indicated an intent to cover pre-bond transactions or were strictly limited to ensuring future performance under the agency agreement.
The extent of the sureties’ liability if the bonds were determined to be non-retrospective, particularly concerning the amount of P194.99 from subsequent transactions.