Title
Macondary and Co. vs. Pinon
Case
G.R. No. L-13817
Decision Date
Aug 31, 1961
Senator Kangleon guaranteed payment for films sold to Piring and Pinon, who defaulted. Court ruled his letter constituted a valid guaranty, holding him liable as guarantor despite claims of payment extension and variations in sale terms.
contract of guaranty
valid contract
statute of frauds
A

Case Summary (G.R. No. L-13817)

Factual Background: The Film Sale and the Letter of 30 January 1954

The plaintiff alleged that, through a representation and undertaking made by Kangleon, then a member of the Senate, it extended credit to the principal debtors. Specifically, Kangleon wrote a letter dated 30 January 1954 addressed to the plaintiff’s manager, introducing Conrado Piring and Perfecto Pinon, described as theater characters known as “Pugak” and “Tugak,” and indicating that they wished to order cinematographic films for use under “All Stars Productions.” The letter stated that the payment for the film order “by their guaranty” would be addressed through Kangleon’s pledge, and it ended with the statement that the senator would appreciate assistance to facilitate the purchases subject to usual business procedures. The plaintiff relied on this letter and, on 2 and 9 February 1954, sold on credit and delivered 127 rolls of films—F. G. release positive type 825B, 35 mm. x 1,000 ft.—for a total sum of P6,985, payable on or before 9 May 1954, with 12% interest from maturity and 20% for attorney’s fees in case of suit for collection.

The plaintiff further asserted that it had conducted extensive investigations to locate leviable property of the principal debtors and found none, and it emphasized that the amount remained unpaid after the due date. Under the parties’ stipulations and documentary evidence, the buyers had agreed to pay interest at 1% per month on unpaid amounts, that venue of action would be the courts of Manila, and that attorney’s fees would be 20% of the amount due and costs in the event of litigation.

Complaint, Submissions, and the Default of Pinon and Piring

On 11 May 1955, the plaintiff filed the complaint in the Court of First Instance of Manila. It prayed for judgment against Pinon and Piring jointly and severally for P6,985, 12% interest, attorney’s fees in the amount equivalent to 20%, and costs, and it sought such other equitable relief. It also prayed for relief against Kangleon if the judgment against the principal debtors remained unsatisfied.

On 10 November 1955, Kangleon answered the complaint. He claimed that his letter dated 30 January 1954 was only meant to introduce his co-defendants and, even assuming an intent to guarantee, the letter amounted merely to an offer to act as guarantor. He further asserted that there was no perfected guaranty because the acceptance was allegedly not actually communicated to him. In addition, he alleged that, assuming a perfected guaranty, his obligation was extinguished by an alleged extension of payment granted by the plaintiff to the co-defendants up to 3 May 1954.

Kangleon also filed a counterclaim for P20,000 for damages to his good name and reputation, P2,000 as attorney’s fees, and P1,000 for litigation expenses, and he prayed for reimbursement from the principal debtors if he were held liable, plus attorney’s fees and expenses. Neither Pinon nor Piring answered despite notice, and the trial court declared them in default. On 25 August 1956, the plaintiff and the answering defendant entered into a stipulation of facts and submitted the case for judgment based on those facts. At the trial on 30 August 1956, the parties further stipulated that the plaintiff looked for properties of the principal debtors but found none. Despite the default status of Pinon and Piring, the plaintiff presented evidence against them before the court rendered judgment.

Judgment of the Trial Court and the Appellate Posture

On 30 September 1957, the trial court rendered judgment ordering Perfecto Pinon and Conrado Piring to pay the plaintiff P6,985, with 12% interest from May 9, 1954 until fully paid, plus an amount equivalent to 20% as attorney’s fees and costs. The court further provided that if the judgment remained unsatisfied by the principal debtors, Ruperto Kangleon would be sentenced to pay the plaintiff “all the amount” to which his co-defendants were sentenced.

Only the answering defendant appealed. During the appeal, Kangleon died, and his heirs and legal representative were substituted and appeared through counsel.

The Appellant’s Contentions on Appeal

The appellant advanced multiple arguments rooted in the concept of binding effect and the nature of a guaranty. First, he argued that although he had admitted the liability of his co-defendants declared in default in the stipulation of facts, such admission could not bind the defendants in default under res inter alios acta because an admission by one third person could not bind another. Second, he contended that the case was submitted to the court solely on the stipulation of facts between him and the plaintiff, and thus the plaintiff had not properly established the principal debtors’ liability as a prerequisite to holding him, whose liability was described as subsidiary.

Third, he disputed the interpretation of his letter dated 30 January 1954. He argued that it was merely a letter of introduction and did not constitute an offer of guaranty that would bind him. Fourth, he invoked article 2055 of the Civil Code to contend that his guaranty could not extend beyond what was stipulated in the letter: he asserted that the films actually sold and delivered differed from what his guaranty was intended to cover. Finally, he invoked an issue regarding notice of acceptance, insisting that the appellee should have notified him of acceptance of any offer to guarantee.

The Court’s Findings: Interpretation of Exhibit F and Perfection of the Guaranty

The Court rejected the appellant’s characterization of the senator’s letter as a mere introduction. It considered the content of Exhibit F in context. Although the letter began by introducing the bearers and stating that they wished to place an order, it later contained a statement that, “by their guaranty,” the appellant pledged payment. The Court treated this pledge as an undertaking that he would guarantee payment if the principal debtors failed to pay. It found that the appellant, being a responsible senator at the time, could be presumed to mean what he said and that the plaintiff, upon receipt of the letter, readily sold the films on credit to the principal debtors in reliance on that undertaking.

The Court also treated the appellant’s subsequent conduct as confirming his understanding of his obligation. In his answer to the plaintiff’s letter dated 27 May 1954, the appellant acknowledged that the films were delivered and billed for P6,985, that the amount had not been paid, and that the plaintiff requested him to send a check to cover the full amount. In his reply of 31 May 1954, the appellant did not deny the guarantee; instead, he stated that the principal debtors were being contacted to invite their attention to the plaintiff’s letter. The Court reasoned that had the appellant meant otherwise, he would have immediately denied that he had guaranteed the principal debtors’ payment, which he did not do.

On the appellant’s arguments regarding contract formation and notice, the Court held that the letter itself constituted the undertaking of guaranty and that no separate notice of acceptance was necessary for validity. It distinguished between the principal contract between the plaintiff and the principal debtors and the subsidiary guaranty contract. The Court held that the principal contract had already been perfected, and that the guaranty became binding upon the effectivity of the principal contract. It added that contracts are obligatory in whatever form they are entered into, provided that the essential requisites for validity are present (Article 1356, Civil Code). It also recognized that a guaranty is not a formal contract and may be valid in whatever form it is made if it complies with the statute of frauds, emphasizing that formality was not determinative in the case.

Establishment of the Principal Debtors’ Liability Despite Default

The appellant argued that the plaintiff had not established a case against the principal debtors and that the matter had been submitted solely on the stipulation of facts between him and the plaintiff. The Court disagreed. It noted that after the co-defendants had been declared in default, the case was called for trial and the plaintiff presented evidence, testimonial and documentary, establishing the principal debtors’ liability. The Court thus treated the principal debt as proven notwithstanding the default of Pinon and Piring, and it held that the appellant’s subsidiary obligation could be enforced if the judgment against the principal debtors remained unsatisfied.

On the plea of res inter alios acta, the Court’s reasoning—though tied to its reading of the record—showed that the stipulated facts and the evidence presented by the plaintiff served to establish the principal debtors’ primary liability. Thus, the Court did not accept the premise that the appellant’s admission could not be used at all against the defaulting defendants as a bar to the court’s finding of liability.

Scope of Guaranty Under Article 2055: Alleged Variance in the Goods and Dates of Payment

The appellant contended that even if the letter constituted guaranty, he could not be held beyond its terms because the letter allegedly covered 10 rol

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