guaranty cases 1

7/28/2019 Guaranty Cases 1

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MUNICIPALITY OF GASAN v MARASIGAN

FACTS:

The plaintiff-appellee municipality, on December 9, 1930, put up at auction the privilege of gathering

whitefish spawn in its jurisdictional waters for the period of one year from January 1, 1931. Two bidders,

Graciano Napa and Miguel Marasigan, appeared at the auction. Graciano Napa proposed to accept theprivilege by paying P5,000 therefor, Miguel Marasigan proposed to do likewise, but by paying only P4,200.

The council of the plaintiff-appellee municipality, in its resolution No. 161 (Exhibit 1) of December 11, 1930

rejected Graciano Napa's bid and accepted that of the appellant Miguel Marasigan.

To secure his compliance with the terms of the contract which was immediately formalized by him and the

plaintiff, and pursuant to the provisions of section 8 of resolution No. 128, series of 1925, of the council of

said plaintiff, Miguel Marasigan filed the bond, Exhibit B, subscribed on December 15, 1930, by the

defendants-appellants Angel R. Sevilla and Gonzalo L. Luna, who bound themselves in said document to pay

to the plaintiff the sum of P8,400, if Miguel Marasigan failed to deposit one-fourth of P4,200 quarterly in

advance in the municipal treasury of Gasan.

Graciano Napa forwarded a protest (Exhibit 4) to the provincial board, which protest was later indorsed by

said provincial board to the Chief of the Executive Bureau, alleging that the plaintiff municipality violated the

provisions of section 2323 of the Administrative Code in rejecting his bid.

The provincial board, passing upon Graciano Napa's protest and acting under the authority which, in its

opinion, was granted to it by section 2233 of the Administrative Code, held that resolution No. 161, series of

1930, by virtue of which the municipal council of Gasan rejected Graciano Napa's bid and accepted that of

Miguel Marasigan, notwithstanding the fact that the latter offered to pay less, was invalid, and suggested that

the privilege should be, awarded to Graciano Napa who, in its opinion, appeared to be the highest bidder in

accordance with the provisions of sections 2323 and 2319 of the Administrative Code (Exhibit 9). The

Executive Bureau, concurring with the provincial board's points of view, declared, in turn, that the concession

made to Marasigan was illegal in view of the fact that Graciano Napa was the highest bidder (Exhibit 13).

The plaintiff municipality decided to award the privilege of gathering whitefish spawn within its waters to

Graciano Napa, giving him a period of seven days, from January 8, 1931 (Exhibit 19-A), to deposit the sum of

P500.

Graciano Napa not only failed to make the deposit required by the plaintiff but he formally declared, through

his duly authorized representative, that he yielded the privilege granted him to Miguel Marasigan or to any

other person selected by the municipal authorities.

One day later plaintiff-appellee municipality sent the letter Exhibit 21 to Miguel Marasigan informing him that

the contract between them becomes effective on January 14, 1931.

Prior to this, plaintiff informed Marasigan that the contract granting Marasigan the privilege is suspended &

considered ineffective while the protest is pending.

Plaintiff filed an action to recover from Marasigan, Sevilla and Luana the sum of P 3,780 as part of license fees

which they failed to pay.

ISSUE: w/n respondents are liable

HELD:



No. The contract was not only considered not consummated but cancelled.

It ceased to be valid when it was cancelled

Neither the appellant nor his sureties were bound to comply with the terms of their respective contracts of

fishing privilege and suretyship.

This is so particularly with respect to the sureties, because suretyship cannot exist without a valid obligation.

Guaranty is not presumed.

The elimination of the obligation for which said sureties desired to answer with their bond also rendered the

bond also eliminated.

WISE & CO. v TANGLAO

FACTS

In the CFI of Manila, Wise & Co filed a civil case against Cornelio C. David for the recovery of a certain sum

of money. David was an agent of Wise & Co. and the amount claimed from him was the result of a liquidation of

accounts showing that he was indebted in said amount.

In said case Wise & Co. asked and obtained a preliminary attachment of David's property.

To avoid the execution of said attachment, David succeeded in having the defendant Attorney Tanglao

sign a power of attorney in his favor, with a clause (considered a special POA to David) “ To sign as

guarantor for himself in his indebtedness to Wise & Company of Manila, and to mortgage the Attorney’s

lot”

Subsequently, David made a compromise with the petitioner by paying P340 leaving an unpaid balance of

P296 and pledged the lot owned by the Atty as a guaranty for the balance.

Wise & Co. now institutes this case against Tanglao for the recovery of said unpaid amount.

There is no doubt that under POA, Tanglao empowered David, in his name, to enter into a contract of

suretyship and a contract of mortgage of the property described in the document, with Wise & Co.

However, David used said power of attorney only to mortgage the property and did not enter into

contract of suretyship.

ISSUE

Whether or not Atty. Tanglao is liable?

RULING

NO.

The SC ruled that there is nothing stated in the Compromise Agreement to the effect that Tanglao became

David's surety for the payment of the sum in question. Neither is this inferable from any of the clauses

thereof, and even if this inference might be made, it would be insufficient to create an obligation of

suretyship which, under the law, must be express and cannot be presumed.

The only obligation which the Compromise Agreement, in connection with POA, has created on the part

of Tanglao, is that resulting from the mortgage of a property belonging to him to secure the payment of

said P640. However, a foreclosure suit is not instituted in this case against Tanglao, but a purely personal

action for the recovery of the amount still owed by David.

At any rate, even granting that Defendant Tanglao may be considered as a surety under the cited

Compromise the action does not yet lie against him on the ground that all the legal remedies against the



debtor have not previously been exhausted (art. 1830 of the Civil Code, and decision of the Supreme

Court of Spain of March 2, 1891).

The Plaintiff has in its favor a judgment against debtor David for the payment of debt. It does not appear

that the execution of this judgment has been asked for and the Compromise, on the other hand, shows

that David has two pieces of property the value of which is in excess of the balance of the debt the

payment of which is sought of Tanglao in his alleged capacity as surety.

guaranty cases 1

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