Republic of the Philippines February 3, 1983, holding themselves jointly and

SUPREME COURT severally liable to private respondent Philippine

Manila Bank of Communications, Cagayan de Oro City
branch. The promissory note was due on May 5,
SECOND DIVISION 1983.

Said due date expired without the promissors having

paid their obligation. Consequently, on November
G.R. No. 96405 June 26, 1996 14, 1983 and on June 8, 1984, private respondent
sent petitioner telegrams demanding payment
BALDOMERO INCIONG, JR., petitioner, thereof.2 On December 11, 1984 private respondent
vs. also sent by registered mail a final letter of demand
COURT OF APPEALS and PHILIPPINE to Rene C. Naybe. Since both obligors did not
BANK OF COMMUNICATIONS, respondents. respond to the demands made, private respondent
filed on January 24, 1986 a complaint for collection
of the sum of P50,000.00 against the three obligors.

ROMERO, J.:p On November 25, 1986, the complaint was

dismissed for failure of the plaintiff to prosecute the
This is a petition for review on certiorari of the case. However, on January 9, 1987, the lower court
decision of the Court of Appeals affirming that of reconsidered the dismissal order and required the
the Regional Trial Court of Misamis Oriental, sheriff to serve the summonses. On January 27,
Branch 18,1 which disposed of Civil Case No. 1987, the lower court dismissed the case against
10507 for collection of a sum of money and defendant Pantanosas as prayed for by the private
damages, as follows: respondent herein. Meanwhile, only the summons
addressed to petitioner was served as the sheriff
WHEREFORE, defendant learned that defendant Naybe had gone to Saudi
BALDOMERO L. INCIONG, JR. is Arabia.
adjudged solidarily liable and
ordered to pay to the plaintiff In his answer, petitioner alleged that sometime in
Philippine Bank of Communications, January 1983, he was approached by his friend,
Cagayan de Oro City, the amount of Rudy Campos, who told him that he was a partner
FIFTY THOUSAND PESOS of Pio Tio, the branch manager of private
(P50,000.00), with interest thereon respondent in Cagayan de Oro City, in the falcata
from May 5, 1983 at 16% per logs operation business. Campos also intimated to
annum until fully paid; and 6% per him that Rene C. Naybe was interested in the
annum on the total amount due, as business and would contribute a chainsaw to the
liquidated damages or penalty from venture. He added that, although Naybe had no
May 5, 1983 until fully paid; plus money to buy the equipment, Pio Tio had assured
10% of the total amount due for Naybe of the approval of a loan he would make
expenses of litigation and attorney's with private respondent. Campos then persuaded
fees; and to pay the costs. petitioner to act as a "co-maker" in the said loan.
Petitioner allegedly acceded but with the
The counterclaim, as well as the understanding that he would only be a co-maker for
cross claim, are dismissed for lack of the loan of P50,000.00.
merit.
Petitioner alleged further that five (5) copies of a
SO ORDERED. blank promissory note were brought to him by
Campos at his office. He affixed his signature
Petitioner's liability resulted from the promissory thereto but in one copy, he indicated that he bound
note in the amount of P50,000.00 which he signed himself only for the amount of P5,000.00. Thus, it
with Rene C. Naybe and Gregorio D. Pantanosas on
was by trickery, fraud and misrepresentation that he Unfazed, petitioner filed a notion for leave to file a
was made liable for the amount of P50,000.00. motion for clarification. In the latter motion, he
asserted that he had attached Registry Receipt No.
In the aforementioned decision of the lower court, it 3268 to page 14 of the petition in compliance with
noted that the typewritten figure "-- 50,000 --" Circular No. 1-88. Thus, on August 7, 1991, the
clearly appears directly below the admitted Court granted his prayer that his petition be given
signature of the petitioner in the promissory due course and reinstated the same.7
note. 3 Hence, the latter's uncorroborated testimony
on his limited liability cannot prevail over the Nonetheless, we find the petition unmeritorious.
presumed regularity and fairness of the transaction,
under Sec. 5 (q) of Rule 131. The lower court added Annexed to the petition is a copy of an affidavit
that it was "rather odd" for petitioner to have executed on May 3, 1988, or after the rendition of
indicated in a copy and not in the original, of the the decision of the lower court, by Gregorio
promissory note, his supposed obligation in the Pantanosas, Jr., an MTCC judge and petitioner's co-
amount of P5,000.00 only. Finally, the lower court maker in the promissory note. It supports
held that, even granting that said limited amount petitioner's allegation that they were induced to sign
had actually been agreed upon, the same would the promissory note on the belief that it was only for
have been merely collateral between him and Naybe P5,000.00, adding that it was Campos who caused
and, therefore, not binding upon the private the amount of the loan to be increased to
respondent as creditor-bank. P50,000.00.

The lower court also noted that petitioner was a The affidavit is clearly intended to buttress
holder of a Bachelor of Laws degree and a labor petitioner's contention in the instant petition that the
consultant who was supposed to take due care of his Court of Appeals should have declared the
concerns, and that, on the witness stand, Pio Tio promissory note null and void on the following
denied having participated in the alleged business grounds: (a) the promissory note was signed in the
venture although he knew for a fact that the falcata office of Judge Pantanosas, outside the premises of
logs operation was encouraged by the bank for its the bank; (b) the loan was incurred for the purpose
export potential. of buying a second-hand chainsaw which cost only
P5,000.00; (c) even a new chainsaw would cost
Petitioner appealed the said decision to the Court of only P27,500.00; (d) the loan was not approved by
Appeals which, in its decision of August 31, 1990, the board or credit committee which was the
affirmed that of the lower court. His motion for practice, as it exceeded P5,000.00; (e) the loan had
reconsideration of the said decision having been no collateral; (f) petitioner and Judge Pantanosas
denied, he filed the instant petition for review were not present at the time the loan was released in
on certiorari. contravention of the bank practice, and (g) notices
of default are sent simultaneously and separately but
On February 6, 1991, the Court denied the petition no notice was validly sent to him.8 Finally,
for failure of petitioner to comply with the Rules of petitioner contends that in signing the promissory
Court and paragraph 2 of Circular note, his consent was vitiated by fraud as, contrary
No. 1-88, and to sufficiently show that respondent to their agreement that the loan was only for the
court had committed any reversible error in its amount of P5,000.00, the promissory note stated the
questioned decision.4 His motion for the amount of P50,000.00.
reconsideration of the denial of his petition was
likewise denied with finality in the Resolution of The above-stated points are clearly factual.
April 24, 1991.5 Thereafter, petitioner filed a Petitioner is to be reminded of the basic rule that
motion for leave to file a second motion for this Court is not a trier of facts. Having lost the
reconsideration which, in the Resolution of May 27, chance to fully ventilate his factual claims below,
1991, the Court denied. In the same Resolution, the petitioner may no longer be accorded the same
Court ordered the entry of judgment in this case.6 opportunity in the absence of grave abuse of
discretion on the part of the court below. Had he
presented Judge Pantanosas affidavit before the
lower court, it would have strengthened his claim therefore, fail as it was evidenced only by his own
that the promissory note did not reflect the correct uncorroborated and, expectedly, self-serving
amount of the loan. testimony.

Nor is there merit in petitioner's assertion that since Petitioner also argues that the dismissal of the
the promissory note "is not a public deed with the complaint against Naybe, the principal debtor, and
formalities prescribed by law but . . . a mere against Pantanosas, his co-maker, constituted a
commercial paper which does not bear the signature release of his obligation, especially because the
of . . . attesting witnesses," parol evidence may dismissal of the case against Pantanosas was upon
"overcome" the contents of the promissory the motion of private respondent itself. He cites as
note.9 The first paragraph of the parol evidence basis for his argument, Article 2080 of the Civil
rule 10 states: Code which provides that:

When the terms of an agreement The guarantors, even though they be

have been reduced to writing, it is solidary, are released from their
considered as containing all the obligation whenever by some act of
terms agreed upon and there can be, the creditor, they cannot be
between the parties and their subrogated to the rights, mortgages,
successors in interest, no evidence of and preferences of the latter.
such terms other than the contents of
the written agreement. It is to be noted, however, that petitioner signed the
promissory note as a solidary co-maker and not as a
Clearly, the rule does not specify that the guarantor. This is patent even from the first
written agreement be a public document. sentence of the promissory note which states as
follows:
What is required is that the agreement be in
writing as the rule is in fact founded on "long Ninety one (91) days after date, for
experience that written evidence is so much more value received, I/we, JOINTLY and
certain and accurate than that which rests in fleeting SEVERALLY promise to pay to the
memory only, that it would be unsafe, when parties PHILIPPINE BANK OF
have expressed the terms of their contract in COMMUNICATIONS at its office
writing, to admit weaker evidence to control and in the City of Cagayan de Oro,
vary the stronger and to show that the Philippines the sum of FIFTY
parties intended a different contract from that THOUSAND ONLY (P50,000.00)
expressed in the writing signed by them." 11 Thus, Pesos, Philippine Currency, together
for the parol evidence rule to apply, a written with interest . . . at the rate of
contract need not be in any particular form, or be SIXTEEN (16) per cent per
signed by both parties. 12 As a general rule, bills, annum until fully paid.
notes and other instruments of a similar nature are
not subject to be varied or contradicted by parol or A solidary or joint and several obligation is one in
extrinsic evidence. 13 which each debtor is liable for the entire obligation,
and each creditor is entitled to demand the whole
By alleging fraud in his answer, 14 petitioner was obligation. 17 on the other hand, Article 2047 of the
actually in the right direction towards proving that Civil Code states:
he and his co-makers agreed to a loan of P5,000.00
only considering that, where a parol By guaranty a person, called the
contemporaneous agreement was the inducing and guarantor, binds himself to the
moving cause of the written contract, it may be creditor to fulfill the obligation of the
shown by parol evidence. 15 However, fraud must principal debtor in case the latter
be established by clear and convincing evidence, should fail to do so.
mere preponderance of evidence, not even being
adequate. 16Petitioner's attempt to prove fraud must,
 If a person binds himself solidarily case against Judge Pontanosas may not be deemed
with the principal debtor, the as having discharged petitioner from liability as
provisions of Section 4, Chapter 3, well. As regards Naybe, suffice it to say that the
Title I of this Book shall be court never acquired jurisdiction over him.
observed. In such a case the contract Petitioner, therefore, may only have recourse
is called a suretyship. (Emphasis against his co-makers, as provided by law.
supplied.)
WHEREFORE, the instant petition for review
While a guarantor may bind himself on certiorari is hereby DENIED and the questioned
solidarily with the principal debtor, the decision of the Court of Appeals is AFFIRMED.
liability of a guarantor is different from that Costs against petitioner.
of a solidary debtor. Thus, Tolentino
explains: SO ORDERED.

A guarantor who binds himself in

solidum with the principal debtor
under the provisions of the second
paragraph does not become a
solidary co-debtor to all intents and
purposes. There is a difference
between a solidary co-debtor and
a fiador in solidum (surety). The
latter, outside of the liability he
assumes to pay the debt before the
property of the principal debtor has
been exhausted, retains all the other
rights, actions and benefits which
pertain to him by reason of
the fiansa; while a solidary co-debtor
has no other rights than those
bestowed upon him in Section 4,
Chapter 3, Title I, Book IV of the
Civil Code. 18

Section 4, Chapter 3, Title I, Book IV of the Civil

Code states the law on joint and several obligations.
Under Art. 1207 thereof, when there are two or
more debtors in one and the same obligation, the
presumption is that the obligation is joint so that
each of the debtors is liable only for a proportionate
part of the debt. There is a solidary liability only
when the obligation expressly so states, when the
law so provides or when the nature of the obligation
so requires. 19

Because the promissory note involved in this case

expressly states that the three signatories therein
are jointly and severally liable, any one, some or all
of them may be proceeded against for the entire
obligation. 20 The choice is left to the solidary
creditor to determine against whom he will enforce
collection. 21 Consequently, the dismissal of the
 Republic of the Philippines ...."2 Pursuant to said agreement, appellee rendered
SUPREME COURT engineering services to appellant in the following
Manila projects:

EN BANC (a) Fil-American Life Insurance

Building at Legaspi City;
G.R. No. L-27782 July 31, 1970
(b) Fil-American Life Insurance
OCTAVIO A. KALALO, plaintiff-appellee, Building at Iloilo City;
vs.
ALFREDO J. LUZ, defendant-appellant. (c) General Milling Corporation
Flour Mill at Opon Cebu;
Amelia K. del Rosario for plaintiff-appellee.
(d) Menzi Building at Ayala Blvd.,
Pelaez, Jalandoni & Jamir for defendant-appellant. Makati, Rizal;

(e) International Rice Research

Institute, Research center Los Baños,
ZALDIVAR, J.: Laguna;

Appeal from the decision, dated, February 10, 1967, (f) Aurelia's Building at Mabini,
of the Court of First Instance of Rizal (Branch V, Ermita, Manila;
Quezon City) in its Civil Case No. Q-6561.
(g) Far East Bank's Office at Fil-
On November 17, 1959, plaintiff-appellee Octavio American Life Insurance Building at
A. Kalalo hereinafter referred to as appellee), a Isaac Peral Ermita, Manila;
licensed civil engineer doing business under the
firm name of O. A. Kalalo and Associates, entered (h) Arthur Young's residence at
into an agreement (Exhibit A )1 with defendant- Forbes Park, Makati, Rizal;
appellant Alfredo J . Luz (hereinafter referred to
as appellant), a licensed architect, doing business (i) L & S Building at Dewey Blvd.,
under firm name of A. J. Luz and Associates, Manila; and
whereby the former was to render engineering
design services to the latter for fees, as stipulated in (j) Stanvac Refinery Service
the agreement. The services included design Building at Limay, Bataan.
computation and sketches, contract drawing and
technical specifications of all engineering phases of On December 1 1, '1961, appellee sent to appellant
the project designed by O. A. Kalalo and Associates a statement of account (Exhibit "1"),3 to which was
bill of quantities and cost estimate, and consultation attached an itemized statement of defendant-
and advice during construction relative to the work. appellant's account (Exh. "1-A"), according to
The fees agreed upon were percentages of the which the total engineering fee asked by appellee
architect's fee, to wit: structural engineering, 12- for services rendered amounted to P116,565.00
½%; electrical engineering, 2-½%. The agreement from which sum was to be deducted the previous
was subsequently supplemented by a "clarification payments made in the amount of P57,000.00, thus
to letter-proposal" which provided, among other leaving a balance due in the amount of P59,565.00.
things, that "the schedule of engineering fees in this
agreement does not cover the following: ... D. On May 18, 1962 appellant sent appellee a resume
Foundation soil exploration, testing and evaluation; of fees due to the latter. Said fees, according to
E. Projects that are principally engineering works appellant. amounted to P10,861.08 instead of the
such as industrial plants, ..." and "O. A. Kalalo and amount claimed by the appellee. On June 14, 1962
Associates reserve the right to increase fees on appellant sent appellee a check for said amount,
projects ,which cost less than P100,000
which appellee refused to accept as full payment of made by appellant, the trial court, upon agreement
the balance of the fees due him. of the parties, authorized the case to be heard before
a Commissioner. The Commissioner rendered a
On August 10, 1962, appellee filed a complaint report which, in resume, states that the amount due
against appellant, containing four causes of action. to appellee was $28,000.00 (U.S.) as his fee in the
In the first cause of action, appellee alleged that for International Research Institute Project which was
services rendered in connection with the different twenty percent (20%) of the $140,000.00 that was
projects therein mentioned there was due him fees paid to appellant, and P51,539.91 for the other
in sum s consisting of $28,000 (U.S.) and projects, less the sum of P69,475.46 which was
P100,204.46, excluding interests, of which sums already paid by the appellant. The Commissioner
only P69,323.21 had been paid, thus leaving unpaid also recommended the payment to appellee of the
the $28,000.00 and the balance of P30,881.25. In sum of P5,000.00 as attorney's fees.
the second cause of action, appellee claimed
P17,000.00 as consequential and moral damages; in At the hearing on the Report of the Commissioner,
the third cause of action claimed P55,000.00 as the respective counsel of the parties manifested to
moral damages, attorney's fees and expenses of the court that they had no objection to the findings
litigation; and in the fourth cause of action he of fact of the Commissioner contained in the
claimed P25,000.00 as actual damages, and also for Report, and they agreed that the said Report posed
attorney's fees and expenses of litigation. only two legal issues, namely: (1) whether under the
facts stated in the Report, the doctrine of estoppel
In his answer, appellant admitted that appellee would apply; and (2) whether the recommendation
rendered engineering services, as alleged in the first in the Report that the payment of the amount. due to
cause of action, but averred that some of appellee's the plaintiff in dollars was legally permissible, and
services were not in accordance with the agreement if not, at what rate of exchange it should be paid in
and appellee's claims were not justified by the pesos. After the parties had submitted their
services actually rendered, and that the aggregate respective memorandum on said issues, the trial
amount actually due to appellee was only court rendered its decision dated February 10, 1967,
P80,336.29, of which P69,475.21 had already been the dispositive portion of which reads as follows:
paid, thus leaving a balance of only P10,861.08.
Appellant denied liability for any damage claimed WHEREFORE, judgment is
by appellee to have suffered, as alleged in the rendered in favor of plaintiff and
second, third and fourth causes of action. Appellant against the defendant, by ordering
also set up affirmative and special defenses, the defendant to pay plaintiff the sum
alleging that appellee had no cause of action, that of P51,539.91 and $28,000.00, the
appellee was in estoppel because of certain acts, latter to be converted into the
representations, admissions and/or silence, which Philippine currency on the basis of
led appellant to believe certain facts to exist and to the current rate of exchange at the
act upon said facts, that appellee's claim regarding time of the payment of this
the Menzi project was premature because appellant judgment, as certified to by the
had not yet been paid for said project, and that Central Bank of the Philippines,
appellee's services were not complete or were from which shall be deducted the
performed in violation of the agreement and/or sum of P69,475.46, which the
otherwise unsatisfactory. Appellant also set up a defendant had paid the plaintiff, and
counterclaim for actual and moral damages for such the legal rate of interest thereon from
amount as the court may deem fair to assess, and for the filing of the complaint in the case
attorney's fees of P10,000.00. until fully paid for; by ordering the
defendant to pay to plaintiff the
Inasmuch as the pleadings showed that the further sum of P8,000.00 by way of
appellee's right to certain fees for services rendered attorney's fees which the Court finds
was not denied, the only question being the to be reasonable in the premises,
assessment of the proper fees and the balance due to with costs against the defendant. The
appellee after deducting the admitted payments
 counterclaim of the defendant is from defendant-appellant to plaintiff-
ordered dismissed. appellee is only P15,792.05.

From the decision, this appeal was brought, directly IV. The lower court erred in
to this Court, raising only questions of law. awarding attorney's fees in the sum
of P8,000.00, despite the
During the pendency of this appeal, appellee filed a commissioner's finding, which
petition for the issuance of a writ of attachment plaintiff-appellee has accepted and
under Section 1 (f) of Rule 57 of the Rules of Court has not questioned, that said fee be
upon the ground that appellant is presently residing only P5,000.00; and
in Canada as a permanent resident thereof. On June
3, 1969, this Court resolved, upon appellee's posting V. The lower court erred in not
a bond of P10,000.00, to issue the writ of granting defendant-appellant relief
attachment, and ordered the Provincial Sheriff of on his counter-claim.
Rizal to attach the estate, real and personal, of
appellant Alfredo J. Luz within the province, to the 1. In support of his first assignment of error
value of not less than P140,000.00. appellant argues that in Exhibit 1-A, which is a
statement of accounts dated December 11, 1961,
The appellant made the following assignments of sent by appellee to appellant, appellee specified the
errors: various projects for which he claimed engineering
fees, the precise amount due on each particular
I. The lower court erred in not engineering service rendered on each of the various
declaring and holding that plaintiff- projects, and the total of his claims; that such a
appellee's letter dated December 11, statement barred appellee from asserting any claim
1961 (Exhibit "1") and the statement contrary to what was stated therein, or from taking
of account (Exhibit "1-A") therein any position different from what he asserted therein
enclosed, had the effect, with respect to the nature of the engineering
cumulatively or alternatively, of services rendered; and consequently the trial court
placing plaintiff-appellee in estoppel could not award fees in excess of what was stated in
from thereafter modifying the said statement of accounts. Appellant argues that for
representations made in said exhibits, estoppel to apply it is not necessary, contrary to the
or of making plaintiff-appellee ruling of the trial court, that the appellant should
otherwise bound by said have actually relied on the representation, but that it
representations, or of being of is sufficient that the representations were intended
decisive weight in determining the to make the defendant act there on; that
true intent of the parties as to the assuming arguendo that Exhibit 1-A did not put
nature and extent of the engineering appellee in estoppel, the said Exhibit 1-A
services rendered and/or the amount nevertheless constituted a formal admission that
of fees due. would be binding on appellee under the law on
evidence, and would not only belie any inconsistent
II. The lower court erred in declaring claim but also would discredit any evidence
and holding that the balance owing adduced by appellee in support of any claim
from defendant-appellant to plaintiff- inconsistent with what appears therein; that,
appellee on the IRRI Project should moreover, Exhibit 1-A, being a statement of
be paid on the basis of the rate of account, establishes prima facie the accuracy and
exchange of the U.S. dollar to the correctness of the items stated therein and its
Philippine peso at the time of correctness can no longer be impeached except for
payment of judgment. . fraud or mistake; that Exhibit 1-A furthermore,
constitutes appellee's own interpretation of the
III. The lower court erred in not contract between him and appellant, and hence, is
declaring and holding that the conclusive against him.
aggregate amount of the balance due
On the other hand, appellee admits that Exhibit 1-A of the Philippines vs. Garcia, et al.,6 this Court
itemized the services rendered by him in the various ruled that there is no estoppel when the statement or
construction projects of appellant and that the total action invoked as its basis did not mislead the
engineering fees charged therein was P116,565.00, adverse party-Estoppel has been characterized as
but maintains that he was not in estoppel: first, harsh or odious and not favored in law.7 When
because when he prepared Exhibit 1-A he was misapplied, estoppel becomes a most effective
laboring under an innocent mistake, as found by the weapon to accomplish an injustice, inasmuch as it
trial court; second, because appellant was not shuts a man's mouth from speaking the truth and
ignorant of the services actually rendered by debars the truth in a particular case.8 Estoppel
appellee and the fees due to the latter under the cannot be sustained by mere argument or doubtful
original agreement, Exhibit "A." inference: it must be clearly proved in all its
essential elements by clear, convincing and
We find merit in the stand of appellee. satisfactory evidence.9 No party should be
precluded from making out his case according to its
The statement of accounts (Exh. 1-A) could not truth unless by force of some positive principle of
estop appellee, because appellant did not rely law, and, consequently, estoppel in pains must be
thereon as found by the Commissioner, from whose applied strictly and should not be enforced unless
Report we read: substantiated in every particular. 1 0

While it is true that plaintiff The essential elements of estoppel in pais may be
vacillated in his claim, yet, defendant considered in relation to the party sought to be
did not in anyway rely or believe in estopped, and in relation to the party invoking the
the different claims asserted by the estoppel in his favor. As related to the party to be
plaintiff and instead insisted on a estopped, the essential elements are: (1) conduct
claim that plaintiff was only entitled amounting to false representation or concealment of
to P10,861.08 as per a separate material facts or at least calculated to convey the
resume of fees he sent to the plaintiff impression that the facts are otherwise than, and
on May 18, 1962 (See Exhibit 6).4 inconsistent with, those which the party
subsequently attempts to assert; (2) intent, or at least
The foregoing finding of the Commissioner, not expectation that his conduct shall be acted upon by,
disputed by appellant, was adopted by the trial court or at least influence, the other party; and (3)
in its decision. Under article 1431 of the Civil Code, knowledge, actual or constructive, of the real facts.
in order that estoppel may apply the person, to As related to the party claiming the estoppel, the
whom representations have been made and who essential elements are (1) lack of knowledge and of
claims the estoppel in his favor must have relied or the means of knowledge of the truth as the facts in
acted on such representations. Said article provides: questions; (2) (reliance, in good faith, upon the
conduct or statements of the party to be estopped;
Art. 1431. Through estoppel an (3) action or inaction based thereon of such
admission or representation is character as To change the position or status of the
rendered conclusive upon the person party claiming the estoppel, to his injury, detriment
making it, and cannot be denied or or prejudice. 1 1
disproved as against the person
relying thereon. The first essential element in relation to the party
sought to be estopped does not obtain in the instant
An essential element of estoppel is that the person case, for, as appears in the Report of the
invoking it has been influenced and has relied on Commissioner, appellee testified "that when he
the representations or conduct of the person sought wrote Exhibit 1 and prepared Exhibit 1-A, he had
to be estopped, and this element is wanting in the not yet consulted the services of his counsel and it
instant case. In Cristobal vs. Gomez,5 this Court was only upon advice of counsel that the terms of
held that no estoppel based on a document can be the contract were interpreted to him resulting in his
invoked by one who has not been mislead by the subsequent letters to the defendant demanding
false statements contained therein. And in Republic payments of his fees pursuant to the contract
Exhibit A." 1 2 This finding of the Commissioner cited as authority by appellant himself. we read
was adopted by the trial court. 1 3 It is established , thus:
therefore, that Exhibit 1-A was written by appellee
through ignorance or mistake. Anent this matter, it An account stated or settled is a mere
has been held that if an act, conduct or admission that the account is correct.
misrepresentation of the party sought to be estopped It is not an estoppel. The account is
is due to ignorance founded on innocent mistake, still open to impeachment for
estoppel will not arise. 1 4 Regarding the essential mistakes or errors. Its effect is to
elements of estoppel in relation to the party establish, prima facie, the accuracy
claiming the estoppel, the first element does not of the items without other proof; and
obtain in the instant case, for it cannot be said that the party seeking to impeach it is
appellant did not know, or at least did not have the bound to show affirmatively the
means of knowing, the services rendered to him by mistake or error alleged. The force of
appellee and the fees due thereon as provided in the admission and the strength of the
Exhibit A. The second element is also wanting, for, evidence necessary to overcome it
as adverted to, appellant did not rely on Exhibit 1-A will depend upon the circumstances
but consistently denied the accounts stated therein. of the case.
Neither does the third element obtain, for appellant
did not act on the basis of the representations in In the instant case, it is Our view that the ignorance
Exhibit 1-A, and there was no change in his mistake that attended the writing of Exhibit 1-A by
position, to his own injury or prejudice. appellee was sufficient to overcome the prima
facie evidence of correctness and accuracy of said
Appellant, however, insists that if Exhibit 1-A did Exhibit 1-A.
not put appellee in estoppel, it at least constituted an
admission binding upon the latter. In this Appellant also urges that Exhibit 1-A constitutes
connection, it cannot be gainsaid that Exhibit 1-A is appellee's own interpretation of the contract, and is,
not a judicial admission. Statements which are not therefore, conclusive against him. Although the
estoppels nor judicial admissions have no quality of practical construction of the contract by one party,
conclusiveness, and an opponent. whose admissions evidenced by his words or acts, can be used against
have been offered against him may offer any him in behalf of the other party, 1 7 yet, if one of the
evidence which serves as an explanation for his parties carelessly makes a wrong interpretation of
former assertion of what he now denies as a fact. the words of his contract, or performs more than the
This may involve the showing of a mistake. contract requires (as reasonably interpreted
Accordingly, in Oas vs. Roa, 1 6 it was held that independently of his performance), as happened in
when a party to a suit has made an admission of any the instant case, he should be entitled to a
fact pertinent to the issue involved, the admission restitutionary remedy, instead of being bound to
can be received against him; but such an admission continue to his erroneous interpretation or his
is not conclusive against him, and he is entitled to erroneous performance and "the other party should
present evidence to overcome the effect of the not be permitted to profit by such mistake unless he
admission. Appellee did explain, and the trial court can establish an estoppel by proving a material
concluded, that Exhibit 1-A was based on either his change of position made in good faith. The rule as
ignorance or innocent mistake and he, therefore, is to practical construction does not nullify the
not bound by it. equitable rules with respect to performance by
mistake." 1 8 In the instant case, it has been shown
Appellant further contends that Exhibit 1-A being a that Exhibit 1-A was written through mistake by
statement of account, establishes prima facie the appellee and that the latter is not estopped by it.
accuracy and correctness of the items stated therein. Hence, even if said Exhibit 1-A be considered as
If prima facie, as contended by appellant, then it is practical construction of the contract by appellee, he
not absolutely conclusive upon the parties. An cannot be bound by such erroneous interpretation. It
account stated may be impeached for fraud, mistake has been held that if by mistake the parties followed
or error. In American Decisions, Vol. 62, p. 95, a practice in violation of the terms of the agreement,
the court should not perpetuate the error. 1 9
2. In support of the second assignment of error, that the fact that appellant received his fees in dollars,
the lower court erred in holding that the balance and appellee's fee is 20% of appellant's fees; and
from appellant on the IRRI project should be paid that if said amount is be converted into Philippine
on the basis of the rate of exchange of the U.S. Currency, the rate of exchange should be that at the
dollar to the Philippine peso at the time of payment time of the execution of the judgment. 2 0
of the judgment, appellant contends: first, that the
official rate at the time appellant received his We have taken note of the fact that on August 25,
architect's fees for the IRRI project, and 1961, the date when appellant said his obligation to
correspondingly his obligation to appellee's fee on pay appellee's fees became due, there was two rates
August 25, 1961, was P2.00 to $1.00, and cites in of exchange, to wit: the preferred rate of P2.00 to
support thereof Section 1612 of the Revised $1.00, and the free market rate. It was so provided
Administrative Code, Section 48 of Republic Act in Circular No. 121 of the Central Bank of the
265 and Section 6 of Commonwealth Act No. 699; Philippines, dated March 2, 1961. amending an
second, that the lower court's conclusion that the earlier Circular No. 117, and in force until January
rate of exchange to be applied in the conversion of 21, 1962 when it was amended by Circular No. 133,
the $28,000.00 is the current rate of exchange at the thus:
time the judgment shall be satisfied was based
solely on a mere presumption of the trial court that 1. All foreign exchange receipts shall
the defendant did not convert, there being no be surrendered to the Central Bank
showing to that effect, the dollars into Philippine of those authorized to deal in foreign
currency at the official rate, when the legal exchange as follows:
presumption should be that the dollars were
converted at the official rate of $1.00 to P2.00 Percentage of Total to be surrendered
because on August 25, 1961, when the IRRI project at
became due and payable, foreign exchange controls
were in full force and effect, and partial Preferred: Free Market Rate: Rate:
decontrol was effected only afterwards, during the
Macapagal administration; third, that the other (a) Export Proceeds, U.S.
ground advanced by the lower court for its ruling, to Government Expenditures invisibles
wit, that appellant committed a breach of his other than those specifically
obligation to turn over to the appellee the mentioned below.
engineering fees received in U.S. dollars for the ................................................ 25 75
IRRI project, cannot be upheld, because there was
no such breach, as proven by the fact that appellee (b) Foreign Investments, Gold
never claimed in Exhibit 1-A that he should be paid Proceeds, Tourists and Inward
in dollars; and there was no provision in the basic Remittances of Veterans and Filipino
contract (Exh. "A") that he should be paid in Citizens; and Personal Expenses of
dollars; and, finally, even if there were such Diplomatic Per personnel
provision, it would have no binding effect under the ................................. 100"2 1
provision of Republic Act 529; that, moreover, it
cannot really be said that no payment was made on The amount of $140,000.00 received by appellant
that account for appellant had already paid foil the International Rice Research Institute project
P57,000.00 to appellee, and under Article 125 of the is not within the scope of sub-paragraph (a) of
Civil Code, said payment could be said to have been paragraph No. 1 of Circular No. 121. Appellant has
applied to the fees due from the IRRI project, this not shown that 25% of said amount had to be
project being the biggest and this debt being the surrendered to the Central Bank at the preferred rate
most onerous. because it was either export proceeds, or U.S.
Government expenditures, or invisibles not included
In refutation of appellant's argument in support of in sub-paragraph (b). Hence, it cannot be said that
the second assignment of error, appellee argues that the trial court erred in presuming that appellant
notwithstanding Republic Act 529, appellant can be converted said amount at the free market rate. It is
compelled to pay the appellee in dollars in view of hard to believe that a person possessing dollars
would exchange his dollars at the preferred rate of exchange prevailing at the time of
P2.00 to $1.00, when he is not obligated to do so, the stipulated date of payment shall
rather than at the free market rate which is much prevail. All coin and currency,
higher. A person is presumed to take ordinary care including Central Bank notes,
of his concerns, and that the ordinary course of heretofore or hereafter issued and
business has been declared by the Government of the
followed. 2 2 Philippines shall be legal tender for
all debts, public and private.
Under the agreement, Exhibit A, appellee was
entitled to 20% of $140,000.00, or the amount of Under the above-quoted provision of Republic Act
$28,000.00. Appellee, however, cannot oblige the 529, if the obligation was incurred prior to the
appellant to pay him in dollars, even if appellant enactment of the Act and require payment in a
himself had received his fee for the IRRI project in particular kind of coin or currency other than the
dollars. This payment in dollars is prohibited by Philippine currency the same shall be discharged in
Republic Act 529 which was enacted on June 16, Philippine currency measured at the prevailing rate
1950. Said act provides as follows: of exchange at the time the obligation was incurred.
As We have adverted to, Republic Act 529 was
SECTION 1. Every provision enacted on June 16, 1950. In the case now before
contained in, or made with respect Us the obligation of appellant to pay appellee the
to, any obligation which provision 20% of $140,000.00, or the sum of $28,000.00,
purports to give the obligee the right accrued on August 25, 1961, or after the enactment
to require payment in gold or in a of Republic Act 529. It follows that the provision of
particular kind of coin or currency Republic Act 529 which requires payment at the
other than Philippine currency or in prevailing rate of exchange when the obligation was
an amount of money of the incurred cannot be applied. Republic Act 529 does
Philippines measured thereby, be as not provide for the rate of exchange for the payment
it is hereby declared against public of obligation incurred after the enactment of said
policy, and null, void and of no Act. The logical Conclusion, therefore, is that the
effect, and no such provision shall be rate of exchange should be that prevailing at the
contained in, or made with respect time of payment. This view finds support in the
to, any obligation hereafter incurred. ruling of this Court in the case of Engel vs. Velasco
Every obligation heretofore or here & Co. 2 3 where this Court held that even if the
after incurred, whether or not any obligation assumed by the defendant was to pay the
such provision as to payment is plaintiff a sum of money expressed in American
contained therein or made with currency, the indemnity to be allowed should be
respect thereto, shall be discharged expressed in Philippine currency at the rate of
upon payment in any coin or exchange at the time of judgment rather than at the
currency which at the time of rate of exchange prevailing on the date of
payment is legal tender for public defendant's breach. This is also the ruling of
and private debts: Provided, That, ( American court as follows:
a) if the obligation was incurred prior
to the enactment of this Act and The value in domestic money of a
required payment in a particular kind payment made in foreign money is
of coin or currency other than fixed with respect to the rate of
Philippine currency, it shall be exchange at the time of payment. (70
discharged in Philippine currency CJS p. 228)
measured at the prevailing rate of
exchange at the time the obligation According to the weight of authority
was incurred, (b) except in case of a the amount of recovery depends
loan made in a foreign currency upon the current rate of exchange,
stipulated to be payable in the same and not the par value of the particular
currency in which case the rate of money involved. (48 C.J. 605-606)
 The value in domestic money of a In the Commissioner's report, it is spetifically
payment made in foreign money is recommended that the appellant be ordered to pay
fixed in reference to the rate of the plaintiff the sum of "$28,000. 00 or its
exchange at the time of such equivalent as the fee of the plaintiff under Exhibit A
payment. (48 C.J. 605) on the IRRI project." It is clear from this report of
the Commissioner that no payment for the account
It is Our considered view, therefore, that appellant of this $28,000.00 had been made. Indeed, it is not
should pay the appellee the equivalent in pesos of shown in the record that the peso equivalent of the
the $28,000.00 at the free market rate of exchange $28,000.00 had been fixed or agreed upon by the
at the time of payment. And so the trial court did parties at the different times when the appellant had
not err when it held that herein appellant should pay made partial payments to the appellee.
appellee $28,000.00 "to be converted into the
Philippine currency on the basis of the current rate 3. In his third assignment of error, appellant
of exchange at the time of payment of this contends that the lower court erred in not declaring
judgment, as certified to by the Central Bank of the that the aggregate amount due from him to appellee
Philippines, ...." 24 is only P15,792.05. Appellant questions the
propriety or correctness of most of the items of fees
Appellant also contends that the P57,000.00 that he that were found by the Commissioner to be due to
had paid to appellee should have been applied to the appellee for services rendered. We believe that it is
due to the latter on the IRRI project because such too late for the appellant to question the propriety or
debt was the most onerous to appellant. This correctness of those items in the present appeal. The
contention is untenable. The Commissioner who record shows that after the Commissioner had
was authorized by the trial court to receive evidence submitted his report the lower court, on February
in this case, however, reports that the appellee had 15, 1966, issued the following order:
not been paid for the account of the $28,000.00
which represents the fees of appellee equivalent to When this case was called for
20% of the $140,000.00 that the appellant received hearing today on the report of the
as fee for the IRRI project. This is a finding of fact Commissioner, the counsels of the
by the Commissioner which was adopted by the parties manifested that they have no
trial court. The parties in this case have agreed that objection to the findings of facts in
they do not question the finding of fact of the the report. However, the report poses
Commissioner. Thus, in the decision appealed from only legal issues, namely: (1)
the lower court says: whether under the facts stated in the
report, the doctrine of estoppel will
At the hearing on the Report of the apply; and (2) whether the
Commissioner on February 15, 1966, recommendation in the report that
the counsels for both parties the alleged payment of the defendant
manifested to the court that they be made in dollars is permissible by
have no objection to the findings of law and, if not, in what rate it should
facts of the Commissioner in his be paid in pesos (Philippine
report; and agreed that the said report Currency). For the purpose of
only poses two (2)legal issues, resolving these issues the parties
namely: (1) whether under the facts prayed that they be allowed to file
stated in the Report, the doctrine of their respective memoranda which
estoppel will apply; and (2) whether will aid the court in the
the recommendation in the Report determination of said issues. 2 6
that the payment of amount due to
the plaintiff in dollars is permissible In consonance with the afore-quoted order of the
under the law, and, if not, at what trial court, the appellant submitted his memorandum
rate of exchange should it be paid in which opens with the following statements:
pesos (Philippine currency) .... 2 5
As previously manifested, this official rate and not any other
Memorandum shall be confined to: rate. 2 7

(a) the finding in the Commissioner's It is clear, therefore, that what was submitted by
Report that defendant's defense of appellant to the lower court for resolution did not
estoppel will not lie (pp. 17-18, include the question of correctness or propriety of
Report); and the amounts due to appellee in connection with the
different projects for which the appellee had
(b) the recommendation in the rendered engineering services. Only legal questions,
Commissioner's Report that as above enumerated, were submitted to the trial
defendant be ordered to pay plaintiff court for resolution. So much so, that the lower
the sum of '$28,000.00 (U.S.) or its court in another portion of its decision said, as
equivalent as the fee of the plaintiff follows:
under Exhibit 'A' in the IRRI project.'
The objections to the
More specifically this Memorandum Commissioner's Report embodied in
proposes to demonstrate defendant's memorandum of
the affirmative of three legal objections, dated March 18, 1966,
issues posed, namely: cannot likewise be entertained by the
Court because at the hearing of the
First: Whether or not plaintiff's letter Commissioner's Report the parties
dated December 11, 1961 (Exhibit had expressly manifested that they
'I') and/or Statement of Account had no objection to the findings of
(Exhibit '1-A') therein enclosed has facts embodied therein.
the effect of placing plaintiff in
estoppel from thereafter modifying We, therefore hold that the third assignment of error
the representations made in said of the appellant has no merit.
letter and Statement of Account or of
making plaintiff otherwise bound 4. In his fourth assignment of error, appellant
thereby; or of being decisive or great questions the award by the lower court of P8,000.00
weight in determining the true intent for attorney's fees. Appellant argues that the
of the parties as to the amount of the Commissioner, in his report, fixed the sum of
engineering fees owing from P5,000.00 as "just and reasonable" attorney's fees,
defendant to plaintiff; to which amount appellee did not interpose any
objection, and by not so objecting he is bound by
Second: Whether or not defendant said finding; and that, moreover, the lower court
can be compelled to pay whatever gave no reason in its decision for increasing the
balance is owing to plaintiff on the amount to P8,000.00.
IRRI (International Rice and
Research Institute) project in United Appellee contends that while the parties had not
States dollars; and objected to the findings of the Commissioner, the
assessment of attorney's fees is always subject to the
Third: Whether or not in case the court's appraisal, and in increasing the
ruling of this Honorable Court be recommended fees from P5,000.00 to P8,000.00 the
that defendant cannot be compelled trial court must have taken into consideration
to pay plaintiff in United States certain circumstances which warrant the award of
dollars, the dollar-to-peso convertion P8,000.00 for attorney's fees.
rate for determining the peso
equivalent of whatever balance is We believe that the trial court committed no error in
owing to plaintiff in connection with this connection. Section 12 of Rule 33 of the Rules
the IRRI project should be the 2 to 1 of Court, on which the fourth assignment of error is
presumably based, provides that when the parties
stipulate that a commissioner's findings of fact shall P5,000.00 to P8,000.00. It is a settled rule that the
be final, only questions of law arising from the facts amount of attorney's fees is addressed to the sound
mentioned in the report shall thereafter be discretion of the court. 3 1
considered. Consequently, an agreement by the
parties to abide by the findings of fact of the It is true, as appellant contends, that the trial court
commissioner is equivalent to an agreement of facts did not state in the decision the reasons for
binding upon them which the court cannot increasing the attorney's fees. The trial court,
disregard. The question, therefore, is whether or not however, had adopted the report of the
the estimate of the reasonable fees stated in the Commissioner, and in adopting the report the trial
report of the Commissioner is a finding of fact. court is deemed to have adopted the reasons given
by the Commissioner in awarding attorney's fees, as
The report of the Commissioner on this matter reads stated in the above-quoted portion of the report.
as follows: Based on the reasons stated in the report, the trial
court must have considered that the reasonable
As regards attorney's fees, under the provisions of attorney's fees should be P8,000.00. Considering
Art 2208, par (11), the same may be awarded, and that the judgment against the appellant would
considering the number of hearings held in this amount to more than P100,000.00, We believe that
case, the nature of the case (taking into account the the award of P8,000.00 for attorney's fees is
technical nature of the case and the voluminous reasonable.
exhibits offered in evidence), as well as the way the
case was handled by counsel, it is believed, subject 5. In his fifth assignment of error appellant urges
to the Court's appraisal of the matter, that the sum that he is entitled to relief on his counterclaim. In
of P5,000.00 is just and reasonable as attorney's view of what We have stated in connection with the
fees." 28 preceding four assignments of error, We do not
consider it necessary to dwell any further on this
It is thus seen that the estimate made by the assignment of error.
Commissioner was an expression of belief, or an
opinion. An opinion is different from a fact. The WHEREFORE, the decision appealed from is
generally recognized distinction between a affirmed, with costs against the defendant-appellant.
statement of "fact" and an expression of "opinion" is It is so ordered. Republic of the Philippines
that whatever is susceptible of exact knowledge is a
matter of fact, while that not susceptible of exact
knowledge is generally regarded as an expression of
opinion. 2 9 It has also been said that the word
"fact," as employed in the legal sense includes
"those conclusions reached by the trior from
shifting testimony, weighing evidence, and passing
on the credit of the witnesses, and it does not denote
those inferences drawn by the trial court from the
facts ascertained and settled by it. 3 0 In the case at
bar, the estimate made by the Commissioner of the
attorney's fees was an inference from the facts
ascertained by him, and is, therefore, not a finding
of facts. The trial court was, consequently, not
bound by that estimate, in spite of the manifestation
of the parties that they had no objection to the
findings of facts of the Commissioner in his report.
Moreover, under Section 11 of Rule 33 of the Rules
of Court, the court may adopt, modify, or reject the
report of the commissioner, in whole or in part, and
hence, it was within the trial court's authority to
increase the recommended attorney's fees of
 SUPREME COURT been dishonored by the bank, appellant could not be
Manila located any-where, until he was summoned in the
City Fiscal's Office in view of the complaint
EN BANC for estafa filed in connection therewith; and that
appellant has not paid as yet the amount of the
G.R. No. L-2516 September 25, 1950 check, or any part thereof."

ANG TEK LIAN, petitioner, Inasmuch as the findings of fact of the Court of
vs. Appeals are final, the only question of law for
THE COURT OF APPEALS, respondent. decision is whether under the facts found, estafa had
been accomplished.
Laurel, Sabido, Almario and Laurel for petitioner.
Office of the Solicitor General Felix Bautista Article 315, paragraph (d), subsection 2 of the
Angelo and Solicitor Manuel Tomacruz for Revised Penal Code, punishes swindling committed
respondent. "By post dating a check, or issuing such check in
payment of an obligation the offender knowing that
BENGZON, J.: at the time he had no funds in the bank, or the funds
deposited by him in the bank were not sufficient to
For having issued a rubber check, Ang Tek Lian cover the amount of the check, and without
was convicted of estafa in the Court of First informing the payee of such circumstances".
Instance of Manila. The Court of Appeals affirmed
the verdict. We believe that under this provision of law Ang
Tek Lian was properly held liable. In this
It appears that, knowing he had no funds therefor, connection, it must be stated that, as explained
Ang Tek Lian drew on Saturday, November 16, in People vs. Fernandez (59 Phil., 615), estafa is
1946, the check Exhibits A upon the China Banking committed by issuing either a postdated check or an
Corporation for the sum of P4,000, payable to the ordinary check to accomplish the deceit.
order of "cash". He delivered it to Lee Hua Hong in
exchange for money which the latter handed in act. It is argued, however, that as the check had been
On November 18, 1946, the next business day, the made payable to "cash" and had not been endorsed
check was presented by Lee Hua Hong to the by Ang Tek Lian, the defendant is not guilty of the
drawee bank for payment, but it was dishonored for offense charged. Based on the proposition that "by
insufficiency of funds, the balance of the deposit of uniform practice of all banks in the Philippines a
Ang Tek Lian on both dates being P335 only. check so drawn is invariably dishonored," the
following line of reasoning is advanced in support
The Court of Appeals believed the version of Lee of the argument:
Huan Hong who testified that "on November 16,
1946, appellant went to his (complainant's) office, . . . When, therefore, he (the offended party )
at 1217 Herran, Paco, Manila, and asked him to accepted the check (Exhibit A) from the
exchange Exhibit A — which he (appellant) then appellant, he did so with full knowledge that
brought with him — with cash alleging that he it would be dishonored upon presentment. In
needed badly the sum of P4,000 represented by the that sense, the appellant could not be said to
check, but could not withdraw it from the bank, it have acted fraudulently because the
being then already closed; that in view of this complainant, in so accepting the check as it
request and relying upon appellant's assurance that was drawn, must be considered, by every
he had sufficient funds in the blank to meet Exhibit rational consideration, to have done so fully
A, and because they used to borrow money from aware of the risk he was running thereby."
each other, even before the war, and appellant owns (Brief for the appellant, p. 11.)
a hotel and restaurant known as the North Bay
Hotel, said complainant delivered to him, on the We are not aware of the uniformity of such practice.
same date, the sum of P4,000 in cash; that despite Instances have undoubtedly occurred wherein the
repeated efforts to notify him that the check had Bank required the indorsement of the drawer before
honoring a check payable to "cash." But cases there have the holder identified, and is not
are too, where no such requirement had been made . negligent in falling to do so. . . . (Michie on
It depends upon the circumstances of each Banks and Banking, Permanent Edition,
transaction. Vol. 5, p. 343.)

Under the Negotiable Instruments Law (sec. 9 [d], a . . . Consequently, a drawee bank to which a
check drawn payable to the order of "cash" is a bearer check is presented for payment need
check payable to bearer, and the bank may pay it to not necessarily have the holder identified
the person presenting it for payment without the and ordinarily may not be charged with
drawer's indorsement. negligence in failing to do so. See Opinions
6C:2 and 6C:3 If the bank has no reasonable
A check payable to the order of cash is a cause for suspecting any irregularity, it will
bearer instrument. Bacal vs. National City be protected in paying a bearer check, "no
Bank of New York (1933), 146 Misc., 732; matter what facts unknown to it may have
262 N. Y. S., 839; Cleary vs. De Beck Plate occurred prior to the presentment." 1 Morse,
Glass Co. (1907), 54 Misc., 537; 104 N. Y. Banks and Banking, sec. 393.
S., 831; Massachusetts Bonding & Insurance
Co. vs. Pittsburgh Pipe & Supply Co. (Tex. Although a bank is entitled to pay the
Civ. App., 1939), 135 S. W. (2d), 818. See amount of a bearer check without further
also H. Cook & Son vs. Moody (1916), 17 inquiry, it is entirely reasonable for the bank
Ga. App., 465; 87 S. E., 713. to insist that holder give satisfactory proof of
his identity. . . . (Paton's Digest, Vol. I, p.
Where a check is made payable to the order 1089.)
of "cash", the word cash "does not purport to
be the name of any person", and hence the Anyway, it is significant, and conclusive, that the
instrument is payable to bearer. The drawee form of the check Exhibit A was totally
bank need not obtain any indorsement of the unconnected with its dishonor. The Court of
check, but may pay it to the person Appeals declared that it was returned
presenting it without any indorsement. . . . unsatisfied because the drawer had insufficient
(Zollmann, Banks and Banking, Permanent funds— not because the drawer's indorsement was
Edition, Vol. 6, p. 494.) lacking.

Of course, if the bank is not sure of the bearer's Wherefore, there being no question as to the
identity or financial solvency, it has the right to correctness of the penalty imposed on the appellant,
demand identification and /or assurance against the writ of certiorari is denied and the decision of
possible complications, — for instance, (a) forgery the Court of Appeals is hereby affirmed, with costs.
of drawer's signature, (b) loss of the check by the
rightful owner, (c) raising of the amount payable, Moran, C. J., Ozaeta, Paras, Pablo, Tuason, and
etc. The bank may therefore require, for its Reyes, JJ., concur.
protection, that the indorsement of the drawer — or
of some other person known to it — be obtained.
But where the Bank is satisfied of the identity and
/or the economic standing of the bearer who tenders
the check for collection, it will pay the instrument
without further question; and it would incur no
liability to the drawer in thus acting.

A check payable to bearer is authority for

payment to holder. Where a check is in the
ordinary form, and is payable to bearer, so
that no indorsement is required, a bank, to
which it is presented for payment, need not
 Republic of the Philippines 22 Feb. 82 90101 to 90120 20
SUPREME COURT P80,000
Manila 26 Feb. 82 74602 to 74691 90
360,000
SECOND DIVISION 2 Mar. 82 74701 to 74740 40
160,000
4 Mar. 82 90127 to 90146 20 80,000
5 Mar. 82 74797 to 94800 4 16,000
G.R. No. 97753 August 10, 1992 5 Mar. 82 89965 to 89986 22 88,000
5 Mar. 82 70147 to 90150 4 16,000
CALTEX (PHILIPPINES), INC., petitioner, 8 Mar. 82 90001 to 90020 20 80,000
vs. 9 Mar. 82 90023 to 90050 28
COURT OF APPEALS and SECURITY BANK 112,000
AND TRUST COMPANY, respondents. 9 Mar. 82 89991 to 90000 10 40,000
9 Mar. 82 90251 to 90272 22 88,000
Bito, Lozada, Ortega & Castillo for petitioners. ——— ————
Total 280 P1,120,000
Nepomuceno, Hofileña & Guingona for private. ===== ========

2. Angel dela Cruz delivered the said

certificates of time (CTDs) to herein
REGALADO, J.: plaintiff in connection with his
purchased of fuel products from the
This petition for review on certiorari impugns and latter (Original Record, p. 208).
seeks the reversal of the decision promulgated by
respondent court on March 8, 1991 in CA-G.R. CV 3. Sometime in March 1982, Angel
No. 23615 1 affirming with modifications, the dela Cruz informed Mr. Timoteo
earlier decision of the Regional Trial Court of Tiangco, the Sucat Branch Manger,
Manila, Branch XLII, 2 which dismissed the that he lost all the certificates of time
complaint filed therein by herein petitioner against deposit in dispute. Mr. Tiangco
respondent bank. advised said depositor to execute and
submit a notarized Affidavit of Loss,
The undisputed background of this case, as found as required by defendant bank's
by the court a quo and adopted by respondent court, procedure, if he desired replacement
appears of record: of said lost CTDs (TSN, February 9,
1987, pp. 48-50).
1. On various dates, defendant, a
commercial banking institution, 4. On March 18, 1982, Angel dela
through its Sucat Branch issued 280 Cruz executed and delivered to
certificates of time deposit (CTDs) in defendant bank the required
favor of one Angel dela Cruz who Affidavit of Loss (Defendant's
deposited with herein defendant the Exhibit 281). On the basis of said
aggregate amount of P1,120,000.00, affidavit of loss, 280 replacement
as follows: (Joint Partial Stipulation CTDs were issued in favor of said
of Facts and Statement of Issues, depositor (Defendant's Exhibits 282-
Original Records, p. 207; 561).
Defendant's Exhibits 1 to 280);
5. On March 25, 1982, Angel dela
CTD CTD Cruz negotiated and obtained a loan
Dates Serial Nos. Quantity Amount from defendant bank in the amount
of Eight Hundred Seventy Five
Thousand Pesos (P875,000.00). On
the same date, said depositor 10. Accordingly, defendant bank
executed a notarized Deed of rejected the plaintiff's demand and
Assignment of Time Deposit claim for payment of the value of the
(Exhibit 562) which stated, among CTDs in a letter dated February 7,
others, that he (de la Cruz) 1983 (Defendant's Exhibit 566).
surrenders to defendant bank "full
control of the indicated time deposits 11. In April 1983, the loan of Angel
from and after date" of the dela Cruz with the defendant bank
assignment and further authorizes matured and fell due and on August
said bank to pre-terminate, set-off 5, 1983, the latter set-off and applied
and "apply the said time deposits to the time deposits in question to the
the payment of whatever amount or payment of the matured loan (TSN,
amounts may be due" on the loan February 9, 1987, pp. 130-131).
upon its maturity (TSN, February 9,
1987, pp. 60-62). 12. In view of the foregoing, plaintiff
filed the instant complaint, praying
6. Sometime in November, 1982, that defendant bank be ordered to
Mr. Aranas, Credit Manager of pay it the aggregate value of the
plaintiff Caltex (Phils.) Inc., went to certificates of time deposit of
the defendant bank's Sucat branch P1,120,000.00 plus accrued interest
and presented for verification the and compounded interest therein at
CTDs declared lost by Angel dela 16% per annum, moral and
Cruz alleging that the same were exemplary damages as well as
delivered to herein plaintiff "as attorney's fees.
security for purchases made with
Caltex Philippines, Inc." by said After trial, the court a quo rendered
depositor (TSN, February 9, 1987, its decision dismissing the instant
pp. 54-68). complaint. 3

7. On November 26, 1982, defendant On appeal, as earlier stated, respondent court

received a letter (Defendant's Exhibit affirmed the lower court's dismissal of the
563) from herein plaintiff formally complaint, hence this petition wherein petitioner
informing it of its possession of the faults respondent court in ruling (1) that the subject
CTDs in question and of its decision certificates of deposit are non-negotiable despite
to pre-terminate the same. being clearly negotiable instruments; (2) that
petitioner did not become a holder in due course of
8. On December 8, 1982, plaintiff the said certificates of deposit; and (3) in
was requested by herein defendant to disregarding the pertinent provisions of the Code of
furnish the former "a copy of the Commerce relating to lost instruments payable to
document evidencing the guarantee bearer. 4
agreement with Mr. Angel dela
Cruz" as well as "the details of Mr. The instant petition is bereft of merit.
Angel dela Cruz" obligation against
which plaintiff proposed to apply the A sample text of the certificates of time deposit is
time deposits (Defendant's Exhibit reproduced below to provide a better understanding
564). of the issues involved in this recourse.

9. No copy of the requested SECURITY BANK

documents was furnished herein AND TRUST COMPANY
defendant. 6778 Ayala Ave., Makati No. 90101
Metro Manila, Philippines
SUCAT OFFICEP 4,000.00
 CERTIFICATE OF DEPOSIT person indicated therein, the
Rate 16% depositor. In effect, the appellee
bank acknowledges its depositor
Date of Maturity FEB. 23, Angel dela Cruz as the person who
1984 FEB 22, 1982, 19____ made the deposit and further engages
itself to pay said depositor the
This is to Certify amount indicated thereon at the
that B E A R E R has stipulated date. 6
deposited in this Bank
the sum of PESOS: We disagree with these findings and conclusions,
FOUR THOUSAND and hereby hold that the CTDs in question are
ONLY, SECURITY negotiable instruments. Section 1 Act No. 2031,
BANK SUCAT otherwise known as the Negotiable Instruments
OFFICE P4,000 & 00 Law, enumerates the requisites for an instrument to
CTS Pesos, Philippine become negotiable, viz:
Currency, repayable
to said depositor 731 (a) It must be in writing and signed
days. after date, upon by the maker or drawer;
presentation and
surrender of this (b) Must contain an unconditional
certificate, with promise or order to pay a sum certain
interest at the rate in money;
of 16% per cent per
annum. (c) Must be payable on demand, or at
a fixed or determinable future time;
(Sgd. Illegible) (Sgd. Illegible)
(d) Must be payable to order or to
—————————— ———— bearer; and
———————
(e) Where the instrument is
AUTHORIZED SIGNATURES 5 addressed to a drawee, he must be
named or otherwise indicated therein
Respondent court ruled that the CTDs in question with reasonable certainty.
are non-negotiable instruments, nationalizing as
follows: The CTDs in question undoubtedly meet the
requirements of the law for negotiability. The
. . . While it may be true that the parties' bone of contention is with regard to
word "bearer" appears rather boldly requisite (d) set forth above. It is noted that Mr.
in the CTDs issued, it is important to Timoteo P. Tiangco, Security Bank's Branch
note that after the word "BEARER" Manager way back in 1982, testified in open court
stamped on the space provided that the depositor reffered to in the CTDs is no other
supposedly for the name of the than Mr. Angel de la Cruz.
depositor, the words "has deposited"
a certain amount follows. The xxx xxx xxx
document further provides that the
amount deposited shall be "repayable Atty. Calida:
to said depositor" on the period
indicated. Therefore, the text of the q In other words Mr.
instrument(s) themselves manifest Witness, you are
with clarity that they are payable, not saying that per books
to whoever purports to be the of the bank, the
"bearer" but only to the specified depositor referred
 (sic) in these meaning of the parties, yet as they have constituted
certificates states that the writing to be the only outward and visible
it was Angel dela expression of their meaning, no other words are to
Cruz? be added to it or substituted in its stead. The duty of
the court in such case is to ascertain, not what the
witness: parties may have secretly intended as
contradistinguished from what their words express,
a Yes, your Honor, but what is the meaning of the words they have
and we have the used. What the parties meant must be determined by
record to show that what they said. 11
Angel dela Cruz was
the one who cause Contrary to what respondent court held, the CTDs
(sic) the amount. are negotiable instruments. The documents provide
that the amounts deposited shall be repayable to the
Atty. Calida: depositor. And who, according to the document, is
the depositor? It is the "bearer." The documents do
q And no other person not say that the depositor is Angel de la Cruz and
or entity or company, that the amounts deposited are repayable
Mr. Witness? specifically to him. Rather, the amounts are to be
repayable to the bearer of the documents or, for that
witness: matter, whosoever may be the bearer at the time of
presentment.
a None, your Honor. 7
If it was really the intention of respondent bank to
xxx xxx xxx pay the amount to Angel de la Cruz only, it could
have with facility so expressed that fact in clear and
Atty. Calida: categorical terms in the documents, instead of
having the word "BEARER" stamped on the space
q Mr. Witness, who is provided for the name of the depositor in each CTD.
the depositor On the wordings of the documents, therefore, the
identified in all of amounts deposited are repayable to whoever may be
these certificates of the bearer thereof. Thus, petitioner's aforesaid
time deposit insofar witness merely declared that Angel de la Cruz is the
as the bank is depositor "insofar as the bank is concerned," but
concerned? obviously other parties not privy to the transaction
between them would not be in a position to know
witness: that the depositor is not the bearer stated in the
CTDs. Hence, the situation would require any party
a Angel dela Cruz is dealing with the CTDs to go behind the plain import
the depositor. 8 of what is written thereon to unravel the agreement
of the parties thereto through facts aliunde. This
xxx xxx xxx need for resort to extrinsic evidence is what is
sought to be avoided by the Negotiable Instruments
On this score, the accepted rule is that the Law and calls for the application of the elementary
negotiability or non-negotiability of an instrument is rule that the interpretation of obscure words or
determined from the writing, that is, from the face stipulations in a contract shall not favor the party
of the instrument itself.9 In the construction of a bill who caused the obscurity. 12
or note, the intention of the parties is to control, if it
can be legally ascertained. 10 While the writing may The next query is whether petitioner can rightfully
be read in the light of surrounding circumstances in recover on the CTDs. This time, the answer is in the
order to more perfectly understand the intent and negative. The records reveal that Angel de la Cruz,
whom petitioner chose not to implead in this suit for
reasons of its own, delivered the CTDs amounting could have proved, if such truly was the fact, that
to P1,120,000.00 to petitioner without informing the CTDs were delivered as payment and not as
respondent bank thereof at any time. Unfortunately security. Having opposed the motion, petitioner
for petitioner, although the CTDs are bearer now labors under the presumption that evidence
instruments, a valid negotiation thereof for the true willfully suppressed would be adverse if
purpose and agreement between it and De la Cruz, produced. 19
as ultimately ascertained, requires both delivery and
indorsement. For, although petitioner seeks to Under the foregoing circumstances, this disquisition
deflect this fact, the CTDs were in reality delivered in Intergrated Realty Corporation, et al. vs.
to it as a security for De la Cruz' purchases of its Philippine National Bank, et al. 20 is apropos:
fuel products. Any doubt as to whether the CTDs
were delivered as payment for the fuel products or . . . Adverting again to the Court's
as a security has been dissipated and resolved in pronouncements in Lopez, supra, we
favor of the latter by petitioner's own authorized and quote therefrom:
responsible representative himself.
The character of the
In a letter dated November 26, 1982 addressed to transaction between
respondent Security Bank, J.Q. Aranas, Jr., Caltex the parties is to be
Credit Manager, wrote: ". . . These certificates of determined by their
deposit were negotiated to us by Mr. Angel dela intention, regardless
Cruz to guarantee his purchases of fuel products" of what language was
(Emphasis ours.) 13 This admission is conclusive used or what the form
upon petitioner, its protestations notwithstanding. of the transfer was. If
Under the doctrine of estoppel, an admission or it was intended to
representation is rendered conclusive upon the secure the payment of
person making it, and cannot be denied or disproved money, it must be
as against the person relying thereon. 14 A party construed as a pledge;
may not go back on his own acts and but if there was some
representations to the prejudice of the other party other intention, it is
who relied upon them. 15 In the law of evidence, not a pledge.
whenever a party has, by his own declaration, act, However, even
or omission, intentionally and deliberately led though a transfer, if
another to believe a particular thing true, and to act regarded by itself,
upon such belief, he cannot, in any litigation arising appears to have been
out of such declaration, act, or omission, be absolute, its object
permitted to falsify it. 16 and character might
still be qualified and
If it were true that the CTDs were delivered as explained by
payment and not as security, petitioner's credit contemporaneous
manager could have easily said so, instead of using writing declaring it to
the words "to guarantee" in the letter aforequoted. have been a deposit of
Besides, when respondent bank, as defendant in the the property as
court below, moved for a bill of particularity collateral security. It
therein 17 praying, among others, that petitioner, as has been said that a
plaintiff, be required to aver with sufficient transfer of property by
definiteness or particularity (a) the due date or dates the debtor to a
of payment of the alleged indebtedness of Angel de creditor, even if
la Cruz to plaintiff and (b) whether or not it issued a sufficient on its face
receipt showing that the CTDs were delivered to it to make an absolute
by De la Cruz as payment of the latter's alleged conveyance, should
indebtedness to it, plaintiff corporation opposed the be treated as a pledge
motion. 18 Had it produced the receipt prayed for, it if the debt continues
 in inexistence and is security, he would be a pledgee but the
not discharged by the requirements therefor and the effects thereof, not
transfer, and that being provided for by the Negotiable Instruments
accordingly the use of Law, shall be governed by the Civil Code
the terms ordinarily provisions on pledge of incorporeal rights, 24 which
importing conveyance inceptively provide:
of absolute ownership
will not be given that Art. 2095. Incorporeal rights,
effect in such a evidenced by negotiable instruments,
transaction if they are . . . may also be pledged. The
also commonly used instrument proving the right pledged
in pledges and shall be delivered to the creditor, and
mortgages and if negotiable, must be indorsed.
therefore do not
unqualifiedly indicate Art. 2096. A pledge shall not take
a transfer of absolute effect against third persons if a
ownership, in the description of the thing pledged and
absence of clear and the date of the pledge do not appear
unambiguous in a public instrument.
language or other
circumstances Aside from the fact that the CTDs were only
excluding an intent to delivered but not indorsed, the factual findings of
pledge. respondent court quoted at the start of this opinion
show that petitioner failed to produce any document
Petitioner's insistence that the CTDs were evidencing any contract of pledge or guarantee
negotiated to it begs the question. Under the agreement between it and Angel de la
Negotiable Instruments Law, an instrument is Cruz. 25 Consequently, the mere delivery of the
negotiated when it is transferred from one person to CTDs did not legally vest in petitioner any right
another in such a manner as to constitute the effective against and binding upon respondent bank.
transferee the holder thereof, 21 and a holder may be The requirement under Article 2096 aforementioned
the payee or indorsee of a bill or note, who is in is not a mere rule of adjective law prescribing the
possession of it, or the bearer thereof. 22 In the mode whereby proof may be made of the date of a
present case, however, there was no negotiation in pledge contract, but a rule of substantive law
the sense of a transfer of the legal title to the CTDs prescribing a condition without which the execution
in favor of petitioner in which situation, for obvious of a pledge contract cannot affect third persons
reasons, mere delivery of the bearer CTDs would adversely. 26
have sufficed. Here, the delivery thereof only as
security for the purchases of Angel de la Cruz (and On the other hand, the assignment of the CTDs
we even disregard the fact that the amount involved made by Angel de la Cruz in favor of respondent
was not disclosed) could at the most constitute bank was embodied in a public instrument. 27 With
petitioner only as a holder for value by reason of his regard to this other mode of transfer, the Civil Code
lien. Accordingly, a negotiation for such purpose specifically declares:
cannot be effected by mere delivery of the
instrument since, necessarily, the terms thereof and Art. 1625. An assignment of credit,
the subsequent disposition of such security, in the right or action shall produce no
event of non-payment of the principal obligation, effect as against third persons, unless
must be contractually provided for. it appears in a public instrument, or
the instrument is recorded in the
The pertinent law on this point is that where the Registry of Property in case the
holder has a lien on the instrument arising from assignment involves real property.
contract, he is deemed a holder for value to the
extent of his lien. 23 As such holder of collateral
Respondent bank duly complied with this statutory As respondent court correctly observed, with
requirement. Contrarily, petitioner, whether as appropriate citation of some doctrinal authorities,
purchaser, assignee or lien holder of the CTDs, the foregoing enumeration does not include the
neither proved the amount of its credit or the extent issue of negligence on the part of respondent bank.
of its lien nor the execution of any public instrument An issue raised for the first time on appeal and not
which could affect or bind private respondent. raised timely in the proceedings in the lower court is
Necessarily, therefore, as between petitioner and barred by estoppel. 30 Questions raised on appeal
respondent bank, the latter has definitely the better must be within the issues framed by the parties and,
right over the CTDs in question. consequently, issues not raised in the trial court
cannot be raised for the first time on appeal. 31
Finally, petitioner faults respondent court for
refusing to delve into the question of whether or not Pre-trial is primarily intended to make certain that
private respondent observed the requirements of the all issues necessary to the disposition of a case are
law in the case of lost negotiable instruments and properly raised. Thus, to obviate the element of
the issuance of replacement certificates therefor, on surprise, parties are expected to disclose at a pre-
the ground that petitioner failed to raised that issue trial conference all issues of law and fact which they
in the lower court. 28 intend to raise at the trial, except such as may
involve privileged or impeaching matters. The
On this matter, we uphold respondent court's determination of issues at a pre-trial conference bars
finding that the aspect of alleged negligence of the consideration of other questions on appeal. 32
private respondent was not included in the
stipulation of the parties and in the statement of To accept petitioner's suggestion that respondent
issues submitted by them to the trial court. 29 The bank's supposed negligence may be considered
issues agreed upon by them for resolution in this encompassed by the issues on its right to
case are: preterminate and receive the proceeds of the CTDs
would be tantamount to saying that petitioner could
1. Whether or not the CTDs as raise on appeal any issue. We agree with private
worded are negotiable instruments. respondent that the broad ultimate issue of
petitioner's entitlement to the proceeds of the
2. Whether or not defendant could questioned certificates can be premised on a
legally apply the amount covered by multitude of other legal reasons and causes of
the CTDs against the depositor's loan action, of which respondent bank's supposed
by virtue of the assignment (Annex negligence is only one. Hence, petitioner's
"C"). submission, if accepted, would render a pre-trial
delimitation of issues a useless exercise. 33
3. Whether or not there was legal
compensation or set off involving the Still, even assuming arguendo that said issue of
amount covered by the CTDs and the negligence was raised in the court below, petitioner
depositor's outstanding account with still cannot have the odds in its favor. A close
defendant, if any. scrutiny of the provisions of the Code of Commerce
laying down the rules to be followed in case of lost
4. Whether or not plaintiff could instruments payable to bearer, which it invokes, will
compel defendant to preterminate the reveal that said provisions, even assuming their
CTDs before the maturity date applicability to the CTDs in the case at bar, are
provided therein. merely permissive and not mandatory. The very
first article cited by petitioner speaks for itself.
5. Whether or not plaintiff is entitled
to the proceeds of the CTDs. Art 548. The dispossessed owner, no
matter for what cause it may
6. Whether or not the parties can be, may apply to the judge or court of
recover damages, attorney's fees and competent jurisdiction, asking that
litigation expenses from each other. the principal, interest or dividends
 due or about to become due, be not
paid a third person, as well as in
order to prevent the ownership of the
instrument that a duplicate be issued
him. (Emphasis ours.)

xxx xxx xxx

The use of the word "may" in said provision shows

that it is not mandatory but discretionary on the part
of the "dispossessed owner" to apply to the judge or
court of competent jurisdiction for the issuance of a
duplicate of the lost instrument. Where the
provision reads "may," this word shows that it is not
mandatory but discretional. 34 The word "may" is
usually permissive, not mandatory. 35 It is an
auxiliary verb indicating liberty, opportunity,
permission and possibility. 36

Moreover, as correctly analyzed by private

respondent, 37 Articles 548 to 558 of the Code of
Commerce, on which petitioner seeks to anchor
respondent bank's supposed negligence, merely
established, on the one hand, a right of recourse in
favor of a dispossessed owner or holder of a bearer
instrument so that he may obtain a duplicate of the
same, and, on the other, an option in favor of the
party liable thereon who, for some valid ground,
may elect to refuse to issue a replacement of the
instrument. Significantly, none of the provisions
cited by petitioner categorically restricts or prohibits
the issuance a duplicate or replacement
instrument sans compliance with the procedure
outlined therein, and none establishes a mandatory
precedent requirement therefor.

WHEREFORE, on the modified premises above set

forth, the petition is DENIED and the appealed
decision is hereby AFFIRMED.

SO ORDERED.