Tan Tiong Tick v. Philippine Manufacturing Corporation
REITERATIONFacts
The Antecedents: Ernesto Tan-Chi, vice-president of Philippine Manufacturing Corporation (plaintiff), and Tan Tiong Tick (defendant) were long-time friends. In 1951, the plaintiff saw an opportunity to import textiles through Lucilo Macaraig, who had an import license and dollar allocation but lacked funds. The plaintiff agreed to advance P120,000.00 but, due to not knowing Macaraig well, issued a check for this amount payable to the defendant Tan Tiong Tick. The defendant indorsed the check, it was cashed, and the proceeds were given to Macaraig. Macaraig failed to deliver the textiles. Procedural History: The plaintiff instituted an action against the defendant for the collection of the face value of the check, with interest, damages, attorney's fees, and costs. The Court of First Instance of Manila ruled in favor of the plaintiff, ordering the defendant to pay P20,000.00 with interest. This decision was affirmed by the Court of Appeals. The Appeal: The defendant appealed to the Supreme Court via certiorari, raising issues regarding the lack of corporate authorization for the transaction, the alleged nullity of the transaction, and the claim that the transaction was merely a guaranty agreement. The defendant also argued that the long delay in filing the suit created a presumption against the existence of the agreement.
Issue(s)
Whether the defendant Tan Tiong Tick is liable for the P20,000.00 advanced by the plaintiff corporation. Whether issues not raised in the lower courts can be raised for the first time on appeal.
Ruling
The Supreme Court dismissed the appeal and affirmed the decision of the Court of Appeals. The defendant Tan Tiong Tick was held liable for the P20,000.00, with interest.
Ratio Decidendi
On Issue 1: The Court found the plaintiff's theory more credible. The issuance of the check payable to the defendant, his indorsement, and the subsequent accounting entries in the plaintiff's books, along with yearly confirmation slips sent to the defendant, sufficiently established an agreement where the defendant was accountable for the P20,000.00 advanced. The defendant's claim that he merely acted as a witness was deemed less credible, as the procedure adopted was unnecessarily circuitous for such a purpose. Furthermore, the defendant's argument that the transaction was a guaranty was not raised in his answer and thus could not be considered on appeal. The Court also noted that the check appeared to have been cashed by the petitioner himself, contradicting his testimony. On Issue 2: The Court held that the issues regarding the lack of written corporate permission or resolution authorizing the transaction, the alleged nullity of the transaction, and the claim that the transaction was merely a guaranty agreement were never raised in the court below. Consequently, these issues could not be raised for the first time in the Supreme Court, as per established rules of procedure.
Main Doctrine
The Supreme Court affirmed the decision of the Court of Appeals, holding that the petitioner's claim that he merely acted as a witness to the encashment of a check was not credible. The Court found that the issuance of the check payable to the petitioner, his indorsement thereof, and the subsequent accounting entries and yearly confirmations by the respondent corporation sufficiently established an agreement where the petitioner was to be accountable for the amount advanced, with profits to be shared. The Court also emphasized that issues not raised in the lower courts cannot be raised for the first time on appeal.