Honrado, Jr. v. Court of Appeals
REITERATIONFacts
The Antecedents: Hadd Construction and Trading Corporation (HCTC), represented by its president, Reynaldo C. Honrado, Jr. (petitioner), purchased a motor vehicle on installment from Cressida Sales Corporation. HCTC executed a promissory note for P49,120.20, payable in 36 monthly installments, with petitioner signing as president and co-maker. A chattel mortgage on the vehicle was also executed. Cressida assigned the promissory note to Jardine-Manila Finance, Inc. (private respondent), with HCTC's conformity and petitioner's signature as co-maker. Procedural History: HCTC failed to pay the monthly amortizations. Private respondent filed an action for replevin and damages against HCTC and petitioner, who was impleaded as co-maker. The trial court eventually granted private respondent's motion to dismiss the case against HCTC without prejudice due to inability to serve summons. Private respondent later waived recovery of the vehicle and pursued its alternative prayer for payment. The Regional Trial Court (RTC) ruled in favor of private respondent, ordering petitioner to pay specific amounts for the principal balance, liquidated damages, attorney's fees, and costs. The Court of Appeals affirmed the RTC decision. The Petition: Petitioner seeks reversal of the Court of Appeals' decision, arguing he signed the documents solely in his official capacity as president of HCTC and not as a co-maker. He contends the appellate court erred in its interpretation of the promissory note and deed of chattel mortgage.
Issue(s)
Whether petitioner was a co-maker of HCTC in the execution of the promissory note and deed of chattel mortgage. Whether the Court of Appeals correctly interpreted the promissory note and deed of chattel mortgage in favor of private respondent and against petitioner.
Ruling
The Court affirmed the decision of the Court of Appeals, with modification regarding the amount awarded. Petitioner Honrado was ordered to pay private respondent MB Finance (formerly Jardine-Manila Finance, Inc.) P40,769.00 with 14% interest per annum from March 10, 1979, until actual payment; P4,076.90 as liquidated damages; P6,115.35 as attorney's fees; and costs of suit.
Ratio Decidendi
On the issue of whether petitioner was a co-maker: The Court found no merit in petitioner's contention that he signed the documents solely in his official capacity as president of HCTC. The promissory note, chattel mortgage, and deed of assignment clearly showed petitioner's signatures multiple times, both as president and as co-maker. Petitioner admitted the genuineness and due execution of these documents, including his signatures. The Court reiterated the principle that a party who signs a contract is presumed to be aware of its contents and the obligations attached thereto, especially when the party is of age, a businessman, and holds a high position in the corporation. The testimony of the sales agent, even if he advised signing in an official capacity, could not alter the legal effect of petitioner voluntarily signing as co-maker. The literal meaning of the stipulations in the documents, which clearly indicated his role as co-maker, must control. On the issue of the Court of Appeals' interpretation of the documents: The Court held that the interpretation of the appellate court was correct. Basic contract law dictates that if the terms of a contract are clear, their literal meaning shall prevail. The promissory note explicitly stated a solidary obligation, as evidenced by the phrase "I/We jointly and severally promised to pay." Citing Parot vs. Gemora, the Court affirmed that co-makers who promise to pay jointly and severally are individually liable for the full amount of the obligation. Petitioner's multiple signatures as co-maker conclusively bound him to the obligations and liabilities of a co-maker. Therefore, he could not renege on these responsibilities. The Court also noted that the award of P81,325.00 by the RTC, which included charges not satisfactorily proven, was modified to P40,769.00, representing the principal balance after deducting payments, plus interest, liquidated damages, and attorney's fees, as these were deemed equitable and supported by the evidence presented.
Main Doctrine
A party who signs a promissory note and other related documents multiple times as both president of a corporation and as a co-maker is presumed to have acted with due care and full knowledge of the contents, obligations, and responsibilities, and cannot later claim to have signed only in an official capacity, especially when the genuineness and due execution of the documents are admitted.