Astro Electronics Corp. v. Philippine Export and Foreign Loan Guarantee Corp.
REITERATIONFacts
The Antecedents: Astro Electronics Corp. (Astro) obtained several loans from Philippine Trust Company (Philtrust) totaling P3,000,000.00, secured by three promissory notes. Petitioner Peter Roxas signed these notes twice, once as President of Astro and once in his personal capacity. Roxas also signed a Continuing Suretyship Agreement in favor of Philtrust. Philippine Export and Foreign Loan Guarantee Corporation (Philguarantee) guaranteed 70% of Astro's loan with Philtrust, with the condition that Philguarantee would be proportionally subrogated to Philtrust's rights upon payment. Due to Astro's failure to pay, Philguarantee paid 70% of the loan to Philtrust. Procedural History: Philguarantee filed a complaint for sum of money against Astro and Roxas. Roxas claimed he signed the instruments in blank and that the phrases "in his personal capacity" and "in his official capacity" were fraudulently inserted without his knowledge. The Regional Trial Court (RTC) ruled in favor of Philguarantee, ordering Astro and Roxas to pay jointly and severally. The Court of Appeals affirmed the RTC decision, finding that Roxas failed to satisfactorily explain why he signed twice and upholding the presumption of regularity in private transactions. The Petition: The present petition for review on certiorari questions whether Roxas should be held jointly and severally liable with Astro.
Issue(s)
Whether Peter Roxas should be held jointly and severally liable with Astro Electronics Corp. for the loan obligations. Whether Roxas' claim that he signed the promissory notes in blank and that the phrases "in his personal capacity" and "in his official capacity" were fraudulently inserted is tenable.
Ruling
The Supreme Court affirmed the decision of the Court of Appeals, holding that Peter Roxas is jointly and severally liable with Astro Electronics Corp. for the loan obligations. The Court found that Roxas' act of signing the promissory notes twice, once as President of Astro and once in his personal capacity, clearly indicated his intention to be bound in both capacities. Furthermore, Philguarantee, having paid 70% of the loan as guarantor, was subrogated to the rights of Philtrust against Astro and Roxas.
Ratio Decidendi
On the issue of Roxas' joint and several liability: The Court held that Roxas is jointly and severally liable with Astro. Roxas signed the three promissory notes twice: once as President of Astro and once in his personal capacity. Under the Negotiable Instruments Law, persons who write their names on the face of promissory notes are makers, promising to pay the payee or any holder. By signing twice, Roxas became a co-maker and cannot escape liability. Even without the phrase "personal capacity," his intention to be liable personally is evident from signing in two capacities. Furthermore, the promissory notes explicitly stated "I/We jointly, severally and solidarily, promise to pay," which binds the makers solidarily. The Court also noted that Roxas' signatures on some notes covered portions of the typewritten words "personal capacity," indicating these words were present when he signed, thus refuting his claim of signing in blank. His execution of a "continuing Surety ship Agreement" where he guaranteed the loan jointly and severally with Astro further reinforced his solidary liability. On Roxas' claim of signing in blank and fraudulent insertion: The Court disregarded Roxas' claim that he signed the notes in blank and that the phrases "in his personal capacity" and "in his official capacity" were fraudulently inserted without his knowledge. The Court reiterated the presumption that private transactions are fair and regular and that individuals take ordinary care of their concerns. Roxas failed to provide any evidence, other than his self-serving allegations, to overcome these presumptions. His failure to explain why he signed twice, coupled with the evidence that his signatures covered the typewritten phrases, demolished his claim. Bare allegations unsubstantiated by evidence are not sufficient proof.
Main Doctrine
A person who signs a promissory note twice, once as President of a corporation and again in his personal capacity, becomes a co-maker and is primarily liable as a joint and several debtor, even without the explicit phrase "personal capacity," as the act of signing twice manifests an intention to undertake the obligation in both official and personal capacities. Furthermore, a guarantor who pays is subrogated by operation of law to all the rights which the creditor had against the debtor.