GR 48197; (November, 1942) (Digest)
G.R. No. 48197 ; November 16, 1942
THE DIRECTOR OF THE BUREAU OF COMMERCE and PAZ M. VDA. DE PARDO DE TAVERA, petitioners, vs. JOSE V. RODRIGUEZ, administrator of the estate of Guillermo A. Benedicto, and VISAYAN SURETY AND INSURANCE CORPORATION, respondents.
FACTS
The case involves a stockbroker’s bond. The surety of the broker (Visayan Surety and Insurance Corporation) informed the Director of Commerce via letter that the term of the bond “is hereby renewed for another period of one year from October 26, 1935 to October 26, 1936.” The Director of Commerce, in his reply, did not object to the renewal but requested compliance with a formal requisite: that the original and a duplicate of the bond be filed with his office. Separately, G. M. (whose full identity is implied but not fully detailed in the provided text) deposited 15,000 shares of Masbate Consolidated Mining Company stock with the broker, Guillermo A. Benedicto, for the purpose of sale. The broker failed to return the shares or their value. G. M. subsequently assigned all her rights in these shares to one of the petitioners, Paz M. Vda. de Pardo de Tavera.
ISSUE
1. Whether the exchange of letters between the surety and the Director of Commerce constituted a valid renewal of the stockbroker’s bond for the period from October 26, 1935, to October 26, 1936.
2. Whether the terms of the broker’s bond cover his failure to return or pay for the shares of stock deposited with him for sale.
RULING
1. Yes. The exchange of letters sufficiently complied with the legal requisites for the renewal of the bond. The surety’s letter explicitly stated the renewal as an accomplished fact. The Director’s response, which did not object but merely sought compliance with a formality (filing the original and duplicate), indicated agreement. The law emphasizes that a meeting of the minds, not form, makes a contract binding. The bond is not required to be in a public instrument; any writing is sufficient. Therefore, a perfected contract of renewal was established through the correspondence.
2. Yes. The terms of the bond cover the broker’s act of failing to return or account for the shares deposited with him. The broker received the shares in the course of his business. If he failed to find a buyer, his obligation was to return the shares or their value. To rule that the bond does not cover this obligation would defeat the very purpose of the law requiring such bonds, which is to protect the public dealing with brokers.