G.R. No. 34686 , February 24, 1932
PHILIPPINE TRUST CO. vs. ANTIGUA BOTICA RAMIREZ, ET AL.

FACTS

The Philippine Trust Company (appellant) filed three consolidated cases to collect various debts from the defendants, including the corporation Antigua Botica Ramirez and its individual stockholders/guarantors (appellees). The debts consisted of: (1) an overdraft balance; (2) a promissory note; and (3) another promissory note partially secured by a mortgage. The trial court dismissed all complaints, ordered the mortgage cancellation, discharged a receiver, and returned the corporation’s properties to the plaintiff. The plaintiff appealed, assigning multiple errors.

ISSUE

Whether the trial court erred in dismissing the complaints and ruling in favor of the defendants based on its findings regarding the admissibility of evidence and the merits of the defendants’ defenses.

RULING

Yes, the trial court erred. The Supreme Court reversed the judgment. The Court held that the trial court improperly admitted parol evidence to vary the terms of the promissory notes (e.g., testimony that a signer was a “mere surety” or signed without consideration), erroneously relied on hearsay evidence regarding alleged extensions of payment, and incorrectly admitted testimony about an alleged assignment of shares in payment of the debts without sufficient proof. The defenses raised by the defendants were not substantiated by credible evidence. Judgment was rendered in favor of the plaintiff for the amounts claimed in each case, with interest and attorney’s fees, with the liability of the mortgagor limited to the secured amount.

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