GR L 11073; (February, 1918) (Digest)
G.R. No. L-11073; February 21, 1918
WISE & CO. (Ltd.), plaintiff-appellant, vs. JAMES KELLY and MARIANO LIM, defendants-appellees.
FACTS:
Plaintiff Wise & Co. filed an action in the Court of First Instance of Manila to recover the amount of a promissory note executed by defendant James Kelly as principal and defendant Mariano Lim as surety. The note, dated December 12, 1912, stated that the signatories guaranteed payment to Wise & Co. of the sum of P13,749.09, which Kelly owed for goods and merchandise previously received. It further stipulated that Kelly would pay at the end of each month all sums received from the sale of said goods, and that the sureties would pay any amounts Kelly failed to remit. In his answer, Lim contended that his obligation was conditional and that the condition had not occurred. The trial court ruled that Lim’s obligation was limited to guaranteeing Kelly’s monthly turnover of sales proceeds and, since plaintiff failed to prove that Kelly did not turn over such proceeds, dismissed the case against Lim. Plaintiff appealed, arguing the trial court erred in interpreting Lim’s obligation as conditional.
ISSUE:
Whether Mariano Lim, as surety, is absolutely liable for the full amount of the promissory note or only conditionally liable for Kelly’s failure to remit proceeds from the sale of the merchandise.
RULING:
The Supreme Court affirmed the trial court’s decision. It held that Lim’s undertaking as surety was not an absolute guarantee for payment of the entire debt of P13,749.09. Instead, it was limited to answering for Kelly’s performance of his accessory obligation to remit monthly the proceeds from the sale of the specific merchandise. The Court emphasized that the obligation was conditional upon proof that Kelly failed to deliver the sales proceeds. Since plaintiff failed to prove that Kelly did not turn over such proceeds, the condition for holding Lim liable did not arise. Accordingly, Lim incurred no liability, and the action against him was properly dismissed. Costs were taxed against appellant.
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