G.R. No. L-5021 July 31, 1953
ISIDORO DE MORA, plaintiff-appellee, vs. LA INSULAR CIGAR AND CIGARETTE FACTORY, INC., defendant-appellant.

FACTS

Isidoro de Mora (appellee) was the General Manager of La Insular Cigar and Cigarette Factory, Inc. (appellant corporation). The corporation was heavily indebted to its principal stockholder, Marquesa de Aranda. In December 1940, the corporation’s Board of Directors sent de Mora to Spain to contact the Marquesa and other stockholders to reorganize and recapitalize the corporation by converting debts into shares. The Marquesa agreed to the plan on condition she be paid an advance of P100,000 on her credit. De Mora, through the suggestion of the Marquesa’s legal adviser, advanced P70,000 (350,000 pesetas) from his own funds to the Marquesa on April 30, 1941. In exchange, the Marquesa issued a handwritten receipt stating she received P70,000 from de Mora, to be charged to her current account with the corporation. After the war, de Mora was relieved of his position. He demanded payment of the P70,000 from the corporation, which refused. De Mora filed a claim against the Marquesa’s estate and a separate action against the corporation. The corporation argued the receipt was merely an “advance receipt” authorizing future collection, not evidence of actual payment, and that the claim was included in a subsequent settlement deed.

ISSUE

The pivotal issue is the correct interpretation of the document (receipt) executed by the Marquesa de Aranda on April 30, 1941, specifically whether it constitutes evidence of an actual payment by de Mora, entitling him to reimbursement from the corporation, or merely an authorization for future collection.

RULING

The Supreme Court affirmed the lower court’s decision, ordering the corporation to pay de Mora P70,000 with legal interest. The Court held that the document’s words, “He recibido de Don Isidoro de Mora Pesos 70,000 … de mi cuenta corriente de La Insular,” are clear and mean the Marquesa actually received the money from de Mora, to be charged to her account with the corporation. The Court rejected the corporation’s theory that it was an “advance receipt,” finding no evidence of such a practice. The transaction was a partial assignment of the Marquesa’s credit in favor of de Mora, who subrogated himself to her rights against the corporation. The Court also ruled that the subsequent deed of settlement between de Mora and the corporation expressly reserved his right to collect sums advanced to individual stockholders, like the Marquesa, thus the claim was not barred.