Commercial - Bank - v. Republic Armored Car

EN BANC
[G.R. Nos. L-18223-24. June 29, 1963.]
COMMERCIAL BANK & TRUST COMPANY OF THE

PHILIPPINES, plaintiff-appellee, vs. REPUBLIC ARMORED CAR
SERVICE CORPORATION and DAMASO PEREZ, ET AL.,
defendants-appellants.
Pompeyo Diaz for plaintiff-appellee.

Halili, Bolinao, Bolinao & Associates and Crispin D. Baizas for
defendants-appellants.
SYLLABUS
1. AGENCY; LIABILITY OF PRINCIPAL TO THIRD PERSON; NOT

AFFECTED BY MISMANAGEMENT OF PRINCIPAL'S BUSINESS BY HIS AGENTS.
— In an action upon a promissory note against the maker, the
mismanagement of the business of the maker by his agents does not relieve
said maker from the responsibility that he had contracted to third persons,
especially in the case at bar where the written agreement contains no
limitations to defendant-appellant's liability.
2. PLEADING AND PRACTICE; THIRD PARTY COMPLAINT; NOT
AVAILABLE WHERE DEFENDANT HAS NO RIGHT TO DEMAND RELIEF FROM
THIRD-PARTY DEFENDANT. — The maker of the note can not claim that a
third-party complaint filed by him is a defense; a third-party complaint is,
under the Rules, available only if the defendant has a right to demand
contribution, indemnity, subrogation or any other relief from the supposed
third- party defendants in respect to the plaintiff's claim. (Sec. 1, Rule 12,
Rules of Court). The supposed parties defendants or alleged officers of the
defendant corporation had nothing to do with the overdraft account of the
defendant corporation with the plaintiff-appellee. Consequently, they cannot
be made parties defendants in a third-party complaint.
DECISION
LABRADOR, J : p
The above-entitled cases are appeals from judgments rendered by the

Court of First Instance of Manila through Judges Gustavo Victoriano and
Conrado M. Vasquez, respectively, of said Court.
In G.R. No. L-18223 plaintiff-appellee filed a complaint alleging that the
defendants-appellants were granted by it credit accommodations in the form
of an overdraft line for an amount not exceeding P80,000, with interest
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(paragraph 2, Complaint); that defendants or either of them drew regularly
upon the above credit line and as of February 10, 1960, the total of their
drawings and interest due amounted to P79,943.80 (par 3, id.); that repeated
demands were made upon defendants to pay for the drawings but said
demands were ignored (par. 4, id.). In their answer to the complaint the
defendants admit having drawn upon the credit line extended to them as
alleged in the complaint; claim they have not ignored the demands for the
payment of the sums demanded and have instituted actions against the
former officers of defendant corporation who had defrauded the latter; etc,
(par. 4, Answer). By way of special affirmative defenses, they allege that the
former officers and directors of the defendant corporation had deliberately
defrauded and mismanaged the corporation, as a part of their scheme to
wrest control of various corporations owned by Damaso Perez, from the
latter and as a result of said frauds or mismanagements the defendants
have instituted actions for damages for breach of trust; and that the
amounts drawn on the credit line subject of the complaint were received and
used by the former directors and officers of the defendant corporations and
constitute part of the funds misapplied by them. Upon motion, Judge
Victoriano entered for the plaintiff a judgment on the pleadings, holding that
the "special affirmative defenses (of the answer) failed to show any
allegation respecting the extent of defendants' drawings, although they have
admitted having drawn against the credit line, subject of the action, so that
said denial, not being a specific denial in the true sense, does not controvert
the allegation at which it is aimed," etc. The Court also further held that the
alleged mismanagement and fraud of the former directors and officials of
defendant corporation and the action now pending in court regarding the
same are merely internal affairs of the corporation which cannot affect or
diminish the liability of the defendant corporation to the plaintiff. The
defendants appealed from the decision to the Court of Appeals, but this
Court certified the case to Us.
In G.R. No. L-18224 the complaint also alleges that the defendants
were given credit accommodation in the form of an overdraft line in an
amount not exceeding P150,000 and drew regularly upon said credit line
amounts which with their interest reach the sum of P133,453.17; that
demands were made for the payment of the drawings but defendants have
failed to pay the amounts demanded. Defendants in their answer admit the
opening of the credit line in their favor and that demands for the
indebtedness were made upon them, but allege an special defenses that the
directors and officers of the defendant corporation deliberately defrauded
and mismanaged the said corporation in breach of trust in order to deprive
Damaso Perez of his control and majority interest in the defendant
corporation, as a result of which fraud, mismanagement and breach of trust
the defendants suffered tremendous losses; that the amounts drawn by
defendant corporation upon the credit line were received and used by the
former directors and officers and same constitute part of the funds of the
defendant corporation misapplied and mismanaged by said former officers
and directors of said corporation. Upon the presentation of the answer the
plaintiff presented a motion for judgment on the pleadings which the court
sustained, holding:
"The defendants having admitted the indebtedness in
question, its liability to pay the plaintiff the amount of the said
indebtedness is beyond question. The alleged fact that the money
borrowed from the plaintiff was misappropriated or misapplied by
some officers of the defendant corporation is no defense against
the liability of the defendants to the plaintiff. It is an internal
matter of the defendant corporation in which the plaintiff has no
concern or participation whatsoever. This is specially so with
respect to the defendant Damaso Perez who appears to have
executed the agreement, Annex A, in his own personal capacity
and not as an officer of the defendant Republic Credit Corporation.
The allegation that the defendants have a right to claim indemnity
or contribution from the erring directors and officers of the
defendant corporation is a matter which may be the subject of a
separate action, and in which the plaintiff is not concerned." (p.
37, Record on Appeal)
Against the above judgment the defendants also have prosecuted this
appeal. The Court of Appeals certified the same to Us in accordance with
law.
In G.R. No. L-18223, the defendants-appellants argue that the
admission made by the defendants in their answer that the amount
demanded was due, is qualified "in the sense that whatever amounts were
drawn from the overdraft line in question were part of those corporate funds
of Philippine Armored Car, Inc., misused and misapplied by Ramon Racelis, et
al., former directors and executive officers of said corporation." (p. 13,
Appellee's Brief) In answer to this argument we call attention to the fact that
in the agreement attached to the complaint Exhibit "A" the obligation of the
defendants-appellants to pay for the amount due under the overdraft line is
not in any way qualified; there is no statement that the responsibility of the
defendants-appellants for the amounts taken on overdraft would cease or be
defeated or reduced upon misappropriation or mismanagement of the funds
of the corporation by the directors and employees thereof. The special
defense is, therefore, a sham defense.
Furthermore, under general rules and principles of law the
mismanagement of the business of a party by his agents does not relieve
said party from the responsibility that he had contracted to third persons,
especially in the case at bar where the written agreement contains no
limitation to defendants-appellants' liability.
The so-called special defense contained in the answer is, therefore, no
special defense to the liability of the defendants-appellants, nor the action,
and the court's action or judgment on the pleadings was properly taken. The
argument contained in the brief of the defendants-appellants that the
defendants contemplated a third-party complaint is of no weight, because a
third-party complaint was not available to the defendants under the facts of
the case. A third-party complaint is, under the Rules, available only if the
defendant has a right to demand contribution, indemnity, subrogation or any
other relief from the supposed third-party defendants in respect to the
plaintiff's claim. (Sec. 1, Rule 12, Rules of Court) The supposed parties
defendants or alleged officers of the defendants corporation had nothing to
do with the overdraft account of defendant corporation with the plaintiff-
appellee. Consequently, they cannot be made parties defendants in a third-
party complaint. Anyway the filing of a third party complaint is no hindrance
to the issuance of the order of the court declaring that the defendants'
answer presented no issue or defense and that, therefore, plaintiff-appellee
was entitled to judgment.
In G.R. No. L-18224, our ruling in the first case is also applicable. In this
second case, it is also alleged that at the time of the agreement for credit in
current account the defendant corporation was under the management of
Roman Racelis and others who defrauded and mismanaged the corporation,
in breach of trust, etc., etc. Again we declare that the written agreement for
credit in current account, Annex "A", contains no limitation about the liability
of the defendants-appellants, nor an express agreement that the
responsibility of the defendants-appellants, should be conditioned upon the
lawful management of the business of the defendant corporation. The same
rulings in the first case are applicable in this second case.
WHEREFORE, the judgments appealed from are hereby affirmed, with
costs against the defendants-appellants.
Padilla, Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Paredes,
Dizon, Regala, and Makalintal, JJ., concur.
Bengzon, C.J., took no part.

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EN BANC

[G.R. Nos. L-18223-24. June 29, 1963.]

COMMERCIAL BANK & TRUST COMPANY OF THE

Pompeyo Diaz for plaintiff-appellee.

1. AGENCY; LIABILITY OF PRINCIPAL TO THIRD PERSON; NOT

The above-entitled cases are appeals from judgments rendered by the

CD Technologies Asia, Inc. © 2024 cdasiaonline.com

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