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PHILIPPINE REPORTS ANNOTATED VOLUME 037

[No. 11073. February 21, 1918.]

WISE & Co. (Ltd.), plaintiff and appellant, vs. JAMES
KELLY and MARIANO LIM, defendants and appellees.
CONTRACTS; OBLIGATIONS; CONDITIONS; SURETY.
A purchased merchandise from B on credit and agreed that
he would apply the proceeds of its sale to the discharge of his
indebtedness. C as surety for A undertook that A would pay
over to B the entire
697

VOL. 37, FEBRUARY 21, 1918.

697

Wise & Co. vs. Kelly and Lim.

proceeds of the sale of the merchandise. Held: That C is not liable

for the difference between the amount realized from the sale of
the merchandise and the purchase price of the same.

APPEAL from a judgment of the Court of First Instance of

Manila. Del Rosario, J.
The facts are stated in the opinion of the court.
Lawrence, Ross & Block for appellant.
Cosme Ferrer for appellees.
FISHER, J.:
This action was brought in the Court of First Instance of
Manila against the appellee, Mariano Lim, and one James
Kelly, the former as surety and the latter as principal, to
recover the amount of a promissory note.
The note upon which the action was brought is in the
following terms:
"Be it known that we guarantee unto the firm of Wise &
Co. (Ltd.) the payment of the sum of thirteen thousand
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seven hundred and fortynine pesos and nine centavos

(P13,749.09) which James Kelly, a merchant, owes to the
said firm of Wise & Co. (Ltd.), for goods and merchandise
received and purchased by Mr. Kelly, to be sold in his
establishment, upon the condition that Mr. Kelly will pay
over to the firm of Wise & Co. (Ltd.) at the end of each
month all sums which he may receive from the sale of said
goods and merchandise, and that in the contrary event we,
the sureties, undertake to pay to the firm of Wise & Co.
(Ltd.) such sums as Mr. James Kelly may fail to turn in as
above stated.
"In witness whereof we have signed this instrument,
Manila, P. I., December 12, 1912.
(Sgd.) "JAMES KELLY.
(Sgd.) "MARIANO LIM."
In his answer to the complaint the appellee, Mariano
Lim, interposed, among others, the defense that the
obligation was conditional as to him, and that the fact
constituting the condition had not occurred.
698

698

PHILIPPINE REPORTS ANNOTATED

Wise & Co. vs. Kelly and Lim.

The trial judge in his decision said, concerning the

construction which in his opinion should be placed upon
note in suit:
"It will be seen that the said document obliges Lim to
respond for the payment to the firm of Wise & Co. (Ltd.) of
the sum of P13,749.09 which the principal obligor Kelly
owes to it for goods and merchandise received and
purchased prior thereto, to be sold in his establishment, to
the extent that Kelly fails to comply with the condition of
paying in at the end of each month all sums which he may
collect f from the sale of such goods and merchandise, it
appearing that he has only undertaken to pay such sums as
have been received from the sale of merchandise by the
principal obligor which have not been paid in by the latter."
Upon the evidence submitted the court below held that
plaintiff had not proven that the principal obligor Kelly had
failed to turn over any money whatever received from the
sale of the merchandise for which the note was given, and
establishes the conclusion that Lim had therefore incurred
no liability, and that plaintiff has no cause of action against
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him.
In accordance with this conclusion, judgment was
rendered against the principal debtor Kelly for the full
amount of the note in suit, with interest, and the action
was dismissed as to Lim. From this judgment plaintiff
appealed and has assigned as error the conclusion of the
trial court with regard to the conditional nature of the
obligation assumed by Lim.
Upon an examination of the document in question it
becomes evident that Lim, as surety, did not undertake
absolutely to pay the sum of P13,749.09, in which the
principal debtor admits himself to be indebted to the
creditor firm. His agreement was limited to respond for the
performance by Kelly of one of the accessory pacts of the
contract evidenced by that document, namely, the
undertaking to deliver to the plaintiff firm the total
proceeds of the sales of the merchandise for the invoice
value of which the promissory note was given.
699

VOL. 37, FEBRUARY 23, 1918.

699

Remata vs. Javier.

It not having been stipulated that the merchandise was to

be sold at a price not less than cost, it follows that even
were Kelly to pay in the total amount derived from its sale,
part of his obligation to the sellers might remain
undischarged. He, unquestionably, is liable for the
payment of the note whatever may be the price at which
the merchandise might be sold; but this obligation is not
extended to Lim. It having been determined by the court, in
its findings, which we regard as fully supported by the
evidence of record, that plaintiff has not proved that it has
not in fact received all the money derived from the "sale of
the merchandise mentioned in the note, it follows that
there is no evidence of the existence of the condition to
which the obligation assumed by Lim was subordinated. In
obligations subject to a suspensive condition the
acquisitions of the right on the part of the creditor depends
upon the occurrence of the event constituting the condition.
(Civil Code, art. 1114.)
For the reason stated, we affirm the judgment appealed
with the costs of this instance to the appellant. So ordered.
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Arellano, C. J., Torres, Johnson, Carson, Araullo,

Street, Malcolm and Avancea, JJ., concur.
Judgment affirmed.
_______________

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