J. Malcolm
PROCEDURAL SHIZ
Aug 25, 1922 Original action commenced by BPI against Laguna Coconut Oil and
Fidelity & Surety Company of the Phil Islands
Fidelity & Surety Comp. interposed a demurrer to BPIs complaint, which was
sustained by the TC
BPI appealed to SC, where the ruling was reversed and the case was remanded
Laguna Coconut Oil Co. made no defense and judgment by default obtained
against it
Upon the pleadings and agreed facts, TC rendered judgment against the Fidelity &
Surety Comp. for the full amount of the note, with interest
Judgment reversed and the action dismissed without prejudice to the bringing of
another action upon the same cause
October 20, 1925 BPI commenced new action against Fidelity & Surety Comp in
CFI Manila
Defendant demurred
STATEMENT OF FACTS
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THURSDAY, 14 SEPTEMBER 2017
April 26, 1920 Laguna Coconut Oil Co. executed in favor of the Phil. Vegetable Oil
Comp. the promissory note:
May 3, 1920 Fidelity & Surety Comp. made a notation on the note, reading as
follows:
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THURSDAY, 14 SEPTEMBER 2017
May 4, 1920 Phil Vegetable Oil Comp. endorsed the note in blank and delivered it
to BPI
possible that Phil Vegetable Oil Comp was paid the sum of P50K therefore
After maturity of the note, demand for its payment was made on Laguna Coconut Oil
Co., Phil Vegetable Oil Comp. and Fidelity & Surety Comp
Innote
their last appearance in the TC, BPI made an eort to connect the promissory
of P50K with an existing obligation of the Phil. Vegetable Oil Comp in the
form of another promissory note
The evidence was also intended to demonstrate that a clear error had been
committed when reference was made to the Laguna Coconut Oil Co. in the notation
on the note
TC judge said that the note could not have been discounted by the Laguna
Coconut Oil Co. and that this must logically have been done by the BPI
However, the Code of Civil Procedure permits evidence of the terms of the
agreement other than the contents of the writing in the following case:
Where a mistake or imperfection of the writing, or its failure to express the
true intent and agreement of the parties is put in issue by the pleadings
This was construed by the US SC in Phil Sugar Estates Devt Comp. vs Govt of the
Philippine Islands: The courts of equity will reform a written contract where,
owing to mutual mistake, the language used therein did not fully or accurately
express the agreement and intent of the parties
Also stated that the relief by way of reformation will not be granted unless the
proof of mutual mistake be of the clearest and most satisfactory character
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THURSDAY, 14 SEPTEMBER 2017
Local courts have applied the rule that the amount of evidence necessary to sustain
a prayer of relief where its sought to impugn a fact in a document is always MORE
THAN A MERE PREPONDERANCE OF EVIDENCE
ISSUE
W/N BPI showed with more than a mere preponderance of evidence that there
was a mutual mistake which would give rise to a relief by way of reformation
NO
BEFORE RESOLVING THE CASE, MUST FIRST LOOK AT WHAT THE COURT SAID
WHEN THE CASE WAS LAST IN THE SC
Mr. Justice Ostrand observed that the writing upon which the note is brought does
not in terms show any obligation in favor of BPI and the action can only be
maintained upon the theory that the writing does not express the true intent of the
parties. We may surmise that the guarantee in question was intended for the benefit
of the party who subsequently discounted the note, but we cannot be certain.
Itandwasthatthenthepointed out that the note may have been merely an accommodation note
guaranty may have intended for the protection of the maker
But the parties did not take advantage of this suggestion (di nila ginamit as an
argument?)
An examination of the note and guaranty discloses that in the notation to the note,
the word hold is interlined
indicates that the VP of the Fidelity & Surety Comp had his particular attention
called to the language of the note, and corrected the typewritten matter by
inserting in ink the word quoted
That the writer of the notation fell into a further error in obligating the company to the
Laguna Coconut Oil Co. may be possible
The the writer may have had in mind to use the words Phil Vegetable Oil Comp.
may also be possible
That the names of the 2 parties before the guarantor were Laguna Coconut Oil Co.
and Phil Vegetable Oil Co.
The guaranteeing comp couldnt very well have assumed that the BPI at a later
date was contemplating discounting the note
Also apparent on the face of the note that it was to draw interest at maturity
this fact would disprove discount of the note by the BPI on or before May 3, 1920
In truth, not certain that the bank ever did discount the note
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THURSDAY, 14 SEPTEMBER 2017
Atdiscounted
least, BPI in its 2nd amended complaint averred that the promissory note was
by the Phil. Vegetable Oil Comp.
The bookkeeping entries of the bank are hardly competent against a stranger to the
transaction, such as Fidelity & Surety Comp in this case
Moreover, it will not escape notice that 1 entry at least in BPIs Exhibit E has been
changed by erasing the words y Fidelity & Surety Co. of the Phil. Islands and
substituting Phil. Vegetable Oil Co. garantizado p. Fidelity & Surety Co. of the Phil.
Islands
The bookkeeping entries taken at their face value are NOT CONCLUSIVE
Nothing in the exhibits from which any such admission can be inferred
An attempt to interpret the correspondence only leads one further in the field of
speculation
BUT the rule is than an admission or declaration, to be competent, must have been
expressed in definite, certain and unequivocal language
Here, the exhibits are couched in language which is neither definite, certain nor
unequivocal for nowhere do they contain an admission of a guaranty made by
Fidelity & Surety Comp for the protection of the BPI
To justify the reformation of a written instrument upon the ground of mistake, the
concurrence of 3 things are necessary:
Second, that the mistake should be proved by clear and convincing evidence
Third, that the mistake should be common to both parties to the instrument
There may have been a mistake here, but it would be straining the natural course of
events to hold that Fidelity & Surety Comp. a party to that mistake
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THURSDAY, 14 SEPTEMBER 2017
We cannot bring ourselves to conclude that the plainti, by proof of the clearest and
most satisfactory character constituting more than a preponderance of the evidence,
has established a mutual mistake. Instead, the proof is left far behind that goal.
RULING
Judgment appealed from will be reversed and the proceedings definitely dismissed.