B2022 REPORTS ANNOTATED
Wise & Co. v Kelly
I. Recit-ready summary
Wise & Co. (creditor) instituted an action to recover the amount of a
promissory note issued and signed by James Kelly (principal debtor) and
Mariano Lim (surety). The Court of First Instance of Manila rendered a
decision dismissing the action note as to Lim. Wise & Co. From this
judgement, Wise & Co appealed and has assigned as error the conclusion of
the trial court with regard to the conditional nature of the obligation assumed
by Lim.
The promissory note states that Lim and Kelly guarantee unto the firm of
Wise & Co. the payment of the sum of P13,749.09 which James Kelly owes
to the said firm for goods and merchandise received and purchased by him,
to be sold in his establishment, upon the condition that he will pay over to
Wise & Co. 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, the
surety, undertakes to pay Wise & Co. such sums as Mr. James Kelly may fail
to turn in as above stated.
Whether Lim, as surety, absolutely undertook to pay the sum of P13,749.09.
No, Lim’s agreement was limited to respond for the performance by Kelly of
one of the necessary pacts of the contract evidenced by that document,
namely, the undertaking to deliver to Wise & Co. the total proceeds of the
sales of the merchandise for the invoice value of which the promissory note
was given.
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. Kelly, 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, Wise & Co. 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.
G.R. NO: L-11073
ARTICLE; TOPIC OF CASE: Surety
VOL 32 [February 21, 1918]
Wise & Co. v Kelly
II. Facts of the case
Wise & Co. - Creditor
James Kelly- Principal Debtor
Mariano Lim- Surety
This action was brought in the Court of First Instance of Manila against
Lim (surety) and Kelly (principal) to recover the amount of a promissory
note.
The promissory note contains the following terms:
1. Lim and Kelly guarantee unto the firm of Wise & Co. the payment
of the sum of P13,749.09 which James Kelly, a merchant, owes to
the said firm 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 Wise & Co. at the end of each
month all sums which he may receive from the sale of said goods
and merchandise.
2. And in the contrary event, the sureties, undertake to pay to the firm
of Wise & Co. such sums as Mr. James Kelly may fail to turn in
as above stated.
Signed by James Kelly and Mariano Lim.
In his answer to the complaint, Lim interposed, among others, the defense
that the obligation was conditional as to him, and that the fact constituting
the condition had not occurred.
Upon the evidence submitted, the CFI of Manila, held Wise & Co. 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 note was given,
and establishes the conclusion that Lim had therefore incurred no liability,
and that plaintiff has no cause of action against 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 said judgement, Wise & Co appealed and has assigned as error the
conclusion of the trial court with regard to the conditional nature of the
obligation assumed by Lim.
PONENTE: Escolin, J.
DIGEST MAKER: Julia
 B2022 REPORTS ANNOTATED VOL 32 [February 21, 1918]

Wise & Co. v Kelly Wise & Co. v Kelly

III. Issue/s
Whether Lim, as surety, absolutely undertook to pay the sum of P13,749.09.
NO.
IV. Ratio/Legal Basis
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 necessary pacts of the contract evidenced by that document, namely, the
undertaking to deliver to Wise & Co. the total proceeds of the sales of the
merchandise for the invoice value of which the promissory note was given.
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. Kelly, 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, Wise & Co. 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.)
V. Disposition
For the reason stated, we affirm the judgment appealed with the costs of this
instance to the appellant. So ordered.
VI. Notes
2 page-case!

G.R. NO: L-11073 PONENTE: Escolin, J.

ARTICLE; TOPIC OF CASE: Surety DIGEST MAKER: Julia