Astro Electronic Vs Roxas

SECOND DIVISION
G.R. No. 136729. September 23 ,2003]
ASTRO ELECTRONICS CORP. and PETER ROXAS, Petitioner,

vs. PHILIPPINE EXPORT AND FOREIGN LOAN GUARANTEE
CORPORATION, respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
Assailed in this petition for review on certiorari under Rule 45 of the

Rules of Court is the decision of the Court of Appeals in CA-G.R. CV
No. 41274,1 affirming the decision of the Regional Trial Court
(Branch 147) of Makati, then Metro Manila, whereby petitioners
Peter Roxas and Astro Electronics Corp. (Astro for brevity) were
ordered to pay respondent Philippine Export and Foreign Loan
Guarantee Corporation (Philguarantee), jointly and severally, the
amount of P3,621,187.52 with interests and costs.
The antecedent facts are undisputed.
Astro was granted several loans by the Philippine Trust Company

(Philtrust) amounting to P3,000,000.00 with interest and secured by
three promissory notes: PN NO. PFX-254 dated December 14, 1981
for P600,000.00, PN No. PFX-258 also dated December 14, 1981 for
P400,000.00 and PN No. 15477 dated August 27, 1981 for
P2,000,000.00. In each of these promissory notes, it appears that
petitioner Roxas signed twice, as President of Astro and in his
personal capacity.2 Roxas also signed a Continuing Surety ship
Agreement in favor of Philtrust Bank, as President of Astro and as
surety.3 cräläwvirt ualib rä ry
Thereafter, Philguarantee, with the consent of Astro, guaranteed in

favor of Philtrust the payment of 70% of Astros loan,4 subject to the
condition that upon payment by Philguanrantee of said amount, it
shall be proportionally subrogated to the rights of Philtrust against
Astro.5cräläwvirtual ibrä ry
As a result of Astros failure to pay its loan obligations, despite

demands, Philguarantee paid 70% of the guaranteed loan to
Philtrust. Subsequently, Philguarantee filed against Astro and Roxas
a complaint for sum of money with the RTC of Makati.
In his Answer, Roxas disclaims any liability on the instruments,

alleging, inter alia, that he merely signed the same in blank and the
phrases in his personal capacity and in his official capacity were
fraudulently inserted without his knowledge.6 cräläwvi rtua lib räry
After trial, the RTC rendered its decision in favor of Philguarantee

with the following dispositive portion:
WHEREFORE, in view of all the foregoing, the Court hereby renders

judgment in favor or (sic) the plaintiff and against the defendants
Astro Electronics Corporation and Peter T. Roxas, ordering the then
(sic) to pay, jointly and severally, the plaintiff the sum of
P3,621.187.52 representing the total obligation of defendants in
favor of plaintiff Philguarantee as of December 31, 1984 with
interest at the stipulated rate of 16% per annum and stipulated
penalty charges of 16% per annum computed from January 1, 1985
until the amount is fully paid. With costs.
SO ORDERED.7 cräläwvirt ualib rä ry
The trial court observed that if Roxas really intended to sign the
instruments merely in his capacity as President of Astro, then he
should have signed only once in the promissory note.8 cräläwvirtual ibrä ry
On appeal, the Court of Appeals affirmed the RTC decision agreeing

with the trial court that Roxas failed to explain satisfactorily why he
had to sign twice in the contract and therefore the presumption that
private transactions have been fair and regular must be
sustained.9cräläwvirtua lib räry
In the present petition, the principal issue to be resolved is whether

or not Roxas should be jointly and severally liable (solidary) with
Astro for the sum awarded by the RTC.
The answer is in the affirmative.
Astros loan with Philtrust Bank is secured by three promissory

notes. These promissory notes are valid and binding against Astro
and Roxas. As it appears on the notes, Roxas signed twice: first, as
president of Astro and second, in his personal capacity. In signing
his name aside from being the President of Asro, Roxas became a
co-maker of the promissory notes and cannot escape any liability
arising from it. Under the Negotiable Instruments Law, persons who
write their names on the face of promissory notes are
makers,10 promising that they will pay to the order of the payee or
any holder according to its tenor.11 Thus, even without the phrase
personal capacity, Roxas will still be primarily liable as a joint and
several debtor under the notes considering that his intention to be
liable as such is manifested by the fact that he affixed his signature
on each of the promissory notes twice which necessarily would
imply that he is undertaking the obligation in two different
capacities, official and personal.
Unnoticed by both the trial court and the Court of Appeals, a closer
examination of the signatures affixed by Roxas on the promissory
notes, Exhibits A-4 and 3-A and B-4 and 4-A readily reveals that
portions of his signatures covered portions of the typewritten words
personal capacity indicating with certainty that the typewritten
words were already existing at the time Roxas affixed his signatures
thus demolishing his claim that the typewritten words were just
inserted after he signed the promissory notes. If what he claims is
true, then portions of the typewritten words would have covered
portions of his signatures, and not vice versa.
As to the third promissory note, Exhibit C-4 and 5-A, the copy
submitted is not clear so that this Court could not discern the same
observations on the notes, Exhibits A-4 and 3-A and B-4 and 4-A.
Nevertheless, the following discussions equally apply to all three

promissory notes.
The three promissory notes uniformly provide: FOR VALUE

RECEIVED, I/We jointly, severally and solidarily, promise to pay to
PHILTRUST BANK or order...12 An instrument which begins with I,
We, or Either of us promise to pay, when signed by two or more
persons, makes them solidarily liable.13 Also, the phrase joint and
several binds the makers jointly and individually to the payee so
that all may be sued together for its enforcement, or the creditor
may select one or more as the object of the suit.14 Having signed
under such terms, Roxas assumed the solidary liability of a debtor
and Philtrust Bank may choose to enforce the notes against him
alone or jointly with Astro.
Roxas claim that the phrases in his personal capacity and in his
official capacity were inserted on the notes without his knowledge
was correctly disregarded by the RTC and the Court of Appeals. It is
not disputed that Roxas does not deny that he signed the notes
twice. As aptly found by both the trial and appellate court, Roxas
did not offer any explanation why he did so. It devolves upon him to
overcome the presumptions that private transactions are presumed
to be fair and regular15 and that a person takes ordinary care of his
concerns.16 Aside from his self-serving allegations, Roxas failed to
prove the truth of such allegations. Thus, said presumptions prevail
over his claims. Bare allegations, when unsubstantiated by
evidence, documentary or otherwise, are not equivalent to proof
under our Rules of Court.17 cräläwvirtual ibrä ry
Roxas is the President of Astro and reasonably, a businessman who

is presumed to take ordinary care of his concerns. Absent any
countervailing evidence, it cannot be gainsaid that he will not sign
document without first informing himself of its contents and
consequences. Clearly, he knew the nature of the transactions and
documents involved as he not only executed these notes on two
different dates but he also executed, and again, signed twice, a
continuing Surety ship Agreement notarized on July 31, 1981,
wherein he guaranteed, jointly and severally with Astro the
repayment of P3,000,000.00 due to Philtrust. Such continuing
suretyship agreement even re-enforced his solidary liability Philtrust
because as a surety, he bound himself jointly and severally with
Astros obligation.18 Roxas cannot now avoid liability by hiding under
the convenient excuse that he merely signed the notes in blank and
the phrases in personal capacity and in his official capacity were
fraudulently inserted without his knowledge.
Lastly, Philguarantee has all the right to proceed against petitioner,

it is subrogated to the rights of Philtrust to demand for and collect
payment from both Roxas and Astro since it already paid the value
of 70% of roxas and Astro Electronics Corp.s loan obligation. In
compliance with its contract of Guarantee in favor of Philtrust.
Subrogation is the transfer of all the rights of the creditor to a third

person, who substitutes him in all his rights.19 It may either be legal
or conventional. Legal subrogation is that which takes place without
agreement but by operation of law because of certain
acts.20 Instances of legal subrogation are those provided in Article
1302 of the Civil Code. Conventional subrogation, on the other
hand, is that which takes place by agreement of the parties.21 cräläwvirtual ib räry
Roxas acquiescence is not necessary for subrogation to take place

because the instant case is one of the legal subrogation that occurs
by operation of law, and without need of the debtors
knowledge.22 Further, Philguarantee, as guarantor, became the
transferee of all the rights of Philtrust as against Roxas and Astro
because the guarantor who pays is subrogated by virtue thereof to
all the rights which the creditor had against the debtor.23 cräläwvirtual ibrä ry
WHEREFORE, finding no error with the decision of the Court of

Appeals dated December 10, 1998, the same is hereby AFFIRMED in
toto.
SO ORDERED
[G.R. No. 136729. September 23 ,2003]

ASTRO ELECTRONICS CORP. and PETER ROXAS, petitioner, vs. PHILIPPINE
EXPORT AND FOREIGN LOAN GUARANTEE CORPORATION,respondent.
Facts: Astro was granted several loans by the Philippine Trust Company (Philtrust) with the total
amounting to P3,000,000.00 with interest and secured by three promissory notes. In each of these
promissory notes, it appears that petitioner Peter Roxas signed twice, as President of Astro and in his
personal capacity. Roxas also signed a Continuing Surety ship Agreement in favor of Philtrust Bank, as
President of Astro and as surety.
Thereafter, Philguarantee, with the consent of Astro, guaranteed in favor of Philtrust the payment of
70% of Astro’s loan,subject to the condition that upon payment by Philguanrantee of said amount, it
shall be proportionally subrogated to the rights of Philtrust against Astro.
As a result of Astro’s failure to pay its loan obligations, despite demands, Philguarantee paid 70% of the
guaranteed loan to Philtrust. Subsequently, Philguarantee filed against Astro and Roxas a complaint for
sum of money with the RTC of Makati.
Petitioner: Roxas claims that merely signed the PN in blank and the phrases “in his personal capacity”
and “in his official capacity” were fraudulently inserted without his knowledge.
Issue: Whether or not Roxas should be jointly and severally liable (solidary) with Astro.
Ruling: Yes. Astro’s loan with Philtrust Bank is secured by three promissory notes. These promissory
notes are valid and binding against Astro and Roxas. Under the Negotiable Instruments Law, persons
who write their names on the face of promissory notes are makers, promising that they will pay to the
order of the payee or any holder according to its tenor. Thus, even without the phrase “personal
capacity,” Roxas will still be primarily liable as a joint and several debtor under the notes considering
that his intention to be liable as such is manifested by the fact that he affixed his signature on each of
the promissory notes twice which necessarily would imply that he is undertaking the obligation in two
different capacities, official and personal.
Roxas’ claim that the phrases “in his personal capacity” and “in his official capacity” were inserted on
the notes without his knowledge was correctly disregarded by the RTC and the Court of Appeals. As
aptly found by both the trial and appellate court, Roxas did not offer any explanation why he did so. It
devolves upon him to overcome the presumptions that private transactions are presumed to be fair and
regular[15] and that a person takes ordinary care of his concerns

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SECOND DIVISION

G.R. No. 136729. September 23 ,2003]

ASTRO ELECTRONICS CORP. and PETER ROXAS, Petitioner,

Assailed in this petition for review on certiorari under Rule 45 of the

The antecedent facts are undisputed.

Astro was granted several loans by the Philippine Trust Company

Thereafter, Philguarantee, with the consent of Astro, guaranteed in

As a result of Astros failure to pay its loan obligations, despite

In his Answer, Roxas disclaims any liability on the instruments,

After trial, the RTC rendered its decision in favor of Philguarantee

WHEREFORE, in view of all the foregoing, the Court hereby renders

SO ORDERED.7 cräläwvirt ualib rä ry

On appeal, the Court of Appeals affirmed the RTC decision agreeing

In the present petition, the principal issue to be resolved is whether

The answer is in the affirmative.

Astros loan with Philtrust Bank is secured by three promissory

Nevertheless, the following discussions equally apply to all three

The three promissory notes uniformly provide: FOR VALUE

Roxas is the President of Astro and reasonably, a businessman who

Lastly, Philguarantee has all the right to proceed against petitioner,

Subrogation is the transfer of all the rights of the creditor to a third

Roxas acquiescence is not necessary for subrogation to take place

WHEREFORE, finding no error with the decision of the Court of

[G.R. No. 136729. September 23 ,2003]

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