The Nederlandsch Indische Handelsbank,  N. V., hereafter called the bank,  brought this action in  the Court of First Instance  of Manila against  the  South Sea  Surety & Insurance Company,  Inc., hereafter  called the  surety company, to collect the amount of  P14,000 on a performance bond,  jointly  and severally executed  by the  surety company  with the Walker Rubber  Corporation, hereafter designated  as vendee,  in  favor of the Associated Finance Company, Inc., hereafter designated as vendor.  The performance is to secure payment of the sum of P14,000, the price of 100,000 pounds of camel back rubber which vendor had  agreed to sell to vendee.  The complaint alleges that the bank relied on the written assurance of the surety that the latter would pay for the draft covering the rubber sold  in the event that drawee  (vendee)  would fail to  pay said draft on  its due  date,  and that vendee  failed to pay  said draft upon presentation.  The defendant surety answered the complaint,  alleging  that  the vendee  had complied with its  undertaking with the vendor; that the bank could  not have relied  on the defendant surety's assurance in discounting the draft as it had already been accepted by the drawee when  the surety agreed to secure its payment; that the vendee did  not.violate the terms or default in any of its  undertakings  with the vendor; that the vendor released the vendee of any and all liability arising from the  acceptance  of the  draft  and that the bond was executed solely for the benefit of  the vendor. In its answer the surety presents a third-party  complaint against the Walker Rubber Corporation, vendee,  and Chua Chuy, indemnitor, both of whom had executed an indemnity agreement with the surety, and prays that if it  is declared liable for  the draft,  then that the vendee  and Chua Chuy  should  reimburse to it  the  amount  of the judgment.

The Court of  First  Instance  rendered  judgment  sentencing the  surety  to  pay to the bank the amount of P14,000, with interest, and  at the same time  ordered the Walker Rubber Corporation and Chua Chuy to  reimburse all amounts that the surety shall pay to the plaintiff bank, plus attorney's fees and costs.

The case was appealed to the  Court of Appeals, and the latter  affirmed the judgement of the Court of First Instance.  It also dismissed a cross-claim filed by the third party defendant Chua Chuy against the other third-party defendant Walker Rubber  Corporation for lack of evidence. This appeal by certiorari  is against this judgment of the Court  of Appeals.   The  facts found  by said court  are as follows:

"In accordance  with  a contract of sale  (Exh.  E-l)  entered into on March 4, 1949 between the Associated Finance Co., Inc., and the Walker Rubber  Corporation, the former  drew a draft (Exh. A)  on  the latter, on March  4, 1950 for W.4,000  payable  sixty days after sight or, to  be exact,  on  May  3,  1950, representing  the value of  100,000 pounds of camelback rubber which formed a part  of goods  and articles mortgaged  by the Associated Finance 'Co., Inc.,  in  favor of the Nederlandsch  Indische & Handelsbank. Said  draft bore  on its  face  its acceptance  by the drawee, the Walker Rubber Corporation, dated  March 4,  1950.

"On March 5, 1949, the Walker Rubber  Corporation, as principal, and the South Sea Surety & Insurance Co., Inc., as surety, executed a performance  bond for the due and  full  observance of all the covenants, conditions  and agreements  set forth in  said contract of sale on condition, among others,  that the liability  of the surety thereon should  expire on March 5,  1950  and the same would  be cancelled ten days after its expiration unless the surety was notified in writing of any existing obligation thereunder.

"Upon presentation  of  said  draft to  the Nederlandsch Indische & Handelsbank for discount, said bank addressed  a letter on March 15, 1950  to the  South Sea Surety &  Insurance Co., Inc., requesting information whether  it  would  consider the  said draft as being covered by its performance bond and if  so, whether  it would be in order for the bank to present the draft to  said surety  company for immediate payment in the event the drawee  fail to  honor  same on its due date,  viz: May 5, 1950, to which the  South Sea Surety & Insurance Co., Inc.,  answered on  March 16, 1950 that it  would consider the draft for P14,000  in order and that the  same could be presented  to  it  for  payment should  drawee  fail to honor it, advising the bank,  however, that any draft drawn  subsequent to March 15, 1950  would not be considered as within the terms  of the performance  bond in question.

"On April 18, 1950, Nederlandsch Indische  &  Handelsbank  authorized  the Luzon Brokerage  Co.,  Inc., to  deliver to Francisco Sycip,  the president of  the Associated  Finance Co.,  Inc., 100,000 pounds  of the camelback  rubber stored in its  Echague  bodega, Warehouse No. 2 (Exh. H).  By means  of an undated  letter addressed to  the  Luzon Brokerage Co., Inc.,  the Associated Finance Co., Inc., and the Walker  Rubber Corporation, Cebu  City, made a demand on  the  Luzon Brokerage  Co.,  Inc.,  for  the  delivery to Mr. Francisco Sycip, of the balance of 100,000 pounds of camelback rubber, as per delivery order  issued by the Nederlandsch Indische & Handelsbank dated March 17, I960 (Exh. I).

"On its due date,  the draft  (Exh.  A) wa,s refused  payment by the Walker Rubber Corporation of Cebu City and  the corresponding protest for non-payment  was  made  in due time (Exh.  E).  On May  4,  1950, the Bank  of  the Philippine Islands,  through  the manager of  the  local branch  of  Cebu City, to  which  the draft (Exh. A) was referred for collection returned it to the Nederlandsch Indische & Handelsbank with the advice that the Walker Rubber Corporation,  Cebu City, dishonored said draft, claiming that their liability  thereunder has been  released by virtue, of an agreement entered into  between  them and the drawers and charged the bank for their commission  and airmail postage the sum  of P18 (Exh. D),

"On April 10,  1950, the Associated Finance Co.,  Inc., and  the Walker Rubber Corporation, represented by their respective Presidents, Francisco Sycip  and   Jose  Tan  Yaotin,  entered  into an agreement whereby the Associated Finance  Co.,  Inc.,  assumed and took delivery of the undelivered balance of camelback rubber and further assumed the full  responsibility of the P14,000  draft thereby releasing  and  discharging  the Walker Rubber  Corporation from the liability as acceptor of said draft, and rescinding and declaring null  and void the contract  of  sale entered into between' them (Exh. 3-Walker)."

Only the vendee  Walker Rubber Corporation  and indemnitor Chua Chuy  have filed petitions  for  certiorari.   In their joint  brief, they make eleven assignments of error. But  in  their Memorandum in lieu  of oral argument,  they re-embodied their  previous assignments of error into three only as  follows:

"Whether  or not the respondent bank,  which  claimed to  have discounted the draft,  Exhibit A, but admitting, however, not to have paid  for  it,  or  not  to have  credited its  drawer, the Associated Finance Co.,  Inc., for  its value, could be considered a holder in due course  thereof.  Petitioners contend  that   said  respondent bank was  never a  holder in due course of said draft.

"Whether or not respondent bank  was  an immediate party to said draft, and whether or not said respondent bank was the beneficiary of the performance bond, Exhibit F,  or Exhibit 1-South Sea Surety.  Petitioners claim  that respondent bank was a  remote party or a  stranger to the transaction covered  by said draft and that said  performance bond was exclusively for the benefit  of the beneficiary named therein, the Associated Finance Co., Inc.

"Whether or not respondent South Sea Surety & Insurance Co., Inc., has the  right  to be indemnified by petitioners for whatever sums of money it would be made to pay to respondent bank  as a consequence of the guaranty respondent  surety made in favor the respondent bank on account of the performance bond in favor of the Associated Finance Co., Inc., without  the knowledge or  consent of petitioner Walker Rubber Corporation, the principal named in  said performance bond.  Petitioners  contend  that  respondent surety has no right to be reimbursed for what it would be made to pay to respondent bank as a consequence of the former's guaranty to the latter, without the knowledge or  consent of petitioners."

The  first  assignment  of error raises the question as to whether or not the bank is a holder in due course.   The Court  of Appeals found that the draft, Exh. A, represents the value of 100,000 pounds of camelback rubber, which form part of the goods and articles  mortgaged by  the vendor in favor of the bank; that on April 18, 1950, upon demand made by the vendor  and  the  vendee,  the bank authorized the  Luzon Brokerage  Company  to  deliver to the President of the vendor company said 100,000 pounds of camelback rubber then stored in its Echague bodega No. 2.  The bank had a lien of mortgage on the 100,000 pounds of camelback rubber.  When the bank parted with the possession thereof by delivery to the vendee, by reason of the  sale,  it  relinquished its right over said  rubber. Valuable consideration or value in  general terms may be some  right,  interest, profit or benefit to  the party who makes  the contract, or some forbearance,  detriment, loss, responsibility, etc. on the other side  (Story on Promissory Notes, Sec.  186, cited in Tolentino  on Commercial Laws of the  Philippines, Vol.  I, p. 244).  For the bank in  the case at bar the relinquishment of its possession  and lien over the, rubber is its  consideration for the  draft and the performance bond executed to guarantee the payment of the draft.

It can not  be  contended, therefore, that the sight draft, Exh. A, was delivered  by  the vendor  to' the bank  for collection merely,  because by the delivery of the 100,000 pounds  of  camelback rubber mortgaged to  it, the bank released its lien over  said  rubber.  The delivery to the vendee of the rubber  and the release thereof from the bank's possession is the consideration for the draft, and said consideration made the holder thereof, the bank, a holder of the draft in due course for value.

It is stated on behalf of petitioners that if the face value of the draft had  been deducted by the bank from the mortgage obligation of the drawer-vendor, the bank would have truly lost the value of the draft,  but it is argued that the camelback rubber did not  belong  to the bank and the mortgage thereon  did not make the bank owner thereof.  In answer to this contention,  it may be stated that the mortgage was as good,  if not better than ownership itself.  By virtue of  the mortgage, the bank could have caused the rubber to  be sold to satisfy the debt covered by the mortgage, and if the proceeds are insufficient it could have demanded a  deficiency judgment that could . be enforced against any other property  of the mortgage.

The above answers  also  the  additional claim  that in-as much as the bank  did  not deduct the amount of the draft from the mortgage  obligation  and neither did  it credit  the amount thereof  with  the vendor, the bank did not  lose anything and, therefore, has  not parted  with any consideration for the  draft.  We also call attention to the fact that once  the draft came into the possession of the bank, the latter asked  from the surety if the performance bond that it had executed in favor of the vendor includes the surety's obligation to pay  the  value of the draft, and the surety promptly answered  in the affirmative, that it would pay the draft if the same is dishonored upon presentation.  The bank only authorized the delivery and parted with the possession of the 100,000 pounds of camelback rubber only  upon the assurances of the surety that the draft was covered by the performance bond that it had executed and that it would pay the draft if dishonored.

An examination of the pleadings will disclose that the action of  the  bank against  the surety was  predicated mainly on the acceptance of liability  on the  draft made expressly by the surety.   This is the basis of the action and of the decision.  The release of the rubber from the control of the bank and the delivery thereof to vendee was due, not only to the draft, but by the express agreement of the surety to be liable for the draft on its performance bond.

It is further argued  that  the bank had not  accepted the draft as partial  payment of the mortgage,  nor  had it credited the  mortgagor  with the amount thereof.  In answer thereto,  the bank alleges that it intended to credit the amount of the draft after its collection.  The argument of petitioners rests merely on the premise that the bank was merely an agent for collection, which is not true or correct.  The argument would be  true if the bank were so,  but as we. have indicated,  it actually had  an interest in the rubber sold and delivered  by it and the parting with the  rubber  was a  sufficient  consideration  for  the holding of the draft.                      

In the second  assignment of error,  it is again argued that the  parties  to  the  draft were the  drawer-vendor and the acceptor-vendee, and that unless the bank acquired the draft for value the parties to  said  draft, the drawer' and the acceptor,  could cancel the  liability created  thereunder.   This argument again fails to take into consideration the fact that the bank  parted with the  possession of the  100,000  pounds of  camelback rubber,  by reason of the  draft and the acceptance by the surety of liability under  its performance bond,  in case  the  draft  is  not paid in presentation.

It is further  argued that the performance bond, Exh. F, was executed by the surety for the benefit of the vendor. This was the original purport or intent of the performance bond, but then the surety, upon a  written  request of the bank if it would consider the draft covered by the performance bond, agreed expressly in writing that the payment of the  draft was covered by  the  same bond.  The argument is to no avail in  view of the express acceptance by the surety of liability under its performance bond, in case the draft was not paid upon presentation.   For clarity the letter of  the bank, Exh. B is as follows:

"South Sea Surety & Ins.  Co.,  Inc.
Manila

Gentlemen:

Performance Bond issued by your goodselves and Messrs. Walker
Rubber Corporation of  Cebu in favour  of  Messrs.  Associated
Finance Co,, Inc. of Manila under date of March 5, 1949.
Messrs. Associated Finance Co., Inc., Manila, have  presented to us for discount the fallowing draft:

drawers Ass. Finance Co., Inc.
drawees The Walker  Rubber Corp., Cebu         
amount P.4,000 (pesos fourteen  thousand only)
date of draft March  4, 1950
tenor of draft 60 days  after sight
draft accepted by Walker Rubber Corporation
date of  acceptance March 4, 1950
accepted due date May 3, 1950

Before discounting  the draft we shall be pleased to hear from you whether you consider the said  draft as being covered by  the captioned performance bond and if so, whether it will be in order for us to present the draft to your goodselves for immediate payment in,, the event of drawees failing to  honour the draft  on due date, viz. May 3, 1950.

For the sake of convenience you may wish to confirm these points to us by returning to us the  attached duplicate of the present, duly provided with your authorized signature.

Yours very truly,

Nederlandschb Indische

Handelsbank, N. V.
Established at Amsterdam
Manila Agency in Liquidation
"(SGD)  Wilmer"

(pp. 48-49, R.O.A.)

and the answer  thereto of the surety is as follows:

"Nederlandsch Indische Handelsbank, N.  V.
Manila, Philippines.

Dear  Sir:

In connection with  your letter  of  March  15,  1950, regarding performance bond  issued by us in behalf of Walker  Rubber  Corporation and  in  favor  of  the  Associated Finance Co.,  Inc., on March 5, 1949, please be informed that we consider the draft for Fourteen Thousand  (P14,000.00)  Pesos, mentioned  therein  to be in order and that you can present same to us for payment should the drawee fail to honor same.  However, any draft drawn subsequent to March 5, 1950 will not be considered as within the terms of the performance bond in question.

Very truly  yours,

SOUTH  SEA  SURETY  &
INSURANCE CO., INC.
BY:  ILLEGIBLE
Vice-Pres. & Assistant
"General Manager"

(p. 50, R.O.A.)

In the third assignment  of  error it is claimed that the petitioners, vendee and  indemnitor,  were not notified and were not aware of the  acceptance of liability  by the surety or its letter to the  bank, Exh. C, and did not consent thereto.  This claim  is unfounded.  Before the performance bond  was  executed the  parties thereto  already knew that the  performance  bond  was to cover the sight draft,  Exh.  A, because it  was known  that the  rubber was mortgaged  to the bank and  under the latter's control, and payment of the draft must first  be secured before the bank would release the rubber from  its  mortgage.   Thus,, the performance bond  expressly  provides that its purpose was to guarantee the payment  of the sight draft:

"Whereas, the contract  requires the above bounden  Principal  to give a good and  sufficient bond in the above-stated sum to secure the full and faithful fulfillment on its part of said contract, particularly the payment of trust  receipt, sixty (60) days sight draft. documents against acceptance, payable to the Nederlandsch Indische & Handelsbank, N. V., Manila.

"The liability of the surety  on this bond will expire on March 5, 1950, and said  bond will be cancelled ten  (10) days after its expiration unless  the surety is notified in writing of any existing obligation thereunder."  (p. 6, Annex A-Petition)

When the petitioners offered  the indemnity agreement, they must have known that  the surety was to guarantee payment of the sight draft,  because  the above statement was put in  the performance bond.  There  was no need, therefore, of  notification  to petitioners  of the surety's acceptance because the bond expressly mentions that the principal beneficiary of the bond is the bank.

We find no  error in the judgment appealed from, and we hereby affirm it, with  costs.  So ordered.

Paras, C.  J., Bengzon, Montemayor, Reyes, A., Bautista Angelo, Concepcion, and Endencia,  JJ., concur.