Title
Bank of the Philippine Islands vs. vs. Concepcion e Hijos, Inc.
Case
G.R. No. 27701
Decision Date
Jul 21, 1928
Defendants defaulted on a promissory note; Elser assumed debt via agreement with defendants, but BPI rejected substitution. Court ruled no novation, Concepcions liable, BPI barred from suing Elser’s estate due to procedural lapse.
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Case Digest (G.R. No. 27701)

Facts:

  1. Execution of Promissory Note and Mortgage
    On July 6, 1921, defendants V. Concepcion e Hijos, Inc., and Venancio Concepcion executed a promissory note in favor of the Bank of the Philippine Islands (BPI) for P342,372.64, payable on demand. As security, they deposited 700 shares of the Philippine National Bank and mortgaged a parcel of land on R. Hidalgo Street, Manila.

  2. Default and Foreclosure Proceedings
    The defendants defaulted on the payment, and on February 3, 1922, BPI initiated foreclosure proceedings.

  3. Negotiations with Henry W. Elser
    Henry W. Elser offered to take over the mortgaged property and assume the debt, provided the Concepcions were relieved of liability. On March 23, 1922, Elser wrote to BPI, proposing to pay the debt in installments and reduce the mortgage over three years. BPI did not respond to this letter.

  4. Further Negotiations and Agreement
    On April 21, 1922, Elser wrote another letter, seeking confirmation that BPI would sell the property to him for the full amount of the judgment if it acquired the property through foreclosure. BPI did not directly reply but indicated through conversations that it would not release the Concepcions from liability.

  5. Deed of Purchase and Sale (Exhibit C)
    On May 5, 1922, Elser entered into a bilateral deed of sale with the Concepcions, agreeing to assume their obligations to BPI in exchange for the mortgaged property. BPI did not formally consent to this agreement.

  6. Inclusion of Elser in Foreclosure Proceedings
    BPI petitioned the court to include Elser as a defendant, alleging he had assumed the Concepcions' obligations. The Concepcions argued that Elser should be substituted as the debtor. The court included Elser as a defendant, and BPI filed multiple amended complaints.

  7. Elser’s Demurrers and Death
    Elser demurred to the complaints, arguing that BPI had not accepted his substitution as debtor. The court sustained the demurrers. Elser died on June 18, 1923, and his estate was substituted as a defendant.

  8. Trial Court Decision
    The trial court absolved Elser’s estate from liability, holding that BPI had not accepted Elser’s substitution as debtor. The Concepcions were ordered to pay the debt, and the mortgaged property was to be sold in case of non-payment.

Issue:

  1. Whether the agreement between Elser and the Concepcions (Exhibit C) constituted a valid stipulation in favor of BPI (stipulation pour autrui), allowing BPI to enforce the agreement against Elser’s estate.
  2. Whether BPI’s failure to present its claim to the committee on claims and appraisal in Elser’s estate proceedings barred it from pursuing a personal judgment against the estate.
  3. Whether Elser’s assumption of the debt and subrogation to the Concepcions’ obligations released the Concepcions from liability.

Ruling:

  • (Subscriber-Only)

Ratio:

  • (Subscriber-Only)


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