G.R. No. 79760 - Perpetual Savings Bank vs. Fajardo

On December 29, 1982, J.J. Mining and Exploration Corporation (“J.J. Mining”) executed and delivered to Perpetual Savings Bank (“Bank”) a promissory note for ₱750,000.00.
The note, payable in one lump sum on January 29, 1984, charged interest at 23% per annum and included a clause for penalty interest at 3% per month on the amount due, compounded monthly.
Respondents Jose Oro B. Fajardo and Emmanuel F. Del Mundo, acting as officers—and in Del Mundo’s case, also as counsel—of J.J. Mining, signed the promissory note on behalf of the corporation.

Upon maturity, neither J.J. Mining nor any other party paid the amount due despite repeated written demands from the Bank.
On July 31, 1986, the Bank filed a complaint in the Regional Trial Court, Makati (Civil Case No. 14501) against J.J. Mining and against Fajardo and Del Mundo, alleging non-payment and seeking to recover the outstanding sum.

The complaint alleged that Fajardo and Del Mundo acted as agents/representatives of J.J. Mining when executing the note, but alternatively, they were also sued in their personal capacities.

First, it was claimed that they contracted the loan knowing full well that J.J. Mining was incapable of repaying the debt.
Second, the Bank alleged that they used the loan proceeds for their personal benefit rather than for the benefit of the borrower corporation.

The Bank detailed that J.J. Mining had received the loan “through” Fajardo and Del Mundo and highlighted the disproportion between the ₱750,000.00 borrowed and the corporation’s paid-up capital of only ₱100,000.00.

Respondents Fajardo and Del Mundo filed a Motion to Dismiss, asserting that the complaint failed to state a cause of action against them personally.
The trial court denied the motion on October 9, 1986, with further denial following a motion for reconsideration.
Respondents proceeded to file a Petition for Certiorari directly to the Supreme Court, which on February 23, 1987, referred the case to the Court of Appeals.
In the Court of Appeals decision dated August 25, 1987, the complaint was dismissed in Civil Case No. 14501 on the ground that there was no cause of action against the respondents in their personal capacities.
The Bank, now represented by a Liquidator, raised issues on appeal regarding the sufficiency of the complaint and the applicability of the rule on alternative defendants.

Respondents acting as authorized agents/representatives of J.J. Mining.
Respondents acting in their personal capacities when it was alleged they had knowledge of the corporation’s inability to pay.

The Bank additionally emphasized, in paragraph 3.1, the severely disproportionate capital structure of J.J. Mining compared to the loan amount, bolstering its contention against the respondents’ personal liability.

Whether the complaint in Civil Case No. 14501 sufficiently stated a cause of action against respondents Fajardo and Del Mundo in their personal capacities, distinct from the borrower corporation, J.J. Mining.
Whether Section 13, Rule 3 of the Rules of Court on alternative defendants is applicable to the case at bar, given that the Bank pleaded alternative relief against both the borrowing corporation and the respondents individually.