G.R. No. L-33393 - Unal vs. People

On March 2, 1949, Apolinar A. Santos, together with Clara D. Palanca (with the consent of her husband, Angel C. Palanca), secured a loan of P7,000 from the Philippine Bank of Commerce.
The loan was to be paid in 90 days from the date of the transaction.
The parties agreed that if collection of the note required the services of an attorney-at-law, the maker and indorser would be responsible for paying 25% of the amount due as attorney’s fees (as evidenced by Exhibit A).

On March 14, 1953, the appellant’s wife, Marciana C. Palanca, died.
Santos was then appointed administrator of his deceased wife’s estate in the special proceedings (Special Proceedings No. 1724) before the Court of First Instance of Rizal.
It was significant that the loan proceeds were used for the benefit of the conjugal partnership – for activities such as repairing and painting the family house, improving Santos’s medical clinic, updating medical equipment, and defraying family expenses.
Partial payments on account of the loan had been made by Santos’s wife prior to her death.

On May 14, 1954, the Philippine Bank of Commerce filed an action in the Court of First Instance of Manila to recover the unpaid balance of the loan, which amounted to P2,910.49, along with interest at 10% per annum from that date until full payment.
The bank also sought an additional P200 as attorney’s fees.
Santos admitted the indebtedness but contended that the debt was chargeable to the conjugal partnership. He argued that because a special proceeding was pending for the settlement of his deceased wife’s estate (and consequently the liquidation of the conjugal partnership), the proper venue for the bank’s claim was within those proceedings, not through an action directly against him.

The trial court found that although the conjugal partnership benefitted from the proceeds of the loan, Santos did not secure the loan in his capacity as the administrator of the conjugal partnership.
Santos did not disclose his marital status, thereby assuming the role of an agent for an undisclosed principal, which led the court to determine that the bank could pursue the obligation against Santos personally.
Subsequently, judgment was rendered in favor of the Philippine Bank of Commerce for the sum claimed by the bank, without any pronouncement regarding costs at that point.

The case made reference to Section 2, Rule 75 and Section 1, Rule 87 regarding the administration and liquidation of the conjugal partnership upon the death of a spouse.
These provisions outline that upon the dissolution of the marriage by death, the debts of the conjugal partnership should be satisfied in the proceedings for settling the deceased spouse’s estate.
It was stressed that the arrangement did not preclude a creditor from enforcing a claim against an obligor who had personally secured a loan, even when the proceeds had also served the conjugal partnership.

Whether the Philippine Bank of Commerce could file an action against Santos in the Court of First Instance of Manila to recover the remaining balance of the loan, or whether the collection claim should have been filed exclusively in the special proceedings for settling the estate of Santos’s deceased wife.

Whether Santos’s obligation arose out of his personal capacity, due to his failure to disclose his marital status, or whether it should be treated as an obligation chargeable to the conjugal partnership, thereby necessitating resolution in the estate proceedings.

Whether requiring the exclusive filing of claims in estate proceedings would hinder banks and credit institutions from effectively enforcing their loan agreements against co-obligors in cases where one spouse dies.
The potential drawbacks to credit institutions if loans contracted by individuals with good credit standing were forced to undergo special probate proceedings for collection.