Case Digest (G.R. No. L-46095)
Facts:
The case involves the Philippine National Bank (petitioner) as the party seeking collection against Elias B. Asuncion, Fabar Incorporated, and private respondents Jose Ma. Barredo, Carmen B. Borromeo, and Tomas L. Borromeo. On January 16, 1963, the Philippine National Bank provided various credit accommodations to Fabar Incorporated, totaling an outstanding balance of ₱8,449,169.98 as of May 13, 1977. The credit facilities, which included a discounting line, overdraft line, and letters of credit for importing machinery, were secured by the joint and several signatures of the mentioned respondents and Manuel H. Barredo. With the failure of these respondents to satisfy their financial obligations, the Philippine National Bank initiated a legal action on October 31, 1972, filed before the Court of First Instance of Manila. Sadly, Manuel H. Barredo passed away on May 19, 1975, before the case was resolved. Subsequently, on November 29, 1976, the court issued an order of dismissal b
Case Digest (G.R. No. L-46095)
Facts:
- Credit Accommodations and Security
- Philippine National Bank (PNB) granted various credit accommodations to respondent Fabar Incorporated on January 16, 1963. These included:
- Discounting line
- Overdraft line
- Temporary overdraft line
- Letters of credit covering the importation of machinery and equipment
- PNB also advanced insurance premium payments for the chattels subject to a mortgage that secured these credit facilities.
- The total outstanding balance of these credit accommodations amounted to P8,449,169.98 as of May 13, 1977.
- The credit facilities were secured by the joint and several signatures of:
- Jose Ma. Barredo
- Carmen B. Borromeo
- Tomas L. Borromeo (all private respondents)
- Manuel H. Barredo
- Commencement of the Collection Case
- Due to the failure of the private respondents to satisfy their obligations despite repeated demands, PNB instituted a case for collection against:
- All private respondents (the aforementioned signatories)
- Manuel H. Barredo
- The complaint was filed on October 31, 1972 before the honorable Judge Elias B. Asuncion of the Court of First Instance of Manila, Branch XII.
- Impact of the Death of Manuel H. Barredo
- Manuel H. Barredo died on May 19, 1975, a fact duly manifested by counsel for the private respondents on June 6, 1975.
- Consequently, on November 29, 1976, the respondent Court issued an Order of dismissal stating:
- "In view of the death of defendant Manuel Barredo, the Court hereby dismisses this case since the present suit is for a money claim which does not survive the death of said defendant."
- The dismissal was based on Section 6, Rule 86 of the Revised Rules of Court, which provides that in solidary obligations, the claim may be filed against the decedent as if he were the only debtor, with the estate eligible for recovery from the other debtor.
- Petitioner's Motion and Subsequent Proceedings
- PNB filed a Motion for reconsideration on December 14, 1976, contending that:
- The dismissal should apply solely to the deceased defendant Manuel H. Barredo.
- The case should proceed against the remaining private respondents.
- The respondent Court denied the Motion on January 26, 1977 for lack of meritorious grounds.
- PNB subsequently elevated the matter through a petition for review on certiorari, raising the issue of erroneous dismissal against all defendants.
- Contentions of the Petitioner
- PNB argued that the dismissal against all defendants was incorrect since it ignored its substantive rights.
- The petitioner maintained that:
- Section 6, Rule 86 of the Revised Rules of Court was being misapplied.
- The rule did not preclude the creditor from proceeding against the surviving solidary debtors.
- Referencing prior jurisprudence (Manila Surety & Fidelity Co., Inc. vs. Villarama, et al.), PNB stressed that:
- The creditor's choice to proceed against any or all solidary debtors is expressly conferred by Article 1216 of the New Civil Code.
Issues:
- Whether the respondent Court erred in dismissing the collection action against all the defendants rather than dismissing it solely as against the deceased defendant Manuel H. Barredo.
- Did the application of Section 6, Rule 86 of the Revised Rules of Court unjustifiably limit the petitioner's right to enforce the credit against the surviving debtors?
- Whether the respondent Court’s reliance on Section 6, Rule 86 of the Revised Rules of Court improperly contravened the substantive rights provided under Article 1216 of the New Civil Code.
- Is it appropriate to mandate that a creditor must pursue collection through the estate of a deceased debtor, thereby negating the option to proceed directly against the surviving debtors?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)