Case Summary (G.R. No. 109941)
Factual Background
• In 1986 petitioner introduced private respondent to Rosita Luanzon, representing Luanzon’s construction business as a stable enterprise offering 5% monthly returns.
• Persuaded by these assurances, private respondent advanced ₱150,000 to Luanzon.
• On June 22, 1987, Luanzon executed a promissory note promising repayment of ₱150,000 on or before August 22, 1987; petitioner signed as guarantor.
• Simultaneously, Luanzon issued a postdated Solidbank check dated August 22, 1987, later replaced by another dated December 22, 1987.
• Luanzon also issued six postdated checks of ₱7,500 each (July–December 1987).
• Private respondent’s demand for payment went unheeded, prompting her to file a collection suit on May 8, 1989, against Luanzon, petitioner, and her husband. Summons was not served on Luanzon.
Procedural History
• RTC Decision (June 14, 1990): Found the transaction to be a loan, held petitioner and her husband liable as guarantors, awarded ₱150,000 plus legal interest and ₱21,000 attorney’s fees.
• CA Decision (November 29, 1991) and Resolution (April 27, 1993): Affirmed the RTC ruling; denied petitioner’s motion for reconsideration.
• Petitioner filed a Rule 45 petition for certiorari before the Supreme Court.
Issues Presented
- Whether the ₱150,000 transaction was a loan giving rise to a creditor–debtor relationship rather than an investment.
- Whether petitioner, as guarantor, can be held liable without exhaustion of the principal debtor’s assets and without a prior judgment against the principal debtor.
- Whether petitioner’s guaranty was released by the extension of the maturity date without her consent.
Nature of the Transaction
• The promissory note’s plain language unambiguously establishes a loan: “I hereby promise to pay Mrs. Leonila Tomacruz the amount of ONE HUNDRED FIFTY THOUSAND PESOS ONLY (P150,000.00) on or before August 22, 1987.”
• Under Civil Code Article 1370, clear contractual stipulations govern the parties’ rights and obligations; extrinsic evidence is inadmissible to contradict unambiguous terms.
• Accordingly, the relationship between Luanzon and Tomacruz is that of debtor and creditor.
Subsidiary Liability and Benefit of Excusation
• As guarantor, petitioner’s liability is subsidiary (Civil Code Article 2058): the creditor must first exhaust the property of t
Case Syllabus (G.R. No. 109941)
Procedural History
- Petitioner Baylon sought review by certiorari under Rule 45 of the Revised Rules of Court from the Court of Appeals’ November 29, 1991 decision in CA-G.R. CV No. 27779, which affirmed the RTC of Quezon City, Branch 88, Decision dated June 14, 1990 in Civil Case No. Q-89-2483.
- The Court of Appeals’ Resolution of April 27, 1993 denied Baylon’s Motion for Reconsideration.
- Baylon filed the present petition before the Supreme Court contesting (a) characterization of the transaction as a loan, (b) application of the benefit of excussion, and (c) waiver of guarantor liability by extension of maturity.
Facts
- In 1986, petitioner Pacionaria C. Baylon introduced Leonila Tomacruz to Rosita B. Luanzon, representing Luanzon as a longstanding contractor seeking capital.
- Tomacruz agreed to lend Luanzon ₱150,000 at 5% monthly interest based on Baylon’s assurances of business stability.
- On June 22, 1987, Luanzon executed a promissory note promising to pay Tomacruz ₱150,000 on or before August 22, 1987; Baylon signed as guarantor.
- Luanzon simultaneously issued Solidbank check No. CA418437 dated August 22, 1987; later replaced by check No. 432945 dated December 22, 1987.
- Luanzon also issued monthly checks of ₱7,500 to Tomacruz from July to December 1987, purportedly as “dividends.”
- Tomacruz demanded payment from Baylon; no compliance followed.
Trial Court Decision
- On May 8, 1989, Tomacr