G.R. No. 84051 - Bergado vs. Court of Appeals

Case Summary (G.R. No. 84051)

Factual Background

On July 13, 1956, Leon G. Moya sued Pedro C. Camus and Luzon Surety Co., Inc. for payment of a promissory note for P2,500, which Camus had signed and which the surety company had guaranteed by a surety bond. At trial, Pedro C. Camus failed to appear. The trial court heard plaintiff’s evidence in Camus’s absence and thereafter rendered judgment condemning the defendants to pay jointly and severally the amount claimed.

Trial Court Proceedings and Post-Trial Motions

After judgment, Pedro C. Camus filed a motion for reconsideration and a motion for a new trial, asserting among other defenses the alleged usury in the transaction. The trial court denied both motions, finding the motion for reconsideration and new trial to be merely pro forma. Camus then filed a notice of appeal, the record on appeal, and an appeal bond, but the trial court disallowed the appeal on the ground that his post-trial motion was pro forma.

Proceedings in the Court of Appeals and Petition for Certiorari

Unable to obtain allowance of his appeal, Pedro C. Camus applied to The Hon. Court of Appeals for a writ of mandamus to compel the trial court to allow his appeal. The Court of Appeals sustained the trial court’s disallowance of the appeal. From that judgment, Camus brought the matter to the Supreme Court by petition for certiorari.

Appellee’s Motion to Dismiss and Its Basis

After appellant’s brief was filed in this Court, Leon G. Moya, the appellee, moved to dismiss the present appeal on the ground that Luzon Surety Co., Inc., the co-defendant and solidary co-debtor, had already paid the judgment entered by the trial court during the pendency of the proceedings in the lower courts, thus rendering the issues between creditor and debtors academic. Moya expressly waived the filing of an appellee’s brief.

Court’s Threshold Determination on Extinguishment by Payment

The Court agreed with Moya and declined to reach the merits because the payment by Luzon Surety Co., Inc. to Moya extinguished the obligation of the solidary debtors under Art. 1217, New Civil Code, which provides that payment made by one of the solidary debtors extinguishes the obligation. The Court concluded that payment by one solidary debtor dissolved the juridical tie between creditor and the solidary debtors and that no useful relief could follow from deciding the appeal as to the creditor and the accused debtors.

Appellant’s Argument That Payment Was Premature

Pedro C. Camus argued that the surety company’s payment was premature and thus did not extinguish the principal obligation. The Court rejected this argument, observing that the promissory note sued upon was long overdue when the complaint was filed and that even if Camus’s defense of usury were true, such defense would not affect the maturity or demandability of the debt but would at most reduce the creditor’s recovery.

Effect of Payment on Appellant’s Defense of Usury and Inter-Creditor Relations

The Court recognized that the payment by the surety company did not extinguish Camus’s defense of usury as against the co-debtor; Camus might still assert that defense if and when sued by the surety company. However, the Court stressed that until the surety company instituted any action against Camus, the issue was purely academic in the present litigation between Moya and the debtors. The Court further explained that even if the surety company overpaid Moya, Camus had no cause of action against Moya to recover any such overpayment; his remedy, if any, lay against his solidary co-debtor.

Request for Substitution and the Court’s Power

Camus urged that Luzon Surety Co., Inc. be substituted as plaintiff to avoid multiplicity of suits. The Court declined to order such substitution, noting that the surety company had not intervened or shown interest in the proceedings regarding Camus’s right to appeal and that neither the Court nor Camus could dictate what steps the surety company might take to protect its own interests.

Theories of Recovery and Requirements for an Action for Usurious Interest

The Court addressed Camus’s contention that dismissal would force him to bring another action to recover alleged usurious interest. The Court considered this claim untenable because Camus could bring such an action only after he had paid his indebtedness plus the alleged usurious interest. Because Camus had not paid the debt, his asserted right of recovery could not be asserted against Moya; at best, proof of usury would reduce his liability to any creditor who might pursue him or his co-debtor.

Procedural Deficiency Pertaining to the Motion for New Trial

Beyond the substantive reasons for dismissal, the Court

Case Syllabus (G.R. No. 84051)

Parties and Procedural Posture

Pedro C. Camus was the petitioner who appealed from a judgment of the Court of First Instance of Negros Occidental condemning him to pay a promissory note and who sought relief by certiorari to the Supreme Court.
Leon G. Moya was the plaintiff in the trial court and the appellee who sued for payment of a promissory note in the sum of P2,500.
Luzon Surety Co., Inc. was the co-defendant and solidary co-debtor that guaranteed the promissory note by a surety bond.
The Court of First Instance of Negros Occidental rendered judgment after petitioner failed to appear at trial and denied petitioner’s motion for reconsideration and new trial on the ground that it was pro forma.
The Court of Appeals denied petitioner’s application for a writ of mandamus to compel allowance of his appeal from the trial court’s disallowance.
Petitioner filed a petition for review by certiorari to the Supreme Court after the Court of Appeals’ judgment.
During the pendency of proceedings in the Court of Appeals, Luzon Surety Co., Inc. paid the trial court judgment in favor of Leon G. Moya, after which Moya moved in the Supreme Court to dismiss the appeal as academic.

Key Factual Allegations

Leon G. Moya filed suit on July 13, 1956 for the payment of a promissory note for P2,500 signed by Pedro C. Camus and guaranteed by Luzon Surety Co., Inc.
Pedro C. Camus failed to appear at trial, whereupon the trial court heard plaintiff’s evidence and rendered judgment against both defendants, jointly and severally.
Pedro C. Camus filed a motion for reconsideration and a motion for new trial alleging, among other defenses, usury.
The trial court found petitioner’s motion for reconsideration and new trial to be pro forma and disallowed petitioner’s appeal.
Luzon Surety Co., Inc. paid the judgment during the pendency of petitioner’s proceedings in the Court of Appeals.
Pedro C. Camus did not append a copy of his motion for new trial to his petition for review in the Supreme Court.

Issues Presented

Whether the appeal should be dismissed as academic because Luzon Surety Co., Inc. paid the judgment against the solidary debtors.
Whether payment by one solidary debtor could be premature and therefore fail to extinguish the principal obligation.
Whether the Court could order substitution of Luzon Surety Co., Inc. as plaintiff in order to avoid multiplicity of suits.
Whether dismissal of the appeal would compel Pedro C. Ca