G.R. No. 189122 - Leviste vs. Court of Appeals

Case Summary (G.R. No. 189122)

Key Dates and Procedural Posture

Promissory note executed: February 3, 1983; due May 5, 1983.
Demands for payment: November 14, 1983; June 8, 1984; final demand by registered mail December 11, 1984.
Complaint for collection filed: January 24, 1986.
Case dismissed for failure to prosecute: November 25, 1986; reconsidered January 9, 1987 and summons ordered served.
Dismissal as to defendant Pantanosas: January 27, 1987 (upon plaintiff’s motion).
Court of Appeals affirmed lower court decision: August 31, 1990.
Supreme Court proceedings included denial for procedural noncompliance, subsequent reinstatement of the petition following submission of registry receipt, and final disposition denying the petition and affirming the Court of Appeals decision.

Applicable Law and Authorities Relied Upon

Constitutional framework: 1987 Philippine Constitution (applicable because the Supreme Court decision date is after 1990).
Rules and doctrines cited in the decision: Rule 131, Sec. 5(q) (presumption of regularity and fairness of official acts/transactions); Sec. 9, Rule 130 (parol evidence rule) and related doctrine that written instruments ordinarily cannot be varied by parol evidence.
Civil Code provisions cited and applied: Article 2080 (release of guarantors when creditor’s acts prevent subrogation), Article 2047 (definition of guaranty and suretyship), Article 1207 (presumption of joint obligations), Article 1216 (creditor’s choice of remedy against solidary debtors).
Authorities and precedents referenced: Tolentino on distinctions between solidary co-debtors and sureties; case citations included in the decision (e.g., Cu v. Court of Appeals; Centenera; SesbreAo v. Court of Appeals; Dimayuga v. Phil. Commercial & Industrial Bank) as support for legal principles applied.

Factual Background (as found below)

Petitioner signed the promissory note together with Naybe and Pantanosas. The note bore the typed figure “P50,000-” directly below petitioner’s admitted signature. The obligors failed to pay by due date; the bank made formal demands and ultimately filed suit when payments were not made. Service of summons was effected only on petitioner as the sheriff reported Naybe had gone abroad. Petitioner testified that he agreed to be a co-maker only for P5,000.00 and that he was induced to sign by a third party, Rudy Campos, who allegedly presented blank notes; petitioner said he signed under the understanding the loan was for P5,000.00 and that Campos caused the amount to be increased to P50,000.00. An affidavit by Pantanosas dated May 3, 1988 (executed after the lower court decision) was later presented in support of petitioner’s claim that the indebtedness was only for P5,000.00.

Defenses Advanced by Petitioner

Alleged fraud, trickery and misrepresentation: that petitioner agreed only to co-sign for P5,000.00 and was deceived into signing other copies showing P50,000.00.
Parol evidence contention: that parol testimony should be admissible to show the parties intended a loan of P5,000.00, since petitioner asserts the written note did not reflect the true agreement.
Claim of release by acts of the creditor: petitioner argued that dismissal of the complaint against co-obligors (Pantanosas and Naybe) constituted a release of his obligation under Article 2080.

Findings and Reasoning of the Trial Court and Court of Appeals

The typewritten amount P50,000.00 appears directly beneath petitioner’s signature on the promissory note; the court gave weight to the written instrument and to the presumption of regularity and fairness under Rule 131, Sec. 5(q).
Petitioner’s uncorroborated testimony that he limited his obligation to P5,000.00 was deemed insufficient to overcome the written instrument. The trial court found it “rather odd” that petitioner would indicate the P5,000.00 obligation on a copy and not on the original note.
Even if petitioner had agreed with Naybe to limit liability to P5,000.00, such an agreement would be collateral (inter se) and would not bind the bank as creditor.
Petitioner’s professional background (law degree, labor consultant) was noted as a factor that heightened his duty of care when executing the instrument.
Pio Tio (allegedly involved) denied participating in the alleged business venture, undermining petitioner’s account.
The Court of Appeals affirmed the trial court’s reliance on the written note and the insufficiency of petitioner’s uncorroborated evidence.

Supreme Court’s Analysis on Evidentiary and Substantive Issues

Factual nature of dispute: The Supreme Court reiterated that the issues raised were primarily factual, and this Court is not a trier of facts. Having had the opportunity to fully present his factual claims below, petitioner could not relitigate them in the Supreme Court absent a showing of grave abuse of discretion by the lower courts.
Timeliness and weight of the co-maker’s affidavit: The affidavit of Pantanosas was executed May 3, 1988, after the lower court’s decision, and could not substitute for evidence that should have been presented at the trial level. Its late presentation could not overturn findings of fact already made.
Parol evidence rule and negotiable instruments: The Court explained the parol evidence rule (Sec. 9, Rule 130): when terms are reduced to writing, the writing is presumed to contain all agreed terms and extrinsic evidence cannot vary it. The Court emphasized that the rule applies to written instruments regardless of whether they are public or private documents. Bills, notes and similar instruments are generally not subject to variation by parol evidence.
Fraud exception and burden of proof: The Court recognized that where a contemporaneous parol agreement induced the written contract, parol evidence may be admissible to show the inducement. However, allegations of fraud must be proven by clear and convincing evidence, not merely by a preponderance. Petitioner’s testimony was uncorroborated and self-serving; thus fraud was not established by the requisite degree of proof.
Effect of dismissal of co-defendants: The Court distinguished between a guarantor and a solidary co-maker. The promissory note expressly stated that signatories were

Case Syllabus (G.R. No. 189122)

Procedural Posture and Disposition

This is a petition for review on certiorari to the Supreme Court from the decision of the Court of Appeals affirming the Regional Trial Court (RTC) of Misamis Oriental, Branch 18, in Civil Case No. 10507 for collection of a sum of money and damages.
The RTC adjudged defendant Baldomero L. Inciong, Jr. solidarily liable to Philippine Bank of Communications (private respondent) in the amount of P50,000.00, with interest at 16% per annum from May 5, 1983 until paid; 6% per annum on the total amount due as liquidated damages/penalty from May 5, 1983 until paid; plus 10% of the total amount due for litigation expenses and attorney’s fees; and costs. Counterclaim and cross-claim were dismissed.
The Court of Appeals affirmed the RTC decision on August 31, 1990. Petitioner’s motion for reconsideration to the Court of Appeals was denied.
The Supreme Court initially denied the petition for failure to comply with Rules and Circular No. 1-88 and to show reversible error (Resolution of February 6, 1991); subsequent motions and procedural filings followed, the petition was reinstated (Aug. 7, 1991) but ultimately found unmeritorious and DENIED; the Court of Appeals’ decision was AFFIRMED; costs against petitioner.

Case Title, Citation and Bench

Case citation: 327 Phil. 364, G.R. No. 96405, June 26, 1996.
Decision authored by Justice Romero, J.
Concurrence by Regalado (Chairman), Puno, Mendoza, and Torres, Jr., JJ.
The RTC proceedings were presided by Judge Senen C. PeAaranda.

Material Facts

A promissory note dated February 3, 1983, was signed by Baldomero L. Inciong, Jr., Rene C. Naybe, and Gregorio D. Pantanosas, holding themselves jointly and severally liable to the Philippine Bank of Communications, Cagayan de Oro City branch, for P50,000.00 due on May 5, 1983.
The note matured on May 5, 1983 and was unpaid on that date.
Private respondent sent telegrams demanding payment on November 14, 1983 and June 8, 1984 (Exhs. D-1 & D), and a final letter of demand by registered mail to Rene C. Naybe on December 11, 1984.
When obligors did not respond, private respondent filed a complaint for collection of P50,000.00 on January 24, 1986.
The complaint was dismissed on November 25, 1986 for failure to prosecute; reconsideration followed on January 9, 1987 and the sheriff was ordered to serve summonses.
Only the summons addressed to petitioner was served because the sheriff learned Naybe had gone to Saudi Arabia; the case against Pantanosas was dismissed on January 27, 1987 as prayed for by private respondent.

Petitioner’s Defense and Allegations

Petitioner alleged that in January 1983 his friend Rudy Campos solicited him to act as co-maker for a loan connected to a falcata logs operation business involving branch manager Pio Tio; Rene C. Naybe was to be the principal and would contribute a chainsaw.
Petitioner contends he agreed to be co-maker only for a loan of P5,000.00.
He alleged Campos brought five copies of a blank promissory note for his signature; he signed them and on one copy indicated he bound himself only for P5,000.00.
Petitioner claims he was tricked and induced by fraud and misrepresentation into being made liable for P50,000.00.
Petitioner further alleged, via points later advanced, that: (a) the note was signed in Judge Pantanosas’ office rather than at the bank; (b) the loan purpose was to buy a second-hand chainsaw costing P5,000.00; (c) even a new chainsaw would cost only P27,500.00; (d) the loan exceeded P5,000.00 yet was not approved by the board or credit committee per bank practice; (e) the loan had no collateral; (f) petitioner and Pantanosas were not present when loan was released contrary to bank practice; and (g) default notices were not validly sent to him.

Evidence Presented

The promissory note (Exh. A) shows the typewritten figure “P50,000-” directly below petitioner’s admitted signature.
Telegrams and demand letters (Exhs. D-1 & D) were sent by private respondent.
An affidavit by Gregorio Pantanosas, Jr., executed May 3, 1988 (after the RTC decision) was annexed to the petition and claimed to corroborate petitioner’s assertion that the note was induced to be for P5,000.00 and that Campos caused the amount to be increased to P50,000.00.
Petitioner’s proof of alleged fraud rests on his own testimony and the subsequently executed Pantanosas affidavit; the record indicates Pio Tio denied involvement in the business venture on the witness stand.

Findings of the Regional Trial Court

The RTC found the promissory note plainly reflected P50,000.00 under petitioner’s signature (Exh. A) and credited the regularity and fairness of the written transaction.
It held petitioner’s uncorroborated testimony about being liable for P5,000.00 could not overcome the presumption of regularity under Sec. 5(q) of Rule 131.
The court described it as “rather odd” that petitioner would indicate his supposed limited liability only on a copy but not on the original note.
The RTC held that even if a private agreement had limited petitioner’s liability to P5,000.00, that agreement would be collateral and not binding on the bank as creditor.
The RTC noted petitioner was a Bachelor of Laws degree holder and labor consultant who should have exerci