G.R. No. L-46095 - Philippine National Bank vs. Asuncion

The Philippine National Bank (petitioner) granted various credit accommodations to Fabar Incorporated (respondent) on January 16, 1963.
These accommodations included a discounting line, overdraft line, temporary overdraft line, and letters of credit for importing machinery and equipment.
The petitioner also advanced insurance premiums for chattels mortgaged to secure these credit accommodations.
As of May 13, 1977, the outstanding balance of these credit accommodations was P8,449,169.98.
The obligations were secured by the joint and several signatures of private respondents Jose Ma. Barredo, Carmen B. Borromeo, Tomas L. Borromeo, and Manuel H. Barredo.

Due to the private respondents' failure to fulfill their obligations despite repeated demands, the petitioner filed a collection case against all private respondents and Manuel H. Barredo on October 31, 1972.
The case was filed before the Court of First Instance of Manila, Branch XII, presided over by Judge Elias B. Asuncion.
On May 19, 1975, Manuel H. Barredo passed away, and his death was communicated to the court by the private respondents' counsel on June 6, 1975.

The respondent Court issued an Order of dismissal on November 29, 1976, stating that the case was dismissed due to the death of Manuel H. Barredo, as the money claim did not survive his death.
The court referenced Section 6, Rule 86 of the Revised Rules of Court, which allows claims against the estate of a deceased debtor but does not prevent actions against surviving solidary debtors.

The petitioner filed a Motion for Reconsideration on December 14, 1976, arguing that the dismissal should only apply to the deceased defendant, Manuel H. Barredo, and that the case should proceed against the surviving defendants.
The respondent Court denied this motion on January 26, 1977, citing a lack of meritorious grounds.

The petitioner contended that the respondent Court erred in dismissing the case against all defendants instead of just the deceased.
The court's reliance on Section 6, Rule 86 was deemed erroneous, as this provision does not preclude a creditor from pursuing claims against surviving solidary debtors.
The creditor has the option to either file a claim against the estate of the deceased debtor or proceed against the surviving debtors.

Article 1216 of the New Civil Code allows a creditor to proceed against any one or all solidary debtors simultaneously.
The creditor is not mandated to dismiss the case against surviving debtors or to...continue reading