Philippine National Bank v. Concepcion Mining Company
REITERATIONFacts
The Antecedents: The Philippine National Bank (PNB) filed an action to recover P7,197.26 from Concepcion Mining Company, Inc. and Jose Sarte based on a promissory note they jointly and severally executed. Procedural History: The Court of First Instance of Manila rendered a decision ordering the defendants to pay the plaintiff the principal amount, interest, attorney's fees, and costs. The defendants appealed this decision. The Appeal: The defendants argued that a co-maker, Vicente L. Legarda, had died and his estate should have been included as a party-defendant. They sought to suspend the judgment's effects to include the estate. The lower court denied this, deeming the inclusion unnecessary and immaterial, citing Article 1216 of the Civil Code and Section 17(g) of the Negotiable Instruments Law. The defendants' motion for reconsideration and petition for relief were also denied, leading to the present appeal.
Issue(s)
Whether the estate of a deceased co-maker of a promissory note should be included as a party-defendant in an action to collect the debt. Whether the lower court erred in ruling that the inclusion of the deceased co-maker's estate was unnecessary and immaterial.
Ruling
The Supreme Court affirmed the decision of the lower court. The Court held that the plaintiff bank, as the payee of the promissory note, had the right to proceed against any one or any two of the solidary debtors for the payment of the amount due. The Court also admonished the attorney for the defendants, Atty. Jose S. Sarte, for alleged discrepancies in the record on appeal that omitted his name as a defendant and co-maker, ordering him to explain.
Ratio Decidendi
On Issue 1: The Supreme Court ruled that the inclusion of the estate of the deceased co-maker was unnecessary and immaterial. Citing Article 1216 of the Civil Code, the Court explained that a creditor may proceed against any one of the solidary debtors or some of them simultaneously. The death of one solidary debtor does not extinguish the obligation; rather, the creditor can still collect from the surviving solidary debtors or, if applicable, from the estate of the deceased debtor in the proper proceedings. The payee had the right to sue only the surviving obligors. On Issue 2: The Court found no error in the lower court's ruling that the inclusion of the deceased co-maker's estate was unnecessary and immaterial. This is directly supported by Section 17(g) of the Negotiable Instruments Law, which states that where an instrument containing the phrase "I promise to pay" is signed by two or more persons, they are deemed to be jointly and severally liable thereon. Consequently, the payee of the promissory note had the legal right to hold any one or any two of the signers responsible for the payment of the amount due, without prejudice to further actions against other parties or estates as may be warranted by law.
Main Doctrine
The Supreme Court affirmed the decision of the lower court, holding that under Article 1216 of the Civil Code and Section 17(g) of the Negotiable Instruments Law, the plaintiff bank had the right to sue any or all of the solidary debtors for the payment of the promissory note. The Court emphasized that the liability of the makers was joint and several, allowing the creditor to proceed against any one of them, irrespective of the death of one of the co-makers, as the estate's liability would be determined in the appropriate proceedings.