Philippine National Bank v. Asuncion
REITERATIONFacts
The Antecedents: Philippine National Bank (PNB) granted Fabar Incorporated various credit accommodations and advances, secured by the joint and several signatures of Jose Ma. Barredo, Carmen B. Borromeo, Tomas L. Borromeo, and Manuel H. Barredo. Due to non-payment, PNB filed a collection case against all the guarantors. Procedural History: Before the case could be decided, Manuel H. Barredo died. PNB's counsel was informed of the death. The respondent Court dismissed the case against all defendants, citing the death of Manuel Barredo and the nature of the suit as a money claim that does not survive. The court invoked Section 6, Rule 86 of the Revised Rules of Court, stating the claim should be filed with the estate proceedings. PNB moved for reconsideration, arguing the dismissal should only be against the deceased defendant. The respondent Court denied the motion. The Petition: PNB filed a petition for review on certiorari, alleging the respondent Court erred in dismissing the case against all defendants instead of only against the deceased defendant.
Issue(s)
Whether the respondent Court committed a grave error in dismissing the collection suit against all solidary debtors upon the death of one, rather than proceeding against the surviving debtors.
Ruling
The Supreme Court ruled that the respondent Court erred in dismissing the case against all the defendants. The dismissal should only be as against the deceased defendant, Manuel H. Barredo, and the case should be remanded for further proceedings against the other solidary debtors.
Ratio Decidendi
On Issue 1: The Court ruled that the respondent Court's reliance on Section 6, Rule 86 of the Revised Rules of Court was misplaced because it ignored the substantive right provided by Article 1216 of the New Civil Code. Article 1216 explicitly allows a creditor to "proceed against any one of the solidary debtors or some or all of them simultaneously." This choice is left entirely to the solidary creditor, and the death of one debtor does not mandate a dismissal against the survivors. Applying the precedent in Manila Surety & Fidelity Co., Inc. vs. Villarama, the Court explained that Rule 86 merely provides the procedure if a creditor chooses to go against the estate, but it is not a condition precedent for suing the surviving debtors. Furthermore, the 1973 Constitution mandates that procedural rules promulgated by the Supreme Court shall not diminish, increase, or modify substantive rights. Since Article 1216 is a substantive law, it cannot be effectively repealed or amended by a procedural rule like Rule 86. Consequently, the creditor retains the right to proceed against the living solidary debtors without the necessity of filing a claim in the estate of the deceased debtor.
Main Doctrine
A creditor in a solidary obligation has the option to proceed against any one of the solidary debtors or some or all of them simultaneously. The death of one solidary debtor does not mandate the dismissal of the case against the surviving solidary debtors; the creditor may still pursue the claim against them without prejudice to filing a claim against the estate of the deceased debtor.