China Banking Corp. v. Court of Appeals
REITERATIONFacts
1. The Antecedents: Petitioner China Banking Corporation filed a complaint for a sum of money against private respondents Esperanza T. Cua and Spouses Manuel and Emerita de Leon. The respondents executed a promissory note for P50,000.00, payable jointly and severally, thirty days after date, with 13% annual interest. While a partial payment of P25,000.00 was received, the remaining balance was not paid. Despite a renewal of the loan and an extension of the maturity date, the De Leon spouses refused to sign the renewal note, and no further payments were made. 2. Procedural History: The Court of First Instance of Manila rendered judgment against all private respondents, holding them jointly and severally liable for P25,000.00 plus interest and attorney's fees. The trial court reasoned that the extension of the maturity date did not release the De Leon spouses from liability due to their consent to extensions in the original note and their refusal to sign the renewal, which did not constitute novation. The private respondents appealed to the Court of Appeals. 3. The Petition: The Court of Appeals reversed the trial court's decision, declaring only Esperanza T. Cua solely liable. The appellate court later denied petitioner China Banking Corporation's motion for reconsideration as it was filed 28 days late. Consequently, China Banking Corporation filed this petition for review by way of certiorari, seeking to set aside the Court of Appeals' decision and resolution, and to reinstate the trial court's decision. The petitioner argues that the De Leon spouses remained solidarily liable and that the refusal to sign the second note did not relieve them of their obligation.
Issue(s)
Whether the refusal of the De Leon spouses to sign the renewal promissory note released them from their liability under the original promissory note. Whether the extension of the maturity date of the original promissory note, without the express consent of the De Leon spouses to the specific extension, released them from their obligation. Whether the motion for reconsideration filed by petitioner China Banking Corporation was filed within the reglementary period.
Ruling
The Supreme Court dismissed the Petition for Review by way of certiorari. It held that the decision of the Court of Appeals promulgated on December 23, 1981, had become final and executory because petitioner China Banking Corporation's Motion for Reconsideration, filed on February 10, 1982, was filed out of time, having been filed 28 days beyond the reglementary period.
Ratio Decidendi
On Issue 1: The Court held that the refusal of the De Leon spouses to sign the second promissory note did not relieve them of their obligation to the petitioner. This is because the original promissory note expressly provided that "I/We hereby consent to any extension which may be requested by anyone of us for the payment of the note." This stipulation clearly indicated their consent to extensions requested by any of the makers. Furthermore, the refusal to sign the renewal note meant there was no novation of the contract, and thus, the De Leon spouses remained liable as makers of the original promissory note. On Issue 2: The Court reiterated that the promissory note explicitly bound the three private respondents to pay jointly and severally. The De Leon spouses did not merely guarantee Esperanza T. Cua's payment but bound themselves solidarily with her. The clause consenting to extensions requested by any of them meant that the extension of the maturity date to October 19, 1969, did not release them from their obligation, as they had already agreed to such possibilities within the original note. On Issue 3: The Court found that the petitioner's Motion for Reconsideration was indeed filed out of time. The decision of the Court of Appeals was received by the petitioner on December 29, 1981. Consequently, the decision became final and executory on January 13, 1982. The motion for reconsideration, dated February 10, 1982, was filed 28 days after the reglementary period had expired. Therefore, the appellate court correctly denied the motion, and the Supreme Court dismissed the petition for review because the decision sought to be reviewed had already attained finality.
Main Doctrine
An accommodation maker is one who signs an instrument as a maker, drawer, or acceptor without receiving value therefor, but in order to accommodate some other party who does receive value. Such a person is liable on the instrument to a holder for value, even though the holder knew him to be only an accommodation party. Furthermore, a stipulation in a promissory note allowing any of the makers to request an extension of the payment date, and binding all makers to such extensions, means that the refusal of some makers to sign a renewal note does not release them from their original liability, especially if no novation occurs.