Rizal Commercial Banking Corporation v. Court of Appeals
REITERATIONFacts
The Antecedents: On May 4, 1979, Alfredo Ching signed a Comprehensive Surety Agreement with Rizal Commercial Banking Corporation (RCBC), jointly and severally guaranteeing PBM's obligations to RCBC up to P40,000,000.00. Between September 8 and October 30, 1980, PBM obtained letters of credit from RCBC, importing goods for which PBM acknowledged receipt through trust receipts, creating an obligation of P7,982,649.08. On August 7, 1981, RCBC filed a collection case against PBM and Ching. On April 1, 1982, PBM filed a Petition for Suspension of Payments and rehabilitation with the Securities and Exchange Commission (SEC). On July 6, 1982, the SEC issued an injunctive order suspending all actions for claims against PBM. On October 14, 1982, RCBC filed an unopposed Motion for Summary Judgment in the collection case, contending that PBM and Ching had not denied their indebtedness. On November 25, 1982, the Court of First Instance (CFI) rendered a summary judgment in favor of RCBC against PBM and Ching. Procedural History: On appeal, the Court of Appeals (CA) set aside the CFI decision, ruling that the proceedings were precipitate and improper given the SEC's suspension order. The CA ordered the lower court to hold in abeyance the determination of the merits pending the outcome of the SEC rehabilitation case. RCBC's motion for reconsideration was denied. The Petition: RCBC filed a Petition for Review, arguing that the SEC injunctive Order only pertained to PBM and did not affect its right to proceed against Ching, the Surety, based on his separate and independent undertaking.
Issue(s)
Whether the SEC injunctive Order suspending claims against PBM also bars RCBC from recovering from Alfredo Ching, the Surety. Whether Alfredo Ching, as a corporate officer, can be held liable for corporate obligations under the surety agreement. Whether the alleged customary extension of payment dates by RCBC to PBM benefits the Surety.
Ruling
The Supreme Court ruled in the negative. The Court set aside the decision of the Court of Appeals and reinstated the judgment of the lower court as far as respondent Alfredo Ching is concerned.
Ratio Decidendi
On the effect of the SEC Injunctive Order on the Surety's liability: The Court held that the SEC injunctive Order, which suspended actions for claims against PBM, did not affect RCBC's right to proceed against Alfredo Ching, the Surety. The Court emphasized that the Comprehensive Surety Agreement created a separate and independent undertaking by Ching. Under Article 1207 of the Civil Code, where there is a solidary liability, the creditor may proceed against any one of the solidary debtors or some or all of them simultaneously, as provided in Article 1216. The SEC's jurisdiction under P.D. 902-A, as amended, extends only to corporations or associations, and its injunctive order was limited to taking custody of PBM's assets and property. Nothing in the SEC Order placed respondent Ching within its scope. Therefore, Ching could not seek refuge behind the SEC order to avoid his due and demandable obligation as Surety. On Ching's liability as a corporate officer: The Court found no evidence or basis in the pleadings or the Surety Agreement to support the claim that Ching acted solely on behalf of PBM as part of its usual corporate procedure. The Agreement explicitly stated Ching's joint and several liability. The Court reiterated the basic principle that parties are bound by the terms of their contract, which is the law between them. The extent of a surety's liability is determined by the contract of suretyship and cannot be extended by implication, nor can it be restricted unless expressly stated. Ching's liability stemmed from his personal undertaking as Surety, not from his corporate position. On the alleged customary extension of payment dates: The Court affirmed the lower court's finding that the obligation was matured and demandable. The alleged agreement to extend payment dates was not supported by any documentary evidence and remained a self-serving assertion. The maturity dates of the trust receipts were clearly established, and the alleged extension, even if it existed, would have had to occur before or on the maturity dates. Since the case was filed after these dates and no such representation was alleged to have been made, the obligation was covered by Article 1193 of the Civil Code, meaning it was demandable when the day came. The lower court correctly found no genuine issue of fact and that the case was ripe for summary judgment.
Main Doctrine
An SEC injunctive order suspending claims against a corporation undergoing rehabilitation does not suspend the creditor's right to proceed against a surety based on the surety's separate and independent undertaking.