GR 160466; (January, 2005) (Digest)
G.R. No. 160466 ; January 17, 2005
SPOUSES ALFREDO and SUSANA ONG, petitioners, vs. PHILIPPINE COMMERCIAL INTERNATIONAL BANK, respondent.
FACTS
Petitioners, the President and Treasurer of Baliwag Mahogany Corporation (BMC), acted as sureties for corporate loans from respondent bank, issuing promissory notes stipulating that the bank could demand payment upon BMC’s insolvency or suspension of payments. In 1991, BMC filed a petition for rehabilitation and suspension of payments with the SEC after its properties were attached. Respondent bank then filed a collection case against the petitioners as sureties. Subsequently, a Memorandum of Agreement (MOA) was executed by BMC, the petitioners (in their corporate capacities), and a consortium of creditor banks, including respondent, which was approved by the SEC. The MOA provided for a suspension of filing or pursuing collection cases against BMC.
Petitioners moved to dismiss the collection case against them, arguing that the benefits of the MOA, particularly the suspension of actions, should extend to them as sureties. They contended that allowing the action to proceed would prejudice them, violating Articles 2063 and 2081 of the Civil Code, which state that a compromise with the principal debtor benefits the guarantor and that a guarantor may set up defenses inherent to the debt. The trial court and the Court of Appeals denied the motion.
ISSUE
Whether the collection case against the petitioners as sureties should be dismissed in light of the MOA suspending actions against the principal debtor, BMC.
RULING
The Supreme Court denied the petition and upheld the denial of the motion to dismiss. The Court clarified that petitioners are sureties, not mere guarantors. A contract of suretyship creates a primary, solidary obligation, distinct from a contract of guaranty which gives rise to a subsidiary liability. Articles 2063 and 2081 of the Civil Code, relied upon by petitioners, pertain specifically to contracts of guaranty and are thus inapplicable.
As sureties, petitioners are principally and solidarily liable with the principal debtor, BMC. Under Article 1216 of the Civil Code, a creditor may proceed against any solidary debtor. Therefore, respondent bank’s right to collect from the sureties exists independently of its right against the principal debtor and is not extinguished by the MOA. The MOA’s provisions for suspension pertained only to actions against the corporate properties of BMC under the SEC’s rehabilitation jurisdiction. The SEC’s jurisdiction and the MOA did not encompass the separate, personal liabilities and properties of the sureties. Consequently, the collection suit against the petitioners, as solidary sureties, could proceed independently of the suspended actions against BMC.