G.R. No. 30111 , February 23, 1929
THE BANK OF THE PHILIPPINE ISLANDS, plaintiff-appellee, vs. MAY MCCOY, as executrix of the Estate of H.B. McCoy, ET AL., defendants-appellants.

FACTS

1. H.B. McCoy and six other individuals (appellants) were joint and several guarantors of a debt owed by the Cooperative Coconut Products Co., Inc. to the Bank of the Philippine Islands (BPI).
2. To avoid foreclosure, the seven guarantors (including McCoy) sent a letter to BPI dated August 16, 1922, proposing that BPI foreclose the mortgage, bid for the property at auction, and then sell it to them for a specified sum payable in installments. The letter stipulated that BPI’s rights against the guarantors would remain in force.
3. BPI’s President replied on August 21, 1922, stating the proposition was “accepted,” with an added caution about the bidding.
4. BPI foreclosed, bought the property at auction, but the guarantors failed to comply with their purchase agreement. BPI later sold the property to a third party, incurring a loss of about P16,000.
5. BPI sued May McCoy, as executrix of H.B. McCoy’s estate, to recover the loss. The court required the other six guarantors to be joined as defendants.
6. Before trial, the executrix settled BPI’s claim for P12,000. The court then allowed the executrix to be substituted as plaintiff to seek contribution from her six co-guarantors (the appellants).
7. The trial court ordered each appellant to pay the executrix P1,714.28 (their proportionate share of the P12,000 settlement), with solidarity for any unpaid shares.
8. The appellants appealed, contesting the substitution of parties and their liability.

ISSUES:
1. Whether the trial court erred in allowing the executrix (May McCoy) to be substituted as plaintiff after settling the bank’s claim.
2. Whether a valid contract was formed between the bank and the guarantors based on the exchange of letters dated August 16 and 21, 1922.
3. Whether the appellants are liable to contribute to the settlement paid by the executrix.

RULING

1. On the substitution of The trial court did not err. By paying the claim, the executrix was subrogated to the rights of BPI. If the original action had proceeded against all defendants, the court would have accounted for their mutual obligation to contribute. The substitution merely gave effect to this right of contribution after payment. The change from an action on the debt to an action for contribution was a proper procedural consequence of the subrogation.

2. On the formation of the contract: Yes, a valid contract was formed. The bank’s letter of August 21, 1922, constituted a valid acceptance of the guarantors’ offer (August 16 letter). The use of the word “accepted” was clear. The added caution about the bidding did not impose a new condition but was merely an advisory note. The acceptance was valid even though it was not in the exact form suggested in the offer (signing and returning a duplicate), as that form was not material to the agreement.

3. On liability for contribution: Yes, the appellants are liable. The seven signatories (including McCoy) were joint and several obligors under the contract evidenced by the letters. Upon payment by one (McCoy’s estate through the executrix), the payer is entitled to contribution from the others under Article 1145 of the Civil Code. The trial court correctly imposed proportional liability.

DISPOSITIVE PORTION:
The Supreme Court AFFIRMED the trial court’s judgment, with the clarification that if any appellant is insolvent, the resulting deficiency should be borne by the solvent appellants and the executrix (representing McCoy’s share) in proportion to their respective shares. Costs against the appellants.