G.R. No. L-2091
FACTS:
Compañía General de Tabacos (plaintiff-appellant) sold cigars and cigarettes on credit to Sebastian Victor Molina (defendant-appellee) in November and December 1895. On January 23, 1896, the parties agreed the debt was 3,319.74 pesos, and Molina executed a promissory note for this amount, with Juan Victor Molina signing as surety. Only 432.80 pesos was paid. On July 17, 1903, the plaintiff filed an action to recover the balance. The lower court dismissed the complaint, ruling that the note was a commercial instrument and the action had prescribed under the three-year limitation period in Article 950 of the Code of Commerce.
ISSUE:
1. Whether the promissory note is a commercial instrument subject to the three-year prescriptive period under the Code of Commerce.
2. If the action on the note is barred, whether the plaintiff can still maintain an action against the principal debtor (Sebastian Victor Molina) based on the original contract of sale.
RULING:
1. Yes, the promissory note is a commercial instrument. The Court held that the note substantially complied with the formal requisites of Article 531 of the Code of Commerce. The omission of the place of payment was not fatal, as such a requirement under Article 531 applies primarily to drafts (letras de cambio) and not necessarily to simple promissory notes (pagarés). Furthermore, the statement “value received in merchandise” sufficiently indicated the origin and nature of the consideration. The commercial character of the note was established by evidence that it originated from a sale of merchandise, a commercial transaction under Article 2 of the Code. Consequently, the action upon the note itself prescribed in three years and was barred. The action against the surety, Juan Victor Molina, whose obligation was solely derived from the note, was also barred.
2. Yes, an action on the original contract of sale remains viable against the principal debtor. The Court applied Article 1170 of the Civil Code, which provides that the delivery of a promissory note only produces the effects of payment when it is collected; meanwhile, the action from the original obligation is merely suspended. The execution of the note by the debtor himself did not constitute a novation of the original obligation under Article 1204 of the Civil Code. Therefore, the original cause of action for the purchase price of the merchandise sold was not extinguished and could still be enforced.
DISPOSITIVE PORTION:
The judgment was affirmed regarding defendant Juan Victor Molina (the surety). It was reversed regarding defendant Sebastian Victor Molina. The case was remanded to the lower court with instructions to enter judgment in favor of the plaintiff against Sebastian Victor Molina for the unpaid balance of the debt, with interest from the filing of the complaint. No costs were awarded.
