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BALDOMERO INCIONG v. CA

FACTS:

This case involves a petition for review on certiorari challenging the decision of the Court of Appeals, which affirmed the decision of the Regional Trial Court. The lower court ordered defendant Baldomero L. Inciong, Jr. to pay the plaintiff Philippine Bank of Communications the amount of P50,000.00, with interest and damages.

The petitioner's liability stems from a promissory note that he signed with two other individuals, Rene C. Naybe and Gregorio D. Pantanosas, jointly and severally liable to the plaintiff bank. The promissory note was due on May 5, 1983, but the obligors failed to pay their obligation. The bank sent telegrams and a final letter of demand to the obligors, but received no response.

The plaintiff then filed a complaint for collection of the sum of P50,000.00 against the three obligors. The case was initially dismissed for failure of the plaintiff to prosecute, but later reconsidered and the summonses were served, except for defendant Naybe who was in Saudi Arabia.

The petitioner alleged that he was deceived into signing the promissory note for only P5,000.00, but it was later increased to P50,000.00 without his knowledge. He also claimed that the bank's branch manager assured Naybe of a loan approval.

The lower court dismissed the petitioner's claim based on the typewritten figure "P50,000-" directly below his signature in the promissory note. The court held that the petitioner's testimony on his limited liability cannot prevail over the presumed regularity and fairness of the transaction. The court also noted that the petitioner, as a holder of a law degree, should have taken due care of his concerns.

The Court of Appeals affirmed the lower court's decision, which led to the petitioner filing a petition for review before the Supreme Court. The Court initially denied the petition for non-compliance with the rules and failure to show any reversible error. However, the Court later granted the petitioner's motion for clarification and reinstated the petition.

However, the Court found the petition unmeritorious. An affidavit by co-maker Pantanosas, supporting the petitioner's claim, was attached to the petition.

ISSUES:

  1. Whether the promissory note signed by the petitioner is valid, especially considering the allegations of fraud and the claimed misunderstanding about the loan amount.

  2. Whether the dismissal of the complaint against co-makers affects the petitioner's own liability under the solidary obligation outlined in the promissory note.

RULING:

  1. The Supreme Court affirmed that the promissory note is valid. The Court stated that the terms of the written agreement as expressed in the promissory note are binding. Concerning the allegations of fraud by the petitioner, the Court held that these claims must be established with clear and convincing evidence, which the petitioner failed to provide. Furthermore, the parol evidence rule was applied, meaning that the written terms of the promissory note could not be contradicted by oral testimony regarding different intentions or understandings.

  2. On the issue concerning the effect of dismissing the complaint against co-makers, the Supreme Court ruled that such dismissal does not release the petitioner from his obligations under the solidary liability agreement in the promissory note. The Court outlined the legal distinction between a guarantor and a solidary debtor, establishing that the petitioner, as a solidary co-debtor, is liable for the entire obligation regardless of the dismissal of claims against his co-makers.

PRINCIPLES:

  1. Validity of Written Agreements The terms expressed in a written agreement are considered binding and constitute the entirety of the agreement between the parties involved.

  2. Parol Evidence Rule When an agreement has been reduced to writing, it cannot be contradicted by oral evidence regarding the terms agreed upon unless there is a valid ground such as proving fraud, mistake, or inequity.

  3. Solidary Liability In obligations where parties are solidarily liable, each debtor is responsible for the entire obligation. The creditor can proceed against any one of the debtors or all of them simultaneously.

  4. Distinction Between Guarantor and Solidary Debtor While a guarantor may bind himself solidarily, this does not equate him to a solidary debtor. A guarantor who binds himself solidarily still retains rights and benefits deriving from the guarantee, while a solidary debtor has a direct and total obligation to fulfill the debt.

  5. Fraud Allegations in Contractual Obligations Allegations of fraud in contractual obligations need to be substantiated with clear and convincing evidence; mere allegations or uncorroborated testimony are insufficient to overturn the obligations as expressed in written forms.