Case Digest: Intestate Estate of Victor Sevilla, Simeon Sedaya v. Sevilla, G.R. No. L-17845, April 27, 1967

Commercial Law | Liability of Guarantors Among Themselves, Accommodation Party

Facts: 

• On March 28, 1949, Victor Sevilla, Oscar Varona, and Simeon Sadaya, jointly and severally, executed a promissory note for P15,000 with interest at 8% per annum, payable on demand, in favor of the Bank of the Philippine Islands (BPI).
• Sevilla and Sadaya signed the note as co-makers as a favor to Varona, who alone received the proceeds.
• Payments were made, and as of June 15, 1950, the outstanding balance was P4,850.
• On October 6, 1952, BPI collected the remaining balance from Sadaya, totaling P5,416.12.
• Varona failed to reimburse Sadaya despite demands.
• Victor Sevilla died intestate.
• Sadaya filed a creditor's claim in the estate proceedings, seeking P5,746.12 plus attorney's fees.
• The administrator resisted the claim, stating that Victor Sevilla signed the note only as a surety for Varona.

• CFI-Rizal: Admitted the claim of Simeon Sadaya in the amount of P5,746.12, and directing the administrator to pay the same from any available funds belonging to the estate of the deceased Victor Sevilla.

• CA: Set aside the order appealed and disallowed "appellee's claim of P5,746.12 against the intestate estate.".

Issue: 

• Whether the claim "in the amount of 50% of P5,746.12, or P2,873.06, against the intestate estate of the deceased Victor Sevilla," may be approved. NO

Held:

1. That Victor Sevilla and Simeon Sadaya were joint and several accommodation makers of the 15,000.00-peso promissory note in favor of the Bank of the Philippine Islands, need not be essayed. As such accommodation the makers, the individual obligation of each of them to the bank is no different from, and no greater and no less than, that contract by Oscar Varona. For, while these two did not receive value on the promissory note, they executed the same with, and for the purpose of lending their names to, Oscar Varona. Their liability to the bank upon the explicit terms of the promissory note is joint and several. Better yet, the bank could have pursued its right to collect the unpaid balance against either Sevilla or Sadaya. And the fact is that one of the last two, Simeon Sadaya, paid that balance.

2. It is beyond debate that Simeon Sadaya could have sought reimbursement of the total amount paid from Oscar Varona. This is but right and just. Varona received full value of the promissory note. Sadaya received nothing therefrom. He paid the bank because he was a joint and several obligor. The least that can be said is that, as between Varona and Sadaya, there is an implied contract of indemnity. And Varona is bound by the obligation to reimburse Sadaya.

3. The common creditor, the Bank of the Philippine Islands, now out of the way, we first look into the relations inter se amongst the three consigners of the promissory note. Their relations vis-a-vis the Bank, we repeat, is that of joint and several obligors. But can the same thing be said about the relations of the three consigners, in respect to each other?

Surely enough, as amongst the three, the obligation of Varona and Sevilla to Sadaya who paid can not be joint and several. For, indeed, had payment been made by Oscar Varona, instead of Simeon Sadaya, Varona could not have had reason to seek reimbursement from either Sevilla or Sadaya, or both. After all, the proceeds of the loan went to Varona and the other two received nothing therefrom.

4. On principle, a solidary accommodation maker — who made payment — has the right to contribution, from his co-accommodation maker, in the absence of agreement to the contrary between them, and subject to conditions imposed by law. This right springs from an implied promise between the accommodation makers to share equally the burdens that may ensue from their having consented to stamp their signatures on the promissory note. For having lent their signatures to the principal debtor, they clearly placed themselves — in so far as payment made by one may create liability on the other — in the category of mere joint grantors of the former. This is as it should be. Not one of them benefited by the promissory note. They stand on the same footing. In misfortune, their burdens should be equally spread.

Manresa, commenting on Article 1844 of the Civil Code of Spain,7 which is substantially reproduced in Article 20738 of our Civil Code, on this point stated:

Others, like Pothier, understand that, although the principle is evident in a strict legal sense, its consequences have been exaggerated to the point where they are contrary, not only to logic but also to equity, which should be the soul of the Law, as Laurent has said.

They argue that this action does not arise from the surety, since, indeed, the act of guaranteeing the same debt does not create any legal bond or reason to bind among the co-sureties. Instead, it stems from a subsequent act, namely the payment of the entire debt made by one of them. Equity does not allow the other co-sureties, who were equally obligated to said payment, to benefit from this act to the detriment of the one who made it.

The fact is that this action granted to the surety does arise from the act of payment, but it is a consequence of the benefit or right to division, as we have already stated. Indeed, by virtue of this, all co-sureties are obligated to contribute to the payment of the part that corresponds to each one. From this obligation, contracted by all of them, those who have not paid are relieved by the act performed by the one who paid. And although this individual only fulfilled the duty imposed by the surety contract to be responsible for the entire debt when he did not limit his obligation to any part of it, this act benefits the other co-sureties, who take advantage of it to be released from any commitment to the creditor.

5. And now, to the requisites before one accommodation maker can seek reimbursement from a co-accommodation maker.

By Article 18 of the Civil Code in matters not covered by the special laws, "their deficiency shall be supplied by the provisions of this Code". Nothing extant in the Negotiable Instruments Law would define the right of one accommodation maker to seek reimbursement from another. Perforce, we must go to the Civil Code. 

Because Sevilla and Sadaya, in themselves, are but co-guarantors of Varona, their case comes within the ambit of Article 2073 of the Civil Code which reads:

ART. 2073. When there are two or more guarantors of the same debtor and for the same debt, the one among them who has paid may demand of each of the others the share which is proportionally owing from him.

If any of the guarantors should be insolvent, his share shall be borne by the others, including the payer, in the same proportion.

The provisions of this article shall not be applicable, unless the payment has been made in virtue of a judicial demand or unless the principal debtor is insolvent.

As Mr. Justice Street puts it: "That article deals with the situation which arises when one surety has paid the debt to the creditor and is seeking contribution from his cosureties."

Not that the requirements in paragraph 3, Article 2073, just quoted, are devoid of cogent reason. Says Manresa:12

6. All of the foregoing postulate the following rules: 

1. A joint and several accommodation maker of a negotiable promissory note may demand from the principal debtor reimbursement for the amount that he paid to the payee; and 
2. a joint and several accommodation maker who pays on the said promissory note may directly demand reimbursement from his co-accommodation maker without first directing his action against the principal debtor provided that 
1. he made the payment by virtue of a judicial demand, or 
2. a principal debtor is insolvent.

The Court of Appeals found that Sadaya's payment to the bank "was made voluntarily and without any judicial demand," and that "there is an absolute absence of evidence showing that Varona is insolvent". This combination of fact and lack of fact epitomizes the fatal distance between payment by Sadaya and Sadaya's right to demand of Sevilla "the share which is proportionately owing from him."

For the reasons given, the judgment of the Court of Appeals under review is hereby affirmed. No costs. So ordered