Iciong, Jr. v. Court of Appeals

G.R. No. 96405 (June 26, 1996)

Facts:

The case involves a petition for review on certiorari filed by Baldomero Inciong, Jr. against the Court of Appeals and the Philippine Bank of Communications. The dispute arose from a promissory note for the amount of P50,000.00, which was signed by the petitioner along with two other individuals, Rene C. Naybe and Gregorio D. Pantanosas, on February 3, 1983. The note was due on May 5, 1983, but the obligors failed to make payment by the due date.

Following the non-payment, the Philippine Bank of Communications sent several demands for payment to the obligors, including telegrams and a final letter of demand. When the obligors did not respond, the bank filed a complaint for collection against them on January 24, 1986. The initial complaint was dismissed for lack of prosecution but was later reinstated. Eventually, the case against Pantanosas was dismissed at the request of the bank, while only Inciong remained as the defendant.

In his defense, Inciong claimed that he was misled into signing the promissory note under the pretense that he was only a co-maker for a loan of P5,000.00. He alleged that he was tricked by Rudy Campos, who had assured him that the loan would be for a smaller amount. Inciong contended that he had signed a blank promissory note and that the amount of P50,000.00 was inserted later without his consent. The trial court found that the typewritten amount of P50,000.00 was clearly visible below his signature, and thus, his claims of limited liability were not credible.

The trial court ruled in favor of the Philippine Bank of Communications, holding Inciong solidarily liable for the full amount of the promissory note, along with interest and attorney's fees. Inciong's appeal to the Court of Appeals was denied, leading to the present petition.

Legal Issues:

1. Whether the petitioner was liable for the full amount of the promissory note despite his claims of being misled regarding the amount.
2. Whether the dismissal of the case against the other co-makers constituted a release of the petitioner from his obligation.
3. The applicability of the parol evidence rule in the context of the promissory note.

Arguments:

Petitioner’s Arguments:

• Inciong argued that he was only a co-maker for a loan of P5,000.00 and was misled into signing the promissory note for P50,000.00.
• He claimed that the promissory note was signed under fraud and misrepresentation, as he believed the loan amount was smaller.
• Inciong contended that the dismissal of the case against his co-makers should release him from liability, citing Article 2080 of the Civil Code.

Respondent’s Arguments:

• The Philippine Bank of Communications maintained that the promissory note clearly indicated the amount of P50,000.00, and Inciong's signature was present, which established his liability.
• The bank argued that the dismissal of the case against the other co-makers did not affect Inciong's solidary obligation, as he signed the note as a solidary co-maker, not as a guarantor.
• The bank asserted that the parol evidence rule barred Inciong from introducing evidence to contradict the written terms of the promissory note.

Court’s Decision and Legal Reasoning:

The Supreme Court denied the petition and affirmed the decision of the Court of Appeals. The Court held that the petitioner’s claims of being misled were not credible, given the clear evidence of his signature on the promissory note with the stated amount. The Court emphasized the principle that a written contract is presumed to contain all the terms agreed upon by the parties, and parol evidence cannot be used to contradict the written terms unless fraud is established by clear and convincing evidence.

The Court also clarified that the dismissal of the case against the other co-makers did not release Inciong from his obligation, as he was a solidary co-maker. The Court distinguished between the roles of a solidary debtor and a guarantor, noting that the liability of a solidary co-maker remains intact regardless of the status of the other co-makers.

Significant Legal Principles Established:

• The parol evidence rule applies to written contracts, and parties cannot introduce evidence to contradict the terms of a written agreement unless fraud is proven.
• A solidary co-maker is fully liable for the entire obligation, and the dismissal of a case against other co-makers does not release a solidary debtor from liability.
• The presumption of regularity in the execution of documents places the burden on the party alleging fraud to provide clear and convincing evidence.