THE PHILIPPINE NATIONAL BANK, PLAINTIFF AND APPELLEE, VS. MARGARITA QUINTOS E YPARRAGUIRRE AND ANGEL A. ANSALDO, DEFENDANTS AND APPELLANTS.

VILLAMOR, J.:

The appellants pray for the dismissal of the complaint with costs against the
plaintiff, alleging that the judgment appealed from is erroneous: (1) Because it
holds that the document Exhibit A does not contain anything that makes the
plaintiff agent of the defendants; (2) because it finds without any ground that
the defendants were husband and wife when they executed said document; (3)
because upon this finding, it considers unnecessary to discuss whether or not
the obligation evidenced by said document is solidary between the defendants;
(4) because to maintain such opinion amounts to compelling the defendants to
comply with said obligation in a manner distinct from that stipulated in the
contract; and (5) because it sanctions an arbitrary, unjust and illegal
procedure.

The Honorable Pedro Concepcion, judge, who tried this case, rendered decision
in the following terms:

“The plaintiff seeks to recover of the defendants the sum of P31,785.96, the
amount of an alleged overdraft against them and in favor of the plaintiff bank,
with interest thereon at 8 per cent per annum from October 1, 1922.

“It appears from the evidence that in a document dated June 20, 1918, the
Philippine National Bank granted the defendants a credit to the amount of
P31,284, and to secure the payment thereof, as well as the interest and costs,
the defendants mortgaged and pledged to the bank certain certificates of one
hundred fifty-eight shares of stock of the Bank of the Philippine Islands of the
nominal value of P200 each. Later on, a certificate of fifty shares and another
of forty were substituted by others of 10 and 30 shares, respectively. Besides
these shares, the defendants delivered to the bank, as additional securities,
fifty shares of stock of the ‘Compaiiia Naviera’ of the nominal value of P100
each; eighty shares of stock of the ‘Compania Mercantir of P100 each; fifty
shares of stock of the Davao Agriculture and Commercial Company of P100 each,
and 10 second liberty bonds. These bonds were sold by the plaintiff bank on or
before August 19, 1922, having realized the sum of P2,360 from the sale thereof.
(Exhibit 3.)

“On August 21, 1920, the herein defendant, Mr. Angel Ansaldo, in his answer
to a letter of the bank addressed to him or to his wife, his codefendant
Margarita Q. de Ansaldo, stated, as may be seen in Exhibit B, that the balance
in his current account in favor of said bank in the sum of P33,558.45 on July
31, 1920, had been examined by him and found correct. This balance with the
interest due from the said date up to September 30, 1922, amounted to P41,212.05
and after deducting the credit and deposits from August 1, 1920, to September
30, 1922, which amount to P9,426.09, there remains a balance of P31,785.96,
payment of which is claimed in the complaint.

“And the complaint was filed because between April 2, 1921, and July 22,
1922, the date of the letter Exhibit 6, the defendant Mr. Ansaldo was several
times required to pay his debt, the securities given having been found to be
insufficient. to secure the payment of his obligations, but the defendants
failed to give the new additional securities demanded.

“The defendants discuss in the first place the nature of the obligation sued
on, maintaining that the same is not of a solidary nature because, say they,
there is nothing in it that expressly determines said character, and therefore
it binds only those who have contracted the same to the extent of their share in
said obligation; and in connection with this point it was attempted to prove
that the defendant Margarita Q. de Ansaldo, making use of the credit granted,
has received from the bank only the sum of P10,000, (Exhibit 5). As an answer to
the question raised the attorney for the bank calls attention to Exhibit A where
it appears that the defendant Angel A. Ansaldo ‘and or’ Margarita Q. de Ansaldo,
both or either of them indiscriminately, could sign checks against the bank in
their current account.

“The court is of the opinion that it is not necessary to discuss whether the
obligation in question is solidary or joint, because in either case this debt is
in the last analysis chargeable to the conjugal partnership of the defendant
spouses. According to article 1408 of the Civil Code, all the debts and
obligations contracted during the marriage by the husband, as well as those
incurred by the wife in those cases in which she may legally bind the
partnership, are chargeable to the conjugal partnership. In the instant case,
the defendant Margarita Q. de Ansaldo joined her husband in the execution of the
document, evidencing the obligation in question, on June 20, 1918, Exhibit A.
(See Joaquin vs. Avellana, 11 Phil., 249; Fulgencio vs. Gatchalian, 21 Phil.,
252; Falcon vs. Manzano, 15 Phil., 441.)

“Another question raised, although indirectly, by the defendants is that,
this being, as it is, a case of a loan for an indefinite period of time they
were not asked to pay in accordance with law, articles 313 and 316 of the Code
of Commerce. This contention is untenable. Under the provision of section 33 of
Act No. 2938, amending the charter of the Philippine National Bank, if, from any
cause whatsoever, any of the securities specified for the loans provided for
therein, or accepted by said bank as security for loans, should decline or
depreciate in market value wholly or in part, said bank may demand additional
securities or may forthwith declare such obligation due and payable; and it is a
fact admitted by the defendants themselves that the securities given by them
have suffered a considerable depreciation and it is a fact proven that tney were
required to give additional securities but failed to do so.

“If the securities were found to have depreciated in value, say the
defendants, ‘the plaintiff bank’s remedy was the one provided in the document
executed by the defendants in its favor and in accordance with its own charter.’
According to the contract, it may hold or sell the securities above mentioned
although as an agent (articles 1710, 1713, 1714, 1718, 1719, and 1796 of the
Civil Code) ; and in accordance with its charter (section 42, Act No. 2612),
said sale may be ordered! 15 days after a demand in writing is made upon the
debtor to increase the amount thereof, if in the meantime said debtor should
have failed to comply with this requirement * * * ‘The plaintiff, say they,
cannot be considered authorized to be negligent, as soon as it shall have
learned that the securities had begun to depreciate, as compared with the value
they had when they were delivered; for then it neither would comply with the
agency stipulated in the document in its favor, which would render it liable,
nor could in justice claim from the debtor what by its own negligence it may
have failed to receive.’ As an answer to this, it may be said that:

” ‘ * * * it must be borne in mind that it is a recognized doctrine in the
matter of suretyship that with respect to the surety, the creditor is under no
obligation to display any diligence in the enforcement of his rights as a
creditor. His mere inaction, indulgence, passiveness, or delay in proceeding
against the principal debtor, or the fact that he did not enforce the guaranty
or apply to the payment of such funds as were available, constitute no defense
at all for the surety, unless the contract expressly requires diligence and
promptness on the part of the creditor, which is not the case in the present
action (Clark vs. Sellner, 42 Phil., 384.)

“Furthermore, there is nothing in the document evidencing the contract which
makes the plaintiff, as the defendants believe, their agent with the obligation
to sell the securities given as pledge; on the contrary, the plaintiff,
according to the document, has a right, not an obligation, to elect to enforce
the securities in the manner it now does by bringing this action.

“As to the amount of the obligation, the defendants argue that the
acknowledgment of the debit balance on July 31, 1920, in the amount of
P33,548.55, (Exhibit B), is not any evidence that may legally bind the defendant
Margarita Q. de Ansaldo, who has not accepted it as correct. The truth, however,
is that the defendant Mr. Ansaldo who gave his conformity with the aforesaid
balance is the husband of the other defendant and the legal manager of the
property of the conjugal partnership which is liable for the payment of this
debt.

“The interest computed was likewise discussed in this case, the defendants
claiming that the same was not fixed with their consent, nor does there exist,
say they, any proof that it was ever fixed by the Board of Directors of the
bank. It appears, however, from the evidence of the plaintiff that the National
Bank had authorized various officers thereof to fix certain rate of interest on
certain occasions; as for instance, the rate of interest for the months of
August to September, 1920, was raised from 9 to 12 per cent. It remained
stationary at the rate of 12 per cent until April, 1922, when it lowered from 12
to 8 per cent. At all events, we believe that the defendants have no right to
raise this question because they have paid interest at the rate of 9 per cent
per annum, as appears from the document marked Exhibit I.

“For all of the foregoing, judgment is rendered sentencing the defendants to
pay the plaintiff bank the sum of thirty-one thousand seven hundred eighty-five
pesos and ninety- six centavos (P31,785.96), with interest thereon at the rate
of 8 per cent per annum from October 1, 1922, until full payment, with the
costs; in case of failure to pay, let the certificates of shares described in
Exhibit A be sold, and if the proceeds of the sale of said shares are not
sufficient to cover the whole amount of the debt, let an execution issue against
any property of the conjugal partnership of the defendants and, in default
thereof, against the private property of each of them, sufficient to cover the
whole amount of the balance that may be remaining unpaid. “

So ordered.

“Manila, P. I., February 5, 1924.

(Sgd.) “Pedro Concepcion

“Judge?

As the transcript of the testimony of the witnesses was not forwarded to this
court, we cannot, according to the constant jurisprudence of this court, review
the evidence and so we have to abide by the findings of fact set forth in the
judgment of the trial court.

We agree with the appellants that, according to the contract of pledge
Exhibit A, attached to the complaint, the defendants authorized the plaintiff to
act as their agent with full power and authority to dispose of the effects
pledged in the manner stipulated in said contract; but it appears that the
plaintiff had also an option, not an obligation precisely, to enforce the
securities given.

The question whether or not the appellants executed the aforesaid document
Exhibit A as husband and wife was decided by the trial court in the sense that
the defendant appellant Mr. Ansaldo is the husband of the other defendant Dona
Margarita Q. e Iparraguirre. For the reason above given we cannot alter this
finding of the trial court and consequently if the defendants are husband and
wife, it is immaterial whether the debt was contracted by one or the other, for
in either case as the debt was contracted during the marriage of the defendants
it must be paid for the account of the conjugal partnership in accordance with
article 1408 of the Civil Code.

After a thorough study of the judgment appealed from, we do not find therein
any substantial error that justifies the reversal thereof and therefore the same
must be, as is hereby, affirmed with costs against the appellants. So
ordered.

Johnson, Street, Malcolm, Avancena, Ostrand, and
Romualdez, JJ., concur.

DECISION UPON MOTION FOR RECONSIDERATION

December 10, 1924.

VlLLAMOR, J.:

In view of the juridical importance of the question raised in this motion,
wherein it is maintained that the obligation of the defendants is chargeable to
the conjugal partnership, and not to the private property of the spouses, and
much less to the private property of Margarita Quintos de Ansaldo, we deem it
well to enlarge upon our decision published October 6, 1924.

It will be remembered that the defendants signed a document of pledge in
favor of the plaintiff Philippine National Bank to secure the payment of a loan
in current account to the amount of P31,284. In said document it does not
clearly appear that the signers were husband and wife, although there is proof
in the record tending to show their civil status as husband and wife. Nor does
it appear in the said document that the signers have bound themselves solidarity
to pay the debt owing to plaintiff.

The judgment appealed from, affirmed by this court in a decision published
October 6, 1924, sentences the defendants to pay the plaintiff bank the sum of
thirty-one thousand seven hundred eighty-five pesos and ninety-six centavos
(P31,785.96) with interest thereon at 8 per cent per annum from October 1, 1922,
until full payment, with the costs; providing that, in default of payment, the
certificates of shares described in Exhibit A must be sold, and in case the
proceeds of the sale were not sufficient to cover the whole amount of the debt,
an execution shall issue against the property of the conjugal partnership of the
defendants and, if no such property was found, then against any private property
of each of them sufficient to cover the whole amount of the balance remaining
unpaid.

There can be no doubt that the property pledged being insufficient, the
property of the conjugal partnership is liable for this obligation in accordance
with article 1408 of the Civil Code, because the same was contracted by the
spouses during the marriage; but in default of property of the conjugal
partnership (article 1401), what is the liability of the spouses as to the
private property (article 1396) of each of them?

In this jurisdiction we do not believe that a similar question was heretofore
ever raised and decided, and so far as the research of the writer hereof
discloses, it finds no precedent in the Spanish jurisprudence.

By express provision of the Civil Code, the conjugal partnership begins to
exist at the celebration of the marriage, and the separation of the properties
between the spouses shall take place (article 1432) only when it is expressly
stipulated in the marriage settlement, or is judicially de- creed, or in the
case provided in article 50 of the Code. This conjugal partnership, however, is
confined to the properties mentioned in article 1401 of the Civil Code, to wit:
(a) Those acquired by onerous title during the marriage at the expense
of the common property whether the acquisition is made for the community or for
only one of them; (b) those obtained by the industry, salary or labor
of the spouses or any of them; (c) the fruits, rents or interest
received or accruing during the marriage, from the common or the private
property of each of the spouses. The partnership does not produce the merger of
the properties of each spouse. Each of them, notwithstanding the existence of
the partnership, continues to be the owner of what he or she had before
contracting marriage, as well as of what he or she may have acquired later by
lucrative title, by right of redemption, or by exchange with his or her
property, or by purchase with his or her money.

The ganancial partnership, to use the expression of Mr. Manresa, is the same
conjugal partnership constituted, in its economical aspect, under the system
established by the law as suppletory. It is, therefore, formed by the husband
and the wife, each with his or her own property and with his or her own debts.
The legislator does not intend to effect a mixture or merger of those debts or
properties between the spouses. The partnership maintains the separation of the
properties brought by each spouse from those that he or she may substitute for
them, or privately acquire afterwards by lucrative title.

Under the provisions of the Code it appears evident that the conjugal
partnership does not produce the merger of properties, nor does it cause the
personality of the wife to disappear; on the contrary, the law establishes
absolute separation of capitals—a complete independence of the capital account
from the account of benefits pertaining to the conjugal partnership, all of
which constitutes an unsurmountable obstacle to the presumption of solidarity
between spouses.

The question submitted to our consideration presupposes the insolvency of the
conjugal partnership, and as there is no presumption of solidarity of properties
between the spouses, the question may be asked, What liability do the partners
have with respect to the debts of the partnership? The legal provisions about
conjugal partnership, contained in chapter 5, title 3, book 4, of the Civil
Code, do not give an adequate answer to this question; so that we have to resort
to other sources for a solution thereof. Mr. Manresa already indicates in his
commentaries on article 1395 that in view of the provisions of the Code
regarding conjugal partnership, “the cases will be rare wherein there would be
any need to resort to the suppletory rule of the contract of partnership; but
the law, which does not in any manner pretend having provided for all the
questions that may present themselves in the practice, points out new sources of
law to which resort must be made in order to solve doubtful cases, situations or
circumstances not provided in articles 1392 to 1431.” The case now before us is
one of them, which requires, in order to be solved, a resort to the rule on the
contract of partnership, prescribed in article 1698, which provides that the
partners are not solidarily liable with respect to the debt of the partnership,
and none can bind the others by a personal act, if they have not given him any
power therefor.

The aforecited provision negativing solidarity in the liability of the
partners is a consequence of the conclusive rule of article 1137, of general
application to all kinds of obligation, to the effect that in obligations
created by the will of the parties, solidarity will exist only when it is
expressly determined in the title thereof, giving them such a character.
Therefore if solidarity exists only by stipulation, or by law, it is evident
that the partner cannot be solidarily liable for the debts of the partnership,
because, as Manresa says, there is no legal provision imposing such burden upon
him, and because the same is not only not authorized by the contract of
partnership, but is contrary to the nature thereof, for gain being the
consideration of the obligation, the latter cannot be extended beyond the
interest that the partner may have therein which is proportional to his
share.

Taking into account that the contract of pledge signed by the defendants does
not show that they have contracted a solidary obligation, it is our opinion, and
so decide, that the properties given as pledge being insufficient, the
properties of the conjugal partnership of the defendants are liable for the debt
to the plaintiff, and in default thereof, they are jointly liable for the
payment thereof.

It being understood that the judgment appealed from is modified in the sense
above stated, the motion of the appellants is denied. So ordered.

Johnson, Street, Malcolm, Avanceña, Ostrand, and Romualdez
JJ., concur.