Republic Glass Corporation vs. Qua

A solidary debtor who pays a creditor an amount equal to or less than his proportionate share in the obligation cannot demand reimbursement from co-debtors, because such payment merely satisfies what is due from him; reimbursement is available only for payments exceeding the paying debtor's share in the obligation.

Petitioners Republic Glass Corporation (RGC) and Gervel, Inc., together with respondent Lawrence C. Qua, were stockholders of Ladtek, Inc. and stood as solidary sureties for Ladtek's loans from Metropolitan Bank and Trust Company (Metrobank) and Private Development Corporation of the Philippines (PDCP). The parties executed Agreements for Contribution, Indemnity, and Pledge of Shares, stipulating proportionate contribution shares (RGC: 35.557%, Gervel: 22.223%, Qua: 42.220%) and pledging Qua's General Milling Corporation (GMC) shares as security for his reimbursement obligation. Upon Ladtek's default, Metrobank filed a collection case against all sureties. RGC and Gervel paid Metrobank P7 million and PDCP P1,730,543.55, after which the creditors executed quitclaims releasing them from further liability. RGC and Gervel subsequently demanded reimbursement from Qua and, upon his refusal, foreclosed his pledged shares.

• The Indemnity Agreements: RGC, Gervel, and Qua executed Agreements for Contribution, Indemnity, and Pledge of Shares, fixing their proportionate shares in case of default (RGC: 35.557%, Gervel: 22.223%, Qua: 42.220%). Qua pledged 1,892,360 GMC shares to secure his reimbursement obligation. The Agreements obligated each party to reimburse the paying party "all sums of money which the party made to pay the Lenders shall pay or become liable to pay," whether the sum was paid in full or in part.
• Default and Partial Payment: Ladtek defaulted on its loans. Metrobank filed Collection Case No. 8364 against Ladtek and the three sureties. During the pendency of the case, RGC and Gervel paid Metrobank P7 million and PDCP P1,730,543.55. The creditors executed quitclaims and releases in favor of RGC and Gervel, discharging them from solidary liability.
• Demand and Foreclosure: RGC and Gervel demanded that Qua pay P3,860,646.00 as reimbursement. Qua refused. RGC and Gervel foreclosed all of Qua's pledged GMC shares at public auction.
• Conflicting Positions in the Collection Case: In Collection Case No. 8364, Qua filed a Motion to Dismiss arguing that RGC and Gervel's P7 million payment covered the entire obligation, thereby extinguishing the debt. The trial court initially dismissed the case against Qua but later reinstated it upon Metrobank's motion for reconsideration. Ultimately, RTC-Branch 62 ruled against Qua, holding him liable for the balance of the obligation, limited to his suretyship amounts.

• Estoppel: Petitioners argued that Qua is estopped from claiming that the payment was not for the entire obligation because he previously asserted the opposite in his Motion to Dismiss in Collection Case No. 8364.
• Condition for Reimbursement: Petitioners maintained that payment of the entire obligation is not a condition sine qua non for demanding reimbursement under the Indemnity Agreements, which expressly cover "all sums of money" paid or liable to be paid.
• Immateriality of Novation: Petitioners contended that any novation of the surety agreements with the creditors is immaterial to the indemnity agreements among themselves; if novation occurred, it would extinguish the entire obligation by operation of law, entitling them to reimbursement for Qua's proportionate share.

• Novation and Extinguishment of Pledge: Respondent countered that the solidary obligation was novated when the creditors accepted partial payment from petitioners and released them, leaving respondent solely liable for the unpaid balance. This novation extinguished the underlying pledge.
• Lack of Basis for Reimbursement: Respondent argued that petitioners' payments merely covered their own proportionate shares, providing no basis for reimbursement, and that the foreclosure was unjustified.

• Estoppel: Whether the principle of estoppel applies to Qua’s judicial statements in the collection case that RGC and Gervel paid the entire obligation.
• Reimbursement Condition: Whether payment of the entire obligation is a condition sine qua non for RGC and Gervel to demand reimbursement from Qua under the Indemnity Agreements.
• Novation: Whether novation of the surety agreements signed by the parties and the creditors occurred, and whether such novation is material to the dispute.

• Estoppel: Estoppel does not apply. The essential elements of estoppel in pais are absent because there was no intent to falsely represent or conceal facts, and petitioners did not rely on Qua's statements to their prejudice. Furthermore, Qua's statements in the collection case do not constitute judicial admissions in the foreclosure case, as judicial admissions must be made in the same case.
• Reimbursement Condition: Payment of the entire obligation is not a condition sine qua non for reimbursement, as the Agreements constitute indemnity against liability. However, reimbursement is available only if the paying solidary debtor's payment exceeded his proportionate share. Because RGC and Gervel's combined share was 57.78% of the total obligation (P14,200,854.37), their payment of P8,730,543.55 was less than their share. Consequently, they cannot seek reimbursement from Qua.
• Novation: No novation occurred. The creditors' election to proceed against only some solidary debtors for their proportionate shares is a valid exercise of discretion under Article 1216 of the Civil Code and does not alter the terms of the Indemnity Agreements or create complete incompatibility in the mode of payment.

• Indemnity Against Liability vs. Indemnity Against Loss — A contract of indemnity against loss renders the indemnitor liable only upon actual payment or loss sustained by the indemnitee, whereas a contract of indemnity against liability becomes operative as soon as the liability of the person indemnified arises, irrespective of actual loss. The Agreements in this case were contracts of indemnity against liability, allowing reimbursement upon the fixing of liability, not merely upon full payment.
• Reimbursement Among Solidary Debtors — A solidary debtor who pays the obligation in part can recover reimbursement from co-debtors only to the extent that his payment exceeded his share in the obligation. Payment of an amount equal to or less than one's proportionate share yields no right of reimbursement, as the debtor merely pays what is due from him.
• Judicial Admissions — An admission, verbal or written, made by a party in the course of the proceedings in the same case does not require proof. To constitute a judicial admission, the admission must be made in the same case in which it is offered; if made in another case, it must be proved like any other fact.

• "If a solidary debtor pays the obligation in part, he can recover reimbursement from the co-debtors only in so far as his payment exceeded his share in the obligation. This is precisely because if a solidary debtor pays an amount equal to his proportionate share in the obligation, then he in effect pays only what is due from him."
• "The agreement here sued upon is not only one of indemnity against loss but of indemnity against liability. While the first does not render the indemnitor liable until the person to be indemnified makes payment or sustains loss, the second becomes operative as soon as the liability of the person indemnified arises irrespective of whether or not he has suffered actual loss."

• Associated Insurance & Surety Co., Inc. v. Chua, 7 SCRA 52 (1963) — Followed. Distinguished between indemnity against loss and indemnity against liability, establishing that the latter allows recovery upon the arising of liability, not just upon actual loss.

• Article 1217, Civil Code — Governs payment by a solidary debtor and the right to claim the corresponding share from co-debtors with interest. Applied to establish that reimbursement is proper only when a co-debtor pays more than his share.
• Article 1216, Civil Code — Allows the creditor to proceed against any one of the solidary debtors or some or all of them simultaneously. Applied to explain that the creditors' election to proceed against only RGC and Gervel for their proportionate shares did not constitute novation.
• Article 1292, Civil Code — Provides that novation requires an unequivocal declaration or complete incompatibility between the old and new obligations. Applied to rule out novation, as the terms of the Agreements remained the same and the creditors' partial collection did not create incompatibility.
• Section 4, Rule 129, Rules of Court — Defines judicial admissions as those made in the same case, which do not require proof. Applied to deny the effect of judicial admission to Qua's statements in a different case.
• Article 2087, Civil Code — States that upon the due date of the principal obligation, the pledged property may be alienated for payment to the creditor. Cited to emphasize that the foreclosure of the pledge was invalid due to the lack of a principal reimbursement obligation.

Davide, Jr., C.J., Quisumbing, Ynares-Santiago, and Azcuna, JJ.