ESCANO and SILOS vs. ORTIGAS, Jr., GR. No.

151953, June 29, 2007 FACTS: Private Development Corporation of the Philippines (PDCP) entered into a loan agreement with Falcon Minerals, Inc. whereby PDCP agreed to make available and lend to Falcon a sum certain. Respondent Rafael Ortigas, Jr., et al., stockholder officers of Falcon, executed an Assumption of Solidary Liability whereby they agreed to assume in their individual capacity, solidary liability with Falcon for the due and punctual payment of the loan contracted by Falcon with PDCP. Two separate guaranties were executed to guarantee the payment of the same loan by other stockholders and officers of Falcon, acting in their personal and individual capacities. One Guaranty was executed by petitioner Salvador Escao, while the other by petitioners Mario M. Silos, Ricardo C. Silverio, et al. Two years later, an agreement developed to cede control of Falcon to Escao, Silos and Joseph M. Matti. Thus, contracts were executed whereby Ortigas, George A. Scholey, Inductivo and the heirs of then already deceased George T. Scholey assigned their shares of stock in Falcon to Escao, Silos and Matti. Part of the consideration that induced the sale of stock was a desire by Ortigas, et al., to relieve themselves of all liability arising from their previous joint and several undertakings with Falcon, including those related to the loan with PDCP. Thus, an Undertaking was executed by the concerned parties with Escao, Silos and Matti identified in the document as sureties, on one hand, and Ortigas, Inductivo and the Scholeys as obligors, on the other. However, Falcon subsequently defaulted in its payments. After PDCP foreclosed on the chattel mortgage, there remained a subsisting deficiency of P5,000,000, which Falcon did not satisfy despite demand. In order to recover the indebtedness, PDCP filed a complaint for sum of money against Falcon, Ortigas, Escao, Silos, Silverio and Inductivo. Ortigas filed together with his

answer a cross-claim against his co-defendants Falcon, Escao and Silos, and also manifested his intent to file a third-party complaint against the Scholeys and Matti. The cross-claim lodged against Escao and Silos was predicated on the 1982 Undertaking, wherein they agreed to assume the liabilities of Ortigas with respect to the PDCP loan. Escao, Ortigas and Silos each sought to seek a settlement with PDCP. The first to come to terms with PDCP was Escao, who entered into a compromise agreement. In exchange, PDCP waived or assigned in favor of Escao 1/3 of its entire claim in the complaint against all of the other defendants in the case. Then Ortigas entered into his own compromise agreement with PDCP, allegedly without the knowledge of Escao, Matti and Silos. Thereby, Ortigas agreed to pay PDCP P1.3M as full satisfaction of the PDCPs claim against Ortigas. Silos and PDCP entered into a Partial Compromise Agreement whereby he agreed to pay P500k in exchange for PDCPs waiver of its claims against him. In the meantime, after having settled with PDCP, Ortigas pursued his claims against Escao, Silos and Matti, on the basis of the 1982 undertaking. He initiated a third-party complaint against Matti and Silos, while he maintained his cross-claim against Escao. RTC issued the Summary Judgment, ordering Escao, Silos and Matti to pay Ortigas, jointly and severally, the amount of P1.3M, as well as P20K in attorneys fees. The trial court ratiocinated that none of the thirdparty defendants disputed the 1982 undertaking. ISSUE: Whether or not petitioners are solidarily liable to respondent Ortigas. Held: Petitioners are not solidarily liable to respondent Ortigas. In case there is a concurrence of two or more creditors or of two or more debtors in one and the same obligation, Article 1207 of the Civil Code states that among

them, there is a solidary liability only when the obligation expressly so states, or when the law or the nature of the obligation requires solidarity. Article 1210 supplies further that the indivisibility of an obligation does not necessarily give rise to solidarity. Nor does solidarity of itself imply indivisibility. Thus, the presumption is that the obligation is only joint. It thus becomes incumbent upon the party alleging that the obligation is indeed solidary in character to prove such fact with a preponderance of evidence. The Undertaking does not contain any express stipulation that the petitioners agreed to bind themselves jointly and severally in their obligations to the Ortigas group, or any such terms to that effect. Hence, such obligation established in the Undertaking is presumed only to be joint. Ortigas, as the party alleging that the obligation is in fact solidary, bears the burden to overcome the presumption of jointness of obligations. He has failed to discharge such burden. The term surety has a specific meaning under our Civil Code. As provided in Article 2047 in a surety agreement the surety undertakes to be bound solidarily with the principal debtor. Thus, a surety agreement is an ancillary contract as it presupposes the existence of a principal contract. It appears that Ortigas argument rests solely on the solidary nature of the obligation of the surety under Article2047. In tandem with the nomenclature sureties accorded to petitioners and Matti in the Undertaking, however, this argument can only be viable if the obligations established in the Undertaking do partake of the nature of a suretyship as defined under Article 2047 in the first place. That clearly is not the case here, notwithstanding the use of the nomenclature sureties in the Undertaking.

Rizal Commercial Banking Corp. vs. Arro

Rizal Commercial Banking Corporation, petitioner, vs. Hon. Jose P. Arro, Judge of the Court of First Instance of Davao, and Residoro Chua, respondents. Date: 31 July 1982 Ponente: De Castro, J. Facts: Private respondent Residoro Chua, with Enrique Go, Sr., executed a comprehensive surety agreement to guaranty, above all, any existing or future indebtedness of Davao Agricultural Industries Corporation (Daicor), and/or induce the bank at any time or from time to time to make loans or advances or to extend credit to said Daicor, provided that the liability shall not exceed ay any time Php100,000.00. A promissory note for Php100,000.00 (for additional capital to the charcoal buy and sell and the activated carbon importation business) was issued in favor of petitioner RCBC payable a month after execution. This was signed by Go in his personal capacity and in behalf of Daicor. Respondent Chua did not sign in said promissory note. As the note was not paid despite demands, RCBC filed a complaint for a sum of money against Daicor, Go and Chua. The complaint against Chua was dismissed upon his motion, alleging that the complaint states no cause of action against him as he was not a signatory to the note and hence he cannot be held liable. This was so despite RCBCs opposition, invoking the comprehensive surety agreement which it holds to cover not just the note in question but also every other indebtedness that Daicor may incur from petitioner bank. RCBC moved for reconsideration of the dismissal but to no avail. Hence, this petition. Issue: WON respondent Chua may be held liable with Go and Daicor under the promissory note, even if he was not a signatory to it, in light of the provisions of the comprehensive surety agreement wherein he bound himself with Go and Daicor, as solidary debtors, to pay existing and future debts of said corporation. Held: Yes, he may be held liable. Order dismissing the complaint against respondent Chua reversed and set aside. Case remanded to court of origin with instruction to set aside motion to dismiss and to require defendant Chua to answer the complaint. Ratio: The comprehensive surety agreement executed by Chua and Go, as president and general manager, respectively, of Daicor, was to cover existing as well as future obligations which Daicor may incur with RCBC. This was only subject to the proviso that their liability shall not exceed at any one time the aggregate principal amount of Php100,000.00. (Par.1 of said agreement).

The agreement was executed to induce petitioner Bank to grant any application for a loan Daicor would request for. According to said agreement, the guaranty is continuing and shall remain in full force or effect until the bank is notified of its termination. During the time the loan under the promissory note was incurred, the agreement was still in full force and effect and is thus covered by the latter agreement. Thus, even if Chua did not sign the promissory note, he is still liable by virtue of the surety agreement. The only condition necessary for him to be liable under the agreement was that Daicor is or may become liable as maker, endorser, acceptor or otherwise. The comprehensive surety agreement signed by Go and Chua was as an accessory obligation dependent upon the principal obligation, i.e., the loan obtained by Daicor as evidenced by the promissory note. The surety agreement unequivocally shows that it was executed to guarantee future debts that may be incurred by Daicor with petitioner, as allowed under NCC Art.2053: A guaranty may also be given as security for future debts, the amount of which is not yet known; there can be no claim against the guarantor until the debt is liquidated. A conditional obligation may also be secured.