http://www.scribd.com/doc/79343534/Escano-v-Ortigas-Jr Escano v. Ortigas, Jr.

526 SCRA 26 (June 29, 2007) Facts: On April 28, 1980, Private Development Corporation of the Philippines (PDCP) ent ered into a loanagreement with Falcon Minerals, Inc. (Falcon) amounting to $320, 000.00 subject to terms and conditions.[ Nagpautang ang PDCP sa Falcon ng $320K ]On the same day, 3 stockholders-officers of Falcon: Ortigas Jr., George A. Scho ley, and George T. Scholeyexecuted an Assumption of Solidary Liability to assume i n [their] individual capacity, solidary liability with[Falcon] for due and punct ual payment of the loan contracted by Falcon with PDCP. Two (2) separate guarantie s were executed to guarantee payment of the same loan by other stockholdersand o fficers of Falcon, acting in their personal and individual capacities. One guara nty was executed byEscano, Silos, Silverio, Inductivo and Rodriguez. Two years l ater, an agreement developed to cede control of Falcon to Escano, Silos and Matt i. Contractswere executed whereby Ortigas, George A. Scholey, Inductivo and the heirs of then already deceasedGeorge T. Scholey assigned their shares of stock i n Falcon to Escano, Silos and Matti. An Undertakingdated June 11, 1982 was execu ted by the concerned parties, namely: with Escano, Silos and Matti asSURETIES and Or tigas, Inductivo and Scholeys as OBLIGORSFalcon eventually availed of the sum of $17 8,655.59 from the credit line extended by PDCP. It would alsoexecute a Deed of C hattel Mortgage over its personal properties to further secure the loan. However ,Falcon subsequently defaulted in its payments. After PDCP foreclosed on the cha ttel mortgage, thereremained a subsisting deficiency of Php 5,031,004.07 which f alcon did not satisfy despite demand. Issue: Whether the obligation to repay is solidary, as contended by respondent and the lower courts, ormerely joint as argued by petitioners. Held/Ruling: In case, there is a concurrence of two or more creditors or of two or more debto rs in one and thesame obligation, Article 1207 of the Civil Code states that amo ng them, [t]here is a solidary liability onlywhen the obligation expressly so stat es, or when the law or the nature of the obligation requiressolidarity. Article 12 10 supplies further caution against the broad interpretation of solidarity by pr oviding:The indivisibility of an obligation does not necessarily give rise to soli darity. Nor does solidarity of itself imply indivisibility. These Civil Code provi sions establish that in case of concurrence of two or morecreditors or of two or more debtors in one and the same obligation, and in the absence of express andi ndubitable terms characterizing the obligation as solidary, the presumption is t hat the obligation is only joint. It thus becomes incumbent upon the party alleg ing that the obligation is indeed solidary in characterto prove such fact with a preponderance of evidence.Note that Article 2047 itself specifically calls for the application of the provisions on joint andsolidary obligations to suretyship contracts. Article 1217 of the Civil Code thus comes into play,recognizing the right of reimbursement from a co-debtor (the principal debtor, in case of surety ship) infavor of the one who paid ( i.e. , the surety). [ However, a significant distinction still lies between a joint andseveral debtor, on one hand, and a surety on the other. Solidarity signifies that the creditor can compelany one of the joint and several debtors or the surety alone to answer for the entirety of the principal debt. The difference lies in the respective f aculties of the joint and several debtor and the surety to seekreimbursement for the sums they paid out to the creditor. In the case of joint and several debtor s, Article1217 makes plain that the solidary debtor who effected the payment to the creditor may claim from hisco-debtors only the share which corresponds to each, with the interest for the payment alreadymade. Such solidary debtor will not be ab

le to recover from the co-debtors the full amount already paid tothe creditor, b ecause the right to recovery extends only to the proportional share of the other co-debtors,and not as to the particular proportional share of the solidary debt or who already paid. In contrast, even asthe surety is solidarily bound with the principal debtor to the creditor, the surety who does pay the creditorhas the r ight to recover the full amount paid, and not just any proportional share, from the principal debtoror debtors. Such right to full reimbursement falls within th e other rights, actions and benefits which pertainto the surety by reason of the subsidiary obligation assumed by the surety. *Petitioners and Matti are jointly liable to Ortigas, Jr. in the amt. of P1.3M; Legal interest of 12% per annum on P 1.3M computed from March 14, 1994. Assailed rulings are affirmed. Costsagainst petitioners