Escaño and Silos vs Ortigas Jr.

March 25, 2016

G.R. No. 151953 (2007)

Ponente: J. Tinga

Facts:

1. On April 28, 1980, Private Development Corp. of the Philippines (PDCP) entered into a
loan agreement with the Falcon Minerals, Inc. (Falcon) whereby PDCP agreed to male
available and lend to Falcon the amount of US $320, 000.00 for specific purposes and
subject to certain terms and conditions.
2. Three stockholder officers of the Falcon assumed solidary liability, in their individual
capacity, with Falcon for the due and punctual payment of the loan.
3. Two years later, control of Falcon was ceded to Escaño, Silos and Matti, and the shares
of deceased Scholey, through his heirs Ortigas, Scholey and Inductivo, were assigned to
the three new stock-holders, as well as all of their guaranteed to PDCP and PAIC.
4. On April 28, 1989, PDCP filed a complaint for sum of money with the RTC of Makati. A
counterclaim was filed by Ortigas.
5. The other parties entered into compromise agreement with PDCP. Ortigas pursued his
claim against Escaño, Silos and Matti, and filing a motion for Summary Judgement in his
favor against Escaño, Silos and Matti.
6. The RTC ruled in favor of Ortigas, ordering the three to pay jointly and severally the
amount of P1,300,000.00 as well as P20,000.00 in attorney’s fees.
7. On appeal, the Court of Appeals affirmed the Summary Judgement. Hence, the present
petition for review.

Issue: Whether or not there was solidary obligation.

Ruling:

No. The obligation was joint.

In this 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 caution against the broad
interpretation of solidarity by providing that the indivisibility of an obligation does not
necessarily give rise to solidarity. Nor does solidarity of itself imply indivisibility.

These Civil Code provisions establish that in case of concurrence of two or more creditors or of
two or more debtors in one and the same obligation, and in the absence of express and
indubitable terms characterizing the obligation as solidary, 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. The SC ruled that he failed to discharge such burde

ASE DIGEST: BANK OF COMMERCE and STEPHEN Z. TAALA, Petitioners, v.

Spouses ANDRES and ELIZA FLORES, Respondents. (G.R. No. 174006; December 8,
2010).

FACTS: Respondents are the registered owners of a condominium unit in Quezon City.
Respondents borrowed money from petitioner bank in the amount of (P900,000.00).
Respondents executed a Real Estate Mortgage over the condominium unit as collateral, and the
same was annotated at the back of the CCT. Respondents again borrowed (P1,100,000.00) from
petitioner bank, which was also secured by a mortgage over the same property.

Respondents paid (P1,011,555.54), as evidenced by an Official Receipt issued by petitioner

bank. On the face of the receipt, it was written that the payment was "in full payment of the loan
and interest." Respondents then asked petitioner bank to cancel the mortgage annotations since
the loans secured by the real estate mortgage were already paid in full. However, the bank
refused to cancel the same and demanded payment of (P4,633,916.67), representing the
outstanding obligation of respondents. Petitioner bank applied for extra-judicial foreclosure of
the mortgages over the condominium unit.
Respondents assailed the validity of the foreclosure and auction sale of the property. They
averred that the loans secured by the property had already been paid in full. Petitioner bank
admitted that there were only two (2) mortgage loans annotated at the back of the CCT, but
denied thatrespondents had already fully settled their outstanding obligations with the bank.It
averred that several credit lines were granted by petitioner bank that were secured by promissory
notes executed by him, and which were either increased or extended from time to time.

ISSUE: Was the real estate mortgage over the subject condominium unit a continuing
guaranty for the future loans of respondent spouses despite the full payment of the
principal loans annotated on the title of the subject property?

HELD: A continuing guaranty is a recognized exception to the rule that an action to foreclose a
mortgage must be limited to the amount mentioned in the mortgage contract. A guaranty shall be
construed as continuing when, by the terms thereof, it is evident that the object is to give a
standing credit to the principal debtor to be used from time to time either indefinitely or until
a certain period, especially if the right to recall the guaranty is expressly reserved.

In the instant case, the language of the real estate mortgage unambiguously reveals that the
security provided in the real estate mortgage is continuing in nature. Thus, it was intended as
security for the payment of the loans annotated at the back of the CCT, and as security for all
amounts that respondents may owe petitioner bank.It is well settled that mortgages given to
secure future advance or loans are valid and legal contracts, and that the amounts named as
consideration in said contracts do not limit the amount for which the mortgage may stand as
security if from the four corners of the instrument the intent to secure future and other
indebtedness can be gathered.