Escaño v.

Ortigas
G.R. No. 151953. June 29, 2007.
FACTS: Falcon Minerals, Inc. (Falcon) obtained a loan from Private Development Corporation
of the Philippines (PDCP) in the amount of US$320,000.00 wherein three stockholders-officers
of Falcon, namely: respondent Rafael Ortigas, George A. Scholey and George T. Scholey
executed an Assumption of Solidarity Liability for the payment of the loan. Control of Falcon was
then ceded to petitioners Salvador Escaño, Mario Silos and Joseph Matti. Thus, Ortigas,
Scholey and Inductivo assigned their shares of stock in Falcon to Escaño, Silos and Matti with
the consideration that Ortigas, et. al. be relieved of all liability arising from the loan with PDCP.
Thus, an Undertaking dated 11 June 1982 was executed with Escaño, Silos and Matti as
“Sureties” and Ortigas, Scholey and Inductivo as “Obligors” wherein “Sureties agree and
undertake to assume all of Obligors’ said guarantees to PDCP and PAIC under the following
terms and conditions: (a) Obligors shall immediately inform Sureties of any demand for the
payment of Falcon’s obligations from PDCP and/or PAIC; (b) Sureties agree to defend Obligors
at their own expense, without prejudice to any and/or all of Obligors impleading Sureties; and (c)
Sureties shall reimburse Obligors for any amount made to pay.”
Falcon defaulted in its payment and despite foreclosure of chattel mortgage, there remained a
subsisting deficiency of P5,031,004.07. PDCP filed a complaint for sum of money against
Falcon, Ortigas, Escaño, Silos, Silverio and Inductivo. Ortigas filed a cross-claim against his co-
defendants Escaño and Silos, predicated on the 1982 Undertaking. Escaño, Ortigas and Silos
each entered into a compromise agreement with PDCP. However, Ortigas allegedly did so
without the knowledge of Escano, Silos and Matti and agreed to pay to PDCP P1,300,000.00 as
“full satisfaction of PDCP’s claim” against him in exchange for his release from any liability or
claim arising therefrom. Thereafter, Ortigas filed a motion for Summary Judgment against
Escaño et. al. on the basis of the 1982 Undertaking which they did not deny. RTC ordered
Escano, et. al. to pay Ortigas jointly and severally the amount of P1.3M . CA affirmed.
ISSUE: Whether Escaño and Silos are jointly and severally liable to Ortigas
RULING: No. Escaño and Silos are only jointly liable to Ortigas in the amount of P1.3M.
Under Article 1207 and Article 1210 of the Civil Code, the presumption is that the obligation is
only joint where there is concurrence of two or more creditors/debtors in one obligation and
there is no express terms characterizing it as solidary. In the case, the 1982 Undertaking does
not contain any express stipulation that Escaño and Silos agreed "to bind themselves jointly and
severally". Hence, such obligation is presumed only to be joint.
In a suretyship, the rights to indemnification and subrogation as granted to guarantors by
Articles 2066 and 2067 extend as well to sureties as defined under Article 2047. Thus, the
surety who pays the creditor has the right to recover the full amount paid from the principal
debtor/s. In the case of joint and several debtors, Article 1217 provides that the solidary
debtor who effected the payment to the creditor "may claim from his co-debtors only the share
which corresponds to each”.
In the case, Ortigas claims that petitioners Escaño and Silos, and Matti identified themselves as
“Sureties” in the 1982 Undertaking which establishes their solidary obligation. However,
notwithstanding the use of the nomenclature “Sureties”, the obligations do not partake of the
nature of a suretyship. It does not appear in the Undertaking that there was agreement between
Escano, Silos and Matti that one of them was to act as surety and pay Ortigas in full which
would have created a solidary obligation and make the agreement a suretyship. The mere
utilization of the term "SURETIES" could not work to such effect, especially as it does not
appear who exactly is the principal debtor whose obligation is "assured" or "guaranteed" by the
surety.