CASE DIGEST No.

6. Estanislao and Africa Sinamban vs. China Banking Corporation,

a. Doctrine:
If a person binds himself solidarily with the principal debtor,
the provisions of Articles 1207 to 1222 of the CivilCode (Section 4,
Chapter 3, Title I, Book IV) on joint and solidary obligations shall be
observed. Thus, where there is a concurrence of two or
more creditors or of two or more debtors in one and the same
obligation, Article 1207 provides that among them, "[t]here is a
solidary liability only when the obligation expressly so states, or
when the law or the nature of the obligation requires solidarity." It is
settled that when the obligor or obligors undertake to be "jointly and
severally" liable, it means that the obligation is solidary.
Article 1216 of the Civil Code provides that "[t]he creditor may
proceed against any one of the solidary debtors or some or all of
them simultaneously. The demand made against one of them shall
not be an obstacle to those which may subsequently be directed
against the others, so long as the debt has not been fully collected

b. Case Title :

Estanislao and Africa Sinamban vs. China Banking

Corporation, GR. No. 193890, (March 11, 2015)
c. Facts:
The spouses Danilo and Magdalena Manalastas (spouses
Manalastas) executed a Real Estate Mortgage (REM) in favor of
respondent China Banking Corporation (Chinabank) over two real
estate properties to secure a loan from Chinabank as working
capital in their rice milling business. During the next few years, they
executed several amendments to the mortgage contract
progressively increasing their credit line secured by the aforesaid
mortgage. The spouses Manalastas executed several promissory
notes (PNs) in favor of Chinabank. In two of the PNs, petitioners
Estanislao and Africa Sinamban (spouses Sinamban) signed as co-
makers. Spouses Estanislao subsequently failed to pay the
obligation and after the mortgage was foreclosed, there still
remained a 1.7M obligation which prompted Chinabank to file a
Complaint for sum of money against the spouses Manalastas and
the spouses Sinamban (collectively called the defendants) before
the RTC. The complaint alleged that they reneged on their loan
obligations under the PNs which the spouses Manalastas executed
in favor of Chinabank on different dates. They averred that they do
not recall having executed two PN's and had no participation in the
execution of one of the PN. They however admitted that they signed
some PN forms as co-makers upon the request of the spouses
Manalastas who are their relatives; although they insisted that they
derived no money or other benefits from the loans. They denied
knowing about the mortgage security provided by the spouses
 Manalastas, or that the latter defaulted on their loans. They also
refused to acknowledge the loan deficiency of P1,758,427.87 on the
PNs, insisting that the mortgage collateral was worth more than
P10,000,000.00, enough to answer for all the loans, interests and
penalties. They also claimed that they were not notified of the
auction sale, and denied that they knew about the Certificate of
Sale and the Statement of Account and insisted that Chinabank
manipulated the foreclosure sale to exclude them therefrom. By way
of counterclaim, the Spouses Sinamban prayed for damages and
attorney's fees of 25%, plus litigation expenses and costs of suit.
The Regional Trial Court ruled in favor of Chinabank. Upon
Motion for Reconsideration, the RTC ruled in favor of the
defendansts. The Court of Appeals on the other hand affirmed the
RTC Ruling on the Motion for Reconsideration.

d. Issue/s:

Whether or not the spouses Sinamban are solidarily liable to

the remaining obligation

e. Held:
YES. Supreme Court overturned the ruling of the Court of
Appeals. A co-maker of a PN who binds himself with the maker
"jointly and severally" renders himself directly and primarily liable
with the maker on the debt, without reference to his solvency .
Employing words of common commercial usage and well-accepted
legal significance, the three subject PNs uniformly describe the
solidary nature and extent of the obligation assumed by each of the
defendants in Civil Case No. 11708, to
wit:
"FOR VALUE RECEIVED, I/We jointly and severally promise
to pay to the CHINA BANKING CORPORATION or its order the
sum of PESOS x x x[.]"
If a person binds himself solidarily with the principal debtor,
the provisions of Articles 1207 to 1222 of the Civil Code (Section 4,
Chapter 3, Title I, Book IV) on joint and solidary obligations shall be
observed. Thus, where there is a concurrence of two or more
creditors or of two or more debtors in one and the same obligation,
Article 1207 provides that among them, "[t]here is a solidary liability
only when the obligation expressly so states, or when the law or the
nature of the obligation requires solidarity." It is settled that when
the obligor or obligors undertake to be "jointly and severally" liable,
it means that the obligation is solidary.

In this case, the spouses Sinamban expressly bound

themselves to be jointly and severally, or solidarily, liable with the
principal makers of the PNs, the spouses Manalastas. Article 1216
of the Civil Code provides that "[t]he creditor may proceed against
any one of the solidary debtors or some or all of them
simultaneously. The demand made against one of them shall not be
an obstacle to those which may subsequently be directed against
the others, so long as the debt has not been fully collected." Article
1252 of the Civil Code does not apply, as urged by the petitioners,
because in the said article the situation contemplated is that of a
debtor with several debts due, whereas the reverse is true, with
each solidary debt imputable to several debtors. As the Court has
noted, by deducting the auction proceeds from the aggregate
amount of the three loans due, Chinabank in effect opted to apply
the entire proceeds of the auction simultaneously to all the three
loans. This implies that each PN will assume a pro rata portion of
the resulting deficiency on the total indebtedness as bears upon
each PN's outstanding balance. Contrary to the spouses
Sinamban's insistence, none of the three PNs is more onerous than
the others to justify applying the proceeds according to Article 1254
of the Civil Code,in relation to Articles 1252 and 1253. Since each
loan, represented by each PN, was obtained under a single credit
line extended by Chinabank for the working capital requirements of
the spouses Manalastas' rice milling business, which credit line was
secured also by a single REM over their properties, then each PN is
simultaneously covered by the same mortgage security, the
foreclosure of which will also benefit them proportionately. No PN
enjoys any priority or preference in payment over the others, with
the only difference being that the spouses Sinamban are solidarily
liable for the deficiency on two of them.

              WHEREFORE, the Decision of the Court of Appeals dated

May 19, 2010 in CA-G.R. CV No. 66274 is MODIFIED. The
Decision dated July 30, 1999 and the Order dated December 8,
1999 of the Regional Trial Court of San Fernando City, Pampanga,
Branch 45 in Civil Case No. 11708 are hereby AFFIRMED with
MODIFICATIONS as follows:
 1. Spouses Danilo and Magdalena Manalastas are solidarily
liable for the deficiency amount of 1,388,320.55 (inclusive of
10% attorney’s fees) on Promissory Note No. OACL 634-95
dated April 24, 1995;

2. Spouses Estanislao and Africa Sinamban are solidarily

liable with spouses Danilo and Magdalena Manalastas for the
deficiency amount of ₱249,907.87(inclusive of 10% attorney’s
fees) on Promissory Note No. OACL 636-95 dated May 23,
1995;

3. Estanislao Sinamban and spouses Danilo and Magdalena

Manalastas are solidarily liable for the deficiency amount of
₱120,199.45 (inclusive of 10% attorney’s fees) on Promissory
Note No. CLF 5-93 dated February 26, 1991; and

4. The foregoing amounts shall bear interest at the rate of

twelve percent (12%) per annum from November 18, 1998 to
June 30, 2013, and six percent (6%) per annum from July 1,
2013 until fully paid.

SO ORDERED.