Escano Vs Silos Digest
Escano Vs Silos Digest
Escano Vs Silos Digest
Ortigas, Jr
FACTS:
RULING: The petitioners are only JOINTLY liable to Ortigas. The 1982 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.
Article 1207 of the Civil Code states that "[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."
Article 1210 supplies further caution against the broad interpretation of solidarity by
providing: "The indivisibility of an obligation does not necessarily give rise to solidarity. Nor
does solidarity of itself imply indivisibility."
Ortigas points out that the Undertaking uses the word "SURETIES" although the document,
in describing the parties. He argues that the usage of the word SURETIES automatically
makes the petitioners solidarily liable to him. This doesn’t hold candle, however, because
the agreement under the undertaking is not of a surety.
The term "surety" has a specific meaning under our Civil Code. Article 2047 provides the
statutory definition of a surety agreement, thus:
Art. 2047. By guaranty a person, called the guarantor, binds himself to the creditor to fulfill
the obligation of the principal debtor in case the latter should fail to do so.
If a person binds himself solidarily with the principal debtor, the provisions of Section 4,
Chapter 3, Title I of this Book shall be observed. In such case the contract is called a
suretyship. [Emphasis supplied]
However, a significant distinction still lies between a joint and several debtor, on one hand,
and a surety on the other. Solidarity signifies that the creditor can compel any 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 faculties of the joint and several debtor and
the surety to seek reimbursement for the sums they paid out to the creditor.
In the case of solidary debtors, Article 1217 makes plain that the solidary debtor who
effected the payment to the creditor "may claim from his co-debtors only the share
which corresponds to each, with the interest for the payment already made." Such
solidary debtor will not be able to recover from the co-debtors the full amount already paid
to the creditor, because 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 debtor who
already paid.
In contrast, even as the surety is solidarily bound with the principal debtor to the creditor,
the surety who does pay the creditor has the right to recover the full amount paid,
and not just any proportional share, from the principal debtor or debtors.
3. That whether or not SURETIES are able to immediately cause PDCP and PAIC to release
OBLIGORS from their said guarantees [sic], SURETIES hereby irrevocably agree and
undertake to assume all of OBLIGORs’ said guarantees [sic] to PDCP and PAIC under the
following terms and conditions:
a. Upon receipt by any of [the] OBLIGORS of any demand from PDCP and/or PAIC for the
payment of FALCON’s obligations with it, any of [the] OBLIGORS shall immediately inform
SURETIES thereof so that the latter can timely take appropriate measures;
b. Should suit be impleaded by PDCP and/or PAIC against any and/or all of OBLIGORS for
collection of said loans and/or credit facilities, SURETIES agree to defend OBLIGORS at their
own expense, without prejudice to any and/or all of OBLIGORS impleading SURETIES
therein for contribution, indemnity, subrogation or other relief in respect to any of the
claims of PDCP and/or PAIC; and
c. In the event that any of [the] OBLIGORS is for any reason made to pay any amount to
PDCP and/or PAIC, SURETIES shall reimburse OBLIGORS for said amount/s within seven (7)
calendar days from such payment;
4. OBLIGORS hereby waive in favor of SURETIES any and all fees which may be due from
FALCON arising out of, or in connection with, their said guarantees[sic].