Evangelista vs. Mercator Finance Corp.

G.R. No. 148864. August 21, 2003. 409 SCRA 410

FACTS:

Petitioners spouses Evangelista filed a complaint for annulment of titles against

respondents, claiming that they are the registered owners of five parcels of land contained in the
Real Estate Mortgage executed by them and Embassy Farms, Inc. The mortgage was in
consideration of certain loans and credit accommodations amounting to PHP 844,625.78.

PETITIONERS:

Petitioners filed a complaint for annulment of titles against respondents, Mercator

Finance Corporation, Lydia P. Salazar, Lamecs Realty and Development Corporation,
and the Register of Deeds of Bulacan.

Petitioners claimed being the registered owners of five (5) parcels of land contained in
the Real Estate Mortgage executed by them and Embassy Farms, Inc. (Embassy
Farms).

executed the Real Estate Mortgage in favor of Mercator Financing Corporation

(Mercator) only as officers of Embassy Farms.

did not receive the proceeds of the loan evidenced by a promissory note, as all of it
went to Embassy Farms. Thus, they contended that the mortgage was without any
consideration as to them since they did not personally obtain any loan or credit
accommodations. There being no principal obligation on which the mortgage rests, the
real estate mortgage is void.

With the void mortgage, they assailed the validity of the foreclosure proceedings
conducted by Mercator, the sale to it as the highest bidder in the public auction, the
issuance of the transfer certificates of title to it, the subsequent sale of the same parcels
of land to respondent Lydia P. Salazar (Salazar), and the transfer of the titles to her
name, and lastly, the sale and transfer of the properties to respondent Lamecs Realty &
Development Corporation (Lamecs).

RESPONDENT:

Mercator admitted that petitioners were the owners of the subject parcels of land.

It, however, contended that on February 16, 1982, plaintiffs, executed a Mortgage in
favor of defendant Mercator Finance Corporation for and in consideration of certain
loans, and/or other forms of credit accommodations obtained from the Mortgagee
(defendant Mercator Finance Corporation) amounting to PHP 844,625.78 and to secure
 the payment of the same and those others that the MORTGAGEE may extend to the
MORTGAGOR (plaintiffs) x x x.

It contended that since petitioners and Embassy Farms signed the promissory note as
co-makers, aside from the Continuing Suretyship Agreement subsequently executed to
guarantee the indebtedness of Embassy Farms, and the succeeding promissory notes
restructuring the loan, then petitioners are jointly and severally liable with Embassy
Farms.

Due to their failure to pay the obligation, the foreclosure and subsequent sale of the
mortgaged properties are valid.

RTC granted the motion for summary judgment and dismissed the complaint ruling that
petitioners bound themselves as solidary debtors with Embassy Farms. The Court of Appeals
affirmed.

ISSUE:

Whether or not petitioners are jointly liable with Embassy Farms.

RULE OF LAW:

SECTION 17. Construction where instrument is ambiguous. - Where the language of the
instrument is ambiguous or there are omissions therein, the following rules of construction apply:
x x x x xx xx

(g) Where an instrument containing the word I promise to pay is signed by two or more
persons, they are deemed to be jointly and severally liable thereon.

ANALYSIS/APPLICATION:

YES. An examination of the promissory note shows no such ambiguity.

Documentary evidence prove that petitioners are solidary obligors with Embassy Farms.
The note was signed at the bottom by petitioners Eduardo B. Evangelista and Epifania C.
Evangelista and Embassy Farms, Inc. with the signature of Eduardo B. Evangelista below it. The
promissory notes subsequently executed by petitioners and Embassy Farms, restructuring their
loan, likewise prove that petitioners are solidarily liable with Embassy Farms.

Even if petitioners intended to sign the note merely as officers of Embassy Farms, still this
does not erase the fact that they subsequently executed a continuing suretyship agreement. A surety
is one who is solidarily liable with the principal. Petitioners cannot claim that they did not
personally receive any consideration for the contract for well-entrenched is the rule that the
consideration necessary to support a surety obligation need not pass directly to the surety, a
consideration moving to the principal alone being sufficient. A surety is bound by the same
 For value received, I/We jointly and severally promise to pay to
the order of MERCATOR FINANCE CORPORATION at its office,
the principal sum of EIGHT HUNDRED FORTY-FOUR THOUSAND
SIX HUNDRED TWENTY-FIVE PESOS & 78/100 (P 844,625.78),
Philippine currency, x x x, in installments as follows:

September 16, 1982 P154,267.87

October 16, 1982 P154,267.87
November 16, 1982 P154,267.87
December 16, 1982 P154,267.87
January 16, 1983 P154,267.87
February 16, 1983 P154,267.87
x x x x x x x x x.

The note was signed at the bottom by petitioners Eduardo B. Evangelista and Epifania C.

Evangelista and Embassy Farms, Inc. with the signature of Eduardo B. Evangelista below it.

consideration that makes the contract effective between the principal parties thereto. Having
executed the suretyship agreement, there can be no dispute on the personal liability of petitioners.

CONCLUSION:

Therefore, having no such ambiguity in the instrument the Petitioners are solidary obligors
with Embassy farms.