NEGO DIGESTS

09 Republic Planters Bank v. CA

G.R. No. 93073. December 21, 1992
Ponente: CAMPOS, JR., J.:
Facts: Defendants Shozo Yamaguchi and Fermin Canlas President/Chief Operating Officer and
Treasurer respectively, of Worldwide Garment Manufacturing, Inc. They applied for credit
facilities with petitioner bank Republic Planters Bank. Petitioner bank issued nine promissory
notes, marked as Exhibits A to I inclusive, each of which were uniformly worded in the
following manner: “_____, after date, for value received, I/we, jointly and severally promise to
pay to the ORDER of the REPUBLIC PLANTERS BANK, at its office in Manila, Philippines,
the sum of____ PESOS ( ), Philippine Currency.”
Thereafter, Worldwide Garment changed its name to Pinch Manufacturing Corporation.
However, they failed to pay the nine promissory notes issued to them by petitioner-bank. This
prompted the petitioner to file for recovery of the funds subject of the promissory notes plus
legal fees. Fermin Canlas, alleged that he is not solidarily liable with the failure to pay the
promissory notes.
Issue: Whether respondent Fermin Canlas is solidarily liable on each of the promissory notes
bearing his signature
Held: Yes
Ruling: Under the Negotiable Instruments Law, persons who write their names on the face
of promissory notes are makers and are liable as such. By signing the notes, the maker
promises to pay to the order of the payee or any holder according to the tenor thereof.
Based on the above provisions of law, there is no denying that private respondent Fermin Canlas
is one of the co-makers of the promissory notes. As such, he cannot escape liability arising
therefrom.
Where an instrument containing the words “I promise to pay” is signed by two or
more persons, they are deemed to be jointly and severally liable thereon. An instrument
which begins with “I”, “We”, or “Either of us” promise to pay, when signed by two or more
persons, makes them solidarily liable. The fact that the singular pronoun is used indicates that
the promise is individual as to each other; meaning that each of the co-signers is deemed to have
made an independent singular promise to pay the notes in full.
In the case at bar, the solidary liability of private respondent Fermin Canlas is made
clearer and certain, without reason for ambiguity, by the presence of the phrase “joint and
several” as describing the unconditional promise to pay to the order of Republic Planters Bank. A
joint and several note is one in which the makers bind themselves both jointly and
individually to the payee so that all may be sued together for its enforcement, or the
creditor may select one or more as the object of the suit. A joint and several obligation in
common law corresponds to a civil law solidary obligation; that is, one of several debtors
bound in such wise that each is liable for the entire amount, and not merely for his proportionate
share. By making a joint and several promise to pay to the order of Republic Planters Bank,
private respondent Fermin Canlas assumed the solidary liability of a debtor and the payee may
choose to enforce the notes against him alone or jointly with Yamaguchi and Pinch
Manufacturing Corporation as solidary debtors

10 Sps. Evangelista v. Mercator Finance Corp.

G.R. No. 148864. August 21, 2003

Ponente: PUNO, J.:
Facts: Petitioners Sps. Evangelista obtained a loan from respondent Mercator Finance Corp. as
officers for Embassy Farms. With this, they executed a real estate mortgage of five parcels of
land which they personally own, in favor of Mercator. The problem started when they failed to
pay the loan which resulted to the foreclosure of the properties in favor of Mercator. The
petitioners alleged that they have no liability with the loan since they did not personally benefit
from the proceeds of the loan, instead it went to “Embassy Farms”. Thus, they also alleged that
the real estate mortgage as well as the foreclosure of the subject properties should be null and
void. 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 note indicated the following: “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…”
The surety agreement also provides that:
Petitioners also allege that there was ambiguity in the wording of the promissory note.
Issue: Whether or not Sps. Evangelista are solidarily liable with the payment of the promissory
notes, thus their property should not be foreclosed
Held: Yes.
Ruling:
An examination of the promissory note shows no such ambiguity. Besides, assuming arguendo
that there is an ambiguity, Section 17 of the Negotiable Instruments Law states, viz: 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:
(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.
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 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.
Regarding the issue on ambiguity.. An examination of the promissory note shows no such
ambiguity. Besides, assuming arguendo that there is an ambiguity, Section 17 of the Negotiable
Instruments Law states, viz: 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: (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.