Escaño v. Ortigas, Jr.

Facts: 
PDCP entered into a loan agreement. On the same day, three stockholders-officers of Falcon, namely: respondent Ortigas, GA Scholey and GT executed an Assumption of Solidary Liability whereby they agreed “to assume in their individual capacity, solidary liability with Falcon for the due and punctual payment” of the loan contracted by Falcon with PDCP. Two separate guaranties were executed to guarantee the payment of the same loan by other stockholders and officers of Falcon, acting in their personal and individual capacities. One Guaranty was executed by petitioner Escaño, while the other by petitioner Silos, Silverio, Inductivo, and Rodriguez Rodriguez.

Two years later, an agreement developed to cede (give up) control of Falcon to Escaño, Silos and Joseph M. Matti (Matti). Thus, contracts were executed whereby Ortigas, George A. Scholey, Inductivo and the heirs of then already deceased George T. Scholey assigned their shares of stock in Falcon to Escaño, Silos and Matti. Part of the consideration that induced the sale of stock was a desire by Ortigas, et al., to relieve themselves of all liability arising from their previous joint and several undertakings with Falcon, including those related to the loan with PDCP. Thus, an Undertaking dated 11 June 1982 was executed  Escaño, Silos and Matti identified in the document as “SURETIES,” on one hand, and Ortigas, Inductivo and the Scholeys as “OBLIGORS,” on the other.

Falcon defaulted in its payments. 

PDCP filed a complaint in RTC Makati against Falcon, Ortigas, Escaño, Silos, Silverio and Inductivo. 

RTC issued the Summary Judgment, ordering Escaño, Silos and Matti to pay Ortigas, jointly and severally.

CA dismissed the appeals.

Issue: 

Whether or not the petitioners are liable to Ortigas 

Held: 

Petitioners and Joseph M. Matti are only jointly liable, not jointly and severally, to respondent Rafael Ortigas, Jr. 

An examination of the document reveals several clauses that make it clear that the agreement was brought forth by the desire of Ortigas, Inductivo and the Scholeys to be released from their liability under the loan agreement which release was, in turn, part of the consideration for the assignment of their shares in Falcon to petitioners and Matti. The whereas clauses manifest that Ortigas had bound himself with Falcon for the payment of the loan with PDCP, and that “amongst the consideration for OBLIGORS and/or their principals aforesaid selling is SURETIES’ relieving OBLIGORS of any and all liability arising from their said joint and several undertakings with FALCON.”