GR 117660; (December, 2000) (Digest)
G.R. No. 117660; December 18, 2000
AGRO CONGLOMERATES, INC. and MARIO SORIANO, petitioners, vs. THE HON. COURT OF APPEALS and REGENT SAVINGS and LOAN BANK, INC., respondents.
FACTS
Petitioner Agro Conglomerates, Inc., through its President Mario Soriano, sold parcels of land to Wonderland Food Industries, Inc. The purchase price included a balance to be paid in installments. An Addendum to their Memorandum of Agreement was executed, wherein Wonderland authorized Agro to obtain a loan from respondent Regent Savings and Loan Bank to cover the initial cash payment and prepaid interest. The Addendum stipulated that while the loan would be in Agro’s name, Wonderland undertook to pay it. Consequently, petitioner Soriano signed several promissory notes in favor of the bank, which released the loan proceeds to petitioners. Wonderland failed to pay the bank, and the underlying sale was eventually rescinded.
Petitioners subsequently defaulted on the promissory notes. Despite extensions granted by the bank, they failed to settle their obligations. Respondent bank filed three complaints for collection of sums of money before the Regional Trial Court. The trial court ruled in favor of the bank, a decision affirmed by the Court of Appeals. Petitioners now argue that under the Addendum, Wonderland was the principal debtor and they were merely accommodation parties, thus liability should fall on Wonderland.
ISSUE
Whether petitioners, as makers of the promissory notes, are liable to respondent bank for the loan proceeds despite the Addendum purportedly making Wonderland the principal debtor.
RULING
Yes, petitioners are solidarily liable to the bank. The Supreme Court denied the petition and affirmed the appellate court’s decision. The legal logic rests on the nature of promissory notes as negotiable instruments and the principle of relativity of contracts. The promissory notes, signed by petitioner Soriano as maker, are clear, unconditional promises to pay a sum certain to the order of the respondent bank. As between the immediate parties to the instrument, the maker is primarily liable. The Addendum, which petitioners claim made Wonderland the true debtor, is a separate agreement between Agro, Wonderland, and the bank. However, this arrangement does not bind the bank to look solely to Wonderland for payment, as the notes themselves create direct liability.
The Court emphasized that petitioners received and benefited from the loan proceeds. Having enjoyed the benefit, they cannot evade the concomitant obligation to repay. The rescission of the sale to Wonderland is a matter strictly between petitioners and Wonderland; it does not affect their direct contractual obligation to the bank under the notes. Petitioners’ remedy, if any, is to seek reimbursement from Wonderland, but they remain primarily and solidarily liable to the respondent creditor-bank. The defense that they signed only as accommodation parties for Wonderland is unavailing against the bank, a holder for value who was not privy to that internal arrangement and who relied on the face of the instruments.