G.R. No. 143584 ; March 10, 2004
SPOUSES ANTONIO and SOLEDAD CONSING, petitioners, vs. COURT OF APPEALS and SUGAR PRODUCERS COOPERATIVE MARKETING ASSOCIATION, respondents.

FACTS

Petitioners, sugar-farm landowners, had an agricultural crop loan with the Philippine National Bank (PNB), which included a fertilizer allotment. In 1975, they purchased fertilizers on credit from respondent SPCMA, a cooperative. To secure the transaction, petitioners presented to SPCMA a PNB certification stating they had a fertilizer allotment and a promissory note chargeable against PNB. Relying on these documents, SPCMA delivered the fertilizers. However, when SPCMA later presented the promissory note for payment, PNB dishonored it, stating petitioners no longer had a fertilizer line. SPCMA then filed a collection suit against the petitioners.
The trial court ruled in favor of SPCMA, ordering the spouses to pay the obligation. The Court of Appeals affirmed the decision, rejecting the petitioners’ argument that their obligation was novated or that PNB had assumed responsibility as a guarantor. The petitioners elevated the case to the Supreme Court via a petition for review.

ISSUE

Whether the petitioners are solely and personally liable to SPCMA for the unpaid fertilizer purchases, notwithstanding the PNB certification and promissory note.

RULING

Yes, the petitioners are personally liable. The Supreme Court affirmed the lower courts’ decisions, with a modification on the interest rate. The legal logic is clear: the transaction was a simple contract of sale between petitioners as buyers and SPCMA as seller. The documentary evidence, including invoices and delivery receipts bearing Antonio Consing’s name, established petitioners as the direct purchasers. The PNB certification did not constitute a contract of guaranty. Under Article 2055 of the Civil Code, a guaranty cannot be presumed; it must be express. The certification merely stated PNB would hold proceeds for SPCMA’s account after the allotment was “processed and approved,” which condition never occurred. PNB’s subsequent dishonor of the note did not extinguish petitioners’ primary obligation to SPCMA. The promissory note was merely a mode of payment that failed; it did not novate the principal contract of sale or make PNB a party to that contract. The sellers’ recourse against the buyers for the price remains intact notwithstanding the dishonor of the note intended to secure payment. Thus, petitioners, as the principal debtors under the sales contract, are solidarily liable to pay SPCMA the principal sum of ₱1,243,325.25 with interest at 12% per annum from April 30, 1983, until full payment.