G.R. No. 151953, June 29, 2007
SALVADOR P. ESCAÑO and MARIO M. SILOS, petitioners, vs. RAFAEL ORTIGAS, JR., respondent.

FACTS

Falcon Minerals, Inc. obtained a loan from PDCP. Respondent Rafael Ortigas, Jr., along with others, executed an Assumption of Solidary Liability for the loan. Petitioners Salvador Escaño and Mario Silos, among others, executed separate guaranties. In 1982, Ortigas and other shareholders sold their Falcon shares to Escaño, Silos, and Joseph Matti. As part of the sale, Escaño, Silos, and Matti (as SURETIES) executed an Undertaking agreeing to assume the liabilities of Ortigas and the other sellers (OBLIGORS) concerning the PDCP loan, including a promise to reimburse any OBLIGOR who pays PDCP within seven days.
Falcon defaulted. PDCP sued several parties, including Ortigas, Escaño, and Silos. Ortigas filed a cross-claim against Escaño and Silos based on the 1982 Undertaking. The parties settled separately with PDCP: Escaño paid ₱1M, Ortigas paid ₱1.3M, and Silos paid ₱500,000. After settling, Ortigas sought reimbursement from Escaño, Silos, and Matti for his ₱1.3M payment. The RTC granted summary judgment, ordering them to pay Ortigas jointly and severally. The Court of Appeals affirmed.

ISSUE

Whether the obligation of petitioners Escaño and Silos to reimburse respondent Ortigas under the 1982 Undertaking is solidary or merely joint.

RULING

The Supreme Court ruled that the obligation is solidary. The Undertaking’s terms are clear: the SURETIES (Escaño, Silos, Matti) irrevocably agreed to “assume all of OBLIGORs’ said guarantees” and stipulated that “SURETIES shall reimburse OBLIGORS for said amount/s within seven (7) calendar days from such payment.” The use of the plural “SURETIES” and “OBLIGORS,” coupled with the promise to reimburse “OBLIGORS” (any one of them), indicates a collective commitment where each surety is liable for the whole obligation. This construes a solidary obligation among the sureties in favor of the obligors.
The legal logic is grounded in contract interpretation and the nature of suretyship. Under Article 1207 of the Civil Code, solidarity must be expressly stated. The Court found the Undertaking’s language sufficiently explicit to establish solidary liability among the sureties. As solidary co-sureties, petitioners are each liable for the entire reimbursement to Ortigas. Ortigas’s payment to PDCP extinguished the principal obligation for all, entitling him to seek full reimbursement from any solidary surety. The separate settlements with PDCP did not negate this solidary undertaking among the sureties themselves. Therefore, petitioners are solidarily liable to reimburse Ortigas for the ₱1.3M he paid.