GR 152082; (March, 2006) (Digest)
G.R. No. 152082 , March 10, 2006
RAMON R. OLBES and RICARDO R. OLBES, Petitioners, vs. CHINA BANKING CORPORATION, Respondent.
FACTS
Respondent China Banking Corporation extended several loans to Olbes, Ogilvy & Mather, Inc. (OO&M) in 1989-1990, evidenced by promissory notes. Petitioner Ramon Olbes signed as an agent of the borrower corporation, while petitioner Ricardo Olbes’s name was stamped as “co-maker” on four notes. To secure these obligations, both petitioners executed a suretyship agreement on November 12, 1990, jointly and severally guaranteeing OO&M’s indebtedness up to P1,000,000 plus interest and attorney’s fees. After OO&M and the Olbeses defaulted, the bank filed a collection suit.
The Olbeses denied liability. Ricardo claimed he signed the promissory notes only in his corporate capacity and that the “co-maker” stamp was fraudulent. Both argued the suretyship agreement was not explained to them and should not apply retroactively to the pre-existing loan obligations.
ISSUE
Whether petitioners Ramon and Ricardo Olbes are solidarily liable for the loan obligations of OO&M.
RULING
Yes, petitioners are solidarily liable. The Supreme Court affirmed the Court of Appeals’ decision. On the suretyship agreement, the Court held that a surety’s obligation is not strictly limited to future debts unless expressly stipulated. The agreement’s terms—“any and all obligations for which the borrower corporation may then or thereafter be indebted”—clearly encompassed both existing and future loans. Petitioners, as experienced businessmen, are presumed to have understood the contract’s import; their claim of lack of explanation is unavailing.
Regarding Ricardo Olbes’s liability as co-maker, the Court found no evidence of fraud in the stamping of “co-maker” on the notes. The promissory notes were stamped prior to his signing, and the regularity of the transaction is presumed. His failure to exercise ordinary prudence in reading the documents before signing binds him. The factual findings of the lower courts on these points are conclusive. Thus, petitioners are jointly and severally liable with OO&M for the unpaid loan principals and stipulated interests, subject to the disallowance of the escalation clause as modified by the appellate court.