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RepublicofthePhilippines
SUPREMECOURT
Manila

THIRDDIVISION

G.R.No.148864August21,2003

SPOUSESEDUARDOB.EVANGELISTAandEPIFANIAC.EVANGELISTA,Petitioners,
vs.
MERCATORFINANCECORP.,LYDIAP.SALAZAR,LAMEC'S**REALTYANDDEVELOPMENTCORP.andthe
REGISTEROFDEEDSOFBULACAN,Respondents.

DECISION

PUNO,J.:

Petitioners,SpousesEvangelista("Petitioners"),arebeforethisCourtonaPetitionforReviewonCertiorariunder
Rule45oftheRevisedRulesofCourt,assailingthedecisionoftheCourtofAppealsdismissingtheirpetition.

Petitionersfiledacomplaint1forannulmentoftitlesagainstrespondents,MercatorFinanceCorporation,LydiaP.
Salazar,LamecsRealtyandDevelopmentCorporation,andtheRegisterofDeedsofBulacan.Petitionersclaimed
beingtheregisteredownersoffive(5)parcelsofland2containedintheRealEstateMortgage3executedbythem
andEmbassyFarms,Inc.("EmbassyFarms").TheyallegedthattheyexecutedtheRealEstateMortgageinfavor
of Mercator Financing Corporation ("Mercator") only as officers of Embassy Farms. They did not receive the
proceedsoftheloanevidencedbyapromissorynote,asallofitwenttoEmbassyFarms.Thus,theycontended
thatthemortgagewaswithoutanyconsiderationastothemsincetheydidnotpersonallyobtainanyloanorcredit
accommodations. There being no principal obligation on which the mortgage rests, the real estate mortgage is
void.4Withthevoidmortgage,theyassailedthevalidityoftheforeclosureproceedingsconductedbyMercator,
thesaletoitasthehighestbidderinthepublicauction,theissuanceofthetransfercertificatesoftitletoit,the
subsequentsaleofthesameparcelsoflandtorespondentLydiaP.Salazar("Salazar"),andthetransferofthe
titlestohername,andlastly,thesaleandtransferofthepropertiestorespondentLamecsRealty&Development
Corporation("Lamecs").

Mercatoradmittedthatpetitionersweretheownersofthesubjectparcelsofland.It,however,contendedthat"on
February16,1982,plaintiffsexecutedaMortgageinfavorofdefendantMercatorFinanceCorporationforandin
consideration of certain loans, and/or other forms of credit accommodations obtained from the Mortgagee
(defendant Mercator Finance Corporation) amounting to EIGHT HUNDRED FORTYFOUR THOUSAND SIX
HUNDREDTWENTYFIVE&78/100(P844,625.78)PESOS,PhilippineCurrencyandtosecurethepaymentofthe
sameandthoseothersthattheMORTGAGEEmayextendtotheMORTGAGOR(plaintiffs)xxx."5Itcontended
thatsincepetitionersandEmbassyFarmssignedthepromissorynote6ascomakers,asidefromtheContinuing
Suretyship Agreement7 subsequently executed to guarantee the indebtedness of Embassy Farms, and the
succeedingpromissorynotes8restructuringtheloan,thenpetitionersarejointlyandseverallyliablewithEmbassy
Farms.Duetotheirfailuretopaytheobligation,theforeclosureandsubsequentsaleofthemortgagedproperties
arevalid.

RespondentsSalazarandLamecsassertedthattheyareinnocentpurchasersforvalueandingoodfaith,relying
onthevalidityofthetitleofMercator.Lamecsadmittedthepriorownershipofpetitionersofthesubjectparcelsof
land,butallegedthattheyarethepresentregisteredowner.Bothrespondentslikewiseassailedthelongsilence
and inaction by petitioners as it was only after a lapse of almost ten (10) years from the foreclosure of the
propertyandthesubsequentsalesthattheymadetheirclaim.Thus,SalazarandLamecsaverredthatpetitioners
areinestoppelandguiltyoflaches.9

Duringpretrial,thepartiesagreedonthefollowingissues:

a. Whether or not the Real Estate Mortgage executed by the plaintiffs in favor of defendant Mercator
FinanceCorp.isnullandvoid
b.Whetherornottheextrajudicialforeclosureproceedingsundertakenonsubjectparcelsoflandtosatisfy
theindebtednessofEmbassyFarms,Inc.is(sic)nullandvoid

c.WhetherornotthesalemadebydefendantMercatorFinanceCorp.infavorofLydiaSalazarandthat
executedbythelatterinfavorofdefendantLamecsRealtyandDevelopmentCorp.arenullandvoid

d.Whetherornotthepartiesareentitledtodamages.10

Afterpretrial,Mercatormovedforsummaryjudgmentonthegroundthatexceptastotheamountofdamages,
there is no factual issue to be litigated. Mercator argued that petitioners had admitted in their pretrial brief the
existence of the promissory note, the continuing suretyship agreement and the subsequent promissory notes
restructuring the loan, hence, there is no genuine issue regarding their liability. The mortgage, foreclosure
proceedingsandthesubsequentsalesarevalidandthecomplaintmustbedismissed.11

PetitionersopposedthemotionforsummaryjudgmentclaimingthatbecausetheirpersonalliabilitytoMercatoris
atissue,thereisaneedforafullblowntrial.12

TheRTCgrantedthemotionforsummaryjudgmentanddismissedthecomplaint.Itheld:

Areadingofthepromissorynotesshow(sic)thattheliabilityofthesignatoriestheretoaresolidaryinviewofthe
phrase "jointly and severally." On the promissory note appears (sic) the signatures of Eduardo B. Evangelista,
EpifaniaC.EvangelistaandanothersignatureofEduardoB.EvangelistabelowthewordsEmbassyFarms,Inc.It
iscrystalclearthenthattheplaintiffsspousessignedthepromissorynotenotonlyasofficersofEmbassyFarms,
Inc.butintheirpersonalcapacityaswell(.)Plaintiffs(,)byaffixingtheirsignaturesthereoninadualcapacityhave
bound themselves as solidary debtor(s) with Embassy Farms, Inc. to pay defendant Mercator Finance
Corporationtheamountofindebtedness.Thattheprincipalcontractofloanisvoidforlackofconsideration,inthe
lightoftheforegoingisuntenable.13

Petitioners motion for reconsideration was denied for lack of merit.14 Thus, petitioners went up to the Court of
Appeals,butagainwereunsuccessful.Theappellatecourtheld:

Theappellantsinsistencethattheloanssecuredbythemortgagetheyexecutedwerenotpersonallytheirsbut
those of Embassy Farms, Inc. is clearly selfserving and misplaced. The fact that they signed the subject
promissory notes in the(ir) personal capacities and as officers of the said debtor corporation is manifest on the
very face of the said documents of indebtedness (pp. 118, 128131, Orig. Rec.). Even assuming arguendo that
theydidnot,theappellantslosesightofthefactthatthirdpersonswhoarenotpartiestoaloanmaysecurethe
latterbypledgingormortgagingtheirownproperty(Lustanvs.CourtofAppeals,266SCRA663,675).xxx.In
constituting a mortgage over their own property in order to secure the purported corporate debt of Embassy
Farms, Inc., the appellants undeniably assumed the personality of persons interested in the fulfillment of the
principalobligationwho,tosavethesubjectrealitiesfromforeclosureandwithaviewtowardsbeingsubrogated
totherightsofthecreditor,werefreetodischargethesamebypayment(Articles1302[3]and1303,CivilCode
ofthePhilippines).15(emphasesintheoriginal)

The appellate court also observed that "if the appellants really felt aggrieved by the foreclosure of the subject
mortgageandthesubsequentsalesoftherealtiestootherparties,whythendidtheycommencethesuitonlyon
August12,1997(whenthecertificateofsalewasissuedonJanuary12,1987,andthecertificatesoftitleinthe
name of Mercator on September 27, 1988)?" Petitioners "procrastination for about nine (9) years is difficult to
understand.Onsoflimsyagroundaslackofconsideration,(w)emayevenventuretosaythatthecomplaintwas
notworththetimeofthecourts."16

Amotionforreconsiderationbypetitionerswaslikewisedeniedforlackofmerit.17Thus,thispetitionwherethey
allegethat:

The court a quo erred and acted with grave abuse of discretion amounting to lack or excess of jurisdiction in
affirming in toto the May 4, 1998 order of the trial court granting respondents motion for summary judgment
despitetheexistenceofgenuineissuesastomaterialfactsanditsnonentitlementtoajudgmentasamatterof
law, thereby deciding the case in a way probably not in accord with applicable decisions of this Honorable
Court.18

weaffirm.

Summaryjudgment"isaproceduraltechniqueaimedatweedingoutshamclaimsordefensesatanearlystage
of the litigation."19 The crucial question in a motion for summary judgment is whether the issues raised in the
pleadingsaregenuineorfictitious,asshownbyaffidavits,depositionsoradmissionsaccompanyingthemotion.A
genuineissuemeans"anissueoffactwhichcallsforthepresentationofevidence,asdistinguishedfromanissue
whichisfictitiousorcontrivedsoasnottoconstituteagenuineissuefortrial."20Toforestallsummaryjudgment,it
is essential for the nonmoving party to confirm the existence of genuine issues where he has substantial,
plausible and fairly arguable defense, i.e., issues of fact calling for the presentation of evidence upon which a
reasonablefindingoffactcouldreturnaverdictforthenonmovingparty.Theproperinquirywouldthereforebe
whether the affirmative defenses offered by petitioners constitute genuine issue of fact requiring a fullblown
trial.21

Inthecaseatbar,therearenogenuineissuesraisedbypetitioners.Petitionersdonotdenythattheyobtaineda
loanfromMercator.TheymerelyclaimthattheygottheloanasofficersofEmbassyFarmswithoutintendingto
personallybindthemselvesortheirproperty.However,asimpleperusalofthepromissorynoteandthecontinuing
suretyshipagreementshowsotherwise.Thesedocumentaryevidenceprovethatpetitionersaresolidaryobligors
withEmbassyFarms.

Thepromissorynote22states:

For value received, I/We jointly and severally promise to pay to the order of MERCATOR FINANCE
CORPORATIONatitsoffice,theprincipalsumofEIGHTHUNDREDFORTYFOURTHOUSANDSIXHUNDRED
TWENTYFIVEPESOS&78/100(P844,625.78),Philippinecurrency,xxx,ininstallmentsasfollows:

September16,1982 P154,267.87
October16,1982 P154,267.87
November16,1982 P154,267.87

December16,1982 P154,267.87
January16,1983 P154,267.87
February16,1983 P154,267.87

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The note was signed at the bottom by petitioners Eduardo B. Evangelista and Epifania C. Evangelista, and
EmbassyFarms,Inc.withthesignatureofEduardoB.Evangelistabelowit.

TheContinuingSuretyshipAgreement23alsoprovesthesolidaryobligationofpetitioners,viz:

(EmbassyFarms,Inc.)
Principal

(EduardoB.Evangelista)
Surety

(EpifaniaC.Evangelista)
Surety

(MercatorFinanceCorporation)
Creditor

To:MERCATORFINANCECOPORATION

(1) For valuable and/or other consideration, EDUARDO B. EVANGELISTA and EPIFANIA C.
EVANGELISTA(hereinaftercalledSurety),jointlyandseverallyunconditionallyguarantees(sic)
to MERCATOR FINANCE COPORATION (hereinafter called Creditor), the full, faithful and
prompt payment and discharge of any and all indebtedness of EMBASSY FARMS, INC.
(hereinaftercalledPrincipal)totheCreditor.

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(3)Theobligationshereunderarejointandseveralandindependentoftheobligationsofthe
Principal. A separate action or actions may be brought and prosecuted against the Surety
whetherornottheactionisalsobroughtandprosecutedagainstthePrincipalandwhetheror
notthePrincipalbejoinedinanysuchactionoractions.

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TheagreementwassignedbypetitionersonFebruary16,1982.Thepromissorynotes24subsequentlyexecuted
bypetitionersandEmbassyFarms,restructuringtheirloan,likewiseprovethatpetitionersaresolidarilyliablewith
EmbassyFarms.

Petitionersfurtherallegethatthereisanambiguityinthewordingofthepromissorynoteandclaimthatsinceit
wasMercatorwhoprovidedtheform,thentheambiguityshouldberesolvedagainstit.

Courts can interpret a contract only if there is doubt in its letter.25 But, an examination of the promissory note
showsnosuchambiguity.Besides,assumingarguendothatthereisanambiguity,Section17oftheNegotiable
InstrumentsLawstates,viz:

SECTION17.Constructionwhereinstrumentisambiguous.Wherethelanguageoftheinstrumentisambiguous
orthereareomissionstherein,thefollowingrulesofconstructionapply:

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(g) Where an instrument containing the word "I promise to pay" is signed by two or more persons, they are
deemedtobejointlyandseverallyliablethereon.

Petitionersalsoinsistthatthepromissorynotedoesnotconveytheirtrueintentinexecutingthedocument. The 1 w p h i1

defenseisunavailing.EvenifpetitionersintendedtosignthenotemerelyasofficersofEmbassyFarms,stillthis
doesnoterasethefactthattheysubsequentlyexecutedacontinuingsuretyshipagreement.Asuretyisonewho
is solidarily liable with the principal.26 Petitioners cannot claim that they did not personally receive any
considerationforthecontractforwellentrenchedistherulethattheconsiderationnecessarytosupportasurety
obligation need not pass directly to the surety, a consideration moving to the principal alone being sufficient. A
surety is bound by the same consideration that makes the contract effective between the principal parties
thereto.27 Having executed the suretyship agreement, there can be no dispute on the personal liability of
petitioners.

Lastly,theparolevidenceruledoesnotapplyinthiscase.28WeheldinTarnatev.CourtofAppeals,29thatwhere
the parties admitted the existence of the loans and the mortgage deeds and the fact of default on the due
repayments but raised the contention that they were misled by respondent bank to believe that the loans were
longterm accommodations, then the parties could not be allowed to introduce evidence of conditions allegedly
agreed upon by them other than those stipulated in the loan documents because when they reduced their
agreement in writing, it is presumed that they have made the writing the only repository and memorial of truth,
andwhateverisnotfoundinthewritingmustbeunderstoodtohavebeenwaivedandabandoned.

INVIEWWHEREOF,thepetitionisdismissed.Treblecostsagainstthepetitioners.

SOORDERED.

Panganiban,andSandovalGutierrez,JJ.,concur.
Corona,andCarpioMorales,JJ.,onofficialleave.

Footnotes

**SometimesspelledasLamecs.

1RTCofMalolos,Bulacan,Br.85,Rollo,pp.2329.

2 With Transfer Certificates of Title Nos. T193458, T192133, T193136, T193137 and T193138 Id. at
3039.

3Id.at40.

4Id.at26.

5Id.at63.

6Id.at71.

7Id.at7273.

8Id.at8083.
9Id.at8597.

10Id.at118.

11Id.at119123.

12Id.at128131.

13Id.at134,datedMay4,1998.

14Id.at159,datedJuly17,1998.

15Id.at222223,DecisiondatedMay12,2000.

16Id.at223.

17Id.at234,datedMay14,2001.

18Id.at12.

19EvadelRealtyandDevelopmentCorporationv.Soriano,357SCRA395(2001).

20 Manufacturers Hanover Trust Co. and/or Chemical Bank v. Rafael Ma. Guerrero, G.R. No. 136804,
February19,2003.

21 Spouses Guillermo Agbada & Maxima Agbada v. Interurban Developers, et al., G.R. No. 144029,
September19,2002.
22Rollo,p.71.

23Id.at7273.

24Id.at8083.

25Article1370.Ifthetermsofacontractareclearandleavenodoubtupontheintentionofthecontracting
parties,theliteralmeaningofitsstipulationsshallcontrol.(CivilCodeofthePhilippines)OngYong,etal.,v.
DavidS.Tiu,etal.,G.R.Nos.144476&144629,February1,2002.
26Goldenrod,Incorporatedv.CourtofAppeals,366SCRA217(2001).

27CharlesLeev.CourtofAppeals,etal.,G.R.Nos.11791314,February1,2002.

28 SEC. 9. Evidence of written agreements When the terms of an agreement have been reduced to
writing,itisconsideredascontainingallthetermsagreeduponandtherecanbe,betweenthepartiesand
theirsuccessorsininterest,noevidenceofsuchtermsotherthanthecontentsofthewrittenagreement.

However, a party may present evidence to modify, explain or add to the terms of the written
agreementifheputsinissueinhispleading:

(a)Anintrinsicambiguity,mistakeorimperfectioninthewrittenagreement

(b)Thefailureofthewrittenagreementtoexpressthetrueintentandagreementoftheparties
thereto

(c)Thevalidityofthewrittenagreementor

(d)Theexistenceofothertermsagreedtobythepartiesoftheirsuccessorsininterestafter
theexecutionofthewrittenagreement.

Theterm"agreement"includeswills.
29241SCRA254(1995).

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