SPOUSES EDUARDO B. EVANGELISTA & EPIFANIA C.

EVANGELISTA,
PETITIONERS
VS.
MERCATOR FINANCE

CORP.,

ET AL, RESPONDENTS

GR no. 148864 August 21, 2003

Puno, J.
SV: the spouses executed a mortgage agreement(using their own property) in favour of Mercator
in consideration for the loans obtained by Embassy from Mercator. They werent able to pay on
time and the parcels of land were foreclosed. The spouses are now alleging that they merely
signed the mortgage as officers and not in their personal capacity
SC: they are solidarily liable with Embassy since they signed as co-makers in their personal
capacity. Even if it is alleged that there was ambiguity the NIL provides when the agreement
contains the phrase I promise to pay and is signed by two or more persons, they are deemed to
be jointly and severally liable.

1. The spouses Evangelista filed a complaint for annulment of titles against Mercator,
Lydia P. Salazar, Lamces Realty and development corporation and the register of
deeds of Bulacan.
2. They claim that they are the owners of 5 parcels of land contained in the Real
Estate Mortgage that was executed by them and Embassy Farms, Inc.
a. They alleged that they only signed the mortgage in favour of Mercator as
officers of Embassy
b. They didnt receive anything from the loan as evidenced by the promissory
note, all of it went to embassy.
c. The mortgage was without consideration as to them and because of this
there was no principal obligation, therefore the mortgage is void.
d. The mortgage being void they are now assailing the foreclosure of the
property and its subsequent sale to Salazar and then to Lamecs.
3. Mercators answer: yes, they were the owner of the lands, but the spouses
executed a mortgage in favour of Mercator for and in consideration of the loans
obtained from the latter (P844, 625. 78). Since the spouses and Embassy signed
the note as co-makers, aside from the continuing suretyship agreement executed
to guarantee the indebtedness of Embassy and the succeeding promissory notes
restructuring the loans, the petitioners are jointly and severally liable with Embassy
farms.
4. Salazar and Lamecs: they are innocent purchasers for value and in good faith. Also
the lapse of almost 10 years made the spouses in estoppels and guilty of laches.
5. During pre-trial, the parties agreed on the following issues: a.Whether or not the
Real Estate Mortgage executed by the plaintiffs in favor of defendant Mercator
Finance Corp. is null and void; b.Whether or not the extra-judicial foreclosure
proceedings undertaken on subject parcels of land to satisfy the indebtedness of
Embassy Farms, Inc. is (sic) null and void; c. Whether or not the sale made by
defendant Mercator Finance Corp. in favor of Lydia Salazar and that executed by
the latter in favor of defendant Lamecs Realty and Development Corp. are null and
void; d. Whether or not the parties are entitled to damages.
6. After the pre-trial, Mercator moved for summary judgment on the ground that
except as to the amount of damages, there is no factual issue to be litigated
(sneaky). Since the spouses admitted to the existence of the promissory note, the
continuing suretyship agreement, and the subsequent promissory notes, there is
no genuine issue as to their liability. The mortgage and subsequent foreclosure was
valid and the case must be dismissed.
7. Despite the spouses opposition, RTC granted summary judgment. The 2 signed the

note not only as officers but in their personal capacity as well. They are solidary
debtors with Embassy farms. MR denied
8. CA: affirmed RTC and held that assuming arguendo that they did not sign in their
personal capacity, persons who are not parties to a loan can still secure a debt
using their personal property. Hence this petition
Issue/s:
1. Are they solidarily liable with Embassy Farms? YES
1. There are no genuine issues (an issue of fact which calls for the presentation of
evidence, as distinguished from an issue which is fictitious or contrived so as not to
constitute a genuine issue for trial) in this case. They do not deny that they obtained a
loan. However they claim that they got the loan as officers of Embassy farms and did not
intend to bind themselves or their property. But the promissory note and the continuing
suretyship agreement shows otherwise.
The agreement 1were signed by the spouses and the subsequent promissory notes
restructuring the loans also proved that the spouses are solidarily liable with Embassy
Farms.
They also allege that there was ambiguity in the wording of the promissory note, and
since it was Mercator who provided it, the ambiguity should be resolved against the latter.
SC: there was no ambiguity and even assuming arguendo that there was, Sec. 17 of the
1 For value received, I/We jointly and severally promise to pay to the order of MERCATOR FINANCE
CORPORATION at its office, the principal sum of EIGHT HUNDRED FORTY-FOUR THOUSAND SIX HUNDRED
TWENTY-FIVE PESOS & 78/100 (P 844,625.78), Philippine currency, x x x, in installments as follows:September
16, 1982
P154,267.87
October 16, 1982
P154,267.87
November 16, 1982
P154,267.87
December 16, 1982
P154,267.87
January 16, 1983
P154,267.87
February 16, 1983
P154,267.87
xxx
xxx
x x x.
The note was signed at the bottom by petitioners Eduardo B. Evangelista and Epifania C. Evangelista, and
Embassy Farms, Inc. with the signature of Eduardo B. Evangelista below it.
The Continuing Suretyship Agreement also proves the solidary obligation of petitioners, viz:
(Embassy Farms, Inc.)
Principal
(Eduardo B. Evangelista)
Surety
(Epifania C. Evangelista)
Surety
(Mercator Finance Corporation)
Creditor
To: MERCATOR FINANCE COPORATION
(1) For valuable and/or other consideration, EDUARDO B. EVANGELISTA and EPIFANIA C. EVANGELISTA
(hereinafter called Surety), jointly and severally unconditionally guarantees (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. (hereinafter called Principal) to the Creditor.
xxx
xxx
xxx
(3) The obligations hereunder are joint and several and independent of the obligations of the Principal. A
separate action or actions may be brought and prosecuted against the Surety whether or not the action is
also brought and prosecuted against the Principal and whether or not the Principal be joined in any such
action or actions.
xxx
xxx
x x x.

NIL provides:
SECTION 17. Construction where instrument is ambiguous. Where the language of the
instrument is ambiguous or there are omissions therein, the following rules of construction
apply:
xxx

xxx

xxx

(g) Where an instrument containing the word I promise to pay is signed by two or more
persons, they are deemed to be jointly and severally liable thereon.

The spouses insists that the note did not convey their true intent, but the continuing
suretyship agreement executed by them proves otherwise. Even if they didnt receive any
consideration from the loan, it doesnt matter since they are sureties. The consideration
need not pass directly to the surety.
Petition Dismissed
Justin Benedict A. Moreto