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    (Spouses Gaerlan), Executed The Joint and Solidary Agreement (JSA), Whereby The Parties

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    Sean Arcilla
    1) Doroteo Gaerlan and Robert Jaworski obtained loans from Philippine National Bank (PNB) to fund their companies, secured by mortgages and personal guarantees. 2) When the companies defaulted, PNB sought to collect. Gaerlan argued he was released by a previous court decision freeing Jaworski, but the Supreme Court found the cases differed and Gaerlan remained liable as a surety. 3) The Court also rejected Gaerlan's usury claim, finding he provided no evidence the interest rates were actually exorbitant given the circumstances.

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    (Spouses Gaerlan), Executed The Joint and Solidary Agreement (JSA), Whereby The Parties

    Uploaded by

    Sean Arcilla
    84 views2 pages
    1) Doroteo Gaerlan and Robert Jaworski obtained loans from Philippine National Bank (PNB) to fund their companies, secured by mortgages and personal guarantees. 2) When the companies defaulted, PNB sought to collect. Gaerlan argued he was released by a previous court decision freeing Jaworski, but the Supreme Court found the cases differed and Gaerlan remained liable as a surety. 3) The Court also rejected Gaerlan's usury claim, finding he provided no evidence the interest rates were actually exorbitant given the circumstances.

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    1) Doroteo Gaerlan and Robert Jaworski obtained loans from Philippine National Bank (PNB) to fund their companies, secured by mortgages and personal guarantees. 2) When the companies defaulted, PNB sought to collect. Gaerlan argued he was released by a previous court decision freeing Jaworski, but the Supreme Court found the cases differed and Gaerlan remained liable as a surety. 3) The Court also rejected Gaerlan's usury claim, finding he provided no evidence the interest rates were actually exorbitant given the circumstances.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    84 views2 pages

    (Spouses Gaerlan), Executed The Joint and Solidary Agreement (JSA), Whereby The Parties

    Uploaded by

    Sean Arcilla
    1) Doroteo Gaerlan and Robert Jaworski obtained loans from Philippine National Bank (PNB) to fund their companies, secured by mortgages and personal guarantees. 2) When the companies defaulted, PNB sought to collect. Gaerlan argued he was released by a previous court decision freeing Jaworski, but the Supreme Court found the cases differed and Gaerlan remained liable as a surety. 3) The Court also rejected Gaerlan's usury claim, finding he provided no evidence the interest rates were actually exorbitant given the circumstances.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Doroteo C. Gaerlan v.

    Philippine National Bank


    G.R. No. 217356
    September 7, 2016

    Topic Under: Different Kinds of Obligations; Joint and Solidary Obligations

    Facts: Supreme Marine Company (SMCI) and MCG Marine Services (MCG) obtained from
    PNB a 5 year Foreign Currency Deposit Unit (FCDU) term loan of not exceeding $4M and a
    domestic bills purchase line (DBP line) not exceeding P10M. This agreement was signed by
    Robert Jaworski (president of SMCI) and Doroteo Gaerlan (president of MCG) as borrowers and
    Inocencio Deza Jr (EVP of PNB) as lender. The loan had an annual interest rate equivalent to 90-
    day London inter-bank offered rate plus spread of 2.5% from initial drawdown until its full
    payment.

    To secure the loan, Gaerlan and Jaworski executed the Chattel Mortgage with Power of Attomey
    over the an oil tanker and, as additional security and by way of payment to the loan, Gaerlan, as
    president of MGG, executed the Deed of Assignment in favor of PNB, pertaining to its monthly
    income of at least P6,000,000.00 arising from the proceeds of the Consecutive Voyage Charter
    Party between Petron Corporation (Petron) and MGG. To personally guarantee the loan,
    Jaworski and his wife, Evelyn (Spouses Jaworski), together with Gaerlan and his wife Marilen
    (Spouses Gaerlan), executed the Joint and Solidary Agreement (JSA), whereby the parties
    absolutely, unconditionally and irrevocably bound themselves, jointly and severally, to pay PNB
    in case the principal debtors defaulted in the payment of the loan.

    When SMCI and PCG defaulted in the payment of their loan obligation, PNB sent a demand
    letter but it was unheeded.

    To protect its interest, PNB instituted a petition for the extrajudicial foreclosure sale of Spouses
    Gaerlan’s real property.

    Gaerlan filed a complaint before the RTC-QC for the nullification of contracts of loan, real estate
    mortgage and extrajudicial foreclosure sale. Gaerlan alleged that the stipulated interests and
    penalties were must higher than 12% per annum and that all loans secured by the promissory
    notes and real estate mortgage was null and void as they violated the Usury Law and in view of
    the nullity of the contracts of loan and the promissory notes, the real estate mortgage and the
    extrajudicial foreclosure sale were likewise null and void.

    Meanwhile, Spouses Jaworski filed an action for declaratory relief before the RTC-Manila
    contending that Jaworski and Gaerlan had executed a Memorandum of Agreement whereby the
    parties had entered into a business divorce and agreed that the ownership of the oil tanker would
    be transferred to Gaerlan in favor of the latter’s assumption of all the loans extended by PNB.
    RTC-Manila granted the action and released the spouses from their duties and responsibilities
    under the Joint and Solidary Agreement.

    Finally, RTC-QC declared the contracts of loan and extrajudicial foreclosure sale null and void
    and releasing Gaerlan from liability. The RTC-QC stated that because the JSA was declared void
    in the January 13, 2004 Order of the RTC-Manila, the principal obligation, guaranteed by
    the said agreement, and the real estate mortgage were likewise void pursuant to the principle
    of res judicata in the concept of conclusiveness of judgment.

    Issue: Whether the decision of the RTC-Manila, which released Spouses Jaworski from
    liability constitutes res judicata redounding to the benefit of petitioner?

    Held: NO. The DOCTRINE OF RES JUDICATA provides that a final judgment or decree
    on the merits by a court of competent jurisdiction is conclusive of the rights of the parties or
    their privies in all later suits on points and matters determined in the former suit.

    In the present case, neither of the two concepts of res judicata finds relevant application.
    There is no identity of subject matter and cause of action. The case filed in RTC-Manila was
    a complaint for declaratory relief filed by Spouses Jaworski for the extinguishment of their
    liability under the JSA on the basis of the MOA stating their business divorce; whereas the
    present case stemmed from a complaint for nullification of loan contracts, real estate
    mortgage and extrajudicial foreclosure sale questioning the alleged usurious interest
    imposed by PNB and the latter’s non- compliance with the requirements of publication and
    posting of notices.

    Furthermore, nowhere in the said order did it pronounce the entire Joint and Solidary
    Agreement invalid as to render it without force and effect. As surety to the contract of loan,
    Gaerlan’s liability subsists. It must be emphasized that a surety is bound equally and
    absolutely with the principal and his liability is immediate and direct. The Court has no
    alternative but to enforce the contractual stipulations in the manner they have been agreed
    upon and written. It could not relieve the parties from obligations voluntarily assumed
    simply because their contract turned out to be disastrous or unwise investments. Hence, in
    view of the principal borrowers' failure to pay their outstanding obligation upon demand, it
    was proper for PNB to exercise its right to foreclose on the mortgaged property. This right
    of PNB to extrajudicially foreclose on the real estate mortgage is provided under the various
    contracts ofthe parties.

    With respect to the claim of petitioner that the stipulated interest on the contract of loan was
    usurious, the Court finds the same untenable. The law and jurisprudence empowers the
    courts to temper interest rates and penalty charges that are iniquitous, unconscionable and
    exorbitant. In exercising this vested power, however, the Court must consider the
    circumstances of the case for what may be iniquitous and unconscionable in one may be
    totally just and equitable in another.In the present case, petitioner failed to show that the
    stipulated rate of interest was indeed exorbitant. He did not present the Omnibus Agreement
    after the loan contract was restructured or any other evidence to support his claim.

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