AGRO CONGLOMERATES V. SORIANO
348 SCRA 450
FACTS:Petitioner sold to Wonderland Food Industries two parcels of land. They stipulated under a Memorandum of Agreement that the terms of payment would be P1,000,000 in cash, P2,000,000 in shares of stock, and the balance would be payable in monthly installments. Thereafter, an
addendum was executed between them, qualifying the cash payment. Instead of cash payment, the vendee authorized the vendor to obtain a loan from the financier on which the vendee bound itself to pay for. This loan was to cover for the payment of P1,000,000. This addendum was not notarized.
Petitioner Soriano signed as maker the promissory notes payable to the bank. However, the petitioners failed to pay the obligations as they were due. During that time, the bank was in financial distress and this prompted it to endorse the promissory notes for collection. The bank gave ample time to petitioners then to satisfy their obligations.
The trial court held in favor of the bank. It didn't find merit to the contention that Wonderland was the one to be held liable for the promissory notes.
First, there was no contract of sale that materialized. The original agreement was that Wonderland would pay cash and petitioner would deliver possession of the farmlands. But this was changed through an addendum, that petitioner would instead secure a loan and the settlement
of the same would be shouldered by Wonderland.
Petitioners became liable as accommodation parties. They have the right after paying the instrument to seek reimbursement from the party accommodated, since the relation between them has in effect became one of principal and surety.
Furthermore, as it turned out, the contract of surety between Woodland and petitioner was extinguished by the rescission of the contract of sale of the farmland. With the rescission, there was confusion in the persons of the principal debtor and surety. The addendum thereon likewise lost its