G.R. No. 184041 - ANICETO G. SALUDO, JR., VS. SECURITY BANK CORPORATION.D E C I S I O N - Supreme Court E-Library

Ruling

WHEREFORE, in view of the foregoing considerations, the Court hereby finds in favor of the plaintiff against the defendants by ordering the defendants Booklight, Inc. and Aniceto G. Saludo, Jr., jointly and severally liable (solidarily liable) to plaintiff [sic], the following sums of Philippine Pesos: PN No. Amount Interest Rate (per annum) Beginning--Until fully paid 74/787/98 P1,927,000.00 20.189% November 2, 1998 74/788/98 913,545.00 20.189% November 2, 1998 74/789/98 1,927,090.00 20.189% November 2, 1998 74/791/98 500,000.0 20.178% November 4, 1998 74/792/98 800,000.00 20.178% November 4, 1998 74/793/98 665,000.00 20.178% November 3, 1998 74/808/98 970,000.00 20.178% November 9, 1998 74/822/98 975,000.00 20.178% November 12, 1998 74/823/98 975,000.00 20.178% November 12, 1998 with attorney's fee of P100,000.00 plus cost of suit. [12] The Court of Appeals affirmed in toto the ruling of the RTC. [13] Petitioner filed a motion for reconsideration but it was denied by the Court of Appeals on 7 August 2008. [14] Hence, the instant petition on the following arguments: The first credit facility has a one-year term from 30 June 1996 to 30 June 1997 while the second credit facility runs from 30 October 1997 to 30 October 1998. When the first credit facility expired, its accessory contract, the Continuing Surety agreement likewise expired. The second credit facility is not covered by the Continuing Suretyship, thus, availments made in 1998 by Booklight are not covered by the Continuing Suretyship. The approval of the second credit facility necessitates the consent of petitioner for the latter's Continuing Suretyship to be effective. The nine (9) promissory notes executed and drawn by Booklight in 1998 did not specify that they were drawn against and subject to the Continuing Suretyship. Neither was it mentioned in the Continuing Suretyship that it was executed to serve as collateral to the nine (9) promissory notes. The Continuing Suretyship is a contract of adhesion and petitioner's participation to it is his signing of his contract. The approval of the second credit facility is considered a novation of the first sufficient to extinguish the Continuing Suretyship and discharge petitioner. The 20.178% interest rate imposed by the RTC is unconscionable. [15] The main derivative of these averments is the issue of whether or not petitioner should be held solidarily liable for the second credit facility extended to Booklight. We rule in the affirmative. There is no doubt that Booklight was extended two (2) credit facilities, each with a one-year term, by SBC. Booklight availed of these two (2) credit lines. While Booklight was able to comply with its obligation under the first credit line, it defaulted in the payment of the loan obligation amounting to P9,652,725.00 under the second credit line. There is likewise no dispute that the first credit line facility, with a term from 30 June 1996 to 30 June 1997, was covered by a Continuing Suretyship with petit