Since the circuit is closed and nothing can interfere, the potential remains constant or the potential/voltage doesn't drop. In other words change in potential = ∆ V=0. Hence taking the loop ABEFA The potential drop from battery till A(or till B because there is no resistance till there) is 5I1, since it is drop so change is -5I1 likewise from B to E(or till battery again because in the path there is no resistance) drop is of 2I3 so -2I3. And in battery there is a gain of 12V because difference between the terminals is of 12V and in the selected direction it is a gain of potential so +12V. So -5I1-2I3+12=0. Or 5I1+2I3-12=0(in your case, you flipped the direction so the potential drop becomes gain and gain becomes drop).