45. SECURITY BANK AND TRUST COMPANY, Inc. vs.
RODOLFO of its indebtedness which was approved and without prior notice to
M. CUENCA
DOCTRINE:
An extension granted to the debtor by the creditor without the consent
of the guarantor extinguishes the guaranty. The 1989 Loan Agreement
expressly stipulated that its purpose was to “liquidate,” not to renew or
extend, the outstanding indebtedness. Moreover, respondent did not
sign or consent to the 1989 Loan Agreeement, which had alledgedly
extended the original P8 million credit facility. Hence, his obligation as
a surety should be deemed extinguished, pursuant to Article 2079 of
the Civil Code, which specifically states that “[a]n extension granted to
the debtor by the creditor without the consent of the guarantor
extinguishes the guaranty.
An essential alteration in the terms of a Loan Agreement without the
consent of the surety extinguishes the latter’s obligation. The
submission that only the borrower, not the surety, is entitled to be
notified of any modification in the original loan accommodation is
untenable - such theory is contrary to the to the principle that a surety
cannot assume an obligation more onerous than that of the principal.
That the Indemnity Agreement is a continuing surety does not authorize
the lender to extend the scope of the principal obligation inordinately; A
continuing guaranty is one which covers all transaction, including those
arising in the future, which are within the description or contemplation
of the contract of guaranty, until the expiration or termination thereof.
FACTS:
Security Bank granted a credit line in the amount of 8 million
pesos in favour of Sta. Ines, a corporation engaged in logging
operations and in which Rodolfo Cuenca is the President. In order
to secure payment, Sta. Ines executed a chattel mortgage over some
of its machineries and equipments and as an additional security
Cuenca executed an Indemnity Agreement where he bound himself
jointly and severally with Sta. Ines and without the benefit of
excussion of whatever amount the client may be indebted to the
bank by virtue of aforesaid credit accommodation(s) including the
substitutions, renewals, extensions, increases, amendments,
conversions and revivals of the aforesaid credit accommodation(s).
After Cuenca resigned, Sta. Ines was able to obtained a loan of
6 million pesos, but was unable to pay the amortization payments
and requested Security Bank a complete restructure
or consent of Cuenca. Despite that Sta. Ines was still unable to pay. As
a result Security Bank made failed attempts to demand from Sta. Ines
and Cuenca the fulfillment
of their obligation, thus a complaint was filed and a decision in
favour of Security Bank was rendered which held Cuenca liable.
On appeal, Cuenca contends that the original agreement of 8
million loan was extinguished by novation when the obligation
under the 6 million loan and subsequent restructuring was granted.
ISSUE:
Whether Cuenca is liable as a surety to the 6 million loan under the
Indemnity Agreement?
HELD:
NO.
The Indemnity Agreement is a continuing surety and as such does not
authorize the bank to extend the scope of the principal obligation
inordinately. A surety being an onerous undertaking, a surety
agreement is strictly construed against the creditor, and every doubt is
resolved in favor of the solidary debtor. The fundamental rules of fair
play require the creditor to obtain the consent of the surety to
any material alteration in the principal loan agreement, or at least
to notify it thereof. Hence, petitioner bank cannot hold herein
respondent liable for loans obtained in excess of the a
mount or beyond the period stipulated in the original agreement,
absent any clear stipulation showing that the latter waived his right to
be notified thereof, or to give consent thereto. This is especially true
where, as in this case, respondent was no longer the principal
officer or major stockholder of the corporate debtor at the time
the later obligations were incurred. He was thus no longer in a position
to compel the debtor to pay the creditor and had no more reason to
bind himself anew to the subsequent obligations.
46. Palmares v CA (Negotiable Instruments Law)
PALMARES vs. CA (288 SCRA 422)
FACTS:
Private respondent M.B. Lending Corporation extended a loan to the
spouses Osmeña and Merlyn Azarraga, together with petitioner
Estrella Palmares, in the amount of P30,000.00 payable on or before
May 12, 1990, with compounded interest at the rate of 6% per annum
to be computed every 30 days from the date thereof.
On four occasions after the execution of the promissory note and
even after the loan matured, petitioner and the Azarraga spouses
were able to pay a total of P16,300.00, thereby leaving a balance of
P13,700.00. No payments were made after the last payment on
September 26, 1991. Consequently, on the basis of petitioner's
solidary liability under the promissory note, respondent corporation
filed a complaint 3 against petitioner Palmares as the lone party-
defendant, to the exclusion of the principal debtors, allegedly by
reason of the insolvency of the latter.
ISSUES:
(1) Where a party signs a promissory note as a co-maker and binds
herself to be jointly and severally liable with the principal debtor in
case the latter defaults in the payment of the loan, is such undertaking
of the former deemed to be that of a surety as an insurer of the debt,
or of a guarantor who warrants the solvency of the debtor? Or WON
Palmares is liable
(2) WON the penalty charge of 3% per month and attorney's fees
equivalent to 25% of the total amount due are highly inequitable and
unreasonable
HELD:
(1) YES.
If a person binds himself solidarily with the principal debtor, the
provisions of Section 4, Chapter 3, Title I of this Book shall be
observed. In such case the contract is called a suretyship.
a surety is bound equally and absolutely with the principal, and as
such is deemed an original promisor and debtor from the beginning.
This is because in suretyship there is but one contract, and the surety
is bound by the same agreement which binds the principal. In
essence, the contract of a surety starts with the agreement, which is
precisely the situation obtaining in this case before the Court.
It is a cardinal rule in the interpretation of contracts that if the terms of
a contract are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of its stipulation shall control. In
the case at bar, petitioner expressly bound herself to be jointly and
severally or solidarily liable with the principal maker of the note. The
terms of the contract are clear, explicit and unequivocal that
petitioner's liability is that of a surety.
(2) YES.
It must be remembered that from the principal loan of P30,000.00, the
amount of P16,300.00 had already been paid even before the filing of
the present case. Article 1229 of the Civil Code provides that the court
shall equitably reduce the penalty when the principal obligation has
been partly or irregularly complied with by the debtor. And, even if
there has been no performance, the penalty may also be reduced if it
is iniquitous or leonine.
The grant of attorney's fees equivalent to 25% of the total amount due
is, in our opinion, unreasonable and immoderate, considering the
minimal unpaid amount involved and the extent of the work involved in
this simple action for collection of a sum of money. We, therefore,
hold that the amount of P10,000.00 as and for attorney's fee would be
sufficient in this case.

47.
E.ZOBEL, INC. vs. CA
GR# 113931, May 6, 1998
FACTS: Respondent Spouses Claveria, doing business under the
name “ Agro Brokers”, applied for a loan with respondent Consolidated
Bank & Trust Corp. (now SOLID BANK) amounting to P2.875M. The
loan was granted subject to the condition that respondent spouses
execute a chattel mortgage over the 3 vessels to be acquired and that
a continuing guarantee be executed by Ayala International Phils., Inc.,
now herein petitioner E.Zobel, Inc. in SOLID BANK’s favor. The
Claverias defaulted in the payment of the entire obligation upon
maturity. Petitioner moved to dismiss the complaint asserting that its
liability as guarantor of the loan was extinguished pursuant to A.2080,
NCC. It argued that it has lost its right to be subrogated to the first
chattel mortgage in view of SOLIDBANK’s failure to register the chattel
mortgage with the appropriate government
agency. SOLIDBANKmeantime claimed that A.2080 is not applicable
because petitioner is not a guarantor but a surety.
HELD: In the contract executed by petitioner in SOLIDBANK’s favor,
albeit denominated as a “Continuing Guaranty”, is in fact a contract of
surety. The contract’s terms obligates petitioner as “surety” to induce
SOLIDBANK to extend credit to the Claverias. The contract clearly
disclose that petitioner assumed liability to SOLIDBANK, as a regular
party the undertaking and obligated itself as an original promissory. It
bound itself jointly and severally to the obligation with the Claverias. In
fact, SOLIDBANK need not resort to all other legal remedies or exhaust
the Claverias’ properties before it can hold petitioner liable for the
obligation. Since the petitioner is a surety, A.2080, NCC is
inapplicable. Said article applies where the liability is as a guaranty not
as a surety.
48. PHILIPPINE BLOOMING MILLS v. CA, GR No. 142381, 2003-10-
15
Facts:
Ching was the Senior Vice President of PBM. In his personal capacity
and not as a corporate officer, Ching signed a Deed of Suretyship dated
21 July 1977 binding himself
On 24 March and 6 August 1980, TRB granted PBM letters of credit on
application of Ching in his capacity as Senior Vice President of PBM.
Ching later accomplished and delivered to TRB trust receipts, which
acknowledged receipt in trust for TRB of the merchandise subject of
the... letters of credit.
On 27 April 1981, PBM obtained a P3,500,000 trust loan from TRB.
Ching signed as co-maker in the notarized Promissory Note evidencing
this trust loan.
On 1 April 1982, PBM and Ching filed a petition for suspension of
payments with the Securities and Exchange Commission ("SEC"),
docketed as SEC Case No. 2250.
On 9 July 1982, the SEC placed all of PBM's assets, liabilities, and
obligations under the rehabilitation receivership of Kalaw, Escaler and
Associates.
On 13 May 1983, ten months after the SEC placed PBM under
rehabilitation receivership, TRB filed with the trial court a complaint for
collection against PBM and Ching.
On 25 May 1983, TRB moved to withdraw the complaint against PBM
on the ground that the SEC had already placed PBM under
receivership.
On 23 June 1983, PBM and Ching also moved to dismiss the complaint
on the ground that the trial court had no jurisdiction over the subject
matter of the case.
Issues:
THE COURT OF APPEALS COMMITTED AN ERROR WHEN IT
RULED THAT PETITIONER ALFREDO CHING WAS LIABLE FOR
OBLIGATIONS CONTRACTED BY PBM LONG AFTER THE
EXECUTION OF THE DEED OF SURETYSHIP.
T
HE COURT OF APPEALS COMMITTED AN ERROR WHEN IT
RULED THAT THE PETITIONERS WERE LIABLE FOR THE TRUST
RECEIPTS DESPITE THE FACT THAT PRIVATE RESPONDENT
HAD PREVENTED THEIR FULFILLMENT.
HE COURT OF APPEALS COMMITTED AN ERROR WHEN IT
FOUND PETITIONER ALFREDO CHING LIABLE FOR
P15,773,708.78 WITH LEGAL INTEREST AT 12% PER ANNUM
UNTIL FULLY PAID DESPITE THE FACT THAT UNDER THE
REHABILITATION PLAN OF PETITIONER PBM
Ruling:
The petition has no merit.
The case before us is an offshoot of the trial court's denial of Ching's
motion to have the case dismissed against him. The petition is a thinly
veiled attempt to make this Court reconsider its decision in the prior
case of Traders Royal Bank v. Court of Appeals.
[48] This Court has already resolved the issue of Ching's separate
liability as a surety despite the rehabilitation proceedings before the
SEC.
Ching is liable for credit obligations contracted by PBM against TRB
before and after the execution of t... he 21 July 1977 Deed of
Suretyship.
Ching would like this Court to rule that his liability is limited, at most, to
the amount stated in PBM's rehabilitation plan.
Ching is still liable for the amounts stated in the letters of credit covered
by the trust receipts. Other than his bare allegations, Ching has not
shown proof of payment or settlement with TRB. Atty. Vicente Aranda,
TRB's corporate secretary and First Vice
President of its Human Resource Management Department, testified
that the conditions in the TRB board resolution presented by Ching
were not met or implemented
The trial court found and the appellate court affirmed that the
outstanding principal amounts as of the filing of the complaint with the
trial court on 13 May 1983
WHEREFORE, we AFFIRM the decision of the Court of Appeals with
MODIFICATION
49. Escaño and Silos vs Ortigas Jr.
March 25, 2016
G.R. No. 151953 (2007)
Ponente: J. Tinga
Facts:
1. On April 28, 1980, Private Development Corp. of the Philippines
(PDCP) entered into a loan agreement with the Falcon Minerals, Inc.
(Falcon) whereby PDCP agreed to male available and lend to Falcon
the amount of US $320, 000.00 for specific purposes and subject to
certain terms and conditions.
2. Three stockholder officers of the Falcon assumed solidary liability, in
their individual capacity, with Falcon for the due and punctual payment
of the loan.
3. Two years later, control of Falcon was ceded to Escaño, Silos and
Matti, and the shares of deceased Scholey, through his heirs Ortigas,
Scholey and Inductivo, were assigned to the three new stock-holders,
as well as all of their guaranteed to PDCP and PAIC.
4. On April 28, 1989, PDCP filed a complaint for sum of money with the
RTC of Makati. A counterclaim was filed by Ortigas.
5. The other parties entered into compromise agreement with PDCP.
Ortigas pursued his claim against Escaño, Silos and Matti, and filing a
motion for Summary Judgement in his favor against Escaño, Silos and
Matti.
6. The RTC ruled in favor of Ortigas, ordering the three to pay jointly and
severally the amount of P1,300,000.00 as well as P20,000.00 in
attorney’s fees.
7. On appeal, the Court of Appeals affirmed the Summary Judgement.
Hence, the present petition for review.
Issue: Whether or not there was solidary obligation.
Ruling:
No. The obligation was joint.
In this case, there is a concurrence of two or more creditors or of two
or more debtors in one and the same obligation. Article 1207 of the Civil
Code states that among them, there is a solidary liability only when the
obligation expressly so states, or when the law or the nature of the
obligation requires solidarity. Article 1210 supplies further caution
against the broad interpretation of solidarity by providing that the
indivisibility of an obligation does not necessarily give rise to solidarity.
Nor does solidarity of itself imply indivisibility.
These Civil Code provisions establish that in case of concurrence of
two or more creditors or of two or more debtors in one and the same
obligation, and in the absence of express and indubitable terms
characterizing the obligation as solidary, the presumption is that the
obligation is only joint. It thus becomes incumbent upon the party
alleging that the obligation is indeed solidary in character to prove such
fact with a preponderance of evidence.
The Undertaking does not contain any express stipulation that the
petitioners agreed to bind themselves jointly and severally in their
obligations to the Ortigas group, or any such terms to that effect. Hence,
such obligation established in the Undertaking is presumed only to be
joint. Ortigas, as the party alleging that the obligation is in fact solidary,
bears the burden to overcome the presumption of jointness of
obligations. The SC ruled that he failed to discharge such burden.
50. Nilo and ramos v obispo digest (SCRIBD digest. Di kop o
madowload huhuhu paupdate nito pls )
51. Pnb v reblando digest (SCRIBD digest. Di kop o madowload
huhuhu paupdate nito pls )
52. UNION BANK OF THE PHILIPPINES VS. LAIN⃰ JUNIAT,
WINWOOD APPAREL, INC., WINGYAN APPAREL, INC.,
NONWOVEN FABRIC PHILIPPINES (G.R. NO. 171569, 01 AUGUST
2011, DEL CASTILLO, J.) SUBJECTS: MORTGAGE; PLEDGE;
DACION EN PAGO. (BRIEF TITLE: UNION BANK VS. JUNIAT).
========================================
DIGEST/SUBJECT/DOCTRINE
JUNIAT EXECUTED A CHATTEL MORTGAGE IN FAVOR OF UNION
BANK COVERING SEWING MACHINES AND OTHER EQUIPMENT
FOR AND ON BEHALF OF WINWOOD AND WINGYAN. JUNIAT ET
AL DID NOT PAY SUBJECT LOAN. UNION BANK SUED THEM FOR
SUM OF MONEY AND MOVED TO ATTACH THE SEWING
MACHINES AND EQUIPMENT. THE MACHINES AND EQUIPMENT
WERE IN THE POSSESSION OF NONWOVEN. COURT ISSUED
SUMMONS TO NONWOVEN. NONWOVEN ARGUED THAT IT HAS
A BETTER RIGHT TO THE MACHINES AND EQUIPMENT BECAUSE
JUNIAT EXECUTED DACION EN PAGO IN THEIR FAVOR. THEY
THEFORE HOLD THE MACHINES AS OWNER WHILE PETITIONER
HOLDS THE MACHINES ONLY AS MORTGAGEE. NONWOVEN
PRESENTED A DOCUMENT WHERE JUNIAT PLEGED THE
MACHINES TO NONWOVEN TO SECURE AN OBLIGATION.
WHO HAS A BETTER RIGHT TO THE MACHINES AND
EQUPMENT?
UNION BANK HAS A BETTER RIGHT. NONWOVEN FAILED TO
PROVE THAT THERE WAS DACION EN PAGO. THE DOCUMENT
EXECUTED BY JUNIAT APPEARS TO BE AN UNNOTARIZED
PLEDGE. IN CASE OF DOUBT WHETHER A DEED IS A SALE OR A
PLEDGE, THE DEED IS DEEMED A PLEDGE. SINCE THE PLEDGE
WAS NOT NOTARIZED IT CANNOT BIND THIRD PARTIES.
A perusal of the Agreement dated May 9, 1992 clearly shows that the
sewing machines, snap machines and boilers were pledged to
Nonwoven by Juniat to guarantee his obligation. However, under
Article 2096 of the Civil Code, “[a] pledge shall not take effect against
third persons if a description of the thing pledged and the date of the
pledge do not appear in a public instrument.” Hence, just like the
chattel mortgage executed in favor of petitioner, the pledge executed
by Juniat in favor of Nonwoven cannot bind petitioner.
Neither can we sustain the finding of the CA that: “The machineries
were ceded to THIRD PARTY NONWOVEN by way of dacion en pago,
a contract later entered into by WINWOOD/WINGYAN and THIRD
PARTY NONWOVEN.”[1][53] As aptly pointed out by petitioner, no
evidence was presented by Nonwoven to show that the attached
properties were subsequently sold to it by way of a dacion en pago.
Also, there is nothing in the Agreement dated May 9, 1992 to indicate
that the motorized sewing machines, snap machines and boilers were
ceded to Nonwoven as payment for the Wingyan’s and Winwood’s
obligation. It bears stressing that there can be no transfer of ownership
if the delivery of the property to the creditor is by way of security.[2][54]
In fact, in case of doubt as to whether a transaction is one of pledge or
dacion en pago, the presumption is that it is a pledge as this involves a
lesser transmission of rights and interests.[3][55]
53. Nestor borromeo v ca digest No digest found
54. martelino v national home digest (SCRIBD digest. Di kop o
madowload huhuhu paupdate nito pls )
55. DBP V. CA (1998)
G.R.No. 118367 January 5, 1998
Lessons Applicable: Certainty (Torts and Damages)
Laws Applicable: Article 1245, Article 1255, Article 2087, Art. 2088 of
the Civil Code
FACTS:
 Lydia P. Cuba is a grantee of a Fishpond Lease Agreement from
the Government
 Cuba obtained loans from DBP stated
under promissory notes dated September 6, 1974; August 11,
1975; and April 4, 1977 executing 2 Deeds of Assignment of her
Leasehold Rights as security
 Upon failure to pay, without foreclosure proceedings it was
appropriated and DBP executed in turn a Deed of Conditional
Sale of the Leasehold Rights in her favor
 Her offer to repurchase was accepted and a new Fishpond Lease
Agreement was issued by the Ministry of Agriculture and Food in
her favor alone excluding her husband
 Failing to pay her amortizations, she entered into a temporary
agreement with DBP
 Soon, she was sent a Notice of Rescission and DBP took
possession of the Leasehold Rights of the fishpond
 After the public bidding, DBP executed a Deed of Conditional Sale
in favor of defendant Agripina Caperal
 Cuba filed against DBP since no foreclosure proceedings was
done thus, contrary to Article 2088 of the Civil Code
 RTC: favored Cuba, it being a pactum commissorium
 return leasehold rights to Cuba
 entitling P1,067,500 actual damages, P100,000 moral
and P50,000 exemplary damages and P100,000 attorney’s fees
 CA: leasehold rights to Caperal as valid but same damages
ISSUE: W/N Cuba should be awarded with actual and compensatory
damages
HELD: NO. CA reversed except the P50,000 as moral
damages. REMANDED to the trial court for the reception of the
income statement of DBP, as well as the statement of the account of
Lydia P. Cuba, and for the determination of each party’s financial
obligation to one another
 assignment of leasehold rights was a mortgage contract (Article
2087)
 not novated, cession (Article 1255 of the Civil Code), dation in
payment (Article 1245 of the civil Code), pactum commissorium
 condition no. 12 did not provide that CUBA’s default would
operate to vest in DBP ownership of the said rights
 The fact that CUBA offered and agreed to repurchase her
leasehold rights from DBP did not estop her from questioning
DBP’s act of appropriation.
 estoppel cannot give validity to an act that is prohibited by law or
against public policy
 alleged loss of personal belongings and equipment was not
proved by clear evidence. Other than the testimony of CUBA and
her caretaker, there was no proof as to the existence of those
items before DBP took over the fishpond in question. Neither was
a single receipt or record of acquisition presented.
 dated 17 May 1985, CUBA included “losses of property” as
among the damages resulting from DBP’s take-over of the
fishpond. Yet, it was only in September 1985 when her son and a
caretaker went to the fishpond and the adjoining house that she
came to know of the alleged loss of several articles
 bangus which died also not duly proved nor was it expressed in
her later 7 months after DBP took over
 The award of actual damages should, therefore, be struck down
for lack of sufficient basis
 Exemplary or corrective damages in the amount of P25,000
should likewise be awarded by way of example or correction for
the public good. There being an award of exemplary damages,
attorney’s fees are also recoverable
Labels: 1998, art 1245, art 1255, art 2087, Case
Digest, certainty, DBP v CA, G.R.No. 118367, January 5, Juris
Doctor, torts and damages, torts and damages case digest