DEPOSIT
Virgilio Garcia, assistant branch manager payable to a
1. Bank of the Philippine Islands vs IAC
A contract of depositum was entered into by Garcia,
on behalf of COMTRUST (BPI), wherein he received
US $3,000 (foreign exchange) from Zshornack for
safekeeping. Later on or over five months later,
Zshornack demanded the return of the money but
the bank refused alleging that the amount was sold
and transferred to her current account.
Original Parties:
Rizaldy and Comtrust (BPI then absorbed COMTRUST,
substituted it in the case)
Rizaldy initiated proceedings by filing in CFI a
complaint against Comtrust alleging 4 causes of
action.
Except for the 3rd cause, CFI ruled in favor of
Zshornack.
Bank appealed to IAC which modified CFI decision
absolving the bank from liability. Ordered comtrust to
restore to dollar savings the account of plaintiff,
Ordered defendant Comtrust to return to plaintiff US
$ 3,000.00 (merely held in custody for safekeeping,
defendants only obli is to return the same to plaintiff
upon demand)
Ordered COMTRUST to pay plaintiff in the amount of
P8,000.00 as damages in the concept of litigation
expenses and attys fees suffered by plaintiff as a
result of the failure of defendant bank to restore to
his (plaintiffs) account the amount of $1,000 and to
return to him $3,000 cash left for safekeeping.
SC- modified, petitioner to restore to the dollar
savings acc of resp the $1,000 to earn interest at rate
fixed by the bank, pet further ordered to pay resp
amount of P8,0000 as damages
^based on last par, bank prays that it be totally
absolved from any liability to Zshornack
*banks liability with regard to the 1st and 2nd causes of
action + liability for damages
- Rizaldy and his wife Shirley maintained in
COMTRUST a dollar savings and a peso account
- an application for a dollar draft was accomplished by
certain dizon in the amount of $1,000
- In the application, Garcia indicated that the amount
was to be charged to dollar savings account of the
Zshornacks, the charges for commission,
documentary stamp tax and others were to be
charged to the current account of Zshornacks
- There was no indication of the name of the
purchaser of the dollar draft
- Comtrust under the signature of Garcia issued a
check payable to the order of Dizon in the amount of
US $ 1,000 charged from Zshornack’s account
- When Zshornack noticed the withdrawal of $1,000
from his acc, he demanded an explanation from the
bank
- COMTRUST claimed that the peso value of the
withdrawal was given to Atty. Ernesto Zshornack, Jr.,
brother of Rizaldy, on October 27, 1975 when he
(Ernesto) encashed with COMTRUST a cashier’s check
for P8,450.00 issued by the Manila Banking
Corporation payable to Ernesto.
1st cause of action: $1,000
2nd cause of action: $3,000 cash safekeeping
Facts:
Rizaldy T. Zshornack and his wife maintained in
COMTRUST a dollar savings account and a peso
current account. An application for a dollar drat was
accomplished by Virgillo Garcia branch manager of
COMTRUST payable to a certain Leovigilda Dizon. In
the PPLICtion, Garcia indicated that the amount was
to be charged to the dolar savings account of the
Zshornacks. There wasa no indication of the name of
the purchaser of the dollar draft. Comtrust issued a
check payable to the order of Dizon. When Zshornack
noticed the withdrawal from his account, he
demanded an explainaiton from the bank. In its
answer, Comtrust claimed that the peso value of the
withdrawal was given to Atty. Ernesto Zshornack,
brother of Rizaldy. When he encashed with
COMTRUST a cashiers check for P8450 issued by the
manila banking corporation payable to Ernesto.
Arguments:
COMTRUST (BPI): The parties entered into a contract
of depositum which banks do not enter into. Thus,
Garcia exceeded his powers when he entered into the
contract on behalf of the bank, hence, the bank
cannot be liable under the contract.
Issue: Whether the contract between petitioner and
respondent bank is a deposit?
Held: The document which embodies the contract
states that the US$3,000.00 was received by the bank
for safekeeping. The subsequent acts of the parties
also show that the intent of the parties was really for
the bank to safely keep the dollars and to return it to
Zshornack at a later time. Thus, Zshornack demanded
the return of the money on May 10, 1976, or over five
months later.
The above arrangement is that contract defined
under Article 1962, New Civil Code, which reads:
Art. 1962. A deposit is constituted from the moment
a person receives a thing belonging to another, with
the obligation of safely keeping it and of returning the
same. If the safekeeping of the thing delivered is not
the principal purpose of the contract, there is no
deposit but some other contract.
2. Bishop of Jaro vs De la Pena
FACTS: In 1898 Fr. De la Peña assigned as trustee of
the sum of P6,641, collected by him for the charitable
purposes he deposited in his personal account
P19,000 in the Hongkong and Shanghai Bank at Iloilo.
During the war of the revolution, Father De la Peña
was arrested by the military authorities as a political
prisoner. The arrest of Father De la Peña and the
confiscation of the funds in the bank were the result
of the claim of the military authorities that he was an
insurgent and that the funds deposited had been
collected by him is for revolutionary purposes. The
money was taken from the bank by the military
authorities by virtue of such order, was confiscated
and turned over to the Government.
ISSUES: Whether or not Father De la Peña is liable for
the loss of the funds?
RULLING: No, he is not liable because there is no
negligent act on the part of Fr. De la Peña. It was so
happened that during that time the money was taken
from him by the U.S. military forces which is
unforeseen event. Although the Civil Code states that
“a person obliged to give something is also bound to
preserve it with the diligence pertaining to a good
father of a family”, it also provides, following the
principle of the Roman law that “no one shall be liable
for events which could not be foreseen, or which
having been foreseen were inevitable, with the
exception of the cases expressly mentioned in the law
or those in which the obligation so declares.”
The court, therefore, finds and declares that the
money which is the subject matter of this action was
deposited by Father De la Peñ a in the Hongkong and
Shanghai Banking Corporation of Iloilo; that said
money was forcibly taken from the bank by the armed
forces of the United Sates during the war of the
insurrection; and that said Father De la Peñ a was not
responsible for its loss.
The judgment is therefore reversed, and it is decreed
that the plaintiff shall take nothing by his complaint.
3. CA Agro-Industrial Development Corp. vs CA
Facts:
CA Agro (through its President, Aguirre) and spouses
Pugao entered into an agreement whereby the
former purchased two parcels of land for P350, 525
with a P75, 725 down payment while the balance was
covered by three (3) postdated checks. Among the
terms embodied in a Memorandum of True and
Actual Agreement of Sale of Land were that titles to
the lots shall be transferred to the petitioner upon full
payment of the purchase price and that the owner’s
copies of the certificates of titles thereto shall be
deposited in a safety deposit box of any bank. The
same could be withdrawn only upon the joint
signatures of a representative of the petitioner upon
full payment of the purchase price. They then rented
Safety Deposit box of private respondent Security
Bank and Trust Company (SBTC). For this purpose,
both signed a contract of lease which contains the
following conditions:
13. The bank is not a depositary of the contents of the
safe and it has neither the possession nor control of
the same.
14. The bank has no interest whatsoever in said
contents, except herein expressly provided, and it
assumes absolutely no liability in connection
therewith.
After the execution of the contract, two (2) renter’s
key were given to Aguirre, and Pugaos. A key guard
remained with the bank. The safety deposit box has
two key holes and can be opened with the use of both
keys. Petitioner claims that the CTC were placed
inside the said box.
Thereafter, a certain Mrs. Ramos offered to buy from
the petitioner the two (2) lots at a price of P225 per
sqm. Mrs. Ramose demanded the execution of a deed
of sale which necessarily entailed the production of
the CTC. Aguirre and Pugaos then proceeded to the
bank to open the safety deposit box. However, when
opened in the presence of bank’s representative, the
box yielded no certificates. Because of the delay in
reconstitution of title, Mrs. Ramos withdrew her
earlier offer and as a consequence petitioner failed to
realize the expected profit of P280 , 500. Hence, the
latter filed a complaint for damages.
RTC: Dismissed the complaint
CA: Affirmed
Issue:
Whether or not the contractual relation between a
commercial bank and another party in the contract of
rent of a safety deposit box is one of bailor and bailee.
Is the contractual relation between a commercial
bank and another party in a contract of rent of a
safety deposit box with respect to its contents placed
by the latter one of bailor and bailee or one of lessor
and lessee?
Ruling:
Yes. The contract in the case at bar is a special kind of
deposit. It cannot be characterized as an ordinary
contract of lease under Article 1643 because the full
and absolute possession and control of the safety
deposit box was not given to the joint renters – the
petitioner and Pugaos.
American Jurisprudence:
The prevailing rule is that the relation between a bank
renting out safe-deposit boxes and its customer with
respect to the contents of the box is that of a bail or
bailee, the bailment being for hire and mutual
benefit.
Our provisions on safety deposit boxes are governed
by Section 72 (a) of the General Banking Act, and this
primary function is still found within the parameters
of a contract of deposit like the receiving in custody
of funds, documents and other valuable objects for
safekeeping. The renting out of the safety deposit
boxes is not independent from, but related to or in
conjunction with, this principal function. Thus,
depositary’s liability is governed by our civil code rules
on obligation and contracts, and thus the SBTC would
be liable if, in performing its obligation, it is found
guilty of fraud, negligence, delay or contravention of
the tenor of the agreement.
Art 1975 of CC not applicable to renting out of safety
deposit boxes in banks
4. Triple – V Food vs Filipino Merchants
Court of Appeals affirming an earlier decision of the
Regional Trial Court an action for damages thereat
filed by respondent Filipino Merchants Insurance,
Company, Inc., against the herein petitioner, Triple-V
Food Services, Inc.
a certain Mary Jo-Anne De Asis (De Asis) dined at
petitioner's Kamayan Restaurant at 15 West Avenue,
Quezon City. De Asis was using a Mitsubishi Galant
Super Saloon Model 1995 with plate number UBU
955, assigned to her by her employer Crispa Textile
Inc. (Crispa). On said date, De Asis availed of the valet
parking service of petitioner and entrusted her car
key to petitioner's valet counter. A corresponding
parking ticket was issued as receipt for the car. The
car was then parked by petitioner's valet attendant, a
certain Madridano, at the designated parking area.
Few minutes later, Madridano noticed that the car
was not in its parking slot and its key no longer in the
box where valet attendants usually keep the keys of
cars entrusted to them. The car was never recovered.
Thereafter, Crispa filed a claim against its insurer,
herein respondent Filipino Merchants Insurance
Company, Inc. (FMICI). Having indemnified Crispa in
the amount of P669.500 for the loss of the subject
vehicle, FMICI, as subrogee to Crispa's rights, filed
with the RTC at Makati City an action for damages
against petitioner Triple-V Food Services, Inc
In so dismissing the appeal and affirming the
appealed decision, the appellate court agreed with
the findings and conclusions of the trial court that: (a)
petitioner was a depositary of the subject vehicle; (b)
petitioner was negligent in its duties as a depositary
thereof and as an employer of the valet attendant;
and (c) there was a valid subrogation of rights
between Crispa and respondent FMICI.
Hence, petitioner's present recourse.
When De Asis entrusted the car in question to
petitioners valet attendant while eating at
petitioner's Kamayan Restaurant, the former
expected the car's safe return at the end of her meal.
Thus, petitioner was constituted as a depositary of
the same car. Petitioner cannot evade liability by
arguing that neither a contract of deposit nor that of
insurance, guaranty or surety for the loss of the car
was constituted when De Asis availed of its free valet
parking service.
In a contract of deposit, a person receives an object
belonging to another with the obligation of safely
keeping it and returning the same. A deposit may be
constituted even without any consideration. It is not
necessary that the depositary receives a fee before it
becomes obligated to keep the item entrusted for
safekeeping and to return it later to the depositor.
5. YHT Realty Corporation vs CA
FACTS
Respondent McLoughlin would always stay at
Tropicana Hotel every time he is here in the
Philippines and would rent a safety deposit box. The
safety deposit box could only be opened through the
use of 2 keys, one of which is given to the registered
guest, and the other remaining in the possession of
the management of the hotel. McLoughlin allegedly
placed the following in his safety deposit box – 2
envelopes containing US Dollars, one envelope
containing Australian Dollars, Letters, credit cards,
bankbooks and a check book. On 12 December 1987,
before leaving for a brief trip, McLoughlin took some
items from the safety box which includes the ff:
envelope containing Five Thousand US Dollars
(US$5,000.00), the other envelope containing Ten
Thousand Australian Dollars (AUS$10,000.00), his
passports and his credit cards. The other items were
left in the deposit box. Upon arrival, he found out that
a few dollars were missing and the jewelry he bought
was likewise missing.
Eventually, he confronted Lainez and Paiyam who
admitted that Tan opened the safety deposit box with
the key assigned to him. McLoughlin went up to his
room where Tan was staying and confronted her. Tan
admitted that she had stolen McLouglin’s key and was
able to open the safety deposit box with the
assistance of Lopez, Paiyam and Lainez. Lopez also
told McLoughlin that Tan stole the key assigned to
McLouglin while the latter was asleep. McLoughlin
insisted that it must be the hotel who must assume
responsibility for the loss he suffered. Lopez refused
to accept responsibility relying on the conditions for
renting the safety deposit box entitled “Undertaking
For the Use of Safety Deposit Box”
ISSUE
WON the “Undertaking for the Use of Safety Deposit
Box” admittedly executed by private respondent is
null and void.
whether a hotel may evade liability for the loss of
items left with it for safekeeping by its guests, by
having these guests execute written waivers holding
the establishment or its employees free from blame
for such loss in light of Article 2003 of the Civil Code
which voids such waivers.
HELD
YES Article 2003 was incorporated in the New Civil
Code as an expression of public policy precisely to
apply to situations such as that presented in this case.
The hotel business like the common carrier’s business
is imbued with public interest. Catering to the public,
hotelkeepers are bound to provide not only lodging
for hotel guests and security to their persons and
belongings. The twin duty constitutes the essence of
the business.
The law in turn does not allow such duty to the public
to be negated or diluted by any contrary stipulation in
so-called “undertakings” that ordinarily appear in
prepared forms imposed by hotel keepers on guests
for their signature. In an early case (De Los Santos v.
Tan Khey), CA ruled that to hold hotelkeepers or inn
keeper liable for the effects of their guests, it is not
necessary that they be actually delivered to the
innkeepers or their employees. It is enough that such
effects are within the hotel or inn. With greater
reason should the liability of the hotelkeeper be
enforced when the missing items are taken without
the guest’s knowledge and consent from a safety
deposit box provided by the hotel itself, as in this
case. Paragraphs (2) and (4) of the “undertaking”
manifestly contravene Article 2003, CC for they allow
Tropicana to be released from liability arising from
any loss in the contents and/or use of the safety
deposit box for any cause whatsoever.
Evidently, the undertaking was intended to bar any
claim against Tropicana for any loss of the contents of
the safety deposit box whether or not negligence was
incurred by Tropicana or its employees. The New Civil
Code is explicit that the responsibility of the hotel-
keeper shall extend to loss of, or injury to, the
personal property of theguests even if caused by
servants or employees of the keepers of hotels or inns
as well as by strangers, except as it may proceed from
any force majeure.
6. PNB vs Noah’s Ark Sugar Refinery
FACTS:
Noah’s Ark Sugar Refinery issued on several dates
warehouse receipts for sugar deposited by RNS
Merchandising (18080, 18081, 18087), St. Therese
Merchandising (18086), and Rosa Ng Sy (18062), 2
warehouse receipts (18080, 18081) were then
negotiated and indorsed to Luis T. Ramos. 18087
wand 18062 (RNS and Rosa Sy) were negotiated and
indorsed to Zoleta.
Goleta and Ramos then used the quedans as security
for loans obtained from PNB in the amount of
Php23.5M and 15.6M respectively.
However, they failed to pay their loans. So, they
wrote to Noah’s Ark Sugar Refinery for the delivery of
the sugar covered. However, Noah’s Ark refused to
comply. Hence, PNB filed a complaint for Specific
Performance with Damages.
Noah’s Ark responded that they agreed to sell the
subject sugar, but the payments of checks were
dishonored. Hence, defendants refused to deliver the
quantity of sugar. Furthermore, quedans are not
negotiable instruments.
Rosa Ng Sy and Teresita Ng answered that the said
transaction was bogus and simulated, and was to
avoid VAT payment and BIR assessments. The
quedans were actually used by Noah’s Ark as security
for their loans.
Trial Court denied the Motion for Summary
Judgment.
PNB filed a petition for certiorari before the CA,
which ordered that summary judgment be rendered.
RTC ruled for the dismissal of plaintiff’s complaint.
ISSUE:
1. W/N the non-payment of the sugar
rendered invalid the negotiation of said
quedans to endorsers and the subsequent
negotiation? NO. It is still valid.
2. The validity of the negotiation by RNS and
St. Therese to Ramos and Goleta, and the
latter to PNB to secure a loan cannot be
impaired by the fact that the negotiation
between Noahs’ Ark and RNS and St.
Therese was made in breach of faith or that
it was deprived of the same by fraud if PNB
paid value in good faith without notice of
breach.
The creditor whose debtor was the owner of the
negotiable document of title shall be entitled to such
aid from the court in attaching such document or in
satisfying the claim. If the quedans were negotiable in
form and duly indorsed to PNB (the creditor), the
delivery of the quedans to PNB makes the PNB the
owner of the property covered by said quedans and
on deposit with Noah’s Ark, the warehouseman.
The Trial Judge’s argument that the Appellate Court’s
decision failed to take account of other “material
facts established on the basis of the pleadings,
documentary evidence on record, stipulations and
admissions during the proceedings on the application
for a writ of preliminary attachment,” is quite
transparently specious.
The quedans were negotiable instruments and had
been duly negotiated to the PNB, thereby acquiring
the rights under Art. 1513.
7. PNB vs Se
FACTS:
Following the facts from the previous case, SC ruled
in favor of PNB. MRs were denied.
Private respondents filed a Motion Seeking
Clarification, which was denied. An Omnibus Motion
was filed, seeking the deferment of proceedings until
private respondents are heard on their claim for
warehouseman’s lien. The Omnius Motion was
granted.
PNB filed a Manifestation with Urgent Motion to
Nullify Court Proceedings. However, the trial court
found that there is a valid warehouseman’s lien.
Hence, the petition.
ISSUES:
1. W/N PNB should pay storage fees for sugar
stocks covered by 5 Warehouse Receipts
stored in the warehouse of private
respondents?
2. Can the warehouseman enforce his lien
before delivering the sugar stocks ordered
by the CA?

HELD:
1. The previous resolution did not carry why
denial of the warehouseman’s lien over the
sugar stocks covered by the subject
Warehouse Receipts. The said judgment
merely found that Noah’s Ark is a
warehouseman which was obliged to deliver
the sugar stocks covered by the receipts
pledged by Zoleta and Ramos to PNB.
Under the subject Warehouse Receipts provision,
storage fees are chargeable. PNB is legally bound to
stand by the express terms and conditions on the face
of the receipts as to the payment of storage fees. Even
in the absence of such stipulation, law wand equity
dictate the payment of the warehouseman’s lien
pursuant to Secs. 27 and 31 of the Warehouse
Receipts Law.
It is imperative to demand payment because
according to Sec. 29, the warehouseman loses his lien
upon surrendering the possession of the goods.
GUARANTY
8. Tupaz IV and Tupaz vs CA *tupazs GUARANTOR
 Trial court found petitioners solidarily liable
with El Oro Corporation for the balance of
El Oro Corporation’s principal debt under
the trust receipts
 CA affirmed RTC in a case for estafa
 Pet tupaz IV and tupaz are VP-operations
and VP-treasurer respectively of El Oro Corp
 El Oro Corp had a contract with Philippine
Army to supply the latter with ‘survival
bolos’
 To finance the purchase of raw materials for
the survival bolos, pet on behalf of el oro
applied with resp bank for 2 commercial
letters of credit
 The letters of credit were in favor of el oro
corp’s suppliers
 Resp bank granted pet’s application and
issued letter of credit
 Simultaneous with the issuance of the
letters of credit, pet signed trust receipts in
favor of bank
 Pet jose tupaz signed in his personal
capacity a trust receipt corresponding to
the letter of credit
 Pet jose bound himself to sell the goods
covered by the letter of credit and to remit
the proceeds to the bank, if sold, or to
return goods if not sold.
 Petitioners did not comply with their
undertaking under the trust receipts.
Respondent bank made several demands
for payments but El Oro Corporation made
partial payments only
 respondent bank’s counsel5 and its
representative6 respectively sent final
demand letters to El Oro Corporation. El
Oro Corporation replied that it could not
fully pay its debt because the Armed Forces
of the Philippines had delayed paying for
the survival bolos.
 Respondent bank charged petitioners with
estafa
Issue: WON Pet are personally liable for el oro corp’s
debts - no
SC- affirm CA ruling that Tupaz is liable as guarantor
of El Oro Corporation’s debt under the trust receipt
Corporation Law; Trusts; A corporate representative
signing as a solidary guarantee as corporate
representative did not undertake to guarantee
personally the payment of the corporation’s debts.—
In the trust receipt dated 9 October 1981, petitioners
signed below this clause as officers of El Oro
Corporation. Thus, under petitioner Petronila Tupaz’s
signature are the words “Vice-Pres–Treasurer” and
under petitioner Jose Tupaz’s signature are the words
“Vice-Pres–Operations.” By so signing that trust
receipt, petitioners did not bind themselves
personally liable for El Oro Corporation’s obligation.
In Ong v. Court of Appeals, a corporate representative
signed a solidary guarantee clause in two trust
receipts in his capacity as corporate representative.
There, the Court held that the corporate
representative did not undertake to guarantee
personally the payment of the corporation’s debts.
A corporation, being a juridical entity, may act only
through its directors, officers, and employees. Debts
incurred by these individuals, acting as such
corporate agents, are not theirs but the direct liability
of the corporation they represent. As an exception,
directors or officers are personally liable for the
corporation’s debts only if they so contractually agree
or stipulate.
Guaranty; Excussion; Excussion is not a prerequisite to
secure judgment against a guarantor; The benefit of
excussion may be waived.—Respondent bank’s suit
against petitioner Jose Tupaz stands despite the
Court’s finding that he is liable as guarantor only.
First, excussion is not a pre-requisite to secure
judgment against a guarantor. The guarantor can still
demand deferment of the execution of the judgment
against him until after the assets of the principal
debtor shall have been exhausted. Second, the
benefit of excussion may be waived. Under the trust
receipt dated 30 September 1981, petitioner Jose
Tupaz waived excussion when he agreed that his
“liability in [the] guaranty shall be DIRECT AND
IMMEDIATE, without any need whatsoever on x x x
[the] part [of respondent bank] to take any steps or
exhaust any legal remedies x x x.” The clear import of
this stipulation is that petitioner Jose Tupaz waived
the benefit of excussion under his guarantee.
9. E. Zobel, Inc. vs CA *zobel surety
Respondent spouses Raul and Elea Claveria, doing
business under the name “Agro Brokers,” applied for
a loan with respondent Consolidated Bank and Trust
Corporation (now SOLIDBANK) in the amount of Two
Million Eight Hundred Seventy Five Thousand Pesos
(P2,875,000.00) to finance3the purchase of two (2)
maritime barges and one tugboat which would be
used in their molasses business. The loan was
granted subject to the condition that respondent
spouses execute a chattel mortgage over the three
(3) vessels to be acquired and that a continuing
guarantee be executed by Ayala International
Philippines, Inc., now herein petitioner E. Zobel, Inc.,
in favor of SOLIDBANK. The respondent spouses
agreed to the arrangement. Consequently, a chattel
mortgage and a Continuing Guaranty4 were
executed.
Respondent spouses defaulted in the payment of
the entire obligation upon maturity. Hence, on
January 31, 1991, SOLIDBANK filed a complaint for
sum of money with a prayer for a writ of preliminary
attachment, against respondents spouses and
petitioner.
Issue: whether or not petitioner under the
“Continuing Guaranty” obligated itself to
SOLIDBANK as a guarantor or a surety.
Contracts; Surety; Guaranty; Words and Phrases;
“Surety” and “Guaranty,” Explained.—A contract of
surety is an accessory promise by which a person
binds himself for another already bound, and agrees
with the creditor to satisfy the obligation if the debtor
does not. A contract of guaranty, on the other hand,
is a collateral undertaking to pay the debt of another
in case the latter does not pay the debt.
Strictly speaking, guaranty and surety are nearly
related, and many of the principles are common to
both. However, under our civil law, they may be
distinguished thus: A surety is usually bound with his
principal by the same instrument, executed at the
same time, and on the same consideration. He is an
original promissor and debtor from the beginning,
and is held, ordinarily, to know every default of his
principal. Usually, he will not be discharged, either by
the mere indulgence of the creditor to the principal,
or by want of notice of the default of the principal, no
matter how much he may be injured thereby. On the
other hand, the contract of guaranty is the
guarantor’s own separate undertaking, in which the
principal does not join. It is usually entered into
before or after that of the principal, and is often
supported on a separate consideration from that
supporting the contract of the principal. The original
contract of his principal is not his contract, and he is
not bound to take notice of its non-performance. He
is often discharged by the mere indulgence of the
creditor to the principal, and is usually not liable
unless notified of the default of the principal. Simply
put, a surety is distinguished from a guaranty in that
a guarantor is the insurer of the solvency of the
debtor and thus binds himself to pay if the principal is
unable to pay while a surety is the insurer of the debt,
and he obligates himself to pay if the principal does
not pay.
The use of the term “guarantee” does not ipso facto
mean that the contract is one of guaranty—
authorities recognize that the word “guarantee” is
frequently employed in business transactions to
describe not the security of the debt but an intention
to be bound by a primary or independent obligation.—
The use of the term “guarantee” does not ipso facto
mean that the contract is one of guaranty. Authorities
recognize that the word “guarantee” is frequently
employed in business transactions to describe not the
security of the debt but an intention to be bound by a
primary or independent obligation. As aptly observed
by the trial court, the interpretation of a contract is
not limited to the title alone but to the contents and
intention of the parties.

Having thus established that petitioner is a surety,

Article 2080 of the Civil Code, relied upon by
petitioner, finds no application to the case at bar. In
Bicol Savings and Loan Association vs. Guinhawa, we
have ruled that Article 2080 of the New Civil Code
does not apply where the liability is as a surety, not as
a guarantor.

Based on the aforementioned definitions, it appears

that the contract executed by petitioner in favor of
SOLIDBANK, albeit denominated as a “Continuing
Guaranty,” is a contract of surety.

CA AFFIRMED

10. IFC vs Imperial Textile Mills, Inc. *itm surety

11. Escao and Silos vs Ortigas

12. Security Bank and Trust Company vs Cuenca

13. Palmares vs CA

14. Phil. Blooming Mills, Inc. vs CA