1. Kevin signed a loan agreement with ABC Bank.

To secure payment, Kevin requested his girlfriend

Rosella to execute a document entitled “Continuing Guaranty Agreement” whereby she expressly
agreed to be solidarily liable for the obligation of Kevin. Can ABC Bank proceed directly against
Rosella upon Kevin’s default even without proceeding against Kevin first? Explain your answer.

Ans: Yes. ABC Bank can proceed directly against Rosella upon Kevin’s default without proceeding against
Kevin first.

Art. 2053. A guaranty may also be given as security for future debts, the amount of which is not
yet known; there can be no claim against the guarantor until the debt is liquidated. A conditional
obligation may also be secured.

In the case of Atok Finance vs CA, the court held that a bank or a financing company which anticipates
entering into a series of credit transactions with a particular company, commonly requires the projected
principal debtor to execute a continuing surety agreement along with its sureties. By executing such an
agreement, the principal places itself in a position to enter into the projected series of transactions with its
creditor; with such surety agreement, there would be no need to execute a separate surety contract or bond
for each financing or credit accommodation extended to the principal debtor.

In this case, it is clearly stipulated and agreed upon by the parties under the Continuing Guaranty Agreement
that Rosella is solidarily liable for Kevin’s obligation. Therefore, ABC Bank can proceed against Rosella
upon Kevin’s default even without proceeding against the latter first.

2. Why did the SC rule that Alfredo cannot demand from the spouses SY what he has paid?
Ans: The court agreed with Land Bank on the point mentioned as to the first part of paragraph 1 of Art.
1236. However, in the context of the second part of said paragraph, Alfredo was not making payment to
fulfill the obligation of the Spouses Sy.

Article 1236. The creditor is not bound to accept payment or performance by a third person
who has no interest in the fulfillment of the obligation, unless there is a stipulation to the
contrary.

Whoever pays for another may demand from the debtor what he has paid, except that if he
paid without the knowledge or against the will of the debtor, he can recover only insofar
as the payment has been beneficial to the debtor. (1158a)

Alfredo made a conditional payment so that the properties subject of the Deed of Sale with Assumption of
Mortgage which Land Bank required from him would be approved. Thus, he made payment not as a debtor
but as a prospective mortgagor.
Alfredo, as a third person, did not, therefore, have an interest in the fulfillment of the obligation of the
Spouses Sy, since his interest hinged on Land Banks approval of his application, which was denied.
The circumstances of the instant case show that the second paragraph of Art. 1236 does not apply.
As Alfredo made the payment for his own interest and not on behalf of the Spouses Sy, recourse is not
against the latter. And as Alfredo was not paying for another, he cannot demand from the debtors, the
Spouses Sy, what he has paid.

3. How did the court decide to reduce the interest rate in Solangon vs Salazar?.
Ans: While decreeing that the aforementioned interest was not usurious, this Court held that the same must
be equitably reduced for being excessive, iniquitous, unconscionable and exorbitant hence, contrary to
morals (‘contra bonos mores’), if not against the law.
In the case at bench, petitioners stand on a worse situation. They are required to pay the stipulated interest
rate of 6% per month or 72% per annum which is definitely outrageous and inordinate. Surely, it is more
consonant with justice that the said interest rate be reduced equitably

4. Can the borrower in a contract of loan be held liable for Estafa?

Ans: No, because in simple loan, the borrower acquires ownership of the money, goods or personal property
borrowed. Being the borrower, he can dispose the thing borrowed hence, there is no unlawful taking of the
property and his act will not be considered misappropriation or estafa. The borrower is only civilly liable
for breach of obligation to pay.

5. B received money as a loan with interest from L secured by a chattel mortgage on the standing crop on
B’s land. The crops were destroyed due to a fortuitous event. Is the obligation of B to pay the loan
extinguishes?
Ans: No. The obligation of B is not to deliver a determinate thing, namely: the crops to be harvested on his
land, but to pay a generic thing, the amount of money representing the loan with interest. (see Art. 1263.)
The loss of the mortgaged crops did not extinguish his obligation to pay, because it could still be paid from
other sources aside from the crops. The chattel mortgage simply stood as a security for the fulfillment of
his obligation. (Republic vs. Grijaldo, 15 SCRA 681 [1965].)

6. ebio

7. what is Irregular deposit?

When the thing deposit is money/other consumable thing and safekeeping is still the principal one, it is
called irregular deposit

Irregular deposit is a deposit in which the depositee is not to return the specific money deposited, but he is
to return an equal sum to the depositor. In an irregular deposit, money is deposited in bank for safe keeping,
and the depositor receives in its place other money.

8. alek