B2013

Credit Transactions| Atty. Vasquez

1


Rizal Commercial Banking Corp. vs. Arro
Rizal Commercial Banking Corporation, petitioner, vs. Hon. Jose P. Arro, Judge of the Court of First Instance of
Davao, and Residoro Chua, respondents.
Date: 31 July 1982
Ponente: De Castro, J.
Facts:
Private respondent Residoro Chua, with Enrique Go, Sr., executed a comprehensive surety agreement to
guaranty, above all, any existing or future indebtedness of Davao Agricultural Industries Corporation
(Daicor), and/or induce the bank at any time or from time to time to make loans or advances or to extend
credit to said Daicor, provided that the liability shall not exceed ay any time Php100,000.00.
A promissory note for Php100,000.00 (for additional capital to the charcoal buy and sell and the activated
carbon importation business) was issued in favor of petitioner RCBC payable a month after execution. This
was signed by Go in his personal capacity and in behalf of Daicor. Respondent Chua did not sign in said
promissory note.
As the note was not paid despite demands, RCBC filed a complaint for a sum of money against Daicor, Go
and Chua.
The complaint against Chua was dismissed upon his motion, alleging that the complaint states no cause of
action against him as he was not a signatory to the note and hence he cannot be held liable. This was so
despite RCBCs opposition, invoking the comprehensive surety agreement which it holds to cover not just
the note in question but also every other indebtedness that Daicor may incur from petitioner bank.
RCBC moved for reconsideration of the dismissal but to no avail. Hence, this petition.

Issue: WON respondent Chua may be held liable with Go and Daicor under the promissory note, even if he was not
a signatory to it, in light of the provisions of the comprehensive surety agreement wherein he bound himself
with Go and Daicor, as solidary debtors, to pay existing and future debts of said corporation.
Held: Yes, he may be held liable. Order dismissing the complaint against respondent Chua reversed and set aside.
Case remanded to court of origin with instruction to set aside motion to dismiss and to require defendant
Chua to answer the complaint.
Ratio:
The comprehensive surety agreement executed by Chua and Go, as president and general manager,
respectively, of Daicor, was to cover existing as well as future obligations which Daicor may incur with
RCBC. This was only subject to the proviso that their liability shall not exceed at any one time the
aggregate principal amount of Php100,000.00. (Par.1 of said agreement).
The agreement was executed to induce petitioner Bank to grant any application for a loan Daicor would
request for. According to said agreement, the guaranty is continuing and shall remain in full force or effect
until the bank is notified of its termination.
During the time the loan under the promissory note was incurred, the agreement was still in full force and
effect and is thus covered by the latter agreement. Thus, even if Chua did not sign the promissory note,
he is still liable by virtue of the surety agreement. The only condition necessary for him to be liable under
the agreement was that Daicor is or may become liable as maker, endorser, acceptor or otherwise.
The comprehensive surety agreement signed by Go and Chua was as an accessory obligation dependent
upon the principal obligation, i.e., the loan obtained by Daicor as evidenced by the promissory note.
The surety agreement unequivocally shows that it was executed to guarantee future debts that may be
incurred by Daicor with petitioner, as allowed under NCC 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.