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G.R.No.72275

TodayisThursday,November10,2016

RepublicofthePhilippines
SUPREMECOURT
Manila
FIRSTDIVISION

G.R.No.72275November13,1991
PACIFICBANKINGCORPORATION,petitioner,
vs.
HONINTERMEDIATEAPPELLATECOURTANDROBERTOREGALA,JR.,respondents.
Ocampo,Dizon&Domingoforpetitioner.
Angara,Concepcion,Regala&Cruzforprivaterespondent.

MEDIALDEA,J.:p
Thisisapetitionforreviewoncertiorariofthedecision(pp2131,Rollo)oftheIntermediateAppellateCourt(now
CourtofAppeals)inACG.R.C.V.No.02753,1whichmodifiedthedecisionofthetrialcourtagainsthereinprivaterespondentRobertoRegala,
Jr.,oneofthedefendantsinthecaseforsumofmoneyfiledbyPacificBankingCorporation.

Thefactsofthecaseasadoptedbytherespondentappellantcourtfromhereinpetitioner'sbriefbeforesaidcourt
areasfollows:
On October 24, 1975, defendant Celia Syjuco Regala (hereinafter referred to as Celia Regala for
brevity),appliedforandobtainedfromtheplaintifftheissuanceanduseofPacificardcreditcard(Exhs.
"A", "Al",), under the Terms and Conditions Governing the Issuance and Use of Pacificard (Exh. "B"
andhereinafterreferredtoasTermsandConditions),acopyofwhichwasissuedtoandreceivedby
thesaiddefendantonthedateoftheapplicationandexpresslyagreedthattheuseofthePacificardis
governedbysaidTermsandConditions.Onthesamedate,thedefendantappelantRobertRegala,Jr.,
spouseofdefendantCeliaRegala,executeda"Guarantor'sUndertaking"(Exh."A1a")infavorofthe
appelleeBank,wherebythelatteragreed"jointlyandseverallyofCeliaAuroraSyjucoRegala,topay
the Pacific Banking Corporation upon demand, any and all indebtedness, obligations, charges or
liabilities due and incurred by said Celia Aurora Syjuco Regala with the use of the Pacificard, or
renewalsthereof,issuedinherfavorbythePacificBankingCorporation".Itwasalsoagreedthat"any
changes of or novation in the terms and conditions in connection with the issuance or use of the
Pacificard, or any extension of time to pay such obligations, charges or liabilities shall not in any
manner release me/us from responsibility hereunder, it being understood that I fully agree to such
charges,novationorextension,andthatthisunderstandingisacontinuingoneandshallsubsistand
bindmeuntiltheliabilitiesofthesaidCeliaSyjucoRegalahavebeenfullysatisfiedorpaid.
PlaintiffappelleePacificBankingCorporationhascontractedwithaccreditedbusinessestablishments
tohonorpurchasesofgoodsand/orservicesbyPacificardholdersandthecostthereoftobeadvanced
bytheplaintiffappelleefortheaccountofthedefendantcardholder,andthelatterundertooktopayany
statementsofaccountrenderedbytheplaintiffappelleefortheadvancesthusmadewithinthirty(30)
daysfromthedateofthestatement,providedthatanyoverdueaccountshallearninterestattherateof
14%perannumfromdateofdefault.
ThedefendantCeliaRegala,assuchPacificardholder,hadpurchasedgoodsand/orservicesoncredit
(Exh."C","Cl"to"C112")underherPacificard,forwhichtheplaintiffadvancedthecostamountingto
P92,803.98atthetimeofthefilingofthecomplaint.
InviewofdefendantCeliaRegala'sfailuretosettleheraccountforthepurchasesmadethrutheuseof
the Pacificard, a written demand (Exh. "D") was sent to the latter and also to the defendant Roberto
Regala,Jr.(Exh."")underhis"Guarantor'sUndertaking."
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A complaint was subsequently filed in Court for defendant's (sic) repeated failure to settle their
obligation.DefendantCeliaRegalawasdeclaredindefaultforherfailuretofileheranswerwithinthe
reglementaryperiod.DefendantappellantRobertoRegala,Jr.,ontheotherhand,filedhisAnswerwith
Counterclaimadmittinghisexecutionofthe"Guarantor'sUnderstanding","butwiththeunderstanding
thathisliabilitywouldbelimitedtoP2,000.00permonth."
In view of the solidary nature of the liability of the parties, the presentation of evidence exparte as
against the defendant Celia Regala was jointly held with the trial of the case as against defendant
RobertoRegala.
After the presentation of plaintiff's testimonial and documentary evidence, fire struck the City Hall of
Manila,includingthecourtwheretheinstantcasewaspending,aswellasallitsrecords.
Upon plaintiffappellee's petition for reconstitution, the records of the instant case were duly
reconstituted. Thereafter, the case was set for pretrial conference with respect to the defendant
appellantRobertoRegalaonplaintiffappellee'smotion,afterfurnishingthelatteracopyofthesame.
No opposition thereto having been interposed by defendantappellant, the trial court set the case for
pretrial conference. Neither did said defendantappellant nor his counsel appear on the date
scheduled by the trial court for said conference despite due notice. Consequently, plaintiffappellee
movedthatthedefendantappellantRobertoRegalahedeclaredasindefaultandthatitbeallowedto
presentitsevidenceexparte,whichmotionwasgranted.OnJuly21,1983,plaintiffappelleepresented
itsevidenceexparte.(pp.2326,Rollo)
Aftertrial,thecourtaquorenderedjudgmentonDecember5,1983,thedispositiveportionofwhichreads:
WHEREFORE,theCourtrendersjudgmentfortheplaintiffandagainstthedefendantscondemningthe
latter,jointlyandseverally,topaysaidplaintifftheamountofP92,803.98,withinterestthereonat14%
perannum,compoundedannually,fromthetimeofdemandonNovember17,1978untilsaidprincipal
amountisfullypaidplus15%oftheprincipalobligationasandforattorney'sfeesandexpenseofsuit
andthecosts.
ThecounterclaimofdefendantRobertoRegala,Jr.isdismissedforlackofmerit.
SOORDERED.(pp.2223,Rollo)
ThedefendantsappealedfromthedecisionofthecourtaquototheIntermediateAppellateCourt.
OnAugust12,1985,respondentappellatecourtrenderedjudgmentmodifyingthedecisionofthetrialcourt.Private
respondent Roberto Regala, Jr. was made liable only to the extent of the monthly credit limit granted to Celia
Regala, i.e., at P2,000.00 a month and only for the advances made during the one year period of the card's
effectivitycountedfromOctober29,1975uptoOctober29,1976.Thedispositiveportionofthedecisionstates:
WHEREFORE,thejudgmentofthetrialcourtdatedDecember5,1983ismodifiedonlyastoappellant
RobertoRegala,Jr.,soastomakehimliableonlyforthepurchasesmadebydefendantCeliaAurora
SyjucoRegalawiththeuseofthePacificardfromOctober29,1975uptoOctober29,1976uptothe
amountofP2,000.00permonthonly,withinterestfromthefilingofthecomplaintuptothepaymentat
therateof14%perannumwithoutpronouncementastocosts.(p.32,Rollo)
AmotionforreconsiderationwasfiledbyPacificBankingCorporationwhichtherespondentappellatecourtdenied
forlackofmeritonSeptember19,1985(p.33,Rollo).
OnNovember8,1985,Pacificardfiledthispetition.Thepetitionercontendsthatwhiletheappellatecourtcorrectly
recognizedCeliaRegala'sobligationtoPacificBankingCorp.forthepurchasesofgoodsandserviceswiththeuse
ofaPacificardcreditcardinthetotalamountofP92,803.98with14%interestperannum,iterredinlimitingprivate
respondent Roberto Regala, Jr.'s liability only for purchases made by Celia Regala with the use of the card from
October29,1975uptoOctober29,1976uptotheamountofP2,000.00permonthwith14%interestfromthefiling
ofthecomplaint.
Thereismeritinthispetition.
Thepertinentportionofthe"Guarantor'sUndertaking"whichprivaterespondentRobertoRegala,Jr.signedinfavor
ofPacificBankingCorporationprovides:
I/We,theundersigned,herebyagree,jointlyandseverallywithCeliaSyjucoRegalatopaythePacific
BankingCorporationupondemandanyandallindebtedness,obligations,chargesorliabilitiesdueand
incurredbysaidCeliaSyjucoRegalawiththeuseofthePacificardorrenewalsthereofissuedinhis
favor by the Pacific Banking Corporation. Any changes of or Novation in the terms and conditions in
connectionwiththeissuanceoruseofsaidPacificard,oranyextensionoftimetopaysuchobligations,
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chargesorliabilitiesshallnotinanymannerreleaseme/usfromtheresponsibilityhereunder,itbeing
understood that the undertaking is a continuing one and shall subsist and bind me/us until all the
liabilitiesofthesaidCeliaSyjucoRegalahavebeenfullysatisfiedorpaid.(p.12,Rollo)
TheundertakingsignedbyRobertoRegala,Jr.althoughdenominated"Guarantor'sUndertaking,"wasinsubstance
acontractofsurety.Asdistinguishedfromacontractofguarantywheretheguarantorbindshimselftothecreditorto
fulfilltheobligationoftheprincipaldebtoronlyincasethelattershouldfailtodoso,inacontractofsuretyship,the
suretybindshimselfsolidarilywiththeprincipaldebtor(Art.2047,CivilCodeofthePhilippines).
We need not look elsewhere to determine the nature and extent of private respondent Roberto Regala, Jr.'s
undertaking. As a surety he bound himself jointly and severally with the debtor Celia Regala "to pay the Pacific
BankingCorporationupondemand,anyandallindebtedness,obligations,chargesorliabilitiesdueandincurredby
said Celia Syjuco Regala with the use of Pacificard or renewals thereof issued in (her) favor by Pacific Banking
Corporation."ThisundertakingwasalsoprovidedasaconditionintheissuanceofthePacificardtoCeliaRegala,
thus:
5.APacificardisissuedtoaPacificardholderagainstthejointandseveralsignatureofathirdparty
andassuch,thePacificardholderandtheguarantorassumejointandseveralliabilitiesforanyandall
amountarisingoutoftheuseofthePacificard.(p.14,Rollo)
Therespondentappellatecourtheldthat"alltheotherrightsoftheguarantorarenottherebylostbytheguarantor
becomingliablesolidarilyandthereforeasurety."Itfurtherruledthatalthoughthesurety'sliabilityislikethatofa
jointandseveraldebtor,itdoesnotmakehimthedebtorbutstilltheguarantor(orthesurety),relyingonthecaseof
GovernmentofthePhilippinesv.Tizon.G.R.No.L22108,August30,1967,20SCRA1182.Consequently,Article
2054oftheCivilCodeprovidingforalimitedliabilityonthepartoftheguarantorordebtorstillapplies.
ItistruethatunderArticle2054oftheCivilCode,"(A)guarantormaybindhimselfforless,butnotformorethanthe
principaldebtor,bothasregardstheamountandtheonerousnatureoftheconditions.2Itislikewisenotdisputedbytheparties
that the credit limit granted to Celia Regala was P2,000.00 per month and that Celia Regala succeeded in using the card beyond the original period of its
effectivity,October29,1979.Wedonotagreehowever,thatRobertoJr.'sliabilityshouldbelimitedtothatextent.PrivaterespondentRobertoRegala,Jr.,assurety
of hiswife,expressly bound himself up to the extent of the debtor's (Celia) indebtedness likewise expressly waiving any "discharge in case of any change or
novationofthetermsandconditionsinconnectionwiththeissuanceofthePacificardcreditcard."Roberto,infact,madehiscommitmentasasuretyacontinuing
one,bindinguponhimselfuntilalltheliabilitiesofCeliaRegalahavebeenfullypaid.Allthesewereclearunderthe"Guarantor'sUndertaking"Robertosigned,
thus:

...Anychangesofornovationinthetermsandconditionsinconnectionwiththeissuanceoruseof
saidPacificard,oranyextensionoftimetopaysuchobligations,chargesorliabilitiesshallnotinany
mannerreleaseme/usfromtheresponsibilityhereunder,itbeingunderstoodthattheundertakingisa
continuingoneandshallsubsistandbindme/usuntilalltheliabilitiesofthesaidCeliaSyjucoRegala
havebeenfullysatisfiedorpaid.(p.12,supraemphasissupplied)
PrivaterespondentRobertoRegala,Jr.hadbeenmadeawarebythetermsoftheundertakingoffuturechangesin
the terms and conditions governing the issuance of the credit card to his wife and that, notwithstanding, he
voluntarilyagreedtobeboundasasurety.Asinguaranty,asuretymaysecureadditionalandfuturedebtsofthe
principaldebtortheamountofwhichisnotyetknown(seeArticle2053,supra).
The application by respondent court of the ruling in Government v. Tizon, supra is misplaced. It was held in that
casethat:
. . . although the defendants bound themselves insolidum, the liability of the Surety under its bond
would arise only if its codefendants, the principal obligor, should fail to comply with the contract. To
paraphrase the ruling in the case of Municipality of Orion vs. Concha, the liability of the Surety is
"consequentupontheliability"ofTizon,or"sodependentonthatoftheprincipaldebtor"thattheSurety
"is considered in law as being the same party as the debtor in relation to whatever is adjudged,
touchingtheobligationofthelatter"ortheliabilitiesofthetwodefendantsherein"aresointerwoven
anddependentastobeinseparable."Changingtheexpression,ifthedefendantsareheldliable,their
liabilitytopaytheplaintiffwouldbesolidary,butthenatureoftheSurety'sundertakingissuchthatit
doesnotincurliabilityunlessanduntiltheprincipaldebtorisheldliable.
Aguarantororsuretydoesnotincurliabilityunlesstheprincipaldebtorisheldliable.Itisinthissensethatasurety,
althoughsolidarilyliablewiththeprincipaldebtor,isdifferentfromthedebtor.Itdoesnotmean,however,thatthe
suretycannotbeheldliabletothesameextentastheprincipaldebtor.Thenatureandextentoftheliabilitiesofa
guarantororasuretyisdeterminedbytheclausesinthecontractofsuretyship(seePCIBv.CA,L34959,March18,
1988,159SCRA24).
ACCORDINGLY, the petition is GRANTED. The questioned decision of respondent appellate court is SET ASIDE
andthedecisionofthetrialcourtisREINSTATED.
SOORDERED.
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Narvasa,CJ.,Cruz,FelicianoandGrioAquino,JJ.,concur.

#Footnotes
1Entitled"PacificBankingCorporation,PlaintiffAppelleeversusCeliaAuroraSyjucoRegala,etal.,
Defendants,versusRobertoRegala.Jr.,DefendantAppellant."
2InHospiciodeSanJosev.FidelityandSurety,Co.,G.R.No.30427,March11,1929,Article2054of
theCivilCodewasappliedtoacontractofsurety.
TheLawphilProjectArellanoLawFoundation

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