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AMERICAN HOME as part of the indemnity agreement because they

FACTS: PPA conducted a bidding project for the are bound jointly and severally. CA affirmed.
dredging of the entrance channel and harbor basin Petition for certiorari before SC, denied in a minute
of the CIP, Cebu. The winning bid was by FF Cruz. resolution.
FF Cruz and G. Reyes Construction executed a
Sub-Contract Agreement where the latter will ISSUE: WON AmHome is liable to FF Cruz for 2.2M
undertake 50% of the project. Among the terms
were: (1) upon receipt of notice to proceed, the sub- RULING: YES. It is clear that the surety bond was
contractor (SCR) shall file immediately a issued to guarantee the payment of the 15% adv.
performance bond equivalent to 10% of the total payment made by FF Cruz to G. Reyes. The bond
cost of the subcontract, and (2) SCR agrees to start was not issued to guarantee the completion of the
to work on the project within 30 days or as directed project. A provision in the bond shows that in order
by the PP from date of notice to proceed and to for AmHome’s liability to attach, two conditions
finish it within the time stipulated. FF Cruz gave G. must be fulfilled: (1) adv. payment made by FF Cruz
Reyes and advance payment of 2.2M guaranteed to G. Reyes remains unpaid and (2) G. Reyes fails
by a surety bond, which guarantees payment of the to comply with the T & C of the SC. Indeed, in this
advance payment made by FF Cruz to G. Reyes for case, FF Cruz remained unpaid. It was also
the project in the event that G. Reyes fails to comply established by the facts that G. Reyes did not finish
with the terms and conditions of the SC. As security the work. They weren’t able to dredge 50% cubic
for the bond, G. Reyes and his wife executed an meters as agreed. It was not even due to force
Indemnity Agreement, agreeing to be jointly and majure—there is no evidence of the alleged heavy
severally liable for all damages, costs, and siltation. FF Cruz was able to finish the project on
penalties of whatever kind and nature that it may time when G. Reyes abandoned the dredging work.
sustain as a consequence of being a surety. They Thus, the second condition also arose. The 2.2M is
also undertook to pay, reimburse, and make good the principal liability of G. Reyes. But because there
to American Home all sums which the latter shall was a suretyship contract, AmHome is also equally
pay on account of the bond. Their liability attaches liable. A contract of suretyship is an agreement
as soon as demand is received by AmHome from whereby a party called the surety, guarantees the
FF Cruz or as soon as it becomes liable under the performance by another party, called the principal
terms of the bond. A few months after its operation, or obligor, of an obligation or undertaking in favor of
G. Reyes complained to the PPA about the great another party called the obligee. The liability of the
deal of silt and waste materials which had surety is joint and several but is limited to the
accumulated in the area, affecting its work amount of the bond, and its terms are determined
accomplishment adversely. Then the equipment strictly by the terms of the contract of suretyship in
used started encountering difficulties because of relation to the principal contract between the obligor
siltation problems. Eventually G. Reyes admitted and the obligee. For lack of evidence to show the
that continuing the project was no longer a wise fact of payment, 2.2M is due FF Cruz.
investment, thus, FF Cruz took over. FF Cruz
demanded from AmHome 2.2M (amt. of the bond), ESCAÑO v. SILOS
and AmHome informed G. Reyes of such demand.
The claims were left unheeded. AmHome filed a FACTS: Private Dev’t Corporation of the Philippines
complaint for Sum of Money against G. Reyes (PDCP) entered into a loan agreement with Falcon
for the payment of the amount, in line with the Minerals (Falcon) whereby PDCP agreed to make
Indemnity Agreement. G. Reyes denied liability by available and lend Falcon the amt. of $320K. On the
saying that it did not fail to comply with its obligation same day, three stockholders-officers of Falcon,
to FF Cruz, because it is only then will their liability ORTIGAS, SCHOLEY AND SCHOLEY executed
arise. G. Reyes stated that it was the siltation an ASSUMPTION OF SOLIDARY LIABILITY
problems caused by FF Cruz that led to the failure whereby they agreed to assume in their indiv.
of the project. capacity, solidary liability with Falcon for due and
punctual payment for the loan. Two separate
RTC rendered the decision in favor of FF. Cruz. guaranties were executed by other stockholders, in
AmHome should pay FF Cruz the amount of the their individual capacities—ESCAÑO and SILOS,
bond and G. Reyes should pay AmHome the same SILVERIO, INDUCTIVO, and RODRIGUEZ.
Eventually, an agreement developed to cede express and indubitable terms characterizing the
control of Falcon to ESCAÑO, SILOS, and MATTI. obligation as solidary, the presumption is that the
Thus contracts were executed assigning their obligation is only joint. It thus becomes incumbent
shares of stock to the said persons, and part of the upon the party alleging that the obligation is indeed
consideration was that they will be relieved from all solidary in character to prove such fact with a
liability arising from previous joint and several preponderance of evidence. The Undertaking does
undertakings with Falcon. ESCAÑO, SILOS, AND not contain any express stipulation that the
MATTI (ESM) were then made as sureties—(1) petitioners agreed "to bind themselves jointly and
shall be informed if PDCP makes a demand, (2) severally" in their obligations to the Ortigas group,
sureties agree to defend obligors at their own or any such terms to that effect. Hence, such
expense and can be impleaded for indemnity, obligation established in the Undertaking is
subrogation, etc., (3) sureties shall reimburse within presumed only to be joint. Ortigas, as the party
7 days in the event that the obligors are made to alleging that the obligation is in fact solidary, bears
pay any mount, (4) they are waiving in favor of the burden to overcome the presumption of
sureties any and all fees due from FALCON. jointness of obligations. We rule and so hold that he
FALCON then availed $17M from the credit line failed to discharge such burden. Ortigas says that it
extended by PDCP, executing a deed of chattel is a surety contract thus there is solidary liability. a
mortgage over its personal prop to further secure surety agreement is an ancillary contract as it
the loan, but they defaulted in their payments. After presupposes the existence of a principal contract. It
foreclosure, there remained about 5MPesos and appears that Ortigas’s argument rests solely on the
this was not satisfied. ESCAÑO entered into a solidary nature of the obligation of the surety under
compromise agreement (COMPAG) where he Article 2047. In tandem with the nomenclature
agreed to pay the bank 1M. PDCP waived or "SURETIES" accorded to petitioners and Matti in
assigned in favor of Escaño 1/3 of the entire claim the Undertaking, however, this argument can only
in the complaint against all the other defendants in be viable if the obligations established in the
the case. ORTIGAS entered into his own COMPAG undertaking do partake of the nature of a suretyship
w/o knowledge of E, M, S. He agreed to pay 1.3M, as defined under Article 2047 in the first place. That
as full satisfaction of the claim against him. Silos clearly is not the case here, notwithstanding the use
agreed to pay 500K. Ortigas went after E, S, M on of the nomenclature "SURETIES" in the
the basis of the agreement before. Summary Undertaking.
Judgment by RTC ordered ESM to pay Ortigas. CA

ISSUE: WON Petitioners are liable to Ortigas on FACTS: Sanyu Chemical as principal and Sanyu
the basis of the undertaking. Trading along with individual private stockholders of
Sanyu Chemical, namely HALILI and BERMUNDO
RULING: YES. The interpretation posed by as SURETIES, executed in the continuing
petitioners would have held water had the Suretyship Agreement in favor of Atok Finance as
Undertaking made clear that the right of Ortigas to CREDITOR. It was stated in the agreement that (1)
seek reimbursement accrued only after he had indebtedness will be used in the most
delivered payment to PDCP as a consequence of a comprehensive sense, including all advances,
final and executory judgment. On the contrary, the debts, obligations and liabilities of the Principal,
clear intent of the Undertaking was for petitioners even if such be barred by the statue of limitations or
and Matti to relieve the burden on Ortigas and his otherwise unenforceable; (2) it is a continuing
fellow "OBLIGORS" as soon as possible, and not suretyship, binding upon heirs and successors; (3)
only after Ortigas had been subjected to a final and the obligations are joint and several; (4) the Creditor
executory adverse judgment. shall have the lien upon and a right of self-off
against all moneys, securities, and other property of
On the issue that the undertaking did not the Surety now and hereafter in the possession of
provide for express solidarity, the Civil Code the Creditor; (5) Any indebtedness of the Principal
provisions establish that in case of concurrence of now or hereafter held by the Surety is hereby
two or more creditors or of two or more debtors in subordinated to the indebtedness of the Principal to
one and the same obligation, and in the absence of the Creditor. In 1981, Sanyu Chemical assigned its
trade receivables outstanding to Atok Finance in position to enter into the projected series of
consideration of receipt from Atok Finance of the transactions with its creditor; with such surety
amount of P105,000.00. The assigned receivables agreement, there would be no need to execute a
carried a standard term of thirty (30) days; it separate surety contract or bond for each financing
appeared, however, that the standard commercial or credit accommodation extended to the principal
practice was to grant an extension of up to one debtor. As we understand it, this is precisely what
hundred twenty (120) days without penalties. In happened in the case at bar.
1984, Atok Finance commenced action against
Sanyu Chemical, the Arrieta spouses, Pablito BANK OF COMMERCE v. SPS FLORES
Bermundo and Leopoldo Halili before the Regional FACTS: A case for specific performance was filed
Trial Court of Manila to collect a sum of money plus by the respondents. They are the registered owners
penalty charges starting from 1 September 1983. of a condominium unit in West Triangle, QC. On
Atok Finance alleged that Sanyu Chemical had OCT 1993, they borrowed money from petitioner
failed to collect and remit the amounts due under bank amounting to PHP900,000. Respondents
the trade receivables. Sanyu Chemical and the executed an REM over the condominium as
individual private respondents sought dismissal of security. OCT 1995 they again borrowed PHP1.1m
Atok's claim upon the ground that such claim had from petitioner, also secured by a mortgage over
prescribed under Article 1629 of the Civil Code and the same property. On JAN 1996, respondents paid
for lack of cause of action. The private respondents about PHP1M, evidenced by a receipt. In there, it
contended that the Continuing Suretyship was written that the payment was in full payment of
Agreement, being an accessory contract, was null the loan and interest. Respondents asked petitioner
and void since, at the time of its execution, Sanyu to cancel the mortgage annotations, since the loans
Chemical had no pre-existing obligation due to Atok were paid in full, but the petitioner refused and
Finance. After trial the trial court rendered a demanded the payment of about PHP4.6M which
decision in favor of Atok Finance, ordering . On represented the outstanding obligation of the
appeal the CA reversed and set aside the decision respondents as of FEB 1998. Respondents
of the trial court and entered a new judgment requested for an accounting which would explain
dismissing the complaint of Atok Finance. how the said amount was arrived at, but the bank
did not heed this and instead applied for extra-
judicial foreclosure of the mortgages over the unit.
ISSUE: WON a continuing suretyship Respondents filed a suit with the RTC to assail the
agreement cannot be effected to secure future validity of the foreclosure and auction sale, arguing
debts that the loan was already fully paid and because the
sale failed to comply with the publication
requirement. A preliminary injunction was also filed
RULING: to enjoin the foreclosure. This was granted.
NO. There is no theoretical or doctrinal difficulty Petitioner argued that they have not yet fully settled
inherent in saying that the suretyship agreement their outstanding obligations, because they granted
itself is valid and binding even before the principal various credit lines to the respondents and the one
obligation intended to be secured thereby is born, that was paid for was only one of the many loans.
any more that there would be in saying that The others were already due and demandable but
obligations which are subject to a condition they had not been paid by the respondents despite
precedent are valid and binding before the repeated demands. The remaining loans, although
occurrence of the condition precedent. not availed of at the time, were secured by the REM
Comprehensive or continuing surety agreements as provided in the continuing guaranty agreement.
are in fact quite common place in present day Their PHP900,000 pesos bills discount line was
financial and commercial practice. A bank or a increased to PHP2M, secured by the same REM.
financing company which anticipates entering into Market value of the condo was lower so they agreed
a series of credit transactions with a particular to fix the amount of the REM at PHP1M. RTC
company, commonly requires the projected dismissed the case filed the Spouses, stating that
principal debtor to execute a continuing surety they indeed had to pay their debts first before they
agreement along with its sureties. By executing demand the release of the mortgage. They filed an
such an agreement, the principal places itself in a MR, but it was likewise denied. They appealed to
the CA, and it reversed the RTC, stating that the suretyship binding himself as a primary obligor that
principal obligations was already extinguished by warrants respondent bank the due and punctual
the full payment thereof, thus, the REMs as security payment by the debtors (PBM) of an amount of
were also extinguished. It also held that mortgages PHP10M, owing to TRB as creditor. The same will
mere NOT meant to serve as a continuing guaranty answer for the debt in case of default by the debtors
for future loans that respondents would obtain. as well as the due and faithful performance by the
same. Their liability shall be solidary, direct, and
ISSUE: WON REM over the condo is a immediate and not contingent upon the pursuit by
continuing guaranty for the future loans of the creditor.
respondent spouses despite full payment of the
principal loans. TRB granted PBM letters of credit on application of
Ching in his capacity as SVP of PBM. He then later
RULING: YES. Contested portion of the deed accomplished and delivered to TRB trust receipts,
indeed states that said property serves as a which acknowledged receipt in trust for TRB of the
security for the payment of the obligation including merchandise subject of the letters of credit. Under
all amounts now owed or hereafter owing by the MR them, PBM had the right to sell the merchandise for
to the ME as well as all other obligations already cash with the obligation to turn over the entire
incurred are which may hereafter be incurred for the proceeds of the sale to TRB as payment of PBM’s
use or accommodation of the MR. In other words, a indebtedness. Then the 3.5M trust loan was
continuing guaranty is one that covers all obtained, evidenced by a PN. PBM defaulted in the
transactions, including those arising in the future, payment of the trust loans and the letters of credit.
which are within the description or contemplation of Petitioners then filed a suspension of payments
the contract of guaranty, until the expiration or with the SEC, seeking to suspend payment of
termination thereof. A guaranty shall be construed PBM’s obligations and prayed that the SEC allow
as continuing when, by the terms thereof, it is PBM to continue its normal business operations
evident that the object is to give a standing credit to free from interference of its creditors. SEC placed
the principal debtor to be used from time to time PBM’s assets, liabilities, and obligations under the
either indefinitely or until a certain period, especially rehabilitation receivership of Kalaw, Escaler, and
if the right to recall the guaranty is expressly Associates. 10 months after, TRB filed with the
reserved. In the instant case, the language of the RTC a complaint for collection against petitioner,
real estate mortgage unambiguously reveals that but later moved to withdraw the same because SEC
the security provided in the real estate mortgage is had already placed pBM under receivership.
continuing in nature. Thus, it was intended as Petitioners also moved to dismissed on the grounds
security for the payment of the loans annotated at of lack of jurisdiction, and TRB filed an opposition
the back of CCT No. 2130, and as security for all arguing that Ching is being sued in his personal
amounts that respondents may owe petitioner capacity as a surety. Trial court denied the motion
bank. It is well settled that mortgages given to to dismiss with respect to Ching, stressing that TRB
secure future advance or loans are valid and legal was holding Ching liable under the deed of
contracts, and that the amounts named as suretyship. The CA reversed and ordered the
consideration in said contracts do not limit the dismissal of the case. RTC said that Ching is still
amount for which the mortgage may stand as liable as a surety, assuming to answer for PBM’s
security if from the four corners of the instrument liability to TRB in the event of default. The CA
the intent to secure future and other indebtedness affirmed but lowered his liability from 19M to 15M.
can be gathered.
ISSUE: WON Alfredo Ching was liable for the
PHILIPPINE BLOOMING MILLS v. CA and obligations contracted by PBM after the
TRADERS ROYAL BANK execution of the Deed of Suretyship.

FACTS: The case stems from an action to compel RULING: YES. It is elementary that a corporation
the petitioner to pay respondent bank amounts from has a personality distinct and separate from its
2 letters of credit and one trust loan (PHP950K, individual stockholders and members. Being an
1.1M, 3.5M). In his personal capacity and not as officer or stockholder of a corporation does not
senior VP of PBM, petitioner signed a deed of make one’s property the property also of the
corporation, for they are separate entities. Ching is payment of ₱150,000 initial payment. The
liable for credit obligations contracted by PBM resolution also states that TRB should not release
against TRB before and after the execution of the Ching’s solidary liability under his surety. The
21 July 1977 Deed of Suretyship. This is evident resolution even directs TRB’s management to study
from the tenor of the deed itself, referring to Ching’s criminal liability under the trust documents.
amounts PBM "may now be indebted or may Ching’s own witness testified that Resolution No.
hereafter become indebted" to TRB. The law 5935 was never implemented. For one, PBM or its
expressly allows a suretyship for "future debts". receiver never paid the ₱150,000 initial payment to
Article 2053 of the Civil Code provides: A guaranty TRB. TRB also rejected the document that PBM’s
may also be given as security for future debts, the receiver presented which would have released
amount of which is not yet known; there can be no Ching from his suretyship. Clearly, Ching cannot
claim against the guarantor until the debt is rely on Resolution No. 5935 to escape liability
liquidated. A conditional obligation may also be under his suretyship.
Ching is still liable for the amounts stated in the
Whether Ching’s liability is limited to the amount letters of credit covered by the trust receipts. Other
stated in PBM’s rehabilitation plan than his bare allegations, Ching has not shown
proof of payment or settlement with TRB. Atty.
Ching would like this Court to rule that his liability is Vicente Aranda, TRB’s corporate secretary and
limited, at most, to the amount stated in PBM’s First Vice President of its Human Resource
rehabilitation plan. In claiming this reduced liability, Management Department, testified that the
Ching invokes Article 1222 of the Civil Code which conditions in the TRB board resolution presented
reads: by Ching were not met or implemented.
A solidary debtor may, in actions filed by the
creditor, avail himself of all defenses which are Ching also claims that TRB prevented PBM from
derived from the nature of the obligation and of fulfilling its obligations under the trust receipts when
those which are personal to him, or pertain to his TRB, together with other creditor banks, took hold
own share. With respect to those which personally of PBM’s inventories, including the goods covered
belong to the others, he may avail himself thereof by the trust receipts. Ching asserts that this act of
only as regards that part of the debt for which the TRB released him from liability under the
latter are responsible. In granting the loan to PBM, suretyship. Ching forgets that he executed, on
TRB required Ching’s surety precisely to insure full behalf of PBM, separate Undertakings for each
recovery of the loan in case PBM becomes trust receipt expressly granting to TRB the right to
insolvent or fails to pay in full. This was the very take possession of the goods at any time to protect
purpose of the surety. Thus, Ching cannot use TRB’s interests. TRB may exercise such right
PBM’s failure to pay in full as justification for his own without waiving its right to collect the full amount of
reduced liability to TRB. As surety, Ching agreed to the loan to PBM. The Undertakings also provide
pay in full PBM’s loan in case PBM fails to pay in that any suspension of payment or any assignment
full for any reason, including its insolvency. TRB, as by PBM for the benefit of creditors renders the loan
creditor, has the right under the surety to proceed due and demandable.
against Ching for the entire amount of PBM’s loan.
This is clear from Article 1216 of the Civil Code: The Even though TRB took possession of the goods
creditor may proceed against any one of the covered by the trust receipts, PBM and Ching
solidary debtors or some or all of them remained liable for the entire amount of the loans
simultaneously. The demand made against one of covered by the trust receipts. Absent proof of
them shall not be an obstacle to those which may payment or settlement of PBM and Ching’s credit
subsequently be directed against the others, so obligations with TRB, Ching’s liability is what the
long as the debt has not been fully collected. Deed of Suretyship stipulates, plus the applicable
interest and penalties.
Ching further claims a reduced liability under TRB
Board Resolution No. 5935. This resolution states SBTC v. CUENCA
that PBM’s outstanding loans may be reduced to FACTS: On Nov. 1980, petitioner SBTC granted
₱1.373 million subject to certain conditions like the SIMC a credit line amounting to PHP8M to assist
the latter in meeting the additional capitalization RULING: YES. For there to be novation, the
requirements of its logging operations. The Credit following requisites must be established: (1) there
Approval memo expressly stated it such facility is a previous valid obligation; (2) the parties
shall be effective until NOV 30, 1981. Respondent concerned agree to a new contract; (3) the old
Cuenca bound himself JOINTLY AND SEVERALLY contract is extinguished; and (4) there is a valid new
with SIMC in favor of the bank for the payment, contract. Clearly, the requisites of novation are
upon demand and without the benefit of excussion present in this case. The 1989 Loan Agreement
of whatever amount…including the substitutions, extinguished the obligation18 obtained under the
renewals, extensions, increases, amendments, 1980 credit accommodation. This is evident from its
conversions, and revivals of the aforesaid credit explicit provision to "liquidate" the principal and the
accommodations. 4 days prior to the expiration of interest of the earlier indebtedness. the 1989 Loan
the period of effectivity of the credit facility, SIMC Agreement expressly stipulated that its purpose
made a first drawdown from its credit line with was to "liquidate," not to renew or extend, the
SBTC amounting to PHP6.1M. To cover this, a PN outstanding indebtedness. Moreover, respondent
was executed for the amount. did not sign or consent to the 1989 Loan
Agreement, which had allegedly extended the
Sometime in 1985, the shareholdings of Cuenca original ₱8 million credit facility. Hence, his
were sold at a public auction and was bought by a obligation as a surety should be deemed
certain Angala, the highest bidder therein. Then, extinguished, pursuant to Article 2079 of the Civil
SIMC repeatedly availed of its credit line and Code, which specifically states that "an extension
obtained 6 other loans amounting to PHP6.3M, and granted to the debtor by the creditor without the
executed PNs to cover the amounts of the consent of the guarantor extinguishes the guaranty.
additional loans. SIMC however found difficulty to The theory behind Article 2079 is that an extension
pay for the amortization on its loans and requested of time given to the principal debtor by the creditor
for the restructuring of the indebtedness. This was without the surety’s consent would deprive the
accommodated by SBTC without notice to or the surety of his right to pay the creditor and to be
prior consent of Cuenca. The 6.1M loan, which is immediately subrogated to the creditor’s remedies
the only loan covered by the indemnity agreement, against the principal debtor upon the maturity date.
was lumped together with the other loans in the The surety is said to be entitled to protect himself
restructuring. So the restructuring was then against the contingency of the principal debtor or
formalized, the loan now amounting to PHP12M, to the indemnitors becoming insolvent during the
be released in two tranches. The first shall be extended period.
applied to liquidate the principal portion of SIMC’s
present total outstanding indebtedness while the At the outset, we should emphasize that an
second shall be applied to liquidate the past due essential alteration in the terms of the Loan
interest and penalty portion of the indebtedness. Agreement without the consent of the surety
SIMC still defaulted in the payment of the extinguishes the latter’s obligation. As the Court
restructured loan, thus SBTC filed a complaint for held in National Bank v. Veraguth, "it is fundamental
collection, which was resolved in their favor. Upon in the law of suretyship that any agreement
appeal, the CA ruled that the loan agreement between the creditor and the principal debtor which
novated the initial accommodation earlier granted, essentially varies the terms of the principal contract,
which effectively extinguished the indemnity without the consent of the surety, will release the
agreement where Cuenca bound himself to be surety from liability."
solidarily liable for the payment of the loans secured
by the credit accommodation. It held that the While respondent held himself liable for the credit
restructuring was tantamount to a grant of an accommodation or any modification thereof, such
extension of time without the consent of the surety. clause should be understood in the context of the
₱8 million limit and the November 30, 1981 term. It
ISSUE: WON the Loan Agreement novated the did not give the bank or Sta. Ines any license to
original credit accommodation and Cuenca’s modify the nature and scope of the original credit
liability under the Indemnity Agreement accommodation, without informing or getting the
consent of respondent who was solidarily liable.
Taking the bank’s submission to the extreme,
respondent (or his successors) would be liable for were sent to her and to Regala Jr. A complaint was
loans even amounting to, say, ₱100 billion obtained filed in Court for her failure to settle their obligation.
100 years after the expiration of the credit Celia was declared in default; Regala Jr however
accommodation, on the ground that he consented said that his liability was limited to PHP2,000 per
to all alterations and extensions thereof. month. RTC ruled in favor of the bank. The IAC
modified the decision of the RTC saying that
Indeed, it has been held that a contract of surety Regala Jr should only be liable for PHP2,000 per
"cannot extend to more than what is stipulated. It is month because it was the credit limit granted to
strictly construed against the creditor, every doubt Celia.
being resolved against enlarging the liability of the
surety." Likewise, the Court has ruled that "it is a ISSUE: WON Regala Jr.’s liability is limited to
well- settled legal principle that if there is any doubt PHP2,000 per month only
on the terms and conditions of the surety
agreement, the doubt should be resolved in favor of RULING: NO. Regala Jr. is liable for all
the surety. Ambiguous contracts are construed indebtedness and liabilities due and incurred by
against the party who caused the ambiguity." Celia as stated in the Undertaking, including any
changes to the provisions of its terms and
That the Indemnity Agreement is a continuing conditions and his liability shall subsist until all has
surety does not authorize the bank to extend the been satisfied. The undertaking signed by Roberto
scope of the principal obligation inordinately. In Regala, Jr. although denominated "Guarantor's
Dino v. CA, the Court held that "a continuing Undertaking," was in substance a contract of
guaranty is one which covers all transactions, surety. As distinguished from a contract of guaranty
including those arising in the future, which are where the guarantor binds himself to the creditor to
within the description or contemplation of the fulfill the obligation of the principal debtor only in
contract of guaranty, until the expiration or case the latter should fail to do so, in a contract of
termination thereof." To repeat, in the present case, suretyship, the surety binds himself solidarily with
the Indemnity Agreement was subject to the two the principal debtor.
limitations of the credit accommodation: (1) that the
obligation should not exceed ₱8 million, and (2) that We need not look elsewhere to determine the
the accommodation should expire not later than nature and extent of private respondent Roberto
November 30, 1981. Hence, it was a continuing Regala, Jr.'s undertaking. As a surety he bound
surety only in regard to loans obtained on or before himself jointly and severally with the debtor Celia
the aforementioned expiry date and not exceeding Regala "to pay the Pacific Banking Corporation
the total of ₱8 million. upon demand, any and all indebtedness,
obligations, charges or liabilities due and incurred
PACIFIC BANKING CORP v. IAC by said Celia Syjuco Regala with the use of
FACTS: On OCT 1975, Celia Regala applied for an Pacificard or renewals thereof issued in (her) favor
obtained from the plaintiff the issuance and use of by Pacific Banking Corporation." Private
Pacificard credit card, under T&C which governs respondent Roberto Regala, Jr. had been made
the use of such card. A copy of this was issued to aware by the terms of the undertaking of future
and received by Celia and agreed that the use of changes in the terms and conditions governing the
the card is governed by the T&C. On the same date, issuance of the credit card to his wife and that
Regala Jr, the former’s spouse, executed a notwithstanding, he voluntarily agreed to be bound
guarantor’s undertaking in favor of the Bank, as a surety. As in guaranty, a surety may secure
wherein he agreed to pay jointly and severally any additional add future debts of the principal debtor
and all indebtedness and liabilities of Celia with the the amount of which is not yet known.
bank upon demand. It was also stipulated that no
changes or novation will release Regala Jr. from GATEWAY ELECTRONICS v. ASIANBANK
liability, and this shall subsist and bind him until said FACTS: Petitioner is a domestic corporation used
liabilities are fully satisfied. Celia then used the car to be engaged in the semi-conductor business.
to purchase goods and/or services for credit, the Geronimo and Andrew delos Reyes (P and VP),
cost of which amounted to about PHP90,000. She executed separate but identical deeds of suretyship
failed to settle her account, and so demand letters in favor of respondent bank, indicating that said
persons will be liable in case of default, together
with all interests, penalty, and other bank charges
as may accrue; the due and faithful performance by
the DRs of all the obligations to be performed under
the contracts evidencing indebtedness. This liability
is solidary, direct and immediate, and not
contingent upon the pursuit by the Creditor.
Eventually, petitioner defaulted in its obligations.
Upon request, the bank extended the maturity
dates with conformity of three officers including
Andrew. Gateway issued two PCIB checks as
payment but both were dishonored for insufficiency
of funds. The bank’s further demands for payment
were unheeded.