RCBC VS ARRO

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 anytime or from time to time to make loans or advances or to extend credit to said Daicor, provided that
theliability shall not exceed 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 RCBC’s 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.1of
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 maybe come 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 Daicoras 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.”