Palmares vs.

CA
(288 SCRA 422)Facts:
Private respondent M.B. Lending Corporation extended a loan to the spouses Osmea and
Merlyn Azarraga, together with petitioner Estrella Palmares, in the amount of P30, 000.00
payable on o rbefore May 12, 1990, with compounded interest at the rate of 6% per annum
to be computed every 30days from the date thereof. 1 On four occasions after the execution of
the promissory note and even after the loan matured, petitioner and the Azarraga spouses were
able to pay a total of P16, 300.00,thereby leaving a balance of P13,700.00. No payments were
made after the last payment on September 26, 1991. 2Consequently, on the basis of petitioner's
solidary liability under the promissory note, Respondent Corporation filed a complaint 3 against
petitioner Palmares as the lone party-defendant, to the exclusion of the principal debtors,
allegedly by reason of the insolvency of the latter.
Issue: WON Palmares is liable
Held:
If a person binds himself solidarily with the principal debtor, the provisions of Section 4,
Chapter3, Title I of this Book shall be observed. In such case the contract is called a suretyship.
It is a cardina lrule in the interpretation of contracts that if the terms of a contract are clear
and leave no doubt upon the intention of the contracting parties, the literal meaning of its
stipulation shall control. 13 In the case at bar, petitioner expressly bound herself to be jointly and
severally or solidarily liable with the principal maker of the note. The terms of the contract are
clear, explicit and unequivocal that petitioner's liability is that of a surety

E Zobel, Inc. vs. CA

Facts: Respondentr spouses applied for a loan with respondent SOLIDBANK. The loan
was granted subject to the condition that spouses execute a chattel mortgage over the 3
vessels to be acquired by them and that a continuing guarantee be executed by petitioner EZ, Inc. in
favor of Solid Bank. The spouses defaulted in payment of the entire obligation uponmaturity. Solid
Bank filed a complaint for the sum of money against EZ Zobel. Petitioner moved to dismiss the
complaint on the ground that its liability as guarantor of the loan was extinguished pursuant to Article
2080.
Issue:
1.WON Art. 2080 is applicable to petitioner;
2.WON petitioners obligation to SOLIDBANK under the continuing
guaranty is that of a surety;
3.WON the failure of SOLIDBANK to register the chattel mor
t g a g e extinguish petitioners liability to SOLIDBANK
Held:
1.Art. 2080 is not applicable where liability is a surety
2.Petitioner obligated itself as a surety the contract executed is
a contact of surety
3.Petitioner bound itself irrespective of existence of collateral failure toregister the chattel
mortgage did not release petitioner from obligation.
Art2080 The guarantors, even though they be solidarily, are released from theirobligation whenever
by some act of the creditor they cannot be subrogated tothe rights, mortgages, and preferences of the latter.