FIDELIZA J. AGLIBOT, Petitioner, v. INGERSOL L. SANTIA, Respondent.

FACTS: Engr. Ingersol L. Santia (Santia) loaned the amount of P2,500,000.00 to Pacific
Lending & Capital Corporation (PLCC), through its Manager, petitioner Fideliza J. Aglibot
(Aglibot). The loan was evidenced by a promissory note. Allegedly as a guaranty for the
payment of the note, Aglibot issued and delivered to Santia eleven (11) post-dated personal
checks drawn from her own account maintained at Metrobank. Upon presentment of the checks
for payment, they were dishonored by the bank for having been drawn against insufficient funds
or closed account. Santia thus demanded payment from PLCC and Aglibot of the face value of
the checks, but neither of them heeded his demand. Consequently, eleven (11) Informations for
violation of B.P. 22 were filed before the MTCC.

MTCC acquitted Aglibot. On appeal, the RTC rendered a decision absolving Aglibot and
dismissing the civil aspect of the case on the ground of failure to fulfill a condition precedent of
exhausting all means to collect from the principal debtor.

On appeal, the Court of Appeals ruled that the RTC erred when it dismissed the civil aspect of
the case. Hence, the CA ruled that Aglibot is personally liable for the loan.

Thus, Aglibot filed this instant petition for certiorari. She argued that she was merely a guarantor
of the obligation and therefore, entitled to the benefit of excussion under Article of the 2058 of
the Civil Code. She further posited that she is not personally liable on the checks since she
merely contracted the loan in behalf of PLCC.

ISSUES:

Is Aglibot entitled to the benefit of excussion?

Is Aglibot personally liable on the checks?

HELD: It is settled that the liability of the guarantor is only subsidiary, and all the properties of
the principal debtor, the PLCC in this case, must first be exhausted before the guarantor may be
held answerable for the debt. Thus, the creditor may hold the guarantor liable only after
judgment has been obtained against the principal debtor and the latter is unable to pay, for
obviously the exhaustion of the principals property the benefit of which the guarantor claims
cannot even begin to take place before judgment has been obtained. This rule is contained in
Article 2062 of the Civil Code, which provides that the action brought by the creditor must be
filed against the principal debtor alone, except in some instances mentioned in Article 2059
when the action may be brought against both the guarantor and the principal debtor.

The Court must, however, reject Aglibots claim as a mere guarantor of the indebtedness of
PLCC to Santia for want of proof, in view of Article 1403(2) of the Civil Code, embodying the
Statute of Frauds. Under the above provision, concerning a guaranty agreement, which is a
promise to answer for the debt or default of another, the law clearly requires that it, or some
note or memorandum thereof, be in writing. Otherwise, it would be unenforceable unless
ratified, although under Article 1358 of the Civil Code, a contract of guaranty does not have to
appear in a public document. Contracts are generally obligatory in whatever form they may have
been entered into, provided all the essential requisites for their validity are present, and the
Statute of Frauds simply provides the method by which the contracts enumerated in Article
1403(2) may be proved, but it does not declare them invalid just because they are not reduced
to writing. Thus, the form required under the Statute is for convenience or evidentiary purposes
only.

On the other hand, Article 2055 of the Civil Code also provides that a guaranty is not presumed,
but must be express, and cannot extend to more than what is stipulated therein. This is the
obvious rationale why a contract of guarantee is unenforceable unless made in writing or
evidenced by some writing.

***

The appellate court ruled that by issuing her own post-dated checks, Aglibot thereby bound
herself personally and solidarily to pay Santia, and dismissed her claim that she issued her said
checks in her official capacity as PLCCs manager merely to guarantee the investment of Santia.
The facts present a clear situation where Aglibot, as the manager of PLCC, agreed to
accommodate its loan to Santia by issuing her own post-dated checks in payment thereof. She
is what the Negotiable Instruments Law calls an accommodation party.

The relation between an accommodation party and the party accommodated is, in effect, one of
principal and surety the accommodation party being the surety. It is a settled rule that a surety is
bound equally and absolutely with the principal and is deemed an original promisor and debtor
from the beginning. The liability is immediate and direct. It is not a valid defense that the
accommodation party did not receive any valuable consideration when he executed the
instrument; nor is it correct to say that the holder for value is not a holder in due course merely
because at the time he acquired the instrument, he knew that the indorser was only an
accommodation party. Unlike in a contract of suretyship, the liability of the accommodation party
remains not only primary but also unconditional to a holder for value, such that even if the
accommodated party receives an extension of the period for payment without the consent of the
accommodation party, the latter is still liable for the whole obligation and such extension does
not release him because as far as a holder for value is concerned, he is a solidary co-debtor.

DENIED