Ong v. PCIB
PPIC
FACTS: Spouses petitioners, President and Treasurer of BMC
obtained a loan from respondent, they signed as sureties. Thereafter,
BMC was under receivership, MOA with all creditors not to collect
for a period of time. Petitioners contend benefits them as
sureties/guarantors. TC, CA, SC for respondent, petitioners are not
guarantors but sureties, bank may after them or BMC.
DOCTRINE: There is a sea of difference in the rights and liabilities
of a guarantor and a surety. A guarantor insures the solvency of the
debtor while a surety is an insurer of the debt itself. A contract of
guaranty gives rise to a subsidiary obligation on the part of the
guarantor. It is only after the creditor has proceeded against the
properties of the principal debtor and the debt remains unsatisfied that
a guarantor can be held liable to answer for any unpaid amount.
International Finance vs Imperial Textile
Date: November 15, 2005
Petitioner: International Finance Corporation
Respondent: Imperial Textile Mills Inc
Ponente: Panganiban
Facts:
- - IFC claims that, under the Guarantee Agreement, ITM bound itself as
On December 17, 1974, IFC and Philippine Polyamide Industrial
Corporation entered into a loan agreement wherein IFC extended to
PPIC a loan of US$7,000,000 payable in sixteen (16) semi - annual
installments of US$437,500.00 each, with 10% interest. The interest
shall be paid in US dollars semi-annually.
A „Guarantee Agreement‟ was executed with ITM, Grand Textile
Manufacturing Corporation and IFC as parties. ITM and Grandtex
agreed to guarantee PPIC‟s obligations under the loan agreement.
defaulted payments. By virtue of PPIC‟s failure to pay, IFC, together
with DBP, applied for the extrajudicial foreclosure of mortgages on the
real estate, buildings, machinery, equipment plant and all improvements
owned by PPIC. During the public sale, IFC‟s bid was for P99, 269,100
which was equivalent to US$5,250,000. The outstanding loan, however,
amounted to US$8,083,967, thus leaving a balance of US$2,833,967
PPIC failed to pay the remaining balance. Consequently, IFC demanded
ITM and Grandtex, as guarantors of PPIC, to pay the outstanding
balance. However, the two failed to pay. - IFC filed a complaint against
PPIC and ITM for the payment of the outstanding balance plus interests
and attorney‟s fees. The trial court dismissed the complaint against ITM.
The CA reversed and held that ITM bound itself under the Guarantee
Agreement. The CA, however, held that ITM‟s liability as a guarantor
would arise only if and when PPIC could not pay. Since PPIC‟s inability
to comply with its obligation was not sufficiently established, ITM could
not immediately be made to assume the liability.
Issue:
WON ITM and Grandtex are sureties and therefore, jointly and severally
liable with PPIC, for the payment of the loan.
Held: Yes
Ratio:
a surety to PPIC‟s obligations proceeding from the Loan Agreement. For
its part, ITM asserts that, by the terms of the Guarantee Agreement, it
was merely a guarantor and not a surety. Moreover, any ambiguity in
the Agreement should be construed against IFC -- the party that drafted
it. - The Agreement uses “guarantee” and “guarantors,” prompting ITM
to base its argument on those words. This Court is not convinced that the
use of the two words limits the Contract to a mere guaranty. The specific
stipulations in the Contract show otherwise. While referring to ITM as a
guarantor, the Agreement specifically stated that the corporation was
“jointly and severally” liable. To put emphasis on the nature of that
liability, the Contract further stated that ITM was a primary obligor, not
a mere surety. Those stipulations meant only one thing: that at bottom,
and to all legal intents and purposes, it was a surety. - Indubitably
therefore, ITM bound itself to be solidarily liable with PPIC for the
latter‟s obligations under the Loan Agreement with IFC. ITM thereby
brought itself to the level of PPIC and could not be deemed merely
secondarily liable. - Initially, ITM was a stranger to the Loan Agreement
between PPIC and IFC. ITM‟s liability commenced only when it
guaranteed PPIC‟s obligation. It became a surety when it bound itself
solidarily with the principal obligor. Thus, the applicable law is Art 2047
CC. Pursuant to this provision, petitioner (as creditor) was justified in
taking action directly against respondent. - The Court does not find any
ambiguity in the provisions of the Guarantee Agreement. When
qualified by the term “jointly and severally,” the use of the word
“guarantor” to refer to a “surety” does not violate the law. As Art 2047
provides, a suretyship is created when a guarantor binds itself solidarily
with the principal obligor. Likewise, the phrase in the Agreement --“as
primary obligor and not merely as surety” -- stresses that ITM is being
placed on the same level as PPIC. Those words emphasize the nature of
their liability, which the law characterizes as a suretyship.
E.ZOBEL, INC. vs. CA GR# 113931, May 6, 1998
FACTS: Respondent Spouses Claveria, doing business under the name “
Agro Brokers”, applied for a loan with respondent Consolidated Bank &
Trust Corp. (now SOLID BANK) amounting to P2.875M. The loan was
granted subject to the condition that respondent spouses execute a chattel
mortgage over the 3 vessels to be acquired and that a continuing guarantee
be executed by Ayala International Phils., Inc., now herein petitioner
E.Zobel, Inc. in SOLID BANK’s favor. The Claverias defaulted in the
payment of the entire obligation upon maturity. Petitioner moved to dismiss
the complaint asserting that its liability as guarantor of the loan was
extinguished pursuant to A.2080, NCC. It argued that it has lost its right to
be subrogated to the first chattel mortgage in view of SOLIDBANK’s
failure to register the chattel mortgage with the appropriate government
agency. SOLIDBANKmeantime claimed that A.2080 is not applicable
because petitioner is not a guarantor but a surety.
HELD: In the contract executed by petitioner in SOLIDBANK’s favor,
albeit denominated as a “Continuing Guaranty”, is in fact a contract of
surety. The contract’s terms obligates petitioner as “surety” to induce
SOLIDBANK to extend credit to the Claverias. The contract clearly
disclose that petitioner assumed liability to SOLIDBANK, as a regular party
the undertaking and obligated itself as an original promissory. It bound
itself jointly and severally to the obligation with the Claverias. In fact,
SOLIDBANK need not resort to all other legal remedies or exhaust the
Claverias’ properties before it can hold petitioner liable for the obligation.
Since the petitioner is a surety, A.2080, NCC is inapplicable. Said article
applies where the liability is as a guaranty not as a surety.
TACAO VS. COURT OF APPEALS G.R. No. 127405
Facts: William Belo introduced Nenita Anay to his girlfriend,
Marjorie Tocao. The three agreed to form a joint venture for the sale
of cooking wares. Belo was to contribute P2.5 million; Tocao also
contributed some cash and she shall also act as president and general
manager; and Anay shall be in charge of marketing. Belo and Tocao
specifically asked Anay because of her experience and connections as
a marketer. They agreed further that Anay shall receive the following:
1. 10% share of annual net profits
2. 6% overriding commission for weekly sales
3. 30% of sales Anay will make herself
4. 2% share for her demo services
 They operated under the name Geminesse Enterprise, this name
was however registered as a sole proprietorship with the Bureau of
Domestic Trade under Tocao. The joint venture agreement was not
reduced to writing because Anay trusted Belo’s assurances.The
venture succeeded under Anay’s marketing prowess.But then the
relationship between Anay and Tocao soured. One day, Tocao
advised one of the branch managers that Anay was no longer a part
of the company. Anay then demanded that the company be audited
and her shares be given to her.
Issue: Whether or not there is a partnership
Held: Yes, even though it was not reduced to writing, for a
partnership can be instituted in any form. The fact that it was
registered as a sole proprietorship is of no moment for such
registration was only for the company’s trade name. Anay was not
even an employee because when they ventured into the agreement,
they explicitly agreed to profit sharing this is even though Anay was
receiving commissions because this is only incidental to her efforts as
a head marketer.
The Supreme Court also noted that a partner who is excluded
wrongfully from a partnership is an innocent partner. Hence, the
guilty partner must give him his due upon the dissolution of the
partnership as well as damages or share in the profits “realized from
the appropriation of the partnership business and goodwill.” An
innocent partner thus possesses “pecuniary interest in every existing
contract that was incomplete and in the trade name of the co-
partnership and assets at the time he was wrongfully expelled.”
ASTRO ELECTRONIC CORP. & ROXAS VS. PHIL. EXPORT
&FOREIGN LOAN GUARANTEE CORP.
G.R. No. 136729. September 23, 2003
Facts: Astro Electronic Corp. (Astro) was granted several loans by
Phil. Trust Co. (Phil Trust) amounting to Php 3,000.00 with interest
and secured by three promissory notes. In each note, it appears that
Roxas signed twice as president of Astro and in his personal capacity.
Thereafter, Philippine Export & Foreign Guarantee Corp. (Phil
Guarantee), with the consent of Astro, guaranteed in favor of Phil
Trust the payment of 70% of Astro’s loan. Upon the latter’s failure to
pay its loan obligation, despite demands, Phil Guarantee paid 70% of
the guaranteed loan. The Phil Trust and Phil Guarantee subsequently
filed against astro and Roxas a complaint for sum of money. The
Regional Trial Court rendered its decision ordering Astro & Roxas to
pay jointly and severally Phil Guarantee the sum of Php 3, 621,
187.52 with interest and cost.
Issue: Whether or not Roxas should be jointly and severally liable
with Astro for the sum awarded by the RTC.
Held: By signing twice, as president of Astro and in his personal
capacity, Roxas became a co-maker of the notes and cannot escape
any liability arising from it. Under the NIL, persons who write their
names on the face of the note as makers, promising that they will pay
to the order of the payee or any holder according to its tenor will be
liable as such. Roxas is primarily liable as a joint and several debtor
considering that his intention to be liable is manifested by the fact that
he affixed his signature twice in each of the three promissory notes
which necessarily would imply that he is undertaking the obligation
in two different capacities, official and personal.
Spouses when bank
Toh vs extended the
Solidbank payment
- Surety date?
Issue Facts
:Is the surety :1.RESPOND
discharged ENT SOLID
BANK %o "& P1'
CORPORATI million in
ON AGREED #a(o o#
TO EXTEND es)on!en" *i
an omnibus s" Business
line Pa)e
c e!i"#acili"$ Co )o a"ion
+*BPC,.- ince o"&e
.s)ouses Luis co2su e"$
To& an! ic/$ # au!ulen"l$
Tan To& !e)a "e!3
si0ne! "&e Ban/ !eman!
con"inuin0 # om
0ua an"$ .s S)ouses To&
)a$men"4.se( !a$s %i"&
e al le""e s ala min0l$
o# c e!i" #la%e!
%e e an!ina!e7ua"e
i e(ocabl$ consi!e a"ion
e5"en!e! #o Ruling:
nine"$ +6',
1.Yes. the extensions of
illicit the letters
extension re of credit
leases the made by
sureties respondent
“The Bank without
foregoing observing the
rigidrestrictio the
ns for ContinuingGu
exercising the aranty
privilege are Art. 2079
not covered of the
by the waiver
stipulated in
Civil Code, without the
[a n consentof
extension the
granted to guarantor
the debtor extinguishes
by the the
creditor guaranty
 As a an! ic/$ Tan
result To& a e
of these illicit relievedof
extensions their
3 obligations
)e"i"ione 2s)o as sureties of
uses Luis To& respondent
 *BPC un!e en#o cin0
A ". -'86 o# "&e
"&e Ci(il in!eb"e!ness
Co!e.9 an !oes no" b$
e5"ension o# i"sel# b in0
"&e )e io! abou" "&e
#o !isc&a 0eo#
"&e su e"ies liabili"$ o# a
unless "&e su e"$ is
e5" a "ime is measu e! b$
no" )e mi""e! "&e "e ms o#
%i"&in "&e &is
"e ms o# "&e con" ac"3
%ai(e ;9"&e an! %&ile &e
is liable "o assume! b$
"&e #ull i"s "e ms.;
e5"en""&e e 2.Moreover,
o#3 &is they are acc
accoun"abili"$ ommodation
is s" ic"l$ sureties3.Th
limi"e! "o "&a" e
conse uenc under !rt.
e of these 2"#" of the
omissions is $ivil $ode,
%&'(
to discharge
the surety, or at the
petitioners very least,
herein, mitigate the
liability of *o "&is
the surety up un%a an"e
tothe value ! e5e cise o#
of the !isc e"ion3
property or es)on!en"
lien released Ban/ bea s
"&e loss< !ue
"o uses Luis To&
i"s unau"&o i an! ic/$ Tan
=e!e5"ensions To& a e
"o )a$ !isc&a 0e!
0 an"e! "o assu e"ies
*BPC3 un!e "&e
)e"i"ione 2s)o Con"inuin0
Gua an"9 i# "&e ) inci)al
"&e s&all #u nis&
su e"$s&i) "&e c e!i"o
con" ac" a!!i"ional
%as ma!e secu i"$3 an!
u)on "&e "&e secu i"$
con!i"ion "&a" bein0
#u nis&e! is %&oll$
un!e "&ese !isc&a 0e!3
con!i"ions is %i"&ou"
a#"e %a !s e0a ! "o
elease! b$ "&e (alue o#
"&ec e!i"o 3 "&e
"&e su e"$ secu i"ies
 >?-@
elease!3
#o suc& ;
a" ansac"ion 4.
amoun"s "o the
an al"e a"ion $ontinuing
o# "&e main )uaranty is a
con" ac". valid and
binding the
contract of presumption
petitioner*sp of
ouses as it is authenticity
apublic and due
document execution
that en+oys
“we are ouses #uis
bound by the Toh and$icky
consistent Tan Toh
finding of voluntarily
the courts a affixed their
!uo that signature[s
petitioner"sp on the surety
agreement forms% “spou
and were thus ses #uis Toh
at somegiven and $icky Tan
point in time Toh are bound
willing to be to the the
liable under surety
those agreement%