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3rd Assignment Digests (2)

3rd Assignment Digests (2)

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Published by Kat Pichay

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Published by: Kat Pichay on Sep 18, 2012
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This is an action brought by plaintiffs to recover fromdefendant the sum of P10,000. The brief decision of the trialcourt held that the suit was premature, and absolved thedefendant from the complaint, with the costs against the plaintiffs. Sellner wrote;
…I will, within fifteen days after notice of such default, pay youin cash the sum of P10,000 and interest upon your  surrendering to me the three thousand shares of stock of the Keystone Mining Co. held by you as security for the payment o said note.
Determination of defendant's status in the transaction referredto. Plaintiffs contend that he is a surety; defendant contendsthat he is a guarantor. Plaintiffs also admit that if defendant isa guarantor, articles 1830, 1831, and 1834 of the Civil Codegovern.
The points of difference between a surety and a guarantor arefamiliar to American authorities. A surety and a guarantor arealike in that each promises to answer for the debt or default of another. A surety and a guarantor are unlike in that the suretyassumes liability as a regular party to the undertaking, whilethe liability as a regular party to upon an independentagreement to pay the obligation if the primary pay or fails todo so. A surety is charged as an original promissory; theengagement of the guarantor is a collateral undertaking. Theobligation of the surety is primary; the obligation of theguarantor is secondary.It is perfectly clear that the obligation assumed by defendantwas simply that of a guarantor, or, to be more precise, of the
whose responsibility is fixed in the Civil Code. Theletter of Mr. Sellner recites that if the promissory note is not paid at maturity, then, within fifteen days after notice of suchdefault and upon surrender to him of the three thousand sharesof Keystone Mining Company stock, he will assumeresponsibility. Sellner is not bound with the principals by thesame instrument executed at the same time and on the sameconsideration, but his responsibility is a secondary one foundin an independent collateral agreement, Neither is Sellner  jointly and severally liable with the principal debtors.
61 SCRA 67 (1974)BARREDO, J.
 AGREEMENT OF LOAN  KNOW YE ALL MEN BY THESE PRESENTS:That I, ESTEBAN PICZON, of legal age, married, Filipino, and resident of and with postal address in the municipality of Catbalogan, Province of Samar, Philippines, in my capacity asthe President of the corporation known as the "SOSING- LOBOS and CO., INC.," as controlling stockholder, and at the same time as guarantor for the same, do by these presentscontract a loan of Twelve Thousand Five Hundred Pesos(P12,500.00), Philippine Currency, the receipt of which ishereby acknowledged, from the "Piczon and Co., Inc." another corporation, the main offices of the two corporations being inCatbalogan, Samar, for which I undertake, bind and agree touse the loan as surety cash deposit for registration with theSecurities and Exchange Commission of the incorporation papers relative to the "Sosing-Lobos and Co., Inc.," and toreturn or pay the same amount with Twelve Per Cent (12%)interest per annum, commencing from the date of executionhereof, to the "Piczon and Co., Inc., as soon as the said incorporation papers are duly registered and the Certificate of  Incorporation issued by the aforesaid Commission. IN WITNESS WHEREOF, I hereunto signed my name inCatbalogan, Samar, Philippines, this 28th day of September,1956.
:Whether or not Esteban was only a guarantor and not a surety.RulingUnder the terms of the contract, Annex A, Esteban Piczonexpressly bound himself only as guarantor, and there are nocircumstances in the record from which it can be deduced thathis liability could be that of a surety. A guaranty must beexpress, (Article 2055, Civil Code) and it would be violativeof the law to consider a party to be bound as a surety when thevery word used in the agreement is "guarantor 
63 PHIL. 51DIAZ, J.FactsThis is an action brought by the municipality of Gasan of theProvince of Marinduque, against Miguel Marasigan, Angel R.Sevilla and Gonzalo L. Luna, to recover from them the sum of P3,780, alleging that it forms a part of the license fees whichMiguel Marasigan failed to pay for the privilege granted himof gathering whitefish spawn (
 semillas de bañgus
) in the jurisdictional waters of the plaintiff municipality during the period from January 1, 1931, to December 31 of said year.Error raised by the Defendant-Sureties;
The court a quo erred in not absolving the defendants Angel R. Sevilla and Gonzalo L. Luna, sureties of the defendant Miguel Marasigan,notwithstanding the fact that resolution No. 161, by virtue of which said defendant subscribed the bond Exhibit B of thecomplaint, had been declared null and void by the provincial board and by the Executive Bureau.
Issue: Whether or not a suretyship existRuling:In either case, it is a fact that, said contract ceased to have lifeor force to bind each of the contracting parties. It ceased to bevalid from the time it was cancelled and this being so, neither the appellant Marasigan nor his sureties or the appellants were bound to comply with the terms of their respective contracts of fishing privilege and suretyship. This is so, particularly withrespect to the sureties-appellants, because suretyship cannotexist without a valid obligation (art. 1824 of the Civil Code).The obligation whose compliance by the appellant Marasiganwas guaranteed by the sureties-appellants, was exclusivelythat appearing in Exhibit A, which should begin on January 1,1931, not on the 14th of said month and year, and end onDecember 31st next. They intervened in no other subsequentcontract which the plaintiff and Miguel Marasigan might haveentered into on or after January 14, 1931. Guaranty is not, presume; it must be expressed and cannot be extended beyondits specified limits (art. 1827 of the Civil Code). Therefore,after eliminating the obligation for which said sureties-appellants desired to answer with their bond, the bondnecessarily ceased and it ceases to have effects. Consequently,said errors I and III are true and well founded.
216 SCRA 9 (1992)PUNO, J.FactsIssueRuling
14 SCRA 1011REYES, JBL.FactsIt appears that on and from October 1, 1957, plaintiff Pedro C.Pastoral leased a crane to defendant Mapada & Company,Inc., at a monthly rental of P900.00, Exhibit A. The contract provides that if the crane be not returned 10 days after noticetherefor, defendant will pay plaintiff P15,000, as the value of the crane. In compliance with paragraph 2(b) of Exhibit A,defendant on October 22, 1957, put up a surety bond, ExhibitB, in the total amount of P15,000 executed by appellantMutual Security Insurance Corporation to fully and faithfullyguarantee compliance by defendant of "all the conditions andobligations" under the lease contract.The surety company appealed, urging that the trial court erredin not holding that it was released from liability under thesurety bond which had become null and void from the failureof plaintiff to report within five days to appellant the violationof the lease contract.IssueRulingThis Court has ruled that where the guaranty requires action by the creditor before the obligation becomes fixed, it is not binding until accepted (National Bank vs. Garcia, 47 Phil. 63;Texas Co. [Phil.] Inc. vs. Alonzo, 73 Phil. 90). The rule isgrounded on common sense; otherwise, the debtor and theguarantor could easily defraud the creditor by inserting in the bond conditions that would render it nugatory.The suretyship contract, therefore, was not perfected and wasnot binding on Pastoral until November 21, 1957, when hereceived copy thereof and tacitly accepted it. By then twodefaults had already occurred (even disregarding the extensionagreement of October 31, hereinafter discussed); and Pastoralwas in no position to give notice of them within 5 days after default, as required by the bond, because the latest happenedon November 5. The 5-day period to notify expired November 10, and Pastoral only learned of the existence of the conditionon November 21.
 Ad impossibilia nemor tenetu
. In fact, bynot notifying Pastoral earlier, the surety must be deemed tohave waived the condition as to rentals already due, since acondition is deemed fulfilled when the obligor voluntarily prevents its fulfillment (Civ. Code, Art. 1186).The Court of Appeals held that Pastoral was duty-bound toknow and secure copy of the surety contract within areasonable time from its execution on October 22, 1957, andthat not having done so, he was chargeable with its contents.We find no justification for this pronouncement. If anyonewas obligated to notify Pastoral of the conditions attached tothe bond, that one was the guarantor. Pastoral was notobligated to inquire, since his assent to the condition wasnecessary; and if no acceptable bond was forthcoming, hecould always rescind the lease of the machinery to Mapada &Co., Inc., and recover his crane.The Court of Appeals further held that the act of Pastoral ingranting to the debtor on October 31, 1957 time up to the endof November, 1957 to pay the rentals that fell due on the firstfive days of October and November, without the surety'sconsent, constituted a material alteration that discharged thesurety. We agree with appellant that this view is untenable.When Pastoral agreed on October 31 that the October and November rentals be paid at the end of November, he had notyet learned of them on November 21. On the latter date, thedebtor was not yet in default, because the extension given hadwiped out the previous failures to pay on October 5 and November 5. The first default after the bond had becomeeffective in law (on November 21) occurred on the last day of  November, and Pastoral gave notice thereof to the surety onthe 5th day of December, within the five-day period prescribed by the bond.A contract of guaranty or suretyship is only prospective, andnot retroactive in operation (Socony Vacuum, Corp. vs.Miraflores, 67 Phil. 304; El Venceder vs. Canlas, 44 Phil. 699;Asiastic Petroleum Co. vs. De Pio, 46 Phil. 167), unless acontrary intent is clearly shown. Consequently, Pastoral, wasentitled to assume that the notice provided by the surety bonddid not, and was not intended to include any defaults incurred prior to his acceptance. The surety, which drafted the bond,could have expressly provided, if it so chose, that the five-daynotice therein provided should extend to the amounts of fallingdue on October 5 and November 5, but the surety failed to doso, and cannot blame Pastoral therefor.

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