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Case: ESTATE OF K. H. HEMADY vs. LUZON SURETY CO., INC.

Date: NOVEMBER 28,1956
Ponente: REYES
Place:
Facts: The Luzon Surety Co. had filed a claim against the Estate based on twenty different
indemnity agreements, or counter bonds, each subscribed by a distinct principal and by the
deceased K. H. Hemady, a surety solidary guarantor) in all of them, in consideration of the
Luzon Surety Co.’s of having guaranteed, the various principals in favor of different creditors.
The Luzon Surety Co., prayed for allowance, as a contingent claim, of the value of the
twenty bonds it had executed in consideration of the counterbonds, and further asked for
judgment for the unpaid premiums and documentary stamps affixed to the bonds, with 12
per cent interest thereon.
the lower court, by order dismissed the claims of Luzon Surety Co., on two grounds:
(1) that the premiums due and cost of documentary stamps were not contemplated under
the indemnity agreements to be a part of the undertaking of the guarantor (Hemady), since
they were not liabilities incurred after the execution of the counter bonds; (2) that “whatever
losses may occur after Hemady’s death, are not chargeable to his estate, because upon his
death he ceased to be guarantor.”

Issue: WON the death of Hemady extinguished liability as guarantor

Held: No

Ratio: Under the law, the general rule is that a party’s contractual rights and obligations are
transmissible to the successors. The rule is a consequence of the progressive
“depersonalization” of patrimonial rights and duties.
Of the three exceptions fixed by Article 1311, the nature of the obligation of the
surety or guarantor does not warrant the conclusion that his peculiar individual qualities are
contemplated as a principal inducement for the contract.
The second exception of Article 1311, p. 1, is intransmissibility by stipulation of the
parties. Being exceptional and contrary to the general rule, this intransmissibility should not
be easily implied, but must be expressly established, or at the very least, clearly inferable
from the provisions of the contract itself, and the text of the agreements sued upon nowhere
indicate that they are non-transferable.
under the law (Article 1311), a person who enters into a contract is deemed to have
contracted for himself and his heirs and assigns, it is unnecessary for him to expressly
stipulate to that effect; hence, his failure to do so is no sign that he intended his bargain to
terminate upon his death. Similarly, that the Luzon Surety Co., did not require bondsman
Hemady to execute a mortgage indicates nothing more than the company’s faith and
confidence in the financial stability of the surety, but not that his obligation was strictly
personal.
The third exception to the transmissibility of obligations under Article 1311 exists
when they are “not transmissible by operation of law”. The provision makes reference to

nor by the stipulations of the contracts themselves. . Hence Article 2057 of the present Civil Code is incompatible with the trial court’s stand that the requirement of integrity in the guarantor or surety makes the latter’s undertaking strictly personal. The contracts of suretyship entered into by K. the disappearance of his integrity after he has become bound) does not terminate the contract but merely entitles the creditor to demand a replacement of the guarantor. 2056. as is the case in legal support (Article 300). This decision was affirmed by the C. his eventual liability thereunder necessarily passed upon his death to his heirs. Hemady in favor of Luzon Surety Co. the articles of the Civil Code that regulate guaranty or suretyship (Articles 2047 to 2084) contain no provision that the guaranty is extinguished upon the death of the guarantor or the surety. Ruling: No. H. so linked to his individuality that the guaranty automatically terminates upon his death. and hold the guarantor to his bargain.A. Baylon signed the promissory note as “guarantor”. Pacionaria Baylon vs Court of Appeals and Leonila Tomacruz August 17. From Art. Persuaded by Baylon’s assurances that the business was stable and the high interest rate Leonila lent Rosita P 150. nor by provision of law. 1987. Rosita on the other hand issued and signed a promissory note acknowledging the receipt of P 150. may waive it if he chooses. But the step remains optional in the creditor: it is his right.those cases where the law expresses that the rights or obligations are extinguished by death. Rosita failed to pay the said amount forcing Leonila to file a case for collection of sum of money against Rosita and Baylon. Baylon denied having guaranteed the payment of the promissory note and claims that the money given to Rosita was not a loan but an investment and that assuming that the loan was guaranteed Leonila has not exhausted the property of Rosita nor resorted to all legal remedies against Rosita as required by law. Issue: WON Baylon should be held liable for the amount of the promissory note. not being rendered intransmissible due to the nature of the undertaking.000. it is immediately apparent that the supervening dishonesty of the guarantor (that is to say. usufruct (Article 603). 1999 Facts: Pacionara Baylon introduced Rosita Luanzon to Leonila Tomacruz which is the co-manager of her husband in PLDT. Later on. However summons were never served to Rosita. By contract. contracts for a piece of work (Article 1726). Trial court ruled in favor of Leonila making Baylon liable for the said amount. partnership (Article 1830 and agency (Article 1919). Baylon invited Leonila to lend Rosita money for her business as contractor and in return pay the amount and a monthly interest rate of 5%.000 payable on August 22. parental authority (Article 327). not his duty.

All the properties of the principal debtor must first be exhausted before his own is levied upon. which the Appellee guaranteed with an indemnity bond.R. except in some instances when the action may be brought against both the debtor and the principal debtor. It is axiomatic that the liability of the guarantor is only subsidiary. Thus. since the most basic prerequisite is wanting — that is. 1957 FACTS:  On February 1954. which provides that — The guarantor cannot be compelled to pay the creditor unless the latter has exhausted all the property of the debtor.000 representing the amount of a loan allegedly taken by the Appellant from the PNB. Inc. there is nothing in the records to show that summons was served upon her.  The complaint further alleged that the Appellant failed to pay said loan. the creditor may hold the guarantor liable only after judgment has been obtained against the principal debtor and the latter is unable to pay. together with interest. like the benefit of excussion.. as counterguaranty. filed a complaint in the CFI Manila against Appellant Estanislao Alvarez for the recovery of the sum of P2." This rule is embodied in article 2062 of the Civil Code which provides that the action brought by the creditor must be filed against the principal debtor alone. Under the circumstances availing in the present case.Rationale: Petitioner is invoking the benefit of excussion pursuant to article 2058 of the Civil Code. L-9434 March 29.. and that Plaintiff agreed not to take any steps against . "for obviously the 'exhaustion of the principal's property' — the benefit of which the guarantor claims — cannot even begin to take place before judgment has been obtained. The court held that private respondent must first obtain a judgment against the principal debtor before assuming to run after the alleged guarantor. the trial court never even acquired jurisdiction over the principal debtor. Thus. Although the principal debtor Luanzon was impleaded as defendant. executed in Plaintiff's favor a mortgage on his share of land in a parcel of land . no judgment was first obtained against the principal debtor Rosita B.  Thereafter. General Indemnity vs Alvarez G. Appellee General Indemnity Co. the court held that it is premature to even determine whether or not petitioner is liable as a guarantor and whether she is entitled to the concomitant rights as such. and for which Appellant. It is useless to speak of a guarantor when no debtor has been held liable for the obligation which is allegedly secured by such guarantee. to PNB as a result of which the bank deducted the amount thereof Plaintiff's deposit. No. and has resorted to all the legal remedies against the debtor. Appellant averred that the loan in question was secured by him only in accommodation of one Hao Lam. Luanzon.

based on the affidavit of its comptroller Pedro R. 2071 of the New Civil Code. since the mortgage deed executed by Appellant in its favor (the genuineness and due execution of which Appellant admitted in his answer) shows Appellant to be the actual and only debtor. 1967 Ponente: J. is premature. provides that the only action the guarantor can file against the debtor "to obtain release from the guaranty. Defendant has failed and refused and still fails and refuses to pay the same.Appellant and the mortgage executed by him in Plaintiff's favor until the latter had failed to obtain payment from said Hao Lam. CARIDAD TORRENTO and MUTUAL SECURITY INSURANCE CORPORATION Date: June 26. or to demand a security that shall protect him from any proceeding by the creditor and from the danger of insolvency of the debtor."  An action by the guarantor against the principal debtor for payment. Issue: Whether or not Defendant Alvarez is liable? Ruling:  NO. before the former has paid the creditor. The SC ruled that there exists a controversy in the complaint and answer as to whether or not Appellee had actually paid Appellant's obligation to the Philippine National Bank. Appellee is correct in saying that said defense is immaterial to its right to recovery. o Notwithstanding said several demands by Plaintiff. Thus this petition. can claim reimbursement from Appellant. the SC opined that the last paragraph of Art.  Case: NATIONAL SHIPYARDS & STEEL CORPORATION v.  However. Plaintiff filed a motion for summary judgment saying that Appellang presented no real and meritorious defense and that it was entitled to a summary judgment in its favor.   Eight months later. as surety. and Appellant is precluded from varying this representation by parol evidence. a matter which should be decided in the affirmative before Appellant. Mendiola essentially saying that: o That he has personal knowledge of the indebtedness of the Defendant. the principal debtor. The lower courts ruled in favour of Plaintiff.  In ruling for the Appellant. Makalintal     Facts: .

. the present appeal.800 so a supplemental bond was executed to increase the same to P25. There was consequently. changing the legal effect of the original contract and not merely the form thereof . Later on. Torrento maintains that NASSCO has no cause of action against her for the reason that inasmuch as she had paid the corresponding premium on the surety bond. there must be a material alteration of the contract in connection with which the bond is given. the right of action.50 tons of steel bars of other sizes for P440 or P430 per ton. and for which the surety furnished the bond.09.000 bond. 3/8” deformed or plain. Pursuant to the stipulation in the contract the value of the steel bars sold to Torrento should be secured by a surety bond. Torrento and NASSCO executed a supplemental agreement wherein NASSCO shall sell to Torrento and the latter shall buy from the former 38. .749. Ratio: The supplemental agreement did not result in Torrento’s assuming more onerous conditions than those stipulated in the original contract. On one hand. NASSCO then delivered to Torrento the said steel bars in the total value of P25. On appeal. Mutual Security Insurance Corporation (MSIC) and Torrento executed in favor of NASSCO a P25. in case of her default is exclusively against her surety. at P430 per ton. would be most unjust and immoral. CA ruled against Torrento and MSIC. hence. A contract of purchase and sale was then executed. The 120-day period for payment lapsed and demand letters were sent but MSIC made no reply. . it was stated in clear terms that both principal and surety are held firmly bound in the said sum. As a consequence.                   Torrento applied for a purchase on credit of 60 tins of steel bars. and would be a perversion of the wise and just rules designed for the protection of voluntary sureties. a change which imposes some new obligation on the party promising or takes away some obligation already imposed. NASSCO could no longer supply the steel bars called for in the contract since the 3/8” deformed steel bars had been exhausted. MSIC averred that the execution of the supplemental agreement without its knowledge and consent released it from any liability under the surety bond as there was a material alteration of the principal contract. Issue: WON the supplemental agreement constitutes a material alteration that may release MSIC from any liability under the surety bond Held: No. She argues that the cause of action does not arise until after payment by MSIC. To address the problem. an action was brought to recover the unpaid contract price from Torrento and MSIC. in compliance therewith. jointly and severally. For purposes of releasing a surety's obligation. whereas the contract called for the payment of P25.800. To allow compensated surety companies to collect and retain premiums for their services and then repudiate their obligations on slight pretexts which have no relation to the risk. In the bond. The lower court ruled against the latter. for a 120-day period with the NASSCO. no material or essential alteration of the original contract which could result in the release of the surety from the obligation under the said bond.

Ines a credit line in the amount of (P8. sureties are only subsidiarily liable for an obligation. its President and Chairman of the Board of Directors Rodolfo Cuenca. or to give consent thereto. it clearly appears that such changes are not substantial and have not added any other liability to that originally assumed. it is a suretyship in which case the provisions of the Civil Code with respect to joint and solidary obligations will apply and Article 1216 of the Civil Code which provides that the creditor may proceed against any of the solidary debtors or all of them simultaneously.: petitioner bank cannot hold herein respondent liable for loans obtained in excess of the amount or beyond the period stipulated in the original agreement. Inc. granted appellant Sta. Ines.R. J. To secure payment. Security Bank and Trust Co. petitioner. While it is the rule that the liability of a surety is limited by the terms of the surety bond fixing its liability and that such liability cannot be extended by implication. the creditor can bring action against anyone of them.00) effective til November 30. 2000 SECURITY BANK AND TRUST COMPANY. either alone or together with the principal debtor. Specific stipulations:    The bank reserves the right to amend any of the aforementioned terms and conditions upon written notice to the Borrower.000. RODOLFO M. G. the Court found that since the surety bond expressly provides that Torrento and MSIC solidarily bind themselves under the surety bond. Rodolfo M. it should be noted in the present case that although the technical specifications of the items to be purchased have been changed.  On the argument of Torrento. .. Ines’/SIMC) is a corporation engaged in logging operations. CUENCA. As additional security for the payment of the loan. nevertheless. it executed a chattel mortgage over some of its machineries and equipments. respondent. PANGANIBAN. executed an Indemnity agreement in favor of Security Bank whereby he bound himself jointly and severally with Sta. absent any clear stipulation showing that the latter waived his right to be notified thereof. And as an additional security. Cuenca executed an Indemnity Agreement dated 17 December 1980 solidary binding himself: ‘Rodolfo M. or in solidum. No. 1981 to assist the latter in meeting the additional capitalization requirements of its logging operations. 138544 October 3. FACTS: Defendant-appellant Sta. with the principal debtor. It was a holder of a Timber License Agreement issued by the DENR On 10 November 1980. upon demand and without the benefit of excussion of whatever amount x x x the client may be indebted to the bank x x x by virtue of aforesaid credit accommodation(s) including the substitutions. Ines Melale (‘Sta. A surety is not released by a change in the contract which does not have the effect of making its obligation more onerous. Cuenca x x x hereby binds himself x x x jointly and severally with the client (SIMC) in favor of the bank for the payment.000. vs. if they biond themselves jointly and severally. Although as a rule.

from which Cuenca appealed CA: Released Cuenca from liability because 1989 Loan Agreement novated the 1980 credit accommodation which extinguished the Indemnity Agreement for which Cuenca was liable solidarily. extension. Ines. SBTC filed a complaint for collection of sum of resulting after trial on the merits in a decision by the court a quo. increases. Since with expiration date. The First Loan shall be applied to liquidate the principal portion of the Borrower’s present total outstanding Indebtedness to the Lender (the "Indebtedness") while . the requisites of novation are present in this case. (3) the old contract is extinguished. Ines.’ 1985: Cuenca resigned as President and Chairman of the Board of Directors of defendantappellant Sta. renewal. The 1989 Loan Agreement extinguished the obligation18 obtained under the 1980 credit accomodation. and (4) there is a valid new contract. pursuant to Article 1292 of the Civil Code. Ines. Security Bank and Sta. Novation of a contract is never presumed. the following requisites must be established: (1) there is a previous valid obligation. This is evident from its explicit provision to "liquidate" the principal and the interest of the earlier indebtedness. Ines were sold at a public auction to Adolfo Angala. amendments.00) The defaulted in the payment of its restructured loan obligations to SBTC despite demands made upon appellant SIMC and CUENCA. the shareholdings of Cuenca in Sta. amendment.000. Subsequently. RATIO: A. ISSUES: (a) whether the 1989 Loan Agreement novated the original credit accommodation and Cuenca’s liability under the Indemnity Agreement YES (b) whether Cuenca waived his right to be notified of and to give consent to any substitution. as the following shows: "1. Clearly. Ines executed a Loan Agreement dated 31 October 1989 ‘ Sta Ines made payments up to (P1. agreed to restructure the past due obligations of defendant-appellant Sta. NO HELD: Petition of Bank no merit. Amounted to extension. No notice/consent to restructure. (2) the parties concerned agree to a new contract. increase. liable only up to that date and up to that amount (8M). Ines. conversion or revival of the said credit accommodation. 16 We reject these contentions. To formalize their agreement to restructure the loan obligations of Sta. SBTC accommodated SIMC’s request and signified its approval in a letter dated 18 February 1988 wherein SBTC and Sta. Before and after this.757. conversions and revivals of the aforesaid credit accommodation(s) x x x . Sta Ines encountered difficulty in making the amortization payments on its loans and requested SBTC for a complete restructuring of its indebtedness.of time with no notice to suret therefore released from liability.02. Sta Ines availed of its credit line. Indeed. Purpose. extensions.renewals. Original Obligation Extinguished by Novation An obligation may be extinguished by novation.CA affirmed. without notice to or the prior consent of ] Cuenca.

it cannot take advantage of that document by agreeing to be bound only by those portions that are favorable to it. which had allegedly extended the original P8 million credit facility. contending that it was not a binding agreement because it was not signed by the parties. 1) NOT Continuing Surety That the Indemnity Agreement is a continuing surety does not authorize the bank to extend the scope of the principal obligation inordinately.the Second Loan shall be applied to liquidatethe past due interest and penalty portion of the Indebtedness. and (2) . To repeat. "[a]n extension granted to the debtor by the creditor without the consent of the guarantor extinguishes the guaranty. Indeed." 2) Binding Nature of the Credit Approval Memorandum Bank objects to the appellate court’s reliance on that document. It should also be observed that the Credit Approval Memorandum clearly shows that the bank did not have absolute authority to unilaterally change the terms of the loan accommodation. It is strictly construed against the creditor. Ines to modify or extend the original obligation without the consent of the surety or notice thereto. in the present case. Hence. At most." not to renew or extend. Ines any license to modify the nature and scope of the original credit accommodation. his obligation as a surety should be deemed extinguished. Since the 1989 Loan Agreement had extinguished the original credit accommodation. while respondent held himself liable for the credit accommodation or any modification thereof. the doubt should be resolved in favor of the surety x x x. without informing or getting the consent of respondent who was solidarily liable. such clause should be understood in the context of the P8 million limit and the November 30. the Court has ruled that "it is a well-settled legal principle that if there is any doubt on the terms and conditions of the surety agreement. It adds that it was merely for its internal use. A contract of surety "cannot extend to more than what is stipulated. NO Waiver of Consent In the Indemnity Agreement. B. x x x. It confers no clear authorization on the bank or Sta. 1981 term. the outstanding indebtedness. the Indemnity Agreement was subject to the two limitations of the credit accommodation: (1) that the obligation should not exceed P8 million. every doubt being resolved against enlarging the liability of the surety.32In the absence of an unequivocal provision that respondent waived his right to be notified of or to give consent to any alteration of the credit accommodation."31 Likewise. we cannot sustain petitioner’s view that there was such a waiver. the Indemnity Agreement 1) NOT mere renewal/ Extension 1989 Loan Agreement expressly stipulated that its purpose was to "liquidate. Moreover. while denying those that are disadvantageous. Ambiguous contracts are construed against the party who caused the ambiguity. the alleged basis of respondent’s waiver is vague and uncertain. respondent did not sign or consent to the 1989 Loan Agreement. It did not give the bank or Sta.

creditor PBCOM (P) demanded payment from the obligors who did not respond. NO PROVISION: ”each suretyship is a continuing one which shall remain in full force and effect until this bank is notified of its revocation. Verily. but the lower court reconsidered and the summonses were eventually served. the creditor’s recourse. Hence. Neither did he have any reason to bind himself further to a bigger and more onerous obligation. which is normally limited to the corporate properties under the veil of separate corporate personality. 1981. 2) Special Nature of the JSS It is a common banking practice to require the JSS ("joint and solidary signature") of a major stockholder or corporate officer. however. Consequently. some or all of the debtors may be proceeded against for the entire obligation. any one. The choice is left to the solidary creditor to determine against whom he will enforce collection.00 against the three obligors. First. Court of Appeals Co-maker (D) vs. Creditor (P) GR 96405 [T] Summary: A co-maker to a loan is facing collection demands from a creditor bank. With co-defendant Naybe in Saudi Arabia. Ines in 1980 when the credit accommodation was granted. he was not in a position then to ensure the payment of the obligation. such surety would be compelled to ensure that the loan would be used for the purpose agreed upon. The complaint was dismissed for failure of the plaintiff to prosecute the case.000-promissory note with Rene Naybe and Gregorio Pantanosas holding themselves jointly and severally liable to creditor Philippine Bank of Communications (P)—PBCOM. creditor PBCOM (P) filed for collection of the sum of P50. and that it would be paid by the corporation. as an additional security for loans granted to corporations. There was no reason or logic. he annexed to his petition an affidavit supporting his claim of fraud. only the summons to co-maker Inciong (D) was duly served. There are at least two reasons for this. he was no longer an officer or a stockholder of the debtor-corporation. Inciong (D) contended that he only agreed to limit his liability to P5.000. it was a continuing surety only in regard to loans obtained on or before the aforementioned expiry date and not exceeding the total of P8 million. Jr. (D) cosigned a P50. Inciong. So. . Ines to assume that he would still agree to act as surety in the 1989 Loan Agreement. On appeal. Following this practice. would extend to the personal assets of the surety. One of his co-defendant is outside the Philippine jurisdiction while the creditor chose to dismiss their claim against the other. Jr. Rule of Law: In solidary obligations. it was therefore logical and reasonable for the bank to have required the JSS of respondent. the lower court dismissed the case against defendant Pantanosas. Cagayan de Oro City branch. who was the chairman and president of Sta. The due date expired without the promissors paying their obligation. As prayed for by PBCOM (P). because at that time. Second. in case of default.000 and that his consent was vitiated by fraud. vs. Facts: Baldomero Inciong. for the bank or Sta.that the accommodation should expire not later than November 30.

Therefore. binds himself to the creditor to fulfill the obligation of the principal debtor in case the latter should fail to do so. If a person binds himself solidarily with the principal debtor. In such a case the contract is called a suretyship. 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. IV. when the law so provides or when the nature of the obligation so requires. some or all of them may be proceeded against for the entire obligation. CA Facts: Respondent spouses Raul and Elea Claveria applied for a loan with respondent SOLIDBANK. As regards co-defendant Naybe. suffice it to say that the court never acquired jurisdiction over him. Chapter 3. Art. There is a solidary liability only when the obligation expressly so states. 2080 is applicable to petitioner.Issues: Can the creditor file a claim for the entire obligation against a co-maker to a loan? Ruling: Yes. called the guarantor. the provisions of Section 4. Section 4. On the other hand. Chapter 3. Article 2047 of the Civil Code states: By guaranty a person. —Tolention. WON. and each creditor is entitled to demand the whole obligation. The spouses defaulted in payment of the entire obligation uponmaturity. Inc. Issue: WON. vs. Inc. as provided by law. Consequently. Vol. SolidBank filed a complaint for the sum of money against EZ Zobel. the presumption is that the obligation is joint so that each of the debtors is liable only for a proportionate part of the debt. Inciong (D) signed the promissory note as a solidary co-maker and not as a guarantor. in favor of Solid Bank. The choice is left to the solidary creditor to determine against whom he will enforce collection. Title I of this Book shall be observed. 217. the dismissal of the case against co-defendant Pantanosas may not be deemed as having discharged petitioner from liability. Because the promissory note involved in this case expressly states that the three signatories therein are jointly and severally liable. Petitioner moved to dismiss the complaint on the ground that its liability as guarantor of the loan was extinguished pursuant to Article 2080. Held: . Book IV of the Civil Code states the law on joint and several obligations. any one. 1991. A solidary or joint and several obligation is one in which each debtor is liable for the entire obligation. —Article 1207 of the New Civil Code E Zobel. petitioner’s obligation to SOLIDBANK under the continuing guaranty is that of a surety. PBCOM (P) only have recourse against his co-makers. Title I. p. When there are two or more debtors in one and the same obligation. Civil Code of the Philippines.

[7] A contract of guaranty. at any time or from time to time hereafter. or at the request or for the account of the Borrower…” Having thus established that petitioner is a surety. to make loans or advances or to extend credit in any other manner to. Based on the aforementioned definitions. In Bicol Savings and Loan Association vs. Guinhawa. of legal age. in your discretion. a surety is distinguished from a guaranty in that a guarantor is the insurer of the solvency of the debtor and thus binds himself to pay if the principal is unable to pay while a surety is the insurer of the debt.[12] we have ruled that Article 2080 of the New Civil Code does not apply where the liability is as a surety. and he obligates himself to pay if the principal does not pay. RAUL P. is a collateral undertaking to pay the debt of another in case the latter does not pay the debt. married and with business address x x x (hereinafter called the Borrower). Article 2080 of the Civil Code. The terms of the contract categorically obligates petitioner as "surety" to induce SOLIDBANK to extend credit to respondent spouses. it appears that the contract executed by petitioner in favor of SOLIDBANK.A contract of surety is an accessory promise by which a person binds himself for another already bound. and agrees with the creditor to satisfy the obligation if the debtor does not. on the other hand. a single proprietorship owned by MR. This can be seen in the following stipulations. CLAVERIA. for the payment of which the undersigned is now obligated to you as surety and in order to induce you. "For and in consideration of any existing indebtedness to you of AGRO BROKERS. . Simply put. finds no application to the case at bar." is a contract of surety. albeit denominated as a "Continuing Guaranty. not as a guarantor. relied upon by petitioner.