113 RCBC vs.

CA GR No 85396 October 27, 1989

Facts:

Alfredo Ching signed a Comprehensive Surety Agreement with RCBC which bounded him to
jointly and severally guarantee the prompt payment of all Philippine Blooming Mills (PBM)
obligations. PBM had files several applications for letters of credit to RCBC and obligated itself
to pay on demand for all drafts drawn under the credits. RCBC opened the letters and imported
various goods for PBMs account which was duly acknowledged by PBM.

Less than a year later, RCBC filed a Complaint for collection of sum against PBM and Ching.
PBM then filed a Petition for Suspension of Payments with the SEC and sought rehabilitation.
SEC approved the revised rehabilitation plan and ordered its implementation.

RCBC followed its claims with the Trial Court unopposed and contended that the respondents
had not denied the indebtedness and there was no genuine issue. On appeal, the CA set aside the
decision of the lower court and denied the Motion for Reconsideration of RCBC subsequently.

Issue(s):

Whether a SEC Order suspension of payment of all claims during the pendency of a
rehabilitation proceeding against the principal debtor, bar the creditor from recovering from the
surety

Ruling:

The Court ruled that as surety, Ching was charged as an original promissory by virtue of his
primary obligation under the Comprehensive Surety Agreement. The lower court had ruled
correctly finding the case without any genuine issue of fact and ripe for judgment. The SEC
Order is of no effect and respondent Ching can be sued separately to enforce his liability as
Surety for PBM.