Professional Documents
Culture Documents
Held: Under the terms of the contract Esteban Piczon expressly bound himself only as guarantor. A guaranty must express, and
it would be violative of the law to consider a party to be bound as surety when the very word used in the agreement is
guarantor.
Held: If a person binds himself solidarily with the principal debtor, the provisions of Section 4, Chapter 3, Title I of this Book
shall be observed. In such case the contract is called a suretyship. It is a cardinal rule in the interpretation of contracts that if
the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its
stipulation shall control. 13 In the case at bar, petitioner expressly bound herself to be jointly and severally or solidarily liable
with the principal maker of the note. The terms of the contract are clear, explicit and unequivocal that petitioner's liability is
that of a surety.
Held: Sellner is a GUARANTOR. Sellner was not bound with Castellvi by the same instrument executed at the time and the same
consideration, but his responsibility was secondary, one founded on an independent collateral agreement. Neither was he
jointly and severally liable with Castellvi.
Held: Memije is primarily liable. It is evident that Memije used the words “gurantor” not in a technical sense but rather that
after satisfying, Reiss as to his own financial responsibility. If goods are sold upon the sole credit and responsibility of the party
who makes the promise then, even though they are delivered to a 3 rd person, there is no liability to the 3rd person. Promise to
pay need not require a writing or memorandum to be enforceable by action.
Held: Circumstances may be shown which convert the contract into one of suretyship but that does not exist. It appears that
the contract is the guarantor’s separate undertaking in which the principal does not join, that it rests on a separate
consideration moving from the principal, and that although it is written in continuation of the contract for the construction of
the building, it is collateral undertaking separate and distinct from the latter. All these are features of a contract of guaranty.
Severino vs. Severino
Facts: Melecio Severino upon his death, left considerable properties. To end litigation among heirs a compromise was effected
where defendant (son of MS) took over the property of deceased and agreed to pay installment of 100K to plaintiff (wife of MS)
payable first in 40K cash upon execution of document in 3 equal installments. Enrique Echauz became guarantor. Upon failure
to pay the balance, plaintiff filed and action against the defendant and Echauz. Enchauz contends that he received nothing from
affixing his signature in the document and the contract lacked the consideration as to him.
Held: 1. The guarantor or surety is bound by the same consideration that makes the contract effective between the principal
parties thereto. 2. It is neither necessary that guarantor or surety should receive any part of the benefit, if such there be
accruing to his principal.
Issue: WON the contract and bond are valid and enforceable?
Held: No. Contract was not consummated and was cancelled. It ceased to be valid when it was cancelled so Marasigsan and
G&H were not bound to comply with the terms of the contract. A guaranty cannot exist without a valid obligation.
Issue: WON Artex is liable for accrued premiums and costs of doc stamps on renewals of the surety bonds after grant of tax
exemption to Plaridel?
Held: No. Suretyship cannot exsist without valid obligation. The renewals were without consideration. Plaridel incurred no risk
from Artex’ tax exemption application was approved. Any renewals were void from the beginning because the cause or object
of said renewals did not exist at the time of the transtaction. Express stipulation by parties, surety bonds became null and void
upon grant of tax exemption.
Held: It is in substance a contract of suretyship. A contract of guaranty is where a guarantor binds himself to pay only in case
the latter should fail to do so; while a contract of suretyship, the surety binds himself solidarily with the principal debtor. Since
Regala Jr. bound himself jointly and severally, he is bound to pay the amount of indebtedness of his wife.
Issue:
Held:
Held: the bonds executed by private respondent LSCI were to guarantee the faithful performance of Depusoy of his obligation
under the Deed of Assignment and not to guarantee payment of the loans or the debt of Depusoy to petitioner to the extent of
P100,000.00. Besides, even if there had been any doubt on the terms and conditions of the surety agreement, the doubt should
be resolved in favor of the surety. As concretely put in Article 2056 of the Civil Code, "A guaranty is not presumed, it must be
ex-pressed and cannot extend to more than what is stipulated therein." LSCI is liable to the full extent thereof, such liability is
strictly limited to that assumed by its terms."
Issue: Should the bond respond for the debt contracted by D prior to execution?
Held: No. Canlas was liable only for the value of goods furnished to D subsequent to the execution of the bond. A contract of
suretyship or guaranty is ordinarily not retrospective and no liability attached for defaults occurring before it is entered into
unless intent to be so liable is indicated either by express words or by necessary implication.
Issue: WON the bond covered the amounts from BPI prior to its date?
Held: Yes. It is very true that bonds or other contracts of suretyship are ordinarily not to be construed retrospectively, but that
rule must yield to the intention of the contracting parties as revealed by the evidence. In the present case, the circumstances
clearly indicated that the bond given by G was intended to cover all of the indebtedness.
Isssue: WON Cho Siong is liable for the debt of the former agent of X which D assumed in virtue of another contract of which
Cho Siong was not aware?
Held: No. Under the terms of the bond, Cho Siong did not answer for D, save for the latter’s acts by virtue of the contract of
agreement between D and X. A contract of suretyship or guaranty is to strictly interpreted and is not to be extended beyond its
terms.
Issue: WON Mendoza and Blas are bound to pay 46K or 23K
Held: 23K. The obligating clause of the contract of guaranty is quite clear to the effect that the rent to be paid for the privilege
of fishery was 23K for the full term of 2 years. It is true that Mendoza and Blas declared 46K, but it was only because the bond
was required to be made in double the amount of the principal liability as an assurance of the performance of the principal
obligation.
Wise and Co. vs. Kelly
Facts: D purchased merchandise from C on credit and agreed that D would apply the proceeds of its sale to the discharge of his
indebtedness in the amount of 13K the purchase price. Kelly as surety for D, undertook that D would pay over to C the entire
proceeds from the sale of the merchandise.
Issue: WON Kelly is liable for the difference between the amount realized from the sale of the merchandise and the purchase
price of the same?
Held: No. Kelly did not undertake absolutely to pay the sum of 13K. His agreement was limited to respond for the performance
by D of his undertaking to deliver to C the total proceeds of the sale of the merchandise for the invoice value of which a
promissory note was given by D.
Issue: WON the delivery of merchandise to Lorenzana at a place other than that appearing in the contract constitutes a material
alteration of the same that would release Lorenzana from liability?
Held: No. The mention of Manila and Rizal in said agreement was designed more as a declaration or identification of the places
wherein Lorenzana was expressly authorized and assigned to sell PTC’s products which is no obstacle to his acceptance of
additional territories in order to fulfill his obligation. A departure from the terms of contract will not have the effect of
discharging a compensated surety unless it appears that such departure has resulted in injury, loss or prejudice to the surety.
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