#9 Pacific Banking Corp. vs.

IAC
Facts:
Cecilia Regala obtained from plaintiff the issuance and use of Pacific card credit card. RobertRegala Jr.,
spouse of Cecilia, executed a Guarantors Undertaking in favor of Pacific wherein the Regala Jr.,
agreed jointly and severally with Cecilia Regala, to pay Pacific upon demand and all indebtedness,
obligations, charges or liabilities due and incurred by her. Cecilia was declared in default for failure to
pay 92K within the reglementary period. Regala Jr. admitting the execution of the Guarantors
Understanding but with the understanding that his liability would be limited to2K/month.
Issue:
WON the Guarantors Understanding is a guaranty or suretyship?
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.

#11 PNB vs. CA, Luzon Surety Co.

Facts:
Estanislao Depusoy, and the Republic of the Philippines, represented by the Director of Public Works,
entered into a building contract, for the construction of the GSTS building at Arroceros Street,Manila,
Depusoy to furnish all materials, labor, plans, and supplies needed in the construction. Depusoy applied
for credit accommodation with the plaintiff. This was approved by the Board of Directors in various
resolutions subject to the conditions that he would assign all payments to be received from the Bureau
of Public Works of the GSIS to the bank, furnish a surety bond, and the surety to deposit P10,000.00 to
the plaintiff. The total accommodation granted to Depusoy wasP100,000.00. This was later extended by
another P10,000.00 and P25,000.00, but in no case should the loan exceed P100,000.00. In compliance
with these conditions, Depusoy executed a Deed of Assignment of all money to be received by him from
the GSIS to PNB. Depusoy defaulted in his building contract with the Bureau of Public Works, and
sometime in September, 1957, the Bureau of Public Works rescinded its contract with Dernisoy. No
furher amounts were thereafter paid by the GSIS to lie plaintiff bank. The amount of the loan of
Depusoy which remains unpaid, including interest, is over P100,000.00. Demands for payment were
made upon Depusoy and Luzon, and as no payment was made, therefore herein petitioner filed with the
trial court a complaint against Estanislao Depusoy and private respondent Luzon Surety Co. Inc. (LSCI).
Issue:
WON Luzon Surety is liable
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 expressed 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."

#12 El Vencedor vs. Canlas

Facts:
An accounting between X company and D, its agent for the sale of merchandise, showed that D had
failed to pay X for the merchandise of the value of 5K. X therefore refused to continue to furnish D
merchandise for sale unless he gave a bond. Canlas bound himself as surety and guarantor to D to
become liable in case of his inability to pay damages. It did not appear that at the time of theexecution
of the bond Canlas had knowledge of the fact that D was indebted to X in any sum. Canlashad no
knowledge.
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.

#13 BPI vs. Forester

Facts:
The Board of directors of corporation X authorized its treasurers to obtain for them a credit current
account for 100K from BPI. Credit was granted and X began to draw against it even before the formal
document of the agreement for the said credit was issued. The accountant G gave a bond in his name as
surety and agreed to be bound jointly and severally in the sum of 100K. The overdraft and interest
amounted to 84,900. BPI was able to collect 43,100 as a result of an action brought against X.BPI
receives 25,500 subsequently.
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.

#14 Standard Oil Co. of NY vs. Cho Siong

Facts:
To guarantee the fulfillment of the obligation of D, as agent of X in the sale of the latters petroleum
products, Cho Siong subscribed to a personal bond in the sum of 3K. Cho Siong also subscribed the 3K
bond and signed an instrument in favor of X in which he assumed responsibility for account of Xs
former agent.
Issue:
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 latters 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.

#15 Municipality of Lemery vs. Mendoza and Blas

Facts:
Municipality of Lemery granted fishing privileges to D for a period of 2 years for the sum of 23K for each
year. Mendoza and Blas as bondsmen, executed a document which declared, among other thing, the
lease by D of the privilege of fishing referred to for the term of 2 years. In said document, Mendoza and
Blass obligated themselves jointly and severally to pay the sum of 46K in case D shall fail to comply with
the conditions of the bond of which we are informed. D failed to pay.
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.

#16 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.

#17 Pacific Tobacco Corp. vs. Lorenzana

Facts:
The Pacific Tobacco Corp. is engaged in the business of manufacturing and distributing cigarettes cigars
and other tobacco products. Lorenzana and PTC entered into an agreement whereby Lorenzana will act
as Distributor of PTC. Lorenzana put up a bond in the amount of 3K with Visayan Surety & Insurance
Corporation, as surety, to guarantee the faithful fulfillment of Lorenzanas part in the contract to sell
and distribute PTCs cigarettes.
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 PTCs
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.