PARTIES: MACONDRAY & COMPANY, INC., plaintiff-appellee, vs. PERFECTO PIÑON, ET AL., defendants.

RUPERTO K. KANGLEON, deceased, substituted by VALENTINA TAGLE-KANGLEON, ET AL., defendants-

appellants.

CAUSE OF ACTION: Appeal from RTC judgment finding appellant liable as guarantor

DOCTRINE: A contract of guaranty is not a formal contract and is valid in whatever form it may be,
provided that it complies with the statute of frauds.

FACTS: On January 30, 1954, defendants Perfecto Piñon and Conrado Piring requested the defendant-
appellant, Ruperto Kangleon, then a member of the Senate, to help them buy on credit from the appellee,
Macondray and Company, some cinematographic films.

Allegedly, Kangleon then wrote a letter to Macondray, making a representation that he would
guarantee payment of his co-defendants’ obligation to Macondray, should they fail to pay on the due
date, on February 2 and 9, 1954. Upon such representation, Macondray sold on credit and delivered to
Piñon and Piring, 127 rolls of cinematographic films, among others, for the total sum of P6,985, payable
on or before May 9, 1954, with 12% interest thereon from date of maturity, and 20% thereof for attorney’s
fees in case of suit for collection.

On May 11, 1955, Macondray filed a complaint against the defendants in the Court of First
Instance of Manila alleging:
1. that the principal debtors have failed to pay the amount owed by them on the due date;
2. that upon extensive investigations made by Macondray as to whether the principal debtors have
any property, real or personal, which may be levied upon for the satisfaction of their obligation,
it has found that they have none;
3. that the defendant Kangleon could not point any property of the principal debtors leviable for
execution sufficient to satisfy the obligation; and
4. that the sum of P6,985, the amount owed or part thereof, has not been paid by the defendants.

On November 10, 1955, Kangleon answered the plaintiff’s complaint, setting up the following
defenses:
1. that the letter he had written to Macondray was only to introduce his co-defendants;
2. that assuming there was an intent on his part to guarantee payment of his co-defendants’
obligation, the said letter was only an offer to act as guarantor of his co-defendants;
3. that as the acceptance of his offer to act as guarantor for his co-defendants has not been
actually made known to him by the plaintiff, the contract of guaranty between them has not
been perfected; and
4. that assuming that there has been a perfected contract of guaranty between the plaintiff and
the answering defendant, the latter’s obligation was extinguished by the extension for
payment up to May 3, 1954 granted by the plaintiff to his co-defendants.

Despite notice, Piñon and Piring did not answer Macondray’s complaint, nor Kangleon’s cross-
claim. The Court then declared Piñon and Piring in default.

On September 30, 1957, the RTC rendered judgment, sentencing defendants Piñon and Piring to
pay Macondray, jointly and severally, the sum of P6,985.00, plus interest at the rate of 12% per annum
from May 9, 1954 until fully paid and an amount equivalent to 20% as attorney’s fees and cost of suit.
 The RTC further held that if Piñon and Piring do not satisfy such judgment, Kangleon shall pay
Macondray all the amounts to which his co-defendants were sentenced to pay.

ISSUE: Whether or not a guarantor can be held liable for the obligation of a debtor who is in default

RULING: YES.

Kangleon claims that his letter to Macondray was a mere letter of introduction, and was not an
offer of guaranty. But cursory reading of the letter says otherwise. Indeed, his opening sentence states,
“This will introduce to you the bearers, Conrado Piring and Perfecto Piñon, who wish to place an order for
cinematographic films.” However, in the later part, he says, “for which by their guaranty I pledge
payment.” This can only mean that he undertakes to guarantee payment of the principal debtors’
obligation, should they fail to pay. Thus, Kangleon’s letter constitutes an undertaking of guaranty.

Article 1356 of the Civil Code provides that contracts shall be obligatory in whatever form they
may have been entered into, provided all the essential requisites for their validity are present. A contract
of guaranty is not a formal contract and shall be valid in whatever form it may be, provided that it complies
with the statute of frauds.

Further, Kangleon insists that he should have been notified by Macondray of the acceptance of
his offer of guaranty. However, the contract entered into by and between Kangleon and the defendants
in default is the principal contract, and Macondray is only subsidiary to the principal contract. Since the
principal contract had already been perfected, the subsidiary contract of guaranty became binding upon
effectivity of the principal contract. Hence, no notice of acceptance by Macondray to Kangleon is
necessary for its validity.

Lastly, Kangleon argues that assuming the letter constitutes a contract of guaranty, the films
actually sold to the principal debtors were 127 rolls of films at 55 pesos each, payable May 9, 1954; while
what he undertook to guarantee payment was 10 rolls negative at 157 pesos each and 100 rolls positive
at 55 pesos each, payable within three months ending April 1954. Citing Article 2055 of the Civil Code
that a guaranty cannot extend to more than what is stipulated therein, Kangleon contends that he cannot
be held liable for the contract in view of the variation in his undertaking. The total cost of what was
actually sold to and bought by the principal debtors is P6,985, which is less than the total cost of what was
originally intended to be bought by them amounting to P7,070. The variation was merely in kind and not
in subject matter — cinematographic films — which did not render Kangleon’s obligation more
burdensome. Instead, by the reduction in the original price, his obligation was rendered less onerous
than what he actually bound himself.

DISPOSITIVE: The judgment appealed from is AFFIRMED against the heirs of the deceased appellant
herein above named, with costs against them.