AGLIBOT V. SANTIA (G.R. NO. 185945.

DECEMBER 5, 2012)

FACTS:

Engr. Ingersol L. Santia (Santia) loaned the amount of P2,500,000.00 to Pacific Lending & Capital
Corporation (PLCC), through its Manager, petitioner Fideliza J. Aglibot (Aglibot). The loan was evidenced
by a promissory note. Allegedly as a guaranty for the payment of the note, Aglibot issued and delivered to
Santia eleven (11) post-dated personal checks drawn from her own account maintained at Metrobank.
Upon presentment of the checks for payment, they were dishonored by the bank for having been drawn
against insufficient funds or closed account. Santia thus demanded payment from PLCC and Aglibot of
the face value of the checks, but neither of them heeded his demand. Consequently, eleven (11)
Informations for violation of B.P. 22 were filed before the MTCC.

MTCC acquitted Aglibot. On appeal, the RTC rendered a decision absolving Aglibot and dismissing the
civil aspect of the case on the ground of "failure to fulfill a condition precedent of exhausting all means to
collect from the principal debtor."

On appeal, the Court of Appeals ruled that the RTC erred when it dismissed the civil aspect of the case.
Hence, the CA ruled that Aglibot is personally liable for the loan.

Thus, Aglibot filed this instant petition for certiorari. She argued that she was merely a guarantor of the
obligation and therefore, entitled to the benefit of excussion under Article of the 2058 of the Civil Code.
She further posited that she is not personally liable on the checks since she merely contracted the loan in
behalf of PLCC.

ISSUES:

Is Aglibot entitled to the benefit of excussion?

Is Aglibot personally liable on the checks?

HELD:

FIRST ISSUE: Aglibot cannot invoke the benefit of excussion. It is settled that the liability of the
guarantor is only subsidiary, and all the properties of the principal debtor, the PLCC in this case, must
first be exhausted before the guarantor may be held answerable for the debt. Thus, the creditor may hold
the guarantor liable only after judgment has been obtained against the principal debtor and the latter is
unable to pay, "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." This
rule is contained in Article 2062 of the Civil Code, which provides that the action brought by the creditor
must be filed against the principal debtor alone, except in some instances mentioned in Article 2059 when
the action may be brought against both the guarantor and the principal debtor.

The Court must, however, reject Aglibot’s claim as a mere guarantor of the indebtedness of PLCC to Santia
for want of proof, in view of Article 1403(2) of the Civil Code, embodying the Statute of Frauds. Under the
above provision, concerning a guaranty agreement, which is a promise to answer for the debt or
default of another, the law clearly requires that it, or some note or memorandum thereof, be in writing.
Otherwise, it would be unenforceable unless ratified, although under Article 1358 of the Civil Code, a
contract of guaranty does not have to appear in a public document

Contracts are generally obligatory in whatever form they may have been entered into, provided all the
essential requisites for their validity are present, and the Statute of Frauds simply provides the method by
which the contracts enumerated in Article 1403(2) may be proved, but it does not declare them invalid
just because they are not reduced to writing. Thus, the form required under the Statute is for convenience
or evidentiary purposes only.
On the other hand, Article 2055 of the Civil Code also provides that a guaranty is not presumed, but must
be express, and cannot extend to more than what is stipulated therein. This is the obvious rationale why a
contract of guarantee is unenforceable unless made in writing or evidenced by some writing.

SECOND ISSUE: Aglibot is an accommodation party and therefore liable to Santia. The

appellate court ruled that by issuing her own post-dated checks, Aglibot thereby bound herself personally
and solidarily to pay Santia, and dismissed her claim that she issued her said checks in her official
capacity as PLCC’s manager merely to guarantee the investment of Santia. The facts present a clear
situation where Aglibot, as the manager of PLCC, agreed to accommodate its loan to Santia by issuing her
own post-dated checks in payment thereof. She is what the Negotiable Instruments Law calls an
accommodation party.

The relation between an accommodation party and the party accommodated is, in effect, one of principal
and surety — the accommodation party being the surety. It is a settled rule that a  surety is bound
equally and absolutely with the principal and is deemed an original promisor and debtor
from the beginning. The liability is immediate and direct.

It is not a valid defense that the accommodation party did not receive any valuable consideration when he
executed the instrument; nor is it correct to say that the holder for value is not a holder in due course
merely because at the time he acquired the instrument, he knew that the indorser was only an
accommodation party. Unlike in a contract of suretyship, the liability of the accommodation party
remains not only primary but also unconditional to a holder for value, such that even if the
accommodated party receives an extension of the period for payment without the consent of the
accommodation party, the latter is still liable for the whole obligation and such extension does not release
him because as far as a holder for value is concerned, he is a solidary co-debtor.