B2013 1

Credit Transactions| Atty. Vasquez

Rizal Commercial Banking Corp. vs. Arro

Rizal Commercial Banking Corporation, petitioner, vs. Hon. Jose P. Arro, Judge of the Court of
First Instance of Davao, and Residoro Chua, respondents.
Date: 31 July 1982
Ponente: De Castro, J.
Facts:
 Private respondent Residoro Chua, with Enrique Go, Sr., executed a comprehensive
surety agreement to guaranty, above all, any existing or future indebtedness of
Davao Agricultural Industries Corporation (Daicor), and/or induce the bank at any
time or from time to time to make loans or advances or to extend credit to said
Daicor, provided that the liability shall not exceed ay any time Php100,000.00.
 A promissory note for Php100,000.00 (for additional capital to the charcoal buy and
sell and the activated carbon importation business) was issued in favor of petitioner
RCBC payable a month after execution. This was signed by Go in his personal
capacity and in behalf of Daicor. Respondent Chua did not sign in said promissory
note.
 As the note was not paid despite demands, RCBC filed a complaint for a sum of
money against Daicor, Go and Chua.
 The complaint against Chua was dismissed upon his motion, alleging that the
complaint states no cause of action against him as he was not a signatory to the note
and hence he cannot be held liable. This was so despite RCBC’s opposition, invoking
the comprehensive surety agreement which it holds to cover not just the note in
question but also every other indebtedness that Daicor may incur from petitioner
bank.
 RCBC moved for reconsideration of the dismissal but to no avail. Hence, this petition.

Issue: WON respondent Chua may be held liable with Go and Daicor under the promissory
note, even if he was not a signatory to it, in light of the provisions of the
comprehensive surety agreement wherein he bound himself with Go and Daicor, as
solidary debtors, to pay existing and future debts of said corporation.
Held: Yes, he may be held liable. Order dismissing the complaint against respondent Chua
reversed and set aside. Case remanded to court of origin with instruction to set aside
motion to dismiss and to require defendant Chua to answer the complaint.
Ratio:
 The comprehensive surety agreement executed by Chua and Go, as president and
general manager, respectively, of Daicor, was to cover existing as well as future
obligations which Daicor may incur with RCBC. This was only subject to the proviso
that their liability shall not exceed at any one time the aggregate principal amount of
Php100,000.00. (Par.1 of said agreement).
 The agreement was executed to induce petitioner Bank to grant any application for a
loan Daicor would request for. According to said agreement, the guaranty is
continuing and shall remain in full force or effect until the bank is notified of its
termination.
 During the time the loan under the promissory note was incurred, the agreement was
still in full force and effect and is thus covered by the latter agreement. Thus, even if
Chua did not sign the promissory note, he is still liable by virtue of the surety
agreement. The only condition necessary for him to be liable under the agreement
was that Daicor “is or may become liable as maker, endorser, acceptor or otherwise.”
 The comprehensive surety agreement signed by Go and Chua was as an accessory
obligation dependent upon the principal obligation, i.e., the loan obtained by Daicor
as evidenced by the promissory note.
 The surety agreement unequivocally shows that it was executed to guarantee future
debts that may be incurred by Daicor with petitioner, as allowed under NCC Art.2053:
 B2013 2
Credit Transactions| Atty. Vasquez

“A guaranty may also be given as security for future debts, the amount of which is
not yet known; there can be no claim against the guarantor until the debt is
liquidated. A conditional obligation may also be secured.”