ASTURIAS SUGAR CENTRAL, INC vs. THE PURE CANE MOLASSES CO., INC.

FACTS: Asturias Sugar Central, Inc., and defendant Pure Cane Molasses Co., entered into a contract,
whereby the former bound itself to sell and the latter to buy all the molasses which the said plaintiff would
produce at the prices and under the conditions that the defendant deposits the sum of P6,000 in the Bank
of the Philippines Islands as a security, which the defendant did.

Plaintiff brought an action against the defendant for the amendment of the contract, raise to the question
relative to its right to cancel the contract upon the payment of the six thousand pesos in accordance to
the terms alleging that it had made a demand on the plaintiff to accept the cancellation and receive the
sum which the plaintiff refuse.

ISSUE: Whether the plaintiff has the right to refuse the payment for the cancellation of the contract.

RULING: in principle, the defendants obligation to pay the sum of P6, 000 to the plaintiff for the
cancellation of the contract is the same as that of the vendor in the contract of sale with the right of
repurchase to refund the purchase prize to the purchaser, for the purpose of the resale, in which case this
court has held that deposit of the repurchase price is not necessary to compel the purchaser to make the
resale, if he refuses to accept it.

Furthermore, this court is of the opinion that the offer of the defendant to pay to the plaintiff the sum of P6,
000 was made in good faith, taking into consideration, particularly, the fact that said sum had been
deposited in a bank at the disposal of the plaintiff, for the purpose, among other things, of the cancellation
of the contract.

TIU HIONG GUAN V. METROPOLITAN BANK & TRUST

COMPANY
G.R. No. 144339 August 9, 2006
FACTS:
Petitioners applied for a continuing credit facility for and in behalf of themselves and their corporation,
Sunta Rubberized Industrial Corporation (Sunta), and executed in their personal and official capacities a
Continuing Surety Agreement. In the said Agreement, petitioners jointly and severally obligated
themselves to pay all loans and credit accommodations that they and Sunta may incur, supposedly not
exceeding P3M. It was further stipulated therein that, in case of default in the payment thereof,
notwithstanding Sunta's dissolution, failure in business, insolvency, and the filing of a petition for
bankruptcy or suspension of payments in the proceeding related thereto, the whole obligation shall
become due and payable without benefit of demand or notice of payment.
Petitioners then opened an irrevocable Commercial Letter of Credit (LC) for the purchase of raw
materials amounting to P480k in favor of Sunta. These materials were delivered and custody thereof
transferred to Sunta, after which a Trust Receipt Agreement was jointly and severally executed by
petitioners in their personal capacities.
Later, Sunta and petitioners also in their personal capacities obtained a loan of P350k. After maturity
of the obligation, there was both failure of payment and compliance with the surety and trust receipt
agreements, sight draft, and promissory note. The total unpaid obligation came to P1.57M.
Prayed for by respondent in its complaint were the payments of P741k, with interest and penalties on
the promissory note, with interest and penalties as stipulated in the Trust Receipt Agreement; and
attorney's fees. In their Answer, petitioners admitted execution of the Continuing Surety Agreement not in
their personal capacities but as officers of Sunta. It was also asserted therein that none of them
personally benefited from the loan transaction, while two of them signed the LC as mere officers of Sunta.
The failure of Sunta to pay its obligation was attributed to both force majeure when fire gutted down
its factory buildings, equipment, machinery, raw materials and finished products and the Order by the
SEC suspending all actions for claims against Sunta that are pending before any court or tribunal.
 It was contended that the real party-in-interest as far as the actionable documents herein were
concerned was Sunta, not petitioners who merely acted as its agents and as guarantors of
its obligation. Therefore, petitioners should not be compelled to pay the obligations of Sunta, because
Sunta is solvent and its assets have not yet been exhausted.

ISSUE: WON PETITIONERS CAN BE HELD LIABLE FOR THE

UNPAID LOAN OF SUNTA CORP.?

HELD: YES. Petitioners should be held liable for their unpaid obligation of P1.57M, based on both the
non-negotiable Promissory Note and Continuing Surety Agreement they executed.
From these two documents, the liability of petitioners is joint and several in both their personal and
official capacities. They are not mere guarantors, but sureties. They do not insure the solvency of the
debtor, but rather the debt itself. They obligate themselves to pay the debt if the principal debtor will not
pay, regardless of whether or not the latter is financially capable to fulfill his obligation. the liability of a
surety is determined strictly on the basis of the terms and conditions set out in the surety agreement.
Solidary liability is one of its primary characteristics. The creditor may proceed against any one of the
solidary debtors or some or all of them simultaneously. Thus, respondent may proceed against Sunta
alone or some or all of petitioners herein.

MOLINO VS. SECURITY DINERS INTERNATIONAL CORPORATION

FACTS: Danilo A. Alto applied for a regular local card with SDIC.He got as his surety his own sister-in-law
Jeanette Molino Alto. On February 8, 1988, Danilo wrote SDIC a letter requesting it to upgrade his card
to a Diamond edition one. Danilo secured from Jeanette her approval and she signed a note which
states that he approves the request of Mr. and Mrs. Alto to upgrade their card from regular to diamond
edition.

Danilo defaulted in the payment of his obligation. Because Danilo and Jeanette did not pay when the
SDIC demanded for payment, SDIC filed an action to collect indebtedness of Jeanette and Danilo. Molino
was sued in her capacity as surety of Danilo. Petitioner claimed that her liability under the Surety
Undertaking was limited to P10, 000 and she did not expressly and categorically agree to act as surety
for Danilo in an amount higher than P10, 000.

Trial court judgement rendered dismissing the complaint against defendant Molino for failure of the
plaintiff to prove its case by a clear preponderance of evidence.

ISSUE: Whether Molino, as a surety of Danilo is held liable for obligation of paying the incurred credit
charged plus appropriate interest and service to SDIC?

RULING: YES. The Surety Undertaking expressly provides that petitioner liability is solidary. A surety is
considered in law as being the same party as the debtor in relation to whatever is adjudged touching the
obligation of the latter, and their liabilities are interwoven as to be inseparable. Although the contract of
a surety is in essence secondary only to a valid principal obligation, his liability to the creditor is direct,
primary and absolute; he becomes liable for the debt and duty of another although he possesses no
direct or personal interest over the obligations nor does he receive any benefit therefrom.
The creditor may proceed against any one of the solidary debtors or some or all of them simultaneously.
The demand made against one of them shall not be an obstacle to those which may be subsequently
directed against the others, so long as the debt has not been fully collected.

La Tondena, INC., vs. ALTO SURETY & INSURANCE CO., INC

FACTS: Primitivo P. Ferrer executed in favor of La Tondena, Inc., a second chattel mortagage upon
certain properties described in the complaint, to guarantee payment of certain amounts. Some of
properties were already subject to a first mortgage in favor of Pedro Ruiz. Ruiz sought foreclosure of the
first mortgage in his favor and started an action for replevin. However, Ferrer secured their release by
means of a redelivery bond guaranteed by the Alto Surety and Insurance Co. The Court sentenced Ferrer
to pay Ruiz P6,590.00 plus interest and attorneys fee and the Alto Surety paid for him.

On March 13,1951, tha Alto surety filed complaint against Ferrer to recover bond premiums and
indemnities paid for his account, and secured writs of preliminary attachment. The Provincial Sheriff
attached the very properties mortgage by Ferrer to La Tondena, Inc.,

La Tondea then filed with the Sheriff a third party claim to the property; the Alto Surety in turn issued
an indemnity bond in favor of the Sheriff, guaranteed by the Associated Insurance Company, to maintain
its levy; and on May 19, 1952, the goods were sold at auction at the instance of Alto Surety and
purchased by the same for P3,507.50.

ISSUE: Whether the surety company became subrogated to the rights of the first mortgagee, and
therefore Alto Surety's rights became superior to those of the second mortgagee La Tondea

RULINGS: by paying off the first mortgage of Pedro Ruiz, Alto Surety became legally subrogated to the rights
of the first mortgagee. This stand fails to take into account that such subrogation only occurs
upon payment of the first mortgage (Civil Code of 1889, Article 1210; new Civil Code, Article 1302), and that
Alto Surety did not begin paying off the first mortgage until March 1952, nor complete its payment until June
19, 1952, while its attachment was levied one year before, in April of 1951. The complaint upon which Alto
Surety obtained the attachment in question was not for the foreclosure of first mortgage, and in fact, did not
even allege that the first mortgage had been paid by Alto Surety. Hence, the subrogation in its favor did not
exist when the attachment was levied, nor make the latter superior to the lien of the second mortgagee, La
Tondea, Inc., as of the time of the attachment; nor would it justify the refusal of the appellees to allow the
foreclosure sale to proceed, or their rejection of the third party claim filed by the second mortgagee on
September 5, 1951. As of the latter date, La Tondea, Inc. was already entitled to seize and sell the security
(of course, subject to the first mortgage), and the attaching creditor, Alto Surety, had only a lien subordinate
to that of its opponent. The refusal to surrender the mortgaged property being evidently wrongful, the
appellees are liable for damages
REHABILITATION FINANCE CORPORATION vs. COURT OF APPEALS, ESTELITO MADRID AND JESUS ANDUIZA

FACTS: REHABILITATION Finance Corporation appeal by certiorari from a decision of the Court of Appeals.
Petitioners wrote a promissory note that on or before October 31, 1951 for value received, we, jointly and
severally , promise to pay the RFC.

Madrid paid the amortization due to the RFC by Anduiza

ISSUE: Whether the payment of Madrid had been made against the express will of Anduiza and whether he
has the right to pay the obligation.

RULING: Article No. 1158 of the Civil Code of Spain, which was in force in the Philippines at the time of the
payment under consideration and of the institution of the present case.

Payment maybe made by any person, whether he has an interest in the performance of the
obligation or not, and whether the payment is known and approved by the debtor or whether he is
unaware of it.
One who makes a payment for the account of another may recover from the debtor the amount of
the payment, unless it was made against his express will.
In the latter case he can recover from the debtor only in so far as the payment has been beneficial to
him.

It is clear therefrom that responded Madrid was entitled to pay the obligation of Andruiza irrespective of the
latters will or that of the Bank, and even over the objection of either or both.

PAL vs. CA

FACTS: November 8, 1967: Amelia Tan, under the name and style of Able Printing Press commenced a
complaint for damages before the CFI

CFI: favored Amelia Tan against Philippine Airlines Inc. (PAL)

CA affirmed with mod

May 18, 1978: PAL received a copy of the first alias writ of execution issued on the same day directing Special
Sheriff Jaime K. del Rosario to levy on execution in the sum of P25,000.00 with legal interest thereon from
July 20,1967 when respondent Amelia Tan made an extra-judicial demand through a letter

May 23, 1978: PAL filed an urgent motion to quash the alias writ of execution stating that no return of the
writ had as yet been made and that the judgment debt had already been fully satisfied as evidenced by the
cash vouchers signed and received by Deputy Sheriff Reyes who absconded

May 26,1978: served a notice of garnishment on the depository bank of PAL

ISSUE: W/N payment made to the absconding sheriff by check in his name operate to satisfy the judgment
debt
HELD: NO. CA affirmed. payment must be made to the obligee himself or to an agent having authority,
express or implied, to receive the particular payment. The receipt of money due on ajudgment by an officer
authorized by law to accept it will, therefore, satisfy the debt

Since a negotiable instrument is only a substitute for money and not money, the delivery of such an
instrument does not, by itself, operate as payment

The payment made by the PAL to the absconding sheriff was not in cash or legal tender but in checks

Article 1249 of the Civil Code provides:

The payment of debts in money shall be made in the currency stipulated, and if it is not possible to deliver
such currency, then in the currency which is legal tender in the Philippines.

The delivery of promissory notes payable to order, or bills of exchange or other mercantile documents shall
produce the effect of payment only when they have been cashed, or when through the fault of the creditor
they have been impaired.

As between two innocent persons, one of whom must suffer the consequence of a breach of trust, the one
who made it possible by his act of confidence must bear the loss.

PAL without prudence, departed from what is generally observed and done, and placed as payee in the
checks the name of the errant Sheriff and not the name of the rightful payee