Emilio Y. Taedo

FIRST DIVISION
[G. R. No. 136603. January 18, 2002]
EMILIO Y. TAEDO, petitioner, vs. ALLIED BANKING CORPORATION, respondent.

DECISION
PARDO, J.:
Appeal via certiorari from the decision of the Court of Appeals [1]reversing the ruling of the trial court and
holding petitioner liable solidarily with defendant Cheng Ban Yek Co., Inc. for all items of the money judgment and
costs of suit.
The Facts
The facts, as found by the Court of Appeals, are as follows:
Appeal by both the plaintiff Allied Banking Corporation and the defendant Cheng Ban Yek & Co., Inc. from the
Order, as summary judgment, of the Regional Trial Court (Branch XLIV, Manila), the decretal part whereof reads:
WHEREFORE, and in view of the foregoing considerations, summary judgment is hereby rendered in favor of the
plaintiff, Allied Banking Corporation, and against defendant Cheng Ban Yek and Co., Inc. as follows:
1. On the first cause of action:
Ordering the defendant Cheng Ban Yek Co., Inc. to pay plaintiff the sum of P2,000,000.00, plus interest thereon at
14% per annum, 2% per annum as service charge, and penalty charge of 1% per month from February 11,
1981 until fully paid;
2. On the second cause of action:
Ordering the defendant Cheng Ban Yek Co., Inc. to pay plaintiff the sum of P2,500,000.00, plus interest thereon at
14% per annum, service charge of 2% per annum, and penalty charge of 1 % per month, from February 3,
3. On the third cause of action:
Ordering the defendant Cheng Ban Yek Co., Inc. to pay plaintiff the sum of P1,000,000.00 plus interest thereon at
4. On the fourth cause of action:
5. On the fifth cause of action:
14% per annum, service charge of 2% per annum, and penalty charge of 1% per month, from February 12,
6. On the sixth cause of action:
7. On the seventh cause of action:
8. On all the causes of action:
Ordering the defendant Cheng Ban Yek Co., Inc. to pay plaintiff the sum equivalent to 25% of the amount due and
demandable as and for attorneys fees;
9. Declaring the Continuing Guaranty as having been extinguished after plaintiff branded it as a worthless security
and preferred to avail, as it did avail, of the provisional remedy of attachment; and declaring defendants Alfredo
Ching and Emilio Taedo relieved of their obligation under the said continuing Guaranty; and
10. Ordering the defendant Cheng Ban Yek Co., Inc. to pay the costs of suit.
SO ORDERED.[2]
The foregoing summary judgment has its roots in a complaint with preliminary attachment filed by plaintiff bank to
recover sums of money from defendant corporation on its seven past due promissory notes with principal amounts
totaling P10,000,000.00, from defendants Alfredo Ching and Emilio Taedo under a Continuing Guaranty providing
for joint and several liability relative to the said promissory notes. The preliminary attachment sought was granted
upon the required bond and was thereafter maintained despite defendant corporations efforts to have it
discharged.
The appeal of plaintiff bank is limited to paragraph 9 of the summary judgment (supra, p. 3) which declared
defendants Aldredo Ching and Emilio Taedo as free from any liability under the Continuing Guaranty since their
respective liabilities thereunder became extinguished when plaintiff bank in its pleading branded the Continuing
Guaranty as worthless security.
On the other hand, defendant corporations appeal is an attack on the summary nature of the proceeding adopted
by the lower court since, according to defendant corporation, there was a petition for suspension of payment filed
by it with the Securities and Exchange Commission which, although dismissed, was duly appealed to the Court of
Appeals.
xxx
Defendant corporations petition for suspension of payment was dismissed by the Securities and Exchange
Commission for lack of quorum. At the creditors meeting called and accordingly held to approve the corporations
petition for suspension of payment, out of outstanding liabilities of P237,718,426.00, only the creditors
representing P110,355,607.37 thereof attended. This was far short of the three-fifths quorum unqualifiedly required
by law which should have been P142,631,055.60 (Act No. 1956, Sec. 8) x x x . [3]
On October 16, 1984, the trial court rendered a summary judgment, as quoted above. [4]
Both plaintiff Allied Banking Corporation and the defendant Cheng Ban Yek & Co., Inc. appealed from the
summary judgment to the Court of Appeals.[5]
On March 27, 1990, the Court of Appeals promulgated a decision, the dispositive portion of which reads:
WHEREFORE, the Order appealed from is in part REVERSED and MODIFIED by deleting paragraph 9 from the
dispositive portion thereof, and declaring the defendants Alfredo Ching and Emilio Taedo solidarily liable with
defendant Cheng Ban Yek Co., Inc. for all items of the money judgment set forth in paragraphs one 91) to eight (8)
inclusive, and paragraph ten (10), of said dispositive portion. The Order is AFFIRMED in its other aspects. No costs
in this instance.
SO ORDERED.[6]
On April 11, 1990, petitioner Emilio Y. Taedo filed a motion for reconsideration of the decision, contending that
while the case was pending before the Court of Appeals the Allied Bank and Cheng Ban Yek & Co., Inc. agreed to
extend the time of payment of the indebtedness, without the consent of petitioner, thereby relieving him of his
obligation as guarantor or surety of such obligation.[7]
On November 27, 1998, the Court of Appeals denied the motion for lack of merit. [8]
Hence, this appeal.[9]
The Issues
The basic issues raised are (a) whether the execution by the respondent Bank of the Fourth Amendatory
Agreement extinguished petitioners obligations as surety, and (b) whether the continuing guarantee executed by
the petitioner is a contract of (surety) adhesion. [10]
The Courts Ruling

We find the petition without merit.
Resolving the first issue, we note that the amendatory agreement between the respondent Allied Banking
Corporation and Cheng Ban Yek & Co., Inc. extended the maturity of the promissory notes without notice or
consent of the petitioner as surety of the obligations. However, the continuing guarantee executed by the
petitioner provided that he consents and agrees that the bank may, at any time or from time to time extend or
change the time of payments and/or the manner, place or terms of payment of all such instruments, loans,
advances, credits or other obligations guaranteed by the surety. Hence, the extensions of the loans did not release
the surety.[11]
As to the second issue, even if the continuing guarantee were considered as one of adhesion, we find the
contract of surety valid because petitioner was free to reject it entirely. [12]Petitioner was a stockholder and officer of
Cheng Ban Yek and Co., Inc. and it was common business and banking practice to require sureties to guarantee
corporate obligations.
The Fallo
IN VIEW WHEREOF, the Court DENIES the petition and AFFIRMS the decision of the Court of Appeals. [13]
No costs in this instance.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, and Ynares-Santiago, JJ., concur.
Kapunan, J., no part.

Emilio Y. Taedo

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Emilio Y. Taedo

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FIRST DIVISION

[G. R. No. 136603. January 18, 2002]

EMILIO Y. TAEDO, petitioner, vs. ALLIED BANKING CORPORATION, respondent.

The Courts Ruling

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