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  • ALLIED BANKING v. YUJUICO (Ramirez)

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    Jesus Yujuico was a surety for loans taken by YLTC from Genebank under an omnibus credit line. The credit line was increased over time and loans became due. Allied Banking Corporation acquired Genebank's assets and liabilities. Yujuico argued a revocation letter released his obligations, but as a surety he was solidarily liable with YLTC for the debts, unlike a guarantor who is secondarily liable. The court found Yujuico remained responsible as the continuing guaranties indicated he was a surety, meaning he was directly and primarily responsible with YLTC for paying the debts.

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    80. ALLIED BANKING v. YUJUICO(Ramirez)

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    Jesus Yujuico was a surety for loans taken by YLTC from Genebank under an omnibus credit line. The credit line was increased over time and loans became due. Allied Banking Corporation acquired Genebank's assets and liabilities. Yujuico argued a revocation letter released his obligations, but as a surety he was solidarily liable with YLTC for the debts, unlike a guarantor who is secondarily liable. The court found Yujuico remained responsible as the continuing guaranties indicated he was a surety, meaning he was directly and primarily responsible with YLTC for paying the debts.

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    © All Rights Reserved
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    23 views1 page

    ALLIED BANKING v. YUJUICO (Ramirez)

    Uploaded by

    juhriz
    Jesus Yujuico was a surety for loans taken by YLTC from Genebank under an omnibus credit line. The credit line was increased over time and loans became due. Allied Banking Corporation acquired Genebank's assets and liabilities. Yujuico argued a revocation letter released his obligations, but as a surety he was solidarily liable with YLTC for the debts, unlike a guarantor who is secondarily liable. The court found Yujuico remained responsible as the continuing guaranties indicated he was a surety, meaning he was directly and primarily responsible with YLTC for paying the debts.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    of 1

    Case No.

    80
    ALLIED BANKING CORPORATION, Petitioner, vs. JESUS S. YUJUICO (DECEASED),
    REPRESENTED BY BRENDON V. YUJUICO, Respondent.
    G.R. No. 163116, June 29, 2015

    TOPIC/DOCTRINE: GUARANTY and SURETYSHIP


    In guaranty, the guarantor "binds himself to the creditor to fulfill the obligation of the principal
    debtor in case the latter should fail to do so." In contrast, the surety is solidarily bound to the
    obligation of the principal debtor.

    FACTS:
    The board of directors of Genebank approved a resolution granting YLTC an Omnibus Credit Line in the
    amount of ₱800,000.00 to be made available. In order to secure punctual payment at maturity of YLTC's
    obligations, the principal stockholders of YLTC as sureties, executed a Continuing Guarantee for the
    amount of ₱800,000. Successive renewals were made until the Credit Line was increased up to P5.2M.
    Meanwhile, loans contracted by YLTC evidenced by promissory notes became due and demandable.

    Pursuant to a MOA executed between the duly appointed bank liquidator and here Allied Banking
    Corporation, the latter acquired all assets and liabilities of Genbank. Allied Banking Corporation, as
    successor-in-interest of Genbank, sought to collect the amount covered by the promissory notes. YLTC
    failed to pay constraining Allied Banking Corporation to file the instant collection suit in court.

    The RTC found that Yujuico may continue to be held responsible only for loans and obligations of YLTC
    already contacted as of the time the letter or revocation was sent but not after the revocations was made.
    It follows that defendant Yujuico cannot be held liable for them.

    ISSUE:
    Whether or not the revocation letter had released Jesus from his obligations as surety.

    RULING:
    The undertaking of Yujuico was that of a surety, not a guarantor. The terms are distinct from each other.
    Thus, in guaranty, the guarantor "binds himself to the creditor to fulfill the obligation of the principal debtor
    in case the latter should fail to do so." The liability of the guarantor is secondary to that of the principal
    debtor because he "cannot be compelled to pay the creditor unless the latter has exhausted all the
    property of the debtor, and has resorted to all the legal remedies against the debtor."In contrast, the
    surety is solidarily bound to the obligation of the principal debtor.

    Simply put, a surety is distinguished from a guaranty in that a guarantor is the insurer of the solvency of
    the debtor and thus binds himself to pay if the principal is unable to pay while a surety is the insurer of the
    debt, and he obligates himself to pay if the principal does not pay.

    With the stipulations in the continuing guaranties indicating that he was the surety of the credit line
    extended to YLTC, Jesus was solidarily liable to Genbank for the indebtedness of YLTC. In other words,
    he thereby rendered himself "directly and primarily responsible" with YLTC, "without reference to the
    solvency of the principal.”

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