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Prof. Joselito Guianan Chan's The Labor Code of the Philippines, Annotated Labor Standards & Social Legislation Volume I of a 3-Volume Series 2019 Edition (3rd Revised Edition)
 

 
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UNITED STATES SUPREME COURT JURISPRUDENCE
 

 
PHILIPPINE SUPREME COURT JURISPRUDENCE
 

   
August-2001 Jurisprudence                 

  • G.R. No. 126899 August 2, 2001 - PEOPLE OF THE PHIL. v. FELICITO T. BARBOSA

  • G.R. No. 128137 August 2, 2001 - PEOPLE OF THE PHIL. v. MARIO HAMTO

  • G.R. No. 131203 August 2, 2001 - PEOPLE OF THE PHIL. v. GUILLERMO CARIÑO

  • G.R. No. 137473 August 2, 2001 - ESTELITO V. REMOLONA v. CSC

  • G.R. Nos. 141702-03 August 2, 2001 - CATHAY PACIFIC AIRWAYS v. NLRC, ET AL.

  • G.R. Nos. 128816 & 139979-80 August 8, 2001 - PEOPLE OF THE PHIL. v. ALFREDO P. CABILTO, ET AL.

  • G.R. No. 131817 August 8, 2001 - PEOPLE OF THE PHIL. v. DANTE L. DOMINGO

  • G.R. Nos. 133791-94 August 8, 2001 - PEOPLE OF THE PHIL. v. CORNELIO SUPNAD

  • G.R. No. 135065 August 8, 2001 - PEOPLE OF THE PHIL. v. BENNY CABANGCALA, ET AL.

  • Adm. Case No. 4982 August 9, 2001 - KATRINA JOAQUIN CARIÑO v. ARTURO DE LOS REYES

  • A.M. No. 01-2-47-RTC August 9, 2001 - RE: JUDGE GUILLERMO L. LOJA,

  • A.M. No. MTJ-01-1365 August 9, 2001 - CESINA EBALLA v. ESTRELLITA M. PAAS, ET AL.

  • Adm. Matter No. P-01-1495 August 9, 2001 - ESMERALDO D. VISITACION v. GREDAM P. EDIZA

  • A.M. No. RTJ-99-1506 August 9, 2001 - JOSEFINA MERONTOS Vda. de SAYSON v. OSCAR E. ZERNA

  • A.M. No. P-01-1489 August 9, 2001 - CATALINO BAUTISTA, ET AL. v. AMELITA O. MENDOZA

  • G.R. No. 110740 August 9, 2001 - NDC-GUTHRIE PLANTATIONS, ET AL. v. NLRC, ET AL.

  • G.R. No. 112485 August 9, 2001 - EMILIA MANZANO v. MIGUEL PEREZ SR., ET AL.

  • G.R. No. 129209 August 9, 2001 - PEOPLE OF THE PHIL. v. JESEMIEL MOSQUERRA, ET AL.

  • G.R. No. 134565 August 9, 2001 - PEOPLE OF THE PHIL v. LUDIVINO MIANA, ET AL.

  • G.R. Nos. 138472-73 August 9, 2001 - PEOPLE OF THE PHIL. v. NOEL PADILLA

  • G.R. No. 138964 August 9, 2001 - VICENTE RELLOSA, ET AL. v. GONZALO PELLOSIS, ET AL.

  • G.R. No. 139411 August 9, 2001 - PEOPLE OF THE PHIL. v. AGAPITO TORALBA

  • G.R. No. 139532 August 9, 2001 - REGAL FILMS v. GABRIEL CONCEPCION

  • G.R. No. 139665 August 9, 2001 - MA. VILMA S. LABAD v. UNIVERSITY OF SOUTHEASTERN PHIL., ET AL.

  • G.R. No. 140347 August 9, 2001 - PEOPLE OF THE PHIL. v. ROLANDO OLITA

  • G.R. No. 142546 August 9, 2001 - ANASTACIO FABELA, ET AL v. COURT OF APPEALS, ET AL.

  • G.R. No. 142838 August 9, 2001 - ABELARDO B. LICAROS v. ANTONIO P. GATMAITAN

  • G.R. No. 143881 August 9, 2001 - DANILO EVANGELISTA v. PEDRO SISTOZA, ET AL.

  • G.R. No. 143949 August 9, 2001 - ATCI OVERSEAS CORP. v. COURT OF APPEALS, ET AL.

  • G.R. No. 144089 August 9, 2001 - CONCORDE HOTEL v. COURT OF APPEALS, ET AL.

  • G.R. No. 126480 August 10, 2001 - MARIA TIN v. PEOPLE OF THE PHIL.

  • G.R. No. 129162 August 10, 2001 - PEOPLE OF THE PHIL. v. WILLY FIGURACION, ET AL.

  • G.R. No. 130998 August 10, 2001 - MARUBENI CORP. ET AL. v. FELIX LIRAG

  • G.R. Nos. 137934 & 137936 August 10, 2001 - BATANGAS LAGUNA TAYABAS BUS COMPANY, ET AL. v. BENJAMIN M. BITANGA. ET AL.

  • G.R. No. 143673 August 10, 2001 - CONRADO TUAZON, ET AL. v. ERNESTO GARILAO, ET AL.

  • G.R. No. 144708 August 10, 2001 - RAFAEL ALBANO, ET AL v. COURT OF APPEALS, ET AL.

  • G.R. No. 146724 August 10, 2001 - GIL TAROJA VILLOTA v. COMELEC, ET AL.

  • G.R. No. 136266 August 13, 2001 - EUTIQUIO A. PELIGRINO v. PEOPLE OF THE PHIL.

  • A.M. No. RTJ-01-1612 August 14, 2001 - MARCO FRANCISCO SEVILLEJA v. ANTONIO N. LAGGUI

  • A.M. No. P-00-1438 August 14, 2001 - JUNN F. FLORES v. ROGER S. CONANAN

  • G.R. No. 135482 August 14, 2001 - ORLANDO SALVADOR v. ANIANO A. DESIERTO, ET AL.

  • G.R. No. 136192 August 14, 2001 - PRESIDENTIAL AD HOC FACT-FINDING COMMITTEE ON BEHEST LOANS v. ANIANO DESIERTO, ET AL.

  • G.R. No. 141617 August 14, 2001 - ADALIA B. FRANCISCO and MERRYLAND DEVELOPMENT CORPORATION v. RITA C. MEJIA

  • G.R. No. 142276 August 14, 2001 - FLORENTINO GO, JR., ET AL. v. COURT OF APPEALS, ET AL.

  • G.R. No. 142662 August 14, 2001 - PEOPLE OF THE PHIL. v. JERRY FERRER

  • A.C. No. 5486 August 15, 2001 - IN RE: ATTY. DAVID BRIONES.

  • A.M. RTJ No. 89-403 August 15, 2001 - MOLINTO D. PAGAYAO v. FAUSTO H. IMBING

  • A.M. No. 96-9-332-RTC August 15, 2001 - DIRECTOR, PNP NARCOTICS COMMAND v. JAIME N. SALAZAR

  • A.M. No. P-99-1311 August 15, 2001 - OFFICE OF THE COURT ADMINISTRATOR v. ALBERTO V. GARONG

  • G.R. Nos. 113822-23 August 15, 2001 - PEOPLE OF THE PHIL. v. RAUL L. PABLO, ET AL.

  • G.R. No. 118492 August 15, 2001 - GREGORIO H. REYES, ET AL. v. COURT OF APPEALS, ET AL.

  • G.R. No. 120468 August 15, 2001 - PEOPLE OF THE PHIL. v. LOPE B. LIWANAG, ET AL.

  • G.R. No. 128177 August 15, 2001 - ROMAN SORIANO v. COURT OF APPEALS, ET AL.

  • G.R. No. 129295 August 15, 2001 - PEOPLE OF THE PHIL. v. EDWIN MORIAL, ET AL.

  • G.R. No. 129598 August 15, 2001 - PNB MADECOR v. GERARDO C. UY

  • G.R. No. 130360 August 15, 2001 - WILSON ONG CHING KIAN CHUAN v. COURT OF APPEALS, ET AL.

  • G.R. No. 136834 August 15, 2001 - FELIX SENDON, ET AL. v. FRATERNIDAD O. RUIZ, ET AL.

  • G.R. No. 137271 August 15, 2001 - PEOPLE OF THE PHIL v. REYNALDO CORRE JR., ET AL.

  • G.R. No. 137509 August 15, 2001 - PEVET ADALID FELIZARDO, ET AL v. SIEGFREDO FERNANDEZ

  • G.R. Nos. 137969-71 August 15, 2001 - PEOPLE OF THE PHIL v. RAFAEL SALALIMA

  • G.R. No. 139337 August 15, 2001 - MA. CARMINIA C. ROXAS v. COURT OF APPEALS, ET AL.

  • G.R. No. 139420 August 15, 2001 - ROBERTO R. SERRANO v. COURT OF APPEALS, ET AL.

  • G.R. Nos. 140900 & 140911 August 15, 2001 - PEOPLE OF THE PHIL. v. RODERICK LICAYAN, ET AL.

  • G.R. No. 143340 August 15, 2001 - LILIBETH SUNGA-CHAN, ET AL v. LAMBERTO T. CHUA

  • G.R. No. 144813 August 15, 2001 - GOLD LINE TRANSIT v. LUISA RAMOS

  • G.R. No. 147270 August 15, 2001 - IN RE: PETE C. LAGRAN

  • A.M. No. RTJ-00-1565 August 16, 2001 - FEDERICO S. BERNARDO v. PATERNO G. TIAMSON

  • G.R. No. 119900 August 16, 2001 - SUNNY MOTORS SALES v. COURT OF APPEALS, ET AL.

  • G.R. No. 121897 August 16, 2001 - PEOPLE OF THE PHIL. v. GIL TEMPLA, ET AL.

  • G.R. No. 126200 August 16, 2001 - DEV’T. BANK OF THE PHIL. v. COURT OF APPEALS, ET AL.

  • G.R. No. 126926 August 16, 2001 - RAMON P. ARON v. COURT OF APPEALS, ET AL.

  • G.R. No. 127543 August 16, 2001 - INTERNATIONAL PIPES, ET AL. v. F. F. CRUZ & CO.

  • G.R. No. 132155 August 16, 2001 - ARAS-ASAN TIMBER CO. v. COMMISSIONER OF INTERNAL REVENUE, ET AL.

  • G.R. No. 134292 August 16, 2001 - PEOPLE OF THE PHIL. v. FRANCO MORALES

  • G.R. No. 136365 August 16, 2001 - ENRIQUE R. CAMACHO, ET AL. v. PHIL. NAT’L. BANK, ET AL.

  • G.R. No. 136780 August 16, 2001 - JEANETTE D. MOLINO v. SECURITY DINERS INTERNATIONAL CORP.

  • A.M. No. RTJ-00-1597 August 20, 2001 - WILSON ANDRES v. ORLANDO D. BELTRAN

  • A.M. No. RTJ-94-1131 August 20, 2001 - MIGUEL ARGEL v. HERMINIA M. PASCUA

  • G.R. No. 110055 August 20, 2001 - ASUNCION SAN JUAN v. COURT OF APPEALS, ET AL.

  • G.R. No. 111685 August 20, 2001 - DAVAO LIGHT & POWER CO. v. COURT OF APPEALS, ET AL.

  • G.R. No. 131866 August 20, 2001 - PEOPLE OF THE PHIL. v. CARLOS DOCTOLERO

  • G.R. No. 132174 August 20, 2001 - GUALBERTO CASTRO v. RICARDO GLORIA

  • G.R. No. 132684 August 20, 2001 - HERNANI N. FABIA v. COURT OF APPEALS, ET AL.

  • G.R. No. 134718 August 20, 2001 - ROMANA INGJUGTIRO v. LEON V. CASALS, ET AL.

  • G.R. No. 142401 August 20, 2001 - ANDREW TAN v. COURT OF APPEALS, ET AL.

  • G.R. No. 137299 August 21, 2001 - PEOPLE OF THE PHIL. v. FRANCISCO NANAS

  • G.R. No. 138869 August 21, 2001 - DAVID SO v. COURT OF APPEALS, ET AL.

  • G.R. No. 140519 August 21, 2001 - PHIL. RETIREMENT AUTHORITY v. THELMA RUPA

  • G.R. No. 130817 August 22, 2001 - PRESIDENTIAL AD HOC FACT-FINDING COMMITTEE ON BEHEST LOANS v. ANIANO A. DESIERTO, ET AL.

  • G.R. No. 138403 August 22, 2001 - PEOPLE OF THE PHIL. v. ROLLY C. ABULENCIA

  • G.R. Nos. 141712-13 August 22, 2001 - PEOPLE OF THE PHIL. v. EDMUNDO M. BOHOL

  • G.R. No. 143867 August 22, 2001 - PLDT v. CITY OF DAVAO, ET AL.

  • G.R. No. 128628 August 23, 2001 - ILDEFONSO SAMALA, ET AL. v. COURT OF APPEALS, ET AL.

  • G.R. No. 133749 August 23, 2001 - HERNANDO R. PEÑALOSA v. SEVERINO C. SANTOS

  • G.R. No. 133789 August 23, 2001 - PEOPLE OF THE PHIL. v. EDUARDO P. CHUA, ET AL.

  • G.R. No. 136506 August 23, 2001 - REPUBLIC OF THE PHIL. v. ANIANO A. DESIERTO, ET AL.

  • G.R. Nos. 137199-230 August 23, 2001 - PEOPLE OF THE PHIL. v. GEORGE J. ALAY-AY

  • G.R. No. 137842 August 23, 2001 - PEOPLE OF THE PHIL. v. DANILO H. CATUBIG

  • G.R. No. 138588 August 23, 2001 - FAR EAST BANK & TRUST COMPANY v. DIAZ REALTY INC.

  • G.R. No. 138022 August 23, 2001 - PEOPLE OF THE PHIL. v. PEDRO A. FRANCISCO

  • G.R. No. 144142 August 23, 2001 - YOLANDA AGUIRRE v. PEOPLE OF THE PHIL.

  • G.R. Nos. 138298 & 138982 August 24, 2001 - RAOUL B. DEL MAR v. PAGCOR, ET AL.

  • G.R. No. 131609 August 27, 2001 - PEOPLE OF THE PHIL. v. BONIFACIO PUERTA

  • A.M. No. RTJ-00-1571 August 28, 2001 - JESUS GUILLAS v. RENATO D. MUÑEZ

  • A.M. No. RTJ-01-1645 August 28, 2001 - VICTORINO S. SIANGHIO, JR. v. BIENVENIDO L. REYES

  • A.M. No. RTJ-01-1626 August 28, 2001 - JOSELITO D. FRANI v. ERNESTO P. PAGAYATAN

  • G.R. Nos. 100633 & 101550 August 28, 2001 - SOCORRO ABELLA SORIANO, ET AL v. COURT OF APPEALS, ET AL.

  • G.R. No. 114118 August 28, 2001 - SIMEON BORLADO, ET AL v. COURT OF APPEALS, ET AL.

  • G.R. No. 125728 August 28, 2001 - MARIA ALVAREZ VDA. DE DELGADO, ET AL v. COURT OF APPEALS, ET AL.

  • G.R. No. 129960 August 28, 2001 - PEOPLE OF THE PHIL. v. PEDRO CARIÑO

  • G.R. No. 131175 August 28, 2001 - JOVITO VALENZUELA, ET AL v. COURT OF APPEALS, ET AL.

  • G.R. No. 133056 August 28, 2001 - FACUNDO T. BAUTISTA v. PUYAT VINYL PRODUCTS

  • G.R. No. 140812 August 28, 2001 - CANDIDO ALFARO v. COURT OF APPEALS, ET AL.

  • G.R. No. 143256 August 28, 2001 - RODOLFO FERNANDEZ, ET AL. v. ROMEO FERNANDEZ, ET AL.

  • G.R. No. 144653 August 28, 2001 - BANK OF THE PHIL. ISLANDS v. COMMISSIONER OF INTERNAL REVENUE

  • A.M. No. P-00-1415-MeTC August 30, 2001 - OFFICE OF THE COURT ADMINISTRATOR v. TERESITA Q. ORBIGO-MARCELO

  • G.R. No. 111709 August 30, 2001 - PEOPLE OF THE PHIL. v. ROGER P. TULIN, ET AL.

  • G.R. No. 119811 August 30, 2001 - SOCORRO S. TORRES, ET AL. v. DEODORO J. SISON, ET AL.

  • G.R. No. 123980 August 30, 2001 - PEOPLE OF THE PHIL. v. MANUEL CALIMLIM

  • G.R. No. 127905 August 30, 2001 - PEOPLE OF THE PHIL. v. DANILO REMUDO

  • G.R. No. 129093 August 30, 2001 - JOSE D. LINA, ET AL. v. FRANCISCO DIZON PAÑO, ET AL.

  • G.R. No. 133113 August 30, 2001 - EDGAR H. ARREZA v. MONTANO M. DIAZ

  • G.R. No. 136280 August 30, 2001 - ORCHARD REALTY and DEV’T CORP. v. REPUBLIC OF THE PHIL, ET AL.

  • G.R. No. 139083 August 30, 2001 - FLORENCIA PARIS v. DIONISIO A. ALFECHE

  • G.R. No. 140229 August 30, 2001 - PEOPLE OF THE PHIL. v. HENRY BALMOJA

  • G.R. No. 140995 August 30, 2001 - PEOPLE OF THE PHIL. v. DANILO M. REGALA

  • G.R. No. 141128 August 30, 2001 - PEOPLE OF THE PHIL. v. ORPIANO DELOS SANTOS

  • G.R. No. 141283 August 30, 2001 - SEGOVIA DEVELOPMENT CORP. v. J.L. DUMATOL REALTY

  • G.R. No. 144442 August 30, 2001 - JESUS SALVATIERRA v. THE PEOPLE OF THE PHILIPPINES

  • A. M. No. 00-7-299-RTC August 31, 2001 - REQUEST FOR CONSOLIDATION OF CIVIL CASE NO. R-1692 RTC BR. 45

  • A.M. No. 00-8-03-SB August 31, 2001 - RE: UNNUMBERED RESOLUTION OF THE SANDIGANBAYAN RE ACQUISITION OF THREE [3] MOTOR VEHICLES FOR OFFICIAL USE OF JUSTICES

  • A.M. No. P-99-1316 August 31, 2001 - KENNETH S. NEELAND v. ILDEFONSO M. VILLANUEVA

  • G.R. Nos. 132548-49 August 31, 2001 - PEOPLE OF THE PHILIPPINES v. ALEJO MIASCO

  • G.R. No. 141211 August 31, 2001 - CITY WARDEN OF THE MANILA CITY JAIL v. RAYMOND S. ESTRELLA, ET AL.

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    G.R. No. 136780   August 16, 2001 - JEANETTE D. MOLINO v. SECURITY DINERS INTERNATIONAL CORP.

     
    PHILIPPINE SUPREME COURT DECISIONS

    THIRD DIVISION

    [G.R. No. 136780. August 16, 2001.]

    JEANETTE D. MOLINO, Petitioner, v. SECURITY DINERS INTERNATIONAL CORPORATION, Respondent.

    D E C I S I O N


    GONZAGA-REYES, J.:


    Assailed by this petition for review on certiorari is the decision of the Court of Appeals dated September 28, 1998 1 which held petitioner liable as surety for the outstanding credit card debts of Danilo Alto with herein respondent corporation.

    The decision of the Court of Appeals satisfactorily sums up the facts that led to the filing of this case:chanrob1es virtual 1aw library

    The Security Diners International Corporation ("SDIC’) operates a credit card system under the name of Diners Club through which it extends credit accommodation to its cardholders for the purchase of goods and payment of services from its member establishments to be reimbursed later on by the cardholder upon proper billing. There are two types of credit cards issued: one, the Regular (Local) Card which entitles the cardholder to purchase goods and pay services from member establishments in an amount not exceeding P10,000.00; and two, the Diamond (Edition) Card which entitles the cardholder to purchase goods and pay services from member establishments in unlimited amounts. One of the requirements for the issuance of either of these cards is that an applicant should have a surety.chanrob1es virtua1 1aw 1ibrary

    On July 24, 1987, Danilo A. Alto applied for a Regular (Local) Card with SDIC. He got as his surety his own sister-in-law Jeanette Molino Alto. Thus, Danilo signed the printed application form (Exhibit ‘A’) and Jeanette signed the Surety Undertaking (Exhibit ‘A-5"). Attached to the Application Form was an Agreement (Use of Diners’ Club Card), paragraph 16 of which reads:chanrob1es virtual 1aw library

    16. SURETY. — The cardholder shall furnish an adequate surety or sureties acceptable to Security Diners who shall be jointly and severally liable with the cardholder to pay Security Diners all the obligations and charges incurred and credit extended on the basis of the card. In the event the surety/sureties furnished the cardholder are discharged the cardholder must furnish a new surety or sureties acceptable to Security Diners within thirty (30) days. Otherwise the cardholder’s privileges shall be automatically terminated in accordance with Section 11 hereof."cralaw virtua1aw library

    The Surety Undertaking signed by Jeanette states:jgc:chanrobles.com.ph

    "I/WE, the undersigned, bind myself/ourselves jointly and severally with Mr. Danilo Alto to pay SECURITY DINERS INTERNATIONAL CORPORATION, hereinafter referred to as ‘Security Diners’ all the obligations and charges including but not limited to fees, interest, attorney’s fees and all other costs incurred by him/her in connection with the use of the DINERS CLUB CARD in accordance with the terms and conditions governing the issuance and use of the Diners Club Card. Any change or novation in the agreement or any extension of time granted by SECURITY DINERS to pay such obligations, charges and fees, shall not release me/us from this Surety Undertaking, it being understood that said undertaking is a continuing one and shall subsist and bind me/us until all such obligations, charges and fees have been fully paid and satisfied.chanrob1es virtua1 1aw 1ibrary

    It is understood that the indication of a credit limit to the cardholder shall not relieve me/us of liability for charges and all other amounts voluntarily incurred by the cardholder in excess of the credit limit.

    On the basis of the completed and signed Application Form and Surety Undertaking, the SDIC issued to Danilo Diners Card No. 36510293216-0006. The latter used this card and initially paid his obligations to SDIC. On February 8, 1988, Danilo wrote SDIC a letter (Exhibit "B") requesting it to upgrade his Regular (Local) Diners Club Card to a Diamond (Edition) one. As a requirement of SDIC, Danilo secured from Jeanette her approval. The latter obliged and so on March 2, 1988, she signed a Note (Exhibit ‘C’) which states:jgc:chanrobles.com.ph

    "This certifies that I, Jeanette D. Molino, approve of the request of Danilo and Gloria Alto with Card No. 3651-203216 0006 and 3651-203412-5007 to upgrade their card from regular to diamond edition."cralaw virtua1aw library

    Danilo’s request was granted and he was issued a Diamond (Edition) Diners Club Card. He used this card and made purchases (Exhibits "D", "D-1" to "D-7") from member establishments. On October 1, 1988 Danilo had incurred credit charged plus appropriate interest and service charges in the aggregate amount of P166,408.31. He defaulted in the payment of this obligation.

    SDIC demanded of Danilo and Jeanette to pay said obligation but they did not pay. So, on November 9, 1988, SDIC filed an action to collect said indebtedness against Danilo and Jeanette. This was docketed in the Regional Trial Court of Makati, Branch 145 as Civil Case No. 88-2381 . . . 2

    Defendant Danilo Alto failed to file an Answer, and during the pre-trial conference respondent moved to have the complaint dismissed against him, without prejudice to a subsequent re-filing. Petitioner was left as the lone defendant, sued in her capacity as surety of Danilo.

    In the Answer with Compulsory Counterclaim that she filed with the RTC, petitioner claimed that her liability under the Surety Undertaking was limited to P10,000.00 and that she did not expressly and categorically agree to act as surety for Danilo in an amount higher than P10,000.00. 3 By way of counterclaim, she asked for moral and exemplary damages.

    On August 19, 1991, the trial court rendered a decision dismissing the complaint for failure of respondent to prove its case by a preponderance of the evidence. It found that while petitioner clearly bound herself as surety under the terms of Danilo Alto’s Regular Diners Club Card, there was no evidence that after the card had been upgraded to Diamond (Edition) petitioner consented or agreed to act as surety for Danilo. Exhibit "C" or Exhibit "1", inter alia, which was a note bearing petitioner’s signature certifying to her approval of Danilo’s request to have his card upgraded should be read simply as a statement of and objection to his request for upgrading, and not as an assumption of liability for the debts that Danilo may later owe through the said card. 4 The trial court also took note of the testimony of Alfredo Vicente, an officer of respondent, who opined that the consent to be bound as surety to an upgraded card should be categorical 5 and not in a simple "no objection" form.chanrob1es virtual law library

    The trial court went on further to state that petitioner was not liable for any amount, not even for P10,000.00 which is the maximum credit limit for Regular Diners Club Cards, since at the time of the upgrading Danilo had no outstanding credit card debts. 6 This is evident from the fact that Danilo’s request for upgrading was approved, since one of the requirements for the approval of a request for the upgrading of a credit card from Regular to Diamond is that the applicant must have paid all his billings for the last three months prior to his request.

    Hence, the trial court disposed of the case with these pronouncements:chanrob1es virtual 1aw library

    WHEREFORE, judgment is rendered dismissing the complaint against defendant Jeanette D. Molino-Alto for failure of the plaintiff to prove its case by a clear preponderance of evidence.

    Said defendants counterclaim is also dismissed.

    No pronouncement as to costs.

    SO ORDERED. 7

    The Court of Appeals found contrary to the lower court, and declared that the Surety Undertaking signed by petitioner when Danilo Alto first applied for a Regular Diners Club Card clearly applied to the unpaid purchases of Danilo Alto under the Diamond card. In holding thus, the Court of Appeals referred to the terms of the said Surety Undertaking, which stated that any change or novation in the agreement on the use of the Diners Club card does not release the surety from his obligations, it being understood that the undertaking is a continuing one which subsists until all obligations and charges under the subject credit card are paid and satisfied. It also cited Pacific Banking Corporation v. Intermediate Appellate Court, 8 a 1991 decision which held the surety liable to the extent of the credit cardholder’s indebtedness, under the clear terms of the Guarantor’s Undertaking that the surety signed with the credit card company.

    The Court of Appeals further declared that it was erroneous of the trial court to conclude that petitioner was completely relieved of liability under Danilo Alto’s credit card since the Surety Undertaking she signed remained valid and enforceable even after the upgrading of the said card; besides, petitioner herself admitted that she was liable to the extent of P10,000.00.chanrob1es virtua1 1aw 1ibrary

    Additionally, the Court of Appeals reduced the attorney’s fees (stipulated in the Agreement for the Use of Diners Club Card) from 25% to 10% of the amount due, judging this to be a more reasonable rate under the circumstances.

    The dispositive portion of the decision of the Court of Appeals reads:chanrob1es virtual 1aw library

    WHEREFORE, the appealed Decision is REVERSED and one is rendered ordering defendant-appellee Jeanette D. Molino-Alto to pay plaintiff-appellant Security Diners Intentional, Inc. the following:chanrob1es virtual 1aw library

    1. The sum of P166,408.31 plus interest of 3% per annum and 2% per month from November 9, 1988 until the obligation is fully paid;

    2. The amount equivalent to 10% of the obligation mentioned in the preceding paragraph as attorneys fees; and

    3. Costs.

    SO ORDERED. 9

    Petitioner’s motion for reconsideration of the above decision was denied for lack of merit on December 1, 1998. Hence, the petition before us, which assigns the following errors:chanrob1es virtual 1aw library

    I.


    The material findings of the Court of Appeals, which are contrary to those of the lower court are erroneous.

    II.


    The findings of the Court of Appeals are conflicting and/or without citation of specific evidence on which they are based.

    III.


    The Court of Appeals erred in disregarding the applicable legal principle established by this Honorable Court that, unlike in ordinary solidary debtors, the surety does not incur liability unless the principal debtor is held liable. 10

    Petitioner posits that she did not expressly give her consent to be bound as surety under the upgraded card. She points out that the note she signed, marked as Exhibit "C", registering her approval of the request of Danilo Alto to upgrade his card, renders the Surety Undertaking she signed under the terms of the previous card "without probative value, immaterial and irrelevant as it covers only the liability of the surety in the use of the regular credit card by the principal debtor . . . . 11" She argues further that because the principal debtor, Danilo Alto, was not held liable, having been dropped as a defendant, she could not be said to have incurred liability as surety.chanrob1es virtua1 law library

    The petition is devoid of merit.

    The resolution of whether petitioner is liable as surety under the Diamond card revolves around the effect of the upgrading by Danilo Alto of his card. Was the upgrading a novation of the original agreement governing the use of Danilo Alto’s first credit card, as to extinguish that obligation and the Surety Undertaking which was simply accessory to it?

    Novation, as a mode of extinguishing obligations, may be done in two ways: by explicit declaration, or by material incompatibility (implied novation). As we stated in Fortune Motors v. Court of Appeals, supra:chanrob1es virtual 1aw library

    . . . The test of incompatibility is whether the two obligations can stand together, each one having its independent existence. If they cannot, they are incompatible and the latter obligation novates the first. Novation must be established either by the express terms of the new agreement or by the acts of the parties clearly demonstrating the intent to dissolve the old obligation as a consideration for the emergence of the new one. The will to novate, whether totally or partially, must appear by express agreement of the parties, or by their acts which are too clear or unequivocal to be mistaken.

    There is no doubt that the upgrading was a novation of the original agreement covering the first credit card issued to Danilo Alto, basically since it was committed with the intent of canceling and replacing the said card. However, the novation did not serve to release petitioner from her surety obligations because in the Surety Undertaking she expressly waived discharge in case of change or novation in the agreement governing the use of the first credit card.

    The nature and extent of petitioner’s obligations are set out in clear and unmistakable terms in the Surety Undertaking. Thus:chanrob1es virtual 1aw library

    1. She bound herself jointly and severally with Danilo Alto to pay SDIC all obligations and charges in the use of the Diners Club Card, including fees, interest, attorney’s fees, and costs;

    2. She declared that "any change or novation in the Agreement or any extension of time granted by SECURITY DINERS to pay such obligation, charges, and fees, shall not release (her) from this Surety Undertaking" ;

    3." (S)aid undertaking is a continuous one and shall subsist and bind (her) until all such obligations, charges and fees have been fully paid and satisfied" ; and

    4. "The indication of a credit limit to the cardholder shall not relieve (her) of liability for charges and all other amounts voluntarily incurred by the cardholder in excess of said credit limit." 12

    We cannot give any additional meaning to the plain language of the subject undertaking. The extent of a surety’s liability is determined by the language of the suretyship contract or bond itself. 13 Article 1370 of the Civil Code provides: "If the terms of contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall control." chanrob1es virtua1 1aw 1ibrary

    This case is no different from Pacific Banking Corporation v. CA, supra, correctly applied by the Court of Appeals, which involved a Guarantor’s Undertaking (although thus denominated, it was in substance a contract of surety signed by the husband for the credit card application of his wife. Like herein petitioner, the husband also argued that his liability should be limited to the credit limit allowed under his wife’s card but the Court declared him liable to the full extent of his wife’s indebtedness. Thus:chanrob1es virtual 1aw library

    We need not look elsewhere to determine the nature and extent of private respondent Roberto Regala, Jr.’s undertaking. As a surety he bound himself jointly and severally with the debtor Celia Regala "to pay the Pacific Banking Corporation upon demand, any and all indebtedness, obligations, charges or liabilities due and incurred by said Celia Syjuco Regala with the use of Pacificard or renewals thereof issued in (her) favor by Pacific Banking Corporation.. . . .

    x       x       x


    It is likewise not disputed by the parties that the credit limit granted to Celia Regala was P2,000.00 per month and that Celia Regala succeeded in using the card beyond the original period of its effectivity, October 29, 1979. We do not agree, however, that Roberto Jr.’s liability should be limited to that extent. Private respondent Roberto Regala, Jr., as surety of his wife, expressly bound himself up to the extent of the debtor’s (Celia’s) indebtedness likewise expressly waiving any "discharge in case of any change or novation of the terms and conditions in connection with the issuance of the Pacificard credit card." Roberto, in fact, made his commitment as a surety a continuing one, binding upon himself until all the liabilities of Celia Regala have been fully paid. All these were clear under the "Guarantor’s Undertaking" Roberto signed, thus:jgc:chanrobles.com.ph

    ". . . Any changes of or novation in the terms and conditions in connection with the issuance or use of said Pacificard, or any extension of time to pay such obligations, charges or liabilities shall not in any manner release me/us from the responsibility hereunder, it being understood that the undertaking is a continuing one and shall subsist and bind me/us until all the liabilities of the said Celia Syjuco Regala have been fully satisfied or paid." (Emphasis supplied)chanrob1es virtua1 1aw 1ibrary

    As a last-ditch measure, petitioner asseverates that, being merely a surety, a pronouncement should first be made declaring the principal debtor liable before she herself can be proceeded against. The argument, which is hinged upon the dropping of Danilo as defendant in the complaint, is bereft of merit.

    The Surety Undertaking expressly provides that petitioner’s 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. 14 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. 15 There being no question that Danilo Alto incurred debts of P166,408.31 in credit card advances, an obligation shared solidarily by petitioner, respondent was certainly within its rights to proceed singly against petitioner, as surety and solidary debtor, without prejudice to any action it may later file against Danilo Alto, until the obligation is fully satisfied. This is so provided under Article 1216 of the Civil Code:chanrob1es virtual 1aw library

    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.

    Petitioner is a graduate of business administration, and possesses considerable work experience in several banks. She knew the full import and consequence of the Surety Undertaking that she executed. She had the option to withdraw her suretyship when Danilo upgraded his card to one that permitted unlimited purchases, but instead she approved the upgrading. While we commiserate in the financial predicament she now faces, it is also evident that the liability she incurred is only the legitimate consequence of an undertaking that she freely and intelligently obliged to. Prospective sureties to credit card applicants would be well-advised to study carefully the terms of the agreements prepared by the credit card companies before giving their consent, and pay heed to speculations that could lead to onerous effects, like in the present case where the credit applied for was limitless. At the same time, it bears articulating that although courts in appropriate cases may equitably reduce the award for penalty as provided under such suretyship agreements if the same is iniquitous or unconscionable, 16 we are unable to give relief to petitioner by way of reducing the amount of the principal liability as surety under the circumstances of this case.chanrob1es virtua1 1aw 1ibrary

    WHEREFORE, the petition is dismissed for lack of merit The decision of the Court of Appeals is AFFIRMED in all respects.

    SO ORDERED.

    Melo, Panganiban and Sandoval-Gutierrez, JJ., concur.

    Vitug, J., concurs in the result (pro hac vice).

    Endnotes:



    1. Promulgated by the former Seventeenth Division; written by Associate Justice Hilarion L; Aquino, and concurred in by Associate Justice Ramon U. Mabutas, Jr. (Chairman) and Associate Justice Renato C. Dacudao.

    2. CA Decision; Rollo, 49-52.

    3. Answer with Compulsory Counterclaim, Annex "B" to Petition; Rollo, 29.

    4. RTC Decision; Rollo, 44-45.

    5. Ibid., 45-46.

    6. Ibid., 46.

    7. Ibid., 47.

    8. 203 SCRA 496.

    9. CA Decision; Rollo, 58.

    10. Petition; Rollo, 10.

    11. Ibid., 14.

    12. Exh. "A-5" ; Records of the Case, 93.

    13. Rizal Commercial Banking Corporation v. Court of Appeals, 178 SCRA 739 (1989); Luzon Surety Company, Inc. v. Quebrar, 127 SCRA 295 (1984).

    14. Philippine National Bank v. Pineda, 197 SCRA 1 (1991).

    15. Garcia v. Court of Appeals, 191 SCRA 493 (1990).

    16. Article 1229 of the Civil Code provides: "The judge shall equitably reduce the panalty when the principal obligation has been partly or irregularly complied with by the debtor. Even if there has been no performance, the penalty may also be reduced by the courts if it is iniquitous or unconscionable." Applied in Palmares v. Court of Appeals, 288 SCRA 422 (1998); Barons Marketing Corporation v. Court of Appeals, 286 SCRA 96 (1998); Insular Bank of Asia & America v. Salazar, 159 SCRA 133 (1988).

    G.R. No. 136780   August 16, 2001 - JEANETTE D. MOLINO v. SECURITY DINERS INTERNATIONAL CORP.


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