32. ROBERTO TOTANES vs. CHINA BANKING CORP.

FACTS:
Petitioner and Manuel Antiquera (Antiquera) maintained their individual savings and current accounts with respondent in
the latters egaspi Cit! "ranch# Petitioner and Antiquera$ in conspirac! with respondents %ranch manager &onnie ou
Marque' (Marque')$ allegedl! engaged in what is commonl! (nown in %an(ing as )(iting operation$* %! manipulating the
handling and operations o+ their deposit accounts# Petitioner and Antiquera$ li(ewise$ e++ected trans+ers o+ +unds to each
others accounts %! drawing chec(s +rom their respective current accounts and depositing the same with the others
accounts %! wa! o+ de%it and credit memos$ all in connivance with Marque'$ to ma(e it appear that their respective
accounts were su++icientl! +unded$ when in truth and in +act$ the! were not#
,n -ul! .$ /.01$ Antiquera dul! e2ecuted and delivered Promissor! 3ote 3o# 450/ in +avor o+ the respondent$ where%! he
promised to pa! the latter on -ul! /1$ /.01$ the sum o+ P/65$555#55 with 478 interest per annum until +ull! paid# ,n -ul!
4.$ /.01$ Antiquera e2ecuted Promissor! 3ote 3o# 45.. +or another P/65$555#55$ pa!a%le on August 6$ /.01$ with the
same rate o+ interest# Antiquera agreed in %oth promissor! notes that he would pa! an additional amount %! wa! o+
penalt!$ equivalent to /9/5 o+ /8 per da! o+ the total amount due +rom date o+ de+ault until +ull pa!ment#
To secure the a+oresaid o%ligations$ a suret! agreement +orm was e2ecuted and signed %! Antiquera as principal and the
petitioner as suret!# As suret!$ petitioner %ound himsel+ to pa! :ointl! and severall! with Antiquera$ the latters o%ligation
with the respondent# ;is lia%ilit!$ however$ was limited to P<55$555#55$ plus interest#
For the alleged acts o+ de+raudation committed %! Antiquera$ Marque' and the petitioner= and +or +ailure o+ Antiquera to
pa! his o%ligations covered %! the promissor! notes$ respondent instituted a complaint +or sum o+ mone! with damages#
Antiquera and the petitioner were declared in de+ault$ hence$ e2 parte hearings ensued#
A+ter trial$ the &TC rendered a >ecision in +avor o+ the respondent$ %ut dismissed the case as against the petitioner# ,n
motion +or reconsideration$ the &TC reversed itsel+ %ut onl! inso+ar as it dismissed the case against the petitioner#
Consequentl!$ petitioner was held :ointl! and severall! lia%le with Antiquera +or P<55$555#55 with 448 interest per annum
until +ull! paid#
Petitioner appealed the a+oresaid order to the CA# Petitioner$ however$ +ailed to persuade the appellate court which
a++irmed the &TCs disposition# The CA sustained the validit! o+ the continuing suret! agreement signed %! petitioner# The
suret!ship$ according to the CA$ was not limited to a single transaction= rather$ it contemplated a +uture course o+ dealing$
covering a series o+ transactions$ generall! +or an inde+inite time or until revo(ed# To %uttress its conclusion$ the CA cited
Ato( Finance Corporation v# Court o+ Appeals$ which it held to %e )on?all?+ours* with the instant case# Finall!$ the CA
declared that petitioners lia%ilit! as a suret! was not negated %! the trial courts +inding that he did not$ in an! wa!$
participate in the alleged )(iting operations* or connive with Antiquera in committing the acts o+ de+raudation$ sa!ing that
petitioners lia%ilit! as a suret! was separate and distinct +rom the +raudulent acts o+ which he was +ound innocent#
Petitioner now comes %e+ore us in this petition +or review on certiorari raising the +ollowing errors:
/) T;@ ASSAA@> >@CASA,3 MASTAB@3C A3> D3AEFDC ;@> P@TATA,3@& AA"@ F,& T;@ >@"T ,F
A3,T;@& A3>AFA>DA$ MA3D@ A3TAGD@&A# D3>@& T;@ H@3@&A &D@ ,3 )&@ATAFATC ,F C,3T&ACT$*
&@SP,3>@3T AS 3,T AA"@ F,& T;@ C,3T&ACTDA ,"AHATA,3 ,F MA3D@ A3TAGD@&A# 3,3@ ,F T;@
&@C,H3AI@> @JC@PTA,3S APPC T, P@TATA,3@&# P@TATA,3@& AS 3,T T;@ MAB@&$ C,?MAB@&$ A3>,&S@&$
AH@3T$ "&,B@&$ ACC,MM,>ATA,3 PA&TC$ HDA&A3T,& ,& SD&@TC ,F MA3D@ A3TAGD@&A#
4) &@SP,3>@3T AS @ST,PP@> F&,M @3F,&CA3H T;@ ,A3 T&A3SACTA,3S (i#e# SD&@TC AH&@@M@3T A3>
P&,MASS,&C 3,T@S) &@SP,3>@3T CAAMS T, "@ F,A> ,& D3ADT;,&AI@> F,& ACB ,F APP&,FA "C
&@SP,3>@3TS ",A&> ,F >A&@CT,&S$ AS &@GDA&@> A3 &@SP,3>@3TS P,ACC STAT@M@3TS >AT@>
,CT,"@& /.$ /.0< (@J;A"AT )@*) A3> S@PT@M"@& 41$ /.01 (@J;A"AT )F*)#
<) T;@ ASSAA@> >@CASA,3 MASA3T@&P&@T@> A3> MASAPPA@> T;@ &DA3H A3 )AT,B FA3A3C@
C,&P,&ATA,3 FS# C,D&T ,F APP@AS* E;AC; C,3C@&3@> ATS@F EAT; T;@ APPACA"AATC ,F T;@
P@&F@CT@> SD&@TC AH&@@M@3T A3 &@ATA,3 T, FDTD&@ ,"AHATA,3S$ E;A@ A3 T;@ P&@S@3T CAS@
T;@ ASSD@ AS T;@ P@&F@CTA,3 ,F T;@ C&@>AT A3@ A3> T;@ SDPP,&TA3H SD&@TC AH&@@M@3T#
7) ASSDMA3H T;@ C&@>AT A3@ A3> T;@ SDPP,&TA3H SD&@TC AH&@@M@3T @JAST$ T;@ D3AAT@&A ,A3
@JT@3SA,3S H&A3T@> "C &@SP,3>@3T T, MA3D@ A3TAGD@&A ;A> &@SDT@> A3 T;@ @JTA3HDAS;M@3T
,F P@TATA,3@&S ,"AHATA,3$ AF A3C$ D3>@& T;@ SD&@TC AH&@@M@3T#
ASSD@:
Ehether the petitioner ma! %e held :ointl! and severall! lia%le with Antiquera +or the latters unsettled o%ligation with the
respondent#
;@>:
Ces#
Petitioners lia%ilit! was %ased on the suret! agreement he e2ecuted and signed +reel! and voluntaril!# ;e$ however$
argues that said agreement was not per+ected %ecause the principal o%ligation$ which is the credit line$ did not materiali'e#
As such$ %eing a stranger to an! contract entered into %! Antiquera with the respondent$ he should not %e held lia%le#
From the terms o+ the contract$ it appears that petitioner :ointl! and severall! undertoo($ %ound himsel+ and warranted to
the respondent )the prompt pa!ment o+ all overdra+ts$ promissor! notes$ discounts$ letters o+ credit$ dra+ts$ %ills o+
e2change$ and other o%ligations o+ ever! (ind and nature$ including trust receipts and discounts o+ dra+ts$ %ills o+
e2change$ promissor! notes$ etc# 2 2 2 +or which the Principal(s) ma! now %e inde%ted or ma! herea+ter %ecome inde%ted
to the Creditor#*/1
The +act that the contract o+ suret!ship was signed %! the petitioner prior to the e2ecution o+ the promissor! note does not
negate the +ormers lia%ilit!# The contract entered into %! the petitioner is commonl! (nown as a continuing suret!
agreement# ,+ course$ a suret! is not %ound to an! particular principal o%ligation until that principal o%ligation is %orn# "ut
there is no theoretical or doctrinal impediment +or us to sa! that the suret!ship agreement itsel+ is valid and %inding even
%e+ore the principal o%ligation intended to %e secured there%! is %orn$ an! more than there would %e in sa!ing that
o%ligations which are su%:ect to a condition precedent are valid and %inding %e+ore the occurrence o+ the condition
precedent#