Phil. Export v. V.P. Eusebio FACTS: Respondent entered into contract with SOB for construction of Therapy Bldg.

SOB demanded bonds to secure performance. ro!ect was delayed "OCTR#$%: By guaranty a person& called the guarantor& binds himself to the creditor to fulfill the obligation of the principal debtor in case the latter should fail to do so' if the person binds himself solidarily with the principal debtor& the contract is called suretyship. That the guarantee issued by the petitioner is unconditional and irre(ocable does not ma)e the petitioner a surety. As a guaranty& it is still characteri*ed by its subsidiary and conditional +uality because it does not ta)e effect until the fulfillment of the condition. ,nconditional guarantee is still sub!ect to the condition that the principal debtor should default in his obligation first before resort to the guarantor could be had.

SOCONY v. Cho Siong FACTS: Cho Siong entered into contract of agency for distribution of petroleum products& assumed liability of former agent Tong -uan. .is agency bond was secured by Ong /uan Can. "efaulted in the amount of 01.22 "OCTR#$%: ,nder the terms of the bond signed by the surety& he did not answer for the principal obligor sa(e for the 3atter4s acts by (irtue of the contract of agency. .e cannot be held liable for the debt of a former agent& which the principal obligor assumed by (irtue of another contract& of which said surety was not e(en aware. A contract of suretyship is to be strictly interpreted and is not to be e5tended beyond its terms.

Ong v. PCIB FACTS: Spouses petitioners& resident and Treasurer of B6C obtained a loan from respondent& they signed as sureties. Thereafter& B6C was under recei(ership& 6OA with all creditors not to collect for a period of time. etitioners contend benefits them as sureties7guarantors. TC& CA& SC for respondent& petitioners are not guarantors but sureties& ban) may after them or B6C. "OCTR#$%: There is a sea of difference in the rights and liabilities of a guarantor and a surety. A guarantor insures the sol(ency of the debtor while a surety is an insurer of the debt itself. A contract of guaranty gi(es rise to a subsidiary obligation on the part of the guarantor. #t is only after the creditor has proceeded against the properties of the principal debtor and the debt remains unsatisfied that a guarantor can be held liable to answer for any unpaid amount. Security Bank v. Cuenca

"OCTR#$%: An e5tension granted to the debtor by the creditor without the consent of the guarantor e5tinguishes the guaranty. The 89:9 3oan Agreement e5pressly stipulated that its purpose was to ;li+uidate&< not to renew or e5tend& the outstanding indebtedness. 6oreo(er& respondent did not sign or consent to the 89:9 3oan Agreeement& which had alledgedly e5tended the original : million credit facility. .ence& his obligation as a surety should be deemed e5tinguished& pursuant to Article =2>9 of the Ci(il Code& which specifically states that ;?a@n e5tension granted to the debtor by the creditor without the consent of the guarantor e5tinguishes the guaranty. An essential alteration in the terms of a 3oan Agreement without the consent of the surety e5tinguishes the latter4s obligation. The submission that only the borrower& not the surety& is entitled to be notified of any modification in the original loan accommodation is untenableAsuch theory is contrary to the to the principle that a surety cannot assume an obligation more onerous than that of the principal. That the #ndemnity Agreement is a continuing surety does not authori*e the lender to e5tend the scope of the principal obligation inordinately' A continuing guaranty is one which co(ers all transaction& including those arising in the future& which are within the description or contemplation of the contract of guaranty& until the e5piration or termination thereof.

Santiago v. ionisio "OCTR#$%: All persons ha(ing or claiming an interest in the mortgaged premises subordinate in right to that of the holder of the mortgage should be made defendants in the action for the foreclosure of the mortgage. #nter(ening as a subordinate lienholder in a foreclosure case merely to oppose the confirmation of the sale upon learning that such a sale had been made& is no the same as being a party to the suit to the e5tent of being bound by the !udgement in the foreclosure suit. The effect of the failure to implead a subordinate lienholder or subse+uent purchaser or both is to render the foreclosure ineffecti(e as against them& with the result that there remains in their fa(or the unforeclosed e+uity of redemption.

BP v. !icuanan "OCTR#$%: The issue of whether demand was made before the foreclosure was affected is essential. #f demand was made and duly recei(ed by the respondents and the latter still did not pay& then they were already in default and foreclosure was proper. .owe(er& if demand was not made& then the loans had not yet become due and demandable. This meant that respondents had not defaulted in their payments and he foreclosure by petitioner was premature. Foreclosure is (alid only when the debtor is in default in the payment of his obligation. Bhether or not demand was made is a +uestion of fact. #t is the refusal to pay after demand that gi(es the creditor a cause of action against the debtor.

"on#on v. $elova "OCTR#$%: Any person ha(ing a lien on the property subse+uent to the mortgage or deed of trust under which the property is sold& may redeem the same at any time within the term of one year from and after the date of sale. %(en if& for the sa)e of argument& Rule 0: is to be applied to e5tra!udicial foreclosure of mortgages& such right can only be gi(en to second mortgagees who are made parties to the C!udicialD foreclosure. Bhile a second mortgagee is a proper and in a sense e(en a necessary party to a proceeding to foreclose a first mortgage on real property& he is not an indispensable party& because a (alid decree may be made& as between the mortgagor and the first mortgagee& without regard to the second mortgagee' but the conse+uence of a failure to ma)e the second mortgagee a party to the proceeding is that the lien of the second mortgagee on the e+uity of redemption is not affected by the decree of foreclosure.