Security Bank v. Rodolfo M. Cuenca

Summary

Security Bank sought to hold Rodolfo Cuenca liable as surety for P39+ million in corporate loans to Sta. Ines Melale Corporation. Cuenca had originally guaranteed only P8 million in credit accommodations expiring November 30, 1981, when he was company president. After his 1985 resignation and share sale, the bank and company restructured all obligations into a P12.2 million loan agreement without his knowledge or consent. The Supreme Court affirmed the Court of Appeals' decision releasing Cuenca from liability, ruling that the 1989 restructuring constituted novation that extinguished both the original obligation and the accessory surety agreement. The Court emphasized that surety contracts must be strictly construed against creditors, and that material alterations without surety consent extinguish liability. The decision reinforced fundamental principles of fair play in commercial lending and the limited scope of surety obligations.