Rosalina Carodan v. China Banking Corporation

Summary

China Banking Corporation sued borrowers Barbara Perez and Rebecca Perez-Viloria, along with accommodation mortgagor and surety Rosalina Carodan, for a deficiency of P365,345.77 remaining after extrajudicial foreclosure of mortgaged property. Rosalina argued she should be discharged from surety liability because the bank released the principal borrowers' properties, violating the indivisibility of mortgage under Article 2089 of the Civil Code. The Supreme Court held that Rosalina remained liable as both accommodation mortgagor and surety, noting that the Surety Agreement expressly waived her rights and allowed the bank to substitute, withdraw or surrender securities without her consent. The Court distinguished between guaranty and suretyship, emphasizing that a surety binds himself to pay if the principal does not pay, regardless of the principal's ability. The decision affirmed the joint and several liability of all parties for the deficiency amount, with modified interest rates reflecting current jurisprudence.