- Petitioner
- El Banco Español Filipino
- Respondent
- Donaldson Sim & Co.
- Citation
- G.R. No. 2422
- Court
- Supreme Court En Banc
- Division
- En Banc
- Ponente
- Arellano, C.J.
- Decided
- December 14, 1905
Summary
Bank sued firm and co-sureties for defaulted P110,000 loan secured by ships and surety guarantee. Principal debtor Donaldson Sim & Co. defaulted, and pledged ships sold at auction for only P4,690 against stipulated P120,000 value. Surety J.M. Tuason & Co. claimed release arguing bank's delay in enforcement constituted tacit extension without consent, and that ship sales violated contract price provisions. Supreme Court rejected both defenses, ruling creditor delay without express extension doesn't release surety under Civil Code Article 1851, and mandatory legal auction procedures supersede private contract price stipulations. Court affirmed surety's liability for remaining debt balance, establishing precedent that mere creditor forbearance doesn't constitute novation requiring surety consent.