Guaranty & Surety Digest

Guaranty & Surety Digest
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  Guaranty & Suretyship: In General; Nature & Extent    Diño vs. Court of Appeals (1992)  In 1977, Uy Tiam Enterprises and Freight Services (UTEFS), thru its representative Uy Tiam, applied for and obtained credit accommodations from Metrobank in the sum of Php700,000. This was secured by Continuing Suretyships separately executed by petitioners Norberto Uy (who agreed to pay Php300,000) and Jacinto Diño (who bound himself liable up to Php800,000). Uy Tiam paid the obligation under this letter of credit in 1977. UTEFS obtained another credit accommodation in 1978, which was likewise settled before he applied and obtained another in 1979 in the sum of Php815,600. This sum covered UTEFS’ purchase of fertilizers from Planters Producst. Uy and Diño did not sign the application for this credit and were not asked to execute suretyship or guarantee. UTEFS executed a trust receipt whereby it agreed to deliver to Metrobank the goods in the event of non-sale, and if sold, the proceeds will be delivered to Metrobank. However, UTEFS did not comply with its obligation. As a result, Metrobank demanded payment from UTEFS and the sureties, Uy & Diño. The sureties refused to pay on the ground that the obligation for which they executed the continuing suretyship agreement has been paid. RTC ruled in favor of the petitioners, CA affirmed. Issue: WON petitioners are liable for payment of the 1979 transaction under the continuing suretyship agreement they executed in 1977. Assuming that they are, what is the extent of their liability?  The Supreme Court held that Uy & Diño are liable. The agreement they executed in 1977 is a continuing suretyship, one which is not limited to a single transaction but which contemplates a succession of liabilities, for which, as they accrue, the guarantor becomes liable. The agreement that petitioners signed expressly provided that it is a continuing guaranty and shall be in full force and effect until written notice to the bank that it has been revoked by the surety. As to the 2 nd  issue, petitioners are only liable up to the maximum limit fixed in the continuing suretyship agreements (Php800,000 for Diño and Php300,000 for Uy). The law is clear that a guarantor may bind himself for less, but not for more than the principal debtor, both as regards the amount and the onerous nature of the conditions (Art. 2054). CA decision ordering petitioners to pay P2,397,883.68 which represents the amount due inclusive of interest and charges, is modified.     Willex Plastic, Inc. v. CA, International Corporate Bank (1996) Doctrine:  It is never necessary that a guarantor or surety should receive any part orbenefit, if such there be, accruing to his principal  Facts:  1978: Inter-Resin took out a loan from Manila Bank. As additional security, Inter-Resin  and Investment Underwriting (IUCP)  executed a Continuing SuretyAgreement stating that the are liable to Manila Bank solidarily for the loan taken outby Inter-Resin 1979: Inter-Resin and Willex Plastic executed a Continuing Guarantee for the loanwhich Inter-Resin obtained from Investment Underwriting to the extent of P5M. 1981: Investment Underwriting (IUCP) paid Manila Bank P4M to satisfy Inter- Resin’s 1978 Obligation  Investment Underwriting (IUCP) then demanded payment of the P4M from bothInter-Resin and Willex oInter-Resin paid IUCP P600K from the proceeds of its fire insurance Willex denied obligation, it alleged that it is only a guarantor of the principal, henceits liability was only secondary to the principal and that it did not receiveconsideration nor benefit from the contract between the bank and Inter-Resin. Willex insisted that IUCP should pursue Inter-Resin and apply to the loan the assetsof the latter first before going after it. Willex further alleged that it is guarantor of a loan to Manila Bank and not toInterbank, hence the Continuing Guaranty cannot be retroactive applied as contractsof suretyship contemplates future dealing. ISSUE: WON Willex is liable as guarantor for the loans obtained by Inter-Resin to IUCP? –   Yes HELD:  Intent is controlling: clear from the evidence that the Continuing Guaranteeexecuted by Willex with Inter-Resinwould cover sums obtained (in the past –  retroactive) and/or to be obtained by Inter-Resin Industrial from Interbank - Although a contract of suretyship is ordinarily not to be construed as retrospective,in the end the intention of the parties as revealed by the evidence is controlling –  apply it to the 1978 loan.   Guarantor or surety is bound by the same consideration that makes the contracteffective between the principal parties thereto. . . . It is never necessary that aguarantor or surety should receive any part or benefit, if such there be, accruing tohis principal. PNB vs. CA, Luzon Surety Co.  Facts: Estanislao Depusoy, and the Republic of the Philippines, represented by the Director of PublicWorks, entered into a building contract, for the construction of the GSTS building at Arroceros Street ,Manila, Depusoy to furnish all materials, labor, plans, and supplies needed in the construction.Depusoy applied for credit accommodation with the plaintiff. This was approved by the Board of Directors in various resolutions subject to the conditions that he would assign all payments to be received from the Bureau of Public Works of the GSIS to the bank, furnish a surety bond, and the surety to deposit P10,000.00 to the plaintiff. Thetotal accommodation granted to Depusoy was P100, 000.00. This was later extended by another P10,000.00 and P25,000.00, but in no case should the loan exceed P100,000.00. In compliance with these conditions, Depusoy executed a Deed of Assignment of all money to be received by him from the GSIS to PNB. Depusoy defaulted in his building contract with the Bureau of Public Works, and sometime in September, 1957, the Bureau of Public Works rescinded its contract with Dernisoy. No furher amounts were thereafter paid by the GSIS to lie plaintiff bank. The amount of the loan of Depusoy which remains unpaid, including interest, is over P100,000.00. Demands for payment were made upon Depusoy and Luzon, and as no payment was made, therefore herein petitioner filed with the trial court a complaint against Estanislao Depusoyand private respondent Luzon Surety Co. Inc. (LSCI). Issue: WON Luzon Surety is liable Held: the bonds executed by private respondent LSCI were to guarantee the faithful performance of Depusoy of his obligation under the Deed of Assignment and not to guarantee payment of the loans orthe debt of Depusoy to petitioner to the extent of P100,000.00. Besides, even if there had been anydoubt on the terms and conditions of the surety agreement, the doubt should be resolved in favor of the surety. As concretely put in Article 2056 of the Civil Code, A guaranty is not presumed, it must beex-pressed and cannot extend to more than what is stipulated therein. LSCI is  liable to the full extentthereof, such liability is strictly limited to that assumed by its terms.


Jul 23, 2017

320 Lecture 24

Jul 23, 2017
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