Case Digest (G.R. No. 80078)
Facts:
The case involves Atok Finance Corporation (petitioner) against the Court of Appeals and several private respondents, including Sanyu Chemical Corporation, Danilo E. Arrieta, Nenita B. Arrieta, Pablito Bermundo, and Leopoldo Halili (respondents). The events leading to the case began on July 27, 1979, when Sanyu Chemical Corporation, as the principal debtor, along with Sanyu Trading Corporation and individual stockholders, executed a Continuing Suretyship Agreement in favor of Atok Finance. This agreement stipulated that the respondents would jointly and severally guarantee the full payment of any indebtedness of Sanyu Chemical to Atok Finance, encompassing all forms of debts, whether existing or future.
On November 27, 1981, Sanyu Chemical assigned its trade receivables, valued at P125,871.00, to Atok Finance in exchange for P105,000.00. The assigned receivables had a standard payment term of 30 days, but it was common practice to extend this to 120 days without penalties. ...
Case Digest (G.R. No. 80078)
Facts:
Parties Involved:
- Petitioner: Atok Finance Corporation ("Atok Finance")
- Respondents: Court of Appeals, Sanyu Chemical Corporation, Danilo E. Arrieta, Nenita B. Arrieta, Pablito Bermundo, and Leopoldo Halili
Background:
Continuing Suretyship Agreement (1979):
- On 27 July 1979, Sanyu Chemical Corporation ("Sanyu Chemical") and its officers (the Arrieta spouses, Pablito Bermundo, and Leopoldo Halili) executed a Continuing Suretyship Agreement in favor of Atok Finance.
- The agreement guaranteed the payment of any and all indebtedness of Sanyu Chemical to Atok Finance, including future debts.
Deed of Assignment (1981):
- On 27 November 1981, Sanyu Chemical assigned its trade receivables (P125,871.00 face value) to Atok Finance for P105,000.00.
- Sanyu Chemical warranted the solvency of its debtors and agreed to be jointly and severally liable with the debtors if they failed to pay.
- Later, additional receivables (P100,378.45 face value) were assigned to Atok Finance.
Failure to Pay and Legal Action:
- Sanyu Chemical failed to collect and remit payments from its debtors.
- On 13 January 1984, Atok Finance filed a complaint in the Regional Trial Court (RTC) of Manila to recover P120,240.00 plus penalties.
Trial Court Decision (1985):
- The RTC ruled in favor of Atok Finance, ordering the respondents to pay jointly and severally.
Appeal to Court of Appeals:
- Respondents appealed to the Intermediate Appellate Court (IAC), but their appeal was dismissed for failure to file an appeal brief.
- Respondents filed a Petition for Relief from Judgment, which the Court of Appeals granted, allowing them to file their appeal brief.
- The Court of Appeals reversed the RTC decision, dismissing Atok Finance's complaint.
Issue:
The main issues raised in the case were:
Validity of the Continuing Suretyship Agreement:
- Whether the agreement could secure future debts and whether it was void for lack of consideration and a pre-existing principal obligation.
Liability Under the Deed of Assignment:
- Whether Sanyu Chemical was liable for the receivables assigned to Atok Finance and whether the warranty of solvency had ceased under Article 1629 of the Civil Code.
Propriety of the Petition for Relief from Judgment:
- Whether the Court of Appeals properly granted the Petition for Relief from Judgment despite the ongoing execution proceedings in the trial court.
Ruling:
The Supreme Court ruled in favor of Atok Finance and reversed the decision of the Court of Appeals.
Continuing Suretyship Agreement:
- The Court held that the agreement was valid and could secure future debts. It was not null and void for lack of consideration or a pre-existing obligation.
Liability Under the Deed of Assignment:
- The Court ruled that Sanyu Chemical was solidarily liable under the Deed of Assignment, and the warranty of solvency was not subject to the limiting period in Article 1629.
Petition for Relief from Judgment:
- The Court found that the defect in the Petition for Relief from Judgment was of secondary importance due to the transition from the IAC to the Court of Appeals.
The Supreme Court reinstated the RTC decision but reduced the penalty from 36% to 18% per annum.
Ratio:
Continuing Suretyship Agreement:
- A suretyship agreement can secure future debts, and it is not necessary for the principal obligation to exist at the time of its execution. The agreement is valid and binding even before the principal obligation is born.
Liability Under the Deed of Assignment:
- The liability of Sanyu Chemical arose ex contractu under the Deed of Assignment, not ex lege under Article 1629. The assignor became a solidary obligor for the assigned receivables, and the sureties were liable under the Continuing Suretyship Agreement.
Propriety of the Petition for Relief from Judgment:
- The Court considered the transition from the IAC to the Court of Appeals and the circumstances surrounding the Petition for Relief from Judgment, finding that the defect was not critical in this case.