Case Digest (G.R. No. 163981)
Facts:
In Construction & Development Corporation of the Philippines (now Philippine National Construction Corporation) v. Cuenca and Malayan Insurance Co., Inc., Malayan Insurance Co., Inc. (“MICI”) issued a surety bond (Bond No. 65734) in the principal amount of ₱600,000.00 to guarantee Ultra International Trading Corporation’s (“UITC”) obligations to Goodyear Tire and Rubber Company of the Philippines. To secure MICI’s exposure, UITC’s President Edilberto Cuenca and Director Rodolfo Cuenca executed an Indemnity Agreement, binding themselves and UITC to reimburse any payment under the bond. When UITC defaulted, Goodyear demanded payment from MICI on February 18, 1983; MICI paid the full ₱600,000.00 on April 25, 1983 and thereafter demanded reimbursement plus interest and attorney’s fees. UITC, a 78%-owned subsidiary of petitioner PNCC, partially paid ₱150,000.00 but failed to satisfy the balance. On July 1, 1983, MICI filed suit against UITC, Edilberto and Rodolfo. Rodolfo then filedCase Digest (G.R. No. 163981)
Facts:
- Surety Bond and Indemnity Agreement
- Ultra International Trading Corporation (UITC) applied to Malayan Insurance Co., Inc. (MICI) for Surety Bond No. 65734 (P600,000) in favor of Goodyear Tire and Rubber Co. of the Philippines; bond valid for 12 months and renewed until May 15, 1983.
- UITC, its President Edilberto Cuenca (in official and personal capacity), and Director Rodolfo Cuenca (in personal capacity) executed an Indemnity Agreement to reimburse MICI for any payments under the bond.
- Default, Payment, and Demand for Reimbursement
- February 18, 1983: Goodyear notified MICI of UITC’s default and demanded payment under the bond.
- April 25, 1983: MICI paid Goodyear P600,000.
- May 3, 1983: MICI demanded reimbursement plus interest; UITC requested time to propose a repayment plan.
- July 1, 1983: MICI filed suit against UITC, Edilberto and Rodolfo Cuenca for P600,000 indemnity, interest compounded quarterly, 20% attorney’s fees, and costs.
- July 23, 1983: UITC offered immediate P150,000, balance at P50,000/month, with interest and penalties waived.
- August 26, 1983: UITC remitted P150,000 as partial payment.
- Third-Party Complaint vs. PNCC
- Rodolfo Cuenca, with leave of court, filed a third-party complaint against Construction & Development Corporation of the Philippines (CDCP, now PNCC), alleging board resolution BD-59-77/78 that CDCP assumed officers’ guarantees.
- Evidence: Certification by CDCP Assistant Corporate Secretary attesting to the excerpt of the minutes of January 10, 1978.
- Trial Court Decision
- January 6, 1994: RTC Manila, Branch 51, held UITC and PNCC jointly and solidarily liable for P600,000 less P150,000 partial payment (P450,000) plus interest from filing, 20% attorney’s fees, and costs; dismissed case against the Cuencas.
- Court of Appeals Decision and Petition
- October 28, 2003: CA affirmed RTC decision in toto; June 3, 2004: denied PNCC’s motion for reconsideration.
- PNCC filed a petition for review on certiorari (G.R. No. 163981), assigning errors on its joint liability and attorney’s fees.
Issues:
- Whether PNCC is jointly and solidarily liable with UITC to MICI under the Indemnity Agreement.
- Whether PNCC assumed Rodolfo Cuenca’s personal liability under that agreement.
- Whether PNCC is liable for attorney’s fees and costs despite not being a signatory to the agreement.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)