Case Digest (G.R. No. 94065)
Facts:
On April 15, 1977, Western Minolco Corporation (WMC) obtained loans from Philippine Investments Systems Organization (PISO) for P2,500,000 and P1,000,000, and on the same date Antonio Garcia, Jr. and Ernest Kahn executed a surety agreement for the P2,500,000 loan. After WMC defaulted and Garcia failed to pay on demand, Lasal Development Corporation (assignee of the PISO credit) sued Garcia in the Regional Trial Court, Makati on April 5, 1983; the trial court dismissed the complaint for lack of consideration, the Court of Appeals reversed and remanded on June 23, 1987, and Garcia sought review in the Supreme Court.Issues:
- Is the surety agreement void for lack of consideration?
- May Antonio Garcia, Jr. invoke corporate limited liability because he was an officer of WMC?
- Did the various restructurings, extensions, unsigned memoranda, or acceptance of new instruments effect a novation that discharged the surety?
- Did the extension of time or compounding of interest extinguish
Case Digest (G.R. No. 94065)
Facts:
- Background of the loans and suretyship
- On April 15, 1977, Western Minolco Corporation (WMC) obtained from Philippine Investments Systems Organization (PISO) two loans for P2,500,000.00 and P1,000,000.00 evidenced by promissory notes payable May 30, 1977.
- On the same date, ANTONIO GARCIA, JR. and Ernest Kahn executed a surety agreement binding themselves jointly and severally for the P2,500,000.00 loan.
- WMC failed to pay despite repeated demands and demand was made on ANTONIO GARCIA, JR. pursuant to the surety agreement; he likewise failed to pay.
- Assignment of claim and civil action
- The credit was earlier assigned by PISO to LASAL DEVELOPMENT CORPORATION.
- On April 5, 1983, LASAL DEVELOPMENT CORPORATION sued ANTONIO GARCIA, JR. in the Regional Trial Court of Makati for recovery of the debt.
- Motion to dismiss, trial court disposition, and appeals
- On May 18, 1983, ANTONIO GARCIA, JR. moved to dismiss the complaint on grounds that: (a) the complaint stated no cause of action; (b) the suit would result in unjust enrichment because he received no consideration from PISO; (c) the surety agreement violated the doctrine of limited corporate liability; and (d) the principal obligation had been novated.
- After hearings, the trial court granted the motion and dismissed the complain...(Subscriber-Only)
Issues:
- Validity of the surety agreement for lack of consideration
- Whether the surety agreement executed by ANTONIO GARCIA, JR. was invalid for want of consideration because he received no benefit from PISO.
- Unjust enrichment and personal liability of corporate officer
- Whether permitting LASAL DEVELOPMENT CORPORATION to recover from ANTONIO GARCIA, JR. would result in unjust enrichment because the loan proceeds were received and enjoyed by WMC.
- Whether ANTONIO GARCIA, JR. was liable only as a corporate officer and thus shielded by the doctrine of limited liability.
- Novation and related transactions alleged to extinguish obligation
- Whether various dealings — including a memorandum of agreement (Annex 5), extensions of time, compounding of interest, restructuring dealings with DBP, proposed sale of assets, priority given to other creditors, and issuance of promissory notes by NDC/NOCOMIN — operated to novate or extinguish the original obligation and the suretyship.
- Effect of waiver clause and Article 2079 on extension of time
- Whether an extension granted to the debtor without the guarantor’s consent extinguished the guaranty under Art. 2079, or whether an express waiver in the surety agreement precluded such extinguishment.
- ...(Subscriber-Only)
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)