G.R. No. 160324 - International Fice Corp. vs. Imperial Textile Mills Inc.

On December 17, 1974, International Finance Corporation (IFC) and Philippine Polyamide Industrial Corporation (PPIC) executed a loan agreement for US$7,000,000, payable in sixteen semi-annual installments of US$437,500 from June 1, 1977 to December 1, 1984, at 10% per annum with semi-annual interest payments.
On the same date, IFC, Imperial Textile Mills, Inc. (ITM), and Grand Textile Manufacturing Corporation (Grandtex) signed a “Guarantee Agreement,” wherein ITM and Grandtex agreed “jointly and severally, irrevocably, absolutely and unconditionally” to guarantee PPIC’s obligations “as primary obligors and not as sureties merely.”

PPIC paid the June 1 and December 1 installments for 1977 and June 1, 1978; the next three installments were rescheduled, but PPIC ultimately defaulted. IFC served a written notice of default on April 1, 1985, which PPIC ignored.
IFC and Development Bank of the Philippines foreclosed extrajudicially on PPIC’s mortgaged real estate and equipment in Calamba, Laguna. At auction, IFC’s bid of ₱99,269,100 (≈US$5,250,000) covered part of the US$8,083,967 outstanding, leaving a shortfall of US$2,833,967.

IFC demanded payment of the US$2,833,967 balance from ITM and Grandtex, but they did not pay.
On May 20, 1988, IFC sued PPIC and ITM in the RTC of Manila for the unpaid balance, interest, attorney’s fees, and costs.
The RTC held PPIC liable and awarded the claimed amounts but exonerated ITM, dismissing the complaint against it.

On appeal in CA-GR CV No. 58471, the Court of Appeals reversed the RTC insofar as it exonerated ITM, holding ITM secondarily liable under the Guarantee Agreement.
The CA denied both parties’ motions for reconsideration in a September 30, 2003 resolution.
IFC filed a Petition for Review under Rule 45 (G.R. No. 160324) challenging the CA’s finding of only secondary liability.

Whether ITM (and Grandtex) are sureties and thus jointly and severally liable with PPIC for the loan.
Whether the petition for review raises a question of law.
Whether the petition introduces a new theory not raised in the lower courts.