Case Digest (G.R. No. 142381)
Facts:
This case involves a petition under Rule 45 for review on certiorari by PHILIPPINE BLOOMING MILLS, INC. (“PBM”) and Alfredo Ching to annul the July 16, 1999 Decision of the Court of Appeals in CA-G.R. CV No. 39690 and its February 17, 2000 Resolution denying reconsideration. The trial court of Pasay City (Branch 113) had on August 31, 1992 declared Ching solidarily liable to Traders Royal Bank (“TRB”) for PBM’s defaults on (a) trusts receipts covering Letters of Credit Nos. 479 AD and 563 AD arising in 1980, amounting to P959,611.96 and P1,191,137.13 respectively; and (b) a P3,500,000 trust loan evidenced by a 1981 Promissory Note. In 1977 Ching, as private individual, executed a Deed of Suretyship to secure PBM’s obligations up to P10 million. After PBM’s default and its placement under SEC rehabilitation in 1982, TRB filed suit in 1983, dismissed PBM but maintained action against Ching alone. The trial court awarded P19.3 million plus interest and attorney’s fees; the Court ofCase Digest (G.R. No. 142381)
Facts:
- Parties and Proceedings
- Petitioners: Philippine Blooming Mills, Inc. (PBM) and Alfredo Ching; Respondents: Court of Appeals (CA) and Traders Royal Bank (TRB).
- TRB extended credit accommodations to PBM; Ching signed a Deed of Suretyship (21 July 1977) as primary obligor.
- PBM defaulted; filed suspension of payments with the Securities and Exchange Commission (SEC) on 1 April 1982; SEC placed PBM under rehabilitation.
- TRB sued PBM and Ching in the Regional Trial Court (RTC) on 13 May 1983 for unpaid obligations; RTC dismissed PBM for SEC receivership but held Ching solidarily liable; CA reversed, dismissing Ching; Supreme Court (in Traders Royal Bank v. CA) reversed CA and held Ching personally liable.
- Credit Transactions and Security Instruments
- Letters of Credit and Trust Receipts
- LC No. 479 AD (US$591,043) covered by Trust Receipt No. 106; LC No. 563 AD (US$155,460.34) covered by Trust Receipt No. 113.
- Ching executed separate Undertakings for each trust receipt, promising payment on demand and attorney’s fees.
- Trust Loan
- P3,500,000 trust loan (27 April 1981) evidenced by a notarized Promissory Note: 18% interest per annum; 2% penalty interest; 10% attorney’s fees; co-maker: Ching.
- Deed of Suretyship (21 July 1977)
- Ching bound himself “as primary obligor” for PBM’s indebtedness up to P10,000,000, covering “amounts … now be indebted or may hereafter become indebted.”
- Solidary, direct, immediate liability; waiver of notices; 10% attorney’s fees on unpaid principal and interest.
- Trial and Appellate Findings
- RTC (31 August 1992) held Ching liable for P19,333,558.16 (principal, interest, penalty) plus 5% attorney’s fees.
- CA (16 July 1999) affirmed but reduced liability to P15,773,708.78 with 12% legal interest per annum.
- Supreme Court’s present review modifies the amount but reaffirms liability.
Issues:
- Does the 1977 Deed of Suretyship cover credit accommodations contracted by PBM after its execution?
- Is Ching’s personal liability limited to the amount of PBM’s secured debts approved under the SEC rehabilitation plan?
- Did TRB’s taking possession of goods under the trust receipts discharge Ching from liability?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)