Case Digest (G.R. No. 140047)
Facts:
Philippine Export and Foreign Loan Guarantee Corporation v. V.P. Eusebio Construction, Inc., et al., G.R. No. 140047, July 13, 2004, the Supreme Court First Division, Davide Jr., J., writing for the Court. Petitioner Philguarantee (now Trade Investment Development Corporation of the Philippines) sought reimbursement from respondents V.P. Eusebio Construction, Inc. (VPECI), 3-Plex International, Inc., spouses Vicente P. and Soledad C. Eusebio, spouses Eduardo E. and Iluminada S. Santos, and First Integrated Bonding and Insurance Company, Inc. (FIBICI) for sums Philguarantee paid under a counter‑guarantee issued to Al Ahli Bank of Kuwait.The dispute arose from a construction contract awarded by the State Organization of Buildings (SOB), Baghdad, to Ajyal Trading and Contracting Company for the Institute of Physical Therapy—Phase II. Ajyal entered a joint venture with local Filipino contractor 3‑Plex, which later assigned its rights to VPECI; 3‑Plex and VPECI agreed on joint management. SOB required performance and advance payment bonds; three layers of guarantees were arranged: Rafidain Bank (Iraq) required a counter‑guarantee from Al Ahli Bank (Kuwait), which in turn required a counter‑guarantee from Philguarantee. Philguarantee issued Letter of Guarantee No. 81‑194‑F (performance) and No. 81‑195‑F (advance payment), secured by a Deed of Undertaking executed by the contractors and principals and by a surety bond from FIBICI.
Work was delayed and incomplete (about 51.7% finished by March 1986); much of the remaining work required imported electromechanical equipment and foreign exchange. SOB repeatedly paid in Iraqi dinars instead of the 75% US‑dollar payments due under the contract and granted time extensions. Al Ahli Bank telexed a demand in October 1986 and later advised it had paid Rafidain Bank US$876,564 under its guarantee; Central Bank authorized remittance and Philguarantee paid Al Ahli US$876,564 on January 21, 1988 and later paid US$59,129.83 in interest and penalties. Philguarantee then demanded reimbursement; when respondents did not pay it filed Civil Case No. 91‑1906 in the Regional Trial Court (Branch 58), Makati, on July 9, 1991.
The RTC dismissed Philguarantee’s complaint, finding that Philguarantee was a guarantor (not a surety), that the guarantee had effectively lapsed or was not validly extended without respondents’ consent, and that respondents had valid defenses because delays w...(Subscriber-Only)
Issues:
- Did Philguarantee act as a surety or as a guarantor under Letter of Guarantee No. 81‑194‑F?
- Was V.P. Eusebio Construction, Inc. in default of its contractual obligations so as to justify calling the guarantee?
- Having paid under its counter‑guarantee, is Philguarantee entitled to reimbursement or subrogation...(Subscriber-Only)
Ruling:
- (Subscriber-Only)
Ratio:
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Doctrine:
- (Subscriber-Only)