Case Digest (G.R. No. 104147)
Facts:
Spouses Vicky Tan Toh and Luis Toh v. Solid Bank Corporation, First Business Paper Corporation, Kenneth Ng Li and Ma. Victoria Ng Li, G.R. No. 154183, August 07, 2003, Supreme Court Second Division, Bellosillo, J., writing for the Court (Quisumbing, Austria‑Martinez, and Tinga, JJ., concurring; Callejo, Sr., J., on leave).Respondent Solid Bank Corporation agreed to extend an omnibus P10,000,000 credit facility to First Business Paper Corporation (FBPC) by a “letter‑advise” dated 16 May 1993 that fixed terms and documentary preconditions and stated the facility would be effective upon compliance with those requirements. Among the documents submitted to the Bank was a public instrument entitled Continuing Guaranty, signed on 10 May 1993 by petitioners spouses Luis and Vicky Toh and by respondents spouses Kenneth and Ma. Victoria Ng Li. The guaranty imposed solidary liability as sureties for “any and all existing indebtedness” of FBPC and contained broad waivers by the sureties, including consent to extensions or changes in payment terms by the Bank, and required written revocation to terminate its effect.
FBPC began to use the facility on 16 June 1993 and by 17 November 1993 had opened thirteen letters of credit and obtained loans amounting to P15,227,510, evidenced also by trust receipts executed by FBPC’s officers. On 13–14 January 1994 the Bank learned that respondents Kenneth and Ma. Victoria Ng Li had allegedly absconded; the Bank demanded payment and invoked acceleration clauses, and on 17 January 1994 filed Civil Case No. 64047 in the Regional Trial Court (RTC), Branch 161, Pasig City, seeking sums owing and a writ of preliminary attachment. Alias summonses were served on FBPC and the Tohs; the Ng Lis were not served. Third‑party claims multiplied and the Bank eventually relinquished most attached properties.
At trial FBPC was declared in default for failing to answer; the Tohs admitted association with FBPC but questioned the authenticity or circumstances of their signatures, alleging they had divested shares and resigned before many of the letters of credit were opened. On 16 May 1996 the RTC (Alicia P. Marina‑Co) found FBPC liable for P10,539,758.68 with 12% interest but absolved the petitioners of liability, reasoning the continuing guaranty did not bind the Tohs for indebtedness incurred after they ceased to be officers/shareholders and criticizing the Bank for failing to safeguard required securities and for relying on agents who had been replaced. Reconsideration was denied on 26 September 1996.
The Bank appealed to the Court of Appeals (CA‑G.R. CV No. 55957). The Court of Appeals, in a decision dated 12 December 2001, modified the RTC judgment and held the Tohs solidarily liable with FBPC for the P10,539,758.68 plus 12% interest, reasoning the guaranty did not show the Tohs signed solely in a corporate capacity and that no written revocation had been served on the Bank; the CA also rejected claims of material alterations and upheld the Bank’s discretionary extensions based on waivers in the guaranty. Reconsideration was denied by the CA on 2 July 2002.
Petitioners timely filed a petition for review on certiorari under Rule 45 of the Rules of Court before the Supreme Court, asserting denial of due ...(Subscriber-Only)
Issues:
- Did the Court of Appeals deprive petitioners of due process by failing to consider their Reply with Motion for Oral Argument?
- Is the Continuing Guaranty valid and binding on petitioners?
- Were petitioners discharged from liability as sureties by the Bank’s conduct — specifically, by illicit extensions, failure to require marginal deposits/partial payments, release or relinquishment of security, or material...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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