G.R. No. 233850 - Trade and Investment Development Corporation of the Philippines vs. Philippine Veterans Bank

Case Summary (G.R. No. 233850)

Facts of the Transaction and Guarantee Agreement

On November 23, 2011, PhilPhos obtained a Five-Year Floating Rate Note Facility Agreement (Series A Notes) up to P5 billion; PVB subscribed P1 billion. To secure the Series A Notes, TIDCORP executed a Guarantee Agreement (also dated November 23, 2011) agreeing to guarantee ninety percent (90%) of outstanding Series A Notes on a rolling three-month basis, and expressly waiving the benefit of excussion and requirements of presentment, demand, protest or notice.

Events Leading to Rehabilitation and Notice of Claim

Typhoon Yolanda (November 8, 2013) damaged PhilPhos’ facilities; PhilPhos later filed a Petition for Voluntary Rehabilitation under FRIA on September 17, 2015, and the Rehabilitation Court issued a Commencement Order with a Stay Order on September 22, 2015. PVB filed its Notice of Claim with TIDCORP on November 5, 2015 (received November 6, 2015). TIDCORP declined to give due course to the Notice by letter dated November 12, 2015, invoking the Rehabilitation Court’s Stay Order. PVB made further demands pursuant to the Guarantee Agreement; TIDCORP persisted in denying the claim on the ground of the Stay Order.

Procedural History in the RTC and Nature of Relief Sought

PVB filed a Complaint for Specific Performance in the Regional Trial Court (RTC) of Makati, Branch 150, seeking enforcement of the Guarantee Agreement. TIDCORP answered and asserted as a key defense that the Rehabilitation Court’s Stay Order divested the RTC of jurisdiction to try the case. PVB moved for summary judgment on February 14, 2017; TIDCORP filed a comment. On August 16, 2017, the RTC granted PVB’s Motion for Summary Judgment, holding there was no genuine issue as to any material fact except as to amount of damages and adjudicating TIDCORP liable under the Guarantee Agreement.

Issue Presented to the Supreme Court

Whether the RTC erred in granting PVB’s Motion for Summary Judgment — principally whether (1) the Rehabilitation Court’s Stay Order deprived the RTC of jurisdiction to hear and decide the Complaint, and (2) whether TIDCORP raised a genuine issue of material fact precluding summary judgment.

Procedural Question: Correct Mode of Appeal

The Supreme Court addressed first the procedural contention that the petition was the wrong mode of appeal. It reaffirmed that an order granting summary judgment which determines the parties’ rights and obligations and leaves only the amount of damages unresolved is a final judgment appealable under Rule 45. Because the RTC’s order definitively adjudicated liability and declared the parties’ rights and obligations, it was a final order subject to review. The Court therefore denied PVB’s Motion to Dismiss on that ground.

Substantive Analysis: Effect of the Rehabilitation Court’s Stay Order

The Court held that the Rehabilitation Court’s Stay Order suspended enforcement of claims and proceedings only against the debtor (PhilPhos) and not against persons who are solidarily liable with the debtor. The Court relied on FRIA Section 18(c), which expressly excludes from the stay the enforcement of claims against sureties and persons solidarily liable with the debtor, and on the Interim Rules (A.M. No. 00-8-10-SC, Rule 4, Section 6) and controlling jurisprudence (Situs Development Corp. v. Asiatrust Bank) to the same effect. Therefore, the stay did not preclude claims directly brought against TIDCORP if TIDCORP was solidarily liable.

Characterization of TIDCORP’s Obligation: Waiver of Excussion and Consequence

The Court examined the Guarantee Agreement’s express waiver of Article 2058’s benefit of excussion and its stipulation allowing Series A Noteholders to claim directly against TIDCORP without exhausting PhilPhos’ assets. The Court explained that waiver of excussion and a direct obligation to the creditor transform what may be labeled a “guarantee” into a suretyship or a solidarily binding obligation. The Court emphasized that the contractual label is not dispositive; substance controls. Because TIDCORP expressly renounced excussion and agreed to be directly liable, it was effectively solidarity liable (in the nature of a surety), and thus the Rehabilitation Court’s stay did not bar PVB’s action against it.

Assessment of the Existence of a Genuine Issue of Material Fact

Applying Rule 35 standards, the Court found no genuine issue of material fact. TIDCORP admitted it was bound by the Guarantee Agreement and acknowledged receipt of the Notice of Claim (letters dated November 12, 2015 and January 27, 2016). The only affirmative defense TIDCORP advanced was the Stay Order argument, which the Court rejected. The Court reiterated that to defeat summary judgment a defendant must proffer a bona fide, plausible defense supported by affidavits or proof; TIDCORP failed to do so and offered no substantial, arguable defense concerning liability. Consequently, summary judgm

Case Syllabus (G.R. No. 233850)

Facts and Antecedent Proceedings

Petition for Review on Certiorari under Rule 45, in relation to Rule 41, Section 2(c), assails RTC Order dated August 16, 2017 in Civil Case No. R‑MKT‑16‑02011‑CV granting respondent Philippine Veterans Bank’s (PVB) Motion for Summary Judgment; petition filed by Trade and Investment Development Corporation (TIDCORP), also known as PhilEXIM.
Complaint for Specific Performance filed by PVB on September 22, 2016 before the Regional Trial Court (RTC) of Makati City, Branch 150.
On November 23, 2011, PVB and other banking institutions (Series A Noteholders) entered into a Five-Year Floating Rate Note Facility Agreement (NFA) with Philippine Phosphate Fertilizer Corporation (PhilPhos) for up to an aggregate of P5 billion; PVB committed P1 billion under the NFA.
To secure payment of the Series A Notes, TIDCORP, with PhilPhos’s express conformity, executed a Guarantee Agreement dated November 23, 2011 whereby TIDCORP agreed to guarantee payment to the extent of ninety percent (90%) of the outstanding Series A Notes, including interest, on a rolling successive three‑month period from first drawdown to maturity.
Typhoon Yolanda made landfall on November 8, 2013, causing extensive damage to PhilPhos’s manufacturing plant in Leyte and preventing resumption of operations; PhilPhos filed a Petition for Voluntary Rehabilitation under the Financial Rehabilitation and Insolvency Act (FRIA) on September 17, 2015 before the Regional Trial Court of Ormoc City, Branch 12.
Rehabilitation Court issued a Commencement Order, including a Stay Order, on September 22, 2015.
PVB filed its Notice of Claim with TIDCORP on November 5, 2015 (received November 6, 2015); TIDCORP, by letter dated November 12, 2015, declined to give due course to the Notice of Claim invoking the Rehabilitation Court’s Stay Order; subsequent demands by PVB were likewise rebuffed by TIDCORP on the same ground.
TIDCORP filed an Answer with Counterclaim asserting that the RTC could not validly try the case because the Rehabilitation Court’s Stay Order enjoined enforcement of all claims, actions and proceedings against PhilPhos.
PVB filed Motion for Summary Judgment dated February 14, 2017; TIDCORP filed its Comment on March 6, 2017.
RTC, in an Order penned by Presiding Judge Elmo M. Alameda dated August 16, 2017, granted PVB’s Motion for Summary Judgment, finding no genuine issue as to any material fact except the amount of damages and adjudicating TIDCORP liable under the Guarantee Agreement.
TIDCORP filed a petition directly to the Supreme Court under Rule 45; PVB moved to dismiss the petition for wrong mode of appeal, but the Supreme Court denied the Motion to Dismiss by Resolution dated September 12, 2018; PVB subsequently filed its Comment on November 5, 2018.

The Singular Issue on Review

Whether the RTC erred in granting respondent PVB’s Motion for Summary Judgment.

RTC’s Ruling on the Motion for Summary Judgment

RTC determined, based on pleadings, supporting affidavits, and admissions on file, that a full‑blown trial was unnecessary because there was no genuine issue as to any material fact except the amount of damages.
RTC made a definitive adjudication on the merits, declaring PVB’s Complaint meritorious and holding TIDCORP liable under the Guarantee Agreement.
RTC therefore granted summary judgment in favor of PVB.

Procedural Issue — Correct Mode of Appeal

PVB contended in its Motion to Dismiss that the petition was the wrong mode of appeal because the assailed Order was interlocutory, not final.
Supreme Court rejected PVB’s contention: an order granting summary judgment that fully determines the parties’ rights and obligations and leaves no other issue unresolved except damages is a final judgment appealable under Rule 45.
The Court relied on precedent (Ybiernas v. Tanco‑Gabaldon) explaining that when a court in granting summary judgment adjudicates the merits and declares the parties’ rights and obligations, such order takes the nature of a final order even if amount of damages remains to be determined.
Conclusion on procedure: the petition was properly brought under Rule 45; PVB’s Motion to Dismiss was denied for lack of merit.

Substantive Standard for Summary Judgment

Summary judgment is a device to weed out sham claims or defenses early and avoid unnecessary trial (Excelsa Industries, Inc. v. Court of Appeals).
Rule 35, Sections 1 and 3 of the Rules of Court: moving party may seek summary judgment with supporting affidavits after the pleadings have been served; judgment shall be rendered if pleadings, affidavits, depositions and admissions show, except as to amount of damages, no