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TIDC Case Digest

The Supreme Court of the Philippines denied the petition of Trade and Investment Development Corporation of the Philippines (TIDCORP) against Philippine Veterans Bank (PVB). TIDCORP had guaranteed a loan of Philippine (PhilPhos) to several banks including PVB. When PhilPhos failed to pay due to damage from a typhoon, PVB filed a claim against TIDCORP. TIDCORP denied the claim, citing a stay order from the rehabilitation court for PhilPhos. However, the Court found that the stay order did not prevent PVB from filing its claim according to the guarantee agreement, to which TIDCORP was bound. As TIDCORP did not offer any valid defense,

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219 views2 pages

TIDC Case Digest

The Supreme Court of the Philippines denied the petition of Trade and Investment Development Corporation of the Philippines (TIDCORP) against Philippine Veterans Bank (PVB). TIDCORP had guaranteed a loan of Philippine (PhilPhos) to several banks including PVB. When PhilPhos failed to pay due to damage from a typhoon, PVB filed a claim against TIDCORP. TIDCORP denied the claim, citing a stay order from the rehabilitation court for PhilPhos. However, the Court found that the stay order did not prevent PVB from filing its claim according to the guarantee agreement, to which TIDCORP was bound. As TIDCORP did not offer any valid defense,

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TRADE AND INVESTMENT DEVELOPMENT CORPORATION OF THE PHILIPPINES ALSO

KNOWN AS PHILIPPINE EXPORT-IMPORT CREDIT AGENCY, PETITIONER, v. PHILIPPINE


VETERANS BANK, RESPONDENT.

G.R. No. 233850, July 01, 2019

CAGUIOA, J.:
Question:

In its Complaint, respondent PVB alleged that, together with other banking institutions, entered into a Five-Year
Floating Rate Note Facility Agreement with debtor Philippine (PhilPhos), a PEZA registered domestic corporation
situated in Leyte, up to the aggregate amount of P5 billion. Under the said NFA, respondent PVB committed the
amount of P1 billion. To secure payment of the Series A Notes, petitioner TIDCORP, with the express conformity of
PhilPhos, executed a Guarantee Agreement whereby petitioner TIDCORP agreed to guarantee the payment of the
guaranty obligation to the extent of ninety (90%) of the outstanding Series A Notes, including interest, on a rolling
successive three-month period commencing on the first drawdown date and ending on the maturity date of the Series
A Notes.

On November 8, 2013, Typhoon Yolanda made landfall in Central Visayas, which resulted in widespread
devastation in the province of Leyte where PhilPhos' manufacturing plant was situated. Due to the damage brought
by said typhoon to PhilPhos' manufacturing facilities, it failed to resume its operations. On November 5, 2015, or 45
days as provided in the Guarantee Agreement, respondent PVB filed its Notice of Claim with petitioner TIDCORP,
which received the same on November 6, 2015. In a Letter, petitioner TIDCORP declined to give due course to
respondent PVB's Notice of Claim, invoking the Stay Order issued by the Rehabilitation Court. Despite several
demands made by respondent PVB pursuant to the Guarantee Agreement, petitioner TIDCORP maintained its
position to deny PVB's claim due to the issuance of the said Stay Order. On August 16, 2017, the RTC issued the
assailed Order

Did the RTC err in granting PVB’s Motion for Summary Judgment?

Answer:

According to Section 1, Rule 35 of the Rules of Court, a party seeking to recover upon a claim may, at any time
after the pleading in answer thereto has been served, move with supporting affidavits, depositions or admissions for
a summary judgment in his/her favor.

According to Section 3 of the same Rule, the judgment sought shall be rendered forthwith if the pleadings,
supporting affidavits, depositions, and admissions on file, show that, except as to the amount of damages, there is no
genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

In assailing the RTC's decision granting the Motion for Summary Judgment, petitioner TIDCORP, in the main,
asserts that respondent PVB is not entitled to judgment as a matter of law and that there are genuine issues on
material facts that necessitate trial on the merits, contrary to the findings of the RTC.

To support this theory, petitioner TIDCORP raises two grounds: (1) the RTC cannot validly hear and decide
respondent PVB's Complaint because of the Rehabilitation Court's Stay Order which enjoined the enforcement of all
claims, actions and proceedings against PhilPhos; and (2) there is supposedly a contentious material fact that raises a
genuine issue in the instant case.

The Stay Order of the Rehabilitation Court did not divest the RTC's jurisdiction to hear and decide respondent
PVB's Complaint. Upon a simple perusal of the Guarantee Agreement, to which petitioner TIDCORP readily
admitted it is bound, the answer to the aforementioned question becomes a clear and unmistakable yes. Petitioner
TIDCORP indubitably engaged to be solidarity liable with PhilPhos under the Guarantee Agreement.
Under a normal contract of guarantee, the guarantor binds himself to the creditor to fulfill the obligation of the
principal debtor in case the latter should fail to do so. The guarantor who pays for a debtor, in turn, must be
indemnified by the latter. However, the guarantor cannot be compelled to pay the creditor unless the latter has
exhausted all the property of the debtor and resorted to all the legal remedies against the debtor. This is what is
otherwise known as the benefit of excussion. Conversely, if this benefit of excussion is waived, the guarantor can be
directly compelled by the creditor to pay the entire debt even without the exhaustion of the debtor's properties.

Hence, taking together the fact that petitioner TIDCORP expressly admitted its obligations under the Guarantee
Agreement, and that it failed to offer any substantial defense against the claim of respondent PVB, the RTC was not
in error in holding that there is no genuine issue as to a material fact extant in the instant case. For the foregoing
reasons, the Court hereby denies the instant Petition for lack of merit.

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