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TRADE v. PHILIPPINE VETERANS BANK

FACTS:

The case involves a Petition for Review on Certiorari filed by Trade and Investment Development Corporation (TIDCORP), also known as Philippine Export-Import Credit Agency (PhilEXIM), against Philippine Veterans Bank (PVB). The dispute arose from a Five-Year Floating Rate Note Facility Agreement (NFA) entered into by PVB, other banking institutions, and debtor Philippine Phosphate Fertilizer Corporation (PhilPhos). Under the NFA, PVB committed to provide P1 billion. To secure payment of the Series A Notes, TIDCORP executed a Guarantee Agreement, wherein it agreed to guarantee payment of ninety percent (90%) of the outstanding Series A Notes. However, due to the devastation caused by Typhoon Yolanda, PhilPhos failed to resume its operations and filed for rehabilitation. PVB filed a Notice of Claim against TIDCORP, seeking payment under the Guarantee Agreement. TIDCORP, invoking the Stay Order issued by the Rehabilitation Court, declined to give due course to PVB's claim. PVB filed a Complaint for Specific Performance, and TIDCORP argued that the RTC cannot try the case due to the Stay Order. PVB filed a Motion for Summary Judgment, which was granted by the RTC. TIDCORP assailed the order, leading to the present petition. The issue before the court is whether the RTC erred in granting PVB's Motion for Summary Judgment.

ISSUES:

  1. Whether the petitioner pursued the correct mode of appeal.

  2. Whether the RTC's Order granting respondent PVB's Motion for Summary Judgment was proper.

  3. Whether the stay order in the rehabilitation proceedings bars claims against sureties and other persons solidarity liable with the debtor.

  4. Whether petitioner TIDCORP is considered a surety or a guarantor under the Guarantee Agreement.

  5. Whether the waiver of the benefit of excussion in the Guarantee Agreement characterizes the obligation as a suretyship contract.

  6. Whether there is a genuine issue of material fact raised by petitioner TIDCORP.

  7. Did the petitioner raise a plausible ground of defense of a substantial character?

  8. Did the petitioner receive a Notice of Claim from the respondent?

  9. Did the petitioner assail the correctness and completeness of the Notice of Claim?

RULING:

  1. The Court held that the petitioner pursued the correct mode of appeal. The order granting a Motion for Summary Judgment, which fully determines the rights and obligations of the parties, except the amount of damages, is considered a final judgment and can be appealed under Rule 45.

  2. The Court ruled that the RTC's Order granting respondent PVB's Motion for Summary Judgment was proper. Summary judgment is a device for weeding out sham claims or defenses at an early stage of the litigation. The requirements for summary judgment were met: there was no genuine issue as to any material fact, and the moving party was entitled to judgment as a matter of law. The Stay Order of the Rehabilitation Court did not divest the RTC's jurisdiction to hear and decide respondent PVB's Complaint.

  3. The stay order in the rehabilitation proceedings does not bar claims against sureties and other persons solidarity liable with the debtor.

  4. Petitioner TIDCORP is considered a surety under the Guarantee Agreement, as it expressly waived the benefit of excussion and made itself directly and principally liable without any qualification to the Series A Noteholders.

  5. The waiver of the benefit of excussion in the Guarantee Agreement characterizes the obligation as a suretyship contract. The crucial factor that differentiates a surety from a guaranty is the waiver of the benefit of excussion. When a person or entity engages to be directly liable to the creditor without the need for the creditor to exhaust the properties of the debtor, then the obligation is in the nature of a suretyship regardless of the labeling of the agreement.

  6. There is no genuine issue of material fact raised by petitioner TIDCORP. In a collection case, where the obligation and the fact of non-fulfillment of the obligation are admitted by the debtor, with only the rate of interest and/or amount of damages being the remaining issue, there is no genuine issue. The court can determine this based on the pleadings, admissions, documents, affidavits, and/or counter-affidavits submitted by the parties.

  7. No. The petitioner failed to proffer a plausible ground of defense of a substantial character.

  8. Yes. The petitioner admitted receiving a Notice of Claim from the respondent.

  9. No. The petitioner did not assail the correctness and completeness of the Notice of Claim.

PRINCIPLES:

  • An order or resolution granting a Motion for Summary Judgment that fully determines the rights and obligations of the parties, except the amount of damages, is considered a final judgment subject to appeal.

  • Summary judgment is a device for weeding out sham claims or defenses at an early stage of the litigation.

  • To obtain summary judgment, the pleadings, supporting affidavits, depositions, and admissions must show that there is no genuine issue as to any material fact.

  • The Stay Order of the Rehabilitation Court does not automatically apply to all claims and proceedings against persons solidarily liable with the debtor.

  • When a stay order is issued in rehabilitation proceedings, claims against sureties and other persons solidarity liable with the debtor are not barred.

  • A guarantor who engages to directly shoulder the debt of the debtor, waiving the benefit of excussion and the requirement of prior presentment, demand, protest, or notice, makes himself/herself solidarily liable to the creditor.

  • The distinguishing characteristic between a guarantee and a suretyship is that in a suretyship, the obligor promises to pay the principal's debt if the principal will not pay, while in a guarantee, the obligor agrees that the creditor may proceed against the obligor after proceeding against the principal and exhausting all of the principal's properties.

  • The designation of an obligor as a "guarantor" or the use of the term "guarantee agreement" does not automatically mean that the obligor is a guarantor or that the contract is a contract of guarantee. The determination of whether an obligation is a suretyship is not a matter of nomenclature and semantics.

  • The waiver of the benefit of excussion is a crucial factor that differentiates a surety from a guaranty.

  • In a suretyship contract, the surety is principally liable for the payment of the debt and the benefit of excussion is not available to the surety.

  • In a contract of guaranty, the guarantor can only be held liable after the creditor has exhausted all the properties of the debtor and resorted to all legal remedies against the debtor.

  • There is no genuine issue of material fact if the issues raised by a party are sham, fictitious, contrived, set up in bad faith, and patently unsubstantial. A summary judgment may be rendered in such cases.

  • A defendant must raise a plausible ground of defense of a substantial character to avoid summary judgment.

  • Admissions made by a party in its correspondence are binding and can be used against them in future litigation.