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PHILIPPINE
EXPORT
AND
FOREIGN
LOAN
GUARANTEE CORPORATION, petitioner, vs. V.P.
EUSEBIO
CONSTRUCTION,
INC.;
3-PLEX
INTERNATIONAL, INC., VICENTE P. EUSEBIO;
SOPLEDAD C. EUSEBIO; EDUARDO E. SANTOS;
ILUMINADA SANTOS; AND FIRST INTEGRATED
BONDING AND INSURANCE COMPANY, INC.,
respondents.
Civil Law; Contracts; Guaranty; Distinguished from Suretyship;
By guaranty a person, called the guarantor, binds himself to the
creditor to fulfill the obligation of the principal debtor in case the
latter should fail to do so; if the person binds himself solidarily with
the principal debtor, the contract is called suretyship.By guaranty
a person, called the guarantor, binds himself to the creditor to fulfill
the obligation of the principal debtor in case the latter should fail to
do so. If a person binds himself solidarily with the principal debtor,
the contract is called suretyship. Strictly speaking, guaranty and
surety are nearly related, and many of the principles are common to
both. In both contracts, there is a promise to answer for the debt or
default of another. However, in this jurisdiction, they may be
distinguished thus: 1. A surety is usually bound with his principal
by the same instrument executed at the same time and on the same
consideration. On the other hand, the contract of guaranty is the
guarantors own separate undertaking often supported by a
consideration separate from that supporting the contract of the
principal; the original contract of his principal is not his contract; 2.
A surety assumes liability as a regular party to the undertaking;
while the liability of a guarantor is conditional depending on the
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_______________
*
FIRST DIVISION.
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latter would be
entitled to a commission of 4% of the
3
contract price. Later, or on 8 April 1981, respondent 3Plex, not being accredited by or registered with the
Philippine Overseas Construction Board (POCB), assigned
and transferred all its rights and interests under the joint
venture agreement to VPECI, a construction
and
4
engineering firm duly registered with the POCB. However,
on 2 May 1981, 3-Plex and VPECI entered into an
agreement
_______________
Now known as the Trade Investment Development Corporation of
the Philippines.
2
p. 395.
3
206
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CA Decision, 3.
10
11
12
207
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14
15
16
17
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19
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208
208
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21
22
23
24
25
26
209
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29
30
31
214.
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E. Zobel Inc. v. Court of Appeals, G.R. No. 113931, 6 May 1998, 290
213
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VI PADILLA 494.
41
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43
SCRA 36.
44
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215
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SALONGA, P. 356.
49
Id., p. 355.
50
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depending
on the percentage of accomplishment within the
55
period. The payments were, in turn, to be used by the
56
contractor to finance the subsequent phase of the work.
However, as explained by VPECI in its letter to the
Department of Foreign Affairs (DFA), the payment by SOB
purely in Dinars adversely affected the completion of the
project; thus:
4. Despite protests from the plaintiff, SOB continued paying
the accomplishment billings of the Contractor purely in
Iraqi Dinars and which payment came only after some
delays.
5. SOB is fully aware of the following:
...
5.2 That Plaintiff is a foreign contractor in Iraq and as such,
would need foreign currency (US$), to finance the purchase
of various equipment, materials, supplies, tools and to pay
for the cost of project management, supervision and skilled
labor not available in Iraq and therefore have to be
imported and or obtained from the Philippines and other
sources outside Iraq.
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52
IV
ARTURO
M.
TOLENTINO,
COMMENTARIES
AND
JURADO, 50.
54
55
See Court of Appeals Decision, 19, Rollo, p. 66; RTCs Decision, 22,
Rollo, p. 93.
56
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VPECI has taken every possible measure for the completion of the
project but the war situation in Iraq particularly the lack of foreign
exchange is proving to be a great obstacle. Our performance
counterguarantee was called last 26 October 1986 when the
negotiations for a foreign currency loan with the Italian government
through Banco de Roma bogged down following news report that
Iraq has defaulted in its obligation with major European banks.
Unless the situation in Iraq is improved as to allay the banks
apprehension, there is no assurance that the project will ever be
58
completed.
58
219
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IV TOLENTINO p. 110.
60
Id., p. 102.
61
Id., p. 110.
62
63
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following
arguments
in
cancelling
the
65
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221
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68
69
70
VI PADILLA, P. 545.
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SO ORDERED.
Panganiban, Ynares-Santiago, Carpio and Azcuna,
JJ., concur.
Petition denied, judgment affirmed.
Note.The guarantor cannot be compelled to pay the
creditor unless the latter has exhausted all the property of
the debtor, and has resorted to all legal remedies against
the debtor. (Baylon v. Court of Appeals, 312 SCRA 502
[1999])
o0o
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71
V TOLENTINO, P. 521.
72
4th Whereas Clause of Executive Order No. 185, which took effect
on 5 June 1987.
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