GR 103066; (April, 1996) (Digest)
G.R. No. 103066 . April 25, 1996.
WILLEX PLASTIC INDUSTRIES, CORPORATION, petitioner, vs. HON. COURT OF APPEALS and INTERNATIONAL CORPORATE BANK, respondents.
FACTS
Inter-Resin Industrial Corporation opened a letter of credit with Manila Banking Corporation (Manilabank) in 1978. To secure this, Inter-Resin and Investment and Underwriting Corporation of the Philippines (IUCP) executed two Continuing Surety Agreements. On April 2, 1979, Inter-Resin and Willex Plastic Industries Corporation executed a Continuing Guaranty in favor of IUCP, guaranteeing payment of Inter-Resin’s obligations to IUCP up to P5,000,000. In 1981, IUCP (succeeded by Atrium Capital Corp., and later by International Corporate Bank or Interbank) paid Manilabank P4,334,280.61 for Inter-Resin’s unpaid obligation. Interbank then demanded payment from Inter-Resin and Willex under the Continuing Guaranty.
Inter-Resin admitted the guaranty’s purpose but claimed full payment. Willex denied liability, asserting its role was merely that of a secondary guarantor, that Interbank failed to exhaust remedies against the principal debtor, and that the complaint stated no cause of action. During trial, Inter-Resin was declared to have waived its right to present evidence due to repeated non-appearance. Willex also rested its case without presenting evidence. The trial court ruled against both, holding them jointly and severally liable.
ISSUE
Whether petitioner Willex Plastic is solidarily liable with Inter-Resin Industrial to Interbank under the Continuing Guaranty for the amount Interbank paid to Manilabank.
RULING
Yes, Willex is solidarily liable. The Supreme Court affirmed the Court of Appeals. The terms of the Continuing Guaranty executed by Willex are clear: it jointly and severally guaranteed the prompt payment of Inter-Resin’s obligations to IUCP (Interbank’s predecessor). The obligation guaranteed materialized when IUCP/Interbank paid Manilabank, thereby stepping into the shoes of the original creditor. This payment created a valid principal obligation of Inter-Resin to reimburse Interbank, which is precisely what the guaranty covered.
Willex’s defense that its liability is only secondary and that Interbank failed to exhaust remedies against the principal is unavailing. A contract of guaranty can be crafted as a solidary undertaking, making the guarantor liable as a primary obligor. The language “jointly and severally” in the agreement establishes solidary liability, negating any requirement for exhaustion of assets (excussion). Furthermore, Willex waived its right to present evidence at trial to prove its claimed defenses, including any alleged payment by Inter-Resin. Having elected not to present evidence, it cannot later complain about being denied an opportunity to do so. The factual findings of the lower courts, based on the evidence on record, are thus binding.