GR 105774; (April, 2002) (Digest)
G.R. No. 105774; April 25, 2002
Great Asian Sales Center Corporation and Tan Chong Lin, petitioners, vs. The Court of Appeals and Bancasia Finance and Investment Corporation, respondents.
FACTS
Petitioner Great Asian Sales Center Corporation, through its authorized Treasurer and General Manager Arsenio Lim Piat, Jr., executed four Deeds of Assignment with respondent Bancasia Finance and Investment Corporation. These deeds assigned fifteen postdated checks, issued by Great Asian’s customers, to Bancasia at a discount. All checks were subsequently dishonored upon presentment for reasons such as “account closed” or “insufficiency of funds,” totaling P1,042,005.00. Petitioner Tan Chong Lin separately executed two surety agreements, guaranteeing solidarily the obligations of Great Asian to Bancasia. After demands for payment were unheeded, Bancasia filed a collection suit against both petitioners.
In their defense, Great Asian and Tan Chong Lin argued that the Deeds of Assignment were void for lack of consideration and that Arsenio Lim Piat, Jr. exceeded his authority. They also contended that the surety agreements were invalid due to lack of consent and that Bancasia failed to provide proper notice of dishonor to Tan Chong Lin as a surety.
ISSUE
The primary issue is whether petitioners Great Asian and Tan Chong Lin are solidarily liable to Bancasia for the value of the dishonored checks assigned under the Deeds of Assignment.
RULING
Yes, the petitioners are solidarily liable. The Supreme Court affirmed the decisions of the lower courts. The Deeds of Assignment constituted a valid discounting arrangement, a common financing practice where a finance company purchases receivables at a discount. Great Asian, through its authorized officer Arsenio Lim Piat, Jr., validly entered into these contracts based on board resolutions granting him such authority. The defense of lack of consideration is untenable; the discount paid by Bancasia constituted the consideration for the assignment.
Regarding Tan Chong Lin’s liability as a surety, the Court ruled that the comprehensive and continuing surety agreements he signed were valid and binding. His obligation became due upon the principal debtor’s default. The defense of lack of notice of dishonor is unavailing. Notice to the principal debtor, Great Asian, is sufficient under the law, and furthermore, the circumstances—including the fact that the checks were drawn by Great Asian’s own customers and that Tan Chong Lin was the corporation’s president—showed he had knowledge of the transactions and the dishonor. Thus, both petitioners are solidarily liable to Bancasia for the amount of the dishonored checks.