Dino vs MBTC - Case Digest PDF

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JACINTO UY DIÑO and NORBERTO UY, HON. COURT OF APPEALS and METROPOLITAN BANK AND TRUST COMPANY DOCTRINES Guaranty Suretyship FACTS: Uy Tiam Enterprises and Freight Services applied for and obtained credit accommodations from the Metropolitan Bank and Trust Company or METROBANK in the sum of P700, 000. 00. This was secured by Continuing Suretyships separately executed by petitioners Norberto Uy and Jacinto Diño. Uy Tiam paid the obligation under this letter of credit. UTEFS obtained another credit accommodation in 1978, and obtained another in 1979 in the sum of Php815,600. UTEFS executed a trust receipt where it agreed to deliver to Metrobank the goods in the event of non-sale, and if sold, the proceeds will be delivered to Metrobank. However, UTEFS did not comply with its obligation. Metrobank demanded payment from UTEFS and the sureties, Uy & Diño. The sureties refused to pay. The Regional Trial Court (RTC) ruled in favour of the petitioners. On appeal, the Court of Appeals reversed the RTC’s decision. ISSUE: 1) Are the petitioners Jacinto Uy Diño and Norberto Uy liable for the obligation contracted by Uy Tiam by virtue of the Continuing Suretyships they executed on February 25, 1977? 2)

If yes, what would be the extent of their liabilities for said 1979 obligations?

RATIONALE FINAL DECISION 1. Yes. The Supreme Court declared that petitioners that Jacinto Uy Diño and Norberto Uy are jointly and severally liable to appellant, Metropolitan Bank and Trust Company (Metrobank), for and are ordered to pay, up to the maximum limit only of their respective Continuing Suretyship Agreement, the remaining unpaid balance of the principal obligation of Uy Tiam or Uy Tiam Enterprises & Freight Services. The agreement they executed in 1977 is a continuing suretyship. 2. Petitioners are only liable up to the maximum limit fixed in the continuing suretyship agreements. The law is clear that a guarantor may bind himself for less, but not for more than the principal debtor....