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    79 - Manila Surety and Fidelity Vs Batu Construction (1957)

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    Bibi Jumpol
    1) Manila Surety and Fidelity Inc filed a case against Batu Construction and Company regarding a surety bond of P8,812 that Manila Surety posted on behalf of Batu Construction for a bridge construction project. 2) The construction contract was later annulled by the Director of Public Works due to unsatisfactory progress. Workers also filed a case against Manila Surety and Batu Construction for unpaid wages. 3) Manila Surety argued it was entitled to security from Batu Construction to protect itself from insolvency under Article 2071 of the Civil Code. However, the Supreme Court ruled that the specific remedy did not apply in this case.

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    79 - Manila Surety and Fidelity Vs Batu Construction (1957)

    Uploaded by

    Bibi Jumpol
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    1) Manila Surety and Fidelity Inc filed a case against Batu Construction and Company regarding a surety bond of P8,812 that Manila Surety posted on behalf of Batu Construction for a bridge construction project. 2) The construction contract was later annulled by the Director of Public Works due to unsatisfactory progress. Workers also filed a case against Manila Surety and Batu Construction for unpaid wages. 3) Manila Surety argued it was entitled to security from Batu Construction to protect itself from insolvency under Article 2071 of the Civil Code. However, the Supreme Court ruled that the specific remedy did not apply in this case.

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    79 - Manila Surety and Fidelity vs Batu Construction (1957)

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    1) Manila Surety and Fidelity Inc filed a case against Batu Construction and Company regarding a surety bond of P8,812 that Manila Surety posted on behalf of Batu Construction for a bridge construction project. 2) The construction contract was later annulled by the Director of Public Works due to unsatisfactory progress. Workers also filed a case against Manila Surety and Batu Construction for unpaid wages. 3) Manila Surety argued it was entitled to security from Batu Construction to protect itself from insolvency under Article 2071 of the Civil Code. However, the Supreme Court ruled that the specific remedy did not apply in this case.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    412 views2 pages

    79 - Manila Surety and Fidelity Vs Batu Construction (1957)

    Uploaded by

    Bibi Jumpol
    1) Manila Surety and Fidelity Inc filed a case against Batu Construction and Company regarding a surety bond of P8,812 that Manila Surety posted on behalf of Batu Construction for a bridge construction project. 2) The construction contract was later annulled by the Director of Public Works due to unsatisfactory progress. Workers also filed a case against Manila Surety and Batu Construction for unpaid wages. 3) Manila Surety argued it was entitled to security from Batu Construction to protect itself from insolvency under Article 2071 of the Civil Code. However, the Supreme Court ruled that the specific remedy did not apply in this case.

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    © All Rights Reserved
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    Title Manila Surety and Fidelity Inc vs Batu Construction and Company, GR

    No. L-9353, May 21, 1957


    Ponente PADILLA, J.
    Doctrine Guaranty and Surety
    Facts ● Manila Surety and Fidelity Inc alleged that Batu Construction and
    Company requested it to post a surety bond for P8,812 in favor
    of PH Gov’t to secure the faithful performance of the construction
    of the Bacarra Bridge in Ilocos Norte, undertaken by the
    partnership as stipulated on contract entered into by and
    between the partnership and PH Gov’t, on condition that
    Baquiran, Amboy and Tunac (members of Batu Construction)
    would indemnify Manila Surety for any damage, loss or expenses
    of whatever kind and nature which it may sustain as a
    consequence of having become surety upon the P8,812 bond

    ● Later, the Director of Public Works annulled the construction


    contract because of the unsatisfactory progress of the work on
    the Bacarra bridge. The Director notified Manila Surety that the
    PH Gov’t would hold it liable for any amount incurred by the gov’t
    for the completion of the bridge

    ● An action was then filed by Ricardo Fernandez and 105 persons


    before the Justice of the Peace Court of Laoag, Ilocos Norte
    against Manila Surety and Batu Construction for the collection of
    unpaid wages

    ● However, Batu Construction, including Baquiran, Amboy and


    Tunac are in imminent danger of becoming insolvent and are
    removing and disposing their properties with intent to defraud
    their creditors, one of them is Manila Surety.

    ● Manila Surety also has no other sufficient security to protect its


    rights against Batu Construction and its 3 members

    ● Manila Surety prayed before the Justice of Peace that decision be


    rendered ordering Batu Construction to deliver to Manila Surety
    the sufficient security as to protect Manila Surety from any of the
    proceedings by the creditors on the Surety Bond of P8,812 and
    from the danger of insolvency of Batu Construction

    ● Justice of peace dismissed said complaint by Manila Surety


    Issue W/N the remedy provided for in the last paragraph of article 2071, NCC
    may be availed of by a surety which is Manila Surety in this case?
    SC Ruling No, the remedy provided for in the last paragraph of Art. 2071, NCC may
    not be availed of by Manila Surety.
    Manila Surety’s cause of action comes under par 1, Art. 2071, not the
    last paragraph, because the action brought by Fernandez and 105
    persons against it in the Justice of the Peace of Court for the collection
    of unpaid wages is in connection with the construction of the Bacarra
    Bridge undertaken by Batu Construction. Par. 1, Art 2071 provides that
    the guarantor, even before having paid, may proceed against the
    principal debtor to obtain release from the guaranty or to demand a
    security that shall protect him from any proceedings by the creditor or
    from the danger of insolvency of the debtor, when the guarantor is sued
    for payment.

    It simply provides that the guarantor of surety be sued for the payment
    of an amount for which the surety bond was put up to secure the
    fulfillment of the obligation undertaken by the principal debtor. Here, the
    suit filed by Fernandez and 105 persons is a suit for the payment of an
    amount for which the surety bond was put up to secure the faithful
    performance of the obligation undertaken by Batu Construction,
    Baquiran, Amboy and Tunac, the principal debtors, in favor of PH Gov’t,
    the creditor.

    Thus, SC dismissed the order appealed from.

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