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Manila Insurance v. sps Amurao
GR 179628 1-16-2013
J. Del Castillo

Suretyship - liability of surety

Facts:

Sps. Amurao (Creditor/Obligee) entered into a Construction Contract Agreement (CCA) w/ Aegean Construction Devt Corp (Debtor/Obligor) for the construction of a 6-storey commercial bldg. To guarantee its full & faithful compliance w/the terms & conditions of the CCA, Aegean posted a performance bond by Manila Insurance Co. (Surety) & Intra Strata Assurance Corp. (Surety).

Due to failure of Aegean to comply w/the project, Sps. Amurao filed a Complaint vs. the Sureties to collect on the performance bond at the RTC QC. Manila Ins. filed a (motion to dismiss) M/D seeks to dismiss on grounds:
1) Lack of cause of action vs. Surety that filing of Complaint is premature due to failure to implead principal contractor; and that at the time the Surety Issued the performance bond, CCA was not yet signed; and
2) lack of jurisdiction.

During pre-trial, Sureties discovered that the CCA contained an arbitration clause.

RTC - denied Sureties M/D and subsequent M/R. It disregarded the fact that CCA was not yet signed at the time Surety issued the performance bond.

CA - dismissed the petition.
1) The presence of arbitration clause in the CCA does not merit dismissal of the case; it is only when there are differences in the interpretation that parties may resort to arbitration
2) found no GAD on the part of the RTC, it explained that performance bond was intended to be coterminous w/The construction of the bldg.
3) it pointed out that if delivery of the CCA is contemporaneous w/delivery of the Surety's obligation: a. Each contract becomes completed at the same time b. Consideration w/c supports the principal contract likewise support the subsidiary c. Although Surety Contract is only an accessory to the principal contract, Surety's liability is: Direct;

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