2. Prudential Guaranty vs. Equinox

PRUDENTIAL GUARANTEE and ASSURANCE, INC VS. EQUINOX LAND CORPORATION Facts: Respondent Equinox Land Corporation constructed five additional floors to its existing building. In the bidding, Equinox formally awarded to J’Marc the contract to build for a consideration of P37, 000,000.00. as part of their undertaking, J’Marc submitted to Equinox two bonds issued by the petitioner PGAI, a surety bond in the amount of P9, 250,000.00 to guarantee the unliquidated portion of the advance payment payable to J’Marc and a performance bond in the amount of P7, 400,000.00 to guarantee J’Marc’s faithful performance of its obligations under the construction agreement. Equinox paid J’Marc a down payment of P9, 250,000.00 equivalents to 25% of the contract price. For failure of J’Marc to finish the project on time. Equinox terminated its contract with J’Marc and took over the project. Equinox filed with the RTC complaint for sum of money and damages against J’Marc and Prudential. Equinox prayed that J’Marc be ordered to reimburse the amounts corresponding to its advanced payments and unliquidated portion of its downpayment. Equinox also prayed that Prudential be ordered to pay its liability under the bonds. On review before the CA Prudential alleged that the CA erred in ruling that it is bound by the terms of the construction contract that it is solidarily liable with J’Marc under its bonds. Issue: WON the CA erred in finding petitioner PGAI solidarily liable with J’Marc for damages. Held: No. The SC affirmed the decision of the CA in Toto. The Court held that it is not disputed that Prudential entered into a suretyship contract with J’Marc. Section 175 of the Insurance Code defines a suretyship as “a contract or agreement whereby a party, called the suretyship, guarantees the performance by another party, called the principal or obligor, of an obligation or undertaking in favor of a third party, called the obligee. It includes official recognizances, stipulations, bonds, or undertakings issued under Act 53, as amended.” Corollarily, Article 2047 of the Civil Code provides that suretyship arises upon the solidary binding of a person deemed the surety with the principal debtor for the purpose of fulfilling an obligation.

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Transcript of 2. Prudential Guaranty vs. Equinox

PRUDENTIAL GUARANTEE and ASSURANCE, INCVS.EQUINOX LAND CORPORATION

Facts:Respondent Equinox Land Corporation constructed five additional floors to its existing building. In the bidding, Equinox formally awarded to JMarc the contract to build for a consideration of P37, 000,000.00. as part of their undertaking, JMarc submitted to Equinox two bonds issued by the petitioner PGAI, a surety bond in the amount of P9, 250,000.00 to guarantee the unliquidated portion of the advance payment payable to JMarc and a performance bond in the amount of P7, 400,000.00 to guarantee JMarcs faithful performance of its obligations under the construction agreement. Equinox paid JMarc a down payment of P9, 250,000.00 equivalents to 25% of the contract price. For failure of JMarc to finish the project on time. Equinox terminated its contract with JMarc and took over the project. Equinox filed with the RTC complaint for sum of money and damages against JMarc and Prudential. Equinox prayed that JMarc be ordered to reimburse the amounts corresponding to its advanced payments and unliquidated portion of its downpayment. Equinox also prayed that Prudential be ordered to pay its liability under the bonds. On review before the CA Prudential alleged that the CA erred in ruling that it is bound by the terms of the construction contract that it is solidarily liable with JMarc under its bonds.

Issue:WON the CA erred in finding petitioner PGAI solidarily liable with JMarc for damages.Held:No. The SC affirmed the decision of the CA in Toto. The Court held that it is not disputed that Prudential entered into a suretyship contract with JMarc. Section 175 of the Insurance Code defines a suretyship as a contract or agreement whereby a party, called the suretyship, guarantees the performance by another party, called the principal or obligor, of an obligation or undertaking in favor of a third party, called the obligee. It includes official recognizances, stipulations, bonds, or undertakings issued under Act 53, as amended. Corollarily, Article 2047 of the Civil Code provides that suretyship arises upon thesolidarybinding of a person deemed the surety with the principal debtor for the purpose of fulfilling an obligation.