Home Insurance Company vs.

Eastern Shipping
Lines
[GR L-34382, 20 July 1983];
Home Insurance vs. Nedlloyd Lijnen [GR L-34383]
Facts: [GR L-34382] On or about 13 January 1967, S. Kajita & Co., on behalf
of Atlas Consolidated Mining & Development Corporation, shipped on board
the SS Eastern Jupiter from Osaka, Japan, 2,361 coils of Black Hot Rolled
Copper Wire Rods. The said VESSEL is owned and operated by Eastern
Shipping Lines. The shipment was covered by Bill of Lading O-MA-9, with
arrival notice to Phelps Dodge Copper Products Corporation of the Philippines
at Manila. The shipment was insured with the Home Insurance Company
against all risks in the amount of P1,580,105.06 under its Insurance Policy AS73633. The coils discharged from the VESSEL numbered 2,361, of which 53
were in bad order. What the Phelps Dodge ultimately received at its
warehouse was the same number of 2,361 coils, with 73 coils loose and partly
cut, and 28 coils entangled, partly cut, and which had to be considered as
scrap. Upon weighing at Phelps Dodge's warehouse, the 2,361 coils were
found to weight 263,940.85 kilos as against its invoiced weight of 264,534.00
kilos or a net loss/shortage of 593.15 kilos, or 1,209,56 lbs., according to the
claims presented by the Phelps Dodge against Home Insurance, the Eastern
Shipping, and Angel Jose Transportation Inc. For the loss/damage suffered by
the cargo, Home Insurance paid the Phelps Dodge under its insurance policy
the amount of P3,260.44, by virtue of which Home Insurance became
subrogated to the rights and actions of the Phelps Dodge. Home Insurance
made demands for payment against the Eastern Shipping and the Angel Jose
Transportation for reimbursement of the aforesaid amount but each refused to
pay the same."
[GR L-34383] On or about 22 December 1966, the Hansa Transport Kontor
shipped from Bremen, Germany, 30 packages of Service Parts of Farm
Equipment and Implements on board the VESSEL, SS 'NEDER RIJN' owned
by N. V. Nedlloyd Lijnen, and represented in the Philippines by its local agent,
the Columbian Philippines, Inc.. The shipment was covered by Bill of Lading
No. 22 for transportation to, and delivery at, Manila, in favor of International
Harvester Macleod, Inc. The shipment was insured with Home Insurance
company under its Cargo Policy AS-73735 'with average terms' for
P98,567.79. The packages discharged from the VESSEL numbered 29, of
which seven packages were found to be in bad order. What International
Harvester ultimately received at its warehouse was the same number of 29
packages with 9 packages in bad order. Out of these 9 packages, 1 package
was accepted by International Harvester in good order due to the negligible

damages sustained. Upon inspection at International Harvester's warehouse,

the contents of 3 out of the 8 cases were also found to be complete and intact,
leaving 5 cases in bad order. The contents of these 5 packages showed
several items missing in the total amount of $131.14; while the contents of the
undelivered 1 package were valued at $394.66, or a total of $525.80 or
P2,426.98. For the short-delivery of 1 package and the missing items in 5 other
packages, Home Insurance paid International Harvester under its Insurance
Cargo Policy the amount of P2,426.98, by virtue of which Home Insurance
became subrogated to the rights and actions of International Harvester.
Demands were made on N.V. Nedlloyd Lijnen and International Harvester for
reimbursement thereof but they failed and refused to pay the same."
When the insurance contracts which formed the basis of these cases were
executed, Home Insurance had not yet secured the necessary licenses and
authority; but when the complaints in these two cases were filed, Home
Insurance had already secured the necessary license to conduct its insurance
business in the Philippines. In both cases, Home Insurance made the
averment regarding its capacity to sue, as that it "is a foreign insurance
company duly authorized to do business in the Philippines through its agent,
Mr. Victor H. Bello, of legal age and with office address at Oledan Building,
Ayala Avenue, Makati, Rizal." The Court of First Instance of Manila, Branch
XVII, however, dismissed the complaints in both cases, on the ground that
Home Insurance had failed to prove its capacity to sue. Home Insurance filed
the petitions for review on certiorari, which were consolidated.
Issue: Whether Home Insurance, a foreign corporation licensed to do
business at he time of the filing of the case, has the capacity to sue for
claims on contracts made when it has no license yet to do business in
the Philippines.
Held: As early as 1924, the Supreme Court ruled in the leading case of
Marshall Wells Co. v. Henry W. Elser & Co. (46 Phil. 70) that the object of
Sections 68 and 69 of the Corporation Law was to subject the foreign
corporation doing business in the Philippines to the jurisdiction of Philippine
courts. The Corporation Law must be given a reasonable, not an unduly harsh,
interpretation which does not hamper the development of trade relations and
which fosters friendly commercial intercourse among countries. The objectives
enunciated in the 1924 decision are even more relevant today when we
commercial relations are viewed in terms of a world economy, when the
tendency is to re-examine the political boundaries separating one nation from
another insofar as they define business requirements or restrict marketing
conditions. The court distinguished between the denial of a right to take
remedial action and the penal sanction for non-registration. Insofar as

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transacting business without a license is concerned, Section 69 of the

Corporation Law imposed a penal sanction imprisonment for not less than 6
months nor more than 2 years or payment of a fine not less than P200.00 nor
more than P1,000.00 or both in the discretion of the court. There is a penalty
for transacting business without registration. And insofar as litigation is
concerned, the foreign corporation or its assignee may not maintain any suit
for the recovery of any debt, claim, or demand whatever. The Corporation Law
is silent on whether or not the contract executed by a foreign corporation with
no capacity to sue is null and void ab initio. Still, there is no question that the
contracts are enforceable. The requirement of registration affects only the
remedy. Significantly, Batas Pambansa 68, the Corporation Code of the
Philippines has corrected the ambiguity caused by the wording of Section 69 of
the old Corporation Law. Section 133 of the present Corporation Code
provides that "No foreign corporation transacting business in the Philippines
without a license, or its successors or assigns, shall be permitted to maintain
or intervene in any action, suit or proceeding in any court or administrative
agency in the Philippines; but such corporation may be sued or proceeded
against before Philippine courts or administrative tribunals on any valid cause
of action recognized under Philippine laws." The old Section 69 has been
reworded in terms of non-access to courts and administrative agencies in order
to maintain or intervene in any action or proceeding. The prohibition against
doing business without first securing a license is now given penal sanction
which is also applicable to other violations of the Corporation Code under the
general provisions of Section 144 of the Code. It is, therefore, not necessary to
declare the contract null and void even as against the erring foreign
corporation. The penal sanction for the violation and the denial of access to
Philippine courts and administrative bodies are sufficient from the viewpoint of
legislative policy. Herein, the lack of capacity at the time of the execution of the
contracts was cured by the subsequent registration is also strengthened by the
procedural aspects of these cases. Home Insurance averred in its complaints
that it is a foreign insurance company, that it is authorized to do business in the
Philippines, that its agent is Mr. Victor H. Bello, and that its office address is
the Oledan Building at Ayala Avenue, Makati. These are all the averments
required by Section 4, Rule 8 of the Rules of Court. Home Insurance
sufficiently alleged its capacity to sue.

Meliton vs. Court of Appeals

FACTS:
1. Nelia Ziga filed a complaint against Lydia Meliton for rescission of a contract
of lease over a parcel of land with RTC of Naga City.
2. In her answer, Lydia Meliton denied the material avernments of the

complaint and setting up 3 counterclaims for the recovery of the value of her
demolished kitchenette in leased land, and for the improvements, and
damages.
3. The court dismissed the complaint based on the motion of Ziga contending
that the cause of action had already been moot and academic by the expiration
of the leased contract.
4.Melitons counterclaim s were also dismissed for non-payment of docket
fees. The trial court said that it had not acquired jurisdiction because of the
non-payment of the docket fees.
5. Spouses Lydia Meliton and Virgilio Meliton filed a complaint against Ziga for
recovery of the same amounts involved and alleged in their counterclaims in
the previous case and assigned to Branch 27 of the same trial court.
6.Ziga filed a motion to dismiss the complaint on the ground that the cause of
action was barred by a prior judgment in the previous case. But the court
denied her motion to dismiss on the ground that the dismissal of the Meliton's
counterclaims in the previous case is not an adjudication on the merits
because the court did not acquire jurisdiction over the counterclaims for failure
of Meliton to pay the docket fees, and for this reason, the said dismissal does
not constitute a bar to the filing of the later complaint. She also filed a motion
for reconsideration but the same was subsequently denied.
7. Aggrieved, Ziga filed a petition for certiorari filed a petition for certiorari with
the SC. Then, the higher court, in its resolution, referred the case to the Court
of Appeals for proper determination and disposition pursuant to Section 9,
paragraph 1, of B.P. Blg. 129.
8. The CA found that Melitons counterclaim The Melitons' counterclaim
against the Ziga is a compulsory counterclaim, it having arisen out of or being
necessarily connected with the transaction or occurrence subject matter of
Zigas complaint. The failure of the Melitons to seek a reconsideration of the
dismissal of their counterclaim or to take an appeal rendered the dismissal
final; and such dismissal barred the prosecution of their counterclaim by
another action.
9. The Melitons challenged the judgment of the CA and praying for its
annulment.
ISSUES:
1. WON the counterclaims of the petitioners are compulsory in nature.
YES. The counterclaims of the petitioners are compulsory in nature.
Section 4 of Rule 9 of the Rules of Court enumerates the requisites
compulsory counterclaim, to wit;(a) it arises out of, or is necessarily connected
with, the transaction or occurrence which is the subject matter of the opposing
party's claim; (b) it does not require for its adjudication the presence of third
parties of whom the court cannot acquire jurisdiction; and (c) the court has
jurisdiction to entertain the claim.

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It has been postulated that while a number of criteria have been advanced for
the determination of whether the counterclaim is compulsory or permissive, the
one compelling test of compulsoriness is the logical relationship between the
claim alleged in the complaint and that in the counterclaim, e.i., where
conducting separate trials of the respective claims of the parties would entail a
substantial duplication of effort and time, as where they involve many of the
same factual and/or legal issues.
In the case at bar, all the requisites of a compulsory counterclaim are present.
The counterclaims are logically related to the complaint. Private respondent
Zigas complaint was for rescission of the contract of lease due to petitioner
Lydia Meliton's breach of her obligations under the said contract. On the other
hand, petitioner's counterclaims were for damages for unlawful demolition of
the improvements. Both the claims of petitioners and private respondent arose
from the same contract of lease. To state it differently, They are offshoots of
the same basic controversy between the parties, e.i., the right of either to the
possession of the property.
2. WON the petitioners are barred from asserting their counterclaims
having failed to seek reconsideration or to take an appeal from the order
of dismissal of the same. NO. The petitioners are not barred from asserting
claims in a separate suit.
While it is true, as stated in Section 4, Rule 9 of the Rules of Court, that a
counterclaim not set up shall be barred if it arises out of or is necessarily
connected with the transaction or occurrence that is the subject matter of the
opposing party's claim and does not require for its adjudication the presence of
third parties of whom the court cannot acquire jurisdiction, cannot be applied to
the case at bar.
Firstly, where a compulsory counterclaim is made the subject of a separate
suit, it may be abated upon a plea of auter action pendant or litis
pendentia and/or dismissed on the ground of res judicata, depending on the
stage or status of the other suit. The action in the case at bar cannot be
dismissed either on the ground of litis pendentia since there is no other
pending action between the same parties and for the same cause, nor on the
ground of res judicata. Also, the dismissal of the counterclaims of the
petitioners because of failure to pay docket fees does not constitute does not
constitute res judicata, there having been no consideration and adjudication of
the case on the merits.
Secondly, a reading of the order of dismissal will show that the trial court, in
dismissing the complaint of private respondent, did not intend to prejudice the
claims of petitioners by barring the subsequent judicial enforcement thereof.
The failure of petitioners to seek reconsideration of or to take an appeal from
the order of dismissal of the counterclaim should not prejudice their right to file
their claims in a separate action because they were thereby made to

understand and believe that their counterclaims were merely permissive and
could be the subject of a separate and independent action. Had the trial court
correctly specified that petitioners' counterclaims were compulsory, petitioners
could have objected to the dismissal sought by private respondent on the
ground that said counterclaims could not remain pending for independent
adjudication

AGANA v. JUDGE SANTIAGO-LAGMAN

Civil Procedure Certification of Non-forum Shopping Not Needed in
Compulsory Counterclaim
In 1996, Agana filed a complaint for annulment of title against Serrano
Enterprises. Said complaint involves a property which is allegedly sold to
Serrano Enterprises by means of fraud. Serrano Enterprises filed a
counterclaim against Agana. Agana moved to dismiss the counterclaim on the
ground that said counterclaim lacks a certification for non-forum shopping.
Agana contends that the same is required by A.C. No. 04-94. Eventually,
Judge Lagman dismissed the motion of Agana.
ISSUE: Whether or not a compulsory
certification for non-forum shopping.

counterclaim

requires

HELD: No. A counterclaim is not an initiatory pleading. Administrative Circular

No. 04-94 does not apply to compulsory counterclaims. The circular applies to
initiatory and similar pleadings only. A compulsory counterclaim set up in the
answer is not an initiatory or similar pleading. The initiatory pleading is the
plaintiffs (Aganas) complaint. A respondent (Serrano Ent.) has no choice but
to raise a compulsory counterclaim the moment the plaintiff files the complaint.
Otherwise, respondent waives the compulsory counterclaim. In short, the
compulsory counterclaim is a reaction or response, mandatory upon pain of
waiver, to an initiatory pleading which is the complaint.
Is the rule the same for permissive counterclaims?
No. If it is a permissive counterclaim, the lack of a certificate of non-forum
shopping is fatal. If it is a compulsory counterclaim, the lack of a certificate of
non-forum shopping is immaterial.

REPUBLIC V. KENRICH DEVELOPMENT CORP

FACTS: This case stemmed from the construction by respondent Kenrick
Development Corporation of a concrete perimeter fence around some parcels
of land located b ehind the Civil Aviation Training Center of the Air
Transportation Office. Parcels of land were allegedly registered in the name of

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Alfonso Concepcion. The Sol citor General filed a complaint of cancellation of

the TCTs against Kenrich Corporation. After numerous pretrial conferences
the OSG moved to declare the defendant in default. Kenrich contended that it
filed an answer through Atty. Garlitos, its counsel which was denied by the
lawyer. It was found that another person si gned for Atty. Garlitos.
ISSUE: Whether or not an answer can be admitted despite the lack of
signature by the counsel.
HELD: Only the signature of either the party himself or his counsel operates to
validly convert a pleading from one that is unsigned to one that is signed.
Counsels authority and duty to sign a pleading are personal to him. He may
not delegate it to just any person. Procedural requirements which have been
labeled as mere technicalities have their own valid raison deitre. Procedural
rules are promulgated into law designed to facilitate the adjudication of cases
and while the court related the rules from time to time, it must not let it be the
last bastion for erring litigants

Court of Appeals stating that:

o "In the present case, absent any compelling reason for petitioner's failure to
comply, at the first instance, with Revised Supreme Court Circular No. 28-91,
the Court cannot therefore, accept its subsequent compliance."
Hence this petition.

Certification against forum-shopping in initiatory pleading. Counsel cannot sign

certification

ISSUE: WHETHER CERTIFICATION OF NON FORUM SHOPPING MAY BE

SIGNED BY COUNSEL AND WILL RESULT TO SUBSTANTIAL
COMPLIANCE
WITH
REVISED
CIRCULAR?
NO. Counsel cannot sign certification.
IT MUST BE ACCOMPLISHED BY PETITIONER HIMSELF.
The reason the certification against forum shopping is required to be
accomplished by petitioner himself is because only the petitioner himself has
actual knowledge of whether or not he has initiated similar actions or
proceedings in different courts or agencies. Even his counsel may be unaware
of such fact. The Revised Circular No. 28-91 provided: "To avoid [forum
shopping], every petition or complaint filed with the Supreme Court, the Court
of Appeals, or different Divisions thereof, or any other tribunal or agency, shall
comply with the following requirements, aside from pertinent provisions of the
Rules of Court and existing circulars:
. . . 2. Certification . The party must certify under oath that he has
not commenced any other action or proceeding involving the same
issues in the Supreme Court, the Court of Appeals, or different
Divisions thereof, or any other tribunal or agency, and that to the best
of his knowledge, no such action or proceeding is pending in the
Supreme Court, the Court of Appeals, or different divisions thereof, or
any other tribunal or agency. If there is any other action pending, he
must state the status of the same. If he should learn that a similar
action or proceeding has been filed or is pending before the Supreme
Court, the Court of Appeals, or different Divisions thereof, or
any other tribunal or agency, he shouldnotify the court, tribunal or
agency within five (5) days from such notice."

Digital Microwave Corporation v. Court of

Appeals
FACTS:

December 14,
1994: Private
respondent Asian High
Technology Corp. filed a complaint against petitioner Digital Microwave Corp.
for a sum of money and damages before the Regional Trial Court of Pasig
City.
Petitioner moved for the dismissal of the complaint.
RTC: Denied the motion, as well as petitioner's subsequent motion for
reconsideration.
Petitioner then initiated a special civil action for certiorari before the Court of
Appeals, alleging grave abuse of discretion on the part of the trial court.
Court of Appeals: Dismissed the petition for failure to comply with Revised
Circular No.28-91, as amended by Administrative Circular No. 04-94.
o Requires the petition filed before the Court of Appeals to be accompanied
by a sworn certification against forum shopping, signed by petitioner himself.
o
Petitioner's certification was signed by counsel; the petition was, thus,
dismissed.
MR to CA: submitted a sworn certification against forum shopping duly
signed by one of its senior officers. The motion was, however, denied, with the

PETITIONER CONTENTION
Petitioner contends that in the case of a corporation as petitioner, the
certification against forum shopping may be signed by a natural person
authorized to do so and with knowledge of the required facts. The authorized
person may be anyone authorized by the corporation, not necessarily an
officer thereof. In such a case, petitioner argues, the counsel of record has the
authority
to execute the certification
on behalf of the
corporation, particularly considering that under the Rules of Court, counsel's
authority to represent his client is presumed. No written power of attorney is
required for counsel to appear for his client.

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This requirement is now found in Rule 7, Section 5 of the 1997 Rules of Civil
Procedure.
The
requirement
for
a
sworn
certification against forum shopping was extended by Administrative Circular N
o. 04-94 to complaints, petitions, applications or other initiatory pleadings filed
in all courts or agencies other than the Supreme Court or the Court of Appeals.
The Court disagrees with petitioner that a corporation cannot possibly hope to
comply with the requirement laid down by Revised Circular No. 28-91 because
it is a juridical entity and not a natural person. If this were so, then it would
have
been
impossible
for
a
corporation
to
do
anything at all. Needless to say, this is the
reason why
corporations have directors and officers, to represent it in its transactions with
others. The same is true for the certification against forum shopping. It could
easily have been made by a duly authorized director or officer of the
corporation.
In the recent case of Spouses Valentin Ortiz and Camilla Milan Ortiz vs.Court
of Appeals, et al., 299 SCRA 708, 711-712 (1998), the Court ruled that
"Regrettably, we find that substantial compliance will not suffice in a matter
involving strict observance as provided for in Circular No. 2891. The
attestation contained in the certification on non-forum shopping requires
personal knowledge by the party who executed the same. To merit the Court's
consideration, petitioners here must show reasonable cause for failure to
personally sign the certification. The petitioners must convince the court that
the outright dismissal of the petition would defeat the administration of justice."
In this case, petitioner has not adequately explained its failure to have the
certification against forum shopping signed by one of its officers. Neither has it
shown any compelling reason for us to disregard strict compliance with the
rules. As the Court further stated in Spouses Ortiz , "Utter disregard of the
rules cannot justly be rationalized by harking on the policy of liberal
construction."

FILIPINAS TEXTILE MILLS, INC. and BERNARDINO

VILLANUEVA
vs. COURT OF APPEALS and STATE INVESTMENT HOUSE, INC.
(Tinga, 2003)
Doctrine:
In order to constitute an extension discharging the surety, it should appear that
the extension was for a definite period, pursuant to an enforceable
agreement between the principal and the creditor, and that it was made without
the consent of the surety or with a reservation of rights with respect to him. The
contract must be one which precludes the creditor from, or at least hinders him

in, enforcing the principal contract within the period during which he could
otherwise have enforced it, and precludes the surety from paying the debt.
Facts:
Filtex applied to SIHI for domestic letters of credit to finance the purchase of
raw materials for its textile business. SIHI accepted. Villanueva executed a
comprehensive surety agreement, where he guaranteed, jointly and severally
with Filtex, the payment at maturity to SIHI of all the indebtedness of Filtex. To
ensure payment of the sight drafts, Filtex issued to SIHI several trust covering
the merchandise sold. Under the trust receipts, Filtex agreed to hold the
merchandise in trust for SIHI, with liberty to sell the same for SIHIs account but
without authority to make any other disposition of the said goods. Because of
Filtexs failure to pay its outstanding obligation despite demand, SIHI filed a
Complaint praying that the petitioners be ordered to pay, jointly and severally,
theprincipal amount.
Filtex: trust receipts and surety agreement dont reflect true intention of parties;
obligation was fully paid; no cause of action
Villanueva: same special and affirmative defenses and added that the
comprehensive surety agreement is null and void
The petitioners, however, failed to specifically deny under oath the
genuineness and due execution of the actionable documents upon which the
Complaint was based
RTC: Filtex and Villanueva jointly and severally liable to SIHI
On appeal to CA, Filtex and Villanueva argued that they have fully paid
their indebtedness to SIHI and asserting that the letters of credit, sight drafts,
trustr eceipts and comprehensive surety agreement upon which the
Complaint is based are inadmissible in evidence supposedly because of nonpayment of documentary stamp taxes as required by the Internal Revenue
Code.
In addition, Villanueva asserted that the comprehensive surety agreement
which he executed is null and void, inadmissible in evidence and contains
material alterations. Thus, he claimed that he should not be held solidarily
liable with Filtex.
CA: Upheld RTC. Petitioners had in effect, admitted the genuineness and due
execution of said documents because of their failure to have their answers
placed under oath, the complaint being based on actionable documents in line
with Section 7, Rule 8 of the Rules of Court. The CA also ruled that there
remained an unpaid balance for which Filtex and Villanueva are solidarily
liable. (MR denied)
Issues:
WON the letters of credit, sight drafts, trust receipts and comprehensive

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surety agreement shouldnt have been admitted as evidence because of

lack of the requisite documentary stamps- NO, they should be admitted.
The Answer with Counterclaim and Answer of Filtex and Villanueva,
respectively, did not contain any specific denial under oath of the said
documents upon which SIHIs Complaint was based, thus giving rise to the
implied admission of the genuineness and due execution of these
documents. Under Sec. 8, Rule 8 of the Rules of Court, when an action or
defense is founded upon a written instrument, copied in or attached to the
corresponding pleading as provided in the preceding section, the genuineness
and due execution of the instrument shall be deemed admitted unless the
adverse party, under oath, specifically denies them, and sets forth what he
claims to be the facts. Moreover, under Section 173 of the Internal Revenue
Code the liability for payment of the stamp taxes is imposed on the person
making, signing, issuing, accepting, or transferring the document. As correctly
pointed out by SIHI, Filtex was the issuer and acceptor of the trust receipts and
sight drafts, respectively, while the letters of credit were issued upon its
application. On the other hand, Villanueva signed the comprehensive surety
agreement. Thus, being among the parties obliged to pay the documentary
stamp taxes, the petitioners are estopped from claiming that the documents
are inadmissible in evidence for non-payment thereof Petitioners questioned
the admissibility of these documents rather belatedly, at the appeal stage
even. The rule is well-settled that points of law, theories, issues and arguments
not adequately brought to the attention of the trial court need not, and
ordinarily will not, be considered by a reviewing court as they cannot be raised
for the first time on appeal because this would be offensive to the basic rules of
fair play, justice and due process.

issue the domestic letters of credit. SIHIs consent to the surety is also
understood from the fact that it demanded payment from both Filtex and
Villanueva. The extension of time granted to Filtex to pay its obligation did not
release Villanueva from his liability. The neglect of the creditor to sue the
principal at the time the debt falls due does not discharge the surety, even if
such delay continues until the principal becomes insolvent. The raison detre
for the rule is that there is nothing to prevent the creditor from proceeding
against the principal at any time. At any rate, if the surety is dissatisfied with
the degree of activity displayed by the creditor in the pursuit of his principal, he
may pay the debt himself and become subrogated to all the rights and
remedies of the creditor. It may not be amiss to add that leniency shown to a
debtor in default, by delay permitted by the creditor without change in the time
when the debt might be demanded, does not constitute an extension of the
time of payment, which would release the surety.
In order to constitute an extension discharging the surety, it should appear that
the extension as for a definite period, pursuant to an enforceable agreement
between the principal and the creditor, and that it was made without the
consent of the surety or with a reservation of rights with respect to him. The
contract must be one which precludes the creditor from, or at least hinders him
in, enforcing the principal contract within the period during which he could
otherwise have enforced it, and precludes the surety from paying the debt.
Dispositive: Petition denied, CA decision affirmed

WON the obligation has been fully paid- Yes.

This Court shall not depart from the findings of the TC and the CA, supported
by the preponderance of evidence and unsatisfactorily refuted by the
petitioners, as they are
WON Villanueva should be held to the comprehensive surety agreement
Villanueva: comprehensive surety agreement is null and void for lack of
consent of Filtex and SIHI. Also, SIHI materially altered the terms and
conditions of thecomprehensive surety agreement by granting Filtex an
extension of the period for payment thereby releasing him from his obligation
as surety.
Held: The consent of Filtex to the surety may be assumed from the fact that
Villanueva was the signatory to the sight drafts and trust receipts
on behalf of Filtex.
Moreover, Filtex admitted the execution of the comprehensive surety
agreement with the only qualification that it was not a means to induce SIHI to

CivPro Digests 01-21-2014