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G.R. No. 80201. November 20, 1990 Antonio Garcia, JR., Petitioner, V. Court of Appeals, Lasal Development Corporation, Respondents

Western Minolco Corporation obtained loans from the Philippine Investments System Organization and Antonio Garcia executed a surety agreement binding himself to pay the loans. When Western Minolco defaulted on repayment, Lasal Development Corporation, to which the credit was assigned, sued Garcia for recovery. The court held that the surety agreement was valid and supported by consideration as the loans to Western Minolco were contemporaneous with Garcia's agreement to act as surety, so each contract was supported by the same consideration.

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168 views1 page

G.R. No. 80201. November 20, 1990 Antonio Garcia, JR., Petitioner, V. Court of Appeals, Lasal Development Corporation, Respondents

Western Minolco Corporation obtained loans from the Philippine Investments System Organization and Antonio Garcia executed a surety agreement binding himself to pay the loans. When Western Minolco defaulted on repayment, Lasal Development Corporation, to which the credit was assigned, sued Garcia for recovery. The court held that the surety agreement was valid and supported by consideration as the loans to Western Minolco were contemporaneous with Garcia's agreement to act as surety, so each contract was supported by the same consideration.

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Nadzlah Bandila
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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G.R. No. 80201.

November 20, 1990


ANTONIO GARCIA, JR., Petitioner, v. COURT OF APPEALS, LASAL
DEVELOPMENT CORPORATION, Respondents.

Facts: On April 15, 1977, the Western Minolco Corporation (WMC) obtain from the
Philippine Investments System Organization two loans for Php 2,500,000.00 and Php
1,000,000.00 for which it issued the corresponding promissory note payables on May 30,1977.
On the same date, Antonio Garcia and Ernest Kahn executed a surety agreement binding
themselves jointly and severally for the payment of the said loan.

Upon failure of WMC to pay after repeated demands, demand was made on Garcia pursuant to
the surety agreement. Garcia also failed to pay. Hence, on April 5, 1983, Lasal Development
Corporation (to which the credit had been assigned earlier by PISO) sued Garcia for recovery of
the debt in the RTC Makati.

On May 18, 1983, Garcia moved to dismiss on the grounds that: (a) the complaint stated no
cause of action; (b) the suit would result in unjust enrichment of the plaintiff because he had not
received any consideration from PISO; (c) the surety agreement violated the doctrine of the
limited liability of corporations; and (d) the principal obligation had been novated.

Issue: Whether or not there was a delivery of consideration in the case at bar.

Held: Yes. The peculiar nature of a surety agreement is that it is regarded as valid despite the
absence of any direct consideration received by the surety either from the principal obligor or
from the creditor. A contract of surety, like any other contract, must generally be supported by a
sufficient consideration. However, the consideration necessary to support a surety obligation
need not pass directly to the surety; a consideration moving to the principal alone will suffice.

It has been held that if the delivery of the original contract is contemporaneous with the delivery
of the surety’s obligation, each contract becomes completed at the same time, and the
consideration which supports the principal contract likewise supports the subsidiary one.

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