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RULING: YES. Even if Visayan Surety was left in the proceedings a quo,
such omission is not fatal to the cause of Spouses Yu. In Malayan
Insurance Company, Inc. v. Salas, we held that "x x x if the surety was
not given notice when the claim for damages against the principal in the
replevin bond was heard, then as a matter of procedural due process the
surety is entitled to be heard when the judgment for damages against
the principal is sought to be enforced against the surety’s replevin bond."
This remedy is applicable for the procedures governing claims for
damages on an attachment bond and on a replevin bond are the same.
FIRST LEPANTO-TAISHO INSURANCE CORPORATION (FLT PRIME
INSURANCE CORPORATION) vs. CHEVRON PHILIPPINES, INC.
(formerly known as CALTEX [PHILIPPINES], INC.)
FACTS: Chevron sued FLT for the payment of unpaid oil and petroleum
purchases made by its distributor Fumitechniks Corporation
(Fumitechniks).
Fumitechniks was issued Surety Bond by FLT for the amount of P15.7M.
The bond was for the requirement for the grant of a credit line with the
respondent “to guarantee payment of the cost of fuel products withdrawn
within the stipulated time in accordance with the terms and conditions of
the agreement.”
Fumitechniks did not send a copy of the agreement secured by the Bond
since no such agreement was executed between Fumitechniks and
Caltex. Petitioner advised respondent of the non-existence of the
principal agreement as confirmed by Fumitechniks. Petitioner explained
that being an accessory contract, the bond cannot exist without a
principal agreement as it is essential that the copy of the basic contract
be submitted to the proposed surety for the appreciation of the extent of
the obligation to be covered by the bond applied for.
Upon failure to pay the balance, plaintiff filed and action against the
defendant and Echauz. Enchauz contends that he received nothing from
affixing his signature in the document and the contract lacked the
consideration as to him.
HELD: NO. The proof shows that the money claimed in this action has
never been paid and is still owing to the plaintiff; and the only defense
worth noting in this decision is the assertion on the part of Enrique
Echaus that he received nothing for affixing his signature as guarantor to
the contract which is the subject of suit and that in effect the contract
was lacking in consideration as to him.