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    Prudential Guarantee VS Equinox

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    Athena Santos
    Prudential issued surety bonds to J'Marc for a construction project by Equinox. J'Marc failed to complete the project on time and Equinox terminated the contract. Equinox sued both J'Marc and Prudential. The Court ruled that while a surety and guarantor are alike in promising to answer for another's debt, a surety assumes primary liability as a regular party to the obligation. As Prudential issued surety bonds, its liability was direct, primary, and solidary with J'Marc. The Court affirmed the finding that Prudential was solidarily liable with J'Marc for damages to Equinox.

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    Prudential Guarantee VS Equinox

    Uploaded by

    Athena Santos
    57 views2 pages
    Prudential issued surety bonds to J'Marc for a construction project by Equinox. J'Marc failed to complete the project on time and Equinox terminated the contract. Equinox sued both J'Marc and Prudential. The Court ruled that while a surety and guarantor are alike in promising to answer for another's debt, a surety assumes primary liability as a regular party to the obligation. As Prudential issued surety bonds, its liability was direct, primary, and solidary with J'Marc. The Court affirmed the finding that Prudential was solidarily liable with J'Marc for damages to Equinox.

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    Prudential issued surety bonds to J'Marc for a construction project by Equinox. J'Marc failed to complete the project on time and Equinox terminated the contract. Equinox sued both J'Marc and Prudential. The Court ruled that while a surety and guarantor are alike in promising to answer for another's debt, a surety assumes primary liability as a regular party to the obligation. As Prudential issued surety bonds, its liability was direct, primary, and solidary with J'Marc. The Court affirmed the finding that Prudential was solidarily liable with J'Marc for damages to Equinox.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    57 views2 pages

    Prudential Guarantee VS Equinox

    Uploaded by

    Athena Santos
    Prudential issued surety bonds to J'Marc for a construction project by Equinox. J'Marc failed to complete the project on time and Equinox terminated the contract. Equinox sued both J'Marc and Prudential. The Court ruled that while a surety and guarantor are alike in promising to answer for another's debt, a surety assumes primary liability as a regular party to the obligation. As Prudential issued surety bonds, its liability was direct, primary, and solidary with J'Marc. The Court affirmed the finding that Prudential was solidarily liable with J'Marc for damages to Equinox.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    XVI.

    Suretyship VS Guarantee

    G.R. Nos. 152505-06 September 13, 2007

    PRUDENTIAL GUARANTEE and ASSURANCE, INC., petitioner, vs.EQUINOX


    LAND CORPORATION, respondent.

    FACTS:
    Sometime in 1996, Equinox Land Corporation (Equinox), respondent,
    decided to construct five (5) additional floors to its existing building, the
    Eastgate Centre. It then sent invitations to bid to various building contractors.
    Four (4) building contractors, including JMarc Construction & Development
    Corporation (JMarc), responded.
    Finding the bid of JMarc to be the most advantageous, Equinox offered
    the construction project to it. On February 22, 1997, JMarc accepted the
    offer. Two days later, Equinox formally awarded to JMarc the contract to build
    the extension for a consideration of P37,000,000.00. On February 24, 1997,
    JMarc submitted to Equinox two (2) bonds, namely: (1) a surety bond issued
    by Prudential Guarantee and Assurance, Inc. (Prudential), herein petitioner, in
    the amount of P9,250,000.00 to guarantee the unliquidated portion of the
    advance payment payable to JMarc; and (2) a performance bond likewise
    issued by Prudential in the amount of P7,400,000.00 to guarantee JMarcs
    faithful performance of its obligations under the construction agreement.
    Under the terms of the contract, JMarc would supply all the labor, materials,
    tools, equipment, and supervision required to complete the project.
    JMarc did not adhere to the terms of the contract. Faced with the
    problem of delay, Equinox formally gave JMarc one final chance to take
    remedial steps in order to finish the project on time. However, JMarc failed to
    undertake any corrective measure. Consequently, on July 10, 1997, Equinox
    terminated its contract with JMarc and took over the project. On the same
    date, Equinox sent Prudential a letter claiming relief from JMarcs violations
    of the contract project.
    Equinox filed a complaint with the RTC for sum of money and damages
    against JMarc and Prudential. Marc alleged that Equinox has no valid ground
    for terminating their contract. For its part, Prudential denied Equinoxs claims
    and instituted a cross-claim against JMarc for any judgment that might be
    rendered against its bonds. CA ruled in favor of Equinox.

    ISSUE:
    WON erred in finding Prudential solidarily liable with JMarc for damages.

    HELD:
    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 536, 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.
    SC held that while a surety and a guarantor are alike in that each
    promises to answer for the debt or default of another, the surety assumes
    liability as a regular party to the undertaking and hence its obligation is
    primary. SC reiterated the rule that while a contract of surety is secondary
    only to a valid principal obligation, the suretys liability to the creditor is said
    to be direct, primary, and absolute. In other words, the surety is directly and
    equally bound with the principal. Thus, Prudential is barred from disclaiming
    that its liability with JMarc is solidary. Petition Is denied.

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