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    CIVCRED 2015 (GR No 172301, Philippine National Construction Corp. v. Asiavest Merchant Bankers (M) Berhad)

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    Michael Parreño Villagracia
    The case involved a dispute between a Philippine construction company (PNCC) and a Malaysian bank (Respondent) over bonds and guarantees related to construction projects in Malaysia. PNCC had failed to perform on its construction obligations, so Respondent paid the required bonds and sued PNCC for recovery. PNCC argued it was not fully liable because the liability was jointly guaranteed by two Malaysian companies, but the court ruled PNCC did not properly raise this argument in lower court proceedings. The court denied PNCC's petition, finding the involvement of the Malaysian companies was a question of fact that PNCC did not sufficiently pursue in lower courts.

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    CIVCRED 2015 (GR No 172301, Philippine National Construction Corp. v. Asiavest Merchant Bankers (M) Berhad)

    Uploaded by

    Michael Parreño Villagracia
    126 views2 pages
    The case involved a dispute between a Philippine construction company (PNCC) and a Malaysian bank (Respondent) over bonds and guarantees related to construction projects in Malaysia. PNCC had failed to perform on its construction obligations, so Respondent paid the required bonds and sued PNCC for recovery. PNCC argued it was not fully liable because the liability was jointly guaranteed by two Malaysian companies, but the court ruled PNCC did not properly raise this argument in lower court proceedings. The court denied PNCC's petition, finding the involvement of the Malaysian companies was a question of fact that PNCC did not sufficiently pursue in lower courts.

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    The case involved a dispute between a Philippine construction company (PNCC) and a Malaysian bank (Respondent) over bonds and guarantees related to construction projects in Malaysia. PNCC had failed to perform on its construction obligations, so Respondent paid the required bonds and sued PNCC for recovery. PNCC argued it was not fully liable because the liability was jointly guaranteed by two Malaysian companies, but the court ruled PNCC did not properly raise this argument in lower court proceedings. The court denied PNCC's petition, finding the involvement of the Malaysian companies was a question of fact that PNCC did not sufficiently pursue in lower courts.

    Copyright:

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

    CIVCRED 2015 (GR No 172301, Philippine National Construction Corp. v. Asiavest Merchant Bankers (M) Berhad)

    Uploaded by

    Michael Parreño Villagracia
    The case involved a dispute between a Philippine construction company (PNCC) and a Malaysian bank (Respondent) over bonds and guarantees related to construction projects in Malaysia. PNCC had failed to perform on its construction obligations, so Respondent paid the required bonds and sued PNCC for recovery. PNCC argued it was not fully liable because the liability was jointly guaranteed by two Malaysian companies, but the court ruled PNCC did not properly raise this argument in lower court proceedings. The court denied PNCC's petition, finding the involvement of the Malaysian companies was a question of fact that PNCC did not sufficiently pursue in lower courts.

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

    CIVIL PROCEDURE

    PHIL. NATIONAL CONSTRUCTION CORP. V. ASIAVEST MERCHANT BANKERS (M) BERHAD


    (GR.172301, August 19, 2015) 
    Question of Fact/Credit Transactions

    FACTS: Respondent is a Malaysian corporation doing business with petitioner in Malaysia, together they
    caused the incorporation of an associate company known as Asiavest CDCP through which they enter
    contracts to construct rural roads and bridges for State of Pahang in Malaysia.

    PNCC obtained various guarantees and bonds from respondent to guarantee the performance of its
    construction obligations with the state of Pahang. Petitioner failed to perform. Asiavest entered into a
    compromise agreement with Pahang and paid the performance bonds.

    Respondent then filed a complaint against Petitioner for recovery of the sum paid before the RTC, basing
    its action on Malaysian Laws. PNCC filed a moex for filings its answer 3 times and sought another 5 day
    extension when the last moex expired.

    RTC denied the final moex on July 13, 1994 and after 2 weeks declared petitioner in default and allowed
    respondent to present evidence ex parte. Ruling in favor of the respondent. RTC found that that it had
    complied with the requisites of foreign law. It had invoked the equivalent provisions of our civil code with
    regard guarantors.

    On Jan. 30, 1995 the RTC denied PNCC’s motion to lift order of default filed on Dec. 12, 1994 and on
    August 11, 1995 denied petitioner’s MR ad cautelam dated December 21, 1994. CA on June 10, 2005
    dismissed PNCC’s appeal for raising pure questions of law exclusively cognizable by the SC and denied
    the following MR.

    PNCC contends it had consistently raised the propriety of impleading the two Malaysian corporations,
    Asiavest-CDCP and Asiavest Holdings, and their participant liability, which are questions of fact. According
    to PNCC, Asiavest-CDCP undertook to hold PNCC "free and harmless from all its obligations under the
    construction agreement while Asiavest Holdings agreed in the guaranty agreement to share with PNCC the
    guarantee liability on a 51% (Asiavest Holdings) - 49% (PNCC) arrangement.

    Since the repayment of financing facilities received by Asiavest-CDCP was jointly guaranteed by PNCC
    and Asiavest Holdings as admitted in the Complaint, the lower courts erred in ordering PNCC to reimburse
    the entire amount claimed by the respondent.

    ISSUES: WON PNCC has proven that it is not fully liable because it was guaranteed by Asiavest Holding
    that its liability would be 49% of the repayment.

    RULING: No, it failed to raise the fact of impleading Asiavest Holding in the trial court proceedings. Hence it
    is a question of fact.

    RATIO: Petitioner has submitted that the impleading of the 2 Malaysian companies is a question of fact but
    that the trial court had erred in not appreciating it. The argument on the two Malaysian corporations was
    raised by petitioner for the first time in its Motion to Lift Order of Default with Affidavit of Merit dated
    December 9, 1994.
    CIVIL PROCEDURE

    It stated that if indeed it was liable, it is joint with Asiavest Holdings Company and only to the extent of 49%
    of the total amount due which is its proportionate share in the joint venture project entered into by them.

    However the RTC denied this motion to lift order. There was no showing whether petitioner questioned this
    trial court Order as petitioner opted to file the Motion for Reconsideration Ad Cautelam praying, that it be
    considered as Motion for Reconsideration of the Decision dated November 29, 1994 in the event that the
    Motion to Lift Order of Default is denied. On August 11, 1995, the trial court also denied this later Motion,
    and there is no showing whether petitioner questioned this trial court Order.

    Petitioner should demonstrate that he has a meritorious cause of action or defense; otherwise, nothing
    would be gained by setting the default order aside.

    The bases of petitioner’s argument to implead and hold the two Malaysian corporations liable are the
    subcontract agreement and guaranty agreement. Copies of these agreements were not submitted with any
    of its pleadings. Thus, the lower courts could not have determined for certain whether the two Malaysian
    corporations did enter into the alleged agreements, the subject of the agreements, or the extent of their
    liabilities, if any.

    Contrary to petitioner’s allegations, the RTC indeed appreciated the fact of the 2 Malaysian corporations in
    ruling on its Motion to Lift Order of Default and Motion for Reconsideration Ad Cautelam.

    Assuming that the subcontract agreement indeed provides that Asiavest-CDCP would answer any liability
    upon default on the performance bond, petitioner may later claim reimbursement from this Malaysian
    corporation the amount it was made to pay by judgment in this suit.

    Petition is denied.

    *No discussion of Credit Transactions in this case.

    *The Malaysian Laws presented by defendant were the following Civil Code provisions:
    ART. 2066. The guarantor who pays for a debtor must be indemnified by the latter.
    The indemnity comprises:

    (1) The total amount of the debt;


    (2) The legal interests thereon from the time the payment was made known to the debtor, even though it
    did not earn interest for the creditor;
    (3) The expenses incurred by the guarantor after having notified the debtor that payment had been
    demanded of him;
    (4) Damages, if they are due.

    ART. 2067. The guarantor who pays is subrogated by virtue thereof to all the rights which the creditor had
    against the debtor.
    If the guarantor has compromised with the creditor, he cannot demand of the debtor more than what he has
    really paid.

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