Contract of surety - G.R. No. 174926

G.R. No. 174926 (click link)

"x x x.

With the violation of the sub-contract, which means fulfillment of the second condition, the liability to pay the advance payment arose.

The payment of the P2.2 million advanced by FF Cruz is the principal liability of G. Reyes. However, with the issuance of the surety bond, a contract of suretyship was entered into making American Home equally liable.

A contract of suretyship is an agreement whereby a party called the surety, guarantees the performance by another party, called the principal or obligor, of an obligation or undertaking in favor of another party called the obligee. By its very nature, under the laws regulating suretyship, the liability of the surety is joint and several but is limited to the amount of the bond, and its terms are determined strictly by the terms of the contract of suretyship in relation to the principal contract between the obligor and the obligee.[27]

The surety is considered in law as possessed of the identity of the debtor in relation to whatever is adjudged touching upon the obligation of the latter. Their liabilities are so interwoven as to be inseparable. Although the contract of suretyship is, in essence, secondary only to a valid principal obligation, the surety’s liability to the creditor is direct, primary, and absolute; he becomes liable for the debt and duty of another although he possesses no direct or personal interest over the obligations nor does he receive any benefit therefrom.[28]

As to the amount of American Home’s liability, the RTC found that G. Reyes did not pay back the full amount of P2.2 million advance payment. American Home, however, claims (for the first time) that G. Reyes actually reimbursed P598,880.52 to FF Cruz. As plaintiff in its complaint and defendant in FF Cruz’s fourth-party complaint, American Home was duty-bound to prove that it was entitled to its claim against G. Reyes under the Indemnity Agreement and that it was not liable to FF Cruz under the surety bond. Yet, American Home chose not to present its evidence to substantiate its claim and defense. For lack of evidence to show the fact of payment, we find no reason to disturb the findings of the trial court as affirmed by the appellate court that P2.2 million is due FF Cruz.

Factual findings of the trial court, particularly when affirmed by the CA, are generally binding on the Court.[29] We have repeatedly held that we are not a trier of facts. We generally rely upon, and are bound by, the conclusions on factual matters made by the lower courts, which are better equipped and have better opportunity to assess the evidence first-hand, including the testimony of the witnesses.[30]

The Court’s jurisdiction over a petition for review on certiorari is limited to reviewing only errors of law, not of facts, unless the factual findings complained of are devoid of support from the evidence on record or the assailed judgment is based on a misapprehension of facts.[31]

x x x."