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Affirmed the trial court’s award of interest and costs of suit but
CA deleted the award of attorney’s fees.
Relevant Whether Tan Chong Lin is liable to Great Asian under the Surety
Issue(s) Agreements.
Tan Chong Lin, as the surety, is held liable together with Great
Asian for the dishonored checks assigned to Bancasia. The court
also emphasized that a surety cannot invoke the defense of lack of
consideration and that the surety agreement is an independent
Analysis contract from the principal obligation. Furthermore, the court
upheld the validity of the Deeds of Assignment of Receivables,
which were used to secure the loan from Bancasia, and held that
these documents collectively evidence the loan accommodation
and credit line granted to Great Asian.
The Court of Appeals affirmed the decision and ordered the
petitioners to pay the private respondent a specific amount,
including interest, penalties, attorney's fees, and costs of suit. Tan
Chong Lin is being sued personally because he signed a Surety
Agreement and is solidarily liable with Great Asian for the payment
Ruling(s) & of its debts to Bancasia. Tan Chong Lin argued that his obligations
Rationale were altered by the warranties in the Deeds of Assignment, but the
Court ruled that the warranties do not increase or enlarge his risks
under the Surety Agreements, and there was no novation of the
debt of Great Asian. The Surety Agreement states that both the
principal and the surety shall be considered in default if the
principal fails to pay or comply with any lawful demand made by
the creditor. The surety agrees to pay jointly and severally with the
principal all outstanding obligations of the creditor, whether due or
not due, and whether owed to the principal in its personal capacity
or as an agent, endorsee, assignee, or transferee.