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    JN Development Corporation vs. Philippine Export and Foreign Loan Guarantee Corporation, 468 SCRA 555

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    JN Development Corporation entered into an agreement with Traders Royal Bank for a loan guaranteed by Philippine Export and Foreign Loan Guarantee Corporation. JN failed to repay the loan and PhilGuarantee paid the bank. PhilGuarantee then demanded reimbursement from JN but JN refused. The Supreme Court ruled that JN is obligated to reimburse PhilGuarantee for the amount it paid the bank, as the law requires the debtor to indemnify the guarantor.

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    JN Development Corporation vs. Philippine Export and Foreign Loan Guarantee Corporation, 468 SCRA 555

    Uploaded by

    gg
    24 views1 page
    JN Development Corporation entered into an agreement with Traders Royal Bank for a loan guaranteed by Philippine Export and Foreign Loan Guarantee Corporation. JN failed to repay the loan and PhilGuarantee paid the bank. PhilGuarantee then demanded reimbursement from JN but JN refused. The Supreme Court ruled that JN is obligated to reimburse PhilGuarantee for the amount it paid the bank, as the law requires the debtor to indemnify the guarantor.

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    Case 3-A

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    JN Development Corporation entered into an agreement with Traders Royal Bank for a loan guaranteed by Philippine Export and Foreign Loan Guarantee Corporation. JN failed to repay the loan and PhilGuarantee paid the bank. PhilGuarantee then demanded reimbursement from JN but JN refused. The Supreme Court ruled that JN is obligated to reimburse PhilGuarantee for the amount it paid the bank, as the law requires the debtor to indemnify the guarantor.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    24 views1 page

    JN Development Corporation vs. Philippine Export and Foreign Loan Guarantee Corporation, 468 SCRA 555

    Uploaded by

    gg
    JN Development Corporation entered into an agreement with Traders Royal Bank for a loan guaranteed by Philippine Export and Foreign Loan Guarantee Corporation. JN failed to repay the loan and PhilGuarantee paid the bank. PhilGuarantee then demanded reimbursement from JN but JN refused. The Supreme Court ruled that JN is obligated to reimburse PhilGuarantee for the amount it paid the bank, as the law requires the debtor to indemnify the guarantor.

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    JN Development Corporation vs.

    Philippine Export and Foreign Loan Guarantee


    Corporation, 468 SCRA 555

    Facts:

    • JN Development Corporation & Traders Royal Bank entered into an agreement where it was
    agreed upon that TRB would extend to JN an Export Packing Credit Line for P2M. The
    agreement includes a real estate mortgage & a letter of guarantee from respondent
    covering 70% of the credit line in favour of TRB.

    • JN failed to pay the loan upon its maturity date. PhilGuarantee paid TRB P934,824.34. With
    this, PhilGuarantee demanded JN for reimbursements but the latter again, failed to pay.

    • PhilGuarantee filed a case to demand the payment of the plaintiff. The RTC dismissed this on
    the grounds that TRB already foreclosed the mortgage & thus extinguishes JN’s debt.
    PhilGuarantee should not have paid in the first place. Also the guarantee was already
    expired.

    • The CA reversed the decision of the RTC on the grounds that there was no factual basis for
    the extinguishment of the obligation through the foreclosure & ordered JN to pay
    PhilGuarantee P934,824.34 including the service charge & interest.

    Issue: WON JN is obliged to reimburse PhilGuarantee

    Ruling: YES. The Court ruled that the respondent’s right of excussion cannot prevent them from
    demanding reimbursement from petitioners. The law requires the debtor to indemnify the
    guarantor what the latter has paid. However, the guarantor cannot be compelled to pay the
    creditor unless the latter has exhausted all the property of the debtor & resorted to all the legal
    remedies against the debtor.

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