AgencyDPFebruary32014

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Unformatted text preview: said amount out of funds payable to the assignor. Such assignment stipulated that the power of attorney shall remain irrevocable until ATACO’s total indebtedness to the said Bank have been fully liquidated. ATACO delivered asphalt to the Bureau of Public Works, and the latter accepted. Of the total value of P431,466.52, PNB regularly collected. Thereafter, however, for unexplained reasons, the Bank ceased to collect from the Bureau. It was later found that more was payable to ATACO, but the bank allowed other creditors to collect the funds due to ATACO. Its demands on the principal debtor and the Surety having been refused, PNB sued both in the CFI of Manila to recover the balance, plus interests and costs. TC: CFI ordered the defendants, Adams & Taguba Corporation and Manila Surety & Fidelity Co., Inc., to pay PNB the sum of P174,462.34 provided that the total amount that should be paid by Manila Surety Co., Inc., shall not exceed P75,000.00. C A: Rendered an adverse decision and modified the judgment of the court of origin as to the surety's liability. It dismissed PNB's complaint against Manila Surety & Fidelity Co., Inc. The CA found the Bank to have been negligent in having stopped collecting from the Bureau of Public Works the money due in favor of the principal debtor, ATACO, before the debt was fully collected, thereby allowing such funds to be taken and exhausted by other creditors to the prejudice of the surety. It also held that the Bank's negligence resulted in exoneration of Manila Surety & Fidelity Company. This holding is now assailed by PNB. It contends that the power of attorney obtained from ATACO was merely an additional security in its favor, and that it was the duty of the surety, and not that of the creditor, to see to it that the obligor fulfills his obligation, and that the creditor owed the surety no duty of active diligence to collect any, sum from the principal debtor. ISSUE: W/N PNB was negligent in failing to collect from the Bureau of Public Works the amount due in favor of ATACO? SC: YES The CA did not hold the B...
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This document was uploaded on 03/11/2014.

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