Subic Bay Distribution, Inc. vs. Western Guaranty Corp.: A Legal Dispute on Suretyship and Contractual ObligationsJuly 28th, 2024
FiledJuly 28th, 2024Subic Bay Distribution, Inc. (SBDI), entered into a Distributor Agreement with Prime Asia Sales and Services, Inc. (PASSI), allowing the latter to purchase petroleum products on credit with terms stipulated in the agreement. To secure its obligations, PASSI was required and did obtain a performance bond from Western Guaranty Corporation (WGC). SBDI later demanded payment from WGC under the surety agreement following PASSI’s failure to pay its outstanding obligations amounting to P100,256,601.17. SBDI’s multiple demand letters to WGC went unheeded, prompting SBDI to initiate a suit for sum of money against WGC at the RTC-Makati City, which decided in favor of SBDI. Upon appeal, however, the Court of Appeals (CA) reversed this decision, finding no conclusive proof of delivery of petroleum products and deeming there were material alterations in the principal contract that discharged WGC from its surety obligations.