University of the Philippines College of Law

MSI D2021

Topic Motion for Summary Judgment

Case No. G.R. No. 173526 August 28, 2008
Case Name BENJAMIN BITANGA, petitioner, vs.
PYRAMID CONSTRUCTION ENGINEERING CORPORATION, respondent.
Ponente Chico-Nazario, J.

RELEVANT FACTS

 Respondent Pyramid Construction entered into an agreement with Macrogen Realty (of which petitioner Bitanga is the
President), to construct for the latter the Shoppers Building Paranaque City. However, Macrogen Realty failed to settle the
progress billings of Pyramid; the latter temporarily stopped the construction. Bitanga then assured Pyramid that the
outstanding account of Macrogen Realty would be paid. On such assurance, Pyramid agreed to continue working.
 Respondent suspended work on the construction yet again because payments were again not settled. Respondent instituted
with the Construction Industry Arbitration Commission (CIAC) a case for arbitration against Macrogen Realty seeking
payment of unpaid billings and its project costs.
 Pyramid and Macrogen Realty entered into a Compromise Agreement, under which Macrogen will pay the P6Mn in six
monthly installments. Bitanga guaranteed the obligations of Macrogen Realty under the Compromise Agreement by
executing a Contract of Guaranty in favor of respondent, by virtue of which he irrevocably and unconditionally guaranteed
the full and complete payment of the principal amount of liability of Macrogen Realty.
 Macrogen failed to pay the P6Mn. Hence, Pyramid moved for the issuance of a writ of execution against Macrogen Realty,
which CIAC granted.
 The sheriff filed a return stating that he was unable to locate any property of Macrogen Realty, except its bank deposit of
P20,242.33, with the Planters Bank.
 Pyramid sent a written demand on Bitanga, as guarantor to pay or to point out properties of the Macrogen Realty to cover
the obligation. It also made verbal demands on petitioner. Yet, its demands were left unheeded.
 Pyramid then filed with the RTC a complaint for specific performance and damages with application for the issuance of WPI
against Bitanga and his wife. (Note: Pyramid alleges that Macrogen Realty is 99% owned by a corporation which in turn is
99% by petitioner’s wife. As such, his wife cannot be unaware of the obligations incurred by Macrogen Realty and petitioner.)
o Pyramid prayed that the RTC render a judgment ordering petitioner and his wife to comply with their obligations by
paying the amount of P6Mn (less the bank deposit of Macrogen with Planters Bank).
 Petitioner’s wife filed an MTD, asserting lack of cause of action against her since she was not a party to the Compromise
Agreement. Neither is her ownership of the corporation a sufficient ground for disregarding its separate personality.
 Bitanga, in his Answer, contends that he never made representations that Macrogen would faithfully comply with its
obligations under the Compromise Agreement; on the contrary, it was allegedly Pyramid who required Macrogen to offer
security before agreeing to the compromise. He further alleged that benefit of excussion was still available to him as a
guarantor because Pyramid failed to exhaust all legal remedies against Macrogen because it still had uncollected credits with
other people.
 Prior to the trial, Pyramid filed a Motion for Summary Judgment, alleging that it was entitled to a summary judgment on
account of petitioner’s admission during the pre-trial of the genuineness and due execution of the Contract of Guaranty.
o Given that the inability of Macrogen Realty as debtor to pay the amount of its debt was already proven by the return
of the writ of execution to CIAC unsatisfied, the liability of petitioner as guarantor already arose.
o The allegation of petitioner and his wife that they could not respond to respondent’s demand letter since they did
not receive the same was unsubstantiated and insufficient to raise a genuine issue of fact which could defeat
respondent’s MSJ.
 In opposition to the MSJ, petitioner and his wife countered that there were genuinely disputed facts that would require trial
on the merits (i.e. w/n his wife may be held personally liable, w/n the conjugal partnership may be held liable, w/n petitioner
is entitled to the benefit of excussion)
 RTC: denied MTD, granted MSJ  ordered Bitanga and his wife to pay Pyramid under the Contract of Guaranty P6Mn (less
the bank deposit of Macrogen Realty with Planters Bank). MR denied.
 CA: Affirmed the decision of RTC with modification that the wife of Bitanga is not liable. Only Bitanga is liable. MR denied.
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MSI D2021

 Hence, this PetRev by petitioner Bitanga, assigning the following errors:

o CA erred in affirming the validity of the partial summary judgment of the RTC despite the clear existence of disputed
genuine and material facts that should have required a trial on the merits specifically on the following questions
 (A) Whether or not there was proper service of notice to petitioner considering the said letter of demand
was allegedly received by one Dette Ramos at Macrogen office and not by him at his residence.
 (B) Whether or not petitioner is entitled to the benefit of excussion?
o CA erred in not upholding the right of the petitioner to the benefit of excussion

ISSUE AND RATIO DECIDENDI

Issue Ratio
W/N the motion for Rule 35, Section 1. Summary judgment for claimant. – A party seeking to recover upon a claim,
summary judgment counterclaim, or cross-claim or to obtain a declaratory relief may, at any time after the pleading in answer
was validly granted thereto has been served, move with supporting affidavits, depositions or admissions for a summary
– YES judgment in his favor upon all or any part thereof.

 For a summary judgment to be proper, the movant must establish two requisites:
o (a) there must be no genuine issue as to any material fact, except for the amount of
damages; and
o (b) the party presenting the motion for summary judgment must be entitled to a judgment
as a matter of law.
 Where, on the basis of the pleadings of a moving party, including documents appended thereto, no
genuine issue as to a material fact exists, the burden to produce a genuine issue shifts to the
opposing party. If the opposing party fails, the moving party is entitled to a summary judgment.
 In a summary judgment, the crucial question is: are the issues raised by the opposing party not
genuine so as to justify a summary judgment?
 First off, we rule that the issue regarding the propriety of the service of a copy of the demand letter
on the petitioner in his office is a sham issue. It is not a bar to the issuance of a summary judgment
in respondent’s favor. In this case, it has to be noted that Bitanga does not deny receipt of the
demand letter; what he harps on is the impropriety of the service (that it was sent to Macrogen’s
office and not his residence, and that a non-employee received the same).
o A genuine issue is an issue of fact which requires the presentation of evidence as
distinguished from an issue which is a sham, fictitious, contrived or false claim.
 To forestall summary judgment, it is essential for the non-moving party to confirm
the existence of genuine issues, as to which he has substantial, plausible and fairly
arguable defense, i.e., issues of fact calling for the presentation of evidence upon
which reasonable findings of fact could return a verdict for the non-moving party,
although a mere scintilla of evidence in support of the party opposing summary
judgment will be insufficient to preclude entry thereof.
 We have consistently expostulated that in summary judgments, the trial court can determine a
genuine issue on the basis of the pleadings, admissions, documents, affidavits or counter affidavits
submitted by the parties. When the facts as pleaded appear uncontested or undisputed, then there
is no real or genuine issue or question as to any fact, and summary judgment is called for.
o Had Bitanga been able to substantiate his claims as regards the impropriety of the service,
the MSJ would not have been granted.
o The issue of non-receipt of the letter of demand is a sham or pretended issue, not a
genuine and substantial issue. Indeed, against the positive assertion of Pyramid’s counsel’s
messenger in his affidavit that he delivered the subject letter to a certain Ms. Dette Ramos
who introduced herself as one of the employees of Macrogen, Bitanga merely offered a
bare denial. But bare denials, unsubstantiated by facts, which would be admissible in
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MSI D2021

evidence at a hearing, are not sufficient to raise a genuine issue of fact sufficient to
defeat a motion for summary judgment.

WON BITANGA is  Under a contract of guarantee, the guarantor binds himself to the creditor to fulfill the obligation
entitled to the of the principal debtor in case the latter should fail to do so. The guarantor who pays for a debtor,
benefit of in turn, must be indemnified by the latter. However, the guarantor cannot be compelled to pay the
excussion? – NO creditor unless the latter has exhausted all the property of the debtor and resorted to all the legal
[not really remedies against the debtor. This is what is otherwise known as the benefit of excussion.
important]  NCC Art. 2060. In order that the guarantor may make use of the benefit of excussion, he must set it
up against the creditor upon the latter’s demand for payment from him, and point out to the
creditor available property of the debtor within Philippine territory, sufficient to cover the amount
of the debt.
 It must be stressed that despite having been served a demand letter at his office, petitioner still
failed to point out to the respondent properties of Macrogen Realty sufficient to cover its debt as
required under Article 2060 of the Civil Code. Such failure on petitioner’s part forecloses his right to
set up the defense of excussion.
 Furthermore, Bitanga cannot contends that the demand was not delivered to him because his
address in the contract was the same address where the demand letter was served. He also did not
submit any affidavit wherein he alleged that the person who received the letter was not his
employee.
 Worthy of note as well is the Sheriff’s return stating that the only property of Macrogen Realty
which he found was its deposit of P20K with the Planters Bank. As such, respondent was able to
exhaust all remedies available upon them.

 Article 2059(5) of the Civil Code thus finds application and precludes petitioner from interposing
the defense of excussion. We quote:
o Art. 2059. This excussion shall not take place: (5) If it may be presumed that an execution
on the property of the principal debtor would not result in the satisfaction of the
obligation.
 As the Court of Appeals correctly ruled:
o Bitanga must be compelled to pay Pyramid.
o Reason: Bitanga had not genuinely controverted the return made by Sheriff, who affirmed
that, after exerting diligent efforts, he was not able to locate any property belonging to
the Macrogen Realty, except for a bank deposit with the Planters Bank at Buendia, in the
amount of P20K. It is axiomatic that the liability of the guarantor arises when the
insolvency or inability of the debtor to pay the amount of debt is proven by the return of
the writ of execution that had not been unsatisfied.

RULING

WHEREFORE, premises considered, the instant petition is DENIED for lack of merit. The Decision of the Court of Appeals dated 11 April
2006 and its Resolution dated 5 July 2006 are AFFIRMED. Costs against petitioner.

SEPARATE OPINIONS

NOTES