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8/13/2019 24 Macheti vs Hispicio
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24 - MACHETTI, vs. HOSPICIO DE SAN JOSE – Kemuel Salmite
Facts:
On July 17, 1916, one Romulo Machetti, by a written agreement undertook to construct a building or the
!os"icio de #an Jose, the contract "rice being $6%,&&&. One o the conditions o the agreement was that
the contractor should obtain the 'guarantee' o the (idelity and #urety )om"any o the $hili""ine *slands
to the amount o $1+,&&.
Machetti constructed the building under the su"ervision o architects re"resenting the !os"icio de #an Jose and, as the work "rogressed, "ayments were made to him rom time to time u"on the
recommendation o the architects, until the entire contract "rice, with the e-ce"tion o the sum o the
$%,97.&, was "aid. #ubseuently it was ound that the work had not been carried out in accordance with
the s"eciications which ormed "art o the contract and that the workmanshi" was not o the standard
reuired, and the !os"icio de #an Jose thereore answered the com"laint and "resented a counterclaim o
damages or the "artial noncom"liance with the terms o the agreement abovementioned, in the total sum
o $71,/0&. ter issue was thus 2oined, Machetti, on "etition o his creditors, was, on (ebruary +7, 191
declared insolvent and on March %, 191, an order was entered sus"ending the "roceeding in the "resent
case in accordance with section 6& o the *nsolvency 3aw, ct 4o. 1906.
5he !os"icio de #an Jose on January +9, 1919, iled a motion asking that the (idelity and #urety )om"any
be made crossdeendant to the e-clusion o Machetti and that the "roceedings be continued as to said
com"any, but still remain sus"ended as to Machetti. 5his motion was granted and on (ebruary 7, 19+&, the
!os"icio iled a com"laint against the (idelity and #urety )om"any asking or a 2udgement or $1+,&&
against the com"any u"on its guaranty. ter trial, the )ourt o (irst *nstance rendered 2udgment against
the (idelity and #urety )om"any or $1+,&& in accordance with the com"laint.
Issue: O4 the undertaking assumed by (#) was that o a guarantor or a surety8
Hel: uarantor.
5he term 'guarantor' im"lies an undertaking o guaranty, as distinguished rom suretyshi". *t is very true
that notwithstanding the use o the words 'guarantee' or 'guaranty' circumstances may be shown which
convert the contract into one o suretyshi" but such circumstances do not e-ist in the "resent case: on thecontrary it a""ear airmatively that the contract is the guarantor;s se"arate undertaking in which the
"rinci"al does not 2oin, that its rests on a se"arate consideration moving rom the "rinci"al and that
although it is written in continuation o the contract or the construction o the building, it is a collatera
undertaking se"arate and distinct rom the latter. ll o these circumstances are distinguishing eatures o
contracts o guaranty.
4ow, while a surety undertakes to "ay i the "rinci"al does not "ay, the guarantor only binds himsel to
"ay i the "rinci"al cannot "ay. 5he one is the insurer o the debt, the other an insurer o the solvency o
the debtor.
5his latter liability is what the (idelity and #urety )om"any assumed in the "resent case. 5he undertaking
is "erha"s not e-actly that o a fianzaunder the )ivil )ode, but is a "erectly valid contract and must begiven the legal eect i ordinarily carries. 5he (idelity and #urety )om"any having bound itsel to "ay only
the event its "rinci"al, Machetti, cannot "ay it ollows that it cannot be com"elled to "ay until it is shown
that Machetti is unable to "ay. #uch ability may be "roven by the return o a writ o e-ecution unsatisied
or by other means, but is not suiciently established by the mere act that he has been declared insolvent
in insolvency "roceedings under our statutes, in which the e-tent o the insolvent;s inability to "ay is no
determined until the inal liuidation o his estate.