Civil Law, 2019 Bar — Question B.16-a

ESSAY

C Corp. entered into a contract with D, Inc. for the construction of the latter's production warehouse. In consideration thereof, D, Inc. was obliged to pay C Corp. the amount of P50,000,000.00 within a period of one (1) month from the time of the project's completion. To secure the payment of the said sum, D, Inc. entered into a surety agreement with S Company. After more than a month from the completion date of the project, C Corp. remained unpaid. Claiming that it was suffering from serious financial reverses, D, Inc. asked C Corp. for an extension of three (3) months to pay the P50,000,000.00 it still owed, to which C Corp. agreed. However, after more than three (3) months, D, Inc. still refused to pay. Hence, C Corp. proceeded to collect the above sum from the surety, S Company. For its part, S Company refused the claim and raised the defense that the extension of time granted by C Corp. to D, Inc. without its consent released it from liability. (a) Will the defense of S Company against the claim hold water? Explain. (3%)

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