Case Digest (G.R. No. L-8961)
Facts:
On June 22, 1948, Alto Surety & Insurance Co., Inc. (the plaintiff) filed a bail bond amounting to P8,000 for the release of Valeriano Dizon y Alvarez, who was the defendant in criminal case No. 3717 at the Court of First Instance of Manila. On the same day, the defendants, including Alejandro Andan, Uy Siok Kiao, and Tan Lee, executed an indemnity agreement (Exhibit B) wherein they agreed to indemnify the plaintiff for any damages incurred as a result of the bail bond. Subsequently, Dizon failed to appear for his trial despite being duly notified, leading the court to order the forfeiture of the bond on June 30, 1950, in favor of the Government (Exhibit C). The plaintiff was unable to produce Dizon within the 30-day period mandated by the rules, resulting in a judgment against the plaintiff for the bond amount on November 14, 1950 (Exhibit D). On March 10, 1951, the plaintiff initiated an action against the defendants in the Court of First Instance of Manila to recover t...
Case Digest (G.R. No. L-8961)
Facts:
Bond Execution and Indemnity Agreement
- On 22 June 1948, Alto Surety & Insurance Co., Inc. (plaintiff) filed a bail bond of P8,000 for the release of Valeriano Dizon y Alvarez, the defendant in Criminal Case No. 3717 of the Court of First Instance of Manila (Exhibit A).
- On the same day, Alejandro Andan, Uy Siok Kiao, and Tan Lee (defendants) executed an indemnity agreement, jointly and severally agreeing to indemnify the plaintiff for any damages or payments arising from the bail bond (Exhibit B).
Forfeiture of the Bond
- Valeriano Dizon failed to appear at the trial despite due notice. On 30 June 1950, the court ordered the forfeiture of the bond in favor of the government (Exhibit C).
- The plaintiff, as bondsman, was given 30 days to produce the defendant or show cause why judgment should not be rendered against it. The plaintiff failed to comply, and on 14 November 1950, the court rendered judgment against the plaintiff for the amount of the bond (Exhibit D).
Plaintiff’s Action Against Defendants
- On 10 March 1951, the plaintiff filed a case against the defendants to recover the amount of the bond, interest, attorney’s fees, and costs.
- The defendants Tan Lee, Quien Tong, and Uy Siok Kiao were declared in default for failing to answer the complaint. Alejandro Andan filed an answer but failed to appear at trial.
Trial Court’s Decision
- On 6 June 1952, the trial court dismissed the complaint, ruling that the plaintiff had no cause of action against the defendants since it had not yet satisfied the judgment for the bond amount.
Appeal
- The plaintiff appealed, arguing that the indemnity agreement obligated the defendants to pay as soon as the plaintiff became liable, regardless of whether the plaintiff had actually paid the government.
Issue:
- Whether the plaintiff has a cause of action against the defendants despite not having satisfied the judgment for the bond amount.
- Whether the indemnity agreement obligates the defendants to pay the plaintiff as soon as the plaintiff becomes liable under the bond, even if no actual payment has been made.
Ruling:
The Supreme Court reversed the trial court’s decision and ruled in favor of the plaintiff. The defendants were ordered to pay the plaintiff the sum of P8,000, 12% interest per annum from the time payment is made to the government, 15% of the amount due as attorney’s fees, and costs.
Ratio:
Cause of Action Exists Upon Liability, Not Actual Payment
- The indemnity agreement (Exhibit B) explicitly states that the defendants are obligated to indemnify the plaintiff "as soon as it becomes liable to make payment of any sum under the terms of the bond, whether the said sum or sums or part thereof, have been actually paid or not."
- The plaintiff became liable to the government when the court ordered the forfeiture of the bond and issued a writ of execution (Exhibit E). Thus, the defendants’ obligation to indemnify the plaintiff arose at that moment, regardless of whether the plaintiff had actually paid the government.
Breach of Bail Conditions Triggers Liability
- The breach of the bail bond conditions occurred when the accused failed to appear at trial, and the plaintiff, as bondsman, failed to produce the accused or explain his non-appearance. This breach made the plaintiff liable to the government, which in turn triggered the defendants’ obligation to indemnify the plaintiff under the indemnity agreement.
Trial Court’s Error
- The trial court erred in dismissing the complaint on the ground that the plaintiff had not yet satisfied the judgment. The indemnity agreement did not require actual payment as a condition for the defendants’ liability.