Title
Asiatic Petroleum Co., Ltd. vs. Ybanez
Case
G.R. No. 21923
Decision Date
Sep 13, 1924
Agency contract breach led to indemnity bond disputes; court upheld bonds, limiting liability based on execution dates and admissions.
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Case Digest (G.R. No. 21923)

Facts:

  1. Contract of Agency:

    • Potenciano de Pio entered into a contract of agency with the Asiatic Petroleum Co. (Philippine Islands), Ltd., on July 21, 1920, becoming the company's agent in Nueva Cadiz, Occidental Negros.
  2. Breach of Contract:

    • De Pio violated the terms of the agency contract, resulting in a loss of P10,758.66 to the company.
  3. Indemnity Bonds:

    • To secure its interests, the company obtained two indemnity bonds:
      • First Bond (July 30, 1920): Signed by Felipe Murillo and Gregorio Ybanez, jointly and severally liable for P10,000.
      • Second Bond (December 6, 1920): Signed by Leon Barilea and Epifanio Tupas, jointly and severally liable for P15,000.
  4. Legal Action:

    • The company filed a lawsuit in the Court of First Instance of Iloilo to recover the losses from the defendants.
    • The trial court ruled in favor of the company, holding the defendants jointly and severally liable for the amounts specified in the bonds.
  5. Appeals:

    • Gregorio Ybanez, Leon Barilea, and Epifanio Tupas appealed the decision, contesting their liability under the indemnity bonds.

Issue:

  1. Whether the indemnity bonds executed by the appellants (Ybanez, Barilea, and Tupas) are valid and enforceable despite vague wording.
  2. Whether the liability of Barilea and Tupas under the second bond is retroactive or limited to debts incurred after the bond's execution.
  3. Whether the appellants are estopped from denying their liability due to their admissions and testimony during the trial.

Ruling:

  1. Validity of Indemnity Bonds:

    • The Supreme Court upheld the validity of the indemnity bonds, ruling that the vague wording was cured by the defendants' admissions and testimony during the trial.
  2. Liability of Ybanez:

    • Gregorio Ybanez is liable for P10,000 under the first bond, as his argument that the second bond substituted the first was unsupported by evidence.
  3. Liability of Barilea and Tupas:

    • Leon Barilea and Epifanio Tupas are liable only for debts incurred by De Pio after December 6, 1920, amounting to P8,187.58. Their liability is additional and secondary to that of the other defendants.
  4. Judgment:

    • The trial court's judgment was affirmed with respect to Potenciano de Pio, Gregorio Ybanez, and Felipe Murillo.
    • The judgment was modified with respect to Leon Barilea and Epifanio Tupas, limiting their liability to P8,187.58.

Ratio:

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