Case Digest (G.R. No. 210950)
Facts:
Milagros P. Enriquez v. The Mercantile Insurance Co., Inc., G.R. No. 210950, August 15, 2018, the Supreme Court Third Division, Leonen, J., writing for the Court.
Petitioner Milagros P. Enriquez filed a Complaint for Replevin in 2003 in the Regional Trial Court (RTC) of Angeles City against respondent Wilfred Asuten to recover a Toyota Hi‑Ace van allegedly worth P300,000. Enriquez applied for and obtained a replevin bond (Bond No. 138) from The Mercantile Insurance Co., Inc. on February 24, 2003 in the amount of P600,000 (one year duration), and executed an indemnity agreement obligating her to indemnify the surety for all sums it might pay under the bond, including an “incontestability of payments” clause.
The RTC approved the bond and ordered the sheriff to deliver the van to Enriquez. The case was later dismissed without prejudice by the RTC for petitioner’s failure to present evidence (May 24, 2004), and the court ordered restoration of the van to Asuten. Enriquez failed to return the van; the RTC thereafter declared Bond No. 138 forfeited, gave Mercantile Insurance time to produce the van or show cause, and at a July 12, 2004 hearing found the surety had failed to produce the van and that the bond had expired — directing the surety to pay Asuten P600,000.
Complying with the RTC order, Mercantile Insurance paid Asuten P600,000 on September 3, 2004 and filed a collection suit against Enriquez in the RTC of Manila. In a July 23, 2010 Decision the RTC, Branch 17, Manila, ruled for Mercantile Insurance, ordering Enriquez to pay P600,000 plus interest and attorney’s fees; Enriquez appealed. The Court of Appeals (Fourth Division) affirmed by Decision dated August 13, 2013 and denied reconsideration in a January 14, 2014 Resolution.
Enriquez filed a Petition for Review on Certiorari with the Supreme Court assailing the Court of Appeals’ affirmance, arguing primarily that the replevin bond had expired on February 24, 2004 and thus the indemnity agreement and Mercantile’s right to reimbursement were unenforceable; she also contended the indemnity agreement was a contract of adhesion and that she should not be liable for the full bond amount because the van’s value was only P300,000. Mercantile asserted procedural defenses and relied on the Guidelines on Corporate Surety Bonds (A.M....(Subscriber-Only)
Issues:
- Is petitioner liable to Mercantile Insurance for the full amount of the replevin bond (P600,000) paid by the surety?
- Was the replevin bond already expired on February 24, 2004 such that the indemnity agreement was unenforceable?
- Could the RTC properly order forfeiture of the entire replevin bond in favor of the defendant absent a judgment on the merits and an application for damages by the defendant?
- Is the indemnity agreement (including the incontestability clause) unenforceable as a co...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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