Case Digest (G.R. No. L-8437)
Facts:
Estate of K. H. Hemady, Deceased v. Luzon Surety Co., Inc., G.R. No. L-8437, November 28, 1956, the Supreme Court En Banc, Reyes, J., writing for the Court.
The appellant Luzon Surety Co., Inc. filed a claim in Special Proceeding No. Q-293 against the estate of K. H. Hemady (represented by his administratrix) in the Court of First Instance of Rizal. The claim arose from twenty separate indemnity agreements (counterbonds) by which different principals obtained guarantees from Luzon Surety; in each counterbond Hemady subscribed as a surety (solidary guarantor). The printed counterbonds set out, among other things, (a) a premium obligation, (b) an indemnity clause obliging the undersigned jointly and severally to indemnify Luzon Surety for any losses, costs and expenses (including attorney’s fees not less than P25 and interest at 12% p.a.), and (c) a waiver of notice and a clause making the liability “primary” and exigible immediately upon default. Luzon Surety prayed for allowance as contingent claims for the value of the bonds and for unpaid premiums and documentary stamps, with 12% interest.
Before an answer was filed, the administratrix moved to dismiss. By order of September 23, 1953, the Court of First Instance, presided by Judge Hermogenes Caluag, dismissed the claim for failure to state a cause of action on two grounds: (1) that premiums and documentary stamps were not obligations incurred after execution of the counterbonds and thus not recoverable under the indemnities; and (2) that Hemady’s liability as guarantor terminated upon his death because the creditor had relied on his personal integrity (citing Article 2046 of the New Civil Code), and integrity is personal and nontransmissible.
The Luzon Surety Co. appealed the dismissal to the Supreme Court. The High Court reviewed the trial court’s legal conclusions, focusing first on whether a surety’s liability is transmissible to his heirs and therefore provable as a contingent claim against th...(Subscriber-Only)
Issues:
- Was the dismissal by the Court of First Instance for failure to state a cause of action proper?
- Does a surety’s or guarantor’s liability terminate upon his death, precluding a claim against his estate (i.e., are such obligations transmissible to heirs)?
- Do unpaid premiums and documentary stamp taxes form part of the indemnity obligations chargeable to the guarantor’...(Subscriber-Only)
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)