A.M. No. 1895-CFI - Macias vs. Araula

Rodolfo Guerrero is the petitioner, while the respondents include the Court of Appeals and Alto Surety & Insurance Co., Inc.
The case involves multiple parties: Jose Robles (borrower), Chan Too (creditor), Vicente Legarda, and Rodolfo Guerrero, who executed an Agreement of Counter-Guaranty with Mortgage and Pledge in connection with a bond.

In September 1963, Jose Robles borrowed P25,000 from Chan Too.
To ensure payment, Alto Surety & Insurance Co., Inc. issued a bond for P25,000 in favor of Chan Too, thereby binding itself jointly and severally with Robles.
In consideration for the issuance of the bond, Robles, Vicente Legarda, and Guerrero executed a counter-guaranty agreement undertaking to indemnify Alto for any damage, loss, or expense (including attorney’s fees) arising from the bond.

The counter-guaranty agreement provided that the indemnity obligation would mature "as soon as demand is received from the creditor" or when Alto became liable to pay under the bond, irrespective of whether payment had been made.
The contract is characterized as a contract of indemnity designed to cover liability as soon as it arises.

Chan Too instituted civil case 29357 in the Court of First Instance against Robles and Alto after Robles failed to pay his indebtedness.
A compromise agreement was reached and incorporated into a rendered judgment on December 6, 1956.

The judgment detailed the amounts due (principal, interest over different periods, and attorney’s fees).
It set out a payment schedule: P15,000 on or before January 10, 1957, P15,000 on or before February 10, 1957, and P5,750 on or before March 10, 1957.

Provisions in the compromise also provided that failure to make timely payments would render the entire balance immediately due and allowed for ex parte executions against both Robles and Alto.

Due to Robles’ default, a writ of execution was issued based on the compromise agreement.
On January 30, 1958, Alto initiated a separate action against Guerrero under the counter-guaranty agreement for the recovery of P25,000 plus interest and attorney’s fees.
Initial judgment in this action was rendered on October 17, 1960, and later amended on January 9, 1961, directing Guerrero to pay an adjusted balance with interest and additional fees.

Guerrero argued that he had been released from his obligation under the counter-guaranty due to novation, claiming that the compromise agreement in civil case 29357 automatically bound all parties to its terms.
He contended that by entering into the compromise agreement, Alto had thereby waived its right to proceed against him.

The record clearly shows that Guerrero was not a party to civil case 29357; only Chan Too, Jose Robles, and Alto were parties to that case.
The counter-guaranty agreement is separate and distinct from the compromise agreement and is essentially a contract of indemnity against liability.
Demand on Guerrero’s obligation was valid because the contract stipulated that the obligation would become due upon demand or when Alto became liable, regardless of actual payment by Alto.

Whether Guerrero was released from his obligation under the counter-guaranty agreement by virtue of novation allegedly effected by the compromise agreement in civil case 29357.

The issue centers on whether the terms of the compromise, which did not involve Guerrero, could extinguish his separate indemnity obligation.
Whether the incorporation or simultaneous occurrence of two different agreements leads to an implied novation.

Whether the clause in the counter-guaranty requiring payment “as soon as demand is received” or when liability arises renders Guerrero liable independent of Alto’s actual payment to Chan Too.
Whether such a clause precludes any defense based on the timing of actual payments.

Whether the petitioner provided clear and convincing evidence of complete incompatibility between the counter-guaranty and the compromise obligations.
Whether the defense of novation can be inferred from the mere fact that Alto first sought recovery from Robles.