Case Digest (G.R. No. 147561)
Facts:
On May 24, 1989, Republic-Asahi Glass Corporation contracted with Jose D. Santos, Jr., proprietor of JDS Construction, for road and drainage works for P5,300,000, and required a performance bond of P795,000 which JDS Construction and Stronghold Insurance Company, Inc. executed jointly and severally. When JDS Construction failed to progress, Republic-Asahi rescinded the contract on November 24, 1989, incurred P3,256,874 to complete the work, demanded the bond, and sued JDS Construction and Stronghold Insurance Company, Inc.; Jose D. Santos, Jr. died in 1990, the trial court at one point dismissed claims against the deceased proprietor, later dismissed claims against petitioner, the Court of Appeals reversed and remanded, and petitioner sought review.
Issues:
- Was Stronghold Insurance Company, Inc.'s liability under the performance bond extinguished by the death of Jose D. Santos, Jr.?
Ruling:
The Petition was denied and the Decision of the Court of Appeals was affirmed. The Court held that petitioner remained liable under the bond and imposed costs against Stronghold Insurance Company, Inc..
Ratio:
The Court explained that obligations arising from contract are generally transmissible to heirs and are not extinguished by death unless they are purely personal or expressly nontransmissible, citing Art. 1311. Money claims against a decedent may be pursued against the estate under Section 5 of Rule 86, so the death of Jose D. Santos, Jr. did not extinguish his contractual liabilities. As surety, petitioner was solidarily liable with the principal under Article 2047 and Art. 1216, and the language of the performance bond expressly bound heirs, executors, administrators, successors and assigns; therefore Republic-Asahi could proceed against petitioner despite the principal's death.
Doctrine:
- A surety's liability is solidary with the principal and the obligee may proceed against either or both debtors, per Article 2047 and Art. 1216.
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