Case Digest (G.R. No. 127195)
Facts:
Walker Rubber Corporation v. Nederlandsch Indische & Handelsbank, N. V. and South Sea Surety & Insurance Co., Inc., G.R. No. L-12502 and G.R. No. L-12512, May 29, 1959, the Supreme Court En Banc, Labrador, J., writing for the Court.The Nederlandsch Indische & Handelsbank, N. V. (the bank) sued South Sea Surety & Insurance Co., Inc. (the surety) in the Court of First Instance of Manila to recover P14,000 under a performance bond jointly executed by the surety and Walker Rubber Corporation (the vendee) in favor of Associated Finance Company, Inc. (the vendor). The bond was given to secure payment of a sixty-days-after-sight draft (P14,000) representing the value of 100,000 pounds of camelback rubber sold by the vendor to the vendee; the draft was drawn March 4, 1950 and accepted by Walker on that date.
The performance bond was dated March 5, 1949 and expressly stated it was to secure payment of the trust-receipt sixty-days sight draft payable to the bank; it also provided the surety’s liability would expire March 5, 1950 and be cancelled ten days thereafter unless notified in writing of any existing obligation. After the draft came into the bank’s hands the bank, before discounting, wrote on March 15, 1950 to the surety asking whether the draft was covered by the bond and whether the bank could present the draft to the surety for payment if dishonored; the surety replied on March 16, 1950 that it considered the draft in order and that the bank could present it for payment, but that drafts drawn after March 5, 1950 would not be within the bond.
On April 18, 1950 the bank authorized delivery of the 100,000 pounds of rubber stored in its warehouse to the vendor’s president; the draft matured and was dishonored on presentation, with a protest for non-payment. The bank then sued the surety to collect P14,000; the surety denied liability, alleged the vendee had been released by the vendor, and brought a third‑party complaint against Walker Rubber Corporation and Chua Chuy (indemnitor) for indemnity under an indemnity agreement.
The Court of First Instance rendered judgment against the surety for P14,000 with interest and ordered Walker and Chua Chuy to reimburse whatever the surety paid, plus attorney’s fees and costs. The Court of Appeals affirmed the trial court’s judgment and dismissed a cross‑claim by Chua Chuy against Walker for lack of evidence. Walker and Chua Chuy filed petitions for certiorari with the Supreme Court challenging the Court of Appeals’ affirmance; their submissions condensed their complai...(Subscriber-Only)
Issues:
- Was the Nederlandsch Indische & Handelsbank, N. V. a holder in due course of the draft?
- Was the bank an immediate party to the draft and a beneficiary of the performance bond, or was the bond exclusively for the benefit of Associated Finance Company, Inc.?
- Did South Sea Surety & Insurance Co., Inc. have the right to be indemnified by Walker Rubber Corporation and Chua Chuy for ...(Subscriber-Only)
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)