Case Summary (G.R. No. L-22366)
Applicable Law
The decision in this case is made under the provisions of the Civil Code of the Philippines with a focus on contracts, particularly indemnity and obligations arising from guarantee agreements. The relevant contractual relationships draw on principles of liability and the effects of novation.
Background of the Obligations
In September 1963, Jose Robles borrowed ₱25,000 from Chan Too. To ensure the payment of this loan, Alto Surety & Insurance Co., Inc. executed a bond in favor of Chan Too, thereby assuming joint liability with Robles. In consideration for the bond, Robles and other guarantors, including Rodolfo Guerrero, executed a "Counter-Guaranty Agreement" which bound them to indemnify Alto for potential losses arising from the bond.
Judicial Proceedings and Default
Following Robles' default in repaying Chan Too, the latter filed a civil case against both Robles and Alto in the Court of First Instance of Manila. A compromise agreement reached in this case concluded with a judgment recognizing Robles' liability and setting terms for repayment. When Robles subsequently failed to fulfill these obligations, Alto initiated another action against Guerrero, seeking to recover amounts owed under the counter-guaranty agreement.
Court Decisions and Amendments
The initial judgment favored Alto, ordering Guerrero to pay a total amount that included the principal obligation, accrued interest, and attorney's fees. This judgment was later amended to clarify the amount owed, yet it was ultimately upheld by the Court of Appeals, which erroneously affirmed the original unamended decision.
Arguments Presented by Guerrero
Guerrero’s primary argument rested on the assertion that the compromise agreement in the previous case extinguished his obligations under the counter-guaranty due to novation. He contended that since ALTO entered into the compromise with Robles and Chan Too, it waived its rights against him.
Examination of Novation Defense
The Court determined that Guerrero was not a party to the civil case between Chan Too and Robles where the compromise agreement was executed. The only parties bound by that agreement were Chan Too, Robles, and Alto. Consequently, Guerrero's claim of novation was unsupported. The nature of the counter-guaranty agreement necessitated indemnification upon demand, independent of whether Alto had made actual payment to Chan Too.
Legal Principles Discussed
The court emphasized the difference between indemnity against liability and indemnity against loss. The obligation of Guerrero to indemnify arose immediately upon
...continue readingCase Syllabus (G.R. No. L-22366)
Case Overview
- Case Reference: G.R. No. L-22366
- Date of Decision: October 30, 1969
- Parties Involved:
- Petitioner: Rodolfo Guerrero
- Respondents: The Hon. Court of Appeals and Alto Surety & Insurance Co., Inc.
- Nature of the Appeal: Appeal by certiorari from the decision of the Court of Appeals in CA-G.R. 29164-R.
Background Facts
- Loan Agreement: In September 1963, Jose Robles borrowed P25,000 from Chan Too.
- Surety Bond: Alto Surety & Insurance Co., Inc. (ALTO) executed a bond for the amount borrowed, binding itself jointly and severally with Robles.
- Counter-Guaranty Agreement: Robles, Vicente Legarda, and Rodolfo Guerrero signed an "Agreement of Counter-Guaranty with Mortgage and Pledge," agreeing to indemnify ALTO for any losses incurred from the bond.
- The agreement specified that indemnities would be paid upon demand from the creditor.
Initial Legal Proceedings
- Civil Case 29357: Chan Too filed a civil case against Robles and ALTO for non-payment. Judgment was rendered on December 6, 1956, based on a compromise agreement.
- Judgment Details:
- Robles acknowledged his debt of P25,000, plus interest and attorney fees, totaling P35,750.
- Payment terms were established with specific dates and conditions for default.
Subsequent Actions
- Default by Robles: Robles failed to fulfill his payment obligations, prompting ALTO to seek execution of the judgment.
- ALTO's Action Against Guerrero: On January 30, 1958, ALTO filed a suit against Rodolfo Guerrero for recovery of P25,000 based on the counter-guaranty agreement.
- Judgment Against Guerrero: On