ASSOCIATED INSURANCE & SURETY COMPANY, INC., PLAINTIFF AND APPELLEE, VS. WELLINGTON CHUA, ET AL., DEFENDANTS, RAMON Y. SY, DEFENDANT AND APPELLANT.

This is an appeal by defendant Ramon Y. Sy from the
decision of the court of First Instance of Manila of May 15, 1959,
ordering him “to pay unto plaintiff for the sole benefit of the
Government of the Philippines the sum of P1,000.00 with interest of 12%
per annum, the interest to be computed from the time of actual payment
by Associated (Insurance & Surety Co., Inc.) unto the Republic of
the Philippines of said sum of money” and furthermore ordering said
appellant, in any case, to pay to plaintiff-appellee the sum of P200.00
as attorney’s fees, without pronouncement as to costs.

The facts are not disputed. On July 29, 1955
appellee put up a bail bond in the sum of P1,000.00 for the provisional
liberty of one Wellington Chua, who was accused in Criminal Cases No.
31951 and 31952 of the Court of First Instance of Manila. An indemnity
agreement in favor of appellee was in turn signed by appellant, jointly
and severally with Chua, for the same sum of P1,000.00, the pertinent
terms of which agreement are as follows:

“2. Indemnity: To indemnify the COMPANY
upon its demand and keep it indemnified for and to. hold and save it
harmless from and against any and all payments, damages, costs, losses,
penalties, charges and expenses of whatsoever kind and nature which the
COMPANY as such surety shall or may, at any time make, sustain, incur
and/or suffer or for which it has or may become liable to the obligee,
and to pay an additional amount as attorney’s fees equal to 20% of the
amount due to the COMPANY by virtue hereof which in no case shall be
less than P50.00 and which shall be payable whether or not the case be
extrajudicially settled, it being understood that demand made upon
anyone of the undersigned herein is admitted as demand made on all of
the signatories hereof;

“3, ACCRUAL OF
ACTION: Notwithstanding the provisions of the next preceding paragraph,
where the obligation involves a liquidated amount for the payment of
which the COMPANY has become legally liable under the term of the
obligation and its suretyship undertaking, or by the demand of the
obligee or otherwise and the latter has merely allowed the COMPANY a
term or extension for payment of the latter’s demand the full amount
necessary to discharge the COMPANY’S aforesaid liability irrespective
of whether or not payment has actually been made by the COMPANY, the
COMPANY for the protection of its interest may forthwith proceed
against the undersigned or either of them by court action or otherwise
to enforce payment, even prior to making payment to the obligee which
may hereafter be done by the COMPANY.”

Chua failed to appear in court for trial, by reason
of which the bail bond was ordered confiscated on February 27, 1956 and
judgment was rendered thereon against the bondsman on the following
September 1. A writ of execution was thereafter issued to enforce the
judgment, but was not carried out when appellee was allowed to put up a
property bond in favor of the Republic of the Philippines to guarantee
its aggregate liabilities in connection with several criminal cases,
amounting to over P73,000.00.

After judgment on the bond was rendered as
aforesaid appellee filed the present action against appellant on the
indemnity agreement he had signed. The parties entered into a
stipulation of facts, after which the decision now sought to be
reviewed was handed down.

Appellant has raised two points ill this appeal.
The first is that the stipulation in the indemnity agreement allowing
appellee to proceed against appellant for indemnification even prior to
actual satisfaction of the judgment on the bond is void, being contrary
to public policy and morals, because it would enable appellee to enrich
itself unjustly at appellant’s expense in the event that the accused
Wellington Chua is finally apprehended and the liability of appellee on
the bond filed by it is reduced. The point is not well taken. The
situation envisaged by appellant, as correctly stated by the court, is
a contingency that may not happen at all; and if it should ever happen
it does not mean that the indemnitor Ramon Sy would be without
protection. Besides, it is specifically stated in the judgment appealed
from that the payment of the sum of P1,000.00 shall be for the benefit
of the government.

The agreement here sued upon is not only one of
indemnity against loss but of indemnity against liability. While the
first does not render the indemnitor liable until the person to be
indemnified makes payment or sustains loss, the second becomes
operative as soon as the liability of the person indemnified arises
irrespective of whether or not he has suffered actual loss.

The next point of appellant is that appellee has
yet no cause of action against him for the reason that the latter’s
liability on the bond is still unliquidated within the meaning of
clause 3 of the indemnity agreement herein-before quoted. The
contention is not correct. Appellee’s liability is already liquidated
and in fact has been the subject of final judgment and of a writ of
execution, although as far as the record shows the execution has not
yet been carried out. It is one thing to say that appellee’s liability
on the bond may possibly be reduced should the principal, Wellington
Chua, be apprehended and surrendered to the proper court and a
different thing altogether to say that the same is unliquidated. This
Court has had occasion to decide the same question now before us in the
case of Alto Surety Insurance Inc., vs. Alejandro Andan,
L-8961 promulgated November 28, 1956 . In that case, upon facts similar
to those obtaining here, the trial court dismissed the complaint filed
by the surety company against the indemnitor on the ground that since
the plaintiff had not yet satisfied the judgment rendered against it
for the amount of the bond, it had no cause of action against the
defendants-indemnitors. Upon Appeal, this Court reversed the judgment,
upholding in effect the validity of the indemnity contract.

The judgment appealed from is affirmed, with costs against appellant.

Bengzon, C. J., Padilla, Bautista Angelo, Labrador , Concepcion , Reyes J. B.L., Barrera, Paredes, Dizon and Regala, JJ., concur.