G.R. No. L-22366. October 30, 1969
RODOLFO GUERRERO, PETITIONER, VS. THE HON. COURT OF APPEALS AND ALTO SURETY & INSURANCE CO., INC., RESPONDENTS.
CASTRO, J.:
Appeal by certiorari from the decision of the
Court of Appeals in CA-G.R. 29164-R, entitled “Alto Surety &
Insurance Company, Inc., plaintiff-appellee, vs.
Rodolfo Guerrero, defendant-appellant.”
Sometime in September
1963 Jose Robles borrowed the sum of P25, 000 from Chan Too, to ensure payment of which the Alto Surety
& Insurance Co., Inc. (hereinafter referred to as ALTO) executed a bond for
25, 000 in favor -of Chan Too, whereby
it bound itself jointly and severally with Robles for the payment of the loan
to Chan Too. In consideration for the
issuance of the said bond, Robles, Vicente Legarda
and the herein petitioner Rodolfo Guerrero executed an “Agreement of
Counter-Guaranty with Mortgage and Pledge,” undertaking jointly and
severally to indemnify ALTO for
any damage, loss, payments of whatever kind or nature, including attorney’s
fees, which might be incurred by the latter as a result of the bond
issued. The counter – guaranty agreement
contains this further provision:
“c) Maturity of OUR OBLIGATION AS CONTRACTED
HEREWITH: – The said indemnities will be
paid to the SURETY COMPANY as soon as demand is received from the creditor, or
as soon as it becomes liable to make payment of any sum under the terms of the
above-mentioned Bond, its renewals, extensions or substitutions, whether the
said sum or sums or part thereof, have been actually paid or not.”
Robles failed to pay his indebtedness to Chan Too, so the latter
instituted civil case 29357 in the Court of First Instance of Manila against
Robles and ALTO. Judgment was rendered
on December 6, 1956 on the basis of a
compromise agreement executed by the parties, the pertinent portions of which
read as follows:
“1. – That
defendant Jose Robles recognizes his liability to the herein plaintiff, Chan
Too, for the following amounts:
Principal Obligation —————————- P25,000.00
Interest at 12% per
annum
from Dec. 19, 1953 to
Dec. 18, 1954 ——————————- 3,000.00
Interest at same rate
from Dec. 19, 1954 to
Dec. 18, 1955 ——————————- 3,000.00
Interest
at same rate
from Dec. 19, 1955 to
Dec. 18, 1956 ——————————- 2,750.00
Attorney’s fees
———————————- 2,000.00
TOTAL ————– P35,750.00
* * *
“3. – That the total
amount of 35, 750. 00 mentioned in paragraph 1 hereof shall be paid by the said
defendant Jose Robles in the following manner:
P15,000.00 to be paid on or before Jan. 10,1957
P15,000.00 to be paid on or before Feb. 10, 1957
P5,750.00 to be paid on or before March 10, 1957
* * *
“4. – That in case of
failure on the part of said defendant Jose Robles to pay unto the plaintiff any
of the amounts mentioned in paragraph 3 hereof on the dates therein agreed upon
the terms of payment given to said defendant in said paragraph 3 shall become null and void and the outstanding balance
shall ipso facto become entirely due and payable and plaintiff in such event
shall be entitled to an ex–parte writ
for the execution of the judgment rendered in this case on the basis of this
agreement;
“5. – That the
defendant Alto Surety Insurance Co., Inc. recognizes its liability to plaintiff
jointly and severally with defendant Jose Robles in the sum of P25, 000.00 plus
P300.00 by way of attorney’s fees;
* * *
“7. – That should the principal
defendant Jose Robles fail to comply with any of the terms and conditions for
payment mentioned in paragraph 3, then
(a) plaintiff is entitled to an ex-parte execution of the judgment rendered hereon in the sum
of P25,000.00 against defendant Alto Surety & Insurance Co., Inc.; and
(b.) cross-plaintiff Alto Surety Insurance Co.,
Inc. is likewise entitled to an ex-parte execution of
the judgment rendered on the cross-claim against cross-defendant Jose
Robles.”
Robles defaulted in his
obligations, so the corresponding writ of execution was issued.[1]
On January 30, 1958 ALTO
instituted the present action against the petitioner Rodolfo Guerrero, on the
basis of the “Agreement of counter-Guaranty
with Mortgage and Pledge,” for the
recovery of the sum of P25,000,
with interest at the rate of 12% per annum from the date of the filing of the
complaint, plus 15% of the said amount as attorney’s fees .
On October
17, 1960 judgment
was rendered
“1. Ordering defendant to pay plaintiff Alto
Surety & Insurance Co., Inc., the amount of P20,725.00, the balance of the
original obligation, less the amount of P10,500.00, corresponding to payments made by Jose Robles to the
plaintiff, or a total of P10,225.00, with interest thereon at the rate of 12%
per annum from the date of the filing of the complaint until fully paid;
“2. Plus the additional sum equivalent to 15% of
the above amount by way of attorney’s fees; and
“3. To pay the costs.”
and dismissing the defendant’s
counter-claim.
This judgment was amended on January 9, 1931 to read as follows:
“WHEREFORE, the Court renders judgment as follows:
“(1) Ordering the defendant to pay plaintiff Alto
Surety-& Insurance Co., Inc., the amount of P20,725.00, the balance of the
original obligation, with interest at the rate of 12% per annum on the amount
of P10,400.00 from the date of the filing of the complaint until fully paid;
“(2) Plus
the additional sum equivalent to 15% of the above amount by way of attorney’s
fees; and
“(3) To pay the costs.”
On appeal, the Court of
Appeals erroneously affirmed the judgment a quo (as unamended) of October
17, 1960. This appeal by certiorari now before us is from the decision of the said Court.
Proceeding now to a
consideration of the petitioner’s stance, we note that the sole
foundation of his position is that he was released from his obligation
under the counter-guaranty agreement by virtue of novation because the compromise agreement entered into by Chan Too, Jose Robles and ALTO in civil case 29357, to which the petitioner claims he was a party, had the legal effect of binding all the
parties exclusively to the terms thereof.
The petitioner’s sole
argument is based on palpably
erroneous assumptions.
The petitioner
erroneously assumes that he was a party case in civil case 29357 where the
compromise agreement was executed, in accordance with which judgment was
rendered. Discovering that he has ensnared himself in his own net of
fiction, he now attempts to disentangle himself by contending
that when ALTO – entered into the
compromise agreement in civil
case 29357, it thereby waived its right
to proceed against him. Were he really a party to
the said civil case 29357, his
argument might perhaps merit attention.
It is patent from the
record, however, that the only parties in the said civil case were Chan Too as plaintiff and Jose Robles and ALTO as defendants. This being the situation, the compromise agreement in that case served to determine
the rights
and obligations of only parties
therein, namely Chan Too as creditor and
Robles and ALTO as debtor and surety respectively.
The petitioner likewise
erroneously assumes that the present case was instituted by ALTO on the basis of the judgment rendered in civil case 29357. ALTO instituted this action against the petitioner on the basis, not of the compromise agreement
nor of the judgment rendered in accordance therewith, but of the separate and
distinct “agreement of counter-guaranty” which he had executed
jointly and severally with Robles and Vicente Legarda.
While the said agreement
is captioned “counter-guaranty,” a close perusal of its terms reveals
that it is actually one of indemnity. Notably, the agreement explicitly provides
that the obligation to indemnify ALTO arises
“as soon as demand is received
from
the creditor” or “as soon as it (ALTO) becomes liable to make payment of any sum under the terms of
the above-mentioned Bond, or any renewals, extensions or substitutions, whether the said sum or sums or part thereof, have been actually paid or not.” (emphasis supplied)
On June 21, 1956 ALTO demanded
from the petitioner fulfillment of
his obligations under the agreement since it had before then received from Chan Too a demand for payment by virtue of the bond it had issued. Another
demand letter
was sent on May 29, 1957 to the petitioner after judgment was rendered in
the
action by Chan Too against Jose Robles and ALTO. The filing of the complaint (by Chan too in civil case 29357) itself constituted a judicial demand on ALTO, and in accordance with the abovecited provision of the “agreement of
counter-guaranty” the obligation of the petitioner thus then matured.
The contract here
involved which was executed by
the petitioner is a contract of indemnity not
only against actual loss but against liability as well, and it will not avail the petitioner any
that, full payment had not yet
been made by ALTO to Chan Too.
In Associated
Insurance & Surety Co., Inc. vs. Chua,[2] we distinguished between a contract of
indemnity against loss and a contract of indemnity against liability, thus:
“The agreement here sued upon is riot 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.”
In
Alto Surety & Insurance Co., Inc. vs. Andan, et
al.,[3] the plaintiff sued the defendants for
payment of their liability under the indemnity contract which they had executed
jointly and severally in favor of the plaintiff in consideration of the
issuance of a bail bond by the latter in a criminal case. The plaintiff was held liable on its bond;
without having paid its liability thereon, it sued the said defendants under
the indemnity-contract. The defendant Andan resisted the plaintiff’s action, contending that as
the plaintiff had not yet paid its liability under the bond, it had no cause of
action against him. The lower court
sustained the defendant’s position and dismissed the case. We reversed, holding that
“The dismissal of the complaint by the trial court is
erroneous because the defendants undertook to indemnify ‘the Company’ as soon
as demand received from the Creditor, or as soon as it becomes liable to make payment of any sum under
the terms of the above-mentioned bond * * * whether the said sum or sums or
part thereof, have been actually paid or not.”
There being no modicum of doubt, in this case before us, that the
obligation of the petitioner has matured, the release of his obligation by
virtue of novation must be proved by clear and
convincing evidence. In the absence of
an express release, nothing less than a showing of complete incompatibility
between the two obligations – the “agreement of counter – guaranty”
and the compromise agreement – would justify a finding of novation
by implication. The express mandate of
the law that for an obligation to be extinguished by another “it is imperative
that it be so declared in unequivocal terms, or that the old and the new
obligations be on every point incompatible with each other,[4]
“blazes the direction to be taken by courts in appraising the defense of novation. This Court
has held time and time again that novation is never
presumed.[5]
The necessity to prove the same by clear and convincing evidence is accentuated where, as in this case,
the obligation of the debtor has already matured.
We fail to see any
incompatibility between the two obligations that would sustain the
defense of novation.
The fact that in the compromise agreement and subsequently in the
execution sale, ALTO chose first to realize its credit from Robles, did not
imply waiver of its right to process against any of the solidary
debtors or some or all of them simultaneously, and the demand made against one
of them is no obstacle to demands which may subsequently be directed against
the others so long as the debt or any part of it remains outstanding and
unpaid.[6]
Upon all the foregoing,
inescapable conclusion is that the compromise agreement on the basis of which
judgment was rendered in civil case 29357, did not serve to release the petitioner from his obligation of indemnity to
ALTO.
ACCORDINGLY, the judgment of the Court of Appeals is set
aside; the judgment of the court a quo (CFI), as amended, dated January 9, 1961,
is revived, at petitioner’s cost.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Fernando, Teehankee,
and Barredo, JJ., concur.
[1]
Properties of Robles were sold at public auction, from which the sum of P1,425
was realized and thereafter received by ALTO in partial satisfaction of its
cross-claim. Robles had made payments to
ALTO in the total sum of P4,275. On the
other hand, the aggregate payments made by ALTO to Chan Too by virtue of the
judgment rendered in civil case 29357 was P10,400, leaving a balance of P14, 600.
[2]
L-15656, January 31, 1963, 7 SCRA
52, 54 (per Makalintal, J.).
[3]
100 Phil. 403 (per Padilla, J.).
[4]
Art. 1292, Civil Code.
[5]
Martinez vs. Cavives, 25 Phil. 581; Young vs. Villa, et al., 93
Phil. 21.
[6]
Art. 1216, Civil Code.