SECURITY BANK & TRUST CO., INC., EXECUTOR AND APPELLEE, VS. GLOBE ASSURANCE CO., INC., CLAIMANT AND APPELLANT.

In this testate proceeding, Globe Assurance Co., Inc., hereinafter
called the claimant, filed against the deceased Vicente L. Legarda,
three monetary claims: the first, for an unpaid promissory note; the
second, in connection with the indemnity agreement, in favor of
claimant, signed by the deceased with Gustavo Sancho and Jose S. Sarte;
and the third, in connection with another indemnity agreement, in favor
of claimant signed by the deceased together with Jose Robles and Magno
Romasanta.

After a proper hearing, the Manila court of first instance, in its
order of August 29, 1957, awarded claimant the sum of P250.00 only on
account of its first claim; but it dismissed the second and third
claims. The claimant appealed in due time, and here insists on the
second and third claims, without questioning the court’s action on its
first claim.

It appears that on December 5, 1955, Gustavo Sancho, Vicente L.
Legarda and Globe Assurance Co., Inc., signed a 90-day promissory note
in favor of Philippine National Bank for the sum of P8,000.00^[1]
Although the note was a joint and several obligation, Globe Assurance
Co. signed it merely as a surety to induce it to stand as such surety,
Gustavo Sancho, Vicente L. Legarda and Jose Sarte executed on December
2, 1955, an indemnity agreement whereby they bound, themselves, jointly
and severally, to indemnify said Company for any damages, prejudice,
etc. it may sustain or incur, “as consequence of having executed the
above-mentioned Bond” (the parties called the note a “Bond”). The
agreement further provided:

“The said indemnities will be paid to the 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, extension or substitutions, whether
the said sum or sums or part thereof, have been actually paid or not. *
* *”

It is not denied that the bond became due and payable on March 4,
1956, but up to the time of the claim’s presentation (December 1956) it
was unpaid.

In opposing this claim, Legarda’s judicial administrator alleged it
had no information sufficient to form a belief as to the truth of
claimant’s averments. And his surviving widow, added the further
objection that the claim was a mere “contingent claim” which may not be
charged to, or collected from, the estate of the deceased. She pointed
out, and it is undenied, that Globe Assurance had not yet paid any amount of money to Philippine National Bank to discharge the bond.

In reply to this contention, claimant invoked the paragraph
hereinbefore quoted wherein Legarda and companions had agreed to pay it
“as soon as it becomes liable to make payment of any sum under the Bond
whether the said sum has been actually paid or not.”

Upholding the opposition, the Manila court opined that the
stipulation cited by claimant contravenes public policy and good
morals, and is therefore void. Consequently, as previously stated, it
denied this second claim.

Herein lies the main issue in this appeal.

In the light of our pronouncements in Alto Surety vs.
Aguilar, L-5625, March 16, 1954, we must now decide for the claimant.
Therein, we clearly held that similar stipulations are enforceable,
that in accordance therewith, the surety may demand from indemnitors
even before paying the creditors.

Supposing the surety will not pay the creditor after getting money
from the indemnitors? That is not the concern of the courts. The
indemnity agreement was not executed for the benefit of the creditors;
it was rather for the benefit of the surety, and if the latter thought
it necessary in its own interest to impose this stipulation, and the
indemnitors voluntarily agreed to the same, the courts should respect
the agreement of the parties—and require them to abide by their
contract.^[2] Specially so in
this case, where the claimant had made the assurance “that it would be
perfectly alright * * * if the court would order the payment of the sum
claimed directly to the obligees concerned, excepting attorneys fees.”

For these reasons, we rule in favor of claimant on this second claim.

In connection with the third claim, it appears that in April 1954,
Globe Assurance Co. Inc., bound itself as surety for the repayment of
two loans totalling P6,000.00 contracted by Jose Robles with Macario
Cuerpocruz as creditor; that the loans were not paid at maturity; that
action for collection was instituted, resulting in a judgment
condemning Jose Robles and Globe Assurance Co. jointly and severally,
“to pay unto plaintiff the sum of P6,000.00, with 12% interest from
April 13, 1954 until fully paid, plus 2% of P6,000.00 as liquidated
damages; plus the sum of P1,500.00 as attorney’s fees, plus the costs.
But the liability of the Globe Assurance Co., Inc. shall not be beyond
P6,000.00.”

It also appears that, Vicente L. Legarda, Jose Robles and Magno
Romasanta executed in favor of herein claim ant two indemnity
agreements to keep it free from loss or damage resulting from its
having acted as surety of the above loans totalling P6,000.00. These
agreements contained clauses identical to the one discussed in the
second claim.

This third claim was rejected in the court below on the same grounds for rejecting the second claim: Globe Assurance had not yet paid
the creditor, and the stipulation in the indemnity agreement allowing
the surety to recover even before it paid the creditor was null and
void. In view of the reasons already stated in discussing the second
claim, we must again hold the rejection to be erroneous, and allow the
claimant to recover.

Wherefore, the appealed order is affirmed as to the first claim, but
reversed as to the second and third claims. The estate is hereby
required to pay on the second claim. P8,000.00 with interest at 8% from
March 4, 1956, plus attorney’s fees of 15% of that amount^[3] and also to pay P6,000.00 on the third claim, plus attorney’s fees of 15% of such amount,^[4]
In accordance with the claimant’s manifestation, payment of the
P8,000.00—debt and interest shall be made directly to Philippine
National Bank and of the P6,000.00—debt to Macario Cuerpocruz. The fees
shall be paid to appellant. Appellee shall pay costs. So ordered.

Paras, C. J. Montemayor, Bautista Angelo, Labrador, Concepcion, Endencia, Barrera, and Gutierrez David, JJ., concur.
Padilla and Reyes, J.B.L., took no part.

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^[1] Interest at 8% from maturity until paid

^[2] This is similar to insurance against liability, not merely against damage. See Sec. 90, Insurance Act.

^[3_4] As stipulated in the indemnity agreement.