Mendezona & Co., a partnership, in liquidation, obtained a judgment on a bond in the Court of First Instance of Manila in civil cause No.
3326 against Mariano Moreno, as principal, and against Amalia Moreno, Camilo Moreno, and Rafael Serra, as sureties, for the sum of P18,154.24, with interest at 6 per cent per annum from the 11th day February, 1905; together with costs. Mendezona & Co. on the 2d day of July, 1908, by an instrument in writing, sold and transferred said judgment to G. Urrutia & Co. 2. On the 1st day of July, 1908, the sheriff sold under execution issued upon the judgment described in the preceeding paragraph one house belonging to Mariano Moreno, described in the first paragraph of the complaint, to Mendezona & Co. for the sum of P2,500. At the same time and under the same execution the sheriff sold seven parcels of land belonging to said Mariano Moreno, described in the second paragraph of the complaint, to said Mendezona & Co. for the various sums in the complaint, amounting in all to P2,710. Under the same execution there were also sold other belonging to Mariano Moreno and to his sureties, among them lands belonging to Amalia Moreno, those belonging to the latter selling for P5,250. 3. The clerk of the Court of First Instance of Manila on the 24th of June, 1908, issued an execution upon a judgment in civil cause No. 4905 in an action entitled G. Urrutia & CO. vs. Mariano Moreno, said judgment being for the sum of P27,185.90, with interest from the 31st of July, 1906, at 9½ per cent per annum. Said G. Urrutia & Co. presented said execution to the registrar of real estate titles of the Province of Ambos Camarines on the 24th of July of the same year, who entered in his daily registry of property 4. Doña Amalia Moreno, as surety of said Mariano Moreno, and subrogated to the rights of Mendozona & Co. and its successors in interest, delivered to the defendant sheriff, Leon Reyes, the sum for which the lands of Mariano Moreno described in the complaint had been sold, together with interest at 1 per month to the 16th of June and the 22d of July, 1909, and said sheriff executed to said Amalia Moreno two documents to the effect that the said Amalia Moreno had redeemed the said lands as such surety and under said subrogation within the legal period. 5. No other creditor of Mariano Moreno, nor any other person, has redeemed the said lands described in the complaint. 6. G. Urritia & Co., on its own behalf and as successors in interest to Mendozona & Co., refused to receive the sum delivered by Amalia Moreno and refuses to recognize the validity of such redemption and alleges that Amalia Moreno had and has no right to redeem nor to retain possession of the said lands of Mariano Moreno, not to be subrogated in the rights of Mendozona & Co. and its successor in interest. 7. Doña Amalia Moreno is now and has been since the month of July, 1909, in possession of the lands described in the complaint, pretending that she is the owner of the same and alleging that having been obliged to pay as surety of said Mariano Moreno the sum of P5,796.66 for the satisfaction of the judgment against him, she was subrogated in all of the rights which pertain to Mendezona & Co. or to its assigns with regard to the said lands to the extent of the money paid by her. 8. The amount paid by Amalia Moreno for the redemption of said lands described in the complaint is in the hands of the defendant sheriff, Leon Reyes. Upon this statement the learned trial court held that Amalia Moreno was entitled under the law to redeem the premises belonging to Mariano Moreno which were sold under the judgment held by Mendezona & Co. This appeal is from that judgment. Issue: whether or not a surety against whom a judgment has been obtained jointly with the principal redeem the real estate belonging to the principal which was sold by virtue of an execution issued upon said judgment, the surety having been obliged to contribute to the payment thereof. Held: in order to be able to redeem, the defendant Amalia Moreno must be either the judgment-debtor or his successor in interest or must hold a lien by judgment or mortgage upon the premises to be redeemed, which lien is subsequent to the lien of the judgment under which the property to be redeemed was sold. Passing without comment the word "lien," as it has been defined by this court, we observe instantly when he as the question whether or not the defendant Amalia Moreno falls within the first class entitled under the section to redeem, that she does not fall within that class unless her contribution to the payment of the judgment against her principal is sufficient in law to substitute her in the place of the judgment-debtor or to make her his successor in interest to the extent of conferring upon her the right to redeem. We are of the opinion that she does not occupy the place of the judgment-debtor in this or any sense. The right of redemption is a right belonging to the debtor and cannot be taken away from him without authorization of law. If the surety upon payment of the judgment were to be substituted in his place and allowed to redeem as such, the right of the judgment-debtor would be thereby destroyed or, better said, would be exercised by another and he would be unable to exercise it thereafter himself. The surety has no right directly to take the property of his principal whose debt he has paid or assisted in paying unless he is expressly authorized to do so by law or has pursued the courses necessary under the law to that end. Courts are not authorized, generally speaking, to take rights from one person and give them to another without notice to the person from whom they are taken and an opportunity to be heard. Not being the judgment debtor or his successor in interest, in short, not representing him in such a way as to be able to exercise his right relative to the redemption, defendant's claim under the first class must fail. We arrive at the same conclusion when we consider whether the defendant falls within the second class. As a general proposition it is true that when a surety pays a judgment which has been obtained jointly against him and his principal, he is subrogated to the rights of the creditor (not the debtor) in the judgment and may execute that judgment against his principal in the same manner and with the same effects as the creditor could have executed it; and it is a rule laid down by some courts that the judgment is kept
on February 10. By letter of December 17. penalties. It is. Jr. Inc. Jr. P) otherwise drastic measures for collection to protect the interest of the bank would be taken. bound themselves jointly and severally to indemnify the plaintiff. represented by Felipe Ysmael.000.. 0030.. P60. & Co. On September 6.. is the same judgment that the creditor held. Issue: whether or not the surety can be allowed indemnification from the defendants-appellants. By agreement dated September 5.. Jr. does not aid the surety in this case. Inc.000.00 (Exh. 1970. executed another surety bond MERICO Bond No. B).
. Jr.. 1970 and No. Edgardo L. an indemnity agreement (Exh. E) with the plaintiff in consideration of the surety bond (referring to MERICO Bond No. costs. Inc.000. to the rights in which she is subrogated. provided she has not done so. shall perform and fulfill its undertakings with the Philippine National Bank. 1967 (Exh. however. 0007 plus P40. & Co.. Applying it.00 on Surety Bond No. Inc. represented by Felipe Ysmael filed an application for an overdraft line of Pl.000.. Attached to the demand letter is a statement of account. and that the attempt to redeem and all of the acts performed in relation thereto by said defendant are without force or effect against the plaintiff. E) the same provisions of paragraph 3 found in exhibit D is provided for. D) wherein the defendants Felipe Ysmael. charges and expenses which said company as surety (relative to MERICO Bond No. G-2 and H-2).000. settlement of its obligation under surety bonds No. Felipe Ysmael Jr.. Since the defendants failed to settle their obligation with the Philippine National Bank. before the right of redemption can be exercised. Inc. & Co.000. upon the latter's default even before the former has paid to the creditor. (G-16)-0007 for P 60. as principal and the Mercantile Insurance Co. we exclude the defendant from the class known as redemptioners. In the indemnity agreement (Exh. adjudged that the defendant Amalia Moreno sold under judgment obtained against him to Mendezona & Co. in the sum of P100. It need no interpretation or construction. G (-16). G(16) 007 of Mercantile Insurance Co.000. 0007) shall incur or become liable to pay plus an additional amount as attorney's fees equal to 20% of the amount due to the company 3) ACCRUAL OF ACTION: — Notwithstanding the provisions of the next preceding paragraph. 1968 (Exh. hold save it harmless from and against any and all payments. G (16) 0030. 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. Jr. Gabriel Daza. requires.000.. In view of the failure of the defendants to pay the overdraft and credit line with the Philippine National Bank demanded from the Mercantile Insurance Co. Jr. represented by Felipe Ysmael filed surety bond No. Jr. Nothing in this decision shall be understood as preventing Amalia Moreno from redeeming her own lands that were sold under execution. and Magdalena Estate. This principle of subrogation.. On December 4..00 and credit line of Pl. Inc.00 applied for provided that the applicant shall have filed a bond in the sum of P140.00 on Surety Bond No. on March 6.000. lnc.. The judgment. 1967. The language of the statute is plain.00 with the Philippine National Bank. Jr. 1967.000. The judgment is reversed.000. G (16) 0030 in the sum of P40. without costs in this instance. It is the condition in both bonds that if the principal Felipe Ysmael. Ysmael Felipe Ysmael. Felipe Ysmael. then.00. that the person who exercises it must be the owner of a judgment the lien of which is subsequent to the judgment under which the sale of the property to be redeemed was made. exhibits A and B. C). plaintiff brought the present action. as president and in his personal capacity executed with the plaintiff Mercantile Insurance Co. G and H) inviting their attention to the letter of demand of the Philippine National Bank sent to the plaintiff and demanding from the defendants the settlement of said account. The code.000. This is the particular provision which prevents the defendant from exercising the right of redemption under the second class even though we concede to her the benefits of the widest doctrine of subrogation. 1971.000.000. & Co. and referred to in the stipulation of facts. C). Inc. & Co. These letters were received as shown by the registry return receipts (Exhs.00 so that the total liability of the plaintiff to the Philippine National Bank in view of the aforesaid reduction is P100.00 to guarantee the payment of the said amount. and her right to do so still subsists Mercantile insurance co.00 (Exh.. Felipe Ysmael. As security and in consideration of the execution of the surety bonds.alive and subsists as a lien in favor of the surety paying it. however. the Legal Department of plaintiff company wrote a letter of demand to the defendants (Exhs. therefore. losses. Vs.00 which expired since September 4.000. the amount of the Bond was reduced by P40. Our duty. damages. Accordingly. Inc. and Felipe Ysmael. is simply to apply it. Inc. The latter was willing to grant credit accommodation of P2. where the obligation involves a liquidated amount for the payment of which the company has become legally liable under the terms 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. Tordesillas and Augusta Torres in their official capacities and the defendants executed another indemnity agreement (Exh. then these surety bonds shall be null and void (Exh. & Co. Inc. 1967.0030 for P 40. Its lien is the same as to time. A).00 which expired on March 6.
Held: There is no dispute that the overdraft line of P1.. Thus. nor has plaintiff-appellee made a single actual payment to said bank. appellants contention that the action of the appellee (surety company) is premature or that the complaint fails to state a cause of action because the surety has not paid anything to the bank. There is.. no principle of guaranty involved and. appellee Cosmopolitan Insurance Co. therefore.. there is no more need for the plaintiff-appellee to exhaust all the properties of the principal debtor before it may proceed against defendants-appellants. C) by P40.000. however. the defendants executed with the plaintiff identical indemnity agreements (Exhs. filed a bond in favor of the Collector of Internal Revenue to secure the payment in stated installments of the total amount of P25. Inc. which appellant Reyes owed for income tax for the years. later reduced as above stated on September 5. as a result. Inc. once the amount has been received by appellee from appellant. reyes It appears that appellee Cosmopolitan Insurance Co. that the party bringing the action must have a cause of action against the other party. As security and in consideration of the execution of the surety bonds. notwithstanding the demand sent to it by the Philippine National Bank. Reyes. In fact.00 or a total amount of P100. L-5625. to receive by way of money judgment from the debtor the amount due to the creditor. the surety may demand from the indemnitors even before paying the creditors. the amount of P10. Hence. such contention is belied not only by the allegations in the complaint but also by the agreement entered into between the appellants and the appellee in favor of the bank. No. as in this case. Inc. the position occupied by them is that of a principal debtor and indemnitor at the same time. v. Elucidating further.000. therefore. are simultaneously the same persons who executed the Indemnity Agreement. that the same would be paid to the Collector of Internal Revenue? Issue: whether.6). It must be stressed that in the case at bar. Co. It has been held that: The stipulation in the indemnity agreement allowing the surety to recover even before it paid the creditor is enforceable. 58 Off.. which he contends is contrary to public policy. 1967 (Exh. Appellant Reyes assails. Co. 49]. G(16) 0007 for one hundred thousand pesos (Exh. 1952 and 1953. and that for a cause of action to be ripe for litigation. public policy and good morals. the appellant raises the point that there is absolutely no authority in any existing law allowing any person in his capacity as guarantor. 3709 [April 30. upon the latter's default. the validity of paragraph 3 of the Indemnity Agreement. the appellee. March 16. Defendants-appellants maintain that the complaint is premature and that paragraph 3 of the indemnity agreements is void for being contrary to law.422. or to demand a security that shall protect him from any proceedings by the creditor and from the danger of insolvency of the debtor" but not an action for indemnification. pp. and their liability being joint and several with the plaintiff-appellee's. as surety. Alto Surety and Ins. et al. Aguilar.000.00 applied for by the defendant was granted by the Philippine National Bank on the strength of the two surety bonds denominated as MERICO Bond No. v. the principal debtors. Otherwise stated. among others that payment of indemnity or compensation may be claimed irrespective of whether or not plaintiff company has actually paid the same.000. To bolster their contention. Globe Assurance. Security Bank v. Hence. (Cosmopolitan Ins. He argues that under Article 2071 of the Civil Code. D and E) which provide. They argued that to allow plaintiff surety (appellee herein) to receive indemnity or compensation for something it has not paid in its capacity as surety would constitute unjust enrichment at the expense of another. when the debt has become demandable "the action of the guarantor is to obtain release from the guaranty. under the Indemnity Agreement of the parties. the Philippine National Bank may proceed against either for fulfillment of the obligation as covered by the surety bonds. v. there must be both wrongful violation and damages. It is not denied that because of appellant Reyes' failure.00. (Brief for Defendants-Appellants.. became liable on its bond. Cosmopolitan insurance co. all of which are not present in the case at bar because plaintiff-appellee has not suffered any injury whatsoever. 7-8. Vs. CA. G(16) 0030 for forty thousand pesos (Exh.
.38 became due and that. to obtain. cannot be sustained (Cosmopolitan Ins. defendants-appellants herein. The appellant further argues: What security does appellant have. Gaz. p. can demand indemnification from appellant Reyes as principal. even before the former has paid to the creditor. 1954).000. to allow plaintiff-appellee to recover from them something which it has not paid in its capacity as surety would violate the fundamental principle which states NEMOCUM ALTERIUS DETRIMENTO LOCOPLETARI POTEST (No person should unjustly enrich himself at the expense of another).000. defendants-appellants argue that it is an indispensable requisite for an action to prosper.00 and the credit line of Pl. 1962].. In accordance therewith.R.85. A) and MERICO Bond No. Co. [Defendants-Appellants' Brief. G. to recover.645. B). the provision of Article 2071 of the Civil Code does not apply.. Inc. 1951. 15 SCRA 528  citing. Reyes.. supra). 1950.
and the herein appellant Capital Insurance & Surety Co. Eurygenes. 53853 was to enforce a liability which existed even before the bond was executed.. And if the case is decided against appellant thereby holding its bond liable. filed a complaint to recover the sum of P l. the surety may demand from the indemnitors even before paying the creditors. Inc. doing business under the name and style of "Ronquillo Trading". The appellees countered that the only purpose of Civil Case No. and Delgado Shipping Agencies. in advance as premium thereof for every twelve (12) months or fraction thereof. the appellant made a formal demand for the payment of the renewal premiums and cost of documentary stamps for another year in the amount of P1. the effectivity was not due to a renewal made by the appellees but because the surety bond provided that "the liability of the surety will not expire if.. filed Civil Case No.D.
We agree with the contention of the appellees. 1963 and said bond will be cancelled 15 days after its expiration. or as long as the court has not determined their liability.. The appellant. under the Indemnity Agreement.S. while this bond or any renewal or substitution thereof is in effect.800. Inc..00 or its equivalent in Philippine currency. contending that the liability of the appellant under the surety bond accrued during the period of twelve months the said bond was originally in force and before its expiration and that the defendants-appellees were under no obligation to renew the surety bond. Inc. Jose L. Philippine Currency. 1963 or about five (5) days before the expiration of the liability on the bond. Ltd. for the sum of $14. it can be deduced that the payment of renewal premiums should depend upon the life and effectivity of the bond and not on the accrual of its liability. Bautista.S. While it is true that the lower court held that the bond was still in effect after its expiry date. the appellees "agree to pay the COMPANY the sum of ONE THOUSAND EIGHT HUNDRED ONLY (P1.S.827. Furthermore. they jointly and severally promised to pay the appellant the sum of P1.00) Pesos." Under this stipulation the bond expired on the stated date and the phrase "unless surety is notified of any existing obligations thereunder" refers to obligations incurred during the term of the bond. It states that as long as the bond is in full force and effect. otherwise. executed and issued a surety bond in the amount of $14. it must pay the face value of its bond. the suit on the bond instituted by the obligees prior to the expiration of the "liability" thereunder was only for the purpose of enforcing that liability and amounted to notice to appellant of an already existing or accrued liability so as not to let that liability lapse or expire and thereby bar enforcement. Eurygenes and booked on said vessel by the Philippine Merchants Steamship Company. the principals pay no consideration for the use of their bond.800. It must be noted that in the surety bond it is stipulated that the "liability of surety on this bond will expire on May 5. As earlier stated. Inc.00 in advance as premium and documentary stamps for each period of twelve months while the surety bond was in effect.800. as in this case.00 against the appellees in the City Court of Manila. thru its general agent. the duration of the bond is for "every twelve (12) months or fraction thereof. it is notified of an existing obligation thereunder". and/or its agents. The bond was a guarantee for any additional freight which may be determined to be due on a cargo of 258 surplus army vehicles consigned from Pusan. the loss they allegedly suffered as a direct consequence of the failure of the defendants to load the stipulated quantity of 406 U." Since the appellees opted not to renew the
.00. Issue: Held: According to the appellant. Marchessini and Co. Inc. The meaning of the bond's still being in effect is that. surety companies will be at the mercy of their principals because while their liability continues to subsist as long as their accrued liability is not determined. In consideration for the issuance by the appellant of the aforesaid surety bond the appellees executed an indemnity agreement whereby among other things. the principal should pay the corresponding renewal premium and should continue to do so even if the liability on the bond has accrued.Held: The stipulation in the indemnity agreement allowing the surety to recover even before it paid the creditor is enforceable.827. which may take years. Korea to the Ronquillo Trading on board the S. The appellant was made party defendant because of the bond it posted in behalf of the appellees. The appellees refused to pay. Delgado Shipping Agencies. In accordance therewith. and yet it is barred from collecting any consideration for the use of its bond during the pendency of the case. Upon the expiration of the 12 months life of the bond... its master. the city court rendered judgment absolving the appellees from the complaint. surplus army vehicles.. unless surety is notified of any existing obligations thereunder. The bond was given to secure payment by appellees of such additional freight as would already be due on the cargo when it actually arrived in Manila. while this bond or any renewal or substitution is in effect.827. Capitol insurance v. The bond was not executed to secure obligation or liability which was still to arise after its twelve month life.00 or its peso equivalent in behalf of Ronquillo Trading and in favor of S. Ronquillo Capital Surety and Insurance Co. P. therefore. 53853 in the Court of First Instance of Manila against the Philippine Merchants Steamship Co. On April 30." Obviously.
Inc. Cinense the amount of P820. in the sum of P685. and the GENERAL INSURANCE AND SURETY CORPORATION. or. a corporation duly organized and existing under and by virtue the laws of the Philippines. plus attorney's fees. payments. its Vice-Chairman. the surety invokes the following provisions of the bond:
. our heirs. of Urdaneta. jointly and severally firmly by these presents. operating the Sison & Aruego Colleges. Sison and Aruego claimed that because of the cancellation and withdrawal of the bond. prejudices. unto the Department of Education of the Republic of the Philippines in the sum of TEN THOUSAND PESOS (P10. we bind ourselves. that the bond is illegal and that the Government has no capacity to sue.000. or a total of P1. as surety. Jose Aruego. there was no basis for the action. for the payment thereof we bind ourselves. While admitting the allegations of the third-party complaint. INC. in behalf of the Republic of the Philippines. successors. on account of or arising from the execution of the above mentioned Bond. this bond may immediately thereafter be declared forfeited and for the payment of the amount above-specified. jointly and firmly.. in the sum of P820. our heirs. unless sooner revoked On the same day.64. represented Dr. 1954 (when the 60-day notice of cancellation and withdrawal ended). administrators. May 15. advances and expenses of whatever kind and nature." chanrobles virtual law On June 25.00. the Solicitor General. Republic the Department of Education has required the Central Luzon Educational Foundation. CENTRAL LUZON EDUCATIONAL FOUNDATION. the Foundation was indebted to two of its teachers for salaries. Arandia. 1955. chanrobles virtual law library WHEN the Secretary of Education is satisfied that said institution of learning had defaulted in any of the foregoing particulars. employees or creditors of the school and of the Government..chanroblesvirtualawlibrary chanrobles virtual law library NOW.B. in order that the Department can take such action as may be necessary to protect the interests of such teachers. present.chanroblesvirtualawlibrary chanrobles virtual law library We further bind ourselves. or in behalf of said school. Philippines. jointly and severally. 1956.chanroblesvirtualawlibrary chanrobles virtual law library LIABILITY of Surety under this bond will expire on June 15. Aruego executed an indemnity agreement binding themselves jointly and severally to indemnify the surety of "any damages. operating the Sison and Aruego Colleges. More specifically. at any time sustain or incur. at the latest.00) Philippine currency. an institution of learning to file a bond to guarantee the adequate and efficient administration of said school or college and the observance of all regulations prescribed by the Secretary of Education and compliance with all obligations.. For support. the Foundation denied the cross-claim and contended that. Inc. executors. the surety advised the Secretary of Education that it was withdrawing and cancelling its bond. and assigns. to wit: to Remedios Laoag.contract they cannot be obliged to pay the premiums. the indemnity agreement ceased to be of force and effect. THEREFORE. v. including the payment of the salaries of all its teachers and employees.chanroblesvirtualawlibrary chanrobles virtual law library For its part. the surety filed its answer in which it set up special defenses and a cross-claim against the Foundation and prayed that the complaint be dismissed and that it be indemnified by the Foundation of any amount it might be required to pay the Government. loss. as well as to reimburse to said COMPANY all sums and amounts of money which the COMPANY or its representatives shall or may pay or cause to be paid or become liable to pay. and to H. by these presents.chanroblesvirtualawlibrary chanrobles virtual law library In due time. the surety contends that it was no longer liable on its bond after August 24. costs. and the payment of all other obligations incurred by.65. executors. Teofilo Sison and Jose M. which the COMPANY may. are held and firmly bound. Copies of the letter were sent to the Bureau of Private Schools and to the Central Luzon Educational Foundation. past. to give the Department of Education at least sixty (60) days notice of the intended withdrawal or cancellation of this bond. general insurance and surety co.chanroblesvirtualawlibrary chanrobles virtual law library The surety also filed a third-party complaint against Teofilo Sison and Jose M. in the Court of First Instance of Manila on July 11. Inc. 1954. the Central Luzon Educational Foundation. because Remedios Laoag owed Fr. including attorney's fees and legal costs. we. after June 15. filed a complaint for the forfeiture of the bond.ch In its first four assignments of error. and future.505. the liability of the principal for premiums after such termination ceases notwithstanding the pendency of a lawsuit to enforce a liability that accrued during its stipulated lifetime. administrators.chanroblesvirtualawlibrary chanrobles virtual law library It appears that on the date of execution of the bond. Aruego on the basis of the indemnity agreement. where a contract of surety is terminated under its terms. 1954. in compliance with said requirement. Pangasinan. and assigns.64 Demand for the above amount having been refused. 1955. successors. as principal.
still that fact would not help the surety. 68 Phil. whereby Bush delivered to the petitioner..Bush for the amount of P2.1954. No..chanroblesvirtualawlibrary chanrobles virtual law library LIABILITY of the Surety under this bond will expire on June 15. should he fail to do so.chanroblesvirtualawlibrary chanrobles virtual law library Lastly.. Bush and George Upton for the recovery of a sum of money. or in behalf of said school. Bush and Upton secured the discharge of the attachment of these properties by filing a bond posted by Far Eastern Surety & Insurance Co. On the other hand. together with other properties." the surety contends that it cannot be made answer for more than the unpaid salaries of H. De la costa The petitioner. the bond was executed. should the plaintiff and petitioner House obtain a judgment against C. and the payment of all other obligations incurred by. further bind ourselves. .P. Remedios Laoag and the Foundation agreed that the latter would pay the former's salaries." the surety contends that it was released from its obligation under the bond when on February 4. Bush entered into an agreement. it is not disputed that even before the execution of the bond the Foundation was already indebted to two of its teachers for past salaries. those discharged from attachment to be sold at public auction. 1144. including the payment of the salaries of its teachers and employees. Arandia. on March 1. because as earlier pointed out. . The supposed extension of time was granted not by the Department of Education or the Government but by the teachers.chanroblesvirtualawlibrary chanrobles virtual law library Should he have bound himself for more. Inc. In support of this proposition. Creditors to the government. the fact remains that the condition of the bond was violated and so the surety became liable for the penalty provided for therein.. without the knowledge or consent of the Far Eastern Surety & Insurance Co. B. plaintiff in a civil case against C. unless sooner revoked.00 only. he
. As already stated. in its third and fourth "alternative assignments of error.P . which were then already due. Eventually the petitioner obtained judgment against C. the Far Eastern Surety & Insurance Co. the petitioner House and C. L-4023. 1956 does not militate against this position because actions based on written contracts prescribe in ten years. his obligations shall be reduced to the limits of that of the debtor. B. In its first and second "alternative assignments of error. But the above provision does not apply to this case. past. in order that the Department can take such action as may be necessary to protect the interest of such teachers.P. From the moment. But there is nothing in these cases that supports the proposition that the liability of a surety for obligations arising during the life of a bond ceases upon the expiration of the bond. but not for more than the principal debtor.R. the latter would return to the Sheriff of Manila the properties discharged from attachment and. by these presents to give the Department of Education at least sixty (60) days notice of the intended withdrawal or cancellation of this bond. The petitioner was the highest bidder in this sale and the properties were adjudicated to him. the surety cites Article 2079 of the Code which provides as follows: An extension granted to the debtor by the creditor without the consent of the guarantor extinguishes the guaranty. 1934. the Government contends that since the salaries of the teachers were due and payable when the bond was still in force. 164 and National Rice & Corn Corp. et al.chanroblesvirtualawlibrary chanrobles virtual law library House v. (NARIC) v.chanroblesvirtualawlibrary chanrobles virtual law library We agree with this contention of the Government. the surety has become liable on its bond from the moment of its execution on May 15. would pay the value thereof. the creditors on the bond are not the teachers but the Department of Education or the Government. employees.P. on August 25. therefore. par. The case of Arandia alone would be enough basis for the Government to proceed against the bond. G. The fact that the action was filed only on July 11. Inc. Civil Code).. obtained a preliminary attachment of certain properties of the latter.WE. Three days thereafter. Arandia. 1. On September 1st following. For whatever may be the amount of salaries due the teachers. both as regards the amount and the onerous nature of the conditions.. the condition of the bond being that. present and future. 1952. Inc. Inc.chanroblesvirtualawlibrary chanrobles virtual law library Even granting that an extension of time was granted without the consent of the surety. which it claimed amounted to P720. the Foundation was also arrears in the payment of the salaries of H. (Art. 1955.000. What We said about the penal nature of the bond would suffice to dispose of this claim.000 and the same not having been satisfied. The surety also cites our decision in the case of Jollye v. 1955.. .chanroblesvirtualawlibrary chanrobles virtual law library It must be remembered that. the right of the Government to proceed against the bond accrued because since then.." Now. there has been violation of the terms of the bond regarding payment of past salaries of teachers at the Sison and Aruego Colleges. because Article 2054 states that A guarantor may bind himself for less. by the terms of the bond the surety guaranteed to the Government "compliance (by the Foundation) with all obligations. February 29. Barcelon and Luzon Surety Co. Rivera. 1955.. for P2. Bush.
. thereby resulting in the release of the surety from its obligation to pay the value of said properties (articles 1184 and 1847 of the Civil Code). Bush to return the properties to the Sheriff. the obligation of C. as surety of C. was a surety.. Inc. was extinguished and compliance therewith became impossible by petitioner's own act.
. The court denied this petition. The petitioner alleges that the court exceeded and abused its discretion in so ruling. The properties discharged from attachment having been turned over to the petitioner and thereafter publicly sold and adjudicated to him under the said agreement. The petition is denied.asked for execution against Far Eastern Surety & Insurance Co. which alteration necessity released the latter from its obligations as such surety.P.
From the foregoing it appears that the petitioner and C.P Bush in the discharge of the properties from the attachment. in satisfaction of the judgment in favor of the petitioner. Inc.P. under the agreement of September 1st. with the costs to the petitioner. substantially altered their judicial relations as to the properties discharged from attachment and for the delivery of which Far Eastern Surety & Insurance Co.. Bush..