Alarilla, Richard Paolo

Enriquez vs. Mercantile Insurance, G.R. No. 210950, August 15, 2018

Enriquez complaint for replevin against Asuten for the recovery of Toyota Hi-Ace. Asuten
refused to return van as a consequence of a gambling deal. Enriquez applied for a replevin
bond from Mercantile Insurance and also an Indemnity Agreement with the latter to answer
for the bond. Mercantile Insurance issued a bond for a period of one year. RTC dismissed the
complaint stating that Enriquez failed to prove payment of her premiums on the replevin
bond or to post a new bond. Mercantile Insurance was asked to pay Asuten the amount of
P600,000. Mercantile Insurance wrote to Enriquez requesting the remittance of P600,000 but
the latter failed to remit. Enriquez argued that she could not be held liable since the replevin
bond had already expired. RTC ruled in favor of Mercantile Insurance and found that non-
payment of the premiums did not cause the replevin bond to expire. Thus Enriquez was still
liable for the reimbursement made by the surety on the bond. Court of Appeals affirmed RTC
decision.

Q: Is Enriquez still liable under the indemnity agreement even if the replevin bond had
already expired?

A: Yes, Enriquez is still liable under the indemnity agreement even if the replevin bond had
already expired

Under the Guidelines on Corporate Surety Bonds, a surety bond remains effective until the
action or proceeding is finally decided, resolved, or terminated. This condition is deemed
incorporated in the contract between the applicant and the surety, regardless of whether they
failed to expressly state it.

In the said case, even if the writ of seizure is dissolved due to the dismissal, the bond stands
because the case has yet to be finally terminated by the Regional Trial Court. Mercantile
Insurance paid Austen twice the value of the can withheld by Enriquez. Mercantile Insurance,
thus, have the right to recover the amount from Enriquez despite the van only being worth
half the amount of the bond.

Q: Is the Indemnity Agreement a Contract of Adhesion?

A: Yes, the Indemnity Agreement is a Contract of Adhesion

Under the Insurance Code, a contract of insurance is, by default, a contract of adhesion. It is
prepared by the insurance company and might contains terms and conditions too vague for a
layperson to understand. Hence, they are construed liberally in favor of the insured.