Jamandre v. Luzon Surety Co., Inc.
REITERATIONFacts
The Antecedents: The case involves a claim for premiums against the intestate estate of the late Cirilo Jamandre. Jamandre was an indemnitor on a redelivery bond issued by Luzon Surety Company, Inc. (claimant-appellant) in favor of Magdalena Tejico, who was a defendant-intervenor in Civil Case No. 3902. Luzon Surety Co., Inc. acted as surety for Tejico in a bond amounting to P25,820.00, undertaking to answer for damages that might be awarded to the plaintiff, Maria Jamandre Yanson, in connection with the return of a property previously seized. Procedural History: The claimant-appellant, Luzon Surety Company, Inc., filed a claim for premiums against the intestate estate of Cirilo Jamandre. The administrator-appellee, Jose T. Jamandre, opposed the claim. The Court of First Instance of Negros Occidental disapproved the claim. The Appeal: Luzon Surety Company, Inc. appealed the order of disapproval to the Supreme Court. The claimant-appellant argued that the indemnity agreement remains valid and the obligation to pay premiums continues as long as the original bond exists. They contended that the bond is coterminous with the pendency of the case, including appeals, and that the return of the property did not extinguish the liability. The administrator-appellee argued that the bond's undertaking was terminated upon the redelivery of the property to the plaintiff.
Issue(s)
Whether the surety bond posted in Civil Case No. 3902 was terminated by the redelivery of the property to the plaintiff, or if it remained in force until the final resolution of the case. Whether the indemnity agreement signed by the late Cirilo Jamandre for the payment of premiums to the surety company is still valid and enforceable.
Ruling
The Supreme Court reversed the order of the lower court. It held that the surety bond is coterminous with the pendency of the case, including appeals, and that the indemnity agreement remains valid and enforceable. The administrator of the estate of the late Cirilo Jamandre was ordered to pay the premiums due on the bond up to the entry of final judgment in Civil Case No. 3902.
Ratio Decidendi
On the issue of whether the surety bond was terminated by the redelivery of the property: The Court ruled that the bond posted by Luzon Surety Company, Inc. was not terminated by the redelivery of the property to the plaintiff. Citing Section 5 of Rule 60 of the Rules of Court, the Court explained that a counterbond filed by a defendant is executed to the plaintiff for the delivery of the property if such delivery be adjudged, and for the payment of such sum as may be recovered against the defendant. The bond, therefore, guarantees not only the return of the property but also the payment of any sum recovered against the defendant. The Court emphasized that the indemnity agreement stands as long as the original bond exists, and the bond is coterminous with the case where it is filed, including the pendency of appeals. On the issue of the validity and enforceability of the indemnity agreement: The Court held that the indemnity agreement signed by the late Cirilo Jamandre is valid and enforceable. The Court reasoned that since the original bond remains valid and enforceable until the final resolution of the case, the indemnity agreement, which secures the surety's undertaking, must also remain in effect. The obligation to pay premiums arises from this agreement and continues for the duration of the bond's existence. Therefore, the estate of Cirilo Jamandre is liable for the premiums due on the bond up to the entry of final judgment in Civil Case No. 3902.
Main Doctrine
The indemnity agreement signed by the late Cirilo Jamandre for the payment of advance annual premiums to the Surety Company must be respected. The indemnity agreement stands as long as the original bond exists. The bond filed for the delivery to the plaintiff of properties seized from, and returned to, the defendant is coterminous with the case where it is filed. Thus, the bond executed by Tejico and Luzon Surety in the amount of P 25,320.00 guarantees not only the return of the property of the defendant but also "the payment of such sum to him (plaintiff as may be recovered against the defendant-intervenor."