578 Phil. 804
CHICO-NAZARIO, J.:
INDEMNITY: - The undersigned agree at all times to jointly and severally indemnify the COMPANY and keep it indemnified and hold and save it harmless from and against any and all damages, losses, costs, stamps, taxes, penalties, charges and expenses of whatsoever kind and nature including counsel or attorney's fee which the COMPANY shall or may at any time sustain or incur in consequence of having become surety upon the bond herein above referred to or any extension, renewal, substitution or alteration thereof, made at the instance of the undersigned or any of them, or any other bond executed on behalf of the undersigned or any of them, and to pay; reimburse and make good to the COMPANY, its successors and assigns, alls sums and amounts of money which it or its representatives shall pay or cause to be paid, or become liable to pay on accounts of the undersigned or any of them, of whatsoever kind and nature, including 25% of the amount involved in the litigation or other matters growing out of or connected therewith, for and as attorney's fees, but in no case less than P300.00 and which shall be payable whether or not the case be extrajudicially settled, it being understood that demand made upon anyone of the undersigned herein is admitted as demand made on all of the signatories hereof. It is hereby further agreed that in case of any extension or renewal of the bond, we equally bind ourselves to the COMPANY under the same terms and conditions as therein provided without the necessity of executing another indemnity agreement for the purpose and that we may be granted under this indemnity agreement.In sum, ISAC issued the subject bonds to guarantee compliance by petitioners with their undertaking with the BOC to re-export the imported vehicles within the given period and pay the taxes and/or duties due thereon. In turn, petitioners agreed, as surety, to indemnify ISAC for the liability the latter may incur on the said bonds.
MATURITY OF OUR OBLIGATIONS AS CONTRACTED HEREWITH AND ACCRUAL OF ACTION: - Notwithstanding of (sic) the next preceding paragraph 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's aforesaid liability irrespective of whether or not payment has actually been made by the COMPANY, 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.
INTEREST IN CASE OF DELAY: - In the event of delay in payment of the said sum or sums by the undersigned they will pay interest at the rate of 12% per annum or same, which interest, if not paid, will be liquidated and accumulated to the capital quarterly, and shall earn the same interest as the capital; all this without prejudice to the COMPANY's right to demand judicially or extrajudicially the full payment of its claims.
INCONTESTABILITY OF PAYMENT MADE BY THE COMPANY: - Any payment or disbursement made by the COMPANY on account of the above-mentioned Bond, its renewals, extensions or substitutions, replacement or novation in the belief either that the COMPANY was obligated to make such payment or that said payment was necessary in order to avoid greater losses or obligations for which the COMPANY might be liable by virtue of the terms of the above-mentioned Bond, its renewal, extensions or substitutions, shall be final and will not be disputed by the undersigned, who bind themselves to jointly and severally indemnify the COMPANY of any such payments, as stated in the preceding clauses:
WAIVER OF VENUE OF ACTION: - We hereby agree that any question which may arise between the COMPANY and the undersigned by reason of this document and which has to be submitted for decision to a court of justice shall be brought before the court of competent jurisdiction in Makati, Rizal, waiving for this purpose any other venue.
WAIVER: - The undersigned hereby waive all the rights[,] privileges and benefits that they have or may have under Articles 2077, 2078, 2079, 2080 and 2081, of the Civil Code of the Philippines.
The undersigned, by this instrument, grant a special power of attorney in favor of all or any of the other undersigned so that any of the undersigned may represent all the others in all transactions related to this Bond, its renewals, extensions, or any other agreements in connection with this Counter-Guaranty, without the necessity of the knowledge or consent of the others who hereby promise to accept as valid each and every act done or executed by any of the attorney's-in-fact by virtue of the special power of attorney.
OUR LIABILITY HEREUNDER: - It shall not be necessary for the COMPANY to bring suit against the principal upon his default or to exhaust the property of the principal, but the liability hereunder of the undersigned indemnitors shall be jointly and severally, a primary one, the same as that of the principal, and shall be exigible immediately upon the occurrence of such default.
CANCELLATION OF BOND BY THE COMPANY: - The COMPANY may at any time cancel the above-mentioned Bond, its renewals, extensions or substitutions, subject to any liability which might have accrued prior to the date of cancellation refunding the proportionate amount of the premium unearned on the date of cancellation.
RENEWALS, ALTERATIONS AND SUBSTITUTIONS: - The undersigned hereby empower and authorize the COMPANY to grant or consent to the granting of any extension, continuation, increase, modification, change, alteration and/or renewal of the original bond herein referred to, and to execute or consent to the execution of any substitution for said Bond with the same or different, conditions and parties, and the undersigned hereby hold themselves jointly and severally liable to the COMPANY for the original Bond herein above-mentioned or for any extension, continuation, increase, modification, change, alteration, renewal or substitution thereof without the necessary of any new indemnity agreement being executed until the full amount including principal, interest, premiums, costs, and other expenses due to the COMPANY thereunder is fully paid up.
SEVERABILITY OF PROVISIONS: - It is hereby agreed that should any provision or provisions of this agreement be declared by competent public authority to be invalid or otherwise unenforceable, all remaining provisions herein contained shall remain in full force and effect.
NOTIFICATION: - The undersigned hereby accept due notice of that the COMPANY has accepted this guaranty, executed by the undersigned in favor of the COMPANY.[3]
WHEREFORE, judgment is hereby rendered in favor of the [herein private respondent ISAC] and as against the [herein petitioners] who are ordered to pay the [private respondent] Intra Strata Assurance Corporation and/or the Bureau of Customs the amount of P1,034,649.00 which is the equivalent amount of the subject bonds as well as to pay the plaintiff corporation the sum of P258,662.25 as and for attorney's fees.[6]Petitioners' Motion for Reconsideration was denied by the RTC in a Resolution dated 15 January 1999.[7]
WHEREFORE, the appealed 16 September 1998 Decision is MODIFIED to reduce the award of attorney's fees to One Hundred Three Thousand Four Hundred Sixty Four Pesos Ninety Centavos (P103,464.90). The rest is affirmed in toto. Costs against [herein petitioners].[8]In a Resolution dated 5 January 2005, the Court of Appeals refused to reconsider its Decision.
I. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN RENDERING JUDGMENT AGAINST PETITIONERS BASED ON A PREMATURE ACTION AND/OR RULING IN FAVOR OF RESPONDENTS WHO HAVE NO CAUSE OF ACTION AGAINST PETITIONERS.
II. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE DECISION OF BRANCH 150, REGIONAL TRIAL COURT OF MAKATI CITY BASED ON MISAPPREHENSION OF FACTS, UNSUPPORTED BY EVIDENCE ON RECORD CONTRARY TO LAW.
III. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT GIVING MERIT TO THE ISSUE RAISED BY PETITIONERS THAT THE BUREAU OF CUSTOMS IS IMPROPERLY IMPLEADED BY INTRA STRATA.
IV. THE HONORABLE COURT OF APPEALS GRAVELY ERRED [IN] AFFIRMING THE PORTION OF THE DECISION HOLDING PETITIONER PETER Y. RODRIGUEZ AS JOINTLY LIABLE WHEN AMENDMENTS WERE INTRODUCED, WITHOUT HIS CONSENT AND APPROVAL.[9]
Secondly, it bears emphasis that as borne by the records, not only is there no writ of forfeiture against Surety Bond No. 7154, there is likewise no evidence adduced on record to prove that respondent Intra Strata has made legal demand against Surety Bond No. 5770 neither is there a showing that respondent BOC initiated a demand or issued notice for its forfeiture and/or confiscation.[11]The Court of Appeals, in its assailed Decision, already directly addressed petitioners' arguments by ruling that an actual forfeiture of the subject bonds is not necessary for petitioners to be liable thereon to ISAC as surety under the Indemnity Agreements.
[W]here the obligation involves a liquidated amount for the payment of which [ISAC] has become legally liable under the terms of the obligation and its suretyship undertaking or by the demand of the [BOC] or otherwise and the latter has merely allowed the [ISAC's] aforesaid liability, irrespective of whether or not payment has actually been made by the [ISAC], the [ISAC] for the protection of its interest may forthwith proceed against [petitioners Autocorp Group and Rodriguez] or either of them by court action or otherwise to enforce payment, even prior to making payment to the [BOC] which may hereafter be done by [ISAC][,][12]petitioners' obligation to indemnify ISAC became due and demandable the moment the bonds issued by ISAC became answerable for petitioners' non-compliance with its undertaking with the BOC. Stated differently, petitioners became liable to indemnify ISAC at the same time the bonds issued by ISAC were placed at the risk of forfeiture by the BOC for non-compliance by petitioners with its undertaking.
Art. 2071. The guarantor, even before having paid, may proceed against the principal debtor:Petitioners also invoke the alleged lack of demand on the part of ISAC on petitioners as regards Instrata Bond No. 5770 before it instituted Civil Case No. 95-1584. Even if proven true, such a fact does not carry much weight considering that demand, whether judicial or extrajudicial, is not required before an obligation becomes due and demandable. A demand is only necessary in order to put an obligor in a due and demandable obligation in delay,[14] which in turn is for the purpose of making the obligor liable for interests or damages for the period of delay.[15] Thus, unless stipulated otherwise, an extrajudicial demand is not required before a judicial demand, i.e., filing a civil case for collection, can be resorted to.
(1) When he is sued for the payment;
(2) In case of insolvency of the principal debtor;
(3) When the debtor has bound himself to relieve him from the guaranty within a specified period, and this period has expired;
(4) When the debt has become demandable, by reason of the expiration of the period for payment;
(5) After the lapse of ten years, when the principal obligation has no fixed period for its maturity, unless it be of such nature that it cannot be extinguished except within a period longer than ten years;
(6) If there are reasonable grounds to fear that the principal debtor intends to abscond;
(7) If the principal debtor is in imminent danger of becoming insolvent.
In all these cases, the action of the guarantor is to obtain release from the guaranty, or to demand a security that shall protect him from any proceedings by the creditor and from the danger of insolvency of the debtor. (Emphases ours.)
SEC. 11. Misjoinder and non-joinder of parties.--Neither misjoinder nor non-joinder of parties is ground for dismissal of an action. Parties may be dropped or added by order of the court on motion of any party or on its own initiative at any stage of the action and on such terms as are just. Any claim against a misjoined party may be severed and proceeded with separately.Consequently, the purported misjoinder of the BOC as a party cannot result in the dismissal of Civil Case No. 95-1584. If indeed the BOC was improperly impleaded as a party in Civil Case No. 95-1584, at most, it may be dropped by order of the court, on motion of any party or on its own initiative, at any stage of the action and on such terms as are just.
SEC. 8. Necessary party.--A necessary party is one who is not indispensable but who ought to be joined as a party if complete relief is to be accorded as to those already parties, or for a complete determination or settlement of the claim subject of the action.The subject matter of Civil Case No. 95-1584 is the liability of Autocorp Group to the BOC, which ISAC is also bound to pay as the guarantor who issued the bonds therefor. Clearly, there would be no complete settlement of the subject matter of the case at bar - the liability of Autocorp Group to the BOC - should Autocorp Group be merely ordered to pay its obligations with the BOC to ISAC. BOC is, therefore, a necessary party in the case at bar, and should not be dropped as a party to the present case.
SEC. 10. Unwilling co-plaintiff.-- If the consent of any party who should be joined as plaintiff can not be obtained, he may be made a defendant and the reason therefor shall be stated in the complaint.Nonetheless, the irregularity in the inclusion of the BOC as a party to Civil Case No. 95-1584 would not in any way affect the disposition thereof. As the Court already found that the BOC is a necessary party to Civil Case No. 95-1584, it would be a graver injustice to drop it as a party.
Art. 2079. An extension granted to the debtor by the creditor without the consent of the guarantor extinguishes the guaranty. The mere failure on the part of the creditor to demand payment after the debt has become due does not of itself constitute any extension of time referred to herein.Petitioner Rodriguez argues that there was an amendment as to the effectivity of the bonds, and this constitutes a modification of the agreement without his consent, thereby exonerating him from any liability.
INDEMNITY: - The undersigned [Autocorp Group and Rodriguez] agree at all times to jointly and severally indemnify the COMPANY [ISAC] and keep it indemnified and hold and save it harmless from and against any and all damages, losses, costs, stamps, taxes, penalties, charges and expenses of whatsoever kind and nature including counsel or attorney's fee which the COMPANY [ISAC] shall or may at any time sustain or incur in consequence of having become surety upon the bond herein above referred to x x xThe Court of Appeals concluded that since petitioner Rodriguez was a surety, Article 2079 of the Civil Code does not apply. The appellate court further noted that both petitioners authorized ISAC to consent to the granting of an extension of the subject bonds.
x x x x
OUR LIABILITY HEREUNDER: - It shall not be necessary for the COMPANY [ISAC] to bring suit against the principal [Autocorp Group] upon his default or to exhaust the property of the principal [Autocorp Group], but the liability hereunder of the undersigned indemnitors [Rodriguez] shall be jointly and severally, a primary one, the same as that of the principal [Autocorp Group], and shall be exigible immediately upon the occurrence of such default. (Emphases supplied.)
RENEWALS, ALTERATIONS AND SUBSTITUTIONS: - The undersigned [Autocorp Group and Rodriguez] hereby empower and authorize the COMPANY [ISAC] to grant or consent to the granting of any extension, continuation, increase, modification, change, alteration and/or renewal of the original bond herein referred to, and to execute or consent to the execution of any substitution for said Bond with the same or different, conditions and parties, and the undersigned [Autocorp Group and Rodriguez] hereby hold themselves jointly and severally liable to the COMPANY [ISAC] for the original Bond herein above-mentioned or for any extension, continuation, increase, modification, change, alteration, renewal or substitution thereof without the necessary of any new indemnity agreement being executed until the full amount including principal, interest, premiums, costs, and other expenses due to the COMPANY [ISAC] thereunder is fully paid up.[23]The foregoing provision in the Indemnity Agreements clearly authorized ISAC to consent to the granting of any extension, modification, alteration and/or renewal of the subject bonds.
(Emphases supplied.)
Art. 1169. Those obliged to deliver or to do something incur in delay from the time the obligee judicially or extrajudicially demands from them the fulfillment of their obligation. However, the demand by the creditor shall not be necessary in order that delay may exist:[15] Article 1170 of the Civil Code provides:
(1) When the obligation or the law expressly so declare; or
(2) When from the nature and the circumstances of the obligation it appears that the designation of the time when the thing is to be delivered or the service is to be rendered was a controlling motive for the establishment of the contract; or
(3) When demand would be useless, as when the obligor has rendered it beyond his power to perform.
In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by the other begins.
Art. 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for damages.[16] Records, p. 1.
Art. 1303. Subrogation transfers to the persons subrogated the credit with all the rights thereto appertaining, either against the debtor or against third person, be they guarantors or possessors of mortgages, subject to stipulation in a conventional subrogation.[20] Civil Code, Article 2067 provides::
Art. 2067. The guarantor who pays is subrogated by virtue thereof to all the rights which the creditor had against the debtor.[21] Id. at 212.