G.R. No. 126275 November 11, 2004
JOHANNE J. PEÑA & ERLANA G. VDA. DE INOCENCIO, doing business under the name and style of LARGESTONE ENTERPRISES, petitioners, vs. THE HONORABLE COURT OF APPEALS and DURA-TIRE & RUBBER INDUSTRIES, INC., respondents.

FACTS

Respondent Dura-Tire & Rubber Industries, Inc. is a manufacturer and seller of vehicle tires. Petitioners Johanne Peña and Erlana Inocencio, doing business as Largestone Enterprises, were its customers and authorized sales agents, purchasing rubber products on credit for resale. On May 8, 1991, Inocencio executed a surety agreement binding herself solidarily with Peña to pay all past and future indebtedness arising from sales transactions with Dura-Tire. Peña signed as a witness.
From November 1990 to December 1991, Dura-Tire delivered various rubber products to Largestone and its customers, as evidenced by sales invoices. In partial payment, petitioners issued several checks, all of which were subsequently dishonored by the drawee banks for reasons such as “closed account,” “payment stopped,” or “insufficient funds.” Despite formal demands, petitioners failed to settle their account, prompting Dura-Tire to file a collection suit before the Regional Trial Court (RTC).

ISSUE

Whether the Court of Appeals erred in affirming the RTC’s decision holding petitioners Peña and Inocencio jointly and severally liable for the unpaid purchases.

RULING

The Supreme Court denied the petition and affirmed the assailed decisions. The legal logic rests on the conclusive establishment of petitioners’ indebtedness and the validity of the surety agreement. Dura-Tire successfully proved the existence and amount of the obligation through the presentation of numerous sales invoices, which were admitted by petitioners during pre-trial. These documents constituted prima facie evidence of the sale and delivery of the goods, and petitioners failed to present clear and convincing evidence to rebut this presumption or to prove payment.
Regarding the surety agreement, the Court ruled it was valid and binding. Inocencio, as a surety, obligated herself solidarily with the principal debtor, Peña. A contract of suretyship is an accessory promise by which a person binds themselves to answer for the debt of another, who is primarily liable. By executing the agreement, Inocencio assumed a direct and primary obligation co-extensive with that of Peña. Her liability is not excused by the mere fact that she signed the agreement on a date after some of the transactions had occurred, as the agreement explicitly covered past indebtedness. Consequently, petitioners were correctly held jointly and severally liable for the unpaid account, with legal interest and attorney’s fees.