GR 166662; (June, 2008) (Digest)
G.R. No. 166662 ; June 27, 2008
AUTOCORP GROUP and PETER Y. RODRIGUEZ, petitioners, vs. INTRA STRATA ASSURANCE CORPORATION and BUREAU OF CUSTOMS, respondents.
FACTS
Petitioners Autocorp Group and its President, Peter Y. Rodriguez, secured two re-export bonds from respondent Intra Strata Assurance Corporation (ISAC) in favor of the Bureau of Customs (BOC) to guarantee the re-export of two vehicles or the payment of corresponding taxes and duties. Petitioners executed Indemnity Agreements in favor of ISAC, wherein they jointly and severally agreed to indemnify ISAC for any amount it would pay under the bonds. The agreements contained stipulations that ISAC’s payment under the bonds would be final and incontestable, and that petitioners’ liability would be primary and exigible immediately upon the principal’s default, without necessity for ISAC to first exhaust the principal’s properties.
The vehicles were not re-exported. The BOC made a formal demand on ISAC, as surety, for payment under the bonds. ISAC paid the BOC and then demanded reimbursement from petitioners. When petitioners failed to pay, ISAC filed a collection case. The Regional Trial Court ruled in favor of ISAC, a decision affirmed by the Court of Appeals with modification on the interest rate. Petitioners appealed to the Supreme Court, arguing that ISAC’s payment to the BOC was premature and that their liability as indemnitors should only arise after the surety’s liability is definitively established.
ISSUE
Whether the petitioners are liable to reimburse ISAC under the Indemnity Agreements despite their contention that the surety’s payment to the BOC was premature.
RULING
Yes, petitioners are liable. The Supreme Court upheld the validity and enforceability of the stipulations in the Indemnity Agreements. The contract clearly stated that any payment made by ISAC in the belief it was obligated to pay “shall be final and will not be disputed by the undersigned.” It further stipulated that petitioners’ liability was “primary” and “exigible immediately upon the occurrence of such default,” without necessity for ISAC to first sue the principal. These provisions are lawful and binding.
The Court emphasized the consensual nature of contracts, which, when not contrary to law, morals, good customs, public order, or public policy, constitute the law between the parties. Petitioners freely agreed to these terms, which effectively waived the benefit of excussion and made their obligation direct and immediate upon the principal’s default and the surety’s payment. The BOC’s valid demand on ISAC triggered the surety’s liability. Having paid pursuant to its bond obligations and the clear terms of the indemnity contract, ISAC acquired the right to demand immediate reimbursement from petitioners. Petitioners’ defenses, which essentially sought to nullify the specific contractual terms they agreed to, were without merit. The Court affirmed the appellate decision with modification, applying a 12% per annum interest rate on the principal obligation from judicial demand until its satisfaction.