G.R. No. L-49180; August 29, 1950
RUFINO BUENO, petitioner, vs. DOMINADOR B. AMBROSIO and THE COURT OF APPEALS, respondents.

G.R. No. L-49181; August 29, 1950
DOMINADOR B. AMBROSIO, plaintiff-appellee, vs. ANTONIO ARIZABAL and PILAR ARIZABAL, defendants-appellants.

FACTS

On December 27, 1937, Antonio L. Arizabal (as principal) and Pilar A. Arizabal and Rufino Bueno (as sureties) executed a surety bond in favor of D.B. Ambrosio & Co. in the amount of P20,000. The bond guaranteed the payment of “all obligations incurred by said Antonio L. Arizabal with the said Brokerage Company for or on his own personal account.” On January 3, 1938, Arizabal signed a consolidated statement of his account (Exhibit B) showing a balance of P30,385.08 in favor of D.B. Ambrosio & Co. as of December 31, 1937. This obligation resulted from Arizabal’s personal stock market transactions. D.B. Ambrosio & Co. filed an amended complaint on January 12, 1940, seeking to recover the bonded amount of P20,000 from Arizabal and his sureties, and an additional P10,385.08 from Arizabal alone. The trial court ruled in favor of the plaintiff, and the Court of Appeals affirmed the decision. The defendants appealed to the Supreme Court.

ISSUE

Whether the surety bond covers the pre-existing obligation of Antonio Arizabal incurred prior to the execution of the bond on December 27, 1937.

RULING

Yes. The Supreme Court affirmed the decision of the Court of Appeals, holding the sureties solidarily liable for the bonded amount. The bond expressly guaranteed “all obligations incurred” by Arizabal, using the past tense. This language, read in context, indicated an intention to secure an obligation already existing at the time of the bond’s execution. This interpretation is supported by the circumstance that Arizabal had already ceased to be the manager of the stock and bond department when the bond was signed; therefore, the sureties could not have been guaranteeing future managerial obligations. A surety bond can validly cover past obligations. The one-year grace period for making a claim under the bond began on December 27, 1937 (the date of the bond), not January 3, 1938 (the date Arizabal signed the account statement). The filing of the complaint in 1939 and the amended complaint in 1940 were therefore not premature.

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