G.R. No. 165487 - COUNTRY BANKERS INSURANCE CORPORATION, VS. ANTONIO LAGMAN.D E C I S I O N - Supreme Court E-Library

Ruling

Accordingly, Country Bankers Insurance Corporation (Country Bankers) issued Warehouse Bond No. 03304 [4] for P1,749,825.00 on 5 November 1989 and Warehouse Bond No. 02355 [5] for P749,925.00 on 13 December 1989 (1989 Bonds) through its agent, Antonio Lagman (Lagman). Santos was the bond principal, Lagman was the surety and the Republic of the Philippines, through the NFA was the obligee. In consideration of these issuances, corresponding Indemnity Agreements [6] were executed by Santos, as bond principal, together with Ban Lee Lim Santos (Ban Lee Lim), Rhosemelita Reguine (Reguine) and Lagman, as co-signors. The latter bound themselves jointly and severally liable to Country Bankers for any damages, prejudice, losses, costs, payments, advances and expenses of whatever kind and nature, including attorney's fees and legal costs, which it may sustain as a consequence of the said bond; to reimburse Country Bankers of whatever amount it may pay or cause to be paid or become liable to pay thereunder; and to pay interest at the rate of 12% per annum computed and compounded monthly, as well as to pay attorney's fees of 20% of the amount due it. [7] Santos then secured a loan using his warehouse receipts as collateral. [8] When the loan matured, Santos defaulted in his payment. The sacks of palay covered by the warehouse receipts were no longer found in the bonded warehouse. [9] By virtue of the surety bonds, Country Bankers was compelled to pay P1,166,750.37. [10] Consequently, Country Bankers filed a complaint for a sum of money docketed as Civil Case No. 95-73048 before the Regional Trial Court (RTC) of Manila. In his Answer, Lagman alleged that the 1989 Bonds were valid only for 1 year from the date of their issuance, as evidenced by receipts; that the bonds were never renewed and revived by payment of premiums; that on 5 November 1990, Country Bankers issued Warehouse Bond No. 03515 (1990 Bond) which was also valid for one year and that no Indemnity Agreement was executed for the purpose; and that the 1990 Bond supersedes, cancels, and renders no force and effect the 1989 Bonds. [11] The bond principals, Santos and Ban Lee Lim, were not served with summons because they could no longer be found. [12] The case was eventually dismissed against them without prejudice. [13] The other co-signor, Reguine, was declared in default for failure to file her answer. [14] On 21 September 1998, the trial court rendered judgment declaring Reguine and Lagman jointly and severally liable to pay Country Bankers the amount of P2,400,499.87. [15] The dispositive portion of the RTC Decision [16] reads: WHEREFORE, premises considered, judgment is hereby rendered, ordering defendants Rhomesita [sic] Reguine and Antonio Lagman, jointly and severally liable to pay plaintiff, Country Bankers Assurance Corporation, the amount of P2,400,499.87, with 12% interest from the date the complaint was filed until fully satisfied plus 20% of the amount due plaintiff as and for attorney's