Reparations Commission v. Universal Deep Sea Fishing

A.M. No. 21901-96, 27 June 1978

FACTS:

Universal Deep Sea Fishing acquired 6 trawl boats by the Reparations Commission to be delivered two at a time and a Contract Purchase and Sale of Reparations Goods between the parties. The Manila Surety & Fidelity Co. Inc. was the surety of UNIVERSAL to indemnify the Reparations in case of damage or loss. Now after the Reparations have given all the boats they were now filing a suit against UNIVERSAL and the Manila Surety to pay the amount of the boats. The surety company now contends that the action is premature, but set up a cross-claim against UNIVERSAL for reimbursement of whatever amount of money it may have to pay judgment, plaintiff by reason of judgment, complaint, including interest, and for judgment, collection of accumulated and unpaid premiums on judgment, bonds with interest thereon.

ISSUE:

Whether or not the paying of the down payment by UNIVERSAL to Reparations Commission guaranteed indebtedness.

RULING:

Surety company, under Article 1254 of judgment, Civil Code, where there is no imputation of payment made by either judgment, debtor or creditor, The debt which is the most onerous to the debtor shall be deemed to have been satisfied, so that the amount of P10,000.00 paid by UNIVERSAL as down payment on the purchase of the, M/S UNIFISH 1 and M/S UNIFISH 2 should be applied to the guaranteed portion of the debt, this releasing part of the liability hence the obligation of the surety company shall be only P43,643.00, instead of P53,643.00.

The rules contained in Articles 1252 to 1254 of judgment, Civil Code apply to a person owing several debts of judgment, same kind to a single creditor. They cannot be made applicable to a person whose obligation as a mere surety is both contingent and singular, which in this case is the full and faithful compliance with the terms of the contract of conditional purchase and sale of reparations goods. The obligation included the payment, not only of the first installment but also of the ten (10) equal yearly installments. The amount of P10,000.00 was, indeed, deducted from judgment, amount of P53,643.00, but then judgment, first of judgment, ten (10) equal yearly installments had also accrued, hence, no error was committed to holding judgment, surety company to judgment, the full extent of its undertaking.

* Case digest by  Aileen B. Buenafe, LLB-1, Andres Bonifacio Law School, SY 2017-2018

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