[ G.R. No. L-8437, November 28, 1956 ] "Art.
"Art. 776, The inheritance includes all the property, rights and
ESTATE OF K. H. HBMADY, DECEASED, VS. LUZON
SURETY CO., INC. CLAIMANT AND APPELLANT
Facts: Luzon Surety Co. filed a claim against the Estate of
Hemady based on twenty different indemnity agreements, or
counter bonds, each subscribed by a distinct principal and by
the deceased K. H. Hemady, a surety solidary guarantor. All of
these were in consideration of the Luzon Surety Co.’s having
guaranteed the various principals in favour of different
creditors.
Luzon Surety prayed for allowance, as a contingent claim, of
the value of the twenty bonds it had executed in consideration
of the counterbonds, and further asked for judgment for the
unpaid premiums and documentary stamps affixed to the bonds,
with 12 per cent interest thereon
The lower court dismissed the claims of Luzon on the ground
that whatever losses may occur after Hemady's death, .are not
chargeable to his estate, because upon his death he ceased to be
guarantor.
The administratrix also contends that upon the death of
Hemady, his liability as a guarantor terminated, and therefore,
in the absence of a showing that a loss or damage was suffered,
the claim cannot be considered contingent. They also added
that since a new requirement has been added for a person to
qualify as a guarantor, that is: integrity- something purely
personal and is not transmissible. Upon the death of Hemady,
his integrity was not transmitted to his estate or successors.
Whatever loss therefore, may occur after Hemady's death, are
not chargeable to his estate because upon his death he ceased to
be a guarantor.
Issue: WON the obligations of Hemady to Luzon Surety were
transmitted to his heirs.
Ruling: Yes.
Under Art. 1311 of the New Civil Code, the rule is that:
Contracts take effect only as between the parties, their assigns
and heirs, except in the case where the rights and obligations
arising from the contract are not transmissible by their nature,
or by stipulation or by provision of law.
While in our successional system the responsibility of the heirs
for the debts of their decedent cannot exceed the value of the
inheritance they receive from him, the principle remains intact
that these heirs succeed not only to the rights of the deceased
but also to his obligations. Articles 774 and 776 of the New
Civil Code expressely so provide, thereby confirming Article
1311 already qouted.
"Art. 774. Succession is a mode of acquisition by virtue of
which the property, rights and obligations to the extent of the
value of the inheritance, of a person are transmitted through his
death to another or others either by his will or by operation of
law."
obligations of a person which are not extinguished by his
death."
Therefore, the general rule is that a party's contractual rights and
obligations are transmissible to the successors.
Although Art. 1311 admits of 3 exceptions: a. nature of the
obligation; b. intransmissibility by stipulation of the parties; c.
intransmissibilty by operation of law, these exceptions do not
apply in the case.
First, the surety or guarantor does not warrant the conclusion
that his peculiar individual qualities are contemplated as a
principal inducement for the contract. Creditor Luzon Surety
Co. only expect of K. H. Hemady reimbursement of the moneys
that the Luzon Surety Co. might have to disburse on account of
the obligations of the principal debtors. It was indifferent that
the reimbursement should be made by Hemady himself or by
someone else in his behalf, so long as the money was paid to it.
Second, the text of the agreements sued upon nowhere indicate
that they are non-transferable. Because under the law (Article
1311), a person who enters into a contract is deemed to have
contracted for himself and his heirs and assigns, it is
unnecessary for him to expressly stipulate to that effect.
Lastly, by contract, the articles of the Civil Code that regulate
guaranty or suretyship (Articles 2047 to 2084) contain no
provision that the guaranty is extinguished upon the death of the
guarantor or the surety.
That integrity, capacity to bind himself, and sufficient property
to answer for the obligation are purely personal is of no merit.
The law requires these qualities to be present only at the time of
the perfection of the contract of guaranty. Once the contract has
become perfected and binding, the supervening incapacity of
the guarantor would not operate to exonerate him of the
eventual liability he has contracted.
Thus, the solidary guarantor's liability is not extinguished by his
death, and that in such event, the Luzon Surety Co., had the
right to file against the estate a contingent claim for
reimbursement.