- Petitioner
- Commonwealth Insurance Corporation
- Respondent
- Court of Appeals
- Citation
- G.R. No. 130886
- Court
- Supreme Court
- Division
- Second Division
- Ponente
- Austria-Martinez, J.
- Decided
- January 29, 2004
Summary
RCBC sued Commonwealth Insurance Corporation to collect on surety bonds securing defaulted export loans to JIGS Manufacturing and ELBA Industries. The central issue was whether CIC must pay 12% legal interest beyond the principal bond amount due to delayed payment. The Supreme Court affirmed that while surety liability is ordinarily limited to the bond amount, delay in payment creates separate liability for legal interest under Civil Code Articles 1169-1170. The Court applied the Eastern Shipping Lines doctrine, awarding 12% annual interest from the dates of extrajudicial demand, distinguishing between contractual liability (limited to bond amount) and legal liability for delay. This case establishes that sureties cannot avoid interest liability by merely negotiating or delaying payment of admitted obligations.