Visayan Surety And Insurance Corporation, Recurrente, Contra Victorina G. De Laperal, Asistida De Su Esposo, Roberto Laperal, Recurridos

Summary

This landmark case clarified the distinction between simple surety and solidary surety under Philippine Civil Code. Artemio S. Vega received P1,000 worth of jewelry from the Laperal couple to sell, guaranteed by Visayan Surety's bond. When Vega failed to pay or return the jewelry, the issue was whether the surety company was jointly and severally liable or only subsidiarily liable. The Supreme Court ruled that the surety bond created only subsidiary liability, not joint and several liability, emphasizing that surety obligations under Article 1822 are accessory and subsidiary by nature unless explicitly made solidary. The Court distinguished between American common law concepts of suretyship/guaranty and Philippine Civil Code provisions, establishing that simple sureties are entitled to the benefit of excussion and execution cannot issue against them until the principal debtor's assets are exhausted. This decision became foundational jurisprudence for Philippine surety law.