November 28, 1956
FACTS:
Luzon Surety filed a claim against the estate of K.H. Hemady based on 20 different indemnity agreements or counter bonds, each subscribed by a distinct principal and by the deceased K.H. Hemady, a surety solidary (guarantor) in all of them.
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% interest thereon.
Upon motion of the administratrix of Hemady’s estate, the Court of First Instance dismissed the claims of Luzon Surety on two grounds. First, the CFI held that the premiums due and cost of documentary stamps were not contemplated under the indemnity agreements to be a part of the undertaking of the guarantor (Hemady), since they were not liabilities incurred after the execution of the counterbonds
And second, the CFI held that whatever losses may occur after Hemady’s death are not chargeable to his estate, because upon his death he ceased to be guarantor.
Hence, the instant petition.
ISSUE:
Whether Hemady’s liability as a solidary guarantor is extinguished by his death. – NO.
HELD:
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.
Under the Civil Code, the heirs, by virtue of the rights of succession, are subrogated to all the rights and obligations of the deceased (Art. 661) and cannot be regarded as third parties with respect to a contract to which the deceased was a party, touching the estate of the deceased. The heirs take such property subject to all the obligations resting thereon in the hands of him from whom they derive their rights.