Cosmopolitan Insurance Co., Inc. vs.

Reyes
G. R. No. L-20199. November 23, 1965
J. Regala

Doctrine:

Suretyship, Right of surety to demand from the indemnitors even

before paying the creditors.

The stipulation in the indemnity agreement allowing the surety to

recover even before it paid the creditor is enforceable. In accordance
therewith, the surety may demand from the indemnitors 'even before
paying the creditors.

Issue:

Whether or not under the Indemnity Agreement of the parties, the

appellee (cosmopolitan), as surety, can demand indemnification from
appellant Reyes as principal, upon the latter's default, even before the
former has paid to the creditor.

Ruling:

Yes, the Indemnity agreement is valid. The same is not contrary to

law nor in any way militate against the public good.

The supreme court has laid down the doctrine held in the case of
Security Bank vs. Globe Assurance, 58 Off, Gaz. 3708 (April 80,1962),
where a similar indemnity agreement of the parties is involved. "The
stipulation in the indemnity agreement allowing the surety to recover
even before it paid the creditor is enforceable. In accordance
therewith, the surety may demand from the indemnitors even before
paying the creditors."

Therefore, under the indemnity agreement the surety

cosmopolitan may demand from appellant Reyes even before paying
to the Commissioner of Internal Revenue.