Liberty Construction Supply Co. v. Pecson
REITERATIONFacts
The Antecedents: Fernando Quema filed a complaint for recovery of possession of 400 black iron pipes against Jaime Castro, Benjamin Layug, and Liberty Construction Supply Company (petitioner). Quema, as plaintiff, posted a bond with Alto Surety and Insurance Co., Inc. (respondent surety) as surety to secure immediate possession. The sheriff took possession, but the pipes were returned to petitioner upon filing a re-delivery bond. Petitioner filed an answer, denying allegations and counterclaiming P1,366.55 for damages due to malicious inclusion and seizure. Procedural History: On September 1, 1949, the respondent Judge rendered judgment dismissing Quema's complaint and ordering Quema to pay petitioner P1,366.55 with interest. The judgment became final as no appeal was filed. On December 27, 1949, petitioner obtained a writ of execution against Quema, which was returned unsatisfied due to Quema's insolvency. Petitioner then moved for an alias writ of execution against the respondent surety. The Petition: The respondent Judge initially ordered the issuance of an alias writ of execution against the surety. However, upon motion for reconsideration by the surety, the Judge set aside the order and writ, citing lack of jurisdiction due to petitioner's alleged failure to file its claim for damages in accordance with Sections 10, Rule 62, and 20, Rule 59 of the Rules of Court. Petitioner's motion for reconsideration of this order was denied.
Issue(s)
Whether the respondent Judge acted with grave abuse of discretion amounting to lack of jurisdiction in setting aside the alias writ of execution against the surety. Whether the judgment for damages in favor of the petitioner against the plaintiff in the civil case binds the respondent surety company, despite the surety not being notified or included as a defendant in the petitioner's counterclaim.
Ruling
The petition for mandamus is denied. The respondent judge acted in accordance with law in refusing to order the execution of its judgment against the respondent Alto Surety and Insurance Co., Inc.
Ratio Decidendi
On the issue of whether the respondent Judge acted with grave abuse of discretion amounting to lack of jurisdiction in setting aside the alias writ of execution against the surety: The Court held that the respondent judge acted in accordance with law. The issuance of an alias writ of execution against a surety to enforce an obligation under a judicial bond requires that the surety be given due notice and an opportunity to present its defenses. The Court cited the ruling in Visayan Surety and Insurance Corp. vs. Pascual et al., which abandoned the earlier ruling in Florentino vs. Domadag. In the present case, the surety was not notified of the counterclaim for damages filed by the petitioner. Therefore, the judgment for damages against the principal cannot be executed against the surety without affording the latter an opportunity to be heard. The respondent judge's reconsideration and setting aside of the alias writ were justified on these grounds, as the surety had not been given its day in court regarding the counterclaim. On the issue of whether the judgment for damages in favor of the petitioner against the plaintiff in the civil case binds the respondent surety company, despite the surety not being notified or included as a defendant in the petitioner's counterclaim: The Court ruled in the negative. While the petitioner cited Florentino vs. Domadag for the proposition that the surety is bound, this ruling was explicitly abandoned in Visayan Surety and Insurance Corp. vs. Pascual et al.. The latter case established that damages resulting from actions secured by a judicial bond must be claimed and ascertained in the same action with due notice to the surety. If the surety is given due notice, it is bound by the judgment against the principal, and an alias writ of execution may be issued against it. Conversely, if no notice is given to the surety, the judgment cannot be executed against him without giving him an opportunity to present such defenses as he may have, which the principal could not previously set up. In this instance, the petitioner's counterclaim for damages was not brought to the attention of the surety, thus precluding execution against the surety.
Main Doctrine
A surety is not bound by a judgment against the principal if the surety was not given due notice and an opportunity to present its defense, even if the judgment was rendered in the same action where the bond was posted.