Visayan Surety & Insurance Corporation v. Aquino
REITERATIONFacts
The Antecedents: In Civil Case No. 397, Ysidra Cojuanco, et al. sued Manuel Ernesto Gonzales for rentals of a leased parcel of land. Judgment was rendered ordering the defendant to pay P6,000 annually from March 1, 1941. This judgment was affirmed by the Supreme Court. Procedural History: While the case was pending trial, the plaintiffs prayed for the appointment of a receiver. The defendant posted a counterbond of P36,000, with Visayan Surety & Insurance Corporation as surety, allowing him to retain possession of the land. The condition of the bond was that the defendant would pay all damages the plaintiffs might suffer by reason of the non-appointment or discharge of the receiver. The Petition: After the Supreme Court affirmed the judgment, the plaintiffs moved for execution against Visayan Surety & Insurance Corporation for the amount of its bond, alleging they were deprived of the harvest due to the filing of the counterbond. The motion was amended to pray for an opportunity to prove damages. The Court of First Instance granted the motion, setting a hearing for the reception of evidence on damages. Visayan Surety & Insurance Corporation filed a petition for certiorari, arguing that the damages sought were not included in the final judgment and that the order exceeded the court's jurisdiction by reopening the case to add a liability not originally adjudged.
Issue(s)
Whether the Court of First Instance acted with grave abuse of discretion in ordering the reception of evidence to determine damages against the surety on a counterbond, when no separate judgment had been rendered against the surety. Whether the damages sought by the plaintiffs are covered by the counterbond posted by the defendant and his surety.
Ruling
The petition for certiorari is granted. The order of the Court of First Instance is revoked, and the preliminary injunction is made absolute.
Ratio Decidendi
On the issue of whether the Court of First Instance acted with grave abuse of discretion in ordering the reception of evidence to determine damages against the surety on a counterbond, when no separate judgment had been rendered against the surety: The Supreme Court held that the order of the Court of First Instance was erroneous. The Court emphasized that a judgment against a defendant personally cannot be enforced by execution against the surety on his counterbond. A separate judgment against the surety must first be secured before the counterbond can be proceeded against. The order complained of was issued to secure a judgment against the surety, which indicates the absence of such a judgment. Therefore, the court acted in excess of its jurisdiction by attempting to enforce a liability against the surety without a prior judgment against it. On the issue of whether the damages sought by the plaintiffs are covered by the counterbond posted by the defendant and his surety: The Court clarified that the procedure for claiming damages against a surety on a bond, as prescribed by the Rules of Court, requires that such claims be made before the judgment becomes final. Specifically, Section 9 of Rule 61, in conjunction with Section 20 of Rule 59, mandates that the amount to be awarded upon any bond shall be claimed, ascertained, and granted under the same procedure as prescribed in Section 20 of Rule 59. This procedure generally involves filing a supplemental complaint or an application before the rendition of the judgment on the merits, so that the damages awarded can be included therein. The philosophy behind this rule is to avoid multiplicity of suits and to settle the entire matter in one proceeding. The damages sought by the plaintiffs, which were for the deprivation of the harvest due to the retention of the leased premises, should have been claimed and proven before the judgment in the main case became final. The counterbond was conditioned upon damages suffered by reason of the non-appointment or discharge of a receiver, and the procedure for enforcing this liability was not followed.
Main Doctrine
A surety on a counterbond filed to prevent the appointment of a receiver is not liable for damages unless a separate judgment is first secured against the surety. The counterbond is conditioned upon the payment of damages suffered by the plaintiffs by reason of the non-appointment or discharge of a receiver, and such damages must be claimed and ascertained in accordance with the procedure prescribed for the enforcement of bonds, which typically involves a separate proceeding or claim against the surety.