Port Motors v. Raposas
REITERATIONFacts
1. The Antecedents: On September 6, 1949, Lt. Colonel Felipe Raposas purchased a Lincoln Cosmopolitan Sports Sedan from Port Motors, Inc. for P12,400. He made a down payment of P2,600 and executed a promissory note for the remaining P9,800, secured by a chattel mortgage on the vehicle. The agreement stipulated that failure to pay installments would render the entire balance immediately due, with 12% annual interest and liquidated damages equivalent to 33 1/3% of the outstanding amount. Raposas defaulted on payments starting November 1949. 2. Procedural History: Port Motors, Inc. filed a complaint on June 22, 1950, in the Court of First Instance of Manila, seeking seizure and disposition of the car. The court issued a seizure order, but Raposas, with Alto Surety and Insurance Co., Inc. as bondsman, posted a counterbond and retained possession of the car. Raposas admitted his indebtedness of P8,970 and requested a two-month period to pay, which he failed to do. The court rendered judgment on January 8, 1951, ordering Raposas to pay P8,970 with 6% interest. Raposas appealed to the Court of Appeals, which dismissed the appeal as abandoned. A writ of execution against Raposas's properties was returned unsatisfied. Port Motors, Inc. then moved to hold the surety liable on July 28, 1952, but the trial court denied this motion, citing procedural rules and the fact that the motion was filed after the judgment became final. The Court of Appeals certified the case to the Supreme Court due to a purely legal question. 3. The Petition: Port Motors, Inc. petitions this Court, arguing that the lower court erred in deeming its motion to hold the bonding company liable as untimely and in denying the motion and subsequent reconsideration. The appellant contends that Alto Surety and Insurance Co., Inc. remains liable under its counterbond, even though the surety was not explicitly included in the original judgment against Raposas. The core of the petition revolves around whether a separate judgment against the surety is required before proceeding against the counterbond, especially when the motion to hold the surety liable is filed after the main judgment has become final and uncollectible from the principal.
Issue(s)
Whether a surety on a counterbond in a Replevin case can be held liable for a judgment after said judgment has already become final and executory, despite the surety's liability not being included in the original dispositive portion.
Ruling
The Supreme Court affirmed the orders of the lower court denying the motion to hold the surety liable. The Court ruled that the motion was filed out of time, as it was made after the judgment had become final and executory. The liability of the surety must be claimed, ascertained, and granted under the same procedure prescribed in Section 20 of Rule 59, which requires the application for damages to be filed before trial or, in the discretion of the court, before entry of final judgment and included in the final judgment.
Ratio Decidendi
On Issue 1: The Supreme Court held that under Section 10, Rule 62, in connection with Section 20, Rule 59 of the Rules of Court, any claim against a bond must be claimed, ascertained, and granted before the entry of final judgment. The Court emphasized that these provisions are mandatory and require that the application for damages against the surety be included in the final judgment. Applying Liberty Construction Supply Co. v. Pecson, the Court reiterated that a judgment against a defendant personally cannot be enforced against the surety if the judgment itself contains no such award. The Court reasoned that to allow a post-judgment motion to hold the surety liable would necessitate a reopening of the case and a modification of a final decision, which is prohibited by public policy. Furthermore, citing Aguasin v. Velasquez, the Court explained that the surety, not being an original party to the action, must be given due process through notice and a hearing before its bond can be reached. The joint and several nature of the bond does not bypass these procedural requirements; rather, the materiality of the 'solidary' obligation only arises after both the principal and surety have been legally adjudged liable by a lawful judgment. Consequently, because Port Motors, Inc. failed to move against the surety before the judgment became final, the right to proceed against the counterbond was lost.
Main Doctrine
A claim against a surety on a counterbond in a replevin case must be seasonably filed and included in the final judgment, as a motion filed after the judgment has become final and executory cannot be entertained to hold the surety liable.