Alliance Insurance v. Piccio
REITERATIONFacts
1. The Antecedents: The underlying dispute originated from a complaint for petition and damages filed by Rufina Vergara against Jose Alcos and Maria Georfo. A preliminary injunction was issued, granting the plaintiff possession of the property pendente lite. After Rufina Vergara's death, she was substituted by Anatolio Ynclino. The defendants later filed a counterbond, subscribed by Bernabe Nengasca and Ismael Abendan, which was subsequently withdrawn. The defendants then secured a new counterbond from Alliance Insurance & Surety Co., Inc. (petitioner herein), stipulating that in case the plaintiff suffered damages due to the lifting of the preliminary injunction, the principal and surety would be jointly and severally liable up to P1,000.00. During the trial, the court, without notifying the surety, ordered the defendants to deliver possession of the property to the plaintiff and pay P8,416.00 in damages. This judgment was affirmed by the Court of Appeals. 2. Procedural History: Following the finality of the judgment, a writ of execution was issued against the defendants, but it was returned unsatisfied due to their insolvency. The plaintiff then moved for an alias writ of execution against the surety, petitioner Alliance Insurance & Surety Co., Inc. The petitioner opposed this motion, arguing that the judgment did not award damages arising from the lifting of the injunction and that, in any event, no notice of the hearing for damages was given to the surety as required by law. Despite the opposition, the respondent Judge granted the motion for execution against the surety. 3. The Petition: This petition for certiorari seeks to set aside the respondent Judge's order directing the issuance of a writ of execution against the petitioner's bond. The petitioner contends that the award of damages cannot be enforced against it because it was not given notice of the hearing concerning said damages, as mandated by Section 9 of Rule 60 in relation to Section 20 of Rule 59 of the Rules of Court. The petitioner argues that since the decision awarding damages became final without proper notice to the surety, it is relieved from its liability under the bond.
Issue(s)
Whether the surety on a counterbond for preliminary injunction may be held liable for damages if it was not notified of the application for damages and the hearing thereon prior to the entry of final judgment.
Ruling
The petition is granted. The order of the respondent Judge dated September 14, 1955, directing the issuance of a writ of execution against the petitioner, is set aside.
Ratio Decidendi
On the Sole Issue: The Supreme Court rules that under Section 20, Rule 59, in relation to Section 9, Rule 60, the application for damages and the notice to the sureties must be filed in the trial court either before the trial or, at the latest, before the entry of final judgment. This rule ensures that the award against the sureties is 'included in the final judgment,' as the rules contemplate a single judgment for damages against both the principal and the solidary sureties. The Court reiterates the doctrine from Del Rosario v. Nava (G.R. No. L-5396), stating that 'before entry of the final judgment' means no later than the date when the judgment becomes final and executory. In this case, since the award for damages was made in a decision that became final and executory without any notice being served to the petitioner-surety, the plaintiff's claim can no longer be enforced against said surety. The Court distinguishes this from Section 17, Rule 59, which applies to counterbonds in attachment cases intended to secure the payment of the main judgment itself, whereas the bond here specifically covered damages arising from the provisional remedy. To hold the surety liable without such timely notice would violate the principles of due process and the specific procedural requirements of the Rules of Court.
Main Doctrine
A surety is entitled to due process, including notice and an opportunity to be heard, before a judgment for damages can be enforced against its bond, especially when such damages were awarded without prior notice to the surety. Failure to provide such notice before the judgment becomes final and executory is fatal and relieves the surety from liability.