McConn v. Haragan
REITERATIONFacts
The Antecedents: On June 30, 1955, pending Civil Case No. 24790, the Bureau of Immigration advised the Court of First Instance of Manila that Paul Haragan had applied for an immigration clearance and re-entry permit for 15 days. By order dated July 11, 1955, the court required Haragan to file a P4,000 bond to answer for his return and the prosecution of his case, with the understanding that the bond would answer pro tanto for any judgment if he failed to return. On July 12, 1955, Haragan submitted a bond subscribed by him as principal and Associated Insurance & Surety Co., Inc. as surety, guaranteeing his return to the Philippines on or before September 16, 1955, and that should he fail to do so, the bond would answer pro tanto for any judgment rendered against him. Procedural History: On July 19, 1955, the court issued an order stating it had no objection to Haragan's departure. The hearing was postponed from September 16, 1955, to November 14, 1955. On the latter date, Haragan's counsel informed the court that Haragan could not return because the Philippine Consulate in Hongkong had advised him of a communication from the Department of Foreign Affairs banning his return. The hearing was further postponed to January 6, 1956. Subsequently, Herbert T. Fallis was impleaded as defendant, and Inocencio Ortiz Luis Jr. intervened. On February 19, 1959, the court rendered judgment sentencing Haragan to pay P5,500 with interest, P1,000 as attorney's fees, and costs. After the judgment became final, the plaintiff moved for execution of the bond. The surety company objected, and the lower court, by order dated October 13, 1959, released the surety from liability and denied the plaintiff's motion. A motion for reconsideration was denied, leading to the present record on appeal. The Petition: The plaintiff-appellant questions the lower court's order releasing the surety company from liability under the bond due to Haragan's failure to return to the Philippines.
Issue(s)
Whether the Surety Company is liable to plaintiff under the bond, considering Haragan's failure to return to the Philippines was caused by a government ban.
Ruling
The Supreme Court affirmed the order of the lower court, releasing the Surety Company from liability under the bond.
Ratio Decidendi
On Issue 1: The Supreme Court held that the Surety Company is not liable to the plaintiff under the bond. The Court meticulously analyzed the terms of the surety bond, noting that the principal commitment was to guarantee Haragan's return to the Philippines on or before September 16, 1955, with the stipulation that failure to do so would make the bond answer pro tanto for any judgment. However, the Court agreed with the lower court's finding that Haragan's return was rendered impossible by the action of the obligee, the Republic of the Philippines, through its Department of Foreign Affairs, which banned his re-entry. This situation falls squarely under the principle articulated in Article 1266 of the Civil Code of the Philippines, which states that "the debtor in obligation to do shall also be released when the prestation becomes legally or physically impossible without the fault of the obligor." Given that the principal obligation (Haragan's return) was made impossible by the very party for whose benefit the bond was ultimately given, the accessory obligation of the surety was necessarily extinguished. The Court cited Tabora vs. Lazatin and House vs. De La Costa as jurisprudential support, where obligors were absolved from their undertakings due to governmental actions preventing performance without their fault, reinforcing the established legal principle.
Main Doctrine
A surety bond guaranteeing the principal's return to the Philippines is extinguished, releasing the surety from liability, when the principal's return is rendered impossible by the actions of the obligee (the Republic of the Philippines).