Vadil v. De Venecia
REITERATIONFacts
The Antecedents: Pablo Española Estate, Inc. filed an action against Raymundo Guinsatao for the recovery of P9,360.00, applying for a writ of preliminary attachment on the ground that Guinsatao was removing his properties to defraud creditors. Procedural History: Guinsatao agreed to file a counterbond. The court ordered him to file a counterbond in the amount of P9,360.00 to secure any judgment. Guinsatao filed a bond with petitioners as sureties, entitled "Defendant's Bond." The condition of the bond stated that it would be null and void if they paid "all the costs which may be awarded to the defendant, and all damages that the defendant may suffer by reason of the Writ of Preliminary Attachment should it be finally adjudged that the same was done without legitimate cause." After trial, the court ordered Guinsatao to pay P9,360.00 plus interest. Execution against Guinsatao yielded insufficient property. Pablo Española Estate, Inc. moved for the execution of the bond. The lower court granted the motion. The Petition: Petitioners filed a petition for certiorari to review the order directing the execution of their bond.
Issue(s)
Whether the sureties are liable for the judgment rendered against the principal defendant. Whether the bond filed by the sureties is valid and enforceable for the payment of the judgment.
Ruling
The petition is granted; the writ of preliminary injunction is made permanent and the order dated August 5, 1959, and the writ of execution dated September 4, 1959, are set aside.
Ratio Decidendi
On the liability of the sureties for the judgment: The Court held that the petitioners are not liable to the plaintiff in the trial court because their undertaking under the bond was to pay "all the costs which may be awarded to the defendant, and all damages that the defendant may suffer by reason of the Writ of Preliminary Attachment should it be finally adjudged that the same was done without legitimate cause," rather than to pay the judgment that the plaintiff might recover. The bond filed was explicitly entitled "Defendant's Bond" and its conditions were for the benefit of the defendant, not the plaintiff. This wording raised doubt as to whether the petitioners understood the import of the court's order directing them to file a counterbond to secure the payment to the plaintiff of any judgment. The Court noted that under Section 2 of Rule 59 of the Rules of Court, a defendant may prevent attachment by giving a bond to satisfy the demand, besides costs, or equal to the value of the property. Given that only P150 was realized from Guinsatao's property, it was unlikely that the petitioners would agree to stand surety for P9,360.00 for the defendant if the property was in imminent danger of attachment. The Court reiterated the principle that sureties are favorites of the law, and all presumptions are indulged in their favor, especially when they assume an obligation without thought of material gain, as in the case of accommodation sureties. Therefore, the doubt was resolved in favor of the petitioners. On the validity and enforceability of the bond: The Court found that the bond filed did not conform to the court's order for a counterbond to secure the payment of any judgment the plaintiff might recover. Instead, the bond's condition was for the payment of costs and damages to the defendant if the attachment was found to be without legitimate cause. Furthermore, the Court noted that there was actually no writ of attachment issued by the court, and the obligation of the bondsmen was premised upon the issuance of such a writ. Since the condition of the bond was not met and the bond itself was not in accordance with the court's directive for a counterbond to secure the plaintiff's judgment, the sureties could not be held liable for the judgment amount.
Main Doctrine
Sureties are favorites of the law and all presumptions are indulged in their favor, especially accommodation sureties who act without motive of pecuniary gain. Their liability should not be extended beyond the terms of their contract.