Consolacion Insurance v. Mojica
REITERATIONFacts
The Antecedents: Respondent Claro Cortes filed Civil Case No. 389-R against Natalia L. Sison and Sergio Mendoza to recover P7,858.62 for construction materials. A writ of preliminary attachment was issued, which was later dissolved upon the defendants' filing of a counter-bond for P8,000.00, with petitioner Consolacion Insurance and Surety Company, Inc. as surety. Procedural History: On October 3, 1962, the respondent judge rendered judgment based on a compromise agreement where defendants confessed judgment for P5,949.15, with no execution to issue within four months from August 2, 1962. On December 21, 1962, respondent Cortes moved for execution against the defendants and petitioner on its bond for the outstanding balance of P4,226.25. Petitioner objected, arguing it was not bound by the compromise agreement and had the right of exhaustion. The respondent judge issued the order of execution on January 21, 1963, and denied petitioner's motion for reconsideration. The Petition: Petitioner Consolacion Insurance and Surety Company, Inc. filed an amended petition for certiorari, with a prayer for a preliminary injunction, seeking to set aside the writ of execution issued against its bond. Petitioner argued that it was not bound by the compromise agreement entered into by the principal debtors without its consent and that it had the right of exhaustion under the Rules of Court.
Issue(s)
Whether the respondent judge committed grave abuse of discretion in issuing the writ of execution against the petitioner's bond despite the compromise agreement entered into by the principal debtors without the surety's consent. Whether the issue had become moot and academic.
Ruling
The Court dismissed the case, holding that the issue had become moot and academic. The respondent, Claro Cortes, indicated in his "Second Motion for Extension of Time to File Answer" that the principal debtors had almost paid the judgment amount, with only a little over P1,000.00 outstanding. Furthermore, respondent Cortes stated he was not interested in proceeding against the petitioner for its liability under the bond, as the Kapit Bahay Incorporated, etc. had made arrangements for the payment of the balance of its indebtedness.
Ratio Decidendi
On Issue 1: The Court did not directly rule on the merits of whether the respondent judge committed grave abuse of discretion. However, the subsequent actions and statements by respondent Claro Cortes rendered the issue of the surety's liability moot. Cortes' admission that the principal debtors had substantially paid the debt and his expressed lack of interest in pursuing the surety indicated that the original dispute concerning the execution against the bond was no longer a live controversy. The Court's dismissal of the case based on mootness implicitly acknowledged that further proceedings on the merits of the surety's liability were unnecessary given the changed circumstances and the respondent's stance. On Issue 2: The Court found that the issue had become moot and academic. This was primarily based on the statements made by respondent Claro Cortes in his motion for extension of time. Cortes acknowledged that the principal debtors had nearly settled their obligation, with only a small balance remaining. Crucially, Cortes explicitly stated his lack of interest in pursuing the petitioner for its liability under the bond, as arrangements for the payment of the remaining indebtedness had been made. This voluntary relinquishment of interest by the party who sought execution against the surety effectively removed any practical purpose or necessity for the Court to rule on the legality of the execution order.
Main Doctrine
The Supreme Court reiterated that a counter-bond posted to dissolve a writ of attachment answers for the judgment that may be rendered in the case. However, the Court noted that the liability of the surety is contingent upon the judgment against the principal debtor. In this instance, the compromise agreement entered into by the principal debtors, which stipulated a period within which no execution would issue, was considered by the Court in relation to the surety's obligation. The case ultimately became moot due to the principal debtors' substantial payment and the respondent's lack of interest in pursuing the surety.