Stronghold Insurance v. CA (1992) Paras, J. Petition for Review on Certiorari assailing the Decision of the Court of Appeals
RATIO !CI!"I# The party against whom the bond was issued may recover on the bond for any damage resulting from the issuance of the bond upon application and hearing. $ACTS# Petitioner: Stronghold nsurance Respondent: Court of Appeals! "orthern #otors! nc.
$eisure Club! nc. filed civil case against "orthern #otors nc. for replevin and damages. t sought the recovery of certain office furnitures and e%uipments. The lower court ordered the delivery of sub&ect properties to $eisure Club nc. sub&ect to the posting of ◦ the re%uisite bond under Section '! Rule () of the Rules of Court. Accordingly! $eisure Club nc. posted a replevin bond issued by Stronghold nsurance Co.! nc. n due course! the lower court issued the writ of replevin! thereby enabling $eisure Club nc. to ta*e possession of the disputed properties. "orthern #otors nc. filed a counterbond for the release of the disputed properties. +owever! efforts to recover these properties proved futile as $eisure Club nc. was never heard of again. ,or failure to appear in the pre-trial of the case! $eisure Club! nc. was declared non-suited. "orthern #otors nc. presented its evidence e-parte and the lower court rendered its decision in favor of "orthern #otors nc. "orthern #otors nc. filed a /#otion for ssuance of 0rit of 1ecution Against 2ond of Plaintiff3s Surety/ which was treated by the lower court as an application for damages against the replevin bond. At the hearing of the said motion as well as the opposition thereto filed by Stronghold nsurance Co.! nc.! "orthern #otors nc. presented one witness in the person of its former manager Clarissa 4. 5campo! whose testimony proved that: ◦ 6a7 "orthern #otors nc.! and #acronics #ar*eting entered into a leased agreement wherein the latter leased certain premises from the former. 6b7 #acronics failed to pay its bills to "orthern #otors nc.! so the latter was forced to terminate the ◦ lease. 6c7 2ecause of #acronics3 unpaid liabilities to "orthern #otors nc.! the latter was forced to sell off the ◦ former3s properties in an auction sale wherein "orthern #otors nc. was the buyer. #acronics was duly notified of the sale. 6d7 These properties sold were the sole means available by which "orthern #otors nc. could enforce its ◦ claim against #acronics. Stronghold nsurance Co.! nc. did not cross-eamine the said witness. nstead it as*ed for continuance in order to present its own witness. Stronghold! however! never presented any witness. The lower court issued its now disputed 5rder finding Stronghold liable under its surety bond for the damages awarded to "orthern #otors nc. The thrust of the opposition of the bonding company is to the effect that the motion for a writ of ◦ eecution is not the proper remedy but an application against the bond should have been the remedy pursued. The surety company contends that it is not a party to the case and that the decision clearly became final and eecutory and! therefore! is no longer liable on the bond. The surety company li*ewise raised the issue as to when the decision became final and eecutory. #oreover! the surety company avers that the defendant failed to prove any damage by reason of the insurance of replevin bond. Sec. ') of Rule 89! in relation to Sec. ) of Rule ()! provides that the party against whom the bond was ◦ issued may recover on the bond for any damage resulting from the issuance of the bond upon application and hearing. The application must be filed either: before trial; before appeal is perfected; before &udgment becomes final and eecutory. 2eing the prevailing party! it is undeniable that the defendant is entitled to recover against the bond. ◦ The application for that propose was made before the decision became final and before the appeal was perfected. 2oth the prevailing and losing parties may appeal the decision. n the case of the plaintiff appears that its counsel did not claim the decision which was sent by registered mail on
( and filed the motion for eecution against the bond on (. +ence! with respect to the defendant the motion against the bond was filed before any appeal was instituted and definitely on or before the &udgment became final. Although the claim against the bond was denominated as a motion for issuance of a writ of eecution! ◦ the allegations are to the effect that the defendant is applying for damages against the bond. n fact! the
defendant invo*es Sec. )! Rule ()! in relation to Sec. ')! Rule 89! Rules of Court. 1vidently! therefore! the defendant is in reality claiming damages against the bond. t is undisputed that the replevin bond was obtained by the plaintiff to answer for whatever damages the ◦ defendant may suffer for the wrongful issuance of the writ. 2y virtue of the writ! the plaintiff too* possession of the auctioned properties. Despite a redelivery bond issued by the defendant! the plaintiff refused to return the properties and in the fact repossessed the same. Clearly! defendant suffered damages by reason of the wrongful replevin! in that it has been deprived of the properties upon which it was entitled to enforce its claim. #oreover! the etent of the damages has been %ualified in the decision dated (. CA affirmed the 5rder. +ence! this petition.
ISS%!# 05" "orthern #otors is entitled for damages against the surety &!' #
n the case of @isayan Surety nsurance Corp. vs. Pascual! the Court eplained the nature of the proceedings to recover damages against a surety! in this wise: ◦ n such case! upon application of the prevailing party! the court must order the surety to show cause why the bond should not respond for the &udgment of damages. f the surety should contest the reality or reasonableness of the damages claimed by the prevailing party! the court must set the application and answer for hearing. The hearing will be summary and will be limited to such new defense! not previously set up by the principal! as the surety may allege and offer to prove. Stronghold nsurance Co.! nc.! never denied that it issued a replevin bond. Bnder the terms of the said bond! Stronghold nsurance together with $eisure Club nc. solidarily bound themselves in the sum of P'!))) ◦ 6a7 for the prosecution of the action! 6b7 for the return of the property to the defendant if the return thereof be ad&udged! and ◦ 6c7 for the payment of such sum as may in the cause be recovered against the plaintiff and the costs of ◦ the action. n the case at bar! all the necessary conditions for proceeding against the bond are present! to wit: 6i7 the plaintiff a %uo! in bad faith! failed to prosecute the action! and after relieving the property! it ◦ promptly disappeared; ◦ 6ii7 the sub&ect property disappeared with the plaintiff! despite a court order for their return; and 6iii7 a reasonable sum was ad&udged to be due to respondent! by way of actual and eemplary ◦ damages! attorney3s fees and costs of suit. 5n the propriety of the award for damages and attorney3s fees! suffice it to state! that as correctly observed by the Court of Appeals! the record shows that the same is supported by sufficient evidence. "orthern #otors proved the damages it suffered thru evidence presented in the hearing of the case itself and in the hearing of its motion for eecution against the replevin bond. "o evidence to the contrary was presented by Stronghold nsurance Co.! nc. in its behalf. t did not impugn said award of eemplary damages and attorney3s fees despite having every opportunity to do so. As correctly held by respondent Court of Appeals EE Stronghold nsurance! nc. has no ground to assail the awards against it in the disputed 5rder. Bnless it ◦ has a new defense! it cannot simplistically dissociate itself from $eisure Club! nc. and disclaim liability vis-a-vis the findings made in the Decision of the lower court dated (. Bnder Section '! Rule () the bond it filed is to ensure /the return of the property to the defendant if the return thereof be ad&udged! and for the payment to the defendant of such sum as he may recover from the plaintiff in the action./ The bond itself ensures! inter alia! /the payment of such sum as may in the cause be recovered against the plaintiff and the cost of the action./ 6pp. '-'8! Rollo7 2eside! $eisure Club nc.3s act of filing a replevin suit without the intention of prosecuting the same but ◦ for the mere purpose of disappearing with the provisionally recovered property in order to evade lawfully contracted obligations constitutes a wanton! fraudulent! rec*less! oppressive and malevolent breach of contract which &ustifies award of eemplary damages under Art. ''?' of the Civil Code.
