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VOL. 163, JULY 14, 1988 443

Zaragoza vs. Fidelino
*
No. L-29723. July 14,1988.

ANTONIO ZARAGOZA, plaintiff-appellee, vs. MAKIA ANGELA

FIDELINO and/or "JOHN DOE," defendants MABINI
INSURANCE & FIDELITY CO., INC., surety-appellant.

Civil Law; Damages; Attachtnent.—If the defendant can show that he

suffered damages by reason of the attachment, indemnification is justly due
him.
Same; Same; Commercial Law; Insurcmce Law; Surety; Requisites to
hold a surety liabie on a counter-bond.—To hold a surety on a counter-bond
liable, what is entailed is (1) the filing of an application therefor with the
court having jurisdiction of the action; (2) the presentation thereof before
the judgment becomes executory (or before the trial or before appeal is
perfected); (3) the attachment in said application of the facts showing the
applicant's right to damages and the amount thereof; (4) the giving of due
notice of the application to the attaching creditor and his surety or sureties;
and (5) the holding of a proper hearing at which the attaching creditor and
sureties may be heard on the application. Such requisites apply not only in
cases of seizure or delivery under Rule 60, but also in cases of preliminary
injunction under Rule 58, and receiverships under Rule 59.
Same; Same; Counter-bond.—The enforcement of a surety's liability
on a counter-bond given for the release of property seized under a writ of
preliminary attachment is governed by Section 17, Rule 57 of the Rules of
Court.
Same; Same; Jurisdiction.—The terms of the counter-bond voluntarily
filed by a surety in defendant's behalf leave no doubt of its assent to be
bound by the court's adjudgment of the defendant's liability, i.e., its
acceptance of the court's jurisdiction.

APPEAL from the judgment of the Court of First Instance of

Quezon City, Br. 5.

The facts are stated in the opinion of the Court.

________________

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* FIRST DIVISION.

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444 SUPREME COURT REPORTS ANNOTATED

Zaragoza vs. Fidelino

NARVASA, J.:

Involved in this appeal is no more than the procedure to hold a

surety liable upon a counter-bond posted by it for the release of an
automobile seized from a defendant in a replevin action under a writ
issued by the Trial Court at the plaintiffs instance.
The suit for the replevy of the car was brought1 by Antonio
Zaragoza in the Court of First Instance at Quezon City against Ma.
Angela Fidelino and/or John Doe. His complaint alleged that the car
had been sold to Fidelino but the latter had failed to pay the price in
the manner stipulated in their agreement. The car was taken from
Fidelino's2 possession by the sheriffon the strength of a writ of
delivery, but was promptly returned to her 3
on orders of the Court
when a surety bond for the car's release was posted in her behalf
by Mabini Insurance & Fidelity Co., Inc. 4
The action resulted in a judgment for the plaintiflf the
dispositive part of which reads as follows:

"WHEREFORE, judgment is hereby rendered in favor of the plaintiif and

against the defendant, ordering the latter to pay to the plaintiff the sum of
P19,417.46, representing the balance of the purchase price of the car sold
including interest thereon, collection charges, notarial fees and sheriff s fees
and expenses in connection with the recovery of the vehicle sold; to pay
liquidated damages in the amount of P6,471.84 equivalent to 33 1/3% of the
balance outstanding; and to pay the costs of this suit."

Within the reglementary period for taking an appeal, Zaragoza

moved for the amendment of the decision so as to include

_________________

1 Branch 5, the case being docketed as Civil Case No. Q-9979.

2 Secs. 3 and 4, Rule 60, Rules of Court.
3 Sec. 5, Rule 60, provides that the bond be "in double the value of the property as
stated in the plaintiff s affidavit (to guarantee) x x the delivery of the property to the
plaintiff, if such delivery be adjudged, and for the payment of such sum to him as may
be recovered against the defendant"
4 Rendered February 12, 1968; pp. 64 et seq. Rec. on Appeal (Rollo, p. 8).

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Zaragoza vs. Fidelino

the surety, Mabini Insurance & Fidelity Co., Inc., as a party

solidarily liable with the5 defendant for the payment of the sums
awarded in the judgment. Despite having been duly furnished with
copies of the motion and the notice of hearing, neither Fidelino nor
the surety company filed any opposition6
to the motion, nor did either
of them appear at the hearing thereof. The Trial Court deemed the7
motion meritorious and granted it. Its Order of April 16,1968
decreed the following:

"WHEREFORE, the motion is hereby granted, and the dispositive portion of

the decision in this case is hereby amended to read as follows:

'WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the
defendant, ordering defendant Maria Angela Fidelino and her surety, the Mabini
Insurance & Fidelity Co., Inc., to pay jointly and severally to the plaintiff the sum of
P19,417.46, representing the balance of the purchase price of the car sold, including
interests thereon, collection charges, notarial fees and sheriff s fees and expenses in
connection with the recovery of the vehicle sold, liquidated damages in the amount
of P6,471.84 equivalent to 33 1/3% of the balance outstanding; and to pay the costs
of this suit.'"

No motion for reconsideration was filed or appeal taken by the

defendant Fidelino as regards either the original or the amended
decision. It was the surety which presented a motion 8for
reconsideration, and upon its denial, appealed to this Court. It
ascribes to the Court a quo, as might be expected, reversible error in
amending the judgment in the manner just described. It argues that
the Lower Court never acquired jurisdiction over it since no
summons was ever served on it, its filing of a counter-bond not
being equivalent to voluntary submission to the Court's jurisdiction;
Zaragoza failed to make a proper

________________

5 Rec. on Appeal, pp. 68-72.

6 Order, April 16,1968 (Rec. on App.: Rollo, p. 8).
7 Pp. 74-76, Rec. on App.; italics supplied.
8 The appeal was taken in accordance with Section 2, Rule 42 of the Rules of
Court, prior to the effectivity of R.A. No. 5440, which required that appeals on pure
questions of law be taken by petition for review on certiorari, as under Rule 45.

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application with notice before finality of the decision as provided by

Section 20, Rule 57 of the Rules of Court; and when the order
amending the judgment was promulgated, the judgment had already
become final, the running of the period of appeal not9 having been
suspended by Zaragoza's motion to amend decision, and so, the
Court no longer had authority to amend it on April 16,1968.
The appellant surety posits, quite correctly, that the situation at
bar is governed by Section 10, Rule 60, in relation to Section 20,
Rule 57, of the Rules of Court. Section 10, Rule 60, provides as
follows:

"SEC. 10. Judgmentto include recoveiy against sureties.—The amount, if

any, to be awarded to either party upon any bond filed by the other in
accordance with the provisions of this rule, shall be claimed, ascertained,
and granted under the same procedure as prescribed in section 20 of Rule
57.

And Section 20, Rule 57 reads as follows:

"SEC. 20. Claim for damages on account ofillegal attachment.—If the

judgment on the action be in favor of the party against whom attachment
was issued, he may recover, upon the bond given or deposit made by the
attaching creditor, any damages resulting from the attachment. Such
damages may be awarded only upon application and after proper hearing,
and shall be included in the final judgment. The application must be filed
before the trial or before appeal is perfected or before the judgment becomes
executory, with due notice to the attaching creditor and his surety or
sureties, setting forth the facts showing his right to damages and the amount
thereof. 10
"x x x.."

It would seem at first blush that Section 20, Rule 57 above quoted is
not relevant. Its title and first sentence speak [1] of

________________

9 Mabini says that Zaragoza received notice of the decision 011 March 7,1968; the
30-day period of appeal was not interrupted by the motion to amend decision dated
March 20, 1968 and therefore the judgment became fmal and executory on April 7,
1968 and hence could no longer be amended on April 16, 1968 when the Order of
amendment was promulgated. (Pp. 96-97, Rec. on App.)
10 Emphasis supplied.

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an illegal attachment, and [2] of a judgment "in favor of the party

against whom (said illegal) attachment was issued." In the case at
bar, the writ of delivery was not illegal; and the judgment was for,
not against, the party in whose favor the writ of delivery was issued.
In other words, it would
11
appear that for Section 20, Rule 57 to apply
to the instant actioin, the judgment should have been "in favor of'
defendant Fidelino (the party "against whom" the writ of delivery
was issued). This however was not the case. The judgment was in
fact against, NOT in favor of Fidelino.
It thus seems indeed that the first sentence of Section 20
precludes recovery of damages by a party against whom an
attachment is issued and enforced if the judgment be adverse to him.
This is not however correct. Although a party be adjudgecl liable to
another, if it be established that the attachment issued at the latter's
instance was wrongful and the former had suffered injury thereby,
recovery for damages may be had by the party thus prejudiced by
the wrongful attachment, even ifthe judgment be adverse to him.
Slight reflection will show the validity of this proposition. For it is
entirely possible for a plaintiff to have a meritorious cause of action
against a defendant but have no proper ground for a preliminary
attachment. In such a case, if the plaintiff nevertheless applies for
and somehow succeeds in obtaining an attachment, but is
subseqi^ently declared by final judgment as not entitled thereto, and
the defendant shows that he has suffered damages by reason of the
attachment, there can be no gainsaying that indemnification is justly
due the latter. So has this Court already had occasion to rule, in
Baron v. David, 51 Phil. 1, and Javellana v. D.O. Plaza Enterprises,
32 SCRA 261.
Be all this as it may, the second and third sentences of Section
20, Rule 57, in relation to Section 10, Rule 60, are unquestionably
relevant to the matter of the suret/s liability upon a counter-bond
12
for
the discharge of a writ of delivery in a replevin suit. Under Section
10, Rule 60 (which makes reference "to either party upon any bond
filed by the other in

________________

11 In relation to said Sec. 10, Rule 60.

12 This is precisely the appellant surety's thesis, as already pointed out.

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448 SUPREME COURT REPORTS ANNOTATED

Zaragoza vs. Fidelino

accordance with the provisions of this rule" [60]), the surety's

liability for damages upon its counter-bond should "be claimed,
ascertained, and granted under the same procedure as prescribed in
13
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13
section 20 of Rule 57;" and said section 20 pertinently decrees that
"(s)uch damages may be awarded only upon application and after
proper hearing, and shall be included in the final judgment x x
(which means that the (application must be filed before the trial or
before appeal is perfected or before the judgment becomes executory,
with due notice to the attaching creditor and his surety or sureties,
setting forth the facts showing his right to damages and the amount
thereof." Stated otherwise, to hold a surety on a counterbond liable,
what is entailed is (1) the filing of an application therefor with the
Court having jurisdiction of the action; (2) the presentation thereof
before the judgment becomes executory (or before the trial or before
appeal is perfected); (3) the statement in said application of the facts
showing the applicant's right to damages and the amount thereof; (4)
the giving of due notice of the application to the attaching creditor
and his surety or sureties; and (5) the holding of a proper hearing at
which the attaching creditor and the sureties may be heard on the
application. These requisites apply not only in cases of seizure or
delivery under 14Rule 60, but also in cases ofpreliminary
15
injunctions
under Rule 58, and receiverships under Rule 59.
It should be stressed, however, that enforcement of a suret/s
liability on a counter-bond given for the release of property seized
under a writ ofpreliminary attachment is governed, not by said
Section 20, but by another specifically and specially

________________

13 The distinctions between a bond given as security for an attachment and a

counter-bond for the discharge thereof, is treated of in some detail in Leelin
Marketing Corp. v. C & S Agro Dev. Co 121 SCRA 725, 728-730.
14 Sec. 9, Rule 58.
15 Sec. 9, Rule 59; SEE Material Distributors (PhiL), Inc. v. Miles Timber and
Transport Corp., et al., 103 Phil. 162, upholding the order of the Trial Court which
declared a surety liable upon its counter-bond for the release of property under
receivership (which counter-bond took "the place of the properties released"), the
order having "issued after due notice and hearing."

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Zaragoza vs. Fidelino

dealing with the matter; Section 17 of Rule 57, which reads as

follows:

"SEC. 17. Wheri execution returned unsatisfied, recovery had upon bond.—
lf the execution be returned unsatisfied in whole or in part, the surety or
sureties on any counter-bond given pursuant to the provisions of this rule to
secure the payment of the judgment shall become charged on such counter-

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bond, and bound to pay to the judgment creditor upon demand, the amount
due under the judgment, which amount may be recovered from such surety
or sureties after notice and summary hearing in the same action."

The record shows that the appellant surety company bound itself
"jointly and severally" with the defendant Fidelino "in the sum of
PESOS FORTY EIGHT THOUSAND ONLY (P48,000.00),
Philippine Cyrrency, which is double the value of the property stated
in the affidavit of the plaintiff, for the delivery thereof if such
delivery is adjudged, orfor thepayment ofsuch sum to him as16 may be
recovered against the defendant and the costs ofthe action."
This being so, the appellant surety's liability attached upon the
promulgation of the verdict against Fidelino. All that was necessary
to enforce the judgment against it was, as aforestated, an application
therefor with the Court, with due notice to the surety, and a proper
hearing, i.e., that it be formally notified that it was in truth being
made responsible for its coprincipal's adjudicated prestation (in this
case, the payment of the balance of the purchase price of the
automobile which could 17
no longer be found and therefore could not
be ordered returned), and an opportunity, at a hearing called for the
purpose, to show to the Court why it should not be adjudged so
responsible.18 A separate action was not necessary; it was in fact
proscribed. And again, the record shows suhstantial compli-

_________________

16 Pp. 59-60 Rec. on App.: Rollo, p. 8.

17 P. 67, Rec. on App.
18 In Del Rosario v. Nava, 95 Phil. 637, 642-643, the Court declared inter alia that
the rule "plainly calls for only one judgment for damages against the x x (losing)
party and his sureties; x x (s)ince a judicial bondsman has no right to demand the
exhaustion of the property of the principal debtor, x x there is no justification for the

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450 SUPREME COURT REPORTS ANNOTATED

Zaragoza vs. Fidelino

ance with these basic requirements, obviously imposed in deference

to due process.
Appellant surety undoubtedly
19
received copy of Zaragoza's
Motion to Amend Decision. That motion made clear its purpose—
that the decision "be amended, or an appropriate order be issued, to
include x x (the surety) as a party jointly and severally liable with
the defendant to the extent of the sums awarded in the decision to be
paid to plaintifF'—as well as the basis thereof—the counter-bond
filcd by it by the explicit terms of which it bound itself "jointly and
severally (with the defendant) x x for the payment of such sum to

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him (plaintiff) as may be recovered against the dcfcndant and the

cost of the action." The motion contained, at the foot thercof, a
"notice that on Saturday, March 23, 1968, at 8:30 a.m., or as soon
thereafter as the matter may be heard, the x x (plaintifFs counsel
would) submit the foregoing motion for the congideration of the
Court." And likewise indubitable is the fact that, as the Court a quo
has observed, "neither x x (Fidelino's) counsel nor the surety
company filed any opposition to said motion, nor did they appear in
the hearing of the motion on March 23,1968 x x (for20which reason)
the motion was deemed submitted for resolution." The surety's
omission to appear at the hearing despite notice of course constituted
a waiver of the right to be heard on the matter.
The surety's theory that never having been served with summons,
it never came under the Lower Court's jurisdiction, is untenable. The
terms of the counter-bond voluntarily filed by

________________

entering of separate judgments against them; x x (and) while the prevailing party
may apply for an award of damages against the surety even after an award has been
already attained against the principal, as ruled in Visayan Surety and Insurance Co.
vs. Pascual, G.R, No. L-3694, still the application and notice against the surety must
be made before the judgment against the principal becomes flnal and executory, so
that all awards for damages may be included in the final judgment." SEE, also, Asian
Surety & Insurance Co., Inc. v. Nolasco, 79 SCRA 472; Cruz v. Manila Surety &
Fidelity Co., Inc., 92 Phil. 699; Japco v. City of Manila, 48 Phil. 851; 855; cf. Pajarito
v. Seneris, 87 SCRA 275.
19 Pp. 69-73, Rec. on App.
20 74, Rec. on App.

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Zaragoza vs. Fidelino

it in defendant's behalf leave np doubt of its assent to be bound by

the Court's adjudgment of the defendant's liability, i.e., its
acceptance of the Court's jurisdiction. For in that counterbond, it
implicitly prayed for affirmative relief; the release of the seized car,
in consideration of which it explicitly bound itself solidarily with
said defendant to answer for the delivery of the car subject of the
action "if such delivery is adjudged," i.e., commanded by the Court's
judgment, or "for the payment of such sum as may be recovered
against the defendant and the costs of the action," the reference to a
possible future judgment against the defendant, and necessarily
against itself, being certain and unmistakable. The filing of that bond
was clearly an act of voluntary submission to the Court's authority,

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which21 is one of the modes for the acquisition of jurisdiction over a

party.
The same theory as that espoused by appellant surety in this case
was, in substance, passed upon and declared to 22
Ijp without merit in a
1962 decision of this Court, Dee v. Masloff. There, a surety on a
counter-bond given to release property from receivership, also
sought to avoid liability by asserting that it was not a party to the
case, had never been made a party, and had not been notified of the
trial. The Court overruled the contention, and upheld the propriety of
the amendment of the judgment which ordered the appellant surety
company to pay—to the extent of its bond and jointly and severally
with defendant—the judgment obligation. The Court ruled that since
such "amended judgment x x (had been) rendered after the appellant
surety company as party jointly and severally liable with the
defendant x x for the damages already awarded to the appellees, to
which the appellant surety company filed its 'Opposition' and
'Rejoinder' to the 'Reply to Opposition' filed by

_________________

21 Sec. 23, Rule 14, Rules of Court; C.J.S., 122,123; SEE Feria, Civil Procedure,
1969 ed., pp. 19-20, and Moran, op. cit., Vol. 1, p. 55.
22 G.R. Nos. L-15836 and 16220, Sept. 29, 1962, 6 SCRA 98, citing Visayan
Surety & Insurance Corp. v. Pascual, et al., 85 Phil. 779 (referring to cases of
wrongfully issued writs of preliminary injunction, receivership, and seizure of
personal property), and Material Distributors (Phil.) Inc. v. Miles Timber and
Transport Corp., et al., 55 O.G. 1025,103 PhiL 162, supra (relating to receivership)

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452 SUPREME COURT REPORTS ANNOTATED

Zaragoza vs. Fidelino

the appellees, without putting in issue the reasonableness of the

amount awarded for damages but confining itself to the defense in
avoidance of liability on its bond that it was not a party to the case
and never rnade a party therein and was not notified of the trial of
the case, and that the appellees were guilty of laches, the
requirement of hearing was fully satisfied or complied with; x x (in
any case,) appellant surety company never prayed for an opportunity
to present evidence in its behalf."
The appellant surety's last argumerit that by the time the Court
amended its decision, the decision had already become final, and
therefore unalterable, is also untenable. The motion for amendment
of the decision was unquestionably in the nature of a motion for
reconsideration under Section 1 (c), Rule 37 of the Rules of Court
which, having been filed within "the period for perfecting 23
an
appeal," had the effect of intermpting said period of appeal.
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WHEREFORE, judgment is hereby rendered AFFIRMING in

toto the Decision of the Court a quo dated February 12, 1968, as
amended by the Order of April 16,1968. Costs against the appellant
surety.

Cruz, Gancayco, Grino-Aquino and Medialdea, JJ., concur.

Decision affirmed.

Note.—The obligation of a surety cannot extend beyond what is

stipulated in the surety bond. (Central Surety vs. Ubay, 135 SCRA
58.)

——oOo——

_________________

23 Sec. 3, Rule 41, Rules of Court.

453

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