G.R. No.

88050

January 30, 1992

STRONGHOLD INSURANCE CO !AN", INC., #$%&%&on$r, '(. HON. COURT O) A!!EALS an* ADRIANO URTESUELA, r$(#on*$n%(.

The petitioner asks for reversal of the !ourt of Appeals. It submits that the decision of the "(2A is not binding upon it because it was not impleaded in the complaintD it was not notified thereof nor did it participate in the hearingD and it was not specifically directed to pay the damages awarded to the complainant. In support of its posture, the petitioner cites abundant 8urisprudence, particularly Aguasin v. 'elas)ueE, 4 where the !ourt heldA

The petitioner invokes due process to escape liability on a surety bond executed for the protection of a Filipino seaman. It is a familiar argument that will be denied, in light of the following findings. Acting on behalf of its foreign principal, Qatar ational Fishing !o., "an Asian #ogistics and Trading, a domestic recruiting and placement agency, hired Adriano $rtesuela as captain of the vessel %&' (ryx for the stipulated period of twelve months. The re)uired surety bond, in the amount of "*+,+++.++, was submitted by "an Asian and ,tronghold Insurance !o., Inc., the herein petitioner, to answer for the liabilities of the employer. $rtesuela assumed his duties on April -., -/.0, but three months later his services were terminated and he was repatriated to %anila. 1e thereupon filed a complaint against "an Asian and his former employer with the "hilippine (verseas 2mployment Administration for breach of contract and damages. In due time, the "(2A rendered a decision in his favor for the amount of "3,456./6, representing his salaries for the unexpired portion of his contract and the cash value of his unused vacation leave, plus attorney7s fees and costs, which the respondents were re)uired to pay. The 8udgment eventually became final and executory, not having been appealed on time. "ursuant thereto, a writ of execution was issued against "an Asian but could be enforced only against its cash bond of "-+,+++.++, the company having ceased to operate. $rtesuela then filed a complaint with the Insurance !ommission against ,tronghold on the basis of the aforementioned surety bond and prayed for the value thereof plus attorney7s fees and litigation costs. $nder the bond, the petitioner and "an Asian undertook 9 To answer for all liabilities which the "hilippine (verseas 2mployment Administration may ad8udge&impose against the "rincipal in connection with the recruitment of Filipino seamen. It is understood that notice to the "rincipal is notice to the surety. :2xh. ;I<0;=. >12?2A,, the liability of the surety under this @ond shall in no case exceed the sum of "2,(,A FIFTB T1($,A C ( #B :"*+,+++.++= "hilippine !urrency. After hearing, the Insurance !ommission held that the complaint should be reformed because the provisions in the surety bond were not stipulations pour autrui to entitle $rtesuela to bring the suit himself. It held that the proper party was the "(2A. - This ruling was reversed on appeal by the respondent court in its decision dated April 0+, -/./. 0 It was there declared that, as the actual beneficiary of the surety bond, $rtesuela was competent to sue ,tronghold, which as surety was solidarily liable with "an Asian for the 8udgment rendered against the latter by the "(2A.

If the surety is to be bound by his undertaking, it is essential according to ,ection -+ of ?ule 30 in connection with ,ection 0+ of ?ule */ of the ?ules of !ourt that the damages be awarded upon application and after proper hearing and included in the 8udgment. As a corollary to these re)uirements, due notice to the plaintiff and his surety setting forth the facts showing his right to damages and the amount thereof under the bond is indispensable. This has to be so if the surety is not to be condemned or made to pay without due process of law. It is to be kept in mind that the surety in this case was not a party to the action and had no notice of or intervention in the trial. It seems elementary that before being condemned to pay, it was the elementary right of the surety to be heard and to be informed that the party seeking indemnity would hold it liable and was going to prove the grounds and extent of its liability. This case is different from those in which the surety, by law and&or by the terms of his contract, has promised to abide by the 8udgment against the principal and renounced the right to be sued or cited. The !ourt has gone over the decision and finds that the petitioner is ;hoist by its own petard.; For as the )uoted excerpt itself says, the case is ;different from those in which the surety, by law and&or by the terms of his contract, has promised to abide by the 8udgment against the principal and renounced the right to be sued or cited.; In the surety bond, the petitioner une)uivocally bound itselfA To answer for all liabilities which the "hilippine (verseas 2mployment Administration may ad8udge&impose against the "rincipal in connection with the recruitment of Filipino seamen. ,trictly interpreted, this would mean that the petitioner agreed to answer for whatever decision might be rendered against the principal, whether or not the surety was impleaded in the complaint and had the opportunity to defend itself. There is nothing in the stipulation calling for a direct 8udgment against the surety as a co<defendant in an action against the principal. (n the contrary, the petitioner agreed ;to answer for all liabilities; that ;might be ad8udged or imposed by the "(2A against the "rincipal.; @ut even if this interpretation were re8ected, considering the well<known maxim that ;the surety is a favorite of the law,; the petitioner would still have to explain its other agreement that ;notice to the "rincipal is notice to the surety.; This was in fact another special stipulation typewritten on the printed form of the surety bond prepared by the petitioner. $nder this commitment, the petitioner is deemed, by the implied notice, to have been given an opportunity to participate in the litigation and to present its side, if it so chose, to avoid liability. If it did not decide to intervene as a co<defendant :and perhaps also as cross<claimant against "an Asian=, it cannot be heard now to complain that it was denied due process.

The petitioner contends, however, that the said stipulation is unconstitutional and contrary to public policy, because it is ;a virtual waiver; of the right to be heard and ;opens wide the door for fraud and collusion between the principal and the bond obligee; to the pre8udice of the surety. 1ence, disregarding the stipulation, the petitioner should be deemed as having received no notice at all of the complaint and therefore deprived of the opportunity to defend itself. The !ourt cannot agree. The argument assumes that the right to a hearing is absolute and may not be waived in any case under the due process clause. This is not correct. As a matter of fact, the right to be heard is as often waived as it is invoked, and validly as long as the party is given an opportunity to be heard on his behalf. 6 The circumstance that the chance to be heard is not availed of does not disparage that opportunity and deprive the person of the right to due process. This !ourt has consistently held in cases too numerous to mention that due process is not violated where a person is not heard because he has chosen, for whatever reason, not to be heard. It should be obvious that if he opts to be silent where he has a right to speak, he cannot later be heard to complain that he was unduly silenced. either is public policy offended on the wicked ground of fraud and collusion imagined by the petitioner. For one thing, the speculation contravenes without proof the presumption of good faith and unreasonably imputes dishonest motives to the principal and the obligee. For another, it disregards the fiduciary relationship between the principal and the surety, which is the legal and also practical reason why the latter is willing to answer for the liabilities of the former. In a familiar parallel, notice to the lawyer is considered notice to the client he represents even if the latter is not actually notified. It has not been suspected that this arrangement might result in a confabulation between the counsel and the other party to the client7s pre8udice. At any rate, it is too late now for the petitioner to challenge the stipulation. If it believed then that it was onerous and illegal, what it should have done was ob8ect when its inclusion as a condition in the surety bond was re)uired by the "(2A. 2ven if the "(2A had insisted on the condition, as now claimed, there was still nothing to prevent the petitioner from refusing altogether to issue the surety bond. The petitioner did neither of these. The fact is that, whether or not the petitioner ob8ected, it in the end filed the surety bond with the suggested condition. The conse)uence of its submission is that it cannot now argue that it is not bound by that condition because it was coerced into accepting it. This !ourt has always been receptive to complaints against the denial of the right to be heard, which is the very foundation of a free society. This right is especially necessary in the court of 8ustice, where cases are decided after the parties shall have been given an opportunity to present their respective positions, for evaluation by the impartial 8udge. evertheless, a party is not compelled to speak if it chooses to be silent. If it avails itself of the right to be heard, well and goodD but if not, that is also its right. In the latter situation, however, it cannot later complain that, because it was not heard, it was deprived of due process.

>orthy of consideration also is the private respondent7s contention that he sought to enforce the petitioner7s liability not in ,@ !ase o. 4.-+<.0 as decided by the "(2A, but in another forum. >hat he did was file an independent action for that purpose with the Insurance !ommission on the basis of the surety bond which bound the petitioner to answer for whatever liabilities might be ad8udged against Qatar ational Fishing !o. by the "(2A. In the proceedings before the !ommission, the petitioner was given full opportunity :which it took= to present its side, in its answer with counterclaim to the complaint, in its testimony at the hearings, in its motion to dismiss the complaint, and in its -+<page memorandum. There is absolutely no )uestion that in that proceeding, the petitioner was actually and even extensively heard.

The surety bond re)uired of recruitment agencies * is intended for the protection of our citiEens who are engaged for overseas employment by foreign companies. The purpose is to insure that if the rights of these overseas workers are violated by their employers, recourse would still be available to them against the local companies that recruited them for the foreign principal. The foreign principal is outside the 8urisdiction of our courts and would probably have no properties in this country against which an adverse 8udgment can be enforced. This difficulty is corrected by the bond, which can be proceeded against to satisfy that 8udgment. Fiven this purpose, and guided by the benign policy of social 8ustice, we re8ect the technicalities raised by the petitioner against its established legal and even moral liability to the private respondent. These technicalities do not impair the rudiments of due process or the re)uirements of the law and must be re8ected in deference to the constitutional imperative of 8ustice for the worker. >12?2F(?2, the petition is C2 I2C and the challenged decision of the !ourt of Appeals AFFI?%2C in toto. The respondent court is directed to 2 F(?!2 payment to the private respondent in full, and with all possible dispatch of the amount awarded to him by the "(2A in its decision dated %ay -4, -/.4. It is so ordered.

arvasa, !.G., FriHo<A)uino and %edialdea, GG., concur.

+G.R. No. 11008,. Ju-y 19, 1999. !ARA OUNT INSURANCE COR!ORATION, #$%&%&on$r, '(. COURT O) A!!EALS an* DAGU!AN ELECTRIC COR!ORATION, r$(#on*$n%(.

4. 2xemplary damages in the sum of "6++,+++.++D 6. AttorneyIs fees in the sum of "-++,+++.++D and *. !osts of the suit. J>hile this case was under litigation, the court issued a number of restraining orders or in8unctions. Curing these incidents, %cAdore filed the following bondsA "olicy o. .+005+/ by "aramount Insurance !orporation for "*++,+++.++D o. ++++5 and o. ++++. by ,entinel Insurance !ompany, Inc. for "-++,+++.++ and "*+,+++.++D and o. -0-4 by the Travelers %ulti<Indemnity !orporation for "00*,+++.++. J"ursuant to the dispositive portion of this decision, the court holds that these bonding companies are 8ointly and severally liable with %cAdore, to the extent of the value of their bonds, to pay the damages ad8udged to Cecorp. J,end this decision toA plaintiffIs counsel Atty. "agapongD defendantIs counsel Atty. 'era !ruED and to each of the bondsman. JIt is so ordered.KL-M %cAC(?2 did not appeal the above decision. "A?A%($ T, however, appealed to the !ourt of Appeals assigning the following errors, to witA I. A""2##A T ,$?2TB >A, !($?T. (T F?A T2C C$2 "?(!2,, (? FI'2 IT, CAB I

@efore this !ourt is a petition for review on certiorari assailing the Cecision of the !ourt of Appeals dated April 4+, -//4 in !A<F.?. !' o. --/5+ which dismissed petitioner "aramount Insurance !orporationIs :"A?A%($ T= appeal, thereby affirming the decision of the court a )uo finding petitioner liable on its in8unction bond. %cAdore Finance and Investment, Inc. :%cAC(?2= was the owner and operator of the %cAdore International "alace 1otel in Cagupan !ity. "rivate respondent Cagupan 2lectric !orporation :C2!(?"=, on the other hand, was the grantee of a franchise to operate and maintain electric services in the province of "angasinan, including Cagupan !ity. (n February 0, -/5., %cAC(?2 and C2!(?" entered into a contract whereby C2!(?" shall provide electric power to %cAC(?2Is 1otel. Curing the term of their contract for power service, C2!(?" noticed discrepancies between the actual monthly billings and the estimated monthly billings of %cAC(?2. $pon inspection, it was discovered that the terminal in the transformers connected to the meter had been interchanged resulting in the slow rotation of the meter. !onse)uently, C2!(?" issued a corrected bill but %cAC(?2 refused to pay. As a result of %cAC(?2Is failure and continued refusal to pay the corrected electric bills, C2!(?" disconnected power supply to the hotel on ovember 05, -/5.. Aggrieved, %cAC(?2 commenced a suit against C2!(?" for damages with prayer for a writ of preliminary in8unction. %cAC(?2 posted in8unction bonds from several sureties, one of which was herein petitioner "A?A%($ T, which issued an in8unction bond on Guly 5, -/.+ with a face amount of "*++,+++.++. Accordingly, a writ of preliminary in8unction was issued wherein C2!(?" was ordered to continue supplying electric power to the hotel and restrained from further disconnecting it. After due hearing, the ?egional Trial !ourt of QueEon !ity, @ranch -+3, rendered 8udgment in favor of C2!(?", the dispositive portion of which readsA J>12?2F(?2, there being preponderance of evidence, the court hereby dismisses the amended complaint. Further, the court rescinds the service contract between the parties, and orders %cAdore to pay Cecorp the followingA -. Actual damages consisting of total arrearages for electric services rendered from February -/5. to Ganuary -/.4, in the sum of "4,.46,6./.30, plus interest at the legal rate, computed from the date of demand until full paymentD

II. A""2##A TI, ,$?2TB @( C, @2I F A I G$ !TI( (? T2%"(?A?B ?2,T?AI I F (?C2? @( C, T12 %A CAT(?B "?(!2C$?2 I ,2!. 0+, ?$#2 *5, I ?2#ATI( T( ,2!. /, ?$#2 *., ?$#2, (F !($?T >A, (T (@,2?'2C I T1I, !A,2D III. ( 2'IC2 !2 (? "?((F 1AC @22 "?2,2 T2C T( ,1(> T1AT 12?2I A""2##A T ,$?2TB @( C ,1($#C @2 12#C #IA@#2 F(? T(TA# CA%AF2, A, ACG$CF2C I T12 !1A##2 F2C C2!I,I( .KL0M In essence, "A?A%($ T contended that it was not given its day in court because it was not notified by C2!(?" of its intention to present evidence of damages against its in8unction bond, as mandated by ,ec. / of ?ule *., in relation to ,ec. 0+ of ?ule *5 of the ?evised ?ules of !ourt. The !ourt of Appeals was not convinced with petitionerIs contentions. (n April 4+, -//4, it affirmed the decision of the trial court.

In the instant petition, "A?A%($ T seeks to reverse and set aside the decision of the !ourt of Appeals on the following assignment of errorsA 0. %oral damages in the sum of "3++,+++.++D

JFI?,T#B, T12 1( (?A@#2 !($?T (F A""2A#, 2??2C I ?$#I F T1AT (TI!2 T( "2TITI( 2? A C IT, "?2,2 !2 T1?($F1 !($ ,2# I ( 2 12A?I F >12?2 ( 2'IC2 !2 I ,$""(?T (F T12 CA%AF2, F$A?A T22C @B "2TITI( 2?I, @( C ?2 C2?, T12 22C F(? A (T12? 12A?I F ( T1AT %ATT2? A ,$"2?F#$ITB. J,2!( C#B, T12 1( (?A@#2 !($?T (F A""2A#, 2??2C I AFFI?%I F T12 C2!I,I( (F T12 !($?T A Q$( T1AT "2TITI( 2? I, G(I T#B A C ,2'2?A##B #IA@#2 >IT1 %cAC(?2 T( T12 2NT2 T (F IT, @( C, >1I!1 C2!I,I( I, (T ,$""(?T2C @B T12 2'IC2 !2.KL4M "A?A%($ T asserts that J:t=he bone of contention in the instant case is the matter of evidence :or lack thereof= presented by private respondent during the hearing of the case a )uo, notice :or lack thereof= to the surety relative to the proceedings before the court a )uo during which said evidence was presented, as well as the actual proceedings themselves.KL6M "A?A%($ T further asseverates that Jno evidence relative to damages suffered by private respondent as a result of the in8unction was ever presented, or that if any such evidence was presented, the same was done without notice to petitioner and in violation of its right to due process.KL*M %oreover, petitioner maintains that the in8unction bond was issued and approved sometime in April -/.+ to guarantee Jactual and material damages as may be sustained and duly proved by private respondent.K Thus, it can only cover the period prospectively from the date of its issuance and does not retroact to the date of the initial controversy. In its !omment, C2!(?" claims that "A?A%($ T participated in the proceedings and was given its day in court. This is evidenced by the J otice of 1earingK dated February 03, -/.* addressed to the three sureties. In fact, at the hearing on %arch 00, -/.*, "A?A%($ T was in attendance represented by Atty. onito Q. !ordero. #ikewise, "A?A%($ T was notified of the next hearing scheduled for April 03, -/.*. C2!(?" further stressed that the hearing on April 03, -/.* proceeded as scheduled without any comment, ob8ection, opposition or reservation from "A?A%($ T. The core issue to be resolved here is whether or not petitioner "aramount Insurance !orporation was denied due process when the trial court found the in8unction bond it issued in favor of %cAC(?2 liable to C2!(?". ,tated otherwise, was there sufficient evidence to establish the liability of the petitioner on its in8unction bondO The petition is devoid of merit. "etitionerIs submissions necessitates going into the nature of an in8unction as well as over the procedure in claiming, ascertaining and awarding damages upon the in8unction bond.

ade)uate or complete relief.L3M A preliminary in8unction is an order granted at any stage of an action or proceeding prior to the 8udgment or final order, re)uiring a party or a court, agency or a person to refrain from a particular act or acts. It may also re)uire the performance of a particular act or acts, in which case it shall be known as a preliminary mandatory in8unction.L5M Its sole purpose is not to correct a wrong of the past, in the sense of redress for in8ury already sustained, but to prevent further in8ury.L.M A preliminary in8unction or temporary restraining order may be granted only when, among others, the applicant, unless exempted by the court, files with the court where the action or proceeding is pending, a bond executed to the party or person en8oined, in an amount to be fixed by the court, to the effect that the applicant will pay such party or person all damages which he may sustain by reason of the in8unction or temporary restraining order if the court should finally decide that the applicant was not entitled thereto. $pon approval of the re)uisite bond, a writ of preliminary in8unction shall be issued.L/M At the trial, the amount of damages to be awarded to either party, upon the bond of the adverse party, shall be claimed, ascertained, and awarded under the same procedure prescribed in ,ection 0+ of ?ule *5.L-+M ?ule *5, ,ection 0+, of the -//5 ?ules of !ivil "rocedure, which is similarly applicable to preliminary in8unction, pertinently providesA J,ec. 0+. !laim for damages on account of improper, irregular or excessive attachment. < An application for damages on account of improper, irregular or excessive attachment must be filed before the trial or before appeal is perfected or before the 8udgment becomes executory, with due notice to the attaching obligee or his surety or sureties, setting forth the facts showing his right to damages and the amount thereof. ,uch damages may be awarded only after proper hearing and shall be included in the 8udgment on the main case. JIf the 8udgment of the appellate court be favorable to the party against whom the attachment was issued, he must claim damages sustained during the pendency of the appeal by filing an application in the appellate court with notice to the party in whose favor the attachment was issued or his surety or sureties, before the 8udgment of the appellate court becomes executory. The appellate court may allow the application to be heard and decided by the trial court. J othing herein contained shall prevent the party against whom the attachment was issued from recovering in the same action the damages awarded to him from any property of the attaching obligee not exempt from execution should the bond or deposit given by the latter be insufficient or fail to fully satisfy the award.K :mutatis mutandis= The above rule comes into play when the plaintiff<applicant for in8unction fails to sustain his action, and the defendant is thereby granted the right to proceed against the bond posted by the former. In the case at bench, the trial court dismissed %cAC(?2Is action for damages with prayer for writ of preliminary in8unction and eventually ad8udged the payment of actual, moral, and exemplary damages against plaintiff<applicant. !onse)uently, private respondent C2!(?" can proceed against the in8unction bond posted by plaintiff<applicant to recover the damages occasioned by the issuance by the trial court of the writ of in8unction.

In8unction is an extraordinary remedy calculated to preserve the status )uo of things and to prevent actual or threatened acts violative of the rules of e)uity and good conscience as would conse)uently afford an in8ured party a cause of action resulting from the failure of the law to provide for an

In order for the in8unction bond to become answerable for the above<described damages, the following re)uisites must concurAL--M -. The application for damages must be filed in the same case where the bond was issuedD 0. ,uch application for damages must be filed before the entry of 8udgmentD and 4. After hearing with notice to the surety. The records of this case reveal that during its pendency in the trial court, C2!(?" filed its Answer raising compulsory counterclaims for rescission of contract, moral damages, exemplary damages, attorneyIs fees and litigation expenses.L-0M Curing the trial, Atty. onito !ordero appearedL-4M as counsel for petitioner. "A?A%($ T as well as the other sureties were properly notified of the hearing and given their day in court. ,pecifically, notice was sent to Atty. !ordero of the hearing on April 05, -/.*, which was set for the purpose of determining the liability of the sureties. The counterclaims for damages of C2!(?" were proven at the trial and yet "A?A%($ T did not exert any effort to controvert the evidence presented by C2!(?". Fiven these circumstances, "A?A%($ T cannot hide under the cloak of non<liability on its in8unction bond on the mere expediency that it was deprived of due process. It bears stressing that what the law abhors is not the absence of previous notice but rather the absolute lack of opportunity to ventilate a partyIs side.L-6M In other words, petitioner cannot successfully invoke denial of due process where it was given the chance to be heard. As aptly held by the !ourt of Appeals, viE.A JThe records of the case disclose that during the trial of the case, "A?A%($ T was present and represented by its counsel Atty. onito Q. !ordero as shown in the trial courtIs order dated %arch 00, -/.* :Annex JAK of AppelleeIs @rief=. In the said order, "A?A%($ T was duly notified of the next hearing which was scheduled on April 03, -/.*. 2vidently, "A?A%($ T was well< apprised of the next hearing and it cannot feign lack of notice. 1aving been given an opportunity to be heard during the main hearing for the matter of damages, "A?A%($ T therefore, cannot bewail that it was not given an opportunity to be heard upon denial of its motion to cancel its in8unction bond. (f what use, therefore, is there to conduct another hearing when the issue of damages has been the sub8ect of the main action of which "A?A%($ T had been duly notifiedO A new notice and hearing prescribed by ,ec. 0+, ?ule *5, is therefore a repetition and a superfluity. J%oreover, "A?A%($ T has only itself to blame when it did not make any opposition or ob8ection during the hearing for the reception of C2!(?"Is evidence. 1aving manifested its desire to cancel its bond, it should have asked for a deferment of hearing on C2!(?"Is evidence but "A?A%($ T did not do anything of this sort. (nly when an adverse 8udgment was rendered by the trial court against its principal %cAdore did it whimper a denial of procedural due process.KL-*M

was presented during the hearing wherein petitionerIs counsel attended nor in the next hearing wherein petitioner was notified but failed to attend. ,ince no hearing was held for the purpose of establishing its liability on the in8unction bond, "A?A%($ T concludes that it is released from its obligation as surety. !ontrary to petitionerIs thesis, it is neither mandatory nor fatal that there should be a separate hearing in order that damages upon the bond can be claimed, ascertained and awarded, as can be gleaned from a cursory reading of the provisions of ?ule *5, ,ection 0+. This !ourt agrees with the appellate courtIs ruling thatA JGurisprudential findings laid down the doctrine that a final ad8udication that the applicant is not entitled to the in8unction does not suffice to make the surety liable. It is necessary, in addition, that the surety be accorded due process, that is, that it be given an opportunity to be heard on the )uestion of its solidary liability for damages arising from a wrongful in8unction order. >ithal, the fact that the matter of damages was among the issues tried during the hearings on the merits will not render unnecessary or superfluous a summary hearing to determine the extent of a suretyIs liability unless of course, the surety had been impleaded as a party, or otherwise earlier notified and given opportunity to be present and ventilate its side on the matter during the trial. JThe exception under the doctrinal ruling abovenoted is extant in the case at bar.KL-3M >hat is necessary only is for the attaching party and his surety or sureties to be duly notified and given the opportunity to be heard. In the case at bench, this !ourt accords due respect to the factual finding of the !ourt of Appeals that J"A?A%($ T was present and represented by its counsel Atty. onito Q. !ordero as shown in the trial courtIs order dated %arch 00, -/.* x x x.KL-5M As stated, "A?A%($ T also argues that assuming it is liable on its in8unction bond, its liability should be limited only to the amount of damages accruing from the time the in8unction bond was issued until the termination of the case, and not from the time the suit was commenced. In short, it claims that the in8unction bond is prospective and not retroactive in application. This !ourt does not agree. ?ule *., ,ection 6:b=, provides that a bond is executed in favor of the party en8oined to answer for all damages which he may sustain by reason of the in8unction. This !ourt already had occasion to rule on this matter in %endoEa v. !ruE,L-.M where it held that J:t=he in8unction bond is intended as a security for damages in case it is finally decided that the in8unction ought not to have been granted. It is designed to cover all damages which the party en8oined can possibly suffer. Its principal purpose is to protect the en8oined party against loss or damage by reason of an in8unction.K o distinction was made as to when the damages should have been incurred.

(n the same point, "A?A%($ T argues that contrary to the ruling of the !ourt of Appeals, there is a need for a separate hearing for the purpose of presenting evidence on the alleged damages claimed by C2!(?" on petitionerIs in8unction bond. "A?A%($ T contends that a separate hearing is needed as no evidence dealing with C2!(?"Is claim for damages on petitionerIs bond

%oreover, when petitioner issued its in8unction bond in favor of C2!(?", it was done with the full knowledge of the relevant facts obtaining in the controversy between C2!(?" and %cAC(?2. At the time the in8unction bond was issued, C2!(?" was already claiming arrears in electric bills and damages from %cAC(?2.

It bears stressing that %cAC(?2 was found liable to pay actual damages, moral damages, exemplary damages, attorneyIs fees and costs of the suit. To argue therefore that "A?A%($ T is only liable on its in8unction bond from the time of its issuance and not from the time the suit was commenced is preposterous if not absurd. Indeed, it would be impossible to determine the reckoning point when moral damages, exemplary damages, attorneyIs fees and costs of the suit were supposed to have been incurred. !onse)uently, it can be safely deduced that the bond answers for any and all damages arising from the in8unction, regardless of whether it was sustained before or after the filing of the in8unction bond. "A?A%($ T further maintains that it is liable to pay actual damages only.L-/M 1owever, ?ule *., ,ection 6:b=, clearly provides that the in8unction bond is answerable for all damages. JThe bond insures with all practicable certainty that the defendant may sustain no ultimate loss in the event that the in8unction could finally be dissolved. !onse)uently, the bond may obligate the bondsmen to account to the defendant in the in8unction suit for allA :-= such damagesD :0= costs and damagesD :4= costs, damages and reasonable attorneyIs fees as shall be incurred or sustained by the person en8oined in case it is determined that the in8unction was wrongfully issued.KL0+M Thus, "A?A%($ T is liable, 8ointly and severally, for actual damages, moral damages, exemplary damages, attorneyIs fees and costs of the suit, to the extent of the amount of the bond. @e that as it may, a scrutiny of petitionerIs Indemnity AgreementL0-M with %cAC(?2 shows that the former agreed Jto become suretyK for the stated amount Jin favor of Cagupan 2lectric !orp.K It should be noted that %cAC(?2 was already in arrears starting from Gune -/5/L00M up to the time it entered into an Indemnity Agreement with "A?A%($ T on Guly -5, -/.+. It may not be amiss to point out that by the contract of suretyship, it is not for the obligee to see to it that the principal pays the debt or fulfills the contract, but for the surety to see to it that the principal pay or perform.L04M The purpose of the in8unction bond is to protect the defendant against loss or damage by reason of the in8unction in case the court finally decides that the plaintiff was not entitled to it, and the bond is usually conditioned accordingly. Thus, the bondsmen are obligated to account to the defendant in the in8unction suit for all damages, or costs and reasonable counselIs fees, incurred or sustained by the latter in case it is determined that the in8unction was wrongfully issued.L06M The posting of a bond in connection with a preliminary in8unction :or attachment under ?ule *5, or receivership under ?ule */, or seiEure or delivery of personal property under ?ule 3+= does not operate to relieve the party obtaining an in8unction from any and all responsibility for the damages that the writ may thereby cause. It merely gives additional protection to the party against whom the in8unction is directed. It gives the latter a right of recourse against either the applicant or his surety, or against both.L0*M In the same manner, when petitioner "A?A%($ T issued the bond in favor of its principal, it undertook to assume all the damages that may be suffered after finding that the principal is not entitled to the relief being sought. >12?2F(?2, based on the foregoing, the instant petition is C2 I2C. The decision of the !ourt of Appeals dated April 4+, -//4 in !A<F.?. !' o. --/5+ is AFFI?%2C. >ith costs. ,( (?C2?2C. G.R. No. /0105 ARCELO A. No'$12$r 13, 198, ESINA, #$%&%&on$r,

'(. THE HONORA3LE INTER EDIATE A!!ELLATE COURT, HON. ARSENIO . GONONG, &n 4&( 5a#a5&%y a( Ju*6$ o7 R$6&ona- Tr&a- Cour% 8 an&-a 93ran54 :III;, JOSE GO, an* AL3ERT U", r$(#on*$n%(.

This is an appeal by certiorari from the decision of the then Intermediate Appellate !ourt :IA! for short=, now the !ourt of Appeals :!A= in A!<F.?. ,.". +65-+, dated Gan. 00, -/.*, which dismissed the petition for certiorari and prohibition filed by %arcelo A. %esina against the trial court in !ivil !ase o. .6<00*-*. ,aid case :an Interpleader= was filed by Associated @ank against Gose Fo and %arcelo A. %esina regarding their conflicting claims over Associated @ank !ashier7s !heck o. +--4+0 for ".++,+++.++, dated Cecember 0/, -/.4.

avarro7s then unnamed client. (n even date, respondent bank received summons and copy of the complaint for damages of a certain %arcelo A. %esina from the ?egional Trial !ourt :?T!= of !aloocan !ity filed on Ganuary 04, -/.6 bearing the number !<---4/. ?espondent bank moved to amend its complaint, having been notified for the first time of the name of Atty. avarro7s client and substituted %arcelo A. %esina for Gohn Coe. ,imultaneously, respondent bank, thru representative Albert $y, informed !pl. Fimao of the >estern "olice Cistrict that the lost check of Gose Fo is in the possession of %arcelo %esina, herein petitioner. >hen !pl. Fimao went to %arcelo %esina to ask how he came to possess the check, he said it was paid to him by Alexander #im in a ;certain transaction; but refused to elucidate further. An information for theft :Annex G= was instituted against Alexander #im and the corresponding warrant for his arrest was issued :Annex 3<A= which up to the date of the filing of this instant petition remains unserved because of Alexander #im7s successful evation thereof. %eanwhile, Gose Fo filed his answer on February 06, -/.6 in the Interpleader !ase and moved to participate as intervenor in the complain for damages. Albert $y filed a motion of intervention and answer in the complaint for Interpleader. (n the ,cheduled date of pretrial conference inthe interpleader case, it was disclosed that the ;Gohn Coe; impleaded as one of the defendants is actually petitioner %arcelo A. %esina. "etitioner instead of filing his answer to the complaint in the interpleader filed on %ay -5, -/.6 an (mnibus %otion to Cismiss 2x Abudante !autela alleging lack of 8urisdiction in view of the absence of an order to litigate, failure to state a cause of action and lack of personality to sue. ?espondent bank in the other civil case :!!<---4/= for damages moved to dismiss suit in view of the existence already of the Interpleader case. The trial court in the interpleader case issued an order dated Guly -4, -/.6, denying the motion to dismiss of petitioner %esina and ruling that respondent bank7s complaint sufficiently pleaded a cause of action for itnerpleader. "etitioner filed his motion for reconsideration which was denied by the trial court on ,eptember 03, -/.6. $pon motion for respondent Gose Fo dated (ctober 4-, -/.6, respondent 8udge issued an order on ovember 3, -/.6, declaring petitioner in default since his period to answer has already expirecd and set the ex<parte presentation of respondent bank7s evidence on ovember 5, -/.6. "etitioner %esina filed a petition for certioari with preliminary in8unction with IA! to set aside -= order of respondent court denying his omnibus %otion to Cismiss 0= order of 4= the order of default against him. (n Ganuary 00, -/.*, IA! rendered its decision dimissing the petition for certiorari. "etitioner %esina filed his %otion for ?econsideration which was also denied by the same court in its resolution dated February -., -/.*.

@riefly, the facts and statement of the case are as followsA ?espondent Gose Fo, on Cecember 0/, -/.4, purchased from Associated @ank !ashier7s !heck o. +--4+0 for ".++,+++.++. $nfortunately, Gose Fo left said check on the top of the desk of the bank manager when he left the bank. The bank manager entrusted the check for safekeeping to a bank official, a certain Albert $y, who had then a visitor in the person of Alexander #im. $y had to answer a phone call on a nearby telephone after which he proceeded to the men7s room. >hen he returned to his desk, his visitor #im was already gone. >hen Gose Fo in)uired for his cashier7s check from Albert $y, the check was not in his folder and nowhere to be found. The latter advised Gose Fo to go to the bank to accomplish a ;,T(" "AB%2 T; order, which suggestion Gose Fo immediately followed. 1e also executed an affidavit of loss. Albert $y went to the police to report the loss of the check, pointing to the person of Alexander #im as the one who could shed light on it. The records of the police show that Associated @ank received the lost check for clearing on Cecember 4-, -/.4, coming from "rudential @ank, 2scolta @ranch. The check was immediately dishonored by Associated @ank by sending it back to "rudential @ank, with the words ;"ayment ,topped; stamped on it. 1owever, the same was again returned to Associated @ank on Ganuary 6, -/.6 and for the second time it was dishonored. ,everal days later, respondent Associated @ank received a letter, dated Ganuary /, -/.6, from a certain Atty. #orenEo avarro demanding payment on the cashier7s check in )uestion, which was being held by his client. 1e however refused to reveal the name of his client and threatened to sue, if payment is not made. ?espondent bank, in its letter, dated Ganuary 0+, -/.6, replied saying the check belonged to Gose Fo who lost it in the bank and is laying claim to it.

(n February -, -/.6, police sent a letter to the %anager of the "rudential @ank, 2scolta @ranch, re)uesting assistance in Identifying the person who tried to encash the check but said bank refused saying that it had to protect its client7s interest and the Identity could only be revealed with the client7s conformity. $nsure of what to do on the matter, respondent Associated @ank on February 0, -/.6 filed an action for Interpleader naming as respondent, Gose Fo and one Gohn Coe, Atty.

%eanwhile, on same date :February -., -/.*=, the trial court in !ivil !ase P.6<00*-* :Interpleader= rendered a decisio, the dispositive portion reading as followsA

>12?2F(?2, in view of the foregoing, 8udgment is hereby rendered ordering plaintiff Associate @ank to replace !ashier7s !heck o. +--4+0 in favor of Gose Fo or its cas e)uivalent with legal rate of itnerest from date of complaint, and with costs of suit against the latter. ,( (?C2?2C. (n %arch 0/, -/.*, the trial court in !ivil !ase pertinent portion of which statesA o. !<---4/, for damages, issued an order, the

0. Annul the orders of respondent Gudge of ?T! %anila giving due course to the interpleader suit and declaring petitioner in default. "etitioner7s allegations hold no water. Theories and examples advanced by petitioner on causes and effects of a cashier7s check such as -= it cannot be countermanded in the hands of a holder in due course and 0= a cashier7s check is a bill of exchange drawn by the bank against itself<are general principles which cannot be aptly applied to the case at bar, without considering other things. "etitioner failed to substantiate his claim that he is a holder in due course and for consideration or value as shown by the established facts of the case. Admittedly, petitioner became the holder of the cashier7s check as endorsed by Alexander #im who stole the check. 1e refused to say how and why it was passed to him. 1e had therefore notice of the defect of his title over the check from the start. The holder of a cashier7s check who is not a holder in due course cannot enforce such check against the issuing bank which dishonors the same. If a payee of a cashier7s check obtained it from the issuing bank by fraud, or if there is some other reason why the payee is not entitled to collect the check, the respondent bank would, of course, have the right to refuse payment of the check when presented by the payee, since respondent bank was aware of the facts surrounding the loss of the check in )uestion. %oreover, there is no similarity in the cases cited by petitioner since respondent bank did not issue the cashier7s check in payment of its obligation. Gose Fo bought it from respondent bank for purposes of transferring his funds from respondent bank to another bank near his establishment realiEing that carrying money in this form is safer than if it were in cash. The check was Gose Fo7s property when it was misplaced or stolen, hence he stopped its payment. At the outset, respondent bank knew it was Gose Fo7s check and no one else since Fo had not paid or indorsed it to anyone. The bank was therefore liable to nobody on the check but Gose Fo. The bank had no intention to issue it to petitioner but only to buyer Gose Fo. >hen payment on it was therefore stopped, respondent bank was not the one who did it but Gose Fo, the owner of the check. ?espondent bank could not be drawer and drawee for clearly, Gose Fo owns the money it represents and he is therefore the drawer and the drawee in the same manner as if he has a current account and he issued a check against itD and from the moment said cashier7s check was lost and&or stolen no one outside of Gose Fo can be termed a holder in due course because Gose Fo had not indorsed it in due course. The check in )uestion suffers from the infirmity of not having been properly negotiated and for value by respondent Gose Fo who as already been said is the real owner of said instrument. In his second assignment of error, petitioner stubbornly insists that there is no showing of conflicting claims and interpleader is out of the )uestion. There is enough evidence to establish the contrary. !onsidering the aforementioned facts and circumstances, respondent bank merely took the necessary precaution not to make a mistake as to whom to pay and therefore interpleader was its proper remedy. It has been shown that the interpleader suit was filed by respondent bank because petitioner and Gose Fo were both laying their claims on the check, petitioner asking payment thereon and Gose Fo as the purchaser or owner. The allegation of petitioner that respondent bank had effectively relieved itself of its primary liability under the check by simply filing a complaint for interpleader is belied by the willingness of respondent bank to issue a certificate of time deposit

The records of this case show that on August 0+, -/.6 proceedings in this case was :were= ordered suspended because the main issue in !ivil !ase o. .6<00*-* and in this instant case are the same which isA who between %arcelo %esina and Gose Fo is entitled to payment of Associated @ank7s !ashier7s !heck o. !!<+--4+0O ,aid issue having been resolved already in !ivil casde o. .6< 00*-*, really this instant case has become moot and academic. >12?2F(?2, in view of the foregoing, the motion sholud be as it is hereby granted and this case is ordered dismissed. In view of the foregoing ruling no more action should be taken on the ;%otion For ?econsideration :of the order admitting the Intervention=; dated Gune 0-, -/.6 as well as the %otion For ?econsideration dated ,eptember -+, -/.6. ,( (?C2?2C. "etitioner now comes to $s, alleging thatA -. IA! erred in ruling that a cashier7s check can be countermanded even in the hands of a holder in due course. 0. IA! erred in countenancing the filing and maintenance of an interpleader suit by a party who had earlier been sued on the same claim. 4. IA! erred in upholding the trial court7s order declaring petitioner as in default when there was no proper order for him to plead in the interpleader complaint. 6. IA! went beyond the scope of its certiorari 8urisdiction by making findings of facts in advance of trial. "etitioner now interposes the following prayerA

-. ?everse the decision of the IA!, dated Ganuary 00, -/.* and set aside the February -., -/.* resolution denying the %otion for ?econsideration.

in the amount of ".++,+++ representing the cashier7s check in )uestion in the name of the !lerk of !ourt of %anila to be awarded to whoever wig be found by the court as validly entitled to it. ,aid validity will depend on the strength of the parties7 respective rights and titles thereto. @ank filed the interpleader suit not because petitioner sued it but because petitioner is laying claim to the same check that Fo is claiming. (n the very day that the bank instituted the case in interpleader, it was not aware of any suit for damages filed by petitioner against it as supported by the fact that the interpleader case was first entitled Associated @ank vs. Gose Fo and Gohn Coe, but later on changed to %arcelo A. %esina for Gohn Coe when his name became known to respondent bank.

,( (?C2?2C.

In his third assignment of error, petitioner assails the then respondent IA! in upholding the trial court7s order declaring petitioner in default when there was no proper order for him to plead in the interpleader case. Again, such contention is untenable. The trial court issued an order, compelling petitioner and respondent Gose Fo to file their Answers setting forth their respective claims. ,ubse)uently, a "re<Trial !onference was set with notice to parties to submit position papers. "etitioner argues in his memorandum that this order re)uiring petitioner to file his answer was issued without 8urisdiction alleging that since he is presumably a holder in due course and for value, how can he be compelled to litigate against Gose Fo who is not even a party to the checkO ,uch argument is trite and ridiculous if we have to consider that neither his name or Gose Fo7s name appears on the check. Following such line of argument, petitioner is not a party to the check either and therefore has no valid claim to the !heck. Furthermore, the (rder of the trial court re)uiring the parties to file their answers is to all intents and purposes an order to interplead, substantially and essentially and therefore in compliance with the provisions of ?ule 34 of the ?ules of !ourt. >hat else is the purpose of a law suit but to litigateO

The records of the case show that respondent bank had to resort to details in support of its action for Interpleader. @efore it resorted to Interpleader, respondent bank took an precautionary and necessary measures to bring out the truth. (n the other hand, petitioner concealed the circumstances known to him and now that private respondent bank brought these circumstances out in court :which eventually rendered its decision in the light of these facts=, petitioner charges it with ;gratuitous excursions into these non<issues.; ?espondent IA! cannot rule on whether respondent ?T! committed an abuse of discretion or not, without being apprised of the facts and reasons why respondent Associated @ank instituted the Interpleader case. @oth parties were given an opportunity to present their sides. "etitioner chose to withhold substantial facts. ?espondents were not forbidden to present their side<this is the purpose of the !omment of respondent to the petition. IA! decided the )uestion by considering both the facts submitted by petitioner and those given by respondents. IA! did not act therefore beyond the scope of the remedy sought in the petition.

>12?2F(?2, finding that the instant petition is merely dilatory, the same is hereby denied and the assailed orders of the respondent court are hereby AFFI?%2C in toto.

$(&na '( IAC

ar5$-o A.

$(&na '(. In%$r1$*&a%$ A##$--a%$ Cour%

F.?. o. 5+-6* ovember -4, -/.3, -6* ,!?A 6/5 <<holder in due course Gose Fo purchased from Associated @ank a cashier7s check for ".++,+++.++. $nfortunately, he left said check on the top of the desk of the bank manager when he left the bank. The bank manager entrusted the check for safekeeping to a bank official, a certain Albert $y. >hile $y went to the men7s room, the check was stolen by his visitor in the person of Alexander #im. $pon discovering that the check was lost, Gose Fo accomplished a ;,T(" "AB%2 T; order. Two days later, Associated @ank received the lost check for clearing from "rudential @ank. After dishonoring the same check twice, Associated @ank received summons and copy of a complaint for damages of %arcelo %esina who was in possession of the lost check and is demanding payment. "etitioner claims that a cashier7s check cannot be countermanded in the hands of a holder in due course. I,,$2A >hether or not petitioner can collect on the stolen check on the ground that he is a holder in due course. ?$#I FA o. "etitioner failed to substantiate his claim that he is a holder in due course and for consideration or value as shown by the established facts of the case. Admittedly, petitioner became the holder of the cashier7s check as endorsed by Alexander #im who stole the check. 1e refused to say how and why it was passed to him. 1e had therefore notice of the defect of his title over the check from the start. The holder of a cashier7s check who is not a holder in due course cannot enforce such check against the issuing bank which dishonors the same. QQA person who became the holder of a cashier7s check as endorsed by the person who stole it and who refused to say how and why it was passed to him is not a holder in due course.

10