Prado vs Veridiano II
PPA then published another notice for another public
1. Smith Bell and Company leased from the government
blocks 144 and 145 of the Port Area Manila. They
transferred all their rights to Philippine Building
Corporation (PBC), duly approved by the Agriculture and
Environment Secretary. PBC was able to renew the lease
contract but transferred all its rights to S. Villanueva
Enterprises, Inc. (SVEI), which secure a renewal of
contract for another 25 yrs.
2. The then Minister of General Services ordered the
cancellation of the contract for violation by SVEI of its
provisions. SVEI appealed the order to the Office of the
President which affirmed the cancellation. SVEI's several
motions for reconsideration were denied.
3. Earlier on, EO 321 expanded the territorial area of the
South Harbor Zone and placed the whole area under the
jurisdiction of the PPA.
4. PPA informed SVEI of its intention to take possession of
the leased premises and demanded payment for accrued
rentals and interests. SVEI countered it with a proposal
to restructure its obligations but the same was rejected
by PPA and demanded SVEI to vacate the premise.
5. PPA caused to publish a notice of bidding over the
premise. SVEI filed for a preliminary injunction and/or
TRO. The court issued a preliminary injunction against
PPA. The PPA then filed an ejectment case in the MTC
against SVEI.
6. PPA filed a motion to dismiss the case filed against it by
SVEI which the court granted.
7. SVEI appealed to the CA, pending resolution.
8. On a separate case filed, the actual occupants of Block
145 filed a petition with RTC Manila for Specific
Performance with preliminary injunction and/or
restraining order against PPA, they claim to be
sublessees of Block 145 which is now a commercial
complex. They stated that they were not served with
notice thus deprived them of due process.
9. Judge Veridiano issued a TRO served only after the
bidding, which was declared as a failure for there were
only 2 bidders. PPA filed an opposition to the injunction.
10.
bidding. A day before the pre-trial, the lessees filed an
unverified Urgent Motion for the Issuance of a Status
Quo Order. The motion does not contain any notice of
hearing to the counsel of the petitioners. There is a
notice of hearing but was addressed to the Clerk of
Court. Judge Veridiano then ordered a Status Quo.
11. Petitioners challenged the issuance of the Status Quo
Order stating that Judge Veridiano committed grave
abuse of discretion.
ISSUE: WON the Judge committed grave abuse of discretion
with the issuance of the Status Quo Order.
HELD: Yes. The act is deemed despotic, arbitrary and
capricious.
1. The Judge should have taken notice that the motion for
the SQO does not contain a notice of hearing addressed
to the counsel of the petitioners. It was addressed to the
Clerk of Court. Non-compliance with Secs. 4 and 5 Rule
15of the RC. A notice that does not contain a notice of
hearing is but a mere scrap of paper; it presents no
questions with merits the attention and consideration of
the court. It is not even a motion for it does not comply
with the rules, the clerk has no right to receive it. There
was also no sufficient proof of service to the counsel of
the government.
2. The urgent motion for a status quo order is unverified.
What is sought to be enjoined is the scheduled public
bidding, an event which is not pleaded or covered by the
original petition. It is therefore a subsequent event which
could properly be the subject of a supplemental pleading
pursuant to Sec 6, Rule 10.
3. Sec 4, Rule 58 RC provides that a preliminary injunction
may be granted only if:
a. The complaint is verified
b. The plaintiff files with the clerk of court the
requisite bond
In the attempt to circumvent the rule, the Judge did not
mention the term preliminary injunction or TRO. He just
directed the parties to maintain a status quo condition. The SQO
was in fact a preliminary injunction to enjoin the government
from continuing the public bidding. Both conditions of the Rule
was not complied with.

4. The sublessees were worse, not entitled by the relied of

preliminary injunction for they are mere sublesssees. The
contract of SVEI with the PPA was cancelled as affirmed
by the Office of the President. Such fact should have
provided basis for the dismissal of the preliminary
injunction relief sought for by the sublessees. For the
moment SVEI is ousted from the premise, the sublessees
was clearly would have no leg to stand on.
 Joy Mart Consolidated Corporation vs. Court of Appeals
Facts:
- The government established the Light Rail Transit System (LRT) which route is from
Baclaran to Balintawak Monument and vice versa.
- Thus, negotiations were made between the government and the owners of the
properties affected by the project.
- Some of the properties are owned by Joy Mart Consolidated, including the lot where
the Presidente Hotel leased by Joy Mart was located.
- Joy Mart consented to sell the properties and give up its leasehold rights over the
adjacent properties, PROVIDED that it would be given the FIRST OPTION to
redevelop the entire area denominated as the CONSOLIDATED BLOCK of the LRT
Carriedo Station encompassing Joy Mart’s properties.
- While negotiations were ongoing, the LRTA (Special Committee on Land and
Property Acquisition of the Light Rail Transit Authority) contracted with Philippine
General Hospital Foundation (PGHF).
- PGHF was granted the right, authority, and license to develop the areas adjacent to
the LRT stations and to manage and operate the concessions to be established in
Caloocan, Manila, and Pasay, with the right to sublease, assign, and transfer any of
its rights and interests therein.
- After that, Joy Mart conveyed its properties to LTRA through a Deed of Absolute
Sale. The said deed contained the right of first option.
- As partial compliance with the aforestated first option, the PGH Foundation
subleased to Joy Mart the LRT Carriedo station covering the consolidated block for
the purpose of constructing a multi-storey building of first class materials.
- LTRA however only allowed Joy Mart to occupy an area of 1,141.20 square meters
as the rest of the areas within the consolidated block would be used by the LRT
station and as set-back area or open space for the benefit of the commuting public.
- It reminded LTRA of its right to exercise the first option.
- Joy Mart then constructed an 8 storey building
- Then, LTRA entered into Commercial Stalls Concession Contract with the Phoenix
Omega Development and Management Corporation ("Phoenix" for brevity) awarding
to it all the areas and commercial spaces within the three LRT terminals and the
fifteen (15) on-line stations.
- Joy Mart learned of this, and demanded its right but to no avail.
- Joy Mart filed a complaint for specific performance of contract and damages for
breach of contract with injunction against the LRTA and Phoenix on August 21,
1987.
- The injunction was to command LTRA and Phoenix individually and
collectively, their officers and employees, to cease and desist from the construction
being had in the property adjacent to the leased premises.
- RTC issued the injunction.
- Phoenix sought relief in CA by filing a Petition for certiorari and prohibition.
(naglibogkokayisasagipangayoni Phoenix kayibalikdawang case sa original na RTC
na first naka take og jurisdiction, perowalanamangisultisa facts kung asajuddiay nag
una).
- While it was pending in CA, Phoneix and LRTA petitioned to dissolve the Writ of
Preliminary Injunction, offering to post a counterbond.
- They alleged that the writ of preliminary injunction was causing tremendous losses
to LRTA and Phoenix because they have been unable to use the commercial stalls
in the consolidated block while Joy Mart could be compensated for any loss it may
suffer if the injunction were lifted.
- Joy Mart opposed the petition.
- RTC dissolved the writ (based on Sec.6, Rule 58) TAKE NOTE: na elevate
naang matter sa CA.
- CA knowing the RTC decision dismissed the certiorari petition for being moot and
academic.
- This time, c Joy Mart na pod angniadtosa CA for a TRO/ PRELIM INJUNCTION
- CA temporarily restrained Phoenix and LTRA from continuing its activities until
further orders from CA.
- Despite such order, Phoenix still continued with its activities.
- Joy Mart filed a motion to declare Phoenix in contempt.
- CA dismissed both petitions by Joy Mart.
- Hence, this appeal.
Issue:whether the trial court continued to have control of the writ of preliminary injunction
even after the same had been raised to the Court of Appeals for review.
Held: NO.
After the LRTA and Phoenix had elevated the writ of preliminary injunction to the Court of
Appeals for determination of the propriety of its issuance (CA-G.R. SP No. 12998), the trial
court (notwithstanding the absence of a temporary restraining order from the appellate court)
could not interfere with or preempt the action or decision of the Court of Appeals on the writ of
preliminary injunction whose annulment was sought therein by Phoenix and the LRTA.
In petitioning the trial court to lift the writ of preliminary injunction which they themselves had
brought up to the Court of Appeals for review, Phoenix and the LRTA engaged in forum-
shopping. After the question of whether the writ of preliminary injunction should be annulled or
continued had been elevated to the Court of Appeals for determination, the trial court lost
jurisdiction or authority to act on the same matter. By seeking from the trial court an order
lifting the writ of preliminary injunction, Phoenix and LRTA sought to divest the Court of
Appeals of its jurisdiction to review the writ. They improperly tried to moot their own petition in
the Court of Appeals — a clear case of trifling with the proceedings in the appellate court or of
disrespect for said court.
The actuation of Judge Luna in Civil Case No. 87-41731 can be categorized as disrespectful.
It is not excused by the fact that Phoenix and LRTA were presenting evidence of losses and
damages in support of their motion to lift the writ of preliminary injunction, for that could as
easily have been done by them in the Court of Appeals which possesses "the power to try
cases and conduct hearing, receive evidence and perform any and all acts necessary to
resolve factual issues raised in cases falling within its original and appellate jurisdiction,
including the power to grant and conduct new trials or further proceedings" (Sec. 9, par. [3],
2nd par.. B.P. Blg. 129).
the lower court's interference with the exercise of the appellate court's jurisdiction to decide
and dispose of the petition for certiorari pending before it. Instead of being jealous of its
jurisdiction, the Appellate Court was simply glad to be rid of the case.
The Court of Appeals' reasoning that the trial court did not overlap or encroach upon its (the
Court of Appeals') jurisdiction because the trial court "was actually delving into a new matter
— the propriety of the continuance of the writ of preliminary injunction in view of developments
and circumstances occurring after the issuance of the injunction" (pp. 51-52, Rollo), is
unconvincing, for the issue of the impropriety of issuing the writ of preliminary injunction was
inseparable from the issue of whether the writ should be maintained or not. By lifting the writ
of injunction before the Court of Appeals could rule on whether or not it was properly issued,
the trial court in effect preempted the Court of Appeals' jurisdiction and flouted its authority.
The private respondents' application to the trial court for the dissolution of the writ of
preliminary injunction that was pending review in the Court of Appeals was a form of forum
shopping which this Court views with extreme disapproval. The lower court's proceeding being
void for lack of jurisdiction, the writ of preliminary injunction should be reinstated, and the
petition to annul the writ (CA-G.R. SP No. 12998) should be dismissed on the ground of forum
shopping as provided in Rule No. 17 of the Interim Rules and Guidelines, Rules of Court.

The trial judge played into the hands of Phoenix and the LRTA, and acted with grave abuse of
discretion amounting to excess of jurisdiction in granting their motion to dissolve the writ of
injunction. Judicial courtesy behooved the trial court to keep its hands off the writ of
preliminary injunction and defer to the better judgment of the Court of Appeals the
determination of whether the writ should be continued or discontinued.

The non-issuance of a temporary restraining order by the Court of Appeals upon receipt of the
petition in CA-G.R. SP No. 12998 simply meant that the trial court could proceed to hear and
decide the main complaint of Joy Mart for specific performance of contract and damages
against the LRTA and Phoenix. It did not give the lower court a license to interfere with the
appellate court's disposition of the writ of preliminary injunction.

By simply "noting" that the trial court's order lifting the writ of preliminary injunction
had mooted the case before it, the Court of Appeals displayed regrettable indifference toward
 PARAMOUNT INSURANCE CORPORATION v. COURT OF
APPEALS and DAGUPAN ELECTRIC CORPORATION The posting of a bond in connection with a preliminary injunction
G.R. No. 110086, 19 July 1999, FIRST DIVISION (Ynares-Santiago, (or attachment under Rule 57, or receivership under Rule 59, or seizure
J.) or delivery of personal property under Rule 60) does not operate to relieve
the party obtaining an injunction from any and all responsibility for the
McAdore Finance and Investment, Inc. (McAdore) and Dagupan damages that the writ may thereby cause. It merely gives additional
Electric Corporation (DECORP) entered into a contract whereby protection to the party against whom the injunction is directed. It gives
DECORP shall provide electric power to McAdore’s Hotel. During the the latter a right of recourse against either the applicant or his surety, or
term of their contract, DECORP notice discrepancies between the actual against both.In the same manner, when petitioner PARAMOUNT issued
monthly billings and the estimated monthly billings of McAdore which the bond in favor of its principal, it undertook to assume all the damages
was later discovered that it was due to a slow rotation of the meter. that may be suffered after finding that the principal is not entitled to the
DECORP issued a corrected bill but McAdore refused to pay thus, relief being sought.
DECORP disconnected the power supply to the hotel. McAdore
commenced a suit against DECORP for damages with prayer for a writ of
preliminary injunction, accompanied by an injunction bond from several
sureties, one of which was Paramount Insurance Corporation
(Paramount). Accordinly, a writ of preliminary injunction was issued and
DECORP was ordered to continue the supply of electric power. The RTC
rendered judgment in favor of DECORP and likewise adjudged
Paramount to pay. On appeal by Paramount, the CA affirmed the
decision of the trial court. Before this Court, Paramount contends that
the injunction bond was issued to guarantee “actual and material
damages as may be sustained and duly proved by DECORP,” to the effect
that it is liable to pay such actual and material damages only and no
other damages.

ISSUE:

Whether Paramount is liable to pay actual and material damages

only

HELD:

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.The purpose of the injunction bond is to protect
the defendant against loss or damage by reason of the injunction 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 injunction suit for all
damages, or costs and reasonable counsel’s fees, incurred or sustained by
the latter in case it is determined that the injunction was wrongfully
issued.
Nerwin v Pnoc Digest Nerwin v Pnoc Digest Nerwin v PNOC,
G.R. No. 167057, April 11, 2012 Facts: 1. In 1999, the
National Electrification Administration (†œNEA†•)
published an invitation to pre-qualify and to bid for a
contract, otherwise known as IPB No. 80Â , for the supply
and delivery of about sixty thousand (60,000) pieces of wood
poles and twenty thousand (20,000) pieces of cross arms
needed in the country†™s Rural Electrification Project.  2.
Thereafter, the qualified bidders submitted their financial
bids where private respondent [Nerwin] emerged as the
lowest bidder for all schedules/components of the contract.
NEA then conducted a pre-award inspection of private
respondent†™s [Nerwin†™s] manufacturing plants and
facilities, including its identified supplier in Malaysia, to
determine its capability to supply and deliver NEA†™s
requirements. Â 3. Upon learning of the issuance of
Requisition No. FGJ 30904R1 for the O-ILAW Project, Nerwin
filed a civil action in the RTC in Manila, docketed as Civil
Case No.03106921 entitled Nerwin Industries Corporation v.
PNOC-Energy Development Corporation and Ester R.
Guerzon, as Chairman, Bids and Awards Committee, alleging
that Requisition No. FGJ 30904R1 was an attempt to subject
a portion of the items covered by IPB No. 80 to another
bidding; and praying that a TRO issue to enjoin
respondents†™ proposed bidding for the wooden poles.
 4. Respondents sought the dismissal of Civil Case No.
03106921, stating that the complaint averred no cause of
action, violated the rule that government infrastructure
projects were not to be subjected to TROs, contravened the
mandatory prohibition against non-forum shopping, and the
corporate president had no authority to sign and file the
complaint. 5. Thence, respondents commenced in the Court
of Appeals (CA) a special civil action for certiorari (CA-GR
SP No. 83144), alleging that the RTC had thereby committed
grave abuse of discretion amounting to lack or excess of
jurisdiction in holding that Nerwin had been entitled to the
issuance of the writ of preliminary injunction despite the
express prohibition from the law and from the Supreme
Court; in issuing the TRO in blatant violation of the Rules of
Court and established jurisprudence; in declaring
respondents in default; and in disqualifying respondents†™
counsel from representing them. Issues/s 1. Whether or not
the CA erred in dismissing the case on the basis of Rep. Act
8975 prohibiting the issuance of temporary restraining
orders and preliminary injunctions, except if issued by the
Supreme Court, on government projects Ruling1. The
petition fails .In its decision of October 22, 2004, the CA
explained why it annulled and set aside the assailed orders of
the RTC issued on July 20, 2003 and December 29, 2003,
and why it altogether dismissed Civil Case No. 03106921, as
follows: a. It is beyond dispute that the crux of the instant
case is the propriety of respondent Judge†™s issuance of a
preliminary injunction, or the earlier TRO, for that matter.
b. Respondent Judge gravely abused his discretion in
entertaining an application for TRO/preliminary injunction,
and worse, in issuing a preliminary injunction through the
assailed order enjoining petitioners†™ sought bidding for
its O-ILAW Project. The same is a palpable violation of RA
8975Â which was approved on November 7, 2000, thus,
already existing at the time respondent Judge issued the
assailed Orders dated July 20 and December 29, 2003.2. The
said proscription is not entirely new. RA 8975 merely
supersedes PD 1818Â which earlier underscored the
prohibition to courts from issuing restraining orders or
preliminary injunctions in cases involving infrastructure or
National Resources Development projects of, and public
utilities operated by, the government. This law was, in fact,
earlier upheld to have such a mandatory nature by the
Supreme Court in an administrative case against a Judge.
WHEREFORE, the Court AFFIRMS the decision of the Court of
Appeals; and ORDERS petitioner to pay the costs of suit

REYNALDO SEBASTIAN vs. SHERIFF ALBERTO A. VALINO
QUIASON, J.:
 A complaint for gross abuse of authority committed in connection with the
implementation of the writ issued by the RTC, Makati, Metro Manila, in Civil
Case No. 89-3368 and refusal to enforce the trial court's for the return of
the seized items was filed by Marblecraft, Inc., against Alberto A. Valino,
Senior Deputy Sheriff, Office of the Regional Sheriff, Pasig, Metro Manila
 The Complainant alleges that on March 3, 1989, Private Devt Corp. of the
Phil. (PDCP) filed a replevin suit against Marblecraft, Inc., in order to
foreclose the chattels mortgaged by Marblecraft.
 A writ of seizure directed against Marblecraft covering the chattels sought to
be replevined was issued by the RTC Makati.
 The enforcement of the writ of seizure was delayed because of the writ of
preliminary injunction enjoining PDCP from proceeding with the foreclosure
sale issued by the RTC Pasig in Civil Case No. 58006. It was only on October
31,1990, when the RTC Pasig, dissolved the writ of preliminary injunction.
 On November 9, 1990, respondent, accompanied by several policemen and
PDCP employees, went to the office of Marblecraft at Barrio Santolan, Pasig,
to implement the writ of seizure. Respondent and his companions forcibly
opened the lockers and desk drawers of the employees of complainant and
took their personal belongings, as well as some office equipment issued to
them. The employees filed with the Office of the Provincial Prosecutor of
Rizal two criminal complaints for robbery against respondent and his
companions.
 Respondent only showed to complainant's counsel a copy of the writ but did
not furnish him with a copy of the application for the writ, the supporting
affidavit and the bond.
 In the course of the implementation of the writ, several pieces of machinery
and equipment were destroyed or taken away by respondent.
 The seized articles were turned over to PCDP’s counsel and the items were
stored in PDCP's warehouse in Taguig.
 Complainant posted a counterbond. RTC of Makati approved the bond and
directed the immediate return of the seized items. PDCP's motion to set
aside was denied and the TC reiterated its directive for the return of the
seized items. Respondent did not implement the orders. MR denied.
 Respondent-case was pure harassment after he had refused to defer the
implementation of the writ of seizure. He said that if he did not implement
the writ, he would have been accused by PDCP of non-performance of his
duties as a sheriff. He pointed out that the criminal complaints for theft filed
against him by the employees of complainant were dismissed by the
Provincial Prosecutor of Rizal.
 Admin. Complaint (J. Villarama, RTC Pasig) found respondent guilty of
partiality when he immediately turned over the seized items to PDCP, and of
willful refusal to enforce the November 14, 26 and December 11, 1990
Orders of the RTC Makati.
ISSUE:
WON the property seized under a writ of replevin is required to be immediately
delivered to the plaintiff.
HELD:
 Under the Revised Rules of Court, the property seized under a writ of
replevin is not to be delivered immediately to the plaintiff. The sheriff must
retain it in his custody for five days and shall return it to the defendant, if
the latter, as in the case, requires its return and files a counterbond (Sec. 4,
Rule 60, Revised Rules of Court).
 In violation of said Rule, respondent immediately turned over the seized
articles to PDCP. His claim that the Office of the Regional Sheriff did not
have a place to store the seized items, cannot justify his violation of the
Rule. As aptly noted by the Investigating Judge, the articles could have been
deposited in a bonded warehouse.
 Respondent must serve on Marblecraft not only a copy of the order of
seizure but also a copy of the application, affidavit and bond (Sec. 4, Rule
60, Revised Rules of Court). Respondent did not furnish defendant with a
copy of the application, affidavit and bond. By his own admission, he only
served it with a copy of the order of seizure.
 The sheriff’s refusal to implement the order of the RTC Makati for him to
return to complainant the articles seized pursuant to the writ of seizure
dated March 30, 1990 was a serious infraction committed by him.
 The only action taken by respondent to implement the Order dated
December 11, 1990 was to write a letter on December 12, 1990, addressed
to the counsel of PDCP, requesting the turnover of seized articles. As
expected, PDCP's counsel refused to part with the possession of the seized
articles and to issue a letter of authorization to withdraw the same from the
warehouse. Instead of taking possession of the articles, respondent merely
reported to the RTC that “it is now clear that the undersigned cannot
implement the Court order dated December 11, 1990 by reason of the
refusal of PDCP to accept or to honor said Court order".
G.R. No. 89020
PARAS, J.:
In this petition for review on certiorari, petitioner
Stronghold Insurance Co., Inc. assails the decision* of
the Court of Appeals in CA-G.R. CV No. 16154
affirming the order of the Regional Trial Court, Branch
167, Pasig, Metro Manila in its Civil Case No. 52177.
The dispositive portion of this order of the Trial court
reads:
"WHEREFORE, in view of the foregoing consideration,
the claim of the defendant against SICI Bond No. 11652
of the Stronghold Insurance Company, Inc. is found to
have been established and said surety company is
adjudged liable for damages suffered by the defendant
as found by this Court in its decision dated June 9,
1986, to the extent of the amount of the replevin bond,
which is P42,000.00" (p. 20, Rollo)
The factual antecedents are not disputed.
On March 21, 1985, Leisure Club, Inc. filed Civil Case
No. 52177 against Northern Motors Inc. for replevin
and damages. It sought the recovery of certain office
furnitures and equipments. In an order dated March
22, 1985, the lower court ordered the delivery of
subject properties to Leisure Club Inc. subject to the
posting of the requisite bond under Section 2, Rule 60
of the Rules of Court. Accordingly, Leisure Club Inc.
posted a replevin bond (SICI Bond No. 11652) dated
March 25, 1985 in the amount of P42,000.00 issued by
Stronghold Insurance Co. Inc. In due course, the lower
court issued the writ of replevin, thereby enabling
Leisure Club Inc. to take possession of the disputed
properties.
Northern Motors Inc. filed a counterbond for the
release of the disputed properties. However, efforts to
recover these properties proved futile as Leisure Club
Inc. was never heard of again.
For failure to appear in the pre-trial of the case,
Leisure Club Inc. was declared non-suited. Northern
Motors Inc. presented its evidence ex-parte and on
June 9, 1986, the lower court rendered its decision in
favor of Northern Motors Inc., the dispositive portion
of which reads -
"PREMISES CONSIDERED, the instant petition is
hereby dismissed and on the counterclaim, plaintiff is
ordered to pay defendant the following:
a) the actual value of the property sold at public
auction by defendant, and repossessed by plaintiff, of
P20,900.00;
b) exemplary damages of P10,000.00;
c) attorney's fees in the amount of P10,000.00; and
d) costs of suit.
SO ORDERED." (p. 21, Rollo)
In the said decision, the lower court ruled that:
1. Northern Motors Inc. had rightful ownership and
right of possession over the subject properties.
2. Leisure Club Inc. is a sister company of Macronics
Inc., a debtor of Northern Motors Inc., and former
owner of these properties.
3. Under the circumstances, Leisure Club Inc.
instituted the action for replevin as part of a scheme to
spirit away these properties and pave the way for the
evasion of lawful obligations by its sister company.
(Decision dated June 4, 1986, p. 4).
On July 3, 1986, Northern Motors Inc. filed a "Motion
for Issuance of Writ of Execution Against Bond of
Plaintiff's Surety", pursuant to Section 10, Rule 20 of
the Rules of Court, 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 Insurance Co.,
Inc., Northern Motors Inc. presented one witness in
the person of its former manager Clarissa G. Ocampo,
whose testimony proved that:
(a) Northern Motors Inc. and Macronics Marketing
entered into a lease agreement wherein the latter
leased certain premises from the former.
(b) Macronics failed to pay its bills to Northern Motors
Inc., so the latter was forced to terminate the lease.
(c) Because of Macronics' unpaid liabilities to Northern
Motors Inc., the latter was forced to sell off the
former's properties in an auction sale wherein
Northern Motors Inc. was the buyer. Macronics was
duly notified of the sale.
(d) These properties sold were the sole means available
by which Northern Motors Inc could enforce its claim
against Macronics. (TSN dated January 30, 1987; pp.
94-95, Rollo)
Stronghold Insurance Co., Inc. did not cross-examine
the said witness. Instead it asked for continuance in
order to present its own witness. Stronghold, however,
never presented any witness.
On July 21, 1987, the lower court issued its now
disputed Order finding Stronghold liable under its
surety bond for the damages awarded to Northern
Motors Inc. in the June 8, 1986 Decision. In the said
Order, the lower court held:
"Submitted for resolution is the 'Motion for Issuance of
Writ of Execution Against Bond of Plaintiff's Surety'
filed by the defendant and the opposition thereto filed
by the Stronghold Insurance Company, Inc.
"In the decision rendered by the Court on June 9, 1977,
the defendant Northern Motors, Inc. was the prevailing
party and the judgment in its favor ordered the
plaintiff to pay the actual value of the property sold at
public auction by the defendant and repossessed by
plaintiff in the amount of P20,900.00, which is in
favor of the plaintiff if the latter is found not entitled to
the writ of replevin earlier issued against the
defendant.
"The thrust of the opposition of the bonding company
is to the effect that the motion for a writ of execution 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 executory
and therefore, is no longer liable on the bond. The
surety company likewise raised the issue as to when
the decision became final and executory. Moreover, the
surety company avers that the defendant failed to
prove any damage by reason of the issuance of replevin
bond.
"Sec. 20 of Rule 57, in relation to Sec. 10 of Rule 60,
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
judgment becomes final and executory.
"Being the prevailing party, it is undeniable that the
defendant is entitled to recover against the bond. The
application for that purpose was made before the
decision became final and before the appeal was
perfected. Both the prevailing and losing parties may
appeal the decision. In the case of the plaintiff it
appears that its counsel did not claim the decision
which was sent by registered mail. Moreover, the
defendant which is the prevailing party received the
decision by registered mail on June 20, 1986 and filed
the motion for execution against the bond on July 3,
1986. Hence, with respect to the defendant the motion
against the bond was filed before any appeal was
instituted and definitely on or before the judgment
became final.
"Although the claim against the bond was denominated
as a Motion for issuance of a writ of execution, the
allegations are to the effect that the defendant is
applying for damages against the bond. In fact, the
defendant invokes Sec. 10, Rule 60, in relation to Sec.
20, Rule 57, Rules of Court. Evidently, therefore, the
defendant is in reality claiming damages against the
bond.
"It 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. By virtue of the writ, the plaintiff took possession
of the auctioned properties. Despite a redelivery bond
issued by the defendant, the plaintiff refused to return
the properties and in 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. Moreover, the extent of the damages has been
qualified in the decision dated June 9, 1986." (pp. 21-
23, Rollo)
This Order was appealed by Stronghold to the Court of
Appeals. In a decision dated July 7, 1989, the Court of
Appeal affirmed the order of the lower court. This
decision is now the subject of the instant petition.
Petitioner raises the following assignments of error:
"1. The lower court erred in awarding damages against
herein petitioner despite complete absence of evidence
in support of the application.
"2. The lower court erred in just adopting the
dispositive portion of the decision dated June 7, 1986
as basis for the award of damages against herein
petitioner.
"3. The lower court erred in awarding exemplary
damages in favor of Northern Motors, Inc. and against
petitioner Stronghold Insurance Co., Inc.
"4. The lower court erred in awarding the attorney's
fees of P10,000.00 as damages against the bond." (pp.
10-11, Rollo)
We find no merit in the petition.
In the case of Visayan Surety & Insurance Corp. vs.
Pascual, 85 Phil. 779, the Court explained the nature of
the proceedings to recover damages against a surety, in
this wise:
"In such case, upon application of the prevailing party,
the court
must order the surety to show cause why the bond sho
uld notrespond for the judgment of damages. If 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 suchnew defense, not previously set up by
the principal, as the surety may allege and offer to
prove." (Id. at 785; underscoring supplied) (p. 96,
Rollo)
Stronghold Insurance Co., Inc., never denied that it
issued a replevin bond. Under the terms of the said
bond, Stronghold Insurance together with Leisure Club
Inc. solidarily bound themselves in the sum of P42,000
(a) for the prosecution of the action,
(b) for the return of the property to the defendant if the
return thereof be adjudged, and
(c) for the payment of such sum as may in the cause be
recovered against the plaintiff and the costs of the
action.
In the case at bar, all the necessary conditions for
proceeding against the bond are present, to wit:
"(i) the plaintiff a quo, in bad faith, failed to prosecute
the action, and after retrieving the property, it
promptly disappeared;
(ii) the subject property disappeared with the plaintiff,
despite a court order for their return; and
(iii) a reasonable sum was adjudged to be due to
respondent, by way of actual and exemplary damages,
attorney's fees and costs of suit." (p. 63, Rollo)
On the propriety of the award for damages and
attorney's 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.
Northern Motors proved the damages it suffered thru
evidence presented in the hearing of the case itself and
in the hearing of its motion for execution against the
replevin bond. No evidence to the contrary was
presented by Stronghold Insurance Co. Inc. in its
behalf. It did not impugn said award of exemplary
damages and attorney's fees despite having every
opportunity to do so.
As correctly held by respondent Court of Appeals red against the plaintiff, and the costs of the action."
(underscoring supplied)
"Stronghold Insurance, Inc. has no ground to assail the
awards against it in the disputed Order. Unless it has a WHEREFORE, the petition is DENIED for lack of
new defense, it cannot simplistically dissociate itself merit. No costs.
from Leisure Club, Inc. and disclaim liability vis-a-vis
the findings made in the Decision of the lower court SO ORDERED.
dated June 9, 1986. Under Section 2; Rule 60 the bond
it filed is to ensure "the return of the property to the
defendant if the return thereof be adjudged, 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." (pp. 24-25, Rollo)
Besides, Leisure Club Inc.'s 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, reckless, oppressive and malevolent breach
of contract which justifies award of exemplary damages
under Art. 2232 of the Civil Code.
The attorney's fees awarded in favor of Northern
Motors Inc. are likewise warranted under Art. 2208 of
the New Civil Code.
In any event, the trial court has decided with finality
that the circumstances justifying the award of
exemplary damages and attorney's fees exist. The
obligation of Stronghold Insurance Co. Inc., under the
bond is specific. It assures
"the payment of such sum as may in the causebe recove