You are on page 1of 2

Topic SURETYSHIP

Case No. G.R. No. 89020 / May 5, 1992


Case Name STRONGHOLD INSURANCE CO. INC. vs. CA
Ponente PARAS, j.

RELEVANT FACTS
 Northern Motors Inc. and Macronics Marketing entered into a lease agreement wherein Northern
Motors leased certain premises to Macronics.
 Macronics failed to pay its bills to Northern Motors so the latter was forced to terminate the lease.
Northern Motors was forced to sell off Macronics’ properties in an auction sale to cover for unpaid
liabilities. Northern Motors was the buyer. Macronics was duly notified of the sale.
 On March 21, 1985, Leisure Club Inc., sister company of Macronics, filed a case for replevin and
damages against Northern Motors. It sought the recovery of certain office furniture and equipment.
 Lower court ordered the delivery of the subject properties to Leisure Club subject to the posting of the
requisite bond under Rule 60, Sec 2 of ROC.
 Leisure Club posted a replevin bond in the amount of P42,000 issued by Stronghold Insurance.
 The lower court issued the writ of replevin. Leisure Club then took possession of the properties.
 Northern Motors filed a counterbond for the release of the properties. However, Leisure Club was never
heard of again. The latter failed to appear in the pre-trial and was declared non-suited.
 Lower court decided in favor of Northern Motors, dismissing Leisure Club’s complaint and ordering it to
pay for damages.
 On July 3, 1986, Northern Motors filed a Motion for Issuance of Execution Against Bond of Plaintiff’s
Surety, which was treated by the lower court as an application for damages against the replevin bond.
 Stronghold Insurance opposed arguing, among others, that:
o The motion for a writ of execution is not the proper remedy; it should have been an application
against the bond.
o It is not a party to the case and that the decision clearly became final and executory and,
therefore, is no longer available on the bond.
 Lower court held Stronghold liable under its surety bond for damages awarded to Northern Motors.
 CA affirmed.

ISSUE AND RATIO DECIDENDI

Issue Ratio
W/N Stronghold is liable for YES.
damages awarded to 1. Stronghold never denied that it issued a replevin bond. Under the
Northern Motors? terms of said bond, Stronghold together with Leisure Club solidarily
bound themselves in the sum of P42,000 –
(a) For the prosecution of 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.
2. In this case, all the necessary conditions for proceeding against the
bond are present:
(a) Leisure Club, in bad faith, failed to prosecute the action, and
after relieving the property, it promptly disappeared,
(b) The subject property disappeared with Leisure, despite a
court order for their return, and
(c) A reasonable sum was adjudged to be due to Northern
Motors, by way of actual and exemplary damages, attorney’s
fees and costs of suit.
3. Stronghold can’t simply dissociate itself from Leisure and disclaim
liability vis-à-vis the findings made in the decision of the lower court.
Under Sec. 2, Rule 60 of ROC 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.”
4. Moreover, the obligation of Stronghold under the bond is specific, i.e.
the payment of such sum as may in the cause be recovered against
the plaintiff, and the costs of the action.
5. Hence, Stronghold must pay Northern Motors for damages.

RULING

WHEREFORE, the petition is DENIED for lack of merit. No costs.

You might also like