Credit Transaction

Chapter 4 Cases

1.

G.R. No. 89020 May 5, 1992

STRONGHOLD INSURANCE CO., INC., petitioner,

vs. COURT OF APPEALS, respondent.

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 —

PREMISE 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 leased 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
prevailling 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 insurance 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 propose 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 appears that its counsel did not claim the decision which was sent 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 the fact repossessed the same. Clearly, defendant suffered
damages by reason of the wrongful replevin, in that it has been deprived of the properties upon which
it was entitled to enforce its claim. 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 Appeals
affirmed the order of the lower court. This decision is now the subject of the instant petition.

Petitioner raises the following assignment 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 should not respond 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 such new defense, not
previously set up by the principal, as the surety may allege and offer to prove. (Id. at 785; emphasis
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 relieving 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 ––

Stronghold Insurance, Inc. has no ground to assail the awards against it in the disputed Order. Unless
it has a new defense, it cannot simplistically dissociate itself from Leisure Club, Inc. and disclaim
liability vis-a-vis the findings made in the Decision of the lower court 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)

Beside, 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 Article 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 cause be recovered against the plaintiff, and the costs of the action." (emphasis
supplied)

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

 2.

G.R. No. L-40517 January 31, 1984

LUZON SURETY COMPANY, INC., plaintiff-appellee,

vs. PASTOR T. QUEBRAR and FRANCISCO KILAYKO, defendants-appellants.

MAKASIAR, J.:

This is an appeal from the judgement of the Court of First Instance of Manila in Civil Case No. 52790 dated November
3, 1964 which was certified to this Court by the Court of Appeals in its resolution dated March 20, 1975.

On August 9, 1954, plaintiff-appellee issued two administrator's bond in the amount of P15,000.00 each, in behalf of
the defendant-appellant Pastor T. Quebrar, as administrator in Special Proceedings Nos. 3075 and 3076 of the Court
of First Instance of Negros Occidental, entitled " Re Testate Estate of A. B. Chinsuy," and Re Testate Estate of
Cresenciana Lipa," respectively, (pp. 8-12, 17-21, ROA; p. 9 rec.). In consideration of the suretyship wherein the
plaintiff-appellee Luzon Surety Company, Inc. was bound jointly and severally with the defendant appellant Pastor T.
Quebrar, the latter, together with Francisco Kilayko, executed two indemnity agreements, where among other things,
they agreed jointly and severally to pay the plaintiff-appellee "the sum of Three Hundred Pesos (P300.00) in advance
as premium thereof for every 12 months or fraction thereof, this ... or any renewal or substitution thereof is in effect"
and to indemnify plaintiff-appellee against any and all damages, losses, costs, stamps taxes, penalties, charges and
expenses, whatsoever, including the 15% of the amount involved in any litigation, for attomey's fees (pp. 12-16, 21-25.
ROA; p. 9, rec.).

For the first year, from August 9, 1954 to August 9, 1955, the defendants-appellants paid P304.50 under each
indemnity agreement or a total of P609.00 for premiums and documentary stamps.

On June 6, 1957, the Court of First Instance of Negros Occidental approved the amended Project of Partition and
Accounts of defendant-appellant (p. 87, ROA; p. 9, rec.).

On May 8, 1962, the plaintiff-appellee demanded from the defendants-appellants the payment of the premiums and
documentary stamps from August 9,1955.

On October 17, 1962, the defendants-appellants ordered a motion for cancellation and/or reduction of executor's bonds
on the ground that "the heirs of these testate estates have already received their respective shares" (pp. 69-70, ROA,
p. 9, rec.).

On October 20, 1962, the Court of First Instance of Negros Occidental acting on the motions filed by the defendants-
appellants ordered the bonds cancelled.

Plaintiff-appellee's demand amounted to P2,436.00 in each case, hence, a total of P4,872.00 for the period of August
9, 1955 to October 20, 1962. The defendants-appellants to pay the said amount of P4,872.00.

On January 8, 1963, the plaintiff-appellee filed the case with the Court of First Instance of Manila During the pre-trial
the parties presented their documentary evidences and agreed on the ultimate issue - "whether or not the
administrator's bonds were in force and effect from and after the year that they were filed and approved by the court up
to 1962, when they were cancelled." The defendants-appellants offered P1,800.00 by way of amicable settlement
which the plaintiff-appellee refused.

The lower court allowed the plaintiff to recover from the defendants-appellants, holding that:

We find for the plaintiff it is clear from the terms of the Order of the Court in which these bond were
filed, that the same were in force and effect from and after filling thereof up to and including 20
October, 1962, when the same werecancelled. It follows that the defendants are liable under the terms
of the Indemnity Agreements, notwithstanding that they have not expressly sought the renewal of
these bonds bemuse the same were in force and effect until they were cancelled by order of the Court.
The renewal of said bonds is presumed from the fact that the defendants did not ask for the
cancellation of the same; and their liability springs from the fact that defendant Administrator Pastor
Quebrar, benefited from the bonds during their lifetime.

We find no merit in defendants' claim that the Administrator's bonds in question are not judicial bonds
but legal or conventional bonds only, since they were constituted by virtue of Rule 82, Sec. 1 of the Old
Rule of Court. Neither is there merit in defendants, claim that payments of premiums and documentary
stamps were conditions precedent to the effectivity of the bonds, since it was the defendants' duty to
pay for the premiums as long as the bonds were in force and effect. Finally, defendants' claim that they
are not liable under the Indemnity Agreements is also without merit since the under of defendants
under said Indemnity Agreements; includes the payment of yearly pre for the bonds.

WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendants,
ordering the tsn the defendant to pay the plaintiff, jointly and severally, the amount of P6,649.36 plus
 interest at the legal rate from 27 July 1964 until fully paid and the sum equivalent to 10% of the total
amount due as and or attorney's fees, and costs (pp. 92-94, ROA; p. 9, rec.).

Defendants-appellants appealed to the Court of Appeals. On March 20, 1975, the Court of Appeals in a resolution
certified the herein case to this Court after finding that this case involves only errors or questions of law.

1. The proper determination of the liability of the surety and of the principal on the bond must depend primarily upon the
language of the bond itself. The bonds herein were required by Section 1 of Rule 81 of the Rules of Court. While a
bond is nonetheless a contract because it is required by statute (Midland Co. vs. Broat 52 NW 972), said statutory
bonds are construed in the light of the statute creating the obligation secured and the purposes for which the bond is
required, as expressed in the statute (Michael vs. Logan, 52 NW 972; Squires vs. Miller, 138 NW 1062). The statute
which requires the giving of a bond becomes a part of the bond and imparts into the bond any conditions prescribed by
the statute (Scott vs. United States Fidelity Co., 252 Ala 373, 41 So 2d 298; Employer's Liability Assurance Corp. vs.
Lunt, 82 Ariz 320, 313 P2d 393).

The bonds in question herein contain practically the very same conditions in Sec. 1, Rule 81 of the Rules of Court.
Pertinent provision of the administrator's bonds is as follows:

Therefore, if the said Pastor T. Quebrar faithfully prepares and presents to the Court, within three months from
the date of his appointment, a correct inventory of all the property of the deceased which may have come into
his possession or into the possession of any other person representing him according to law, if he administers
all the property of the deceased which at any time comes into his possession or into the possession of any
other person representing him; faithfully pays all the debts, legacies, and bequests which encumber said
estate, pays whatever dividends which the Court may decide should be paid, and renders a just and true
account of his administrations to the Court within a year or at any other date that he may be required so to do,
and faithfully executes all orders and decrees of said Court, then in this case this obligation shall be void,
otherwise it shall remain full force and effect (p. 9, 18, ROA p. 9, rec.).

Section 1 of Rule 81 of the Rules of Court requires the administrator/executor to put up a bond for the purpose of
indemnifying the creditors, heirs, legatees and the estate. It is conditioned upon the faithful performance of the
administrator's trust (Mendoza vs. Pacheco, 64 Phil. 134).

Having in mind the purpose and intent of the law, the surety is then liable under the administrator's bond, for as long as
the administrator has duties to do as such administrator/executor. Since the liability of the sureties is co-extensive with
that of the administrator and embraces the performance of every duty he is called upon to perform in the course of
administration (Deobold vs. Oppermann, 111 NY 531, 19 NE 94), it follows that the administrator is still duty bound to
respect the indemnity agreements entered into by him in consideration of the suretyship

It is shown that the defendant-appellant Pastor T. Quebrar, still had something to do as an administrator/executor even
after the approval of the amended project of partition and accounts on June 6, 1957.

The contention of the defendants-appellants that the administrator's bond ceased to be of legal force and effect with
the approval of the project of partition and statement of accounts on June 6, 1957 is without merit. The defendant-
appellant Pastor T. Quebrar did not cease as administrator after June 6, 1957, for administration is for the purpose of
liquidation of the estate and distribution of the residue among the heirs and legatees. And liquidation means the
determination of all the assets of the estate and payment of all the debts and expenses (Flores vs. Flores, 48 Phil.
982). It appears that there were still debts and expenses to be paid after June 6, 1957.

And in the case of Montemayor vs. Gutierrez (114 Phil. 95), an estate may be partitioned even before the termination of
the administration proceedings. Hence, the approval of the project of partition did not necessarily terminate the
administration proceedings. Notwithstanding the approval of the partition, the Court of First Instance of Negros
Occidental still had jurisdiction over the administration proceedings of the estate of A.B. Chinsuy and Cresenciana Lipa.

2. The sureties of an administration bond are liable only as a rule, for matters occurring during the term covered by the
bond. And the term of a bond does not usually expire until the administration has been closed and terminated in the
manner directed by law (Hartford Accident and Indemnity Co. vs. White, 115 SW 2d 249). Thus, as long as the probate
court retains jurisdiction of the estate, the bond contemplates a continuing liability (Deobold vs. Oppermann, supra)
notwithstanding the non-renewal of the bond by the defendants-appellants.

It must be remembered that the probate court possesses an all-embracing power over the administrator's bond and
over the administration proceedings and it cannot be devoid of legal authority to execute and make that bond
answerable for the every purpose for which it was filed (Mendoza vs. Pacheco, 64 Phil. 1-05). It is the duty of the courts
of probate jurisdiction to guard jealously the estate of the deceased persons by intervening in the administration thereof
in order to remedy or repair any injury that may be done thereto (Dariano vs. Fernandez Fidalgo, 14 Phil. 62, 67; Sison
vs. Azarraga, 30 Phil. 129, 134).

3. In cases like these where the pivotal point is the interpretation of the contracts entered into, it is essential to
scrutinize the very language used in the contracts. The two Indemnity Agreements provided that:

The undersigned, Pastor T. Quebrar and Dr. Francisco Kilayko, jointly and severally, bind ourselves unto the
Luzon Surety Co., Inc. ... in consideration of it having become SURETY upon Civil Bond in the sum of Fifteen
Thousand Pesos (P15,000.00) ... in favor of the Republic of the Philippines in Special Proceeding ... dated
 August 9, 1954, a copy of which is hereto attached and made an integral part hereof (emphasis supplied; pp.
12-13, 21, ROA p. 9, rec.),

To separately consider these two agreements would then be contrary to the intent of the parties in making them
integrated as a whole.

The contention then of the defendants-appellants that both the Administrator's Bonds and the Indemnity Agreements
ceased to have any force and effect, the former since June 6, 1957 with the approval of the project of partition and the
latter since August 9, 1955 with the non-payment of the stated premiums, is without merit. Such construction of the said
contracts entered into would render futile the purpose for which they were made.

To allow the defendants-appellants to evade their liability under the Indemnity Agreements by non-payment of the
premiums would ultimately lead to giving the administrator the power to diminish or reduce and altogether nullify his
liability under the Administrator's Bonds. As already stated, this is contrary to the intent and purpose of the law in
providing for the administrator's bonds for the protection of the creditors, heirs, legatees, and the estate.

4. Moreover, the lower court was correct in holding that there is no merit in the defendants' claim that payments of
premiums and documentary stamps are conditions precedent to the effectivity of the bonds.

It is worthy to note that there is no provision or condition in the bond to the effect that it will terminate at the end of the
first year if the premium for continuation thereafter is not paid. And there is no clause by which its obligation is avoided
or even suspended by the failure of the obligee to pay an annual premium (U.S. vs. Maryland Casualty Co. DCMD 129
F. Supp; Dale vs. Continental Insurance Co., 31 SW 266; Equitable Insurance C. vs. Harvey, 40 SW 1092).

It was held in the case of Fourth and First Bank and Trust Co. vs. Fidelity and Deposit Co. (281 SW 785), that "at the
end of the first year, the bond went on, whether or not the premium was paid or not ... Even on a failure to pay an
annual premium, the contract ran on until affirmative action was taken to avoid it. The obligation of the bond was
therefore continuous." And in United States vs. American Surety Co. of New York (172 F2d 135), it was held that
"under a surety bond securing faithful performance of duties by postal employee, liability for default of employee
occurring in any one year would continue, whether or not a renewal premium was paid for a later year."

The payment of the annual premium is to be enforced as part of the consideration, and not as a condition Woodfin vs.
Asheville Mutual Insurance Co., 51 N.C. 558); for the payment was not made a condition to the attaching or continuing
of the contract (National Bank vs. National Surety Co., 144 A 576). The premium is the consideration for furnishing the
bonds and the obligation to pay the same subsists for as long as the liability of the surety shall exist (Reparations
Commission vs. Universal Deep-Sea Fishing Corp., L-21996, 83 SCRA 764, June 27, 1978). And in Arranz vs. Manila
Fidelity and Surety Co., Inc. (101 Phil. 272), the "premium is the consideration for furnishing the bond or the guaranty.
While the liability of the surety subsists the premium is collectible from the principal. Lastly, in Manila Surety
and Fidelity Co., Inc. vs. Villarama (107 Phil. 891), it was held that "the one-year period mentioned therein refers not to
the duration or lifetime of the bond, but merely to the payment of premiums, and, consequently, does not affect at all
the effectivity or efficacy of such bond. But such non- payment alone of the premiums for the succeeding years ... does
not necessarily extinguish or terminate the effectivity of the counter-bond in the absence of an express stipulation in the
contract making such non-payment of premiums a cause for the extinguishment or termination of the undertaking.
...There is no necessity for an extension or renewal of the agreement because by specific provision thereof, the
duration of the counter-bond was made dependent upon the existence of the original bond."

5. It is true that in construing the liability of sureties, the principle of strictissimi juris applies (Asiatic Petroleum Co. vs,
De Pio, 46 Phil. 167; Standard Oil Co. of N.Y. vs. Cho Siong, 53 Phil. 205); but with the advent of corporate surety,
suretyship became regarded as insurance where, usually, provisions are interpreted most favorably to the insured and
against the insurer because ordinarily the bond is prepared by the insurer who then has the opportunity to state plainly
the term of its obligation (Surety Co. vs. Pauly, 170 US 133, 18 S. Ct. 552.,42 L. Ed. 972).

This rule of construction is not applicable in the herein case because there is no ambiguity in the language of the bond
and more so when the bond is read in connection with the statutory provision referred to.

With the payment of the premium for the first year, the surety already assumed the risk involved, that is, in case
defendant-appellant Pastor T. Quebrar defaults in his administrative duties. The surety became liable under the bond
for the faithful administration of the estate by the administrator/executor. Hence, for as long as defendant-appellant
Pastor T. Quebrar was administrator of the estates, the bond was held liable and inevitably, the plaintiff-appellee's
liability subsists since the liability of the sureties is co-extensive with that of the administrator.

WHEREFORE, THE DECISION OF THE COURT OF FIRST INSTANCE OF MANILA DATED NOVEMBER 3, 1964 IS
HEREBY AFFIRMED. WITH COSTS AGAINST DEFENDANTS-APPELLANTS.
 3.

G.R. No. L-40334 February 28, 1985

CENTRAL SURETY and INSURANCE COMPANY, INC., petitioner,

vs. Hon. ALBERTO Q. UBAY as Judge of the Court of First Instance of Rizal, Caloocan City, Branch XXXII and
ONG CHI, doing business under the Firm Name. "TABLERIA DE LUXE respondents.

ABAD SANTOS, J.:

Ong Chi, doing business under the firm name "Tableria de Luxe sued Francisco Reyes, Jr. for a sum of money in the
City Court of Caloocan City. Ong Chi applied for a writ of attachment and upon filing a bond in the amount of
P6,464.18, a jeep belonging to Reyes was placed in custodia legis.

Reyes moved to dissolve the writ of attachment. He posted a counterbond in the amount of P 6,465.00; his surety was
Central Surety and Insurance Co., the petitioner herein. The condition of the counterbond is that "in consideration of
the dissolution of said attachment, [Francisco Reyes, Jr., as principal and Central Surety and Insurance Co., as surety]
hereby jointly and severally, bind ourselves in the sum of SIX THOUSAND FOUR HUNDRED SIXTY FIVE ONLY ( P
6,465.00 ) Philippine Currency, under the condition that in the case the plantiff recovers judgment in the action the
defendant will on demand redeliver the attached property so released to the officer of the Court to be applied to the
payment of the judgment or in default thereof that the defendant and surety will on demand pay to the plaintiff the full
value of the property released." (Rollo, p. 11) The writ of attachment was thereafter lifted and the jeep was returned to
Reyes.

In the course of time, the City Court rendered judgment as follows:

WHEREFORE, judgment is hereby rendered in favor of the Plaintiff and against the defendant, ordering said
defendant to pay plaintiff the sum of P 6,964.18, with legal interests thereon from the date of the filing of this
complaint until fully paid, plus the sum of P 500. 00, as and by way of attorney's fees, and the costs of the suit.
(Id, p. 14.)

Defendant Reyes appealed to the Court of First Instance of Rizal but said court affirmed the judgment in toto. (Rollo, p.
16.) Upon finality of the judgment, a writ of execution was issued against Reyes. The jeep which was the object of the
attachment was sold by the sheriff for P4,000.00 and the amount was credited against the judgment in partial
satisfaction thereof.

Soon after the sale of the jeep, Central Surety and Insurance Co. filed a motion to cancel the counterbond. Ong Chi not
only opposed the motion but he also asked that the surety company pay the deficiency on the judgment in the amount
of P5,730. 00 (P9,730.00 as of the filing of the motion, less P4,000.00 the proceeds of the sale of the jeep). The motion
for a deficiency judgment was opposed by the surety on the ground that it had fulfilled the condition of the counterbond.
Despite the opposition, the court ordered the surety to pay. A motion for reconsideration was denied which accounts for
the instant petition.

The issue is whether or not the petitioner surety is liable for the deficiency. The petitioner urges a negative answer; it
relies on the terms of the counterbond. Upon the other hand, the private respondent claims that an affirmative answer
is proper, he relies on Section 17 of Rule 57, Rules of Court which stipulates thus:

SEC. 17. When execution returned unsatisfied, recovery had upon bond. — If the execution be returned
unsatisfied in whole or in part, the surety or sureties on any counterbond given pursuant to the provisions of
this rule to secure the payment of the judgment shall become charged on such counterbond, and bound to pay
to the judgment creditor upon demand, the amount due under the judgment, which amount may be recovered
from such surety or sureties after notice and summary hearing in the same action.

The petition is highly impressed with merit.

The stipulation in the counterbond executed by the petitioner is the law between the parties in this case and not the
provisions of the Rules of Court.

Under the counterbond, the petitioner surety company bound itself solidarily with the principal obligor "in the sum of P
6,465.00 under the condition that in case the plaintiff recovers judgment in the action, the defendant will, on demand,
redeliver the attached property so released to the officer of the court to be applied to the payment of the judgment or in
default thereof that the defendant and surety will, on demand, pay to the plaintiff the full value of the property released."
The main obligation of the surety was to redeliver the jeep so that it could be sold in case execution was issued against
the principal obligor. The amount of P6,465.00 was merely to fix the limit of the surety's liability in case the jeep could
not be reached. In the instant case, the jeep was made available for execution of the judgment by the surety. The
surety had done its part; the obligation of the bond had been discharged; the bond should be cancelled.

The impropriety of the orders of the respondent judge is made more manifest by still another circumstance. The
petitioner's surety bond was for the amount of P6,465.00. So even on the assumption that the bond was not
discharged, since the sale of the jeep yielded P4,000.00, the surety can be held liable at most for P2,465.00. But the
respondent judge ordered the surety to pay P5,730.00 which is the entire deficiency and is in excess of P2,465.00. It is
axiomatic that the obligation of a surety cannot extend beyond what is stipulated.

WHEREFORE, the petition is granted; the questioned orders of the respondent judge are hereby set aside and in lieu
thereof another is entered cancelling the petitioner's counterbond, with costs against the private respondent. SO
ORDERED.

4.

G.R. Nos. L-4743-45 February 27, 1953

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs. ARMINGOL HANASAN, accused.
EUSTAQUIO TUGADE, NICOLAS EDIG, and JOSE BAGION, bondsmen-appellants.

REYES, J.:

Two sets of sureties signed a bail bond for the provisional release of Armingol Hanasan who was held on a charge of
estafa through falsification of public documents in three criminal complaints filed in the municipal court of the City of
Davao. Becoming apprehensive, however, that the accused might jump his bail following his detention for the criminal
abduction in another municipality, some of the bondsmen in both sets surrendered him to the court with a petition that
he be committed to custody and the bond for his temporary release cancelled. Acting on the petition, the municipal
judge had the accused put in jail, but ordered him released again when a new surety, Teofilo Flores, signed a seperate
bail bond for P13,000 to take the place of the sureties who had petitioned for the cancellation of their bond, the judge
being obviously of the impression that, despite the surrender and incarceration of the accused, the other
sureties, i.e., those who did not join the petition for cancellation, continued bound on their undertaking and became co-
sureties of the new bondsman.

Once at liberty, the accused jumped his bail, and as the bondsmen (i.e. the new one and those who took no part in the
surrender of the accused) were not able to produce him, the Court of First Instance of Davao, to which the cases were
forwarded after the accused had waived preliminary investigation, declared the bond forfeited, at the same time
denying the bondsmen's petition for discharge from liability, and in a "decision" finally rendered ordered the bond
executed. From this "decision", as well as from the order denying their petition for discharge, the sureties Nicolas Edig,
Eustaquio Tugade, and Jose Bagion have appealed to this court alleging that their appeal "is based purely on question
of law."

It is the contention of the appellants that when the accused Armingol Hanasan was surrendered to the court and
ordered into custody, the bailment ended so that all of the sureties on the bail bond, themselves included, were
discharged from their undertaking. This contention is correct, for the Rules of Court provides that the bail bond shall be
cancelled and the sureties discharged from liability where the sureties so request upon surrender of the accused to the
court or where he is re-arrested or ordered into custody on the same charge or for the same offense. (Section 16 [a]
and [b] of Rule 110.) In the present case, the accused was surrendered to the court and forthwith ordered into custody
on the same charge. It is immaterial that it was not the appellants themselves but their co-sureties who surrendered the
accused. Once the accused was ordered into custody, his bondsmen no longer had control over him so that neither
those of them who effected the surrender nor the others who did not, could be held responsible for his appearance for
any purpose. Thus, in the case of State vs. Doyal, 12 La. Ann. 653, 5 Cent. Dig., 2433, where the accused escaped
after he was delivered by two of the three sureties on his bail bond and the State sought to hold the third surety liable, it
was held that "when one of several sureties on a single bond avails himself of the privilege of surrendering the prisoner,
it must be presumed to be done in the interest of his co-sureties, as well as of himself, and it absolves all if it absolves
one." This obviously sound doctrine is supported by the overwhelming weight of authority. (Nichols vs. United States,
22 Fed. [2nd], 8.)

In the case last cited, bail was fixed at $5,000 and taken in two seperate recognizances for $2,500 each, one with one
surety and the other with another. One of the sureties surrendered the accused and was discharged, whereupon the
accused gave a new bond in the sum of &2,500 with a new surety. The court held that both of the former sureties on
seperate recognizances were discharged upon substitution of a new surety for the surety surrendering the accused
without the other surety's consent.

It should also be noted that, according to the terms of the bail bond, the appellants and their co-sureties were jointly
and severally bound. This entitled any one of them who paid to demand contribution from those who did not. This right
would be impaired if some of the sureties could be discharged or substituted without the knowledge and consent of the
others.

The prosecution, however, alleges that appellants had knowledge of the substitution of their co-sureties by Teofilo
Flores, that after the substitution one of them, Jose Bagion, asked the municipal judge to allow him to withdraw from
the undertaking and Later on even moved for the substitution of his property bond by a cash bond, and that all of the
appellants, instead of repudiating their bond as inoperative, moved the court for an alias warrant of arrest when the
accused jumped his bail. And construing appellant's behaviour as an indication of their willingness to continue with their
undertaking notwithstanding the withdrawal of their co-sureties, the prosecution argues that appellants are by their
acquiscence estopped from denying that their bond was still in force.
The argument is based on a wrong premise. Estoppel by acquiescence is founded on knowledge and assent
(Oklahoma City vs. Wells, 91 P 2nd 1077, 1084), so it does not lie where knowledge and assent are lacking. The
record does not show that appellants had knowledge of the withdrawal of their co-sureties or their alleged substitution
by anew surety, Teofilo Flores, who signed a separate bail bond independently of the other sureties. And contrary to
the Government's contention that knowledge is not legally to be deduced from the mere fact that all of the parties live in
the same town. Not having knowledge of the withdrawal or discharge of their co-sureties or their substitution by a new
surety, appellants necessarily had to assume that their undertaking was still in force and to act accordingly. Acts
performed on such erroneous assumption cannot serve as a basis for estoppel. And as was said in a case, "one cannot
be estopped from a present assertion of his rights because he failed to assert them at some prior time when he had no
knowledge of them . . ." (Smith vs. Cross, 140 S.W., 1060, 1065.)

In view of the foregoing, the "decision" and order appealed from are hereby revoked, but only in so far as the
appellants herein are concerned, who are hereby declared released from their undertaking as sureties, the said
"decision" and order to stand as regards the surety Teofilo Flores. Without costs.

5.

[G.R. No. L-5794. July 23, 1953.]

THE PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v. MAMERTO DE LA CRUZ, Defendant. BENIGNO

ILAGAN, CHRISTOPHER VALENCIA and TIMOTEO VALENCIA, sureties-appellants.

SYLLABUS

1. CRIMINAL PROCEDURE; BAIL; EXONERATION OF SURETIES WHERE ACCUSED, DETAINED FOR ANOTHER
OFFENSE, ESCAPES. — Section 16-a of Rule 110 has in view a situation where the prisoner is at the disposal of his
sureties and these wish to be released from their obligation on the bond before its terms are broken. The sureties’
rights, duties, and liabilities after the prisoner is, for another offense, arrested, detained in another province, escapes,
and absconds, must be controlled by other statutory provisions or by the general principles of contract. Bail is nothing
but a contract. Bail will be exonerated where the performance of the condition is rendered impossible by the act of God,
the act of the obligee, or the act of law." (Taylor v. Taintor, 83 U. S., 366, cited in U. S. v. Bonoan, 22 Phil., 1.)

TUASON, J.:

This appeal is from an order of the Court of First Instance of Quezon for the appellants, as sureties for an accused who
had escaped, to show cause why the bail bond should not be forfeited, and another order denying their motion to be
discharged as sureties. The bail has not actually been forfeited and much less have the appellants been required to
pay the a mount thereof, but it is assumed that they would be unless the orders on appeal were set aside.

The facts are not in dispute. It will be well to sacrifice brevity in the recital of the facts the better to understand and
appreciate the main issue and the discussion that will follow. The main issue is whether the actions of the sureties, of
the court, and of the government, to be presently set forth, worked to cancel the bail or exonerate the appellants.

Mamerto de la Cruz was charged with theft of large cattle in the court of justice of the peace of Tagkawayan, Province
of Quezon, by reason of which on December 31, 1946, he put up a bond of P1,500 signed by the three appellants
herein. Preliminary investigation of the complaint was conducted on January 2, 1947, after which, on the same date,
the defendant was bound over to the Court of First Instance for trial. The Provincial Fiscal filed an information on
January 9, and the case was set for arraignment of the accused for January 31.

Meanwhile, i.e., on December 24, 1946, the Justice of the Peace of Paracale, Camarines Norte, had issued a warrant
for the arrest of the same defendant, also for thefts of large cattle, which warrant a squad of constabulary soldiers
headed by one Sergeant Andres Agustin from Camarines Norte came to Tagkawayan to execute. Appraised of that
fact, the sureties surrendered De la Cruz to the Mayor of that municipality, and that official took him into custody and
forthwith turned him over to the Justice of the Peace, who in turn delivered him over to the constabulary soldiers from
the adjacent province. Then and there, in a writing dated January 14, 1947, Sgt. Agustin acknowledged receipt of the
prisoner and further stated, among other matters: "Subject to action by superior authorities, I undertake to bring back
the person of said Mamerto de la Cruz to Tagkawayan, Quezon, whatever may be the result of the investigation to be
made by the Justice of the Peace of Paracale, Camarines Norte, so that said accused may be transmitted to Lucena,
Quezon, to answer for the criminal case No. 656 of that court."

Let us return to developments in Lucena.

Notice of the order setting the case for arraignment for January 31 was sent on January 16 by the Provincial Sheriff for
service to the bondsmen. On January 18, the Chief of Police of Tagkawayan returned the notice to the Provincial
Sheriff with the information that the bondsmen "refused to sign the subpoena because the accused Mamerto de la Cruz
is held for trial at the Justice of the Peace Court of Paracale, Camarines Norte." Thereupon, on January 20, the Clerk of
Court of Quezon transmitted the notice direct to the Chief of Police of Paracale, Camarines Norte, but none to the
bondsmen, who from this time on were bypassed. On January 25, the Chief of Police of Paracale returned the notice to
the Court of First Instance of Quezon stating that Mamerto de la Cruz was being detained in the provincial jail at Daet,
Camarines Norte, awaiting trial. The Paracale Chief of Police added that the cases with the accused had been elevated
to the Court of First Instance at Daet on the 18th of January by the Justice of the Peace of Paracale. The Chief of
Police attached to his communication a copy of the receipt of the prisoner signed by the Clerk of Court of Camarines
Norte.

On February 1, the Clerk of Court of Quezon wrote the Provincial Warden at Daet, Camarines Norte, for confirmation of
the Paracale Chief of Police’s communication, with a request for an early reply, and on February 6, the Provincial
Warden answered "that Mamerto de la Cruz was already confined in the provincial jail of Daet, Camarines Norte, since
January 18, 12:30 p.m., 1947."

In view of the defendant’s arrest and detention in Camarines Norte, on February 11 Judge Antonio Cañizares of the
Court of First Instance of Quezon reset the case in an order of the following tenor: "Apareciendo del informe del Alcaide
Provincial de Daet, Camarines Norte, que el acusado Mamerto de la Cruz se halla detenido en la carcel provincial de
dicha provincia, se señala la vista de esta causa para el dia 25 de Marzo de 1947, a las ocho y media de la mañana."
On the same date His Honor appointed an attorney de oficio to defend the defendant. On his part the Clerk of Court
forwarded to the Provincial Sheriff of Camarines Norte at Daet, for service on Mamerto de la Cruz, notice in judicial
form No. 65 informing the prisoner that his case was set for arraignment and hearing for March 25th.

For reasons not disclosed by the record, on February 13, the arraignment and hearing was ordered postponed for
March 31 and notice of the postponement was forwarded on February 14 by registered mail to the Provincial Sheriff of
Camarines Norte for service on Mamerto de la Cruz. On February 17, the Provincial Sheriff through a deputy returned
the notice to the Clerk of Court of Quezon with the information that it had been duly served.

On February 26, Mamerto de la Cruz escaped from the provincial jail at Daet. Unaware, apparently, of that escape, the
Provincial Fiscal of Quezon moved for postponement of the arraignment and hearing from March 31 to another date,
alleging that he was "contemplating to conduct a reinvestigation of the case to secure additional evidence," and the
court ordered that the case be included in the next April calendar.

Nothing seems to have been done on the case until December of the same year (1947), when notice was sent by the
Clerk of Court of Quezon by registered mail to the Provincial Sheriff of Camarines Norte for service on the prisoner
through the Provincial Warden. On December 18, the Provincial Warden informed the Camarines Norte Provincial
Sheriff that the prisoner had escaped in February (ten months ago), which information was transmitted to the Quezon
Court of First Instance on the same date.

Because of that information, so it seems, trial of the case in Lucena was set for February 23, 1948, and from that date
postponed to March 17. On the latter date Judge Arguelles, then presiding, having "been informed by the fiscal that the
accused had escaped," had the case dropped from the calendar until further assignment, and ordered the arrest of the
escaped prisoner. Still no order to produce the accused or notice of the hearing was given the sureties.

In an order dated December 10, 1948, the case was put on the calendar for January 10, 1949, by Honorable
Victoriano, now the presiding Judge. Before the latter date, the Fiscal filed a motion for an indefinite postponement of
the trial because of the prisoner’s escape. Nevertheless, on the scheduled date, January 10, the case was called.

It was then that the bondsmen were given by Judge Victoriano 30 days within which to show cause why the bail should
not be forfeited. In the same order His Honor, Judge Victoriano, noted that the bondsmen had refused to sign the
subpoena on the ground that they had already withdrawn as such.

In United States v. Bonoan, 22 Phil., 1, it was held that it was a good defense in an action on a bail bond for the
sureties to allege that the indicted person was, when his, production was ordered, in prison in another province for
another offense.

The facts of that case were substantially identical with those of the instant case. As summarized in the syllabus of the
decision they were as follows:

Mandac was allowed bail by the Court of First Instance of Ilocos Norte while his case was on appeal in the Supreme
Court from a sentence for homicide. While at liberty, he committed the crime of bandolerismo in Nueva Vizcaya, for
which he was arrested. His appeal having been declared deserted by the Supreme Court, the sentence was remanded
for execution. At the precise time the lower court called upon his bondsmen for his appearance, their principal was
under arrest in Nueva Vizcaya, whose authorities refused to surrender him to the said bondsmen.

The Solicitor General would distinguish between that case and the case at bar because "the sureties in the Bonoan
case could have produced the accused in court were it not for the refusal by the provincial authorities of Nueva Vizcaya
to surrender him." In other words, Bonoan and his fellow-sureties made an effort to bring Mandac from Nueva Vizcaya
while the sureties here did nothing of the sort.

It is not easy to see how the failure of the appellants herein to claim Mamerto de la Cruz from the authorities of
Camarines Norte can influence the result of this appeal. In the first place, the unsuccessful attempt by Mandac’s
sureties to get their principal was not the ratio decidendi of the judgment or the underlying reason for exonerating them.
In the second place, law does not require the useless or the impossible. The Camarines Norte authorities could hardly
be expected to let the bondsmen have the prisoner if they had demanded his custody for the purpose of presenting him
to the Court of First Instance of Quezon Province. As a matter of fact, it was the court alone which could demand the
transfer of the accused to Quezon; and the court far from doing something in that direction, appeared from all
indications to be satisfied with holding the case before it until the Camarines Norte cases were finished.
It is pointed out that the appellant did not surrender the accused to the court as provided by section 16 of Rule 110,
according to which, "upon application filed with the court and after due notice to the fiscal, the bail shall be cancelled
and the sureties discharged from liability (a) where the sureties so request upon surrender of the defendant to the
court; . . ." But this Rule has no bearing on the case, in our opinion. Manifestly it has in view a situation where the
prisoner is at the disposal of his sureties and these wish to be released from their obligation on the bond before its
terms are broken. The sureties’ rights, duties, and liabilities after the prisoner has absconded, or when for one reason
or another he cannot be found, must be controlled by other statutory provisions or by the general principles of contract.
Bail is nothing but a contract. (U. S. v. Bonoan, supra).

In consonance with these principles, "It is the settled law of this class of cases that the bail will be exonerated where
the performance of the condition is rendered impossible by the act of God, the act of the obligee, or the act of law."
(Taylor v. Taintor, 83 U. S., 366, cited in U. S. v. Bonoan, supra). And so the Court reasoned on Bonoan’s appeal:

"The United States, the plaintiff in the homicide case against Mandac, was the obligee in the bond. The same plaintiff
and obligee caused the arrest and confinement of Mandac in Nueva Vizcaya on a charge of bandolerismo and refused
to surrender him to the appellants. It would be against all principle of equity and justice to allow the Government to
recover against the sureties for not producing their principal when it had itself placed the principal beyond their reach
and control. There was an implied covenant on the part of the Government when the bond was accepted that it would
not in any way interfere with the due compliance of the conditions in the bond or take any proceeding against the
principal which would affect the rights of the sureties. Reese v. U. S., 13, citing Rathbone v. Warren, 10 Jones 586; etc.

x x x

"The Government had a perfect right to arrest and hold Mandac in the Province of Nueva Vizcaya on the charge of
bandolerismo. It also had the right to decline to surrender him to these appellants. But it cannot by these acts prevent
the fulfillment of the conditions in the bond by the sureties, and at the same time force the sureties to pay the amount of
the bond."

What material differences there are between the Bonoan case and the case at hand will be found to improve the herein
appellants’ position. As already noted, soon after Mamerto de la Cruz was arrested in Tagkawayan and conducted to
Camarines Norte — to be exact, on January 18 (the escape took place on February 26) — the sureties refused to
accept service of notice of hearing and informed the court through the Provincial Sheriff that their principal was being
held for trial in other cases in Camarines Norte, and gave the court to understand that, for that reason, they could not
effect his appearance and were not obligated to do so. And from that time on the court dealt directly and exclusively
with Camarines Norte officials, not bothering any more in any manner with the sureties. The court did not tell the
sureties to produce the defendant until 1949, more than two years after his escape and after it had notice of the
escape. When the accused vas still in jail the court did not insinuate to the sureties that they should go and fetch him. If
it had, it is to be presumed that the sureties would have followed the indication, much as they realized the futility and
senselessness of the step. As it was, the court by its action led the sureties into believing, and these had every reason
to believe all that time, that what they had done was enough and that their connection with the case had been
terminated. From this standpoint, incidentally, the Government may rightly be considered estopped by laches.

If this appeal must be decided within the confines of section 16 of Rule 110, as the appellee would have it, the
preceding circumstances and discussion could supply the argument that the appellants did substantially comply with
the terms of their undertaking. It has been seen that if the sureties did not bring the person of the accused to court,
which they were powerless to do due to causes brought about by the Government itself, they did the next best thing by
informing the court of the prisoner’s arrest and confinement in another province and impliedly asking that they be
discharged. On its part, the court, by keeping quiet and, indeed, issuing notices of the hearings direct to the prisoner
through the Sheriff of Camarines Norte and ignoring the sureties, impliedly acquiesced in the latter’s request and
appeared to have regarded the accused surrendered. All signs combined to give the impression that the court in reality
had that precise notion and intent.

As to the Provincial Fiscal, no notice of the sureties’ desire to be discharged was furnished him. But there is every
reason to believe that he learned of all that happened. Having control of the case, he must have known of its various
continuances and the reasons therefor. What is more, notice to the Provincial Fiscal of the sureties’ request for
discharge would have been a useless formality. There is no suggestion that that office would have opposed or could
have done anything to change the bondsmen’s status and responsibility or otherwise protect the interest of the
Government if he had been given formal notice. And again, the Government can not very well complain that the
prosecuting officer was not informed in writing of De la Cruz’s detention in Camarines Norte and the bondsmen’s desire
to be relieved of all obligation, when it itself, through other agencies, effected the detention. Lastly, the Fiscal appears
to have been satisfied with the manner in which the sureties proceeded in the premises, as evidenced by his making no
move whatever to have them brought to account. The order to the sureties to explain why their bail should not be
forfeited was of the court’s own initiative, even in disregard of the Fiscal’s motion to continue the scheduled trial
indefinitely.

Unversed in the manners of court and law, the appellants may not have followed the prescribed procedure to the letter,
but they tried with all the diligence at their command to live up to their commitment the best they knew how and the
court and the Government’s representative acquiesced in what they had done and the form in which they had acted.

One important point to be kept in mind in this discussion is that sureties are said to be favorites of the law. Assuming
an obligation without any thought of material gain, except in some instances, all presumptions are indulged in their
favor. This rule is especially to be adhered to with respect to bail, which is a right ensured by the Constitution as a
matter of the highest public concern and policy.
Accordingly it is the judgment of this Court that the appellants should be discharged as sureties for Mamerto de laCruz,
and it is so ordered, without costs.

Paras, C.J., Pablo, Bengzon, Padilla, Reyes, Jugo, Bautista Angelo and Labrador, JJ., concur.

Separate Opinions

MONTEMAYOR, J.,

From the majority opinion discharging the appellants as sureties, I dissent.

In great measure the majority relies on the case of U. S. v. Bonoan (22 Phil., 1), and it is claimed that the ratio
decidendi in said case was not the unsuccessful attempt by the sureties to get the accused from the Nueva Vizcaya
authorities and present him to the Court of First Instance of Ilocos Norte. I am afraid that claim is untenable. I hold that
the only reason why the Supreme Court in that case exonerated the sureties was because the Nueva Vizcaya
authorities refused to give up Mandac to them. And that is why the court said that it would be against all principle and
justice to allow the Government to recover against the sureties for not producing their principal when it had itself placed
the principal beyond their reach and control. And to further show that the ratio decidendi of the case was the refusal of
the Nueva Vizcaya authorities to give the defendant up, said sureties gave as reason for their failure to produce
Mandac before the court the fact that the Nueva Vizcaya authorities refused to give him up; and the decision of this
Court in that case mentioned this refusal thus:

". . . It is admitted by all parties . . . that the said authorities (Nueva Vizcaya) refused to turn him over to the appellant
bondsmen for the purpose of presentation to the Court of First Instance of Ilocos Norte; . . .

". . . The same plaintiff and obligee (United States) caused the arrest and confinement of Mandac in Nueva Vizcaya on
a charge of bandolerismo and refused to deliver him up to the appellants." (22 Phil., 1, 4 and 5).

The very majority opinion in citing the case of Mandac states that the Nueva Vizcaya authorities refused to surrender
him to the appellant bondsmen.

The rule cannot be otherwise. The mere arrest of a defendant out on bail, for the commission of another crime in
another province, does not ipso facto release the sureties in the first case. While said defendant is confined in the
second province under the second charge, the obligation and liability of the surety on the bail in the first charge is
merely suspended, dormant, unless, of course, as in the case of Mandac, they tried to get the defendant from the
authorities in the second province to present him to the court of the first province and they were refused by the
authorities. Any other rule would be unfair and disastrous to the Government.

Supposing that A is arrested on a charge of murder and before trial, he is released on bail, but because of the strength
of the evidence against him, the amount of the bond is fixed at P30,000. Let us further suppose that now free, A goes
to another province and commits a light offense or misdemeanor penalized with arresto menor. Does it mean and could
it mean that for the arrest under the second charge of said light offense or misdemeanor, the sureties on the bail bond
of P30,000 are automatically released? If so, then what assurance or guarantee has the court in the first province
before which the charge of murder is pending, that A will appear at the trial, if we assume that his sureties have already
been released on their bond? A, in this case, for the light offense committed in the second province may at any time be
released on bail for, say P50 or a P100. But even if he were not released on bail under the second charge, considering
the lack of facilities of small towns or municipalities for keeping prisoners, and considering the tax methods of confining
them, specially those charged only with a light offense, he could easily escape. Whether he escapes from the town jail
or is let out on bail of say P50 or P100, he is completely free and at liberty, without any bail on the serious charge of
murder in the first province, this under the theory of the majority that his second arrest for misdemeanor automatically
cancelled his bond on the murder charge. It is not difficult to imagine the serious consequences of such a rule. I hold
that the subsequent arrest for another charge in another province of a person out on bail in the first province on a
different charge, does not automatically exonerate and release his sureties, but that the obligation of said sureties is
merely suspended.

"The subsequent arrest or custody of the principal on another charge, or in other proceedings, while he is out on bail,
does not operate ipso facto as a discharge of his bail, but its effect depends on its continuance at the time the principal
is bound to appear. For example, where the removal of a prisoner by a court of competent jurisdiction beyond the
control of the bondsmen continues through the term at which he is bound to appear, thus rendering them unable to
produce him at the time and place set for trial in accordance with the obligation, it constitutes an act of law which
discharges the sureties. Until the time for trial the rights and liabilities of the bail are dormant only, and revive the
moment the principal is free again, so that if, while in custody on another charge, he escapes, or is again discharged,
and is a free man when called upon his recognizance to appear, his bail are bond to produce him." (8 C. J. S., Bail sec.
77 p. 148.)

The majority opinion leans heavily on the circumstance that the Court of Quezon Province by-passed the sureties and
had been dealing directly with the authorities of Camarines Norte in notifying the defendant to appear for trial in
Quezon Province. This was a mistake on the part of the court or rather of the Clerk of Court of Quezon Province. This
error may have been due to the impression of the Quezon Province Court or clerk that the sureties had already been
released and so were no longer under obligation to bring the accused before it for trial. But this wrong impression was
created or caused by the sureties themselves who refused to sign the notice sent to them claiming that by surrendering
the defendant to the town authorities of Tagkawayan, they had already been released. Of course, this was an error. In
fact, there has been a series or comedy of errors, beginning with the municipal authorities of Tagkawayan, down to the
Court of Quezon Province, not excluding the sureties themselves. When the Constabulary soldiers came to
Tagkawayan with a warrant of arrest against the defendant, his sureties believing that they could release themselves
by presenting him to the town authorities, brought him to the Municipal Mayor; the Municipal Mayor acknowledged
delivery and in turn delivered the accused to the Justice of the Peace and the latter official, believing himself duly
authorized, acknowledged delivery and turned him over to the PC soldiers, who accepted delivery and promised to
bring him back if and when needed. Of course, all this was based on a misapprehension of their powers, duties and
obligations, and a misconception of the law governing bail bonds and their release. But surely error or ignorance of the
law, though based on good faith, cannot serve to exonerate the sureties to a bail bond.

The law on the release of sureties is clear and definite. Rule 110, section 16 (a) provides as follows:

"SEC. 16. Discharge of sureties. — Upon application filed with the court and after due notice to the fiscal, the bail bond
shall be cancelled and the sureties discharged from liability (a) where the sureties so request upon surrender of the
defendant to the court; . . ."

Said section of the rule was taken from section 75 of General Orders No. 58. In interpreting said section 75, this Court
in the case of People v. Loredo (50 Phil., 209) said:

"In the present case it does not appear that the fiscal had been notified of the petition for the discharge of the bond, nor
had the court issued an order of discharge. The mere presentation or presence of an accused in an open court is not
sufficient in itself. The attention of the court must be called to his presence and the intention to surrender the body of
the accused must be clearly and definitely stated and understood by the court. (6 C. J., page 243, paragraph 313). A
surety who desires to produce and surrender the body of the accused in open court is not relieved from further liability
upon his bond until the court accepts said surrender, and the only evidence of such act is the record of the court. (Du
Lawrence v. State, 31 Oh. Cir., 418.)"

It is a rule of general acceptance that the law on the release of bondsmen must be substantially complied with.

"SEC. 164. Compliance with Statutory Requisites. — The procedure required by a statute prescribing the manner in
which a surrender by the sureties of their principal shall be made must be substantially followed in order to exonerate
them." (6 Am. Jur., 111, 112).

"Surrender should be by unequivocal act with delivery of defendant into proper custody, and should be made in
compliance with statutory regulations, if any, such as those covering notice and costs.

". . . If the statute or rules of court provide that a surrender by bail of their principal shall be made in a certain manner,
the surrender, to be effectual, should be in the manner prescribed . . ." (8 C.J.S., sec. 25d[1], page 38).

Some authorities even stand for strict compliance:

"Statutory manner in which surrender in exoneration of bail should be performed must be strictly followed." (664 Bay
Ridge Ave. Corporation v. Maresca, 263 N.Y.S. 600, 147 Misc. 232, cited in 3 C.J.S., 38 note 49).

It is evident that by their act of delivering the person of the accused to the municipal authorities of Tagkawayan, the
appellants herein were not released. In the first place, they made no proper application for release. In the second
place, the Provincial Fiscal was not notified. But most important of all was the fact that at that time the Justice of the
Peace Court had already lost jurisdiction over the case, because it had long been sent up to the Court of First Instance,
and the Provincial Fiscal had already even filed the corresponding information. At that stage, it was only the Court of
First Instance of Quezon Province that could validly and competently accept delivery of the person of the accused and
release the sureties, provided, of course, that the corresponding application was made and the Provincial Fiscal was
notified, which were not done.

The majority opinion says that the sureties were bypassed, and were not notified to produce the defendant until 1949,
and that "when the accused was still in jail the court did not insinuate to the sureties that they should go and fetch him.
If it had, it is to be presumed that the sureties would have followed the indication, much as they realized the futility and
senselessness of the step." This assertion not only finds no support in the record, but is even contrary to it and to the
very statement of facts contained in the first part of the majority decision, which says:jgc:chanrobles.com.ph

"Notice of the order setting the case for arraignment for January 31 was sent on January 16 by the Provincial Sheriff to
the Chief of Police of Tagkawayan as ex-oficio Deputy Sheriff for service to the bondsmen. On January 18, the Chief of
Police of Tagkawayan returned the notice to the Provincial Sheriff with the information that the bondsmen ’refused to
sign the subpoena because the accused Mamerto de la Cruz is held for trial at the Justice of the Peace Court of
Paracale, Camarines Norte.’" (as quoted from page 3 of the majority opinion).

The majority decision says that the Camarines Norte authorities could hardly be expected to let the bondsmen have the
prisoner if they had demanded his custody for the purpose of presenting him to the Court of First Instance of Quezon
Province, and that the law does not require the useless or the impossible. To this I cannot agree. There is nothing to
justify the belief that the Camarines Norte authorities would not give up the defendant for trial in Quezon Province. In
Camarines Norte, he was accused only of theft of large cattle, the same kind of offense of which he was accused in
Quezon Province. The notice sent by the Quezon Province Court to the defendant through the Camarines Norte
authorities was according to the records duly served on him while in jail. If the Camarines Norte authorities were really
unwilling to give him up even temporarily for trial in Quezon Province, they would have said so in the return of the
service and they would not even have made the service on the defendant because in that case it would have been
useless and unnecessary to notify him if said authorities would not let him go anyway. Moreover, the very Sergeant of
the Constabulary who received the person of the defendant in Tagkawayan, made a solemn promise in writing that he
would bring back the accused to Quezon Province whenever needed. In other words, there was already an undertaking
by the authorities of Camarines Norte through a responsible peace officer that they would not only release the accused
from confinement in Camarines Norte, but would even take him to Quezon Province for trial. Furthermore, it is nothing
unusual for a prisoner confined in jail in one province to be taken to another province to face trial for another offense.
Of course, he would have to be under guard. Even dangerous criminals finally convicted and serving sentence in the
Insular Prison at Muntinglupa are sometimes sent to distant provinces even by sea to face trial there in another case,
or even merely to testify. So, with more reason may one, Accused of nothing more than theft of large cattle, be sent to
another province to face trial on another prior charge, specially when his sureties demand his presence there.

In the present case, Quezon Province and Camarines Norte adjoin each other and their capitals are not far from each
other. Had the appellant sureties complied with the notice to them on January 27 to bring the accused for trial in
Quezon Province, there is no reason to believe that the Camarines Norte authorities would not have given them the
custody of the accused, although perhaps under Constabulary guard. The trouble is that they made no effort or attempt
in that direction, but even ignored the notice by refusing to sign it. And now they come here and blame the Court of
First Instance of Quezon Province for holding them accountable for their failure to comply with the terms of their
undertaking.

Again, the majority says: "Unversed in the manners of court and law, the appellants may not have followed the
prescribed procedure to the letter, but they tried with all the diligence at their command to live up to their commitment
the best they knew how . . ." I am afraid this assertion not only finds no support in the record of the case, but actually
runs counter to it, because said record reveals that far from trying with all the diligence at their command to live up to
their commitment, they not only neglected to live up to said commitment, but they actually refused to do so, in spite of
the notice given them by the court in January, 1947, before the accused had escaped. And as to their ignorance of
manners of court and law, there is the universal principle that ignorance of the law excuses no one.

The majority opinion itself states that a bail bond is a contract between the Government and the surety. I agree. But
surely, a person who assumes the role of surety and contracts with the Government should before doing so apprise
himself of the meaning and consequences of the contract into which he is entering. He cannot and should not do it
blindly and in blissful ignorance and later ask and expect the courts to protect him from the consequences of his own
ignorance, neglect or folly. And the Government has reason to assume that said person offering to be a bondsman is
responsible and knows what he is doing. When a person who commits a crime is arrested, the Government is
unreservedly willing to keep him safely in custody and even give him food and shelter meanwhile, so as to secure his
appearance in court for trial and decision. And when the surety comes to court and offers himself to assume the role of
jailer and solemnly promises to produce the person of the accused in court whenever needed or else forfeits the
amount of his bond, he knowingly assumes a serious and solemn undertaking from which he cannot easily extricate
himself, to the prejudice of the Government, the speedy administration of justice and the conviction and punishment of
the accused if found guilty.

Finally, the majority opinion says that the Government through the court, in leading the appellants into believing that
what they had done was enough and that their connection with the case had been terminated, may really be
considered as estopped by laches. In the first place, the court’s erroneous impression at the beginning that the
appellants were no longer liable under, the bail bond and so by- passed them and dealt directly with the authorities of
Camarines Norte, was induced by the very act of said appellants in making the court believe that they had already
been released as sureties by their act of delivering the accused to the municipal authorities of Tagkawayan. Surely, this
mutual error, even assuming the act of the clerk of court in later sending the notice of hearing to the authorities of
Camarines Norte, to be the act of the court itself, cannot serve to release appellants, in violation of the express
provision of the law. To secure exoneration as sureties, the law provides a procedure which must be substantially
followed. In the second place, the general rule is that the Government may be held guilty of equitable estoppel only
when acting in its proprietary capacity. It cannot be so held when it acts in its governmental capacity, as the
Government acted in the present case.

"An equitable estoppel ordinarily may not be involved against a government or public agency functioning in its
governmental capacity; but where the elements of an estoppel are present it may be asserted against the government
when acting in its proprietary capacity." (31 C. J. S., 403.) In view of the foregoing, I dissent.

6.

G.R. No. L-25806 April 29, 1977

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs. ELMO CELESTE, accused, RIZAL SURETY & INSURANCE COMPANY, INC., bondsman-appellant.

MUÑOZ PALMA, J.:

The crux of this appeal lies in the question, viz: for purposes of discharge of a bondsman from his liability under a bail
bond, is it sufficient that he produces the accused before the court for the promulgation of the judgment without need of
his filing a motion or verbally moving for discharge and without the court expressly relieving the bondsman from further
liability on his bond?

Appellant Rizal Surety & Insurance Co. answers the query in the affirmative and avers that the court a quo erred in
holding the contrary and declaring it liable under its bail bond of Twelve Thousand Pesos (P12,000.00) filed in Criminal
Case No. 4066 of the Court of First Instance of Misamis Oriental.

The antecedent facts follow:

On January 17, 1963, Elmo D. Celeste was charged with frustrated murder in an Information filed with the Municipal
Court of Cagayan de Oro City. A warrant for his arrest was issued and a bail bond for his provisional release was fixed
at P12,000.00. The accused filed the required bond of P12,000.00 with the Rizal Surety & Insurance Company as his
bondsman, the bail bond been approved on February 14, 1963. The accused waived his right to a preliminary
investigation and the record of the case was forwarded to the Court of First Instance of Misamis Oriental for trial on the
merits. 1

After the trial was completed, the case was set for promulgation of judgment and on January 31, 1964, the decision
was read to the accused in open court whereby he was found guilty and sentenced accordingly for the crime of
frustrated homicide. 2

On February 7, 1964, the accused, through counsel, filed a notice of appeal, hence, on the same date the trial court
issued an order fixing the bail bond on appeal at P12,000.00. 3 Because of the failure of the accused to file the required
bail bond, the court ordered the arrest of the accused. 4

In the meantime the record of the case had been forwarded to the Court of Appeals. On April 21, 1965, the Appellate
Court dismissed the appeal of accused Celeste for failure to file the appellant's brief within the reglementary period. 5

The case was then remanded to the trial court which set the promulgation of the Resolution of the Court of Appeals
sending notice thereof to the Rizal Surety as bondsman of the accused. For non-appearance of the accused, the
Presiding Judge, Hon. Benjamin K. Gorospe, issued in open court on September 15, 1965, an order for the arrest of
the defendant and the confiscation of his bail bond. 6

Appellant herein in a motion dated October 21, 1965, moved for 30 days extension of time to produce the accused in
court and this was granted. 7

Subsequently, another motion dated November 5, 1965, was filed praying that the order of confiscation be lifted and
that the bail bond be cancelled and the bondsman released under said bond, alleging inter alia that conscious of its
undertaking under the bond, movant-appellant notified and caused the appearance of the accused in court for the
reading of the sentence, that the record shows that the judgment was promulgated in the presence of the accused and
consequently, the bonding company was relieved of its obligation, having faithfully complied with its undertaking, to wit:

NOW THEREFORE, the RIZAL SURETY & INSURANCE COMPANY, of Manila, hereby undertakes
that the above-named ELMO D. CELESTE, will appear and answer the charge abovementioned in
whatever court it may be tried, and will at all times hold himself/herself amenable to the order and
processes of the court, and if convicted, will appear for judgment and render himself/herself to the
execution thereof; ... 8

Appellant's foregoing motion was denied for lack of merit in an order dated November 13, 1965. 9

A second motion dated November 26, 1965, was filed praying for another 30-day extension to produce the accused
which was granted by the court counted from November 27, 1965 with warning however of no further extension. 10

In a motion dated December 24, 1965, appellant moved for a reconsideration of the November 13, 1965 order which
denied its motion to lift order of forfeiture, praying, in the alternative, for another extension of 30 days within which to
produce the accused counted from December 27, 1965. The motion for reconsideration was denied in an order
dated January 5, 1966, although the surety was given another extension of 30 days from December 27, 1965 to
surrender the accused. 11

Hence, this appeal from the Orders of September 15, 1965, November 13, 1965, and January 5, 1966.

Appellant in its assignment of errors poses the following questions:

1. Whether or not it has fully complied with its undertaking under the bond;
2. Whether or not it has been relieved of its liability; and
3. Whether or not its bail bond would still answer for the presence of the accused before the Court for the
promulgation of the judgment of conviction rendered by the Court of Appeals. (pp. 6-7, Appellant's brief)

1. Appellant submits that its liability under the bail bond extended "only up to the promulgation of the judgment of
conviction" and inasmuch as it had produced the accused in court during the promulgation, it is now relieved from its
obligation under the bond; that to hold otherwise would be to extend the liability of the surety beyond that stipulated in
the bail bond and to impose an additional obligation to the bondsman, contrary to Article 1231 of the Civil Code which
provides that obligations are extinguished, among others, by payment or performance. 12

Appellant's assertion is unfounded. The very terms of the bail bond provide that the surety undertakes that the accused
will at all times hold himself amenable to the order and processes of the court and if convicted will appear for judgment
and render himself to the execution thereof.

Here, the criminal proceeding in the trial court consisted mainly of three stages: the trial, the promulgation of judgment,
and the execution of the sentence. The surety's liability covered all the three stages — appearance of the accused at
the trial, appearance during the promulgation of judgment, and service by the accused of the sentence imposed upon
him. This undertaking of the surety is derived from Section 2, Rule 114 of the Rules of Court which sets forth the
conditions of bail in criminal cases, viz:

SEC. 2. Condition of the bail. — The condition of the bail is that the defendant shall answer the complaint or
information in the court in which it is filed or to which it may be transferred for trial, and after conviction, if the
case is appealed to the Court of First Instance upon application supported by an undertaking or bail, that he
will surrender himself in execution of such judgment as the appellate court may render, or that, in case the
cause is to be tried anew or remanded for a new trial, he will appear in the court to which it may be remanded
and submit himself to the orders and processes thereof.

2. To effect the discharge of appellant surety from its undertaking, it was not enough that it produced the person of the
accused at the time of promulgation of the decision. Section 16, Rule 114 sets forth a procedure for discharge of
sureties which was not followed by herein appellant.

In the early case of People vs. Lorredo, 1927, the Court, speaking through Justice Antonio Villa-Real, explicitly ruled
that the mere presentation or presence of an accused in an open court is not sufficient in itself to cause the discharge
of a bond, for the attention of the court must be called to his presence and the intention to surrender the body of the
accused must be clearly and definitely stated and understood by the Court, and that a surety who desires to produce
and surrender the body of the accused is not relieved from further liability upon his bond until the court accepts said
surrender. 13

The ruling in Lorredo was reiterated in People vs. Valle, defendant, Alto Surety & Insurance Co., bondsman-
appellant, through then Justice, later Chief Justice, Roberto Concepcion where the Court stated inter alia that the
appellant surety's liability continued until after the accused had been surrendered and the court had ordered the
cancellation of its bonds. 14

Again in Mabuhay Insurance & Guaranty, Inc, vs. Court of Appeals, et al., the Court, this time through Justice Claudio
Teehankee, adhering to the pronouncements made in Lorredo and following Sec. 16, Rule 114 of the Rules of Court,
held that a bondsman who wishes to be relieved from its undertaking should petition the court for his discharge as a
surety, and inasmuch as petitioner Mabuhay did not avail itself of Sec. 16, Rule 114 and ask for its discharge as a
surety nor did it manifest to the trial court at the promulgation of sentence its wish to be relieved of its responsibility for
the custody of the accused, its liability under the bond continued to exist. 15

The circumtances present in the instant case are not course exactly the same as those
in Valle and Mabuhay, nonetheless, the principles enunciated therein given above are equally applicable to now
appellant Rizal Surety who as stated earlier did not petition the trial court that it be discharged from its bond upon the
appearance of the accused Celeste during the promulgation of the court's decision for which reason there was no order
of the court cancelling said bond.

3. It is contention of appellant Rizal Surety that when the accused Celeste filed on February 7, 1964, that is, seven
days after the promulgation of judgment, a notice of appeal, it was relieved from its undertaking considering that the
trial court ordered the accused to file a new bond on appeal for P12,000.00, and that consequently there is no legal
basis for holding appellant liable for the non-appearance of the accused at the promulgation of the decision of the Court
of Appeals.

At first blush there appears to be some merit to appellant's plea, but again We cannot dissociate the situation from
the Lorredo Decision to which We are bound to adhere based as it is on existing law and authoritative jurisprudence.

The sureties ibn the Lorredo case were even in a more pathetic situation, We may say, than Rizal Surety. There the
accused was presented by the sureties in open court for the promulgation of the judgment and upon the decision being
read which imposed a fine of Fifty Pesos (P50.00) on the accused, the latter's counsel offered a guaranty that the
accused would comply with the judgment within the period of ten days. Forthwith, the sureties filed a motion stating that
they were surrendering the body of the accused and asking that they be relieved of all liability in connection with their
bond. The record of the case did not show that their motion was acted upon by the court. The 10-day period expired
without the accused paying the fine as promised. On motion of the fiscal the trial court ordered the execution of the
judgment, directed the sureties to produce the body of the accused and at the same time issued warrants of arrest. The
sureties then explained to the court that they were relieved from their undertaking with the acceptance by the court of
the guaranty of the lawyer that the accused would comply with the judgment. This explanation was not found
satisfactory and an order of forfeiture of the bonds was issued. On appeal, this Court, as earlier indicated, sustained
the liability of the sureties, and We quote further from the decision as follows:

From what has been said it follows that the mere filing of a motion stating the surrender of the person of the
accused and asking for their release from liability upon the obligation contracted by virtue of a bond for
temporary release, where it does not appear that the attention of the court had been called to said surrender
and that the latter had so understood it, and without an express order accepting said surrender and relieving
the sureties from all liability, does not relieve them from the same, notwithstanding the fact that the court
granted the accused the period of ten days within which to comply with the judgment under a verbal guaranty
of his attorney. (supra, p. 218) I

Thus, in Lorredo the accused promised to comply with the judgment in ten days, while in this case of Rizal Surety, the
accused filed a notice of appeal on the seventh day; in Lorredo the accused failed to comply within the promised
period, in Rizal Surety the accused failed to file a bond on appeal and his appeal was eventually dismissed;
in Lorredo, the sureties filed a motion to be discharged, in Rizal Surety no such motion was ever filed by the sureties;
in Lorredo, the accused eventually appeared and paid his fine, while in Rizal Surety, the accused remains at large; in
both, there was no court order cancelling the bonds.

Under these circumstances, We cannot but hold Rizal Surety liable under its bond which through its own inaction it
allowed to remain uncancelled by the trial court. The legal question posed at the opening of this Decision calls
therefore for a negative answer as correctly asserted by the Solicitor General. 16

To restate, for a surety to be discharged it is necessary that he petitions the court for relief from liability and that the
court grants the petition and cancels the bond.

PREMISES CONSIDERED, We find this appeal without merit and We hereby affirm the appealed order of Hon.
Benjamin K. Gorospe dated September 15, 1965, and all subsequent orders relative thereto with double costs against
appellant. So ordered.

7.

G.R. No. L-64157-58 April 29, 1987

PHILIPPINE PHOENIX SURETY and INSURANCE INC., petitioner,

vs. SANDIGANBAYAN [Third Division] respondent.

FERNAN, J.:

The issue in this special civil action for certiorari is whether or not the Sandiganbayan acted with grave abuse of
discretion in denying petitioner Philippine Phoenix Surety and Insurance, Inc.'s motion for the cancellation of the bail
bonds issued to accused Remberto F. Castro and Winston Dulay were detained at the PC-INP jail in Camp Crame by
virtue of an Arrest, Search and Seizure Order [ASSO 4735] for alleged economic sabotage.

On March 3, 1980, two informations for estafa against Castro were separately filed in Branch 20 and 21 of the Court of
First Instance of Rizal in Pasig [Criminal Cases Nos. 34721 and 347221. On the same day, two informations for
falsification of public documents were separately filed against him in the Court of First Instance of Rizal in Pasay City.

On April 1, 1980, Phoenix Surety issued personal bail bonds for Castro [AAF 01077, 01078, 01079 and
010801. 1 Castro paid P9,832.00 for premiums.

On June 4, 1980, Castro escaped from the custody of his military escorts while enroute to attend trial before Branch 20
of the Court of First Instance of Rizal in Pasig. He has reportedly left the country since then. Winston Dulay, on the
other hand, is still at large.

In June 1980, Phoenix Surety filed an urgent motion for cancellation of bail bond before the Court of First Instance of
Rizal, Branch 20 and 21 in Pasig, on the ground that the bonds posted for Castro were useless because the military
authorities did not recognize them as legal basis for Castro's release. Judge Gregorio G. Pineda of Branch 21 denied
the motion, it appearing that Castro was no longer in military custody as he had escaped. 2

Judge Celso L. Magsino of Branch 20, however, granted Phoenix Surety's motion and relieved the latter of any
responsibility on the personal bail bond, JCR [21 Bond No. 0619, AAF 0 1065: 3 for the provisional liberty of Castro. 4

In due time, the records of the four criminal cases against Castro and Dulay were endorsed to the Office of the
Tanodbayan by the Ministry of Justice. The Tanodbayan consolidated the cases and filed before the Sandiganbayan
two amended informations charging Castro with two separate complex crimes of estafa through falsification of public
documents [Criminal Cases Nos. 5556-5557].

It appears that the Sandiganbayan directed Phoenix Surety to produce Castro and Dulay before the court. Despite an
extension of the deadline for complying with the court order, Phoenix Surety was unable to do so. As a result, on April
23, 1982, the Sandiganbayan apparently declared the forfeiture of Dulay's bond and required the petitioner surety to
show cause why a judgment should not be rendered against it for the amount of the bond. 5 That prompted Phoenix
Surety to file several motions with the Sandiganbayan seeking the reconsideration of its order dated April 23, 1982
insofar as accused Dulay was concerned, the cancellation of the bond issued in favor of Castro, and the suspension of
the resolution of the prosecution's motion for judgment on the bond.

The Sandiganbayan, in its challenged resolution of December 27, 1982, denied the motion for reconsideration in
connection with Dulay and refused the cancellation of Castro's bond as well as the suspension of the resolution on the
motion for judgmenton the bond. Accordingly, it granted the prosecution's motion for judgment on the bonds of Castro
and Dulay for their full amount in view of Phoenix Surety's failure to procure their presence before the court within the
required period. Upon denial of its motion for reconsideration on April 29, 1983, Phoenix Surety filed the present
petition praying that the resolutions of December 27, 1982 and April 29, 1983 be set aside and that the bail bonds in
favor of Castro be discharged.

'I'he petition is devoid of merit.

Bail is defined by the Rules as the security required and given for the release of a person who has been placed under
legal custody, that he will appear before any court in which hisappearance may be required as stipulated in the bail
bond or recognizance. 6

The purpose of the bail is to relieve an accused from imprisonment until his conviction and yet secure his appearance
at the trial. 7

To release on bail an arrested person "is to deliver him in contemplation of law, yet not commonly in real fact, to others
who become entitled to his custody and responsible for his appearance when and where agreed." 8 Upon assumption
of the obligation of bail, the sureties become in law the jailers of their principal. 9

The conditions of the bail are: [1] If before conviction, that the defendant shall answer the complaint or information in
the court in which it is filed or to which it may be transferred for trial; [2] after conviction, that he will surrender hiniself in
execuLion of the judgment that the appellate court may render; and [3] that in case the cause is remanded for new trial,
he will appear in the court to which it may be remanded and submit himself to the orders and processes thereof. For
failure to perform any of these conditions, the bond git,en in security thereof nlay be forfeited. 10

The forfeiture of the bond rests upon the sound discretion of the court, also dependent upon the court's discretion is the
question of discharge of the surety. As a general principle, aside from the instances enumerated in section 16 of Rule
114, the surety, upon application filed with the court, may also be relieved from the non-appearance of the bond where
its performance is rendered impossible by the act of God, the act of the obligee [the Government] or the act of the law.
The exoneration under the second category is predicated upon the principle thatthe Government, as the obligee in the
bond, cannot by its own acts prevent the fulfillment of the conditions of the bond by the sureties and at the same time
demand its forfeiture. 11

There is no question that in the present case petitioner Phoenix Surety failed to produce the body of Remberto F.
Castro before the Sandiganbayan within the required period. However, Phoenix Surety opted to wash its hands off the
matter by insisting that the bail bonds it posted for Castro were null and void since Castro was under military detention
[by virtue of an ASSO issued by the Minister of National Defense] at the time of his escape. It argued that considering
that the bail bonds were intended primarily to obtain the provisional liberty of the accused and this was rendered
impossible by the ASSO, then it would be more in accord with justice and fairness for the Sandiganbayan to absolve
the surety from furthelliability on the bonds.

While the argument may be valid, we cannot fully subscribe to it for the precise reason that Phoenix Surety is in
estoppel. As correctly observed by the Solicitor General, Phoenix Surety issued the personal bail bonds of Castro on
April 1, 1980 when latter had already been under detention for three 131 months. Without question, Phoenix Surety
had knowledge of Castro's detention by the military when it issued the bail bonds. As a matter of fact, Phoenix Surety
attached as Annex "F" to the present petition the letter [dated May 29, 1980] of Castro's counsel requesting petitioner
surety to seek the cancellation of said bc)nds. Said letter reads in part:

It is unfortunate however that despite the said bail bonds, the representations and assurances of your agent la
certain Alice] to my client that he woVId thereafter enjoy his provisional liberty turned to be false and untrue.

To the present, my client has not been released from military custody [Camp Cramel for the reason that the
bail bonds issued by your company are not recognized as legal basis for his release. Your agent [Alice] knew
from the beginning that my client is under detention.at Camp Crame by virtue of an ASSO ... 12

So, at the outset, Phoenix Surety had offered for a valuable consideration, to assume the responsibility under the bond
despite knowledge of Castro's military detention by reason of an ASSO. It must be presumed that Phoenix Surety knew
fully well that the existence of the ASSO precluded provisional release by bail or by any other means.

Under such circumstances and considering that when the surety posts a bond for the temporary liberty of an accused,
it becomes its jailer and as such is at all times charged with the duty to keep him under its surveillance, which duty
continues until the bond is cancelled, or the surety is discharged. 13 Phoenix Surety is likewise deemed to have
assumed the responsibility for Castro's escape and subsequent flight to another country. It was incumbent upon the
surety to prohibit the accused from leaving the jurisdiction of the Philippines and placing himself beyond the reach of its
orders and processes.

In conclusion, the principle of estoppel strongly militates against the stand taken by Phoenix Surety. Although the
courts are usually liberal in accepting the explanations of the surety regarding the cancellation of the bond, such
liberality must not be to the extent of totally exonerating a surety from an undertaking it has freely and voluntarily
assumed with full awareness of all its attendant risks.

WHEREFORE, finding no cogent reason to set aside the resolutions of the Sandiganbayan dated December 27, 1982
and April 29, 1983, the Court RESOLVED to DISMISS the instant petition for lack of merit. SO ORDERED.