G.R. No. 195450 February 1, 2017
DEVELOPMENT BANK OF THE PHILIPPINES, Petitioner vs. HON. EMMANUEL C. CARPIO, in his capacity as Presiding Judge, Regional Trial Court, Branch 16, Davao City, COUNTRY BANKERS INSURANCE CORPORATION, DABAY ABAD, HATAB ABAD, OMAR ABAS, HANAPI ABDULLAH, ROJEA AB ABDULLAH, ABDULLAH ABEDIN, ALEX ABEDIN, et al., represented by their Attorney-in-Fact, MR. MANUEL L. TE, Respondents

FACTS

Respondents (Abad, et al.) filed a complaint for delivery of certificates of title against petitioner DBP and Guarantee Fund for Small and Medium Enterprise (GFSME) before the RTC. They obtained a writ of seizure, supported by a bond from Country Bankers Insurance Corporation (CBIC), to compel the delivery of titles they claimed were unlawfully detained. DBP moved to dismiss the case on the ground of improper venue, which the RTC granted in an Order dated September 25, 2001. Subsequently, the RTC ordered respondents to return the seized titles to DBP. Respondents failed to comply, leading DBP to file a motion for execution, which was granted, but respondents still did not return the titles.
Following respondents’ failure to return the titles despite the writ of execution, DBP filed a Motion/Application to Call on Plaintiff’s Surety Bond with the RTC, seeking damages from the bond posted by CBIC. The RTC denied the motion, ruling that its resolution was no longer part of its residual power since the main case had been dismissed due to improper venue and not after a trial on the merits. The Court of Appeals affirmed the RTC’s denial, strictly applying Section 20, Rule 57 of the Rules of Court, which requires a claim for damages on a bond to be filed before trial or before judgment becomes executory.

ISSUE

Whether the Court of Appeals erred in its strict application of Section 20, Rule 57 of the 1997 Rules of Civil Procedure in dismissing DBP’s claim for damages against the surety bond.

RULING

The Supreme Court denied the petition and affirmed the CA’s ruling. The Court held that the CA correctly applied Section 20, Rule 57 of the Rules of Court. This provision explicitly states that a claim for damages arising from an improper attachment must be filed “before the trial of the action, or before judgment becomes executory.” The purpose of this rule is to ensure that such claims are adjudicated within the same proceeding and that the surety’s liability is determined with finality alongside the main case.
The legal logic is that the bond is intended to answer for damages incurred by the defendant due to the issuance of the provisional remedy during the pendency of the action. Once the main action is terminated—in this case, by a final order of dismissal—the trial court loses jurisdiction over the claim against the bond unless it was timely filed. DBP’s motion was filed years after the dismissal order became final and executory, thus it was filed out of time. The Court emphasized that procedural rules on claims against bonds are strictly construed to ensure orderly judicial administration. DBP’s argument that the damages occurred only after the refusal to return the titles was unavailing; the proper recourse was a separate civil action for damages, not a belated claim against the bond in a case already terminated.