G.R. No. L-21627 June 29, 1967
PEOPLE’S SURETY AND INSURANCE COMPANY, INC., petitioner, vs. HONORABLE COURT OF APPEALS (Fourth Division) and RAFAEL V. GUZMAN, respondents.

FACTS

On December 29, 1960, Rosario Yulo filed a petition for certiorari, prohibition, and mandamus with preliminary injunction in the Court of Appeals (CA- G.R. No. 28671 -R) against the Court of First Instance of Manila, the Sheriff of Manila, and Rafael V. Guzman. The appellate court issued the writ of preliminary injunction on January 7, 1961, upon a bond of P2,000.00 subscribed by Yulo as principal and People’s Surety & Insurance Co., Inc. as surety. During the pendency of the case, Guzman filed a “Manifestation” on July 17, 1961, claiming P50,000.00 as damages from Yulo due to the injunction and praying for its dissolution. The Court of Appeals received evidence on this claim without notice to the surety. On February 5, 1962, it rendered a decision dismissing Yulo’s petition, dissolving the injunction, and holding Yulo and the surety solidarily liable for P2,000.00 in actual damages, with Yulo also ordered to pay P1,000.00 in attorney’s fees. This decision became final on May 30, 1962. A writ of execution against Yulo was returned unsatisfied, leading Guzman to file an urgent ex parte motion for an alias writ of execution against both Yulo and the surety. Over the surety’s objection, the Court of Appeals granted the motion on March 25, 1963, and issued the alias writ. The surety filed a motion for reconsideration, arguing the court had no jurisdiction to issue execution against it due to lack of notice. On May 29, 1963, the Court of Appeals suspended its judgment and resolution insofar as the surety was concerned and ordered Guzman to file an application for damages with notice to the surety. Guzman filed this application on June 11, 1963. Despite the surety’s objection that the decision was final and executory, the court set the case for hearing on August 2, 1963. The surety then filed the present petition for certiorari and prohibition with the Supreme Court.

ISSUE

Whether the Court of Appeals acted without or in excess of jurisdiction: 1) in allowing a writ of execution against the surety upon a judgment rendered without notice to it; 2) in passing the resolution of May 29, 1963, authorizing Guzman to file an application for damages against the surety; and 3) in approving the resolution of July 5, 1963, setting the claim for damages for hearing.

RULING

The Supreme Court ruled in favor of the petitioner surety. It annulled the decision of the Court of Appeals dated February 5, 1962, and its orders dated March 25, May 29, and July 5, 1963, insofar as they concerned the surety, and perpetually restrained the respondents from enforcing them against the surety. The Court held that the decision of February 5, 1962, holding the surety liable, was null and void as to the surety for lack of due process, as it was rendered without notice to the surety of Guzman’s claim for damages or the hearing thereon. Citing the precedent in Del Rosario v. Nava, the Court reiterated the settled rule that an application for damages against a surety and notice to the surety must be filed before the judgment against the principal becomes final and executory, so that all awards for damages may be included in a single final judgment. This rule avoids multiplicity of suits and respects the finality of judgment. Since the judgment against Yulo had become final and entry of judgment had been made on May 30, 1962, the Court of Appeals no longer had jurisdiction to entertain proceedings to hold the surety liable on its bond. Therefore, its subsequent orders attempting to do so were issued without jurisdiction.