G.R. No. L-27863 August 29, 1969
LUZON METAL AND PLUMBING WORKS CO., INC., plaintiff-appellee, vs. THE MANILA UNDERWRITERS INSURANCE CO., INC., defendant-appellant.

FACTS

On February 24, 1961, Roda Construction Company (Lessee) entered into a contract with Luzon Metal and Plumbing Works Company (Lessor) to rent tools and machineries for four months. The contract obligated the Lessee to return the items in the same good condition, repair or replace any damaged items at its expense, and file a P2,000 performance bond to guarantee payment for any breakage, damage, loss, and weekly rentals. On the same date, the Lessee, as principal, and Manila Underwriters Insurance Co., Inc. (Guarantor), as guarantor, executed a surety bond for P2,000 to secure performance of all undertakings in the lease contract. The Lessor filed an action in the municipal court of Manila against the Lessee and the Guarantor to recover P73.25 as unpaid rentals (from May 18 to June 12, 1961) and P1,005.50 as the value of damages to the leased items, plus attorney’s fees and costs. The Lessee was declared in default, and the municipal court rendered a decision against both defendants, holding them jointly and severally liable. Only the Guarantor appealed this decision to the Court of First Instance. The Lessor moved for a summary judgment, which the court granted, rendering a decision substantially identical to that of the municipal court. The Guarantor appealed, arguing that its appeal vacated the municipal court’s decision in its entirety (including against the non-appealing Lessee) and that the summary judgment was improper as no evidence was received on the amount of damages.

ISSUE

1. Whether the Guarantor’s appeal from the municipal court’s decision vacated that decision in its entirety, including the liability of the non-appealing Lessee.
2. Whether the Court of First Instance erred in rendering a summary judgment against the Guarantor without receiving evidence on the amount of damages.

RULING

1. No. The Guarantor’s appeal vacated the municipal court’s decision only as to itself, not as to the Lessee. The decision against the Lessee, who did not appeal, became final and executory and could be enforced by writ of execution. The liability of the Lessee is principal, while the Guarantor’s liability is merely accessory and dependent on the Lessee’s liability. An appeal by one of several parties jointly and severally liable does not affect the finality of the judgment against the non-appealing parties.
2. No. The summary judgment was proper. The performance bond guaranteed the Lessee’s fulfillment of all undertakings in the lease contract, including payment for damages and unpaid rentals. The breach of contract by the Lessee and the amount of its liability were definitively settled and fixed in the municipal court’s final and executory decision against the Lessee. That decision, part of the record in the Court of First Instance, served as conclusive proof of both the breach and the amount of liability. A surety is bound by the judgment against its principal and cannot, after judgment, raise questions that could have been raised by the principal before judgment, absent fraud, collusion, or clerical error. The Guarantor’s answer set up no affirmative defense and only generally denied liability, so the court correctly relied on the municipal court’s determination of amounts.
The decision appealed from is affirmed, with costs against the Guarantor.