GR L 40334; (February, 1985) (Digest)
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.
FACTS
Ong Chi sued Francisco Reyes, Jr. for a sum of money and obtained a writ of attachment on a jeep belonging to Reyes. To dissolve the attachment, Reyes posted a counterbond with Central Surety and Insurance Co. as surety. The bond’s condition was that, should Ong Chi recover judgment, Reyes would redeliver the attached jeep to the court for application to the judgment, or, in default thereof, the surety would pay the plaintiff the full value of the property released, with the bond amount of P6,465.00 setting the limit of liability. The attachment was lifted and the jeep returned to Reyes.
Ong Chi obtained a favorable judgment, which was affirmed on appeal. Upon finality, a writ of execution was issued. The sheriff sold the previously attached jeep for P4,000.00, crediting this amount to the judgment. Central Surety then moved to cancel its counterbond, but Ong Chi opposed and sought a deficiency judgment against the surety for the balance of P5,730.00. The trial court granted Ong Chi’s motion and ordered the surety to pay the deficiency.
ISSUE
Whether the petitioner surety is liable for the deficiency judgment.
RULING
No. The Supreme Court ruled that the surety is not liable for the deficiency. The legal logic is anchored on the specific terms of the counterbond, which constitute the law between the parties. The bond obligated the surety to ensure the redelivery of the specific attached property (the jeep) for execution, or, failing that, to pay its value up to the bond amount. The condition was fulfilled when the jeep was made available and was subsequently sold at public auction to satisfy part of the judgment. The surety’s obligation was thereby extinguished.
The Court clarified that the provisions of Section 17, Rule 57 of the Rules of Court, cited by the respondent, do not apply as the parties’ contract (the bond) stipulated a different and specific condition. Furthermore, even assuming arguendo that liability persisted, the surety’s maximum exposure was the bond amount of P6,465.00. Since the jeep was sold for P4,000.00, the surety’s potential liability could not exceed P2,465.00. The trial court’s order to pay the full deficiency of P5,730.00 was a clear excess. The petition was granted and the counterbond ordered cancelled.