G.R. No. L-4203
MANUEL CRAME SY PANCO, plaintiff-appellee, vs. RICARDO GONZAGA, ET AL., defendants-appellants.
March 27, 1908

FACTS: Manuel Crame Sy Panco (plaintiff-appellee) instituted an action against Alejo Lanzon for the recovery of P300.42. Sy Panco obtained a preliminary attachment on three carabaos owned by Lanzon. The attachment was subsequently released under a P500 bond provided by Ricardo Gonzaga, et al. (defendants-appellants). The bond stipulated that if judgment was rendered in favor of the plaintiff, Lanzon would redeliver the carabaos, or, failing that, the sureties would pay the total value of the carabaos up to P500.

Lanzon was eventually sentenced to pay Sy Panco P300.42. A writ of execution was issued but could not be enforced as Lanzon had no property, and the attached carabaos were not produced. Sy Panco then sued Gonzaga, et al. to enforce the bond for the P300.42 and legal interest, as well as P57.47 for costs from Lanzon’s appeal, which the defendants readily agreed to pay.

Gonzaga, et al. presented evidence through two uncontradicted witnesses that all three carabaos had died from a “prevailing disease” in the province, thus a fortuitous event. The lower court, however, stated it could not consider it proven that all carabaos had died, implying only some had.

ISSUE: 1. Can the sureties (Gonzaga, et al.) be held liable for the principal debt of P300.42 when the specific property (carabaos) that was the subject of the bond died due to a fortuitous event?
2. What is the nature and extent of the sureties’ liability under the bond given the fortuitous loss of the attached property?

RULING: The Supreme Court reversed the lower court’s judgment regarding the P300.42 claim and affirmed the part concerning the P57.47 costs.

1. The Court held that the death of the three carabaos due to a prevailing disease was a fortuitous event, occurring without fault on the part of the defendants. Under Article 1182 of the Civil Code, an obligation to deliver a specific thing is extinguished if the thing is lost or destroyed without the debtor’s fault. Consequently, the primary obligation of the defendants to return the carabaos was extinguished. The subsidiary obligation to pay the value of the carabaos was also extinguished because, according to Article 1105 of the Civil Code, no one should be held accountable for fortuitous cases unless there is a legal provision or express covenant to the contrary, neither of which existed here.

2. Furthermore, the Court clarified that the bond executed by Gonzaga, et al. was to respond for the delivery of the carabaos, and in default thereof, to pay their value, up to P500. It was not a bond for Lanzon’s debt of P300.42. Under Section 440 of the Code of Civil Procedure, a bondsman is only responsible for the released property or its value, and the obligation “shall stand in place of the property so released.” Since the actual value of the carabaos was not proven, there was no basis to determine the amount the sureties should pay, even if they were hypothetically liable.

Therefore, the defendants could not be compelled to pay Lanzon’s P300.42 debt. However, since the defendants agreed to pay the P57.47 for costs in Lanzon’s appeal, that portion of the judgment was affirmed.