G.R. No. L-48820 May 25, 1979
MALAYAN INSURANCE CO., INC., petitioner, vs. HON. EMILIO V. SALAS, as Presiding Judge, Court of First Instance of Rizal, Branch I, Pasig, Metro Manila, ROSENDO FERNANDO and JOHN DOE, respondents.

FACTS

Makati Motor Sales, Inc. sued Rosendo Fernando for the recovery of four diesel trucks and a monetary obligation. To secure immediate possession of the trucks via a writ of replevin, Makati posted a bond executed by Malayan Insurance Co., Inc. The bond obligated the surety to pay for the property’s return and any sum recovered against the plaintiff. The sheriff seized the trucks, and two were later returned to Fernando. After trial, the lower court rendered a judgment with reciprocal monetary awards between the parties. Makati appealed to the Court of Appeals, which affirmed the lower court’s decision.
Before the record was elevated on appeal, Fernando filed an application for damages against the replevin bond in the trial court, which was denied due to the perfected appeal. Subsequently, while the case was pending before the Court of Appeals, Fernando filed his claim for damages against the bond. The appellate court, in its decision affirming the main judgment, noted the claim was correct and ordered it to be heard before the trial court. After the decision became final and the record was remanded, Fernando moved to set his application for hearing. The trial court, after a hearing, directed Malayan Insurance to pay the damages adjudged against its principal.

ISSUE

Whether the trial court had jurisdiction to hear and grant Fernando’s application for damages against the surety on the replevin bond after the Court of Appeals’ decision had become final and executory.

RULING

Yes, the trial court had jurisdiction, but it erred in automatically holding the surety liable without a proper hearing. The Supreme Court clarified the procedure under Section 20, Rule 57 of the Rules of Court, applicable to replevin bonds. A claimant must file the application for damages before the trial court loses jurisdiction—either before trial, before appeal is perfected, or before the judgment becomes executory—with due notice to both the principal and the surety. The award must be included in the final judgment.
In this case, Fernando seasonably filed his application in the Court of Appeals while the appeal was pending. The appellate court’s directive for the trial court to hear the claim was proper, as it retained supervisory authority to implement its final judgment. Therefore, the trial court acted within its jurisdiction in complying with that directive. However, the trial court erred by simply ordering the surety to pay the damages adjudged against its principal without conducting a summary hearing where the surety could contest the reality and reasonableness of the claimed damages. The surety is entitled to such a hearing to present defenses not necessarily available to the principal. The order was set aside, and the case was remanded for a proper summary hearing on the claim for damages.