G.R. No. 20484. November 13, 1923

STATEMENT

Thomas Casey et al. commenced an action in the Court of First Instance, in
which the plaintiff here was the defendant. It was founded upon a contract, and
prayed for an accounting. In that action the plaintiffs applied for, and
obtained, an order of arrest of the defendant under the provisions of Chapter
XVII of the Code of Civil Procedure. The order was granted upon the condition
that the plaintiffs would furnish and approve a bond in the sum of P2,000. This
bond was furnished with the plaintiffs in that action, as principals, and the
defendant, Fidelity & Surety Company, as surety, and among other things it
provides that the plaintiffs, as principals, and the Surety Company, as surety,
“in consideration of the above and of the issuance of said order, hereby jointly
and severally bind ourselves in the sum of two thousand pesos (P2,000),
Philippine currency, under the condition that the surety and the plaintiff will
pay all the costs which may be adjudged to the defendant, and all damages which
he may sustain by reason of aforesaid order of arrest if the same shall finally
be adjudged to have been wrongful or without sufficient cause.” Upon the
strength of the bond, the warrant for the arrest of the defendant was issued,
and he was arrested and confined in Bilibid from the 14th of January, 1922, to
the 4th of February, 1922. During the period of his confinement, he applied to
this court for a writ of habeas corpus upon which he was released.

April 1, 1922, this action was commenced against the Fidelity & Surety
Company as defendant, in which after formal allegations it is alleged that on or
about October 18, 1921, Thomas Casey and William A. Caldwell commenced an action
against this plaintiff in which they sought to recover from him upon an alleged
breach of contract; that on January 14, 1922, they applied for the order of
arrest, which was granted upon the giving of a bond in the sum of P2,000, with
the Surety Company as surety. The plaintiff alleges his confinement in Bilibid
and the issuing out and the granting of the writ of habeas corpus, from which he
“suffered damages and was forced to pay costs in securing his release from the
said arrest and imprisonment in the amount of P4,600,” for which he prays
judgment, with interest and costs.

For answer, the Surety Company admits all of the allegations of the
complaint, except as to damages, which it specifically denies, and, as a
separate defense, alleges that the action in which Caldwell and Casey were
plaintiffs, and the plaintiff here was defendant, is still pending in the Court
of First Instance of the City of Manila, and that no finding has been made in
the court as to whether the order for the arrest was issued wrongfully and
without sufficient cause, and for another defense, it alleges that it became
surety in consideration of the signing of the bond by the defendants William A.
Caldwell and R. G. Woods, who jointly and severally agreed in writing to pay and
reimburse the defendant for any sums of money which it might pay or become
liable to pay on account of having signed the bond as surety, and it prays that
the complaint be dismissed, and that Caldwell and Woods be made parties
defendant, and that in any judgment which may be rendered, the Surety Company
shall have the same amount of judgment jointly and severally against Caldwell
and Woods. The order was granted, and those parties were made defendants, and
after making like admissions and denial as the Surety Company, they allege, in
substance, that Chapter XVII of the Code of Civil Procedure mentioned in the
complaint is unconstitutional, inoperative, null and void, and that every
obligation arising therefrom is null and void, and that there is no
consideration for the bond, and that the original action is still pending in the
Court of First Instance, and that no final action has been rendered there.

Upon such issues, testimony was taken, and the lower court rendered judgment
for the defendants and dismissed the complaint, from which the plaintiff
appeals, specifying six different assignments of error, in substance that the
trial court erred in holding that before the action can be maintained, there
must be a final adjudication by the trial court that the arrest was wrongful or
without sufficient cause, and in holding that there has been no adjudication by
the Supreme Court that the order of arrest was wrongful or without sufficient
cause, and in holding that an action for damages must wait the result of a suit
in which the party was arrested, and in not deciding in favor of the
plaintiff.

JOHNS, J.:

In its opinion the lower court cited and relied upon the decision of this
court in Raymundo vs. Carpio (33 Phil., 395), which was an action brought
upon an attachment bond under section 427 of the Code of Civil Procedure, in
which this court held, in legal effect, that an action cannot be brought upon an
attachment bond until after a final judgment has been rendered in the court in
which the action was pending, to the effect “that the attachment had been
obtained wrongfully or without sufficient cause.”

There is this distinction. In the instant case, a warrant of arrest, which is
in the nature of a quasi-criminal proceeding, was wrongfully issued in the civil
action, under which the defendant was arrested and thrown in Bilibid. To obtain
his release, he applied direct to this court for a writ of habeas corpus, and in
a well-written opinion, the plaintiff was released by this court upon the writ,
for the plain, simple reason that his arrest was wrongful and without sufficient
cause, and, .as this court held, that under the Jones Law “debtors cannot be
committed to prison for liabilities arising from actions ex contractu,”
and that the action was founded upon contract. (Ganaway vs. Quillen, 42
Phil., 805.) That was a final adjudication of this court that the arrest of the
plaintiff in the civil action was wrongful and without sufficient cause. It is
true that in the petition for a writ of habeas corpus, the warden of the prison
was the only defendant. But it is also true that the defendants here were
privies to that proceeding, and are bound by that decision. The plaintiff was
confined in prison because the defendants gave the bond. In other words, in the
habeas corpus proceeding, there was a final adjudication by this court that the
arrest of the defendant was wrongful and without sufficient cause, and that
decision binds the defendants as privies to the proceeding.

Upon the facts shown, we are clearly of the opinion that the instant action
was not prematurely brought.

The rule in this class of cases is well stated in Corpus Juris, vol. 5, page
526, where it is said:

“Upon undertaking.—(a) In general.—Defendant’s right to
maintain an action on the undertaking by plaintiff for defendant’s arrest
accrues when it is judicially determined that plaintiff was not entitled to have
him arrested, although the original cause is still pending, unless the
undertaking is conditioned upon recovery of judgment by defendant, and, although
the cause of action and grounds for the arrest are identical, because liability
on the bond is fixed by the discharge from arrest.”

The remaining question is the amount of damages which the plaintiff has
sustained.

It is conceded that he was confined in Bilibid for twenty-one days. To obtain
his release, he was forced to employ counsel and file his petition for a writ of
habeas corpus, which was argued and submitted to this court. There is also
testimony tending to show that at the time of his arrest, he had a concession at
the carnival grounds for the painting of signs upon the fence surrounding the
grounds, for which he had already procured some contracts, and that in the
ordinary course of business, he would have obtained a large number of other
contracts, upon which he claims that there would have been profits to him and
his partner for about P8,000, of which he would have been entitled to
one-half.

The evidence as to the amount of damages from loss of business by reason of
plaintiff’s arrest is not very clear or satisfactory, but it does tend to show
that he sustained some damage from such loss.

The rule as to the measure of damage is well stated on page 528 in the Corpus
Juris above cited, as follows:

“The items of damage that may be recovered include the taxable costs, counsel
fees in proceedings to vacate the order of arrest, expenses in securing bail,
and compensation for loss of earnings during imprisonment.”

We hold that the plaintiff’s arrest was wrongful and without sufficient
cause, and that within the meaning of the bond, the question of his wrongful
arrest was finally adjudicated in the habeas corpus proceeding in this court.
All things considered, we find that the amount of costs and damages which the
plaintiff sustained, by reason of his arrest, is P1,500.

The judgment of the lower court will be reversed, and one will be entered
here jointly and severally against the Surety Company and William A. Caldwell
and R. G. Woods for the sum of P1,500, with interest at the legal rate from this
date, and for the costs on appeal and in the lower court, and judgment for a
like amount will be entered in favor of the Fidelity & Surety Company of the
Philippine Islands against the defendants William A. Caldwell and R. G. Woods
upon their bond to guarantee and protect the Surety Company and hold it
harmless. So ordered.

Johnson, Malcolm, Avanceña, Villamor, and
Romualdez, JJ., concur.

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STREET, J.:

The bond which is the basis of this action against the defendant as surety
was executed pursuant to section 415 of the Code of Civil Procedure, with a view
to procuring an order for the attachment of the person of the herein plaintiff
in a civil action which had been instituted against him by other persons. The
condition of the bond is to the effect “that the surety and the plaintiff will
pay all the costs which may be adjudged to the defendant and all damages which
he may sustain by reason of the aforesaid order of arrest if the same shall
finally be adjudged to have been wrongful or without sufficient cause.”

The language which we have quoted is in exact conformity with the requirement
of the statute and is in fact reproduced in great part from the section above
cited. When the law provided that the parties to the bond shall obligate
themselves to pay all damages which the arrested person may sustain by reason of
the arrest if the same shall finally be adjudged to have been wrongful or
without sufficient cause, the undoubted intention was that the liability
thereby created should become effective when the civil case, to which the arrest
was an incident, should be decided. By the decision now made an independent
action on the bond is sustained by this court before the civil liability
incident to the civil action has been declared.

To permit such procedure operates with injustice to the desfendant, for if
this judgment should be executed before the civil cause is determined and it
should be there found that the herein plaintiff is indebted to his opponent in
the civil action, the surety against whom judgment is now rendered will have
been deprived of the opportunity to set off !the amount for which the plaintiff
herein may be found liable in the civil action against the present judgment. The
arrest of this plaintiff in the civil action was a mere incident of the
principal action and any damages to which he may be entitled by reason of the
arrest which has been declared unlawful would be a proper subject of
consideration in that action and the damages should go to the extinction of the
civil liability if any should be declared in that case.

The law concerning arrest in a civil case, or attachment of the person, rests
upon the same basis, so far as the principles involved are concerned, as the law
concerning the attachment of property in a civil action; and it will be noted
that the obligation of the surety in case of the attachment of property is
precisely the same, under section 427 of the Code of Civil Procedure, as the
obligation of the surety in case of arrest under section 415. The words are
identical in the two sections—”that the plaintiff will pay all costs which may
be adjudged to the defendant, and all damages which he may sustain by reason of
the arrest [or attachment], if the same shall finally be adjudged to have been
wrongful or without sufficient cause.” (Secs. 415, 427.) The meaning of this
language, as expressed in section 427, has been considered by this court in
Raymundo vs. Carpio (33 Phil., 395), where it was said:

“Section 427 of the Code of Civil Procedure provides that damages which the
defendant may sustain by reason of an attachment may be obtained in the
principal action when ‘it shall finally be adjudged to have been wrongful or
without sufficient cause.’ This means that it is a necessary prerequisite to
defendant’s right to recover damages for the issuance of an attachment by
plaintiff that the Court of First Instance in which the action was tried shall
adjudge in its final judgment that the attachment had been obtained wrongfully
or without sufficient cause. If such a pronouncement is not obtained from the
Court of First Instance in its final judgment in the action, then there can
exist no foundation for an action by the defendant to obtain damages which he
may have sustained by reason of the attachment.”

It is difficult to see how a court can commit itself to the proposition that
certain language in section 427 means one thing and that the identical language
in another section means something entirely different. The inconsistency is
obvious and needs no comment to expose it.

In the passage quoted in the opinion of the court from Corpus Juris it is
said that the right to maintain an action on a bond of the kind now under
consideration accrues when it is judicially determined that the plaintiff was
not entitled to have the defendant arrested, although the original cause is
still pending. Reference to this passage will reveal the fact that the only
cases cited to the part which we have put in italics are New York cases, and we
are informed in a note that the practise indicated is permissible only under the
present Practise Act in New York and that the law in that State formerly was to
the effect that the entry of judgment in favor of the defendant in the civil
action was a condition precedent to liability on the undertaking for the order
of arrest. Evidently these later New York cases can have no value in a
jurisdiction where the law is expressed as in sections 415 and 427 of our Code
of Civil Procedure.

Authority decidedly more in point upon the interpretation of our statute is
to be found in the decisions of the Supreme Court of California, for upon
comparison it will be found that section 415 of our Code of Civil Procedure, in
the part here material to be noted, is taken almost verbally from section 482 of
the Code of Civil Procedure of the State of California, which we here
reproduce:

“SEC. 482. Security by plaintiff before order of arrest.— Before
making the order, the judge must require a written undertaking on the part of
the plaintiff, with sureties in an amount to be fixed by the judge, which must
be at least five hundred dollars, to the effect that the plaintiff will pay all
costs which may be adjudged to the defendant, and all damages which he may
sustain by reason of the arrest, if the same be wrongful, or without sufficient
cause, not exceeding the sum specified in the undertaking. The undertaking must
be filed with the clerk of the court.”

In the case of Stechhan vs. Roraback (67 Cal., 29), the Supreme Court
of California had occasion to consider a question under their statute, which was
almost identical with that involved in the present case, namely, whether an
independent action would lie against the sureties after the arrested person had
been discharged but before the civil action had been finally determined in the
superior court. It was held that the action could not be maintained. The opinion
delivered by the Supreme Court of California is brief and may be here reproduced
to advantage in its entirety:

“The defendant Roraback commenced an action against Stechhan in a justice’s
court, and procured an order for his arrest. In procuring such order Stechhan
gave an undertaking, with the other defendants herein as sureties. On the trial
of the action, the justice held the arrest to have been wrongful and without
cause, and discharged Stechhan. This action is on the undertaking. The
defendants herein in their answer averred that after the judgment in the
justice’s court, Roraback, plaintiff therein, appealed from such judgment to the
Superior Court, and that such appeal was still untried and undetermined. This
portion of the answer was demurred to, and the demurrer sustained. We are of
opinion that this ruling was error. On the appeal the whole case was for hearing
and determination, including the question whether or not the arrest was wrongful
or without sufficient cause; and until such determination it could not be known
whether liability on the undertaking had been incurred.”

It will be noted that the only difference between the provision in question,
as it stands in the California Code of Civil Procedure and as it stands in the
Philippine Code of Civil Procedure, is that where the California law says “if
the same be wrongful, or without sufficient cause,” our statute says “if the
same shall finally be adjudged to have been wrongful or without sufficient
cause.”

The greater fullness and precision of the words of our own statute—where the
two thus differ—make the interpretation adopted by the California court even
more inevitable in this jurisdiction than in California. The words “finally
adjudged,” used in our statute, were evidently chosen with a view to indicating
more clearly than in the original that the liability must have been finally
determined in the civil action in which the undertaking of the sureties was
given.

I am therefore of the opinion, as was the trial judge, that the action
is, to say the least, premature; and the judgment dismissing the case should
accordingly be affirmed.