ALLEN MCCONN, PLAINTIFF AND APPELLANT, VS. PAUL HARAGAN, ET AL., DEFENDANTS, AND ASSOCIATED INSURANCE & SURETY CO., INC., DEFENDANT AND APPELLEE.

On June 30, 1955—pending hearing of Civil Case No. 24790 of the Court of
First Instance of Manila, entitled “Morris McConn vs. Paul Haragan”, which was
scheduled to take place on September 16, 1955—the Bureau of Immigration advised
said court that defendant PaulHaragan had applied for an immigration clearance
and a re-entry permit to enable him to leave the Philippines for 15 days only
and requested information whether the court had any objection thereto. By an
order dated July 11, 1955, the court required Haragan to file a bend of P4,000
“to answer for his return to the Philippines and the prosecution of this case
against him, with the understanding that upon his failure to return, said bond
will answer pro tanto for any judgment that may be rendered against him”.
Thereupon, or on July 12, 1955, Haragan submitted a bond, subscribed by him and
the Associated Insurance & Surety Co., as principal and surety,
respectively, reading:

“WHEREAS, the above-bounden PRINCIPAL, is intending to leave the Philippines
on a business trip to Hongkong and Tokyo, Japan, for a period of thirty (30)
days from date of his departure, in connection with his business;

“WHEREAS, the above-bounden PRINCIPAL, has a pending case before the Court of
First Instance of Manila, Branch III, entitled: “Allen McConn, Plaintiff vs.
Paul Haragan, Defendant”, Civil Case No. 24790, which is scheduled for hearing
on September 16, 1955;

“WHEREAS, before the above-bounden PRINCIPAL could leave the Philippines for
Hongkong and Tokyo, Japan, the above-mentioned Court has required him to post a
Surety Bond, in the amount of PESOS FOUR THOUSAND ONLY (P4,000.00) Philippine
Currency, to guarantee that he will return to the Philippines on or before
September 16, 1955;

“NOW, THEREFORE, for and in consideration of the above premises, the
principal and the Surety, hereby bind themselves, jointly and severally, in
favor of the Republic of the Philippines, or its authorized representatives! in
the sum of PESOS FOUR THOUSAND ONLY (P4,000.00) Philippine Currency, that the
herein principal will return to the Philippines on or before September 16, 1955
and that should he fail to do so, said bond will answer pro tanto for any
judgment that may be rendered against him”.

Soon thereafter, or on July 19, 1955, tihe court issued an order stating that
“in view of said bond, it would have no objection” to Haragan’s “departure from
the Philippines for a short stay abroad” and that “formal leave” was thereby
given him. On the date set for the hearing of the case, Haragan’s counsel moved
for continuance, whereupon, the hearing was postponed to November 14, 1955. On
the date last mentioned, the same counsel informed the court that Haragan had
been unable to return to the Philippines because the Philippine Consulate in
Hongkong had advised Haragan of a communication from our Department of Foreign
Affairs banning him from returning to the Philippines. The court then postponed
the hearing to January 6, 1956. Subsequently, Herbert T. Fallis was impleaded as
defendant and, later on, one Inocencio Ortiz Luis, Jr. was allowed to intervene.
In due course, thereafter, or on February 19, 1959, the court rendered judgment,
which, inter alia, sentenced Haragan to pay to plaintiff the sum of P5,500, with
6% interest thereon from December 8, 1954, until full payment, plus P1,000 as
attorney’s fees and costs. After this judgment had become final and executory,
plaintiff moved for the execution of the aforementioned bond to satisfy said
judgment against Haragan. The surety company objected thereto upon several
grounds and, after due hearing, the lower court issued an order dated October
13, 1959, releasing said company from liability under the bond aforementioned
and denying plaintiff’s motion. A reconsideration of this order having been
denied, the case is now before us on record on appeal filed by the
plaintiff.

The issue is whether the Surety Company is liable to plaintiff under the bond
quoted above, in view of the failure of Haragan to return to the Philippines.
The lower court decided the issue in the negative upon the following ground:

“* * * A careful reading of the surety bond, Exhibit F, indicate that the
surety’s principal commitment is ‘to guarantee that he (Haragan) will return to
the Philippines on or before September 16, 1955’ (See the third ‘Whereas’). In
the last paragraph of said surety bond, Exhibit F, it appears that said bond was
executed in favor of the Republic of the Philippines or its duly authorized
representatives to guarantee ‘that the herein principal (Haragan) will return to
the Philippines on or before September 16, 1955 and that should he fail to do
so, said bond will answer pro tanto for any judgment that may be
rendered against him.’ As the terms of the bond so state, it appears clearly
Chat, the bond will only answer for the judgment which may be rendered against
defendant, should he (defendant Haragan) fail to return to the Philippines. In
other words, if defendant Haragan should return to the Philippines on or before
September 16, 1955, said bond will not answer for the judgment. It is now the
contention of the Associated Insurance that since it was the Republic of
Philippines (obligee under the bond) who rendered the return of defendant
Haragan to the Philippines impossible, said surety company is thereby released
from its obligation, and cites in support thereof Articles 1266 and 2076 of the
New Civil Code. Upon a consideration of this contention, the Court finds it
tenable and well grounded, for as the surety company has so well stated ‘where
the principal obligation (of returning to the Philippines) has been extinguished
by the action of the obligee, Philippine Government, in preventing such return,
the accessory obligation of the surety is likewise extinguished and the bond
released of its liability.’ Paraphrasing the last paragraph of the bond in a
negative way, it will read thus: ‘should he (not) fail to do so, said bond will
(not) answer pro tanto for any judgment that may be rendered against
him.”

We are fully in agreement with the foregoing view, which is in accord with
the principle that:

“The debtor in obligation to do shall also be released when the prestation
becomes legally or physically impossible without the fault of the obligor.”
(Article 1266, Civil Code of the Philippines.)

Thus, in Tabora vs. Lazatin, G. R. No. L-5245, May 29, 1953, we said:

“This Court finds that despite his efforts to secure the necessary building
permit for the reconstruction, he failed because of the disapproval or
unfavorable attitude of the Urban Planning Commission toward reconstruction
unless they conformed to the plan of widening the city streets. Finding that
defendant had done all he could to secure the permit and to comply with his
obligations, but because of the refusal of the government authorities to issue
and permit, he failed to fulfill his undertaking, he should be absolved and
released from said obligation.”

To same effect, substantially, is the decision of this Court in House vs. De la
Costa (40 Off. Gaz., [3 S] 47).

Wherefore, the order appealed from is hereby affirmed, with the costs of this
instance against plaintiff-appellant. It is so ordered.

Padilla, Bautista Angelo, Labrador, Reyes, J. B. L., Barrera, Paredes,
Dizon, and De Leon, JJ., concur.