G.R. No. L-27863. August 29, 1969
LUZON METAL AND PLUMBING WORKS CO., INC., PLAINTIFF-APPELLEE, VS. THE MANILA UNDERWRITERS INSURANCE CO., INC., DEFENDANT-APPELLANT.
CONCEPCION, C.J.:
This case has been certified to Us by the Court of Appeals,
pursuant, presumably, to Section 31 of Republic Act No. 296.
On February 24, 1961, Roda Construction
Company, hereinafter referred to as the Lessee, entered into a written
contract with the Luzon Metal and Plumbing Works Company, hereinafter referred
to as the Lessor, whereby the Lessee rented and hired
from the Lessor specified tools and machineries, at a
given weekly rental, for a period of four (4) months, at the expiration of
which the tools and machineries would be returned to the Lessor
“in the same good working and satisfactory conditions they were
taken,” with the obligation, inter alia,
on the part of the Lessee, that, “in case there are defects” in said
tools and machinery, to cause them to “be repaired, if reparable, and if
not” to secure new ones to replace those damaged, all at the expense of
the Lessee. The latter, also, agreed to
file a performance bond in the sum of P2, 000 “to guarantee the full
payment of the value of the above-mentioned tools and machineries in case of
breakage, damage or loss, as well as the weekly-rentals for the use of said
tools and machineries. ” On the same date, the Lessee and the Manila
Underwriters Insurance Co., Inc., executed, the former as principal and the
latter as guarantor, a surety bond in said sum of P2, 000, to
“secure” the performance and fulfillment of “all the
undertakings, covenants, terms, conditions and agreements stipulated in said
contract” between the Lessor and the Lessee.
Subsequently, or on November 7, 1962, the Lessor
commenced the present action, in the municipal court of Manila, against the Lessee
and the Guarantor, to recover the sums of P73.25, as balance of the weekly
rentals said to be due from the Lessee, under its aforementioned contract with
the Lessor, from May 18 to June 12, 1961, and
P1,005.50, as value of the damages allegedly caused on the leased tools and
machineries, plus P300, as attorney’s fees, apart from the costs. After declaring the Lessee in default, said court
rendered, in due course, a decision, on October
4, 1962, the dispositive part of which
reads:
“JUDGMENT is hereby rendered for the plaintiff and against the
defendants (Roda Construction Co. by default),
ordering the latter to pay the former, jointly and severally, the sum of P73.25
as the unpaid weekly rentals for the period from May 18, 1961 to June 12, 1961;
to pay plaintiff, jointly and severally, the sum of P1, 005.50 as damages
sustained by the plaintiff in having the tools and machineries; plus the sum of
P100.00 for attorney’s fees, aside from the costs of the suit.”
From this decision, only the Guarantor appealed to the Court of
First Instance of Manila, in which said appellant reproduced its answer in the
municipal court, admitting the allegations of the complaint, regarding the
capacity of the parties and execution of the aforementioned two (2) contracts,
and the demands made by the Lessor for the payment
of the sums above referred to and the refusal of the defendants to heed said
demands, but denying their liability under said contracts and alleging lack of
knowledge or information sufficient to form a belief as to the truth of the
allegations relative to the delivery of the tools and machinery in question to
the Lessee, the condition thereof at the time of said delivery, the agreement
of the Lessee to return said tools and machinery in good working and
satisfactory condition, the amount of unpaid rentals due from the Lessee, the
damaged condition of the tools and machinery at the time of the return thereof
to the Lessor and the alleged bad faith of the Lessee
and the Guarantor in not satisfying the claims of the Lessor.
On motion of the latter, supported by the requisite affidavit,
and over the Guarantor’s objection, the court of first instance subsequently
rendered a summary judgment against the Guarantor, the dispositive
part of which judgment is substantially identical to that of the municipal
court. A reconsideration of this decision having been denied, the Guarantor
interposed the present appeal, in which it raises several questions, the gist
of which is that said court erred: (1) in holding that the decision of the
municipal court had become final and
executory, insofar as the Lessee is concerned,
despite the appeal taken by the Guarantor; and (2) in rendering a summary
judgment without any evidence on the amount of damages collectible by the Lessor.
It is urged by the Guarantor that its appeal from the decision of
the municipal court had the effect of vacating the same in its entirety, even
insofar as the Lessee is concerned, notwithstanding the fact that the latter
had not appealed from said decision. This pretense is manifestly devoid of
merit. To be sure, the appeal of the
Guarantor vacated said decision of the municipal court, but as regards said appellant
only. It could not and did not affect the decision against the Lessee,
which, in view of its failure to appeal, became final and could have
been enforced by writ of execution.[1]
In the language of Singh v. Liberty[2]:
“It is true, as appellant claims, that an appeal from the
decision of an inferior court operates to vacate said decision, thereafter the
case to stand trial de novo in the Court of First Instance, but it seems
obvious that this applies only to the party who had taken the appeal.
As against other parties adversely affected by the decision who did not
appeal, the decision must be deemed to have become final and executory. A
contrary view would lead to indefensible results. “
In Municipality of Orion v. Concha,[3]
the question.: “(w)ill the appeal of one of several persons who have been
declared jointly and severally liable for the payment of a sum of money affect
the liability of his cojudgment debtors in case the
appeal results in modifying the judgment of the lower court as to the
appellant?” was resolved in the negative. That case involved a performance
bond to guarantee a construction contract. The bond was executed by the
contractor and two (2) bondsmen. Judgment having been rendered against all of
them, by the court of first instance, holding them jointly and severally liable
for the amount of the bond, an appeal was taken by one of the bondsmen, who was
absolved by the appellate court, upon the ground that the creditor had granted
the contractor, without the knowledge or consent of the appellant, an extension
of the stipulated time to complete the construction, thereby relieving said
appellant from liability under the bond. It was held that this result did not
inure to the benefit of the other bondsmen who had not appealed,
“considering that the principal debtor has not a pealed and the judgment
against him has not been modified x x x .”
The foregoing view was quoted with approval in Unsay, Basilio et al. v. Muñoz-Palma4 and
applied in Gutierrez v. Court of Appeals5.
In the case at bar, the liability of the Lessee does not depend
upon that of the Guarantor. The latter’s
liability is the one dependent upon that of the former, which is principal,
without which its accessory – the contract of guaranty – cannot exist6.
As regards the propriety of a summary judgment rendered by the
court of first instance without receiving therein any evidence on the amount of
damages due to the Lessor, it should be noted that
the performance bond in its favor guaranteed that the Lessee “shall well
and truly perform and fulfill all the undertakings, covenants, terms,
conditions and agreements stipulated” in the contract of lease, which, in
turn, provided that said bond shall “guarantee the full payment of the
value of the above-mentioned tools and machineries in case of x x x damage x x x as well as the weekly rentals for the use
of said tools and said machineries. ” Upon the other hand, the breach of
said contract of lease by the Lessee and the amount of its liability thereunder have been definitely settled and fixed in
the decision of the municipal court against said Lessee, which is final and executory. That decision, which formed part of the record
of this case in the court of first instance, is conclusive proof, not
only of the aforementioned breach, but, also, of the amount of
the liability of the Lessee arising therefrom. Hence
said court needed no further evidence thereon. Indeed, it has been held:
“It is too well settled not to admit of any discussion that a
surety on an eventual condemnation money bond in an action of trover is bound by the judgment against his principal, and
will not be heard, after judgment, to raise any question which could have been
raised by his principal before judgment.
Jackson v. Guilmartin, 61 Ga.
544; Crawford v. Jones, 65 Ga.
523 (2); Thomas v. Price, 88 Ga.
533; 15 S.E. 11 (2); Hogans v. Dizon,
105 Ga. 171, 31 S.E. 422 (1);
Holmes v. Langston, 110 Ga. 869,
36 S.E. 255. In the case last cited it
was said: ‘After becoming securities on the bond, they must remain silent witnesses
to the conflict between the parties to the suit, standing ready to fulfill at
the end of the litigation the obligation they have undertaken, x x x’.”7
” x x x
After judgment against his principal, the surety cannot ‘raise any question
which could have been raised by the principal before judgment.’ Waldrop v.
Wolff, 114 Ga. 610 (7), 620, 40
S.E. 830,”8
“The surety on a bond given by the defendant in an action of trover for the eventual condemnation money is bound by the
judgment against the defendant, and cannot, after judgment, raise any question
which could have been raised by the principal before judgment. x x x”9
” x x x
The judgment of the trial court is final as to these principals, and since the
latter cannot now question the correctness of the judgment rendered against
them, the sureties cannot.”10
” x x x
Many authorities held that a judgment against the principal, x x x absent fraud, collusion, or
clerical error in its entry, is conclusive on the sureties. x x x “11
Inasmuch as the Guarantor’s answer to the complaint herein set up
no affirmative or special defense of any kind whatsoever, and limited
itself to a general denial of said liability and to asserting lack of
knowledge or information sufficient to form a belief as to the truth of the
allegations in said complaint regarding the amount of rentals unpaid by the
Lessee and the amount of damages due therefrom, it
follows that the court of first instance has properly rendered its summary
judgment relying upon the determination of such amounts in the decision
rendered by the municipal court against said Lessee.
WHEREFORE, the decision appealed from should be, as it is,
hereby affirmed, with costs against the guarantor, Manila Underwriters
Insurance Co., Inc.
IT IS SO ORDERED.
Dizon, Makalintal,
Zaldivar, Sanchez, Castro, Fernando, Capistrano, Teehankee and Barredo, JJ., concur.
Reyes, J., is on official leave
abroad
[1]
Fiesta v. Llorente, 25 Phil. 554; Lim v.
Singian, 37 Phil. 817; Ebero
v. Cañizares, 79 Phil. 152.
[2]
G.R. No. L-16860, July 31, 1963;
See, also, Firestone Tire & Rubber Co. of the Phil. v.
Tempongko, G.R. No. L-24399, March 28, 1969. Underscoring supplied.
[3]
50 Phil. 679, 680.
4
G.R. No. L-17712, May 31, 1965.
5
G.R. No. L-25972, Nov. 26, 1968.
6
Article 2052, Civil Code of the Philippines.
7
Waldrop v. Wolff, 40 S. E. 830, 835.
8
Taliaferro v. Farkas, 166 S.E. 426.
9
King v. Irwin, 171 S. E. 302, 303.
10
Lawyers Lloyds of Texas v.
Webb, 154 S.W. 2d 867, 868.
11
Home Ins. Co. of New York v.
Savage, 103 S. W. 2d 900, 902.