TOWERS ASSURANCE CORPORATION, PETITIONER, VS. ORORAMA SUPERMART, ITS OWNER-PROPRIETOR, SEE HONG AND JUDGE BENJAMIN K. GOROSPE, PRESIDING JUDGE, COURT OF FIRST INSTANCE OF MISAMI…

This case is about the liability of a surety in a counterbond for the lifting of a writ of preliminary
attachment.

On February 17, 1976 See Hong, the proprietor of Ororama Supermart in Cagayan de Oro City, sued the spouses
Ernesto Ong and Conching Ong in the Court of First Instance of Misamis
Oriental for the collection of the sum of P58,400 plus litigation expenses and
attorney’s fees (Civil Case No. 4930).

See Hong asked for a writ of preliminary attachment.  On March
5, 1976, the lower court issued an order of attach­ment.  The deputy sheriff attached the properties of
the Ong spouses in Valencia,
Bukidnon and in Cagayan de Oro City.

To lift the attachment, the Ong spouses
filed on March 11, 1976 a counterbond in the amount of P58,400
with Towers Assurance Corporation as surety. 
In that undertaking, the Ong spouses and
Towers Assurance Corporation bound themselves to pay solidarily
to See Hong the sum of P58,400.

On March 24, 1976
the Ong spouses filed an answer with a
counterclaim.  For nonappearance at the
pre-trial, the Ong spouses were declared in default.

On October 25, 1976, the lower court rendered a decision,
ordering not only the Ong spouses but also their
surety, Towers Assurance Corporation, to pay solidarily
to See Hong the sum of P58,400.  The
court also ordered the Ong spouses to pay P10,000 as litigation expenses and attorney’s fees.

Ernesto Ong manifested that he did not
want to appeal.  On March 8, 1977, Ororama Supermart filed a motion for execu­tion.  The lower court granted that motion.  The writ of execution was issued on March 14
against the judgment debtors and their surety. 
On March 29, 1977,
Towers Assurance Corporation filed the instant petition for certiorari
where it assails the decision and writ of execution.

We hold that the lower court acted with grave abuse of discretion
in issuing a writ of execution against the surety with­out first giving it an
opportunity to be heard as required in Rule 57 of the Rules of Court which
provides:

“SEC. 17.  When execution returned unsatisfied,
recovery had upon bond.- If the execution be
returned unsatisfied in whole or in part, the surety or sureties on any counter
bond given pursuant to the provisions of this rule to secure the payment of the
judgment shall become charged on such counter bond, and bound to pay to the
judgment creditor upon demand, the amount due under the judgment, which amount
may be recovered from such surety or sureties after notice and summary
hearing in the same action.”

Under section 17, in order that the judgment creditor might
recover from the surety on the counter bond, it is necessary (1) that execution
be first issued against the principal debtor and that such execution was
returned unsatisfied in whole or in part; (2) that the creditor made a demand
upon the surety for the satisfaction of the judgment, and (3) that the surety
be given notice and a summary hearing in the same action as to his liability
for the judgment under his counter bond.

The first requisite mentioned above is not applicable to this
case because Towers Assurance Corporation assumed a solidary
liability for the satisfaction of the judgment. 
A surety is not entitled to the exhaustion of the properties of the
principal debtor (Art. 2959, Civil Code; Luzon Steel Corporation vs. Sia, L-26449, May 15, 1969, 28 SCRA 58, 63).

But certainly, the surety is entitled to be heard before an
execution can be issued against him since he is not a party in the case
involving his principal.  Notice and hearing constitute the essence of procedural due
process.  (Martinez vs. Villacete, 116 Phil. 326; Alliance Insurance & Surety
Co., Inc. vs. Hon. Piccio, 105 Phil. 1192, 1200;
Luzon Surety Co., Inc. vs. Beson, L-26865-66, January
30, 1970, 31 SCRA 313).

WHEREFORE, the order and writ of execution, insofar as
they concern Towers Assurance Corporation, are set aside.  The lower court is directed to conduct a
summary hearing on the surety’s liability on its counter bond.  No costs.

SO ORDERED.

Fernando, (Chairman), Barredo,
Antonio, Concepcion, Jr., and Santos, JJ., concur.