THE COMMISSIONER OF IMMIGRATION, PLAINTIFF-APPELLANT, VS. ASIAN SURETY & INSURANCE COMPANY, INC., DEFENDANT-APPELLEE.

Appellee Asian Surety & Insurance Co.,
Inc. would free itself from a liability, clear and undeniable, under a bond
executed by it to guarantee that a non-immigrant Chinese student would, within
a certain period, leave the country by invoking equity.  It turned out that there was an extension of
his temporary stay authorized by the Bureau of Immigration without appellee being notified. 
When the time came for his surrender, he was
not immediately available, three days having elapsed before such an event took
place.  The lower court was impressed by
the equitable aspect of the matter and dismissed a complaint for the recovery
of the bond.  Hence,
this appeal by the Commissioner of Immigration.  We reverse.

The statement of the case was set forth in the appealed decision
thus:  “This is an action on a bond
filed by defendant [now appellee Asian Surety &
Insurance Co., Inc.] in the sum of P7,000 to guarantee that Cua
Giok Ke, a Chinese citizen
admitted to the Philippines temporarily as a non-immigrant student, ‘would
actually depart from the Philippines on or before April 7, 1958, or within such
period as, in his discretion, the Commissioner of Immigration or his authorized
representative may properly allow.’ * * *. “^[1]
It was next noted by the lower court that after April 7, 1958, “the Bureau of Immigration extended
several times the temporary stay of Cua Giok Ke in the Philippines
without notifying the de­fendant bonding company.”^[2]

What happened next was set forth thus:  “On June 13, 1961, deportation proceedings were instituted
against Cua Giok Ke.  A warrant for
his arrest was also issued by the plaintiff who simultaneously wrote to
defendant informing the latter that the ‘authorized stay of Cua
Giok Ke expired at the end
of the 1st semester of the school year 1960-1961′ and that since he did not
leave the country up to the date of the letter the terms of the bond were
violated.  Declaring the bond
confiscated, plaintiff [appellant Commissioner of Immigration] demanded the
payment of P7,000 which represents the amount of the
bond.”^[3]

Upon receipt by appellee Asian Surety
& Insurance Co., Inc. of the above letter declaring the bond confiscated,
it took steps to cause Cua Giok
Ke’s surrender, which took place on June 16, 1961. Thereafter, appellee wrote to the Commissioner of Immi­gration on June 22, 1961 with a request for the
lifting of the order of confiscation. 
The request was denied.

The action on the bond followed.^[4]
As the forfeiture, accord­ing to the lower court, was made to depend on the
failure of Cua Giok Ke to leave the country upon the expiration of his
authorized stay which in its opinion could not be considered a violation of the
terms of the bond inasmuch as such failure to depart on said date was the
result of the extension of his stay authorized by appellant, appellee Surety Company not being informed thereof, there
should be no liability on its part.  Such
was the conclusion of the lower court.

In the language of the decision: 
“The Court, therefore, holds that it is neither fair nor just or
equitable to penalize the defendant for an omission, which was due to
plaintiff’s own fault.  How could defendant be expected to cause Cua
Giok Ke to leave the Philippines
upon the expiration of the last extension when defendant was not even aware of
said extension.  Since this lack of
awareness on the part of defendant was due to plaintiff’s fault, plaintiff
should not be permitted to invoke its own fault as basis for a recovery.”^[5]

In this appeal, appellant Commissioner of Immigration would
stress that appellee’s undertaking under the bond is
con­tractual in nature.  His brief
continues:  “Plaintiff-appellant has
not committed any act in violation of any of its provisions, while on the other
hand, defendant-appellee has failed to carry out one
of its undertakings in the bond ‘that said Cua Giok Ke will actually depart from
the Philippines on or before said date so specified or within such period as,
in his discretion, the Commissioner of Immigration or his authorized
representative may properly allow.’  For
such breach it is liable under the [terms] and conditions of the bond.  No cause for extinguishment of its obligation
has arisen, and the trial court erred in can­celling
the bond and releasing defendant-appellee from its
responsibility.”^[6]

Appellee could not deny the above
stipulation contained in its surety bond to the effect that it had full
knowledge that the Chinese national, Cua Giok Ke, was authorized to stay
in this country only up to and including April 7, 1958, and it did under­take
that he would “actually depart from the Philippines on or before said date
so specified, or within such period as, in his discretion, the Commissioner of
Immigration or his authorized representative may properly allow; * * *.”^[7] Appellee did not deny as it could not deny that there was a
breach of stipulation.  It would stress,
however, in support of the decision appealed from, that the various extensions
given by appellant to Cua Giok
Ke to stay in the Philippines
after April 7, 1958 was not
only without its knowledge but without its consent.  It would argue that it was released from any
obligation under such surety bond.^[8]

In the light of the above, a reversal of the lower court decision
is called for.  The admission that there
was a failure to live up to the terms of the bond is fatal to the claim for
exemption on the part of appellee Asian Surety &
Insurance Co., Inc.  The obligation under
such bond was the law between the parties. 
It could not thereafter in litigation arising precisely as a result of breach
thereof seek refuge in the allegation that there were ex­tensions granted of
which it was not notified.

At the most, the plea is equitable in character, and its
persuasive value is far from overwhelming. 
Nor could it be said that appellee was
entirely without fault.  It was not
unaware of its obligation.  The terms
were quite explicit.  Even if it did not
know as a matter of fact that there were extensions granted, it could have
known by making the appropriate inquiries. 
That it failed to do.

It must abide then by what was covenanted.  What it pro­mised to do, something which it
could comply with, should have been lived up to.  Since it was not true to its word, it must
suffer the consequences.  It is as clear
as that.

Pastoral v. Mutual Security Insurance Corp.,^[9] a
1965 decision, is authoritative.  In the
opinion of this Court, through Justice J. B. L. Reyes, reference was made to
earlier decisions,^[10]
where we have repeatedly announced “that the rule holding sureties to be
favorites of the law, and their contracts to be strictissimi
juris, does not apply to compensated
sureties,* * *.”

In the same case, an excerpt from a leading United States Supreme
Court opinion was cited with approval. 
Thus:  “‘We are familiar with
the old rule of strict construction in favor of the surety, based upon the
underlying principle that formerly parties became sureties, not for hire but as
a matter of accommodation, usually lending their names through motives of
friendship, and hence a surety obligation would be construed most strongly in
their favor.  But the rule ‘strictissimi juris‘ has no
application to surety companies, organized for the purpose of conducting an
indemnity business at established rates of compensation.’ * * *.”

One of the cases cited, Pacific Tobacco Co. v. Lorenzana,^[11]
is illuminating.  Thus:  “The rationale of this doctrine is
reasonable; an accommodation surety acts without motive of pecuniary gain and,
hence, should be protected against unjust pecuniary impoverishment by imposing
on the principal duties akin to those of a fiduciary.  This cannot be said of a compensated
corporate surety which is a business association organized for the purpose of
assuming classified risks in large numbers, for profit and on an impersonal
basis, through the medium of standardized written contractual forms drawn by
its own representatives with the primary aim of protecting its own interests
(See Stearn’s The Law of Suretyship,
4th ed., 402-403).  American courts in
refusing to apply this rule on compensated sureties have expressed themselves
in varying language. Sometimes it is said that a corporate compensated surety
is not entitled to the benefits of the rule of strictissimi
juris * * *; or that the contract is to be
construed against the surety and in favor of the promisee
* * *; or that the contract is like one of insurance, hence one or the other of
the above rules is to be applied * * *, and it was even said:  ‘The law does not have the same solicitude
for corpora­tions engaged in giving indemnity bonds for profit as it does for
individual surety who voluntarily undertakes to answer for the obligations of
another.  Although
calling themselves sureties, such corporations are in fact insurers, and in
determining their rights and liabilities as the rules peculiar to suretyship apply’ * * *.”^[12]

It is thus evident that whatever plausibility may attach to the
conclusion reached by the lower court, based solely on what was deemed
compelling equitable considerations, it lacks sup­port in the applicable codal provisions as well as the doctrinal pronouncements of
this Court.  Hence its affirmance is not warranted.

One last consideration.  The Philippines
continues to be vexed by the serious problem of overstaying aliens.  Its solution will not be hastened if bonding
companies were not constantly made aware that their failure to surrender an
alien, who has no further claim to the hospitality of this country, would not,
in accordance with their undertaking, be held liable.  A policy of leniency,
assuming that it is legally allowable, would tend on the contrary to encourage
carelessness, not to say collusion, with the aliens who would, in defiance of
the applicable law, prolong their stay in the country.  That such a result should be avoided should
be obvious to all.

WHEREFORE, the decision is reversed, and appellee Asian Surety & Insurance Co., Inc. held liable
under the bond accord­ing to its terms. 
The case is remanded to the lower court for further proceedings to
determine the liability of third party de­fendants Cua
Chi Ying and Leandro Kuon,
against whom a third party complaint was filed by appellee
Asian Surety & Insurance Co., Inc.  With costs against appellee Asian Surety
& Insurance Co., Inc.

Zaldivar, Sanchez, Castro,
Capistrano, Teehankee, and
Barredo, JJ., concur.

Concepcion, C.J., concurs in the foregoing opinion as amplified by that
of Justice Dizon.

Reyes, J.B.L., J., concurs with
Justice Dizon.

Dizon, J., concurs in a separate opinion.

Makalintal, J., did not take part.

^[1]
Decision, Record on Appeal, p. 91.

^[2] Ibid,
pp. 91-92.

^[3] Ibid, p. 92.

^[4] Ibid,
pp. 92-93.

^[5] Ibid,
pp. 94-95.

^[6] Brief for the Appellant, p. 19.

^[7]
Brief for Defendant-Appellee, p. 5.

^[8] Ibid, p. 7.

^[9]
L-20469, August 31, 1965.

^[10] Pacific Tobacco Co. v. Lorenzana,
102 Phil. 234 (1957); Phil. Surety & Ins. Co. v. Royal Oil Products,
102 Phil. 326 (1957); Atkins Kroll & Co. v. Reyes, 105 Phil. 640
(1959).

^[11] 102 Phil. 234, 242 (1957).

^[12]
This last excerpt is from Metropolitan Casualty Ins. Co. v. United Brick
and Tile Co., 29 P [2d] 771 (1934).

Normal
150
Clean
Clean

6 pt
6 pt
0
3

MicrosoftInternetExplorer4

/* Style Definitions */
table.MsoNormalTable
{mso-style-name:”Table Normal”;
mso-tstyle-rowband-size:0;
mso-tstyle-colband-size:0;
mso-style-noshow:yes;
mso-style-parent:””;
mso-padding-alt:0in 5.4pt 0in 5.4pt;
mso-para-margin:0in;
mso-para-margin-bottom:.0001pt;
mso-pagination:widow-orphan;
font-size:10.0pt;
font-family:”Times New Roman”;}