G.R. No. L-25335. February 26, 1968
SUN BROS. APPLIANCES, INC., PLAINTIFF-APPELLEE, VS. TRINITY LUNCHEONETTE & SOCIAL CLUB CORPORATION, ET AL., DEFENDANTS, THE CAPITAL INSURANCE & SURETY CO., INC., DEFENDANT-APPEL…
BENGZON, J.P., J.:
On October 12, 1962, Sun Bros. Appliances, Inc. sold two air
conditioners to Trinity Luncheonette and Social Club Corporation, by virtue of
a written contract of conditional sale which provides, among others, that: The
air conditioners cost a total of P7,180 (P3,590 each), payable on a monthly
installment of P258 after a down payment of P988; title to the property shall
vest in the upon full payment of the entire account and only upon complete
performance of all other conditions; default in the payment of two installments or violation of paragraph four[1]
entitles the seller to retake possession
of the property free from all claims whatever, and all sums paid are
forfeited as compensation for the use of the property and as liquidated damages
for wear and tear.
As of February 1, 1963, Trinity Luncheonette had paid only the
down payment, and was in default on installments due since November 18, 1962.
That same day, February 1, 1963, the Sheriff of Manila attached
and levied on the properties of Trinity Luncheonette including one of the air
conditioners, as a result of the writ of attachment issued by the municipal
court of Manila in Civil Case No. 105804 entitled Trinity Investment Co., Inc.
v. Trinity Luncheonette and Social Club Corporation, et al. Soon after, on February 9, 1963, Sun Brothers
filed a third party claim over the air conditioner with the sheriff’s
office. Notified by the sheriff of the
third party claim, Trinity Investment posted an indemnity bond of P3,600 in favor of the sheriff through Capital Insurance
pursuant to section 14, Rule 59 of the Rules of Court.[2]
As consideration for the bond, Trinity Investment had earlier, on March 5,
1963, executed an indemnity agreement in favor of Capital Insurance. Consequently, the sheriff sold the attached
property, including the air conditioner at a public auction.
The present action is one for damages pursuant to Section 14,
Rule 59, of the Rules of Court, brought by Sun Brothers on June 7, 1963 before
the City Court of Manila[3]
against Trinity Luncheonette, Trinity Investment, the Sheriff of Manila and
Capital Insurance. The City Court on
November 5, 1963 absolved the sheriff, declared Trinity Luncheonette in default
and upholding the validity of the retained-ownership-until-full-payment-condition,
ordered Trinity Luncheonette, Trinity Investment, and Capital Insurance, to
pay Sun Brothers jointly and severally P3,590 (value of one air conditioner)
with interest from February 9, 1963 plus P300 attorney’s fees and the cost of
the suit. As prayed for, Trinity
Investment was ordered to pay Capital Insurance whatever the latter paid the
plaintiff plus P100 attorney’s fees and costs of the suit.
Upon appeal by Capital Insurance[4]
the Court of First Instance on April 6, 1965, citing Articles 1478 and 1503 of
the Civil Code upheld the validity of the conditional sale and declaring Sun
Brothers as owner of the air conditioner, affirmed the City Court’s
decision. Its motion for reconsideration
having been denied, Capital Insurance now seeks before Us
on appeal to be absolved from liability considering that the sheriff himself
was absolved and prays to recover from Trinity Investment the 12% rate of
interest and 15% attorney’s fees as stipulated in the indemnity agreement in
its favor.
The validity of the conditional sale is not here questioned. It is claimed by appellant, however, that
since the sheriff was absolved from liability, it should also be absolved for
the reason that the indemnity bond was made in the sheriff’s favor – not the
plaintiff’s – to answer for damages the sheriff may be held accountable for
wrongful attachment and levy; that only the sheriff has a cause of action
against appellant and not the plaintiff who was not a party to the bond
agreement, and that the sheriff must first be held liable before the appellant
may be proceeded against thereunder.
This court has long since held[5]
that the execution of the indemnity bond in favor of the sheriff indemnifying
him damages resulting from an unlawful levy and sale of the property, affirmatively
establishes the liability of the indemnitor and his
bondsmen as principals in the subsequent trespass committed by the
sheriff. The bond is equivalent to the
personal interference by the indemnitor and his
bondsmen. They assume control and direction
of the future actions of the sheriff, making them responsible for the
continuance of the wrongful possession and sale and conversion of the goods –
in other words, for the real damages suffered by the plaintiff.
According to the indemnity agreement, Trinity Investment’s
obligation matures when Capital Insurance becomes liable under the bond.[6]
The indemnity includes attorney’s fees, not less than 15% of the claim[7]
with 12% per annum interest in case of delay.[8] It
is but equitable that the indemnity agreement, not in any way shown to be
irregular, be respected. Since the
liability of Capital Insurance under the bond is from the date of the filing of
the complaint which is June 7, 1963,[9]
it is also from such date that the indemnity obligation matures. Trinity Investment, therefore, started to be
in delay from demand by Capital Insurance in its cross-claim on July 25,
1963. And from that date, it is liable
for interest.
WHEREFORE, the judgment appealed from is modified only as
regards defendant Capital Insurance & Surety Co., Inc.’s cross-claim, in
that cross-defendant Trinity, Investment Co., Inc. is ordered to pay said
cross-plaintiff interest at the rate of 12% per annum on the amount to be
reimbursed, counted from the filing of the cross-claim on July 25, 1963, plus
attorney’s fees of 15% of the amount of the claim awarded, in lieu of the P100
granted, plus costs. In all other
respects, the judgment is affirmed. No
costs in this instance.
SO ORDERED.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Ruiz Castro, Angeles, and Fernando, JJ., concur.
[1]
Paragraph 4 is a stipulation not to remove the air conditioners from the
premises.
[2] Now Section 14, Rule 57.
[3] Civil Case No. 109923.
[4]
Trinity Investment did not appeal.
[5] Alzua and Arnalot v.
Johnson, 21 Phil. 311; Waite v. Peterson, 8 Phil. 449, both citing
Lovejoy v. Murray, 3 Wallace 1-19, 70 U.S. 9-18.
[6]
Record on Appeal, p. 38.
[7]
Record on Appeal, p. 37.
[8]
Record on Appeal, pp. 39-40.
[9] CFI judgment, pp. 104, Record on Appeal.