FAR EASTERN SURETY & INSURANCE CO., INC., PETITIONER, VS. THE COURT OF APPEALS AND REPUBLIC OF THE PHILIPPINES, RESPONDENTS.

Far Eastern Surety versus Court of Appeals and the Republic of the Philippines

The Case

This is a petition for review by way of certiorari brought by Far Eastern Surety and Insurance Company against the Court of Appeals and the Republic of the Philippines. The surety company had posted a bond in favor of the Commissioner of Immigration to guarantee the temporary stay of a Chinese alien named Co Too, and the Government sought to confiscate that bond when the alien was not produced for investigation. The case matters because it settles three things a reviewee must know: when an immigration bond is deemed forfeited, whether the Commissioner of Immigration may cancel a bond on grounds outside the statute, and whether the full amount of a bond running to the sovereign may be recovered without proof of actual damage.

Procedural History

The Commissioner of Immigration demanded payment of the bond, and when the surety did not pay, the matter was referred to the Solicitor General, who filed a complaint for recovery. The Court of First Instance of Manila rendered judgment ordering the confiscation of the bond. The surety appealed, and the Court of Appeals affirmed the judgment of the trial court. The surety then came to the Supreme Court by petition for review on certiorari, and the Supreme Court affirmed the decision appealed from.

Facts

On December 24, 1947, Far Eastern Surety and Insurance Company posted a three thousand peso surety bond in favor of the Commissioner of Immigration for the temporary stay in the Philippines of Co Too, a Chinese alien. Under the bond, the surety undertook that Co Too would not leave Manila or change his address without the prior written consent of the Commissioner; that it would make Co Too available and present him within twenty four hours after notice to produce him for investigation of his right to further stay; that it would produce him for deportation within twenty four hours after demand; and that a breach of any condition would entitle the Commissioner to declare the bond or part of it forfeited.

On February 6, 1950, the Commissioner wrote the surety requiring Co Too to appear for investigation of his right to stay beyond one year, warning that failure to produce him would result in forfeiture. On February 22, 1950, the Commissioner wrote again, requesting payment of three thousand pesos within five days, which letter the surety received on February 24, 1950. Two extensions were granted to produce Co Too, the second expiring on April 14, 1950. After that date the surety still failed to present him, and on April 17, 1950 the Commissioner declared the bond forfeited and referred the matter to the Solicitor General. The action was instituted only on July 11, 1951.

In the meantime, Co Too was apprehended by the immigration authorities on August 24, 1950, without any help from the surety, and was ordered deported. Because of lack of transportation and of a definite place to deport him, he continued to stay here after posting a cash bond and a surety bond from another company on January 24, 1951. The Commissioner later sent the surety a list of cancelled bonds that included the name of Co Too, but by letter dated July 26, 1951 explained that the inclusion was due to mistake or inadvertence, since it was not within his authority to cancel a bond already declared forfeited.

Issues

• Whether or not Co Too illegally overstayed in the Philippines, such that the respondent suffered damage from the breach of the bond.
• Whether or not the cancellation of the bond by the Commissioner of Immigration, made after forfeiture and on the ground that a new bond had been posted, is valid.
• Whether or not there was a forfeiture of the bond despite the earlier letters of the Commissioner being mere warnings and requests.
• Whether or not the principle of estoppel applies against the Government because the surety was led to believe its bond had been cancelled.
• Whether or not the amount stated in the bond is the measure of damage, even without proof of actual damage.
• Whether or not the respondent is entitled only to the expenses of arresting Co Too, rather than the full amount of the bond.

Applicable Provisions

Section 40, paragraph c, of Commonwealth Act Number 613, the Philippine Immigration Act, provides:

Section. 40. (c) When the conditions of the bond or cash deposit are fulfilled, or, in the case of a bond or deposit given to insure against an alien becoming a public charge, when the Commissioner of Immigration, shall decide that the likelihood no longer exists, or in the event of the naturalization as a Philippine citizen or the death of the alien in whose behalf the bond or deposit is given, the bond shall be cancelled or the sum deposited shall be returned to the depositor, or his legal representative. In case of forfeiture, the proceeds of the bond or the cash deposit, as the case may be, shall be deposited in the Philippine Treasury by the Collector of Customs.

This provision supplies the only statutory grounds for cancelling an immigration bond, and the Court uses it to test whether the cancellation of the surety's bond was lawful.

Ruling

On the first issue, the Court held that Co Too did overstay. The one year period allowed him had expired, which prompted the demand for his appearance; the demand was ignored by both the surety and the alien; and he was arrested and ordered deported. The Court called it absurd for the surety to claim that Co Too did not overstay.

On the second issue, the Court held the cancellation null and void. The ground relied upon, the posting of a new bond, is not among those provided in Section 40, paragraph c, of Commonwealth Act Number 613. Moreover, the new bonds were filed after Co Too had been ordered deported and after the original bond had already been forfeited, so they could not have been posted to cancel a bond that no longer subsisted.

On the third issue, the Court held that there was indeed a forfeiture. The letters of February 6 and February 22, 1950 were only warnings, but the actual forfeiture was made on April 17, 1950, after the surety failed to produce Co Too despite two extensions. The Court quoted its own recent ruling:

By the failure of the alien to appear before the Commissioner of Immigration and to report to him once a week as stipulated in the surety bond, the terms thereof, were breached not only by the principal but also by the surety, which justified the forfeiture of the bond.

On the fourth issue, the Court rejected estoppel. The cancellation was made through mistake, and the Court held that a bond surrendered and cancelled through mistake or fraud may be treated as a valid and subsisting instrument, citing the rule that ignorance of the truth or mistake cannot stop an actor.

On the fifth issue, the Court held that the amount stated in the bond is the measure of damage. The failure to produce Co Too breached a principal condition of the bond and entitled the Government to forfeit it in full without proving actual damage. The Court explained the reason for this rule in bonds running to the sovereign:

The bond was declared forfeited in the full amount by reason of the obligor's default, although no pecuniary damage were shown to have been sustained by the State. In the opinion, Mr. Justice Mathews pointed out the distinction between private obligations and bonds given to the sovereign for the purpose of promoting a public interest or policy, and he stated that in the latter class of cases there can be no intention of indemnification, for the reason that the State can gain nothing in its political or sovereign character by the performance of the conditions nor lose anything by a default.

On the sixth issue, the Court refused to reduce the liability to the expenses of arrest. While the Court follows a policy of liberality toward bondsmen, that liberality is gauged by the diligence of the bondsman, and here the diligence was entirely absent, since Co Too was apprehended through no effort of the surety.

Doctrine

An immigration bond is forfeited upon the breach of its conditions, particularly the failure to produce the alien for investigation despite demand and extensions, and the forfeiture is not negated by the fact that the earlier letters of the Commissioner were mere warnings. The Commissioner of Immigration may cancel an immigration bond only on the grounds enumerated in Section 40, paragraph c, of Commonwealth Act Number 613; a cancellation made after forfeiture and on the ground that a new bond was posted is void. A bond surrendered and cancelled through mistake or fraud remains a valid and subsisting instrument, and mistake cannot give rise to estoppel against the Government. Finally, in bonds running to the sovereign for the promotion of a public interest, the full amount of the bond may be recovered upon default without proof of actual pecuniary damage, and any liberality toward the bondsman is measured by his diligence.

Disposition

The Supreme Court affirmed the decision appealed from, with costs against the petitioner, so the bond was confiscated in favor of the Government.

Remember This

Memorize the line that a bond cancelled through mistake remains a valid and subsisting instrument, and that the full amount of a bond running to the sovereign is recoverable without proof of actual damage. Examiners use this case on the forfeiture and cancellation of immigration bonds, on estoppel against the Government, and on the measure of liability of sureties.