EMILIO SY, ET AL., PETITIONERS, VS. HON. PATRICIO CENIZA, ETC., ET AL., RESPONDENTS.

Bonifacio R. Sevilla and Matias Ranillo, Jr. were movie film
producers doing business under the style of Sevilla-Ranillo
Productions. Sometime before 1955 they and theater owners Persing Tan
Queto and Antonio Yap Hockun entered into a contract whereby the latter
were granted the exclusive right to exhibit at their Waling-Waling
Theater at Ozamiz City, Ken Theater at Pagadian, Zamboanga del Sur, Ivy
Theeater at Dipolog, Zamboanga del Norte, and Gen Theater at Oroquieta,
Misamis Occidental, all the pictures to be produced by the former under
a profit-sharing ratio of 50-50% if a deposit of not more than P2,000
per picture be made by the theater owners within 30 or 45 days before
the release of any picture and under a ratio of 60-40% in favor of the
producers if no deposit be needed by the latter. It was stipulated that
the producers “shall not enter into any booking contract of any kind
with any theater” in the places above enumerated. The first picture
produced under the contract was entitled “Paradista” and the parties
complied with their respective obligations. The second picture produced
was entitled “Dalagang Pilipinhon,” but the producers sold it to Mrs.
Capper, who was the maternal grand-mother of Matias Ranillo, Jr., one
of the producers. In view of this sale, the theater owners brought an
action against Bonifacio R. Sevilla and Matias Ranillo, Jr. for
specific performance and breach of contract praying that they be
ordered to perform the obligations under the contract and to pay
damages, and that a preliminary writ of mandatory injunction issue
(civil case No. 1828). On 13 October 1955 the court issued a writ
ordering the defendants producers to turn over the film “Dalagang
Pilipinhon” to the Sheriff of Cebu City who in turn was directed to
deliver ‘ it to the plaintiffs or their authorized representatives and
enjoining the release to or exhibition thereof by any other cinema or
theater owners in Dipolog, Zamboanga del Norte, City of Ozamis and
Pagadian, Zamboanga del Sur. On 31 October 1955 upon a counterbond in
the sum of P20,000 filed by the defendants the court dissolved the
preliminary writ of mandatory injunction. In the said bond, Emilio Sy,
Silvino Clarete and Florencio Calugcug, the petitioners herein, were
the sureties or bondsmen.

On 29 April 1957 the court rendered judgment ordering the
defendants, jointly and severally, to pay the plaintiffs P5,000 for
actual and moral damages, P1,000 as attorney’s fees, and costs. On 19
November 1958 a writ of execution and on 23 February 1959 as alias writ thereof were issued, the first having been returned unsatisfied (Annexes B and B-l).

On 18 February 1959 the sureties in the counterbond, petitioners
herein, were served notice that their property would be sold at public
auction (Annex C). By an urgent petition filed on 17 March 1959 they
prayed that the Provincial Sheriff of Misamis Occidental be enjoined
from selling their property and that the writ of execution issued on
their counterbond be set aside (Annex D). The plaintiffs, respondents
herein, objected thereto. On 21 March 1959 the sale of the petitioners’
property set for 31 March 1959 was enjoined (Annex E).

On 31 March 1959 the petitioners replied to the respondents’
objection, contending that their counterbond could not answer for the
judgment rendered in the case, for said bond was put up to answer only
for damages which the dissolutoin of the writ of preliminary injunction
might have brought about or caused to the respondents and that after
final judgment had been entered any claim against the bond was barred
and the court ceased to have jurisdiction over it (Annex F). On 14 May
1959 the court denied the petition to consider the counterbond
withdrawn.

On 9 June 1959 the respondents filed a “Petition for the Final
Charge of Defendants’ Bond and for the Issuance of Writ of Execution
Thereof” (Annex H), to which on 17 June 1959 the petitioners objected
(Annex I). On 15 June 1959 the petitioners moved for the
reconsideration of the order of 14 May 1959 denying their petition to
consider or declare the counter bond withdrawn (Annex G).

On 12 April 1960 the court again denied the discharge or withdrawal
of the counterbond and allowed the respondents to apply or ask for a
hearing with notice to the petitioners to prove the extent of damages
they (the respondents) had suffered as a result of the dissolution of
the writ of preliminary injunction issued on 13 October 1955.

By these proceedings, the petitioners pray this Court to enjoin the
respondent court from hearing or receiving evidence on the damages
arising or resulting from the dissolution of the writ of preliminary
injunction, to annul the orders of 14 May 1959 and 12 April 1960 and to
grant them any other just and equitable relief.

The question to determine is whether after judgment had been
rendered which has become final and executory, a counterbond filed or
put up by sureties or bondsmen, who were not parties to the action nor
had been notified of the proceedings had therein, may be made or held
liable to answer for and satisfy the judgment on their counterbond.

The petitioners contend that under such circumstances they are
relieved from liability on their counterbond; whereas the respondents
claim that, even after entry of final judgment, they may be made or
held answerable on their counterbond to satisfy the judgment rendered
in the case.

The point had been passed upon by this Court in the case of Alliance Insurance & Surety Co., Inc. vs. Hon. Edmundo S. Piccio etc. et al., 105 Phil., 1192 where it was

said that—

It really appears from the above that the
application for damages resulting from the issuance of a writ of
preliminary injunction must be filed before the trial or before entry
of final judgment with due notice to the other party and his surety,
setting forth the facts showing his right to the damages and the amount
thereof. It likewise appears that the damages may be awarded only upon
proper application and after proper hearing, and shall be included in
the final judgment, the philosophy of this ruling being that the court
that had acted on the provisional remedy which caused the damages has
the exclusive jurisdiction to assess them because of its control of the
case. * * * And it has been held that this remedy is exclusive and by
failing to file a motion for the determination of damages on time and
while the judgment is still under the control of the court, the
claimant loses his right to such damages,

and after stating that the issue involved was—

* * * Since plaintiff’s claim for damages has
already been awarded in the main decision without notice to the surety
and the decision has become final, can said claim still be pressed
against the surety by setting the same for hearing and giving the
surety notice thereof? Does the failure to notify the surety on time
relieve the surety from his liability under the bond?

this Court held—

This is the issue that was resolved by this court in
a more recent case wherein after making a review of all the decisions
of this Court on matters pertaining to the execution of the bond that
may be filed in relation to attachment, injunction, and replevin,
reached the conclusion that such failure is fatal in that it has the effect of relieving the surety from liability. * * * (Italics supplied.)

Contrary to the respondents’ contention, there is no distinction or
difference between sureties or bondsmen of a bond and those of a
counterbond, for section 9, Rule 60, of the Rules of Court makes no
such distinction or difference. “Upon the trial the amount of damages
to be awarded to the plaintiff, or to the defendant, as the case may
be, upon the bond of the other party, shall be claimed ascertained, and
awarded under the same procedure as prescribed in section 20 of Rule
59.” ^[1]

The writs prayed for are granted; the orders entered by the
respondent court on 14 May 1959 and 12 April 1960 are annulled and set
aside, without special pronouncement as to costs.

Bengzon, C. J., Bautista Angelo, Labrador, Concepcion, Barrera, Paredes, Dizon, Regala, and Makalintal, JJ., concur.