EN BANC
[G.R. No. L-16550. January 31, 1962. ]
ALLEN McCONN, Plaintiff-Appellant, v. PAUL HARAGAN, ET AL., Defendants, ASSOCIATED INSURANCE & SURETY CO., INC., Defendant-Appellee.
Jose Desiderio, Jr., Andres E. Matias and Juan C. Nabong, Jr., for Plaintiff-Appellant.
M. Perez Cardenas, for Defendant-Appellee.
SYLLABUS
1. SURETYSHIP AND GUARANTY; OBLIGATION AND CONTRACTS; RELEASE OF SURETY IF FULFILLMENT OF PRINCIPAL OBLIGATION IS PREVENTED BY THE GOVERNMENT. — Where, under the surety bond, the surety’s principal commitment is to guarantee that a certain person would return to the Philippines on or before a certain date, and that should he fail to do so, said bond would answer pro tanto for any judgment that may be rendered against him and the return of said person was rendered impossible by the action of the Government, the obligation of the surety is extinguished and the bond is released of its liability in accordance with Article 1266 of the Civil Code of the Philippines, which provides that "The debtor in obligation to do shall also be released when the presentation becomes legally or physically impossible without the fault of the obligor."
D E C I S I O N
CONCEPCION, J.:
On June 30, 1955 — pending hearing of Civil Case No. 24790 of the Court of First Instance of Manila, entitled "Morris McConn v. Paul Haragan", which was scheduled to take place on September 16, 1955 — the Bureau of Immigration advised said court that defendant Paul Haragan had applied for an immigration clearance and a re-entry permit to enable him to leave the Philippines for 15 days only and requested information whether the court had any objection thereto. By an order dated July 11, 1955, the court required Haragan to file a bond of P4,000 "to answer for his return to the Philippines and the prosecution of this case against him, with the understanding that upon his failure to return, said bond will answer pro tanto for any judgment that may be rendered against him." Thereupon, or on July 12, 1955, Haragan submitted a bond, subscribed by him and the Associated Insurance & Surety Co., as principal and surety, respectively, reading:jgc:chanrobles.com.ph
"WHEREAS, the above-bounden PRINCIPAL, is intending to leave the Philippines on a business trip to Hongkong and Tokyo, Japan, for a period of thirty (30) days from date of his departure, in connection with his business;
"WHEREAS, the above-bounden PRINCIPAL, has a pending case before the Court of First Instance of Manila, Branch III, entitled: "Allen McConn, Plaintiff v. Paul Haragan, Defendant", Civil Case No. 24790, which is scheduled for hearing on September 16, 1955;
"WHEREAS, before the above-bounden PRINCIPAL could leave the Philippines for Hongkong and Tokyo, Japan, the above-mentioned Court has required him to post a Surety Bond, in the amount of PESOS FOUR THOUSAND ONLY (P4,000.00) Philippine Currency, to guarantee that he will return to the Philippines on or before September 16, 1955;
"NOW, THEREFORE, for and in consideration of the above premises, the PRINCIPAL and the Surety, hereby bind themselves, jointly and severally, in favor of the Republic of the Philippines, or its authorized representatives, in the sum of PESOS FOUR THOUSAND ONLY (P4,000.00) Philippine Currency, that the herein PRINCIPAL will return to the Philippines on or before September 16, 1965 and that should he fail to do so, said bond will answer pro tanto for any judgment that may be rendered against him."
Soon thereafter, or on July 19, 1955, the court issued an order stating that "in view of said bond, it would have no objection" to Haragan’s "departure from the Philippines for a short stay abroad" and that "formal leave" was thereby given him. On the date set for the hearing of the case, Haragan’s counsel moved for continuance, whereupon, the hearing was postponed to November 14, 1955. On the date last mentioned, the same counsel informed the court that Haragan had been unable to return to the Philippines because the Philippine Consulate in Hongkong had advised Haragan of a communication from our Department of Foreign Affairs banning him from returning to the Philippines. The court then postponed the hearing to January 6, 1956. Subsequently, Herbert T. Fallis was impleaded as defendant and, later on, one Inocencio Ortiz Luis, Jr. was allowed to intervene. In due course, thereafter, or on February 19, 1959, the court rendered judgment, which, inter alia, sentenced Haragan to pay to plaintiff the sum of P5,500, with 6% interest thereon from December 8, 1954, until full payment, plus P1,000 as attorney’s fees and costs. After this judgment had become final and executory, plaintiff moved for the execution of the aforementioned bond to satisfy said judgment against Haragan. The surety company objected thereto upon several grounds and, after due hearing, the lower court issued an order dated October 13, 1959, releasing said company from liability under the bond aforementioned and denying plaintiff’s motion. A reconsideration of this order having been denied, the case is now before us on record on appeal filed by the plaintiff.
The issue is whether the Surety Company is liable to plaintiff under the bond quoted above, in view of the failure of Haragan to return to the Philippines. The lower court decided the issue in the negative upon the following ground:jgc:chanrobles.com.ph
". . . A careful reading of the surety bond, Exhibit F, indicates that the surety’s principal commitment is ’to guarantee that he (Haragan) will return to the Philippines on or before September 16, 1955’ (See the third `Whereas’). In the last paragraph of said surety bond, Exhibit F, it appears that said bond was executed in favor of the Republic of the Philippines or its duly authorized representatives to guarantee ’that the herein principal (Haragan) will return to the Philippines on or before September 16, 1955 and that should he fail to do so, said bond will answer pro tanto for any judgment that may be rendered against him.’ As the terms of the bond so state, it appears clearly that the bond will only answer for the judgment which may be rendered against defendant, should he (defendant Haragan) fail to return to the Philippines. In other words, if defendant Haragan should return to the Philippines on or before September 16, 1955, said bond will not answer for the judgment. It is now the contention of the Associated Insurance that since it was the Republic of Philippines (obligee under the bond) who rendered the return of defendant Haragan to the Philippines impossible, said surety company is thereby released from its obligation, and cites in support thereof Articles 1266 and 2076 of the New Civil Code. Upon a consideration of this contention, the Court finds it tenable and well grounded, for as the surety company has so well stated ’where the principal obligation (of returning to the Philippines) has been extinguished by the action of the obligee, Philippine Government, in preventing such return, the accessory obligation of the surety is likewise extinguished and the bond released of its liability.’ Paraphrasing the last paragraph of the bond in a negative way, it will read thus: ’should he (not) fail to do so, said bond will (not) answer pro tanto for any judgment that may be rendered against him." ’
We are fully in agreement with the foregoing view, which is in accord with the principle that:jgc:chanrobles.com.ph
"The debtor in obligation to do shall also be released when the prestation becomes legally or physically impossible without the fault of the obligor." (Article 1266, Civil Code of the Philippines.)
Thus, Tabora v. Lazatin, G. R. No. L-5245, May 29, 1953), we said:jgc:chanrobles.com.ph
"This Court finds that despite his efforts to secure the necessary building permit for the reconstruction, he failed because of the disapproval or unfavorable attitude of the Urban Planning Commission toward reconstruction unless they conformed to the plan of widening the city streets. Finding that defendant had done all he could to secure the permit and to comply with his obligations, but because of the refusal of the government authorities to issue and permit, he failed to fulfill his undertaking, he should be absolved and released from said obligation."cralaw virtua1aw library
To same effect, substantially, is the decision of this Court in House v. De la Costa (40 Off. Gaz., [3 S] 47).
WHEREFORE, the order appealed from is hereby affirmed, with the costs of this instance against plaintiff-appellant. It is so ordered.
Padilla, Bautista Angelo, Labrador, Reyes, J.B.L., Barrera, Paredes, Dizon and De León, JJ., concur.
Bengzon, C.J., took on part.
"WHEREAS, the above-bounden PRINCIPAL, is intending to leave the Philippines on a business trip to Hongkong and Tokyo, Japan, for a period of thirty (30) days from date of his departure, in connection with his business;
"WHEREAS, the above-bounden PRINCIPAL, has a pending case before the Court of First Instance of Manila, Branch III, entitled: "Allen McConn, Plaintiff v. Paul Haragan, Defendant", Civil Case No. 24790, which is scheduled for hearing on September 16, 1955;
"WHEREAS, before the above-bounden PRINCIPAL could leave the Philippines for Hongkong and Tokyo, Japan, the above-mentioned Court has required him to post a Surety Bond, in the amount of PESOS FOUR THOUSAND ONLY (P4,000.00) Philippine Currency, to guarantee that he will return to the Philippines on or before September 16, 1955;
"NOW, THEREFORE, for and in consideration of the above premises, the PRINCIPAL and the Surety, hereby bind themselves, jointly and severally, in favor of the Republic of the Philippines, or its authorized representatives, in the sum of PESOS FOUR THOUSAND ONLY (P4,000.00) Philippine Currency, that the herein PRINCIPAL will return to the Philippines on or before September 16, 1965 and that should he fail to do so, said bond will answer pro tanto for any judgment that may be rendered against him."
Soon thereafter, or on July 19, 1955, the court issued an order stating that "in view of said bond, it would have no objection" to Haragan’s "departure from the Philippines for a short stay abroad" and that "formal leave" was thereby given him. On the date set for the hearing of the case, Haragan’s counsel moved for continuance, whereupon, the hearing was postponed to November 14, 1955. On the date last mentioned, the same counsel informed the court that Haragan had been unable to return to the Philippines because the Philippine Consulate in Hongkong had advised Haragan of a communication from our Department of Foreign Affairs banning him from returning to the Philippines. The court then postponed the hearing to January 6, 1956. Subsequently, Herbert T. Fallis was impleaded as defendant and, later on, one Inocencio Ortiz Luis, Jr. was allowed to intervene. In due course, thereafter, or on February 19, 1959, the court rendered judgment, which, inter alia, sentenced Haragan to pay to plaintiff the sum of P5,500, with 6% interest thereon from December 8, 1954, until full payment, plus P1,000 as attorney’s fees and costs. After this judgment had become final and executory, plaintiff moved for the execution of the aforementioned bond to satisfy said judgment against Haragan. The surety company objected thereto upon several grounds and, after due hearing, the lower court issued an order dated October 13, 1959, releasing said company from liability under the bond aforementioned and denying plaintiff’s motion. A reconsideration of this order having been denied, the case is now before us on record on appeal filed by the plaintiff.
The issue is whether the Surety Company is liable to plaintiff under the bond quoted above, in view of the failure of Haragan to return to the Philippines. The lower court decided the issue in the negative upon the following ground:jgc:chanrobles.com.ph
". . . A careful reading of the surety bond, Exhibit F, indicates that the surety’s principal commitment is ’to guarantee that he (Haragan) will return to the Philippines on or before September 16, 1955’ (See the third `Whereas’). In the last paragraph of said surety bond, Exhibit F, it appears that said bond was executed in favor of the Republic of the Philippines or its duly authorized representatives to guarantee ’that the herein principal (Haragan) will return to the Philippines on or before September 16, 1955 and that should he fail to do so, said bond will answer pro tanto for any judgment that may be rendered against him.’ As the terms of the bond so state, it appears clearly that the bond will only answer for the judgment which may be rendered against defendant, should he (defendant Haragan) fail to return to the Philippines. In other words, if defendant Haragan should return to the Philippines on or before September 16, 1955, said bond will not answer for the judgment. It is now the contention of the Associated Insurance that since it was the Republic of Philippines (obligee under the bond) who rendered the return of defendant Haragan to the Philippines impossible, said surety company is thereby released from its obligation, and cites in support thereof Articles 1266 and 2076 of the New Civil Code. Upon a consideration of this contention, the Court finds it tenable and well grounded, for as the surety company has so well stated ’where the principal obligation (of returning to the Philippines) has been extinguished by the action of the obligee, Philippine Government, in preventing such return, the accessory obligation of the surety is likewise extinguished and the bond released of its liability.’ Paraphrasing the last paragraph of the bond in a negative way, it will read thus: ’should he (not) fail to do so, said bond will (not) answer pro tanto for any judgment that may be rendered against him." ’
We are fully in agreement with the foregoing view, which is in accord with the principle that:jgc:chanrobles.com.ph
"The debtor in obligation to do shall also be released when the prestation becomes legally or physically impossible without the fault of the obligor." (Article 1266, Civil Code of the Philippines.)
Thus, Tabora v. Lazatin, G. R. No. L-5245, May 29, 1953), we said:jgc:chanrobles.com.ph
"This Court finds that despite his efforts to secure the necessary building permit for the reconstruction, he failed because of the disapproval or unfavorable attitude of the Urban Planning Commission toward reconstruction unless they conformed to the plan of widening the city streets. Finding that defendant had done all he could to secure the permit and to comply with his obligations, but because of the refusal of the government authorities to issue and permit, he failed to fulfill his undertaking, he should be absolved and released from said obligation."cralaw virtua1aw library
To same effect, substantially, is the decision of this Court in House v. De la Costa (40 Off. Gaz., [3 S] 47).
WHEREFORE, the order appealed from is hereby affirmed, with the costs of this instance against plaintiff-appellant. It is so ordered.
Padilla, Bautista Angelo, Labrador, Reyes, J.B.L., Barrera, Paredes, Dizon and De León, JJ., concur.
Bengzon, C.J., took on part.
