Case - Rule 60 Case 7 Sapugay Vs CA (Digest)

SECOND DIVISION
G.R. No. 86792 March 21, 1990 SPOUSES MARINO AND LINA JOEL
SAPUGAY, petitioners, vs. HON. COURT OF APPEALS, MOBIL PHILIPPINES,
INC. AND RICARDO CARDENAS, respondents.
REGALADO, J
FACTS:
Plaintiff Mobil Philippines, Inc. filed a complaint for replevin with damages against
defendant Lina Joel Sapugay before the Court of First Instance of Rizal, Seventh
Judicial District, Pasig, Metro Manila
Upon the termination of the Dealership Agreement between Mobil Oil Philippines,
Inc. and Nemar Marketing Corporation, defendant applied to the plaintiff to become a
dealer of the latter's a preliminary agreement was signed constituting defendant as
plaintiff's authorized dealer, whereupon plaintiff turned over to the defendant the
equipment to be used therefor; that plaintiff instructed defendant to commence
operation whereupon the latter made the necessary preparations amounting to
P38,000.00; that defendant commenced operation on June 26, 1982, pending
execution of the formal dealership agreement; that on the last week of July, 1982,
they signed the formal dealership agreement a copy of which was withheld from them
by the plaintiff pending its notarization; that as the formal agreement had already
been signed, defendant and her husband requested plaintiff that they be allowed to
get gas even on a cash basis, but plaintiff denied the request claiming that they still
have to post a surety bond which was initially fixed at P200,000.00 then later
increased to P700,000.00.
Since defendant failed to secure and file the required surety bond, compelling plaintiff
to reject defendant's application and the return and redelivery of the aforementioned
properties; that defendant refused to return said equipments, and demanded instead
that defendant be paid first the sum of P15,000.00 daily as rental and guard's fees
from June 8, 1982 up to the day of actual pull-out. Thus, plaintiff prays for the return
of said properties or its value including damages, attorney's fees and costs of suit.
Defendant discovered that plaintiff and its manager intended all along, to award said
dealership to Island Air Product Corporation; that in furtherance of said scheme
plaintiff caused all the LP-Gas equipment to be publicly pulled out from defendant's
premises. As counterclaim, defendant prayed that plaintiff and its manager be made
liable for their pre-operation expenses rental, storage, and guarding fees, unrealized
profit including damages and the return of the LP-Gas equipment to the premises.
The writ of replevin dated October 22, 1982 issued by Honorable Eduardo C. Abaya
of the Court of First Instance, Rizal, Branch XXIV was duly executed.
Regional Trial Court rendered judgment in favor of the defendant, dismissing the
complaint and ordering plaintiff and its manager to pay the pre-operation expenses,
rental, storage, and guarding fees of plaintiff's LPG equipment; unrealized profits,
moral damages including litigation expenses, attorney's fees and costs of the suit.
Court of Appeals rendered a decision hereby MODIFIED in that the awards of rental,
storage and guarding fees and the award of unrealized profits, are hereby DELETED,
and the award of damages REDUCED. The decision is AFFIRMED in all other
aspects with Mobil Philippines, lnc. being solely liable.
Consequently the petitioners filed motion for reconsideration praying that the bond
posted by Malayan Insurance Co., Inc. in behalf of herein private respondents be
made liable for damages suffered by petitioners, was denied by respondent court
ISSUE:
Whether or not Malayan Insurance Co., Inc., be made liable for damages suffered by
petitioners.
RULING:
No. The surety's liability upon the replevin bond, we do not believe that Malayan
Insurance Co., Inc. should be made liable thereon. As correctly observed by
respondent court, "the damages awarded by the trial court were based on Articles 19
and 20 of the New Civil Code and not on the deprivation of personal properties
subject of the replevin bond. The lower court found that the requirement of posting a
bond, initially fixed at P200,000.00 then raised to P700,000.00 was a preplanned
scheme of plaintiff and/or R.. Cardenas to put every hindrance before the defendant
so that the latter could not get the dealership agreement . . .
As found by the trial court, all these acts of plaintiff and its manager, R.. Cardenas,
are contrary to Articles 19 and 20 of the New Civil Code, to wit:
Art. 19. Every person must, in the exercise of his rights and in the performance of his
duties act with justice, give everyone his due and observe honesty and good faith.
Art. 20. Every person who, contrary to law, wilfully or negligently causes damage to
another, shall indemnify the latter for the same.
for which plaintiff must be made to recompense the damages the defendant suffered.
Moreover no judgment was entered for the return of the properties subject of the
replevin bond to the defendant, the latter never having raised the issue of rightful
possession to the said properties."
A replevin bond is simply intended to indemnify the defendant against any loss that
he may suffer by being compelled to surrender the possession of the disputed
property pending the trial of the action. He cannot recover on the bond as for a
reconversion when he has failed to have the judgment entered for the return of the
property. Nor is the surety liable for payment of the judgment for damages rendered
against the plaintiff on a counterclaim or punitive damages for fraudulent or wrongful
acts committed by the plaintiffs and unconnected with the defendant's deprivation of
possession by the plaintiff. Indeed, even where the judgment was that the defendant
was entitled to the property, but no order was made requiring the plaintiff to return it
or assessing damages in default of a return, it was declared that until judgment was
entered that the property should be restored, there could be no liability on the part of
the sureties.
Private respondent Ricardo P. Cardenas should be held jointly and severally liable
with his co-respondent Mobil Philippines, Inc. for having acted in bad faith by
impeding and preventing the award of the dealership to petitioners through fraudulent
means.

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SECOND DIVISION

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