FIRST DIVISION

[G.R. No. L-25921. May 27, 1975.]

VANGUARD ASSURANCE CORPORATION , petitioner, vs. HON. COURT

OF APPEALS and JALWINDOR MANUFACTURING, INC. , respondents.

De Santos & Delfino for petitioner.

Dionisio A. Guzman for respondents.

SYNOPSIS

In a complaint for the recovery of a sum of money, petitioner corporation acted

as surety on the defendant's counterbond which was posted to lift the order of
attachment secured by the plaintiff, private respondent herein. After a judgment on
compromise was rendered in favor of the plaintiff, a writ of execution was issued
against the defendant but it was only partially satis ed as no su cient property of the
defendant was located. Petitioner ignored plaintiff's demand for payment of the
balance of the judgment debt and on plaintiff's motion, the lower court, after summary
hearing, ordered petitioner to pay the balance. Petitioner elevated the case to the Court
of Appeals but its appeal was dismissed. The instant petition was then led, petitioner
contending that private respondent's claim on the counter-bond was barred by its
failure to le a supplemental pleading before nality of the judgment to x the liability
of the counter-surety.
The Supreme Court held that Section 20 of Rule 57 upon which petitioner's
contention was based was not applicable to the case at bar. Citing the provisions of
Sections 12 and 17 of the same Rule, the Court stated that after the judgment for the
plaintiff has become executory and the execution is returned unsatis ed, the liability of
the bond automatically attaches and, in case of failure of the surety to satisfy the
judgment against the defendant despite demand therefor, a writ of execution may issue
against the surety to enforce the obligation.
Decision appealed from affirmed.

SYLLABUS

1. PROVISIONAL REMEDIES; ATTACHMENT; SURETY; LIABILITY OF SURETY ON

COUNTERBOND NEED NOT BE ADJUDICATED AT THE SAME TIME WITH THAT OF
PRINCIPAL DEFENDANT BEFORE FINAL JUDGMENT. — A surety in a counterbond is not
to be considered as a special intervenor in the principal case, joining issue with the
principal defendants; hence, its rights and liabilities need not be ascertained, xed or
adjudicated at the same time with those of the principal defendant before the nal
judgment, or in a supplemental pleading for that purpose.
2. ID.; ID.; ID.; REMEDY UNDER SECTION 20, RULE 57 AVAILABLE TO
DEFENDANT ONLY. — The procedure laid down in Section 20 of Rule 57 need not be
followed in a case where the plaintiff seeks from the surety in a counterbond led by
the defendant to lift an order of attachment previously issued. Said section refers to
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 recovery of damages by a party against whom attachment was issued and the remedy
provided therein is available only to the defendant, not the plaintiff.
3. ID.; ID.; ID.; LIABILITY OF SURETY ON COUNTERBOND ATTACHES WHEN
EXECUTION OF JUDGMENT AGAINST DEFENDANT IS RETURNED UNSATISFIED. — The
provisions of Sections 12 and 17 of Rule 57 apply to a case where the plaintiff seeks to
recover from the surety in counterbond. Section 12 provides that a counter-bond in an
attachment is executed "to secure payment of any judgment that the attaching creditor
may recover in the action;" while Section 17 contemplates proceedings on execution
after the judgment when the liability upon the surety's bond may be determined. The
key term in Section 17 is the phrase "if the execution be returned unsatis ed in whole or
in part," in which event the liability of the bond automatically attaches.
4. ID.; ID.; ID.; LIABILITY OF SURETY AUTOMATICALLY ATTACHES. — After the
judgment for the plaintiff had become executory and the execution is returned
unsatis ed, the liability of the bond automatically attaches, and if surety fails to satisfy
the judgment against defendant despite therefor, a writ of execution may issue against
the surety to enforce the obligation of the bond.
5. ID.; ID.; ID.; SURETY LIABLE EVEN IF IT DID NOT HAVE OPPORTUNITY TO
ASCERTAIN CORRECTNESS OF JUDGMENT. — A surety on a counter-bond is bound by
the judgment rendered against the principal based on a compromise entered into by
the plaintiff and defendant, or the evidence duly presented by the parties, although the
surety never consented to the compromise or was not noti ed of the trial, and was not
given opportunity to ascertain the correctness of the judgment on compromise before
its finality.
6. ID.; ID.; ID.; FINDINGS OF FACT OF TRIAL AND APPELLATE COURTS WILL NOT
BE DISTURBED BY SUPREME COURT. — The Supreme Court denied the contention of
surety that defendant had fully paid the obligation sought to be enforced against the
counter-bond, it appearing that the trial court found, which nding was a rmed by the
Court of Appeals, that there was really no full payment of the judgment debt; besides,
the surety's evidence to that effect is hearsay since the defendant was never presented
to testify thereon.
7. APPEAL; MANIFESTLY FRIVOLOUS APPEAL. — Generally, an appeal should not
be dismissed on a ground which goes to the merits of the case or the right of plaintiff
or defendant to recover, except when the appellate court nds the appeal to be
manifestly and palpably frivolous.

DECISION

ESGUERRA , J : p

Appeal by certiorari to review the decision of the Court of Appeals dismissing

petitioner's appeal.
In the Court of First Instance of Manila plaintiff (now respondent) Jalwindor
Manufacturers, Inc. sued Felipe Hernandez to recover the sum of P30,000.00. In its
complaint plaintiff also prayed for a writ of preliminary attachment against the property
of the defendant to answer for any judgment which the former may obtain against the
latter. Upon plaintiff's ling a bond in the amount of P30,000.00 the lower court issued
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 the order of attachment against defendant Felipe Hernandez.
On May 28, 1964 Felipe Hernandez moved to dissolve or to lift the order of
attachment and put up a counterbond in the amount of P30,000.00, with petitioner
Vanguard Assurance Corporation acting as surety. Under the counterbond Hernandez
and the Vanguard Assurance Corporation jointly and severally bound themselves "in the
sum of P30,000.00, under the condition that in case the plaintiff recover judgment in
the action the defendant will on demand redeliver the attached property so released to
the o cer of the Court to be applied to the payment of the judgment, or in default
thereof that the defendant and surety will on demand pay to the plaintiff the full value of
the property released." Accordingly, the lower court approved the counterbond and
lifted the writ of attachment.
After the issues had been joined the parties, duly assisted by their respective
counsel, entered into a compromise agreement whereby Felipe Hernandez undertook
and agreed to pay the plaintiff P26,000.00 in three (3) monthly installments, the rst of
which would be payable on or before October 25, 1964, the second, on or before
November 25, 1964 and the last, on or before December 25, 1964. It was also provided
in the compromise agreement that the counterbond executed by the defendant would
remain in full force and effect in favor of the plaintiff and that in case of breach by the
defendant of any provision of the compromise agreement, especially that which relates
to the satisfaction of the principal obligation, he would be amenable to the execution of
the judgment and other relief available to the plaintiff as circumstances may warrant.
The compromise agreement was submitted to the court for approval and on October
28, 1964, the court a quo approved the same and rendered judgment on the basis
thereof.
On motion of the plaintiff due to defendant's failure to pay accordingly, the lower
court issued a writ of execution on December 22, 1964. However, no su cient property
of the defendant was located and the writ of execution was only partially satis ed to
the extent of P5,000.00. Plaintiff demanded from the Vanguard Assurance Corporation,
as surety, the balance of P21,000.00 plus P652.57 representing the costs of the suit.
The demand for payment having been ignored, plaintiff led a motion with the lower
court for an order to recover the unpaid balance from the counterbond, pursuant to Sec.
17, Rule 57 of the Rules of Court. The surety, answering plaintiff's motion, interposed
two special defenses, to wit: (1) that plaintiff's motion is not the proper pleading and/or
remedy to make said surety liable on its counterbond, but by a supplemental complaint
led before the nality of the judgment against Hernandez; and (2) that the surety
company has never become liable under its counterbond because plaintiff was never
able to attach the property of the defendant. After a summary hearing, the lower court
granted the motion and ordered the surety company to pay plaintiff the amount of
P21,000.00.
Vanguard Assurance Corporation elevated the case to the Court of Appeals.
After the perfection of the appeal and before the parties had led their respective
briefs, appellee Jalwindor Manufacturers, Inc. moved to dismiss the appeal, to which
appellant surety led an opposition claiming that the motion to dismiss could not be
determined without resolving the entire case on the merits. However, the Court of
Appeals sustained the motion in its decision promulgated on December 17, 1965, the
dispositive part of which reads as follows:
"WHEREFORE, the appeal interposed by the Vanguard Assurance
Corporation is hereby dismissed for being manifestly and palpably frivolous, and
the appealed judgment is affirmed in toto, with costs against appellant surety."
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 Hence, the instant petition for certiorari.
The several errors assigned in petitioner's brief may be summarized into two
major issues, to wit: (1) whether or not respondent's claim on the counter-bond was
barred by its failure to le a supplemental pleading before nality of the judgment
wherein the liability of the counter-surety may be xed, ascertained and adjudicated;
and (2) whether or not the Court of Appeals erred in dismissing the appeal before the
submission of the briefs and before the parties could be heard on the merits.
Petitioner contends that a surety in a counterbond should be considered as a
special intervenor in the principal case, joining issue with the principal defendant,
wherein its rights and liabilities should be ascertained, xed and adjudicated at the
same time with the principal defendant before nal judgment; or in a supplemental
pleading for that purpose, otherwise the surety's liability under the bond would be
barred.
The contention does not nd support from the rules applicable to the instant
case. Petitioner might have in mind Section 20 of Rule 57 which outlines the procedure
to be followed in a claim for damages by the party against whom attachment was
issued. This rule provides that such damages may be awarded only upon application
and after proper hearing, and shall be included in the judgment; and that the application
must be led before the trial or before appeal is perfected or before the judgment
becomes executory, with due notice to the attaching creditor or his surety or sureties,
setting forth the facts showing his right to damages and the amount thereof.
By its very terms, Section 20 of Rule 57 obviously refers to the recovery of
damages by a party against whom attachment was issued. This remedy is available
only to the defendant not the plaintiff (Dizon vs. Valdez, G.R. No. L-23920, April 25,
1968). Rule 57 of the Rules of Court, particularly Sections 12 and 17 thereof, is the rule
applicable to the case at bar. Section 12 provides that a counter-bond in an attachment
is executed "to secure the payment of any judgment that the attaching creditor may
recover in the action". This legal precept should be read together with Section 17 of the
same Rule, which we quote:
"When execution returned unsatis ed, recovery had upon bond. — If the
execution be returned unsatis ed in whole or in part, the surety or sureties on any
counter-bond given pursuant to the provisions of this rule to secure the payment
of the judgment shall become charged on such counter-bond, and bound to pay
to the judgment creditor upon demand, the amount due under the judgment,
which amount may be recovered from such surety or sureties after notice and
summary hearing in the same action."

The above-quoted provision of the pertinent Rule contemplates of proceedings

on execution after judgment when liability upon the surety's bond may be determined.
The key term in Section 17 is the phrase "if the execution be returned unsatis ed in
whole or in part." (Dizon vs. Valdez, supra). Hence, after the judgment for the plaintiff
has become executory and the execution is returned unsatis ed, as in the instant case,
the liability of the bond automatically attaches and, in case of failure of the surety to
satisfy the judgment against the defendant despite demand therefor, writ of execution
may issue against the surety to enforce the obligation of the bond (Tijam, et al. vs.
Manila Surety and Fidelity Co., Inc., et al., G.R. No. L-21450, April 15, 1968).
It is also contended that where the case is tried and disposed of either on the
basis of a compromise entered into by the plaintiff and the defendant, or the evidence
duly presented by the parties, where the surety has never consented to the compromise
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 nor noti ed of the trial, the judgment rendered against the principal based thereon
cannot bind the surety unless he is given an opportunity to ascertain the correctness of
said judgment before it becomes nal, otherwise any subsequent claim against the
surety on the counterbond should be barred. It is claimed that unless this is the rule the
plaintiff and the defendant can easily connive by means of a compromise to prejudice
the surety.
The contentions are not new. In Anzures vs. Alto Surety & Insurance Co., Inc., et
al., 49 O.G. 946, this Court, thru Mr. Chief Justice Ricardo Paras, brushed aside a similar
contention in this wise:
"There is no point in the contention that the compromise was entered into
without the surety's knowledge and consent, thus becoming as to it essentially
fraudulent. The surety is not a party to Civil Case No. 117848 and, therefore, need
not be served with notice of the petition for judgment. As against the conjecture
of said respondent that the parties may easily connive by means of a
compromise to prejudice it, there is also the likelihood that the same end may be
attained by parties acting in bad faith through a simulated trial. At any rate, it is
within the power of the Surety Company to protect itself against a risk of the
kind."

Petitioner likewise claims that the Court of Appeals erred in not considering its
defense showing full payment by defendant of the obligation sought to be enforced
against the counterbond.
On the issue of full payment by defendant of the obligation, the trial court made
the following findings:
"As it appears that defendant has not yet paid to plaintiff the amount of
P21,000.00, being the balance of the judgment which the latter secured against
the former by virtue of their Compromise Agreement approved by this Court on
October 28, 1964, it follows that the said counterbond is still liable for the said
unpaid balance.
"The said liability may only be avoided if there is collusion between
plaintiff and defendant in securing the said judgment to the prejudice of the
surety on the counter-bond, or if the said judgment has already been paid by
defendant. There is no showing whatsoever of such collusion, nor was defendant
presented as a witness that he has fully said judgment." (Record on Appeal pp.
78-79)

It must be noted that the decision of the trial court was a rmed in toto by the
Court of Appeals. In other words, the above ndings of the trial court that there was
really no full payment of the judgment debt was also found correct by the Court of
Appeals when it fully a rmed the decision appealed from. Besides, the petitioner's
evidence to that effect partook of the nature of hearsay evidence, considering that the
defendant was never presented to testify thereon.
As regards the last issue, we are not prepared to say that the Court of Appeals
erred in dismissing the appeal of the petitioner on the ground that the same was
manifestly frivolous and instituted merely for delay. On the face of the record before Us
We could not see any prospect of the decision appealed from being reversed or
modi ed, in view of the clear and unequivocal provisions of Sections 12 and 17 of Rule
57 of the Rules of Court regarding the liability of a surety on a counter-bond in
attachment proceedings. To entertain the instant appeal by remanding the case to the
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 Court of Appeals for further proceedings would entail too much time and effort which
would impair the speedy administration of justice. The instant appeal is manifestly
frivolous and completely devoid of merit. Thus:
". . . Although, as a general rule, an appeal should not be dismissed on a
ground which goes to the merits of the case or to the right of plaintiff or
defendant to recover, yet, in exceptional instance, an appellate court may order
the dismissal when the appeal appears to be manifestly and palpably frivolous.
And where, as in the instant case, the dismissal has been ordered by the trial
court, it will not be disturbed in the appellate court if the latter nds the appeal to
have been interposed ostensibly for delay. It has been held that a frivolous appeal
is one presenting no justiciable question, or one so readily recognizable as devoid
of merit on the face of the record that there is little, if any, prospect that it can ever
succeed. The instant case is one such instance in which the appeal is evidently
without merit, taken manifestly for delay." (De la Cruz, et al. vs. Blanco, et al., 73
Phil. 956, cited in Keater Huang, et al. vs. Associated Realty Development Co., Inc.,
G.R. No. L-26421, October 29, 1966).

WHEREFORE, the decision appealed from is a rmed, with costs against

petitioner.
SO ORDERED.
Castro (Chairman), Teehankee, Makasiar, Muñoz Palma and Martin, JJ., concur.

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