[ G.R. No.

210950, August 15, 2018 ]

DECISION
LEONEN, J.:
A surety bond remains effective until the action or proceeding is finally decided, resolved, or terminated, regardless of
whether the applicant fails to renew the bond. The applicant will be liable to the surety for any payment the surety
makes on the bond, but only up to the amount of this bond.

This is a Petition for Review on Certiorari[1] assailing the August 13, 2013 Decision[2] and January 14, 2014
Resolution[3] of the Court of Appeals in CA-G.R. CV No. 95955, which affirmed the Regional Trial Court's finding that
Milagros P. Enriquez (Enriquez) was liable for the full amount of the replevin bond issued by The Mercantile
Insurance Company, Inc. (Mercantile Insurance).

Sometime in 2003, Enriquez filed a Complaint for Replevin[4] against Wilfred Asuten (Asuten) before the Regional
Trial Court of Angeles City, Pampanga. This Complaint, docketed as Civil Case No. 10846,[5] was for the recovery of
her Toyota Hi-Ace van valued at P300,000.00.[6] Asuten allegedly refused to return her van, claiming that it was given
by Enriquez's son as a consequence of a gambling deal.[7]

Enriquez applied for a replevin bond from Mercantile Insurance. On February 24, 2003, Mercantile Insurance issued
Bond No. 138 for P600,000.00,[8] which had a period of one (1) year or until February 24, 2004. Enriquez also
executed an indemnity agreement with Mercantile Insurance, where she agreed to indemnify the latter "for all
damages, payments, advances, losses, costs, taxes, penalties, charges, attorney's fees and expenses of whatever
kind and nature"[9] that it would incur as surety of the replevin bond.[10]

On May 24, 2004, the Regional Trial Court issued an Order[11] dismissing the Complaint without prejudice due to
Enriquez's continued failure to present evidence.

The Regional Trial Court found that Enriquez surrendered the van to the Bank of the Philippine Islands, San
Fernando Branch but did not comply when ordered to return it to the sheriff within 24 hours from receipt of the
Regional Trial Court March 15, 2004 Order.[12] She also did not comply with prior court orders to prove payment of her
premiums on the replevin bond or to post a new bond. Thus, the Regional Trial Court declared Bond No. 138
forfeited. Mercantile Insurance was given 10 days to produce the van or to show cause why judgment should not be
rendered against it for the amount of the bond.[13]

On July 12, 2004, the Regional Trial Court held a hearing on the final forfeiture of the bond where it was found that
Mercantile Insurance failed to produce the van, and that Bond No. 138 had already expired.[14] In an Order[15] issued
on the same day, the Regional Trial Court directed Mercantile Insurance to pay Asuten the amount of P600,000.00.

Mercantile Insurance wrote to Enriquez requesting the remittance of P600,000.00 to be paid on the replevin bond.
[16]
 Due to Enriquez's failure to remit the amount, Mercantile Insurance paid Asuten P600,000.00 on September 3,
2004, in compliance with the Regional Trial Court July 12, 2004 Order.[17] It was also constrained to file a collection
suit against Enriquez with the Regional Trial Court of Manila.[18]

In her defense, Enriquez claimed that her daughter-in-law, Asela, filed the Complaint for Replevin in her name and
that Asela forged her signature in the indemnity agreement. She also argued that she could not be held liable since
the replevin bond had already expired.[19]

In its July 23, 2010 Decision,[20] the Regional Trial Court ruled in favor of Mercantile Insurance. It found that non-
payment of the premiums did not cause the replevin bond to expire. Thus, Enriquez was still liable for the
reimbursement made by the surety on the bond. The Regional Trial Court likewise pointed out that Enriquez made
"conflicting claims" of having applied for the bond and then later claiming that her daughter-in-law was the one who
applied for it.[21] The dispositive portion of the Regional Trial Court July 23, 2010 Decision read:

WHEREFORE, judgment is hereby rendered in favor of plaintiff The Mercantile Insurance Co., Inc. and against
defendant Milagros P. Enriquez, as follows:

(i) Ordering defendant Milagros P. Enriquez to pay plaintiff the claim of P600,000.00 enforced under the Indemnity
Agreement plus legal interest at the rate of 12% per annum from date of judicial demand on October 22, 2004, until
fully paid;

(ii) Ordering defendant Milagros P. Enriquez to pay attorney's fees fixed in the reasonable amount of P50,000.00;

(iii) Ordering defendant Milagros P. Enriquez to pay the costs of

SO ORDERED.[22]

Enriquez appealed[23] with the Court of Appeals, arguing that the replevin bond had already expired; therefore, she
could not have been liable under the indemnity agreement. She also averred that even assuming that she was still
liable under the indemnity agreement, she should not pay the full amount considering that the value of the van was
only P300,000.00.[24]

On August 13, 2013, the Court of Appeals rendered a Decision[25] affirming the Regional Trial Court's July 23, 2010
Decision.

The Court of Appeals held that under the Guidelines on Corporate Surety Bonds,[26] the lifetime of any bond issued in
any court proceeding shall be from court approval until the case is finally terminated. Thus, it found that the replevin
bond and indemnity agreement were still in force and effect when Mercantile Insurance paid P600,000.00 to Asuten.
[27]

The Court of Appeals likewise found that Enriquez was "bound by the incontestability of payments clause" in the
indemnity agreement, which stated that she would be held liable for any payment made by the surety under the bond,
regardless of the actual cost of the van.[28] It held that the issue of whether Enriquez was liable for the full amount of
the replevin bond should have been raised before the Regional Trial Court in the Complaint for Replevin, and not in
her appeal.[29]

Enriquez moved for reconsideration[30] but was denied by the Court of Appeals in its January 14, 2014 Resolution.
[31]
 Hence, this Petition[32] was filed before this Court.

Petitioner argues that when respondent paid Asuten on September 3, 2004, the indemnity agreement was no longer
in force and effect since the bond expired on February 24, 2004.[33] She claims that the indemnity agreement was a
contract of adhesion, and that respondent "intended the agreement to be so comprehensive and all-encompassing to
the point of being ambiguous."[34]

Petitioner contends that even assuming that the indemnity agreement could be enforced, she should not have been
held liable for the full amount of the bond. Citing Rule 60, Section 2 of the Rules of Court, she argues that a judgment
on replevin is only "either for the delivery of the property or for its value in case delivery cannot be made and for such
damages as either party may prove, with costs."[35]

Respondent, on the other hand, contends that the present action has already prescribed, considering that Rule 60,
Section 10, in relation to Rule 57, Section 20 of the Rules of Court, mandates that any objection on the award should
be raised in the trial court where the complaint for replevin is filed. It argues that since petitioner only raised the
objection before the Court of Appeals, her action should have been barred.[36]

Respondent likewise points out that the forfeiture of the bond was due to petitioner's own negligence. It asserts that in
the proceedings before the Regional Trial Court, Enriquez failed to present her evidence, and it was only when she
filed an appeal that she raised her objections.[37] It argues that the Guidelines on Corporate Surety Bonds specify that
the expiry of the bond shall be after the court proceeding is finally decided; hence, the bond was still in effect when
respondent paid Asuten.[38]

The sole issue for this Court's resolution is whether or not petitioner Milagros P. Enriquez should be made liable for
the full amount of the bond paid by respondent The Mercantile Insurance Co., Inc. as surety, in relation to a previous
case for replevin filed by petitioner.

Replevin is an action for the recovery of personal property.[39] It is both a principal remedy and a provisional relief.
When utilized as a principal remedy, the objective is to recover possession of personal property that may have been
wrongfully detained by another. When sought as a provisional relief, it allows a plaintiff to retain the contested
property during the pendency of the action. In Tillson v. Court of Appeals:[40]
The term replevin is popularly understood as "the return to or recovery by a person of goods or chattels claimed to be
wrongfully taken or detained upon the person's giving security to try the matter in court and return the goods if
defeated in the action;" "the writ by or the common-law action in which goods and chattels are replevied," i.e., taken
or gotten back by a writ for replevin;" and to replevy, means to recover possession by an action of replevin; to take
possession of goods or chattels under a replevin order. Bouvier's Law Dictionary defines replevin as "a form of action
which lies to regain the possession of personal chattels which have been taken from the plaintiff unlawfully . . ., (or
as) the writ by virtue of which the sheriff proceeds at once to take possession of the property therein described and
transfer it to the plaintiff upon his giving pledges which are satisfactory to the sheriff to prove his title, or return the
chattels taken if he fail so to do;" the same authority states that the term, "to replevy" means "to re-deliver goods
which have been distrained to the original possessor of them, on his giving pledges in an action of replevin." The term
therefore may refer either to the action itself, for the recovery of personality, or the provisional remedy traditionally
associated with it, by which possession of the property may be obtained by the plaintiff and retained during the
pendency of the action. In this jurisdiction, the provisional remedy is identified in Rule 60 of the Rules of Court as an
order for delivery of personal property.[41]

Similarly, in BA Finance Corporation v. Court of Appeals:[42]

Replevin, broadly understood, is both a form of principal remedy and of a provisional relief. It may refer either to the
action itself, i.e., to regain the possession of personal chattels being wrongfully detained from the plaintiff by another,
or to the provisional remedy that would allow the plaintiff to retain the thing during the pendency of the action and
hold it pendente lite. The action is primarily possessory in nature and generally determines nothing more than the
right of possession. Replevin is so usually described as a mixed action, being partly in rem and partly in personam-in
rem insofar as the recovery of specific property is concerned, and in personam as regards to damages involved. As
an "action in rem," the gist of the replevin action is the right of the plaintiff to obtain possession of specific personal
property by reason of his being the owner or of his having a special interest therein. Consequently, the person in
possession of the property sought to be replevied is ordinarily the proper and only necessary party defendant, and
the plaintiff is not required to so join as defendants other persons claiming a right on the property but not in
possession thereof. Rule 60 of the Rules of Court allows an application for the immediate possession of the property
but the plaintiff must show that he has a good legal basis, i.e., a clear title thereto, for seeking such interim
possession.[43]

As a provisional remedy, a party may apply for an order for the delivery of the property before the commencement of
the action or at any time before an answer is filed.[44] Rule 60 of the Rules of Court outlines the procedure for the
application of a writ of replevin. Rule 60, Section 2 requires that the party seeking the issuance of the writ must first
file the required affidavit and a bond in an amount that is double the value of the property:

Section 2. Affidavit and bond. — The applicant must show by his own affidavit or that of some other person who
personally knows the facts:

(a) That the applicant is the owner of the property claimed, particularly describing it, or is entitled to the possession
thereof;

(b) That the property is wrongfully detained by the adverse party, alleging the cause of detention thereof according to
the best of his knowledge, information, and belief;

(c) That the property has not been distrained or taken for a tax assessment or a fine pursuant to law, or seized under
a writ of execution or preliminary attachment, or otherwise placed under custodia legis, or if so seized, that it is
exempt from such seizure or custody; and

(d) The actual market value of the property.

The applicant must also give a bond, executed to the adverse party in double the value of the property as stated in
the affidavit aforementioned, for the return of the property to the adverse party if such return be adjudged, and for the
payment to the adverse party of such sum as he may recover from the applicant in the action.[45]

Once the affidavit is filed and the bond is approved by the court, the court issues an order and a writ of seizure
requiring the sheriff to take the property into his or her custody.[46] If there is no further objection to the bond filed
within five (5) days from the taking of the property, the sheriff shall deliver it to the applicant.[47] The contested
property remains in the applicant's custody until the court determines, after a trial on the Issues, which among the
parties has the right of possession.[48]

In Civil Case No. 10846, petitioner Enriquez filed a replevin case against Asuten for the recovery of the Toyota Hi-
Ace van valued at P300,000.00.[49] She applied for a bond in the amount of P600,000.00 with respondent in Asuten's
favor. The Regional Trial Court approved the bond and ordered the sheriff to recover the van from Asuten and to
deliver it to petitioner. While the van was in petitioner's custody, the Regional Trial Court dismissed the case without
prejudice for failure to prosecute. Thus, it ordered the sheriff to restore the van to Asuten. When petitioner failed to
produce the van, the Regional Trial Court directed respondent to pay Asuten the amount of the bond.

There was no trial on the merits. The Regional Trial Court's dismissal for failure to prosecute was a dismissal without
prejudice to re-filing. In this particular instance, any writ of seizure, being merely ancillary to the main action,
becomes functus oficio.  The parties returned to the status quo as if no case for replevin had been filed. Thus, upon
the dismissal of the case, it was imperative for petitioner to return the van to Asuten. In Advent Capital and Finance
Corporation v. Young:[50]

We agree with the Court of Appeals in directing the trial court to return the seized car to Young since this is the
necessary consequence of the dismissal of the replevin case for failure to prosecute without prejudice. Upon the
dismissal of the replevin case for failure to prosecute, the writ of seizure, which is merely ancillary in nature,
became functus officio  and should have been lifted. There was no adjudication on the merits, which means that there
was no determination of the issue who has the better right to possess the subject car. Advent ca mot therefore retain
possession of the subject car considering that it was not adjudged as the prevailing party entitled to the remedy of
replevin.

Contrary to Advent's view, Olympia International Inc. v. Court of Appeals applies to this case. The dismissal of the
replevin case for failure to prosecute results in the restoration of the parties' status prior to litigation, as if no complaint
was filed at all. To let the writ of seizure stand after the dismissal of the complaint would be adjudging Advent as the
prevailing party, when precisely no decision on the merits had been rendered. Accordingly, the parties must be
reverted to their status quo ante.  Since Young possessed the subject car before the filing of the replevin case, the
same must be returned to him, as if no complaint was filed at all.[51]

Petitioner argues that she should not have been made liable for the bond despite her failure to return the van,
considering that it was effective only until February 24, 2004, and that she did not renew or post another bond.

De Guia v. Alto Surety & Insurance, Co.[52] requires that any application on the bond be made after hearing but before
the entry of judgment. Otherwise, the surety can no longer be made liable under the bond:

Construing and applying these provisions of the Rules, we have held in a long line of cases that said provisions are
mandatory and require the application upon the bond against the surety or bondsmen and the award thereof to be
made after hearing and before the entry of final judgment in the case; that if the judgment under execution contains
no directive for the surety to pay, and the proper party fails to make any claim for such directive before such judgment
had become final and executory, the surety or bondsman cannot be later made liable under the bond. The purpose of
the aforementioned rules is to avoid multiplicity of suits.[53]

For this reason, a surety bond remains effective until the action or proceeding is finally decided, resolved, or
terminated. This condition is deemed incorporated in the contract between the applicant and the surety, regardless of
whether they failed to expressly state it. Under the Guidelines on Corporate Surety Bonds:[54]

VII. LIFETIME OF BONDS IN CRIMINAL AND CIVIL ACTIONS/SPECIAL PROCEEDINGS

Unless and until the Supreme Court directs otherwise,[55] the lifetime or duration of the effectivity of any bond issued
in criminal and civil actions/special proceedings, or in any proceeding or incident therein shall be from its approval by
the court, until the action or proceeding is finally decided, resolved or terminated. This condition must be incorporated
in the terms and condition of the bonding contract and shall bind the parties notwithstanding their failure to expressly
state the same in the said contract or agreement.  (Emphasis supplied)

Civil Case No. 10846 is a rare instance where the writ of seizure is dissolved due to the dismissal without prejudice,
but the bond stands because the case has yet to be finally terminated by the Regional Trial Court.

The peculiar circumstances in this case arose when petitioner failed to return the van to Asuten, despite the dismissal
of her action. This is an instance not covered by the Rules of Court or jurisprudence. In its discretion, the Regional
Trial Court proceeded to rule on the forfeiture of the bond. As a result, respondent paid Asuten twice the value of the
van withheld by petitioner. Respondent, thus, seeks to recover this amount from petitioner, despite the van only being
worth half the amount of the bond.

Of all the provisional remedies provided in the Rules of Court, only Rule 60, Section 2[56] requires that the amount of
the bond be double  the value of the property. The other provisional remedies provide that the amount be fixed by
court or be merely equal to the value of the property:

Provisional Remedies

Rule 57
Preliminary Attachment

....

Section 4. Condition of applicant's bond. — The party applying for the order must thereafter give a bond executed to
the adverse party in the amount fixed by the court in its order granting the issuance of the writ,  conditioned that the
latter will pay all the costs which may be adjudged to the adverse party and all damages which he may sustain by
reason of the attachment, if the court shall finally adjudge that the applicant was not entitled thereto.
....

Section 12. Discharge of attachment upon giving counter-bond. — After a writ of attachment has been enforced, the
party whose property has been attached, or the person appearing on his behalf, may move for the discharge of the
attachment wholly or in part on the security given. The court shall, after due notice and hearing, order the discharge
of the attachment if the movant makes a cash deposit, or files a counter-bond executed to the attaching party with the
clerk of the court where the application is made, in an amount equal to that fixed by the court in the order of
attachment, exclusive of costs.  But if the attachment is sought to be discharged with respect to a particular
property, the counter-bond shall be equal to the value of that property as determined by the court.  In either case, the
cash deposit or the counter-bond shall secure the payment of any judgment that the attaching party may recover in
the action. A notice of the deposit shall forthwith be served on the attaching party. Upon the discharge of an
attachment in accordance with the provisions of this section, the property attached, or the proceeds of any sale
thereof, shall be delivered to the party making the deposit or giving the counter-bond, or to the person appearing on
his behalf, the deposit or counter-bond aforesaid standing in place of the property so released. Should such counter-
bond for any reason be found to be or become insufficient, and the party furnishing the same fail to file an additional
counter-bond, the attaching party may apply for a new order of attachment.
....

Section 14. Proceedings where property claimed by third person. — If the property attached is claimed by any person
other than the party against whom attachment had been issued or his agent, and such person makes an affidavit of
his title thereto, or right to the possession thereof, stating the grounds of such right or title, and serves such affidavit
upon the sheriff while the latter has possession of the attached property, and a copy thereof upon the attaching party,
the sheriff shall not be bound to keep the property under attachment, unless the attaching party or his agent, on
demand of the sheriff, shall file a bond approved by the court to indemnify the third-party claimant in a sum not less
than the value of the property levied upon.  In case of disagreement as to such value, the same shall be decided by
the court issuing the writ of attachment. No claim for damages for the taking or keeping of the property may be
enforced against the bond unless the action therefor is filed within one hundred twenty (120) days from the date of
the filing of the bond.
....

Rule 58
Preliminary Injunction

....

Section 4. Verified application and bond for preliminary injunction or temporary restraining order. — A preliminary
injunction or temporary restraining order may be granted only when:

....

(b) Unless exempted by the court, the applicant files with the court where the action or proceeding is pending, a bond
executed to the party or person enjoined, in an amount to be fixed by the court, to the effect that the applicant will pay
to such party or person all damages which he may sustain by reason of the injunction or temporary restraining order if
the court should finally decide that the applicant was not entitled thereto. Upon approval of the requisite bond, a writ
of preliminary injunction shall be issued.
....

Section 6. Grounds for objection to, or for motion of dissolution of, injunction or restraining order. — The application
for injunction or restraining order may be denied, upon a showing of its insufficiency. The injunction or restraining
order may also be denied, or, if granted, may be dissolved, on other grounds upon affidavits of the party or person
enjoined, which may be opposed by the applicant also by affidavits. It may further be denied, or, if granted, may be
dissolved, if it appears after hearing that although the applicant is entitled to the injunction or restraining order, the
issuance or continuance thereof, as the case may be, would cause irreparable damage to the party or person
enjoined while the applicant can be fully compensated for such damages as he may suffer, and the former files a
bond in an amount fixed by the court conditioned that he will pay all damages which the applicant may suffer by the
denial or the dissolution of the injunction or restraining order. If it appears that the extent of the preliminary injunction
or restraining order granted is too great, it may be modified.
....

Rule 59
Receivership

....

Section 2. Bond on appointment of receiver. — Before issuing the order appointing a receiver the court shall require
the applicant to file a bond executed to the party against whom the application is presented, in an amount to be fixed
by the court, to the effect that the applicant will pay such party all damages he may sustain by reason of the
appointment of such receiver in case the applicant shall have procured such appointment without sufficient cause;
and the court may, in its discretion, at any time after the appointment, require an additional bond as further security
for such damages.

Section 3. Denial of application or discharge of receiver. — The application may be denied, or the receiver
discharged, when the adverse party files a bond executed to the applicant, in an amount to be fixed by the court, to
the effect that such party will pay the applicant all damages he may suffer by reason of the acts, omissions, or other
matters specified in the application as ground for such appointment. The receiver may also be discharged if it is
shown that his appointment was obtained without sufficient cause.
....

Rule 60
Replevin

....

Section 7. Proceedings where property claimed by third person. — If the property taken is claimed by any person
other than the party against whom the writ of replevin had been issued or his agent, and such person makes an
affidavit of his title thereto, or right to the possession thereof, stating the grounds therefor, and serves such affidavit
upon the sheriff while the latter has possession of the property and a copy thereof upon the applicant, the sheriff shall
not be bound to keep the property under replevin or deliver it to the applicant unless the applicant or his agent, on
demand of said sheriff, shall file a bond approved by the court to indemnify the third-party claimant in a sum not less
than the value of the property under replevin  as provided in section 2 hereof. In case of disagreement as to such
value, the court shall determine the same. No claim for damages for the taking or keeping of the property may be
enforced against the bond unless the action therefor is filed within one hundred twenty (120) days from the date of
the filing of the bond.[57] (Emphasis supplied)

However, there is a rationale to the requirement that the bond for a writ of seizure in a replevin be double the value of
the property. The bond functions not only to indemnify the defendant in case the property is lost, but also to answer
for any damages that may be awarded by the court if the judgment is rendered in defendant's favor. In Citibank, N.A.
v. Court of Appeals:[58]

It should be noted that a replevin bond is intended to indemnify the defendant against any loss that he may suffer by
reason of its being compelled to surrender the possession of the disputed property pending trial of the action. The
same may also be answerable for damages if any when judgment is rendered in favor of the defendant or the party
against whom a writ of replevin was issued and such judgment includes the return of the property to him. Thus, the
requirement that the bond be double the actual value of the properties litigated upon. Such is the case because the
bond will answer for the actual loss to the plaintiff, which corresponds to the value of the properties sought to be
recovered and for damages, if any.[59]

Any application of the bond in a replevin case, therefore, is premised on the judgment rendered in favor of the
defendant. Thus, the Rules of Court imply that there must be a prior judgment on the merits before there can be any
application on the bond:

Rule 60
Replevin

....

Section 9. Judgment. — After trial of the issues, the court shall determine who has the right of possession to and the
value of the property and shall render judgment in the alternative for the delivery thereof to the party entitled to the
same, or for its value in case delivery cannot be made, and also for such damages as either party may prove, with
costs.

Section 10. Judgment to include recovery against sureties. — The amount, if any, to be awarded to any party upon
any bond filed in accordance with the provisions of this Rule, shall be claimed, ascertained, and granted under the
same procedure as prescribed in section 20 of Rule 57.

The Rules of Court likewise require that for the defendant to be granted the full  amount of the bond, he or she must
first apply to the court for damages. These damages will be awarded only after a proper hearing:

Rule 57
Preliminary Attachment

....

Section 20. Claim for damages on account of improper, irregular or excessive attachment. — An application for
damages on account of improper, irregular or excessive attachment must be filed before the trial or before appeal is
perfected or before the judgment becomes executory, with due notice to the attaching party and his surety or
sureties, setting forth the facts showing his right to damages and the amount thereof. Such damages may be
awarded only after proper hearing and shall be included in the judgment on the main case.

If the judgment on the appellate court be favorable to the party against whom the attachment was issued, he must
claim damages sustained during the pendency of the appeal by filing an application in the appellate court, with notice
to the party in whose favor the attachment was issued or his surety or sureties, before the judgment of the appellate
court becomes executory. The appellate court may allow the application to be heard and decided by the trial court.

Nothing herein contained shall prevent the party against whom the attachment was issued from recovering in the
same action the damages awarded to him from any property of the attaching party not exempt from execution should
the bond or deposit given by the latter be insufficient or fail to fully satisfy the award.

Forfeiture of the replevin bond, therefore, requires first,  a judgment on the merits in the defendant's favor,
and second,  an application by the defendant for damages. Neither circumstance appears in this case. When
petitioner failed to produce the van, equity demanded that Asuten be awarded only an amount equal to the value of
the van. The Regional Trial Court would have erred in ordering the forfeiture of the entire bond in Asuten's favor,
considering that there was no trial on the merits or an application by Asuten for damages. This judgment could have
been reversed had petitioner appealed the Regional Trial Court's May 24, 2004 Order in Civil Case No.
10846. Unfortunately, she did not. Respondent  was, thus, constrained to follow the Regional Trial Court's directive to
pay Asuten the full amount of the bond.

II

This is a simple case for collection of a sum of money. Petitioner cannot substitute this case for her lost appeal in
Civil Case No. 10846.
In applying for the replevin bond, petitioner voluntarily undertook with respondent an Indemnity Agreement, which
provided:

INDEMNIFICATION – to indemnify the SURETY for all damages, payments, advances, losses, costs, taxes,
penalties, charges, attorney's fees and expenses of whatever kind and nature that the SURETY may at any time
sustain or incur as a consequence of having become a surety upon the above-mentioned bond, and to pay,
reimburse and make good to the SURETY, its successors and assigns, all sums or all money which it shall pay or
become liable to pay by virtue of said bond even if said payment/s or liability exceeds the amount of the bond. . . .

INCONTESTABILITY OF PAYMENTS MADE BY THE SURETY – any payment or disbursement made by the surety
on account of the above-mentioned bond, either in the belief that the SURETY was obligated to make such payment
or in the belief that said payment was necessary in order to avoid a greater loss or obligation for which the SURETY
might be liable by virtue of the . . . above-mentioned bond, shall be final, and will not be contested by the
undersigned, who jointly and severally bind themselves to indemnify the SURETY for any of such payment or
disbursement.[60]

Basic is the principle that "a contract is law between the parties"[61] for as long as it is "not contrary to law, morals,
good customs, public order, or public policy."[62] Under their Indemnity Agreement, petitioner held herself liable for any
payment made by respondent by virtue of the replevin bond.

Petitioner contends that the Indemnity Agreement was a contract of adhesion since respondent made the extent of
liability "so comprehensive and all-encompassing to the point of being ambiguous."[63]

A contract of insurance is, by default, a contract of adhesion. It is prepared by the insurance company and might
contain terms and conditions too vague for a layperson to understand; hence, they are construed liberally in favor of
the insured. In Verendia v. Court of Appeals:[64]

Basically a contract of indemnity, an insurance contract is the law between the parties. Its terms and conditions
constitute the measure of the insurer's liability and compliance therewith is a condition precedent to the insured's right
to recovery from the insurer. As it is also a contract of adhesion, an insurance contract should be liberally construed
in favor of the insured and strictly against the insurer company which usually prepares it.[65]

Respondent, however, does not seek to recover an amount which exceeds the amount of the bond or any "damages,
payments, advances, losses, costs, taxes, penalties, charges, attorney's fees and expenses of whatever kind and
nature,"[66] all of which it could have sought under the Indemnity Agreement. It only seeks to recover from petitioner
the amount of the bond, or P600,000.00.

Respondent paid P600,000.00 to Asuten pursuant to a lawful order of the Regional Trial Court in Civil Case No.
10846. If there were any errors in the judgment of the Regional Trial Court, as discussed above, petitioner could have
appealed this. Petitioner, however, chose to let Civil Case No. 10846 lapse into finality. This case cannot now be
used as a substitute for her lost appeal.

It is clear from the antecedents that any losses which petitioner has suffered were due to the consequences of her
actions, or more accurately, her inactions. Civil Case No. 10846, which she filed, was dismissed due to her failure to
prosecute. The Regional Trial Court forfeited the replevin bond which she had filed because she refused to return the
property. She is now made liable for the replevin bond because she failed to appeal its forfeiture.
[ G.R. No. 205998, April 24, 2017 ]
WILLIAM ANGHIAN SIY, PETITIONER, VS. ALVIN TOMLIN, RESPONDENT.
The Petition must be denied.

"In a complaint for replevin, the claimant must convincingly show that he is either the owner or clearly entitled to the
possession of the object sought to be recovered, and that the defendant, who is in actual or legal possession thereof,
[24]
wrongfully detains the same."  "Rule 60 x x x allows a plaintiff, in an action for the recovery of possession of
personal property, to apply for a writ of replevin if it can be shown that he is 'the owner of the property claimed ... or is
entitled to the possession thereof.' The plaintiff need not be the owner so long as he is able to specify his right to the
[25]
possession of the property and his legal basis therefor."

[26]
In Filinvest Credit Corporation v. Court of Appeals,  this Court likewise held that -

x x x It is not only the owner who can institute a replevin suit. A person "entitled to the possession" of the property
also can, as provided in the same paragraph cited by the trial court, which reads:
Sec. 2. Affidavit and bond. - Upon applying for such order the plaintiff must show ...

(a) That the plaintiff is the owner of the property claimed, particularly describing it, or is entitled to the possession
thereof; x x x
[27]
As correctly cited by respondent in his Comment:

x x x [A] party praying for the recovery of possession of personal property must show by his own affidavit or that of
some other person who personally knows the facts that he is the owner of the property claimed, particularly
describing it, or is entitled to the possession thereof. It must be borne in mind that replevin is a possessory action the
gist of which focuses on the right of possession that, in tum, is dependent on a legal basis that, not infrequently, looks
to the ownership of the object sought to be replevied. Wrongful detention by the defendant of the properties sought in
an action for replevin must be satisfactorily established. If only a mechanistic averment thereof is offered, the writ
should not be issued.[28]
Petitioner admits and claims in his pleadings that on July 22, 2009, he purchased the subject vehicle from Lopez,
[29]
who executed and signed in blank a deed of sale and surrendered all documents of title to him;  that he did not
[30]
register the sale in his favor, such that the vehicle remained in the name of Lopez;  that in September, 2010, he
delivered the subject vehicle, together with all its documents of title and the blank deed of sale, to Ong, with the
express intention of selling the vehicle through the latter as broker/second hand car dealer; that Ong appears to have
[31]
issued in his favor two guarantee checks amounting to P4.95 million; and that these checks bounced.  Thereafter,
Ong was able to sell the vehicle using the deed of sale executed and signed in blank by Lopez to Chua, who secured
[32]
a certificate of registration in his name.  Chua then sold the vehicle, via a Deed of Sale of Motor Vehicle dated
December 7, 2010, to respondent, who caused registration of the vehicle in his name on March 7, 2011.
[33]
 Apparently, Ong did not remit Chua's payment to petitioner, prompting the latter to file formal complaints/charges
for 1) estafa and carnapping on May 18, 2011 before the Office of the City Prosecutor of Quezon City,
and 2) carnapping on June 15, 2011 before the PNP-HPG in Camp Crame, Quezon City against Ong and Centeno.
[34]
 It appears as well that prior to the filing of these formal complaints, or sometime in November, 2010, petitioner
appeared before the Quezon City Anti-Carnapping Unit based in Camp Karingal, Quezon City and, claiming that the
subject vehicle was carnapped, filed a "Failed to Return Vehicle" report; that on February 23, 2011, petitioner,
respondent, Ong, and Chua appeared at Camp Karingal to shed light on the claimed carnapping; that the parties
were requested to voluntarily surrender the subject vehicle, but the request proved futile; and that petitioner was
instead advised to file appropriate charges and file a complaint with the PNP-HPG in order to include the subject
vehicle in the "hold order list".

This Court is not unaware of the practice by many vehicle buyers and second-hand car traders of not transferring
registration and ownership over vehicles purchased from their original owners, and rather instructing the latter to
execute and sign in blank deeds of sale covering these vehicles, so that these buyers and dealers may freely and
readily trade or re-sell the vehicles in the second-hand car market without difficulty. This way, multiple transfers,
sales, or trades of the vehicle using these undated deeds signed in blank become possible, until the latest purchaser
decides to actually transfer the certificate of registration in his name. For many car owners-sellers, this is an easy
concession; so long as they actually receive the sale price, they will sign sale deeds in blank and surrender them to
the buyers or dealers; and for the latter, this is convenient since they can "flip" or re-sell the vehicles to the public
many times over with ease, using these blank deeds of sale.
In many cases as well, busy vehicle owners selling their vehicles actually leave them, together with all the documents
of title, spare keys, and deeds of sale signed in blank, with second-hand car traders they know and trust, in order for
the latter to display these vehicles for actual viewing and inspection by prospective buyers at their lots, warehouses,
garages, or showrooms, and to enable the traders to facilitate sales on-the-spot, as-is-where-is, without having to
inconvenience the owners with random viewings and inspections of their vehicles. For this kind of arrangement, an
agency relationship is created between the vehicle owners, as principals, and the car traders, as agents. The
situation is akin to an owner of jewelry who sells the same through an agent, who receives the jewelry in trust and
offers it for sale to his/her regular clients; if a sale is made, the agent takes payment under the obligation to remit the
same to the jewelry owner, minus the agreed commission or other compensation.

From petitioner's own account, he constituted and appointed Ong as his agent to sell the vehicle, surrendering to the
latter the vehicle, all documents of title pertaining thereto, and a deed of sale signed in blank, with full understanding
that Ong would offer and sell the same to his clients or to the public. In return, Ong accepted the agency by his
receipt of the vehicle, the blank deed of sale, and documents of title, and when he gave bond in the form of two
guarantee checks worth P4.95 million. AH these gave Ong the authority to act for and in behalf of petitioner. Under
the Civil Code on agency,

Art. 1869. Agency may be express, or implied from the acts of the principal, from his silence or Jack of action, or
his failure to repudiate the agency, knowing that another person is acting on his behalf without authority.

Agency may be oral, unless the law requires a specific form.

Art. 1870. Acceptance by the agent may also be express, or implied from his acts which carry out the agency,
or from his silence or inaction according to the circumstances. (Emphasis and underscoring supplied)
"The basis of agency is representation and the same may be constituted expressly or impliedly. In an implied agency
[35]
the principal can be bound by the acts of the implied agent."  The same is true with an oral agency.

Acting for and in petitioner's behalf by virtue of the implied or oral agency, Ong was thus able to sell the vehicle to
Chua, but he failed to remit the proceeds thereof to petitioner; his guarantee checks bounced as well. This entitled
petitioner to sue for estafa through abuse of confidence. This is exactly what petitioner did: on May 18, 2011, he tiled
a complaint for estafa and carnapping against Ong before the Quezon City Prosecutor's Office.

Since Ong was able to sell the subject vehicle to Chua, petitioner thus ceased to be the owner thereof. Nor is he
entitled to the possession of the vehicle; together with his ownership, petitioner lost his right of possession over the
vehicle. His argument that respondent is a buyer In bad faith, when the latter nonetheless proceeded with the
purchase and registration of the vehicle on March 7, 2011, despite having been apprised of petitioner's earlier
November, 2010 "Failed to Return Vehicle" report filed with the PNP-HPG, is unavailing. Petitioner had no right to file
said report, as he was no longer the owner of the vehicle at the time; indeed, his right of action is only against Ong,
for collection of the proceeds of the sale.

Considering that he was no longer the owner or rightful possessor of the subject vehicle at the time he filed Civil Case
No. Q-11-69644 in July, 2011, petitioner may not seek a return of the same through replevin. Quite the contrary,
respondent, who obtained the vehicle from Chua and registered the transfer with the Land Transportation Office, is
the rightful owner thereof, and as such, he is entitled to its possession. For this reason, the CA was correct in
decreeing the dismissal of Civil Case No. Q-11-69644, although it erred in ordering the return of the vehicle to the
PNP-HPG, which had no further right to hold the vehicle in its custody. As the registered and rightful owner of the
subject vehicle, the trial court must return the same to respondent.

Petitioner cannot be allowed to cut his losses by ostensibly securing the recovery of the subject vehicle in lieu of its
price, which Ong failed and continues to fail to remit. On the other hand, Ong's declarations contained in his Affidavit,
[36]
 to the effect that petitioner remains the owner of the vehicle, and that Chua came into illegal possession and
ownership of the same by unlawfully appropriating the same for himself without paying for it, are unavailing. Faced
with a possible criminal charge for estafa initiated by petitioner for failing or refusing to remit the price for the subject
vehicle, Ong's declarations are considered self-serving, that is, calculated to free himself from the criminal charge.
The premise is that by helping petitioner to actually recover his vehicle by insisting that the same was unlawfully
taken from him, instead of remitting its price to petitioner, Ong expects that he and petitioner may redeem themselves
from their bad judgment; for the petitioner, the mistake of bestowing his full faith and confidence upon Ong, and
blindly surrendering the vehicle, its documents of title, and a deed of sale executed and signed in blank, to the latter;
and for Ong, his failure to remit the proceeds of the sale to petitioner; and petitioner might then opt to desist from
pursuing the estafa and other criminal charges against him.

Having disposed of the case in the foregoing manner, there is no need to discuss the other issues raised by the
parties.

WHEREFORE, the Petition is DENIED. The October 9, 2012 Decision and February 19, 2013 Resolution of the Court
of Appeals in CA-G.R SP No. 124967 are AFFIRMED WITH MODIFICATION, in that the subject Land Rover Range
Rover, with Plate Number ZMG 272 and particularly described in and made subject of these proceedings,
is ORDERED RETURNED to respondent Alvin Tomlin as its registered owner.

SO ORDERED.

Kinds of Damages under Philippine

Moral damages are awarded to enable the injured party to obtain means, diversions or
amusements that will serve to alleviate the moral suffering he has undergone, by reason of
the defendant’s culpable action. (Kierulf vs. Court of Appeals, G.R. No. 99301, 13 March
1997)

Article 2229 of the Civil Code provides that exemplary or corrective damages are imposed,
by way of example or correction for the public good, in addition to moral, temperate,
liquidated or compensatory damages. Article 2231 of the same Code further states that
in quasi-delicts, exemplary damages may be granted if the defendant acted with gross
negligence. (Mariano Mendoza vs. Leonora Gomez, G.R. No. 160110, June 18, 2014)

Under Article 2226 of the Civil Code, liquidated damages are those agreed upon by the
parties to a contract, to be paid in case of breach thereof. the parties to a contract are
allowed to stipulate on liquidated damages to be paid in case of breach. It is attached to an
obligation in order to ensure performance and has a double function: (1) to provide for
liquidated damages, and (2) to strengthen the coercive force of the obligation by the threat
of greater responsibility in the event of breach. The amount agreed upon answers for
damages suffered by the owner due to delays in the completion of the project. As a pre-
condition to such award, however, there must be proof of the fact of delay in the
performance of the obligation. (Atlantic Erectors, Inc., vs. Court of Appeals, G.R. No.
170732, 11 October 2012)
Under Article 2224 of the New Civil Code, temperate damages may be recovered when
pecuniary loss has been suffered but the amount cannot, from the nature of the case, be
proven with certainty. In such cases, the amount of the award is left to the discretion of the
courts, according to the circumstances of each case, but the same should be reasonable,
bearing in mind that temperate damages should be more than nominal but less than
compensatory. (Republic of the Philippines vs. Alberto Looyuko, G.R. No. 170966, 22
June 2016)

Under Article 2221 of the Civil Code, nominal damages may be awarded in order that the
plaintiff’s right, which has been violated or invaded by the defendant, may be vindicated or
recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered. 
Nominal damages are ‘recoverable where a legal right is technically violated and must be
vindicated against an invasion that has produced no actual present loss of any kind or
where there has been a breach of contract and no substantial injury or actual damages
whatsoever have been or can be shown. (Seven Brothers Shipping Corporation vs.
DMC-Construction Resources, Inc., G.R. No. 193914, 26 November 2014)