8/12/2019 Paramount Insurance Corporation v. CA

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PARAMOUNT INSURANCE CORPORATION v COURT OF APPEALS and DAGUPAN ELECTRICCORPORATIONG.R. No. 110086, 19 July 1999, FIRST DIVISION Ynares-Santiago, .)McAdore Finance and Investment, Inc. (McAdore) and Dagupan Electric Corporation

(DECORP) entered into a contract whereby DECORP shall provide electric power to McAdores

Hotel. During the term of their contract, DECORP notice discrepancies between the actual monthlybillings and the estimated monthly billings of McAdore which was later discovered that it was due toa slow rotation of the meter. DECORP issued a corrected bill but McAdore refused to pay thus,DECORP disconnected the power supply to the hotel. McAdore commenced a suit against DECORPfor damages with prayer for a writ of preliminary injunction, accompanied by an injunction bondfrom several sureties, one of which was Paramount Insurance Corporation (Paramount). Accordinly,a writ of preliminary injunction was issued and DECORP was ordered to continue the supply ofelectric power. The RTC rendered judgment in favor of DECORP and likewise adjudged Paramountto pay. On appeal by Paramount, the CA affirmed the decision of the trial court. Before this Court,Paramount contends that the injunction bond was issued to guarantee actual and material damagesas may be sustained and duly proved by DECORP, to the effect that it is liable to pay such actualand material damages only and no other damages.

ISSUE:Whether Paramount is liable to pay actual and material damages only

HELD:It may not be amiss to point out that by the contract of suretyship, it is not for the obligee to

see to it that the principal pays the debt or fulfills the contract, but for the surety to see to it that theprincipal pay or perform. The purpose of the injunction bond is to protect the defendant against lossor damage by reason of the injunction in case the court finally decides that the plaintiff was notentitled to it, and the bond is usually conditioned accordingly. Thus, the bondsmen are obligated toaccount to the defendant in the injunction suit for all damages, or costs and reasonable counselsfees, incurred or sustained by the latter in case it is determined that the injunction was wrongfullyissued.

The posting of a bond in connection with a preliminary injunction (or attachment under Rule57, or receivership under Rule 59, or seizure or delivery of personal property under Rule 60) does notoperate to relieve the party obtaining an injunction from any and all responsibility for the damagesthat the writ may thereby cause. It merely gives additional protection to the party against whom theinjunction is directed. It gives the latter a right of recourse against either the applicant or hissurety, or against both. In the same manner, when petitioner PARAMOUNT issued the bond in favorof its principal, it undertook to assume all the damages that may be suffered after finding that theprincipal is not entitled to the relief beingsought.