Stronghold Insurance Co., Inc. vs. CA Facts: Leisure Club Inc.

filed a case for replevin and damages against Northern Motors Inc. which sought the recovery of certain office furniture and equipments. The lower court ordered the delivery of the subject properties upon the posting of the requisite bond issued by Stronghold Insurance Co., Inc. (SI)Leisure Club was able to take possession of the disputed properties. Northern Motors (NM) filed a counterbond for the release of the properties however Leisure Club was never heard of again. The latter was declared non-suited for failure to appear in the pre-trial. Lower court rendered its decision in favor of Northern Motors. It held that NM had the rightful ownership and possession over the subject properties. NM filed a Motion for Issuance of Writ of Execution Against Bond of Plaintiffs Surety pursuant to Sec. 10 Rule 20 of the Rules of Court which was treated by the lower court as an application for damages against the replevin bond. The opposition by SI proved futile before the lower court which ordered the Insurance company liable under its surety bond for the damages awarded to NM. Issue: Whether or not the lower court erred in finding Stronghold Insurance liable in the case at bar Held: Negative. The Supreme Court finds no merit in the petition. SI never denied that it issued a replevin bond. Under the terms of the bond, SI together with Leisure Club solidarily bound themselves the sum of P42,000.00 for the prosecution of the action, the return of the property if it be adjudged and the payment of costs of action. In the case at bar, all the necessary condition for proceeding against the bond are present: 1. The plaintiff a quo, in bad faith, failed to prosecute the action, and after retrieving the property, it promptly disappeared 2. The subject property disappeared with the plaintiff despite court order for return and 3. A reasonable sum was adjudged to be due to the respondent, by way of actual damages, attorneys fees and costs of suit. NM proved the damages it suffered through evidence presented in the hearing of the case itself and in the hearing of its motion for execution against the replevin bond. No evidence to the contrary was presented by SI in its behalf. It did not impugn the award of said exemplary damages and attorneys fees despite having every opportunity to do so. Leisure Clubs act of filing a replevin suit without the intention of prosecuting the same but or mere purpose of disappearing with the provisionally recovered property in order to evade lawfully contracted obligations constitutes wanton, fraudulent, reckless oppressive and malevolent breach of contract which justifies the award of exemplary damages.