Aquino vs. Socorro

The Court held that a claim for damages arising from the improvident issuance of a writ of preliminary injunction must be maintained upon the injunction bond under Section 9, Rule 58 of the Rules of Court—where malice is not an element and dissolution of the writ establishes liability—only when the claim is pursued against the bond itself; where the party restrained files a counterbond that dissolves the injunction bond and seeks damages beyond the bond amount, the claim is governed by the principles of malicious prosecution, requiring proof that the injunction was obtained maliciously and without probable cause.

Francisco Socorro filed a petition for certiorari before the Court of Appeals (CA-G.R. 33560-R) against Zacarias Aquino and others, seeking to restrain Aquino from entering, cutting, hauling, selling, and exporting logs from a disputed forest area subject of litigation.

• On February 14, 1964, the Court of Appeals issued a writ of preliminary injunction in CA-G.R. 33560-R in favor of Francisco Socorro, restraining Zacarias Aquino from entering, cutting, hauling, selling, and/or exporting logs or other forest products from the forest area subject of litigation, upon Socorro's posting of a P1,000 bond.
• Aquino filed a counterbond in the amount of P2,000, which effected the immediate dissolution of the writ of preliminary injunction.
• On June 29, 1964, the Court of Appeals dismissed Socorro's main petition for certiorari for lack of jurisdiction to entertain the same.
• Socorro appealed the dismissal to the Supreme Court, which affirmed the appellate court's decision on December 24, 1964 in G.R. L-23608.
• On July 15, 1964, before the Court of Appeals' decision became final, Aquino filed with that court his claim for damages in the amount of P199,000 on account of the wrongful issuance of the writ of preliminary injunction.
• The Court of Appeals denied Aquino's claim on the ground that Socorro did not act with bad faith and malice in filing his petition and securing the issuance of the writ.
• Aquino's subsequent motion for reconsideration was denied, prompting the filing of the present petition for certiorari.

• Petitioner Aquino maintained that the Court of Appeals erred in denying his claim for damages on the ground of want of bad faith and malice on the part of Socorro.
• He invoked Section 9, Rule 58 in relation to Section 20, Rule 57 of the Rules of Court, contending that these provisions do not require proof of bad faith or malice for a claimant to recover damages on account of the wrongful issuance of a writ of preliminary injunction.
• He cited Section 4(b) of Rule 58, which makes the party applying for an injunction liable for all damages sustained by the other party if the court finally decides the applicant was not entitled thereto, arguing that the dissolution of the writ demonstrated Socorro was not entitled to the injunction.

• Respondent Socorro countered that the petition should be dismissed because Aquino refused to prosecute his claim for damages in the main action then pending on appeal.
• He argued that Aquino failed to state in his motion claiming damages the facts upon which his rights thereto were based.
• He maintained that if Aquino was suing on the bond, he had no cause of action because the bond had already been dissolved upon Aquino's filing of the counterbond.
• He contended that if Aquino was suing beyond the bond, he failed to show that Socorro was motivated by malice or bad faith in filing the petition for certiorari and securing the issuance of the writ.

• Procedural:
  • Whether the Court of Appeals committed grave abuse of discretion in denying Aquino's claim for damages on the ground of failure to prove bad faith and malice.
• Substantive Issues:
  • Whether recovery of damages for the wrongful issuance of a preliminary injunction requires proof of malice and lack of probable cause where the claimant has filed a counterbond that dissolved the injunction bond.
  • Whether a claim for damages exceeding the amount of the injunction bond may be maintained under Section 9, Rule 58 when the bond has been dissolved by a counterbond.

• Procedural:
  • N/A
• Substantive:
  • The Court ruled that Section 9, Rule 58 of the Rules of Court permits recovery of damages upon the injunction bond without proof of malice or bad faith, as the dissolution of the injunction amounts to a determination that it was wrongfully obtained and creates an immediate right of action on the bond.
  • The Court held, however, that this rule applies only when the party restrained pursues his claim for damages upon the injunction bond itself, and recovery is limited to the amount of the bond.
  • The Court found that Aquino filed a counterbond of P2,000 which dissolved Socorro's P1,000 injunction bond, and subsequently claimed P199,000 in damages—an amount far exceeding the bond and indicating he was not suing on the bond but beyond it.
  • Consequently, the Court held that Aquino's claim was governed by the principles of malicious prosecution as established in Molina vs. Somes, requiring proof that the injunction was obtained maliciously and without probable cause.
  • Because Aquino neither alleged nor proved malice or lack of probable cause, the Court affirmed the denial of his claim.

• Recovery upon Injunction Bond (Section 9, Rule 58) — The bond filed to secure a preliminary injunction undertakes to answer for all damages which the party to be restrained may sustain by reason of the injunction if the court should finally decide that the plaintiff was not entitled thereto. Malice or lack of good faith is not an element of recovery on the bond; the dissolution of the injunction, even if obtained in good faith, amounts to a determination that it was wrongfully obtained and creates an immediate right of action on the bond. The Court applied this doctrine to explain that had Aquino pursued his claim against the bond itself, he would not have been required to prove malice, though his recovery would have been limited to the bond amount.
• Malicious Prosecution in Improper Injunction Cases — When a party restrained by an injunction does not pursue his claim for damages upon the injunction bond but instead seeks damages beyond the bond or after the bond has been dissolved by a counterbond, the claim must be maintained upon the same principles governing an action for the wrongful bringing of an action—that is, the plaintiff must establish that the injunction was obtained maliciously and without probable cause. The Court applied this doctrine to hold that Aquino's claim, having been filed after dissolution of the bond and for an amount far exceeding it, required proof of malice and lack of probable cause, which was absent.

• "The statutory undertaking of the bond is that it shall answer for all damages which the party to be restrained may sustain by reason of the injunction if the court should finally decide that the plaintiff was not entitled thereto. Malice or lack of good faith is not an element of recovery on the bond. This must be so, because to require malice as a prerequisite would make the filing of the bond a useless formality." — The Court emphasized that the purpose of the injunction bond is to provide security for the restrained party, and requiring malice would defeat this statutory protection.
• "the dissolution of the injunction, even if the injunction was obtained in good faith, amounts to a determination that the injunction was wrongfully obtained and a right of action on the injunction bond immediately accrues." — This establishes that the dissolution of the writ alone establishes the actionable wrong for purposes of recovery on the bond.
• "an action for damages for the improper suing out of an injunction must be maintained upon the same principles which govern an action for the wrongful bringing of action." — Citing Molina vs. Somes, the Court distinguished between actions on the bond (no malice required) and actions for malicious prosecution (malice required).

• Pacis vs. Commission on Elections — Cited as controlling precedent establishing that damages from wrongfully obtained injunction may be recovered upon the bond without proof of malice, and that dissolution of the injunction establishes actionable wrong.
• Molina vs. Somes — Cited for the rule that actions for damages not pursued upon the bond must follow principles of malicious prosecution, requiring malice and lack of probable cause.
• Palmer vs. Foley — Cited within Molina vs. Somes to support the distinction between recovery on bond and recovery for malicious prosecution.

• Section 9, Rule 58 of the Rules of Court — Governs judgment for damages against party and sureties on injunction bonds; incorporates Section 20 of Rule 57 by reference.
• Section 20, Rule 57 of the Rules of Court — Prescribes procedure for claiming damages on account of illegal attachment, applied by reference to injunction bonds under Section 9, Rule 58.
• Section 4(b), Rule 58 of the Rules of Court — Provides that a party applying for injunction is liable for all damages sustained by the other party if the court finally decides the applicant was not entitled thereto.