LEGAL RESEARCH ON INDEMNITY BONDS

Section 16. Proceedings where property claimed by third person. — If the property levied on is claimed
by any person other than the judgment obligor 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 the
same upon the officer making the levy and copy thereof, stating the grounds of such right or tittle, and a
serves the same upon the officer making the levy and a copy thereof upon the judgment obligee, the
officer shall not be bound to keep the property, unless such judgment obligee, on demand of the officer,
files a bond approved by the court to indemnity the third-party claimant in a sum not less than the value
of the property levied on. In case of disagreement as to such value, the same shall be determined by the
court issuing the writ of execution. 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.

The officer shall not be liable for damages for the taking or keeping of the property, to any third-party
claimant if such bond is filed. Nothing herein contained shall prevent such claimant or any third person
from vindicating his claim to the property in a separate action, or prevent the judgment obligee from
claiming damages in the same or a separate action against a third-party claimant who filed a frivolous or
plainly spurious claim.

When the writ of execution is issued in favor of the Republic of the Philippines, or any officer duly
representing it, the filing of such bond shall not be required, and in case the sheriff or levying officer is
sued for damages as a result of the levy, he shall be represented by the Solicitor General and if held
liable therefor, the actual damages adjudged by the court shall be paid by the National Treasurer out of
such funds as may be appropriated for the purpose. (17a)

Section 16, Rule 39 of the Rules of Court, explicitly mandates that the indemnity bond shall be in a sum
not less than the value of the property levied on. It was incumbent upon respondent, as the officer
effecting the levy, to ascertain the veracity of the third party claims, and not simply rely on the third
party claimants’ representations as to the value of the levied properties, prior to issuing the said Orders.
He could have easily asked for the tax declarations thereon when presented with the third party claims.
Thus, the delay in the conduct of the auction sale and the procedural shortcuts taken thereon are
attributable to the respondent.

Moreover, the Orders requiring the judgment obligee to post indemnity bonds for the levied properties
were issued on the date of the auction sale itself, giving the judgment obligee only until 4:00 p.m. of
that very day to post the indemnity bonds.9 Evidently, even if the judgment obligee complied therewith,
respondent would still continue with the scheduled auction sale in direct violation of our rules thereon.
Co vs. Sillador, 531 SCRA 657, A.M. No. P-07-2342 August 31, 2007

Same; Same; Sheriff’s Indemnity Bond; The bond in Section 14 of Rule 57 (proceedings where property is
claimed by third person) is different from the bond in Section 3 of the same rule (affidavit and bond).—
Pursuant to Section 14 of Rule 57, the sheriff is not obligated to turn over to respondents the properties
subject of this case in view of respondents’ failure to file a bond. The bond in Section 14 of Rule 57
(proceedings where property is claimed by third person) is different from the bond in Section 3 of the
same rule (affidavit and bond). Under Section 14 of Rule 57, the purpose of the bond is to indemnify the
sheriff against any claim by the intervenor to the property seized or for damages arising from such
seizure, which the sheriff was making and for which the sheriff was directly responsible to the third
party. Section 3, Rule 57, on the other hand, refers to the attachment bond to assure the return of
defendant’s personal property or the payment of damages to the defendant if the plaintiff’s action to
recover possession of the same property fails, in order to protect the plaintiff’s right of possession of
said property, or prevent the defendant from destroying the same during the pendency of the suit. Fort
Bonifacio Development Corporation vs. Yllas Lending Corporation, 567 SCRA 454, G.R. No. 158997
October 6, 2008

Sheriff’s Indemnity Bond

FBDC laments the failure of the trial court to require respondents to file an indemnity bond for FBDC’s
protection. The trial court, on the other hand, did not mention the indemnity bond in its Orders dated 7
March 2003 and 3 July 2003.

Pursuant to Section 14 of Rule 57, the sheriff is not obligated to turn over to respondents the properties
subject of this case in view of respondents’ failure to file a bond. The bond in Section 14 of Rule 57
(proceedings where property is claimed by third person) is different from the bond in Section 3 of the
same rule (affidavit and bond). Under Section 14 of Rule 57, the purpose of the bond is to indemnify the
sheriff against any claim by the intervenor to the property seized or for damages arising from such
seizure, which the sheriff was making and for which the sheriff was directly responsible to the third
party. Section 3, Rule 57, on the other hand, refers to the attachment bond to assure the return of
defendant’s personal property or the payment of damages to the defendant if the plaintiff’s action to
recover possession of the same property fails, in order to protect the plaintiff’s right of possession of
said property, or prevent the defendant from destroying the same during the pendency of the suit.

Because of the absence of the indemnity bond in the present case, FBDC may also hold the sheriff for
damages for the taking or keeping of the properties seized from FBDC.

WHEREFORE, we GRANT the petition. We SET ASIDE the Orders dated 7 March 2003 and 3 July 2003 of
Branch 59 of the Regional Trial Court of Makati City in Civil Case No. 01-1452 dismissing Fort Bonifacio
Development Corporation’s Third Party Claim and denying Fort Bonifacio Development Corporation’s
Motion to Intervene and Admit Complaint in Intervention. We REINSTATE Fort Bonifacio Development
Fort Bonifacio Development Corporation vs. Yllas Lending Corporation, 567 SCRA 454, G.R. No. 158997
October 6, 2008

The execution of the indemnity bond in favor of the sheriff indemnifying him against damages resulting
from an unlawful levy and sale of property, affirmatively establishes the liability of the indemnitor and
his bondsmen as principals in the subsequent trespass committed by the sheriff (Sun Bros. Appliances
Inc. vs. Trinity Luncheonette & Social Club Corp., 22 SCRA 801). Cases on Civil Bonds, 61 SCRA 30,
November 31, 1974

A bond, when required by law, is commonly understood to mean an undertaking that is sufficiently
secured, and not for cash or currency (Commissioner of Customs vs. Alikpala, 36 SCRA 208). It is an
obligation in writing and under seal (Denton v. Adams, 6 Vt. 40; Harman v. Harman, 1 Baldwin, 129, Fed.
Cas. No. 6, 701). Cases on Civil Bonds, 61 SCRA 30, November 31, 1974
§ IX. To what replevin bond refers; how it is generally understood

A bond that is required to be given by law is commonly understood to refer to an obligation or

undertaking in writing that is sufficiently secured. It is not indispensably necessary however, that the
obligation of the bond be secured or supported by cash or personal property or real property or the
obligation of the surety other than the person giving the bond. Most generally understood, a "bond" is
an obligation reduced to writing binding the obligor to pay a sum of money to the obligee under
specified conditions. At common law, a bond is merely a written obligation under seal. A bond is often
as a commercial matter, secured by a mortgage on real property; the mortgagee may be the obligee,
although the mortgagee may also be a third party surety whose personal credit is added to that of the
principal obligor under the bond. (Yang vs. Valdez, supra). The Provisional Remedy of Replevin, 188 SCRA
275, August 2, 1990

§ XIII. Indemnity bond in favor of the sheriff; presence of third party claimant; jurisdiction over person of
surety

In an action for replevin wherein an indemnity bond was given in favor of the sheriff in order that the
latter should proceed with the seizure notwithstanding the claim presented by a third person, the court
has no jurisdiction over the person of the surety on said bond, and a judgment rendered by said court,
sentencing the plaintiff to pay a certain amount to the third party claimant, cannot be enforced against
the property of said surety without further proceeding, where no claim was presented against the claim
of the sheriff or said surety, nor any judgment rendered against either. (Union Guarantee Co., vs. Del
Rosario, 46 Phil. 805). The Provisional Remedy of Replevin, 188 SCRA 275, August 2, 1990

Same; Same; Same; Cash deposits and counter-bonds posted by the defendant to lift the writ of
attachment is a security for the payment of any judgment that the attaching party may obtain; they are
thus, mere replacement of the property previously attached.—Cash deposits and counter-bonds posted
by the defendant to lift the writ of attachment is a security for the payment of any judgment that the
attaching party may obtain; they are, thus, mere replacements of the property previously attached.
Accordingly, the P8,634,448.20 cash deposit of petitioner, as replacement of the properties to be
attached, should never have been released to Win Multi-Rich. Excellent Quality Apparel, Inc. vs. Visayan
Surety & Insurance Corporation, 761 SCRA 464, G.R. No. 212025 July 1, 2015

Same; Same; Same; Counter-Bond; Under Section 17, Rule 57, in relation to Section 12 therein, the cash
deposit or the counter-bond shall secure the payment of any judgment that the attaching party may
recover in the action.—On the other hand, under Section 17, Rule 57, in relation to Section 12 therein,
the cash deposit or the counter-bond shall secure the payment of any judgment that the attaching party
may recover in the action. Stated differently, the damages sought to be charged against the surety bond
are liquidated. The final judgment had already determined the amount to be awarded to the winning
litigant on the main action. Thus, there is nothing left to do but to execute the judgment against the
losing party, or in case of insufficiency, against its sureties. Excellent Quality Apparel, Inc. vs. Visayan
Surety & Insurance Corporation, 761 SCRA 464, G.R. No. 212025 July 1, 2015

A third-party claim on a levied property does not automatically prevent execution. Under Rule 39 of the
Revised Rules of Court, execution is a remedy afforded by law for the enforcement of a judgment, its
object being to obtain satisfaction of the decision on which the writ is issued.17 In executing a money
judgment against the property of the obligor, the sheriff shall levy on all properties belonging to the
 judgment debtor as is amply sufficient to satisfy the decision and the costs; and shall sell the same,
paying to the judgment creditor as much of the proceeds as will satisfy the amount of the debt and
costs.18 Sheriffs who levy upon properties other than those of the judgment debtors are acting beyond
the limits of their authority.

When a third-party claim is filed, the sheriff is not bound to proceed with the levy of the property unless
the judgment creditor or the latter’s agent posts an indemnity bond against the claim.20 Where the
bond is filed, the remedy of the third-party claimant is to file an independent reivindicatory action
against the judgment creditor or the purchaser of the property at public auction.21 The NLRC should not
have automatically lifted the levy and restrained execution, just because a third-party claim had been
filed. Tanongon vs. Samson, 382 SCRA 130, G.R. No. 140889 May 9, 2002

 Sheriff’s Indemnity Bond - Seeks to protect the sheriff against the claim of a third party
alleging adverse title or right of possession to the property being seized.
A bond is a three-party agreement where Charter Ping An (Surety company) assures the
performance of an obligation of the Bond Applicant (Principal/Obligor) to a Third Party
(Obligee/Bond Beneficiary), by virtue of the contract or as required by law.
https://www.axa.com.ph/charterpingan/bonds

The issue in this case is whether the appellate court abused its discretion when it reversed the trial
court's order requiring the posting of a cash bond in lieu of a surety bond. It is the argument of the
private respondent that under Section 12 of PD No. 463, the posting of a cash deposit is no longer
needed to answer for damages, and that the posting of a surety bond is sufficient. Evangelista vs. Court
of Appeals, 205 SCRA 83, G.R. No. 41229 January 13, 1992

We reverse the decision of the Court of Appeals and affirm the decision of the trial court. It was within
the lower court's power to order the posting of an additional cash bond in view of the private
respondent's continued violation of the amended writ of preliminary injunction. Moreover, it must be
stressed that the discretion whether to require a cash or surety bond, as well as to ascertain its
sufficiency, is a matter addressed to the sound discretion of the lower court.10 Evangelista vs. Court of
Appeals, 205 SCRA 83, G.R. No. 41229 January 13, 1992

Moreover, under the circumstance, a cash bond is more appropriate. It assures immediate
compensation of the damages already sustained while in the case of a surety bond, the trial court has
still to inquire into the sufficiency of the bond from the issuing bonding company, thus delaying
payment to the prejudiced parties. To sustain the pretentions of private respondent would be to allow
the company to have an undue advantage over the petitioners and thereby profit from its errant
conduct.

It must be observed that the private respondent never objected to the cash bond imposed by the trial
court prior to its entry into and quarrying operations in the mineral lands of petitioners. In fact, it readily
complied with the order. Evangelista vs. Court of Appeals, 205 SCRA 83, G.R. No. 41229 January 13, 1992

The Court of Appeals in relying on our decision in Commissioner of Customs vs. Alikpala13 chose a
rather restrictive definition of a bond to the effect that when required by law, a bond can only mean "an
undertaking that is sufficiently secured and not cash or currency." But as enunciated in the recent case
of Yang vs. Valdez,14 a bond can either be secured by cash or by personal or real property or surety.
Stripped to its bare meaning, a bond is a written obligation or undertaking that is sufficiently secured.

Yang vs. Valdez, G.R. No. 73317, August 31, 1989, 177 SCRA 141. Evangelista vs. Court of Appeals, 205
SCRA 83, G.R. No. 41229 January 13, 1992

13 No. L-32542, November 26, 1970, 36 SCRA 208.

14 Supra, expounding on the meaning of a bond, the Court held in the case of Yang vs. Valdez that, "it is
not indispensably necessary, however, that the obligation of the bond be secured or supported by cash
or personal property or real property or the obligation of a surety other than the person giving the
bond." Evangelista vs. Court of Appeals, 205 SCRA 83, G.R. No. 41229 January 13, 1992

The Alikpala case must be scrutinized closely. Under consideration was Section 2301 of the Tariff and
Customs Code which stated that "upon making any seizure (of prohibited goods on no-dollar imports)
the Collector of Customs shall issue a warrant of detention, but if the owner or importer desires to
secure the release of the property, the Collector may surrender it upon the filing of a sufficient bond."
The central issue was not so much the meaning of a bond but rather whether the lower court gravely
abused its discretion in restraining the Commissioner and Collector of Customs, from proceeding with
the seizure and sale at public auction of the imported goods upon filing of sufficient bond. We upheld
the lower court and dismissed the petition for certiorari filed by the Commissioner of Customs, ruling
that the lower court was within its discretion in requiring the filing of a surety bond instead of a cash
bond as subsequently ordered by the Collector of Customs because: 1) the latter did not even bother to
inquire as to the sufficiency of the bonds nor investigated the solvency of the bonding company; 2) to
require the owners to put up a cash bond in the amount of P513,865 was prohibitive and unrealistic and
3) the filing of a surety bond was already an established practice at the Bureau of Customs.

Verily, in Alikpala, the lower court should have required the filing of a cash bond instead, if the
circumstances so warranted. But for the reasons aforementioned, it chose to require a surety bond, a
course of action subsequently upheld by the Court of Appeals on the principal ground that Section 2301
of the Tariff Code was liberal enough to permit the filing of a surety bond as reflected in the use of the
words "sufficient bond." Thus, in the instant case, the appellate court misconstrued the meaning of a
bond. Oblivious to the nuances of the Alikpala case, it readily applied its restrictive concept of a bond.

Needless to say, contrary to the private respondent's argument that PD 463 disallows the filing of a cash
bond, we hold that it is entirely upon the discretion of the lower court to require the filing of either a
cash bond or a surety bond so long as the owner or possessor of the land is protected as to
compensation for damage and rental. Both C.A. 137 and P.D. 463 are not wanting in these twin
safeguards. The difference in phraseology is not substantive. While Section 67 of C.A. 137 states that
Evangelista vs. Court of Appeals, 205 SCRA 83, G.R. No. 41229 January 13, 1992

in case of refusal of the owner to grant written authority, the same shall be granted by the court as soon
as the applicant deposits the amount fixed as value of the land and as compensation for any resulting
damage, or files a bond to be approved by the court sufficient to insure the payment of rental of the
land, Section 12 of P.D. No. 463 also provides that pending the determination of the amount of
compensation and/or rental due the owner or possessor, the court, upon recommendation of the
Director (of Mines), shall permit the interested person to enter, prospect and/or undertake other mining
operations on the disputed land upon the posting of a bond which the court shall consider adequate to
answer for any damage caused to the owner or possessor of the land resulting by reason of such entry,
prospecting, and any other mining operation. Evangelista vs. Court of Appeals, 205 SCRA 83, G.R. No.
41229 January 13, 1992