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G.R. NO.

88050 JANUARY 30, 1992


PETITIONER STRONGHOLD INSURANCE COMPANY, INC.
RESPONDENTS HON. COURT OF APPEALS and ADRIANO URTESUELA

Facts:

In 1982, Adriano Urtesuela (Urtesuela), a Filipino seaman, was hired as captain of the
vessel M/V Oryx by a domestic recruiting and placement agency, Pan Asian Logistics and
Trading (Pan Asian), on behalf of its foreign principalQatar National Fishing Co. The required
surety bond (P50, 000) was submitted by Pan Asian and Stronghold Insurance Company, Inc.
(Stronghold). However, Urtesuela was terminated three months into his one-year contract and
thereby filed a complaint against Pan Asian and his former employer with the POEA for breach
of contract and damages. The POEA rendered a decision in favor of Urtesuela and issued a writ
of execution against Pan Asians cash bond (P10, 000) as the latter already ceased to operate.
Subsequently, Urtesuela filed a complaint against Stronghold on the basis of the
aforementioned surety bond and prayed for the value thereof plus attorney's fees and litigation
costs. The Court of Appeals (CA) ruled in favor of Urtesuela. Accordingly, Stronghold seeks
the reversal of CAs Decision; it invokes due process claiming that in the first place, it was not
impleaded in the complaint neither was it notified nor did it participate in the hearing to be
specifically directed to pay the damages awarded to Urtesuela, in order to escape its liability on
the surety bond executed for the protection of the latter as a Filipino seaman. The case was
brought on a petition before the Supreme Court but to no avail.

Issue/s:

Whether or not Stronghold, as surety, was condemned to pay without due process of law.

Ruling:

No. As held in the case of Aguasin v. Velasquez, although it is an elementary right for
the surety to be heard and to be informed that the property seeking indemnity would hold it
liable, the instant case, as excerpted from the same is "different from those in which the surety,
by law and/or by the terms of his contract, has promised to abide by the judgment against the
principal and renounced the right to be sued or cited." Strictly interpreted, this means that
whether or not the surety (Stronghold) was impleaded in the complaint and had the opportunity
to defend itself, it already agreed to answer for whatever decision might be rendered against the
Principal (Pan Asia) because of the surety bond wherein it clearly bound itself with the Principal
for whatever liability the POEA may adjudge/impose against it.

Ratio Decidendi:

The printed form of the surety bond prepared by the petitioner shows its agreement that
"notice to the Principal is notice to the surety." Whereby, under this commitment, it has been
given an opportunity to participate in the litigation and to present its side, if it so chose, to avoid
liability. Since it decided not to intervene, it cannot complain to have been denied due process
because it is also a right of a party to not be compelled to speak if it chooses to be silent. This
Court has consistently held in cases that if one opts to be silent where he has a right to speak,
he cannot later be heard to complain that he was unduly silenced. The Court upheld the
fiduciary relationship between the principal and the surety, which is the legal and also practical
reason why the latter is willing to answer for the liabilities of the former.