G.R. No. 156956, 9 October 2006, 504 SCRA 53


On January 15, 2002, the RTC rendered a Decision finding the defendants (Vilfran Liner, Inc., Hilaria Villegas and Maura Villegas) jointly and severally liable to pay Del Monte Motors, Inc., P11,835,375.50 representing the balance of Vilfran Liners service contracts with respondent. The trial court further ordered the execution of the Decision against the counterbond posted by Vilfran Liner and issued by Capital Insurance and Surety Co., Inc. (CISCO).

CISCO opposed the Motion for Execution filed by respondent, claiming that the latter had no record or document regarding the alleged issuance of the counterbond; thus, the bond was not valid and enforceable.


Whether or not the security deposit held by the Insurance Commissioner pursuant to Section 203 of the Insurance Code may be levied or garnished in favor of only one insured.


No. The law expressly and clearly states that the security deposit shall be (1) answerable for all the obligations of the depositing insurer under its insurance contracts; (2) at all times free from any liens or encumbrance; and (3) exempt from levy by any claimant.

CISCO has valid outstanding policies. Its policy holders have a right under the law to be equally protected by its security deposit. To allow the garnishment of that deposit would impair the fund by decreasing it to less than the percentage of paid-up capital that the law requires to be maintained. Further, this move would create, in favor of respondent, a preference of credit over the other policy holders and beneficiaries.

*Case digest by Geraldine M. Cabucos, LLB-IV, Andres Bonifacio College Law School, SY 2018-2019