Section 4(b), Rule 58 of the Rules provides that the injunction bond is answerable for all damages that may be occasioned by the improper issuance of a writ of preliminary injunction.

G.R. No. 189358               October 8, 2014

CENTENNIAL GUARANTEE ASSURANCE CORPORATION, Petitioner,
vs.
UNIVERSAL MOTORS CORPORATION, RODRIGO T. JANEO, JR., GERARDO GELLE, NISSAN CAGAYAN DE ORO DISTRIBUTORS, INC., JEFFERSON U. ROLIDA, and PETER YAP, Respondents.

"x x x.

Now, going to the second issue as above-stated, the Court resolves that CGAC’s liability should – as the CA correctly ruled – be confined to the amount of _1,000,000.00, and not _500,000.00 as the latter purports.

Section 4(b), Rule 58 of the Rules provides that the injunction bond is answerable for all damages that may be occasioned by the improper issuance of a writ of preliminary injunction.31 The Court has held in Paramount Insurance Corp. v. CA32 that:

The bond insures with all practicable certainty that the defendant may sustain no ultimate loss in the event that the injunction could finally be dissolved. Consequently, the bond may obligate the bondsmen to account to the defendant in the injunction suit for all: (1) such damages; (2) costs and damages; (3) costs, damages and reasonable attorney's fees as shall be incurred or sustained by the person enjoined in case it is determined that the injunction was wrongfully issued. 33

In this case, the R TC, in view of the improvident issuance of the April 2, 2002 Writ of Preliminary Injunction, adjudged CGAC's principals, NSSC and Orimaco, liable not only for damages as against NCOD, Rolida, and Yap but also as against UMC. As may be gleaned from the dispositive portion of the RTC Decision, the amount adjudged to the former group was P500,000.00,34 while it was found - this time, contained in the body of the same decision - that damages in the amount P4,199,355.00 due to loss of sales was incurred by UMC in the year 2002,35 or the year in which the latter was prevented from selling their products pursuant to the April 2, 2002 Writ of Preliminary Injunction. Since CGAC is answerable jointly and severally with NSSC and Orimaco for their liabilities to the above-mentioned parties for all damages caused by the improvident issuance of the said injunctive writ, and considering that the total amount of damages as above-stated evidently exhausts the full Pl ,000,000.00 amount of the injunction bond, there is perforce no reason to reverse the assailed CA Decision even on this score.

x x x."