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SECTION 6 As scheduled, the public auction took place on 22 August 2000 for which respondent sheriff issued a

Certificate of Sale stating that the subject properties had been sold at public auction in favor of
respondent iBank, subject to the third-party claims of petitioners.8

G.R. No. 175145 March 28, 2008


Petitioners filed with the RTC of Pasig City the instant case for Annulment of Sheriffs Auction Sale
Proceedings and Certificate of Sale against iBank, the Clerk of Court and Ex-Officio Sheriff of RTC Makati
SPOUSES ALFREDO and SHIRLEY YAP, Petitioners, vs. INTERNATIONAL EXCHANGE City, and Sheriff Flora. The case was docketed as Civil Case No. 68088 and was raffled to Branch 264.
BANK,1 SHERIFF RENATO C. FLORA and/or OFFICE OF THE CLERK OF COURT, REGIONAL The Complaint was amended to include a prayer for the issuance of a Temporary Restraining Order
TRIAL COURT, MAKATI CITY, Respondents. and/or Writ of Preliminary Injunction.9

Before Us is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure which Engracio M. Escarias, Jr., Clerk of Court VII and Ex-Officio Sheriff of RTC Makati City, filed his Answer
seeks to set aside the Resolution2 of the Court of Appeals in CA-G.R. SP No. 95074 dated 11 July 2006 while respondents iBank and Sheriff Flora filed an Omnibus Motion (Motion to Refer the Complaint to the
which dismissed petitioner-spouses Alfredo and Shirley Yaps petition for certiorari which questioned the Office of the Clerk of Court for Raffle in the Presence of Adverse Party and Motion to Dismiss) dated 17
Order3 of Branch 264 of the Regional Trial Court (RTC) of Pasig City in Civil Case No. 68088 recalling October 2000.10
and dissolving the Writ of Preliminary Injunction dated 13 August 2001, and its Resolution4 dated 9
October 2006 denying petitioners Motion for Reconsideration.
In an Order dated 20 February 2001, Hon. Leoncio M. Janolo, Jr. denied the Omnibus Motion for lack of
merit.11Respondents iBank and Sheriff Flora filed a Motion for Reconsideration dated 26 February 2001. 12
The factual antecedents are as follows:
A hearing was held on the application for preliminary injunction. On 18 July 2001, an Order was issued by
Respondent International Exchange Bank (iBank, for brevity) filed a collection suit with application for the Judge Janolo granting petitioners application for issuance of a writ of preliminary injunction. The Order
issuance of a writ of preliminary attachment against Alberto Looyuko and Jimmy T. Go in the RTC of reads:
Makati. The case was raffled to Branch 150 and was docketed as Civil Case No. 98-791. On 7 October
1999, the trial court rendered a Decision in favor of respondent iBank and found Alberto Looyuko and
Jimmy T. Go liable, ordering them to pay the amount of ninety-six million pesos (P96,000,000.00), plus WHEREFORE, premises considered, plaintiffs application for issuance of a Writ of Preliminary Injunction
penalty. is GRANTED, and defendants and their representatives are enjoined from proceeding further with the
execution, including consolidating title and taking possession thereof, against plaintiffs real properties
covered by Transfer Certificates of Title Nos. PT-66751, PT-66749, 55469, 45229, 4621, 52987 and
A Writ of Execution on the judgment against Mr. Looyuko was implemented. Thereafter, a Writ of 36489.
Execution was issued against Mr. Go for his part of the liability. Thereupon, respondent Renato C. Flora,
Sheriff of Branch 150 of the RTC of Makati City, issued a Notice of Sheriffs Sale on 12 May 2000
notifying all the parties concerned, as well as the public in general, that the following real properties, The Writ of Preliminary Injunction shall be issued upon plaintiffs posting of a bond executed to defendant
among other properties, covered by Transfer Certificates of Title (TCTs) No. PT-66751, No. PT-66749, in the amount of Three Million Pesos (P3,000,000.00) to the effect that plaintiffs will pay defendants all
No. 55469 and No. 45229 of the Registry of Deeds of Pasig City, TCT No. 36489 of the Registry of damages which the latter may sustain by reason of the injunction if it be ultimately decided that the
Quezon City, and TCTs No. 4621 and No. 52987 of the Registry of Deeds of Mandaluyong City, allegedly injunction is unwarranted.13
owned by Mr. Go will be sold at public auction on 15 June 2000.5 Said public auction did not push
through. On 13 August 2001, upon posting a bond in the amount of three million pesos (P3,000,000.00), Judge
Janolo issued the Writ of Preliminary Injunction.14
On 13 June 2000, petitioner-spouses Alfredo and Shirley Yap filed a Complaint for Injunction with Prayer
for Temporary Restraining Order and/or Preliminary Injunction with the RTC of Pasig City. The case was Respondents iBank and Sheriff Flora filed on 29 August 2001 a Motion for Reconsideration15 of the order
docketed as Civil Case No. 67945 and was raffled to Branch 158 thereof. Petitioners sought to stop the granting the Writ of Preliminary Injunction which the trial court denied in an Order dated 21 November
auction sale alleging that the properties covered by TCTs No. PT-66751, No. PT-66749, No. 55469 and 2001.16
No. 45229 of the Registry of Deeds of Pasig City, TCT No. 36489 of the Registry of Quezon City, and
TCTs No. 4621 and No. 52987 of the Registry of Deeds of Mandaluyong City, are already owned by them
by virtue of Deeds of Absolute Sale6 executed by Jimmy Go in their favor. They further alleged that With the denial of their Motion for Reconsideration, respondents iBank and Sheriff Flora filed with the
respondent sheriff disregarded their right over the properties despite their execution of an Affidavit of Court of Appeals a Petition for Certiorari, Prohibition and Mandamus with prayer for issuance of
Adverse Claim to prove their claim over the properties and the publication of a Notice to the Public Temporary Restraining Order and/or Preliminary Injunction17 praying that it: (a) issue immediately a
warning that various deeds had already been issued in their favor evidencing their right over the same. temporary restraining order enjoining Judge Janolo from taking any action or conducting any further
proceeding on the case; (b) annul the Orders dated 18 July 2001 and 21 November 2001; and (c) order
the immediate dismissal of Civil Case No. 68088.
A second Notice of Sheriffs Sale dated 30 June 2000 was issued by Sheriff Flora scheduling a public
auction on 24 July 2000 for the afore-mentioned properties. The public auction did not happen anew.
Thereafter, a third Notice of Sheriffs Sale dated 21 July 2000 scheduling a public auction on 22 August In its decision dated 18 July 2003, the Court of Appeals dismissed the Petition. 18 It explained that no
2000 was issued. grave abuse of discretion was committed by Judge Janolo in promulgating the two Orders. It emphasized
that its ruling only pertains to the propriety or impropriety of the issuance of the preliminary injunction and
has no bearing on the main issues of the case which are still to be resolved on the merits. The Very
On 21 August 2000, the RTC of Pasig City, Branch 158, issued an Order in Civil Case No. 67945 denying Urgent Motion for Reconsideration filed by respondents iBank and Sheriff Flora was denied for lack of
petitioners application for a writ of preliminary injunction.7 merit.19
Respondents iBank and Sheriff Flora thereafter filed with this Court a Petition for Certiorari which we The provisions of Section 6, Rule 58 of the Revised Rules of Court allow dissolution of the injunction
dismissed. The Courts Resolution dated 7 March 2005 reads: granted provided there is affidavit of party or persons enjoined; an opportunity to oppose by the other
party; hearing on the issue, and filing of a bond to be fixed by the court sufficient to compensate damages
applicant may suffer by dissolution thereby.
Considering the allegations, issues and arguments adduced in the petition for certiorari, the Court
Resolves to DISMISS the petition for being a wrong remedy under the Rules and evidently used as a
substitute for the lost remedy of appeal under Rule 45 of the 1997 Rules of Civil Procedure, as amended. A preliminary injunction is merely a provisional remedy, an adjunct to the main case subject to the latters
Besides, even if treated as a petition under Rule 65 of the said Rules, the same would be dismissed for outcome. Its sole objective is to preserve the status quo until the trial court hears fully the merits of the
failure to sufficiently show that the questioned judgment is tainted with grave abuse of discretion. 20 case. The status quo is the last actual, peaceable and uncontested situation which precedes a
controversy. The status quo should be that existing at the time of the filing of the case. A preliminary
injunction should not establish new relations between the parties, but merely maintain or re-establish the
Accordingly, an Entry of Judgment was issued by the Supreme Court certifying that the resolution pre-existing relationship between them. x x x.
dismissing the case had become final and executory on 30 July 2005.21

When the complainants right or title is doubtful or disputed, he does not have a clear legal right and,
Subsequently, respondents iBank and Sheriff Flora filed with the RTC of Pasig City, Branch 264, an therefore, the issuance of injunctive relief is not proper and constitutes grave abuse of discretion. x x x. In
Omnibus Motion (To Resolve Motion to Dismiss Complaint and/or Dissolve Injunction) dated 31 January the case at bar, plaintiffs deed of sale was purported to be not duly notarized. As such, the legal right of
2006 praying that their pending Motion for Reconsideration dated 26 February 2001 which seeks for the what the plaintiffs claim is still doubtful and such legal right can only be threshed out in a full blown trial
dismissal of the case be resolved and/or the Writ of Preliminary Injunction previously issued be where they can clearly establish the right over the disputed properties.
dissolved.22

Moreover, defendants are willing to post a counter bond which could cover up to the damages in favor of
On 9 February 2006, petitioners filed their Comment thereon with Motion to Cite in Contempt the plaintiffs in case the judgment turns out to be adverse to them. Under the Rules of Civil Procedure, this is
counsel23 of respondents. They pray that the pending Motion for Reconsideration be denied for being perfectly allowed and the dissolution of the writ of injunction can accordingly be issued. In the case of
devoid of merit, and that the Motion to Dissolve Writ of Preliminary Injunction be also denied, it being a Lasala vs. Fernandez, the highest court has enunciated that "a court has the power to recall or modify a
clear defiance of the directive of the Supreme Court which ruled with finality that the injunction issued by writ of preliminary injunction previously issued by it. The issuance or recall of a preliminary writ of
the trial court was providently issued and was not tainted with grave abuse of discretion. They further ask injunction is an interlocutory matter that remains at all times within the control of the court." (G.R. No. L-
that respondents counsel be cited in contempt of court and be meted out the appropriate 16628, May 23, 1962). The defendants had shown that dissolution of the writ of injunction is just and
penalty.24 Respondents filed a Reply dated 20 February 2006. proper. It was duly shown that great and irreparable injury would severely cause the defendants if the writ
of injunction shall continue to exist.31
In a Manifestation dated 24 March 2006, respondents iBank and Sheriff Flora submitted an Affidavit of
Merit to emphasize their resolve and willingness, among other things, to file a counter-bond to cover On 5 May 2006, petitioners filed a Petition for Certiorari before the Court of Appeals asking that the trial
whatever damages petitioners may suffer should the trial court decide to dissolve the writ of preliminary courts Order dated 29 April 2006 be set aside.32
injunction.25 Petitioners filed a Counter-Manifestation with Second Motion to Cite Respondents Counsel
in Direct Contempt of Court26 to which respondents filed an Opposition.27 Petitioners filed a Reply
thereto.28 During the pendency of the Petition for Certiorari, petitioners filed before the trial court a Very Urgent
Motion to Suspend Proceedings33 to which respondents filed a Comment.34
In an Order29 dated 29 April 2006, the trial court recalled and dissolved the Writ of Preliminary Injunction
dated 13 August 2001, and ordered respondents to post a counter-bond amounting to ten million pesos. It On 11 July 2006, the Court of Appeals resolved to dismiss outright the Petition for Certiorari for failure of
directed the Branch Clerk of Court to issue a Writ Dissolving Preliminary Injunction upon the filing and petitioners to file a motion for reconsideration of the Order dated 29 April 2006.35 The Motion for
approval of the required counter-bond. The dispositive portion of the Order reads: Reconsideration36 filed by petitioners was denied.37

WHEREFORE, this Courts writ of preliminary injunction dated August 13, 2001 is recalled and dissolved. After being granted an extension of thirty days within which to file a petition for certiorari, petitioners filed
Defendants are hereby ordered to post a counter-bond amounting to ten million pesos (P10,000,000.00) the instant Petition on 14 December 2006. They made the following assignment of errors:
to cover the damages plaintiffs would incur should a favorable judgment be rendered them after trial on
the merits.
I

The Branch Clerk of Court is directed to issue a Writ Dissolving Preliminary Injunction upon the filing and
approval of defendants counter-bond.30 THE HONORABLE PUBLIC RESPONDENT JUDGE LEONCIO M. JANOLO, JR. GRAVELY ABUSED
HIS DISCRETION TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION IN DISSOLVING THE
WRIT OF PRELIMINARY INJUNCTION DATED 13 AUGUST 2001.
The trial court explained its ruling in this wise:
1. DESPITE THE FACT THAT THE COURT OF APPEALS RESOLVED WITH FINALITY
In our jurisdiction, the provisions of Rule 58 of the Revised Rules of Court allow the issuance of THAT YOUR PERITIONERS WILL "SUFFER IRREPARABLE INJURY" (C.A.s emphasis) IF
preliminary injunction. This court granted plaintiffs prayer preliminary injunction in the Order dated July NO INJUNCTION IS ISSUED.
18, 2001 and the corresponding writ issued on August 13, 2001.
2. DESPITE THE FACT THAT THE HON. SUPREME COURT RULED WITH FINALITY THAT
Defendants in this case, however, are not without remedy to pray for dissolution of preliminary injunction THE COURT A QUO DID NOT ABUSE ITS JURISDICTION WHEN IT ISSUED THE
already granted because it is only interlocutory and not permanent in nature. INJUNCTION DATED 13 AUGUST 2001, THUS, SUSTAINING THE REGULARITY OF THE
WRIT OF PRELIMINARY INJUNCTION.
II The question is: Under the circumstances obtaining in this case, may the trial court recall and dissolve the
preliminary injunction it issued despite the rulings of the Court of Appeals and by this Court that its
issuance was not tainted with grave abuse of discretion?
THE HONORABLE PUBLIC RESPONDENT JUDGE LEONCIO M. JANOLO, JR. GRAVELY ABUSED
HIS DISCRETION TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION BY FIXING THE
PHP10,000,000.00 COUNTER-BOND DESPITE THE FACT THAT THE IRREPARABLE DAMAGE TO We hold that the trial court may still order the dissolution of the preliminary injunction it previously
PETITIONERS AS A RESULT OF DISSOLVING THE WRIT OF PRELIMINARY INJUNCTION IS issued.1avvphi1 We do not agree with petitioners argument that the trial court may no longer dissolve the
INCAPABLE OF PECUNIARY ESTIMATION OR COULD NOT BE QUANTIFIED. preliminary injunction because this Court previously ruled that its issuance was not tainted with grave
abuse of discretion.
III
The issuance of a preliminary injunction is different from its dissolution. Its issuance is governed by
Section 3,38Rule 58 of the 1997 Rules of Civil Procedure while the grounds for its dissolution are
THE HONORABLE COURT OF APPEALS ERRED AND GRAVELY ABUSED ITS DISCRETION IN contained in Section 6, Rule 58 of the 1997 Rules of Civil Procedure. As long as the party seeking the
OUTRIGHTLY DISMISSING YOUR PETITIONERS PETITION FOR CERTIORARI IN CA-GR SP NO. dissolution of the preliminary injunction can prove the presence of any of the grounds for its dissolution,
95074, AS IT FAILED TO APPLY EXISTING JURISPRUDENCE TO THE EFFECT THAT A MOTION same may be dissolved notwithstanding that this Court previously ruled that its issuance was not tainted
FOR RECONSIDERATION MAY BE DISPENSED WITH WHERE THE CONTROVERTED ACT IS with grave abuse of discretion.
PATENTLY ILLEGAL OR WAS PERFORMED WITHOUT JURISDICTION OR IN EXCESS OF
JURISDICTION AS HELD IN HAMILTON VS. LEVY, (344 SCRA 821)
Section 6 of Rule 58 reads:
IV
Section 6. Grounds for objection to, or for motion of dissolution of, injunction or restraining order. The
application for injunction or restraining order may be denied, upon a showing of its insufficiency. The
THE HONORABLE COURT OF APPEALS LIKEWISE ERRED AND GRAVELY ABUSED ITS injunction or restraining order may also be denied, or, if granted, may be dissolved, on other grounds
DISCRETION WHEN IT DENIED PETITIONERS MOTION FOR RECONSIDERATION CLEARLY upon affidavits of the party or person enjoined, which may be opposed by the applicant also by affidavits.
POINTING OUT TO THE COURT THAT AS AN EXCEPTION TO THE RULE, THE REQUIRED MOTION It may further be denied, or, if granted, may be dissolved, if it appears after hearing that although the
FOR RECONSIDERATION MAY BE DISPENSED WITH. applicant is entitled to the injunction or restraining order, the issuance or continuance thereof, as the case
may be, would cause irreparable damage to the party or person enjoined while the applicant can be fully
At the outset, it must be said that the Writ of Preliminary Injunction dated 13 August 2001 issued by the compensated for such damages as he may suffer, and the former files a bond in an amount fixed by the
trial court has not yet been actually dissolved because respondents have not posted the required counter- court conditioned that he will pay all damages which the applicant may suffer by the denial or the
bond in the amount of P10,000,000.00. The dissolution thereof is primed on the filing of the counter-bond. dissolution of the injunction or restraining order. If it appears that the extent of the preliminary injunction or
restraining order granted is too great, it may be modified.

Petitioners argue that the trial court abused its discretion when it ordered the dissolution of the Writ of
Preliminary Injunction, the propriety of its issuance having been affirmed by both the Court of Appeals Under the afore-quoted section, a preliminary injunction may be dissolved if it appears after hearing that
and the Supreme Court. There being an Order by this Court that the injunction issued by the trial court although the applicant is entitled to the injunction or restraining order, the issuance or continuance
was not tainted with grave abuse of discretion, the dissolution of said writ is a clear defiance of this thereof, as the case may be, would cause irreparable damage to the party or person enjoined while the
Courts directive. applicant can be fully compensated for such damages as he may suffer, and the former files a bond in an
amount fixed by the court on condition that he will pay all damages which the applicant may suffer by the
denial or the dissolution of the injunction or restraining order. Two conditions must concur: first, the court
Respondents, on the other hand, contend that the trial court has the authority and prerogative to set aside in the exercise of its discretion, finds that the continuance of the injunction would cause great damage to
the Writ of Preliminary Injunction. They add that since petitioners Deed of Sale was not duly notarized, the defendant, while the plaintiff can be fully compensated for such damages as he may suffer; second,
the latters application for preliminary injunction is devoid of factual and legal bases. They assert that, not the defendant files a counter-bond.39 The Order of the trial court dated 29 April 2006 is based on this
being public documents, the subject deeds of sale are nothing but spurious, if not falsified, documents. ground.
They add that the continuance of the Writ of Preliminary Injunction would cause them irreparable damage
because it continues to incur damage not only for the nonpayment of the judgment award (in Civil Case
No. 98-791 before the RTC of Makati City, Br. 150), but also for opportunity losses resulting from the In the case at bar, the trial court, after hearing, found that respondents duly showed that they would suffer
continued denial of its right to consolidate title over the levied properties. great and irreparable injury if the injunction shall continue to exist. As to the second condition, the trial
court likewise found that respondents were willing to post a counter-bond which could cover the damages
that petitioners may suffer in case the judgment turns out to be adverse to them. The Order of the trial
There is no dispute that both the Court of Appeals and this Court have ruled that the issuance of the Writ court to recall and dissolve the preliminary injunction is subject to the filing and approval of the counter-
of Preliminary Injunction by the trial court was not tainted with grave abuse of discretion. Respondents bond that it ordered. Failure to post the required counter-bond will necessarily lead to the non-dissolution
tried to undo the issuance of said writ but to no avail. The Resolution on the matter attained finality on 30 of the preliminary injunction. The Order of Dissolution cannot be implemented until and unless the
July 2005 and an entry of judgment was made. required counter-bond has been posted.

This, notwithstanding, respondents filed with the RTC of Pasig City, Branch 264, an Omnibus Motion (To The well-known rule is that the matter of issuance of a writ of preliminary injunction is addressed to the
Resolve Motion to Dismiss Complaint and/or Dissolve Injunction) dated 31 January 2006 praying that sound judicial discretion of the trial court, and its action shall not be disturbed on appeal unless it is
their Motion for Reconsideration dated 26 February 2001 of the trial courts denial of their Motion to demonstrated that it acted without jurisdiction or in excess of jurisdiction or, otherwise, in grave abuse of
Dismiss which the trial court failed to resolve, be resolved and/or the Writ of Preliminary Injunction discretion. By the same token, the court that issued such a preliminary relief may recall or dissolve the
previously issued be dissolved. With this Omnibus Motion, the trial court issued the Order dated 13 writ as the circumstances may warrant.40 In the case on hand, the trial court issued the order of
August 2001 recalling and dissolving the Writ of Preliminary Injunction conditioned on the filing of dissolution on a ground provided for by the Rules of Court. The same being in accordance with the rules,
a P10,000,000.00 counter-bond. we find no reason to disturb the same.
Petitioners contend that the Court of Appeals erred and gravely abused its discretion when it dismissed SECTION 8
outright their Petition for Certiorari by failing to apply existing jurisprudence that a motion for
reconsideration may be dispensed with where the controverted act is patently illegal or was performed [G.R. No. 126462.February 5, 2003]
without jurisdiction or in excess of jurisdiction. On the other hand, respondents urge the Court to deny the NATALIA REALTY vs. CA
Petition for Review, arguing that the Court of Appeals properly applied the general rule that the filing of a
motion for reconsideration is a condition sine qua non in order that certiorari will lie.
Gentlemen:
We find petitioners contention to be untenable.
Quoted hereunder, for your information, is a resolution of this Court dated FEB 5 2003.
The rule is well settled that the filing of a motion for reconsideration is an indispensable condition to the
filing of a special civil action for certiorari.41 It must be stressed that a petition for certiorari is an G.R. No. 126462(Natalia Realty, Inc. vs. Court of Appeals, et al.)
extraordinary remedy and should be filed only as a last resort. The filing of a motion for reconsideration is
intended to afford the trial court an opportunity to correct any actual error attributed to it by way of re-
examination of the legal and factual issues.42 By their failure to file a motion for reconsideration, they Before the Court are two motions filed by private respondents: (1) Motion for Execution Against TRO Bond
deprived the trial court of the opportunity to rectify any error it committed, if there was any. (Manager's Check) and (2) Manifestation with Motion for Entry of Judgment.

Moreover, a perusal of petitioners petition for certiorari filed with the Court of Appeals shows that they On November 12, 2002, the Court dismissed the petition for certiorari filed by Natalia Realty, Inc.
filed the same because there was no appeal, or any plain, speedy and adequate remedy in the course of ("petitioner" for brevity) against Antonio Martinez, Felipe Padua, Mario Perfecto and Hermito Salodega
law except via a petition for certiorari. When same was dismissed by the Court of Appeals for failure to file ("private respondents" for brevity). The dispositive portion of the decision reads:
a motion for reconsideration of the trial courts Order, they argue that while the filing of a motion for
reconsideration is a sine qua non before a petition for certiorari is instituted, the same is not entirely "WHEREFORE, the petition is DISMISSED. The Regional Trial Court of Antipolo, Rizal, Branch 74, shall
without exception like where the controverted act is patently illegal or was performed without jurisdiction forthwith issue and cause to be immediately enforced an ALIAS WRIT OF EXECUTION of the Order of
or in excess of jurisdiction. It was only when the Court of Appeals dismissed their Petition did they argue August 3, 1995 granting possession to private respondents of portions of the parcels of land covered by
that exceptions to the general rule should apply. Their invocation of the application of the exceptions was TCT Nos. 31527 and 31528 (now No. N-67845). This decision is immediately executory. The Clerk of Court
belatedly made. The application of the exceptions should be raised in their Petition for Certiorari and not is directed to remand the records of the case to the court of origin.
when their Petition has already been dismissed. They must give their reasons and explain fully why their
case falls under any of the exceptions. This, petitioners failed to do.
Costs against petitioner.

Petitioners argument that they filed the Petition for Certiorari without filing a motion for reconsideration
because there is no appeal, or any plain, speedy and adequate remedy in the course of law except via a SO ORDERED."
Petition for Certiorari does not convince. We have held that the "plain" and "adequate remedy" referred to
in Section 1, Rule 65 of the Rules of Court is a motion for reconsideration of the assailed Order or
On November 28, 2002, private respondents filed a "Motion for Execution Against TRO Bond (Manager's
Resolution.43 The mere allegation that there is "no appeal, or any plain, speedy and adequate remedy" is
Check)". In their motion, private respondents point out that to secure the issuance of a temporary restraining
not one of the exceptions to the rule that a motion for reconsideration is a sine qua non before a petition
order, petitioner posted with the Court a Manager's Check of BPI-Family Bank, Taytay Branch, dated
for certiorari may be filed.
February 27, 1997 in the amount of P100,000.00. Petitioner posted the cash bond pursuant to the March
3, 1997 Resolution of the Court granting the motion of petitioner to file a cash bond. The pertinent portion
All told, we hold that the act of the trial court of issuing the Order dated 29 April 2006 was not patently of the Court's resolution reads:
illegal or performed without or in excess of jurisdiction. The Court of Appeals was correct in dismissing
outright petitioners Petition for Certiorari for failing to file a motion for reconsideration of the trial courts
"The motion of the petitioner dated February 25, 1997 to file a cash bond in lieu of the supersedeas bond
Order.
issued by Mercantile Insurance Company which petitioner filed on October 29, 1996 in order to expedite
the issuance of a temporary restraining order in this case and submitting a Manager's Check in the amount
Our pronouncements in this case are confined only to the issue of the dissolution of the preliminary of P100,000.00 issued by the BPI-Family Bank, Taytay Branch, is GRANTED. As prayed for, let
injunction and will not apply to the merits of the case. a TEMPORARY RESTRAINING ORDER ISSUE enjoining the respondents from enforcing the Court of
Appeals' questioned resolutions promulgated on June 27, 1995 and June 19, 1996 in CA-G.R. CV No.
44915 entitled "Natalia Realty, Inc. vs. Antonio Martinez, et al."
WHEREFORE, all considered, the Petition is hereby DENIED. The Resolutions of the Court of Appeals in
CA-GR SP No. 95074 dated 11 July 2006 and 9 October 2006 are AFFIRMED. The Order dated 29 April
2006 of Branch 264 of the Regional Trial Court (RTC) of Pasig City in Civil Case No. 68088 recalling and In view of the November 12, 2002 Decision of the Court dismissing the instant petition, private respondents
dissolving the Writ of Preliminary Injunction dated 13 August 2001 is AFFIRMED. Upon the posting by pray that the bond posted by petitioner with the Court, in the amount of P100,000.00, be executed on and
respondents of the counter-bond required, the trial court is directed to issue the Writ Dissolving released in private respondents' favor.
Preliminary Injunction. No costs.
On December 16, 2002, the Court required petitioner to file its Comment.
SO ORDERED.
Petitioner filed its "Opposition to Motion of Ceferino Padua To Have Manager's Check of P100,000.00 Be
SECTION 7 Released In Favor of Respondents" arguing for the denial of the motion of private respondents. Petitioner
contends that the manager's check deposited by it should be applied to the satisfaction of any judgment
rendered in favor of private respondents, and after satisfying the judgment, the balance should be refunded
Fortune Life vs. Luczon (supra)
to it. Petitioner insists that a hearing should be conducted to determine the extent of the damage suffered The applicable provision to private respondents' claim for damages on the bond is Section 8 of Rule 58 of
by private respondents. Petitioner invokes Section 18 of Rule 57 of the Rules of Court.The provision reads: the Rules of Court. It states that the "amount of damages to be awarded to either party, upon the bond of
the adverse party shall be claimed, ascertained, and awarded under the same procedure prescribed in
Section 20 of Rule 57." The pertinent portion of Section 20, Rule 57 in turn provides:
"Sec. 18. Disposition of money deposited.- Where the party against whom attachment had been issued has
deposited money instead of giving counter-bond, it shall be applied under the direction of the court to the
satisfaction of any judgment rendered in favor of the attaching party, and after satisfying the judgment the "xxx
balance shall be rendered to the depositor or his assignee. If the judgment is in favor of the party against
whom attachment was issued, the whole sum deposited must be refunded to him or his assignee."
If the judgment of the appellate court be favorable to the party against whom the attachment was issued,
he must claim damages sustained during the pendency of the appeal by filing an application in the
On January 13, 2003, private respondents filed a "Manifestation with Motion for Entry of Judgment". Private appellate court, with notice to the party in whose favor the attachment was issued or his surety or
respondents bewail the fact that the Regional Trial Court could not act on their motion for execution of the sureties, before the judgment of the appellate court becomes executory. The appellate court may allow
Decision of the Court dated November 12, 2002 because the records of the case have not been remanded the application to be heard and decided by the trial court.
to it. Private respondents manifest that they are now far more interested in forthwith executing the decision
of the Court granting them possession of the parcels of land covered by TCT Nos. 31527 and 31528 instead
of pursuing execution on the bond. Private respondents would rather withdraw their Motion for Execution xxx"
Against TRO Bond (Manager's Check) if the motion would only pose as an obstacle to an immediate
execution of the Court's decision. To expedite the execution of the decision, private respondents pray for In cases where injunction or a temporary restraining order is issued, the damages that the other party may
the issuance of an entry of judgment since petitioner did not file a motion for reconsideration of said suffer by reason of the writ are recoverable from the bond.[4]cralawThe Court has ruled in Socorro v.
decision. Private respondents believe that an entry of judgment is in order even while the Motion for Aquino[5]cralaw that the dissolution of the injunction even if the injunction was obtained in good faith
Execution Against TRO Bond (Manager's Check) is pending before the Court. amounts to a determination that the injunction was wrongly obtained and a right of action on the injunction
bond immediately accrues to the defendant. The dismissal of the petition in this case resulted in the
The Court resolves to reiterate its declaration in its Decision dated November 12, 2002 that said decision dissolution of the temporary restraining order, conferring on private respondents a right of action on the
is immediately executory. The Court also resolves to refer private respondents' Motion for Execution injunctive bond.
Against TRO Bond (Manager's Check) to the Regional Trial Court so that it could hear private respondents'
claim for damages. Thus, the Regional Trial Court is instructed to hear and decide private respondents' Motion for Execution
Against TRO Bond (Manager's Check) to determine the extent of damages sustained by private
Section 1 of Rule 39 of the Rules of Court provides that before a writ of execution could issue, the judgment respondents.[6]cralaw The hearing on private respondents' application for damages against
obligee must first apply for execution with the court of origin and with notice to the adverse party. Together theP100,000.00 bond posted by petitioner should not in anyway hinder the prompt execution of the order
with the motion, the judgment obligee must submit (1) certified true copies of the judgment or judgments or of the Court for the immediate execution of its November 12, 2002 Decision.
final order or orders sought to be enforced and (2) the entry of such judgment or final order.[1]cralawAn
entry of judgment is thus generally required before a writ of execution could issue. However, where the WHEREFORE, the Regional Trial Court of Antipolo, Rizal, Branch 74, is ordered to forthwith issue and
judgment or final order or resolution, or a portion thereof is ordered to be immediately executory, an entry cause to be immediately enforced an ALIAS WRIT OF EXECUTION of the Order of August 3, 1995 granting
of judgment is no longer necessary.[2]cralawSection 11 of Rule 51 of the Rules of Court clearly provides: possession to private respondents of portions of the parcels of land covered by TCT Nos. 31527 and 31528
(now No. N-67845). The Motion for Execution Against TRO Bond (Manager's Check) of private respondents
"Sec.11- Except where the judgment or final order or resolution, or a portion thereof, is ordered to be is REFERRED to the same court so that it could hear and decide the claim for damages pursuant to Section
immediately executory, the motion for its execution may only be filed in the proper court after its entry." 20, Rule 57 of the Rules of Court.

To avoid unnecessary delays and to prevent the losing party from thwarting execution, the 1997 Rules of [G.R. No. 149758. September 25, 2006]
Court has abandoned the requirement that a court must await the return of the records before it could effect
execution.[3]cralawThe Regional Trial Court, the court of origin in this case, has therefore no reason to PHILEX GOLD PHILIPPINES, INC., et al. vs. PHILEX BULAWAN SUPERVISORS UNION,
deny or delay the enforcement of execution just because the records of the case have yet to be remanded REPRESENTED BY ITS PRESIDENT, JOSE D. PAMPLIEGA
to it.

Sirs/Mesdames:
For as long as private respondents have on motion applied for a writ of execution with notice to the adverse
party and submitted certified true copies of the judgment or final orders sought to be enforced, the Regional
Trial Court should posthaste comply with the Court's directive. In its November 12, 2002 Decision, the Court Quoted hereunder, for your information, is a resolution of this Court dated SEPT. 25, 2006.
emphatically orders the Regional Court to "forthwith issue and cause to be immediately enforced an ALIAS
WRIT OF EXECUTION of the Order of August 3, 1995 granting possession to private respondents of
G.R. No. 149758 (Philex Gold Philippines, Inc., et al. vs. Philex Bulawan Supervisors Union, represented
portions of the parcels of land covered by TCT Nos. 31527 and 31528 (now No. N-67845). This decision
by its President, Jose D. Pampliega)
is immediately executory." To repeat, the absence of the records and entry of judgment should not be an
excuse in delaying the execution of the Court's decision and which decision the Court declares to be
"immediately executory". For consideration of the Court are the following:
(a) Respondent's Ex Parte Motion to Withdraw Bond; and
(b) Petitioners' Opposition (to respondent's Ex Parte Motion to Withdraw Bond)
With respect to private respondents' Motion for Execution Against TRO Bond (Manager's Check), the trial
court is directed to hear private respondents' application for damages pursuant to Section 20, Rule 57 of
the Rules of Court. Respondent union was the sole and exclusive bargaining representative of all the supervisors of petitioner
Philex Gold Philippines, Inc., a gold mining company with mine site at Vista Alegre, Nabulao, Sipalay,
Negros Occidental. On July 2, 1997, respondent union entered into a collective bargaining agreement SEC. 8. Judgment to include damages against party and sureties. - At the trial, the amount of damages to
(CBA) with petitioners covering the period from August 1, 1996 to July 31, 2001. After the signing of the be awarded to either party, upon the bond of the adverse party, shall be claimed, ascertained, and awarded
CBA, petitioners made the employees of Philex Mining Corp. from Padcal, Tuba, Benguet (referred to as under the same procedure prescribed in section 20 of Rule 57. (9a)
the "ex-Padcal" supervisors) its regular supervisory employees effective July 1, 1997. As the ex-Padcal
supervisors were maintained under a "confidential payroll" who receive a different set of benefits and higher
salaries compared to the locally-hired supervisors (referred to as the local hires) of similar rank and Correlatively, Section 20, Rule 57 thereof provides that:
classification and who perform parallel duties and functions, respondent union filed a complaint against
petitioners seeking the payment of wage differentials and damages and the rectification of the SEC. 20. Claim for damages on account of improper, irregular or excessive attachment. - An application
discriminatory salary structure and benefits between the ex-Padcal supervisors and the local hires. for damages on account of improper, irregular or excessive attachment must be filed before the trial or
before appeal is perfected or before the judgment becomes executory, with due notice to the attaching
On January 14, 2000, the Voluntary Arbitrator rendered a decision in favor of respondent union and ordered party and his surety or sureties, setting forth the facts showing his right to damages and the amount thereof.
petitioners, jointly and severally, to readjust the monthly rates of pay of the locally-hired supervisors (with Such damages may be awarded only after proper hearing and shall be included in the judgment on the
the categories of S-1 to S-5 ranks) in the same level or amount as that of the ex-Padcal supervisors and to main case.
pay the wage differentials of the locally-hired supervisors. In his Resolution of February 29, 2000, the
Voluntary Arbitrator clarified that there was no discrimination in the determination of the rates of pay of the If the judgment of the appellate court be favorable to the party against whom the attachment was issued,
supervisors, but increased by P800 a month the amount of wages of the local supervisors as their uniform he must claim damages sustained during the pendency of the appeal by filing an application in the appellate
wage increase effective October 1, 1999. court, with notice to the party in whose favor the attachment was issued or his surety or sureties, before the
judgment of the appellate court becomes executory. The appellate court may allow the application to be
Respondent union then filed a petition for review in the Court of Appeals. In the decision of April 23, 2001, heard and decided by the trial court.
the Court of Appeals reversed and set aside the Resolution dated February 29, 2000 of the Voluntary
Arbitrator and reinstated the Voluntary Arbitrator's decision dated January 14, 2000 with modification that Nothing herein contained shall prevent the party against whom the attachment was issued from recovering
the adjustment of the monthly rates of pay of the locally-hired supervisors as well as their wage differential in the same action the damages awarded to him from any property of the attaching party not exempt from
pay be made effective August 1, 1997 up to the finality of this decision. It also ordered that the case be execution should the bond or deposit given the latter be insufficient or fail to fully satisfy the award. (20a)
remanded to the Voluntary Arbitrator for the proper computation of wage differential and attorney's fees.

While it may not have filed a claim for damages before the finality of the judgment of this Court, respondent
Petitioners thus filed a petition for review on certiorari with this Court with prayer for the issuance of a union is nonetheless entitled to recover on the P100,000 bond posted by the petitioners. Respondent
temporary restraining order. After the petitioners posted a cash bond of P100,000, the Court issued a union's entitlement to the damages arises only after the finality of the decision of this Court, as it would be
temporary restraining order enjoining the execution of the decision of the Court of Appeals dated April 23, only then that it can be determined with certainty whether respondent union has incurred any damage as a
2001. result of the decision of the Court of Appeals dated April 23, 2001 being enjoined at the instance of
petitioners. Verily, the Court (First Division) in a Resolution dated October 8, 2001 stated:
On August 25, 2005, the Court rendered a decision affirming the decision of the Court of Appeals and lifting
the temporary restraining order it earlier issued. Applying the doctrine of "equal pay for equal work," the Considering the allegations contained, the issues and the arguments adduced in the petition for review on
Court ruled that petitioner company and its corporate officers were guilty of discriminating the locally-hired certiorari, with prayer for the issuance of a temporary restraining order and/or status quo order, of the
supervisors of equal rank who performed the same kind of work as the ex-Padcal supervisors. decision of the Court of Appeals dated April 23, 2001, the Court Resolves, without giving due course to the
petition, to require the respondents to COMMENT thereon, not to file a motion to dismiss, within ten (10)
Petitioners moved for a partial reconsideration averring that it had sufficiently established that there was no days from notice.
discrimination. It argued that the ex-Padcal supervisors possessed the necessary experience, training, and
skill in the underground mining method which they gained through lengthy service in the Padcal mines Acting on the prayer for issuance of temporary restraining order, the Court Resolves to issue a temporary
which used the same technology and that none of the locally-hired supervisors had undergone the same restraining order enjoining the execution of the decision dated April 23, 2001 and resolution dated August
training. On November 14, 2005, the Court denied petitioners' motion for partial reconsideration. 29, 2001 in CA-G.R. SP No. 57701 entitled "Philex Bulawan Supervisors Union, etc. vs. Philex Gold
Philippines, Inc., et al." upon the petitioners' filing of a bond in the amount of One Hundred Thousand
On December 28, 2005, respondent union filed the present Ex-Parte Motion to Withdraw Bond seeking the (P100,000.00) within a period of five (5) days from notice hereof otherwise this resolution shall be deemed
release of the P100,000 bond posted by petitioners on the temporary restraining order which the Court to be no force and effect. Said bond shall answer for the payment to private respondent of any damages
earlier issued. Respondent claims that the P100,000 bond posted by petitioners should be released in favor which it may incur by reason of the issuance of the temporary restraining order sought,if it should be finally
of its employees who would have been earlier benefited by the supposed salary adjustments in the decision adjudged that said petitioners were not entitled thereto, effective upon approval by this Court of the bond
of the Court of Appeals had the execution thereof not been stayed for 4 years. to be posted.... (Emphasis supplied.)

Petitioners counter that the temporary restraining order is intended to be a restraint only until the propriety Petitioners added that there will be no damage to respondent union and its members regarding the
of granting an injunction can be determined. Since Section 8, Rule 58 of the Rules of Court provides that supposed salary adjustments mandated by the decision of the Court of Appeals since it may still claim the
the amount of damages to be awarded shall be claimed in the same proceeding, the absence of an award amounts awarded by the Court of Appeals. The fact that the entitlement of respondent union and its
of damages by the Court's decision dated August 25, 2005 does not entitle the respondents to their claim members to the salary adjustments pursuant to the decision of the Court of Appeals has been stalled by
for damages against the petitioners' bond. Petitioners conclude that since it failed to file an application for reason of the temporary restraining order issued constitutes the damage itself, thereby warranting the
damages during the pendency of the appeal and before the decision became final and executory, recovery on the bond in favor of respondent union.
respondent union is not entitled to withdraw the bond they had posted.
WHEREFORE, in view of the foregoing, the Ex Parte Motion to Withdraw [and/or Recover on the] Bond
On the matter of preliminary injunction, Section 8, Rules 58 provides that: filed by respondent Philex Bulawan Supervisors Union is GRANTED and the opposition thereto filed by
petitioners Philex Gold Philippines, Inc. and its corporate officers is NOTED. SO ORDERED.
SECTION 9 The office of a judge exists for one solemn end - to promote the ends of justice by administering
it speedily and impartially. The judge as the person presiding over that court is the visible representation
Kho vs. CA (supra) of the law and justice.8Failure to resolve cases submitted for decision within the period fixed by law
constitutes a serious violation of the constitutional right of the parties to a speedy disposition of their
cases.9

A.M. No. MTJ-02-1453 April 29, 2003


Rules 1.02 of Canon 1 and 3.05 of Canon 3 of the Code of Judicial Conduct state:

EDITHA PALMA GIL, complainant,vs. JUDGE FRANCISCO H. LOPEZ, JR., Municipal Circuit Trial
Rule 1.02. - A judge should administer justice impartially and without delay. (Emphasis ours)
Court, Lupon, Davao Oriental, respondent.

Rule 3.05. - A judge shall dispose of the court's business promptly and decide cases within the
A magistrate should dispose of the court's business promptly and decide cases within the required
required periods. (Emphasis ours)
periods. Delay in the disposition of cases erodes the faith and confidence of the public in the institution of
justice, lowers its standards and brings them into disrepute. Every judge must cultivate a capacity for
quick decision; he must not delay the judgment which a party justly deserves. The public trust reposed in Moreover, SC Administrative Circular No. 13-87 provides:
a judge's office imposes upon him the highest degree of responsibility to promptly administer justice. 1

3. Judges shall observe scrupulously the periods prescribed by Article VIII, Section 15 of the
In an Affidavit-Complaint2 dated October 30, 2001, complainant Editha Palma Gil charged respondent Constitution for the adjudication and resolution of all cases or matters submitted in their courts.
Judge Francisco H. Lopez, Jr. of the Municipal Circuit Trial Court of Lupon, Davao Oriental, with Manifest Thus, all cases or matters must be decided or resolved within twelve months from date of
Bias and Partiality, Undue Delay in the Disposition of Case and Ignorance of the Law. submission by all lower collegiate courts while all other lower courts are given a period of three
months to do so. . . (Emphasis ours)
Complainant alleged that she is the defendant in Civil Case No. 1110 for Forcible Entry and Damages
with Preliminary Prohibitory and Mandatory Injunction, entitled "Carlos Palen, Sr., Plaintiff versus Editha Along the same vein, SC Administrative Circular No. 1-88 states:
Palma Gil, Defendant," pending before the sala of respondent judge; and that respondent failed to render
judgment therein within the thirty-day period required by Rule 70, Section 11 of the 1997 Code of Civil
Procedure. She further averred that on October 9, 2001, the plaintiff in the said case filed a motion for 6.1 All Presiding Judges must endeavor to act promptly on all motions and interlocutory
temporary restraining order, which respondent Judge granted on the same day, despite procedural matters pending before their courts. x x x .
defects therein such as the lack of a verification, bond, and service of summons, all in violation of Rule
58, Section 4 of the 1997 Rules of Civil Procedure. Complainant further assails the manner in which the Considering the summary nature of Civil Case No. 1110, which is an action for forcible entry, Rule 70,
temporary restraining order was implemented with the assistance of policemen. Section 11 of the 1997 Rules of Summary Procedure expressly provides:

In his Comment dated March 1, 2002, respondent judge denied that there was a deliberate and Period for rendition of judgment. - Within thirty (30) days after receipt of the affidavits and
unreasonable delay in the resolution of Civil Case No. 1110. He alleged that aside from his court, he had position papers, or the expiration of the period for filing the same, the court shall render
to hear the cases in the municipal courts in Governor Generoso and San Isidro, Davao Oriental due to the judgment.
inhibition of the presiding judges therein. Moreover, he alleged that the legal and factual issues raised in
Civil Case No. 1110 are complicated. Anent the alleged issuance of temporary restraining order,
respondent claims that what he issued was a status quo order because complainant's men entered the However, should the court find it necessary to clarify certain material facts, it may, during the
land in dispute and attempted to prevent the harvesting of palay by plaintiff. Finally, respondent states said period, issue an order specifying the matters to be clarified, and require the parties to
that he had to seek the assistance of the police to implement the order because his court had no regular submit affidavits or other evidence on the said matters within ten (10) days from receipt of said
sheriff and because there were armed guards employed by both parties.3 order. Judgment shall be rendered within fifteen (15) days after receipt of the last affidavit or
the expiration of the period for filing the same.
In compliance with our Resolution dated August 14, 2002, 4 both parties manifested their willingness to
submit the case on the basis of the pleadings filed.5 The court shall not resort to the foregoing procedure just to gain time for the rendition of
judgment. (Emphasis ours)
After evaluation, the Office of the Court Administrator (OCA) found respondent guilty of delay in the
rendition of judgment in Civil Case No. 1110 and erred in issuing a temporary restraining order despite Thus, respondent judge is guilty of gross inefficiency for his failure to resolve and dispose of Civil Case
procedural defects. Hence, it recommended that respondent be fined in the amount of Ten Thousand No. 1110 within the period prescribed by the Rules. The penalty for gross inefficiency ranges from
Pesos (P10,000.00). reprimand and admonition10 to removal from office11 and/or a fine.12

We agree with the findings of the OCA, however, we find the recommended penalty to be not Respondent judge likewise erred in issuing the temporary restraining order. Rule 58, Section 4 of the
commensurate with the gravity of respondent's misdeeds. 1997 Rules of Civil Procedure provides:

The reasons proffered by respondent judge, i.e., that he had to hear cases in the other courts, will not Verified application and bond for preliminary injunction or temporary restraining order. - A
excuse his delay in deciding Civil Case No. 1110.6 If he felt that he could not decide the case within the preliminary injunction or temporary restraining order may be granted only when:
reglementary period, he should have asked for a reasonable extension of time to decide the same.7
(a) The application in the action or proceeding is verified and shows facts entitling the applicant Aside from the lack of verification of the motion, no affidavits of the applicant and his witnesses were
to the relief demanded; and appended thereto. Furthermore, the assailed Order did not specify the duration of the temporary
restraining order.
(b) Unless exempted by the court, the applicant files with the court where the action or
proceeding is pending, a bond executed to the party or person enjoined, in an amount to be Respondent argues that considering that the complaint in Civil Case No. 1110 was verified and prayed for
fixed by the court, to the effect that the applicant will pay to such party or person all damages the issuance of a preliminary and prohibitory injunction, the verification of the motion for issuance of
which he may sustain by reason of the injunction or temporary restraining order if the court temporary restraining order may be dispensed with. We do not agree.
should finally decide that the applicant was not entitled thereto. Upon approval of the requisite
bond, a writ of preliminary injunction shall be issued.
The Rules as above-quoted explicitly mandate that the application for injunction should be verified. While
litigation is not a game of technicalities, every case must be prosecuted in accordance with the prescribed
(c) When an application for a writ of preliminary injunction or a temporary restraining order is procedure to insure an orderly administration of justice.14
included in a complaint or any initiatory pleading, the case, if filed in a multiple-sala court shall
be raffled to only after notice to and in the presence of the adverse party or the person to be
enjoined. In any event, such notice shall be preceded, or contemporaneously accompanied by We see nothing wrong in respondent's act of securing the assistance of the police in implementing his
service of summons, together with a copy of the complaint or initiatory pleading and the Order. Administrative Circular No. 12-85, paragraph 7 allows a judge to designate or deputize any person
applicant's affidavit and bond, upon the adverse party in the Philippines. to serve court processes and writs in remote areas in the absence of the regular sheriff thereat.

However, where the summons could not be served personally or by substituted service despite Furthermore, the better part of prudence, caution and plain conventional wisdom dictates the presence of
diligent efforts, or the adverse party is a resident of the Philippines, temporarily absent the police on account of the potentially violent situation engendered by the presence of armed followers of
therefrom or is a nonresident thereof, the requirement of prior contemporaneous service of the contending factions.
summons shall not apply.
Considering the seriousness of the respondent judge's offenses, stiffer penalties should be imposed to
(d) The application for a temporary restraining order shall thereafter be acted upon only after inculcate in him the value of being proficient in both substantive and procedural laws.
all the parties are heard in a summary hearing which shall be conducted within twenty-four (24)
hours after the sheriff's return of service and/or the records are received by the branch In Caas v. Castigador,15 we held:
selected by raffle to which the records shall be transmitted immediately.

Observance of the law which he is bound to know and sworn to uphold is required of every
The records reveal that the motion for temporary restraining order was not verified.13 Respondent judge judge. When the law is sufficiently basic, a judge owes it to his office to simply apply it;
issued the Order on the same date when the motion was filed without prior notice to the complainant and anything less than that would be constitutive of gross ignorance of the law. In short, when the
without a hearing. law is so elementary, not to be aware of it constitutes gross ignorance of the law.

The issuance of the assailed Order cannot be justified under Rule 58, Section 5 of the 1997 Rules of Civil In the case at bar, the ignorance of respondent judge is so gross that he should be held administratively
Procedure, which reads: liable even if he acted in good faith.16 Hence, the imposition of a fine in the amount of P20,000.00 is a
more appropriate penalty.
Preliminary injunction not granted without notice; exception. - No preliminary injunction shall be
grantedwithout hearing and prior notice to the person or party sought to be enjoined. If it shall WHEREFORE, based on the foregoing, respondent Judge Francisco H. Lopez, Jr. of the Municipal
appear from the facts shown by the affidavits or by the verified application that great or Circuit Trial Court of Lupon, Davao Oriental, is found GUILTY of gross ignorance of the law and gross
irreparable injury would result to the applicant before the matter can be heard on notice, the inefficiency. He is ordered to pay a FINE in the amount of Twenty Thousand Pesos (P20,000.00) and is
court to which the application for preliminary injunction was made, may issue a temporary STERNLY WARNED that a repetition of the same or similar acts shall be dealt with more severely.
restraining order to be effective only for a period of twenty (20) days from service on the party
or person sought to be enjoined, except as herein provided. Within the said twenty-day period,
the court must order said party of person to show cause, at a specified time and place, why the SO ORDERED.
injunction should not be granted, determine within the same period whether or not the
preliminary injunction shall be granted and accordingly issued the corresponding order.

However, and subject to the provisions of the preceding sections, if the matter is of extreme
urgency and the applicant will suffer grave injustice and irreparable injury, the executive judge
of a multiple-sala court or the presiding judge of a single-sala court may issue ex parte a
temporary restraining order effective for only seventy-two (72) hours from issuance but he shall
immediately comply with provisions of the next preceding section as to service of summons
and the documents to be served therewith. Thereafter, within the aforesaid seventy-two (72)
hours, the judge before whom the case is pending shall conduct a summary hearing to
determine whether the temporary restraining order shall be extended until the application for
preliminary injunction can be heard. In no case shall the total period of effectivity of the
temporary restraining order exceed twenty (20) days, including the original seventy-two (72)
hours provided therein. (Emphasis and italics ours)
RULE 59 RECEIVERSHIP Respondent bank assailed this order before the Court of Appeals on a petition for certiorari. On January
11, 1996, the Court of Appeals annulled the order for receivership and dismissed petitioners' complaint for
improper venue and lack of cause of action. The dispositive portion of the decision reads:
G.R. No. 125008 June 19, 1997

WHEREFORE, the petition for certiorari is GRANTED. Accordingly, the assailed


COMMODITIES STORAGE & ICE PLANT CORPORATION, SPOUSES VICTOR & JOHANNAH order dated December 13, 1994 (Annex A, petition) is ANNULLED and SET ASIDE
TRINIDAD,petitioners, vs. COURT OF APPEALS, JUSTICE PEDRO A.. RAMIREZ, CHAIRMAN and and respondent's complaint in Civil Case No. 94-72076 in the respondent court
FAR EAST BANK & TRUST COMPANY, respondents. (Annexes F, petition; 4, comment), is DISMISSED. Costs against respondents
except the court.
In this petition for certiorari, petitioner seeks to annul and set aside the decision and resolution of the
Court of Appeals 1 in CA-G.R. SP No. 36032 dismissing the complaint in Civil Case No. 94-72076 before SO ORDERED.
the Regional Trial Court, Branch 9, Manila.

Reconsideration was denied on May 23, 1996. 8 Hence, this petition.


The facts show that in 1990, petitioner spouses Victor and Johannah Trinidad obtained a loan of
P31,000,000.00 from respondent Far East Bank & Trust Company to finance the purchase of the Sta.
Maria Ice Plant & Cold Storage in Sta. Maria, Bulacan. The loan was secured by a mortgage over the ice Section 1 of Rule 59 of the Revised Rules of Court provides that:
plant and the land on which the ice plant stands. Petitioner spouses failed to pay their loan. The bank
extrajudicially foreclosed the mortgage and the ice plant was sold by public bidding on March 22, 1993. Sec. 1. When and by whom receiver appointed. One or more receivers of the
Respondent bank was the highest bidder. It registered the certificate of sale on September 22, 1993 and property, real or personal, which is the subject of the action, may be appointed by
later took possession of the property. the judge of the Court of First Instance in which the action is pending, or by a
Justice of the Court of Appeals or of the Supreme Court, in the following cases:
On November 22, 1993, petitioner spouses filed Civil Case No. 956-M-93 against respondent bank before
the Regional Trial Court, Malolos, Bulacan for reformation of the loan agreement, annulment of the (a) When the corporation has been dissolved, or is insolvent, or is in imminent
foreclosure sale and damages. 2 The trial court dismissed the complaint for petitioners' failure to pay the
danger of insolvency, or has forfeited its corporate rights;
docket fees. The dismissal was without prejudice to refiling of the complaint. 3

(b) When it appears from the complaint or answer, and such other proof as the
On October 28, 1994, petitioners filed Civil Case No. 94-72076 against respondent bank before the judge may require, that the party applying for the appointment of receiver has an
Regional Trial Court, Branch 9, Manila for damages, accounting and fixing of redemption period. 4 As a interest in the property or fund which is the subject of the action, and that such
provisional remedy, petitioners filed on November 16, 1994 an "Urgent Petition for Receivership." They property or fund is in danger of being lost, removed or materially injured unless a
alleged that respondent bank took possession of the ice plant forcibly and without notice to them; that receiver be appointed to guard and preserve it;
their occupation resulted in the destruction of petitioners' financial and accounting records making it
impossible for them to pay their employees and creditors; the bank has failed to take care of the ice plant
with due diligence such that the plant has started emitting ammonia and other toxic refrigerant chemicals (c) When it appears in an action by the mortgagee for the foreclosure of a mortgage
into the atmosphere and was posing a hazard to the health of the people in the community; the spouses' that the property is in danger of being wasted or materially injured, and that its value
attention had been called by several people in the barangay who threatened to inform the Department of is probably insufficient to discharge the mortgage debt, or that the parties have so
Environment and Natural Resources should they fail to take action. Petitioners thus prayed for the stipulated in the contract of mortgage;
appointment of a receiver to save the ice plant, conduct its affairs and safeguard its records during the
pendency of the case. 5
(d) After judgment, to preserve the property during the pendency of the appeal, or to
dispose of it according to the judgment, or to aid execution when the execution has
Instead of an answer, respondent bank filed on November 25, 1994 a "Motion to Dismiss and Opposition been returned unsatisfied or the judgment debtor refuses to apply his property in
to Plaintiff's Petition for Receivership." It alleged that the complaint states no cause of action and that satisfaction of the judgment, or otherwise carry the judgment into effect;
venue had been improperly laid. It also alleged that petitioners failed to pay the proper docket fees and
violated the rule on forum-shopping. 6
(e) Whenever in other cases it appears that the appointment of a receiver is the
most convenient and feasible means of preserving, administering, or disposing of
In an order dated December 13, 1994, the trial court granted the petition for receivership and appointed the property in litigation.
petitioners' nominee, Ricardo Pesquera, as receiver. The order disposed as follows:
A receiver of real or personal property, which is the subject of the action, may be appointed by
WHEREFORE, premises considered the Urgent Petition for Receivership is the court when it appears from the pleadings or such other proof as the judge may require, that
GRANTED and Mr. Ricardo Pesquera to whose appointment no opposition was the party applying for such appointment has (1) an actual interest in it; and (2) that (a) such
raised by the defendant and who is an ice plant contractor, maintainer and installer property is in danger of being lost, removed or materially injured; or (b) whenever it appears to
is appointed receiver. Accordingly, upon the filing and approval of the bond of TWO be the most convenient and feasible means of preserving or administering the property in
MILLION (P2,000,000.00) pesos which shall answer for all damages defendant may litigation. 9
sustain by reason of the receivership, said Ricardo Pesquera is authorized to
assume the powers of a receiver as well as the obligation as provided for in Rule 59
of the Rules of Court after taking his oath as such receiver. A receiver is a person appointed by the court in behalf of all the parties to the action for the purpose of
preserving and conserving the property in litigation and prevent its possible destruction or dissipation, if it
were left in the possession of any of the parties. 10 The appointment of a receiver is not a matter of
SO ORDERED. 7
absolute right. It depends upon the sound discretion of the court 11 and is based on facts and the respondent court should have refrained from ruling on the motion to dismiss because the motion itself
circumstances of each particular case. 12 was not before it. 22

Petitioners claim that the appointment of a receiver is justified under Section 1 (b) of Rule 59. They argue Again, we reject petitioners' contention. The motion to dismiss is anchored on improper venue, lack of
that the ice plant which is the subject of the action was in danger of being lost, removed and materially cause of action and forum-shopping. We agree with the respondent court that the question of venue
injured because of the following "imminent perils": relates to the principal action and is prejudicial to the ancillary issue of receivership. Although the grounds
for dismissal were not specifically raised before the appellate court, the said court may consider the same
since the petition for receivership depends upon a determination thereof. 23
6.1 Danger to the lives, health and peace of mind of the inhabitants living near the Sta. Maria Ice
Plant;
In their complaint, petitioners prayed for the following:
6.2 Drastic action or sanctions that could be brought against the plaintiff by affected third persons,
including workers who have claims against the plaintiff but could not be paid due to the numbing WHEREFORE, in view of the foregoing, it is respectfully prayed that after trial on the merits
manner by which the defendant took the Sta. Maria Ice Plant; judgment be rendered:

6.3 The rapid reduction of the Ice Plant into a scrap heap because of evident incompetence, neglect 1. Ordering the Defendant to pay COMMODITIES actual and compensatory damages in the amount
and vandalism. 13 of PESOS: TWO MILLION FIVE HUNDRED THOUSAND and 00/100 (P2,500,000.00);

A petition for receivership under Section 1 (b) of Rule 59 requires that the property or fund which is the 2 Ordering the Defendant to pay Plaintiffs moral damages in the amount of PESOS: TWO MILLION
subject of the action must be in danger of loss, removal or material injury which necessitates protection or and 00/100 (P2,000,000.00) to compensate the Plaintiffs for the anxiety and besmirched reputation
preservation. The guiding principle is the prevention of imminent danger to the property. If an action by its caused by the unjust actuations of the Defendant;
nature, does not require such protection or reservation, said remedy cannot be applied for and granted. 14
3. Ordering the Defendant to pay Plaintiffs nominal and exemplary damages in the amount of
In the instant case, we do not find the necessity for the appointment of a receiver. Petitioners have not PESOS: FIVE HUNDRED THOUSAND and 00/100 (P500,000.00) to deter the repetition of such
sufficiently shown that the Sta. Maria Ice Plant is in danger of disappearing or being wasted and reduced unjust and malicious actuations of the Defendant;
to a "scrap heap." Neither have they proven that the property has been materially injured which
necessitates its protection and preservation. 15 In fact, at the hearing on respondent bank's motion to
dismiss, respondent bank, through counsel, manifested in open court that the leak in the ice plant had 4. In order to restore the legal right of the Plaintiff COMMODITIES to redeem its foreclosed property,
already been remedied and that no other leakages had been reported since. 16 This statement has not a right which COMMODITIES has been unjustly deprived of by the malicious and bad faith
been disputed by petitioners. machinations of the Defendant, compelling the Defendant to produce the correct, lawful, official and
honest statements of account and application of payment. Concomitantly, ordering the Defendant to
accept the redemption of the foreclosed properties pursuant to Rule 39 of the Revised Rules of
At the time the trial court issued the order for receivership of the property, the problem had been Court in conjunction with Act 3135, within the prescribed period for redemption, said period to
remedied and there was no imminent danger of another leakage. Whatever danger there was to the commence from the date of receipt by the Plaintiff COMMODITIES of the correct, lawful, official and
community and the environment had already been contained. honest statements of account and application of payments;

The "drastic sanctions" that may be brought against petitioners due to their inability to pay their 5. Ordering the Defendant to pay attorney's fees in the amount of PESOS: THREE HUNDRED
employees and creditors as a result of "the numbing manner by which [respondent bank] took the ice THOUSAND (P300,000.00); and costs of litigation.
plant" does not concern the ice plant itself. These claims are the personal liabilities of petitioners
themselves. They do not constitute "material injury" to the ice plant.
Other reliefs and remedies just and equitable under the circumstances are likewise prayed for. 24

Moreover, the receiver appointed by the court appears to be a representative of petitioners. Respondent
bank alleges that it was not aware that petitioners nominated one Mr. Pesquera as receiver. 17 The Petitioners pray for two remedies: damages and redemption. The prayer for damages is based on
general rule is that neither party to a litigation should be appointed as receiver without the consent of the respondent bank's forcible occupation of the ice plant and its malicious failure to furnish them their
other because a receiver should be a person indifferent to the parties and should be impartial and statements of account and application of payments which prevented them from making a timely
disinterested. 18 The receiver is not the representative of any of the parties but of all of them to the end redemption. 25 Petitioners also pray that respondent bank be compelled to furnish them said documents,
that their interests may be equally protected with the least possible inconvenience and expense. 19 and upon receipt thereof, allow redemption of the property. They ultimately seek redemption of the
mortgaged property. This is explicit in paragraph 4 of their prayer.

The power to appoint a receiver must be exercised with extreme caution. There must be a clear showing
of necessity therefor in order to save the plaintiff from grave and irremediable loss or damage. 20 It is only An action to redeem by the mortgage debtor affects his title to the foreclosed property. If the action is
when the circumstances so demand, either because there is imminent danger that the property sought to seasonably made, it seeks to erase from the title of the judgment or mortgage debtor the lien created by
be placed in the hands of a receiver be lost or because they run the risk of being impaired, endeavouring registration of the mortgage and sale. 26 If not made seasonably, it may seek to recover ownership to the
to avoid that the injury thereby caused be greater than the one sought to be avoided. 21 land since the purchaser's inchoate title to the property becomes consolidated after expiration of the
redemption period. 27 Either way, redemption involves the title to the foreclosed property. It is a real
action.
The Court of Appeals correctly found that the trial court gravely abused its discretion in issuing the order
for receivership. The respondent court, however, went further and took cognizance of respondent bank's
motion to dismiss. And finding merit in the motion, it dismissed the complaint. Petitioners now claim that Section 2 of Rule 4 of the Revised Rules of Court provides:
Sec. 2. Venue in Courts of First Instance. (a) Real actions. Actions affecting the third member, appointed by the trial court, shall act as chairperson. The disputed properties were then
title to, or for recovery of possession, or for partition or condemnation of, or annotated with notices of lis pendens upon the instance of petitioners.
foreclosure of mortgage on, real property, shall be commenced and tried in the
province where the property or any part thereof lies. 28
On March 15, 2000, petitioners filed a Motion to Place Properties in Litigation under Receivership4 before
the trial court alleging that to their prejudice respondent had, without prior court approval and without
Where the action affects title to the property, it should be instituted in the Regional Trial Court petitioners knowledge, sold to third parties and transferred in his own name several common properties.
where the property is situated. The Sta. Maria Ice Plant & Cold Storage is located in Sta. Petitioners also averred that respondent fraudulently antedated, prior to May 12, 1992, some
Maria, Bulacan. The venue in Civil Case No. 94-72076 was therefore laid improperly. conveyances and transfers to make it appear that these were no longer part of the estate of Severino
under litigation. They further claimed that respondent was and is in possession of the common properties
in the estate of Severino, and exclusively enjoying the fruits and income of said properties and without
Finally, there is no merit in petitioners' claim that the respondent bank is no longer the real party in rendering an accounting on them and turning over the share pertaining to Torcuato. Thus, petitioners
interest after selling the ice plant to a third person during the pendency of the case. Section 20 of Rule 3 prayed to place the entire disputed estate of Severino under receivership. They nominated a certain Lope
of the Revised Rules of Court provides that in a transfer of interest pending litigation, the action may be Salantin to be appointed as receiver.
continued by or against the original party, unless the court, upon motion, directs the transferee to be
substituted in the action or joined with the original party. The court has not ordered the substitution of
respondent bank. On March 23, 2000, respondent filed his Opposition to Place the Estate of Severino Reyes under
Receivership,5denying that he had fraudulently transferred any property of the estate of Severino and
asserting that any transfer in his name of said properties was a result of the oral partition between him
IN VIEW WHEREOF, the decision dated January 11, 1996 and resolution dated May 23, 1996 of the and Torcuato that enabled the latter as well to transfer several common properties in his own name.
Court of Appeals in CA-G.R. SP No. 36032 are affirmed. Costs against petitioners. SO ORDERED.

On May 24, 2000, petitioners filed their Offer of Exhibits in support of their motion for receivership. On the
G.R. No. 155408 February 13, 2008 same date, the trial court issued an Order6 granting petitioners motion and appointed Salantin as receiver
conditioned on the filing of a PhP 50,000 bond. Respondent filed a motion for reconsideration, contending
JULIO A. VIVARES and MILA G. IGNALING, petitioners, vs. ENGR. JOSE J. REYES, respondent. that the appointment of a receiver was unduly precipitate considering that he was not represented by
counsel and thus was deprived of due process.

The Case
On August 4, 2000, the trial court allowed respondent to present his evidence to contest petitioners
grounds for the appointment of a receiver, and the trial court set the reception of respondents evidence
The kernel dispute in this petition under Rule 45 is the legality of the May 22, 2001 Resolution1 of the for September 4, 2000. However, on August 24, 2000, respondent filed a motion for postponement of the
Camiguin Regional Trial Court (RTC), Branch 28 in Civil Case No. 517, which placed the estate of September 4, 2000 scheduled hearing on the ground that he was in the United States as early as July 23,
Severino Reyes under receivership. The Court of Appeals (CA) saw it differently in CA-G.R. SP No. 2000 for medical examination. On September 5, 2000, the trial court denied respondents motion for
67492its June 18, 2002 Decision2recalled the RTC directive on the appointment of the receiver, postponement and reinstated its May 24, 2000 Order.
prompting Julio Vivares and Mila Ignaling to file the petition at bar to convince the Court to reinstate the
receivership.
On September 19, 2000, respondent filed a Manifestation with Motion to Discharge Receiver, reiterating
the circumstances which prevented him from attending the September 4, 2000 hearing and praying for
The Facts the discharge of the receiver upon the filing of a counterbond in an amount to be fixed by the court in
accordance with Section 3, Rule 59 of the 1997 Revised Rules on Civil Procedure. On October 10, 2000,
petitioners filed their undated Opposition to Motion to Discharge Receiver.
Severino Reyes was the father of respondent Jose Reyes and Torcuato Reyes. Upon the death of
Severino, respondent and Torcuato came upon their inheritance consisting of several properties. They
had an oral partition of the properties and separately appropriated to themselves said properties. Subsequently, respondent filed a Motion to Cancel Notice of Lis Pendens which was annotated on Tax
Declaration (TD) No. 112 covering Lot No. 33 allegedly belonging exclusively to him. Respondent
asserted in the motion that an adjacent property to Lot No. 33, particularly a portion of Lot No. 35, which
On May 12, 1992, Torcuato died with a last will and testament executed on January 3, 1992. In Reyes v.
is owned by a certain Elena Unchuan, was erroneously included in Lot No. 33 and, consequently, was
Court of Appeals,3 we affirmed the November 29, 1995 CA Decision, admitting the will for probate.
subjected to the notice of lis pendens. Petitioners filed their Opposition to the Motion to Cancel Lis
Pendens.
Petitioner Vivares was the designated executor of Torcuatos last will and testament, while petitioner
Ignaling was declared a lawful heir of Torcuato.
Consequently, on May 22, 2001, the trial court issued a Resolution, denying respondents motions to
discharge receiver and cancel the notice of lis pendens in TD No. 112. Respondent seasonably filed a
Believing that Torcuato did not receive his full share in the estate of Severino, petitioners instituted an partial motion for reconsideration of the May 22, 2001 Resolution, attaching copies of deeds of sale
action forPartition and Recovery of Real Estate before the Camiguin RTC, Branch 28 entitled Julio A. executed by Torcuato covering several common properties of the estate of Severino to prove that he and
Vivares, as executor of the estate of Torcuato J. Reyes and Mila R. Ignaling, as heir v. Engr. Jose J. Torcuato had indeed made an oral partition of the estate of their father, Severino, and thus allowing him
Reyes and docketed as Civil Case No. 517. With the approval of the trial court, the parties agreed that and Torcuato to convey their respective shares in the estate of Severino to third persons.
properties from the estate of Severino, which were already transferred in the names of respondent and
Torcuato prior to the latters death on May 12, 1992, shall be excluded from litigation. In short, what was
On October 19, 2001, the trial court heard respondents motion for partial reconsideration, and on the
being contested were the properties that were still in the name of Severino.
same date issued an Order denying the motion for partial reconsideration on the ground that respondent
failed to raise new matters in the motion but merely reiterated the arguments raised in previous pleadings.
On November 24, 1997, for the purpose of collating the common properties that were disputed, the trial
court directed the formation of a three-man commission with due representation from both parties, and
Aggrieved, respondent filed a Petition for Certiorari before the CA, assailing the May 22, 2001 Resolution First, petitioners asseverate that respondent alienated several common properties of Severino without
and October 19, 2001 Order of the RTC. court approval and without their knowledge and consent. The fraudulent transfers, they claim, were
antedated prior to May 12, 1992, the date of Torcuatos death, to make it appear that these properties no
longer form part of the assets of the estate under litigation in Civil Case No. 517.
The Ruling of the Court of Appeals

Petitioners position is bereft of any factual mooring.


On June 18, 2002, the CA rendered the assailed Decision, sustaining respondents position and granted
relief, thus:
Petitioners miserably failed to adduce clear, convincing, and hard evidence to show the alleged fraud in
the transfers and the antedating of said transfers. The fact that the transfers were dated prior to the
WHEREFORE, premises considered, the Petition is hereby GRANTED. The Resolution dated demise of Torcuato on May 12, 1992 does not necessarily mean the transfers were attended by fraud. He
22 May 2001 of the Regional Trial Court of Camiguin, Branch 28 in Civil Case No. 517 is who alleges fraud has the burden to prove it.
hereby reversed and set aside. The court-appointed receiver, Lope Salantin, is discharged
upon the posting by petitioner of a counterbond in the amount of P100,000.00. The notice of lis
pendens in Tax Declaration 112, in so far as it covers the property of Elena Unchuan, is Moreover, respondent has adduced documentary proof that Torcuato himself similarly conveyed several
cancelled. Let this case be remanded to the court a quo for further proceedings.7 lots in the estate of Severino based on the oral partition between the siblings. To lend credence to the
transfers executed by Torcuato but distrust to those made by respondent would be highly inequitable as
correctly opined by the court a quo.
In reversing the trial court, the CA reasoned that the court a quo failed to observe the well-settled rule that
allows the grant of the harsh judicial remedy of receivership only in extreme cases when there is an
imperative necessity for it. The CA thus held that it is proper that the appointed receiver be discharged on Indeed, receivership is a harsh remedy to be granted only in extreme situations. As early as 1914, the
the filing of a counterbond pursuant to Sec. 3, Rule 59 of the 1997 Revised Rules on Civil Procedure. Court already enunciated the doctrinal pronouncement in Velasco & Co. v. Gochuico & Co. that courts
must use utmost circumspection in allowing receivership, thus:
Moreover, the CA ratiocinated that respondent has adequately demonstrated that the appointment of the
receiver has no sufficient basis, and further held that the rights of petitioners over the properties in The power to appoint a receiver is a delicate one and should be exercised with extreme
litigation are doubly protected through the notices of lis pendens annotated on the titles of the subject caution and only under circumstances requiring summary relief or where the court is satisfied
properties. In fine, the appellate court pointed out that the appointment of a receiver is a delicate one, that there is imminent danger of loss, lest the injury thereby caused be far greater than the
requiring the exercise of discretion, and not an absolute right of a party but subject to the attendant facts injury sought to be averted. The court should consider the consequences to all of the parties
of each case. The CA found that the trial court abused its discretion in appointing the receiver and in and the power should not be exercised when it is likely to produce irreparable injustice or injury
denying the cancellation of the notice of lis pendens on TD No. 112, insofar as it pertains to the portion to private rights or the facts demonstrate that the appointment will injure the interests of others
owned by Unchuan. whose rights are entitled to as much consideration from the court as those of the complainant. 9

Aggrieved, petitioners in turn interposed a Motion for Reconsideration that was denied through the Petitioners cannot now impugn the oral partition entered into by Torcuato and respondent and hence
assailed September 24, 2002 CA Resolution. cannot also assail the transfers made by respondent of the lots which were subject of said agreement,
considering that Torcuato also sold properties based on said verbal arrangement. Indeed, the parties
agreed that the civil action does not encompass the properties covered by the oral partition. In this factual
Thus, this petition for review on certiorari is before us, presenting the following issues for consideration: setting, petitioners cannot convince the Court that the alleged fraudulent transfers of the lots made by
respondent, which purportedly form part of his share in Severinos estate based on the partition, can
I provide a strong basis to grant the receivership.
WHETHER OR NOT THE ANNOTATION OF A NOTICE OF LIS PENDENS PRECLUDES
THE APPOINTMENT OF A RECEIVER WHEN THERE IS A NEED TO SAFEGUARD THE Second, petitioner is willing to post a counterbond in the amount to be fixed by the court based on Sec. 3,
PROPERTIES IN LITIGATION. Rule 59 of the 1997 Rules of Civil Procedure, which reads:
II
WHETHER OR NOT A DULY APPOINTED RECEIVER OF PROPERTIES IN LITIGATION
SHOULD BE DISCHARGED SIMPLY BECAUSE THE ADVERSE PARTY OFFERS TO POST Sec. 3. Denial of application or discharge of receiver.The application may be denied, or the
A COUNTERBOND. receiver discharged, when the adverse party files a bond executed to the applicant, in an
III amount to be fixed by the court, to the effect that such party will pay the applicant all damages
WHETHER OR NOT THE CANCELLATION OF A NOTICE OF LIS PENDENS ANNOTATED he may suffer by reason of the acts, omissions, or other matter specified in the application as
ON TAX DECLARATION NO. 112 IS CONTRARY TO LAW.8 ground for such appointment. The receiver may also be discharged if it is shown that his
appointment was obtained without sufficient cause.
The Courts Ruling
Anchored on this rule, the trial court should have dispensed with the services of the receiver, more so
considering that the alleged fraud put forward to justify the receivership was not at all established.
The petition must be denied. Being closely related, we discuss the first and second issues together.

Petitioners advance the issue that the receivership should not be recalled simply because the adverse
Receivership not justified party offers to post a counterbond. At the outset, we find that this issue was not raised before the CA and
therefore proscribed by the doctrine that an issue raised for the first time on appeal and not timely raised
We sustain the CA ruling that the trial court acted arbitrarily in granting the petition for appointment of a in the proceedings in the lower court is barred by estoppel.10 Even if we entertain the issue, the
receiver as "there was no sufficient cause or reason to justify placing the disputed properties under contention is nevertheless devoid of merit. The assailed CA decision supported the discharge of the
receivership." receiver with several reasons including the posting of the counterbond. While the CA made a statement
that the trial court should have discharged the appointed receiver on the basis of the proposed WHEREFORE, premises considered, the Petition is hereby PARTLY GRANTED. The
counterbond, such opinion does not jibe with the import of Sec. 3, Rule 59. The rule states that the Resolution dated 22 May 2001 of the Regional Trial Court of Camiguin, Branch 28 in Civil
"application may be denied or the receiver discharged." In statutory construction, the word "may" has Case No. 517 is hereby reversed and set aside. The court-appointed receiver, Lope Salantin,
always been construed as permissive. If the intent is to make it mandatory or ministerial for the trial court is discharged upon the posting by petitioner of a counterbond in the amount of PhP
to order the recall of the receiver upon the offer to post a counterbond, then the court should have used 100,000. The notice of lis pendens in TD No. 112, including the portion allegedly
the word "shall." Thus, the trial court has to consider the posting of the counterbond in addition to other belonging to Elena Unchuan, remains valid and effective. Let this case be remanded to the
reasons presented by the offeror why the receivership has to be set aside. court a quo for further proceedings in Civil Case No. 517. No costs. SO ORDERED.

Third, since a notice of lis pendens has been annotated on the titles of the disputed properties, the rights G.R. No. 61508 March 17, 1999
of petitioners are amply safeguarded and preserved since "there can be no risk of losing the property or
any part of it as a result of any conveyance of the land or any encumbrance that may be made thereon
posterior to the filing of the notice of lis pendens."11 Once the annotation is made, any subsequent Citibank, N.A. (Formerly First National City Bank), petitioner, vs. The Honorable Court of Appeals
conveyance of the lot by the respondent would be subject to the outcome of the litigation since the fact and Douglas F. Anama, respondents.
that the properties are under custodia legis is made known to all and sundry by operation of law. Hence,
there is no need for a receiver to look after the disputed properties. At bar is a special civil action for certiorari with prayer for a temporary restraining order faulting the Court
of Appeals1 with grave abuse of discretion for nullifying the lower court's order of seizure of mortgaged
On the issue of lis pendens, petitioners argue that the mere fact that a notice of lis pendens was properties subject of a case for sum of money and replevin.
annotated on the titles of the disputed properties does not preclude the appointment of a receiver. It is
true that the notice alone will not preclude the transfer of the property pendente lite, for the title to be The facts leading to the institution of the case are as follows:
issued to the transferee will merely carry the annotation that the lot is under litigation. Hence, the notice
of lis pendens, by itself, may not be the "most convenient and feasible means of preserving or
administering the property in litigation." However, the situation is different in the case at bar. A In considering for a loan obtained from Citibank, N.A. (formerly First National City Bank), the defendant
counterbond will also be posted by the respondent to answer for all damages petitioners may suffer by (private respondent herein) Douglas Anama executed a promissory note, dated November 10, 1972, 2 to
reason of any transfer of the disputed properties in the future. As a matter of fact, petitioners can also ask pay the plaintiff bank the sum of P418,000.00 in sixty (60) equal successive monthly installments of
for the issuance of an injunctive writ to foreclose any transfer, mortgage, or encumbrance on the disputed P8,722.25, starting on the 10th day of December 1972 and on the 10th of every month thereafter. The
properties. These considerations, plus the finding that the appointment of the receiver was without said Promissory Note stipulated further that:
sufficient cause, have demonstrated the vulnerability of petitioners postulation.
(a) the loan is subject to interest at the rate of twelve percent (12%) per annum;
Fourth, it is undisputed that respondent has actual possession over some of the disputed properties
which are entitled to protection. Between the possessor of a subject property and the party asserting
(b) the promissory note and the entire amount therein stated shall become immediately due and
contrary rights to the properties, the former is accorded better rights. In litigation, except for exceptional
payable without notice or demand upon
and extreme cases, the possessor ought not to be deprived of possession over subject property. Article
539 of the New Civil Code provides that "every possessor has a right to be respected in his possession;
and should he be disturbed therein he shall be protected in or restored to said possession by the means (aa) default in the payment of any installment of principal or interest at the time when the same
established by the laws and the Rules of Court." InDescallar v. Court of Appeals, we ruled that the is due;
appointment of a receiver is not proper where the rights of the parties, one of whom is in possession of
the property, are still to be determined by the trial court.12
(bb) the occurrence of any change in the condition and affairs of the defendant, which in the
opinion of the plaintiff shall increase its credit risk;
In view of the foregoing reasons, we uphold the CA ruling that the grant of the receivership was without
sufficient justification nor strong basis.
(c) the defendant agrees to pay all costs, expenses, handling and insurance charges incurred in the
granting of the loan;
Anent the third issue that the cancellation of the notice of lis pendens on TD No. 112 is irregular as Lot
No. 33 is one of the disputed properties in the partition case, petitioners position is correct.
(d) in case the services of a lawyer is made necessary for collection, defendant shall be liable for
attorney's fees of at least ten percent (10%) of the total amount due. 3
The CA made a factual finding that the property of Unchuan was erroneously included in Lot No. 33, one
of the disputed properties in Civil Case No. 517. It then ruled that the annotation of lis pendens should be
lifted. To secure payment of the loan, private respondent Anama also constituted a Chattel Mortgage of even
date in favor of petitioner, on various machineries and equipment located at No. 1302 Epifanio delos
Santos Avenue, Quezon City, under the following terms and conditions:
This ruling is bereft of factual basis.
(a) The machineries and equipment subject of the mortgage, stand as security for defendant's
The determination whether the property of Unchuan is a part of Lot No. 33 and whether that portion really account.
belongs to Unchuan are matters to be determined by the trial court. Consequently, the notice of lis
pendens on TD No. 112 stays until the final ruling on said issues is made.
(b) All replacement, substitutions, additions, increases and accretions to the properties mortgaged
shall also be subject to the mortgage.
WHEREFORE, the petition is PARTLY GRANTED. The June 18, 2002 CA Decision in CA-G.R. SP No.
67492 isAFFIRMED with MODIFICATION insofar as it ordered the cancellation of the notice of lis
pendens in TD No. 112. As thus modified, the appealed CA Decision should read as follows:
(c) The defendant appoints the plaintiff as his attorney-in-fact with authority to enter the premises of On January 29, 1977, petitioner presented a Motion for the Issuance of an Alias Writ of Seizure, ordering
the defendant and take actual possession of the mortgaged chattels without any court order, to sell the sheriff to seize the properties involved and dispose of them in accordance with the Revised Rules of
said property to any party. Court. The lower court then gave private respondent five (5) days to oppose the said motion and on
February 22, 1977, he sent in his opposition thereto on the grounds: (1) that Citibank's P400,000 replevin
bond to answer for damages was grossly inadequate because the market value of the properties involved
(d) All expenses in carrying into effect the stipulations therein shall be for the account of the is P1,710,000 and their replacement cost is P2,342,300.00 per the appraisal report of the Appraisal and
defendant and shall form part of the amount of the obligation secured by the mortgage. Research Corp.; (2) that he was never in default to justify the seizure; (3) that the Civil Case No. 18071 of
the Court of First Instance, entitled Hernandes vs. Anama, et al., which, according to Citibank,
(e) In case the plaintiff institutes proceedings for the foreclosure of the mortgage, the plaintiff shall supposedly increased its credit risk in the alleged obligation, had already been dismissed as against him
be entitled to the appointment of a receiver without a bond. and the case terminated with the dismissal of the complaint against the remaining defendant, First
National City Bank, by the Court in its orders of January 12, 1977 and February 7, 1977; (4) that his
(defendant's) supposed obligations with Citibank were fully secured and his mortgaged properties are
(f) In case of default, the defendant shall be liable for attorney's fees and cost of collection in the more than sufficient to secure payment thereof; and (5) that the writ of seizure if issued would stop his
sum equal to twenty-five (25%) of the total amount of the indebtedness outstanding and unpaid. 4 business operations and contracts and expose him to lawsuits from customers, and also dislocate his
employees and their families entirely dependent thereon for their livelihood.
On November 25, 1974, for failure and refusal of the private respondent to pay the monthly installment
due under the said promissory note since January 1974, despite repeated demands, petitioner filed a On February 28, 1977, acting on the said Motion and private respondent's opposition, the trial court
verified complaint against private respondent Anama for the collection of his unpaid balance of issued an Order granting the Motion for Alias Writ of Seizure, ruling thus:
P405,820.52 on the said promissory note, for the delivery and possession of the chattels covered by the
Chattel Mortgage preparatory to the foreclosure thereof as provided under Section 14 of the Chattel
Mortgage Law, docketed as Civil Case No. 95991 before the then Court of First Instance of Manila. WHEREFORE, the motion for alias writ of seizure is hereby granted. At any rate, this Order gives
another opportunity for defendant and the intervenor who claims to be a part owner to file a
counterbond under Sec. 60 of Rules of Court. 5
On February 20, 1975, the defendant Anama submitted his Answer with Counterclaim, denying the
material averments of the complaint, and averring inter alia (1) that the remedy of replevin was improper
and the writ of seizure should be vacated; (2) that he signed the promissory note for P418,000.00 without Private respondent moved for reconsideration of the aforesaid order but the same was denied by the
receiving from plaintiff Citibank any amount, and was even required to pay the first installment on the Resolution of March 18, 1977, to wit:
supposed loan in December 1974; (3) that the understanding between him and the Citibank was for the
latter to release to him the entire loan applied for prior to and during the execution of his promissory note, In view of the foregoing, the motion for reconsideration is hereby denied.
but Citibank did not do so and, instead, delayed the release of any amount on the loan even after the
execution of the promissory note thereby disrupting his timetable of plans and causing him damages; (4)
that the amount released by Citibank to him up to the present was not the amount stated in the At any rate, as already stated, the defendant has still a remedy available which is to file a bond
promissory note, and his alleged default in paying the installment on the loan was due to the delay in executed to the plaintiff in double the value of the properties as stated in the plaintiff's affidavit. The
releasing the full amount of the loan as agreed upon; (5) that the macheniries and equipment described in Court at this instance therefore has no authority to stop or suspended the writ of seizure already
the chattel mortgage executed by him are really worth more than P1,000,000.00 but he merely acceded ordered. 6
to the valuation thereof by Citibank in said document because of the latter's representation that the same
was necessary to speed up the granting of the loan applied for by him; (6) that the properties covered by
said chattel mortgage are real properties installed in a more or less permanent nature at his (defendant's) Accordingly, by virtue of the Alias writ of Seizure, petitioner took possession of the mortgaged chattels of
premises in Quezon City, as admitted by Citibank in said mortgage document; (7) that the mortgage private respondent. As a consequence, the sheriff seized subject properties, dismantled and removed
contract itself stipulated that the manner and procedure for affecting the sale or redemption of the them from the premises where they were installed, delivered them to petitioner's possession on March 17,
mortgage properties, if made extrajudicial, shall be governed by Act No. 1508 and other pertinent laws 18 and 19, 1977 and advertised them for sale at public auction scheduled on March 22, 1977.
which all pertain to real properties; and (8) that because of the filing of this complaint without valid
grounds therefor, he suffered damages and incurred attorney's fees; the defendant, now private On March 21, 1977, private respondent filed with the Court of Appeals a Petition for Certiorari and
respondent, averred. Prohibition 7 with Injunction to set aside and annul the questioned resolution of the trial court on the
ground that they were issued "in excess of jurisdiction and with grave abuse of discretion" because of the
On December 2, 1974, the trial court upon proof of default of the private respondent in the payment of the "lack of evidence and clear cut right to possession of First National City Bank (herein petitioner)" top the
said loan, issued an Order of Replevin over the macheneries and equipment covered by the Chattel machineries subject of the Chattel Mortgage.
Mortgage.
On July 30, 1982, finding that the trial court acted with grave abuse of discretion amounting to excess of
However, despite the issuance of the said order of seizure of subject chattels, actual delivery of lack of jurisdiction in issuing the assailed resolutions, the Court of Appeals granted petition, holding that
possession thereof to petitioner did not take place because negotiations for an amicable settlement the provision of the Rules of Court on Replevin and Receivership have not been complied with, in that (1)
between the parties were encouraged by the trial court. there was no Affidavit of Merit accompanying the Complaint for Replevin; (2) the bond posted by Citibank
was insufficient; and (3) there was non-compliance with the requirement of a receiver's bond and oath of
office. The decretal portion of the assailed decision of the Court of Appeals, reads:
On March 24, 1975, a pre-trial conference was held and the lower court issued an order for joint
management by the petitioner and the private respondent of the latter's business for ten (10) days, after
which the former would appointed receiver for the said business. WHEREFORE, the petition is granted. The questioned resolutions issues by the respondent judge in
Civil Case No. 95991, dated February 28, 1977 and March 18, 1977, together with the writs and
processes emanating or deriving therefrom, are hereby declare null and void ab initio.
On April 1, 1975, the petitioner took over private respondent's business as receiver. When further
proposals to settle the case amicably failed, the lower court proceeded to try the case on the merits.
The respondent ex-officio sheriff of Quezon City and the respondent First National City Bank are Sec. 2. Affidavit and Bond. Upon applying or such order the plaintiff must show
hereby ordered to return all the machineries and equipment with their accessories seized, by his own affidavit or that of some other person who personally knows the facts:
dismantled and hauled, to their original and respective places and position in the shop flooring of the (a) That the plaintiff is the owner of the property claimed
petitioner's premises where these articles were, before they were dismounted, seized and hauled at particularly describing it, or is entitled to the possession
their own expense. The said respondents are further ordered to cause the repair of the concrete thereof;
foundations destroyed by them including the repair of the electrical wiring and facilities affected (b) That the property is wrongfully detained by the defendant,
during the seizure, dismanting and hauling. alleging the cause of detention thereof according to his best of
knowledge, information and belief;
(c) That it has nor been taken for a tax assessment or fine
The writ of preliminary injunction heretofore in effect is hereby made permanent. Costs against the pursuant to law, or seized under an execution, or an
private respondents. SO ORDERED 8 attachment against the property of the plaintiff, or is so seized,
that is exempt from such seizure; and
Therefrom, Citibank came to this Court via its present petition for certiorari, ascribing grave abuse of (d) The actual value of the property.
discretion to the Court of Appeals and assigning as errors, that: The plaintiff must also give a bond, executed to the defendant in double of the value
of the property as stated in the affidavit aforementioned, for the property to the
defendant of such sum as he may recover from the plaintiff in the action.
I
THE RESPONDENT COURT ERRED IN PRACTICALLY AND IN EFFECT RENDERING
JUDGMENT ON THE MERITS AGAINST THE HEREIN PETITIONER BY ORDERING THE The Court of Appeals did not pass upon the issue of who, as between Douglas Anama and Citibank, is
RETURN OF THE MACHINERIES AND EQUIPMENT AND ITS ACCESSORIES TO THEIR entitled to the possession of subject machineries, as asserted by the latter. When it ordered the
ORIGINAL AND RESPECTIVE PLACES AND POSITIONS. restoration of the said machineries to Douglas Anama (now the private respondent), it merely defendant
II to the possession of his properties, since there was a finding that the issuance of the writ was not in
THE RESPONDENT COURT ERRED IN FINDING THAT THE COMPLAINT OF THE PETITIONER accordance with the specific rules of the Rules of Court.
DID NOT COMPLY WITH THE PROVISIONS OF SEC. 2, RULE 60 OF THE RULES OF COURT.
III II
THAT THE RESPONDENT COURT ERRED IN FINDING THAT THE BOND POSTED BY THE
PETITIONER IS QUESTIONABLE AND/OR INSUFFICIENT.
IV In its second assignment of errors, petitioner theorizes that the Court of Appeals erred in
THE RESPONDENT COURT ERRED IN FINDING THAT THE PETITIONER DID NOT COMPLY finding that it did not comply with Section 2, Rule 60 of the Rules of Court requiring the replevin
WITH THE PROVISIONS OF SEC. 5, RULE 59 BY FAILING TO POST A RECEIVER'S BOND. plaintiff to attach an affidavit of merit to the compliant.
V
THE RESPONDENT ERRED IN FINDING THAT THE HON. JORGE R. COQUIA ACTED WITH
GRAVE ABUSE OF DISCRETION AMOUNTING TO EXCESS OR LACK OF JURISDICTION IN Petitioner maintains that although there was no affidavit of merit accompanying its complaint, there was
DEALING WITH THE SITUATION. nonetheless substantial compliance with the said rule as all that is required to be alleged in the affidavit of
merit was set forth in its verified complaint. Petitioner argues further that assuming arguendo that there
was non-compliance with the affidavit of merit requirement, such defense can no longer be availed of by
I private respondent Anama as it was not alleged in his Answer and was only belatedly interposed in his
Reply to the Petitioner's Comment on the Petitioner for Certiorari before the Court of Appeals.
Anent the first assigned error, petitioner contends that the Court of Appeals, by nullifying the writ of
seizure issued below, in effect, rendered judgment on the merits and adjudged private respondent Anama Petitioner is correct insofar as it contends that substantial compliance with the affidavit requirement may
as the person lawfully entitled to the possession of the properties subject of the replevin suit. It is be permissible. There is substantial compliance with the rule requiring that an affidavit of merit to support
theorized that the same cannot be done, as the case before the court below was yet at trial stage and the complaint for replevin if the complaint itself contains a statements of every fact required to be stated in
lower court still had to determine whether or not private respondent was in fact in default in the payment the affidavit of merit and the complaint is verified like an affidavit. On the matter of replevin, Justice
of his obligation to petitioner Citibank, which default would warrant the seizure of subject machineries and Vicente Francisco's Comment on the Rules of Court, states:
equipment.
Although the better practice is to keep the affidavit and pleading separate, if
The contention is untenable. A judgment is on the merits when it determines the rights and liabilities of plaintiff's pleading contains a statement of every fact which the statute requires to
the parties on the basis of the disclosed facts, irrespective of formal technical or dilatory objections, and it be shown in the affidavits, and the pleading is verified by affidavit covering every
is not necessary that there should have been a trial. 9 The assailed decision of the Court of Appeals did statement therein, this will be sufficient without a separate affidavit; but in no event
not make any adjudication on the rights and liabilities between Citibank and Douglas Anama. There was can the pleading supply the absence of the affidavit unless all that the affidavit is
no finding yet of the fact of default. The decision only ruled on the propriety of the issuance of the writ of required to contain is embodied in the pleading, and the pleading is verified in the
seizure by the trial court. As worded by the respondent court itself, "the main issues to be resolved are form required in the case of a separate affidavit. (77 CJS 65 cited in Francisco,
whether there was lack or excess of jurisdiction, or grave abuse of discretion, in the issuance of the Rules of Court of the Philippines, Vol. IV-A, p. 383)
orders in question, and there is no appeal nor any plain, speedy, and adequate remedy in the ordinary
course of law." 10
And similarly, in the case of an attachment which likewise requires an affidavit of merit, the Court held
that the absence of an affidavit of merit is not fatal where the petition itself, which is under oath, recites
In resolving the issue posed by the petition, the Court of Appeals limited its disposition to a determination the circumstances or facts constitutive of the grounds for the petition. 11
of whether or not the assailed order of seizure was issued in accordance with law, that is, whether the
provisions of the Rules of Court on delivery of personal property or replevin as a provisional remedy were
followed. The Court of Appeals relied on Ruled 60 of the Rules of Court, which prescribed the procedure The facts that must be set forth in the affidavit of merit are (1) that plaintiff owns the property particularly
for the recovery of possession of personal property, which Rule, provides: describing the same, or that he is entitled to its possession; (2) wrongful detention by defendants of said
property; (3) that the property is not taken by virtue of a tax assessment or fine pursuant to law or seized The Court reiterates its findings on the second assignment of errors, particularly on the issue of the actual
under execution or attachment or, if it is so seized, that it is exempt from seizure; and the, (4) the actual of subject properties as against their probable value. Private respondent, at the onset, has put into issues
value of the property. 12 the value of the said properties. In the Special Defenses contained in his Answer, private respondent
averred:
But, as correctly taken note of by the Court of Appeals, petitioner's complaint does not allege all the facts
that should be set forth in an affidavit of merit. Although the complaint alleges that petitioner is entitled to That while defendant admits that he executed a Chattel Mortgage in favor of
the possession of subject properties by virtue of the chattel mortgage executed by the private respondent, plaintiff, he vigorously denies that the machineries covered therein are worth
upon the latter's default on its obligation, and the defendant's alleged "wrongful detention" of the same, P200,000.00. The fact is that plaintiff knew fully well that said chattels are worth no
the said complaint does not state that subject properties were not taken by virtue of a tax assessment or less than P1,000,000.00, said defendant having acceded to said valuation upon
fine imposed pursuant to law or seized under execution or attachment or, if they were so seized, that they plaintiff's representation that it would be necessary to speed up the granting of the
are exempt from such seizure. loan.

Then too, petitioner stated the value of subject properties at a "probable value of P200,000.00, more or As here was a disagreement on the valuation of the properties in the first place, proper determination of
less". Pertinent rules require that the affidavit of merit should state the actual value of the property subject the value of the bond to be posted by the plaintiff cannot be sufficiently arrived at. Though the rules
of a replevin suit and not just its probable value. Actual value (or actual market value) means "the price specifically require that the needed bond be double the value of the properties, since plaintiff merely
which an article would command in the ordinary course of business, that is to say, when offered for sale denominated a probable value of P200,000.00 and failed to aver the properties' actual value, which is
by one willing to sell, but not under compulsion to sell and purchased by another who is willing to buy, but claimed to be much greater than that declared by plaintiff, the amount of P400,000.00 would indeed be
under no obligation to purchase it". 13Petitioner alleged that the machineries and equipment involved are insufficient as found by the Court of Appeals. The Rules of Court requires the plaintiff to "give a bond,
valued at P200,000.00 while respondent denies the same, claiming that per the appraisal report, the executed to the defendant in double the value of the property as stated in the affidavit
market value of the said properties is P1,710,000.00 and their replacement cost is P2,342,300.00. . . . ." Hence, the bond should be double the actual value of the properties involved. In this case, what
Petitioner's assertion is belied by the fact that upon taking possession of the aforesaid properties, it was posted was merely an amount which was double the probable value as declared by the plaintiff and,
insured the same for P610,593.74 and P450,000.00, separately. It bears stressing that the actual value of therefore, inadequate should there be a finding that the actual value is actually far greater than
the properties subject of a replevin is required to be in the affidavit because such actual value will be the P200,000.00. Since the valuation made by the petitioner has been disputed by the respondent, the lower
basis of the replevin bond required to be posted by the plaintiff. Therefore, when the petitioner failed to court should have determined first the actual value of the properties. It was thus as error for the said court
declare the actual value of the machineries and equipment subject of the replevin suit, there was non- to approve the bond, which was based merely on the probable value of the properties.
compliance with Section 2, Rule 60 of the Revised Rules of Court.
It should be noted that a replevin bond is intended to indemnify the defendant against any loss that he
It should be noted, however, that the private respondent interposed the defense of lack of affidavit of may suffer by reason of its being compelled to surrender the possession of the disputed property pending
merit only in his Reply to the Comment of Citibank on the Petition for Certiorari which respondent filed trial of the
with the Court of Appeals. Section 2, Rule 9 of the Revised Rules of Court, provides: action. 14 The same may also be answerable for damages if any when judgment is rendered in favor of
the defendant or the party against whom a writ of replevin was issued and such judgment includes the
return of the property to him. 15 Thus, the requirement that the bond be double the actual value of the
Sec. 2. Defenses and objections not pleaded deemed waived Defenses and properties litigated upon. Such is the case because the bond will answer for the actual loss to the plaintiff,
objections not pleaded either in a motion to dismiss or in the answer are deemed which corresponds to the value of the properties sought to be recovered and for damages, if any.
waived; except the failure to state a cause of action which may be alleged in later
pleading, . . . .
Petitioner also maintains that, assuming for the sake of argument that its replevin bond was grossly
inadequate or insufficient, the recourse of the respondent should be to post a counterbound or a
This Rule has been revised and amended, as follows: redelivery bond as provided under Section 5 of Rule 60.

Sec. 1. Defenses and objection not pleaded. Defenses and objections not Sec. 5 and 6, Rule 60 of the Rules of Court, read:
pleaded in a motion to dismiss or in the answer are deemed waived. However,
when it appears from the pleadings or the evidence on record that the court has no
jurisdiction over the subject matter, that there is another action pending between the Sec. 5. Return of property. If the defendant objects to the sufficient of the
same parties for the same cause, or that the action is barred by a prior judgment or plaintiff's bond, or of the surety or sureties thereon, he cannot require the return of
by statute of limitations, the court shall dismiss the claim. the property as in this section provided; but if he does not so object, he may, at any
time before the delivery of the property to the plaintiff, if such delivery be adjudge,
and for the payment of such sum to him as may be recovered against the
Thus, although respondent's defense of lack of affidavit of merit is meritorious, procedurally, such a defendant, and by serving a copy of such bond on the plaintiff or his attorney.
defense is no longer available for failure to plead the same in the Answer as required by the omnibus
motion rule.
Sec. 6. Disposition of property by officer. If within five (5) days after the taking of
the property by the officer, the defendant does not object to the sufficiecy of the
III bond, or of the surety or sureties thereon, or require the return of the property as
provided in the last preceding section; or if the defendant so objects, and the
Petitioner also faults the Court of Appeals for finding that the bond posted by the petitioner is plaintiff's first or new bond is approved; or if the defendant so require, and his bond
questionable and/or insufficient. It is averred that, in compliance with Section 2, Rule 60 requiring the is object to and found insufficient and he does not forthwith file an approved bond,
replevin plaintiff to post a bond in double the value of the properties involved, it filed a bond in the amount the property shall be delivered to the plaintiff, the officer must return it to the
P400,000.00 which is twice the amount of P200,000.00 declared in its complaint. defendant.
The Court held in a prior case 16 that the remedies provided under Section 5, Rule 60, are alternative Petitioner cannot therefore deny that nine days after the trial court issued the order of receivership, it
remedies. ". . . If a defendant in a replevin action wishes to have the property taken by the sheriff restored informed he private respondent that it would, as it did, assume receivership.
to him, he should, within five days from such taking, (1) post a counter-bond in double the value of said
property, and (2) serve plaintiff with a copy thereof, both requirements as well as compliance therewith
within the five-day period mentioned being mandatory." 17 This course of action is available to the The Court of Appeals found that the requirements of Section 5, Rule 59 on receivership were not
defendant for as long as he does not object to the sufficiency of the plaintiff's bond. complied with by the petitioner, particularly the filing or posting of a bond and the taking of an oath.

Conformably, a defendant in a replevin suit may demand the return of possession of the property It should be noted that under the old Rules of Court which was in effect at the time this case was still at
replevined by filing a redelivery bond executed to the plaintiff in double the value of the property as stated trial stage, a bond for the appointment of a receiver was not generally required of the applicant, except
in the plaintiff's affidavit within the period specified in Section 5 and 6. when the application wasex parte. 22 Therefore, petitioner was not absolutely required to file a bond.
Besides, as stipulated in the chattel mortgage contract between the parties, petitioner, as the mortgagee,
is entitled to the appointment of a receiver without a bond.
Alternatively, "the defendant may object to the sufficiency of the plaintiff's bond, or of the surety or
sureties thereon;" but if he does so, "he cannot require the return of the property" by posting a counter-
bond pursuant to Section 5 and 6. 18 However, the Court of Appeals was right in finding a defect in such assumption of receiver in that the
requirement of taking an oath has not been complied with Section 5, Rule 59, states:

In the case under consideration, the private respondent did not opt to cause redelivery of the
properties to him by filing a counter-bond precisely because he objected to the sufficiency of Sec. 5. Oath and bond of receiver. Before entering upon his duties, the receiver
the bond posted by plaintiff. Therefore, he need not file a counter-bond or redelivery bond. must be sworn to perform them faithfully, and must file a bond, executed to such
When such objection was not given due course in the court below when, instead of person and in such sum as the court or judge may direct, to the effect that he will
requiring the plaintiff to post a new bond, the court approved the bond in the amount of faithfully discharge the duties of receiver in the action and obey the orders of the
P400,000.00, claimed by respondent to be insufficient, and ordered the seizure of the court therein.
properties recourse to a petition for certiorari before the Court of Appeals assailing such
order is proper under the circumstances. Consequently, the trail court erred in allowing the petitioner to assume receivership over the machine
shop of private respondent without requiring the appointed receiver to take an oath.
IV
V
As its fourth assignment of errors, petitioner contends that the Court of Appeals made an error of
judgment in finding that the petitioner did not comply with the provisions of Section 5, Rule 59 by failing to In light of the foregoing, the answer to the fifth assignment of errors is in the negative. For erroneously
post a receiver's bond. Petitioner contends that although it is in agreement with the Court of Appeals that issuing thealias writ of seizure without inquiring into the sufficiency of the replevin bond and for allowing
a receiver's bond is separate and distinct from a replevin bond, under the circumstances it was not petitioner to assume receivership without the requisite oath, the Court of Appeals aptly held that the trial
required to file a receiver's bond because it did not assume receivership over the properties. It is further court acted with grave abuse of discretion in dealing with situation.
argued that assuming that it did assume receivership, the Chattel Mortgage expressly provides, that:

Under the Revised Rules of Court, the property seized under a writ of replevin is not to be delivered
In case the MORTGAGEE institutes proceedings, judicially or otherwise, for the immediately to the plaintiff. 23 This is because a possessor has every right to respected in its possession
foreclosure of this Chattel Mortgage, or to enforce any of its rights hereunder, the and may not be deprived of it without due process. 24
MORTGAGEE shall be entitled as a matter of right to the appointment of a receiver,
without bond, of the mortgaged properties and of such properties, real or personal,
claims and rights of the MORTGAGOR as shall be necessary or proper to enable As enunciated by this Court in the case of Filinvest Credit Corporation vs. Court of Appeals, 25
the said receiver to property control and dispose of the mortgaged properties. 19
The reason why the law does not allow the creditor to possess himself of the
The order of the trial court dated March 24, 1975 provided, among others, that the properties shall be mortgaged property with violence and against the will of the debtor is to be found in
under joint management for a period of ten days, after which period "the bank, by virtue of the stipulations the fact that the creditor's right of possession is conditioned upon the fact of default,
under the chattel mortgage, becomes the Receiver to perform all the obligations as such Receiver" and and the existence of this fact may naturally be the subject of controversy. The
"in the event that the bank decides not to take over the receivership, the joint management continues." 20 debtor, for instance, may claim in good faith, and rightly or wrongly, that the debt is
paid, or that for some other reason the alleged default is nonexistent. His
possession in this situation is as fully entitled to protection as that of any other
From the evidence on record, it is palpably clear that petitioner Citibank did, in fact, assume receivership. person, and in the language of Article 446 of the Civil Code, he must be respected
A letter 21dated April 1, 1975 sent by petitioner to the private respondent, reads: therein. To allow the creditor to seized the property against the will of the debtor
would make the former to a certain extent both judge and executioner in his own
Anama Engineering Service Group cause a thing which is inadmissible in the absence of unequivocal agreement in
114 R. Lagmay Street the contract itself or express provision to the effect in the statute.
San Juan, Rizal
Attention: Mr. Douglas Anama WHEREFORE, for lack of merit, the petition is hereby DISMISSED. No pronouncement as to costs. SO
Gentlemen: ORDERED.
Pursuant to the Court order, we have decided to take over your machine shop as Receiver.
We are hereby appointing Mr. Artemio T. Gonzales as our representative.
G.R. No. 111357 June 17, 1997 The difference between the two causes of action is unmistakable. In G.R. No. 60076, the petition was for
the annulment of the trial court's order requiring Tayengco to render and submit an accounting of the
rental of the buildings and apartments, while C.A. G.R. CV No. 21423 was an appeal questioning the
TRADERS ROYAL BANK, petitioner, vs. INTERMEDIATE APPELLATE COURT, and HEIRS OF THE order of the trial court authorizing the deduction by TRB of its compensation from the receivership funds.
LATE JOSE C. TAYENGCO, respondents. There is clearly no identity of causes of action here. Clearly, the last element of res judicata is absent in
the case at bar.
The factual aspects of this case have already been resolved by this Court in G.R. No. 63855, 1 wherein
we ruled the deceased spouses Jose and Salvacion Tayengco to be the lawful owners of the properties Procedural obstacles aside, we now answer the principal query posed in the instant petition.
under receivership, and G.R. No. 60076, 2 where we affirmed the validity of the appointment of petitioner
Traders Royal Bank (TRB) as receiver pendente lite.
Nobody questions the right of TRB to receive compensation. Section 8, Rule 59 of the Rules of Court,
however, explicitly provides for the manner in which it shall be paid for its services, to wit:
In view of these rulings, the receivership proceeding was duly terminated. Thus, TRB rendered its final
accounting of the funds under receivership wherein it retained the amount of P219,016.24 as its receiver's
fee, instead of turning over the entire fund to the Tayengcos. The Regional Trial Court of Iloilo, Branch 5, Sec. 8. Termination of receivership; compensation of receiver. Whenever the court, of its own
in an order dated July 5, 1988, approved the final accounting submitted by TRB, including the deduction motion or on that of either party, shall determine that the necessity for a receiver no longer exists, it
of its fee from the fund under receivership. shall, after due notice to all interested parties and hearing, settle the accounts of the receiver, direct
the delivery of the funds and other property in his hands to the persons adjudged entitled to receive
them, and order the discharge of the receiver from further duty as such. The court shall allow the
The Tayengcos assailed said order before the Court of Appeals, 3 contending that TRB's compensation receiver such reasonable compensation as the circumstances of the case warrant, to be taxed as
should have been charged against the losing party and not from the funds under receivership. costs against the defeated party, or apportioned, as justice requires. (Emphasis supplied).

In resolving this issue the Court of Appeals, 4 in its decision dated February 12, 1993, ruled that TRB It is, therefore, clear that when the services of a receiver who has been properly appointed terminates, his
cannot deduct its fee from the funds under its receivership since this must be shouldered by the losing compensation is to be charged against the defeated party, or the prevailing litigant may be made to share
party or equally apportioned among the parties-litigants. Consequently, TRB was ordered to return the the expense, as justice requires. Consequently, the trial court's order approving TRB's compensation to
P219,016.24 to the Tayengcos, and the losing parties, Cu Bie,et al., were held solely liable for TRB's be charged solely against the funds under its receivership is without legal justification; hence, it was
compensation. 5 TRB filed a motion for reconsideration, but this was denied by the appellate court in its correctly reversed by the Court of Appeals.
resolution dated August 17, 1993. 6

IN VIEW OF THE FOREGOING, the decision appealed from is AFFIRMED. Costs against petitioner. SO
In this appeal, TRB raises the following errors allegedly committed by the Court of Appeals: ORDERED.

1. The Hon. IAC (should be CA) erred when it rendered the judgment and Resolution ordering the
return by TRB of Receiver's Fee of P219,016.24 to the heirs of Jose Tayengco, as it reversed the
Decision of the Supreme Court in the case of Jose Tayengco vs. Hon. Ilarde, TRB, et al., GR No.
60076, which ordered the Trial Court to "settle the account of the receiver, TRB" to thereafter
discharge the receiver and charged as cost against the losing party;

2. The Hon. IAC had no jurisdiction in CA-GR. 21423 and erred in knowingly taking cognizance and
rendering the judgment and resolution on the issue of the payment of receiver's fee to TRB since the
same subject matter was already within the jurisdiction of the Supreme Court in GR. No. 60076;

3. The Hon. IAC erred when it rendered the judgment and Resolution which reversed the final
Supreme Court Decision in GR. No. 60076 on the payment of the receiver's fee to TRB as it violated
the Rule on "Bar by Final Judgment". 7 (Emphasis supplied).

TRB's assignment of errors submits for resolution two vital issues: (1) Is the Court of Appeals decision
dated February 12, 1993 barred by res judicata by virtue of our ruling in G.R. No. 60076 recognizing the
propriety of TRB's appointment as receiver? (2) Who is responsible for TRB's receiver's fee?

With respect to the first assigned error, we are not persuaded.

The elements of res judicata are: (1) The previous judgment has become final; (2) the prior judgment was
rendered by a court having jurisdiction over the matter and parties; (3) the first judgment was made on the
merits; and (4) there was substantial identity of parties, subject matter, and cause of action, as between
the prior and subsequent actions. 8
RULE 60 REPLEVIN ownership thereof; and that the bus subject of the complaint was not the same bus involved in the
December 13, 1990 accident.

Replevin defined
By way of Counterclaim, respondents prayed for the award of P40,326.54 in actual damages, P50,000.00
in exemplary damages, and P130,000.00 in attorneys fees and litigation expenses.
G.R. No. 169596 March 28, 2007
By Decision of December 9, 1997, the trial court dismissed petitioners complaint. On respondents
SUPERLINES TRANSPORTATION COMPANY, INC., Petitioner, vs. PHILIPPINE NATIONAL Counterclaim, it ordered petitioner to pay respondent PNCC the amount of P40,320.00 representing
CONSTRUCTION COMPANY and PEDRO BALUBAL, Respondents actual damages to the radio room.

Assailed via petition for review is the Court of Appeals Decision1 dated September 6, 2005 dismissing for Petitioner appealed to the Court of Appeals9 which held that the storage of the bus for safekeeping
lack of merit the appeal of petitioner Superlines Transportation Company, Inc. (petitioner), docketed as purposes partakes of the nature of a deposit, hence, custody or authority over it remained with Lopera
CA-G.R. CV No. 61144. who ordered its safekeeping; and that Lopera acted as respondent PNCCs agent, hence, absent any
instruction from him, respondent PNCC may not release the bus.
Petitioner is a corporation engaged in the business of providing public transportation. On December 13,
1990, one of its buses, while traveling north and approaching the Alabang northbound exit lane, swerved The appellate court thus concluded that the case should have been brought against the police authorities
and crashed into the radio room of respondent Philippine National Construction Company (PNCC). instead of respondents.

The incident was initially investigated by respondent PNCCs toll way patrol, Sofronio Salvanera, and Hence, the present petition for review.
respondent Pedro Balubal (Balubal), then head of traffic control and security department of the South
Luzon tollway.2 The bus3was thereafter turned over to the Alabang Traffic Bureau for it to conduct its own
investigation of the incident. Because of lack of adequate space, the bus was, on request of traffic The petition is impressed with merit.
investigator Pat. Cesar Lopera (Lopera), towed by the PNCC patrol to its compound where it was stored.4
Before proceeding to the substantive issues raised in the petition, the Court resolves to dispose first the
Subsequently, petitioner made several requests for PNCC to release the bus, but respondent Balubal procedural issues raised by respondents in their Comment.10
denied the same, despite petitioners undertaking to repair the damaged radio room. Respondent Balubal
instead demanded the sum of P40,000.00, or a collateral with the same value, representing respondent Respondents contend that the petition raises only questions of fact and suffers from a procedural defect
PNCCs estimate of the cost of reconstruction of the damaged radio room. By petitioners estimate, in that it failed to include "such material portions of the record as would support the petition" as required
however, the damage amounted to P10,000.00 only.5 under Section 4, Rule 4511 of the Rules of Court, hence, it should be dismissed outright.

Petitioner thus filed a complaint for recovery of personal property (replevin) with damages6 against Contrary to respondents contention, the petition raises questions of law foremost of which is whether the
respondents PNCC and Balubal with the Regional Trial Court of Gumaca, Quezon, praying as follows: owner of a personal property may initiate an action for replevin against a depositary and recover
damages for illegal distraint.
xxxx
In any event, while it is settled that this Court is not a trier of facts and does not, as a rule, undertake a re-
2. after trial on the issues, judgment be rendered examination of the evidence presented by the parties, a number of exceptions have nevertheless been
a) adjudging that plaintiff has the right to the possession of subject personal property and recognized by the Court. These exceptions are enumerated in Insular Life Assurance Company, Ltd. v.
awarding the material possession of said property to plaintiff as the sole and absolute owner Court of Appeals:12
thereof;
b) ordering defendants jointly and severally to pay the plaintiff the following: It is a settled rule that in the exercise of the Supreme Courts power of review, the Court is not a trier of
(1) the sum of P500,000.00 representing unrealized income as of the date of the facts and does not normally undertake the re-examination of the evidence presented by the contending
filing of the instant complaint and, thereafter, the sum of P7,500.00 daily until parties during the trial of the case considering that the findings of facts of the CA are conclusive and
subject passenger bus shall have been delivered to and in actual material binding on the Court. However, the Court had recognized several exceptions to this rule, to wit: (1) when
possession of plaintiff; the findings are grounded entirely on speculation, surmises or conjectures; (2) when the inference made
(2) the sum of P100,000.00 as and for attorneys fees; is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4) when the
(3) the sum of P20,000.00 as litis expenses; and judgment is based on a misapprehension of facts; (5) when the findings of facts are conflicting; (6) when
(4) the cost of suit.7 in making its findings the Court of Appeals went beyond the issues of the case, or its findings are contrary
to the admissions of both the appellant and the appellee; (7) when the findings are contrary to the trial
In view of its inability to put up the bond for the issuance of a writ of replevin, petitioner opted to forego court; (8) when the findings are conclusions without citation of specific evidence on which they are based;
the same and just wait for the courts final judgment. (9) when the facts set forth in the petition as well as in the petitioners main and reply briefs are not
disputed by the respondent; (10) when the findings of fact are premised on the supposed absence of
evidence and contradicted by the evidence on record; and (11) when the Court of Appeals manifestly
In respondents Answer8 to the complaint, they claimed that they merely towed the bus to the PNCC overlooked certain relevant facts not disputed by the parties, which, if properly considered, would justify a
compound for safekeeping pursuant to an order from the police authorities; that respondent Balubal did different conclusion. x x x (Italics in original; underscoring supplied; citations omitted)
not release the bus to petitioner in the absence of an order from the police authorities; that petitioner, in
claiming the bus, failed to present the certificate of registration and official receipt of payment to establish
As will be discussed below, number 11 of the foregoing enumeration applies in the present case.
Respecting the second procedural issue, as a rule, the failure of a petitioner to comply with any of the The Constitution grants the right against unreasonable seizures. Thus, Section 2, Article III provides:
requirements under Section 4, Rule 45 of the Rules of Court regarding the contents of and the documents
which should accompany the petition constitutes sufficient ground for its dismissal. 13
The right of the people to be secure in their persons, houses, papers, and effects against
unreasonable searches and seizures of whatever nature and for any purpose shall be inviolable, and no
In the exercise of its equity jurisdiction, however, procedural lapses may be disregarded so that a case search warrant or warrant of arrest shall issue except upon probable cause to be determined personally
may be resolved on its merits. As held in Durban Apartments Corporation v. Catacutan:14 by the judge after examination under oath or affirmation of the complainant and the witnesses he may
produce, and particularly describing the place to be searched and the persons or things to be seized.
(Underscoring supplied)
It is well to remember that this Court, in not a few cases, has consistently held that cases shall be
determined on the merits, after full opportunity to all parties for ventilation of their causes and defense,
rather than on technicality or some procedural imperfections. In so doing, the ends of justice would be The seizure and impounding of petitioners bus, on Loperas request, were unquestionably violative of
better served. The dismissal of cases purely on technical grounds is frowned upon and the rules of "the right to be let alone" by the authorities as guaranteed by the Constitution.21
procedure ought not be applied in a very rigid, technical sense, for they are adopted to help secure, not
override, substantial justice, and thereby defeat their very ends. Indeed, rules of procedure are mere tools
designed to expedite the resolution of cases and other matters pending in court. A strict and rigid The Court of Appeals reliance on Victory Liner, Inc. v. Bellosillo 22 to justify the impounding of vehicles
application of the rules that would result in technicalities that tend to frustrate rather than promote justice involved in accidents by police authorities is misplaced. The Victory Liner case was an administrative
must be avoided. case against a trial court judge. This Court explicitly declined to rule on the legality of such an order:

x x x x (Emphasis supplied; citations omitted) In the same vein, this administrative case is not the right forum to determine the issue of the legality of
respondents order requiring VLI to post a cash bond for the release of its impounded vehicle. VLI should
have raised that issue in the proper courts and not directly to us, and much less by way of an
The facts and circumstances attendant to the case dictate that, in the interest of substantial justice, this administrative case. x x x
Court resolves it on the merits.
xxxx
On to the substantive issues. Tillson v. Court of Appeals15 discusses the term replevin as follows:
To allow VLI to raise that issue before us and obtain a ruling thereon directly from us through an
The term replevin is popularly understood as "the return to or recovery by a person of goods or chattels administrative case would be to countenance a disregard of the established rules of procedure and of the
claimed to be wrongfully taken or detained upon the persons giving security to try the matter in court and hierarchy of courts. VLI would thus be able to evade compliance with the requirements inherent in the
return the goods if defeated in the action;" "the writ by or the common-law action in which goods and filing of a property petition, including the payment of docket fees. Hence, we shall shun from passing
chattels are replevied," i.e., taken or gotten back by a writ for replevin;" and to replevy, means to recover upon that issue in this case.23 (Underscoring supplied)
possession by an action of replevin; to take possession of goods or chattels under a replevin order.
Bouviers Law Dictionary defines replevin as "a form of action which lies to regain the possession of
personal chattels which have been taken from the plaintiff unlawfully x x x, (or as) the writ by virtue of This Courts statement in Victory Liner on the lack of a "clear-cut policy" refers to the practice, rightly or
which the sheriff proceeds at once to take possession of the property therein described and transfer it to wrongly, of trial court judges of issuing orders for the impounding of vehicles involved in accidents. It has
the plaintiff upon his giving pledges which are satisfactory to the sheriff to prove his title, or return the no application to the instant case which involves the seizure and distraint implemented by respondents
chattels taken if he fail so to do; the same authority states that the term, "to replevy" means " to re-deliver upon a verbal order by Lopera without the benefit or color of legality afforded by a court process, writ or
goods which have been distrained to the original possessor of them, on his giving pledges in an action of order.
replevin." The term therefore may refer either to the action itself, for the recovery of personality, or the
provisional remedy traditionally associated with it, by which possession of the property may be obtain[ed] That a year after the incident the driver of the bus was criminally charged for reckless imprudence
by the plaintiff and retained during the pendency of the action. (Emphasis and underscoring supplied; resulting to damage to property in which the bus could possibly be held as evidence does not affect the
citations omitted) outcome of this case.24As explained in Bagalihog v. Fernandez:25

In a complaint for replevin, the claimant must convincingly show that he is either the owner or clearly It is true that property held as evidence in a criminal case cannot be replevied. But the rule applies only
entitled to the possession of the object sought to be recovered,16 and that the defendant, who is in actual where the property is lawfully held, that is, seized in accordance with the rule against warrantless
or legal possession thereof, wrongfully detains the same.17 searches and seizures or its accepted exceptions. Property subject of litigation is not by that fact alone in
custodia legis. As the Court said in Tamisin v. Odejar, 26 "A thing is in custodia legis when it is shown that
Petitioners ownership of the bus being admitted by respondents,18 consideration of whether respondents it has been and is subjected to the official custody of a judicial executive officer in pursuance of his
have been wrongfully detaining it is in order. execution of a legal writ." Only when property is lawfullytaken by virtue of legal process is it considered in
the custody of the law, and not otherwise. (Emphasis and underscoring supplied; italics in the original;
citations omitted)
Following the conduct of an investigation of the accident, the bus was towed by respondents on the
request of Lopera.19 It was thus not distrained or taken for a tax assessment or a fine pursuant to law, or
seized under a writ of execution or preliminary attachment, or otherwise placed under custodia legis. Petitioners prayer for recovery of possession of the bus is, in light of the foregoing discussion, thus in
order.

In upholding the dismissal of petitioners complaint, the Court of Appeals held that while "there is no law
authorizing the impounding of a vehicle involved in an accident by the police authorities, x x x neither is As for petitioners claim for damages, the Court finds that it cannot pass upon the same without
there a law making the impounding of vehicles involved in accidents illegal." It added that "the Supreme impleading Lopera and any other police officer responsible for ordering the seizure and distraint of the
Court is of the view that there is yet no clear-cut policy or rule on the matter."20 The appellate court is bus. The police authorities, through Lopera, having turned over the bus to respondents for safekeeping, a
mistaken. contract of deposit27 was perfected between them and respondents.
Petitioners failure to implead indispensable parties is not, of course, fatal to its cause of action, Despite the abolition of the CSMG/FSD, Astorga continued reporting for work. But on March 3, 1998,
misjoinder or non-joinder of parties not being a ground for its dismissal.28 Domingo v. Scheer29 elucidates: SMART issued a memorandum advising Astorga of the termination of her employment on ground of
redundancy, effective April 3, 1998. Astorga received it on March 16, 1998.7
However, the non-joinder of indispensable parties is not a ground for the dismissal of an action. Parties
may be added by order of the court on motion of the party or on its own initiative at any stage of the The termination of her employment prompted Astorga to file a Complaint8 for illegal dismissal, non-
action and/or such times as are just. If the petitioner/plaintiff refuses to implead an indispensable party payment of salaries and other benefits with prayer for moral and exemplary damages against SMART
despite the order of the court, the latter may dismiss the complaint/petition for the petitioner/plaintiffs and Ann Margaret V. Santiago (Santiago). She claimed that abolishing CSMG and, consequently,
failure to comply therefor. The remedy is to implead the non-party claimed to be indispensable. terminating her employment was illegal for it violated her right to security of tenure. She also posited that
(Emphasis and underscoring supplied; citations omitted) it was illegal for an employer, like SMART, to contract out services which will displace the employees,
especially if the contractor is an in-house agency.9
For petitioner to pursue its claim for damages then, it or the trial court motu proprio may implead as
defendants the indispensable parties Lopera and any other responsible police officers. SMART responded that there was valid termination. It argued that Astorga was dismissed by reason of
redundancy, which is an authorized cause for termination of employment, and the dismissal was effected
in accordance with the requirements of the Labor Code. The redundancy of Astorgas position was the
WHEREFORE, the assailed Court of Appeals Decision is REVERSED and SET ASIDE. result of the abolition of CSMG and the creation of a specialized and more technically equipped SNMI,
which is a valid and legitimate exercise of management prerogative.10
The prayer of petitioner, Superlines Transportation Company, Inc., for recovery of possession of personal
property is GRANTED. In the meantime, on May 18, 1998, SMART sent a letter to Astorga demanding that she pay the current
market value of the Honda Civic Sedan which was given to her under the companys car plan program, or
The records of the case are REMANDED to the court of origin, the Regional Trial Court, Branch 62, to surrender the same to the company for proper disposition.11 Astorga, however, failed and refused to do
Gumaca, Quezon, which is DIRECTED to REINSTATE petitioners complaint to its docket if petitioner is either, thus prompting SMART to file a suit for replevin with the Regional Trial Court of Makati (RTC) on
still interested to pursue its claim for damages and to act in accordance with the foregoing August 10, 1998. The case was docketed as Civil Case No. 98-1936 and was raffled to Branch 57.12
pronouncement of the Court. SO ORDERED.
Astorga moved to dismiss the complaint on grounds of (i) lack of jurisdiction; (ii) failure to state a cause of
NATURE OF THE PROCEEDINGS action; (iii) litis pendentia; and (iv) forum-shopping. Astorga posited that the regular courts have no
jurisdiction over the complaint because the subject thereof pertains to a benefit arising from an
employment contract; hence, jurisdiction over the same is vested in the labor tribunal and not in regular
G.R. No. 148132 January 28, 2008 courts.13

SMART COMMUNICATIONS, INC., petitioner, vs. REGINA M. ASTORGA, respondent. Pending resolution of Astorgas motion to dismiss the replevin case, the Labor Arbiter rendered a
Decision14 dated August 20, 1998, declaring Astorgas dismissal from employment illegal. While
recognizing SMARTs right to abolish any of its departments, the Labor Arbiter held that such right should
For the resolution of the Court are three consolidated petitions for review on certiorari under Rule 45 of be exercised in good faith and for causes beyond its control. The Arbiter found the abolition of CSMG
the Rules of Court. G.R. No. 148132 assails the February 28, 2000 Decision1 and the May 7, 2001 done neither in good faith nor for causes beyond the control of SMART, but a ploy to terminate Astorgas
Resolution2 of the Court of Appeals (CA) in CA-G.R. SP. No. 53831. G.R. Nos. 151079 and 151372 employment. The Arbiter also ruled that contracting out the functions performed by Astorga to an in-
question the June 11, 2001 Decision3 and the December 18, 2001 Resolution4 in CA-G.R. SP. No. 57065. house agency like SNMI was illegal, citing Section 7(e), Rule VIII-A of the Rules Implementing the Labor
Code.
Regina M. Astorga (Astorga) was employed by respondent Smart Communications, Incorporated
(SMART) on May 8, 1997 as District Sales Manager of the Corporate Sales Marketing Group/ Fixed Accordingly, the Labor Arbiter ordered:
Services Division (CSMG/FSD). She was receiving a monthly salary of P33,650.00. As District Sales WHEREFORE, judgment is hereby rendered declaring the dismissal of [Astorga] to be illegal
Manager, Astorga enjoyed additional benefits, namely, annual performance incentive equivalent to 30% and unjust. [SMART and Santiago] are hereby ordered to:
of her annual gross salary, a group life and hospitalization insurance coverage, and a car plan in the 1. Reinstate [Astorga] to [her] former position or to a substantially equivalent position, without
amount of P455,000.00.5 loss of seniority rights and other privileges, with full backwages, inclusive of allowances and
other benefits from the time of [her] dismissal to the date of reinstatement, which computed as
In February 1998, SMART launched an organizational realignment to achieve more efficient operations. of this date, are as follows:
This was made known to the employees on February 27, 1998.6 Part of the reorganization was the (a) Astorga
outsourcing of the marketing and sales force. Thus, SMART entered into a joint venture agreement with
NTT of Japan, and formed SMART-NTT Multimedia, Incorporated (SNMI). Since SNMI was formed to do BACKWAGES; (P33,650.00 x 4 months)
the sales and marketing work, SMART abolished the CSMG/FSD, Astorgas division.
UNPAID SALARIES (February 15, 1998-April 3, 1998
To soften the blow of the realignment, SNMI agreed to absorb the CSMG personnel who would be
recommended by SMART. SMART then conducted a performance evaluation of CSMG personnel and February 15-28, 1998
those who garnered the highest ratings were favorably recommended to SNMI. Astorga landed last in the
performance evaluation, thus, she was not recommended by SMART. SMART, nonetheless, offered her March 1-31, [1998]
a supervisory position in the Customer Care Department, but she refused the offer because the position
carried lower salary rank and rate. April 1-3, 1998
CAR MAINTENANCE ALLOWANCE undertaken by SMART = P resulting
8,000.00 in the abolition of CSMG was a legitimate exercise of management
(P2,000.00 x 4) prerogative. It rejected Astorgas posturing that her non-absorption into SNMI was tainted with bad faith.
However, the CA found that SMART failed to comply with the mandatory one-month notice prior to the
FUEL ALLOWANCE intended termination.=PAccordingly,
14,457.83 the CA imposed a penalty equivalent to Astorgas one-month salary for
(300 liters/mo. x 4 mos. at P12.04/liter) this non-compliance. The CA also set aside the NLRCs order for the return of the company vehicle
holding that this issue is not essentially a labor concern, but is civil in nature, and thus, within the
competenceTOTAL = P211,415.52
of the regular court to decide. It added that the matter had not been fully ventilated before
the NLRC, but in the regular court.
xxxx
3. Jointly and severally pay moral damages in the amount of P500,000.00 x x x and exemplary
damages in the amount of P300,000.00. x x x Astorga filed a motion for reconsideration, while SMART sought partial reconsideration, of the Decision.
4. Jointly and severally pay 10% of the amount due as attorneys fees. On December 18, 2001, the CA resolved the motions, viz.:
SO ORDERED.15 WHEREFORE, [Astorgas] motion for reconsideration is hereby PARTIALLY GRANTED.
[Smart] is hereby ordered to pay [Astorga] her backwages from 15 February 1998 to 06
Subsequently, on March 29, 1999, the RTC issued an Order16 denying Astorgas motion to dismiss the November 1998. [Smarts] motion for reconsideration is outrightly DENIED.
replevin case. In so ruling, the RTC ratiocinated that: SO ORDERED.25
Assessing the [submission] of the parties, the Court finds no merit in the motion to dismiss.
As correctly pointed out, this case is to enforce a right of possession over a company car
assigned to the defendant under a car plan privilege arrangement. The car is registered in the Astorga and SMART came to us with their respective petitions for review assailing the CA ruling,
name of the plaintiff. Recovery thereof via replevin suit is allowed by Rule 60 of the 1997 Rules docketed as G.R Nos. 151079 and 151372. On February 27, 2002, this Court ordered the consolidation of
of Civil Procedure, which is undoubtedly within the jurisdiction of the Regional Trial Court. these petitions with G.R. No. 148132.26
In the Complaint, plaintiff claims to be the owner of the company car and despite demand,
defendant refused to return said car. This is clearly sufficient statement of plaintiffs cause of In her Memorandum, Astorga argues:
action.
Neither is there forum shopping. The element of litis penden[t]ia does not appear to exist
because the judgment in the labor dispute will not constitute res judicata to bar the filing of this I
case. THE COURT OF APPEALS ERRED IN UPHOLDING THE VALIDITY OF ASTORGAS
WHEREFORE, the Motion to Dismiss is hereby denied for lack of merit. DISMISSAL DESPITE THE FACT THAT HER DISMISSAL WAS EFFECTED IN CLEAR
SO ORDERED.17 VIOLATION OF THE CONSTITUTIONAL RIGHT TO SECURITY OF TENURE,
CONSIDERING THAT THERE WAS NO GENUINE GROUND FOR HER DISMISSAL.
II
Astorga filed a motion for reconsideration, but the RTC denied it on June 18, 1999.18 SMARTS REFUSAL TO REINSTATE ASTORGA DURING THE PENDENCY OF THE
APPEAL AS REQUIRED BY ARTICLE 223 OF THE LABOR CODE, ENTITLES ASTORGA
Astorga elevated the denial of her motion via certiorari to the CA, which, in its February 28, 2000 TO HER SALARIES DURING THE PENDENCY OF THE APPEAL.
Decision,19reversed the RTC ruling. Granting the petition and, consequently, dismissing the replevin case, III
the CA held that the case is intertwined with Astorgas complaint for illegal dismissal; thus, it is the labor THE COURT OF APPEALS WAS CORRECT IN HOLDING THAT THE REGIONAL TRIAL
tribunal that has rightful jurisdiction over the complaint. SMARTs motion for reconsideration having been COURT HAS NO JURISDICTION OVER THE COMPLAINT FOR RECOVERY OF A CAR
denied,20 it elevated the case to this Court, now docketed as G.R. No. 148132. WHICH ASTORGA ACQUIRED AS PART OF HER EMPLOYEE (sic) BENEFIT.27

Meanwhile, SMART also appealed the unfavorable ruling of the Labor Arbiter in the illegal dismissal case On the other hand, Smart in its Memoranda raises the following issues:
to the National Labor Relations Commission (NLRC). In its September 27, 1999 Decision, 21 the NLRC
sustained Astorgas dismissal. Reversing the Labor Arbiter, the NLRC declared the abolition of CSMG I
and the creation of SNMI to do the sales and marketing services for SMART a valid organizational action. WHETHER THE HONORABLE COURT OF APPEALS HAS DECIDED A QUESTION OF
It overruled the Labor Arbiters ruling that SNMI is an in-house agency, holding that it lacked legal basis. It SUBSTANCE IN A WAY PROBABLY NOT IN ACCORD WITH LAW OR WITH APPLICABLE
also declared that contracting, subcontracting and streamlining of operations for the purpose of increasing DECISION OF THE HONORABLE SUPREME COURT AND HAS SO FAR DEPARTED
efficiency are allowed under the law. The NLRC further found erroneous the Labor Arbiters disquisition FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS AS TO CALL
that redundancy to be valid must be impelled by economic reasons, and upheld the redundancy FOR AN EXERCISE OF THE POWER OF SUPERVISION WHEN IT RULED THAT SMART
measures undertaken by SMART. DID NOT COMPLY WITH THE NOTICE REQUIREMENTS PRIOR TO TERMINATING
ASTORGA ON THE GROUND OF REDUNDANCY.
The NLRC disposed, thus: II
WHEREFORE, the Decision of the Labor Arbiter is hereby reversed and set aside. [Astorga] is WHETHER THE NOTICES GIVEN BY SMART TO ASTORGA AND THE DEPARTMENT OF
further ordered to immediately return the company vehicle assigned to her. [Smart and LABOR AND EMPLOYMENT ARE SUBSTANTIAL COMPLIANCE WITH THE NOTICE
Santiago] are hereby ordered to pay the final wages of [Astorga] after [she] had submitted the REQUIREMENTS BEFORE TERMINATION.
required supporting papers therefor. III
SO ORDERED.22 WHETHER THE RULE ENUNCIATED IN SERRANO VS. NATIONAL LABOR RELATIONS
COMMISSION FINDS APPLICATION IN THE CASE AT BAR CONSIDERING THAT IN THE
SERRANO CASE THERE WAS ABSOLUTELY NO NOTICE AT ALL.28
Astorga filed a motion for reconsideration, but the NLRC denied it on December 21, 1999. 23 IV
WHETHER THE HONORABLE COURT OF APPEALS HAS DECIDED A QUESTION OF
SUBSTANCE IN A WAY PROBABLY NOT IN ACCORD WITH LAW OR WITH APPLICABLE
Astorga then went to the CA via certiorari. On June 11, 2001, the CA rendered a Decision24 affirming with DECISION[S] OF THE HONORABLE SUPREME COURT AND HAS SO FAR DEPARTED
modification the resolutions of the NLRC. In gist, the CA agreed with the NLRC that the reorganization
FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS AS TO CALL The labor dispute involved is not intertwined with the issue in the Replevin Case. The
FOR AN EXERCISE OF THE POWER OF SUPERVISION WHEN IT RULED THAT THE respective issues raised in each forum can be resolved independently on the other. In fact in
REGIONAL TRIAL COURT DOES NOT HAVE JURISDICTION OVER THE COMPLAINT FOR 18 November 1986, the NLRC in the case before it had issued an Injunctive Writ enjoining the
REPLEVIN FILED BY SMART TO RECOVER ITS OWN COMPANY VEHICLE FROM A petitioners from blocking the free ingress and egress to the Vessel and ordering the petitioners
FORMER EMPLOYEE WHO WAS LEGALLY DISMISSED. to disembark and vacate. That aspect of the controversy is properly settled under the Labor
V Code. So also with petitioners right to picket. But the determination of the question of who has
WHETHER THE HONORABLE COURT OF APPEALS HAS FAILED TO APPRECIATE THAT the better right to take possession of the Vessel and whether petitioners can deprive the
THE SUBJECT OF THE REPLEVIN CASE IS NOT THE ENFORCEMENT OF A CAR PLAN Charterer, as the legal possessor of the Vessel, of that right to possess in addressed to the
PRIVILEGE BUT SIMPLY THE RECOVERY OF A COMPANY CAR. competence of Civil Courts.
VI
WHETHER THE HONORABLE COURT OF APPEALS HAS FAILED TO APPRECIATE THAT
ASTORGA CAN NO LONGER BE CONSIDERED AS AN EMPLOYEE OF SMART UNDER In thus ruling, this Court is not sanctioning split jurisdiction but defining avenues of jurisdiction
THE LABOR CODE.29 as laid down by pertinent laws.

The Court shall first deal with the propriety of dismissing the replevin case filed with the RTC of Makati The CA, therefore, committed reversible error when it overturned the RTC ruling and ordered the
City allegedly for lack of jurisdiction, which is the issue raised in G.R. No. 148132. dismissal of the replevin case for lack of jurisdiction.

Replevin is an action whereby the owner or person entitled to repossession of goods or chattels may Having resolved that issue, we proceed to rule on the validity of Astorgas dismissal.
recover those goods or chattels from one who has wrongfully distrained or taken, or who wrongfully
detains such goods or chattels. It is designed to permit one having right to possession to recover property Astorga was terminated due to redundancy, which is one of the authorized causes for the dismissal of an
in specie from one who has wrongfully taken or detained the property.30 The term may refer either to the employee. The nature of redundancy as an authorized cause for dismissal is explained in the leading
action itself, for the recovery of personalty, or to the provisional remedy traditionally associated with it, by case of Wiltshire File Co., Inc. v. National Labor Relations Commission,35 viz:
which possession of the property may be obtained by the plaintiff and retained during the pendency of the
action.31
x x x redundancy in an employers personnel force necessarily or even ordinarily refers to
duplication of work. That no other person was holding the same position that private
That the action commenced by SMART against Astorga in the RTC of Makati City was one for replevin respondent held prior to termination of his services does not show that his position had not
hardly admits of doubt. become redundant. Indeed, in any well organized business enterprise, it would be surprising to
find duplication of work and two (2) or more people doing the work of one person. We believe
In reversing the RTC ruling and consequently dismissing the case for lack of jurisdiction, the CA made the that redundancy, for purposes of the Labor Code, exists where the services of an employee
following disquisition, viz.: are in excess of what is reasonably demanded by the actual requirements of the enterprise.
Succinctly put, a position is redundant where it is superfluous, and superfluity of a position or
positions may be the outcome of a number of factors, such as overhiring of workers,
[I]t is plain to see that the vehicle was issued to [Astorga] by [Smart] as part of the employment decreased volume of business, or dropping of a particular product line or service activity
package. We doubt that [SMART] would extend [to Astorga] the same car plan privilege were it previously manufactured or undertaken by the enterprise.
not for her employment as district sales manager of the company. Furthermore, there is no civil
contract for a loan between [Astorga] and [Smart]. Consequently, We find that the car plan
privilege is a benefit arising out of employer-employee relationship. Thus, the claim for such The characterization of an employees services as superfluous or no longer necessary and, therefore,
falls squarely within the original and exclusive jurisdiction of the labor arbiters and the NLRC. 32 properly terminable, is an exercise of business judgment on the part of the employer. The wisdom and
soundness of such characterization or decision is not subject to discretionary review provided, of course,
that a violation of law or arbitrary or malicious action is not shown.36
We do not agree. Contrary to the CAs ratiocination, the RTC rightfully assumed jurisdiction over the suit
and acted well within its discretion in denying Astorgas motion to dismiss. SMARTs demand for payment
of the market value of the car or, in the alternative, the surrender of the car, is not a labor, but a civil, Astorga claims that the termination of her employment was illegal and tainted with bad faith. She asserts
dispute. It involves the relationship of debtor and creditor rather than employee-employer relations.33 As that the reorganization was done in order to get rid of her. But except for her barefaced allegation, no
such, the dispute falls within the jurisdiction of the regular courts. convincing evidence was offered to prove it. This Court finds it extremely difficult to believe that SMART
would enter into a joint venture agreement with NTT, form SNMI and abolish CSMG/FSD simply for the
sole purpose of easing out a particular employee, such as Astorga. Moreover, Astorga never denied that
In Basaya, Jr. v. Militante,34 this Court, in upholding the jurisdiction of the RTC over the replevin suit, SMART offered her a supervisory position in the Customer Care Department, but she refused the offer
explained: because the position carried a lower salary rank and rate. If indeed SMART simply wanted to get rid of
her, it would not have offered her a position in any department in the enterprise.
Replevin is a possessory action, the gist of which is the right of possession in the plaintiff. The
primary relief sought therein is the return of the property in specie wrongfully detained by Astorga also states that the justification advanced by SMART is not true because there was no
another person. It is an ordinary statutory proceeding to adjudicate rights to the title or compelling economic reason for redundancy. But contrary to her claim, an employer is not precluded from
possession of personal property. The question of whether or not a party has the right of adopting a new policy conducive to a more economical and effective management even if it is not
possession over the property involved and if so, whether or not the adverse party has experiencing economic reverses. Neither does the law require that the employer should suffer financial
wrongfully taken and detained said property as to require its return to plaintiff, is outside the losses before he can terminate the services of the employee on the ground of redundancy. 37
pale of competence of a labor tribunal and beyond the field of specialization of Labor Arbiters.
We agree with the CA that the organizational realignment introduced by SMART, which culminated in the
xxxx abolition of CSMG/FSD and termination of Astorgas employment was an honest effort to make SMARTs
sales and marketing departments more efficient and competitive. As the CA had taken pains to elucidate:
x x x a careful and assiduous review of the records will yield no other conclusion than that the The CA, therefore, committed no reversible error in sustaining Astorgas dismissal and at the same time,
reorganization undertaken by SMART is for no purpose other than its declared objective as a awarding indemnity for violation of Astorga's statutory rights.
labor and cost savings device. Indeed, this Court finds no fault in SMARTs decision to
outsource the corporate sales market to SNMI in order to attain greater productivity. [Astorga]
belonged to the Sales Marketing Group under the Fixed Services Division (CSMG/FSD), a However, we find the need to modify, by increasing, the indemnity awarded by the CA to Astorga, as a
distinct sales force of SMART in charge of selling SMARTs telecommunications services to sanction on SMART for non-compliance with the one-month mandatory notice requirement, in light of our
the corporate market. SMART, to ensure it can respond quickly, efficiently and flexibly to its ruling in Jaka Food Processing Corporation v. Pacot,43 viz.:
customers requirement, abolished CSMG/FSD and shortly thereafter assigned its functions to
newly-created SNMI Multimedia Incorporated, a joint venture company of SMART and NTT of [I]f the dismissal is based on a just cause under Article 282 but the employer failed to comply
Japan, for the reason that CSMG/FSD does not have the necessary technical expertise with the notice requirement, the sanction to be imposed upon him should
required for the value added services. By transferring the duties of CSMG/FSD to SNMI, be tempered because the dismissal process was, in effect, initiated by an act imputable to the
SMART has created a more competent and specialized organization to perform the work employee, and (2) if the dismissal is based on an authorized cause under Article 283 but the
required for corporate accounts. It is also relieved SMART of all administrative costs employer failed to comply with the notice requirement, the sanction should bestiffer because
management, time and money-needed in maintaining the CSMG/FSD. The determination to the dismissal process was initiated by the employers exercise of his management prerogative.
outsource the duties of the CSMG/FSD to SNMI was, to Our mind, a sound business judgment
based on relevant criteria and is therefore a legitimate exercise of management prerogative.
We deem it proper to increase the amount of the penalty on SMART to P50,000.00.

Indeed, out of our concern for those lesser circumstanced in life, this Court has inclined towards the
worker and upheld his cause in most of his conflicts with his employer. This favored treatment is As provided in Article 283 of the Labor Code, Astorga is, likewise, entitled to separation pay equivalent to
consonant with the social justice policy of the Constitution. But while tilting the scales of justice in favor of at least one (1) month salary or to at least one (1) months pay for every year of service, whichever is
workers, the fundamental law also guarantees the right of the employer to reasonable returns for his higher. The records show that Astorgas length of service is less than a year. She is, therefore, also
investment.38 In this light, we must acknowledge the prerogative of the employer to adopt such measures entitled to separation pay equivalent to one (1) month pay.
as will promote greater efficiency, reduce overhead costs and enhance prospects of economic gains,
albeit always within the framework of existing laws. Accordingly, we sustain the reorganization and
Finally, we note that Astorga claimed non-payment of wages from February 15, 1998. This assertion was
redundancy program undertaken by SMART.
never rebutted by SMART in the proceedings a quo. No proof of payment was presented by SMART to
disprove the allegation. It is settled that in labor cases, the burden of proving payment of monetary claims
However, as aptly found by the CA, SMART failed to comply with the mandated one (1) month notice rests on the employer.44 SMART failed to discharge the onus probandi. Accordingly, it must be held liable
prior to termination. The record is clear that Astorga received the notice of termination only on March 16, for Astorgas salary from February 15, 1998 until the effective date of her termination, on April 3, 1998.
199839 or less than a month prior to its effectivity on April 3, 1998. Likewise, the Department of Labor and
Employment was notified of the redundancy program only on March 6, 1998. 40
However, the award of backwages to Astorga by the CA should be deleted for lack of basis. Backwages
is a relief given to an illegally dismissed employee. Thus, before backwages may be granted, there must
Article 283 of the Labor Code clearly provides: be a finding of unjust or illegal dismissal from work.45 The Labor Arbiter ruled that Astorga was illegally
dismissed. But on appeal, the NLRC reversed the Labor Arbiters ruling and categorically declared
Astorgas dismissal valid. This ruling was affirmed by the CA in its assailed Decision. Since Astorgas
Art. 283. Closure of establishment and reduction of personnel. The employer may also dismissal is for an authorized cause, she is not entitled to backwages. The CAs award of backwages is
terminate the employment of any employee due to the installation of labor saving devices, totally inconsistent with its finding of valid dismissal.
redundancy, retrenchment to prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and WHEREFORE, the petition of SMART docketed as G.R. No. 148132 is GRANTED. The February 28,
Employment at least one (1) month before the intended date thereof x x x. 2000 Decision and the May 7, 2001 Resolution of the Court of Appeals in CA-G.R. SP. No. 53831
are SET ASIDE. The Regional Trial Court of Makati City, Branch 57 is DIRECTED to proceed with the
trial of Civil Case No. 98-1936 and render its Decision with reasonable dispatch.
SMARTs assertion that Astorga cannot complain of lack of notice because the organizational realignment
was made known to all the employees as early as February 1998 fails to persuade. Astorgas actual
knowledge of the reorganization cannot replace the formal and written notice required by the law. In the On the other hand, the petitions of SMART and Astorga docketed as G.R. Nos. 151079 and 151372
written notice, the employees are informed of the specific date of the termination, at least a month prior to are DENIED. The June 11, 2001 Decision and the December 18, 2001 Resolution in CA-G.R. SP. No.
the effectivity of such termination, to give them sufficient time to find other suitable employment or to 57065, are AFFIRMED withMODIFICATION. Astorga is declared validly dismissed. However, SMART is
make whatever arrangements are needed to cushion the impact of termination. In this case, ordered to pay Astorga P50,000.00 as indemnity for its non-compliance with procedural due process, her
notwithstanding Astorgas knowledge of the reorganization, she remained uncertain about the status of separation pay equivalent to one (1) month pay, and her salary from February 15, 1998 until the effective
her employment until SMART gave her formal notice of termination. But such notice was received by date of her termination on April 3, 1998. The award of backwages is DELETED for lack of basis. SO
Astorga barely two (2) weeks before the effective date of termination, a period very much shorter than ORDERED.
that required by law.

Be that as it may, this procedural infirmity would not render the termination of Astorgas employment
illegal. The validity of termination can exist independently of the procedural infirmity of the
dismissal.41 In DAP Corporation v. CA,42 we found the dismissal of the employees therein valid and for
authorized cause even if the employer failed to comply with the notice requirement under Article 283 of
the Labor Code. This Court upheld the dismissal, but held the employer liable for non-compliance with the
procedural requirements.
G.R. No. 148980 September 21, 2007 The evidence further shows that defendants were not able to pay off their obligation to plaintiff due to the
fact that their fishing area in Batanes and their boat were badly damaged. Defendants in fact informed
plaintiff of their predicament by sending plaintiff a copy of a letter explaining such predicament (Exh. "2").
PCI LEASING & FINANCE, INC., Petitioner, vs. SPOUSES GEORGE M. DAI and DIVINA There was no bad faith on defendants part when they failed to comply with their obligation.
DAI, Respondents.

The Court is convinced that plaintiff is not entitled to recover from defendants attorneys fees and
Respondents, spouses George and Divina Dai, obtained a loan on June 16, 1994 from petitioner, PCI liquidated damages in the sum of P1,225,733.25. "In determining whether a penalty clause is iniquitous
Leasing and Finance, Inc., evidenced by a promissory note1 for the sum of P3,352,892 payable in and unconscionable, a court may very well take into account the actual damages sustained by a creditor
monthly installments ofP152,265 starting on July 16, 1994. The proceeds of the loan partly financed the who has been compelled to sue the defaulting debtor x x x." (Pacific Mills, Inc. vs. Court of Appeals, G.R.
purchase by respondents of a vessel-fishing boat which was named "F/B Sea Doll." To secure the No. 87182, February 17, 1992, 206 SCRA 317, 327) No substantial damage having been sustained by
payment of the loan, respondents executed a chattel mortgage2 over the vessel in favor of petitioner. plaintiff as it already had in its possession the certificate of registration of the vessel and had in fact
foreclosed the mortgage on said vessel, its claim for attorneys fees and liquidated damages must fail.
Both the promissory note and the chattel mortgage provided that, in case of failure to pay the installments
or interest due thereon, the entire amount remaining unpaid shall immediately become due and payable.3 On the second issue

Respondents failed to pay the second and third installments which fell due on August 16, 1994 and Defendants have not presented sufficient and convincing evidence to support their claim for moral and
September 16, 1994, respectively, prompting petitioner to file on October 27, 1994 before the Regional exemplary damages and attorneys fees. Hence, said claim is hereby denied for lack of merit. 8 (Emphasis
Trial Court (RTC) of Cebu City a complaint for replevin and damages, docketed as Civil Case No. CEB- and underscoring supplied)
16691, praying that the trial court:

Accordingly, the trial court dismissed the parties respective claims for damages and attorneys fees. No
a) . . . issue a writ of replevin ordering the seizure of the vessel xxx complete with all its appeal having been taken from the trial courts decision, it became final and executory.
accessories and equipments [sic], together with the registration certificate and direct the
delivery thereof to plaintiff in accordance with law and after due hearing, declare that plaintiff is
entitled to the possession of the vessel and confirm its seizure and delivery to plaintiff; More than a year and a half following the promulgation by the trial court of its decision in Civil Case No.
CEB-16691 or on August 26, 1998, petitioner filed a complaint9 for deficiency judgment and/or collection
of sum of money before the Cebu RTC where it was docketed as Civil Case No. CEB-22585. In its
b) In the event that manual delivery of the said vessel cannot be effected, . . . render judgment complaint, petitioner alleged, inter alia, as follows:
in favor of plaintiff and against defendants ordering them to pay the plaintiff, the sum of
P3,502,095.00 plus interest and penalty thereon from October 12, 1994 until fully paid as
provided in the Promissory Note [;] xxxx

c) In either case, . . . order defendants to pay jointly and severally the sum of P1,225,733.25 as 10. Subsequent to the aforesaid sale the outstanding obligation of defendants to the plaintiff, inclusive of
attorneys fees and liquidated damages, plus bonding fees and other expenses incurred in the interest, and net of its P2,000,000.00, representing the proceeds of the aforesaid sale of the mortgaged
seizure of the said vessel which will be proved during the trial.4 (Emphasis and underscoring property is Philippine Pesos: Nine Hundred Sixty-One Thousand (P961,000.00) as of January 16,
supplied) 1995 exclusive of cost of suit and collection expenses;

In their Answer, respondents claimed that, inter alia, the possession of the vessel including its registration 11. Payment of the aforesaid outstanding obligation representing the deficiency claims of the plaintiff
certificate had been surrendered to petitioner before the filing of the complaint. Respondents thus prayed arising from the said promissory note (Annex "A") is now long overdue but defendants failed and refused
for the award of damages and attorneys fees by way of Counterclaim. and still fail and refuse to pay the same despite demand from plaintiff;

Following the filing by respondents of their Answer, petitioner foreclosed the chattel mortgage and bought 12. It is expressly stipulated in the promissory note (Annex "A") that in case the same is referred to an
the vessel at the public auction conducted on January 13, 1995 for P2,000,000.5 A Certificate of Sale of attorney-at-law for collection defendants shall pay attorneys fees in a sum equivalent to ten percent
the vessel in favor of petitioner was subsequently issued on January 16, 1995. (10%) of the amount due and twenty-five percent (25%) of the total amount due as liquidated
damages aside from expenses of collectionan[d] costs of suit which amount is equivalent to
P336,350.00[.]
More than eight months later or on September 29, 1995, the Pre-trial of the case was conducted during
which the following were defined as issues:
x x x x10 (Underscoring supplied)
1. Whether or not [petitioner] is entitled to recover damages from the [respondents]; and
Petitioner thus prayed that the court render judgment in its favor and against respondents, ordering them
to pay.
2. Whether or not [respondents] are entitled to recover damages in accordance with their
counterclaim.6
1. The amount of P961,000.00 representing the outstanding obligation of the defendants to the
7
plaintiff exclusive of interest, and net of the proceeds of the aforesaid sale of the mortgaged
By Decision of February 3, 1997, Branch 58 of the Cebu RTC resolved both issues in the negative in this property plus interest from January 16, 1995;
wise:

2. The amount of P336,350.00 as attorneys fees and liquidated damages;


3. The costs of suit and collection expenses. sufficient to put an end to litigation of such claim or demand. The principle of res judicata is based on the
salutary public policy against unnecessary multiplicity of suits. Indeed, it is to the interest of the public that
there should be an end to litigation by the parties over a subject fully and fairly adjudicated, and an
x x x x11 (Underscoring supplied) individual should not be vexed twice for the same cause.19 (Underscoring supplied)

In their Answer12 to the complaint in Civil Case No. CEB-22585, respondents pleaded bar by prior Its Motion for Reconsideration20 having been denied by the appellate court,21 petitioner filed the present
judgment13 and Article 1484 of the Civil Code14 which provides: Petition for Review22 raising the issue of "whether or not a judgment in a replevin case and/or delivery of
personal property would bar a subsequent action for deficiency judgment."23
Art. 1484. In a contract of sale of personal property the price of which is payable in installments, the
vendor may exercise any of the following remedies: For res jusdicata to apply, four requisites must be met: (1) the former judgment or order must be final; (2)
it must be a judgment or an order on the merits; (3) it must have been rendered by a court having
(1) Exact fulfillment of the obligation, should the vendee fail to pay; jurisdiction over the subject matter and the parties; and (4) there must be, between the first and second
actions, identity of parties, of subject matter and cause of action.24

(2) Cancel the sale, should the vendees failure to pay cover two or more installments;
Petitioner denies the existence of identity of causes of action between the replevin case and the case for
deficiency judgment or collection of sum of money, thus:
(3) Foreclose the chattel mortgage on the thing sold, if one has been constituted, should the
vendees failure to pay cover two or more installments. In this case, he shall have no further
action against the purchaser to recover any unpaid balance of the price. Any agreement to the Being a preparatory action for the foreclosure of the mortgage, necessarily therefore, the claim of the
contrary shall be void. (Underscoring supplied) petitioner (deficiency judgment) which is the subject of Civil Case No. CEB-22585 was not yet covered or
an issue in the said civil case. The deficiency claim of the petitioner is only determined after the
extrajudicial foreclosure.
By Decision of November 22, 1999, Branch 58 of the Cebu RTC, the same branch and presided by the
same judge which decided Civil Case No. CEB-16691, dismissed Civil Case No. CEB-22585 in this wise:
In this connection, Section 9 of Rule 60 of the 1997 Rules of Civil Procedure categorically defines or limits
the judgment or decision that may be rendered by the court in an action for replevin, thus:
It is . . . apparent that plaintiffs present action for deficiency judgment is barred by the prior judgment in
CEB-16691. The parties and the cause of action in CEB-16691 and the instant case are the same.
Plaintiffs prayer in CEB-16691 is in the alternative. Having availed of foreclosure of the chattel mortgage, Section 9. Judgment. After trial of the issues, the court shall determine who has the right of possession
plaintiff cannot anymore come to court again and avail of its second alternative prayer. The instant case to and the value of the property and shall render judgment in the alternative for the delivery thereof to the
should, therefore, be dismissed. (Section 1(f), Rule 16, 1997 Rules of Civil Procedure). party entitled to the same, or for its value in case delivery can not be made and also for such damages as
either party may prove, with costs.

Parenthetically, let it be noted [that] in CEB-16691, plaintiff had foreclosed the mortgage and a certificate
of sale was issued in its favor even before the pre-trial conference therein was conducted. Plaintiff did not Careful reading of the above-quoted procedural law would show that it does not authorize the court to
make any move to amend the pre-trial order which limited the issues to be resolved therein to the render judgment on the deficiency after foreclosure.25 (Underscoring supplied)
damages claimed by the parties.15(Emphasis and underscoring supplied)
Petitioners position fails.
On appeal, the Court of Appeals, by Decision16 dated March 12, 2001, brushed aside respondents
invocation of Article 1484 of the Civil Code on the ground that the same applies only to a case of sale of Petitioner ignores the fact that it prayed in the replevin case that in the event manual delivery of the
[personal] property payable in installments which is secured by a chattel mortgage between the vendor vessel could not be effected, the court "render judgment in its favor by ordering [herein respondents] to
and the vendee over the thing sold,17 citing Bicol Savings & Loan Association v. Guinhawa.18 pay . . . the sum ofP3,502,095.00 plus interest and penalty thereon from October 12, 1994 until fully paid
as provided in the Promissory Note."26
The appellate court nevertheless affirmed the decision of the trial court on the ground of res judicata.
Thus it held: Since petitioner had extrajudicially foreclosed the chattel mortgage over the vessel even before the pre-
trial of the case, it should have therein raised as issue during the pre-trial the award of a deficiency
. . . [I]t is clear that appellants present claim for deficiency judgment is among those matters which could judgment. After all, the basis of its above-stated alternative prayer was the same as that of its prayer for
have been adjudged in CEB-16691. While that earlier case is for replevin and damages, the appellant replevin the default of respondents in the payment of the monthly installments of their loan.27 But it did
during the pendency of that case had extrajudicially foreclosed the chattel mortgage and the Certificate of not.1wphi1
Sale had been issued to it by the Provincial Sheriff as the highest bidder. Appellant after realizing the
amount of P2,000,000.00 from the proceeds of the foreclosure sale, could have prayed for a deficiency Section 49 of Rule 39 of the 1964 Rules of Court, which governed petitioners complaint for replevin filed
judgment in the same action as in fact it pursued its claim for attorneys fees and liquidated damages on October 27, 1994, and which Section is reproduced as Section 47 of the present Rules, reads:
therein, which claim was however, dismissed by the trial court. Appellant, however, did not press any
demand for such deficiency judgment in said case and instead filed this present suit for deficiency
judgment long after the trial court rendered judgment in the earlier case. It cannot, however, evade the SEC. 49. Effect of judgments or final orders. The effect of a judgment or final order rendered by a court
application of res judicata by varying the form of its action herein since the causes of action in the first of the Philippines, having jurisdiction to pronounce the judgment or final order, may be as follows:
case and in the present suit are clearly identical[.] The same evidence which is necessary to sustain the
second action would have been sufficient to authorize a recovery in the first, even if the forms or nature of
the two actions are different. That appellants cause of action as such creditor-mortgagee of the (a) In case of a judgment or final order against a specific thing, or in respect to the probate of a
defendant-appellees had already been fully determined and tried in the earlier case would have been will, or the administration of the estate of a deceased person, or in respect to the personal,
political, or legal condition or status of a particular person or his relationship to another, the G.R. No. 165895 June 5, 2009
judgment or final order is conclusive upon the title to the thing, the will or administration, or the
condition, status or relationship of the person; however, the probate of a will or granting of
letters of administration shall only be prima facie evidence of the death of the testator or TERLYNGRACE RIVERA, Petitioner, vs. FLORENCIO L. VARGAS, Respondent.
intestate;
What is the effect of a writ of replevin that has been improperly served?
(b) In other cases, the judgment or final order is, with respect to the matter directly adjudged or
as to any other matter that could have been raised in relation thereto, conclusive between the This is the sole issue to be resolved in this petition for review on certiorari seeking to set aside the
parties and their successors in interest by title subsequent to the commencement of the action Decision1 of the Court of Appeals (CA) dated November 18, 2003 in CA-G.R. SP No. 78529, as well as its
or special proceeding, litigating for the same thing and under the same title and in the same October 20, 2004 Resolution,2 denying the petition for certiorari filed by petitioner Terlyngrace Rivera
capacity; and (Rivera).

(c) In any other litigation between the same parties or their successors in interest, that only is The facts follow.
deemed to have been adjudged in a former judgment or final order which appears upon its
face to have been so adjudged, or which was actually and necessarily included therein or
necessary thereto. (Emphasis and underscoring supplied) On February 24, 2003, respondent Florencio Vargas (Vargas) filed a complaint3 against petitioner and
several John Does before Branch 02 of the Regional Trial Court (RTC) in Tuguegarao City, Cagayan, for
the recovery of a 150 T/H rock crushing plant located in Sariaya, Quezon. In his complaint and
Paragraph (a) is the rule on res judicata in judgments in rem. Paragraph (b) is the rule on res judicata in affidavit,4 Vargas claims ownership of the said equipment, having purchased and imported the same
judgments in personam. Paragraph (c) is the rule on conclusiveness of judgment.28 directly from Hyun Dae Trading Co., in Seoul, South Korea, in December 1993. 5 The equipment was
allegedly entrusted to petitioners husband, Jan T. Rivera, who died sometime in late 2002, as caretaker
Petitioner contends that Section 9 of Rule 60 of the 1997 Rules of Court which reads: of respondents construction aggregates business in Batangas. According to Vargas, petitioner failed to
return the said equipment after her husbands death despite his repeated demands, thus forcing him to
resort to court action.6 The complaint was accompanied by a prayer for the issuance of a writ of replevin
Sec. 9. Judgment. After trial of the issues, the court shall determine who has the right of possession to and the necessary bond amounting to P2,400,000.00.
and the value of the property and shall render judgment in the alternative for the delivery thereof to the
party entitled to the same, or for its value in case delivery cannot be made, and also for such damages as
either party may prove, with costs, does not authorize the court to render judgment on the deficiency after Summons7 dated February 24, 2003 was served upon petitioner through her personal secretary on April
foreclosure, citing BA Finance Corp. v. CA.29 28, 2003 at her residence in Paraaque City. Interestingly, however, the writ of replevin8 was served upon
and signed by a certain Joseph Rejumo, the security guard on duty in petitioners crushing plant in
Sariaya, Quezon on April 29, 2003,9 contrary to the sheriffs return10 stating that the writ was served upon
But replevin is, as the above-cited BA Finance Corp. case holds, usually described as a mixed action. Rivera.

Replevin, broadly understood, is both a form of principal remedy and of a provisional relief. It may refer On May 8, 2003, Rivera filed her answer, manifestation, and motion for the acceptance of petitioners
either to the action itself, i.e., to regain the possession of personal chattels being wrongfully detained from redelivery bond.11 In her answer, petitioner countered that the rock-crushing plant was ceded in favor of
the plaintiff by another, or to the provisional remedy that would allow the plaintiff to retain the thing during her husband as his share following the dissolution of the partnership formed between Jan Rivera and
the pendency of the action and hold it pendente lite. The action is primarily possessory in nature and respondents wife, Iluminada Vargas (Iluminada), on May 28, 1998, while the partnerships second rock-
generally determines nothing more than the right of possession. Replevin is so usually described as a crushing plant in Cagayan was ceded in favor of Iluminada.12 She further averred that from the time that
mixed action, being partly in rem and partly in personam in rem insofar as the recovery of specific the partnership was dissolved sometime in 2000 until Jan Riveras death in late 2002, it was petitioners
property is concerned, and in personam as regards to damages involved. As an "action in rem," the gist of husband who exercised ownership over the said equipment without any disturbance from respondent.13
the replevin action is the right of the plaintiff to obtain possession of specific personal property by reason
of his being the owner or of his having a special interest therein. (Citations omitted, italics in the original,
underscoring supplied) On May 12, 2003, the RTC issued an Order14 disapproving petitioners redelivery bond application for
failure to comply with the requirements under Sections 5 and 6 of Rule 60 of the Rules of Court. 15 Without
directly saying so, the RTC faulted petitioner for her failure to file the application for redelivery bond within
Petitioners complaint for replevin was doubtless a mixed action in rem with respect to its prayer for the five (5) days from the date of seizure as provided in the Rules of Court. Petitioner moved for
recovery of the vessel, and in personam with respect to its claim for damages. And it was, with respect to reconsideration,16 but the same was also denied.17
its alternative prayer, clearly one in personam.
Aggrieved, petitioner elevated the matter to the CA through a petition for certiorari under Rule 65. This,
Following paragraph (b) of Section 49, Rule 39 of the 1964 Rules of Court, now 47 of Rule 39 of the too, was denied for lack of merit.18 Petitioner moved for reconsideration,19 but it was also denied.20
present Rules, petitioners second complaint is unquestionably barred by res judicata.30
Undaunted, petitioner now comes to us via this Rule 45 petition.
WHEREFORE, the petition is DENIED. Costs against petitioner. SO ORDERED.
Petitioner argues that the RTC committed grave abuse of discretion in denying her counterbond on the
ground that it was filed out of time. She contends that the mandatory five-day period did not even begin to
run in this case due to the improper service of the writ of replevin, contrary to Section 4 of Rule 60. 21

We find the petition meritorious.


Replevin is one of the most ancient actions known to law, taking its name from the object of its action of replevin if it seizes and detains a personalty on the basis of a writ that was improperly served,
process.22 It originated in common law as a remedy against the wrongful exercise of the right of distress such as what happened in this case.
for rent23 and, according to some authorities, could only be maintained in such a case.24 But by the weight
of authority, the remedy is not and never was restricted to cases of wrongful distress in the absence of
any statutes relating to the subject, but is a proper remedy for any unlawful taking.25 "Replevied," used in At the outset, petitioners proper remedy should have been to file a motion to quash the writ of replevin or
its technical sense, means delivered to the owner,26while the words "to replevy" means to recover a motion to vacate the order of seizure. Nevertheless, petitioners filing of an application for a redelivery
possession by an action of replevin.27 bond, while not necessary, did not thereby waive her right to question the improper service. It now
becomes imperative for the trial court to restore the parties to their former positions by returning the
seized property to petitioner and by discharging the replevin bond filed by respondent. The trial, with
Broadly understood in this jurisdiction, replevin is both a form of principal remedy and of provisional relief. respect to the main action, shall continue. Respondent may, however, file a new application for replevin
It may refer either to the action itself, i.e., to regain the possession of personal chattels being wrongfully should he choose to do so.
detained from the plaintiff by another, or to the provisional remedy that would allow the plaintiff to retain
the thing during the pendency of the action and to hold it pendente lite.28 The action is primarily
possessory in nature and generally determines nothing more than the right of possession. 29 WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals, as well as its Resolution,
in CA-G.R. SP No. 78529 is hereby SET ASIDE. The Regional Trial Court is hereby ordered to restore
the parties to their former positions, discharge respondents replevin bond, and proceed with the trial of
The law presumes that every possessor is a possessor in good faith.30 He is entitled to be respected and the main action with dispatch. SO ORDERED.
protected in his possession31 as if he were the true owner thereof until a competent court rules
otherwise.32 Before a final judgment, property cannot be seized unless by virtue of some provision of
law.33 The Rules of Court, under Rule 60, authorizes such seizure in cases of replevin. However, a JURISDICTION
person seeking a remedy in an action for replevin must follow the course laid down in the statute, since
the remedy is penal in nature.34 When no attempt is made to comply with the provisions of the law relating G.R. No. 166901 October 27, 2006
to seizure in this kind of action, the writ or order allowing the seizure is erroneous and may be set aside
on motion35 by the adverse party. Be it noted, however, that a motion to quash the writ of replevin goes to
the technical regularity of procedure, and not to the merits of the case36 in the principal action. ASIAN TERMINALS, INC., petitioner, vs. HON. HELEN BAUTISTA-RICAFORT, Presiding Judge of
RTC, Branch 260, Paraaque City; SAMUEL ROSETE, in his personal capacity and as attorney-in-
fact and in representation of NOEL TABUELOG, proprietor of BEST PART ENTERPRISES;
The process regarding the execution of the writ of replevin in Section 4 of Rule 60 is unambiguous: the ERNESTO DE JESUS, President of EASTERN METROPOLITAN BUS CORP.; NORMA PONDEVIDA,
sheriff, upon receipt of the writ of replevin and prior to the taking of the property, must serve a copy proprietress of NSP TRANSPORTATION SERVICES; RENATO CLAROS, President of PRINCE BUS
thereof to the adverse party (petitioner, in this case) together with the application, the affidavit of merit, AND TRUCK PARTS, INC.; ERNESTO M. CHUA, President of EMC TRANSPORTATION, INC.;
and the replevin bond.37 The reasons are simple, i.e., to provide proper notice to the adverse party that CECILIA T. SAULOG, proprietress of MANSOUR TRANSPORT SERVICES; JENELITA S.
his property is being seized in accordance with the courts order upon application by the other party, and NAPARATE, proprietress of SANEI SOUGYO TRADING; RODOLFO J. MAGO, proprietor of DNS
ultimately to allow the adverse party to take the proper remedy consequent thereto. SHUTTLE SERVICES; and AMALIA C. EDAMURA, Proprietress of DAMLAR TRADING, respondents.

Service of the writ upon the adverse party is mandatory in line with the constitutional guaranty on
Before us is a Petition for Review on Certiorari for the reversal of the Decision1 of the Court of Appeals
procedural due process and as safeguard against unreasonable searches and seizures.38 If the writ was
(CA) in CA-G.R. SP No. 61562, affirming the Orders2 of the Regional Trial Court (RTC) of Paraaque
not served upon the adverse party but was instead merely handed to a person who is neither an agent of
City, Branch 260, in Civil Case No. 98-0435 for replevin and damages.
the adverse party nor a person authorized to receive court processes on his behalf, the service thereof is
erroneous and is, therefore, invalid, running afoul of the statutory and constitutional requirements. The
service is likewise invalid if the writ of replevin was served without the required documents. Under these Section 1, Republic Act (RA) No. 8506, which took effect on February 22, 1998, provides that "it shall be
circumstances, no right to seize and to detain the property shall pass, the act of the sheriff being both unlawful for any person to import, cause the importation of, register, cause the registration of, use or
unlawful and unconstitutional.1avvphi1 operate any vehicle with its steering wheel right hand side thereof in any highway, street or road, whether
private or public, or at the national or local x x x."
In the case at bar, petitioner avers that the writ of replevin was served upon the security guard where the
rock-crushing plant to be seized was located.39 The signature of the receiving party indicates that the writ Noel Tabuelog, Ernesto de Jesus, Norma Pondevida, Renato Claros, Ernesto M. Chua, Cecilia T. Saulog,
was received on April 29, 2003 by a certain Joseph Rejumo, the guard on duty in a plant in Sariaya, Jenelita S. Naprate, Rodolfo F. Mago, and Amalia C. Edamura are duly-licensed importers of vehicles.
Quezon, where the property to be seized was located, and witnessed by Claudio Palatino, respondents Sometime in April and May 1998, they imported 72 secondhand right-hand drive buses from Japan.
caretaker.40 The sheriffs return,41however, peremptorily states that both the writ of replevin and the When the shipment arrived at the South Harbor, Port of Manila, the District Collector of Customs
summons were served upon Rivera. On May 8, 2003, or nine (9) days after the writ was served on the impounded the vehicles and ordered them stored at the warehouse of the Asian Terminals, Inc. (ATI), a
security guard, petitioner filed an answer to the complaint accompanied by a prayer for the approval of customs-bonded warehouse under the custody of the Aviation and Cargo Regional Division. Conformably
her redelivery bond. The RTC, however, denied the redelivery bond for having been filed beyond the five- with Section 2607 of the Tariff and Customs Code, the District Collector of Customs issued Warrants of
day mandatory period prescribed in Sections 5 and 6 of Rule 60.42 But since the writ was invalidly served, Distraint3 against the shipment and set the sale at public auction on September 10, 1998.4
petitioner is correct in contending that there is no reckoning point from which the mandatory five-day
period shall commence to run.
In the meantime, on October 28, 1998, the Secretary of Justice rendered Opinion No. 127, 5 Series of
1998, stating that shipments of right hand wheel vehicles loaded and exported at the port of origin before
The trial court is reminded that not only should the writ or order of replevin comply with all the February 22, 1998 were not covered by RA No. 8506 unless the same were loaded and imported after
requirements as to matters of form or contents prescribed by the Rules of Court. 43 The writ must also said date.
satisfy proper service in order to be valid and effective: i.e. it should be directed to the officer who is
authorized to serve it; and it should be served upon the person who not only has the possession or
custody of the property involved but who is also a party or agent of a party to the action. Consequently, a On November 11, 1998, the importers, through their Attorney-in-Fact Samuel N. Rosete, filed a complaint
trial court is deemed to have acted without or in excess of its jurisdiction with respect to the ancillary with the RTC of Paraaque City, against the Secretary of Finance, Customs Commissioner, and the Chief
Executive of the Societe Generale de Surillee, for replevin with prayer for the issuance of a writ of Plaintiffs opposed the Third-Party Claim of ATI claiming that it failed to allege in its Affidavit of Third-Party
preliminary and mandatory injunction and damages. Claim any factual and legal basis for its alleged lien and to present documentary evidence to prove the
same. ATI has no cause of action against them for wharfage/arrastre services because there was no
contract to cover said charges.17
Plaintiffs averred, inter alia, that in accordance with the opinion of the Assistant Director of the Customs
Legal Service and the Office of the Legal Affairs of the Department of Finance, the importation of right-
hand drive vehicles are not prohibited under RA No. 8506 provided that conversion kits are included in Before the court could resolve the motions, plaintiffs filed a "Motion/Notice to Dismiss/Withdraw
the imported vehicles. As such, there was no factual and legal basis for the seizure of the shipment and Complaint"18against the officials of the Bureau of Customs and Department of Finance, on the ground that
the storage thereof at the ATI. The complaint contained the following prayer: said defendants had agreed to the implementation of the writ of replevin issued by the court on condition
that plaintiffs pay the taxes, dues, and other charges on the importation amounting to P7,528,635.00 to
the government and that plaintiffs had paid the said amount. The OSG opposed the motion, alleging that:
WHEREFORE, premises considered, it is most respectfully prayed before this Honorable
Court that an Order be issued in the following tenor:
A. PRIOR TO HEARING: The instant Complaint states that the subject importation is legal. This is a matter which cannot
1. A Writ of Replevin be issued upon the posting of a bond of PhP12,000,000.00 (double the be admitted by defendants simply because the law and the Opinion of the Secretary of Justice
value of the vehicles) executed in favor of defendants to answer for damages, and approved are crystal clear. Likewise, all the erroneous statements of law and legal conclusions stated
by this Court, directing the Sheriff or his deputies to forthwith take custody of the said vehicles therein cannot be hypothetically admitted.
which are in the possession and custody of the defendants or their agents at the Bureau of
Customs Holding Area, located at South Harbor, Port Area, Manila City, and retain it in its
custody; 3. Hence, it is imperative that the Omnibus Motion be resolved first prior to any other incident
B. AFTER HEARING: for the same delves on the very merits of the instant case.
1. To pay the sum of PhP6,000,000.00 if the Writ of Replevin cannot be implemented
successfully plus interest until fully paid; 4. The release of the imported right-hand drive buses by the Bureau of Customs cannot make
2. To pay compensatory damages of not less than PhP840,000.00 for unrealized profits, moral the said importation legal; otherwise, said act will constitute a violation of R.A. No. 8506 which
damages of not less [than] PhP1,000,000.00, exemplary damages of not less than declares illegal the act of importation of this type of vehicle.
PhP250,000.00, litigation and necessary expenses of not less than PhP500,000.00, attorneys
fees on a contingent basis, not less thanP1,000,000.00 actual damages if and when plaintiffs
are legally obliged to pay storage fees; 5. The Bureau of Customs was constrained to release the subject vehicles on November 27,
3. Such other reliefs just and equitable under the premises.6 1998 because of this Courts Order dated November 23, 1998, the last paragraph of which
states:

The RTC granted the application for a writ of replevin on a bond of P12,000,000.00.7
"Chief of PNP General Roberto Lastimoso is ordered to assist the Sheriff in the
implementation of its order dated November 11, 1998 and to effect the arrest of
However, George Jeroes, the Chief of Customs Police and four (4) customs policemen prevented the persons who would obstruct the implementation of this courts order."
Sheriff and the policemen assisting him from taking custody of the vehicles.8 He claimed that the District
Collector of Customs had jurisdiction over the vehicles. On motion of the plaintiffs, the court issued an
Order9 on November 23, 1998, directing the PNP Director to assist the Sheriff in implementing the writ it The overwhelming number of PNP personnel who accompanied the sheriff (there were at least
issued and to arrest anyone who would obstruct the implementation of its order. The Sheriff served a 20 police cars which swarmed over the area), pitied against only three (3) hapless Customs
copy of the Order on ATI and succeeded in taking custody of the vehicles and signed a receipt policemen, plus the threat to arrest anyone who would obstruct the implementation of the
therefor.10 The District Collector of Customs agreed to transfer the custody of the vehicles to the RTC, on Order dated November 11, 1998 granting the application for a Writ of Replevin, left the Bureau
the condition that the required taxes, dues, and other charges be paid. The Customs Commissioner of Customs with no choice but to allow the release of the subject vehicles.19
approved the decision of the District Collector.11 Plaintiffs paid the requisite taxes, dues, and other
charges amounting to P7,528,635.00. They were able to take possession of the vehicles over the
On January 13, 1999, ATI filed a Motion for Intervention and for Admission of its Complaint-in-
objections of ATI.12
Intervention, alleging that it had a lien on the vehicles to the extent of P13,820,150.93, representing
accumulated storage and arrastre charges and wharfage dues. ATI prayed that its Complaint-in-
On November 27, 1998, the defendants, through the Office of the Solicitor General, filed an Omnibus Intervention be admitted, and that after due proceedings judgment be rendered in its favor, thus:
Motion13, seeking the reconsideration of the RTC Order granting plaintiffs plea for a writ of replevin. It WHEREFORE, it is respectfully prayed of this Honorable Court that judgment be rendered in
likewise prayed that the writ of replevin issued by the court be quashed on the ground that the RTC has this Complaint-in-Intervention ordering plaintiffs to pay intervenor:
no jurisdiction over the vehicles subject of seizure and detention before the Bureau of Customs. The OSG a) the sum of PESOS THIRTEEN MILLION EIGHT HUNDRED TWENTY THOUSAND ONE
declared that the Bureau of Customs which had custody of the vehicles through ATI "had exclusive HUNDRED FIFTY AND 93/100 (P13,820,150.93), plus legal interest from the date of the filing
jurisdiction over said vehicles and on the issues of the seizure and detention thereof." The ATI filed a of this Complaint-in-Intervention.
motion for the court to allow the vehicles to remain in its warehouse.14 b) the sum of PESOS ONE HUNDRED THOUSAND (P100,000.00) as and for attorneys fees;
and
c) costs of suit.20
On December 1, 1998, the ATI filed a Third-Party Claim15 over the shipment, alleging that it had a lien
over the vehicles for accumulated and unpaid storage and arrastre charges, and wharfage dues
amounting toP13,036,480.94. It prayed that the vehicles be returned and remain with it until payment of Plaintiffs opposed the motion of ATI on the following grounds: (1) ATI failed to allege and present any
said dues. On December 9, 1998, ATI filed a Motion16 seeking to require plaintiffs (third-party defendants) contract covering the deposit/storage of the vehicles in its warehouse; (2) ATI has no legal interest over
to post a bond to insure payment of its claims against the plaintiffs, or to order the Sheriff to return the matter in litigation; and (3) the adjudication of the rights of the parties may be delayed or prejudiced
possession of the vehicles to it. while those of ATI may be protected in a separate proceeding.21
The OSG opposed the motion of the plaintiffs and the notice to dismiss/withdraw the complaint, praying On November 30, 2004, the CA rendered judgment dismissing the petition for lack of merit.28 The
that the court resolve its pending motions.22 appellate court ruled that the RTC had no jurisdiction over the complaint filed by respondents. Under the
Customs and Tarriff Code, the Collector of Customs sitting in seizure and forfeiture proceedings had the
exclusive jurisdiction to hear and determine all questions relating on the seizure and forfeiture of dutiable
On April 27, 1999, the court issued an Order dismissing the complaint on the following grounds: goods. The RTC had no review powers over such proceedings; it is the Court of Tax Appeals under RA
1. Plaintiffs themselves filed a Motion to Dismiss against Secretary of Finance and No. 1125. Since the RTC had no jurisdiction over the main case, it was also bereft of authority to hear the
Commissioner of Customs. third-party claim or the complaint-in-intervention filed by ATI. Citing Saw v. Court of Appeals,29 the
2. This Court has no jurisdiction over the case. "The Court of Tax Appeals exercises exclusive appellate court ruled that intervention was not an independent proceeding but merely an ancillary and
appellate jurisdiction to review the ruling of the Commissioner in seizure and confiscation supplemental one, which, in the nature of things, is subordinate to the main proceeding unless otherwise
cases and that power is to the exclusion of the Court of First Instance which may not interfere provided for by statute or by the Rules of Court. The general rule is that an intervention is limited to the
with the Commissioners decisions x x x" field of litigation open to the original parties. The RTC had dismissed the main action; thus, there was no
In view of the foregoing, let this case be as it is hereby ordered Dismissed. more principal proceeding in which petitioner ATI may intervene.
SO ORDERED.23

ATI filed a motion for reconsideration, which the CA denied through its January 28, 2005 Resolution. 30
The OSG filed a motion for reconsideration of the April 27, 1999 Order, and prayed that the court resolve
the issue as to who is entitled to the possession of the vehicles as required by Sections 9 and 10, Rule 60
of the Rules of Court. For its part, ATI filed a motion for clarification of the order, alleging that the court In the present petition, ATI (now petitioner) raises the following issues:
failed to resolve its motion. It also pleaded for the court to admit its Complaint-in-Intervention and its 1. THE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE ERROR IN
motion seeking to require plaintiffs to post a bond to insure payment of its claims for wharfage/arrastre DISMISSING THE THIRD-PARTY CLAIM WHICH WAS CONVERTED INTO A COMPLAINT-
charges.24 IN-INTERVENTION BASED ON THE GROUND THAT IT IS ANCILLARY TO THE
DISMISSED MAIN ACTION.
2. THE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE ERROR IN
On September 23, 1999, the RTC issued its Order dismissing the Complaint-in-Intervention, thus: DISMISSING THE THIRD-PARTY CLAIM WHICH WAS CONVERTED INTO A COMPLAINT-
Before this Court are the following Motions: IN-INTERVENTION BASED ON THE GROUND THAT THE COURT A QUO HAS NO
1. Motion for Clarification, and JURISDICTION OVER THE PRINCIPAL ACTION.
2. Motion for Reconsideration 3. THE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE ERROR IN
The Complaint-in-Intervention of Intervenor - ATI is likewise dismissed, it being only an DISMISSING THE COMPLAINT IN INTERVENTION ON THE BASIS OF THE RULING IN
accessory to the principal case. BARANGAY MATICTIC VS. ELBINIAS (148 SCRA 83).31
Plaintiff Samuel Rosete is hereby ordered to return the possession of the subject buses to
Pedro Mendoza, in his capacity as Customs Commissioner of the Bureau of Customs.
SO ORDERED.25 Citing Metropolitan Bank and Trust Company v. The Presiding Judge, RTC, Manila Branch
39,32 petitioner maintains that the dismissal of the original complaint filed by respondents cannot, in any
way, result in the denial of its complaint-in-intervention. It posits that its consent as intervenor is
ATI filed a motion for reconsideration, which the court denied on July 31, 2000. While it recognized the necessary for the dismissal of the main action, and that the original parties cannot "isolate" it and agree,
arguments of ATI, the court held that its rights could be fully protected in a separate proceeding. It among themselves, to dismiss the complaint. Petitioner asserts that, even if the original complaint was
declared that the subject buses were under custodia legis by virtue of the writ of replevin it had issued. properly dismissed, its complaint-in-intervention survives the original complaint and may proceed as long
However, due to the dismissal of the plaintiffs complaint, the subject buses have to be returned to the as the existence of an actual controversy had been established by the pleadings. It insists that the
person who was in custody prior to the implementation of the writ. The motion for reconsideration filed by intervention has to be heard regardless of the disposition of the principal action.
ATI and the opposition filed by plaintiffs were likewise denied.26

Petitioner submits that even on the assumption that the lower court has no jurisdiction over the principal
ATI filed a Petition for Certiorari under Rule 65 before the CA, assailing the RTC Orders dated April 27, action, the third-party complaint may still be maintained.
1999, September 23, 1999, and July 31, 2000. It raised the following questions:

Petitioner further contends that the appellate court erred in relying on Barangay Matictic v.
WHETHER OR NOT THE LOWER COURT COMMITTED GRAVE ABUSE OF DISCRETION Elbinias33 because in that case, the third-party-complaint was filed after the decision in the main case had
WHEN IT OUTRIGHTLY DISMISSED THE SUBJECT COMPLAINT FILED BY PRIVATE already become final, whereas, in the present case, the third-party claim and third-party complaint before
RESPONDENTS. the RTC dismissed respondents action. Petitioner maintains that the Metropolitan case is thus applicable,
and points out that the Court therein ruled that the complaint-in-intervention should be preserved
WHETHER OR NOT THE LOWER COURT COMMITTED GRAVE ABUSE OF DISCRETION regardless of the outcome of the original complaint.
WHEN IT DENIED THE MOTION FOR RECONSIDERATION FILED BY THE PETITIONER.
For their part, respondents assert that the CA decision is in accord with the Rules of Court.
WHETHER OR NOT THE PUBLIC RESPONDENTS COMMITTED GRAVE ABUSE OF
DISCRETION WHEN IT OUTRIGHTLY DISMISSED THE COMPLAINT-IN-INTERVENTION We are thus tasked to resolve the issue of whether the CA erred in dismissing the petition for certiorari of
FILED BY PETITIONER.27 the petitioner.

ATI averred that it filed its Complaint-in-Intervention before the RTC dismissing the complaint of private The petition is denied for lack of merit.
respondents. It pointed out that the dismissal of the main case does not necessarily result in the dismissal
of its ancillary action because it has a legal interest in the matter in litigation, that is, it is so situated as to
be adversely affected by the distribution or other disposition of the property in question. It thus behooved We rule that the trial court acted in accordance with the Tariff and Customs Code (TCC) and the rulings of
the court to have ordered respondents to post a bond following its third-party claim over the property for this Court when it issued the assailed Orders.
the collection of the wharfage and arrastre fees/charges.
Section 602 of the TCC provides that the Bureau of Customs shall exercise exclusive jurisdiction over vehicles and set the sale thereof at public auction. The RTC should have dismissed the petition for
seized and forfeited cars. It is tasked to enforce tariff, and supervise and control customs law and all other replevin at the outset. By granting the plea of respondents (plaintiffs below) for the seizure of the vehicles
laws, rules and regulations relating to the tariff and customs administration; and to supervise and control and the transfer of custody to the court, the RTC acted without jurisdiction over the action and the
all import and export cargoes, loaded or stored in piers, terminal facilities, including container yards and vehicles subject matter thereof. It bears stressing that the forfeiture of seized goods in the Bureau of
freight stations, for the protection of government revenues. Under Section 2301 of the TCC, the Collector Customs is a proceeding against the goods and not against the owner. It is in the nature of a proceeding
of Customs is empowered to make a seizure of cargoes and issue a receipt for the detention thereof: in rem, i.e., directed against the res or imported articles and entails a determination of the legality of their
importation. In this proceeding, it is, in legal contemplation, the property itself which commits the violation
and is treated as the offender, without reference whatsoever to the character or conduct of the owner.36
SEC. 2301. Warrant for Detention of Property-Cash Bond. Upon making any seizure, the
Collector shall issue a warrant for the detention of the property; and if the owner or importer
desires to secure the release of the property for legitimate use, the Collector shall, with In fine, the initial orders of the RTC granting the issuance of the writ of replevin and its implementation are
the approval of the Commissioner of Customs, surrender it upon the filing of a cash void.37While it is true that the District Collector of Customs allowed the release of the vehicles and the
bond, in an amount to be fixed by him, conditioned upon the payment of the appraised value transfer thereof to the custody of the RTC upon the payment by the private respondents of the required
of the article and/or any fine, expenses and costs which may be adjudged in the case: taxes, duties and charges, he did not thereby lose jurisdiction over the vehicles; neither did it vest
Provided, That such importation shall not be released under any bond when there is a prima jurisdiction on the RTC to take cognizance of and assume jurisdiction over the petition for replevin. As
facie evidence of fraud in the importation of the article: Provided further, That articles the very well explained by the Office of the Solicitor General, the District Collector of Customs agreed to
importation of which is prohibited by law shall not be released under any circumstance transfer the vehicles to the custody of the RTC since the latter had ordered the arrest of those who would
whomsoever, Provided, finally, That nothing in this section shall be construed as relieving the obstruct the implementation of the writ. The District Collector of Customs had yet to resolve whether to
owner or importer from any criminal liability which may arise from any violation of law order the vehicles forfeited in favor of the government, in light of the opinion of the Secretary of Justice
committed in connection with the importation of the article. (emphasis supplied) that, under RA No. 8506, the importation was illegal.

Section 2530 of the TCC enumerates the properties subject of seizure and forfeiture: The RTC cannot be faulted for dismissing petitioners complaint-in-intervention. Considering that it had no
jurisdiction over respondents action and over the shipment subject of the complaint, all proceedings
before it would be void.38 The RTC had no jurisdiction to take cognizance of the complaint-in-intervention
Section 2530. Property Subject of Forfeiture Under Tariff and Customs Laws. Any vehicle, and act thereon except to dismiss the same. Moreover, considering that intervention is merely ancillary
vessel or aircraft, cargo, article and objects shall, under the following conditions be subject to and supplemental to the existing litigation and never an independent action,39 the dismissal of the
forfeiture: principal action necessarily results in the dismissal of the complaint-in-intervention. Likewise, a court
which has no jurisdiction over the principal action has no jurisdiction over a complaint-in-intervention.
xxxx Intervention presupposes the pendency of a suit in a court of competent jurisdiction.40 Jurisdiction of
intervention is governed by jurisdiction of the main action.41

(f) Any article the importation or exportation of which is effected or attempted contrary to law,
or any article of prohibited importation or exportation, and all other articles which, in the opinion IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The Court of Appeals Decision in CA-G.R.
of the Collector, have been used, are or were entered to be used as instruments in the SP No. 61562 is AFFIRMED. SO ORDERED.
importation or exportation of the former.

As the Court ruled in Jao v. Court of Appeals,34 Regional Trial Courts are devoid of any competence to
pass upon the validity or regularity of seizure and forfeiture proceedings conducted by the Bureau of
Customs and to enjoin or otherwise interfere with these proceedings. It is the Collector of Customs, sitting
in seizure and forfeiture proceedings, who has exclusive jurisdiction to hear and determine all questions
touching on the seizure and forfeiture of dutiable goods. The Regional Trial Courts are precluded from
assuming cognizance over such matters even through petitions of certiorari, prohibition or mandamus.
The Court further explained:

It is likewise well-settled that the provisions of the Tariff and Customs Code and that of
Republic Act No. 1125, as amended, otherwise known as "An Act Creating the Court of Tax
Appeals," specify the proper fora and procedure for the ventilation of any legal objections or
issues raised concerning these proceedings. Thus, actions of the Collector of Customs are
appealable to the Commissioner of Customs, whose decision, in turn, is subject to the
exclusive appellate jurisdiction of the Court of Tax Appeals and from there to the Court of
Appeals.

The rule that Regional Trial Courts have no review powers over such proceedings is anchored
upon the policy of placing no unnecessary hindrance on the governments drive, not only to
prevent smuggling and other frauds upon Customs, but more importantly, to render effective
and efficient the collection of import and export duties due the State, which enables the
government to carry out the functions it has been instituted to perform. 35

Thus, the RTC had no jurisdiction to take cognizance of the petition for replevin by respondents herein,
issue the writ of replevin and order its enforcement. The Collector of Customs had already seized the