REM2 - Cases - Rule 57 - 61 - Provisional Remedies

G.R. No.
125027
http://www.lawphil.net/judjuris/juri2002/aug2002/gr_125027_2002.html
Today is Wednesday, November 13, 2013
Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 125027 August 12, 2002
ANITA MANGILA, petitioner, vs. COURT OF APPEALS and LORETA GUINA, respondents. CARPIO, J.: The Case This is a petition fore review on certiorari under Rule 45 of the Rules of Court, seeking to set aside the Decision of the Court of Appeals affirming the Decision of the Regional Trial Court, Branch 108, Pasay City. The trial court upheld the writ of attachment and the declaration of default on petitioner while ordering her to pay private respondent P109,376.95 plus 18 percent interest per annum, 25 percent attorneys fees and costs of suit. The Facts Petitioner Anita Mangila ("petitioner" for brevity) is an exporter of sea foods and doing business under the name and style of Seafoods Products. Private respondent Loreta Guina ("private respondent" for brevity) is the President and General Manager of Air Swift International, a single registered proprietorship engaged in the freight forwarding business. Sometime in January 1988, petitioner contracted the freight forwarding services of private respondent for shipment of petitioners products, such as crabs, prawns and assorted fishes, to Guam (USA) where petitioner maintains an outlet. Petitioner agreed to pay private respondent cash on delivery. Private respondents invoice stipulates a charge of 18 percent interest per annum on all overdue accounts. In case of suit, the same invoice stipulates attorneys fees equivalent to 25 percent of the amount due plus costs of suit.
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On the first shipment, petitioner requested for seven days within which to pay private respondent. However, for the next three shipments, March 17, 24 and 31, 1988, petitioner failed to pay private respondent shipping charges amounting to P109, 376.95.
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Despite several demands, petitioner never paid private respondent. Thus, on June 10, 1988, private respondent filed Civil Case No. 5875 before the Regional Trial Court of Pasay City for collection of sum of money. On August 1, 1988, the sheriff filed his Sheriffs Return showing that summons was not served on petitioner. A woman found at petitioners house informed the sheriff that petitioner transferred her residence to Sto. Nio, Guagua, Pampanga. The sheriff found out further that petitioner had left the Philippines for Guam.
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Thus, on September 13, 1988, construing petitioners departure from the Philippines as done with intent to defraud her creditors, private respondent filed a Motion for Preliminary Attachment. On September 26, 1988, the trial court issued an Order of Preliminary Attachment against petitioner. The following day, the trial court issued a Writ of Preliminary Attachment. The trial court granted the request of its sheriff for assistance from their counterparts in RTC, Pampanga. Thus, on October 28, 1988, Sheriff Alfredo San Miguel of RTC Pampanga served on petitioners household help in San Fernando, Pampanga, the Notice of Levy with the Order, Affidavit and Bond.
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On November 7, 1988, petitioner filed an Urgent Motion to Discharge Attachment without submitting herself to the jurisdiction of the trial court. She pointed out that up to then, she had not been served a copy of the Complaint and the summons. Hence, petitioner claimed the court had not acquired jurisdiction over her person.
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In the hearing of the Urgent Motion to Discharge Attachment on November 11, 1988, private respondent sought and was granted a re-setting to December 9, 1988. On that date, private respondents counsel did not appear, so the
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Urgent Motion to Discharge Attachment was deemed submitted for resolution.
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The trial court granted the Motion to Discharge Attachment on January 13, 1989 upon filing of petitioners counter-bond. The trial court, however, did not rule on the question of jurisdiction and on the validity of the writ of preliminary attachment. On December 26, 1988, private respondent applied for an alias summons, which the trial court issued on January 19, 1989.
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It was only on January 26, 1989 that summons was finally served on petitioner.
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On February 9, 1989, petitioner filed a Motion to Dismiss the Complaint on the ground of improper venue. Private respondents invoice for the freight forwarding service stipulates that "if court litigation becomes necessary to enforce collection xxx the agreed venue for such action is Makati, Metro Manila." Private respondent filed an Opposition asserting that although "Makati" appears as the stipulated venue, the same was merely an inadvertence by the printing press whose general manager executed an affidavit admitting such inadvertence. Moreover, private respondent claimed that petitioner knew that private respondent was holding office in Pasay City and not in Makati. The lower court, finding credence in private respondents assertion, denied the Motion to Dismiss and gave petitioner five days to file her Answer. Petitioner filed a Motion for Reconsideration but this too was denied. Petitioner filed her Answer
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on June 16, 1989, maintaining her contention that the venue was improperly laid.
On June 26, 1989, the trial court issued an Order setting the pre-trial for July 18, 1989 at 8:30 a.m. and requiring the parties to submit their pre-trial briefs. Meanwhile, private respondent filed a Motion to Sell Attached Properties but the trial court denied the motion. On motion of petitioner, the trial court issued an Order resetting the pre-trial from July 18, 1989 to August 24, 1989 at 8:30 a.m.. On August 24, 1989, the day of the pre-trial, the trial court issued an Order terminating the pre-trial and allowing the private respondent to present evidence ex-parte on September 12, 1989 at 8:30 a.m.. The Order stated that when the case was called for pre-trial at 8:31 a.m., only the counsel for private respondent appeared. Upon the trial courts second call 20 minutes later, petitioners counsel was still nowhere to be found. Thus, upon motion of private respondent, the pre-trial was considered terminated. On September 12, 1989, petitioner filed her Motion for Reconsideration of the Order terminating the pre-trial. Petitioner explained that her counsel arrived 5 minutes after the second call, as shown by the transcript of stenographic notes, and was late because of heavy traffic. Petitioner claims that the lower court erred in allowing private respondent to present evidence ex-parte since there was no Order considering the petitioner as in default. Petitioner contends that the Order of August 24, 1989 did not state that petitioner was declared as in default but still the court allowed private respondent to present evidence ex-parte.18 On October 6, 1989, the trial court denied the Motion for Reconsideration and scheduled the presentation of private respondents evidence ex-parte on October 10, 1989.
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On October 10, 1989, petitioner filed an Omnibus Motion stating that the presentation of evidence ex-parte should be suspended because there was no declaration of petitioner as in default and petitioners counsel was not absent, but merely late. On October 18, 1989, the trial court denied the Omnibus Motion.
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On November 20, 1989, the petitioner received a copy of the Decision of November 10, 1989, ordering petitioner to pay respondent P109,376.95 plus 18 percent interest per annum, 25 percent attorneys fees and costs of suit. Private respondent filed a Motion for Execution Pending Appeal but the trial court denied the same. The Ruling of the Court of Appeals On December 15, 1995, the Court of Appeals rendered a decision affirming the decision of the trial court. The Court of Appeals upheld the validity of the issuance of the writ of attachment and sustained the filing of the action in the RTC of Pasay. The Court of Appeals also affirmed the declaration of default on petitioner and concluded that the trial court did not commit any reversible error. Petitioner filed a Motion for Reconsideration on January 5, 1996 but the Court of Appeals denied the same in a Resolution dated May 20, 1996. Hence, this petition. The Issues The issues raised by petitioner may be re-stated as follows:
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I. WHETHER RESPONDENT COURT ERRED IN NOT HOLDING THAT THE WRIT OF ATTACHMENT WAS IMPROPERLY ISSUED AND SERVED; II. WHETHER THERE WAS A VALID DECLARATION OF DEFAULT; III. WHETHER THERE WAS IMPROPER VENUE. IV. WHETHER RESPONDENT COURT ERRED IN DECLARING THAT PETITIONER IS OBLIGED TO PAY P109, 376.95, PLUS ATTORNEYS FEES.
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The Ruling of the Court Improper Issuance and Service of Writ of Attachment Petitioner ascribes several errors to the issuance and implementation of the writ of attachment. Among petitioners arguments are: first, there was no ground for the issuance of the writ since the intent to defraud her creditors had not been established; second, the value of the properties levied exceeded the value of private respondents claim. However, the crux of petitioners arguments rests on the question of the validity of the writ of attachment. Because of failure to serve summons on her before or simultaneously with the writs implementation, petitioner claims that the trial court had not acquired jurisdiction over her person and thus the service of the writ is void. As a preliminary note, a distinction should be made between issuance and implementation of the writ of attachment. It is necessary to distinguish between the two to determine when jurisdiction over the person of the defendant should be acquired to validly implement the writ. This distinction is crucial in resolving whether there is merit in petitioners argument. This Court has long settled the issue of when jurisdiction over the person of the defendant should be acquired in cases where a party resorts to provisional remedies. A party to a suit may, at any time after filing the complaint, avail of the provisional remedies under the Rules of Court. Specifically, Rule 57 on preliminary attachment speaks of the grant of the remedy "at the commencement of the action or at any time thereafter." This phrase refers to the date of filing of the complaint which is the moment that marks "the commencement of the action." The reference plainly is to a time before summons is served on the defendant, or even before summons issues. In Davao Light & Power Co., Inc. v. Court of Appeals, should be had:
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this Court clarified the actual time when jurisdiction
"It goes without saying that whatever be the acts done by the Court prior to the acquisition of jurisdiction over the person of defendant - issuance of summons, order of attachment and writ of attachment - these do not and cannot bind and affect the defendant until and unless jurisdiction over his person is eventually obtained by the court, either by service on him of summons or other coercive process or his voluntary submission to the courts authority. Hence, when the sheriff or other proper officer commences implementation of the writ of attachment, it is essential that he serve on the defendant not only a copy of the applicants affidavit and attachment bond, and of the order of attachment, as explicitly required by Section 5 of Rule 57, but also the summons addressed to said defendant as well as a copy of the complaint xxx." (Emphasis supplied.) Furthermore, we have held that the grant of the provisional remedy of attachment involves three stages: first, the court issues the order granting the application; second, the writ of attachment issues pursuant to the order granting the writ; and third, the writ is implemented. For the initial two stages, it is not necessary that jurisdiction over the person of the defendant be first obtained. However, once the implementation of the writ commences, the court must have acquired jurisdiction over the defendant for without such jurisdiction, the court has no power and authority to act in any manner against the defendant. Any order issuing from the Court will not bind the defendant.
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In the instant case, the Writ of Preliminary Attachment was issued on September 27, 1988 and implemented on October 28, 1988. However, the alias summons was served only on January 26, 1989 or almost three months after the implementation of the writ of attachment. The trial court had the authority to issue the Writ of Attachment on September 27 since a motion for its issuance can be filed "at the commencement of the action." However, on the day the writ was implemented, the trial court should have, previously or simultaneously with the implementation of the writ, acquired jurisdiction over the petitioner. Yet, as was shown in the records of the case, the summons was actually served on petitioner several months after the writ had been implemented.
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Private respondent, nevertheless, claims that the prior or contemporaneous service of summons contemplated in Section 5 of Rule 57 provides for exceptions. Among such exceptions are "where the summons could not be served personally or by substituted service despite diligent efforts or where the defendant is a resident temporarily absent therefrom x x x." Private respondent asserts that when she commenced this action, she tried to serve summons on petitioner but the latter could not be located at her customary address in Kamuning, Quezon City or at her new address in Guagua, Pampanga. Furthermore, respondent claims that petitioner was not even in Pampanga; rather, she was in Guam purportedly on a business trip. Private respondent never showed that she effected substituted service on petitioner after her personal service failed. Likewise, if it were true that private respondent could not ascertain the whereabouts of petitioner after a diligent inquiry, still she had some other recourse under the Rules of Civil Procedure. The rules provide for certain remedies in cases where personal service could not be effected on a party. Section 14, Rule 14 of the Rules of Court provides that whenever the defendants "whereabouts are unknown and cannot be ascertained by diligent inquiry, service may, by leave of court, be effected upon him by publication in a newspaper of general circulation x x x." Thus, if petitioners whereabouts could not be ascertained after the sheriff had served the summons at her given address, then respondent could have immediately asked the court for service of summons by publication on petitioner.
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Moreover, as private respondent also claims that petitioner was abroad at the time of the service of summons, this made petitioner a resident who is temporarily out of the country. This is the exact situation contemplated in Section 16,
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Rule 14 of the Rules of Civil Procedure, providing for service of summons by publication.
In conclusion, we hold that the alias summons belatedly served on petitioner cannot be deemed to have cured the fatal defect in the enforcement of the writ. The trial court cannot enforce such a coercive process on petitioner without first obtaining jurisdiction over her person. The preliminary writ of attachment must be served after or simultaneous with the service of summons on the defendant whether by personal service, substituted service or by publication as warranted by the circumstances of the case. The subsequent service of summons does not confer a retroactive acquisition of jurisdiction over her person because the law does not allow for retroactivity of a belated service. Improper Venue Petitioner assails the filing of this case in the RTC of Pasay and points to a provision in private respondents invoice which contains the following: "3. If court litigation becomes necessary to enforce collection, an additional equivalent (sic) to 25% of the principal amount will be charged. The agreed venue for such action is Makati, Metro Manila, Philippines."
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Based on this provision, petitioner contends that the action should have been instituted in the RTC of Makati and to do otherwise would be a ground for the dismissal of the case. We resolve to dismiss the case on the ground of improper venue but not for the reason stated by petitioner. The Rules of Court provide that parties to an action may agree in writing on the venue on which an action should be brought.
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However, a mere stipulation on the venue of an action is not enough to preclude parties from bringing a
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case in other venues. The parties must be able to show that such stipulation is exclusive. Thus, absent words that show the parties intention to restrict the filing of a suit in a particular place, courts will allow the filing of a case in any venue, as long as jurisdictional requirements are followed. Venue stipulations in a contract, while considered valid and enforceable, do not as a rule supersede the general rule set forth in Rule 4 of the Revised Rules of Court.
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In the absence of qualifying or restrictive words, they should be considered merely as an agreement on
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additional forum, not as limiting venue to the specified place.
In the instant case, the stipulation does not limit the venue exclusively to Makati. There are no qualifying or restrictive words in the invoice that would evince the intention of the parties that Makati is the "only or exclusive" venue where the action could be instituted. We therefore agree with private respondent that Makati is not the only venue where this case could be filed. Nevertheless, we hold that Pasay is not the proper venue for this case. Under the 1997 Rules of Civil Procedure, the general rule is venue in personal actions is "where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff." The exception to this rule is when the parties agree on an exclusive venue other than the places mentioned in the rules. But, as we have discussed, this exception is not applicable in this case. Hence, following the general rule, the instant case may be brought in the place of residence of the plaintiff or defendant, at the election of the plaintiff (private respondent herein).
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In the instant case, the residence of private respondent (plaintiff in the lower court) was not alleged in the complaint. Rather, what was alleged was the postal address of her sole proprietorship, Air Swift International. It was only when private respondent testified in court, after petitioner was declared in default, that she mentioned her residence to be in Better Living Subdivision, Paraaque City. In the earlier case of Sy v. Tyson Enterprises, Inc., the reverse happened. The plaintiff in that case was Tyson Enterprises, Inc., a corporation owned and managed by Dominador Ti. The complaint, however, did not allege the office or place of business of the corporation, which was in Binondo, Manila. What was alleged was the residence of Dominador Ti, who lived in San Juan, Rizal. The case was filed in the Court of First Instance of Rizal, Pasig. The Court there held that the evident purpose of alleging the address of the corporations president and manager was to justify the filing of the suit in Rizal, Pasig instead of in Manila. Thus, the Court ruled that there was no question that venue was improperly laid in that case and held that the place of business of Tyson Enterpises, Inc. is considered as its residence for purposes of venue. Furthermore, the Court held that the residence of its president is not the residence of the corporation because a corporation has a personality separate and distinct from that of its officers and stockholders. In the instant case, it was established in the lower court that petitioner resides in San Fernando, Pampanga
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while
private respondent resides in Paraaque City. However, this case was brought in Pasay City, where the business of private respondent is found. This would have been permissible had private respondents business been a corporation, just like the case in Sy v. Tyson Enterprises, Inc. However, as admitted by private respondent in her Complaint
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in the lower court, her business is a sole proprietorship, and as such, does not have a separate juridical
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personality that could enable it to file a suit in court. suit in court.

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In fact, there is no law authorizing sole proprietorships to file a
A sole proprietorship does not possess a juridical personality separate and distinct from the personality of the owner of the enterprise. The law merely recognizes the existence of a sole proprietorship as a form of business organization conducted for profit by a single individual and requires its proprietor or owner to secure licenses and permits, register its business name, and pay taxes to the national government.
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The law does not vest a separate

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legal personality on the sole proprietorship or empower it to file or defend an action in court.
Thus, not being vested with legal personality to file this case, the sole proprietorship is not the plaintiff in this case but rather Loreta Guina in her personal capacity. In fact, the complaint in the lower court acknowledges in its caption that the plaintiff and defendant are Loreta Guina and Anita Mangila, respectively. The title of the petition before us does not state, and rightly so, Anita Mangila v. Air Swift International, but rather Anita Mangila v. Loreta Guina. Logically then, it is the residence of private respondent Guina, the proprietor with the juridical personality, which should be considered as one of the proper venues for this case. All these considered, private respondent should have filed this case either in San Fernando, Pampanga (petitioners residence) or Paraaque (private respondents residence). Since private respondent (complainant below) filed this case in Pasay, we hold that the case should be dismissed on the ground of improper venue. Although petitioner filed an Urgent Motion to Discharge Attachment in the lower court, petitioner expressly stated that she was filing the motion without submitting to the jurisdiction of the court. At that time, petitioner had not been served the summons and a copy of the complaint. Thereafter, petitioner timely filed a Motion to Dismiss on the ground of improper venue. Rule 16, Section 1 of the Rules of Court provides that a motion to dismiss may be filed "[W]ithin the time for but before filing the answer to the complaint or pleading asserting a claim." Petitioner even raised the issue of improper venue in his Answer
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as a special and affirmative defense. Petitioner also continued to

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raise the issue of improper venue in her Petition for Review this case on the ground of improper venue is warranted.
before this Court. We thus hold that the dismissal of
The rules on venue, like other procedural rules, are designed to insure a just and orderly administration of justice or the impartial and evenhanded determination of every action and proceeding. Obviously, this objective will not be attained if the plaintiff is given unrestricted freedom to choose where to file the complaint or petition. We find no reason to rule on the other issues raised by petitioner.
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WHEREFORE, the petition is GRANTED on the grounds of improper venue and invalidity of the service of the writ of attachment. The decision of the Court of Appeals and the order of respondent judge denying the motion to dismiss are REVERSED and SET ASIDE. Civil Case No. 5875 is hereby dismissed without prejudice to refiling it in the proper venue. The attached properties of petitioner are ordered returned to her immediately. SO ORDERED. Puno, Panganiban, and JJ., concur. Sandoval-Gutierrez, J., On leave.
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Footnotes
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Penned by Justice Quirino Abad Santos, Jr. with members Justices Nathaneal de Pano, Jr. and B.A. Adefuin-Dela Cruz; Docketed as C.A. G.R. CV No. 25119. Penned by Judge Priscilla Mijares. Rollo, p. 97. Ibid. Records of Civil Case No. 5875, p. 9 (hereinafter Records). Ibid., p. 23. Rollo, p. 98. Records, p. 31. Rollo, p. 11. Ibid. Records, p. 86. Ibid., p. 91. Ibid., p. 97. Ibid., p. 102. Ibid., p. 100. Ibid., p. 131. Ibid., p. 161. Rollo, p. 13. Records, p. 182. Rollo, pp. 13-14. Section 1, Rule 57, Rules of Court. 204 SCRA 343 (1991). Cuartero v. Court of Appeals, 212 SCRA 260 (1992). Rollo, p. 102.
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UCPB v. Ongpin, G.R. No. 146593, October 26, 2001. Sec. 14. Service upon defendant whose identity or whereabouts are unknown.- In any action where the defendant is designated as an unknown owner, or the like, or whenever his whereabouts are unknown and cannot be ascertained by diligent inquiry, service, may, by leave of court, be effected upon him by publication in a newspaper of general circulation and in such places and for such time as the court may order Sec. 15. Extraterritorial service.- xxx, service, may, by leave of court, be effected out of the Philippines by personal service as under section 6 or by publication in a newspaper of general circulation in such places and for such time as the court may order, in which case a copy of the summons and order of the court shall be sent by registered mail to the last known address of the defendant, or in any other manner the court may deem sufficient. xxx
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Sec. 16. Residents temporarily out of the Philippines.- when any action is commenced against a defendant who ordinarily resides within the Philippines, but who is temporarily out of it, service, may, by leave of court, be also effected out of the Philippines, as under the preceding section.
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See note 25. Supra, note 13. Rule 4 of the Revised Rules of Civil Procedure: Sec. 4. When rule not applicable. - This rule shall not applyxxx. (b) Where the parties have validly agreed in writing before the filing of the action on the exclusive venue thereof.
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Langkaan Realty Development, Inc. v. UCPB, 347 SCRA 542 (2000).
Supena v. Dela Rosa, 267 SCRA 1(1999) citing Philippine Banking Corporation v. Tensuan, 230 SCRA 913 (1994); Unimasters Conglomeration, Inc. v. Court of Appeals, 267 SCRA 759 (1997).
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Ibid. Rule 4, Section 2. 119 SCRA 367 (1982). Records, p. 31. TSN, October 24, 1989, p. 2. Records, p. 1.
Yao Ka Sin Trading v. Court of Appeals, 209 SCRA 763 (1992) citing Jariol, Jr. v. Sandiganbayan, 188 SCRA 475 (1990).
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Juasing Hardware v. Hon. Mendoza, 201 Phil. 369 (1982), also cited in the Yao Ka Sin Trading case. Ibid. Ibid. Ibid.
The Lawphil Project - Arellano Law Foundation
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G.R. No. 139941
http://www.lawphil.net/judjuris/juri2001/jan2001/gr_139941_2001.html
Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 139941 January 19, 2001
VICENTE B. CHUIDIAN, petitioner, vs. SANDIGANBAYAN (Fifth Division) and the REPUBLIC OF THE PHILIPPINES, respondents. YNARES-SANTIAGO, J.: The instant petition arises from transactions that were entered into by the government in the penultimate days of the Marcos administration. Petitioner Vicente B. Chuidian was alleged to be a dummy or nominee of Ferdinand and Imelda Marcos in several companies said to have been illegally acquired by the Marcos spouses. As a favored business associate of the Marcoses, Chuidian allegedly used false pretenses to induce the officers of the Philippine Export and Foreign Loan Guarantee Corporation (PHILGUARANTEE), the Board of Investments (BOI) and the Central Bank, to facilitate the procurement and issuance of a loan guarantee in favor of the Asian Reliability Company, Incorporated (ARCI) sometime in September 1980. ARCI, 98% of which was allegedly owned by Chuidian, was granted a loan guarantee of Twenty-Five Million U.S. Dollars (US$25,000,000.00).
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While ARCI represented to Philguarantee that the loan proceeds would be used to establish five inter-related projects in the Philippines, Chuidian reneged on the approved business plan and instead invested the proceeds of the loan in corporations operating in the United States, more particularly Dynetics, Incorporated and Interlek, Incorporated. Although ARCI had received the proceeds of the loan guaranteed by Philguarantee, the former defaulted in the payments thereof, compelling Philguarantee to undertake payments for the same. Consequently, in June 1985, Philguarantee sued Chuidian before the Santa Clara County Superior Court, charging that in violation of the terms of the loan, Chuidian not only defaulted in payment, but also misused the funds by investing them in Silicon Valley corporations and using them for his personal benefit. For his part, Chuidian claimed that he himself was a victim of the systematic plunder perpetrated by the Marcoses as he was the true owner of these companies, and that he had in fact instituted an action before the Federal Courts of the United States to recover the companies which the Marcoses had illegally wrested from him.
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On November 27, 1985, or three (3) months before the successful people's revolt that toppled the Marcos dictatorship, Philguarantee entered into a compromise agreement with Chuidian whereby petitioner Chuidian shall assign and surrender title to all his companies in favor of the Philippine government. In return, Philguarantee shall absolve Chuidian from all civil and criminal liability, and in so doing, desist from pursuing any suit against Chuidian concerning the payments Philguarantee had made on Chuidian's defaulted loans. It was further stipulated that instead of Chuidian reimbursing the payments made by Philguarantee arising from Chuidian's default, the Philippine government shall pay Chuidian the amount of Five Million Three Hundred Thousand Dollars (US$5,300,000.00). Initial payment of Five Hundred Thousand Dollars (US$500,000.00) was actually received by Chuidian, as well as succeeding payment of Two Hundred Thousand Dollars (US$200,000.00). The remaining balance of Four Million Six Hundred Thousand Dollars (US$4,600,000.00) was to be paid through an irrevocable Letter of Credit (L/C) from which Chuidian would draw One Hundred Thousand Dollars (US$100,000.00) monthly. Accordingly, on December 12, 1985, L/C No. SSD-005-85 was issued for the said amount by the Philippine National Bank (PNB). Subsequently, Chuidian was able to make two (2) monthly drawings from said L/C at the Los Angeles branch of the PNB.
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With the advent of the Aquino administration, the newly-established Presidential Commission on Good Government (PCGG) exerted earnest efforts to search and recover money, gold, properties, stocks and other assets suspected as having been illegally acquired by the Marcoses, their relatives and cronies. Petitioner Chuidian was among those whose assets were sequestered by the PCGG. On May 30, 1986, the PCGG issued a Sequestration Order directing the PNB to place under its custody, for and in behalf of the PCGG, the irrevocable L/C (No. SSD-005-85). Although Chuidian was then residing in the United States, his name was placed in the Department of Foreign Affairs' Hold Order list.
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In the meantime, Philguarantee filed a motion before the Superior Court of Santa Clara County of California in Civil Case Nos. 575867 and 577697 seeking to vacate the stipulated judgment containing the settlement between Philguarantee and Chuidian on the grounds that: (a) Philguarantee was compelled by the Marcos administration to agree to the terms of the settlement which was highly unfavorable to Philguarantee and grossly disadvantageous to the government; (b) Chuidian blackmailed Marcos into pursuing and concluding the settlement agreement by threatening to expose the fact that the Marcoses made investments in Chuidian's American enterprises; and (c) the Aquino administration had ordered Philguarantee not to make further payments on the L/C to Chuidian. After considering the factual matters before it, the said court concluded that Philguarantee "had not carried its burden of showing that the settlement between the parties should be set aside." On appeal, the Sixth Appellate District of the Court of Appeal of the State of California affirmed the judgment of the Superior Court of Sta. Clara County denying Philguarantee's motion to vacate the stipulated judgment based on the settlement agreement.
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After payment on the L/C was frozen by the PCGG, Chuidian filed before the United States District Court, Central District of California, an action against PNB seeking, among others, to compel PNB to pay the proceeds of the L/C. PNB countered that it cannot be held liable for a breach of contract under principles of illegality, international comity and act of state, and thus it is excused from payment of the L/C. Philguarantee intervened in said action, raising the same issues and arguments it had earlier raised in the action before the Santa Clara Superior Court, alleging that PNB was excused from making payments on the L/C since the settlement was void due to illegality, duress and fraud.
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The Federal Court rendered judgment ruling: (1) in favor of PNB excusing the said bank from making payment on the L/C; and (2) in Chuidian's favor by denying intervenor Philguarantee's action to set aside the settlement agreement.
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Meanwhile, on February 27, 1987, a Deed of Transfer was executed between then Secretary of Finance Jaime V. Ongpin and then PNB President Edgardo B. Espiritu, to facilitate the rehabilitation of PNB, among others, as part of the government's economic recovery program. The said Deed of Transfer provided for the transfer to the government of certain assets of PNB in exchange for which the government would assume certain liabilities of PNB. Among those liabilities which the government assumed were unused commercial L/C's and Deferred L/C's, including SSD-005-85 listed under Dynetics, Incorporated in favor of Chuidian in the amount of Four Million Four Hundred Thousand Dollars (US$4,400,000.00).
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On July 30, 1987, the government filed before the Sandiganbayan Civil Case No. 0027 against the Marcos spouses, several government officials who served under the Marcos administration, and a number of individuals known to be cronies of the Marcoses, including Chuidian. The complaint sought the reconveyance, reversion, accounting and restitution of all forms of wealth allegedly procured illegally and stashed away by the defendants. In particular, the complaint charged that Chuidian, by himself and/or in conspiracy with the Marcos spouses, engaged in "devices, schemes and stratagems" by: (1) forming corporations for the purpose of hiding and avoiding discovery of illegally obtained assets; (2) pillaging the coffers of government financial institutions such as the Philguarantee; and (3) executing the court settlement between Philguarantee and Chuidian which was grossly disadvantageous to the government and the Filipino people. In fine, the PCGG averred that the above-stated acts of Chuidian committed in unlawful concert with the other defendants constituted "gross abuse of official position of authority, flagrant breach of public trust and fiduciary obligations, brazen abuse of right and power, unjust enrichment, violation of the Constitution and laws" of the land.
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While the case was pending, on March 17, 1993, the Republic of the Philippines filed a motion for issuance of a writ of attachment
15
over the L/C, citing as grounds therefor the following:
(1) Chuidian embezzled or fraudulently misapplied the funds of ARCI acting in a fiduciary capacity, justifying issuance of the writ under Section 1(b), Rule 57 of the Rules of Court; (2) The writ is justified under Section 1(d) of the same rule as Chuidian is guilty of fraud in contracting the debt or incurring the obligation upon which the action was brought, or that he concealed or disposed of the property that is the subject of the action; (3) Chuidian has removed or disposed of his property with the intent of defrauding the plaintiff as justified under Section 1(c) of Rule 57; and (4) Chuidian is residing out of the country or one on whom summons may be served by publication, which justifies the writ of attachment prayed for under Section 1(e) of the same rule. The Republic also averred that should the action brought by Chuidian before the U.S. District Court of California to compel payment of the L/C prosper, inspite of the sequestration of the said L/C, Chuidian can ask the said foreign court to compel the PNB Los Angeles branch to pay the proceeds of the L/C. Eventually, Philguarantee will be made to shoulder the expense resulting in further damage to the government. Thus, there was an urgent need for the writ
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of attachment to place the L/C under the custody of the Sandiganbayan so the same may be preserved as security for the satisfaction of judgment in the case before said court. Chuidian opposed the motion for issuance of the writ of attachment, contending that: (1) The plaintiff's affidavit appended to the motion was in form and substance fatally defective; (2) Section 1(b) of Rule 57 does not apply since there was no fiduciary relationship between the plaintiff and Chuidian; (3) While Chuidian does not admit fraud on his part, if ever there was breach of contract, such fraud must be present at the time the contract is entered into; (4) Chuidian has not removed or disposed of his property in the absence of any intent to defraud plaintiff; (5) Chuidian's absence from the country does not necessarily make him a non-resident; and (6) Service of summons by publication cannot be used to justify the issuance of the writ since Chuidian had already submitted to the jurisdiction of the Court by way of a motion to lift the freeze order filed through his counsel. On July 14, 1993, the Sandiganbayan issued a Resolution ordering the issuance of a writ of attachment against L/C No. SSD-005-85 as security for the satisfaction of judgment. The Sandiganbayan's ruling was based on its disquisition of the five points of contention raised by the parties. On the first issue, the Sandiganbayan found that although no separate affidavit was attached to the motion, the motion itself contained all the requisites of an affidavit, and the verification thereof is deemed a substantial compliance of Rule 57, Section 3 of the Rules of Court. Anent the second contention, the Sandiganbayan ruled that there was no fiduciary relationship existing between Chuidian and the Republic, but only between Chuidian and ARCI. Since the Republic is not privy to the fiduciary relationship between Chuidian and ARCI, it cannot invoke Section 1(b) of Rule 57. On the third issue of fraud on the part of Chuidian in contracting the loan, or in concealing or disposing of the subject property, the Sandiganbayan held that there was a prima facie case of fraud committed by Chuidian, justifying the issuance of the writ of attachment. The Sandiganbayan also adopted the Republic's position that since it was compelled to pay, through Philguarantee, the bank loans taken out by Chuidian, the proceeds of which were fraudulently diverted, it is entitled to the issuance of the writ of attachment to protect its rights as creditor. Assuming that there is truth to the government's allegation that Chuidian has removed or disposed of his property with the intent to defraud, the Sandiganbayan held that the writ of attachment is warranted, applying Section 1(e) of Rule 57. Besides, the Rules provide for sufficient security should the owner of the property attached suffer damage or prejudice caused by the attachment.
17 16
Chuidian's absence from the country was considered by the Sandiganbayan to be "the most potent insofar as the relief being sought is concerned." Taking judicial notice of the admitted fact that Chuidian was residing outside of the country, the Sandiganbayan observed that: "x x x no explanation whatsoever was given by him as to his absence from the country, or as to his homecoming plans in the future. It may be added, moreover, that he has no definite or clearcut plan to return to the country at this juncture given the manner by which he has submitted himself to the jurisdiction of the court."
19 18
Thus, the Sandiganbayan ruled that even if Chuidian is one who ordinarily resides in the Philippines, but is temporarily living outside, he is still subject to the provisional remedy of attachment. Accordingly, an order of attachment was issued by the Sandiganbayan on July 19, 1993, ordering the Sandiganbayan Sheriff to attach PNB L/C No. SSD-005-85 for safekeeping pursuant to the Rules of Court as security for the satisfaction of judgment in Sandiganbayan Civil Case No. 0027. On August 11, 1997, or almost four (4) years after the issuance of the order of attachment, Chuidian filed a motion to lift the attachment based on the following grounds: First, he had returned to the Philippines; hence, the Sandiganbayan's "most potent ground" for the issuance of the writ of preliminary attachment no longer existed. Since his absence in the past was the very foundation of the Sandiganbayan's writ of preliminary attachment, his presence in the country warrants the immediate lifting thereof. Second, there was no evidence at all of initial fraud or subsequent concealment except for the affidavit submitted by the PCGG Chairman citing mere "belief and information" and "not on knowledge of the facts." Moreover, this statement is hearsay since the PCGG Chairman was not a witness to the litigated incidents, was never presented as a witness by the Republic and thus was not subject to cross-examination. Third, Chuidian denies that he ever disposed of his assets to defraud the Republic, and there is nothing in the
20
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records that support the Sandiganbayan's erroneous conclusion on the matter. Fourth, Chuidian belied the allegation that he was also a defendant in "other related criminal action," for in fact, he had "never been a defendant in any prosecution of any sort in the Philippines." Moreover, he could not have personally appeared in any other action because he had been deprived of his right to a travel document by the government. Fifth, the preliminary attachment was, in the first place, unwarranted because he was not "guilty of fraud in contracting the debt or incurring the obligation". In fact, the L/C was not a product of fraudulent transactions, but was the result of a US Court-approved settlement. Although he was accused of employing blackmail tactics to procure the settlement, the California Supreme Court ruled otherwise. And in relation thereto, he cites as a sixth ground the fact that all these allegations of fraud and wrongdoing had already been dealt with in actions before the State and Federal Courts of California. While it cannot technically be considered as forum shopping, it is nevertheless a "form of suit multiplicity over the same issues, parties and subject matter." judicata which warrant the dismissal of the case itself.
22 21
These foreign judgments constitute res
Chuidian further contends that should the attachment be allowed to continue, he will be deprived of his property without due process. The L/C was payment to Chuidian in exchange for the assets he turned over to the Republic pursuant to the terms of the settlement in Case No. 575867. Said assets, however, had already been sold by the Republic and cannot be returned to Chuidian should the government succeed in depriving him of the proceeds of the L/C. Since said assets were disposed of without his or the Sandiganbayan's consent, it is the Republic who is fraudulently disposing of assets. Finally, Chuidian stressed that throughout the four (4) years that the preliminary attachment had been in effect, the government had not set the case for hearing. Under Rule 17, Section 3, the case itself should be dismissed for laches owing to the Republic's failure to prosecute its action for an unreasonable length of time. Accordingly, the preliminary attachment, being only a temporary or ancillary remedy, must be lifted and the PNB ordered to immediately pay the proceeds of the L/C to Chuidian. Subsequently, on August 20, 1997, Chuidian filed a motion to require the Republic to deposit the L/C in an interest bearing account. Annex "D"; Rollo, pp. 77-79.23 He pointed out to the Sandiganbayan that the face amount of the L/C had, since its attachment, become fully demandable and payable. However, since the amount is just lying dormant in the PNB, without earning any interest, he proposed that it would be to the benefit of all if the Sandiganbayan requires PNB to deposit the full amount to a Sandiganbayan trust account at any bank in order to earn interest while awaiting judgment of the action. The Republic opposed Chuidian's motion to lift attachment, alleging that Chuidian's absence was not the only ground for the attachment and, therefore, his belated appearance before the Sandiganbayan is not a sufficient reason to lift the attachment. Moreover, allowing the foreign judgment as a basis for the lifting of the attachment would essentially amount to an abdication of the jurisdiction of the Sandiganbayan to hear and decide the ill gotten wealth cases lodged before it in deference to the judgment of foreign courts. In a Resolution promulgated on November 13, 1998, the Sandiganbayan denied Chuidian's motion to lift attachment.
24 23
On the same day, the Sandiganbayan issued another Resolution denying Chuidian's motion to require deposit of the attached L/C in an interest bearing account.
25
In a motion seeking a reconsideration of the first resolution, Chuidian assailed the Sandiganbayan's finding that the issues raised in his motion to lift attachment had already been dealt with in the earlier resolution dated July 14, 1993 granting the application for the writ of preliminary attachment based on the following grounds: First, Chuidian was out of the country in 1993, but is now presently residing in the country. Second, the Sandiganbayan could not have known then that his absence was due to the non-renewal of his passport at the instance of the PCGG. Neither was it revealed that the Republic had already disposed of Chuidian's assets ceded to the Republic in exchange for the L/C. The foreign judgment was not an issue then because at that time, said judgment had not yet been issued and much less final. Furthermore, the authority of the PCGG Commissioner to subscribe as a knowledgeable witness relative to the issuance of the writ of preliminary attachment was raised for the first time in the motion to lift the attachment. Finally, the issue of laches could not have been raised then because it was the Republic's subsequent neglect or failure to prosecute despite the passing of the years that gave rise to laches.
26
Chuidian also moved for a reconsideration of the Sandiganbayan resolution denying the motion to require deposit of the L/C into an interest bearing account. He argued that contrary to the Sandiganbayan's pronouncement, allowing the deposit would not amount to a virtual recognition of his right over the L/C, for he is not asking for payment but simply requesting that it be deposited in an account under the control of the Sandiganbayan. He further stressed that the Sandiganbayan abdicated its bounden duty to rule on an issue when it found "that his motion will render nugatory the purpose of sequestration and freeze orders over the L/C." Considering that his assets had already been sold by the Republic, he claimed that the Sandiganbayan's refusal to exercise its fiduciary duty over attached
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assets will cause him irreparable injury. Lastly, the Sandiganbayan's position that Chuidian was not the owner but a mere payee-beneficiary of the L/C issued in his favor negates overwhelming jurisprudence on the Negotiable Instruments Law, while at the same time obliterating his rights of ownership under the Civil Code.
27
On July 13, 1999, the Sandiganbayan gave due course to Chuidian's plea for the attached L/C to be deposited in an interest-bearing account, on the ground that it will redound to the benefit of both parties. The Sandiganbayan declared the national government as the principal obligor of the L/C even though the liability remained in the books of the PNB for accounting and monitoring purposes. The Sandiganbayan, however, denied Chuidian's motion for reconsideration of the denial of his motion to lift attachment, agreeing in full with the government's apriorisms that: x x x (1) it is a matter of record that the Court granted the application for writ of attachment upon grounds other than defendant's absence in the Philippine territory. In its Resolution dated July 14, 1993, the Court found a prima facie case of fraud committed by defendant Chuidian, and that defendant has recovered or disposed of his property with the intent of defrauding plaintiff; (2) Chuidian's belated presence in the Philippines cannot be invoked to secure the lifting of attachment. The rule is specific that it applies to a party who is about to depart from the Philippines with intent to defraud his creditors. Chuidian's stay in the country is uncertain and he may leave at will because he holds a foreign passport; and (3) Chuidian's other ground, sufficiency of former PCGG Chairman Gunigundo's verification of the complaint, has been met fairly and squarely in the Resolution of July 14, 1993.
28
Hence, the instant petition for certiorari contending that the respondent Sandiganbayan committed grave abuse of discretion amounting to lack or excess of jurisdiction when it ruled that: 1) Most of the issues raised in the motion to lift attachment had been substantially addressed in the previous resolutions dated July 14, 1993 and August 26, 1998, while the rest were of no imperative relevance as to affect the Sandiganbayan's disposition; and 2) PNB was relieved of the obligation to pay on its own L/C by virtue of Presidential Proclamation No. 50. The Rules of Court specifically provide for the remedies of a defendant whose property or asset has been attached. As has been consistently ruled by this Court, the determination of the existence of grounds to discharge a writ of attachment rests in the sound discretion of the lower courts.
29
The question in this case is: What can the herein petitioner do to quash the attachment of the L/C? There are two courses of action available to the petitioner: First. To file a counterbond in accordance with Rule 57, Section 12, which provides: SEC. 12. Discharge of attachment upon giving counterbond. At anytime after an order of attachment has been granted, the party whose property has been attached, or the person appearing on his behalf, may, upon reasonable notice to the applicant, apply to the judge who granted the order, or to the judge of the court in which the action is pending, for an order discharging the attachment wholly or in part on the security given. The judge shall, after hearing, order the discharge of the attachment if a cash deposit is made, or a counterbond executed to the attaching creditor is filed, on behalf of the adverse party, with the clerk or judge of the court where the application is made, in an amount equal to the value of the property attached as determined by the judge, to secure the payment of any judgment that the attaching creditor may recover in the action. Upon the filing of such counter-bond, copy thereof shall forthwith be served on the attaching creditor or his lawyer. Upon the discharge of an attachment in accordance with the provisions of this section the property attached, or the proceeds of any sale thereof, shall be delivered to the party making the deposit or giving the counter-bond, or the person appearing on his behalf, the deposit or counter-bond aforesaid standing in place of the property so released. Should such counterbond for any reason be found to be, or become, insufficient, and the party furnishing the same fail to file an additional counter-bond, the attaching creditor may apply for a new order of attachment.
1 wphi 1 . nt
or Second. To quash the attachment on the ground that it was irregularly or improvidently issued, as provided for in Section 13 of the same Rule: SEC. 13. Discharge of attachment for improper or irregular issuance. - The party whose property has been attached may also, at any time either before or after the release of the attached property, or before any attachment shall have been actually levied, upon reasonable notice to the attaching creditor, apply to the judge who granted the order, or to the judge of the court in which the action is pending, for an order to discharge the attachment on the ground that the same was improperly or irregularly issued. If the motion be made on affidavits on the part of the party whose property has been attached, but not otherwise, the attaching creditor may oppose the same by counter-affidavits or other evidence in addition to that on which the attachment was made. After hearing, the judge shall order the discharge of the attachment if it appears that it was improperly or irregularly issued and the defect is not cured forthwith.
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It would appear that petitioner chose the latter because the grounds he raised assail the propriety of the issuance of the writ of attachment. By his own admission, however, he repeatedly acknowledged that his justifications to warrant the lifting of the attachment are facts or events that came to light or took place after the writ of attachment had already been implemented. More particularly, petitioner emphasized that four (4) years after the writ was issued, he had returned to the Philippines. Yet while he noted that he would have returned earlier but for the cancellation of his passport by the PCGG, he was not barred from returning to the Philippines. Then he informed the Sandiganbayan that while the case against him was pending, but after the attachment had already been executed, the government lost two (2) cases for fraud lodged against him before the U.S. Courts, thus invoking res judicata. Next, he also pointed out that the government is estopped from pursuing the case against him for failing to prosecute for the number of years that it had been pending litigation. It is clear that these grounds have nothing to do with the issuance of the writ of attachment. Much less do they attack the issuance of the writ at that time as improper or irregular. And yet, the rule contemplates that the defect must be in the very issuance of the attachment writ. For instance, the attachment may be discharged under Section 13 of Rule 57 when it is proven that the allegations of the complaint were deceptively framed,
31 30
or when the
complaint fails to state a cause of action. Supervening events which may or may not justify the discharge of the writ are not within the purview of this particular rule. In the instant case, there is no showing that the issuance of the writ of attachment was attended by impropriety or irregularity. Apart from seeking a reconsideration of the resolution granting the application for the writ, petitioner no longer questioned the writ itself. For four (4) long years he kept silent and did not exercise any of the remedies available to a defendant whose property or asset has been attached. It is rather too late in the day for petitioner to question the propriety of the issuance of the writ. Petitioner also makes capital of the two foreign judgments which he claims warrant the application of the principle of res judicata. The first judgment, in Civil Case Nos. 575867 and 577697 brought by Philguarantee before the Santa Clara Country Superior Court, denied Philguarantee's prayer to set aside the stipulated judgment wherein Philguarantee and Chuidian agreed on the subject attached L/C. On March 14, 1990, the Court of Appeal of the State of California affirmed the Superior Court's judgment. The said judgment became the subject of a petition for review by the California Supreme Court. There is no showing, however, of any final judgment by the California Supreme Court. The records, including petitioner's pleadings, are bereft of any evidence to show that there is a final foreign judgment which the Philippine courts must defer to. Hence, res judicata finds no application in this instance because it is a requisite that the former judgment or order must be final.
32
Second, petitioner cites the judgment of the United States District Court in Civil Case 86-2255 RSWL brought by petitioner Chuidian against PNB to compel the latter to pay the L/C. The said Court's judgment, while it ruled in favor of petitioner on the matter of Philguarantee's action-in-intervention to set aside the settlement agreement, also ruled in favor of PNB, to wit: Under Executive Order No. 1, the PCGG is vested by the Philippine President with the power to enforce its directives and orders by contempt proceedings. Under Executive Order No. 2, the PCGG is empowered to freeze any, and all assets, funds and property illegally acquired by former President Marcos or his close friends and business associates. On March 11, 1986, PNB/Manila received an order from the PCGG ordering PNB to freeze any further drawings on the L/C. The freeze order has remained in effect and was followed by a sequestration order issued by the PCGG. Subsequently, Chuidian's Philippine counsel filed a series of challenges to the freeze and sequestration orders, which challenges were unsuccessful as the orders were found valid by the Philippine Supreme Court. The freeze and sequestration orders are presently in effect. Thus, under the PCGG order and Executive Orders Nos. 1 and 2, performance by PNB would be illegal under Philippine Law. Therefore PNB is excused from performance of the L/C agreement as long as the freeze and sequestration orders remain in effect. (Underscoring ours) xxx xxx xxx
Chuidian argues that the fact that the L/C was issued pursuant to a settlement in California, that the negotiations for which occurred in California, and that two of the payments were made at PNB/LA, compels the conclusion that the act of prohibiting payment of the L/C occurred in Los Angeles. However, the majority of the evidence and Tchacosh and Sabbatino compel the opposite conclusion. The L/C was issued in Manila, such was done at the request of a Philippine government instrumentality for the benefit of a Philippine citizen, the L/C was to be performed in the Philippines, all significant events relating to the issuance and implementation of the L/C occurred in the Philippines, the L/C agreement provided that the L/C was to be construed according to laws of the Philippines, and the Philippine government certainly has an interest in preventing the L/C from being remitted in that it would be the release of funds that are potentially illgotten gains. Accordingly, the Court finds that the PCGG orders are acts of state that must be respected by this Court, and thus PNB is excused from making payment on the L/C as long as the freeze and sequestration orders remain in effect.
33
(Underscoring ours)
Petitioner's own evidence strengthens the government's position that the L/C is under the jurisdiction of the
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Philippine government and that the U.S. Courts recognize the authority of the Republic to sequester and freeze said L/C. Hence, the foreign judgments relied upon by petitioner do not constitute a bar to the Republic's action to recover whatever alleged ill-gotten wealth petitioner may have acquired. Petitioner may argue, albeit belatedly, that he also raised the issue that there was no evidence of fraud on record other than the affidavit of PCGG Chairman Gunigundo. This issue of fraud, however, touches on the very merits of the main case which accuses petitioner of committing fraudulent acts in his dealings with the government. Moreover, this alleged fraud was one of the grounds for the application of the writ, and the Sandiganbayan granted said application after it found a prima facie case of fraud committed by petitioner. In fine, fraud was not only one of the grounds for the issuance of the preliminary attachment, it was at the same time the government's cause of action in the main case. We have uniformly held that: x x x when the preliminary attachment is issued upon a ground which is at the same time the applicant's cause of action; e.g., "an action for money or property embezzled or fraudulently misapplied or converted to his own use by a public officer, or an officer of a corporation, or an attorney, factor, broker, agent, or clerk, in the course of his employment as such, or by any other person in a fiduciary capacity, or for a willful violation of duty," or "an action against a party who has been guilty of fraud in contracting the debt or incurring the obligation upon which the action is brought," the defendant is not allowed to file a motion to dissolve the attachment under Section 13 of Rule 57 by offering to show the falsity of the factual averments in the plaintiff's application and affidavits on which the writ was based and consequently that the writ based thereon had been improperly or irregularly issued the reason being that the hearing on such a motion for dissolution of the writ would be tantamount to a trial of the merits of the action. In other words, the merits of the action would be ventilated at a mere hearing of a motion, instead of at the regular trial.
34
(Underscoring ours)
Thus, this Court has time and again ruled that the merits of the action in which a writ of preliminary attachment has been issued are not triable on a motion for dissolution of the attachment, otherwise an applicant for the lifting of the writ could force a trial of the merits of the case on a mere motion.
35
It is not the Republic's fault that the litigation has been protracted. There is as yet no evidence of fraud on the part of petitioner. Petitioner is only one of the twenty-three (23) defendants in the main action. As such, the litigation would take longer than most cases. Petitioner cannot invoke this delay in the proceedings as an excuse for not seeking the proper recourse in having the writ of attachment lifted in due time. If ever laches set in, it was petitioner, not the government, who failed to take action within a reasonable time period. Challenging the issuance of the writ of attachment four (4) years after its implementation showed petitioner's apparent indifference towards the proceedings before the Sandiganbayan. In sum, petitioner has failed to convince this Court that the Sandiganbayan gravely abused its discretion in a whimsical, capricious and arbitrary manner. There are no compelling reasons to warrant the immediate lifting of the attachment even as the main case is still pending. On the other hand, allowing the discharge of the attachment at this stage of the proceedings would put in jeopardy the right of the attaching party to realize upon the relief sought and expected to be granted in the main or principal action. It would have the effect of prejudging the main case. The attachment is a mere provisional remedy to ensure the safety and preservation of the thing attached until the plaintiff can, by appropriate proceedings, obtain a judgment and have such property applied to its satisfaction. To discharge the attachment at this stage of the proceedings would render inutile any favorable judgment should the government prevail in the principal action against petitioner. Thus, the Sandiganbayan, in issuing the questioned resolutions, which are interlocutory in nature, committed no grave abuse of discretion amounting to lack or excess of jurisdiction. As long as the Sandiganbayan acted within its jurisdiction, any alleged errors committed in the exercise of its jurisdiction will amount to nothing more than errors of judgment which are reviewable by timely appeal and not by special civil action of certiorari.
37 36
Moreover, we have held that when the writ of attachment is issued upon a ground which is at the same time the applicant's cause of action, the only other way the writ can be lifted or dissolved is by a counterbond, in accordance with Section 12 of the same rule. Solicitor General in his comment.
39 38
This recourse, however, was not availed of by petitioner, as noted by the
To reiterate, there are only two ways of quashing a writ of attachment: (a) by filing a counterbond immediately; or (b) by moving to quash on the ground of improper and irregular issuance. These grounds for the dissolution of an attachment are fixed in Rule 57 of the Rules of Court and the power of the Court to dissolve an attachment is circumscribed by the grounds specified therein. Petitioner's motion to lift attachment failed to demonstrate any infirmity or defect in the issuance of the writ of attachment; neither did he file a counterbond. Finally, we come to the matter of depositing the Letter of Credit in an interest-bearing account. We agree with the Sandiganbayan that any interest that the proceeds of the L/C may earn while the case is being litigated would redound to the benefit of whichever party will prevail, the Philippine government included. Thus, we affirm the
41 40
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Sandiganbayan's ruling that the proceeds of the L/C should be deposited in an interest bearing account with the Land Bank of the Philippines for the account of the Sandiganbayan in escrow until ordered released by the said Court. We find no legal reason, however, to release the PNB from any liability thereunder. The Deed of Transfer, whereby certain liabilities of PNB were transferred to the national government, cannot affect the said L/C since there was no valid substitution of debtor. Article 1293 of the New Civil Code provides: Novation which consists in substituting a new debtor in the place of the original one, may be made without the knowledge or against the will of the latter, but not without the consent of the creditor. Payment by the new debtor gives him the rights mentioned in Articles 1236 and 1237. Accordingly, any substitution of debtor must be with the consent of the creditor, whose consent thereto cannot just be presumed. Even though Presidential Proclamation No. 50 can be considered an "insuperable cause", it does not necessarily make the contracts and obligations affected thereby exceptions to the above-quoted law, such that the substitution of debtor can be validly made even without the consent of the creditor. Presidential Proclamation No. 50 was not intended to set aside laws that govern the very lifeblood of the nation's commerce and economy. In fact, the Deed of Transfer that was executed between PNB and the government pursuant to the said Presidential Proclamation specifically stated that it shall be deemed effective only upon compliance with several conditions, one of which requires that: (b) the BANK shall have secured such governmental and creditors' approvals as may be necessary to establish the consummation, legality and enforceability of the transactions contemplated hereby." The validity of this Deed of Transfer is not disputed. Thus, PNB is estopped from denying its liability thereunder considering that neither the PNB nor the government bothered to secure petitioner's consent to the substitution of debtors. We are not unmindful that any effort to secure petitioner's consent at that time would, in effect, be deemed an admission that the L/C is valid and binding. Even the Sandiganbayan found that: Products Corp. v. Macaraig, Jr., 299 SCRA 491, 515 (1998).
36
Sta. Ines Melale Forest
x x x Movant has basis in pointing out that inasmuch as the L/C was issued in his favor, he is presumed to be the lawful payee-beneficiary of the L/C until such time that the plaintiff successfully proves that said L/C is ill-gotten and he has no right over the same.
42 43
In Republic v. Sandiganbayan, we held that the provisional remedies, such as freeze orders and sequestration, were not "meant to deprive the owner or possessor of his title or any right to the property sequestered, frozen or taken over and vest it in the sequestering agency, the Government or other person." Thus, until such time that the government is able to successfully prove that petitioner has no right to claim the proceeds of the L/C, he is deemed to be the lawful payee-beneficiary of said L/C, for which any substitution of debtor requires his consent. The Sandiganbayan thus erred in relieving PNB of its liability as the original debtor. WHEREFORE, in view of all the foregoing, the petition is DISMISSED. The Resolutions of the Sandiganbayan dated November 6, 1998 and July 2, 1999 are AFFIRMED. The PNB is DIRECTED to remit to the Sandiganbayan the proceeds of Letter of Credit No. SFD-005-85 in the amount of U.S. $4.4 million within fifteen (15) days from notice hereof, the same to be placed under special time deposit with the Land Bank of the Philippines, for the account of Sandiganbayan in escrow for the person or persons, natural or juridical, who shall eventually be adjudged lawfully entitled thereto, the same to earn interest at the current legal bank rates. The principal and its interest shall remain in said account until ordered released by the Court in accordance with law.
1 wphi 1 . nt
No costs. SO ORDERED. Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Pardo, JJ., concur. Footnotes: 1 Santa Clara County Superior Court, Civil Case Nos. 575867 and 577697. 2 U.S. District Court for the Northern District of California, Case No. C-85-3799EFL. 3 Settlement Agreement and Mutual Release, Records, pp. 1785-1794; Exhibit "5-e", Vol. 4. 4 Records, Vol. I, pp. 165-166. 5 Annex "A"; Rollo, p. 42. 6 Annex "O"; Rollo, p. 133. 7 Records, Vol. 10, p. 4708.
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8 Annex "C-1"; Records, Vol. 10, p. 4735. 9 Order and Judgment, Civil Case No. 86-2255RSWL, U.S. District Court, Central District of California; Records, p. 4992. 10 Supra., Records, pp. 5502-5003. 11 Pursuant to Proclamation No. 50 issued on December 8, 1986 by then president Corazon C. Aquino. 12 Deed of Transfer, Rollo, p. 122. 13 Rollo, p. 116. 14 Complaint, Records, Vol. I, pp. 162-167. 15 Records, Vol. 8, pp. 3951-3959. 16 Sandiganbayan Resolution, Rollo, p. 64. 17 Section 3, Rule 57, Rules of Court. 18 Sandiganbayan Resolution, Rollo, p. 61. 19 Ibid., p. 61. 20 Order of Attachment, Annex "B-1"; Rollo, pp. 66-67. 21 Motion to Lift Attachment, Rollo, p. 71. 22 Ibid., Rollo, p. 72. 24 Annex "E", Resolution; Rollo, p. 83. 25 Annex "E-1"; Rollo, p. 88. 26 Annex "F"; Rollo, pp. 97-99. 27 Annex "F-1"; Rollo, pp. 100-101. 28 Supra.; Rollo, p. 107. 29 Jopillo, Jr. v. CA, 167 SCRA 247, 253 (1988). 30 Gruenberg v. CA, 138 SCRA 471, 478 (1985). 31 Acua v. Yatco, 20 SCRA 867, 876 (1967). 32 Casil v. CA, 285 SCRA 264, 276 (1998); De Knecht v. CA, 290 SCRA 223, 237 (1998). 33 Ibid., pp. 5000-5001. 34 Mindanao Savings and Loan Association, Inc. v. CA, 172 SCRA 480, 488-489 (1989). 35 Cuartero v. CA, 212 SCRA 260, 267 (1992); The Consolidated Bank and Trust Corp. v. CA, 197 SCRA 663, 674 (1991). 37 Commissioner on Internal Revenue v. CA, 257 SCRA 200, 232 (1996). 38 Supra., Jopillo, Jr. v. CA, p. 254. 39 Comments; Rollo, pp. 215-216. 40 Calderon v. IAC, 155 SCRA 531, 540 (1987). 41 Santos v. Aquino, Jr., 205 SCRA 127, 135 (1992). 42 Resolution, Rollo, p. 105. 43 G.R. No. 88228, 186 SCRA 864, 869 (1990).
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G.R. No. 156580
http://www.lawphil.net/judjuris/juri2004/jun2004/gr_156580_2004.html
Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 156580 June 14, 2004
LUZ DU, petitioner, vs. STRONGHOLD INSURANCE Promulgated: CO., INC., respondent. DECISION PANGANIBAN, J.: Preference is given to a duly registered attachment over a subsequent notice of lis pendens, even if the beneficiary of the notice acquired the subject property before the registration of the attachment. Under the torrens system, the auction sale of an attached realty retroacts to the date the levy was registered. The Case Before us is a Petition for Review under Rule 45 of the Rules of Court, seeking to nullify the March 19, 2002 Decision and the December 5, 2002 Resolution of the Court of Appeals (CA) in CA-GR CV No. 50884. The CA disposed as follows: "Parenthetically, when the decision in Civil Case No. 90-1848 became final and executory, levy on execution issued and the attached property sold at public auction, the latter retroacts to the date of the levy. Said the High Court: In line with the same principle, it was held that where a preliminary attachment in favor of A was recorded on November 11, 1932, and the private sale of the attached property in favor of B was executed on May 29, 1933, the attachment lien has priority over the private sale, which means that the purchaser took the property subject to such attachment lien and to all of its consequences, one of which is the subsequent sale on execution (Tambao v. Suy, 52 Phil. 237). The auction sale being a necessary sequel to the levy, it enjoys the same preference as the attachment lien enjoys over the private sale. In other words, the auction sale retroacts to the date of the levy. [Were] the rule be otherwise, the preference enjoyed by the levy of execution would be meaningless and illusory (Capistrano v. Phil. Nat. Bank, 101 Phil. 1117). (Underscoring supplied) "By and large, We find no reversible error in the appealed decision. "IN VIEW OF ALL THE FOREGOING, the instant appeal is ordered DISMISSED. No pronouncement as to cost."
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The questioned Resolution, on the other hand, denied petitioners Motion for Reconsideration. The Facts The CA narrated the facts as follows: "x x x Aurora Olarte de Leon was the registered owner of Lot No. 10-A (LRC Psd 336366) per Transfer Certificate of Title No. 582/T-3. Sometime in January 1989, De Leon sold the property to Luz Du under a Conditional Deed of Sale wherein said vendee paid a down payment of P75,000.00 leaving a balance of P95,000.00. "Then again, on April 28, 1989, Aurora de Leon sold [the] same property to spouses Enrique and Rosita Caliwag without prior notice to Luz Du. As a result, Transfer Certificate of Title No. 582/T-3 was cancelled and Transfer Certificate of Title No. 2200 was issued in favor of the Caliwag spouses. "Meanwhile, Stronghold Insurance Corp., Inc. x x x commenced Civil Case No. 90-1848 against spouses Rosita and Enrique Caliwag et al., for allegedly defrauding Stronghold and misappropriating the companys fund by falsifying and simulating purchases of documentary stamps. The action was accompanied by a prayer
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for a writ of preliminary attachment duly annotated at the back of Transfer Certificate of Title No. 2200 on August 7, 1990. "On her part, on December 21, 1990, Luz Du initiated Civil Case No. 60319 against Aurora de Leon and the spouses Caliwag for the annulment of the sale by De Leon in favor of the Caliwags, anchored on the earlier mentioned Deed of Conditional Sale. "On January 3, 1991, Luz Du caused the annotation of a Notice Of Lis Pendens at the back of Transfer Certificate of Title No. 2200. "On February 11, 1991, the decision was handed down in Civil Case No. 90-1848 in favor of Stronghold, ordering the spouses Caliwag jointly and severally to pay the plaintiff P8,691,681.60, among others. When the decision became final and executory, on March 12, 1991, a notice of levy on execution was annotated on Transfer Certificate of Title No. 2200 and the attached property was sold in a public auction. On [August] 5, 1991, the certificate of sale and the final Deed of Sale in favor of Stronghold were inscribed and annotated leading to the cancellation of Transfer Certificate of Title No. 2200 and in lieu thereof, Transfer Certificate of Title No. 6444 was issued in the name of Stronghold. "It came to pass that on August 5, 1992, Luz Du too was able to secure a favorable judgment in Civil Case No. 60319 and which became final and executory sometime in 1993, as well. "Under the above historical backdrop, Luz Du commenced the present case (docketed as Civil Case No. 64645) to cancel Transfer Certificate of Title No. 6444 in the name of Stronghold with damages claiming priority rights over the property by virtue of her Notice Of Lis Pendens under Entry No. 13305 and inscribed on January 3, 1991, and the final and executory decision in Civil Case No. 60319 she filed against spouses Enrique and Rosita Caliwag. According to Luz Du, despite her said notice of lis pendens annotated, Stronghold still proceeded with the execution of the decision in Civil Case No. 90-1848 against the subject lot and ultimately the issuance of Transfer Certificate of Title No. 6444 in its (Strongholds) name."
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The trial court ruled that Stronghold had superior rights over the property because of the prior registration of the latters notice of levy on attachment on Transfer Certificate of Title (TCT) No. 2200. For this reason, it found no basis to nullify TCT No. 6444, which was issued in the name of respondent after the latter had purchased the property in a public auction. Ruling of the Court of Appeals Sustaining the trial court in toto, the CA held that Strongholds notice of levy on attachment had been registered almost five (5) months before petitioners notice of lis pendens. Hence, respondent enjoyed priority in time. Such registration, the appellate court added, constituted constructive notice to petitioner and all third persons from the time of Strongholds entry, as provided under the Land Registration Act -- now the Property Registration Decree. The CA also held that respondent was a purchaser in good faith. The necessary sequels of execution and sale retroacted to the time when Stronghold registered its notice of levy on attachment, at a time when there was nothing on TCT No. 2200 that would show any defect in the title or any adverse claim over the property. Hence, this Petition.
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Issues Petitioner submits the following issues for our consideration: "I. "Whether a Notice of Levy on Attachment on the property is a superior lien over that of the unregistered right of a buyer of a property in possession pursuant to a Deed of Conditional Sale. "II. "Whether the acquisition of the subject property by Respondent Stronghold was tainted with bad faith." The Courts Ruling The Petition has no merit. Main Issue: Superiority of Rights Petitioner submits that her unregistered right over the property by way of a prior conditional sale in 1989 enjoys preference over the lien of Stronghold -- a lien that was created by the registration of respondents levy on attachment in 1990. Maintaining that the ruling in Capistrano v. PNB was improperly applied by the Court of
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Appeals, petitioner avers that unlike the circumstances in that case, the property herein had been sold to her before the levy. We do not agree. The preference given to a duly registered levy on attachment or execution over a prior unregistered sale is well-settled in our jurisdiction. As early as Gomez v. Levy Hermanos, this Court has held that an attachment that is duly annotated on a certificate of title is superior to the right of a prior but unregistered buyer. In that case, the Court explained as follows: "x x x. It is true that she bought the lots with pacto de retro but the fact of her purchase was not noted on the certificates of title until long after the attachment and its inscription on the certificates. In the registry, therefore, the attachment appeared in the nature of a real lien when Apolonia Gomez had her purchase recorded. The legal effect of the notation of said lien was to subject and subordinate the right of Apolonia Gomez, as purchaser, to the lien. She acquired the ownership of the said parcels only from the date of the recording of her title in the register, which took place on November 21, 1932 (sec. 51 of Act No. 496; LiongWong-Shih vs. Sunico and Peterson, 8 Phil. 91; Tabigue vs. Green, 11 Phil. 102; Buzon vs. Lucauco, 13 Phil. 354; and Worcester vs. Ocampo and Ocampo, 34 Phil. 646), and the right of ownership which she inscribed was not an absolute but a limited right, subject to a prior registered lien, by virtue of which Levy Hermanos, Inc. was entitled to the execution of the judgment credit over the lands in question, a right which is preferred and superior to that of the plaintiff (sec, 51, Act No. 496 and decisions cited above). x x x"
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Indeed, the subsequent sale of the property to the attaching creditor must, of necessity, retroact to the date of the levy. Otherwise, the preference created by the levy would be meaningless and illusory, as reiterated in Defensor v. Brillo:
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"x x x. The doctrine is well-settled that a levy on execution duly registered takes preference over a prior unregistered sale; and that even if the prior sale is subsequently registered before the sale in execution but after the levy was duly made, the validity of the execution sale should be maintained, because it retroacts to the date of the levy; otherwise, the preference created by the levy would be meaningless and illusory. "Even assuming, therefore, that the entry of appellants sales in the books of the Register of Deeds on November 5, 1949 operated to convey the lands to them even without the corresponding entry in the owners duplicate titles, the levy on execution on the same lots in Civil Case No. 1182 on August 3, 1949, and their subsequent sale to appellee Brillo (which retroacts to the date of the levy) still takes precedence over and must be preferred to appellants deeds of sale which were registered only on November 5, 1949. "This result is a necessary consequence of the fact that the properties herein involved were duly registered under Act No. 496, and of the fundamental principle that registration is the operative act that conveys and binds lands covered by Torrens titles (sections 50, 51, Act 496). Hence, if appellants became owners of the properties in question by virtue of the recording of the conveyances in their favor, their title arose already subject to the levy in favor of the appellee, which had been noted ahead in the records of the Register of Deeds."
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(Citations omitted, italics supplied)
The Court has steadfastly adhered to the governing principle set forth in Sections 51 and 52 of Presidential Decree No. 1529:
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"SEC. 51. Conveyance and other dealings by registered owner. - An owner of registered land may convey, mortgage, lease, charge or otherwise deal with the same in accordance with existing laws. He may use such forms of deeds, mortgages, leases or other voluntary instruments as are sufficient in law. But no deed, mortgage, lease, or other voluntary instrument, except a will purporting to convey or affect registered land shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties and as evidence of authority to the Registry of Deeds to make registration. "The act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned, and in all cases under this Decree, the registration shall be made in the office of the Register of Deeds for the province or the city where the land lies. "SEC. 52. Constructive notice upon registration. - Every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting registered land shall, if registered, filed or entered in the office of the Register of Deeds for the province or city where the land to which it relates lies, be constructive notice to all persons from the time of such registering, filing or entering."(Italics supplied)
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As the property in this case was covered by the torrens system, the registration of Strongholds attachment the operative act that gave validity to the transfer and created a lien upon the land in favor of respondent. Capistrano Ruling Correctly Applied
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was
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The preference created by the levy on attachment is not diminished even by the subsequent registration of the prior sale. That was the import of Capistrano v. PNB, which held that precedence should be given to a levy on attachment or execution, whose registration was before that of the prior sale. In Capistrano, the sale of the land in question -- though made as far back as 1946 -- was registered only in 1953, after the property had already been subjected to a levy on execution by the Philippine National Bank. The present case is not much different. The stipulation of facts shows that Stronghold had already registered its levy on attachment before petitioner annotated her notice of lis pendens. As in Capistrano, she invokes the alleged superior right of a prior unregistered buyer to overcome respondents lien. If either the third-party claim or the subsequent registration of the prior sale was insufficient to defeat the previously registered attachment lien, as ruled by the Court in Capistrano, it follows that a notice of lis pendens is likewise insufficient for the same purpose. Such notice does not establish a lien or an encumbrance on the property affected. As the name suggests, a notice of lis pendens with respect to a disputed property is intended merely to inform third persons that any of their transactions in connection therewith -- if entered into subsequent to the notation -- would be subject to the result of the suit. In view of the foregoing, the CA correctly applied Capistrano, as follows: "x x x the rule now followed is that if the attachment or levy of execution, though posterior to the sale, is registered before the sale is registered, it takes precedence over the latter. "The rule is not altered by the fact that at the time of the execution sale the Philippine National Bank had information that the land levied upon had already been deeded by the judgment debtor and his wife to Capistrano. The auction sale being a necessary sequel to the levy, for this was effected precisely to carry out the sale, the purchase made by the bank at said auction should enjoy the same legal priority that the levy had over the sale in favor of plaintiff. In other words, the auction sale retroacts to the date of the levy. Were the rule otherwise, the preference enjoyed by the levy of execution in a case like the present would be meaningless and illusory."
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(Citations omitted, italics supplied) Second Issue: Taking in Bad Faith
We now tackle the next question of petitioner: whether Stronghold was a purchaser in good faith. Suffice it to say that when Stronghold registered its notice of attachment, it did not know that the land being attached had been sold to petitioner. It had no such knowledge precisely because the sale, unlike the attachment, had not been registered. It is settled that a person dealing with registered property may rely on the title and be charged with notice of only such burdens and claims as are annotated thereon. This principle applies with more force to this case, absent any allegation or proof that Stronghold had actual knowledge of the sale to petitioner before the registration of its attachment. Thus, the annotation of respondents notice of attachment was a registration in good faith, the kind that made its prior right enforceable.
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Moreover, it is only after the notice of lis pendens is inscribed in the Office of the Register of Deeds that purchasers of the property become bound by the judgment in the case. As Stronghold is deemed to have acquired the property -- not at the time of actual purchase but at the time of the attachment -- it was an innocent purchaser for value and in good faith. WHEREFORE, the Petition is DENIED, and the assailed Decision and Resolution AFFIRMED. Costs against petitioner. SO ORDERED. Davide, Jr., Ynares-Santiago, Carpio, and Azcuna, JJ., concur.
Footnotes
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On leave. Rollo, pp. 8-21.
Id., pp. 22-28. Penned by Justice Conrado M. Vasquez Jr. (Tenth Division chair) and concurred in by Justices Andres B. Reyes Jr. and Amelita G. Tolentino (members). Id., p. 30.
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CA Decision, pp. 6-7; rollo, pp. 27-28. TCT No. 2200, records, p. 8. CA Decision, pp. 1-3; rollo, pp. 22-24. Boldface in the original.
The case was deemed submitted for decision on October 3, 2003, upon the Courts receipt of respondents Memorandum, signed by Atty. Ricardo L. Saclayan of Gascon, Rellora & Associates. Petitioners Memorandum, signed by Atty. Benjamin A. Moraleda Jr., was received on September 4, 2003. Petitioners Memorandum, p. 6; rollo, p. 55. 67 Phil. 134, April 3, 1939. Id., p. 137, per Concepcion, J. 98 Phil. 427, February 21, 1956. Defensor v. Brillo, supra, pp. 429-430, per Reyes, J.
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Otherwise known as the Property Registration Decree. The above-quoted Sections were 50 and 51 of Act No. 496 or the Land Registration Act. See Lavides v. Pre, 419 Phil. 665, 671-672, October 17, 2001; Sajonas v. CA, 258 SCRA 79, 91, July 5, 1996; Calalang v. Register of Deeds of Quezon City, 231 SCRA 88, 103, March 11, 1994; Landig v. US Commercial Co., 89 Phil. 638, 642, July 31, 1951. The lien or security obtained by attachment -- even before judgment -- is a fixed and positive security, the existence of which is no way contingent, conditional, or inchoate. (BF Homes, Inc. v. CA, 190 SCRA 262, 272, October 3, 1990; citing Ching Liu & Co. v. Mercado, 67 Phil. 409, 413, April 13, 1939). It ripens into a judgment against the res when the order of sale is made. (Republic v. Saludares, 384 Phil. 192, 204, March 9, 2000).
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See also Vargas v. Tancioco, 67 Phil. 308, 311, April 12, 1939; Landig v. US Commercial Co., supra. Lavides v. Pre, supra, p. 672 (citing Defensor v. Brillo, supra; and Gomez v. Levy Hermanos, Inc., supra).
101 Phil. 1117, 1120, August 30, 1957. The same ruling -- over competing claims of a third-party claimant and the attaching creditor/purchaser -- was made earlier in Vargas v. Tancioco, supra.
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Legarda v. CA, 345 Phil. 890, 903, October 16, 1997. Capistrano v. PNB, supra, p. 1120, per Reyes, J. Legarda v. CA, supra, p. 903; Sandoval v. CA, 260 SCRA 283, 295, August 1, 1996; Sajonas v. CA, supra. Cheng v. Genato, 360 Phil. 891, 911, December 29, 1998.
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Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 154106 June 29, 2004
D.M. WENCESLAO and ASSOCIATES, INC., and/or DOMINADOR S. DAYRIT, petitioners, vs. READYCON TRADING AND CONSTRUCTION CORP., respondent. DECISION QUISUMBING, J.: This petition for review assails the decision of the Court of Appeals, dated January 30, 2002, as well as its resolution dated June 20, 2002 in CA-GR CV No. 49101, denying petitioners motion for reconsideration. The appellate court affirmed the decision of the Regional Trial Court of Pasig City, Branch 165, in Civil Case No. 61159, ordering petitioners to pay the sum of P1,014,110.45 with interest rate of 12% per annum (compounded annually) from August 9, 1991, the date of filing of the complaint, until fully paid to Readycon Trading and Construction Corp., plus damages. Petitioner D.M. Wenceslao and Associates, Inc. (WENCESLAO, for brevity) is a domestic corporation, organized under and existing pursuant to Philippine laws, engaged in the construction business, primarily infrastructure, foundation works, and subdivision development. Its co-petitioner, Dominador Dayrit, is the vice-president of said company. Respondent Readycon Trading and Construction Corporation (READYCON, for brevity) is likewise a corporate entity organized in accordance with Philippine laws. Its primary business is the manufacture and sale of asphalt materials.
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The facts of this case are not in dispute. WENCESLAO had a contract with the Public Estates Authority (PEA) for the improvement of the main expressway in the R-1 Toll Project along the Coastal Road in Paraaque City. To fulfill its obligations to the PEA, WENCESLAO entered into a contract with READYCON on April 16, 1991. READYCON agreed to sell to WENCESLAO asphalt materials valued at P1,178,308.75. The contract bore the signature of co-petitioner Dominador Dayrit, as signatory officer for WENCESLAO in this agreement. Under the contract, WENCESLAO was bound to pay respondent a twenty percent (20%) downpayment, or P235,661.75, upon delivery of the materials contracted for. The balance of the contract price, amounting to P942,647, was to be paid within fifteen (15) days thereof. It was further stipulated by the parties that respondent was to furnish, deliver, lay, roll the asphalt, and if necessary, make the needed corrections on a prepared base at the jobsite.
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On April 22, 1991, READYCON delivered the assorted asphalt materials worth P1,150,531.75. Accordingly, WENCESLAO paid the downpayment of P235,661.75 to READYCON. Thereafter, READYCON performed its obligation to lay and roll the asphalt materials on the jobsite.
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Fifteen (15) days after performance of said work, READYCON demanded that WENCESLAO pay the balance of the contract price. WENCESLAO, however, ignored said demand. On May 30, 1991, the counsel for READYCON wrote a demand letter to WENCESLAO asking that it make good on the balance it owed. Again, WENCESLAO failed to heed the demand. It did not even bother to reply to the demand letter.
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In view of this development, on July 19, 1991, READYCON filed a complaint with the Regional Trial Court of Pasig City for collection of a sum of money and damages, with prayer for writ of preliminary attachment against D.M. Wenceslao and/or Dominador Dayrit, docketed as Civil Case No. 61159. READYCON demanded payment of P1,014,110.45 from petitioners herein with P914,870.75 as the balance of contract price, as well as payment of P99,239.70, representing another unpaid account.
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As READYCON timely posted the required bond of P1,150,000, its application for the writ of preliminary attachment
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was granted. On September 5, 1991, the RTC Sheriff attached certain assets of WENCESLAO, particularly, the following heavy equipments: One (1) asphalt paver, one (1) bulldozer, one (1) dozer and one (1) grader.
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On September 16, 1991, WENCESLAO moved for the release of the attached equipments and posted its counter-bond. The trial court granted the motion and directed the RTC Sheriff to return the attached equipments. On September 25, 1991, the Sheriff released the attached heavy machineries to WENCESLAO.
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In the proceedings below, WENCESLAO admitted that it owed READYCON P1,014,110.45 indeed. However, it alleged that their contract was not merely one of sale but also of service, namely, that respondent shall lay the asphalt in accordance with the specifications and standards imposed by and acceptable to the government. WENCESLAO also alleged that since the contract did not indicate this condition with respect to the period within which the balance must be paid, the contract failed to reflect the true intention of the parties. It alleged READYCON agreed that the balance in the payments would be settled only after the government had accepted READYCONs work as to its quality in laying the asphalt. By way of counterclaim, WENCESLAO prayed for the payment of damages caused by the filing of READYCONs complaint and the issuance of the writ of attachment despite lack of cause.
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On December 26, 1994, the RTC rendered judgment in this wise: WHEREFORE, judgment is hereby rendered ordering the defendant D.M. Wenceslao & Associates, Inc. to pay plaintiff as follows: 1. The amount of P1,014,110.45 with interest at the rate of 12% per annum (compounded annually) from August 9, 1991, date of filing of the complaint, until fully paid. 2. The amount of P35,000.00 as and for attorneys fees and expenses of litigation. 3. Costs of suit. The counterclaim of the defendants is dismissed for lack of merit.
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Dissatisfied with the decision, the petitioners appealed to the Court of Appeals. The appellate court, however, affirmed in toto the decision of the lower court.
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In denying the appeal, the appellate court found that contrary to WENCESLAOs assertion, malice and bad faith in obtaining a writ of attachment must be proved before a claim for damages on account of wrongful attachment will prosper, citing Philippine Commercial International Bank v. Intermediate Appellate Court, 196 SCRA 29 (1991). The CA stressed that the trial court found neither malice nor bad faith relative to the filing of the complaint and the obtaining of the writ of attachment. Also, according to the CA, petitioners did not adduce evidence to show that the attachment caused damage to the cited pieces of heavy equipment.
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The appellate court also found that the trial court correctly interpreted the period for payment of the balance. It held that the text of the stipulation that the balance shall be paid within fifteen days is clear and unmistakable. Granting that the sales contract was not merely for supply and delivery but also for service, the balance was already due and demandable when demand was made on May 30, 1991, which was a month after READYCON performed its obligation.
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Hence, the instant petition, wherein petitioners raise the following issues: 1. WHETHER OR NOT QUESTIONS OF FACTS ARE RAISED IN THE APPEAL BY CERTIORARI; 2. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING RESPONDENT LIABLE FOR COMPENSATORY DAMAGES FOR THE WRONGFUL ISSUANCE OF THE WRIT OF PRELIMINARY ATTACHMENT; 3. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THE OBLIGATION [AS] NOT YET DUE AND DEMANDABLE.
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We find proper for resolution two issues: (1) Is respondent READYCON liable to petitioner WENCESLAO for damages caused by the issuance and enforcement of the writ of preliminary attachment? (2) Was the obligation of WENCESLAO to pay READYCON already due and demandable as of May 30, 1991? On the first issue, petitioners rely mainly on Lazatin v. Twano and Castro, 112 Phil. 733 (1961), reiterated in MC Engineering v. Court of Appeals, 380 SCRA 116 (2002). In Lazatin, we held that actual or compensatory damages may be recovered for wrongful, though not malicious, attachment. Lazatin also held that attorneys fees may be
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recovered under Article 2208 of the Civil Code. Petitioners contend that Lazatin applies in the instant case because the wrongful attachment of WENCESLAOs equipment resulted in a paralysis of its operations, causing it to sustain a loss of P100,000 per day in terms of accomplishment of work. Since the attachment lasted 19 days it suffered a total loss of P1.9 million. Aside from that, it had to spend P50,000 on the pullout of the equipment and another P100,000 to repair and restore them to their former working condition.
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Respondent counters that inasmuch as a preliminary attachment is an available ancillary remedy under the rules, a penalty cannot be meted out for the enforcement of a right, such as in this case when it sought such relief. It stresses that the writ was legally issued by the RTC, upon a finding that READYCON sought the relief without malice or bad faith. Furthermore, WENCESLAO failed to show concrete and credible proof of the damages it suffered. The issuance of a writ and its enforcement entail a rigorous process where the court found that it was not attended by malice or bad faith. It cites Mindanao Savings and Loan Association v. Court of Appeals, 172 SCRA 480 (1989), to the effect where a counter-bond is filed, the right to question the irregularity and propriety of the writ of attachment must be deemed waived since the ground for the issuance of the writ forms the core of the complaint.
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We find for the respondent on this issue. However, its reliance upon Mindanao Savings and Loan Association is misplaced. It is to be stressed that the posting of a counter-bond is not tantamount to a waiver of the right to damages arising from a wrongful attachment. This we have made clear in previous cases, e.g., Calderon v. Intermediate Appellate Court,
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where we ruled that:
Whether the attachment was discharged by either of the two (2) ways indicated in the law, i.e., by filing a counterbond or by showing that the order of attachment was improperly or irregularly issued, the liability of the surety on the attachment bond subsists because the final reckoning is when "the Court shall finally adjudge that the attaching creditor was not entitled" to the issuance of the attachment writ in the first place. The attachment debtor cannot be deemed to have waived any defect in the issuance of the attachment writ by simply availing himself of one way of discharging the attachment writ, instead of the other. Moreover, the filing of a counterbond is a speedier way of discharging the attachment writ maliciously sought out by the attaching party creditor instead of the other way, which in most instances like in the present case, would require presentation of evidence in a fullblown trial on the merits and cannot easily be settled in a pending incident of the case.
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The point in Mindanao Savings, alluded to by respondent, pertained to the propriety of questioning the writ of attachment by filing a motion to quash said writ, after a counter-bond had been posted by the movant. But nowhere in Mindanao Savings did we rule that filing a counter-bond is tantamount to a waiver of the right to seek damages on account of the impropriety or illegality of the writ. We note that the appellate court, citing Philippine Commercial & Industrial Bank, 196 SCRA 29 (1991), stressed that bad faith or malice must first be proven as a condition sine qua non to the award of damages. The appellate court appears to have misread our ruling, for pertinently what this Court stated was as follows: The silence of the decision in GR No. 55381 on whether there was bad faith or malice on the part of the petitioner in securing the writ of attachment does not mean the absence thereof. Only the legality of the issuance of the writ of attachment was brought in issue in that case. Hence, this Court ruled on that issue without a pronouncement that procurement of the writ was attended by bad faith. Proof of bad faith or malice in obtaining a writ of attachment need be proved only in the claim for damages on account of the issuance of the writ. We affirm the finding of the respondent appellate court that malice and bad faith attended the application by PCIB of a writ of attachment.
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Plainly, we laid no hard and fast rule that bad faith or malice must be proved to recover any form of damages. In Philippine Commercial & Industrial Bank, we found bad faith and malice to be present, thereby warranting the award of moral and exemplary damages. But we denied the award of actual damages for want of evidence to show said damages. For the mere existence of malice and bad faith would not per se warrant the award of actual or compensatory damages. To grant such damages, sufficient proof thereon is required. Petitioners cite Lazatin and MC Engineering insofar as proof of bad faith and malice as prerequisite to the claim of actual damages is dispensed with. Otherwise stated, in the present case, proof of malice and bad faith are unnecessary because, just like in Lazatin and MC Engineering, what is involved here is the issue of actual and compensatory damages. Nonetheless, we find that petitioner is not entitled to an award of actual or compensatory damages. Unlike Lazatin and MC Engineering, wherein the respective complaints were dismissed for being unmeritorious, the writs of attachment were found to be wrongfully issued, in the present case, both the trial and the appellate courts held that the complaint had merit. Stated differently, the two courts found READYCON entitled to a writ of preliminary attachment as a provisional remedy by which the property of the defendant is taken into custody of the law as a security for the satisfaction of any judgment which the plaintiff may recover. Rule 57, Section 4 of the 1997 Rules of Civil Procedure states that:
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SEC. 4. Condition of applicants bond. - The party applying for the order must thereafter give a bond executed to the adverse party in the amount fixed by the court in its order granting the issuance of the writ, conditioned that the latter will pay all the costs which may be adjudged to the adverse party and all damages which he may sustain by reason of the attachment, if the court shall finally adjudge that the applicant was not entitled thereto (italics for emphasis). In this case, both the RTC and the Court of Appeals found no reason to rule that READYCON was not entitled to issuance of the writ. Neither do we find now that the writ is improper or illegal. If WENCESLAO suffered damages as a result, it is merely because it did not heed the demand letter of the respondent in the first place. WENCESLAO could have averted such damage if it immediately filed a counter-bond or a deposit in order to lift the writ at once. It did not, and must bear its own loss, if any, on that account. On the second issue, WENCESLAO admits that it indeed owed READYCON the amount being claimed by the latter. However, it contends that while the contract provided that the balance was payable within fifteen (15) days, said agreement did not specify when the period begins to run. Therefore, according to petitioner, the appellate court erred when it held the contract clear enough to be understood on its face. WENCESLAO insists that the balance of the purchase price was payable only "upon acceptance of the work by the government." In other words, the real intent of the parties was that it shall be due and demandable only fifteen days after acceptance by the government of the work. This is common practice, according to petitioner. Respondent argues that the stipulation in the sales contract is very clear that it should be paid within fifteen (15) days without any qualifications and conditions. When the terms of a contract are clear and readily understandable, there is no room for construction. Even so, the contention was mooted and rendered academic when, a few days after institution of the complaint, the government accepted the work but WENCESLAO still failed to pay respondent. Under Article 1582 of the Civil Code, the buyer is obliged to pay the price of the thing sold at the time stipulated in the contract. Both the RTC and the appellate court found that the parties contract stated that the buyer shall pay the manufacturer the amount of P1,178,308.75 in the following manner: 20% downpayment - P235,661.75 Balance payable within fifteen (15) days P942,647.00 Following the rule on interpretation of contracts, no other evidence shall be admissible other than the original document itself,
26
except when a party puts in issue in his pleading the failure of the written agreement to express
27
the true intent of the parties.
This was what the petitioners wanted done.
However, to rule on whether the written agreement failed to express the true intent of the parties would entail having this Court reexamine the facts. The findings of the trial court as affirmed by the appellate court on this issue, however, bind us now. For in a petition for certiorari under Rule 45 of the 1997 Rules of Civil Procedure, this Court may not review the findings of fact all over again. Suffice it to say, however, that the findings by the RTC, then affirmed by the CA, that the extra condition being insisted upon by the petitioners is not found in the sales contract between the parties. Hence it cannot be used to qualify the reckoning of the period for payment. Besides, telling against petitioner WENCESLAO is its failure still to pay the unpaid account, despite the fact of the works acceptance by the government already. With submissions of the parties carefully considered, we find no reason to warrant a reversal of the decisions of the lower courts. But since Dominador Dayrit merely acted as representative of D.M. Wenceslao and Associates, Inc., in signing the contract, he could not be made personally liable for the corporations failure to comply with its obligation thereunder. Petitioner WENCESLAO is properly held liable to pay respondent the sum of P1,014,110.45 with interest rate of 12% per annum (compounded annually) from August 9, 1991, the date of filing of the complaint, until fully paid, plus damages. WHEREFORE, the petition is DENIED. The assailed decision and resolution of the Court of Appeals in CA-G.R. CV No. 49101, affirming the judgment of the Regional Trial Court of Pasig City, Branch 165, in Civil Case No. 61159, are AFFIRMED. No pronouncement as to costs. SO ORDERED. Puno, Austria-Martinez , Callejo, Sr., and Tinga, JJ., concur.
*
Footnotes
* 1
On Leave.
Rollo, pp. 25-31. Penned by Associate Justice Elvi John S. Asuncion, with Associate Justices Romeo A. Brawner, and Rebecca De Guia-Salvador concurring.
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Id. at 33. Id. at 128-137. Id. at 84. Id. at 25. Id. at 26, 129. Id. at 26, 130. The amount stated is P235,661.00. Ibid. Rollo, pp. 27, 129-130. Id. at 86. Id. at 133. Ibid. Ibid. Id. at 137. Id. at 31. Id. at 29. Id. at 30. Id. at 91.
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Art. 2208. In the absence of stipulation, attorneys fees and expenses of litigation, other than judicial costs, cannot be recovered, except: ... (11) In any other case where the court deems it just and equitable that attorneys fees and expenses of litigation should be recovered. ...
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Rollo, p. 93. Id. at 119-125. Nos.L-74696 & L-73916, 11 November 1987, 155 SCRA 531. Id. at 540-541. Philippine Commercial International Bank v. IAC, G.R. No. 73610, 19 April 1991, 196 SCRA 29, 36. SEC. 1, Rule 57, 1997 Revised Rules of Civil Procedure.
Rule 130, SEC. 3. Original document must be produced; exceptions. When the subject of inquiry is the contents of a document, no evidence shall be admissible other than the original document itself, except in the following cases: (a) When the original has been lost or destroyed, or cannot be produced in court, without bad faith on the part of the offeror; (b) When the original is in the custody or under the control of the party against whom the evidence is offered, and the latter fails to produce it after reasonable notice;
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(c) When the original consists of numerous accounts or other documents which cannot be examined in court without great loss of time and the fact sought to be established from them is only the general result of the whole; and (d) When the original is a public record in the custody of a public officer or is recorded in a public office. Rule 130, SEC. 9. Evidence of written agreements. When the terms of an agreement have been reduced to writing, it is considered as containing all the terms agreed upon and there can be, between the parties and their successors in interest, no evidence of such terms other than the contents of the written agreement. However, a party may present evidence to modify, explain or add to the terms of the written agreement if he puts in issue in his pleading: (a) An intrinsic ambiguity, mistake or imperfection in the written agreement; (b) The failure of the written agreement to express the true intent and agreement of the parties thereto; (c) The validity of the written agreement; or (d) The existence of other terms agreed to by the parties or their successors in interest after the execution of the written agreement. The term "agreement" includes wills.
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G.R. No. 166759
http://www.lawphil.net/judjuris/juri2009/nov2009/gr_166759_2009.html
Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 166759 November 25, 2009
SOFIA TORRES, FRUCTOSA TORRES, HEIRS OF MARIO TORRES and SOLAR RESOURCES, INC., Petitioners, vs. NICANOR SATSATIN, EMILINDA AUSTRIA SATSATIN, NIKKI NORMEL SATSATIN and NIKKI NORLIN SATSATIN, Respondents. DECISION PERALTA, J.: This is a petition for review on certiorari assailing the Decision dated November 23, 2004 of the Court of Appeals (CA) in CA-G.R. SP No. 83595, and its Resolution reconsideration.
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dated January 18, 2005, denying petitioners motion for
The factual and procedural antecedents are as follows: The siblings Sofia Torres (Sofia), Fructosa Torres (Fructosa), and Mario Torres (Mario) each own adjacent 20,000 square meters track of land situated at Barrio Lankaan, Dasmarias, Cavite, covered by Transfer Certificate of Title (TCT) Nos. 251267, 251266, and 251265, respectively. Sometime in 1997, Nicanor Satsatin (Nicanor) asked petitioners mother, Agripina Aledia, if she wanted to sell their lands. After consultation with her daughters, daughter-in-law, and grandchildren, Agripina agreed to sell the properties. Petitioners, thus, authorized Nicanor, through a Special Power of Attorney, to negotiate for the sale of the properties.
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Sometime in 1999, Nicanor offered to sell the properties to Solar Resources, Inc. (Solar). Solar allegedly agreed to purchase the three parcels of land, together with the 10,000-square-meter property owned by a certain Rustica Aledia, for P35,000,000.00. Petitioners alleged that Nicanor was supposed to remit to them the total amount of P28,000,000.00 or P9,333,333.00 each to Sofia, Fructosa, and the heirs of Mario. Petitioners claimed that Solar has already paid the entire purchase price of P35,000,000.00 to Nicanor in Thirty-Two (32) post-dated checks which the latter encashed/deposited on their respective due dates. Petitioners added that they also learned that during the period from January 2000 to April 2002, Nicanor allegedly acquired a house and lot at Vista Grande BF Resort Village, Las Pias City and a car, which he registered in the names of his unemployed children, Nikki Normel Satsatin and Nikki Norlin Satsatin. However, notwithstanding the receipt of the entire payment for the subject property, Nicanor only remitted the total amount of P9,000,000.00, leaving an unremitted balance of P19,000,000.00. Despite repeated verbal and written demands, Nicanor failed to remit to them the balance of P19,000,000.00. Consequently, on October 25, 2002, petitioners filed before the regional trial court (RTC) a Complaint for sum of money and damages, against Nicanor, Ermilinda Satsatin, Nikki Normel Satsatin, and Nikki Norlin Satsatin. The case was docketed as Civil Case No. 2694-02, and raffled to RTC, Branch 90, Dasmarias, Cavite. On October 30, 2002, petitioners filed an Ex-Parte Motion for the Issuance of a Writ of Attachment, alleging among other things: that respondents are about to depart the Philippines; that they have properties, real and personal in Metro Manila and in the nearby provinces; that the amount due them is P19,000,000.00 above all other claims; that there is no other sufficient security for the claim sought to be enforced; and that they are willing to post a bond fixed by the court to answer for all costs which may be adjudged to the respondents and all damages which respondents may sustain by reason of the attachment prayed for, if it shall be finally adjudged that petitioners are not entitled thereto. On October 30, 2002, the trial court issued an Order directing the petitioners to post a bond in the amount of P7,000,000.00 before the court issues the writ of attachment, the dispositive portion of which reads as follows:
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WHEREFORE, premises considered, and finding the present complaint and motion sufficient in form and substance, this Court hereby directs the herein plaintiffs to post a bond, pursuant to Section 3, Rule 57 of the 1997 Rules of Civil Procedure, in the amount of Seven Million Pesos (P7,000,000.00), before the Writ of Attachment issues.
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On November 15, 2002, petitioners filed a Motion for Deputation of Sheriff, informing the court that they have already filed an attachment bond. They also prayed that a sheriff be deputized to serve the writ of attachment that would be issued by the court. In the Order dated November 15, 2002, the RTC granted the above motion and deputized the sheriff, together with police security assistance, to serve the writ of attachment. Thereafter, the RTC issued a Writ of Attachment dated November 15, 2002, directing the sheriff to attach the estate, real or personal, of the respondents, the decretal portion of which reads: WE, THEREFORE, command you to attach the estate, real or personal, not exempt from execution, of the said defendants, in your province, to the value of said demands, and that you safely keep the same according to the said Rule, unless the defendants give security to pay such judgment as may be recovered on the said action, in the manner provided by the said Rule, provided that your legal fees and all necessary expenses are fully paid. You shall return this writ with your proceedings indorsed hereon within twenty (20) days from the date of receipt hereof. GIVEN UNDER MY HAND AND SEAL of this Court, this 15th day of November, 2002, at Imus for Dasmarias, Cavite, Philippines.
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On November 19, 2002, a copy of the writ of attachment was served upon the respondents. On the same date, the sheriff levied the real and personal properties of the respondent, including household appliances, cars, and a parcel of land located at Las Pias, Manila.
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On November 21, 2002, summons, together with a copy of the complaint, was served upon the respondents. On November 29, 2002, respondents filed their Answer.
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On the same day respondents filed their answer, they also filed a Motion to Discharge Writ of Attachment anchored on the following grounds: the bond was issued before the issuance of the writ of attachment; the writ of attachment was issued before the summons was received by the respondents; the sheriff did not serve copies of the application for attachment, order of attachment, plaintiffs affidavit, and attachment bond, to the respondents; the sheriff did not submit a sheriffs return in violation of the Rules; and the grounds cited for the issuance of the writ are baseless and devoid of merit. In the alternative, respondents offered to post a counter-bond for the lifting of the writ of attachment.
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On March 11, 2003, after the parties filed their respective pleadings, the RTC issued an Order but at the same time, directing the respondents to file a counter-bond, to wit:
denying the motion,
WHEREFORE, premises considered, after the pertinent pleadings of the parties have been taken into account, the herein defendants are hereby directed to file a counter-bond executed to the attaching party, in the amount of Seven Million Pesos (P7,000,000.00), to secure the payment of any judgment that the attaching party may recover in the action, with notice on the attaching party, whereas, the Motion to Discharge Writ of Attachment is DENIED. SO ORDERED.
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Thereafter, respondents filed a motion for reconsideration and/or motion for clarification of the above order. On April 3, 2003, the RTC issued another Order
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which reads:
In view of the Urgent Motion For Reconsideration And/Or Motion For Clarification of the Order of this Court dated March 11, 2003, denying their Motion to Discharge Writ of Attachment filed by the defendants through counsel Atty. Franco L. Loyola, the Motion to Discharge Writ of Attachment is denied until after the defendants have posted the counter-bond in the amount of Seven Million Pesos (P7,000,000.00). The defendants, once again, is directed to file their counter-bond of Seven Million Pesos (P7,000,000.00), if it so desires, in order to discharge the Writ of Attachment. SO ORDERED. On December 15, 2003, respondents filed an Urgent Motion to Lift/Set Aside Order Dated March [11], 2003, the RTC denied in an Order
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which
of even date, the dispositive portion of which reads:
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WHEREFORE, premises considered, defendants Urgent Motion to Lift/Set Aside Order Dated March 23, 2003 (With Manifestation to Dissolve Writ of Attachment) is hereby DENIED for lack of Merit. SO ORDERED. Respondents filed an Urgent Motion for Reconsideration,
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but it was denied in the Order
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dated March 3, 2004.
Aggrieved, respondents filed before the CA a Petition for Certiorari, Mandamus and Prohibition with Preliminary Injunction and Temporary Restraining Order 83595, anchored on the following grounds:
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under Rule 65 of the Rules of Court, docketed as CA-G.R. SP No.
(1) public respondents committed grave abuse of discretion amounting to lack of or in excess of jurisdiction in failing to notice that the lower court has no jurisdiction over the person and subject matter of the complaint when the subject Writ of Attachment was issued; (2) public respondents committed grave abuse of discretion amounting to lack of or in excess of jurisdiction in granting the issuance of the Writ of Attachment despite non-compliance with the formal requisites for the issuance of the bond and the Writ of Attachment.
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Respondents argued that the subject writ was improper and irregular having been issued and enforced without the lower court acquiring jurisdiction over the persons of the respondents. They maintained that the writ of attachment was implemented without serving upon them the summons together with the complaint. They also argued that the bond issued in favor of the petitioners was defective, because the bonding company failed to obtain the proper clearance that it can transact business with the RTC of Dasmarias, Cavite. They added that the various clearances which were issued in favor of the bonding company were applicable only in the courts of the cities of Pasay, Pasig, Manila, and Makati, but not in the RTC, Imus, Cavite.
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On November 23, 2003, the CA rendered the assailed Decision in favor of the respondents, finding grave abuse of discretion amounting to lack of or in excess of jurisdiction on the part of the RTC in issuing the Orders dated December 15, 2003 and March 3, 2004. The decretal portion of the Decision reads: WHEREFORE, the instant petition is hereby GRANTED. Accordingly, the assailed Orders are hereby nullified and set aside. The levy on the properties of the petitioners pursuant to the Writ of Attachment issued by the lower court is hereby LIFTED. SO ORDERED.
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Petitioners filed a Motion for Reconsideration,
but it was denied in the Resolution
dated January 18, 2005.
Hence, this petition assigning the following errors: I. THE HONORABLE COURT OF APPEALS ERRED IN ORDERING THE LIFTING OF THE WRIT OF ATTACHMENT PURSUANT TO SECTION 13, RULE 57 OF THE REVISED RULES OF CIVIL PROCEDURE. II. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF OR IN EXCESS OF JURISDICTION IN GRANTING THE WRIT OF ATTACHMENT DESPITE THE BOND BEING INSUFFICIENT AND HAVING BEEN IMPROPERLY ISSUED. III. THE HONORABLE COURT OF APPEALS ERRED IN NOT DISMISSING THE PETITION BY REASON OF ESTOPPEL, LACHES AND PRESCRIPTION AND IN HOLDING THAT THE WRIT OF ATTACHMENT WAS IMPROPERLY AND IRREGULARLY ENFORCED IN VIOLATION OF SECTION 5, RULE 57 OF THE REVISED RULES OF COURT. IV. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE PRINCIPLE OF ESTOPPEL WILL NOT LIE AGAINST RESPONDENTS. Petitioners maintain that in the case at bar, as in the case of FCY Construction Group, Inc. v. Court of Appeals, the only way the subject writ of attachment can be dissolved is by a counter-bond. They claim that the respondents are not allowed to file a motion to dissolve the attachment under Section 13, Rule 57 of the Rules of Court. Otherwise, the hearing on the motion for the dissolution of the writ would be tantamount to a trial on the merits,
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considering that the writ of preliminary attachment was issued upon a ground which is, at the same time, the applicants cause of action. Petitioners insist that the determination of the existence of grounds to discharge a writ of attachment rests in the sound discretion of the lower court. They argue that the Certification
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issued by the Office of the Administrator and
the Certifications issued by the clerks of court of the RTCs of Dasmarias and Imus, Cavite, would show that the bonds offered by Western Guaranty Corporation, the bonding company which issued the bond, may be accepted by the RTCs of Dasmarias and Imus, Cavite, and that the said bonding company has no pending liability with the government. Petitioners contend that respondents are barred by estoppel, laches, and prescription from questioning the orders of the RTC issuing the writ of attachment. They also maintain that the issue whether there was impropriety or irregularity in the issuance of the orders is moot and academic, considering that the attachment bond questioned by the respondent had already expired on November 14, 2003 and petitioners have renewed the attachment bond covering the period from November 14, 2003 to November 14, 2004, and further renewed to cover the period of November 14, 2004 to November 14, 2005. The petition is bereft of merit. A writ of preliminary attachment is defined as a provisional remedy issued upon order of the court where an action is pending to be levied upon the property or properties of the defendant therein, the same to be held thereafter by the sheriff as security for the satisfaction of whatever judgment that might be secured in the said action by the attaching creditor against the defendant.
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In the case at bar, the CA correctly found that there was grave abuse of discretion amounting to lack of or in excess of jurisdiction on the part of the trial court in approving the bond posted by petitioners despite the fact that not all the requisites for its approval were complied with. In accepting a surety bond, it is necessary that all the requisites for its approval are met; otherwise, the bond should be rejected.
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Every bond should be accompanied by a clearance from the Supreme Court showing that the company concerned is qualified to transact business which is valid only for thirty (30) days from the date of its issuance.
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However, it is
apparent that the Certification issued by the Office of the Court Administrator (OCA) at the time the bond was issued would clearly show that the bonds offered by Western Guaranty Corporation may be accepted only in the RTCs of the cities of Makati, Pasay, and Pasig. Therefore, the surety bond issued by the bonding company should not have been accepted by the RTC of Dasmarias, Branch 90, since the certification secured by the bonding company from the OCA at the time of the issuance of the bond certified that it may only be accepted in the abovementioned cities. Thus, the trial court acted with grave abuse of discretion amounting to lack of or in excess of jurisdiction when it issued the writ of attachment founded on the said bond. Moreover, in provisional remedies, particularly that of preliminary attachment, the distinction between the issuance and the implementation of the writ of attachment is of utmost importance to the validity of the writ. The distinction is indispensably necessary to determine when jurisdiction over the person of the defendant should be acquired in order to validly implement the writ of attachment upon his person. This Court has long put to rest the issue of when jurisdiction over the person of the defendant should be acquired in cases where a party resorts to provisional remedies. A party to a suit may, at any time after filing the complaint, avail of the provisional remedies under the Rules of Court. Specifically, Rule 57 on preliminary attachment speaks of the grant of the remedy "at the commencement of the action or at any time before entry of judgment." This phrase refers to the date of the filing of the complaint, which is the moment that marks "the commencement of the action." The reference plainly is to a time before summons is served on the defendant, or even before summons issues. In Davao Light & Power Co., Inc. v. Court of Appeals, be had:
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this Court clarified the actual time when jurisdiction should
It goes without saying that whatever be the acts done by the Court prior to the acquisition of jurisdiction over the person of defendant x x x issuance of summons, order of attachment and writ of attachment x x x these do not and cannot bind and affect the defendant until and unless jurisdiction over his person is eventually obtained by the court, either by service on him of summons or other coercive process or his voluntary submission to the courts authority. Hence, when the sheriff or other proper officer commences implementation of the writ of attachment, it is essential that he serve on the defendant not only a copy of the applicants affidavit and attachment bond, and of the order of attachment, as explicitly required by Section 5 of Rule 57, but also the summons addressed to said defendant as well as a copy of the complaint x x x. (Emphasis supplied.) In Cuartero v. Court of Appeals, this Court held that the grant of the provisional remedy of attachment involves three stages: first, the court issues the order granting the application; second, the writ of attachment issues pursuant to the order granting the writ; and third, the writ is implemented. For the initial two stages, it is not necessary that jurisdiction over the person of the defendant be first obtained. However, once the implementation of the writ
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commences, the court must have acquired jurisdiction over the defendant, for without such jurisdiction, the court has no power and authority to act in any manner against the defendant. Any order issuing from the Court will not bind the defendant.
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Thus, it is indispensable not only for the acquisition of jurisdiction over the person of the defendant, but also upon consideration of fairness, to apprise the defendant of the complaint against him and the issuance of a writ of preliminary attachment and the grounds therefor that prior or contemporaneously to the serving of the writ of attachment, service of summons, together with a copy of the complaint, the application for attachment, the applicants affidavit and bond, and the order must be served upon him. In the instant case, assuming arguendo that the trial court validly issued the writ of attachment on November 15, 2002, which was implemented on November 19, 2002, it is to be noted that the summons, together with a copy of the complaint, was served only on November 21, 2002. At the time the trial court issued the writ of attachment on November 15, 2002, it can validly to do so since the motion for its issuance can be filed "at the commencement of the action or at any time before entry of judgment." However, at the time the writ was implemented, the trial court has not acquired jurisdiction over the persons of the respondent since no summons was yet served upon them. The proper officer should have previously or simultaneously with the implementation of the writ of attachment, served a copy of the summons upon the respondents in order for the trial court to have acquired jurisdiction upon them and for the writ to have binding effect. Consequently, even if the writ of attachment was validly issued, it was improperly or irregularly enforced and, therefore, cannot bind and affect the respondents. Moreover, although there is truth in the petitioners contention that an attachment may not be dissolved by a showing of its irregular or improper issuance if it is upon a ground which is at the same time the applicants cause of action in the main case, since an anomalous situation would result if the issues of the main case would be ventilated and resolved in a mere hearing of a motion. However, the same is not applicable in the case bar. It is clear from the respondents pleadings that the grounds on which they base the lifting of the writ of attachment are the irregularities in its issuance and in the service of the writ; not petitioners cause of action.
1av v phi 1
Further, petitioners contention that respondents are barred by estoppel, laches, and prescription from questioning the orders of the RTC issuing the writ of attachment and that the issue has become moot and academic by the renewal of the attachment bond covering after its expiration, is devoid of merit. As correctly held by the CA: There are two ways of discharging the attachment. First, to file a counter-bond in accordance with Section 12 of Rule 57. Second[,] [t]o quash the attachment on the ground that it was irregularly or improvidently issued, as provided for in Section 13 of the same rule. Whether the attachment was discharged by either of the two ways indicated in the law, the attachment debtor cannot be deemed to have waived any defect in the issuance of the attachment writ by simply availing himself of one way of discharging the attachment writ, instead of the other. The filing of a counter-bond is merely a speedier way of discharging the attachment writ instead of the other way.
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Moreover, again assuming arguendo that the writ of attachment was validly issued, although the trial court later acquired jurisdiction over the respondents by service of the summons upon them, such belated service of summons on respondents cannot be deemed to have cured the fatal defect in the enforcement of the writ. The trial court cannot enforce such a coercive process on respondents without first obtaining jurisdiction over their person. The preliminary writ of attachment must be served after or simultaneous with the service of summons on the defendant whether by personal service, substituted service or by publication as warranted by the circumstances of the case. The subsequent service of summons does not confer a retroactive acquisition of jurisdiction over her person because the law does not allow for retroactivity of a belated service.
46
WHEREFORE, premises considered, the petition is DENIED. The Decision and Resolution of the Court of Appeals dated November 23, 2004 and January 18, 2005, respectively, in CA-G.R. SP No. 83595 are AFFIRMED. SO ORDERED. DIOSDADO M. PERALTA Associate Justice WE CONCUR: RENATO C. CORONA Associate Justice Chairperson MINITA V. CHICO-NAZARIO Associate Justice PRESBITERO J. VELASCO, JR. Associate Justice
ANTONIO EDUARDO B. NACHURA Associate Justice
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ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. RENATO C. CORONA Associate Justice Third Division, Chairperson CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution and the Division Chairpersons Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. REYNATO S. PUNO Chief Justice
Footnotes
1
Penned by Associate Justice Mariano C. Del Castillo (now a member of this Court), with Associate Justices Romeo A. Brawner (now deceased) and Magdangal M. De Leon, concurring; rollo, pp. 41-59. Rollo, p. 39. CA rollo, pp. 54-55. Id. at 56-57. Id. at 58-59. Id. at 60-65. Records, pp. 1-14. CA rollo, pp. 79-83. Id. at 110-112. Id. at 112. Id. at 127. Id. at 128. Id. at 129-130. Id. at 130. Id. at 154-156. Id. at 131-132. Id. at 133-145. Id. at 146-153. Id. at 146-149. Id. at 169-170. Id. at 170. Id. at 171.
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Id. at 171-178. Id. at 39. Id. at 184-189. Id. at 36-38. Id. at 2-35. Rollo, p. 52. Id. at 53. Id. at 58. Id. at 60-69. Id. at 38-39. G.R. No. 123358, February 1, 2000, 324 SCRA 270. CA rollo, p. 354. Id. at 356-365. Cuartero v. Court of Appeals, G.R. No. 102448, August 5, 1992, 212 SCRA 260.
Judicial Audit and Physical Inventory of Confiscated Cash, Surety and Property Bonds at RTC, Tarlac City, Brs. 63, 64 & 65, A.M. No. 04-7-358-RTC, July 22, 2005, 464 SCRA 21, 28. Id. CA rollo, p. 119. Rules of Court, Rule 57, Sec. 1. Mangila v. Court of Appeals , 435 Phil. 870, 880 (2002). G.R. No. 93262, November 29, 1991, 204 SCRA 343, 355-356. Supra note 36. Id. at 266. Rollo, pp. 57-58. Supra note 41, at 883.
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G.R. No. 171741
Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 171741 November 27, 2009
METRO, INC. and SPOUSES FREDERICK JUAN and LIZA JUAN, Petitioners, vs. LARA'S GIFTS AND DECORS, INC., LUIS VILLAFUERTE, JR. and LARA MARIA R. VILLAFUERTE, Respondents. DECISION CARPIO, J.: The Case This is a petition for review of the 29 September 2004 Decision and 2 March 2006 Resolution of the Court of Appeals in CA-G.R. SP No. 79475. In its 29 September 2004 Decision, the Court of Appeals granted the petition for certiorari of respondents Laras Gifts and Decors, Inc., Luis Villafuerte, Jr., and Lara Maria R. Villafuerte (respondents). In its 2 March 2006 Resolution, the Court of Appeals denied the motion for reconsideration of petitioners Metro, Inc., Frederick Juan and Liza Juan (petitioners). The Facts Laras Gifts and Decors Inc. (LGD) and Metro, Inc. are corporations engaged in the business of manufacturing, producing, selling and exporting handicrafts. Luis Villafuerte, Jr. and Lara Maria R. Villafuerte are the president and vice-president of LGD respectively. Frederick Juan and Liza Juan are the principal officers of Metro, Inc. Sometime in 2001, petitioners and respondents agreed that respondents would endorse to petitioners purchase orders received by respondents from their buyers in the United States of America in exchange for a 15% commission, to be shared equally by respondents and James R. Paddon (JRP), LGDs agent. The terms of the agreement were later embodied in an e-mail labeled as the "2001 Agreement."
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In May 2003, respondents filed with the Regional Trial Court, Branch 197, Las Pias City (trial court) a complaint against petitioners for sum of money and damages with a prayer for the issuance of a writ of preliminary attachment. Subsequently, respondents filed an amended complaint and alleged that, as of July 2002, petitioners defrauded them in the amount of $521,841.62. Respondents also prayed for P1,000,000 as moral damages, P1,000,000 as exemplary damages and 10% of the judgment award as attorneys fees. Respondents also prayed for the issuance of a writ of preliminary attachment. In its 23 June 2003 Order, the trial court granted respondents prayer and issued the writ of attachment against the properties and assets of petitioners. The 23 June 2003 Order provides: WHEREFORE, let a Writ of Preliminary Attachment issue against the properties and assets of Defendant METRO, INC. and against the properties and assets of Defendant SPOUSES FREDERICK AND LIZA JUAN not exempt from execution, as may be sufficient to satisfy the applicants demand of US$521,841.62 US Dollars or its equivalent in Pesos upon actual attachment, which is about P27 Million, unless such Defendants make a deposit or give a bond in an amount equal to P27 Million to satisfy the applicants demand exclusive of costs, upon posting by the Plaintiffs of a Bond for Preliminary Attachment in the amount of twenty five million pesos (P25,000,000.00), subject to the approval of this Court. SO ORDERED.
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On 26 June 2003, petitioners filed a motion to discharge the writ of attachment. Petitioners argued that the writ of attachment should be discharged on the following grounds: (1) that the 2001 agreement was not a valid contract because it did not show that there was a meeting of the minds between the parties; (2) assuming that the 2001 agreement was a valid contract, the same was inadmissible because respondents failed to authenticate it in accordance with the Rules on Electronic Evidence; (3) that respondents failed to substantiate their allegations of fraud with specific acts or deeds showing how petitioners defrauded them; and (4) that respondents failed to
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establish that the unpaid commissions were already due and demandable. After considering the arguments of the parties, the trial court granted petitioners motion and lifted the writ of attachment. The 12 August 2003 Order of the trial court provides: Premises considered, after having taken a second hard look at the Order dated June 23, 2003 granting plaintiffs application for the issuance of a writ of preliminary attachment, the Court holds that the issuance of a writ of preliminary attachment in this case is not justified. WHEREFORE, the writ of preliminary attachment issued in the instant case is hereby ordered immediately discharged and/or lifted. SO ORDERED.
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Respondents filed a motion for reconsideration. In its 10 September 2003 Order, the trial court denied the motion. Respondents filed a petition for certiorari before the Court of Appeals. Respondents alleged that the trial court gravely abused its discretion when it ordered the discharge of the writ of attachment without requiring petitioners to post a counter-bond. In its 29 September 2004 Decision, the Court of Appeals granted respondents petition. The 29 September 2004 Decision provides: WHEREFORE, finding merit in the petition, We GRANT the same. The assailed Orders are hereby ANNULLED and SET ASIDE. However, the issued Writ of Preliminary Attachment may be ordered discharged upon the filing by the private respondents of the proper counter-bond pursuant to Section 12, Rule 57 of the Rules of Civil Procedure. SO ORDERED.
10
Petitioners filed a motion for reconsideration. In its 2 March 2006 Resolution, the Court of Appeals denied the motion. Hence, this petition. The 12 August 2003 Order of the Trial Court According to the trial court, respondents failed to sufficiently show that petitioners were guilty of fraud either in incurring the obligation upon which the action was brought, or in the performance thereof. The trial court found no proof that petitioners were motivated by malice in entering into the 2001 agreement. The trial court also declared that petitioners failure to fully comply with their obligation, absent other facts or circumstances to indicate evil intent, does not automatically amount to fraud. Consequently, the trial court ordered the discharge of the writ of attachment for lack of evidence of fraud. The 29 September 2004 Decision of the Court of Appeals According to the Court Appeals, the trial court gravely abused its discretion when it ordered the discharge of the writ of attachment without requiring petitioners to post a counter-bond. The Court of Appeals said that when the writ of attachment is issued upon a ground which is at the same time also the applicants cause of action, courts are precluded from hearing the motion for dissolution of the writ when such hearing would necessarily force a trial on the merits of a case on a mere motion. The Court of Appeals pointed out that, in this case, fraud was not only alleged as the ground for the issuance of the writ of attachment, but was actually the core of respondents complaint. The Court of Appeals declared that the only way that the writ of attachment can be discharged is by posting a counter-bond in accordance with Section 12,
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Rule 57 of the Rules of Court. The Issue
Petitioners raise the question of whether the writ of attachment issued by the trial court was improperly issued such that it may be discharged without the filing of a counter-bond. The Ruling of the Court The petition has no merit. Petitioners contend that the writ of attachment was improperly issued because respondents amended complaint failed to allege specific acts or circumstances constitutive of fraud. Petitioners insist that the improperly issued writ of attachment may be discharged without the necessity of filing a counter-bond. Petitioners also argue that respondents failed to show that the writ of attachment was issued upon a ground which is at the same time also respondents cause of action. Petitioners maintain that respondents amended complaint was not an action based on fraud but was a simple case for collection of sum of money plus damages.
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On the other hand, respondents argue that the Court of Appeals did not err in ruling that the writ of attachment can only be discharged by filing a counter-bond. According to respondents, petitioners cannot avail of Section 13, Rule 57 of the Rules of Court to have the attachment set aside because the ground for the issuance of the writ of attachment is also the basis of respondents amended complaint. Respondents assert that the amended complaint is a complaint for damages for the breach of obligation and acts of fraud committed by petitioners.
1 a vv p h i 1
13
In this case, the basis of respondents application for the issuance of a writ of preliminary attachment is Section 1(d), Rule 57 of the Rules of Court which provides: SEC. 1. Grounds upon which attachment may issue. At the commencement of the action or at any time before entry of judgment, a plaintiff or any proper party may have the property of the adverse party attached as security for the satisfaction of any judgment that maybe recovered in the following cases: x x x (d) In an action against a party who has been guilty of fraud in contracting the debt or incurring the obligation upon which the action is brought, or in the performance thereof; x x x In Liberty Insurance Corporation v. Court of Appeals,
14
we explained:
To sustain an attachment on this ground, it must be shown that the debtor in contracting the debt or incurring the obligation intended to defraud the creditor. The fraud must relate to the execution of the agreement and must have been the reason which induced the other party into giving consent which he would not have otherwise given. To constitute a ground for attachment in Section 1(d), Rule 57 of the Rules of Court, fraud should be committed upon contracting the obligation sued upon. A debt is fraudulently contracted if at the time of contracting it the debtor has a preconceived plan or intention not to pay, as it is in this case.
15
The applicant for a writ of preliminary attachment must sufficiently show the factual circumstances of the alleged fraud because fraudulent intent cannot be inferred from the debtors mere non-payment of the debt or failure to comply with his obligation.
16
In their amended complaint, respondents alleged the following in support of their prayer for a writ of preliminary attachment: 5. Sometime in early 2001, defendant Frederick Juan approached plaintiff spouses and asked them to help defendants export business. Defendants enticed plaintiffs to enter into a business deal. He proposed to plaintiff spouses the following: a. That plaintiffs transfer and endorse to defendant Metro some of the Purchase Orders (POs) they will receive from their US buyers; b. That defendants will sell exclusively and "only thru" plaintiffs for their US buyer; xxx 6. After several discussions on the matter and further inducement on the part of defendant spouses, plaintiff spouses agreed. Thus, on April 21, 2001, defendant spouses confirmed and finalized the agreement in a letterdocument entitled "2001 Agreement" they emailed to plaintiff spouses, a copy of which is hereto attached as Annex "A". xxx 20. Defendants are guilty of fraud committed both at the inception of the agreement and in the performance of the obligation. Through machinations and schemes, defendants successfully enticed plaintiffs to enter into the 2001 Agreement. In order to secure plaintiffs full trust in them and lure plaintiffs to endorse more POs and increase the volume of the orders, defendants during the early part, remitted to plaintiffs shares under the Agreement. 21. However, soon thereafter, just when the orders increased and the amount involved likewise increased, defendants suddenly, without any justifiable reasons and in pure bad faith and fraud, abandoned their contractual obligations to remit to plaintiffs their shares. And worse, defendants transacted directly with plaintiffs foreign buyer to the latters exclusion and damage. Clearly, defendants planned everything from the beginning, employed ploy and machinations to defraud plaintiffs, and consequently take from them a valuable client. 22. Defendants are likewise guilty of fraud by violating the trust and confidence reposed upon them by plaintiffs. Defendants received the proceeds of plaintiffs LCs with the clear obligation of remitting 15% thereof to the plaintiffs. Their refusal and failure to remit the said amount despite demand constitutes a breach of trust amounting to malice and fraud.
17
(Emphasis and underscoring in the original) (Boldfacing and italicization supplied)
We rule that respondents allegation that petitioners undertook to sell exclusively and only through JRP/LGD for Target Stores Corporation but that petitioners transacted directly with respondents foreign buyer is sufficient allegation of fraud to support their application for a writ of preliminary attachment. Since the writ of preliminary attachment was properly issued, the only way it can be dissolved is by filing a counter-bond in accordance with
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Section 12, Rule 57 of the Rules of Court. Moreover, the reliance of the Court of Appeals in the cases of Chuidian v. Sandiganbayan,
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FCY Construction
Group, Inc. v. Court of Appeals, and Liberty Insurance Corporation v. Court of Appeals is proper. The rule that "when the writ of attachment is issued upon a ground which is at the same time the applicants cause of action, the only other way the writ can be lifted or dissolved is by a counter-bond" is applicable in this case. It is clear that in respondents amended complaint of fraud is not only alleged as a ground for the issuance of the writ of preliminary attachment, but it is also the core of respondents complaint. The fear of the Court of Appeals that petitioners could force a trial on the merits of the case on the strength of a mere motion to dissolve the attachment has a basis. WHEREFORE, we DENY the petition. We AFFIRM the 29 September 2004 Decision and 2 March 2006 Resolution of the Court of Appeals in CA-G.R. SP No. 79475. SO ORDERED. ANTONIO T. CARPIO Associate Justice WE CONCUR: TERESITA J. LEONARDO-DE CASTRO Associate Justice ARTURO D. BRION Associate Justice ROBERTO A. ABAD Associate Justice ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. ANTONIO T. CARPIO Associate Justice Chairperson CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. REYNATO S. PUNO Chief Justice
* 21
MARIANO C. DEL CASTILLO Associate Justice
Footnotes
* 1 2
Designated additional member per Special Order No. 776. Under Rule 45 of the Rules of Court.
Rollo, pp. 36-45. Penned by Associate Justice Portia Alio-Hormachuelos, with Associate Justices Rebecca de Guia-Salvador and Aurora Santiago-Lagman, concurring. Id. at 46-47. CA rollo, p. 47. Rollo, pp. 48-60. Id. at 61-63. Penned by Judge Manuel N. Duque. Id. at 63.
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Id. at 64-67. Id. at 67. Id. at 44.
10 11
Citing Chuidian v. Sandiganbayan, 402 Phil. 795 (2001); FCY Construction Group, Inc. v. Court of Appeals, 381 Phil. 282 (2000); and Liberty Insurance Corporation v. Court of Appeals, G.R. No. 104405, 13 May 1993, 222 SCRA 37.
12
Section 12, Rule 57 of the Rules of Court provides: SEC. 12. Discharge of attachment upon giving counter-bond. - After a writ of attachment has been enforced, the party whose property has been attached, or the person appearing on his behalf, may move for the discharge of the attachment wholly or in part on the security given. The court shall, after due notice and hearing, order the discharge of the attachment if the movant makes a cash deposit, or files a counter-bond executed to the attaching party with the clerk of the court where the application was made, in an amount equal to that fixed by the court in the order of attachment, exclusive of costs. But if the attachment is sought to be discharged with respect to a particular property, the counter-bond shall be equal to the value of that property as determined by the court. In either case, the cash deposit or the counter-bond shall secure the payment of any judgment that the attaching party may recover in the action. A notice of the deposit shall forthwith be served on the attaching party. Upon the discharge of an attachment in accordance with the provisions of this section, the property attached, or the proceeds of any sale thereof, shall be delivered to the party making the deposit or giving the counter-bond, or to the person appearing on his behalf, the deposit or counter-bond aforesaid standing in place of the property so released. Should such counter-bond for any reason be found to be, or become insufficient, and the party furnishing the same fail to file an additional counter-bond, the attaching party may apply for a new order of attachment.
13
Section 13, Rule 57 of the Rules of Court provides: SEC. 13. Discharge of attachment on other grounds. - The party whose property has been ordered attached may file a motion with the court in which the action is pending, before or after a levy or even after the release of the attached property, for an order to set aside or discharge the attachment on the ground that the same was improperly or irregularly issued or enforced, or that the bond is insufficient. If the attachment is excessive, the discharge shall be limited to the excess. If the motion be made on affidavits on the part of the movant but not otherwise, the attaching party may oppose the motion by counter-affidavits or other evidence in addition to that on which the attachment was made. After due notice and hearing, the court shall order the setting aside or the corresponding discharge of the attachment if it appears that it was improperly or irregularly issued or enforced, or that the bond is insufficient, or that the attachment is excessive, and the defect is not cured forthwith.
14 15 16
Supra note 11. Id. at 45.
Foundation Specialists, Inc. v. Betonval Ready Concrete, Inc., G.R. No. 170674, 24 August 2009; Tanchan v. Allied Banking Corporation, G.R. No. 164510, 25 November 2008, 571 SCRA 512; Ng Wee v. Tankiansee, G.R. No. 171124, 13 February 2008, 545 SCRA 263; and Philippine National Construction Corporation v. Dy, G.R. No. 156887, 3 October 2005, 472 SCRA 1. Rollo, pp. 49, 52-53. Chuidian v. Sandiganbayan, supra note 11. FCY Construction Group, Inc. v. Court of Appeals, supra note 11. Liberty Insurance Corporation v. Court of Appeals, supra note 11. Chuidian v. Sandiganbayan, supra note 11, at 817-818.
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G.R. No. 161028
Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 161028 January 31, 2005
TERESITA V. IDOLOR, petitioner, vs. HON. COURT OF APPEALS, SPOUSES GUMERSINDO DE GUZMAN and ILUMINADA DE GUZMAN and HON. JOSE G. PINEDA, Presiding Judge of Regional Trial Court, National Capital Judicial Region, Branch 220, Quezon City, respondents. DECISION YNARES-SANTIAGO, J.: This petition for review on certiorari assails the September 1, 2003 decision of the Court of Appeals in CA-G.R. SP No. 72494 which reversed the May 27, 2002 order of the Regional Trial Court of Quezon City, Branch 220, in Civil Case No. Q-98-34728, denying respondent-spouses Motion for Immediate Issuance of Writ of Possession. Petitioner Teresita V. Idolor obtained a loan from respondent-spouses Gumersindo and Iluminada De Guzman secured by a real estate mortgage over a property covered by Transfer Certificate of Title No. 25659.
2 1
Upon default by petitioner in the payment of her obligation, respondent-spouses instituted extra-judicial foreclosure proceedings against the real estate mortgage. During the auction sale, respondent-spouses emerged as the highest bidder and were issued a Certificate of Sale.
3
On June 25, 1998, petitioner filed with the Regional Trial Court of Quezon City, Branch 220, a complaint for annulment of the Certificate of Sale with prayer for the issuance of a temporary restraining order and a writ of preliminary injunction. The case was docketed as Civil Case No. Q-98-34728. The trial court issued a writ of preliminary injunction, however, the Court of Appeals in a petition for certiorari filed by respondent-spouses, annulled the same for having been issued with grave abuse of discretion. We affirmed said decision of the appellate court in Idolor v. Court of Appeals .
4
The ownership over the subject property having been consolidated in their name, respondent-spouses De Guzman moved for the issuance of a writ of possession with the Regional Trial Court where the case for the annulment of the Certificate of Sale was pending. On May 27, 2002, the trial court denied the motion, ruling that the "the lifting of the writ of preliminary injunction does not ipso facto entitle defendant De Guzman to the issuance of a writ of possession over the property in question. It only allows the defendant Sheriff to issue a final deed of sale and confirmation sale and the defendant De Guzman to consolidate the ownership/title over the subject property in his name."
6
1awp hi 1 . n t
In a petition for certiorari before the Court of Appeals, the appellate court found that the trial court gravely abused its discretion in denying the motion for the issuance of the "writ of possession to the mortgagee or the winning bidder is a ministerial function of the court and that the pendency of an action questioning the validity of a mortgage cannot bar the issuance of the writ of possession after title to the property has been consolidated in the mortgagee." Hence, it reversed and set aside the May 27, 2002 order of the trial court. The following issues are raised for our consideration: A. WHETHER OR NOT THE COURT A QUO HAS JURISDICTION ON THE MOTION OF THE MORTGAGEE TO APPLY FOR A WRIT OF POSSESSION NOTWITHSTANDING NON-PAYMENT OF DOCKET FEES; B. WHETHER OR NOT THE MORTGAGEE, BY MERE MOTION, NOT BY A PETITION, MAY APPLY FOR A WRIT OF POSSESSION IN THE SAME CASE FOR ANNULMENT OF THE SHERIFFS CERTIFICATE OF SALE OF WHICH HE IS A DEFENDANT.
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A writ of possession is an order whereby the sheriff is commanded to place a person in possession of a real or personal property. It may be issued under the following instances: (1) land registration proceedings under Sec. 17 of Act 496; (2) judicial foreclosure, provided the debtor is in possession of the mortgaged realty and no third person, not a party to the foreclosure suit, had intervened; and (3) extrajudicial foreclosure of a real estate mortgage under Sec. 7 of Act 3135 as amended by Act 4118,
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to which the present case falls.
Section 7, Act 3135, as amended by Act 4118, provides: SECTION 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of First Instance of the province or place where the property or any part thereof is situated, to give him possession thereof during the redemption period, furnishing bond in an amount equivalent to the use of the property for a period of twelve months, to indemnify the debtor in case it be shown that the sale was made without violating the mortgage or without complying with the requirements of this Act. Such petition shall be made under oath and filed in form of an ex parte motion in the registration or cadastral proceedings if the property is registered, or in special proceedings in the case of property registered under the Mortgage Law or under section one hundred and ninety-four of the Administrative Code, or of any other real property encumbered with a mortgage duly registered in the office of any register of deeds in accordance with any existing law, and in each case the clerk of the court shall, upon the filing of such petition, collect the fees specified in paragraph eleven of section one hundred and fourteen of Act Numbered Four hundred and ninety-six, as amended by Act Numbered Twenty-eight hundred and sixty-six, and the court shall, upon approval of the bond, order that a writ of possession issue, addressed to the sheriff of the province in which the property is situated, who shall execute said order immediately. Under the provision cited above, the purchaser in a foreclosure sale may apply for a writ of possession during the redemption period by filing for that purpose an ex parte motion under oath, in the corresponding registration or cadastral proceeding in the case of a property with torrens title. Upon the filing of such motion and the approval of the corresponding bond, the court is expressly directed to issue the writ.
11
Upon the expiration of the redemption period, the right of the purchaser to the possession of the foreclosed property becomes absolute. The basis of this right to possession is the purchasers ownership of the property. Mere filing of an ex parte motion for the issuance of the writ of possession would suffice, and the bond required is no longer necessary, since possession becomes an absolute right of the purchaser as the confirmed owner.
12
In this case, respondent-spouses acquired an absolute right over the property upon the failure of petitioner to exercise her right of redemption and upon the consolidation of the title in their name. The pendency of the case for the annulment of the Certificate of Sale is not a bar to the issuance of the writ of possession. Upon the filing of the motion, the trial court has no discretion to deny the same, thus: This Court has consistently held that the duty of the trial court to grant a writ of possession is ministerial. Such writ issues as a matter of course upon the filing of the proper motion and the approval of the corresponding bond. No discretion is left to the trial court. Any question regarding the regularity and validity of the sale, as well as the consequent cancellation of the writ, is to be determined in a subsequent proceeding as outlined in Section 8 of Act 3135. Such question cannot be raised to oppose the issuance of the writ, since the proceeding is ex parte. The recourse is available even before the expiration of the redemption period provided by law and the Rules of Court.
13
The judge to whom an application for writ of possession is filed need not look into the validity of the mortgage or the manner of its foreclosure. As a rule, after the consolidation of title in the buyers name, for failure of the mortgagor to redeem, the writ of possession becomes a matter of right. Its issuance to a purchaser in an extrajudicial foreclosure is merely a ministerial function. As such, the court neither exercises its official discretion nor judgment. Any question regarding the validity of the mortgage or its foreclosure cannot be a legal ground for refusing the issuance of a writ of possession. Regardless of whether or not there is a pending suit for annulment of the mortgage or the foreclosure itself, the purchaser is entitled to a writ of possession, without prejudice of course to the eventual outcome of said case.
15 14
Contrary to petitioners assertion, the Regional Trial Court of Quezon City has jurisdiction to act on respondents motion for writ of possession. Section 7, Act 3135, as amended, is clear that in any sale made under its provisions, "the purchaser may petition the Court of the province or place where the property or any part thereof is situated" Since the property subject of this controversy is in Quezon City, then the citys Regional Trial Court should rightly take cognizance of the case. The Court of Appeals correctly observed: Thus, it is clear under the aforesaid law that the RTC of the place where the property is situated has the appropriate authority to issue the writ of possession and, specifically in the instant case, it is the RTC of Quezon City. And when jurisdiction pertains to the RTC of Quezon City, it includes all branches thereof including the court a quo where a related proceeding is being conducted.
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Further, in Bacalso, et al. v. Ramolete, et al.,
17
we held:
The various branches of the Court of First Instance of Cebu under the Fourteenth Judicial District, are a coordinate and co-equal courts, and the totality of which is only one Court of First Instance. The jurisdiction is vested in the court, not in the judges. And when a case is filed in one branch, jurisdiction over the case does not attach to the branch or judge alone, to the exclusion of the other branches. Trial may be held or proceedings continue by and before another branch or judge. It is for this reason that Section 57 of the Judiciary Act expressly grants to the Secretary of Justice, the administrative right or power to apportion the cases among the different branches, both for the convenience of the parties and for the coordination of the work by the different branches of the same court. The apportionment and distribution of cases does not involve a grant or limitation of jurisdiction; the jurisdiction attaches and continues to be vested in the Court of First Instance of the province, and the trials may be held by any branch or judge of the court. Necessarily, therefore, Branch 220 of the Regional Trial Court of Quezon City has jurisdiction over respondentspouses application for writ of possession over a property in Quezon City. The Court of Appeals properly debunked petitioners claim that the Regional Trial Court acquired no jurisdiction over the case due to alleged non-payment of docket fees by the respondent. This allegation, having been raised for the first time on appeal, should be disallowed. Besides, the fees mentioned in Section 7, Act 3135 in relation to Section 114, Act 496, pertain to fees payable upon registration of land titles, and not to court or docket fees, as erroneously claimed by petitioner. An ex-parte petition for issuance of possessory writ under Section 7 of Act No. 3135 is not, strictly speaking, a "judicial process". Even if the same may be considered a judicial proceeding for the enforcement of ones right of possession as purchaser in a foreclosure sale, it is not an ordinary suit filed in court, by which one party "sues another for the enforcement or protection of a right, or the prevention or redress of a wrong." It is a non-litigious proceeding and summary in nature as well. As such, the rigid and technical application of the rules on legal fees may be relaxed in order to avoid manifest injustice to the respondent. After all, rules of procedure are used to help secure and not override substantial justice. Even the Rules of Court mandates a liberal construction in order to promote their objective of securing a just, speedy and inexpensive disposition of every action and proceeding. Since rules of procedure are mere tools designed to facilitate the attainment of justice, their strict and rigid application which would result in technicalities that tend to frustrate rather than promote substantial justice must always be avoided.
19
1awphi 1 . nt
18
This rule is applicable in the present case. Although respondent- spouses have been declared as the highest bidder and despite having consolidated the title in their name, they still failed to take possession of the property through numerous legal maneuverings of the petitioner. A simple ex parte application for the issuance of a writ of possession has become a litigious and protracted proceeding. Thus, if we strictly apply the Rules, justice long been denied to respondent would be effectively defeated. At any rate, should there be fees and costs relative to the issuance and implementation of the writ of possession, the same may be assessed and collected from the respondent-spouses De Guzman.
^ l v v phi 1 . net
WHEREFORE, in view of the foregoing, the petition for review on certiorari is DENIED and the decision of the Court of Appeals in CA-G.R. SP No. 72494 is AFFIRMED. The Regional Trial Court of Quezon City, Branch 220 is ordered to issue a writ of possession in favor of respondent-spouses Gumersindo and Iluminada De Guzman. SO ORDERED. Davide, Jr., C.J. (Chairman), Quisumbing, Carpio, and Azcuna, JJ., concur.
Footnotes
1
Penned by Associate Justice Rodrigo V. Cosico and concurred in by Associate Justices Mariano C. Del Castillo and Rosalinda Asuncion-Vicente; Rollo, pp. 17-21. CA Rollo, p. 5. Id., pp. 5-6. G.R. No. 141853, 7 February 2001, 351 SCRA 399, 409. CA Rollo, 15-20. Id., p. 24.
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Rollo, p. 19. Id., p. 11. Chailease Finance Corporation v. Ma, G.R. No. 151941 , 15 August 2003, 409 SCRA 250, 252. Sps. Ong v. Court of Appeals, 388 Phil. 857, 863-864 [2000]. Samson, et al. v. Judge Rivera, et al., G.R. No. 154355 , 20 May 2004. Sps. Uy Tansipek v. PBC, 423 Phil. 727, 734 [2001]. Samson, et al. v. Judge Rivera, supra at 11. Sps. Yulienco v. Court of Appeals, 441 Phil. 397, 407 [2002]. Sps. Ong v. Court of Appeals, supra at 10. Rollo, p. 20. 128 Phil. 559, 564-565 [1967], cited in Maloles II v. Court of Appeals, 381 Phil. 179, 194 [2000]. See Philippine National Bank v. Court of Appeals, 424 Phil. 757, 770 [2002].
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Bank of the Philippine Islands v. Court of Appeals, G.R. No.146923 , 30 April 2003, 402 SCRA 449, 454-455.
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A.M. No. MTJ-00-1250
http://www.lawphil.net/judjuris/juri2001/feb2001/am_mtj-00-1250_20...
Republic of the Philippines SUPREME COURT Manila SECOND DIVISION A.M. No. MTJ-00-1250 February 28, 2001 [Formerly OCA IPI No. 97-332-MTJ] RIMEO S. GUSTILO, complainant, vs. HON. RICARDO S. REAL, SR., Presiding Judge, 2nd Municipal Circuit Trial Court of Victorias-Manapla, Negros Occidental, respondent. QUISUMBING, J.: In a verified complaint dated June 15, 1997, Rimeo S. Gustilo charged respondent Judge Ricardo S. Real, Sr., of the Municipal Circuit Trial Court of Victorias-Manapla, Negros Occidental with gross misconduct, gross incompetence, gross ignorance of the law, and violation of the Anti-Graft and Corrupt Practices Act relative to Civil Case No. 703-M entitled "Weddy C. Libo-on v. Rimeo S. Gustilo, et al. " for recounting of ballots of Precinct Nos. 27 and 27-A, Barangay Punta Mesa, Manapla, Negros Occidental. Complainant avers that he was a candidate for punong barangay of Barangay Punta Mesa, Manapla, Negros Occidental in the May 12, 1997 elections. His lone opponent was Weddy C. Libo-on, then the incumbent punong barangay and the representative of the Association of Barangay Captains (ABC) to the Sangguniang Bayan of Manapla and the Sangguniang Panlalawigan of Negros Occidental. Both complainant and Libo-on garnered eight hundred nineteen (819) votes during the elections, resulting in a tie. The breaking of the tie by the Board of Canvassers was in complainant's favor and he was proclaimed duly elected punong barangay of Punta Mesa, Manapla.
2 1
On May 20, 1997, his opponent filed an election protest case, docketed as Civil Case No. 703-M, before the MCTC of Victorias-Manapla, Negros Occidental. Libo-on sought the recounting of ballots in two precincts, preliminary prohibitory injunction, and damages.
1 wph 1 i . nt
On May 21, 1997, respondent ordered the issuance of summons to the parties and set the hearing on June 6, 1997.
3
On May 27, 1997, however, Libo-on filed a motion to advance the hearing to May 29 and 30, 1997. The next day, respondent granted Libo-on's motion. The hearing was advanced to May 29 and 30, 1997 cancelling the hearing for June 6, 1997. Complainant avers that he was not furnished a copy of this Order dated May 28, 1997. On May 29, 1997, respondent judge issued a temporary restraining order (TRO) and annulled the proclamation of complainant as the duly elected punong barangay of Punta Mesa, Manapla. Complainant declares that no copy of this Order dated May 29, 1997 was served on him. That same day, however, he was able to secure copies of the orders of respondent dated May 28 and May 29, 1997 from the COMELEC Registrar of Manapla, Negros Occidental and the Department of Interior and Local Government (DILG). Moreover, it was only in the afternoon of May 29, 1997 that complainant received a copy of Libo-on's petition in Civil Case No. 703-M and respondent's Order dated May 21, 1997. On May 30, 1997, complainant took his oath of office as punong barangay. That same day, he also filed a petition for certiorari before the Regional Trial Court of Silay City, Negros Occidental, Branch 69 docketed as Special Civil Action No. 1936-69. On June 5, 1997, the RTC lifted the TRO issued by respondent and declared as null and void the order nullifying complainant's proclamation as duly elected punong barangay.
7 6 5 4
Believing that respondent could not decide Civil Case No. 703-M impartially, complainant moved for his inhibition. On June 11, 1997, respondent denied complainant's motion for inhibition and after hearing Libo-on's motion for
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permanent injunction, issued a second TRO "to maintain the status quo between the contending parties."
Complainant argues that by issuing the second TRO, respondent reversed the order of the RTC of Silay City dated June 5, 1997. He also claims that by preventing him from assuming office, he was excluded by the DILG from participating in the election of the Liga ng Mga Barangay on June 14, 1997. In his Comment, respondent denied the allegations. He claimed that when Libo-on filed his motion to advance the hearing of the prayer for injunction on May 27, 1997 in Civil Case No. 703-M, complainant was served a copy by registered mail as shown by the registry receipts attached to said motion. Considering the urgency of the matter and since there was substantial compliance with due process, he issued the Order of May 28, 1997 which cancelled the hearing set for June 6, 1997 and advanced it to May 29 and 30, 1997. Respondent claims that on May 29, 1997, Libo-on and his counsel appeared but complainant did not, despite due notice. The hearing then proceeded, with Libo-on presenting his evidence. As a result, he issued the TRO prayed for and annulled complainant's proclamation. Respondent admits that the Order of May 29, 1997, particularly the annulment of complainant's proclamation, was outside the jurisdiction of his court. But since the COMELEC ignored Libo-on's petition for correction of erroneous tabulation and Libo-on had no other remedy under the law, he was constrained to annul complainant's proclamation, which from the very beginning was illegal. He justified his action by our rulings in Bince, Jr. v. COMELEC, 312 Phil. 316 (1995) and Tatlonghari v. COMELEC, 199 SCRA 849 (1991), which held that a faulty tabulation cannot be the basis of a valid proclamation. Respondent also faults the RTC of Silay City for issuing the Order dated June 5, 1997, which lifted the TRO he issued and declared void his nullification of complainant's proclamation. Respondent contends that complainant should first have exhausted all remedies in his court before resorting to the special civil action for certiorari with the RTC. The latter court, in turn, should have dismissed the action for certiorari for failure to exhaust judicial remedies. With respect to his Order of June 11, 1997, respondent explains that it was never meant to reverse the Order of the RTC of Silay City dated June 5, 1997. He points out that both parties in Civil Case No. 703-M were present during the hearing after due notice. After receiving their evidence, he found that unless a TRO was issued, Libo-on would suffer a grave injustice and irreparable injury .He submits that absent fraud, dishonesty, or corruption, his acts, even if erroneous, are not the subject of disciplinary action. In its evaluation and recommendation report dated November 29, 1999, the Office of the Court Administrator (OCA) found that respondent's errors were not honest mistakes in the performance of his duties. Rather, his actions showed a bias in favor of Libo-on and "evinced a pattern to prevent the complainant from assuming office as the duly elected punong barangay despite his having been proclaimed as such by the Board of Canvassers." The OCA recommends that respondent be fined P20,000.00 and warned that a repetition of similar acts in the future will be dealt with more severely. Supreme Court Administrative Circular No. 20-95 provides: 2. The application for a TRO shall be acted upon only after all parties are heard in a summary hearing conducted within twenty-four (24) hours after the records are transmitted to the branch selected by raffle. The records shall be transmitted immediately after raffle (Emphasis supplied). xxx 4. With the exception of the provisions which necessarily involve multiple-sala stations, these rules shall apply to single-sala stations especially with regard to immediate notice to all parties of all applications for TRO. The foregoing clearly show that whenever an application for a TRO is filed, the court may act on the application only after all parties have been notified and heard in a summary hearing. In other words, a summary hearing may not be dispensed with. In the instant case, respondent admits that he issued the injunctive writ sought on May 29, 1997 after receiving the applicant's evidence ex parte. His failure to abide by Administrative Circular No. 20-95 in issuing the first TRO is grave abuse of authority, misconduct, and conduct prejudicial to the proper administration of justice. Worse, he compounded the infraction by annulling complainant's proclamation as the duly elected punong barangay of Punta Mesa, Manapla and prohibiting him from assuming office. Respondent admits that his court was not vested with the power or jurisdiction to annul the proclamation, but seeks to justify his action on the ground that the proclamation was void ab initio. In so doing, respondent wantonly usurped a power exclusively vested by law in the COMELEC. A judge is expected to know the jurisdictional boundaries of courts and quasi-judicial bodies like the COMELEC as mapped out by the Constitution and statutes and to act only within said limits. A judge who wantonly arrogates unto himself the authority and power vested in other agencies not only acts in oppressive disregard of the basic requirements of due process, but also creates chaos and contributes to confusion in the administration of justice. Respondent, in transgressing the jurisdictional demarcation lines between his court and the COMELEC, clearly failed to realize the position that his court occupies in the interrelation and operation of the country's justice system. He displayed a marked ignorance of basic laws and principles. Rule 3.01 of the Code of Judicial Conduct provides that a "judge shall be faithful to the law and maintain professional competence." By annulling complainant's proclamation as the duly elected punong barangay, despite being aware of the fact that his court had no power to do
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so, not only is respondent guilty of grave' abuse of authority, he also manifests unfaithfulness to a basic legal rule as well as injudicious conduct. Moreover, in willfully nullifying complainant's proclamation despite his court's want of authority, respondent knowingly issued an unjust order. Note that the RTC of Silay City corrected respondent's errors by declaring null and void his Order dated May 29, 1997. Nonetheless, he compounded his previous errors of judgment by proceeding to hear Libo-on's motion for permanent injunction and issuing a second TRO on June 11, 1997 on the ground that "extreme urgency" and "grave injustice and irreparable injury will arise" if no injunctive remedy were granted. Respondent insists that his act did not reverse the Order of the RTC in Special Civil Action No.1936-69, since the second TRO he issued satisfied the notice and hearing requirements of Circular No. 20-95. Before an injunctive writ can be issued, it is essential that the following requisites be present: (1) there must be aright in esse or the existence of a right to be protected; and (2) the act against which injunction to be directed is a violation of such right. The onus probandi is on movant to show that there exists a right to be protected, which is directly threatened by the act sought to be enjoined. Further, there must be a showing that the invasion of the right is material and substantial and that there is an urgent and paramount necessity for the writ to prevent a serious damage. In this case, complainant had been duly proclaimed as the winning candidate for punong barangay. He had taken his oath of office. Unless his election was annulled, he was entitled to all the rights of said office. We do not see how the complainant's exercise of such rights would cause an irreparable injury or violate the right of the losing candidate so as to justify the issuance of a temporary restraining order "to maintain the status quo." We see no reason to disagree with the finding of the OCA that the evident purpose of the second TRO was to prevent complainant from participating in the election of the Liga ng mga Barangay. Respondent must be held liable for violating Rule 3.02 of the Code of Judicial Conduct which provides that, "In every case, a judge shall endeavor diligently to ascertain the facts and the applicable law unswayed by partisan interests, public opinion, or fear of criticism." In a similar case, a judge was fined P5,000.00 for failure to observe the requirements of Administrative Circular No. 20-95 when he issued a TRO enjoining a duly proclaimed barangay captain from participating in the elections of officers of the ABC of Tart, Eastern Samar. Note, however, that in the instant case, the respondent's infractions are not limited to the mere issuance of a restraining order without conducting the summary conference required by Administrative Circular No. 20-95. He also annulled the proclamation of the complainant knowing very well that he had no such authority. When his first restraining order was set aside and nullification of complainant's proclamation was declared null and void by the RTC of Silay City, a superior court, he again issued a TRO, which showed his partiality to complainant's political rival. Respondent is thus guilty of violating Rules 3.01 and 3.02 of the Code of Judicial Conduct; knowingly rendering an unjust order; gross ignorance of the law or procedure; as well as bias and partiality. All of the foregoing are serious charges under Rule 140, Section 3 of the Rules of Court. We agree with the sanction recommended by the OCA, finding it to be in accord with Rule 140, Section 10 (A) of the Rules of Court.
1 wphi 1 . nt
11
12
13
WHEREFORE, this COURT finds respondent judge GUILTY of violating Rules 3.01 and 3.02 of the Code of Judicial Conduct, knowingly rendering an unjust order, gross ignorance of the law and procedure, and bias and partiality. Accordingly, a fine of Twenty Thousand Pesos (P20,000.00) is hereby imposed upon respondent with a STERN WARNING that a repetition of the same or similar acts will be dealt with more severely. SO ORDERED. Bellosillo, Mendoza, Buena, and De Leon, Jr., JJ., concur.
Footnote
1 2 3 4 5 6 7
Rollo, pp.1-12. Id. at 14. Id. at 38. Id. at 39. Id. at 40. Id. at 15. Id. at 41-44.
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8 9
Id. at 61. Abunda v. Judge Mania, Jr., 312 SCRA 1, 19 (1999).
Elect. Code, Art. 242. Commission's exclusive jurisdiction of all pre-proclamation controversies.The Commission shall have exclusive jurisdiction of all pre-proclamation controversies. It may motu proprio or upon written petition, and after due notice and hearing, Order the partial or total suspension of the proclamation of any candidate-elect or annul partially or totally any proclamation, if one has been made, as the evidence shall warrant in accordance with the succeeding sections.
11 12 13
10
Ortaflez-Enderes, et al. v. Court of Appeals, 321 SCRA 178, 186 (1999). Medina, et al. v. City Sheriff of Manila, 276 SCRA 133, 139 (1997). Adao v. Judge Lorenzo, 316 SCRA 570, 580 (1999).
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G.R. No. 168637
http://sc.judiciary.gov.ph/jurisprudence/2008/september2008/168637_...
MICHAEL J. LAGROSAS, Petitioner,
G.R. No. 168637
Present: - versus QUISUMBING, J., Chairperson, CARPIO MORALES, TINGA, VELASCO, JR., and BRION, JJ.
BRISTOL-MYERS SQUIBB (PHIL.), INC./MEAD JOHNSON PHIL., RICHARD SMYTH as General Manager and FERDIE SARFATI, as Medical Sales Director, Respondents. x- - - - - - - - - - - - - - - - - - - - - - - - - -x BRISTOL-MYERS SQUIBB (PHIL.), INC./MEAD JOHNSON PHIL., Petitioner,
G.R. No. 170684
- versus -
COURT OF APPEALS and Promulgated: MICHAEL J. LAGROSAS, Respondents. September 12, 2008 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
QUISUMBING, J.:
Before this Court are two consolidated petitions. The first petition, docketed as [1] G.R. No. 168637, filed by Michael J. Lagrosas, assails the Decision dated January 28, [2] 2005 and the Resolution dated June 23, 2005 of the Court of Appeals in CA-G.R. SP No. 83885. The second petition, docketed as G.R. No. 170684, filed by Bristol-Myers
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[3] Squibb (Phil.), Inc./Mead Johnson Phil., assails the Resolutions dated August 12, 2005 and October 28, 2005 of the Court of Appeals in CA-G.R. SP No. 83885. The facts are undisputed. Michael J. Lagrosas was employed by Bristol-Myers Squibb (Phil.), Inc./Mead Johnson Phil. from January 6, 1997 until March 23, 2000 as Territory Manager in its [4] Medical Sales Force Division. On February 4, 2000, Ma. Dulcinea S. Lim, also a Territory Manager and Lagrosas former girlfriend, attended a district meeting of territory managers at McDonalds Alabang Town Center. After the meeting, she dined out with her friends. She left her car at McDonalds and rode with Cesar R. Menquito, Jr. When they returned to McDonalds, Lim saw Lagrosas car parked beside her car. Lim told Menquito not to stop his car but Lagrosas followed them and slammed Menquitos car thrice. Menquito and Lim alighted from the car. Lagrosas approached them and hit Menquito with a metal steering wheel lock. When Lim tried to intervene, Lagrosas accidentally hit her head. Upon learning of the incident, Bristol-Myers required Lagrosas to explain in writing why he should not be dismissed for assaulting a co-employee outside of business hours. While the offense is not covered by the Code of Discipline for Territory Managers, the Code states that other infractions not provided for herein shall be penalized in the most [5] appropriate manner at the discretion of management. In his memo, Lagrosas admitted that he accidentally hit Lim when she tried to intervene. He explained that he did not intend to hit her as shown by the fact that he never left the hospital until he was assured [6] that she was all right. In the disciplinary hearing that followed, it was established that Lagrosas and Lim had physical confrontations prior to the incident. But Lagrosas denied saying that he might not be able to control himself and hurt Lim and her boyfriend if he sees them together. [7] On March 23, 2000, Bristol-Myers dismissed Lagrosas effective immediately.
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[8] Lagrosas then filed a complaint Share Stock Option Grant. [9] On February 28, 2002, Labor Arbiter Renaldo O. Hernandez rendered a Decision in NLRC NCR Case No. 00-03-02821-99, declaring the dismissal illegal. He noted that while Lagrosas committed a misconduct, it was not connected with his work. The incident occurred outside of company premises and office hours. He also observed that the misconduct was not directed against a co-employee who just happened to be accidentally hit in the process. Nevertheless, Labor Arbiter Hernandez imposed a penalty of three months suspension or forfeiture of pay to remind Lagrosas not to be carried away by the mindless dictates of his passion. Thus, the Arbiter ruled:
WHEREFORE, premises considered, judgment is hereby [rendered] finding that respondent company illegally dismissed complainant thus, ORDERING it: 1) [t]o reinstate him to his former position without loss of seniority rights, privileges and benefits and to pay him full backwages reckoned from [the] date of his illegal dismissal on 23 March 2000 including the monetary value of his vacation/sick leave of 16 days per year reckoned from July 1, 2000 until actually reinstated, less three (3) months salary as penalty for his infraction; 2) to pay him the monetary equivalent of his accrued and unused combined sick/vacation leaves as of June 30, 2000 of 16 days x 3 years and 4 months 10 days x P545.45 = P23,636.16 and the present fair market value of his Team Share stock option grant for eight hundred (800) BMS common shares of stock listed in the New York Stock Exchange which vested in complainant as of 01 July 1997, provisionally computed as 90% (800 shares x US$40.00 per share x P43.20/US$ = P1,244,160.00). 3) to pay him Attorneys fee of 10% on the entire computable amount. All other claims of complainant are dismissed for lack of merit. [10] SO ORDERED.
for illegal dismissal, non-payment of vacation and sick
leave benefits, 13th month pay, attorneys fees, damages and fair market value of his Team
On appeal, the National Labor Relations Commission (NLRC) set aside the [11] Decision of Labor Arbiter Hernandez in its Decision dated September 24, 2002. It held that Lagrosas was validly dismissed for serious misconduct in hitting his co-employee and another person with a metal steering wheel lock. The gravity and seriousness of his misconduct is clear from the fact that he deliberately waited for Lim and Menquito to return to McDonalds. The NLRC also ruled that the misconduct was committed in
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connection with his duty as Territory Manager since it occurred immediately after the district meeting of territory managers. Lagrosas moved for reconsideration. [12] Resolution reversing its earlier ruling. It ratiocinated that the incident was not work-related since it occurred only after the district meeting of territory managers. It emphasized that for a serious misconduct to merit dismissal, it must be connected with the employees work. The dispositive portion of the Resolution states:
WHEREFORE, premises considered, We find this time no reason to alter the Labor Arbiters Decision of February 28, 2002 and hereby affirm the same in toto. We vacate our previous Decision of September 24, 2002. [13] SO ORDERED.
On May 7, 2003, the NLRC issued a
Bristol-Myers filed a motion for reconsideration which the NLRC denied in an Order dated February 4, 2004 in NLRC NCR Case No. 00-03-02821-99 (NLRC NCR CA [14] [15] No. 031646-02). Later, Labor Arbiter Hernandez issued a writ of execution. Notices of garnishment were then served upon the Philippine British Assurance Co., Inc. for the supersedeas bond posted by Bristol-Myers and the Bank of the Philippine Islands [16] for the balance of the judgment award. Bristol-Myers moved to quash the writ of execution contending that it timely filed a petition for certiorari with the Court of Appeals. The appellate court gave due course to [17] Bristol-Myers petition and issued a temporary restraining order (TRO) enjoining the enforcement of the writ of execution and notices of garnishment. Upon the expiration of the TRO, the appellate court issued a writ of preliminary injunction dated September 17, [18] 2004. Bristol-Myers then moved to discharge and release the TRO cash bond. It argued that since it has posted an injunction cash bond, the TRO cash bond should be legally discharged and released. On January 28, 2005, the appellate court rendered the following Decision:
WHEREFORE, the petition is GRANTED. The Resolution of May 7, 2003 and
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the Order of February 4, 2004 in NLRC NCR Case No. [00-03-02821-99] (NLRC NCR CA No. [031646-02]), are REVERSED and SET ASIDE. The public respondent NLRCs Decision dated September 24, 2002 which reversed the Labor Arbiters decision and in effect sustained the legality of the private respondents termination and the dismissal of his claim for the fair market value of the [Team Share] stock option grant is REINSTATED and AFFIRMED, with MODIFICATION that the petitioner shall pay the private respondent the monetary equivalent of his accrued and unused combined sick/vacation leave plus ten (10%) percent thereof, as attorneys fees. The injunction bond and the TRO bond previously posted by the petitioner are DISCHARGED. SO ORDERED.
[19]
The appellate court considered the misconduct as having been committed in connection with Lagrosas duty as Territory Manager since it occurred immediately after the district meeting of territory managers. It also held that the gravity and seriousness of the misconduct cannot be denied. Lagrosas employed such a degree of violence that caused damage not only to Menquitos car but also physical injuries to Lim and Menquito. Lagrosas filed a motion for reconsideration which the appellate court denied. In the meantime, Bristol-Myers moved to release the TRO cash bond and injunction cash bond in view of the Decision dated January 28, 2005. On August 12, 2005, the appellate court denied the motion as premature since the decision is not yet final and [20] executory due to Lagrosas appeal to this Court. Bristol-Myers filed a motion for reconsideration. appellate court resolved:
WHEREFORE, the petitioners Motion [f]or Reconsideration dated September 6, 2005 is PARTIALLY GRANTED and the Resolution of August 12, 2005 is RECONSIDERED and SET ASIDE. The temporary restraining order cash bond in the amount of SIX HUNDRED THOUSAND PESOS (P600,000.00) which was posted by the petitioners on July 19, 2004 is ordered DISCHARGED and RELEASED to the petitioners. SO ORDERED.
On October 28, 2005, the
[21]
The appellate court held that upon the expiration of the TRO, the cash bond intended for it also expired. Thus, the discharge and release of the cash bond for the expired TRO is proper. But the appellate court disallowed the discharge of the injunction cash bond since the writ of preliminary injunction was issued pendente lite. Since there is
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a pending appeal with the Supreme Court, the Decision dated January 28, 2005 is not yet final and executory. Hence, the instant petitions. In G.R. No. 168637, Lagrosas assigns the following errors:
I. THE HONORABLE COURT OF APPEALS IN DECLARING THAT THE TERMINATION OF EMPLOYMENT OF THE PETITIONER-APPELLANT WAS LEGAL HAD DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORD WITH THE LABOR LAWS AND JURISPRUDENCE AND DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS, AS TO CALL FOR THE EXERCISE OF THIS HONORABLE COURTS POWER OF REVIEW AND/OR SUPERVISION. II. THE HONORABLE COURT OF APPEALS IN IMPOSING THE PENALTY OF DISMISSAL, BEING A PENALTY TOO HARSH IN THIS CASE, DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORD WITH THE LABOR LAWS AND JURISPRUDENCE AND DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS, AS TO CALL FOR THE EXERCISE OF THIS HONORABLE COURTS POWER OF REVIEW AND/OR SUPERVISION.
[22]
In G.R. No. 170684, Bristol-Myers raises the following issue:

[WHETHER OR NOT THE HONORABLE] COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN DISALLOWING THE RELEASE AND DISCHARGE OF PETITIONERS INJUNCTION BOND.
[23]
Simply put, the basic issues in the instant petitions are: (1) Did the Court of Appeals err in finding the dismissal of Lagrosas legal? and (2) Did the Court of Appeals err in disallowing the discharge and release of the injunction cash bond? On the first issue, serious misconduct as a valid cause for the dismissal of an employee is defined simply as improper or wrong conduct. It is a transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error of judgment. To be serious within the meaning and intendment of the law, the misconduct must be of such grave and aggravated character and not merely trivial or unimportant. However serious such
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misconduct, it must, nevertheless, be in connection with the employees work to constitute just cause for his separation. The act complained of must be related to the performance of the employees duties such as would show him to be unfit to continue working for the [24] employer. Thus, for misconduct or improper behavior to be a just cause for dismissal, it (a) must be serious; (b) must relate to the performance of the employees duties; and (c) must [25] show that the employee has become unfit to continue working for the employer. Tested against the foregoing standards, it is clear that Lagrosas was not guilty of serious misconduct. It may be that the injury sustained by Lim was serious since it rendered her unconscious and caused her to suffer cerebral contusion that necessitated hospitalization for several days. Bristol-Myers. Although we have recognized that fighting within company premises may constitute serious misconduct, we have also held that not every fight within company premises in [26] which an employee is involved would automatically warrant dismissal from service. More so, in this case where the incident occurred outside of company premises and office hours and not intentionally directed against a co-employee, as hereafter explained. First, the incident occurred outside of company premises and after office hours since the district meeting of territory managers which Lim attended at McDonalds had long been finished. McDonalds may be considered an extension of Bristol-Myers office and any business conducted therein as within office hours, but the moment the district meeting was concluded, that ceased too. When Lim dined with her friends, it was no longer part of the district meeting and considered official time. Thus, when Lagrosas assaulted Lim and Menquito upon their return, it was no longer within company premises and during office hours. Second, Bristol-Myers itself admitted that Lagrosas intended to [27] hit Menquito only. In the Memorandum dated March 23, 2000, it was stated that You got out from your car holding an umbrella steering wheel lock and proceeded to hit Mr. Menquito. Dulce tried to intervene, but you accidentally hit her on the head, knocking her [28] unconscious. Indeed, the misconduct was not directed against a co-employee who
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But we fail to see how such misconduct could be
characterized as work-related and reflective of Lagrosas unfitness to continue working for
G.R. No. 168637
unfortunately got hit in the process. Third, Lagrosas was not performing official work at the time of the incident. He was not even a participant in the district meeting. Hence, we fail to see how his action could have reflected his unfitness to continue working for Bristol-Myers. In light of Bristol-Myers failure to adduce substantial evidence to prove that Lagrosas was guilty of serious misconduct, it cannot use this ground to justify his dismissal. Thus, the dismissal of Lagrosas employment was without factual and legal basis. On the second issue, it is settled that the purpose of a preliminary injunction is to prevent threatened or continuous irremediable injury to some of the parties before their claims can be thoroughly studied and adjudicated. Its sole aim is to preserve the status [29] quo until the merits of the case can be heard fully. A preliminary injunction may be granted only when, among other things, the applicant, not explicitly exempted, 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 fixed by the court, to the effect that the applicant will pay such party or person all damages which he may sustain by reason of the injunction or temporary restraining order if the court should finally decide that the applicant was not entitled thereto. Upon approval of the requisite [30] bond, a writ of preliminary injunction shall be issued. The injunction bond is intended as a security for damages in case it is finally decided that the injunction ought not to have been granted. Its principal purpose is to protect the enjoined party against loss or damage by reason of the injunction, and the bond [31] is usually conditioned accordingly. In this case, the Court of Appeals issued the writ of preliminary injunction to enjoin the implementation of the writ of execution and notices of garnishment pending final [32] resolution of this case or unless the [w]rit is sooner lifted by the Court. By its Decision dated January 28, 2005, the appellate court disposed of the case by granting Bristol-Myers petition and reinstating the Decision dated September 24, 2002 of the NLRC which dismissed the complaint for dismissal. It also ordered the discharge of
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the TRO cash bond and injunction cash bond. Thus, both conditions of the writ of preliminary injunction were satisfied. Notably, the appellate court ruled that Lagrosas had no right to the monetary awards granted by the labor arbiter and the NLRC, and that the implementation of the writ of execution and notices of garnishment was properly enjoined. This in effect amounted to a finding that Lagrosas did not sustain any damage by reason of the injunction. To reiterate, the injunction bond is intended to protect Lagrosas against loss or damage by reason of the injunction only. Contrary to Lagrosas claim, it is not a security for the judgment award by [33] the labor arbiter. Considering the foregoing, we hold that the appellate court erred in disallowing the discharge and release of the injunction cash bond. WHEREFORE, the two consolidated petitions are GRANTED. In G.R. No.
168637, filed by Michael J. Lagrosas, the Decision dated January 28, 2005, and the Resolution dated June 23, 2005 of the Court of Appeals in CA-G.R. SP No. 83885 are REVERSED. The Resolution dated May 7, 2003, and the Order dated February 4, 2004 of the NLRC in NLRC NCR Case No. 00-03-02821-99 (NLRC NCR CA No. 031646-02) are REINSTATED and hereby AFFIRMED. In G.R. No. 170684, filed by Bristol-Myers Squibb (Phil.), Inc./Mead Johnson Phil., the Resolutions dated August 12, 2005 and October 28, 2005 of the Court of Appeals in CA-G.R. SP No. 83885 are REVERSED. The injunction cash bond in the amount of SIX HUNDRED THOUSAND PESOS (P600,000) which was posted by Bristol-Myers Squibb (Phil.), Inc./Mead Johnson Phil. on September 17, 2004 is hereby ordered DISCHARGED and RELEASED to it. No pronouncement as to costs. SO ORDERED.
LEONARDO A. QUISUMBING Associate Justice
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WE CONCUR:
CONCHITA CARPIO MORALES Associate Justice
DANTE O. TINGA Associate Justice
PRESBITERO J. VELASCO, JR. Associate Justice
ARTURO D. BRION Associate Justice
I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.
LEONARDO A. QUISUMBING Associate Justice Chairperson
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.
REYNATO S. PUNO
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Chief Justice
[1] [2] [3] [4] [5] [6] [7] [8] [9] [10] [11] [12] [13] [14] [15] [16] [17] [18] [19] [20] [21] [22] [23] [24] [25]
Rollo (G.R. No. 168637), pp. 35-46. Penned by Associate Justice Hakim S. Abdulwahid, with Associate Justices Remedios A. Salazar-Fernando and Juan Q. Enriquez, Jr. concurring. Id. at 32-33. Rollo (G.R. No. 170684), pp. 24-25 and 27-29. Records, Vol. I, p. 53. Id. at 79. Id. at 82. Id. at 18-21. Id. at 1. Id. at 146-155. Id. at 155. Id. at 534-543. Id. at 616-619. Id. at 618-619. Id. at 723-724. Id. at 806-808. Records, Vol. II, p. 31. CA rollo, p. 188. Id. at 406. Rollo (G.R. No. 168637), pp. 45-46. Rollo (G.R. No. 170684), pp. 24-25. Id. at 29. Rollo (G.R. No. 168637), p. 6. Rollo (G.R. No. 170684), p. 12. Villamor Golf Club v. Pehid, G.R. No. 166152, October 4, 2005, 472 SCRA 36, 48; Samson v. National Labor Relations Commission, G.R. No. 121035, April 12, 2000, 330 SCRA 460, 471. Lopez v. National Labor Relations Commission, G.R. No. 167385, December 13, 2005, 477 SCRA 596, 601; Fujitsu Computer Products Corporation of the Philippines v. Court of Appeals, G.R. No. 158232, March 31, 2005, 454 SCRA 737, 768. Supreme Steel Pipe Corporation v. Bardaje, G.R. No. 170811, April 24, 2007, 522 SCRA 155, 167. Records, Vol. I, pp. 18-21. Id. at 18. Medina v. Greenfield Development Corporation, G.R. No. 140228, November 19, 2004, 443 SCRA 150, 159. Limitless Potentials, Inc. v. Court of Appeals, G.R. No. 164459, April 24, 2007, 522 SCRA 70, 83-84.
[26] [27] [28] [29] [30]
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[31] [32] [33]
Id. at 84. CA rollo, p. 406. Rollo (G.R. No. 170684), p. 318.
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G.R. No. 172138
http://www.lawphil.net/judjuris/juri2010/sep2010/gr_172138_2010.html
Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 172138 September 8, 2010
NELSON JENOSA and his son NIO CARLO JENOSA, SOCORRO CANTO and her son PATRICK CANTO, CYNTHIA APALISOK and her daughter CYNDY APALISOK, EDUARDO VARGAS and his son CLINT EDUARD VARGAS, and NELIA DURO and her son NONELL GREGORY DURO, Petitioners, vs. REV. FR. JOSE RENE C. DELARIARTE, O.S.A., in his capacity as the incumbent Principal of the High School Department of the University of San Agustin, and the UNIVERSITY OF SAN AGUSTIN, herein represented by its incumbent President REV. FR. MANUEL G. VERGARA, O.S.A., Respondents. DECISION CARPIO, J.: The Case This is a petition for review of the 16 June 2005 Decision and 22 March 2006 Resolution of the Court of Appeals in CA-G.R. SP No. 78894. In its 16 June 2005 Decision, the Court of Appeals granted the petition of respondents University of San Augustin (University), represented by its incumbent President Rev. Fr. Manuel G. Vergara, O.S.A. (University President), and Rev. Fr. Jose Rene C. Delariarte, O.S.A. (Principal), in his capacity as the incumbent Principal of the High School Department of the University (respondents) and ordered the dismissal of Civil Case Nos. 03-27460 and 03-27646 for lack of jurisdiction over the subject matter. In its 22 March 2006 Resolution, the Court of Appeals denied the motion for reconsideration of petitioners Nelson Jenosa and his son Nio Carlo Jenosa, Socorro Canto and her son Patrick Canto, Cynthia Apalisok and her daughter Cyndy Apalisok, Eduardo Vargas and his son Clint Eduard Vargas, and Nelia Duro and her son Nonell Gregory Duro (petitioners). The Facts On 22 November 2002, some students of the University, among them petitioners Nio Carlo Jenosa, Patrick Canto, Cyndy Apalisok, Clint Eduard Vargas, and Nonell Gregory Duro (petitioner students), were caught engaging in hazing outside the school premises. The hazing incident was entered into the blotter of the Iloilo City Police.
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Thereafter, dialogues and consultations were conducted among the school authorities, the apprehended students and their parents. During the 28 November 2002 meeting, the parties agreed that, instead of the possibility of being charged and found guilty of hazing, the students who participated in the hazing incident as initiators, including petitioner students, would just transfer to another school, while those who participated as neophytes would be suspended for one month. The parents of the apprehended students, including petitioners, affixed their signatures to the minutes of the meeting to signify their conformity. In view of the agreement, the University did not anymore convene the Committee on Student Discipline (COSD) to investigate the hazing incident. On 5 December 2002, the parents of petitioner students (petitioner parents) sent a letter to the University President urging him not to implement the 28 November 2002 agreement. According to petitioner parents, the Principal, without convening the COSD, decided to order the immediate transfer of petitioner students. On 10 December 2002, petitioner parents also wrote a letter to Mrs. Ida B. Endonila, School Division Superintendent, Department of Education (DepEd), Iloilo City, seeking her intervention and prayed that petitioner students be allowed to take the home study program instead of transferring to another school. The DepEd asked the University to comment on the letter. The University replied and attached the minutes of the 28 November 2002 meeting.
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On 3 January 2003, petitioners filed a complaint for injunction and damages with the Regional Trial Court, Branch 29, Iloilo City (trial court) docketed as Civil Case No. 03-27460. Petitioners assailed the Principals decision to order the immediate transfer of petitioner students as a violation of their right to due process because the COSD was not convened.
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On 5 February 2003, the trial court issued a writ of preliminary injunction and directed respondents to admit petitioner students during the pendency of the case.
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The 5 February 2003 Order reads:
WHEREFORE, let [a] Writ of Preliminary Mandatory Injunction issue. The defendants are hereby directed to allow the plaintiffs minor children to attend their classes during the pendency of this case, without prejudice to any disciplinary proceeding to which any or all of them may be liable. SO ORDERED.
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Respondents filed a motion for reconsideration and asked for the dissolution of the writ. The trial court denied respondents motion. Respondents complied but with reservations. On 25 March 2003, respondents filed a motion to dismiss. Respondents alleged that the trial court had no jurisdiction over the subject matter of the case and that petitioners were guilty of forum shopping. On 19 May 2003, the trial court denied respondents motion. Respondents filed a motion for reconsideration. On 21 April 2003, petitioners wrote the DepEd and asked that it direct the University to release the report cards and other credentials of petitioner students.
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On 8 May 2003, the DepEd sent a letter to the University advising it to

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release petitioner students report cards and other credentials if there was no valid reason to withhold the same.
On 14 May 2003, the DepEd sent another letter to the University to follow-up petitioners request. On 20 May 2003, the University replied that it could not release petitioner students report cards due to their pending disciplinary case with the COSD.
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On 28 May 2003, petitioners filed another complaint for mandatory injunction praying for the release of petitioner students report cards and other credentials docketed as Civil Case No. 03-27646. The trial court consolidated the two cases.
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On 17 June 2003, the trial court issued a writ of preliminary injunction and directed the University to release petitioner students report cards and other credentials. Respondents filed a motion for reconsideration. Respondents alleged that they could not comply with the writ because of the on-going disciplinary case against petitioner students. On 26 June 2003, the COSD met with petitioners for a preliminary conference on the hazing incident. On 7 July 2003, the University, through the COSD, issued its report finding petitioner students guilty of hazing. The COSD also recommended the exclusion of petitioner students from its rolls effective 28 November 2002. On 14 July 2003, the trial court issued an Order denying both motions for reconsideration.
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On 1 September 2003, respondents filed a special civil action for certiorari with the Court of Appeals. Respondents insisted that the trial court had no jurisdiction over the subject matter of Civil Case Nos. 03-27460 and 03-27646. Respondents also alleged that petitioners were guilty of forum shopping. The Ruling of the Court of Appeals In its 16 June 2005 Decision, the Court of Appeals granted respondents petition and ordered the trial court to dismiss Civil Case Nos. 03-27460 and 03-27646 for lack of jurisdiction over the subject matter because of petitioners failure to exhaust administrative remedies or for being premature. According to the Court of Appeals, petitioners should have waited for the action of the DepEd or of the University President before resorting to judicial action. The Court of Appeals held: From the foregoing, it is clear that the court a quo committed grave [abuse] of discretion amounting to LACK OF JURISDICTION in INTERFERING, pre-maturely, with the exclusive and inherent authority of educational institutions to discipline. In directing herein petitioners [respondents in this case] to re-admit herein private respondents [petitioners in this case] and eventually, to release the report cards and other school credentials, prior to the action of the President of USA and of the recommendation of the COSD, the court a quo is guilty of improper judicial intrusion by encroaching into the exclusive prerogative of educational institutions. Petitioners filed a motion for reconsideration. petitioners motion for lack of merit.
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In its 22 March 2006 Resolution, the Court of Appeals denied
The Issues Petitioners raise the following issues: 1. Was the Court of Appeals correct in holding that Branch 29 of the Regional Trial Court of Iloilo City in Civil
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Case Nos. 03-27460 and 03-27646 did not acquire jurisdiction over the subject matter of this case for failure of petitioners to exhaust administrative remedies? 2. Was the recommendation/report/order of the Committee on Student Discipline dated 7 July 2003 valid, and did it justify the order of exclusion of petitioner students retroactive to 28 November 2002? The Ruling of the Court The petition has no merit. Discipline in education is specifically mandated by the 1987 Constitution which provides that all educational institutions shall "teach the rights and duties of citizenship, strengthen ethical and spiritual values, develop moral character and personal discipline."
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Schools and school administrators have the authority to maintain school

26
discipline and the right to impose appropriate and reasonable disciplinary measures. On the other hand, students have the duty and the responsibility to promote and maintain the peace and tranquility of the school by observing the rules of discipline.
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In this case, we rule that the Principal had the authority to order the immediate transfer of petitioner students because of the 28 November 2002 agreement. Petitioner parents affixed their signatures to the minutes of the 28 November 2002 meeting and signified their conformity to transfer their children to another school. Petitioners Socorro Canto and Nelia Duro even wrote a letter to inform the University that they would transfer their children to another school and requested for the pertinent papers needed for the transfer. In turn, the University did not anymore convene the COSD. The University agreed that it would no longer conduct disciplinary proceedings and instead issue the transfer credentials of petitioner students. Then petitioners reneged on their agreement without any justifiable reason. Since petitioners present complaint is one for injunction, and injunction is the strong arm of equity, petitioners must come to court with clean hands. In University of the Philippines v. Hon. Catungal, Jr., case involving student misconduct, this Court ruled:
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Since injunction is the strong arm of equity, he who must apply for it must come with equity or with clean hands. This is so because among the maxims of equity are (1) he who seeks equity must do equity, and (2) he who comes into equity must come with clean hands. The latter is a frequently stated maxim which is also expressed in the principle that he who has done inequity shall not have equity. It signifies that a litigant may be denied relief by a court of equity on the ground that his conduct has been inequitable, unfair and dishonest, or fraudulent, or deceitful as to the controversy in issue.
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Here, petitioners, having reneged on their agreement without any justifiable reason, come to court with unclean hands. This Court may deny a litigant relief if his conduct has been inequitable, unfair and dishonest as to the controversy in issue.
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Since petitioners have come to court with inequitable and unfair conduct, we deny them relief. We uphold the validity of the 28 November 2002 agreement and rule that the Principal had the authority to order the immediate transfer of petitioner students based on the 28 November 2002 agreement. WHEREFORE, we DENY the petition. We AFFIRM the 16 June 2005 Decision and the 22 March 2006 Resolution of the Court of Appeals. SO ORDERED. ANTONIO T. CARPIO Associate Justice WE CONCUR: ANTONIO EDUARDO B. NACHURA Associate Justice DIOSDADO M. PERALTA Associate Justice JOSE C. MENDOZA Associate Justice ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. ANTONIO T. CARPIO Associate Justice ROBERTO A. ABAD Associate Justice
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Chairperson CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. RENATO C. CORONA Chief Justice
Footnotes
1 2
Under Rule 45 of the Rules of Civil Procedure.
Rollo, pp. 24-34. Penned by Associate Justice Arsenio J. Magpale, with Associate Justices Sesinando E. Villon and Enrico A. Lanzanas, concurring.
Id. at 36-37. Penned by Associate Justice Arsenio J. Magpale, with Associate Justices Vicente L. Yap and Enrico A. Lanzanas, concurring.
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Id. at 62. Id. at 93-94. Id. at 63-64. Id. at 65-68. Id. at 69. Id. at 92-94. Id. at 55-61. Id. at 95-96. Id. at 96. Id. at 76. Id. at 75. Id. at 77. Id. at 78-79. Id. at 98-105. Id. at 388-389. Id. at 141-142. Id. at 151-152. Id. at 32-33. Id. at 39-46. Id. at 852. Constitution, Art. XIV, Sec. 3(2). Manual of Regulations for Private Schools (1992), Section 74.
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Manual of Regulations for Private Schools (1992), Section 75. Batas Pambansa Blg. 232 (1982), Section 15.3. Rollo, pp. 92-94. Id. at 246 and 248. 338 Phil. 728 (1997). Id. at 743-744.
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G.R. No. 179665
http://www.lawphil.net/judjuris/juri2013/apr2013/gr_179665_2013.html
Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 179665 April 3, 2013
SOLID BUILDERS, INC. and MEDINA FOODS INDUSTRIES, INC., Petitioners, vs. CHINA BANKING CORPORATION, Respondent. DECISION LEONARDO-DE CASTRO, J.: This petition for review on certiorari assails the Decision dated April 16, 2007 and the Resolution September 18, 2007 of the Court of Appeals in CA-G.R. SP No. 81968.
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dated
During the period from September 4, 1992 to March 27, 1996, China Banking Corporation (CBC) granted several loans to Solid Builders, Inc. (SBI), which amounted to P139,999,234.34, exclusive of interests and other charges. To secure the loans, Medina Foods Industries, Inc. (MFII) executed in CBCs favor several surety agreements and contracts of real estate mortgage over parcels of land in the Loyola Grand Villas in Quezon City and New Cubao Central in Cainta, Rizal.
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Subsequently, SBI proposed to CBC a scheme through which SBI would sell the mortgaged properties and share the proceeds with CBC on a 50-50 basis until such time that the whole obligation would be fully paid. SBI also proposed that there be partial releases of the certificates of title of the mortgaged properties without the burden of updating interests on all loans.
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In a letter dated March 20, 2000 addressed to CBC, SBI requested the restructuring of its loans, a reduction of interests and penalties and the implementation of a dacion en pago of the New Cubao Central property. The letter reads: March 20, 2000 CHINA BANKING CORPORATION Dasmarinas cor. Juan Luna Sts. Binondo, Manila Attn: Mr. George Yap Account Officer Dear Mr. Yap, This is to refer to our meeting held at your office last March 10, 2000. In this regard, please allow us to call your attention on the following important matters we have discussed: 1. With respect to the penalties, we are requesting for a reduction in the rates as we find it onerous considering the big amount of our loan (P218,540,648.00). The interest together with the penalties that you are imposing is similar to the ones being charged by private lending institutions, i.e., 4.5%/month total. 2. As I had discussed with you regarding Dacion en Pago, which you categorically stated that it could be a possibility, we are considering putting our New Cubao Central (NCC) on Dacion and restructuring our loan with regards to our Loyola Grand Villas. Considering that you had stated that our restructuring had not been finalized, we find it timely to raise these urgent matters and possibly agree on a realistic and workable scheme that we can incorporate on our final agreement.
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Thank you and we strongly hope for your prompt consideration on our request. Very truly yours, V. BENITO R. SOLIVEN (Sgd.) President
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In response, CBC sent SBI a letter dated April 17, 2000 stating that the loans had been completely restructured effective March 1, 1999 in the amount of P218,540,646.00. On the aspect of interests and charges, CBC suggested the updating of the obligation to avoid paying interests and charges. The relevant portion of the letter dated April 17, 2000 reads: First of all, to clarify, the loans restructuring has been finalized and completed on 3/01/99 with the booking of the Restructured loan of P218,540,646. Only two Amendments of Real Estate Mortgages remain to be registered to date. Certain documents that we requested from your company since last year, that could facilitate this amendment have not yet been forwarded to us until now. Nevertheless, this does not change the fact that the restructuring of the loan has been done with and finalized. This in turn is with regards to statement[s] no. 1 & 2 of your letter, referring to the interest rates and penalties. As per our records, the rates are actually the prevailing bank interest rates. In addition, penalty charges are imposed in the event of non-payment. To avoid experiencing having to pay more due to the penalty charges, updating of obligations is necessary. Thus, we advise updating of your obligations to avoid penalty charges. However, should you be able to update both interest and penalty through a "one-time" payment, we shall present your request to Senior Management for possible reduction in penalty charges. Concerning statement no. 3 containing your request for the possible Dacion en Pago of your NCC properties, as was discussed already in the meeting, it is a concern that has to be discussed with Senior Management and approved by the Executive Committee before we can commit to you on the matter. We suggest that your company, Solid Builders, exhaust all possibilities to sell the NCC properties yourselves because, being a real estate company, Solid has better ways and means of selling the properties.
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This was followed by another communication from CBC to SBI reiterating, among others, that the loan has been restructured effective March 1, 1999 upon issuance by SBI of promissory notes in favor of CBC. The relevant portion of that letter dated May 19, 2000 reads: Again, in response to your query with regards the issue of the loans restructuring, to reiterate, the loan restructuring has been finalized and completed on 3/01/99 with the booking of the Restructured loan of P231,716,646. The Restructured Loan was effective ever since the new Promissory Note was signed on the said date. The interest rates for the loans are actually rates booked since the new Promissory Notes were effective. Any move of changing it or "re-pricing" the interest is only possible every 90 days from the booking date, which represents the interest amortization payment dates. No change or "re-pricing" in interest rates is possible since interest payment/obligations have not yet been paid.
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With regards to the possible Dacion en Pago of your NCC properties, as was discussed already in the meeting, it is a concern that has to be discussed with Senior Management and approved by the Executive Committee before we can commit to you on the matter. We suggest that your company, Solid Builders, exhaust all possibilities to sell the NCC properties yourselves because, being a real estate company, Solid has better ways and means of selling the properties.
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Subsequently, in a letter dated September 18, 2000, CBC demanded SBI to settle its outstanding account within ten days from receipt thereof. The letter dated September 18, 2000 reads: September 18, 2000 SOLID BUILDERS, INC. V.V. Soliven Bldg., I EDSA, San Juan, Metro Manila
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PN NUMBER
O/S BALANCE
DUE DATE INTEREST 03/01/2004 04/13/1999 03/01/2004 08/05/1999 03/01/2004 --------------03/01/2004 --------------03/01/2004 07/26/1999
PN-MK-TS-342924 PHP 89,700,000.00 PN-MK-TS-342931 19,350,000.00 PN-MK-TS-342948 35,888,000.00 PN-MK-TS-342955 6,870,000.00 PN-MK-TS-342962 5,533,646.00
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PN-MK-TS-342979 21,950,000.00 PN-MK-TS-342986 3,505,000.00 PN-MK-TS-342993 19,455,000.00 PN-MK-TS-343002 4,168,000.00 PN-MK-TS-343026 12,121,000.00 PHP218,540,646.00 ================ Greetings!
03/01/2004 --------------03/01/2004 08/09/1999 03/01/2004 --------------03/01/2004 --------------03/01/2004 ---------------
We refer again to the balances of the abovementioned Promissory Notes amounting to PHP218,540,646.00 excluding interest, penalties and other charges signed by you jointly and severally in our favor, which remains unpaid up to this date despite repeated demands for payment. In view of the strict regulations of Bangko Sentral ng Pilipinas on past due accounts, we regret that we cannot hold these accounts further in abeyance. Accordingly, we are reiterating our request that arrangements to have these accounts settled within ten (10) days from receipt hereof, otherwise, we shall be constrained to refer the matter to our lawyers for collection. We enclose a Statement of Account as of September 30, 2000 for your reference and guidance. Very truly yours, MERCEDES E. GERMAN (Sgd.) Manager Loans & Discounts Department H.O.
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On October 5, 2000, claiming that the interests, penalties and charges imposed by CBC were iniquitous and unconscionable and to enjoin CBC from initiating foreclosure proceedings, SBI and MFII filed a Complaint "To Compel Execution of Contract and for Performance and Damages, With Prayer for Writ of Preliminary Injunction and Ex-Parte Temporary Restraining Order" in the Regional Trial Court (RTC) of Pasig City. The case was docketed as Civil Case No. 68105 and assigned to Branch 264.
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In support of their application for the issuance of writ of preliminary injunction, SBI and MFII alleged: IV. APPLICATION FOR PRELIMINARY INJUNCTION WITH EX- PARTE TEMPORARY RESTRAINING ORDER A. GROUNDS FOR PRELIMINARY INJUNCTION 1. That SBI and MFII are entitled to the reliefs demanded, among which is enjoining/restraining the commission of the acts complained of, the continuance of which will work injustice to the plaintiffs; that such acts are in violation of the rights of plaintiffs and, if not enjoined/restrained, will render the judgment sought herein ineffectual. 2. That under the circumstances, it is necessary to require, through preliminary injunction, CBC to refrain from immediately enforcing its letters dated April 17, 2000 and May 19, 2000 and September 18, 2000 during the pendency of this complaint, and 3. That SBI and MFII submit that they are exempt from filing of a bond considering that the letters dated April 17, 2000, May 19, 2000 and September 18, 2000 are a patent nullity, and in the event they are not, they are willing to post such bond this Honorable Court may determine and under the conditions required by Section 4, Rule 58.
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In its Answer and Opposition to the issuance of the writ of preliminary injunction, CBC alleged that to implement the agreed restructuring of the loan, SBI executed ten promissory notes stipulating that the interest rate shall be at 18.5% per annum. For its part, MFII executed third party real estate mortgage over its properties in favor of CBC to secure the payment of SBIs restructured loan. As SBI was delinquent in the payment of the principal as well as the interest thereon, CBC demanded settlement of SBIs account.
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After hearing the parties, the trial court issued an Order dated December 14, 2000 granting the application of SBI and MFII for the issuance of a writ of preliminary injunction. The trial court held that SBI and MFII were able to sufficiently comply with the requisites for the issuance of an injunctive writ: It is well-settled that to be entitled to an injunctive writ, a party must show that: (1) the invasion of right sought to be protected is material and substantial; (2) the right of complainant is clear and unmistakable; and, (3) there is an
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urgent and paramount necessity for the writ to prevent serious damage. The Court opines that the above-mentioned requisites have been sufficiently shown by plaintiffs in this case, accordingly, a writ of preliminary injunction is in order. The three subject letters, particularly the letter dated September 18, 2000, indicate that the promissory notes executed by Benito Soliven as President of plaintiff SBI amounted to P218,540,646.00, excluding interest, penalties and other charges remained unpaid, and demand that the account be settled within ten days, else defendant bank shall refer the latter to its lawyers for collection. The message in the letter is clear: If the account is not settled within the grace period, defendant bank will resort to foreclosure of mortgage on the subject properties. The actual or imminent damage to plaintiffs is likewise clear. Considering the number of parcels of land and area involved, if these are foreclosed by defendant bank, plaintiffs properties and source of income will be effectively diminished, possibly to the point of closure. The only issue remaining is whether or not plaintiffs have the right to ask for an injunctive writ in order to prevent defendant bank from taking over their properties. Plaintiffs argued that the interest and penalties charged them in the subject letters and attached statements of account increased during a seven-month period to an amount they described as "onerous", "usurious" ad "greedy". They likewise asserted that there were on-going talks between officers of the corporations involved to treat or restructure the contracts to a dacion en pago, as there was a proposed plan of action by representatives of plaintiffs during the meetings. Defendant, on the other hand, sought to explain the increase in the interest as contained in the promissory notes which were voluntarily and willingly signed by Soliven, therefore, binding on plaintiffs and that the proposed plan of action is merely an oral contract still in the negotiation stage and not binding. The condition on the interest payments as contained in the promissory notes are as follows: "Interest for the first quarter shall be @ 18.5% P.A. Thereafter, it shall be payable quarterly in arrears based on three months average rate." In its Memorandum, defendant bank tried to show that the questioned increase in the interests was merely in compliance with the above condition. To this Court, the explanation is insufficient. A more detailed rationalization is required to convince the court of the fairness of the increase in interests and penalties. However, the coming explanation may probably be heard only during trial on the merits, and by then this pending incident or the entire case, may already be moot and academic if the injunctive writ is not issued. The dispositive portion of the trial courts Order dated December 14, 2000 reads: WHEREFORE, premises considered, the application for issuance of writ of preliminary injunction is GRANTED. Defendant CHINA BANKING CORPORATION, its representatives, agents and all persons working in its behalf are hereby enjoined from enforcing the contents of its letters to plaintiffs dated April 17, 2000, May 19, 2000 and September 18, 2000, particularly the banks legal department or other counsel commencing collection proceedings against plaintiffs in the amount stated in the letters and statements of account. The Writ of Preliminary Injunction shall be issued upon plaintiffs posting of a bond executed to defendant in the amount of Two Million Pesos (P2,000,000.00) to the effect [that] the plaintiffs will pay defendant all damages which the latter may sustain by reason of the injunction if it be ultimately decided that the injunction is unwarranted. CBC sought reconsideration but the trial court denied it in an Order
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dated December 10, 2001.

18
Subsequently, CBC filed a "Motion to Dissolve Injunction Order" but this was denied in an Order dated November 10, 2003. The trial court ruled that the motion was in the nature of a mere belated second motion for reconsideration of the Order dated December 14, 2000. It also declared that CBC failed to substantiate its prayer for the dissolution of the injunctive writ. Aggrieved, CBC filed a Petition for Certiorari docketed as CA-G.R. SP No. 81968 in the Court of Appeals where it claimed that the Orders dated December 14, 2000 (granting the application of petitioners SBI and MFII for the issuance of writ of preliminary injunction), December 10, 2001 (denying reconsideration of the order dated December 14, 2000), and November 10, 2003 (denying the CBCs motion to dissolve injunction order) were all issued with grave abuse of discretion amounting to lack of jurisdiction.
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In a Decision dated April 16, 2007, the Court of Appeals found that, on its face, the trial courts Order dated
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December 14, 2000 granting the application of SBI and MFII for the issuance of a writ of preliminary injunction had no basis as there were no findings of fact or law which would indicate the existence of any of the requisites for the grant of an injunctive writ. It appeared to the Court of Appeals that, in ordering the issuance of a writ of injunction, the trial court simply relied on the imposition by CBC of the interest rates to the loans obtained by SBI and MFII. According to the Court of Appeals, however, the records do not reveal a clear and unmistakable right on the part of SBI and MFII that would entitle them to the protection of a writ of preliminary injunction. Thus, the Court of Appeals granted the petition of CBC, set aside the Orders dated December 14, 2000, December 10, 2001, and November 10, 2003 and dissolved the injunctive writ issued by the RTC of Pasig City.
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SBI and MFII filed a motion for reconsideration but it was denied by the Court of Appeals in a Resolution dated September 18, 2007. Hence, this petition. SBI and MFII assert that the Decision dated April 16, 2007 of the Court of Appeals is legally infirm as its conclusions are contrary to the judicial admissions of CBC. They allege that, in its Answer, CBC admitted paragraphs 25 and 26 of the Complaint regarding the interests and charges amounting to P35,093,980.14 and P80,614,525.15, respectively, which constituted more than 50% of the total obligation of P334,249,151.29 as of February 15, 2000. For SBI and MFII, CBCs admission of paragraphs 25 and 26 of the Complaint is an admission that the interest rate imposed by CBC is usurious, exorbitant and confiscatory. Thus, when the Court of Appeals granted the petition of CBC and ordered the lifting of the writ of preliminary injunction it effectively disposed of the main case, Civil Case No. 68105, without trial on the merits and rendered moot and academic as it enabled CBC to foreclose on the mortgages despite the usurious, exorbitant and confiscatory interest rates.
21
SBI and MFII also claim that the Court of Appeals either overlooked or disregarded undisputed and admitted facts which, if properly considered, would have called for the maintenance and preservation of the preliminary injunction issued by the trial court. They argue that the Court of Appeals did not even consider Article 1229 of the Civil Code which provides: Art. 1229. The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the debtor. Even if there has been no performance, the penalty may also be reduced by the courts if it is iniquitous or unconscionable. For SBI and MFII, the failure of the Court of Appeals to take into account Article 1229 of the Civil Code and its act of lifting the preliminary injunction "would definitely pave the way for CBCs unbridled imposition of illegal rates of interest and immediate foreclosure" of the properties of SBI and MFII "without the benefit of a full blown trial."
22
For its part, CBC assails the petition contending that it is not allowed under Rule 45 of the Rules of Court because it simply raises issues of fact and not issues of law. CBC further asserts that the Decision of the Court of Appeals is an exercise of sound judicial discretion as it is in accord with the law and the applicable provisions of this Court. The petition fails. This Court has recently reiterated the general principles in issuing a writ of preliminary injunction in Palm Tree Estates, Inc. v. Philippine National Bank : A preliminary injunction is an order granted at any stage of an action prior to judgment of final order, requiring a party, court, agency, or person to refrain from a particular act or acts. It is a preservative remedy to ensure the protection of a partys substantive rights or interests pending the final judgment in the principal action. A plea for an injunctive writ lies upon the existence of a claimed emergency or extraordinary situation which should be avoided for otherwise, the outcome of a litigation would be useless as far as the party applying for the writ is concerned. At times referred to as the "Strong Arm of Equity," we have consistently ruled that there is no power the exercise of which is more delicate and which calls for greater circumspection than the issuance of an injunction. It should only be extended in cases of great injury where courts of law cannot afford an adequate or commensurate remedy in damages; "in cases of extreme urgency; where the right is very clear; where considerations of relative inconvenience bear strongly in complainants favor; where there is a willful and unlawful invasion of plaintiffs right against his protest and remonstrance, the injury being a continuing one, and where the effect of the mandatory injunction is rather to reestablish and maintain a preexisting continuing relation between the parties, recently and arbitrarily interrupted by the defendant, than to establish a new relation." A writ of preliminary injunction is an extraordinary event which must be granted only in the face of actual and existing substantial rights. The duty of the court taking cognizance of a prayer for a writ of preliminary injunction is to determine whether the requisites necessary for the grant of an injunction are present in the case before it. In this connection, a writ of preliminary injunction is issued to preserve the status quo ante, upon the applicants showing of two important requisite conditions, namely: (1) the right to be protected exists prima facie, and (2) the acts sought to be enjoined are violative of that right. It must be proven that the violation sought to be prevented would cause an irreparable injury.
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Here, SBI and MFII basically claim a right to have their mortgaged properties shielded from foreclosure by CBC on the ground that the interest rate and penalty charges imposed by CBC on the loans availed of by SBI are iniquitous and unconscionable. In particular, SBI and MFII assert: There is therefore an urgent necessity for the issuance of a writ of preliminary injunction or at least a status quo [order], otherwise, respondent bank will definitely foreclose petitioners properties without awaiting the trial of the main case on the merits, with said usurious and confiscatory rates of interest as basis. and There is therefore no legal justification for the Honorable Court of Appeals to lift/dissolve the injunction issued by the trial court, otherwise, respondent bank on the basis of this illegal imposition of interest can already foreclose the properties of petitioners and render the whole case (sans trial on the merits) moot and academic.
28 27
On this matter, the Order dated December 14, 2000 of the trial court enumerates as the first argument raised by SBI and MFII in support of their application for the issuance of a writ of preliminary injunction: 1. Their rights basically are for the protection of their properties put up as collateral for the loans extended by defendant bank to them.
29
As debtor-mortgagors, however, SBI and MFII do not have a right to prevent the creditor-mortgagee CBC from foreclosing on the mortgaged properties simply on the basis of alleged "usurious, exorbitant and confiscatory rate of interest." First, assuming that the interest rate agreed upon by the parties is usurious, the nullity of the stipulation of usurious interest does not affect the lenders right to recover the principal loan, nor affect the other terms thereof.
31 30
Thus, in a usurious loan with mortgage, the right to foreclose the mortgage subsists, and this right can be
32
exercised by the creditor upon failure by the debtor to pay the debt due.
Second, even the Order dated December 14, 2000 of the trial court, which granted the application for the issuance of a writ of preliminary injunction, recognizes that the parties still have to be heard on the alleged lack of "fairness of the increase in interests and penalties" during the trial on the merits. Thus, the basis of the right claimed by SBI and MFII remains to be controversial or disputable as there is still a need to determine whether or not, upon consideration of the various circumstances surrounding the agreement of the parties, the interest rates and penalty charges are unconscionable. Therefore, such claimed right cannot be considered clear, actual and subsisting. In the absence of a clear legal right, the issuance of the injunctive writ constitutes grave abuse of discretion.
34 33
The Order dated December 10, 2001 also shows the reasoning of the trial court which betrays that its grant of the application of SBI and MFII for the issuance of a writ of preliminary injunction was not based on a clear legal right. Said the trial court: It was likewise shown that plaintiffs SBI and MFII had the clear right and urgency to ask for injunction because of the issue of validity of the increase in the amount of the loan obligation.
35
(Emphasis supplied.)
At most, the above finding of the trial court that the validity of the increase in the amount of the loan obligation is in issue simply amounted to a finding that the rights of SBI and MFII vis--vis that of CBC are disputed and debatable. In such a case where the complainant-movants right is doubtful or disputed, the issuance of an injunctive writ is not proper.
36
Even assuming that SBI and MFII are correct in claiming their supposed right, it nonetheless disintegrates in the face of the ten promissory notes in the total amount of P218,540,648.00, exclusive of interest and penalties, issued by SBI in favor of CBC on March 1, 1999 which until now remain unpaid despite the maturity of the said notes on March 1, 2004 and CBCs repeated demands for payment. nonpayment of mortgage indebtedness.
38 37
Foreclosure is but a necessary consequence of

39
As this Court held in Equitable PCI Bank, Inc. v. OJ-Mark Trading, Inc. :
Where the parties stipulated in their credit agreements, mortgage contracts and promissory notes that the mortgagee is authorized to foreclose the mortgaged properties in case of default by the mortgagors, the mortgagee has a clear right to foreclosure in case of default, making the issuance of a Writ of Preliminary Injunction improper. x x x. (Citation omitted.) In addition, the default of SBI and MFII to pay the mortgage indebtedness disqualifies them from availing of the equitable relief that is the injunctive writ. In particular, SBI and MFII have stated in their Complaint that they have made various requests to CBC for restructuring of the loan. The trial courts Order dated December 14, 2000 also found that SBI wrote several letters to CBC "requesting, among others, for a reduction of interests and penalties and restructuring of the loan." A debtors various and constant requests for deferment of payment and restructuring of loan, without actually paying the amount due, are clear indications that said debtor was unable to settle his obligation. SBIs default or failure to settle its obligation is a breach of contractual obligation which tainted its hands and disqualified it from availing of the equitable remedy of preliminary injunction.
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As SBI is not entitled to the issuance of a writ of preliminary injunction, so is MFII. The accessory follows the principal. The accessory obligation of MFII as accommodation mortgagor and surety is tied to SBIs principal obligation to CBC and arises only in the event of SBIs default. Thus, MFIIs interest in the issuance of the writ of preliminary injunction is necessarily prejudiced by SBIs wrongful conduct and breach of contract. Even Article 1229 of the Civil Code, which SBI and MFII invoke, works against them. Under that provision, the equitable reduction of the penalty stipulated by the parties in their contract will be based on a finding by the court that such penalty is iniquitous or unconscionable. Here, the trial court has not yet made a ruling as to whether the penalty agreed upon by CBC with SBI and MFII is unconscionable. Such finding will be made by the trial court only after it has heard both parties and weighed their respective evidence in light of all relevant circumstances. Hence, for SBI and MFII to claim any right or benefit under that provision at this point is premature. As no clear right that warrants the extraordinary protection of an injunctive writ has been shown by SBI and MFII to exist in their favor, the first requirement for the grant of a preliminary injunction has not been satisfied. In the absence of any requisite, and where facts are shown to be wanting in bringing the matter within the conditions for its issuance, the ancillary writ of injunction must be struck down for having been rendered in grave abuse of discretion. Thus, the Court of Appeals did not err when it granted the petition for certiorari of CBC and ordered the dissolution of the writ of preliminary injunction issued by the trial court. Neither has there been a showing of irreparable injury. An injury is considered irreparable if it is of such constant and frequent recurrence that no fair or reasonable redress can be had therefor in a court of law, or where there is no standard by which their amount can be measured with reasonable accuracy, that is, it is not susceptible of mathematical computation. The provisional remedy of preliminary injunction may only be resorted to when there is a pressing necessity to avoid injurious consequences which cannot be remedied under any standard of compensation.
44 43
In the first place, any injury that SBI and MFII may suffer in case of foreclosure of the mortgaged properties will be purely monetary and compensable by an appropriate judgment in a proper case against CBC. Moreover, where there is a valid cause to foreclose on the mortgages, it cannot be correctly claimed that the irreparable damage sought to be prevented by the application for preliminary injunction is the loss of the mortgaged properties to auction sale. The alleged entitlement of SBI and MFII to the "protection of their properties put up as collateral for the loans" they procured from CBC is not the kind of irreparable injury contemplated by law. Foreclosure of mortgaged property is not an irreparable damage that will merit for the debtor-mortgagor the extraordinary provisional remedy of preliminary injunction. As this Court stated in Philippine National Bank v. Castalloy Technology Corporation : All is not lost for defaulting mortgagors whose properties were foreclosed by creditors-mortgagees. The respondents will not be deprived outrightly of their property, given the right of redemption granted to them under the law. Moreover, in extrajudicial foreclosures, mortgagors have the right to receive any surplus in the selling price. Thus, if the mortgagee is retaining more of the proceeds of the sale than he is entitled to, this fact alone will not affect the validity of the sale but will give the mortgagor a cause of action to recover such surplus. (Citation omitted.) The En Banc Resolution in A.M. No. 99-10-05-0, Re: Procedure in Extrajudicial or Judicial Foreclosure of Real Estate Mortgages, further stacks the odds against SBI and MFII. Issued on February 20, 2007, or some two months before the Court of Appeals promulgated its decision in this case, the resolution embodies the additional guidelines intended to aid courts in foreclosure proceedings, specifically limiting the instances, and citing the conditions, when a writ against foreclosure of a mortgage may be issued, to wit: (1) No temporary restraining order or writ of preliminary injunction against the extrajudicial foreclosure of real estate mortgage shall be issued on the allegation that the loan secured by the mortgage has been paid or is not delinquent unless the application is verified and supported by evidence of payment. (2) No temporary restraining order or writ of preliminary injunction against the extrajudicial foreclosure of real estate mortgage shall be issued on the allegation that the interest on the loan is unconscionable, unless the debtor pays the mortgagee at least twelve percent per annum interest on the principal obligation as stated in the application for foreclosure sale, which shall be updated monthly while the case is pending. (3) Where a writ of preliminary injunction has been issued against a foreclosure of mortgage, the disposition of the case shall be speedily resolved. To this end, the court concerned shall submit to the Supreme Court, through the Office of the Court Administrator, quarterly reports on the progress of the cases involving ten million pesos and above. (4) All requirements and restrictions prescribed for the issuance of a temporary restraining order/writ of preliminary injunction, such as the posting of a bond, which shall be equal to the amount of the outstanding debt, and the time limitation for its effectivity, shall apply as well to a status quo order. The guidelines speak of strict exceptions and conditions.
48 47 46 45
To reverse the decision of the Court of Appeals and
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reinstate the writ of preliminary injunction issued by the trial court will be to allow SBI and MFII to circumvent the guidelines and conditions provided by the En Banc Resolution in A.M. No. 99-10-05-0 dated February 20, 2007 and prevent CBC from foreclosing on the mortgaged properties based simply on the allegation that the interest on the loan is unconscionable. This Court will not permit such a situation. What cannot be done directly cannot be done indirectly.
49
All told, the relevant circumstances in this case show that there was failure to satisfy the requisites for the issuance of a writ of preliminary injunction. The injunctive writ issued by the trial court should therefore be lifted and dissolved. That was how the Court of Appeals decided. That is how it should be. WHEREFORE, the petition is hereby DENIED. SO ORDERED. TERESITA J. LEONARDO-DE CASTRO Associate Justice WE CONCUR: MARIA LOURDES P. A. SERENO Chief Justice Chairperson LUCAS P. BERSAMIN Associate Justice MARTIN S. VILLARAMA, JR. Associate Justice BIENVENIDO L. REYES Associate Justice CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. MARIA LOURDES P. A. SERENO Chief Justice
Footnotes
1 2
Under Rule 45 of the Rules of Court.
Rollo, pp. 31-40; penned by Justice Rodrigo V. Cosico with Associate Justices Rosmari D. Carandang and Mariflor P. Punzalan Castillo, concurring.
3 4 5 6 7 8 9
Id. at 42-43. Id. at 32-33. Id. at 33. Id. CA rollo, p. 101. Rollo, p. 33. CA rollo, pp. 104-105. Id. at 106. Id. at 113. Rollo, p. 34. CA rollo, pp. 48-49.
10 11 12 13
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14 15 16 17 18 19 20 21 22 23 24
Rollo, pp. 34-35. CA rollo, pp. 33-34. Id. at 34. Id. at 185. Id. at 27-31. Rollo, p. 37. Id. at 39. Rollo, pp. 9-29. Id. at 22. Rollo, pp. 226-228.
G.R. No. 159370, October 3, 2012, citing Barbieto v. Court of Appeals, G.R. No. 184645, October 30, 2009, 604 SCRA 825, 844-845. Id.
25 26
Philippine National Bank v. Castalloy Technology Corporation, G.R. No. 178367, March 19, 2012, 668 SCRA 415, 421.
27 28 29 30 31 32
Rollo, p. 25. Id. at 20. CA rollo, p. 33. Rollo, p. 20. First Metro Investment Corporation v. Este Del Sol Mountain Reserve, Inc., 420 Phil. 902, 918 (2001).
Advocates for Truth in Lending, Inc. v. Bangko Sentral Monetary Board, G.R. No. 192986, January 15, 2013. Rollo, p. 51. Palm Tree Estates, Inc. v. Philippine National Bank, supra note 24. CA rollo, p. 185.
33 34 35 36
See Selegna Management and Development Corporation v. United Coconut Planters Bank, 522 Phil. 671, 691 (2006). In this case, it was held that preliminary injunction is not proper when the complainants right is doubtful or disputed.
Demand letters dated June 22, 2010 of CBC to SBI and MFII, respectively, Annexes "B" and "C" of the Urgent Ex-Parte Petition for Immediate Issuance of Temporary Restraining Order and/or Writ of Preliminary Injunction filed by SBI and MFII in this case on July 9, 2010. Lotto Restaurant Corporation v. BPI Family Savings Bank, Inc., G.R. No. 177260, March 30, 2011, 646 SCRA 699, 705.
39 40 38
37
G.R. No. 165950, August 11, 2010, 628 SCRA 79, 91-92.
Paragraphs 13-16 of Part II (General Allegations) and 2 of Part III.A. (First Cause of Action), rollo, pp. 62-63 and 67-68, respectively.
41
Rollo, p. 49.
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42 43 44 45
Palm Tree Estates, Inc. v. Philippine National Bank, supra note 24. Id. Philippine National Bank v. Castalloy Technology Corporation, supra note 26 at 424.
G.G. Sportswear Manufacturing Corporation v. Banco De Oro Unibank, Inc., G.R. No. 184434, February 8, 2010, 612 SCRA 47, 53.
46 47 48 49
Supra note 26 at 425. Id. at 423. Id. at 424.
Tawang Multi-Purpose Cooperative v. La Trinidad Water District, G.R. No. 166471, March 22, 2011, 646 SCRA 21, 31.
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Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 157911 September 19, 2006
SPOUSES MANUEL A. AGUILAR and YOLANDA C. AGUILAR, petitioners, vs. THE MANILA BANKING CORPORATION, respondent. DECISION AUSTRIA-MARTINEZ, J.: The sad and lamentable spectacle that this case presents, that is, the execution of a final and executory decision forestalled by perpetual dilatory tactics employed by a litigant, makes a blatant mockery of justice. The Court cannot countenance, and in fact, condemns, the outrageous abuse of the judicial process by Spouses Manuel A. Aguilar and Yolanda C. Aguilar (petitioners) and their counsel. Before the Court is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure assailing the Decision dated October 29, 2002 of the Court of Appeals (CA) in CA-G.R. SP No. 71849 which dismissed petitioners' Petition for Certiorari, and the CA Resolution dated April 29, 2003 which denied petitioners' Motion for Reconsideration. The procedural antecedents and factual background of the case are as follows: Sometime in 1979, petitioners obtained a P600,000.00 loan from the Manila Banking Corporation (respondent), secured by a real estate mortgage over their 419-square meter property located at No. 8 Pia St., Valle Verde, Pasig City, covered by Transfer Certificate of Title (TCT) No. 11082. When petitioners failed to pay their obligation, the mortgaged property was extra-judicially foreclosed. Respondent was the winning bidder at public auction sale on May 20, 1982. Consequently, a Certificate of Sale was issued in its favor on June 23, 1982. Subsequently, on May 30, 1983, instead of redeeming the property, petitioners filed a complaint for annulment of the foreclosure sale of the property before the Regional Trial Court, Branch 165, Pasig City (RTC Branch 165), docketed as Civil Case No. 49793. While the case was pending, the parties entered into a compromise agreement.
3 2 1
Under the Compromise Agreement dated January 23, 1987, the petitioners admitted the validity of the extra-judicial foreclosure and agreed to purchase the property from respondent for P2,548,000.00. Parties agreed that the amount of P100,000.00 shall be payable upon execution of the agreement and the balance of P2,448,000.00, which shall earn twenty-six per cent (26%) interest per annum, shall be payable in eighteen installments from February 23, 1987 to July 27, 1988. They further agreed that in case of default: (a) all outstanding installments and/or interest thereon shall be immediately due; (b) petitioners shall immediately vacate the property and deliver possession thereof to respondent; (c) respondent shall be entitled to register all documents needed to transfer title over the property in their favor; and, (d) respondent shall be entitled to ask for the execution of the judgment or an ancillary remedy necessary to place it in possession of the property. On January 30, 1987, RTC Branch 165 adopted and approved the Compromise Agreement.
4
Petitioners failed to pay the balance of P2,448,000.00 within the eighteen-installment period from February 23, 1987 to July 27, 1988. A year and three months later, or on October 20, 1989, respondent filed a Motion for Issuance of Writ of Execution to enforce the Decision dated January 30, 1987.
5
On November 28, 1989, RTC Branch 165 issued an Order granting the motion and issuing a writ of execution: (a) directing petitioners to immediately vacate the property and surrender possession to the respondent; (b) directing the Register of Deeds of Metro Manila, District II to register any and all documents needed to transfer title over the property to respondent and to issue a new certificate of title respondent's favor free from any liens, adverse claims and/or encumbrances; (c) issuing a writ of possession in respondent's favor to place it in possession of the property.
6
However, on January 22, 1990, petitioners filed a Manifestation praying for deferment of the enforcement of the writ
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of execution until July 31, 1990 because petitioners have a pending proposal for the settlement of their judgment debt. The manifestation was with the conformity of respondents. On January 24, 1990, RTC Branch 165 issued an Order granting the motion and holding in abeyance the enforcement of the writ of execution until July 31, 1990. However, no settlement was reached by the parties during the period.
9 7 8
One year and four months later, petitioners still failed to settle their judgment debt. Consequently, respondent filed on December 2, 1991 a Manifestation reiterating its motion for the issuance of a writ of execution. On December 5, 1991, RTC Branch 165 issued an Order granting the manifestation and directing the issuance of a writ of execution to enforce the Decision dated January 30, 1987.
11 10
To evade the implementation of the writ, petitioners filed on December 20, 1991 an Ex-Parte Motion to Recall the Court's Order dated December 5, 1991 claiming that their obligation was novated by the Letter dated June 7, 1991 from respondent's Statutory Receiver. In said letter, respondent's Statutory Receiver approved the purchase of the property on installment basis over a three-year period at an interest rate of twelve per cent (12%) with P481,265.00 due on September 30, 1991, P481,265.00 due on September 30, 1992, and P724,064.79 due on September 30, 1993.
13 12
On December 2, 1992, respondent filed a Manifestation and Motion for Issuance of Alias Writ of Execution manifesting that the Letter dated June 7, 1991 did not novate the Decision dated January 30, 1987 but was a mere accommodation of the petitioners' request for a liberal mode of payment of their account and petitioners still failed to comply with such approved mode of payment.
14
On December 14, 1992, petitioners filed their Comment and Manifestation praying for a humanitarian and liberal judicial dispensation since that they have been paying their obligations to respondent despite delay due to "financial restraints for family subsistence and their children's educational expenses".
15
On February 1, 2000, respondent filed an Urgent Ex-Parte Manifestation praying for resolution of the pending incidents. On March 3, 2000, petitioners filed their Opposition claiming that Section 6, Rule 39 of the Rules of Court bars execution, by mere motions, of judgment which is more than five years old. On March 14, 2000, respondent filed its Reply stating that the peculiar circumstances of the case warrant its exclusion from the scope of said Rule. On March 20, 2000, RTC Branch 165 issued its Order which resolved the pending motions with the Court. With respect to petitioner's ex-parte motion to recall, the Court said that for failure to comply with Sections 4, 5 and 6 of Rule 15 of the Revised Rules of Court and considering the nature of petitioners' motion, it treated petitioner's motion as a mere scrap of paper. As to respondent's motion for issuance of a writ of execution, it granted the same, holding that Section 6, Rule 39 of the Rules of Court does not apply since the delay in the execution of the judgment was due to petitioners who made several alternative payment proposals, requested several extensions of time to pay their account, filed dilatory motions and pleadings and it would be a blatant injustice to allow them to profit from the delays they deliberately caused to escape completely and absolutely the satisfaction of their admitted and confessed obligation by sheer literal adherence to technicality.
18 19 17 16
On March 30, 2000, petitioners filed their Motion for Reconsideration dated May 30, 2000.
20 21
but RTC Branch 165 denied it in its Order
On June 20, 2000, petitioners filed a Notice of Appeal
but RTC Branch 165 denied it in its Order dated August 21,
22
2000 on the ground that an order of execution is not appealable.
Thereafter, petitioners filed a six-page Petition for Review on Certiorari with this Court, docketed as G.R. No. 144719, reiterating that the Decision dated January 30, 1987 can no longer be executed on mere motion since it is more than five years old.
23
In a Resolution dated October 11, 2000, the First Division of this Court denied the petition for violation of the rule on hierarchy of courts and failure to show special and important reasons or exceptional and compelling circumstances that justify a disregard of the rule.
24
Petitioners filed a Motion for Reconsideration but the Court denied it with finality
25
in its Resolution dated December 11, 2000.
Since the Resolution in G.R. No. 144719 became final and executory on January 16, 2001, RTC Branch 165 issued a writ of execution on February 19, 2001 to enforce the Decision dated January 30, 1987. the Sheriff issued a Notice for Compliance of the said writ.
27 26
On February 23, 2001,
Undaunted by their previous setbacks, petitioners filed on March 6, 2001 in RTC Branch 165 an Omnibus Motion to quash the Writ of Execution insisting anew on their novation and prescription theories. They also moved for consignation of the amount of their obligation under the Letter dated June 7, 1991 of respondent's Statutory
28
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Receiver. On March 14, 2001, respondent filed an Ex-Parte Motion for Order to Divest Plaintiffs' Title and to Direct the Register of Deeds to Transfer Title to Defendant based on Section 10, Rule 39 of the 1997 Rules of Civil Procedure. On March 19, 2001, respondent filed its Opposition (to petitioners' Omnibus Motion) and Motion to Cite Plaintiffs in Contempt claiming that the Omnibus Motion is nothing but petitioners' desperate attempt to thwart or delay the payment of their obligations and they should be declared guilty of indirect contempt for their improper conduct calculated to impede, obstruct and degrade the administration of justice.
31 30 29
On May 2, 2001, petitioners filed an Urgent Motion for Inhibition. While RTC Branch 165 Presiding Judge Marietta A. Legaspi denied the motion for inhibition in her Order dated June 5, 2001, she voluntarily inhibited herself from further participating in the case to show that she has no interest therein. Reconsideration to no avail. Amelia C. Manalastas.
33 34 32
Respondent filed a Motion for Partial
The case was re-raffled and was assigned to Branch 268 presided by Judge
On September 17, 2001 and January 4, 2002, respondent filed two Motions to Resolve Pending Incidents. Despite the fact that Judge Manalastas has not actively participated in the case since she has not acted on the pending incidents, petitioners filed on February 5, 2002 a Motion for Inhibition.
37 36
35
A day later, on February 6, 2002,
Judge Manalastas granted the motion for inhibition. Thus, the case was again re-raffled and was assigned to Branch 167 presided by Judge Jesus G. Bersamira. On February 13, 2002, respondent filed again a Motion to Resolve Pending Incidents.
38 39
On March 22 and 26, 2002, both parties filed separate Urgent Motions to Resolve the case.
Subsequently,
40
petitioners filed a Manifestation and Motion that the Letter dated June 7, 1991 be marked as their exhibit. Branch 167 in its Order dated April 30, 2002 admitted the exhibit over the objections of respondent.
41
RTC
On May 24, 2002, RTC Branch 167 rendered its Omnibus Order denying the Omnibus Motion to quash the writ of execution and for consignation, as well as the motion to cite petitioners in contempt and the ex parte motion for an order to divest petitioners' title to respondent. It held that there was no novation because there was no incompatibility between the Letter dated June 7, 1991 and the Decision dated January 30, 1987 with the former only providing for a more liberal scheme of payment and grant of reduced interest; that petitioners' claim that respondent's receivership and the Letter dated June 7, 1991 are supervening events which rendered the execution unjust and impossible is unavailing since there is nothing on record to indicate that such circumstances resulted in unfairness and injustice to petitioners if execution of judgment is carried out; that petitioner's claim that the judgment could no longer be executed by mere motion after the five-year period had elapsed from its finality is specious since any interruption or delay occasioned by petitioners will extend the time within which the judgment may be executed by motion.
42
No motion for reconsideration was filed by the petitioners. Accordingly, RTC Branch 167 issued a Writ of Execution on July 4, 2002.
43
On July 23, 2002, the Sheriff issued the Notice for Compliance of the said writ.
44 45
Petitioners filed on July 26, 2002 a petition for certiorari with the CA, docketed as CA-G.R. SP No. 71849. They reiterated that the Decision dated January 30, 1987 cannot be executed by mere motion filed on February 1, 2000 since more than five years have elapsed. On October 29, 2002, the CA denied the petition for certiorari. It held that since the delays were occasioned by petitioners' own initiative and for their own advantage, the five-year period allowed for the enforcement of the judgment by motion have been interrupted or suspended. On November 13, 2002, petitioners filed a Motion for Reconsideration April 29, 2003.
48 47 46
but the CA denied it in its Resolution dated
Hence, the present petition anchored on the following grounds: 1. THE HONORABLE COURT OF APPEALS ERRED IN NOT RECOGNIZING THAT PRESCRIPTION HAS SET IN IN THIS CASE CONSIDERING THAT MORE THAN FIVE (5) YEARS, NAY, MORE THAN TEN (10) YEARS, HAD ELAPSED SINCE THE DECISION BASED ON COMPROMISE AGREEMENT BECAME FINAL AND EXECUTORY. 2. THE HONORABLE COURT OF APPEALS ERRED IN NOT RECOGNIZING THAT EVENTS AND CIRCUMSTANCES IN THIS CASE HAVE TRANSPIRED AFTER THE DECISION HAD BECOME FINAL AND EXECUTORY THAT WARRANTS AND CALLS FOR STAY OR PRECLUSION OF EXECUTION, CONSIDERING THAT THE LETTER-APPROVAL OF THE STATUTORY RECEIVER OF RESPONDENT PARTAKES OF AN EXCEPTION TO THE GENERAL RULE WHICH HAS BEEN CONSISTENTLY UPHELD BY THIS HONORABLE SUPREME COURT.
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3. THE HONORABLE COURT OF APPEALS ERRED IN NOT RECOGNIZING THAT THE LETTER APPROVAL OF THE STATUTORY RECEIVER NOVATED THE COMPROMISE AGREEMENT AND DECISION BASED ON COMPROMISE AGREEMENT. 4. THE HONORABLE COURT OF APPEALS ERRED IN NOT RECOGNIZING THAT THE EQUITIES OF THE CASE FAVOR HEREIN PETITIONERS.
49
Anent the first ground, petitioners reiterate that under Section 6 of Rule 39, Rules of Court, the execution of the judgment by mere motion was barred by prescription, given that more than five years had lapsed since the Decision dated January 30, 1987 became final and executory and they cannot be faulted for the delay as they have done nothing that warrants the conclusion that they employed unscrupulous machinations and dilatory tactics. As to the second ground, petitioners argue that respondent's receivership is a supervening event that rendered execution of the Decision dated January 30, 1987 impossible, if not unjust; that since a bank under receivership is relieved of its obligation to pay interest on the deposits of its depositors, they (petitioners) are also not obliged to pay interest on a loan due it and interest shall commence again only after respondent's resumption of banking operations. On the third ground, petitioners maintain that the Letter dated June 7, 1991 of respondent's Statutory Receiver novated the Decision dated January 30, 1987 considering the substantial differences in their principal terms and conditions. On the fourth ground, petitioners aver that the acceleration clause provision of the Compromise Agreement is iniquitous and void for being violative of morals and public policy. In their Comment, respondent contends that the present petition should be dismissed outright because it is barred by res judicata or the final judgment of this Court in G.R. No. 144719 and petitioners engaged in forum-shopping by deliberately failing to state that they previously filed G.R. No. 144719 where the issue of prescription was raised. Even if the petition is given due course, respondent argues that execution of the Decision dated January 30, 1987 is not barred by prescription; that respondent's receivership and the Letter dated June 7, 1991 of respondent's Statutory Receiver are not circumstances that would render the execution of the judgment unjust, inequitable or even merit a stay of execution; that the Letter dated June 7, 1991 of respondent's Statutory Receiver did not novate the Decision dated January 30, 1987 since there was no intent to novate petitioners' judgment obligation.
50
In Reply, petitioners argue that res judicata is not applicable since the minute Resolution of the Court in G.R. No. 144719: (a) does not operate as adjudication on the merits, (b) was not rendered with jurisdiction over the parties; and (c) involved different subject matters and causes of action.
51
In the Resolution dated May 15, 2003, upon motion of petitioner, the Court directed the parties to maintain the status quo until further orders from this Court. The petition is bereft of merit. Prefatorily, the Court notes that the petition for certiorari before the CA should have been dismissed outright since petitioners failed to file a motion for reconsideration from the RTC Omnibus Order dated May 24, 2002. Section 1 of Rule 65 of the 1997 Rules of Civil Procedure provides: SECTION 1. Petition for certiorari. When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of his jurisdiction, or with grave abuse of discretion amounting to lack of or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of the law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may require. (Emphasis supplied) The plain and adequate remedy referred to in the rule is a motion for reconsideration of the assailed decision or order. The purpose for this requirement is to grant an opportunity for the court or agency to correct any actual or perceived error attributed to it by the re-examination of the legal and factual circumstances of the case
54 53 52
without the
intervention of a higher court. Thus, the filing of a motion for reconsideration is a condition sine qua non to the institution of a special civil action for certiorari. While jurisprudence has recognized several exceptions to the rule, such as: (a) where the order is a patent nullity, as where the court a quo has no jurisdiction; (b) where the questions raised in the certiorari proceedings have been duly raised and passed upon by the lower court, or are the same as those raised and passed upon in the lower court; (c) where there is an urgent necessity for the resolution of the question and any further delay would prejudice the interests of the Government or of the petitioner or the subject matter of the action is perishable; (d) where, under the circumstances, a motion for reconsideration would be useless; (e) where petitioner was deprived of due process and there is extreme urgency for relief; (f) where, in a criminal case, relief from an order of arrest is urgent and the granting of such relief by the trial court is improbable; (g) where the proceedings in the lower court are a nullity for
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lack of due process; (h) where the proceedings was ex parte or in which the petitioner had no opportunity to object; and (i) where the issue raised is one purely of law or where public interest is involved, apply here.
55
none of these exceptions
In the present case, the petitioners not only failed to explain their failure to file a motion for reconsideration before the RTC, they also failed to show sufficient justification for dispensing with the requirement. A motion for reconsideration is not only expected to be but would actually have provided an adequate and more speedy remedy than the petition for certiorari.
56
Certiorari cannot be resorted to as a shield from the adverse consequences of

57
petitioners' own omission to file the required motion for reconsideration.
In any case, even if petitioners' procedural faux pas is ignored, their contentions on the substantive aspect of the case fail to invite judgment in their favor. Petitioners are barred from raising the issue on the prescription of execution of the decision by mere motion under the principle of the "law of the case," which is the practice of courts in refusing to reopen what has been decided. It means that whatever is once irrevocably established as the controlling legal rule or decision between the same parties in the same case continues to be the law of the case, whether correct on general principles or not, so long as the facts on which such decision was predicated continue to be the facts of the case before the court.
58
The law of the case on the issue of prescription of the execution of the decision by mere motion or applicability of Section 6, Rule 39 of the Rules of Court has been settled in the Order dated March 20, 2000 of RTC Branch 165. Upon denial of petitioner's motion for reconsideration, they erroneously sought review with this Court which dismissed their petition for review on certiorari for violation of the rule on hierarchy of courts and for failure to show special and important reasons or exceptional and compelling circumstances that justify a disregard of the rule. This Court's Resolution became final and executory on January 16, 2001. Thus, petitioners are bound thereby. The question of prescription has been settled with finality and may no longer be resurrected by petitioners. It is not subject to review or reversal in any court, even this Court. The CA failed to consider this principle of law of the case, which is totally different from the concept of res judicata. In Padillo v. Court of Appeals,
60 59
the Court distinguished the two as follows:
x x x Law of the case does not have the finality of the doctrine of res judicata, and applies only to that one case, whereas res judicata forecloses parties or privies in one case by what has been done in another case. In the 1975 case of Comilang v. Court of Appeals (Fifth Division.), a further distinction was made in this manner: The doctrine of law of the case is akin to that of former adjudication, but is more limited in its application. It relates entirely to questions of law, and is confined in its operation to subsequent proceedings in the same case. The doctrine of res judicata differs therefrom in that it is applicable to the conclusive determination of issues of fact, although it may include questions of law, and although it may apply to collateral proceedings in the same action or general proceeding, it is generally concerned with the effect of an adjudication in a wholly independent proceeding.
61
To elucidate further, res judicata or bar by prior judgment is a doctrine which holds that a matter that has been adjudicated by a court of competent jurisdiction must be deemed to have been finally and conclusively settled if it arises in any subsequent litigation between the same parties and for the same cause. The four requisites for res judicata to apply are: (a) the former judgment or order must be final; (b) it must have been rendered by a court having jurisdiction over the subject matter and the parties; (c) it must be a judgment or an order on the merits; and (d) there must be, between the first and the second actions, identity of parties, of subject matter and of cause of action. The fourth requisite is wanting in the present case. There is only one case involved. There is no second independent proceeding or subsequent litigation between the parties. The present petition concerns subsequent proceedings in the same case, with petitioners raising the same issue long settled by a prior appeal. On the matter of forum shopping, while the Court has held that forum shopping exists only where the elements of litis pendentia are present or where a final judgment in one case will amount to res judicata in another, it must be recalled that the doctrines of law of the case and res judicata are founded on a public policy against reopening that which has previously been decided. Both doctrines share the policy consideration of putting an end to litigation. Thus, the principle of forum shopping should apply by analogy to a case involving the principle of law of the case.
65 66 64 63 62
Moreover, although forum shopping exists when, as a result of an adverse opinion in one forum, a party seeks a favorable opinion, other than by appeal or certiorari, in another, or when a party institutes two or more suits in different courts, either simultaneously or successively, in order to ask the courts to rule on the same or related causes and/or to grant the same or substantially the same reliefs on the supposition that one or the other court would make a favorable disposition or increase a party's chances of obtaining a favorable decision or action, the peculiar circumstances attendant in this case bate out a situation akin to forum shopping - there is only one court
67
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involved, RTC Pasig City, but the issue of prescription was ultimately resolved by two different branches thereof Branches 165 and 167. Petitioners first raised before RTC Branch 165 the issue of prescription of the execution of the decision by mere motion. Said RTC Branch 165 ruled against petitioners and the court's order thereon became final and executory. Petitioners raised the issue again in an Omnibus Motion with the same RTC Branch 165. However, they moved for the inhibition of the presiding judge hearing the issue not only once, but twice, both motions granted in their favor and the case was successively raffled and assigned to two different branches of RTC Pasig, first to Branch 268 and then to Branch 167, which ruled against petitioners. Through the motions for inhibition of the presiding judges and the assignment of the case to different branches of the same court, petitioners sought to obtain from one branch a ruling more favorable than the ruling of another branch. They deliberately sought a friendly branch of the same court to grant them the relief that they wanted, despite the finality of the resolution of one branch on the matter. This is a permutation of forum shopping. It trifles with the courts, abuses their processes, degrades the administration of justice, and congests court dockets.
68
Be it remembered that the grave evil sought to be avoided by the rules against forum shopping is the rendition by two competent tribunals of two separate, and contradictory decisions. Unscrupulous party-litigants, taking advantage of a variety of competent tribunals, may repeatedly try their luck in several different fora until a favorable result is reached. This would make a complete mockery of the judicial system.
69
As to petitioners' arguments on the inequity of the acceleration clause of the Compromise Agreement, respondent's receivership as a supervening event, and novation of the Compromise Agreement by the Letter dated June 7, 1991, the Court holds that these were raised as mere afterthought. If petitioners sincerely believed in the merits of their arguments, they should have raised them at the earliest opportunity and pursued their ultimate resolution. However, petitioners did not. Petitioners are barred from raising arguments concerning the inequity of the acceleration clause of the Compromise Agreement since they only raised it for the first time before the CA in their Petition for Certiorari in CA-G.R. SP No. 71849. To consider the argument raised belatedly in a pleading filed in the appellate court, especially in the executory stage of the proceedings, would amount to trampling on the basic principles of fair play, justice and due process. In addition, after adopting and agreeing to the terms and conditions of the Compromise Agreement, petitioners cannot be permitted to subsequently make a complete volte face and attack the validity of the said agreement when they miserably failed to comply with its provisions. Our law and policy do not sanction such a somersault. What's more, petitioners also failed to comply with the reduced purchase amount and interest rate granted in the Letter dated June 7, 1991. They can hardly evoke judicial compassion. On the arguments relating to the effect of respondent's receivership, petitioners brought this matter for the first time in RTC Branch 165 in their Omnibus Motion dated March 5, 2001, fourteen years after respondent was placed under receivership and was ordered to close operation in 1987. The belated invocation of such circumstance speaks strongly of the staleness of their claim. Besides, it would be absurd to adopt petitioners' position that they are not obliged to pay interest on their obligation when respondent was placed under receivership. When a bank is placed under receivership, it would only not be able to do new business, that is, to grant new loans or to accept new deposits. However, the receiver of the bank is in fact obliged to collect debts owing to the bank, which debts form part of the assets of the bank. Thus, petitioners' obligation to pay interest subsists even when respondent was placed under receivership. The respondent's receivership is an extraneous circumstance and has no effect on petitioners' obligation. On the claim of novation, petitioners raised it for the first time before RTC Branch 165 in their Ex-Parte Motion to Recall the Court's Order dated December 5, 1991 but they did not pursue the matter after their ex-parte motion was denied. They did not raise said issue in their motion for reconsideration or in their first petition for review on certiorari with this Court in G.R. No. 144719. Thus, they are deemed to have abandoned their claim of novation. They cannot be allowed to revive the issue as it is offensive to basic rules of fair play, justice and due process. Moreover, the Court cannot see how novation can take place considering that the surrounding circumstances negate the same. The established rule is that novation is never presumed; it must be clearly and unequivocally shown. Novation will not be allowed unless it is clearly shown by express agreement, or by acts of equal import. Thus, to effect an objective novation it is imperative that the new obligation expressly declares that the old obligation is thereby extinguished or that the new obligation be on every point incompatible with the new one.
74 73 72 71 70
In the present case, there is no clear intent of the parties to make the Letter dated June 7, 1991 completely supersede and abolish the Compromise Agreement adopted and approved by the RTC in its Decision dated January 30, 1987. Petitioners were merely granted a more liberal scheme of payment and reduced rate of interest but the conditions relating to the consequences of default in payment remained, such that when petitioners' failed to
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comply with the approved mode of payment in the Letter dated June 7, 1991, respondents were entitled to call for enforcement of the Decision dated January 30, 1987 and eject petitioners from the property. The well-settled rule is that, with respect to obligations to pay a sum of money, the obligation is not novated by an instrument that expressly recognizes the old, changes only the terms of payment, adds other obligations not incompatible with the old ones, or the new contract merely supplements the old one.
75
Hence, there is no merit to petitioners' claim of novation.
Without a doubt, the present case is an instance where the due process routine vigorously pursued by petitioners is but a clear-cut devise meant to perpetually forestall execution of an otherwise final and executory decision. Aside from clogging court dockets, the strategy is deplorably a common course resorted to by losing litigants in the hope of evading manifest obligations. The Court condemns this outrageous abuse of the judicial process by the petitioners and their counsels. It is an important fundamental principle in the judicial system that every litigation must come to an end. Access to the courts is guaranteed. But there must be a limit thereto. Once a litigant's rights have been adjudicated in a valid and final judgment of a competent court, he should not be granted an unbridled license to come back for another try. The prevailing party should not be harassed by subsequent suits. For, if endless litigations were to be encouraged, then unscrupulous litigants will multiply to the detriment of the administration of justice.
76
The Court reminds petitioners' counsel of the duty of lawyers who, as officers of the court, must see to it that the orderly administration of justice must not be unduly impeded. It is the duty of a counsel to advise his client, ordinarily a layman on the intricacies and vagaries of the law, on the merit or lack of merit of his case. If he finds that his client's cause is defenseless, then it is his bounden duty to advise the latter to acquiesce and submit, rather than traverse the incontrovertible. A lawyer must resist the whims and caprices of his client, and temper his client's propensity to litigate. A lawyer's oath to uphold the cause of justice is superior to his duty to his client; its primacy is indisputable.
77
There should be a greater awareness on the part of litigants and counsels that the time of the judiciary, much more so of this Court, is too valuable to be wasted or frittered away by efforts, far from commendable, to evade the operation of a decision final and executory, especially so, where, as shown in the present case, the clear and manifest absence of any right calling for vindication, is quite obvious and indisputable. Verily, by the undue delay in the execution of a final judgment in their favor, respondents have suffered an injustice. The Court views with disfavor the unjustified delay in the enforcement of the final decision and orders in the present case. Once a judgment becomes final and executory, the prevailing party should not be denied the fruits of his victory by some subterfuge devised by the losing party. Unjustified delay in the enforcement of a judgment sets at naught the role of courts in disposing justiciable controversies with finality. WHEREFORE, the present petition is DENIED. The assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 71849 are AFFIRMED. The status quo order issued by this Court on May 15, 2003 is LIFTED. The Regional Trial Court, Branch 167, Pasig City, is directed to issue the corresponding writ of execution and the Sheriff of the court is ordered to enforce the same to its ultimate conclusion. Triple costs against petitioners. SO ORDERED. Panganiban, C.J., Chairperson, Ynares-Santiago, Callejo, Sr., Chico-Nazario, J.J., concur.
78
Footnotes Penned by Associate Justice Eugenio S. Labitoria (now retired) and concurred in by Associate Justices Renato C. Dacudao and Danilo B. Pine (now retired), CA rollo, p. 495
2 3 4 5 6 7 8 1
CA rollo, p. 618. Id. at 44. Id. at 40. Id. at 49. Id. at 52. Id. at 53. Id.
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Id. at 55. Id. at 56. Id. at 58. Id. at 59. Id. at 61. Id. at 240. Id. at 246. Id. at 62. Id. at 72. Id. at 68. Id. at 99. Id. at 102. Id. at 104. Id. at 105.
10 11 12 13 14 15 16 17 18 19 20 21 22 23
Entitled, "Manuel Aguilar and Yolanda Aguilar v. The Manila Banking Corporation", Annex "J" of the Comment, id. at 262.
24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
CA rollo, p. 106. Id. at 107. Id. at 77. Id. at 79. Id. at 82. Id. at 359. id. at 108. Id. at 134. Id. at 136. Id. at 140. Id. at 148. Id. at 154 and 164. Id. at 168. Id. at 170. Id. at 400. Id. at 171 and 175. Id. at 424.
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41 42 43 44 45 46 47 48 49 50 51 52 53
Id. at 426. Id. at 32. Id. at 35. Id. at 39. Id. at 2. Supra note 1. Id. at 507. Supra note 2. Rollo, pp. 16-17. Id. at 173. Id. at 648. Id. at 163.
Estate of Salvador Serra Serra v. Heirs of Primitivo Hernaez, G.R. No. 142913, August 9, 2005, 466 SCRA 120, 127; Interorient Maritime Enterprises, Inc. v. National Labor Relations Commission, 330 Phil. 493, 503 (1996). S/G Luna v. National Labor Relations Commission, 336 Phil. 963, 969 (1997); Villarama v. National Labor Relations Commission, G.R. No. 106341, September 2, 1994, 236 SCRA 280, 287. Tan, Jr. v. Sandiganbayan, 354 Phil. 463, 469-470 (1998); Tan v. Court of Appeals, 341 Phil. 570, 576-578 (1997). Alcosero v. National Labor Relations Commission, 351 Phil. 368, 378 (1998); Plaza v. Hon. Mencias and Filipinas Motor Services, Inc., 116 Phil. 875, 879 (1962). Seagull Shipmanagement and Transport, Inc. v. National Labor Relations Commission, 388 Phil. 906, 912 (2000); Alcosero v. National Labor Relations Commission, supra.
58 59 60 61 62 57 56 55 54
Padillo v. Court of Appeals , 422 Phil. 334, 351 (2001). Supra note 24. Supra note 58. Id. at 352.
Equitable Philippine Commercial International Bank v. Court of Appeals, G.R. No. 143556, March 16, 2004, 425 SCRA 544, 553; Development Bank of the Philippines v. Court of Appeals, G.R. No. 110203, May 9, 2001, 357 SCRA 626, 632. De la Cruz v. Joaquin, G.R. No. 162788, July 28, 2005, 464 SCRA 576, 589; Bardillon v. Barangay Masili of Calamba, Laguna, 450 Phil. 521, 529 (2003). De la Cruz v. Joaquin, supra; Tolentino v. Natanauan, G.R. No. 135441, November 20, 2003, 416 SCRA 273, 282.
65 66 67 64 63
46 Am Jur 2d, Judgments, 520, citing Rail N Ranch Corp. v. State, 7 Ariz App 558, 441 P2d 786. Id.
Villaluz v. Ligon, G.R. No. 143721, August 31, 2005, 468 SCRA 486, 499; Top Rate Construction & Gen. Services, Inc. v. Paxton Development Corporation, 457 Phil. 740, 748 (2003).
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68 69
Villaluz v. Ligon, supra note 67.
Guaranteed Hotels, Inc. v. Baltao, G.R. No. 164338, January 17, 2005, 448 SCRA 738, 746; TF Ventures, Inc. v. Matsuura, G.R. No. 154177, June 9, 2004, 431 SCRA 526, 531.
70 71 72 73
Supra note 45. Provident Savings Bank v. Court of Appeals, G.R. No. 97218, May 17, 1993, 222 SCRA 125, 131-132. Supra note 12.
Garcia v. Llamas, G.R. No. 154127, December 8, 2003, 417 SCRA 292, 294; Agro Conglomerates, Inc. v. Court of Appeals, 401 Phil. 644, 656 (2000). Civil Code, Art. 1292; Ajax Marketing & Development Corporation v. Court of Appeals, G.R. No. 118585, September 14, 1995, 248 SCRA 222, 227. Spouses Reyes v. BPI Family Savings Bank, Inc., G.R. Nos. 149840-41, March 31, 2006; Garcia, Jr. v. Court of Appeals, G.R. No. L-80201, November 20, 1990, 191 SCRA 493, 502.
76 77 78 75 74
Ferinion v. Sta. Romana, 123 Phil. 191, 195 (1966). Perez v. Lantin, 133 Phil. 219, 226 (1968).
Natalia Realty, Inc. v. Court of Appeals, 440 Phil. 1, 28 (2002); Nasser v. Court of Appeals, 314 Phil. 871, 883 (1995).
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G.R. No. 135706
http://www.lawphil.net/judjuris/juri2004/oct2004/gr_135706_2004.html
Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 135706 October 1, 2004
SPS. CESAR A. LARROBIS, JR. and VIRGINIA S. LARROBIS, petitioners, vs. PHILIPPINE VETERANS BANK, respondent. DECISION AUSTRIA-MARTINEZ, J.: Before us is a petition for review of the decision of the Regional Trial Court (RTC), Cebu City, Branch 24, dated April 17, 1998, and the order denying petitioners motion for reconsideration dated August 25, 1998, raising pure questions of law.
2 1
The following facts are uncontroverted: On March 3, 1980, petitioner spouses contracted a monetary loan with respondent Philippine Veterans Bank in the amount of P135,000.00, evidenced by a promissory note, due and demandable on February 27, 1981, and secured by a Real Estate Mortgage executed on their lot together with the improvements thereon. On March 23, 1985, the respondent bank went bankrupt and was placed under receivership/liquidation by the Central Bank from April 25, 1985 until August 1992.
3
On August 23, 1985, the bank, through Francisco Go, sent the spouses a demand letter for "accounts receivable in the total amount of P6,345.00 as of August 15, 1984," which pertains to the insurance premiums advanced by respondent bank over the mortgaged property of petitioners.
5 4
On August 23, 1995, more than fourteen years from the time the loan became due and demandable, respondent bank filed a petition for extrajudicial foreclosure of mortgage of petitioners property. On October 18, 1995, the property was sold in a public auction by Sheriff Arthur Cabigon with Philippine Veterans Bank as the lone bidder. On April 26, 1996, petitioners filed a complaint with the RTC, Cebu City, to declare the extra-judicial foreclosure and the subsequent sale thereof to respondent bank null and void.
7 6
In the pre-trial conference, the parties agreed to limit the issue to whether or not the period within which the bank was placed under receivership and liquidation was a fortuitous event which suspended the running of the ten-year prescriptive period in bringing actions.
8
On April 17, 1998, the RTC rendered its decision, the fallo of which reads: WHEREFORE, premises considered judgment is hereby rendered dismissing the complaint for lack of merit. Likewise the compulsory counterclaim of defendant is dismissed for being unmeritorious. It reasoned that: defendant bank was placed under receivership by the Central Bank from April 1985 until 1992. The defendant bank was given authority by the Central Bank to operate as a private commercial bank and became fully operational only on August 3, 1992. From April 1985 until July 1992, defendant bank was restrained from doing its business. Doing business as construed by Justice Laurel in 222 SCRA 131 refers to: ".a continuity of commercial dealings and arrangements and contemplates to that extent, the performance of acts or words or the exercise of some of the functions normally incident to and in progressive prosecution of the purpose and object of its organization." The defendant banks right to foreclose the mortgaged property prescribes in ten (10) years but such period
9
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was interrupted when it was placed under receivership. Article 1154 of the New Civil Code to this effect provides: "The period during which the obligee was prevented by a fortuitous event from enforcing his right is not reckoned against him." In the case of Provident Savings Bank vs. Court of Appeals, 222 SCRA 131, the Supreme Court said. "Having arrived at the conclusion that a foreclosure is part of a banks activity which could not have been pursued by the receiver then because of the circumstances discussed in the Central Bank case, we are thus convinced that the prescriptive period was legally interrupted by fuerza mayor in 1972 on account of the prohibition imposed by the Monetary Board against petitioner from transacting business, until the directive of the Board was nullified in 1981. Indeed, the period during which the obligee was prevented by a caso fortuito from enforcing his right is not reckoned against him. (Art. 1154, NCC) When prescription is interrupted, all the benefits acquired so far from the possession cease and when prescription starts anew, it will be entirely a new one. This concept should not be equated with suspension where the past period is included in the computation being added to the period after the prescription is presumed (4 Tolentino, Commentaries and Jurisprudence on the Civil Code of the Philippines 1991 ed. pp. 18-19), consequently, when the closure of the petitioner was set aside in 1981, the period of ten years within which to foreclose under Art. 1142 of the N.C.C. began to run and, therefore, the action filed on August 21, 1986 to compel petitioner to release the mortgage carried with it the mistaken notion that petitioners own suit for foreclosure has prescribed." Even assuming that the liquidation of defendant bank did not affect its right to foreclose the plaintiffs mortgaged property, the questioned extrajudicial foreclosure was well within the ten (10) year prescriptive period. It is noteworthy to mention at this point in time, that defendant bank through authorized Deputy Francisco Go made the first extrajudicial demand to the plaintiffs on August 1985. Then on March 24, 1995 defendant bank through its officer-in-charge Llanto made the second extrajudicial demand. And we all know that a written extrajudicial demand wipes out the period that has already elapsed and starts anew the prescriptive period. (Ledesma vs. C.A., 224 SCRA 175.)
10 11
Petitioners filed a motion for reconsideration which the RTC denied on August 25, 1998. for review where petitioners claim that the RTC erred: I
Thus, the present petition
IN RULING THAT THE PERIOD WITHIN WHICH RESPONDENT BANK WAS PUT UNDER RECEIVERSHIP AND LIQUIDATION WAS A FORTUITOUS EVENT THAT INTERRUPTED THE RUNNING OF THE PRESCRIPTIVE PERIOD. II IN RULING THAT THE WRITTEN EXTRA-JUDICIAL DEMAND MADE BY RESPONDENT ON PETITIONERS WIPED OUT THE PERIOD THAT HAD ALREADY ELAPSED. III IN DENYING PETITIONERS MOTION FOR RECONSIDERATION OF ITS HEREIN ASSAILED DECISION.
12
Petitioners argue that: since the extra-judicial foreclosure of the real estate mortgage was effected by the bank on October 18, 1995, which was fourteen years from the date the obligation became due on February 27, 1981, said foreclosure and the subsequent sale at public auction should be set aside and declared null and void ab initio since they are already barred by prescription; the court a quo erred in sustaining the respondents theory that its having been placed under receivership by the Central Bank between April 1985 and August 1992 was a fortuitous event that interrupted the running of the prescriptive period;
14 13
the court a quos reliance on the case of Provident Savings
Bank vs. Court of Appeals is misplaced since they have different sets of facts; in the present case, a liquidator was duly appointed for respondent bank and there was no judgment or court order that would legally or physically hinder or prohibit it from foreclosing petitioners property; despite the absence of such legal or physical hindrance, respondent banks receiver or liquidator failed to foreclose petitioners property and therefore such inaction should bind respondent bank; foreclosure of mortgages is part of the receivers/liquidators duty of administering the banks assets for the benefit of its depositors and creditors, thus, the ten-year prescriptive period which started on February 27, 1981, was not interrupted by the time during which the respondent bank was placed under receivership; and the Monetary Boards prohibition from doing business should not be construed as barring any and all business dealings and transactions by the bank, otherwise, the specific mandate to foreclose mortgages under Sec. 29 of R.A. No. 265 as amended by Executive Order No. 65 would be rendered nugatory. reads:
16 15
Said provision
Section 29. Proceedings upon Insolvency Whenever, upon examination by the head of the appropriate
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supervising or examining department or his examiners or agents into the condition of any bank or non-bank financial intermediary performing quasi-banking functions, it shall be disclosed that the condition of the same is one of insolvency, or that its continuance in business would involve probable loss to its depositors or creditors, it shall be the duty of the department head concerned forthwith, in writing, to inform the Monetary Board of the facts. The Board may, upon finding the statements of the department head to be true, forbid the institution to do business in the Philippines and designate the official of the Central Bank or a person of recognized competence in banking or finance, as receiver to immediately take charge its assets and liabilities, as expeditiously as possible, collect and gather all the assets and administer the same for the benefit of its creditors, and represent the bank personally or through counsel as he may retain in all actions or proceedings for or against the institution, exercising all the powers necessary for these purposes including, but not limited to, bringing and foreclosing mortgages in the name of the bank. Petitioners further contend that: the demand letter, dated March 24, 1995, was sent after the ten-year prescriptive period, thus it cannot be deemed to have revived a period that has already elapsed; it is also not one of the instances enumerated by Art. 1115 of the Civil Code when prescription is interrupted; and the August 23, 1985 letter by Francisco Go demanding P6,345.00, refers to the insurance premium on the house of petitioners, advanced by respondent bank, thus such demand letter referred to another obligation and could not have the effect of interrupting the running of the prescriptive period in favor of herein petitioners insofar as foreclosure of the mortgage is concerned.
18 17
Petitioners then prayed that respondent bank be ordered to pay them P100,000.00 as moral damages, P50,000.00 as exemplary damages and P100,000.00 as attorneys fees.
19
Respondent for its part asserts that: the period within which it was placed under receivership and liquidation was a fortuitous event that interrupted the running of the prescriptive period for the foreclosure of petitioners mortgaged property; within such period, it was specifically restrained and immobilized from doing business which includes foreclosure proceedings; the extra-judicial demand it made on March 24, 1995 wiped out the period that has already lapsed and started anew the prescriptive period; respondent through its authorized deputy Francisco Go made the first extra-judicial demand on the petitioners on August 23, 1985; while it is true that the first demand letter of August 1985 pertained to the insurance premium advanced by it over the mortgaged property of petitioners, the same however formed part of the latters total loan obligation with respondent under the mortgage instrument and therefore constitutes a valid extra-judicial demand made within the prescriptive period.
20
In their Reply, petitioners reiterate their earlier arguments and add that it was respondent that insured the mortgaged property thus it should not pass the obligation to petitioners through the letter dated August 1985.
21
To resolve this petition, two questions need to be answered: (1) Whether or not the period within which the respondent bank was placed under receivership and liquidation proceedings may be considered a fortuitous event which interrupted the running of the prescriptive period in bringing actions; and (2) Whether or not the demand letter sent by respondent banks representative on August 23, 1985 is sufficient to interrupt the running of the prescriptive period. Anent the first issue, we answer in the negative. One characteristic of a fortuitous event, in a legal sense and consequently in relations to contract, is that its occurrence must be such as to render it impossible for a party to fulfill his obligation in a normal manner.
22
Respondents claims that because of a fortuitous event, it was not able to exercise its right to foreclose the mortgage on petitioners property; and that since it was banned from pursuing its business and was placed under receivership from April 25, 1985 until August 1992, it could not foreclose the mortgage on petitioners property within such period since foreclosure is embraced in the phrase "doing business," are without merit. While it is true that foreclosure falls within the broad definition of "doing business," that is: a continuity of commercial dealings and arrangements and contemplates to that extent, the performance of acts or words or the exercise of some of the functions normally incident to and in progressive prosecution of the purpose and object of its organization.
23
it should not be considered included, however, in the acts prohibited whenever banks are "prohibited from doing business" during receivership and liquidation proceedings. This we made clear in Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of the Philippines
24
where we explained that:
Section 29 of the Republic Act No. 265, as amended known as the Central Bank Act, provides that when a bank is forbidden to do business in the Philippines and placed under receivership, the person designated as receiver shall immediately take charge of the banks assets and liabilities, as expeditiously as possible, collect and gather all the assets and administer the same for the benefit of its creditors, and represent the bank
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personally or through counsel as he may retain in all actions or proceedings for or against the institution, exercising all the powers necessary for these purposes including, but not limited to, bringing and foreclosing mortgages in the name of the bank.
25
This is consistent with the purpose of receivership proceedings, i.e., to receive collectibles and preserve the assets of the bank in substitution of its former management, and prevent the dissipation of its assets to the detriment of the creditors of the bank.
26
When a bank is declared insolvent and placed under receivership, the Central Bank, through the Monetary Board, determines whether to proceed with the liquidation or reorganization of the financially distressed bank. A receiver, who concurrently represents the bank, then takes control and possession of its assets for the benefit of the banks creditors. A liquidator meanwhile assumes the role of the receiver upon the determination by the Monetary Board that the bank can no longer resume business. His task is to dispose of all the assets of the bank and effect partial payments of the banks obligations in accordance with legal priority. In both receivership and liquidation proceedings, the bank retains its juridical personality notwithstanding the closure of its business and may even be sued as its corporate existence is assumed by the receiver or liquidator. The receiver or liquidator meanwhile acts not only for the benefit of the bank, but for its creditors as well. In Provident Savings Bank vs. Court of Appeals,
28 27
we further stated that:
When a bank is prohibited from continuing to do business by the Central Bank and a receiver is appointed for such bank, that bank would not be able to do new business, i.e., to grant new loans or to accept new deposits. However, the receiver of the bank is in fact obliged to collect debts owing to the bank, which debts form part of the assets of the bank. The receiver must assemble the assets and pay the obligation of the bank under receivership, and take steps to prevent dissipation of such assets. Accordingly, the receiver of the bank is obliged to collect pre-existing debts due to the bank, and in connection therewith, to foreclose mortgages securing such debts.
29
It is true that we also held in said case that the period during which the bank was placed under receivership was deemed fuerza mayor which validly interrupted the prescriptive period. This is being invoked by the respondent and was used as basis by the trial court in its decision. Contrary to the position of the respondent and court a quo however, such ruling does not find application in the case at bar. A close scrutiny of the Provident case, shows that the Court arrived at said conclusion, which is an exception to the general rule, due to the peculiar circumstances of Provident Savings Bank at the time. In said case, we stated that: Having arrived at the conclusion that a foreclosure is part of a banks business activity which could not have been pursued by the receiver then because of the circumstances discussed in the Central Bank case, we are thus convinced that the prescriptive period was legally interrupted by fuerza mayor in 1972 on account of the prohibition imposed by the Monetary Board against petitioner from transacting business, until the directive of the Board was nullified in 1981.
31 30
Further examination of the Central Bank case reveals that the circumstances of Provident Savings Bank at the time were peculiar because after the Monetary Board issued MB Resolution No. 1766 on September 15, 1972, prohibiting it from doing business in the Philippines, the banks majority stockholders immediately went to the Court of First Instance of Manila, which prompted the trial court to issue its judgment dated February 20, 1974, declaring null and void the resolution and ordering the Central Bank to desist from liquidating Provident. The decision was appealed to and affirmed by this Court in 1981. Thus, the Superintendent of Banks, which was instructed to take charge of the assets of the bank in the name of the Monetary Board, had no power to act as a receiver of the bank and carry out the obligations specified in Sec. 29 of the Central Bank Act.
32
In this case, it is not disputed that Philippine Veterans Bank was placed under receivership by the Monetary Board of the Central Bank by virtue of Resolution No. 364 on April 25, 1985, pursuant to Section 29 of the Central Bank Act on insolvency of banks.
33
Unlike Provident Savings Bank, there was no legal prohibition imposed upon herein respondent to deter its receiver and liquidator from performing their obligations under the law. Thus, the ruling laid down in the Provident case cannot apply in the case at bar. There is also no truth to respondents claim that it could not continue doing business from the period of April 1985 to August 1992, the time it was under receivership. As correctly pointed out by petitioner, respondent was even able to send petitioners a demand letter, through Francisco Go, on August 23, 1985 for "accounts receivable in the total amount of P6,345.00 as of August 15, 1984" for the insurance premiums advanced by respondent bank over the mortgaged property of petitioners. How it could send a demand letter on unpaid insurance premiums and not foreclose the mortgage during the time it was "prohibited from doing business" was not adequately explained by respondent.
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Settled is the principle that a bank is bound by the acts, or failure to act of its receiver. Veterans Bank vs. NLRC,
35
34
As we held in Philippine
a labor case which also involved respondent bank,
all the acts of the receiver and liquidator pertain to petitioner, both having assumed petitioners corporate existence. Petitioner cannot disclaim liability by arguing that the non-payment of MOLINAs just wages was committed by the liquidators during the liquidation period.
36
However, the bank may go after the receiver who is liable to it for any culpable or negligent failure to collect the assets of such bank and to safeguard its assets.
37
Having reached the conclusion that the period within which respondent bank was placed under receivership and liquidation proceedings does not constitute a fortuitous event which interrupted the prescriptive period in bringing actions, we now turn to the second issue on whether or not the extra-judicial demand made by respondent bank, through Francisco Go, on August 23, 1985 for the amount of P6,345.00, which pertained to the insurance premiums advanced by the bank over the mortgaged property, constitutes a valid extra-judicial demand which interrupted the running of the prescriptive period. Again, we answer this question in the negative. Prescription of actions is interrupted when they are filed before the court, when there is a written extra-judicial demand by the creditors, and when there is any written acknowledgment of the debt by the debtor.
38
Respondents claim that while its first demand letter dated August 23, 1985 pertained to the insurance premium it advanced over the mortgaged property of petitioners, the same formed part of the latters total loan obligation with respondent under the mortgage instrument, and therefore, constitutes a valid extra-judicial demand which interrupted the running of the prescriptive period, is not plausible. The real estate mortgage signed by the petitioners expressly states that: This mortgage is constituted by the Mortgagor to secure the payment of the loan and/or credit accommodation granted to the spouses Cesar A. Larrobis, Jr. and Virginia S. Larrobis in the amount of ONE HUNDRED THIRTY FIVE THOUSAND (P135,000.00) PESOS ONLY Philippine Currency in favor of the herein Mortgagee.
39
The promissory note, executed by the petitioners, also states that: FOR VALUE RECEIVED, I/WE, JOINTLY AND SEVERALLY, PROMISE TO PAY THE PHILIPPINE VETERANS BANK, OR ORDER, AT ITS OFFICE AT CEBU CITY THE SUM OF ONE HUNDRED THIRTY FIVE THOUSAND PESOS (P135,000.00), PHILIPPINE CURRENCY WITH INTEREST AT THE RATE OF FOURTEEN PER CENT (14%) PER ANNUM FROM THIS DATE UNTIL FULLY PAID.
40
Considering that the mortgage contract and the promissory note refer only to the loan of petitioners in the amount of P135,000.00, we have no reason to hold that the insurance premiums, in the amount of P6,345.00, which was the subject of the August 1985 demand letter, should be considered as pertaining to the entire obligation of petitioners. In Quirino Gonzales Logging Concessionaire vs. Court of Appeals, we held that the notices of foreclosure sent by the mortgagee to the mortgagor cannot be considered tantamount to written extrajudicial demands, which may validly interrupt the running of the prescriptive period, where it does not appear from the records that the notes are covered by the mortgage contract.
42 41
In this case, it is clear that the advanced payment of the insurance premiums is not part of the mortgage contract and the promissory note signed by petitioners. They pertain only to the amount of P135,000.00 which is the principal loan of petitioners plus interest. The arguments of respondent bank on this point must therefore fail. As to petitioners claim for damages, however, we find no sufficient basis to award the same. For moral damages to be awarded, the claimant must satisfactorily prove the existence of the factual basis of the damage and its causal relation to defendants acts. Exemplary damages meanwhile, which are imposed as a deterrent against or as a negative incentive to curb socially deleterious actions, may be awarded only after the claimant has proven that he is entitled to moral, temperate or compensatory damages.
45 44 43
Finally, as to attorneys fees, it is demanded that there be
factual, legal and equitable justification for its award. Since the bases for these claims were not adequately proven by the petitioners, we find no reason to grant the same. WHEREFORE, the decision of the Regional Trial Court, Cebu City, Branch 24, dated April 17, 1998, and the order denying petitioners motion for reconsideration dated August 25, 1998 are hereby REVERSED and SET ASIDE. The extra-judicial foreclosure of the real estate mortgage on October 18, 1995, is hereby declared null and void and respondent is ordered to return to petitioners their owners duplicate certificate of title. Costs against respondent.
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SO ORDERED. Puno, Callejo, Sr., Tinga, and Chico-Nazario , JJ., concur. Footnotes
* 1 2 3 4 5 6 7 8 *
On leave. Penned by Judge Priscila S. Agana; Rollo, pp. 29-37. Rollo, pp. 38-42. Rollo, pp. 29, 82. Records, p. 14. Rollo, pp. 62-63. Records, pp. 15-16. Id., pp. 11-12. Rollo, pp. 12, 35, 58. Art. 1144 of the Civil Code provides: The following actions must be brought within ten years from the time the right of action accrues: (1) Upon a written contract; (2) Upon an obligation created by law; (3) Upon a judgment.
Id., p. 37. Rollo, pp. 35-37. Id., p. 42. Id., p. 13. G.R. No. , Id., p. 14. G.R. No. 97218, May 17, 1993, 222 SCRA 125. Rollo, pp. 13-14. Id., pp. 17-18.
10 11 12 13 14 15 16 17
Art. 1115. The prescription of actions is interrupted when they are filed before the court, when there is a written extra-judicial demand by the creditors, and when there is any written acknowledgment of the debt by the debtor.
18 19 20 21 22
Rollo, pp. 19-22. Id., p. 23. Id., pp. 58-59, 62-63. Rollo, p. 72.
National Power Corporation vs. Philipp Brothers Oceanic Inc., G.R. No. 126204, November 20, 2001, 369 SCRA 629, 643.
23
Provident Savings Bank vs. Court of Appeals, G.R. No. 97218, May 17, 1993, 222 SCRA125, 131, citing
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Mentholatum Co., Inc., et al. vs. Mangaliman, et al., 72 Phil 524 (1941).
24 25 26
G.R. No. 70054, December 11, 1991, 204 SCRA 767. Id., p. 788.
Banco Filipino Savings and Mortgage Bank vs. Monetary Board, Central Bank of the Philippines, G.R. No. 70054, December 11, 1991, 204 SCRA 767, 789-790. Philippine Veterans Bank vs. NLRC, G.R. No. 130439, October 26, 1999, 317 SCRA 510, 519. G.R. No. 97218, May 17, 1993, 222 SCRA 125. Id., pp. 131-132. Id., p. 132. Id. Central Bank vs. Court of Appeals, Nos. L-50031-32, July 27, 1981, 106 SCRA 143, pp. 149-157.
27 28 29 30 31 32 33
Philippine Veterans Bank vs. Intermediate Appellate Court, G.R. No. 73162, October 23, 1989, 178 SCRA 645, 651. Philippine Trust Co. vs. HSBC, 67 Phil 204 (1939). G.R. No. 130439, October 26, 1999, 317 SCRA 510. Id., p. 520. Philippine Trust Co. vs. HSBC, 67 Phil 204 (1939). Civil Code, Art. 1155. Records, p. 13. Id., p. 11. G.R. No. 126568, April 30, 2003, 402 SCRA 181. Id., p. 191
34 35 36 37 38 39 40 41 42 43
Development Bank of the Philippines vs. Emerald Resort Hotel Corp., G.R. No. 125838, June 10, 2003, 403 SCRA 460.
44 45
Del Rosario vs. Court of Appeals, G.R. No. 118325, January 29, 1997, 267 SCRA 158, 172. Id., p. 173
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Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 168332 June 19, 2009
ANA MARIA A. KORUGA, Petitioner, vs. TEODORO O. ARCENAS, JR., ALBERT C. AGUIRRE, CESAR S. PAGUIO, FRANCISCO A. RIVERA, and THE HONORABLE COURT OF APPEALS, THIRD DIVISION, Respondents. x - - - - - - - - - - - - - - - - - - - - - - -x G.R. No. 169053 June 19, 2009
TEODORO O. ARCENAS, JR., ALBERT C. AGUIRRE, CESAR S. PAGUIO, and FRANCISCO A. RIVERA, Petitioners, vs. HON. SIXTO MARELLA, JR., Presiding Judge, Branch 138, Regional Trial Court of Makati City, and ANA MARIA A. KORUGA, Respondents. DECISION NACHURA, J.: Before this Court are two petitions that originated from a Complaint filed by Ana Maria A. Koruga (Koruga) before the Regional Trial Court (RTC) of Makati City against the Board of Directors of Banco Filipino and the Members of the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) for violation of the Corporation Code, for inspection of records of a corporation by a stockholder, for receivership, and for the creation of a management committee. G.R. No. 168332 The first is a Petition for Certiorari under Rule 65 of the Rules of Court, docketed as G.R. No. 168332, praying for the annulment of the Court of Appeals (CA) Resolution in CA-G.R. SP No. 88422 dated April 18, 2005 granting the prayer for a Writ of Preliminary Injunction of therein petitioners Teodoro O. Arcenas, Jr., Albert C. Aguirre, Cesar S. Paguio, and Francisco A. Rivera (Arcenas, et al.). Koruga is a minority stockholder of Banco Filipino Savings and Mortgage Bank. On August 20, 2003, she filed a complaint before the Makati RTC which was raffled to Branch 138, presided over by Judge Sixto Marella, Jr. Korugas complaint alleged:
2 1
10. 1 Violation of Sections 31 to 34 of the Corporation Code ("Code") which prohibit self-dealing and conflicts of interest of directors and officers, thus: (a) For engaging in unsafe, unsound, and fraudulent banking practices that have jeopardized the welfare of the Bank, its shareholders, who includes among others, the Petitioner, and depositors. (sic) (b) For granting and approving loans and/or "loaned" sums of money to six (6) "dummy" borrower corporations ("Borrower Corporations") which, at the time of loan approval, had no financial capacity to justify the loans. (sic) (c) For approving and accepting a dacion en pago, or payment of loans with property instead of cash, resulting to a diminished future cumulative interest income by the Bank and a decline in its liquidity position. (sic) (d) For knowingly giving "favorable treatment" to the Borrower Corporations in which some or most of them have interests, i.e. interlocking directors/officers thereof, interlocking ownerships. (sic) (e) For employing their respective offices and functions as the Banks officers and directors, or omitting to perform their functions and duties, with negligence, unfaithfulness or abuse of confidence of fiduciary duty, misappropriated or misapplied or ratified by inaction the misappropriation or misappropriations, of (sic) almost
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P1.6 Billion Pesos (sic) constituting the Banks funds placed under their trust and administration, by unlawfully releasing loans to the Borrower Corporations or refusing or failing to impugn these, knowing before the loans were released or thereafter that the Banks cash resources would be dissipated thereby, to the prejudice of the Petitioner, other Banco Filipino depositors, and the public. 10.2 Right of a stockholder to inspect the records of a corporation (including financial statements) under Sections 74 and 75 of the Code, as implemented by the Interim Rules; (a) Unlawful refusal to allow the Petitioner from inspecting or otherwise accessing the corporate records of the bank despite repeated demand in writing, where she is a stockholder. (sic) 10.3 Receivership and Creation of a Management Committee pursuant to: (a) Rule 59 of the 1997 Rules of Civil Procedure ("Rules"); (b) Section 5.2 of R.A. No. 8799; (c) Rule 1, Section 1(a)(1) of the Interim Rules; (d) Rule 1, Section 1(a)(2) of the Interim Rules; (e) Rule 7 of the Interim Rules; (f) Rule 9 of the Interim Rules; and (g) The General Banking Law of 2000 and the New Central Bank Act.
3
On September 12, 2003, Arcenas, et al. filed their Answer raising, among others, the trial courts lack of jurisdiction to take cognizance of the case. They also filed a Manifestation and Motion seeking the dismissal of the case on the following grounds: (a) lack of jurisdiction over the subject matter; (b) lack of jurisdiction over the persons of the defendants; (c) forum-shopping; and (d) for being a nuisance/harassment suit. They then moved that the trial court rule on their affirmative defenses, dismiss the intra-corporate case, and set the case for preliminary hearing. In an Order dated October 18, 2004, the trial court denied the Manifestation and Motion, ruling thus: The result of the procedure sought by defendants Arcenas, et al. (sic) is for the Court to conduct a preliminary hearing on the affirmative defenses raised by them in their Answer. This [is] proscribed by the Interim Rules of Procedure on Intracorporate (sic) Controversies because when a preliminary hearing is conducted it is "as if a Motion to Dismiss was filed" (Rule 16, Section 6, 1997 Rules of Civil Procedure). A Motion to Dismiss is a prohibited pleading under the Interim Rules, for which reason, no favorable consideration can be given to the Manifestation and Motion of defendants, Arcenas, et al. The Court finds no merit to (sic) the claim that the instant case is a nuisance or harassment suit. WHEREFORE, the Court defers resolution of the affirmative defenses raised by the defendants Arcenas, et al.
5 6 4
Arcenas, et al. moved for reconsideration but, on January 18, 2005, the RTC denied the motion. This prompted Arcenas, et al. to file before the CA a Petition for Certiorari and Prohibition under Rule 65 of the Rules of Court with a prayer for the issuance of a writ of preliminary injunction and a temporary retraining order (TRO).
7
On February 9, 2005, the CA issued a 60-day TRO enjoining Judge Marella from conducting further proceedings in the case.
8 9
On February 22, 2005, the RTC issued a Notice of Pre-trial setting the case for pre-trial on June 2 and 9, 2005. Arcenas, et al. filed a Manifestation and Motion before the CA, reiterating their application for a writ of preliminary injunction. Thus, on April 18, 2005, the CA issued the assailed Resolution, which reads in part: (C)onsidering that the Temporary Restraining Order issued by this Court on February 9, 2005 expired on April 10, 2005, it is necessary that a writ of preliminary injunction be issued in order not to render ineffectual whatever final resolution this Court may render in this case, after the petitioners shall have posted a bond in the amount of FIVE HUNDRED THOUSAND (P500,000.00) PESOS. SO ORDERED.
11 10
Dissatisfied, Koruga filed this Petition for Certiorari under Rule 65 of the Rules of Court. Koruga alleged that the CA effectively gave due course to Arcenas, et al.s petition when it issued a writ of preliminary injunction without factual or legal basis, either in the April 18, 2005 Resolution itself or in the records of the case. She prayed that this Court restrain the CA from implementing the writ of preliminary injunction and, after due proceedings, make the injunction against the assailed CA Resolution permanent.
12
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In their Comment, Arcenas, et al. raised several procedural and substantive issues. They alleged that the Verification and Certification against Forum-Shopping attached to the Petition was not executed in the manner prescribed by Philippine law since, as admitted by Korugas counsel himself, the same was only a facsimile. They also averred that Koruga had admitted in the Petition that she never asked for reconsideration of the CAs April 18, 2005 Resolution, contending that the Petition did not raise pure questions of law as to constitute an exception to the requirement of filing a Motion for Reconsideration before a Petition for Certiorari is filed. They, likewise, alleged that the Petition may have already been rendered moot and academic by the July 20, 2005 CA Decision, which denied their Petition, and held that the RTC did not commit grave abuse of discretion in issuing the assailed orders, and thus ordered the RTC to proceed with the trial of the case. Meanwhile, on March 13, 2006, this Court issued a Resolution granting the prayer for a TRO and enjoining the Presiding Judge of Makati RTC, Branch 138, from proceeding with the hearing of the case upon the filing by Arcenas, et al. of a P50,000.00 bond. Koruga filed a motion to lift the TRO, which this Court denied on July 5, 2006. On the other hand, respondents Dr. Conrado P. Banzon and Gen. Ramon Montao also filed their Comment on Korugas Petition, raising substantially the same arguments as Arcenas, et al. G.R. No. 169053 G.R. No. 169053 is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, with prayer for the issuance of a TRO and a writ of preliminary injunction filed by Arcenas, et al. In their Petition, Arcenas, et al. asked the Court to set aside the Decision dated July 20, 2005 of the CA in CA-G.R. SP No. 88422, which denied their petition, having found no grave abuse of discretion on the part of the Makati RTC. The CA said that the RTC Orders were interlocutory in nature and, thus, may be assailed by certiorari or prohibition only when it is shown that the court acted without or in excess of jurisdiction or with grave abuse of discretion. It added that the Supreme Court frowns upon resort to remedial measures against interlocutory orders. Arcenas, et al. anchored their prayer on the following grounds: that, in their Answer before the RTC, they had raised the issue of failure of the court to acquire jurisdiction over them due to improper service of summons; that the Koruga action is a nuisance or harassment suit; that there is another case involving the same parties for the same cause pending before the Monetary Board of the BSP, and this constituted forum-shopping; and that jurisdiction over the subject matter of the case is vested by law in the BSP. Arcenas, et al. assign the following errors: I. THE COURT OF APPEALS, IN "FINDING NO GRAVE ABUSE OF DISCRETION COMMITTED BY PUBLIC RESPONDENT REGIONAL TRIAL COURT OF MAKATI, BRANCH 138, IN ISSUING THE ASSAILED ORDERS," FAILED TO CONSIDER AND MERELY GLOSSED OVER THE MORE TRANSCENDENT ISSUES OF THE LACK OF JURISDICTION ON THE PART OF SAID PUBLIC RESPONDENT OVER THE SUBJECT MATTER OF THE CASE BEFORE IT, LITIS PENDENTIA AND FORUM SHOPPING, AND THE CASE BELOW BEING A NUISANCE OR HARASSMENT SUIT, EITHER ONE AND ALL OF WHICH GOES/GO TO RENDER THE ISSUANCE BY PUBLIC RESPONDENT OF THE ASSAILED ORDERS A GRAVE ABUSE OF DISCRETION. II. THE FINDING OF THE COURT OF APPEALS OF "NO GRAVE ABUSE OF DISCRETION COMMITTED BY PUBLIC RESPONDENT REGIONAL TRIAL COURT OF MAKATI, BRANCH 138, IN ISSUING THE ASSAILED ORDERS," IS NOT IN ACCORD WITH LAW OR WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT.
16 15 14 13
Meanwhile, in a Manifestation and Motion filed on August 31, 2005, Koruga prayed for, among others, the consolidation of her Petition with the Petition for Review on Certiorari under Rule 45 filed by Arcenas, et al., docketed as G.R. No. 169053. The motion was granted by this Court in a Resolution dated September 26, 2005. Our Ruling Initially, we will discuss the procedural issue. Arcenas, et al. argue that Korugas petition should be dismissed for its defective Verification and Certification Against Forum-Shopping, since only a facsimile of the same was attached to the Petition. They also claim that the Verification and Certification Against Forum-Shopping, allegedly executed in Seattle, Washington, was not authenticated in the manner prescribed by Philippine law and not certified by the Philippine Consulate in the United States. This contention deserves scant consideration. On the last page of the Petition in G.R. No. 168332, Korugas counsel executed an Undertaking, which reads as follows:
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In view of that fact that the Petitioner is currently in the United States, undersigned counsel is attaching a facsimile copy of the Verification and Certification Against Forum-Shopping duly signed by the Petitioner and notarized by Stephanie N. Goggin, a Notary Public for the Sate (sic) of Washington. Upon arrival of the original copy of the Verification and Certification as certified by the Office of the Philippine Consul, the undersigned counsel shall immediately provide duplicate copies thereof to the Honorable Court. Thus, in a Compliance
18 17
filed with the Court on September 5, 2005, petitioner submitted the original copy of the duly
19
notarized and authenticated Verification and Certification Against Forum-Shopping she had executed. This Court noted and considered the Compliance satisfactory in its Resolution dated November 16, 2005. There is, therefore, no need to further belabor this issue. We now discuss the substantive issues in this case. First, we resolve the prayer to nullify the CAs April 18, 2005 Resolution. We hold that the Petition in G.R. No. 168332 has become moot and academic. The writ of preliminary injunction being questioned had effectively been dissolved by the CAs July 20, 2005 Decision. The dispositive portion of the Decision reads in part: The case is REMANDED to the court a quo for further proceedings and to resolve with deliberate dispatch the intracorporate controversies and determine whether there was actually a valid service of summons. If, after hearing, such service is found to have been improper, then new summons should be served forthwith.
20
Accordingly, there is no necessity to restrain the implementation of the writ of preliminary injunction issued by the CA on April 18, 2005, since it no longer exists. However, this Court finds that the CA erred in upholding the jurisdiction of, and remanding the case to, the RTC. The resolution of these petitions rests mainly on the determination of one fundamental issue: Which body has jurisdiction over the Koruga Complaint, the RTC or the BSP? We hold that it is the BSP that has jurisdiction over the case. A reexamination of the Complaint is in order. Korugas Complaint charged defendants with violation of Sections 31 to 34 of the Corporation Code, prohibiting self-dealing and conflict of interest of directors and officers; invoked her right to inspect the corporations records under Sections 74 and 75 of the Corporation Code; and prayed for Receivership and Creation of a Management Committee, pursuant to Rule 59 of the Rules of Civil Procedure, the Securities Regulation Code, the Interim Rules of Procedure Governing Intra-Corporate Controversies, the General Banking Law of 2000, and the New Central Bank Act. She accused the directors and officers of Banco Filipino of engaging in unsafe, unsound, and fraudulent banking practices, more particularly, acts that violate the prohibition on self-dealing. It is clear that the acts complained of pertain to the conduct of Banco Filipinos banking business. A bank, as defined in the General Banking Law, refers to an entity engaged in the lending of funds obtained in the form of deposits. The banking business is properly subject to reasonable regulation under the police power of the state because of its nature and relation to the fiscal affairs of the people and the revenues of the state. Banks are affected with public interest because they receive funds from the general public in the form of deposits. It is the Governments responsibility to see to it that the financial interests of those who deal with banks and banking institutions, as depositors or otherwise, are protected. In this country, that task is delegated to the BSP, which pursuant to its Charter, is authorized to administer the monetary, banking, and credit system of the Philippines. It is further authorized to take the necessary steps against any banking institution if its continued operation would cause prejudice to its depositors, creditors and the general public as well.
23 21 22
The law vests in the BSP the supervision over operations and activities of banks. The New Central Bank Act provides: Section 25. Supervision and Examination. - The Bangko Sentral shall have supervision over, and conduct periodic or special examinations of, banking institutions and quasi-banks, including their subsidiaries and affiliates engaged in allied activities.
24
Specifically, the BSPs supervisory and regulatory powers include: 4.1 The issuance of rules of conduct or the establishment of standards of operation for uniform application to all institutions or functions covered, taking into consideration the distinctive character of the operations of institutions and the substantive similarities of specific functions to which such rules, modes or standards are to be applied; 4.2 The conduct of examination to determine compliance with laws and regulations if the
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circumstances so warrant as determined by the Monetary Board; 4.3 Overseeing to ascertain that laws and Regulations are complied with; 4.4 Regular investigation which shall not be oftener than once a year from the last date of examination to determine whether an institution is conducting its business on a safe or sound basis: Provided, That the deficiencies/irregularities found by or discovered by an audit shall be immediately addressed; 4.5 Inquiring into the solvency and liquidity of the institution (2-D); or 4.6 Enforcing prompt corrective action.
25
Koruga alleges that "the dispute in the trial court involves the manner with which the Directors (sic) have handled the Banks affairs, specifically the fraudulent loans and dacion en pago authorized by the Directors in favor of several dummy corporations known to have close ties and are indirectly controlled by the Directors." Her allegations, then, call for the examination of the allegedly questionable loans. Whether these loans are covered by the prohibition on self-dealing is a matter for the BSP to determine. These are not ordinary intra-corporate matters; rather, they involve banking activities which are, by law, regulated and supervised by the BSP. As the Court has previously held: It is well-settled in both law and jurisprudence that the Central Monetary Authority, through the Monetary Board, is vested with exclusive authority to assess, evaluate and determine the condition of any bank, and finding such condition to be one of insolvency, or that its continuance in business would involve a probable loss to its depositors or creditors, forbid bank or non-bank financial institution to do business in the Philippines; and shall designate an official of the BSP or other competent person as receiver to immediately take charge of its assets and liabilities.
27 26
Correlatively, the General Banking Law of 2000 specifically deals with loans contracted by bank directors or officers, thus: SECTION 36. Restriction on Bank Exposure to Directors, Officers, Stockholders and Their Related Interests. No director or officer of any bank shall, directly or indirectly, for himself or as the representative or agent of others, borrow from such bank nor shall he become a guarantor, indorser or surety for loans from such bank to others, or in any manner be an obligor or incur any contractual liability to the bank except with the written approval of the majority of all the directors of the bank, excluding the director concerned: Provided, That such written approval shall not be required for loans, other credit accommodations and advances granted to officers under a fringe benefit plan approved by the Bangko Sentral. The required approval shall be entered upon the records of the bank and a copy of such entry shall be transmitted forthwith to the appropriate supervising and examining department of the Bangko Sentral. Dealings of a bank with any of its directors, officers or stockholders and their related interests shall be upon terms not less favorable to the bank than those offered to others. After due notice to the board of directors of the bank, the office of any bank director or officer who violates the provisions of this Section may be declared vacant and the director or officer shall be subject to the penal provisions of the New Central Bank Act. The Monetary Board may regulate the amount of loans, credit accommodations and guarantees that may be extended, directly or indirectly, by a bank to its directors, officers, stockholders and their related interests, as well as investments of such bank in enterprises owned or controlled by said directors, officers, stockholders and their related interests. However, the outstanding loans, credit accommodations and guarantees which a bank may extend to each of its stockholders, directors, or officers and their related interests, shall be limited to an amount equivalent to their respective unencumbered deposits and book value of their paid-in capital contribution in the bank: Provided, however, That loans, credit accommodations and guarantees secured by assets considered as non-risk by the Monetary Board shall be excluded from such limit: Provided, further, That loans, credit accommodations and advances to officers in the form of fringe benefits granted in accordance with rules as may be prescribed by the Monetary Board shall not be subject to the individual limit. The Monetary Board shall define the term "related interests." The limit on loans, credit accommodations and guarantees prescribed herein shall not apply to loans, credit accommodations and guarantees extended by a cooperative bank to its cooperative shareholders.
28
Furthermore, the authority to determine whether a bank is conducting business in an unsafe or unsound manner is also vested in the Monetary Board. The General Banking Law of 2000 provides: SECTION 56. Conducting Business in an Unsafe or Unsound Manner. In determining whether a particular act or omission, which is not otherwise prohibited by any law, rule or regulation affecting banks, quasi-banks or trust entities, may be deemed as conducting business in an unsafe or unsound manner for purposes of this Section, the Monetary Board shall consider any of the following circumstances:
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56.1. The act or omission has resulted or may result in material loss or damage, or abnormal risk or danger to the safety, stability, liquidity or solvency of the institution; 56.2. The act or omission has resulted or may result in material loss or damage or abnormal risk to the institution's depositors, creditors, investors, stockholders or to the Bangko Sentral or to the public in general; 56.3. The act or omission has caused any undue injury, or has given any unwarranted benefits, advantage or preference to the bank or any party in the discharge by the director or officer of his duties and responsibilities through manifest partiality, evident bad faith or gross inexcusable negligence; or 56.4. The act or omission involves entering into any contract or transaction manifestly and grossly disadvantageous to the bank, quasi-bank or trust entity, whether or not the director or officer profited or will profit thereby. Whenever a bank, quasi-bank or trust entity persists in conducting its business in an unsafe or unsound manner, the Monetary Board may, without prejudice to the administrative sanctions provided in Section 37 of the New Central Bank Act, take action under Section 30 of the same Act and/or immediately exclude the erring bank from clearing, the provisions of law to the contrary notwithstanding. Finally, the New Central Bank Act grants the Monetary Board the power to impose administrative sanctions on the erring bank: Section 37. Administrative Sanctions on Banks and Quasi-banks. - Without prejudice to the criminal sanctions against the culpable persons provided in Sections 34, 35, and 36 of this Act, the Monetary Board may, at its discretion, impose upon any bank or quasi-bank, their directors and/or officers, for any willful violation of its charter or by-laws, willful delay in the submission of reports or publications thereof as required by law, rules and regulations; any refusal to permit examination into the affairs of the institution; any willful making of a false or misleading statement to the Board or the appropriate supervising and examining department or its examiners; any willful failure or refusal to comply with, or violation of, any banking law or any order, instruction or regulation issued by the Monetary Board, or any order, instruction or ruling by the Governor; or any commission of irregularities, and/or conducting business in an unsafe or unsound manner as may be determined by the Monetary Board, the following administrative sanctions, whenever applicable: (a) fines in amounts as may be determined by the Monetary Board to be appropriate, but in no case to exceed Thirty thousand pesos (P30,000) a day for each violation, taking into consideration the attendant circumstances, such as the nature and gravity of the violation or irregularity and the size of the bank or quasi-bank; (b) suspension of rediscounting privileges or access to Bangko Sentral credit facilities; (c) suspension of lending or foreign exchange operations or authority to accept new deposits or make new investments; (d) suspension of interbank clearing privileges; and/or (e) revocation of quasi-banking license. Resignation or termination from office shall not exempt such director or officer from administrative or criminal sanctions. The Monetary Board may, whenever warranted by circumstances, preventively suspend any director or officer of a bank or quasi-bank pending an investigation: Provided, That should the case be not finally decided by the Bangko Sentral within a period of one hundred twenty (120) days after the date of suspension, said director or officer shall be reinstated in his position: Provided, further, That when the delay in the disposition of the case is due to the fault, negligence or petition of the director or officer, the period of delay shall not be counted in computing the period of suspension herein provided. The above administrative sanctions need not be applied in the order of their severity. Whether or not there is an administrative proceeding, if the institution and/or the directors and/or officers concerned continue with or otherwise persist in the commission of the indicated practice or violation, the Monetary Board may issue an order requiring the institution and/or the directors and/or officers concerned to cease and desist from the indicated practice or violation, and may further order that immediate action be taken to correct the conditions resulting from such practice or violation. The cease and desist order shall be immediately effective upon service on the respondents. The respondents shall be afforded an opportunity to defend their action in a hearing before the Monetary Board or any committee chaired by any Monetary Board member created for the purpose, upon request made by the respondents within five (5) days from their receipt of the order. If no such hearing is requested within said period, the order shall be final. If a hearing is conducted, all issues shall be determined on the basis of records, after which the Monetary Board may either reconsider or make final its order.
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The Governor is hereby authorized, at his discretion, to impose upon banking institutions, for any failure to comply with the requirements of law, Monetary Board regulations and policies, and/or instructions issued by the Monetary Board or by the Governor, fines not in excess of Ten thousand pesos (P10,000) a day for each violation, the imposition of which shall be final and executory until reversed, modified or lifted by the Monetary Board on appeal.
29
Koruga also accused Arcenas, et al. of violation of the Corporation Codes provisions on self-dealing and conflict of interest. She invoked Section 31 of the Corporation Code, which defines the liability of directors, trustees, or officers of a corporation for, among others, acquiring any personal or pecuniary interest in conflict with their duty as directors or trustees, and Section 32, which prescribes the conditions under which a contract of the corporation with one or more of its directors or trustees the so-called "self-dealing directors" would be valid. She also alleged that Banco Filipinos directors violated Sections 33 and 34 in approving the loans of corporations with interlocking ownerships, i.e., owned, directed, or managed by close associates of Albert C. Aguirre. Sections 31 to 34 of the Corporation Code provide: Section 31. Liability of directors, trustees or officers. - Directors or trustees who wilfully and knowingly vote for or assent to patently unlawful acts of the corporation or who are guilty of gross negligence or bad faith in directing the affairs of the corporation or acquire any personal or pecuniary interest in conflict with their duty as such directors or trustees shall be liable jointly and severally for all damages resulting therefrom suffered by the corporation, its stockholders or members and other persons. When a director, trustee or officer attempts to acquire or acquires, in violation of his duty, any interest adverse to the corporation in respect of any matter which has been reposed in him in confidence, as to which equity imposes a disability upon him to deal in his own behalf, he shall be liable as a trustee for the corporation and must account for the profits which otherwise would have accrued to the corporation. Section 32. Dealings of directors, trustees or officers with the corporation. - A contract of the corporation with one or more of its directors or trustees or officers is voidable, at the option of such corporation, unless all the following conditions are present: 1. That the presence of such director or trustee in the board meeting in which the contract was approved was not necessary to constitute a quorum for such meeting; 2. That the vote of such director or trustee was not necessary for the approval of the contract; 3. That the contract is fair and reasonable under the circumstances; and 4. That in case of an officer, the contract has been previously authorized by the board of directors. Where any of the first two conditions set forth in the preceding paragraph is absent, in the case of a contract with a director or trustee, such contract may be ratified by the vote of the stockholders representing at least two-thirds (2/3) of the outstanding capital stock or of at least two-thirds (2/3) of the members in a meeting called for the purpose: Provided, That full disclosure of the adverse interest of the directors or trustees involved is made at such meeting: Provided, however, That the contract is fair and reasonable under the circumstances. Section 33. Contracts between corporations with interlocking directors. - Except in cases of fraud, and provided the contract is fair and reasonable under the circumstances, a contract between two or more corporations having interlocking directors shall not be invalidated on that ground alone: Provided, That if the interest of the interlocking director in one corporation is substantial and his interest in the other corporation or corporations is merely nominal, he shall be subject to the provisions of the preceding section insofar as the latter corporation or corporations are concerned. Stockholdings exceeding twenty (20%) percent of the outstanding capital stock shall be considered substantial for purposes of interlocking directors. Section 34. Disloyalty of a director. - Where a director, by virtue of his office, acquires for himself a business opportunity which should belong to the corporation, thereby obtaining profits to the prejudice of such corporation, he must account to the latter for all such profits by refunding the same, unless his act has been ratified by a vote of the stockholders owning or representing at least two-thirds (2/3) of the outstanding capital stock. This provision shall be applicable, notwithstanding the fact that the director risked his own funds in the venture. Korugas invocation of the provisions of the Corporation Code is misplaced. In an earlier case with similar antecedents, we ruled that: The Corporation Code, however, is a general law applying to all types of corporations, while the New Central Bank Act regulates specifically banks and other financial institutions, including the dissolution and liquidation thereof. As between a general and special law, the latter shall prevail generalia specialibus non derogant.
32 31 30
Consequently, it is not the Interim Rules of Procedure on Intra-Corporate Controversies, or Rule 59 of the Rules of Civil Procedure on Receivership, that would apply to this case. Instead, Sections 29 and 30 of the New Central Bank
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Act should be followed, viz.: Section 29. Appointment of Conservator. - Whenever, on the basis of a report submitted by the appropriate supervising or examining department, the Monetary Board finds that a bank or a quasi-bank is in a state of continuing inability or unwillingness to maintain a condition of liquidity deemed adequate to protect the interest of depositors and creditors, the Monetary Board may appoint a conservator with such powers as the Monetary Board shall deem necessary to take charge of the assets, liabilities, and the management thereof, reorganize the management, collect all monies and debts due said institution, and exercise all powers necessary to restore its viability. The conservator shall report and be responsible to the Monetary Board and shall have the power to overrule or revoke the actions of the previous management and board of directors of the bank or quasi-bank. xxxx The Monetary Board shall terminate the conservatorship when it is satisfied that the institution can continue to operate on its own and the conservatorship is no longer necessary. The conservatorship shall likewise be terminated should the Monetary Board, on the basis of the report of the conservator or of its own findings, determine that the continuance in business of the institution would involve probable loss to its depositors or creditors, in which case the provisions of Section 30 shall apply. Section 30. Proceedings in Receivership and Liquidation. - Whenever, upon report of the head of the supervising or examining department, the Monetary Board finds that a bank or quasi-bank: (a) is unable to pay its liabilities as they become due in the ordinary course of business: Provided, That this shall not include inability to pay caused by extraordinary demands induced by financial panic in the banking community; (b) has insufficient realizable assets, as determined by the Bangko Sentral, to meet its liabilities; or (c) cannot continue in business without involving probable losses to its depositors or creditors; or (d) has willfully violated a cease and desist order under Section 37 that has become final, involving acts or transactions which amount to fraud or a dissipation of the assets of the institution; in which cases, the Monetary Board may summarily and without need for prior hearing forbid the institution from doing business in the Philippines and designate the Philippine Deposit Insurance Corporation as receiver of the banking institution. xxxx The actions of the Monetary Board taken under this section or under Section 29 of this Act shall be final and executory, and may not be restrained or set aside by the court except on petition for certiorari on the ground that the action taken was in excess of jurisdiction or with such grave abuse of discretion as to amount to lack or excess of jurisdiction. The petition for certiorari may only be filed by the stockholders of record representing the majority of the capital stock within ten (10) days from receipt by the board of directors of the institution of the order directing receivership, liquidation or conservatorship. The designation of a conservator under Section 29 of this Act or the appointment of a receiver under this section shall be vested exclusively with the Monetary Board. Furthermore, the designation of a conservator is not a precondition to the designation of a receiver.
33
On the strength of these provisions, it is the Monetary Board that exercises exclusive jurisdiction over proceedings for receivership of banks. Crystal clear in Section 30 is the provision that says the "appointment of a receiver under this section shall be vested exclusively with the Monetary Board." The term "exclusively" connotes that only the Monetary Board can resolve the issue of whether a bank is to be placed under receivership and, upon an affirmative finding, it also has authority to appoint a receiver. This is further affirmed by the fact that the law allows the Monetary Board to take action "summarily and without need for prior hearing." And, as a clincher, the law explicitly provides that "actions of the Monetary Board taken under this section or under Section 29 of this Act shall be final and executory, and may not be restrained or set aside by the court except on a petition for certiorari on the ground that the action taken was in excess of jurisdiction or with such grave abuse of discretion as to amount to lack or excess of jurisdiction."
1 av v ph 1 i
From the foregoing disquisition, there is no doubt that the RTC has no jurisdiction to hear and decide a suit that seeks to place Banco Filipino under receivership. Koruga herself recognizes the BSPs power over the allegedly unlawful acts of Banco Filipinos directors. The records of this case bear out that Koruga, through her legal counsel, wrote the Monetary Board on April 21, 2003 to bring to its attention the acts she had enumerated in her complaint before the RTC. The letter reads in part:
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Banco Filipino and the current members of its Board of Directors should be placed under investigation for violations of banking laws, the commission of irregularities, and for conducting business in an unsafe or unsound manner. They should likewise be placed under preventive suspension by virtue of the powers granted to the Monetary Board under Section 37 of the Central Bank Act. These blatant violations of banking laws should not go by without penalty. They have put Banco Filipino, its depositors and stockholders, and the entire banking system (sic) in jeopardy. xxxx We urge you to look into the matter in your capacity as regulators. Our clients, a minority stockholders, (sic) and many depositors of Banco Filipino are prejudiced by a failure to regulate, and taxpayers are prejudiced by accommodations granted by the BSP to Banco Filipino
35
In a letter dated May 6, 2003, BSP Supervision and Examination Department III Director Candon B. Guerrero referred Korugas letter to Arcenas for comment. On June 6, 2003, Banco Filipinos then Executive Vice President and Corporate Secretary Francisco A. Rivera submitted the banks comments essentially arguing that Korugas accusations lacked legal and factual bases.
37 36
On the other hand, the BSP, in its Answer before the RTC, said that it had been looking into Banco Filipinos activities. An October 2002 Report of Examination (ROE) prepared by the Supervision and Examination Department (SED) noted certain dacion payments, out-of-the-ordinary expenses, among other dealings. On July 24, 2003, the Monetary Board passed Resolution No. 1034 furnishing Banco Filipino a copy of the ROE with instructions for the bank to file its comment or explanation within 30 to 90 days under threat of being fined or of being subjected to other remedial actions. The ROE, the BSP said, covers substantially the same matters raised in Korugas complaint. At the time of the filing of Korugas complaint on August 20, 2003, the period for Banco Filipino to submit its explanation had not yet expired.
38
Thus, the courts jurisdiction could only have been invoked after the Monetary Board had taken action on the matter and only on the ground that the action taken was in excess of jurisdiction or with such grave abuse of discretion as to amount to lack or excess of jurisdiction. Finally, there is one other reason why Korugas complaint before the RTC cannot prosper. Given her own admission and the same is likewise supported by evidence that she is merely a minority stockholder of Banco Filipino, she would not have the standing to question the Monetary Boards action. Section 30 of the New Central Bank Act provides: The petition for certiorari may only be filed by the stockholders of record representing the majority of the capital stock within ten (10) days from receipt by the board of directors of the institution of the order directing receivership, liquidation or conservatorship. All the foregoing discussion yields the inevitable conclusion that the CA erred in upholding the jurisdiction of, and remanding the case to, the RTC. Given that the RTC does not have jurisdiction over the subject matter of the case, its refusal to dismiss the case on that ground amounted to grave abuse of discretion. WHEREFORE, the foregoing premises considered, the Petition in G.R. No. 168332 is DISMISSED, while the Petition in G.R. No. 169053 is GRANTED. The Decision of the Court of Appeals dated July 20, 2005 in CA-G.R. SP No. 88422 is hereby SET ASIDE. The Temporary Restraining Order issued by this Court on March 13, 2006 is made PERMANENT. Consequently, Civil Case No. 03-985, pending before the Regional Trial Court of Makati City, is DISMISSED. SO ORDERED. ANTONIO EDUARDO B. NACHURA Associate Justice WE CONCUR: CONSUELO YNARES-SANTIAGO Associate Justice Chairperson ANTONIO T. CARPIO Associate Justice
*
RENATO C. CORONA Associate Justice DIOSDADO M. PERALTA Associate Justice ATTESTATION
**
I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the
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writer of the opinion of the Courts Division. CONSUELO YNARES-SANTIAGO Associate Justice Chairperson, Third Division CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. REYNATO S. PUNO Chief Justice
Footnotes Additional member in lieu of Associate Justice Conchita Carpio Morales per Special Order No. 646 dated May 15, 2009. Additional member in lieu of Associate Justice Minita V. Chico-Nazario per Special Order No. 631 dated April 29, 2009.
1 2 3 4 5 6 7 8 9 ** *
Rollo (G.R. No. 168332), pp. 48-49. Now a Justice of the Court of Appeals. Rollo (G.R. No. 168332), pp. 7-9. CA rollo, p. 48. Id. at 52-60. Id. at 50. Id. at 2-47. Id. at 95-97. Rollo (G.R. No. 168332), p. 196. Id. at 197-198. Id. at 49. Id. at 40.
10 11 12 13
Penned by Associate Justice Eugenio S. Labitoria, with Associate Justices Eliezer R. delos Santos and Arturo D. Brion (now a member of this Court), concurring; id. at 259-277.
14 15 16 17 18 19 20
Rollo (G.R. No. 169053), pp. 58-76. Id. at 8-9. Id. at 17-18. Rollo (G.R. No. 168332), p. 44. Id. at 286-288. Id. at 290-292. Rollo (G.R. No. 169053), p. 75.
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Republic Act (R.A.) No. 8791. R.A. No. 8791, Sec. 3 (3.1).
Central Bank of the Philippines v. Court of Appeals, G.R. No. 88353, May 8, 1992, 208 SCRA 652, 684-685. R.A. No. 7653. R.A. No. 8791, Sec. 4. (Emphasis supplied.) Memorandum, rollo (G.R. No. 169053), p. 717.
24 25 26 27
Miranda v. Philippine Deposit Insurance Corporation, G.R. No. 169334, September 8, 2006, 501 SCRA 288, 298. Emphasis supplied. Emphasis supplied.
28 29 30
See Prime White Cement Corporation v. Honorable Intermediate Appellate Court, et al., G.R. No. 68555, March 19, 1993, 220 SCRA 103. In Re: Petition for Assistance in the Liquidation of the Rural Bank of Bokod (Benguet), Inc., PDIC v. Bureau of Internal Revenue, G.R. No. 158261, December 18, 2006, 511 SCRA 123, 141, citing Laureano v. Court of Appeals, 381 Phil. 403, 411-412 (2000). A.M. No. 01-2-04-SC dated April 1, 2001. Emphasis supplied. Rollo (G.R. No. 169053), pp. 266-272 Id. at 271-272. (Citations omitted.) Id. at p.457 Id. at pp. 459-462. CA rollo, p. 460.
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Republic of the Philippines SUPREME COURT Manila FIRST DIVISION
G.R. No. 111080
April 5, 2000
JOSE S. OROSA and MARTHA P. OROSA, petitioners, vs. HON. COURT OF APPEALS and FCP CREDIT CORPORATION, respondents.
YNARES-SANTIAGO, J.: On December 6, 1984, private respondent FCP Credit Corporation filed a complaint for replevin and damages in the Regional Trial Court of Manila against petitioner Jose S. Orosa and one John Doe to recover possession of a 1983 Ford Laser 1.5 Sedan with Motor and Serial No. SUNKBT-14584. The complaint alleged that on September 28, 1983, petitioner purchased the subject motor vehicle on installment from Fiesta Motor Sales Corporation. He executed and delivered to Fiesta Motor Sales Corp. a promissory note in the sum of P133,824.00 payable in monthly installments. To secure payment, petitioner executed a chattel mortgage over the subject motor vehicle in favor of Fiesta Motor Sales Corp. On September 28, 1983, Fiesta Motor Sales assigned the promissory note and chattel mortgage to private respondent FCP Credit Corporation. The complaint further alleged that petitioner failed to pay part of the installment which fell due on July 28, 1984 as well as three (3) consecutive installment which fell due on August 28, September 28, and October 28, 1984. Consequently, private respondent FCP Credit Corporation demanded from petitioner payment of the entire outstanding balance of the obligation amounting to P106,154.48 with accrued interest and to surrender the vehicle which petitioner was allegedly detaining. After trial, the lower court dismissed private respondent's complaint in a Decision dated March 25, 1988, the decretal portion of which reads: WHEREFORE, judgment is rendered for the defendant, and against the plaintiff: 1) Dismissing the complaint for lack of merit; 2) Declaring that the plaintiff was not entitled to the Writ of Replevin, issued on January 7, 1985, and is now liable to the defendant for actual damages under the Replevin bond it filed; 3) On defendant's counter-claim, ordering the plaintiff to pay the defendant the sum of P400,000.00 as moral damages, P100,000.00 as exemplary damages, and P50,000.00 as, and for, attorney's fees; 4) Ordering the plaintiff to return to the defendant the subject 1983 Ford Laser Sedan, with Motor or Serial No. SUNKBT-14584, or its equivalent, in kind or value, in cash, as of this date, and to pay the costs. SO ORDERED. The trial court ruled that private respondent FCP had no reason to file the present action since petitioner already paid the installments for the months of July to November 1984, which are the sole bases of the complaint. The lower court declared that private respondent was not entitled to the writ of replevin, and was liable to petitioner for actual damages under the replevin bond it filed.
3 2 1
Ruling on petitioner's counterclaim, the trial court stated that there was no legal or factual basis for the writ of replevin and that its enforcement by the sheriff was "highly irregular, and unlawful, done, as it was, under shades of extortion, threats and force." The trial court ordered private respondent to pay the sum of P400,000.00 as moral damages; P100,000.00 as exemplary damages and P50,000.00 as attorney's fees. Private respondent was also ordered to return to petitioner the 1983 Ford Laser 1.5 Sedan, or its equivalent, in kind or value in cash, as of date of judgment and to pay the costs of the suit.
5 4
On June 7, 1988, a "Supplemental Decision" was rendered by the trial court ordering private respondent's surety,
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Stronghold Insurance Co., Inc. to jointly and severally [with private respondent] return to petitioner the 1983 Ford Laser 1.5 Sedan or its, equivalent in kind or in cash and to pay the damages specified in the main decision to the extent of the value of the replevin bond in the amount of P210,000.00.
6
The surety company filed with the Court of Appeals a petition for certiorari to annul the Order of the trial court denying its motion for partial reconsideration, as well as the Supplemental Decision. On the other hand, private respondent appealed the decision of the RTC Manila to the Court of Appeals. The surety company's petition for certiorari, docketed as CA-G.R. SP No. 14938, was dismissed by the Court of Appeals' First Division which upheld the trial court's order of execution pending appeal. On November 6, 1989, this Court affirmed the Court of Appeals decision, but deleted the order for the issuance of a writ of execution pending appeal.
8 7
Meanwhile, in private respondent's appeal, the Court of Appeals' Eighth Division partially affirmed the ruling of the trial court, in a Decision dated April 19, 1993, the dispositive portion of which reads:
9
WHEREFORE, the Decision of 25 March 1988 of the Regional Trial Court, Branch 3, Manila is hereby AFFIRMED with the following modifications: (1) The award of moral damages, exemplary damages and attorney's fees is DELETED; (2) The order directing plaintiff-appellant FCP Credit Corporation to return to defendant-appellee Jose S. Orosa the subject 1983 Ford Laser Sedan, with Motor and Serial No. SUNKBT-14584, its equivalent, in kind or value in cash, as of 25 March 1988, and to pay the costs is DELETED; and; (3) Plaintiff-appellant FCP Credit Corporation is ordered to pay defendant-appellee Jose S. Orosa the amount equivalent to the value of the fourteen (14) monthly installments made by the latter to the former on the subject motor vehicle, with interest from the time of filing of the complaint or from 6 December 1984. No costs. SO ORDERED. Hence, this petition for review, on the following assignments of error:
10
(1) The Hon. Court of Appeals (former Eighth Division) acted without or in excess of jurisdiction when reversed a final decision dated September 9, 1988, of a co-equal division of the Hon. Court of Appeals (Special First Division) promulgated in CA. G.R. No. 14938, and which was sustained by the Hon. Supreme Court in a final decision promulgated in G.R. No. 84979 dated November 6, 1989 which cases have the same causes of actions, same set of facts, the same parties and the same relief. (2) The Hon. Court of Appeals (former Eighth Division) acted with grave abuse of discretion and authority when it considered causes of actions not alleged in the complaint and which were raised for the first time on appeal in deciding this case. (3) The Hon. Court of Appeals (former Eighth Division) committed serious error in applying the cause of Filinvest Credit Corporation vs. Ivans Mendez, 152 SCRA 598, as basis in deciding this case when said case has a different set of facts from this case. In its first assignment of error, petitioner alleges that the Eighth Division of the Court of Appeals had no jurisdiction to review the present case since the First Division of the Court of Appeals already passed upon the law and the facts of the same. Petitioner alleges that the present appeal involves the same causes of action, same parties, same facts and same relief involved in the decision rendered by the First Division and affirmed by this Court in G.R. No. 84979.
11
Petitioner's argument is untenable. Jurisdiction is simply the power or authority to hear a case. The appellate jurisdiction of the Court of Appeals to review decisions and orders of lower courts is conferred by Batas Pambansa Blg. 129. More importantly, petitioner cannot now assail the Court of Appeals' jurisdiction after having actively participated in the appeal and after praying for affirmative relief.
12
Neither can petitioner argue that res judicata bars the determination of the present case. The two cases involve different subject matters, parties and seek different reliefs. The petition docketed as CA-G.R. SP No. 14938 was for certiorari with injunction, brought by Stronghold Insurance Company, Inc. alleging that there was grave abuse of discretion when the trial court adjudged it liable for damages without due process, in violation of Rule 60, Section 10 in relation to Rule 57, Section 20, of the Rules of Court. The surety also questioned the propriety of the writ of execution issued by the trial court pending appeal.
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On the other hand, CA-G.R. CV No. 25929 was filed by petitioner Orosa under Rule 45 of the Revised Rules of Court raising alleged errors of law on the part of the trial court. The subject of the appeal was the main decision, while the subject of the petition in CA-G.R. SP No. 14938 was the Supplemental Decision. We agree with the Court of Appeals that:
14
The decisions of the Court of Appeals in CA-G.R. SP No. 14938 and the Supreme Court in G.R. No. 84979 did not pass on the merits of this case. It merely ruled on the issues of whether the surety, Stronghold Insurance, Co., Inc., can be held jointly and solidarily liable with plaintiff-appellant and whether execution pending appeal is proper under the facts and circumstances of this case. Consequently, this Court is not estopped from reviewing the conclusions reached by the court a quo. (emphasis ours) In its second assigned error, petitioner posits that the Court of Appeals committed grave abuse of discretion when it considered causes of actions which were raised for the first time on appeal.
15
True, private respondent submitted issues to the Court of Appeals which were not raised in the original complaint. Private respondent belatedly pointed out that:
16
1.1. It is pertinent to note that Defendant-Appellee has waived prior notice and demand in order to be rendered in default, as in fact the Promissory Note expressly stipulates that the monthly installments shall be paid on the date they fall due, without need of prior notice or demand. 1.2. Said Promissory Note likewise expressly stipulates that a late payment charge of 2% per month shall be added on each unpaid installment from maturity thereof until fully paid. 1.3. Of equal significance is the Acceleration Clause in the Promissory Note which states that if default be made in the payment of any of the installments or late payment charges thereon when the same became due and payable, the total principle sum then remaining unpaid, together with the agreed late payment charges thereon, shall at once become due and payable. Private respondent argued that based on the provisions of the Promissory Note itself, petitioner incurred in default since, even though there was actual payment of the installments which fell due on July 28, 1984, as well as the three installments on August 28 to October 28, 1984, the payments were all late and irregular. Private respondent also argued that petitioner assigned the subject car to his daughter without the written consent of the obligee, and hence, violated the terms of the chattel mortgage. Meritorious as these arguments are, they come too late in the day. Basic is the rule that matters not raised in the complaint cannot be raised for the first time on appeal. Contrary to petitioner's accusation, the Court of Appeals restricted the determination of the case to matters alleged in the complaint and raised during trial. Citing jurisprudence, the Court of Appeals held that "it would be offensive to the basic rule of fair play, justice and due process" if it considered issues raised for the first time on appeal.
21 19 20 18 17
The Court of Appeals' statement that "under the terms and conditions of the chattel mortgage, defendant-appellee Jose S. Orosa was already in default," was made only to justify the deletion of the trial court's award of moral, exemplary damages and attorney's fees, in consonance with its finding that private respondent was motivated by a sincere belief that it had sufficient basis and acted in good faith when it filed the claim.
22
We now come to the matter of moral damages. Petitioner insists that he suffered untold embarrassment when the complaint was filed against him. According to petitioner, the car subject of this case was being used by his daughter, married to Jose Concepcion III, a scion of a prominent family. Petitioner laments that he assigned the car to his daughter so that she could "approximate without equaling the status of her in-laws." This being the case, petitioner experienced anguish and unquantifiable humiliation when he had to face his daughter's wealthy in-laws to explain the "why and the whats of the subject case." Petitioner further insists that an award of moral damages is especially justified since he is no ordinary man, but a businessman of high social standing, a graduate of De La Salle University and belongs to a well known family of bankers.
23
We must deny the claim. The law clearly states that one may only recover moral damages if they are the proximate result of the, other party's wrongful act or omission. Two elements are required. First, the act or omission must be the proximate result of the physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation and similar injury. Second, the act must be wrongful. Petitioner maintains that embarrassment resulted when he had to explain the suit to his daughter's in-laws. However, that could have been avoided had he not assigned the car to his daughter and had he been faithful and prompt in paying the installments required. Petitioner brought the situation upon himself and cannot now complain that private respondent is liable for the mental anguish and humiliation he suffered.
1a\ ^ / phi 1
24
Furthermore, we agree with the appellate court that when private respondent brought the complaint, it did so only to
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exercise a legal right, believing that it had a meritorious cause of action clearly borne out by a mere perusal of the promissory note and chattel mortgage. To constitute malicious prosecution, there must be proof that the prosecution was prompted by a sinister design to vex and humiliate a person, and that it was initiated deliberately, knowing that the charges were false and groundless. Such was not the case when the instant complaint was filed. The rule has always been that moral damages cannot be recovered from a person who has filed a complaint against another in good faith.
26 25
The law always presumes good faith such that any person who seeks to be awarded damages due to
27
acts of another has the burden of proving that the latter acted in bad faith or with ill motive.
Anent the award of exemplary damages, jurisprudence provides that where a party is not entitled to actual or moral damages, an award of exemplary damages is likewise baseless.
28
In the matter of attorney's fees, petitioner avers that to prosecute and defend this case in the lower court and in the appellate court, he incurred expenses amounting to P50,000.00, and as such, attorney's fees should be granted. We deny the claim. No premium should be placed on the right to litigate and not every winning party is entitled to an automatic grant of attorney's fees. Article 2208 of the Civil Code.
31 30 29
The party must show that he falls under one of the instances enumerated in
32
This, petitioner failed to do. Furthermore, where the award of moral and exemplary
damages is eliminated, so must the award for attorney's fees be deleted.
We also agree with the Court of Appeals that the trial court erred when it ordered private respondent to return the subject car or its equivalent considering that petitioner had not yet fully paid the purchase price. Verily, to sustain the trial court's decision would amount to unjust enrichment. The Court of Appeals was correct when it instead ordered private respondent to return, not the car itself, but only the amount equivalent to the fourteen installments actually paid with interest.
33
WHEREFORE, above premises considered, the petition is DENIED, and the Court of Appeals' Decision of April 19, 1993 and its Resolution of July 22, 1993 are AFFIRMED in toto. No costs.
1 wphi 1 . nt
SO ORDERED. Davide, Jr., C.J., Kapunan and Pardo, JJ., concur. Puno, J., took no part.
Footnotes
1 2 3 4 5 6 7 8 9
Records, p. 1. Ibid. Rollo, p. 66. Rollo, p. 67. Rollo, p. 68. Records, p. 321. Rollo, pp. 220-228. Rollo, pp. 230-241. Rollo, p. 49-59. Rollo, p. 12. Rollo, p. 11.
10 11 12
Francisco Motors Corporation v. Court of Appeals and Spouses Gregorio and Librada Manuel, G.R. No. 100812, June 25, 1999.
13
Records, p. 341.
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14 15 16 17 18 19
Rollo, p. 52. Rollo, p. 12. Rollo, p. 85. Rollo, p. 90. Rollo, pp. 99-100.
Said the Court of Appeals: "Accordingly, the Court will limit itself to the determination of whether or not defendant-appellee Jose S. Orosa did in fact fail to pay the monthly installments that fell due from 28 July 1984 and 28 October 1984." (Rollo, p. 55).
20
Medida, et al. v. Court of Appeals, et al., 208 SCRA 887 (1992); Gevero, et al. v. Intermediate Appellate Court, et al., 189 SCRA 201 (1990). Rollo, p. 55. Rollo, p. 57. Rollo, p. 36. Civil Code, Art. 2217. Drilon, et al. v. Court of Appeals, et al., 270 SCRA 211 (1997). Mijares, et al. v. Court of Appeals, et al., 271 SCRA 558 (1997). Ford Philippines, Inc., et al. v. Court of Appeals, et al., 267 SCRA 320 (1997). Bernardo v. Court of Appeals (Special Sixth Division), et al., 275 SCRA 413 (1997). Rollo, p. 37. Philtranco Service Enterprises, Inc., et al. v. Court of Appeals, et al., 273 SCRA 562 (1997).
21 22 23 24 25 26 27 28 29 30 31
Art. 2208 of the Civil Code provides: In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial cost cannot be recovered except; (1) When exemplary damages are awarded; (2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons, or to incur expenses to protect his interest; (3) In criminal cases of malicious prosecution against the plaintiff; (4) In case of a clearly unfounded civil action or proceeding against the plaintiff; (5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly valid, just and demandable claim; (6) In actions for legal support; (7) In actions far recovery of wages of household helpers, laborers and skilled workers; (8) In actions for indemnity under workmen's compensation and employer's liability laws; (9) In a separate civil action to recover civil liability arising from a crime; (10) When at least double judicial costs are awarded; (11) In any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be recovered. In all cases, the attorney's fees and expenses of litigation must be reasonable.
32
Bernardo v. Court of Appeals (Special Sixth Division), et al., supra.
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33
Rollo, p. 57.
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G.R. No. 174356
Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 174356 January 20, 2010
EVELINA G. CHAVEZ and AIDA CHAVEZ-DELES, Petitioners, vs. COURT OF APPEALS and ATTY. FIDELA Y. VARGAS, Respondents. DECISION ABAD, J.: This case is about the propriety of the Court of Appeals (CA), which hears the case on appeal, placing the property in dispute under receivership upon a claim that the defendant has been remiss in making an accounting to the plaintiff of the fruits of such property. The Facts and the Case Respondent Fidela Y. Vargas owned a five-hectare mixed coconut land and rice fields in Sorsogon. Petitioner Evelina G. Chavez had been staying in a remote portion of the land with her family, planting coconut seedlings on the land and supervising the harvest of coconut and palay. Fidela and Evelina agreed to divide the gross sales of all products from the land between themselves. Since Fidela was busy with her law practice, Evelina undertook to hold in trust for Fidela her half of the profits. But Fidela claimed that Evelina had failed to remit her share of the profits and, despite demand to turn over the administration of the property to Fidela, had refused to do so. Consequently, Fidela filed a complaint against Evelina and her daughter, Aida C. Deles, who was assisting her mother, for recovery of possession, rent, and damages with prayer for the immediate appointment of a receiver before the Regional Trial Court (RTC) of Bulan, Sorsogon. In their answer, Evelina and Aida claimed that the RTC did not have jurisdiction over the subject matter of the case since it actually involved an agrarian dispute. After hearing, the RTC dismissed the complaint for lack of jurisdiction based on Fidelas admission that Evelina and Aida were tenants who helped plant coconut seedlings on the land and supervised the harvest of coconut and palay. As tenants, the defendants also shared in the gross sales of the harvest. The court threw out Fidelas claim that, since Evelina and her family received the land already planted with fruit-bearing trees, they could not be regarded as tenants. Cultivation, said the court, included the tending and caring of the trees. The court also regarded as relevant Fidelas pending application for a five-hectare retention and Evelinas pending protest relative to her three-hectare beneficiary share.
2 1
Dissatisfied, Fidela appealed to the CA. She also filed with that court a motion for the appointment of a receiver. On April 12, 2006 the CA granted the motion and ordained receivership of the land, noting that there appeared to be a need to preserve the property and its fruits in light of Fidelas allegation that Evelina and Aida failed to account for her share of such fruits.
3
Parenthetically, Fidela also filed three estafa cases with the RTC of Olongapo City and a complaint for dispossession with the Department of Agrarian Reform Adjudication Board (DARAB) against Evelina and Aida. In all these cases, Fidela asked for the immediate appointment of a receiver for the property. The Issues Presented Petitioners present the following issues: 1. Whether or not respondent Fidela is guilty of forum shopping considering that she had earlier filed identical applications for receivership over the subject properties in the criminal cases she filed with the RTC of Olongapo City against petitioners Evelina and Aida and in the administrative case that she filed against them before the DARAB; and 2. Whether or not the CA erred in granting respondent Fidelas application for receivership.
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The Courts Ruling One. By forum shopping, a party initiates two or more actions in separate tribunals, grounded on the same cause, trusting that one or the other tribunal would favorably dispose of the matter. The elements of forum shopping are the same as in litis pendentia where the final judgment in one case will amount to res judicata in the other. The elements of forum shopping are: (1) identity of parties, or at least such parties as would represent the same interest in both actions; (2) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (3) identity of the two preceding particulars such that any judgment rendered in the other action will, regardless of which party is successful, amount to res judicata in the action under consideration.
5 4
Here, however, the various suits Fidela initiated against Evelina and Aida involved different causes of action and sought different reliefs. The present civil action that she filed with the RTC sought to recover possession of the property based on Evelina and Aidas failure to account for its fruits. The estafa cases she filed with the RTC accused the two of misappropriating and converting her share in the harvests for their own benefit. Her complaint for dispossession under Republic Act 8048 with the DARAB sought to dispossess the two for allegedly cutting coconut trees without the prior authority of Fidela or of the Philippine Coconut Authority. The above cases are similar only in that they involved the same parties and Fidela sought the placing of the properties under receivership in all of them. But receivership is not an action. It is but an auxiliary remedy, a mere incident of the suit to help achieve its purpose. Consequently, it cannot be said that the grant of receivership in one case will amount to res judicata on the merits of the other cases. The grant or denial of this provisional remedy will still depend on the need for it in the particular action. Two. In any event, we hold that the CA erred in granting receivership over the property in dispute in this case. For one thing, a petition for receivership under Section 1(b), Rule 59 of the Rules of Civil Procedure requires that the property or fund subject of the action is in danger of being lost, removed, or materially injured, necessitating its protection or preservation. Its object is the prevention of imminent danger to the property. If the action does not require such protection or preservation, the remedy is not receivership.
6
Here Fidelas main gripe is that Evelina and Aida deprived her of her share of the lands produce. She does not claim that the land or its productive capacity would disappear or be wasted if not entrusted to a receiver. Nor does Fidela claim that the land has been materially injured, necessitating its protection and preservation. Because receivership is a harsh remedy that can be granted only in extreme situations, Fidela must prove a clear right to its issuance. But she has not. Indeed, in none of the other cases she filed against Evelina and Aida has that remedy been granted her.
8 7
Besides, the RTC dismissed Fidelas action for lack of jurisdiction over the case, holding that the issues it raised properly belong to the DARAB. The case before the CA is but an offshoot of that RTC case. Given that the RTC has found that it had no jurisdiction over the case, it would seem more prudent for the CA to first provisionally determine that the RTC had jurisdiction before granting receivership which is but an incident of the main action.
1 a vv p h i 1
WHEREFORE, the Court GRANTS the petition. The Resolutions dated April 12, 2006 and July 7, 2006 of the Court of Appeals in CA-G.R. CV 85552, are REVERSED and SET ASIDE. The receivership is LIFTED and the Court of Appeals is directed to resolve CA-G.R. CV 85552 with utmost dispatch. SO ORDERED. ROBERTO A. ABAD Associate Justice WE CONCUR: ANTONIO T. CARPIO Associate Justice ARTURO D. BRION Associate Justice JOSE P. PEREZ Associate Justice ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. ANTONIO T. CARPIO Associate Justice MARIANO C. DEL CASTILLO Associate Justice
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Chairperson, Second Division CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution and the Division Chairpersons Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. REYNATO S. PUNO Chief Justice
Footnotes
1 2 3
Branch 65. Rollo, pp. 59-64.
Id. at 13-15. Penned by Associate Justice Hakim S. Abdulwahid, with Associate Justices Remedios A. Salazar-Fernando and Estela M. Perlas-Bernabe concurring.
4 5 6
Philippine National Construction Corporation v. Dy, G.R. No. 156887, October 3, 2005, 472 SCRA 1, 6. Cruz v. Caraos, G.R. No. 138208, April 23, 2007, 521 SCRA 510, 522.
Commodities Storage & Ice Plant Corp. v. Court of Appeals, G.R. No. 125008, June 19, 1997, 274 SCRA 439, 446-447. Vivares v. Reyes, G.R. No. 155408, February 13, 2008, 545 SCRA 80, 87. Rollo, pp. 93, 205-208, 295-301.
7 8
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G.R. No. 148132
http://sc.judiciary.gov.ph/jurisprudence/2008/jan2008/148132.htm
THIRD DIVISION SMART COMMUNICATIONS, INC., Petitioner, - versus REGINA M. ASTORGA, Respondent. x---------------------------------------------------x SMART COMMUNICATIONS, INC., Petitioner, - versus REGINA M. ASTORGA, Respondent. x---------------------------------------------------x REGINA M. ASTORGA, Petitioner, G.R. No. 148132
G.R. No. 151079
G.R. No. 151372
Present: - versus YNARES-SANTIAGO, J., Chairperson, AUSTRIA-MARTINEZ, CORONA,* NACHURA, and REYES, JJ. SMART COMMUNICATIONS, INC. and ANN MARGARET V. SANTIAGO, Respondents. Promulgated: ____________________ x------------------------------------------------------------------------------------x DECISION NACHURA, J.:
For the resolution of the Court are three consolidated petitions for review on certiorari under Rule 45 of the Rules of Court. G.R. No. 148132 assails the February 28, 2000
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Decision
[1]
[2] and the May 7, 2001 Resolution of the Court of Appeals (CA) in CA-G.R. SP.
[3] and the No. 53831. G.R. Nos. 151079 and 151372 question the June 11, 2001 Decision [4] December 18, 2001 Resolution in CA-G.R. SP. No. 57065. 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 Services Division (CSMG/FSD). She was receiving a monthly salary of P33,650.00. As District Sales Manager, Astorga enjoyed additional benefits, namely, annual performance incentive equivalent to 30% of her annual gross salary, a group [5] life and hospitalization insurance coverage, and a car plan in the amount of P455,000.00. In February 1998, SMART launched an organizational realignment to achieve more [6] Part efficient operations. This was made known to the employees on February 27, 1998. of the reorganization was the 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 the sales and marketing work, SMART abolished the CSMG/FSD, Astorgas division. 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 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 a supervisory position in the Customer Care Department, but she refused the offer because the position carried lower salary rank and rate. Despite the abolition of the CSMG/FSD, Astorga continued reporting for work. But on March 3, 1998, 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 [7] 16, 1998. [8] The termination of her employment prompted Astorga to file a Complaint for illegal dismissal, non-payment of salaries and other benefits with prayer for moral and exemplary
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damages against SMART and Ann Margaret V. Santiago (Santiago).
She claimed that
abolishing CSMG and, consequently, terminating her employment was illegal for it violated her right to security of tenure. She also posited that it was illegal for an employer, like SMART, to contract out services which will displace the employees, especially if the [9] contractor is an in-house agency. 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 result of the abolition of CSMG and the creation of a specialized and more technically equipped SNMI, which is a valid and [10] legitimate exercise of management prerogative. 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 to surrender the same to the company for proper [11] Astorga, however, failed and refused to do either, thus prompting SMART to disposition. file a suit for replevin with the Regional Trial Court of Makati (RTC) on August 10, 1998. [12] The case was docketed as Civil Case No. 98-1936 and was raffled to Branch 57. Astorga moved to dismiss the complaint on grounds of (i) lack of jurisdiction; (ii) failure to state a cause of 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 [13] same is vested in the labor tribunal and not in regular courts. Pending resolution of Astorgas motion to dismiss the replevin case, the Labor Arbiter [14] dated August 20, 1998, declaring Astorgas dismissal from rendered a Decision employment illegal. While recognizing SMARTs right to abolish any of its departments, the Labor Arbiter held that such right should be exercised in good faith and for causes beyond its control. The Arbiter found the abolition of CSMG done neither in good faith nor for causes beyond the control of SMART, but a ploy to terminate Astorgas employment. The Arbiter also ruled that contracting out the functions performed by Astorga to an in-house agency like SNMI was illegal, citing Section 7(e), Rule VIII-A of the Rules Implementing the Labor
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Code. Accordingly, the Labor Arbiter ordered:

WHEREFORE, judgment is hereby rendered declaring the dismissal of [Astorga] to be illegal and unjust. [SMART and Santiago] are hereby ordered to: 1. Reinstate [Astorga] to [her] former position or to a substantially equivalent position, without 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 of this date, are as follows: (a) Astorga BACKWAGES; (P33,650.00 x 4 months) UNPAID SALARIES (February 15, 1998April 3, 1998 February 15-28, 1998 March 1-31, [1998] April 1-3, 1998 CAR MAINTENANCE ALLOWANCE (P2,000.00 x 4) FUEL ALLOWANCE (300 liters/mo. x 4 mos. at P12.04/liter) TOTAL 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 4. Jointly and severally pay 10% of the amount due as attorneys fees. = P134,600.00
= P 16,823.00 = P 33,650.00 = P 3,882.69
= P 8,000.00 = P 14,457.83 = P211,415.52
[15]
SO ORDERED.
[16] denying Astorgas Subsequently, on March 29, 1999, the RTC issued an Order motion to dismiss the replevin case. In so ruling, the RTC ratiocinated that:
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 name of the plaintiff. Recovery thereof via replevin suit is allowed by Rule 60 of the 1997 Rules of Civil Procedure, which is undoubtedly within the jurisdiction of the Regional Trial
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Court. 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 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 case. WHEREFORE, the Motion to Dismiss is hereby denied for lack of merit. [17] SO ORDERED.
Astorga filed a motion for reconsideration, but the RTC denied it on June 18, 1999.
[18]
Astorga elevated the denial of her motion via certiorari to the CA, which, in its [19] reversed the RTC ruling. Granting the petition and, February 28, 2000 Decision, consequently, dismissing the replevin case, the CA held that the case is intertwined with Astorgas complaint for illegal dismissal; thus, it is the labor tribunal that has rightful jurisdiction over the complaint. SMARTs motion for reconsideration having been [20] it elevated the case to this Court, now docketed as G.R. No. 148132. denied, Meanwhile, SMART also appealed the unfavorable ruling of the Labor Arbiter in the illegal dismissal case to the National Labor Relations Commission (NLRC). In its September [21] the NLRC sustained Astorgas dismissal. Reversing the Labor 27, 1999 Decision, Arbiter, the NLRC declared the abolition of CSMG and the creation of SNMI to do the sales and marketing services for SMART a valid organizational action. It overruled the Labor Arbiters ruling that SNMI is an in-house agency, holding that it lacked legal basis. It also declared that contracting, subcontracting and streamlining of operations for the purpose of increasing efficiency are allowed under the law. The NLRC further found erroneous the Labor Arbiters disquisition that redundancy to be valid must be impelled by economic reasons, and upheld the redundancy measures undertaken by SMART. The NLRC disposed, thus:
WHEREFORE, the Decision of the Labor Arbiter is hereby reversed and set aside. [Astorga] is further ordered to immediately return the company vehicle assigned to her.
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[Smart and Santiago] are hereby ordered to pay the final wages of [Astorga] after [she] had submitted the required supporting papers therefor.
[22]
SO ORDERED.
1999.
Astorga filed a motion for reconsideration, but the NLRC denied it on December 21, [23]
Astorga then went to the CA via certiorari. On June 11, 2001, the CA rendered a [24] affirming with modification the resolutions of the NLRC. In gist, the CA Decision agreed with the NLRC that the reorganization undertaken by SMART resulting in the abolition of CSMG was a legitimate exercise of management 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 intended termination. Accordingly, the CA imposed a penalty equivalent to Astorgas one-month salary for 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 competence of the regular court to decide. It added that the matter had not been fully ventilated before the NLRC, but in the regular court. Astorga filed a motion for reconsideration, while SMART sought partial reconsideration, of the Decision. On December 18, 2001, the CA resolved the motions, viz.:
WHEREFORE, [Astorgas] motion for reconsideration is hereby PARTIALLY GRANTED. [Smart] is hereby ordered to pay [Astorga] her backwages from 15 February 1998 to 06 November 1998. [Smarts] motion for reconsideration is outrightly DENIED.
SO ORDERED.
[25]
Astorga and SMART came to us with their respective petitions for review assailing the CA ruling, docketed as G.R Nos. 151079 and 151372. On February 27, 2002, this Court [26] ordered the consolidation of these petitions with G.R. No. 148132. In her Memorandum, Astorga argues:
I
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THE COURT OF APPEALS ERRED IN UPHOLDING THE VALIDITY OF ASTORGAS DISMISSAL DESPITE THE FACT THAT HER DISMISSAL WAS EFFECTED IN CLEAR VIOLATION OF THE CONSTITUTIONAL RIGHT TO SECURITY OF TENURE, CONSIDERING THAT THERE WAS NO GENUINE GROUND FOR HER DISMISSAL. II SMARTS REFUSAL TO REINSTATE ASTORGA DURING THE PENDENCY OF THE APPEAL AS REQUIRED BY ARTICLE 223 OF THE LABOR CODE, ENTITLES ASTORGA TO HER SALARIES DURING THE PENDENCY OF THE APPEAL. III THE COURT OF APPEALS WAS CORRECT IN HOLDING THAT THE REGIONAL TRIAL COURT HAS NO JURISDICTION OVER THE COMPLAINT FOR RECOVERY OF A CAR WHICH ASTORGA ACQUIRED AS PART OF HER EMPLOYEE
[27]
(sic) BENEFIT.
On the other hand, Smart in its Memoranda raises the following issues:
I WHETHER THE HONORABLE COURT OF APPEALS HAS DECIDED A QUESTION OF SUBSTANCE IN A WAY PROBABLY NOT IN ACCORD WITH LAW OR WITH APPLICABLE DECISION OF THE HONORABLE SUPREME COURT AND HAS SO FAR DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS AS TO CALL FOR AN EXERCISE OF THE POWER OF SUPERVISION WHEN IT RULED THAT SMART DID NOT COMPLY WITH THE NOTICE REQUIREMENTS PRIOR TO TERMINATING ASTORGA ON THE GROUND OF REDUNDANCY. II WHETHER THE NOTICES GIVEN BY SMART TO ASTORGA AND THE DEPARTMENT OF LABOR AND EMPLOYMENT ARE SUBSTANTIAL COMPLIANCE WITH THE NOTICE REQUIREMENTS BEFORE TERMINATION. III 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
[28]
NOTICE AT ALL. IV
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WHETHER THE HONORABLE COURT OF APPEALS HAS DECIDED A QUESTION OF SUBSTANCE IN A WAY PROBABLY NOT IN ACCORD WITH LAW OR WITH APPLICABLE DECISION[S] OF THE HONORABLE SUPREME COURT AND HAS SO FAR DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS AS TO CALL FOR AN EXERCISE OF THE POWER OF SUPERVISION WHEN IT RULED THAT THE REGIONAL TRIAL COURT DOES NOT HAVE JURISDICTION OVER THE COMPLAINT FOR REPLEVIN FILED BY SMART TO RECOVER ITS OWN COMPANY VEHICLE FROM A FORMER EMPLOYEE WHO WAS LEGALLY DISMISSED. V WHETHER THE HONORABLE COURT OF APPEALS HAS FAILED TO APPRECIATE THAT THE SUBJECT OF THE REPLEVIN CASE IS NOT THE ENFORCEMENT OF A CAR PLAN PRIVILEGE BUT SIMPLY THE RECOVERY OF A COMPANY CAR. VI WHETHER THE HONORABLE COURT OF APPEALS HAS FAILED TO APPRECIATE THAT ASTORGA CAN NO LONGER BE CONSIDERED AS AN EMPLOYEE OF
[29]
SMART UNDER THE LABOR CODE.
The Court shall first deal with the propriety of dismissing the replevin case filed with the RTC of Makati City allegedly for lack of jurisdiction, which is the issue raised in G.R. No. 148132. Replevin is an action whereby the owner or person entitled to repossession of goods or chattels may 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 in specie from one who has wrongfully taken or [30] The term may refer either to the action itself, for the recovery of detained the property. personalty, or to the provisional remedy traditionally associated with it, by which possession of the property may be obtained by the plaintiff and retained during the pendency of the [31] action. That the action commenced by SMART against Astorga in the RTC of Makati City was one for replevin hardly admits of doubt. In reversing the RTC ruling and consequently dismissing the case for lack of jurisdiction, the CA made the following disquisition, viz.:
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[I]t is plain to see that the vehicle was issued to [Astorga] by [Smart] as part of the employment package. We doubt that [SMART] would extend [to Astorga] the same car plan privilege were it 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 employeremployee relationship. Thus, the claim for such falls squarely within the original and
[32]
exclusive jurisdiction of the labor arbiters and the NLRC.
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, dispute. It involves the relationship of [33] debtor and creditor rather than employee-employer relations. As such, the dispute falls within the jurisdiction of the regular courts. [34]
In Basaya, Jr. v. Militante, over the replevin suit, explained:
this Court, in upholding the jurisdiction of the RTC
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 another person. It is an ordinary statutory proceeding to adjudicate rights to the title or possession of personal property. The question of whether or not a party has the right of possession over the property involved and if so, whether or not the adverse party has wrongfully taken and detained said property as to require its return to plaintiff, is outside the pale of competence of a labor tribunal and beyond the field of specialization of Labor Arbiters. xxxx The labor dispute involved is not intertwined with the issue in the Replevin Case. The respective issues raised in each forum can be resolved independently on the other. In fact in 18 November 1986, the NLRC in the case before it had issued an Injunctive Writ enjoining the petitioners from blocking the free ingress and egress to the Vessel and ordering the petitioners to disembark and vacate. That aspect of the controversy is properly settled under the Labor Code. So also with petitioners right to picket. But the determination of the question of who has the better right to take possession of the Vessel and whether petitioners can deprive the Charterer, as the legal possessor of the Vessel, of that right to possess in addressed to the competence of Civil Courts. In thus ruling, this Court is not sanctioning split jurisdiction but defining avenues of jurisdiction as laid down by pertinent laws.
The CA, therefore, committed reversible error when it overturned the RTC ruling and ordered
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the dismissal of the replevin case for lack of jurisdiction. Having resolved that issue, we proceed to rule on the validity of Astorgas dismissal. Astorga was terminated due to redundancy, which is one of the authorized causes for the dismissal of an employee. The nature of redundancy as an authorized cause for dismissal is explained in the leading case of Wiltshire File Co., Inc. v. National Labor Relations [35] viz: Commission,
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 respondent held prior to termination of his services does not show that his position had not 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 that redundancy, for purposes of the Labor Code, exists where the services of an employee 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, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise.
The characterization of an employees services as superfluous or no longer necessary and, therefore, 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 [36] action is not shown. Astorga claims that the termination of her employment was illegal and tainted with bad faith. She asserts that the reorganization was done in order to get rid of her. But except for her barefaced allegation, no 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 SMART offered her a supervisory position in the Customer Care Department, but she refused the offer 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. Astorga also states that the justification advanced by SMART is not true because there was no compelling economic reason for redundancy. But contrary to her claim, an employer
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is not precluded from adopting a new policy conducive to a more economical and effective management even if it is not experiencing economic reverses. Neither does the law require that the employer should suffer financial losses before he can terminate the services of the [37] employee on the ground of redundancy. We agree with the CA that the organizational realignment introduced by SMART, which culminated in the 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 reorganization undertaken by SMART is for no purpose other than its declared objective as a 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 distinct sales force of SMART in charge of selling SMARTs telecommunications services to the corporate market. SMART, to ensure it can respond quickly, efficiently and flexibly to its 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 Japan, for the reason that CSMG/FSD does not have the necessary technical expertise required for the value added services. By transferring the duties of CSMG/FSD to SNMI, SMART has created a more competent and specialized organization to perform the work required for corporate accounts. It is also relieved SMART of all administrative costs management, time and money-needed in maintaining the CSMG/FSD. The determination to 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.
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 consonant with the social justice policy of the Constitution. But while tilting the scales of justice in favor of workers, the fundamental law also guarantees the [38] right of the employer to reasonable returns for his investment. In this light, we must acknowledge the prerogative of the employer to adopt such measures 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 redundancy program undertaken by SMART. However, as aptly found by the CA, SMART failed to comply with the mandated one (1) month notice prior to termination. The record is clear that Astorga received the notice of
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[39] termination only on March 16, 1998 or less than a month prior to its effectivity on April 3, 1998. Likewise, the Department of Labor and Employment was notified of the [40] redundancy program only on March 6, 1998. Article 283 of the Labor Code clearly provides:
Art. 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of any employee due to the installation of labor saving devices, 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 Employment at least one (1) month before the intended date thereof x x x.
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 written notice, the employees are informed of the specific date of the termination, at least a month prior to the effectivity of such termination, to give them sufficient time to find other suitable employment or to make whatever arrangements are needed to cushion the impact of termination. In this case, notwithstanding Astorgas knowledge of the reorganization, she remained uncertain about the status of her employment until SMART gave her formal notice of termination. But such notice was received by Astorga barely two (2) weeks before the effective date of termination, a period very much shorter than 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 [41] [42] In DAP Corporation v. CA, we found the procedural infirmity of the dismissal. 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. The CA, therefore, committed no reversible error in sustaining Astorgas dismissal and at the same time, awarding indemnity for violation of Astorga's statutory rights. However, we find the need to modify, by increasing, the indemnity awarded by the CA
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to Astorga, as a sanction on SMART for non-compliance with the one-month mandatory notice requirement, in light of our ruling in Jaka Food Processing Corporation v. Pacot, viz.:
[I]f the dismissal is based on a just cause under Article 282 but the employer failed to comply with the notice requirement, the sanction to be imposed upon him should be tempered because the dismissal process was, in effect, initiated by an act imputable to the employee, and (2) if the dismissal is based on an authorized cause under Article 283 but the employer failed to comply with the notice requirement, the sanction should be stiffer because the dismissal process was initiated by the employers exercise of his management prerogative.
[43]
We deem it proper to increase the amount of the penalty on SMART to P50,000.00. As provided in Article 283 of the Labor Code, Astorga is, likewise, entitled to separation pay equivalent to at least one (1) month salary or to at least one (1) months pay for every year of service, whichever is higher. The records show that Astorgas length of service is less than a year. She is, therefore, also entitled to separation pay equivalent to one (1) month pay. Finally, we note that Astorga claimed non-payment of wages from February 15, 1998. This assertion was 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 [44] SMART failed to burden of proving payment of monetary claims rests on the employer. discharge the onus probandi. Accordingly, it must be held liable for Astorgas salary from February 15, 1998 until the effective date of her termination, on April 3, 1998. 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 be a finding of unjust or illegal dismissal from [45] The Labor Arbiter ruled that Astorga was illegally dismissed. But on appeal, the work. 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 dismissal is for an authorized cause, she is not entitled to backwages. The CAs award of backwages is totally inconsistent with its finding of valid dismissal. WHEREFORE, the petition of SMART docketed as G.R. No. 148132 is GRANTED. The February 28, 2000 Decision and the May 7, 2001 Resolution of the Court
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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. On the other hand, the petitions of SMART and Astorga docketed as G.R. Nos. 151079 and 151372 are DENIED. The June 11, 2001 Decision and the December 18, 2001 Resolution in CA-G.R. SP. No. 57065, are AFFIRMED with MODIFICATION. Astorga is declared validly dismissed. However, SMART is ordered to pay Astorga P50,000.00 as indemnity for its non-compliance with procedural due process, her separation pay equivalent to one (1) month pay, and her salary from February 15, 1998 until the effective date of her termination on April 3, 1998. The award of backwages is DELETED for lack of basis. SO ORDERED.
ANTONIO EDUARDO B. NACHURA Associate Justice WE CONCUR:
CONSUELO YNARES-SANTIAGO Associate Justice Chairperson
MA. ALICIA AUSTRIA-MARTINEZ Associate Justice
RENATO C. CORONA Associate Justice
RUBEN T. REYES Associate Justice
I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.
CONSUELO YNARES-SANTIAGO Associate Justice Chairperson, Third Division
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Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.
REYNATO S. PUNO Chief Justice

* [1] In lieu of Associate Justice Minita V. Chico-Nazario per Special Order No. 484 dated January 11, 2008.
Penned by Associate Justice Elvi John S. Asuncion (dismissed), with Associate Justices Corona Ibay-Somera (retired) and Portia Alio-Hormachuelos, concurring; rollo (G.R. No. 148132), pp. 146-152. [2] Rollo, pp. 164-165. [3] Penned by Associate Justice Romeo Brawner (retired), with Associate Justices Remedios Salazar-Fernando and Josefina Guevara-Salonga, concurring; rollo (G.R. No. 151079), pp. 24-36. [4] Id. at 42-45. [5] Rollo (G.R. No. 151372), pp. 58-59. [6] Rollo (G.R. No. 151079), p. 46. [7] Rollo (G.R. No. 151372), p. 62. [8] Id. at 40-42. [9] Id. at 43-54. [10] [11] [12] [13] [14] [15] [16] [17] [18] [19] [20] [21] [22] [23] [24] [25] Id. at 68-78. Rollo (G.R. No. 148132), p. 47. Id. at 30-34. Id. at 51-59. Rollo (G.R. No. 151372), pp. 79-92. Id. at 90-92. Rollo (G.R. No. 148132), pp. 79-80. Id. Id. at 110. Id. at 146-152. Id. at 164-165. Rollo (G.R. No. 151079), pp. 102-120. Id. at 120. Id. at 122. Id. at 24-36. Id. at 45.
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[26] [27] [28] [29] [30] [31] [32]
Rollo (G.R. No. 151372), p. 175. Rollo (G.R. No. 151079), p. 250. Id. at 273. Rollo (G.R. No. 148132), p. 266. Blacks Law Dictionary, Fifth Edition, p. 1168. Tillson v. Court of Appeals, G.R. No. 89870, May 28, 1991, 197 SCRA 587, 598. Id. at 148.
[33] 340, 343. [34] [35] [36] [37] [38] [39] [40] [41] [42] [43] [44] [45]
See Nestle Philippines Inc. v. National Labor Relations Commission, G. R. No. 85197, March 18, 1991, 195 SCRA G.R. L-75837, December 11, 1987, 156 SCRA 299, 303-304. G.R. No. 82249, February 7, 1991, 193 SCRA 665, 672. Dole Philippines, Inc. v. National Labor Relations Commission, 417 Phil. 428, 440 (2001). Id. Asian Alcohol Corporation v. National Labor Relations Commission, 364 Phil. 912, 924-925 (1999). Rollo (G.R. No. 151372), p. 62. Id. at 56. DAP Corporation v. Court of Appeals, G.R. No. 165811, December 14, 2005, 477 SCRA 792, 798. Id. G.R. No. 151378, March 28, 2005, 454 SCRA 119, 125-126. G & M (Phil.), Inc. v. Batomalaque, G.R. No. 151849, June 23, 2005, 461 SCRA 111, 118.
Filflex Industrial & Manufacturing Corporation v. National Labor Relations Commission, G.R. No. 115395, February 12, 1998, 286 SCRA 245, 253.
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A.M. No. P-07-2384
http://www.lawphil.net/judjuris/juri2008/jun2008/am_p-07-2384_2008...
Republic of the Philippines SUPREME COURT Manila SECOND DIVISION A.M. No. P-07-2384 June 18, 2008
KENNETH HAO, complainant, vs. ABE C. ANDRES, Sheriff IV, Regional Trial Court, Branch 16, Davao City, respondent. RESOLUTION QUISUMBING, J.: Before us is an administrative complaint for gross neglect of duty, grave abuse of authority (oppression) and violation of Republic Act No. 3019 filed by complainant Kenneth Hao against respondent Abe C. Andres, Sheriff IV of the Regional Trial Court (RTC) of Davao City, Branch 16. The antecedent facts are as follows: Complainant Hao is one of the defendants in a civil case for replevin docketed as Civil Case No. 31, 127-2005 entitled "Zenaida Silver, doing trade and business under the name and style ZHS Commercial v. Loreto Hao, Atty. Amado Cantos, Kenneth Hao and John Does," pending before the RTC of Davao City, Branch 16. On October 17, 2005, Judge Renato A. Fuentes issued an Order of Seizure against 22 motor vehicles allegedly owned by the complainant. On the strength of the said order, Andres was able to seize two of the subject motor vehicles on October 17, 2005; four on October 18, 2005, and another three on October 19, 2005, or a total of nine motor vehicles.
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In his Affidavit-Complaint against Andres before the Office of the Court Administrator (OCA), Hao alleged that Andres gave undue advantage to Zenaida Silver in the implementation of the order and that Andres seized the nine motor vehicles in an oppressive manner. Hao also averred that Andres was accompanied by unidentified armed personnel on board a military vehicle which was excessive since there were no resistance from them. Hao also discovered that the compound where the seized motor vehicles were placed is actually owned by Silver.
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On October 21, 2005, in view of the approval of the complainants counter-replevin bond, Judge Emmanuel C. Carpio ordered Andres to immediately cease and desist from further implementing the order of seizure, and to return the seized motor vehicles including its accessories to their lawful owners.
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However, on October 24, 2005, eight of the nine seized motor vehicles were reported missing. In his report, Andres stated that he was shocked to find that the motor vehicles were already missing when he inspected it on October 22, 2005. He narrated that on October 21, 2005, PO3 Rodrigo Despe, one of the policemen guarding the subject motor vehicles, reported to him that a certain "Nonoy" entered the compound and caused the duplication of the vehicles keys. 2005.
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But Andres claimed the motor vehicles were still intact when he inspected it on October 21,
Subsequently, Hao reported that three of the carnapped vehicles were recovered by the police. He then accused Andres of conspiring and conniving with Atty. Oswaldo Macadangdang (Silvers counsel) and the policemen in the carnapping of the motor vehicles. Hao also accused Andres of concealing the depository receipts from them and pointed out that the depository receipts show that Silver and Atty. Macadangdang were the ones who chose the policemen who will guard the motor vehicles. In his Comment dated March 3, 2006, Andres vehemently denied violating Rep. Act No. 3019 and committing gross neglect of duty. Andres denied implementing the Order of Seizure in an oppressive manner. He said he took the vehicles because they were the specific vehicles ordered to be seized after checking their engine and chassis numbers. Andres likewise denied that he was accompanied by military personnel in the implementation of the order. He claimed that
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he was merely escorted by policemen pursuant to the directive of Police Senior Supt. Catalino S. Cuy, Chief of the Davao City Police Office. Andres also maintained that no form of harassment or oppression was committed during the implementation of the order, claiming that the presence of the policemen was only for the purpose of preserving peace and order, considering there were 22 motor vehicles specified in the Order of Seizure. Andres added that he exercised no discretion in the selection of the policemen who assisted in the implementation of the order, much less of those who will guard the seized motor vehicles. Andres disputed the allegation that he neglected his duty to safeguard the seized vehicles by pointing out that he placed all the motor vehicles under police watch. He added that the policemen had control of the compound where the seized motor vehicles were kept. Andres likewise contended that after the unauthorized duplication of the vehicles keys was reported to him, he immediately advised the policemen on duty to watch the motor vehicles closely. He negated the speculations that he was involved in the disappearance of the seized motor vehicles as he claims to be the one who reported the incident to the court and the police. As to the allegation of undisclosed depository receipts, Andres maintained that he never denied the existence of the depository receipts. He said the existence of the depository receipts was immediately made known on the same day that the subject motor vehicles were discovered missing. He even used the same in the filing of the carnapping case against Silver and her co-conspirators. Finally, Andres insisted that the guarding of properties under custodia legis by policemen is not prohibited, but is even adopted by the court. Hence, he prays that he be held not liable for the loss of the vehicles and that he be relieved of his duty to return the vehicles.
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After the OCA recommended that the matter be investigated, we referred the case to Executive Judge Renato A. Fuentes for investigation, report and recommendation.
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In his Investigation Report dated September 21, 2006, Judge Fuentes found Andres guilty of serious negligence in the custody of the nine motor vehicles. He recommended that Andres be suspended from office. Judge Fuentes found numerous irregularities in the implementation of the writ of replevin/order of seizure, to wit: (1) at the time of the implementation of the writ, Andres knew that the vehicles to be seized were not in the names of any of the parties to the case; (2) one vehicle was taken without the knowledge of its owner, a certain Junard Escudero; (3) Andres allowed Atty. Macadangdang to get a keymaster to duplicate the vehicles keys in order to take one motor vehicle; and (4) Andres admitted that prior to the implementation of the writ of seizure, he consulted Silver and Atty. Macadangdang regarding the implementation of the writ and was accompanied by the latter in the course of the implementation. Judge Fuentes observed that the motor vehicles were speedily seized without strictly observing fairness and regularity in its implementation.
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Anent the safekeeping of the seized motor vehicles, Judge Fuentes pointed out several instances where Andres lacked due diligence to wit: (1) the seized motor vehicles were placed in a compound surrounded by an insufficiently locked see-through fence; (2) three motor vehicles were left outside the compound; (3) Andres turned over the key of the gate to the policemen guarding the motor vehicles; (4) Andres does not even know the full name of the owner of the compound, who was merely known to him as "Gloria"; (5) except for PO3 Despe and SPO4 Nelson Salcedo, the identities of the other policemen tapped to guard the compound were unknown to Andres; (6) Andres also admitted that he only stayed at least one hour each day from October 19-21, 2005 during his visits to the compound; and (7) even after it was reported to him that a certain "Nonoy" entered the compound and duplicated the keys of the motor vehicles, he did not exert his best effort to look for that "Nonoy" and to confiscate the duplicated keys. Judge Fuentes also observed that Andres appeared to be more or less accommodating to but hostile and uncooperative to the complainant. He pointed out that Andres depended selection of the policemen who would guard the seized motor vehicles. He added that even were not turned over to the defendants/third-party claimants in the replevin case but were
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Silver and her counsel solely on Silver in the the depository receipts in fact concealed from
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them. Andres also gave inconsistent testimonies as to whether he has in his possession the depository receipts.
The OCA disagreed with the observations of Judge Fuentes. It recommended that Andres be held liable only for simple neglect of duty and be suspended for one (1) month and one (1) day. We adopt the recommendation of the investigating judge. Being an officer of the court, Andres must be aware that there are well-defined steps provided in the Rules of Court regarding the proper implementation of a writ of replevin and/or an order of seizure. The Rules, likewise, is explicit on the duty of the sheriff in its implementation. To recapitulate what should be common knowledge to sheriffs, the pertinent provisions of Rule 60, of the Rules of Court are quoted hereunder: SEC. 4. Duty of the sheriff.Upon receiving such order, the sheriff must serve a copy thereof on the adverse party, together with a copy of the application, affidavit and bond, and must forthwith take the property, if it
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be in the possession of the adverse party, or his agent, and retain it in his custody. If the property or any part thereof be concealed in a building or enclosure, the sheriff must demand its delivery, and if it be not delivered, he must cause the building or enclosure to be broken open and take the property into his possession. After the sheriff has taken possession of the property as herein provided, he must keep it in a secure place and shall be responsible for its delivery to the party entitled thereto upon receiving his fees and necessary expenses for taking and keeping the same. (Emphasis supplied.) SEC. 6. Disposition of property by sheriff.If within five (5) days after the taking of the property by the sheriff, the adverse party does not object to the sufficiency of the bond, or of the surety or sureties thereon; or if the adverse party so objects and the court affirms its approval of the applicants bond or approves a new bond, or if the adverse party requires the return of the property but his bond is objected to and found insufficient and he does not forthwith file an approved bond, the property shall be delivered to the applicant. If for any reason the property is not delivered to the applicant, the sheriff must return it to the adverse party. (Emphasis supplied.) First, the rules provide that property seized under a writ of replevin is not to be delivered immediately to the plaintiff. In accordance with the said rules, Andres should have waited no less than five days in order to give the complainant an opportunity to object to the sufficiency of the bond or of the surety or sureties thereon, or require the return of the seized motor vehicles by filing a counter-bond. This, he failed to do. Records show that Andres took possession of two of the subject motor vehicles on October 17, 2005, four on October 18, 2005, and another three on October 19, 2005. Simultaneously, as evidenced by the depository receipts, on October 18, 2005, Silver received from Andres six of the seized motor vehicles, and three more motor vehicles on October 19, 2005. Consequently, there is no question that Silver was already in possession of the nine seized vehicles immediately after seizure, or no more than three days after the taking of the vehicles. Thus, Andres committed a clear violation of Section 6, Rule 60 of the Rules of Court with regard to the proper disposal of the property. It matters not that Silver was in possession of the seized vehicles merely for safekeeping as stated in the depository receipts. The rule is clear that the property seized should not be immediately delivered to the plaintiff, and the sheriff must retain custody of the seized property for at least five days. Hence, the act of Andres in delivering the seized vehicles immediately after seizure to Silver for whatever purpose, without observing the five-day requirement finds no legal justification. In Pardo v. Velasco,
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this Court held that
Respondent as an officer of the Court is charged with certain ministerial duties which must be performed faithfully to the letter. Every provision in the Revised Rules of Court has a specific reason or objective. In this case, the purpose of the five (5) days is to give a chance to the defendant to object to the sufficiency of the bond or the surety or sureties thereon or require the return of the property by filing a counterbond. In Sebastian v. Valino,
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this Court reiterated that
Under the Revised Rules of Court, the property seized under a writ of replevin is not to be delivered immediately to the plaintiff. The sheriff must retain it in his custody for five days and he shall return it to the defendant, if the latter, as in the instant case, requires its return and files a counterbond. supplied.)
27
(Emphasis
Likewise, Andres claim that he had no knowledge that the compound is owned by Silver fails to convince us. Regardless of who actually owns the compound, the fact remains that Andres delivered the vehicles to Silver prematurely. It violates the rule requiring him to safekeep the vehicles in his custody. The alleged lack of facility to store the seized vehicles is unacceptable considering that he should have deposited the same in a bonded warehouse. If this was not feasible, he should have sought prior authorization from the court issuing the writ before delivering the vehicles to Silver. Second, it must be stressed that from the moment an order of delivery in replevin is executed by taking possession of the property specified therein, such property is in custodia legis. As legal custodian, it is Andres duty to safekeep the seized motor vehicles. Hence, when he passed his duty to safeguard the motor vehicles to Silver, he committed a clear neglect of duty. Third, we are appalled that even after PO3 Despe reported the unauthorized duplication of the vehicles keys, Andres failed to take extra precautionary measures to ensure the safety of the vehicles. It is obvious that the vehicles were put at risk by the unauthorized duplication of the keys of the vehicles. Neither did he immediately report the incident to the police or to the court. The loss of the motor vehicles could have been prevented if Andres immediately asked the court for an order to transfer the vehicles to another secured place as soon as he discovered the unauthorized duplication. Under these circumstances, even an ordinary prudent man would have exercised extra diligence. His warning to the policemen to closely watch the vehicles was insufficient. Andres cannot toss back
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to Silver or to the policemen the responsibility for the loss of the motor vehicles since he remains chiefly responsible for their safekeeping as legal custodian thereof. Indeed, Andres failure to take the necessary precaution and proper monitoring of the vehicles to ensure its safety constitutes plain negligence. Fourth, despite the cease and desist order, Andres failed to return the motor vehicles to their lawful owners. Instead of returning the motor vehicles immediately as directed, he opted to write Silver and demand that she put up an indemnity bond to secure the third-party claims. Consequently, due to his delay, the eventual loss of the motor vehicles rendered the order to return the seized vehicles ineffectual to the prejudice of the complaining owners. It must be stressed that as court custodian, it was Andres responsibility to ensure that the motor vehicles were safely kept and that the same were readily available upon order of the court or demand of the parties concerned. Specifically, sheriffs, being ranking officers of the court and agents of the law, must discharge their duties with great care and diligence. In serving and implementing court writs, as well as processes and orders of the court, they cannot afford to err without affecting adversely the proper dispensation of justice. Sheriffs play an important role in the administration of justice and as agents of the law, high standards of performance are expected of them. Hence, his failure to return the motor vehicles at the time when its return was still feasible constitutes another instance of neglect of duty. Fifth, as found by the OCA, we agree that Andres also disregarded the provisions of Rule 141 Court with regard to payment of expenses.
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of the Rules of
Under Section 9, Rule 141 of the Rules of Court, the procedure for the execution of writs and other processes are: First, the sheriff must make an estimate of the expenses to be incurred by him; Second, he must obtain court approval for such estimated expenses; Third, the approved estimated expenses shall be deposited by the interested party with the Clerk of Court and ex officio sheriff; Fourth, the Clerk of Court shall disburse the amount to the executing sheriff; and Fifth, the executing sheriff shall liquidate his expenses within the same period for rendering a return on the writ. In this case, no estimate of sheriffs expenses was submitted to the court by Andres. Without approval of the court, he also allowed Silver to pay directly to the policemen the expenses for the safeguarding of the motor vehicles including their meals. Court.
32
Obviously, this practice departed from the accepted procedure provided in the Rules of
In view of the foregoing, there is no doubt that Andres failed to live up to the standards required of his position. The number of instances that Andres strayed from the regular course observed in the proper implementation of the orders of the court cannot be countenanced. Thus, taking into account the numerous times he was found negligent and careless of his duties coupled with his utter disregard of legal procedures, he cannot be considered guilty merely of simple negligence. His acts constitute gross negligence. As we have previously ruled: Gross negligence refers to negligence characterized by the want of even slight care, acting or omitting to act in a situation where there is a duty to act, not inadvertently but willfully and intentionally, with a conscious indifference to consequences in so far as other persons may be affected. It is the omission of that care which even inattentive and thoughtless men never fail to take on their own property. (Emphasis supplied.)
33
Gross neglect, on the other hand, is such neglect from the gravity of the case, or the frequency of instances, becomes so serious in its character as to endanger or threaten the public welfare. The term does not necessarily include willful neglect or intentional official wrongdoing.
34
Good faith on the part of Andres, or lack of it, in proceeding to properly execute his mandate would be of no moment, for he is chargeable with the knowledge that being an officer of the court tasked therefor, it behooves him to make due compliance. He is expected to live up to the exacting standards of his office and his conduct must at all times be characterized by rectitude and forthrightness, and so above suspicion and mistrust as well. Thus, an act of gross neglect resulting in loss of properties in custodia legis ruins the confidence lodged by the parties to a suit or the citizenry in our judicial process. Those responsible for such act or omission cannot escape the disciplinary power of this Court. Anent the allegation of grave abuse of authority (oppression), we likewise agree with the observations of the investigating judge. Records show that Andres started enforcing the writ of replevin/order of seizure on the same day that the order of seizure was issued. He also admitted that he took the vehicles of persons who are not parties to the replevin case.
36 35
He further admitted that he took one vehicle belonging to a certain Junard Escudero without
37
the latters knowledge and even caused the duplication of its keys in order that it may be taken by Andres. Certainly, these are indications that Andres enforced the order of seizure with undue haste and without giving the complainant prior notice or reasonable time to deliver the motor vehicles. Hence, Andres is guilty of grave abuse of authority (oppression).
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When a writ is placed in the hands of a sheriff, it is his duty, in the absence of any instructions to the contrary, to proceed with reasonable celerity and promptness to execute it according to its mandate. However, the prompt implementation of an order of seizure is called for only in instances where there is no question regarding the right of the plaintiff to the property. Where there is such a question, the prudent recourse for Andres is to desist from executing the order and convey the information to his judge and to the plaintiff. True, sheriffs must comply with their mandated ministerial duty to implement writs promptly and expeditiously, but equally true is the principle that sheriffs by the nature of their functions must at all times conduct themselves with propriety and decorum and act above suspicion. There must be no room for anyone to conjecture that sheriffs and deputy sheriffs as officers of the court have conspired with any of the parties to a case to obtain a favorable judgment or immediate execution. The sheriff is at the front line as representative of the judiciary and by his act he may build or destroy the institution.
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However, as to the charge of graft and corruption, it must be stressed that the same is criminal in nature, thus, the resolution thereof cannot be threshed out in the instant administrative proceeding. We also take note that there is a pending criminal case for carnapping against Andres; hence, with more reason that we cannot rule on the allegation of graft and corruption as it may preempt the court in its resolution of the said case. We come to the matter of penalties. The imposable penalty for gross neglect of duty is dismissal. While the penalty imposable for grave abuse of authority (oppression) is suspension for six (6) months one (1) day to one (1) year. Section 55, Rule IV, of the Uniform Rules on Administrative Cases in the Civil Service provides that if the respondent is found guilty of two or more charges or counts, the penalty to be imposed should be that corresponding to the most serious charge or count and the rest shall be considered as aggravating circumstances. In the instant case, the penalty for the more serious offense which is dismissal should be imposed on Andres. However, following Sections 53 and 54, Rule IV of the Uniform Rules on Administrative Cases in the Civil Service, we have to consider that Andres is a first-time offender; hence, a lighter penalty than dismissal from the service would suffice. Consequently, instead of imposing the penalty of dismissal, the penalty of suspension from office for one (1) year without pay is proper for gross neglect of duty, and another six (6) months should be added for the aggravating circumstance of grave abuse of authority (oppression). WHEREFORE, the Court finds Abe C. Andres, Sheriff IV, RTC of Davao City, Branch 16, GUILTY of gross neglect of duty and grave abuse of authority (oppression) and is SUSPENDED for one (1) year and six (6) months without pay. He is also hereby WARNED that a repetition of the same or similar offenses in the future shall be dealt with more severely. SO ORDERED. LEONARDO A. QUISUMBING Associate Justice
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WE CONCUR: DANTE O. TINGA Associate Justice

*
**
TERESITA J. LEONARDO-DE CASTRO Associate Justice
Footnotes
*
Additional member in place of Associate Justice Presbitero J. Velasco, Jr. who is on official leave. Additional member in place of Associate Justice Conchita Carpio Morales who is on official leave. Anti-Graft and Corrupt Practices Act, approved on August 17, 1960. Also known as "Civil Case No. 31, 137-2005" in other parts of the rollo. Then pairing judge of Branch 16, who became the executive judge of RTC-Davao City.
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Rollo, pp. 157-158. Id. at 159-167. Id. at 95-96. Id. at 124. Presiding Judge of Branch 16, RTC-Davao City at the time of the issuance of the Order. Rollo, p. 102; Order erroneously dated October 21, 2004. Id. at 53-56. Id. at 342. Id. at 2-8. Id. at 145-156. Id. at 342. Id. at 121-122. Id. at 305-306. Id. at 545-563. Id. at 559. Id. at 559-560. Id. at 560-561. Id. at 603-613.
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Spouses Normandy and Ruth Bautista v. Ernesto L. Sula, Sheriff IV, Regional Trial Court, Branch 98, Quezon City, A.M. No. P-04-1920, August 17, 2007, 530 SCRA 406, 422. Rules of Court, Rule 60, Secs. 4 and 6. Adm. Matter Nos. P-90-408 & P-90-453, August 7, 1992, 212 SCRA 323. Id. at 328-329. A.M. No. P-91-549, July 5, 1993, 224 SCRA 256. Id. at 259. Rules of Court, Rule 60, Sec. 4. Chupungco v. Cabusao, Jr., A.M. No. P-03-1758, December 10, 2003, 417 SCRA 365, 369. As amended by A.M. No. 04-2-04-SC, took effect on August 16, 2004. SEC. 9. Sheriffs and other persons serving processes. xxxx In addition to the fees hereinabove fixed, the party requesting the process of any court, preliminary, incidental, or final, shall pay the sheriffs expenses in serving or executing the process, or safeguarding the property, levied upon, attached or seized, including kilometrage for each kilometer of travel, guards fees, warehousing and similar charges, in an amount estimated by the sheriff, subject to the approval of the court. Upon approval of said estimated expenses, the interested party shall deposit such amount with the clerk of court and ex officio sheriff, who shall disburse the same to the deputy sheriff assigned
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to effect the process, subject to liquidation within the same period for rendering a return on the process. Any unspent amount shall be refunded to the party making the deposit. A full report shall be submitted by the deputy sheriff assigned with his return, and the sheriffs expenses shall be taxed as costs against the judgment debtor.
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Rollo, pp. 334-335. Brucal v. Desierto, G.R. No. 152188, July 8, 2005, 463 SCRA 151, 166.
Report on the Alleged Spurious Bailbonds and Release Orders Issued by the RTC, Br. 27, Sta. Cruz, Laguna, A.M. No. 04-6-332-RTC, April 5, 2006, 486 SCRA 500, 518. Chupungco v. Cabusao, Jr., supra note 29. Rollo, pp. 319-320, 326-327. Id. at 327-328. Mamanteo v. Magumun, A.M. No. P-98-1264, July 28, 1999, 311 SCRA 259, 265. Id. at 266. Rollo, pp. 648-663.
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Civil Service Commission Resolution No. 991936 (1999) also known as the Uniform Rules on Administrative Cases in the Civil Service, Rule IV, Section 52. RULE IV PENALTIES Section 52. Classification of Offenses. Administrative offenses with corresponding penalties are classified into grave, less grave or light, depending on their gravity or depravity and effects on the government service. xxxx 2. Gross Neglect of Duty 1 offense Dismissal xxxx 14. Oppression 1 offense Suspension (6 mos. 1 day to 1 year) xxxx Section 53. Extenuating, Mitigating, Aggravating, or Alternative Circumstances. - In the determination of the penalties to be imposed, mitigating, aggravating and alternative circumstances attendant to the commission of the offense shall be considered. xxxx
43 42 st st
Section 54. Manner of Imposition. When applicable, the imposition of the penalty may be made in accordance with the manner provided herein below: a. The minimum of the penalty shall be imposed where only mitigating and no aggravating circumstances are present. b. The medium of the penalty shall be imposed where no mitigating and aggravating circumstances are present. c. The maximum of the penalty shall be imposed where only aggravating and no mitigating circumstances are present. d. Where aggravating and mitigating circumstances are present, paragraph [a] shall be applied where there are more mitigating circumstances present; paragraph [b] shall be applied when the circumstances equally offset each other; and paragraph [c] shall be applied when there are more aggravating circumstances. (Emphasis supplied.)
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G.R. No. 165895
TERLYNGRACE RIVERA, Petitioner, vs. FLORENCIO L. VARGAS, Respondent. DECISION NACHURA, J.: What is the effect of a writ of replevin that has been improperly served? This is the sole issue to be resolved in this petition for review on certiorari seeking to set aside the Decision of the Court of Appeals (CA) dated November 18, 2003 in CA-G.R. SP No. 78529, as well as its October 20, 2004 Resolution, denying the petition for certiorari filed by petitioner Terlyngrace Rivera (Rivera). The facts follow. On February 24, 2003, respondent Florencio Vargas (Vargas) filed a complaint 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 affidavit, Vargas claims ownership of the said equipment, having purchased and imported the same directly from Hyun Dae Trading Co., in Seoul, South Korea, in December 1993. The equipment was allegedly entrusted to petitioners husband, Jan T. Rivera, who died sometime in late 2002, as caretaker 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. The complaint was accompanied by a prayer for the issuance of a writ of replevin and the necessary bond amounting to P2,400,000.00. Summons dated February 24, 2003 was served upon petitioner through her personal secretary on April 28, 2003 at her residence in Paraaque City. Interestingly, however, the writ of replevin 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, contrary to the sheriffs return
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stating that the writ was served upon Rivera.
On May 8, 2003, Rivera filed her answer, manifestation, and motion for the acceptance of petitioners redelivery bond. In her answer, petitioner countered that the rock-crushing plant was ceded in favor of her husband as his share following the dissolution of the partnership formed between Jan Rivera and respondents wife, Iluminada Vargas (Iluminada), on May 28, 1998, while the partnerships second rock-crushing plant in Cagayan was ceded in favor of Iluminada. She further averred that from the time that the partnership was dissolved sometime in 2000 until Jan Riveras death in late 2002, it was petitioners husband who exercised ownership over the said equipment without any disturbance from respondent.
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On May 12, 2003, the RTC issued an Order
disapproving petitioners redelivery bond application for failure to

15
comply with the requirements under Sections 5 and 6 of Rule 60 of the Rules of Court. Without directly saying so, the RTC faulted petitioner for her failure to file the application for redelivery bond within five (5) days from the date of seizure as provided in the Rules of Court. Petitioner moved for reconsideration,
16
but the same was also denied.
17
Aggrieved, petitioner elevated the matter to the CA through a petition for certiorari under Rule 65. This, too, was denied for lack of merit.
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Petitioner moved for reconsideration,
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but it was also denied.
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Undaunted, petitioner now comes to us via this Rule 45 petition. Petitioner argues that the RTC committed grave abuse of discretion in denying her counterbond on the ground that it
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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. We find the petition meritorious. Replevin is one of the most ancient actions known to law, taking its name from the object of its process. originated in common law as a remedy against the wrongful exercise of the right of distress for rent
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It
and, according
to some authorities, could only be maintained in such a case. 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 its technical sense, means delivered to the owner,

27
26
while the words "to replevy" means to recover possession by an action of replevin.
Broadly understood in this jurisdiction, replevin is both a form of principal remedy and of provisional relief. It may refer either to the action itself, i.e., to regain the possession of personal chattels being wrongfully 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.
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The action is primarily possessory in nature and generally determines
nothing more than the right of possession.
The law presumes that every possessor is a possessor in good faith. in his possession
31
He is entitled to be respected and protected

32
as if he were the true owner thereof until a competent court rules otherwise.
33
Before a final
judgment, property cannot be seized unless by virtue of some provision of law. The Rules of Court, under Rule 60, authorizes such seizure in cases of replevin. However, a 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. When no attempt is made to comply with the provisions of the law relating to seizure in this kind of action, the writ or order allowing the seizure is erroneous and may be set aside on motion
35 34
by the adverse party. Be it noted, however, that a motion to quash the

36
writ of replevin goes to the technical regularity of procedure, and not to the merits of the case action.
in the principal
The process regarding the execution of the writ of replevin in Section 4 of Rule 60 is unambiguous: the sheriff, upon receipt of the writ of replevin and prior to the taking of the property, must serve a copy thereof to the adverse party (petitioner, in this case) together with the application, the affidavit of merit, and the replevin bond. The reasons are simple, i.e., to provide proper notice to the adverse party that his property is being seized in accordance with the courts order upon application by the other party, and ultimately to allow the adverse party to take the proper remedy consequent thereto. Service of the writ upon the adverse party is mandatory in line with the constitutional guaranty on procedural due process and as safeguard against unreasonable searches and seizures. If the writ was not served upon the adverse party but was instead merely handed to a person who is neither an agent of 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 circumstances, no right to seize and to detain the property shall pass, the act of the sheriff being both unlawful and unconstitutional.
1a v v ph 1 i
37
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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. The signature of the receiving party indicates that the writ was received on April 29, 2003 by a certain Joseph Rejumo, the guard on duty in a plant in Sariaya, Quezon, where the property to be seized was located, and witnessed by Claudio Palatino, respondents caretaker.
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The sheriffs
return, however, peremptorily states that both the writ of replevin and the summons were served upon Rivera. On May 8, 2003, or nine (9) days after the writ was served on the security guard, petitioner filed an answer to the complaint accompanied by a prayer for the approval of her redelivery bond. The RTC, however, denied the redelivery bond for having been filed beyond the five-day mandatory period prescribed in Sections 5 and 6 of Rule 60. But since the writ was invalidly served, petitioner is correct in contending that there is no reckoning point from which the mandatory five-day period shall commence to run. The trial court is reminded that not only should the writ or order of replevin comply with all the requirements as to matters of form or contents prescribed by the Rules of Court. The writ must also 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 trial court is deemed to have acted without or in excess of its jurisdiction with respect to the ancillary action of replevin if it seizes and detains a personalty on the basis of a writ that was improperly served, such as what happened in this case. At the outset, petitioners proper remedy should have been to file a motion to quash the writ of replevin or a motion
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to vacate the order of seizure. Nevertheless, petitioners filing of an application for a redelivery 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 respect to the main action, shall continue. Respondent may, however, file a new application for replevin should he choose to do so. 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 main action with dispatch. SO ORDERED. ANTONIO EDUARDO B. NACHURA Associate Justice WE CONCUR: CONSUELO YNARES-SANTIAGO Associate Justice Chairperson ANTONIO T. CARPIO Associate Justice
*
RENATO C. CORONA Associate Justice DIOSDADO M. PERALTA Associate Justice ATTESTATION
**
I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. CONSUELO YNARES-SANTIAGO Associate Justice Chairperson, Third Division CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. REYNATO S. PUNO Chief Justice
Footnotes
*
Additional member in lieu of Associate Justice Conchita Carpio Morales per Special Order No. 646 dated May 15, 2009.
Additional member in lieu of Associate Justice Minita V. Chico-Nazario per Special Order No. 631 dated April 29, 2009.
1
**
Penned by Associate Justice Eugenio S. Labitoria, with Associate Justices Mercedes Gozo-Dadole and Rosmari D. Carandang, concurring; rollo, pp. 32-35. Rollo, pp. 45-46. Id. at 51-65. Id. at 56-57. Id. at 55-57. Id. at 51-53.
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Id. at 70. Id. at 68-69. Id. at 69. Id. at 72-73. Id. at 74-94. Id. at 76-79, 85-87. Id. at 76-79. Id. at 101. Secs. 5 and 6, Rule 60 of the Rules of Court, read: SEC. 5. Return of property. If the adverse party objects to the sufficiency of the applicants bond, or of the surety or sureties thereon, he cannot immediately require the return of the property, but if he does not so object, he may, at any time before the delivery of the property to the applicant, require the return thereof, by filing with the court where the action is pending a bond executed to the applicant, in double the value of the property as stated in the applicants affidavit for the delivery thereof to the applicant, if such delivery be adjudged, and for the payment of such sum to him as may be recovered against the adverse party, and by serving a copy of such bond on the applicant. SEC. 6. Disposition of property by sheriff. If within five (5) days after the taking of the property by the sheriff, the adverse party does not object to the sufficiency of the bond, or of the surety or sureties thereon; or if the adverse party so objects and the court affirms its approval of the applicants bond or approves a new bond, or if the adverse party requires the return of the property but his bond is objected to and found insufficient and he does not forthwith file an approved bond, the property shall be delivered to the applicant. If for any reason the property is not delivered to the applicant, the sheriff must return it to the adverse party.
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Rollo, pp. 103-107. Id. at 108. Id. at 32-35. Id. at 36-44. Supra note 2. Sec. 4, Rule 60 of the Rules of Court, reads: SEC. 4. Duty of the sheriff. Upon receiving such order, the sheriff must serve a copy thereof on the adverse party, together with a copy of the application, affidavit and bond, and must forthwith take the property, if it be in the possession of the adverse party, or his agent, and retain it in his custody. If the property or any part thereof be concealed in a building or enclosure, the sheriff must demand its delivery, and if it be not delivered, he must cause the building or enclosure to be broken open and take the property into his possession. After the sheriff has taken possession of the property as herein provided, he must keep it in a secure place and shall be responsible for its delivery to the party entitled thereto upon receiving his fees and necessary expenses for taking and keeping the same.
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Stone v. Church, 16 N.Y.S.2d 512, 515, 172 Misc. 1007, 1008 (1939).
Sinnott v. Feiock, 59 N.E. 265, 165 N.Y. 444, 80 Am.S.R. 736, 53 L.R.A. 565 (1901); and Kurzweil v. Story & Clark Piano Co. and Blumgarten v. Mason & Hamlin Co., 159 N.Y.S. 231, 95 Misc. 484 (1916). Palmer v. King, 41 App. DC. 419, L.R.A.1916D 278, Ann. Cas.1915C 1139 (1914). Stone v. Church, supra note 22. Steuer v. Maguire, 66 N. E. 706, 707; 182 Mass. 575, 576 (1903).
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Tillson v. Court of Appeals, G.R. No. 89870, May 28, 1991, 197 SCRA 587, 598.
BA Finance Corporation v. CA, 327 Phil. 716, 724-725 (1996). See also Tillson v. Court of Appeals, id.; Bouvier's Dictionary, Third (Rawle's) Revision, Vol. 2; Black's Law Dictionary, Sixth Edition, p. 1299.
29 30
BA Finance Corporation v. CA, supra, at 725. Art. 527 of the New Civil Code provides: Art. 527. Good faith is always presumed, and upon him who alleges bad faith on the part of a possessor rests the burden of proof.
31
Art. 539 of the New Civil Code provides: Art. 539. 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 established by the laws and the Rules of the Court.
32
Yu v. Honrado, No. 50025, August 21, 1980, 99 SCRA 273, 277, citing Chua Hai v. Kapunan, Jr., etc. and Ong Shu, 104 Phil. 110, 118 (1958). Heath v. Steamer "San Nicolas," 7 Phil. 532, 538 (1907). Weaver Piano Co., Inc. v. Curtis, 158 S.C. 117; 155 SE 291, 300 (1930). Heath v. Steamer "San Nicolas," supra note 33, at 538. Cummings v. Gordon, 29 Pa. Dist. 740; 77 C.J.S. 120. Supra note 21. Secs. 1 and 2, Art. III of the Constitution provides in full: Section 1. No person shall be deprived of life liberty or property without due process of law, nor shall any person be denied the equal protection of the laws. Section 2. 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 search warrant or warrant of arrest shall issue except upon probable cause to be determined personally by the judge after examination under oath or affirmation of the complainant and witnesses he may produce, and particularly describing the place to be searched and the persons or things be seized. (Italics supplied.)
33 34 35 36 37 38
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Rollo, pp. 13, 69, 138. Annex "G-2," id. at 69. Rollo, pp. 72-73. Id. at 101.
Vicente Francisco, The Revised Rules of Court in the Philippines, Provisional Remedies, Vol. IV-A, 1971, p. 394, citing 77 C.J.S. 81-82.
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G.R. No. 153788
Republic of the Philippines SUPREME COURT Manila G.R. No. 153788 November 27, 2009
ROGER V. NAVARRO, Petitioner, vs. HON. JOSE L. ESCOBIDO, Presiding Judge, RTC Branch 37, Cagayan de Oro City, and KAREN T. GO, doing business under the name KARGO ENTERPRISES, Respondents. DECISION BRION, J.: This is a petition for review on certiorari that seeks to set aside the Court of Appeals (CA) Decision dated October 16, 2001 and Resolution dated May 29, 2002 in CA-G.R. SP. No. 64701. These CA rulings affirmed the July 26, 2000 and March 7, 2001 orders of the Regional Trial Court (RTC), Misamis Oriental, Cagayan de Oro City, denying petitioner Roger V. Navarros (Navarro) motion to dismiss. BACKGROUND FACTS On September 12, 1998, respondent Karen T. Go filed two complaints, docketed as Civil Case Nos. 98-599 (first complaint) and 98-598 (second complaint), before the RTC for replevin and/or sum of money with damages against Navarro. In these complaints, Karen Go prayed that the RTC issue writs of replevin for the seizure of two (2) motor vehicles in Navarros possession. The first complaint stated: 1. That plaintiff KAREN T. GO is a Filipino, of legal age, married to GLENN O. GO, a resident of Cagayan de Oro City and doing business under the trade name KARGO ENTERPRISES, an entity duly registered and existing under and by virtue of the laws of the Republic of the Philippines, which has its business address at Bulua, Cagayan de Oro City; that defendant ROGER NAVARRO is a Filipino, of legal age, a resident of 62 Dolores Street, Nazareth, Cagayan de Oro City, where he may be served with summons and other processes of the Honorable Court; that defendant "JOHN DOE" whose real name and address are at present unknown to plaintiff is hereby joined as party defendant as he may be the person in whose possession and custody the personal property subject matter of this suit may be found if the same is not in the possession of defendant ROGER NAVARRO; 2. That KARGO ENTERPRISES is in the business of, among others, buying and selling motor vehicles, including hauling trucks and other heavy equipment; 3. That for the cause of action against defendant ROGER NAVARRO, it is hereby stated that on August 8, 1997, the said defendant leased [from] plaintiff a certain motor vehicle which is more particularly described as follows Make/Type FUSO WITH MOUNTED CRANE Serial No. FK416K-51680 Motor No. 6D15-338735 Plate No. GHK-378 as evidenced by a LEASE AGREEMENT WITH OPTION TO PURCHASE entered into by and between KARGO ENTERPRISES, then represented by its Manager, the aforementioned GLENN O. GO, and defendant ROGER NAVARRO xxx; that in accordance with the provisions of the above LEASE AGREEMENT WITH OPTION TO PURCHASE, defendant ROGER NAVARRO delivered unto plaintiff six (6) post-dated checks each in the amount of SIXTY-SIX THOUSAND THREE HUNDRED THIRTY-THREE & 33/100 PESOS (P66,333.33) which were supposedly in payment of the agreed rentals; that when the fifth and sixth checks, i.e. PHILIPPINE BANK OF COMMUNICATIONS CAGAYAN DE ORO BRANCH CHECKS NOS. 017112 and 017113, respectively dated January 8, 1998 and February 8, 1998, were presented for payment and/or credit, the same were dishonored and/or returned by the drawee bank for the common reason that the current deposit account against which the said checks were issued did not have sufficient funds to cover the amounts thereof; that the total amount of the two (2) checks,
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i.e. the sum of ONE HUNDRED THIRTY-TWO THOUSAND SIX HUNDRED SIXTY-SIX & 66/100 PESOS (P132,666.66) therefore represents the principal liability of defendant ROGER NAVARRO unto plaintiff on the basis of the provisions of the above LEASE AGREEMENT WITH RIGHT TO PURCHASE; that demands, written and oral, were made of defendant ROGER NAVARRO to pay the amount of ONE HUNDRED THIRTY-TWO THOUSAND SIX HUNDRED SIXTY-SIX & 66/100 PESOS (P132,666.66), or to return the subject motor vehicle as also provided for in the LEASE AGREEMENT WITH RIGHT TO PURCHASE, but said demands were, and still are, in vain to the great damage and injury of herein plaintiff; xxx 4. That the aforedescribed motor vehicle has not been the subject of any tax assessment and/or fine pursuant to law, or seized under an execution or an attachment as against herein plaintiff; xxx 8. That plaintiff hereby respectfully applies for an order of the Honorable Court for the immediate delivery of the above-described motor vehicle from defendants unto plaintiff pending the final determination of this case on the merits and, for that purpose, there is attached hereto an affidavit duly executed and bond double the value of the personal property subject matter hereof to answer for damages and costs which defendants may suffer in the event that the order for replevin prayed for may be found out to having not been properly issued. The second complaint contained essentially the same allegations as the first complaint, except that the Lease Agreement with Option to Purchase involved is dated October 1, 1997 and the motor vehicle leased is described as follows: Make/Type FUSO WITH MOUNTED CRANE Serial No. FK416K-510528 Motor No. 6D14-423403 The second complaint also alleged that Navarro delivered three post-dated checks, each for the amount of P100,000.00, to Karen Go in payment of the agreed rentals; however, the third check was dishonored when presented for payment.
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On October 12, 1998 and October 14, 1998, the RTC issued writs of replevin for both cases; as a result, the Sheriff seized the two vehicles and delivered them to the possession of Karen Go. In his Answers, Navarro alleged as a special affirmative defense that the two complaints stated no cause of action, since Karen Go was not a party to the Lease Agreements with Option to Purchase (collectively, the lease agreements) the actionable documents on which the complaints were based. On Navarros motion, both cases were duly consolidated on December 13, 1999. In its May 8, 2000 order, the RTC dismissed the case on the ground that the complaints did not state a cause of action. In response to the motion for reconsideration Karen Go filed dated May 26, 2000, the RTC issued another order dated July 26, 2000 setting aside the order of dismissal. Acting on the presumption that Glenn Gos leasing business is a conjugal property, the RTC held that Karen Go had sufficient interest in his leasing business to file the action against Navarro. However, the RTC held that Karen Go should have included her husband, Glenn Go, in the complaint based on Section 4, Rule 3 of the Rules of Court (Rules). a motion for the inclusion of Glenn Go as co-plaintiff.
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Thus, the lower court ordered Karen Go to file
When the RTC denied Navarros motion for reconsideration on March 7, 2001, Navarro filed a petition for certiorari with the CA, essentially contending that the RTC committed grave abuse of discretion when it reconsidered the dismissal of the case and directed Karen Go to amend her complaints by including her husband Glenn Go as co-plaintiff. According to Navarro, a complaint which failed to state a cause of action could not be converted into one with a cause of action by mere amendment or supplemental pleading. On October 16, 2001, the CA denied Navarros petition and affirmed the RTCs order. Navarros motion for reconsideration in its resolution of May 29, 2002, THE PETITION Navarro alleges that even if the lease agreements were in the name of Kargo Enterprises, since it did not have the requisite juridical personality to sue, the actual parties to the agreement are himself and Glenn Go. Since it was Karen Go who filed the complaints and not Glenn Go, she was not a real party-in-interest and the complaints failed to state a cause of action. Navarro posits that the RTC erred when it ordered the amendment of the complaint to include Glenn Go as a co-plaintiff, instead of dismissing the complaint outright because a complaint which does not state a cause of action cannot be converted into one with a cause of action by a mere amendment or a supplemental pleading. In effect, the
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The CA also denied
leading to the filing of the present petition.
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lower court created a cause of action for Karen Go when there was none at the time she filed the complaints. Even worse, according to Navarro, the inclusion of Glenn Go as co-plaintiff drastically changed the theory of the complaints, to his great prejudice. Navarro claims that the lower court gravely abused its discretion when it assumed that the leased vehicles are part of the conjugal property of Glenn and Karen Go. Since Karen Go is the registered owner of Kargo Enterprises, the vehicles subject of the complaint are her paraphernal properties and the RTC gravely erred when it ordered the inclusion of Glenn Go as a co-plaintiff. Navarro likewise faults the lower court for setting the trial of the case in the same order that required Karen Go to amend her complaints, claiming that by issuing this order, the trial court violated Rule 10 of the Rules. Even assuming the complaints stated a cause of action against him, Navarro maintains that the complaints were premature because no prior demand was made on him to comply with the provisions of the lease agreements before the complaints for replevin were filed. Lastly, Navarro posits that since the two writs of replevin were issued based on flawed complaints, the vehicles were illegally seized from his possession and should be returned to him immediately. Karen Go, on the other hand, claims that it is misleading for Navarro to state that she has no real interest in the subject of the complaint, even if the lease agreements were signed only by her husband, Glenn Go; she is the owner of Kargo Enterprises and Glenn Go signed the lease agreements merely as the manager of Kargo Enterprises. Moreover, Karen Go maintains that Navarros insistence that Kargo Enterprises is Karen Gos paraphernal property is without basis. Based on the law and jurisprudence on the matter, all property acquired during the marriage is presumed to be conjugal property. Finally, Karen Go insists that her complaints sufficiently established a cause of action against Navarro. Thus, when the RTC ordered her to include her husband as co-plaintiff, this was merely to comply with the rule that spouses should sue jointly, and was not meant to cure the complaints lack of cause of action. THE COURTS RULING We find the petition devoid of merit. Karen Go is the real party-in-interest The 1997 Rules of Civil Procedure requires that every action must be prosecuted or defended in the name of the real party-in-interest, i.e., the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit.
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Interestingly, although Navarro admits that Karen Go is the registered owner of the business name Kargo Enterprises, he still insists that Karen Go is not a real party-in-interest in the case. According to Navarro, while the lease contracts were in Kargo Enterprises name, this was merely a trade name without a juridical personality, so the actual parties to the lease agreements were Navarro and Glenn Go, to the exclusion of Karen Go. As a corollary, Navarro contends that the RTC acted with grave abuse of discretion when it ordered the inclusion of Glenn Go as co-plaintiff, since this in effect created a cause of action for the complaints when in truth, there was none. We do not find Navarros arguments persuasive. The central factor in appreciating the issues presented in this case is the business name Kargo Enterprises. The name appears in the title of the Complaint where the plaintiff was identified as "KAREN T. GO doing business under the name KARGO ENTERPRISES," and this identification was repeated in the first paragraph of the Complaint. Paragraph 2 defined the business KARGO ENTERPRISES undertakes. Paragraph 3 continued with the allegation that the defendant "leased from plaintiff a certain motor vehicle" that was thereafter described. Significantly, the Complaint specifies and attaches as its integral part the Lease Agreement that underlies the transaction between the plaintiff and the defendant. Again, the name KARGO ENTERPRISES entered the picture as this Lease Agreement provides: This agreement, made and entered into by and between: GLENN O. GO, of legal age, married, with post office address at xxx, herein referred to as the LESSOR-SELLER; representing KARGO ENTERPRISES as its Manager, xxx thus, expressly pointing to KARGO ENTERPRISES as the principal that Glenn O. Go represented. In other words, by the express terms of this Lease Agreement, Glenn Go did sign the agreement only as the manager of Kargo Enterprises and the latter is clearly the real party to the lease agreements. As Navarro correctly points out, Kargo Enterprises is a sole proprietorship, which is neither a natural person, nor a juridical person, as defined by Article 44 of the Civil Code:
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Art. 44. The following are juridical persons: (1) The State and its political subdivisions; (2) Other corporations, institutions and entities for public interest or purpose, created by law; their personality begins as soon as they have been constituted according to law; (3) Corporations, partnerships and associations for private interest or purpose to which the law grants a juridical personality, separate and distinct from that of each shareholder, partner or member. Thus, pursuant to Section 1, Rule 3 of the Rules, Kargo Enterprises cannot be a party to a civil action. This legal reality leads to the question: who then is the proper party to file an action based on a contract in the name of Kargo Enterprises? We faced a similar question in Juasing Hardware v. Mendoza,
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where we said:
Finally, there is no law authorizing sole proprietorships like petitioner to bring suit in court. The law merely recognizes the existence of a sole proprietorship as a form of business organization conducted for profit by a single individual, and requires the proprietor or owner thereof to secure licenses and permits, register the business name, and pay taxes to the national government. It does not vest juridical or legal personality upon the sole proprietorship nor empower it to file or defend an action in court. Thus, the complaint in the court below should have been filed in the name of the owner of Juasing Hardware. The allegation in the body of the complaint would show that the suit is brought by such person as proprietor or owner of the business conducted under the name and style Juasing Hardware. The descriptive words "doing business as Juasing Hardware" may be added to the title of the case, as is customarily done.
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This conclusion should be read in relation with Section 2, Rule 3 of the Rules, which states: SEC. 2. Parties in interest. A real party in interest is the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit. Unless otherwise authorized by law or these Rules, every action must be prosecuted or defended in the name of the real party in interest. As the registered owner of Kargo Enterprises, Karen Go is the party who will directly benefit from or be injured by a judgment in this case. Thus, contrary to Navarros contention, Karen Go is the real party-in-interest, and it is legally incorrect to say that her Complaint does not state a cause of action because her name did not appear in the Lease Agreement that her husband signed in behalf of Kargo Enterprises. Whether Glenn Go can legally sign the Lease Agreement in his capacity as a manager of Kargo Enterprises, a sole proprietorship, is a question we do not decide, as this is a matter for the trial court to consider in a trial on the merits. Glenn Gos Role in the Case We find it significant that the business name Kargo Enterprises is in the name of Karen T. Go, who described herself in the Complaints to be "a Filipino, of legal age, married to GLENN O. GO, a resident of Cagayan de Oro City, and doing business under the trade name KARGO ENTERPRISES." That Glenn Go and Karen Go are married to each other is a fact never brought in issue in the case. Thus, the business name KARGO ENTERPRISES is registered in the name of a married woman, a fact material to the side issue of whether Kargo Enterprises and its properties are paraphernal or conjugal properties. To restate the parties positions, Navarro alleges that Kargo Enterprises is Karen Gos paraphernal property, emphasizing the fact that the business is registered solely in Karen Gos name. On the other hand, Karen Go contends that while the business is registered in her name, it is in fact part of their conjugal property. The registration of the trade name in the name of one person a woman does not necessarily lead to the conclusion that the trade name as a property is hers alone, particularly when the woman is married. By law, all property acquired during the marriage, whether the acquisition appears to have been made, contracted or registered in the name of one or both spouses, is presumed to be conjugal unless the contrary is proved. Our examination of the records of the case does not show any proof that Kargo Enterprises and the properties or contracts in its name are conjugal. If at all, only the bare allegation of Navarro to this effect exists in the records of the case. As we emphasized in Castro v. Miat:
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Petitioners also overlook Article 160 of the New Civil Code. It provides that "all property of the marriage is presumed to be conjugal partnership, unless it be prove[n] that it pertains exclusively to the husband or to the wife." This article does not require proof that the property was acquired with funds of the partnership. The presumption applies even when the manner in which the property was acquired does not appear.
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Thus, for purposes solely of this case and of resolving the issue of whether Kargo Enterprises as a sole proprietorship is conjugal or paraphernal property, we hold that it is conjugal property.
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Article 124 of the Family Code, on the administration of the conjugal property, provides: Art. 124. The administration and enjoyment of the conjugal partnership property shall belong to both spouses jointly. In case of disagreement, the husbands decision shall prevail, subject to recourse to the court by the wife for proper remedy, which must be availed of within five years from the date of the contract implementing such decision. xxx This provision, by its terms, allows either Karen or Glenn Go to speak and act with authority in managing their conjugal property, i.e., Kargo Enterprises. No need exists, therefore, for one to obtain the consent of the other before performing an act of administration or any act that does not dispose of or encumber their conjugal property. Under Article 108 of the Family Code, the conjugal partnership is governed by the rules on the contract of partnership in all that is not in conflict with what is expressly determined in this Chapter or by the spouses in their marriage settlements. In other words, the property relations of the husband and wife shall be governed primarily by Chapter 4 on Conjugal Partnership of Gains of the Family Code and, suppletorily, by the spouses marriage settlement and by the rules on partnership under the Civil Code. In the absence of any evidence of a marriage settlement between the spouses Go, we look at the Civil Code provision on partnership for guidance. A rule on partnership applicable to the spouses circumstances is Article 1811 of the Civil Code, which states: Art. 1811. A partner is a co-owner with the other partners of specific partnership property. The incidents of this co-ownership are such that: (1) A partner, subject to the provisions of this Title and to any agreement between the partners, has an equal right with his partners to possess specific partnership property for partnership purposes; xxx Under this provision, Glenn and Karen Go are effectively co-owners of Kargo Enterprises and the properties registered under this name; hence, both have an equal right to seek possession of these properties. Applying Article 484 of the Civil Code, which states that "in default of contracts, or special provisions, co-ownership shall be governed by the provisions of this Title," we find further support in Article 487 of the Civil Code that allows any of the co-owners to bring an action in ejectment with respect to the co-owned property. While ejectment is normally associated with actions involving real property, we find that this rule can be applied to the circumstances of the present case, following our ruling in Carandang v. Heirs of De Guzman. In this case, one spouse filed an action for the recovery of credit, a personal property considered conjugal property, without including the other spouse in the action. In resolving the issue of whether the other spouse was required to be included as a co-plaintiff in the action for the recovery of the credit, we said: Milagros de Guzman, being presumed to be a co-owner of the credits allegedly extended to the spouses Carandang, seems to be either an indispensable or a necessary party. If she is an indispensable party, dismissal would be proper. If she is merely a necessary party, dismissal is not warranted, whether or not there was an order for her inclusion in the complaint pursuant to Section 9, Rule 3. Article 108 of the Family Code provides: Art. 108. The conjugal partnership shall be governed by the rules on the contract of partnership in all that is not in conflict with what is expressly determined in this Chapter or by the spouses in their marriage settlements. This provision is practically the same as the Civil Code provision it superseded: Art. 147. The conjugal partnership shall be governed by the rules on the contract of partnership in all that is not in conflict with what is expressly determined in this Chapter. In this connection, Article 1811 of the Civil Code provides that "[a] partner is a co-owner with the other partners of specific partnership property." Taken with the presumption of the conjugal nature of the funds used to finance the four checks used to pay for petitioners stock subscriptions, and with the presumption that the credits themselves are part of conjugal funds, Article 1811 makes Quirino and Milagros de Guzman co-owners of the alleged credit. Being co-owners of the alleged credit, Quirino and Milagros de Guzman may separately bring an action for the recovery thereof. In the fairly recent cases of Baloloy v. Hular and Adlawan v. Adlawan, we held that, in a co-ownership, co-owners may bring actions for the recovery of co-owned property without the necessity of joining all the other co-owners as co-plaintiffs because the suit is presumed to have been filed for the benefit of his co-owners. In the latter case and in that of De Guia v. Court of Appeals, we also held that Article 487 of the Civil Code, which provides that any of the co-owners may bring an action for ejectment, covers all kinds of action for the recovery of possession. In sum, in suits to recover properties, all co-owners are real parties in interest. However, pursuant to Article 487 of the Civil Code and relevant jurisprudence, any one of them may bring an action, any kind of action, for the recovery
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of co-owned properties. Therefore, only one of the co-owners, namely the co-owner who filed the suit for the recovery of the co-owned property, is an indispensable party thereto. The other co-owners are not indispensable parties. They are not even necessary parties, for a complete relief can be accorded in the suit even without their participation, since the suit is presumed to have been filed for the benefit of all co-owners.
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Under this ruling, either of the spouses Go may bring an action against Navarro to recover possession of the Kargo Enterprises-leased vehicles which they co-own. This conclusion is consistent with Article 124 of the Family Code, supporting as it does the position that either spouse may act on behalf of the conjugal partnership, so long as they do not dispose of or encumber the property in question without the other spouses consent. On this basis, we hold that since Glenn Go is not strictly an indispensable party in the action to recover possession of the leased vehicles, he only needs to be impleaded as a pro-forma party to the suit, based on Section 4, Rule 4 of the Rules, which states: Section 4. Spouses as parties. Husband and wife shall sue or be sued jointly, except as provided by law. Non-joinder of indispensable parties not ground to dismiss action Even assuming that Glenn Go is an indispensable party to the action, we have held in a number of cases that the misjoinder or non-joinder of indispensable parties in a complaint is not a ground for dismissal of action. As we stated in Macababbad v. Masirag:
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Rule 3, Section 11 of the Rules of Court provides that neither misjoinder nor nonjoinder of parties is a ground for the dismissal of an action, thus: Sec. 11. Misjoinder and non-joinder of parties. Neither misjoinder nor non-joinder of parties is ground for dismissal of an action. Parties may be dropped or added by order of the court on motion of any party or on its own initiative at any stage of the action and on such terms as are just. Any claim against a misjoined party may be severed and proceeded with separately. In Domingo v. Scheer, this Court held that the proper remedy when a party is left out is to implead the indispensable party at any stage of the action. The court, either motu proprio or upon the motion of a party, may order the inclusion of the indispensable party or give the plaintiff opportunity to amend his complaint in order to include indispensable parties. If the plaintiff to whom the order to include the indispensable party is directed refuses to comply with the order of the court, the complaint may be dismissed upon motion of the defendant or upon the court's own motion. Only upon unjustified failure or refusal to obey the order to include or to amend is the action dismissed. In these lights, the RTC Order of July 26, 2000 requiring plaintiff Karen Go to join her husband as a party plaintiff is fully in order. Demand not required prior to filing of replevin action In arguing that prior demand is required before an action for a writ of replevin is filed, Navarro apparently likens a replevin action to an unlawful detainer. For a writ of replevin to issue, all that the applicant must do is to file an affidavit and bond, pursuant to Section 2, Rule 60 of the Rules, which states: Sec. 2. Affidavit and bond. The applicant must show by his own affidavit or that of some other person who personally knows the facts: (a) That the applicant is the owner of the property claimed, particularly describing it, or is entitled to the possession thereof; (b) That the property is wrongfully detained by the adverse party, alleging the cause of detention thereof according to the best of his knowledge, information, and belief; (c) That the property has not been 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, or if so seized, that it is exempt from such seizure or custody; and (d) The actual market value of the property. The applicant must also give a bond, executed to the adverse party in double the value of the property as stated in the affidavit aforementioned, for the return of the property to the adverse party if such return be adjudged, and for the payment to the adverse party of such sum as he may recover from the applicant in the action. We see nothing in these provisions which requires the applicant to make a prior demand on the possessor of the property before he can file an action for a writ of replevin. Thus, prior demand is not a condition precedent to an
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action for a writ of replevin. More importantly, Navarro is no longer in the position to claim that a prior demand is necessary, as he has already admitted in his Answers that he had received the letters that Karen Go sent him, demanding that he either pay his unpaid obligations or return the leased motor vehicles. Navarros position that a demand is necessary and has not been made is therefore totally unmeritorious. WHEREFORE, premises considered, we DENY the petition for review for lack of merit. Costs against petitioner Roger V. Navarro. SO ORDERED. ARTURO D. BRION Associate Justice WE CONCUR: ANTONIO T. CARPIO Associate Justice Chairperson TERESITA J. LEONARDO-DE CASTRO Associate Justice ROBERTO A. ABAD Associate Justice ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. ANTONIO T. CARPIO Associate Justice Chairperson CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. REYNATO S. PUNO Chief Justice MARIANO C. DEL CASTILLO Associate Justice
Footnotes
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Under Rule 45 of the 1997 Revised Rules of Civil Procedure; rollo, pp. 11-46.
Penned by Associate Justice Eliezer R. De Los Santos, with the concurrence of Associate Justice Godardo A. Jacinto and Associate Justice Bernardo P. Abesamis (all retired); id. at 48-53.
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Id. at 55. Id. at 105-107. Id. at 108-109. Id. at 129-140. Id. at 143-154. Philippine Bank of Communications Cagayan de Oro Branch Check No. 017020 dated January 1, 1998. Rollo, p. 155. Id. at 156.
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Id. at 179-181. Section 4. Spouses as parties. Husband and wife shall sue or be sued jointly, except as provided by law. Supra note 2. Supra note 3. RULES OF COURT, Rule 3, Sec. 2.
Sec. 1. Who may be parties. Only natural or juridical persons or entities authorized by law may be parties in a civil action.
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201 Phil. 369, 372-373 (1982). Id. at 372-373. Rollo, p. 185. Id. at 129 and 143. FAMILY CODE, Article 116; CIVIL CODE, Article 160. 445 Phil. 284, 293 (2003). Id. at 293. G.R. No. 160347, November 29, 2006, 508 SCRA 469. Id. at 486-488.
Domingo v. Scheer, 466 Phil. 235 (2004); Vesagas, et al. v. Court of Appeals, et al., 422 Phil. 860 (2001); Salvador, et al. v. Court of Appeals, et al., 313 Phil. 36 (1995); Cuyugan v. Dizon, 79 Phil. 80 (1947); Alonso v. Villamor, 16 Phil. 315 (1910). G.R. No. 161237, January 14, 2009.
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A.M. No. P-04-1920
http://www.lawphil.net/judjuris/juri2007/aug2007/am_p-04-1920_2007...
Republic of the Philippines SUPREME COURT Manila SECOND DIVISION A.M. No. P-04-1920 August 17, 2007
SPOUSES NORMANDY and RUTH BAUTISTA, Complainants, vs. ERNESTO L. SULA, Sheriff IV, Regional Trial Court, Branch 98, Quezon City, Respondent. DECISION CARPIO, J.: The Facts On 6 December 2003, Ruth B. Bautista (Ruth) borrowed P300,000 from Ceniza C. Glor (Glor). The loan, payable in three months, bore a monthly interest of five percent. The three-month period commenced on 6 December 2003 and expired on 6 March 2004. To secure the loan, Ruth executed a chattel mortgage over her Honda CRV in favor of Glor.
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Upon maturity of the loan, Glor repeatedly demanded payment from Ruth. Despite the repeated demands, Ruth refused to pay her debt, or surrender possession of the vehicle. Thus, on 6 May 2004, Glor filed with the Regional Trial Court, Branch 98, Quezon City (trial court), a civil case for judicial foreclosure of chattel mortgage with prayer for the issuance of a writ of replevin. Thereafter, the trial court issued a writ of replevin dated 14 May 2004 directing Ernesto L. Sula (respondent), Sheriff IV of the trial court, to take possession of the vehicle and keep it in his custody: WHEREAS, plaintiff Ceniza C. Glor, in the above-entitled case, having filed an application with this Court praying for the seizure and delivery to Ceniza C. Glor of the property, more particularly described hereafter, and having filed the affidavit required by the Rules of Court and executed to the defendant a bond in the sum of EIGHT HUNDRED THOUSAND PESOS ONLY (P800,000.00). You are hereby ordered to take immediate possession of the following property which is now detained by the defendant, to wit: MAKE & TYPE : Honda CRV (Station Wagon) MOTOR NO. CHASSIS NO. PLATE NO. FILE NO. : PEWD7P100308 : PADRD1830WV000347 : HRS-555 : 1320-00000161749
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and to keep the said property in your possession for five (5) days. At the expiration of the said period, you shall deliver, subject to the provisions of Sections 5, 6 and 7 of Rule 60 of the Rules of Court, to the plaintiff the said property, provided that your legal fees and all the necessary expenses are fully paid. Respondent enforced the writ on 17 May 2004. On 20 May 2004, spouses Normandy R. Bautista and Ruth B. Bautista (complainants) filed with the trial court an urgent motion for the return of the vehicle and submission of counter-bond. On 21 May 2004, complainants filed a motion to withdraw the urgent motion, attaching thereto an omnibus motion for entry of appearance, urgent setting of hearing, and redelivery of the vehicle to them. Pursuant to Section 5 of Rule 60, complainants required the return of the vehicle to them by filing a counter-bond and serving Glor a copy of the counter-bond.
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Because the trial court failed to approve complainants counter-bond within the five-day period provided in Section 6
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of Rule 60, Glor, in a letter dated 24 May 2004, asked respondent to deliver the vehicle to her. In a letter dated 26 May 2004, complainants asked respondent not to deliver the vehicle to Glor because (1) pursuant to Section 5, they had required the return of the vehicle to them and filed the corresponding counter-bond; (2) the vehicles delivery to Glor was not justified under Section 6; and (3) there was no order from the trial court directing the delivery to Glor. In a letter dated 26 May 2004, Glor reiterated her demand on respondent to deliver the vehicle to her; otherwise, she would be constrained to pursue legal actions against him. On 26 May 2004, complainants alleged that respondent approached them in the Quezon City Hall of Justice building asking them to wait for him by the benches at the back of the second floor. There, respondent told them that he was willing to ignore Glors request in exchange for P20,000. With a little hesitation, they offered him P3,000 and promised to give the balance on the following day. Respondent agreed and immediately received the P3,000. On the next day, however, complainants did not give the balance. They asked respondent if he could give them more time to raise the money. Respondent was irked by this. Complainants alleged that: At 4:50 P.M. he came to us at the designated place and while we were reading his Sheriffs Manifestation, he said he had not eaten lunch yet because in his words "dahil sa paggawa ko ng Manifestation at sama ng loob dahil ako ang naipit dito sa kaso nyo, si judge kasi ang bagal mag-release ng order. Kakasuhan na ko sa Ombudsman ng plaintiff." Trying to clarify what he meant about this, we ask [sic] him what we on our part need [sic] to do so that the property will be ensured that its [sic] under the custody of the court or "custodia legis" until such time that the Honorable Court could resolve our motion. However we were totally surprised when he said that "Nasa sa inyo yan pero yun kasing kabila talagang desidido na makuha ang property, kung makapagbigay kayo ng kahit Twenty (20) Thousand sa akin magagawan natin yan ng paraan na di makuha ng plaintiff, yun ay kung gusto nyo lang, kasi pag napunta yan sa kanila baka di nyo na makita yan". [With] those words from Sheriff IV Ernesto L. Sula it became clear to us that he was asking money to favor us in the disposition of the property, I replied that the only cash we have [sic] at the time was only Three (3) Thousand Pesos and ask [sic] him if he could accept it for the meantime and that we will come up with the balance on the following morning. He said "Cge pero siguraduhin nyo lang maibigay nyo ang balanse bukas ng maaga kasi meron din akong bibigyan para safe din ako. Ganito kasi dito kailangan may nakakaalam na mas mataas para may proteksiyon tayo." At this point I asked my wife, Ruth B. Bautista what she thought about it and she said its [sic] up to me and thereafter I gestured to give him the Three (3) Thousand Pesos which he said "Isimple mo lang ang abot para walang makapansin" and I simply slipped the money in his hand and after he received the money put his hand immediately in his pocket. x x x [O]n the following day 27th May 2004 at 8:10 A.M. We met him at the benches at the back of the 3rd floor of the Justice Hall Bldg. We immediately apologized and told him that we failed to borrow money for the balance of our agreement and ask [sic] if he could wait until at [sic] Friday 29th May 2004 to come up with the balance of our agreement because it might take some time before we can raise it. x x x He answered that "Medyo mahirap pala kayong kausap" and left us.
13 12
10
11
On 27 May 2004, respondent filed a sheriffs manifestation asking the trial courts guidance on whether he should deliver the vehicle to Glor or keep it in custodia legis: [T]his Manifestation is respectfully filed before the Honorable Court, in order that he maybe [sic] guided on whether he should release the vehicle as demanded by plaintiff or hold its release until such time that the Motions and Counter[-]bond filed by defendants is [sic] resolved as requested by the defendant.
14
Without waiting for the trial courts instructions regarding the vehicle, respondent filed his sheriffs return on 28 May 2004 stating that he had already delivered the vehicle to Glor: [O]n May 27, 2004, after the expiration of the five (5) days [sic] period and in the absence of any Court Order/s, undersigned turned-over the possession of the motor vehicle to the Plaintiff as per Court/Sheriffs Receipt hereto attached.
15
On 31 May 2004, complainants alleged that they went to the trial court to check on the vehicle and to look for respondent. There, respondent admitted to them that he had already delivered the vehicle to Glor he acted on his own discretion. Complainants asked respondent how much he received from Glor and why he did not give them a chance to fulfill their agreement. He just said "pasensiyahan na lang tayo."
16
On 2 and 7 June 2004, complainants filed with the Office of the Ombudsman and the Office of the Court Administrator (OCA), respectively, a joint affidavit-complaint against respondent. Since the acts complained of were related to respondents functions as an officer of the court, the Office of the Ombudsman, in its 1st Indorsement
18 17
dated 20 July 2004, referred the matter to the OCA.

19
In his comment
dated 4 August 2004, respondent prayed that the instant case be dismissed because:
1. Complainants accusations against him were malicious and unfounded. They filed the instant case against
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him because they "amassed so much anxiety and wrath against respondent to the point of even telling telltales." They felt aggrieved because of the vehicles delivery to Glor and its subsequent foreclosure. 2. He was only guided by the orders of the court and, in their absence, by the Rules of Court particularly Rule 60. Under Section 6 of the said Rule, the vehicles delivery to Glor followed as a matter of course because she posted a bond which was approved by the court. On the other hand, up to the time of the delivery, complainants counter-bond had not been approved by the court. 3. Complainants accusation that he asked for P20,000 was incredulous and a total lie. He never dealt clandestinely with complainants, much less demanded money from them. He did not personally know Glor, nor was he acquainted with complainants. 4. Complainants had no evidence to support their accusation. If it were true that he asked and received money from them, it would have been easy for them to entrap him, yet, they did not do so. 5. He enjoyed the presumption of regularity in the performance of his duties. In their comment to respondents comment dated 4 August 2004, complainants prayed that respondent be preventively suspended pending the investigation of the case. They alleged that they had a witness who was willing to testify on the circumstances surrounding respondents demand and receipt of the money from them. However, the witness did not want to testify unless respondent was placed under preventive suspension because she was afraid that her testimony would endanger her means of livelihood inside the Hall of Justice building. The Office of the Court Administrators Report and Recommendations In its memorandum dated 14 October 2004, the OCA found that respondent erred when he released the vehicle to Glor without waiting for the trial courts instructions on who had a better right over the vehicle. The OCA recommended that the case be re-docketed as a regular administrative matter and that respondent be held liable for grave abuse of authority and fined P4,000. The OCA recommended that the charges for violation of the Anti-Graft and Corrupt Practices Act, gross ignorance of the law, and conduct prejudicial to the best interest of the service be dismissed for insufficiency of evidence. In a Resolution
22 21 20
dated 8 December 2004, the Court ordered the re-docketing of the case as a regular
23
administrative matter and, in a Resolution dated 16 March 2005, the Court required the parties to manifest if they were willing to submit the case for decision based on the pleadings already filed. Complainants filed a motion for further investigation and preventive suspension of respondent pending the investigation of the case. They prayed that the case be referred to the Executive Judge of the Regional Trial Court, Quezon City, for investigation. They also prayed that respondent be placed under preventive suspension to allow their witness to testify without fear of being harassed by respondent. The Court noted complainants motion for further investigation and preventive suspension and referred the case to the OCA for investigation, report, and recommendation.
28 25 24
In an Order
26
dated 24 August 2005, the OCA set the

27
case for investigation on 15 and 16 September 2005. In the investigation, only respondent appeared.
The
complainants filed a manifestation and motion dated 10 September 2005 stating that although they were willing to participate in the investigation, they could not convince their witness to testify unless respondent was preventively suspended. In a letter
29
dated 20 September 2005, the OCA returned the rollo of the case together with complainants
30
manifestation and motion to the Court for further instructions. In a Resolution dated 10 October 2005, the Court noted the said letter and referred the same to the OCA for report and recommendation. Accordingly, the OCA set the case for investigation on 23 and 24 August 2006. Again, only respondent appeared in the investigation. The complainants reiterated their claim that they could not participate in the investigation unless respondent was preventively suspended.
33 32 31
In its Report dated 13 September 2006, the OCA recommended that (1) the motion to preventively suspend respondent be denied; (2) the previous recommendation imposing a fine of P4,000 on respondent for grave abuse of authority be adopted; and (3) the charges for violation of the Anti-Graft and Corrupt Practices Act, gross ignorance of the law, and conduct prejudicial to the best interest of the service be dismissed for insufficiency of evidence. The Courts Ruling The Court finds respondent liable for simple misconduct. On the Charge of Violation of the
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Anti-Graft and Corrupt Practices Act, Gross Ignorance of the Law, and Conduct Prejudicial to the Best Interest of the Service Complainants bear the burden of proving, by substantial evidence, the allegations in the complaint. "Substantial evidence means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion."
34
In the instant case, complainants failed to substantiate the allegation that respondent violated the Anti-Graft and Corrupt Practices Act. Aside from their bare allegation that respondent demanded and received money from them, complainants did not present any substantial evidence to support the charge. The only pieces of evidence they offered were (1) respondents admission in his reply that he approached complainants in the Hall of Justice building and (2) a witness who could testify on respondents alleged acts of demanding and receiving money from the complainants: From the very words of the respondent Sheriff himself (page 5 of his Reply), he admitted to have [sic] APPROACHED US when he furnished us a copy of his Manifestation x x x. Why then did the respondent Sheriff approached [sic] us when his Manifestation is addressed and concerns only the Court? To put to rest that this is just a bare allegation, a third person is willing to present herself to the investigation of this Honorable Office to testify to the truth of the circumstances of the said incident which she personally witnessed but which [sic] we could not reveal her identity at the moment upon her own request because the said person makes her living in the hallway of the Hall of Justice of Quezon City.
35
Complainants, however, never appeared in any of the investigations, nor presented their witness. The fact that respondent approached complainants in the Hall of Justice building is not enough basis for this Court to conclude that respondent demanded and received money from them. On complainants witness, the OCA found that "[t]he alleged fear from harassment of the complainants unnamed witness [precluding her] to testify against the respondent unless the latter is suspended from office is purely speculative." quantum of evidence required to hold respondent liable.
36
Complainants failed to present the
There is also no sufficient evidence to prove that respondent is guilty of gross ignorance of the law and conduct prejudicial to the best interest of the service. As the OCA correctly held, "[t]he charges for Gross Ignorance of the Law and Conduct Prejudicial to the Best Interest of the Service must likewise fail, for insufficiency of evidence; if there was any fault by herein respondent, it was his overzealousness to perform his duty." On the Charge of Simple Misconduct The Court, however, finds respondent liable for simple misconduct. Simple misconduct has been defined as an unacceptable behavior that transgresses the established rules of conduct for public officers.
39 38 37
It is an unlawful
behavior. "Misconduct in office is any unlawful behavior by a public officer in relation to the duties of his office, willful in character. It generally means wrongful, improper, unlawful conduct motivated by a premeditated, obstinate, or intentional purpose although it may not necessarily imply corruption or criminal intent."
40
The OCA found that respondent erred when he delivered the vehicle to Glor without waiting for the trial courts instructions on the matter: In this case, plaintiff/applicant had posted a replevin bond duly approved by the court. Nevertheless, one of the elements upon which the property subject of replevin may be delivered to the plaintiff/applicant is lacking. There appears to be no court order issued yet for the release of the aforementioned property to the plaintiff/applicant. The order dated 12 May 2004 issued by the court only directed respondent to take into his custody the subject motor vehicle. Further, respondent filed a manifestation seeking guidance from the court on the disposal of the seized property. Hence, respondents justification that the release of the seized property to the plaintiff/applicant follows as a matter of course because the applicant/plaintiff had already filed a replevin bond to answer for any damage that may be suffered by complainants may not be given weight. It must be stressed that the prerogatives of Sheriffs do not give them any discretion to determine who among the parties is entitled to possession of the subject property. The appropriate course of action should have been for respondent to wait for the instructions of the court as to whom he will release the property since he had already asked for its guidance through his Manifestation which was submitted to the court virtually at the close of office hours on 26 May 2004. Yet the following morning, he suddenly decided to release the car to the plaintiff without waiting for any court order on the matter. Such apparent haste raised questions on his actions and leaves doubts as to his intent or interest in the case. Moreover, under the Revised Rules of Court, the property seized under a writ of replevin is not to be delivered immediately to the plaintiff. This is because a possessor has every right to be respected in its possession and may not be deprived of it without due process. The purpose of the five (5) day period in Section 6, Rule 60 is to give defendants in a replevin case a chance to
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require the return of the property by filing a counter[-]bond. Considering that there was no court order to release the property to the applicant/plaintiff and the complainants were able to require the return of the property and file their counter[-]bond within the five (5) day period required by the Rules, respondent should have been more circumspect in releasing the property to the plaintiff/applicant. By hastily deciding to release the seized property to the plaintiff/applicant without waiting for the courts order, respondent patently abused his authority. (Emphasis ours) Indeed, respondent went beyond the call of his duties when he delivered the vehicle to Glor. The writ of replevin issued by the trial court specifically stated that the vehicle shall be delivered to Glor subject to the provisions of Sections 5 and 6 of Rule 60. Yet, respondent opted to ignore these provisions. Good faith on respondents part, or lack of it, would be of no moment for he is chargeable with the knowledge that being an officer of the court, his duty is to comply with the Rules.
41
Sections 5 and 6 of Rule 60 provide that:
SEC. 5. Return of property. If the adverse party objects to the sufficiency of the applicants bond, or of the surety or sureties thereon, he cannot immediately require the return of the property, but if he does not so object, he may, at any time before the delivery of the property to the applicant, require the return thereof, by filing with the court where the action is pending a bond executed to the applicant, in double the value of the property as stated in the applicants affidavit for the delivery thereof to the applicant, if such delivery be adjudged, and for the payment of such sum to him as may be recovered against the adverse party, and by serving a copy of such bond on the applicant. SEC. 6. Disposition of property by sheriff. If within five (5) days after the taking of the property by the sheriff, the adverse party does not object to the sufficiency of the bond, or of the surety or sureties thereon; or if the adverse party so objects and the court affirms its approval of the applicants bond or approves a new bond, or if the adverse party requires the return of the property but his bond is objected to and found insufficient and he does not forthwith file an approved bond, the property shall be delivered to the applicant. If for any reason the property is not delivered to the applicant, the sheriff must return it to the adverse party. (Emphasis ours) Under Section 5, complainants may require the return of the vehicle by (1) posting a counter-bond in double the value of the vehicle and (2) serving Glor with a copy of the counter-bond. Both requirements must be complied with before the vehicle is delivered to Glor. Put differently: If a defendant in a replevin action wishes to have the property taken by the sheriff restored 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. x x x Conformably, a defendant in a replevin suit may demand the return of possession of the property replevined by filing a redelivery bond executed to the plaintiff in double the value of the property as stated in the plaintiffs affidavit within the period specified in Sections 5 and 6.
42
Under Section 6, the vehicle shall be delivered to Glor only under the following instances: 1. If within five days after the taking of the vehicle, complainants do not object to the sufficiency of the bond or of the surety or sureties thereon; 2. If within five days after the taking of the vehicle, complainants object to the sufficiency of the bond and the trial court affirms its approval of Glors bond or approves a new bond; or 3. If within five days after the taking of the vehicle, complainants require the return of the vehicle and their bond is objected to and found insufficient and they do not forthwith file an approved bond. In the instant case, complainants duly complied with all of the requirements under Sections 5 and 6 for the return of the vehicle. Respondent took possession of the vehicle on 17 May 2004. On 20 May 2004, complainants filed their urgent motion for the return of the vehicle and submission of counter-bond and, on 21 May 2004, they filed a motion to withdraw the urgent motion and change the same with an omnibus motion. Both the urgent motion and the omnibus motion were filed before the delivery of the vehicle to Glor and before the expiration of the five-day period. Later, the trial court approved complainants counter-bond. Thus, respondent committed an irregularity when he hastily delivered the vehicle to Glor. Under the Rules of Court, the sheriff should not immediately deliver the property seized under a writ of replevin to the plaintiff. This is because defendants have every right to be respected in their possession and may not be deprived of it without due process.
43
The purpose of the five-day period in Section 6 is to give defendants in a

44
replevin case a chance to require the return of the property by filing a counter-bond. In Pardo v. Velasco, Court held that:
this
Respondent as an officer of the Court is charged with certain ministerial duties which must be performed faithfully to the letter. Every provision in the Revised Rules of Court has a specific reason or objective. In this case, the purpose
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of the five (5) days is to give a chance to the defendant to object to the sufficiency of the bond or the surety or sureties thereon or require the return of the property by filing a counter[-]bond. In Sebastian v. Valino,
45
this Court held that:
Under the Revised Rules of Court, the property seized under a writ of replevin is not to be delivered immediately to the plaintiff. The sheriff must retain it in his custody for five days and he shall return it to the defendant, if the latter, as in the instant case, requires its return and files a counter[-]bond (Sec. 4, Rule 60, Revised Rules of Court). (Emphasis ours) The prerogatives of sheriffs do not include the discretion to determine who among the parties is entitled to the possession of the property. Even when placed in a difficult situation, they are not called to exercise their own discretion. In Cruz v. Villar,
46
the Court agreed with the OCAs observations:
The nature of their functions is essentially ministerial. Their prerogatives do not give them any discretion to determine who among the parties is entitled to possession of the subject properties. The appropriate course of action should have been for respondents to inform their judge of the situation by way of a partial Sheriffs Return and wait for instructions on the proper procedure to be observed. These respondents failed to do. Similarly, in Mamanteo v. Magumun,
47
this Court held that:
[T]he novelty of his predicament did not call for him to use his discretion x x x without waiting for instructions from his judge. A sheriffs prerogative does not give him the liberty to determine who among the parties is entitled to the possession of the attached property. Respondents act of filing the manifestation seeking the trial courts guidance virtually at the close of office hours on 26 May 2004 then delivering the vehicle to Glor in the morning of 27 May 2004 is highly questionable. As the OCA held: [R]espondent filed a Manifestation seeking guidance from the court on the disposal of the seized property. Hence, respondents justification that the release of the seized property to plaintiff/applicant follows as a matter of course because the applicant/plaintiff had already filed a replevin bond to answer for any damage that may be suffered by complainants may not be given weight. The appropriate course of action should have been for respondent to wait for the instructions of the court as to whom he will release the property since he had already asked for its guidance through his Manifestation which was submitted to the court virtually at the close of office hours on 26 May 2004. Yet the following morning, he suddenly decided to release the car to the plaintiff without waiting for any court order on the matter. Such apparent haste raised questions on his action and leaves doubts as to his intent or interest in the case.
1a v v ph 1 i
Since respondent had filed a manifestation seeking the trial courts guidance, the most appropriate course of action should have been for him to wait for the trial courts instructions on what he should do with the vehicle. Assuming that the issue may have been too technical for respondent to decide on the spot, it would have been prudent for him to let the trial court decide on the matter. However, he was overzealous and delivered the vehicle to Glor without even giving the trial court a chance to act on his manifestation. His unusual zeal and precipitate decision to give possession of the vehicle to Glor effectively destroyed the presumption of regularity in the performance of his duties.
48
"While the expeditious and efficient execution of court orders and writs is commendable, it should not,
49
under any circumstances, be done by departing from the Rules governing the same."
Respondent should execute the directives of the trial court strictly "in accordance with the letter thereof and without any deviation therefrom." As an officer of the court, he should follow the provisions of the Rules to the letter especially when the law is clear. When, as in this case, the law is clear, respondent owes it to himself and to the public he serves to adhere to its dictates. The failure to do so exposes the wrongdoer to administrative sanctions. When the inefficiency of an officer of the court springs from a failure to consider so basic and elemental a rule, a law or a principle in the discharge of his duties, he is either too incompetent and undeserving of the position and title he holds or is too vicious that the oversight or omission was deliberately done in bad faith or with grave abuse of authority.
52 51 53 50
Section 52(B)(2) of the Revised Uniform Rules on Administrative Cases in the Civil Service classifies simple misconduct as a less grave offense punishable by suspension of one month and one day to six months for the first offense. Having been in the service for more than 26 years, respondent cannot wrongly interpret basic rules without appearing grossly incompetent or having acted in bad faith. WHEREFORE, we find respondent Ernesto L. Sula, Sheriff IV, Regional Trial Court, Branch 98, Quezon City, GUILTY of SIMPLE MISCONDUCT. Accordingly, we SUSPEND him for six months without pay and STERNLY WARN him that a repetition of the same or similar acts shall be dealt with more severely.
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SO ORDERED. ANTONIO T. CARPIO Associate Justice WE CONCUR: LEONARDO A. QUISUMBING Associate Justice Chairperson CONCHITA CARPIO MORALES Associate Justice PRESBITERO J. VELASCO, JR. Associate Justice DANTE O. TINGA Associate Justice
Footnotes
1 2 3
Rollo, p. 7. Id. at 8.
Docketed as Civil Case No. Q-04-52587, entitled "Ceniza C. Glor v. Ruth B. Bautista, assisted by her husband Normandy R. Bautista."
4 5 6 7 8 9
Rollo, p. 54. Id. at 12. Id. at 13-14. Id. at 18-19. Id. at 20-23. Id. at 1. Id. at 28-29. Id. at 30-31. Id. at 34-35. Id. at 2-3. Id. at 37. Id. at 12. Id. at 3-4. Id. at 42-46 and 1-5. 1st Indorsement, CPL C-04-1027, 20 July 2004. Rollo, pp. 144-150. Id. at 162-164. Id. at 152-157. Id. at 181.
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23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52
Id. at 185. Id. at 186-188. Id. at 189. Id. at 195. OCAs Report and Recommendation, A.M. No. P-04-1920, 13 September 2006, p. 6. Rollo, pp. 193-194. Id. at 191. Id. at 197. Id. at 210-211. OCAs Report and Recommendation, A.M. No. P-04-1920, 13 September 2006, p. 7. Id. Pan v. Salamat, A.M. No. P-03-1678, 26 June 2006, 492 SCRA 460, 466. Rollo, pp. 162-163. OCAs Report and Recommendation, A.M. No. P-04-1920, 13 September 2006, p. 7. Id. at 5. Castelo v. Florendo, 459 Phil. 581, 597 (2003). Imperial v. Santiago, Jr., 446 Phil. 104, 118 (2003). Villaceran v. Beltejar, A.M. No. P-05-1934, 11 April 2005, 455 SCRA 191, 201. Bernabe v. Eguia, A.M. No. P-03-1742, 18 September 2003, 411 SCRA 259, 265. Citibank, N.A. v. Court of Appeals, 364 Phil. 328, 348 (1999). Id. at 351-352. A.M. No. P-90-408, 7 August 1992, 212 SCRA 323, 328-329. A.M. No. P-91-549, 5 July 1993, 224 SCRA 256, 259. 427 Phil. 229, 234 (2002). 370 Phil. 278, 285 (1999). Villanueva-Fabella v. Lee, 464 Phil. 548, 568 (2004). Miramar Fish Co., Inc. v. Jalon, A.M. No. P-04-1904, 25 October 2005, 474 SCRA 22, 26. De Guzman v.Gatlabayan, 404 Phil. 901, 913 (2001). Tolarba v. Conejero, 454 Phil. 28, 32 (2003). Section 52 of the Revised Uniform Rules on Administrative Cases in the Civil Service provides:
Section 52. Classification of Offenses. Administrative offenses with corresponding penalties are classified into grave, less grave or light, depending on their gravity or depravity and effects on the government service. B. The following are less grave offenses with the corresponding penalties:
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xxxx 2. Simple Misconduct 1st offense Suspension (1 mo. 1 day to 6 mos.) 2nd offense Dismissal
53
Promulgated by the Civil Service Commission through Resolution No. 99-1936 dated 31 August 1999 and implemented by CSC Memorandum Circular No. 19, Series of 1999. Rollo, p. 183.
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G.R. No. 182963
SPOUSES DEO AGNER and MARICON AGNER, Petitioners, vs. BPI FAMILY SAVINGS BANK, INC., Respondent. DECISION PERALTA, J.: This is a petition for review on certiorari assailing the April 30, 2007 Decision and May 19, 2008 Resolution of the Court of Appeals in CAG.R. CV No. 86021, which affirmed the August 11, 2005 Decision of the Regional Trial Court, Branch 33, Manila City. On February 15, 2001, petitioners spouses Deo Agner and Maricon Agner executed a Promissory Note with Chattel Mortgage in favor of Citimotors, Inc. The contract provides, among others, that: for receiving the amount of Php834, 768.00, petitioners shall pay Php 17,391.00 every 15th day of each succeeding month until fully paid; the loan is secured by a 2001 Mitsubishi Adventure Super Sport; and an interest of 6% per month shall be imposed for failure to pay each installment on or before the stated due date.
4 3 1 2
On the same day, Citimotors, Inc. assigned all its rights, title and interests in the Promissory Note with Chattel Mortgage to ABN AMRO Savings Bank, Inc. (ABN AMRO), which, on May 31, 2002, likewise assigned the same to respondent BPI Family Savings Bank, Inc.
5
For failure to pay four successive installments from May 15, 2002 to August 15, 2002, respondent, through counsel, sent to petitioners a demand letter dated August 29, 2002, declaring the entire obligation as due and demandable and requiring to pay Php576,664.04, or surrender the mortgaged vehicle immediately upon receiving the letter. As the demand was left unheeded, respondent filed on October 4, 2002 an action for Replevin and Damages before the Manila Regional Trial Court (RTC). A writ of replevin was issued. Despite this, the subject vehicle was not seized. Trial on the merits ensued. On August 11, 2005, the Manila RTC Br. 33 ruled for the respondent and ordered petitioners to jointly and severally pay the amount of Php576,664.04 plus interest at the rate of 72% per annum from August 20, 2002 until fully paid, and the costs of suit. Petitioners appealed the decision to the Court of Appeals (CA), but the CA affirmed the lower courts decision and, subsequently, denied the motion for reconsideration; hence, this petition. Before this Court, petitioners argue that: (1) respondent has no cause of action, because the Deed of Assignment executed in its favor did not specifically mention ABN AMROs account receivable from petitioners; (2) petitioners cannot be considered to have defaulted in payment for lack of competent proof that they received the demand letter; and (3) respondents remedy of resorting to both actions of replevin and collection of sum of money is contrary to the provision of Article 1484 of the Civil Code and the Elisco Tool Manufacturing Corporation v. Court of Appeals ruling. The contentions are untenable. With respect to the first issue, it would be sufficient to state that the matter surrounding the Deed of Assignment had already been considered by the trial court and the CA. Likewise, it is an issue of fact that is not a proper subject of a petition for review under Rule 45. An issue is factual when the doubt or difference arises as to the truth or falsehood of alleged facts, or when the query invites calibration of the whole evidence, considering mainly the credibility of witnesses, existence and relevancy of specific surrounding circumstances, their relation to each other and to the whole, and the probabilities of the situation. Time and again, We stress that this Court is not a trier of facts and generally does not weigh anew evidence which lower courts have passed upon.
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As to the second issue, records bear that both verbal and written demands were in fact made by respondent prior to the institution of the case against petitioners. Even assuming, for arguments sake, that no demand letter was sent by respondent, there is really no need for it because petitioners legally waived the necessity of notice or demand in the Promissory Note with Chattel Mortgage, which they voluntarily and knowingly signed in favor of respondents predecessor-in-interest. Said contract expressly stipulates: In case of my/our failure to pay when due and payable, any sum which I/We are obliged to pay under this note and/or any other obligation which I/We or any of us may now or in the future owe to the holder of this note or to any other party whether as principal or guarantor x x x then the entire sum outstanding under this note shall, without prior notice or demand, immediately become due and payable. (Emphasis and underscoring supplied) A provision on waiver of notice or demand has been recognized as legal and valid in Bank of the Philippine Islands v. Court of Appeals,
13 12
wherein We held:
The Civil Code in Article 1169 provides that one incurs in delay or is in default from the time the obligor demands the fulfillment of the obligation from the obligee. However, the law expressly provides that demand is not necessary under certain circumstances, and one of these circumstances is when the parties expressly waive demand. Hence, since the co-signors expressly waived demand in the promissory notes, demand was unnecessary for them to be in default.
14 15
Further, the Court even ruled in Navarro v. Escobido that prior demand is not a condition precedent to an action for a writ of replevin, since there is nothing in Section 2, Rule 60 of the Rules of Court that requires the applicant to make a demand on the possessor of the property before an action for a writ of replevin could be filed. Also, petitioners representation that they have not received a demand letter is completely inconsequential as the mere act of sending it would suffice. Again, We look into the Promissory Note with Chattel Mortgage, which provides: All correspondence relative to this mortgage, including demand letters, summonses, subpoenas, or notifications of any judicial or extrajudicial action shall be sent to the MORTGAGOR at the address indicated on this promissory note with chattel mortgage or at the address that may hereafter be given in writing by the MORTGAGOR to the MORTGAGEE or his/its assignee. The mere act of sending any correspondence by mail or by personal delivery to the said address shall be valid and effective notice to the mortgagor for all legal purposes and the fact that any communication is not actually received by the MORTGAGOR or that it has been returned unclaimed to the MORTGAGEE or that no person was found at the address given, or that the address is fictitious or cannot be located shall not excuse or relieve the MORTGAGOR from the effects of such notice. underscoring supplied)
16
(Emphasis and
The Court cannot yield to petitioners denial in receiving respondents demand letter. To note, their postal address evidently remained unchanged from the time they executed the Promissory Note with Chattel Mortgage up to time the case was filed against them. Thus, the presumption that "a letter duly directed and mailed was received in the regular course of the mail"
17
stands in the absence of satisfactory proof to the contrary.

18
Petitioners cannot find succour from Ting v. Court of Appeals simply because it pertained to violation of Batas Pambansa Blg. 22 or the Bouncing Checks Law. As a higher quantum of proof that is, proof beyond reasonable doubt is required in view of the criminal nature of the case, We found insufficient the mere presentation of a copy of the demand letter allegedly sent through registered mail and its corresponding registry receipt as proof of receiving the notice of dishonor. Perusing over the records, what is clear is that petitioners did not take advantage of all the opportunities to present their evidence in the proceedings before the courts below. They miserably failed to produce the original cash deposit slips proving payment of the monthly amortizations in question. Not even a photocopy of the alleged proof of payment was appended to their Answer or shown during the trial. Neither have they demonstrated any written requests to respondent to furnish them with official receipts or a statement of account. Worse, petitioners were not able to make a formal offer of evidence considering that they have not marked any documentary evidence during the presentation of Deo Agners testimony.
19
Jurisprudence abounds that, in civil cases, one who pleads payment has the burden of proving it; the burden rests on the defendant to prove payment, rather than on the plaintiff to prove non-payment.
20
When the creditor is in

21
possession of the document of credit, proof of non-payment is not needed for it is presumed. Respondent's possession of the Promissory Note with Chattel Mortgage strongly buttresses its claim that the obligation has not been extinguished. As held in Bank of the Philippine Islands v. Spouses Royeca:
22
x x x The creditor's possession of the evidence of debt is proof that the debt has not been discharged by payment. A promissory note in the hands of the creditor is a proof of indebtedness rather than proof of payment. In an action for replevin by a mortgagee, it is prima facie evidence that the promissory note has not been paid. Likewise, an uncanceled mortgage in the possession of the mortgagee gives rise to the presumption that the mortgage debt is
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unpaid.
23
Indeed, when the existence of a debt is fully established by the evidence contained in the record, the burden of proving that it has been extinguished by payment devolves upon the debtor who offers such defense to the claim of the creditor. payment.
25 24
The debtor has the burden of showing with legal certainty that the obligation has been discharged by
Lastly, there is no violation of Article 1484 of the Civil Code and the Courts decision in Elisco Tool Manufacturing Corporation v. Court of Appeals.
26
In Elisco, petitioner's complaint contained the following prayer: WHEREFORE, plaintiffs pray that judgment be rendered as follows: ON THE FIRST CAUSE OF ACTION Ordering defendant Rolando Lantan to pay the plaintiff the sum of P39,054.86 plus legal interest from the date of demand until the whole obligation is fully paid; ON THE SECOND CAUSE OF ACTION To forthwith issue a Writ of Replevin ordering the seizure of the motor vehicle more particularly described in paragraph 3 of the Complaint, from defendant Rolando Lantan and/or defendants Rina Lantan, John Doe, Susan Doe and other person or persons in whose possession the said motor vehicle may be found, complete with accessories and equipment, and direct deliver thereof to plaintiff in accordance with law, and after due hearing to confirm said seizure and plaintiff's possession over the same; PRAYER COMMON TO ALL CAUSES OF ACTION 1. Ordering the defendant Rolando Lantan to pay the plaintiff an amount equivalent to twenty-five percent (25%) of his outstanding obligation, for and as attorney's fees; 2. Ordering defendants to pay the cost or expenses of collection, repossession, bonding fees and other incidental expenses to be proved during the trial; and 3. Ordering defendants to pay the costs of suit. Plaintiff also prays for such further reliefs as this Honorable Court may deem just and equitable under the premises.
27
The Court therein ruled: The remedies provided for in Art. 1484 are alternative, not cumulative. The exercise of one bars the exercise of the others. This limitation applies to contracts purporting to be leases of personal property with option to buy by virtue of Art. 1485. The condition that the lessor has deprived the lessee of possession or enjoyment of the thing for the purpose of applying Art. 1485 was fulfilled in this case by the filing by petitioner of the complaint for replevin to recover possession of movable property. By virtue of the writ of seizure issued by the trial court, the deputy sheriff seized the vehicle on August 6, 1986 and thereby deprived private respondents of its use. The car was not returned to private respondent until April 16, 1989, after two (2) years and eight (8) months, upon issuance by the Court of Appeals of a writ of execution. Petitioner prayed that private respondents be made to pay the sum of P39,054.86, the amount that they were supposed to pay as of May 1986, plus interest at the legal rate. At the same time, it prayed for the issuance of a writ of replevin or the delivery to it of the motor vehicle "complete with accessories and equipment." In the event the car could not be delivered to petitioner, it was prayed that private respondent Rolando Lantan be made to pay petitioner the amount of P60,000.00, the "estimated actual value" of the car, "plus accrued monthly rentals thereof with interests at the rate of fourteen percent (14%) per annum until fully paid." This prayer of course cannot be granted, even assuming that private respondents have defaulted in the payment of their obligation. This led the trial court to say that petitioner wanted to eat its cake and have it too. In contrast, respondent in this case prayed: (a) Before trial, and upon filing and approval of the bond, to forthwith issue a Writ of Replevin ordering the seizure of the motor vehicle above-described, complete with all its accessories and equipments, together with the Registration Certificate thereof, and direct the delivery thereof to plaintiff in accordance with law and after due hearing, to confirm the said seizure; (b) Or, in the event that manual delivery of the said motor vehicle cannot be effected to render judgment in favor of plaintiff and against defendant(s) ordering them to pay to plaintiff, jointly and severally, the sum of
28
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P576,664.04 plus interest and/or late payment charges thereon at the rate of 72% per annum from August 20, 2002 until fully paid; (c) In either case, to order defendant(s) to pay jointly and severally: (1) the sum of P297,857.54 as attorneys fees, liquidated damages, bonding fees and other expenses incurred in the seizure of the said motor vehicle; and (2) the costs of suit. Plaintiff further prays for such other relief as this Honorable Court may deem just and equitable in the premises.
29
Compared with Elisco, the vehicle subject matter of this case was never recovered and delivered to respondent despite the issuance of a writ of replevin. As there was no seizure that transpired, it cannot be said that petitioners were deprived of the use and enjoyment of the mortgaged vehicle or that respondent pursued, commenced or concluded its actual foreclosure. The trial court, therefore, rightfully granted the alternative prayer for sum of money, which is equivalent to the remedy of "exacting fulfillment of the obligation." Certainly, there is no double recovery or unjust enrichment
30
to speak of.
1 wph 1 i
All the foregoing notwithstanding, We are of the opinion that the interest of 6% per month should be equitably reduced to one percent (1%) per month or twelve percent (12%) per annum, to be reckoned from May 16, 2002 until full payment and with the remaining outstanding balance of their car loan as of May 15, 2002 as the base amount. Settled is the principle which this Court has affirmed in a number of cases that stipulated interest rates of three percent (3%) per month and higher are excessive, iniquitous, unconscionable, and exorbitant. While Central Bank Circular No. 905-82, which took effect on January 1, 1983, effectively removed the ceiling on interest rates for both secured and unsecured loans, regardless of maturity, nothing in the said circular could possibly be read as granting carte blanche authority to lenders to raise interest rates to levels which would either enslave their borrowers or lead to a hemorrhaging of their assets. Since the stipulation on the interest rate is void for being contrary to morals, if not against the law, it is as if there was no express contract on said interest rate; thus, the interest rate may be reduced as reason and equity demand.
33 32 31
WHEREFORE, the petition is DENIED and the Court AFFIRMS WITH MODIFICATION the April 30, 2007 Decision and May 19, 2008 Resolution of the Court of Appeals in CA-G.R. CV No. 86021. Petitioners spouses Deo Agner and Maricon Agner are ORDERED to pay, jointly and severally, respondent BPI Family Savings Bank, Inc. ( 1) the remaining outstanding balance of their auto loan obligation as of May 15, 2002 with interest at one percent ( 1 o/o) per month from May 16, 2002 until fully paid; and (2) costs of suit. SO ORDERED. DIOSDADO M. PERALTA Associate Justice WE CONCUR: PRESBITERO J. VELASCO, JR. Associate Justice Chairperson ROBERTO A. ABAD Associate Justice JOSE CATRAL MENDOZA Associate Justice
MARVIC MARIO VICTOR F. LEONEN Associate Justice ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. PRESBITERO J. VELASCO, JR. Associate Justice Chairperson, Third Division CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.
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MARIA LOURDES P. A. SERENO Chief Justice
Footnotes
1
Penned by Associate Justice Vicente Q. Roxas, with Associate Justices Josefina Guevara-Salonga and Ramon R. Garcia concurring; rollo, pp. 49-54. Id. at 56. Records, pp. 149-151. Id. at 28. Id. at 29, 33-35. Id. at 36. Id. at 40. TSN, November 23, 2004, p. 15.
2 3 4 5 6 7 8 9
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: (1) Exact fulfillment of the obligation, should the vendee fail to pay; (2) Cancel the sale, should the vendee's failure to pay cover two or more installments; (3) Foreclose the chattel mortgage on the thing sold, if one has been constituted, should the vendee's 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 contrary shall be void.
10 11
G.R. No. 109966, May 31, 1999, 307 SCRA 731.
Royal Cargo Corporation v. DFS Sports Unlimited, Inc., G.R. No. 158621, December 10, 2008, 573 SCRA 414, 421.
12 13 14 15 16 17 18 19 20
TSN, November 23, 2004, p. 11. 523 Phil. 548 (2006). Id. at 560. G.R. No. 153788, November 27, 2009, 606 SCRA 1, 20-21. Records, p. 31. RULES OF COURT, Rule 131, Sec. 3 (v). 398 Phil. 481 (2000). Records, p. 145.
Royal Cargo Corporation v. DFS Sports Unlimited, Inc., supra note 11, at 422; Bank of the Philippine Islands v. Spouses Royeca, G.R. No. 176664, July 21, 2008, 559 SCRA 207, 216; Benguet Corporation v. Department of Environment and Natural Resources-Mines Adjudication Board, G.R. No. 163101, February 13, 2008, 545 SCRA 196, 213; Citibank, N.A. v. Sabeniano, 535 Phil. 384, 419 (2006); Keppel Bank Philippines, Inc. v. Adao, 510 Phil. 158, 166-167 (2005); and Far East Bank and Trust Company v. Querimit, 424 Phil. 721, 730-731 (2002).
21 22
Tai Tong Chuache & Co. v. Insurance Commission, 242 Phil. 104, 112 (1988). Supra note 20.
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23 24 25
Bank of the Philippine Islands v. Spouses Royeca, id. at 219. Id. at 216; Citibank, N.A. v. Sabeniano, supra note 20; and Coronel v. Capati, 498 Phil. 248, 255 (2005).
Royal Cargo Corporation v. DFS Sports Unlimited, Inc., supra note 11, at 422; Bank of the Philippine Islands v. Spouses Royeca, supra note 20; Benguet Corporation v. Department of Environment and Natural Resources-Mines Adjudication Board, supra note 20; Citibank, N.A. v. Sabeniano, supra note 20; Coronel v. Capati, supra note 24, at 256; and Far East Bank and Trust Company v. Querimit, supra note 20.
26 27 28 29 30
Supra note 10. Elisco Tool Manufacturing Corporation v. Court of Appeals, id. at 735-736. Id. at 743-744. Records, pp. 24-25.
In Cabrera v. Ameco Contractors Rental, Inc. (G.R. No. 201560, June 20, 2012 Second Division Minute Resolution), We held: The principle of unjust enrichment is provided under Article 22 of the Civil Code which provides: Article 22. Every person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him. There is unjust enrichment "when a person unjustly retains a benefit to the loss of another, or when a person retains money or property of another against the fundamental principles of justice, equity and good conscience." The principle of unjust enrichment requires two conditions: (1) that a person is benefited without a valid basis or justification, and (2) that such benefit is derived at the expense of another.
31 32
Arthur F. Menchavez v. Marlyn M. Bermudez, G.R. No. 185368, October 11, 2012.
Macalinao v. Bank of the Philippine Islands, G.R. No. 175490, September 17, 2009, 600 SCRA 67, 77, citing Chua v. Timan, G.R. No. 170452, August 13, 2008, 562 SCRA 146, 149-150.
33
Arthur F. Menchavez v. Marlyn M. Bermudez, G.R. No. 185368, October 11, 2012, citing Macalinao v. Bank of the Philippine Islands, supra, at 77, and Chua v. Timan, supra, at 150.
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G.R. No. 127578
http://www.lawphil.net/judjuris/juri1999/feb1999/gr_127578_1999.html
Republic of the Philippines SUPREME COURT Manila THIRD DIVISION
G.R. No. 127578 February 15, 1999 MANUEL DE ASIS, petitioner, vs. COURT OF APPEALS, HON. JAIME T. HAMOY, Branch 130, RTC, Kalookan City and GLEN CAMIL ANDRES DE ASIS represented by her mother/guardian VIRCEL D. ANDRES, respondents.
PURISIMA, J.: Petition for certiorari under Rule 65 oft he Revised Rules of Court seeking to nullify the decision of the Court of Appeals which affirmed the trial court's Orders, dated November 25, 1993 and February 4, 1994, respectively, denying petitioner's Motion to Dismiss the Complaint in Civil Case No. C-16107, entitled "Glen Camil Andres de Asis, etc. vs. Manuel de Asis", and the motion for reconsideration. The pertinent facts leading to the filing of the petition at bar are as follows: On October 14, 1988, Vircel D. Andres, (the herein private respondent) in her capacity as the legal guardian of the minor, Glen Camil Andres de Asis, brought an action for maintenance and support against Manuel de Asis, docketed as Civil Case No. Q-88-935 before the Regional Trial Court of Quezon City, Branch 94, alleging that the defendant Manuel de Asis (the petitioner here) is the father of subject minor Glen Camil Andres de Asis, and the former refused and/or failed to provide for the maintenance of the latter, despite repeated demands. In his Answer, petitioner denied his paternity of the said minor and theorized that he cannot therefore be required to provide support for him. On July 4, 1989, private respondent Vircel D. Andres, through counsel, sent in a manifestation the pertinent portion of which, reads; 1. That this proposed Amended Answer, defendant (herein petitioner) has made a judicial admission/declaration that "1). defendant denies that the said minor child (Glen Camil) is his child 2) he (petitioner) has no obligation to the plaintiff Glen Camil . . . 2. That with the aforesaid judicial admission/declarations by the defendant, it seems futile and a useless exercise to claim support from said defendant.
3. That under the foregoing circumstances it would be more practical that plaintiff withdraws the complains against the defendant subject to the condition that the defendant should not pursue his counterclaim in the above-entitled case, . . .
1
By virtue of the said manifestation, both the plaintiff and the defendant agreed to move for the dismissal of the case. Acting thereupon, the Regional Trial Court a quo issued the following Order of August 8, 1989, dismissing Civil Case No. Q-88-935 with prejudice, to wit: Acting on the manifestation of Atty. Romualdo C. delos Santos, counsel for the defendant, that counsel for the plaintiff Atty. Ismael J. Andres has no objection that this case be withdrawn provided that the defendant will withdraw the counterclaim, as prayed for, let the case be dismissed with prejudice.
SO ORDERED.
2
On September 7, 1995, another Complaint for maintenance and support was brought against Manuel A. de Asis, this time in the name of Glen Camil Andres de Asis, represented by her legal guardian/mother, Vircel D. Andres. Docketed as Civil Case No. C-16107 before Branch 130 of the Regional Trial Court of Kalookan, the said Complaint prayed, thus:
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WHEREFORE, premises considered, it is respectfully prayed that judgment be rendered ordering defendant: 1. To pay plaintiff the sum of not less than P2,000.00 per month for every month since June 1, 1987 as support in arrears which defendant failed to provide plaintiff shortly after her birth in June 1987 up to present; 2. To give plaintiff a monthly allowance of P5,000.00 to be paid in advance on or before the 5th of each and every month. 3. To give plaintiff by way of support pendente lite a monthly allowance of P5,000.00 per month, the first monthly allowance to start retroactively from the first day of this month and the subsequent ones to be paid in advance on or before the 5th of each succeeding month. 4. To pay the costs of suit.
Plaintiff prays for such other relief just and equitable under the premises.
3
On October 8, 1993, petitioner moved to dismiss the Complaint on the ground of res judicata, alleging that Civil Case C-16107 is barred by the prior judgment which dismissed with prejudice Civil Case Q -88-935. In the Order dated November 25, 1993 denying subject motion to dismiss, the trial court ruled that res judicata is inapplicable in an action for support for the reason that renunciation or waiver of future support is prohibited by law. Petitioner's motion for reconsideration of the said Order met the same fate. It was likewise denied. Petitioner filed with the Court of Appeals a Petition for Certiorari. But on June 7, 1996, the Court of Appeals found that the said Petition devoid of merit and dismissed the same. Undaunted, petitioner found his way to this court via the present petition, posing the question whether or not the public respondent acted with grave abuse of discretion amounting to lack or excess of jurisdiction in upholding the denial of the motion to dismiss by the trial court, and holding that an action for support cannot be barred by res judicata. To buttress his submission, petitioner invokes the previous dismissal of the Complaint for maintenance and support, Civil Case Q-88-935, filed by the mother and guardian of the minor, Glen Camil Andres de Asis, (the herein private respondent). In said case, the complainant manifested that because of the defendant's judicial declaration denying that he is the father of subject minor child, it was "futile and a useless exercise to claim support from defendant". Because of such manifestation, and defendant's assurance that he would not pursue his counterclaim anymore, the parties mutually agreed to move for the dismissal of the complaint. The motion was granted by the Quezon City Regional Trial Court, which then dismissed the case with prejudice. Petitioner contends that the aforecited manifestation, in effect admitted the lack of filiation between him and the minor child, which admission binds the complainant, and since the obligation to give support is based on the existence of paternity and filiation between the child and the putative parent, the lack thereof negates the right to claim for support. Thus, petitioner maintains that the dismissal of the Complaint by the lower court on the basis of the said manifestation bars the present action for support, especially so because the order of the trial court explicitly stated that the dismissal of the case was with prejudice. The petition is not impressed with merit. The right to receive support can neither be renounced nor transmitted to a third person. Article 301 of the Civil Code, the law in point, reads: Art. 301. The right to receive support cannot be renounced, nor can it be transmitted to a third person. Neither can it be compensated with what the recipient owes the obligor. . . . Furthermore, future support cannot be the subject of a compromise. Art. 2035, ibid, provides, that: No compromise upon the following questions shall be valid: (1) The civil status of persons; (2) The validity of a marriage or legal separation; (3) Any ground for legal separation (4) Future support; (5) The jurisdiction of courts;
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(6) Future legitime. The raison d' etre behind the proscription against renunciation, transmission and/or compromise of the right to support is stated, thus: The right to support being founded upon the need of the recipient to maintain his existence, he is not entitled to renounce or transfer the right for this would mean sanctioning the voluntary giving up of life itself. The right to life cannot be renounce; hence, support which is the means to attain the former, cannot be renounced. xxx xxx xxx
To allow renunciation or transmission or compensation of the family right of a person to support is virtually to allow either suicide or the conversion of the recipient to a public burden. This is contrary to public policy.
4
In the case at bar, respondent minor's mother, who was the plaintiff in the first case, manifested that she was withdrawing the case as it seemed futile to claim support from petitioner who denied his paternity over the child. Since the right to claim for support is predicated on the existence of filiation between the minor child and the putative parent, petitioner would like us to believe that such manifestation admitting the futility of claiming support from him puts the issue to rest and bars any and all future complaint for support. The manifestation sent in by respondent's mother in the first case, which acknowledged that it would be useless to pursue its complaint for support, amounted to renunciation as it severed the vinculum that gives the minor, Glen Camil, the right to claim support from his putative parent, the petitioner. Furthermore, the agreement entered into between the petitioner and respondent's mother for the dismissal of the complaint for maintenance and support conditioned upon the dismissal of the counterclaim is in the nature of a compromise which cannot be countenanced. It violates the prohibition against any compromise of the right to support.
Thus, the admission made by counsel for the wife of the facts alleged in a motion of the husband, in which the latter prayed that his obligation to support be extinguished cannot be considered as an assent to the prayer, and much less, as a waiver of the right to claim for support.
5
It is true that in order to claim support, filiation and/or paternity must first be shown between the claimant and the parent. However, paternity and filiation or the lack of the same is a relationship that must be judicially established and it is for the court to declare its existence or absence. It cannot be left to the will or agreement of the parties.
The civil status of a son having been denied, and this civil status, from which the right to support is derived being in issue, it is apparent that no effect can be .given to such a claim until an authoritative declaration has been made as to the existence of the cause.
6
Although in the case under scrutiny, the admission may be binding upon the respondent, such an admission is at most evidentiary and does not conclusively establish the lack of filiation. Neither are we persuaded by petitioner's theory that the dismissal with prejudice of Civil Case Q-88-935 has the effect of res judicata on the subsequent case for support. The case of Advincula vs. Advincula 7 comes to the fore. In Advincula, the minor, Manuela Advincula, instituted a case for acknowledgment and support against her putative father, Manuel Advincula. On motion of both parties and for the reason that the "plaintiff has lost interest and is no longer interested in continuing the case against the defendant and has no further evidence to introduce in support of the complaint", the case was dismissed. Thereafter, a similar case was instituted by Manuela, which the defendant moved to dismiss, theorizing that the dismissal of the first case precluded the filing of the second case. In disposing such case, this Court ruled, thus: The new Civil Code provides that the allowance for support is provisional because the amount may be increased or decreased depending upon the means of the giver and the needs of the recipient (Art. 297); and that the right to receive support cannot be renounced nor can it be transmitted to a third person neither can it be compensated with what the recipient owes the obligator (Art .301). Furthermore, the right to support can not be waived or transferred to third parties and future support cannot be the subject of compromise (Art. 2035; Coral v. Gallego, 38 O.G. 3135, cited in IV Civil Code by Padilla, p. 648; 1956 Ed.). This being true, it is indisputable that the present action for support can be brought, notwithstanding the fact the previous case filed against the same defendant was dismissed. And it also appearing that the dismissal of Civil Case No. 3553, was not an adjudication upon the merits, as heretofore shown, the right of herein plaintiff-appellant to reiterate her suit for support and acknowledgment is available, as her needs arise. Once the needs of plaintiff arise, she has the right to bring an action for support, for it is only then that her cause for action is accrues.. . . xxx xxx xxx It appears that the former dismissal was predicated upon compromise. Acknowledgment, affecting as it does the civil status of a persons and future support, cannot be the subject of compromise (pars. 1 & 4,
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Art. 2035, Civil Code). Hence, the first dismissal cannot have force and effect and can not bar the filing of another action, asking for the same relief against the same defendant. (emphasis supplied). Conformably, notwithstanding the dismissal of Civil Case Q-88-935 and the lower court's pronouncement that such dismissal was with prejudice, the second action for support may still prosper. WHEREFORE, the petition under consideration is hereby DISMISSED and the decision of the Court of Appeals AFFIRMED. No pronouncement as to costs. SO ORDERED. Romero, Vitug, Panganiban and Gonzaga-Reyes, JJ., concur. Footnotes 1 Rollo, p. 7. 2 Ibid. p. 18. 3 Ibid. pp. 18-19. 4 Arturo Tolentino, Commentaries and Jurisprudence on the Civil Code of the Philippines, Vol. 1, p. 596, 601. 5 Ibid., p. 596-597, citing Coral vs. Gallego, 39 Official Gazette 3150. 6 Tolentino, p 579 citing Francisco vs. Zandueta, 61 Phil. 752; Garcia vs. CA, 4 SCRA 689. 7 10 SCRA 189.
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G.R. No. 128157
Republic of the Philippines SUPREME COURT Manila EN BANC
G.R. No. 128157 September 29, 1999 PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. MANUEL MANAHAN, alias "Maning," defendant-appellant.
BELLOSILLO, J.: MANUEL MANAHAN alias Maning was found guilty of rape and sentenced to death by the court a quo. He was also ordered to indemnify the victim P50,000.00 as moral damages, pay the costs, and acknowledge and support the offspring of his indiscretion. 1 This case is now before us on automatic review. Complainant Teresita Tibigar, 16 years old, worked at the Espiritu Canteen in Dagupan City. As a stay-in waitress she slept at the second floor of the canteen. Manuel Manahan is the brother-in-law of Josefina Espiritu, owner of the canteen. His wife Primadonna is the sister of Josefina Espiritu. Manuel and Primadonna temporarily reside at the canteen together with the family of Josefina as Primadonna was then pregnant.
1 wphi 1 . nt
On 5 January 1995, at about two o'clock in the morning, Teresita who was asleep was suddenly awakened when she felt someone beside her. Upon opening her eyes she saw accused Manuel Manahan as he immediately placed himself on top of her. She tried to shout but the accused covered her mouth. He then forcibly spread her legs. She cried; she pushed and kicked him many times in an effort to free herself but the accused proved too strong for her. Soon enough she became weary and exhausted. Her condition enabled the accused to pursue his immoral intentions. He lifted her skirt, removed her panty and then inserted his penis into her vagina. He succeeded in having carnal knowledge of her. After satisfying his lust, the accused warned the victim not to report the incident to anyone and threatened her that should she squeal he would kill her and her family. Thereafter, he left her. She was terribly afraid and shaken and could do nothing but cry until dawn. 2 Within the month Teresita left the canteen and returned home to her parents in Mangaldan, Pangasinan. The sexual encounter resulted in her pregnancy. When her parents discovered it and learned of her story, they brought her to the hospital where she was examined by Dr. Casimero Bacugan. From there they proceeded to the police station where a statement of Teresita was taken by SPO1 Isagani L. Ico. Police Chief Inspector Wendy G. Rosario later endorsed the complaining witness to the Office of the City Prosecutor of Dagupan City for appropriate legal action. Thereafter, with the assistance of her mother, Teresita filed a criminal complaint accusing Manuel Manahan alias Maning of rape. 3 Meanwhile, on 2 October 1995, she gave birth to a healthy baby girl and christened her Melanie Tibigar. Accused Manuel Manahan has a different story. He denied having raped Teresita. He claimed they were lovers. According to him, he met Teresita at the Espiritu Canteen in August 1994 and began courting her. Subsequently, they became sweethearts and their first sexual intercourse occurred on 27 December 1994 followed by another on 28 December 1994. In the first week of January 1995 they again had a tryst in the house of Teresita's Aunt Fely, their last intercourse being on 7 May 1995 in the house of one Maura Manahan-Quinto, his sister. Manuel further alleged that even after Teresita left the Espiritu Canteen there were several occasions when they saw each other in front of the DBP in Dagupan City. In one of those assignations Teresita allegedly told him that she wanted to have the child aborted as her father might kill her if he discovered she was pregnant, but accused did not agree. In September 1995, the accused was arrested in connection with the case filed by Teresita but was later released. We fail to discern from the records the reason for his release. But on 15 March 1996 he was again arrested and detained at the Dagupan City Jail where Estrella, Teresita's mother, supposedly visited him at least five (5) times to ask about his condition and whether he was tortured in detention. The accused maintained that Estrella was trying
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to conceal Teresita's condition from her father. She purportedly proposed to the accused to sell his land and give the proceeds to Teresita's father as a form of settlement. The accused assails in his appeal brief the credibility of the complaining witness. He asserts that the prosecution failed to prove his guilt beyond reasonable doubt and reiterates that he and the complaining witness were lovers, and that their sexual congress was consensual. We have painstakingly reviewed the records and we sustain the conviction of the accused. The prosecution for rape almost always involves sharply contrasting and irreconcilable declarations of the victim and the accused. At the heart of almost all rape cases is the issue of credibility of the witnesses, to be resolved primarily by the trial court which is in a better position to decide the question, having heard the witnesses and observed their deportment and manner of testifying. Accordingly, its findings are entitled to the highest degree of respect and will not be disturbed on appeal in the absence of any showing that the trial court overlooked, misunderstood or misapplied some facts or circumstances of weight or substance which would otherwise affect the result of the case. The exception is nowhere perceivable in the present case. The accused banks heavily on his "sweetheart theory," a usual defense in rape cases, and vigorously maintains that the sexual intercourse between him and Teresita was but the culmination of a mutual passion. But we find otherwise primarily because the accused miserably failed to prove that he and the complaining witness indeed had a romantic liaison as this claim was categorically denied by her. Moreover, there was no substantial evidence, e.g., love notes, mementos or pictures, presented to support it. The testimony of defense witnesses Nelson de Venecia and Arvin Sereban that they used to see Manuel and Teresita together in front of the DBP in Dagupan City, even if true, did not confirm that there was indeed an amorous relationship between the two. 4 Likewise, the testimony of Isabel Remandaban, another defense witness, that she saw the accused and the complaining witness embracing each other in the house of Maura Manahan-Quinto can hardly be given weight. The trifling manner by which she answered the questions propounded to her at the witness stand even prompted the trial court to remark that she was not serious with her testimony. Thus COURT: This is not a joke. The penalty [for] the accused [if convicted] is death. Do not testify here as if you are joking, or you will be the one to [be] sen[t] to jail ahead of Manahan. You want to be sent to jail? WITNESS: No sir. COURT: Why are you smiling? This is a serious matter. Put that on record the witness is smiling. Not serious about her testimony (emphasis supplied). Ultimately, the trial court disregarded altogether, and rightly so, the testimony of Isabel Remandaban. To emphasize, the task of assigning values to the testimonies of witnesses in the stand and weighing their credibility is best left to the trial court which forms first-hand impressions of the witnesses testifying before it, and therefore more competent to discriminate between the true and the false. 5 We find no trace of whim or arbitrariness on the court a quo in its assessment of the testimony of this witness. Also, Exh. "1" of the defense, a photograph showing Estrella talking to the accused while carrying Melanie, the offspring of Teresita and Manuel, does not establish anything. As Estrella explained, she visited the accused in jail not to show him Melanie but to ascertain that he was in fact incarcerated, 6 and that she only brought the child with her incidentally during her visit because Teresita was sick at that time and there was no one else to take care of the baby. 7 Even assuming ex gratia argumenti that the accused and the victim were really lovers, that fact alone would not negate the commission of rape. A sweetheart cannot be forced to have sex against her will. Definitely, a man cannot demand sexual gratification from a fiancee and, worse, employ violence upon her on the pretext of love. Love is not a license for lust. 8 Equally untenable is the accused's contention that there can be no rape since the prosecution failed to prove beyond reasonable doubt the element of intimidation. One of the modes of committing the crime of rape is by having carnal knowledge of a woman using force and intimidation. Even if we concede the absence of intimidation in this case, the fact remains that the accused employed force against his victim. Thus, testifying in a clear, definitive and convincing manner as concluded by the trial court, Teresita established beyond any scintilla of doubt the presence of force essential in rape Q: What were you doing then when Manuel Manahan accosted you? A: I was sleeping, then suddenly I felt somebody near me and when I opened my eyes I saw Manuel Manahan and then he immediately laid on top of me, sir. Q: How did you come to know that it was Manuel Manahan who went, who laid on top of you?
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A: I know him, sir. Q: What did you do when Manuel Manahan laid on top of you? A: I was about to shout but he covered my mouth and then he immediately spread my legs, sir. Q: What did you do when he did that to you? A: I cried, sir. Q: Before Manuel Manahan spread your legs, what did you do? Before he was able to spread your legs? A: I pushed him and I kicked him several times, sir. Q: What happened when you pushed him and kicked him several times ? A: I got weakened because he was strong that is why he was able to abuse me, sir. Q: After Manuel Manahan was able to spread your legs, what did he do?
A: And then he inserted his penis, sir . . . .
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Again, during the cross-examination the victim recounted how she was forced to have sexual intercourse with the accused, thus Q: Did you spread your legs voluntarily or did he force open your legs? A: He forced me, sir. Q: What did he do to force open your legs? A: By the use of his legs, sir. Q: He did that while he was on top of you? A: Yes, sir. Q: What legs did he use, was it the right leg or both legs? A: Both legs, sir. Q: You mentioned about crossing his legs and then forced open your legs, will you please demonstrate how he forced open your legs by the use of this pencil and ballpen illustrate your legs with these two other ballpens where the legs of Manuel Manahan, will you please demonstrate how he forced open his legs when you said first he put together his legs and then open your legs, will you please do it? A: He went on top of me and he put his legs between my legs and also his legs, sir. INTERPRETER: Witness, demonstrating by spreading both ends of the ballpen. Q: And then by doing so, by spreading his legs between your legs, he was able to insert his penis? A: Yes, sir. Q: At that precise moment when he was on top of you and also your legs, where was the right hand of Manuel Manahan? A: He closed my mouth with his right hand. Q: What about his left hand? A: He used his left hand in pulling up my dress. Q: At that precise moment when he was doing the push and pull, was his right hand still with your mouth? A: Yes, sir. Q: What about his left hand after raising your skirt, what was his left hand doing?
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A: He was squeezing my neck, sir . . . . Q: During your direct testimony you mentioned about having resisted him, now, at what precise moment did you try to resist him? A: When he went on top of me I struggled, sir. Q: Were you able to dislodge him from being on top of you? A: Yes, sir. COURT: Then what did he do when you were able to dislodge him on top of you? A: He went again on top of me, sir. Q: Did you again struggle to resist him or no more?
A: No more because I already felt weak, sir . . . .
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Evidently, complainant offered a tenacious resistance to the criminal acts of the accused, but the serious determination of the latter to accomplish what he intended to do eventually weakened complainant and shocked her into insensibility. It is quite understandable that, at a tender age of 16 and innocent in the ways of the world, complainant is no match to the accused, a 28-year old married man endowed with physical strength she could not possibly overcome. Neither could she shout to alert the other occupants of the house as the accused prevented her by covering her mouth with his right hand. The accused however claims that complainant had the opportunity to shout for help at that precise moment he was removing his pants and brief, but she did not. Suffice it to say, in this connection, that not every victim of a crime can be expected to act reasonably and conformably with the expectations of mankind. Different people react to similar situations dissimilarity. While the normal response of a woman about to be defiled may be to shout and put up a wild struggle, others become virtually catatonic because of the mental shock they experience and the fear engendered by the unexpected occurrence. Yet it can never be successfully argued that the latter are any less sexual victims than the former. 11 The failure of complainant to disclose the outrage on her person to anybody, including her parents, is due to the threats on her life and that of her family. Indeed, one cannot expect her to act like an adult or a mature experienced woman who would have the courage and intelligence to disregard the threat to her life and complain immediately that she had been sexually assaulted. It is not uncommon for young girls to conceal for sometime the assaults on their virtue because of the rapists' threats to their lives. Delay or vacillation in making a criminal accusation does not necessarily impair the credibility of the witness if such delay is satisfactorily explained, as in this case. 12 In the instant case, the complaining witness may not have even filed the rape charge had she not become pregnant. This Court has taken cognizance of the fact that many of the victims of rape never complain or file criminal charges against the rapists. They prefer to bear the ignominy in painful silence rather than reveal their shame to the world and risk the rapists' making good their threats to kill or hurt their victims. 13 That accused also asserts that the rape case is a mere face-saving device of the victim to escape the anger of her father. Again, we are not convinced. It taxes credulity that a simple barrio lass 14 like the victim, a minor and a mere elementary graduate at that, could contrive such an unthinkable solution to save herself from the imagined wrath of her father; what is more, concoct such a good rape story convincing enough to withstand the rigors of crossexamination, and sway the judge to impose on the accused the extreme penalty of death. Indeed, it is very unlikely that the victim would make up a story of rape with all its attendant scandal and humiliation. Considering the modesty and timidity of a typical Filipina, especially one from the rural areas, it is hard to accept that the victim would fabricate facts which would seriously cast dishonor on her maidenhood. No young Filipina of decent repute would publicly admit she had been raped unless that was the truth. It is her natural instinct to protect her honor. As we have long held, when a woman says that she has been raped, she says in effect all that is necessary to show that rape has been committed. Her testimony is credible where she has no motive to testify against the accused. 15 On the matter of acknowledgment and support of the child, a correction of the view of the court a quo is in order. Article 345 of The Revised Penal Code provides that persons guilty of rape shall also be sentenced to "acknowledge the offspring, unless the law should prevent him from doing so," and "in every case to support the offspring." In the case before us, compulsory acknowledgment of the child Melanie Tibigar is not proper there being a legal impediment in doing so as it appears that the accused is a married man. As pronounced by this Court in People v. Guerrero, 16 the rule is that if the rapist is a married man, he cannot be compelled to recognize the offspring of the crime, should there be any, as his child, whether legitimate or illegitimate." Consequently, that portion of the judgment under review is accordingly deleted. In any case, we sustain that part ordering the accused to support the
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child as it is in accordance with law. Finally, we do not agree with the trial court that the proper penalty to be imposed on the accused is death, it appearing that the crime committed was merely simple rape, i.e., not committed with or effectively qualified by any of the circumstances enumerated under Art. 335 of The Revised Penal Code, as amended by Sec. 11, RA 7659, under which the death penalty is authorized. 17 In this case, the proper imposable penalty should only be reclusion perpetua. WHEREFORE, the Decision of the Regional Trial Court of Dagupan City, Branch 40, dated 28 November 1996, convicting accused MANUEL MANAHAN alias Maning of the crime of rape is AFFIRMED subject however to the modification that the death sentence imposed on the accused is reduced to reclusion perpetua. The portion of the decision of the trial court ordering the accused, a married man, to acknowledge the child Melanie Tibigar is DELETED being contrary to law and jurisprudence.
1wp hi 1 . n t
SO ORDERED. Davide, Jr., C.J., Melo, Puno, Vitug, Kapunan, Mendoza, Panganiban, Quisumbing, Purisima, Pardo, Buena, Gonzaga-Reyes and Ynares-Santiago, JJ., concur. Footnotes 1 Decision dated 28 November 1996 penned by Judge Deodoro J. Sison, RTC-Br. 40, Dagupan City. 2 TSN, 4 June 1998, pp. 6-13. 3 Rollo, pp. 6-7. 4 See People v. Laray, G.R. No. 101809, 20 February 1996, 253 SCRA 654. 5 People v. Sarabia, G.R. No. 124076, 21 January 1997, 266 SCRA 471. 6 TSN, 18 June 1996, p. 20. 7 Id., p. 19. 8 People v. Tismo, G.R. No. 44773, 4 December 1991, 204 SCRA 535. 9 TSN, 4 June 1996, pp. 6-7. 10 TSN, 11 June 1996, pp. 11-15. 11 See People v. Dupali, G.R. No. 97474, 14 February 1994, 230 SCRA 62. 12 See People v. Errojo, G.R. No. 102077, 4 January 1994, 229 SCRA 49, 57. 13 Ibid. 14 The victim lived in a remote area of Barangay Salaan, Mangaldan, Pangasinan. 15 People v. Domingo, G.R. No. 97921, 8 September 1993, 226 SCRA 156. 16 G.R. No. 950331, 23 March 1995, 242 SCRA 606. 17 Art. 335 When and how rape is committed. Rape is committed by having carnal knowledge of a woman under any of the following circumstances: (1) By using force and intimidation; (2) When the woman is deprived of reason or otherwise unconscious; and, (3) When the woman is under twelve years of age or is demented. The crime of rape shall be punished by reclusion perpetua. Whenever the crime of rape is committed with the use of a deadly weapon or by two or more persons, the penalty shall be reclusion perpetua to death. When by reason or on the occasion of the rape, the victim has become insane, the penalty shall be death. When the rape is attempted or frustrated and a homicide is committed by reason or on the occasion thereof, the penalty shall be reclusion perpetua to death. When by reason or on the occasion of the rape, a homicide is committed, the penalty shall be death. The death penalty shall also be imposed if the crime of rape is committed with any of the following attendant circumstances: (1) When the victim is under eighteen (18) years of age and the offender is a parent, ascendant, step-parent, guardian, relative by consanguinity or affinity within the third civil degree, or the
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common-law spouse of the parent of the victim; (2) When the victim is under the custody of the police or military authorities; (3) When the rape is committed in full view of the husband, parent, any of the children or other relatives within the third degree of consanguinity; (4) When the victim is a religious or a child below seven (7) years old; (5) When the offender knows that he is afflicted with Acquired Immune Deficiency Syndrome (AIDS) disease; (6) When committed by any member of the Armed Forces of the Philippines or the Philippine National Police or any law enforcement agency; and, (7) When by reason or on the occasion of the rape, the victim has suffered permanent physical mutilation.
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G.R. No. 148510
http://www.lawphil.net/judjuris/juri2004/jul2004/gr_148510_2004.html
Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 148510 July 21, 2004
ALBERTO LOPEZ a.k.a. CESAR A. LOPEZ, petitioner, vs. HON. COURT OF APPEALS, HON. BENJAMIN ANTONIO, Presiding Judge of RTC, Branch 170, Malabon, Metro Manila and CHERRY PIE LOPEZ, respondents.
RESOLUTION
CARPIO MORALES, J.: Sought to be nullified via petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure are the March 19, 2001, April 26, 2001, and June 8, 2001 Resolutions of the Court of Appeals in CA-G.R. CV No. 6014-UDK, "Cherry Pie Lopez v. Alberto Lopez a.k.a. Cesar Lopez". The antecedents of the case are as follows: The Regional Trial Court (RTC) of Malabon rendered on June 15, 2000 a decision in Civil Case No. 3023-MN declaring the nullity of marriage between Cherry Pie Lopez and Alberto Lopez a.k.a Cesar Lopez (petitioner). The decision became final and executory based on a certification dated January 5, 2001. Petitioner moved to reconsider the support aspect of the decision but was denied by Order of January 26, 2001.
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On February 8, 2001, the RTC, acting on petitioners Notice of Appeal filed on February 7, 2001, gave it due course and directed the transmittal of the records of the case to the Court of Appeals "as soon as possible." On February 12, 2001, petitioner paid before the RTC a total of Sixty (P60.00) Pesos as docket fees as shown by Official Receipt Nos. 12968987 and 13536702.
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For petitioners failure to pay the full amount of P520.00 docket fees, the Court of Appeals, by Resolution of March 19, 2001, dismissed his appeal. Petitioner filed a Motion for Reconsideration of the appellate courts March 19, 2001 Resolution, but it was denied by Resolution of April 26, 2001 on the grounds that the motion did not contain an affidavit or proof of service and that it did not state on its face the material dates determinative of its timeliness. Petitioner filed a Motion for Reconsideration of the April 26, 2001 Resolution which was denied by Resolution of June 8, 2001 on the ground that no second motion by the same party can be entertained. Since petitioner assails final resolutions of the Court of Appeals, he should have filed a petition for review on certiorari under Rule 45, instead of a petition for certiorari under Rule 65. On this score alone, the petition should be dismissed. Remedial faux pas aside, even if a petition for certiorari under Rule 65 were to be, in the greater interest of justice, allowed, the petition just the same is dismissable for having been filed out of time. As petitioners motion for reconsideration of the questioned March 19, 2001 Resolution of the appellate court did not contain an affidavit or proof of service as required by Section 6, Rule 15 of the Rules of Civil Procedure nor did it state the material dates in order to determine its timeliness, it is considered a mere scrap of paper, and did not thus toll the running of the period to file the motion. In fact, petitioner did not even state when he received the said resolution, hence, it can not even be determined when the reglementary period expired.
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http://www.lawphil.net/judjuris/juri2004/jul2004/gr_148510_2004.html
Assuming that petitioner received the March 19, 2001 Resolution on the same date it was promulgated, petitioner had 60 days or until May 18, 2001 to file the present petition.
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He filed it, however, only on July 4, 2001.
En passant, the dismissal of the petition notwithstanding, petitioner is not without remedy. For as what he seeks to assail is the amount of support he was adjudged to provide, he can file a motion with the trial court for its modification since a judgment granting support never becomes final. WHEREFORE, the instant petition is DISMISSED. SO ORDERED. Panganiban, (Chairman), and Sandoval-Gutierrez, JJ., concur. Corona, J., on leave.
12
Footnotes
1 2 3 4 5 6 7 8 9
Rollo at 24. Id. at 25-28. Id. at 29-30. Id. at 31. Id. at 32. Id. at 17. Id. at 34-35. Id. at 15-16. Id. at 19-20. Cruz v. Court of Appeals, 388 SCRA 72, 80-81 (2002). Section 4, Rule 65 of the 1997 Rules of Civil Procedure reads:
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SECTION 4. When and where petition filed. The petition shall be filed not later than sixty (60) days from notice of the judgment, order or resolution. In case a motion for reconsideration or new trial is timely filed, whether such motion is required or not, the sixty (60) day period shall be counted from notice of the denial of said motion. The petition shall be filed in the Supreme Court or, if it relates to the acts or omissions of a lower court or of a corporation, board, officer or person, in the Regional Trial Court exercising jurisdiction over the territorial area as defined by the Supreme Court. It may also be filed in the Court of Appeals whether or not the same is in the aid of its appellate jurisdiction, or in the Sandiganbayan if it is in aid of its appellate jurisdiction. If it involves the acts or omissions of a quasi-judicial agency, unless otherwise provided by law or these rules, the petition shall be filed in and cognizable only by the Court of Appeals. No extension of time to file the petition shall be granted except for compelling reason and in no case exceeding 15 days. (4a) (As amended by A.M. No. 00-2-03 SC effective September 1, 2000)
12
A. Tolentino, I Civil Code of the Philippines: Commentaries and Jurisprudence 586 (1999 Ed. ) (citations omitted); A. Sempio-Dy, Handbook on the Family Code of the Philippines 327 (1997 Ed.).
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G.R. No. 165016
Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 165016 June 17, 2008
DOLORES MONTEFALCON & LAURENCE MONTEFALCON, petitioners, vs. RONNIE S. VASQUEZ, respondent. DECISION QUISUMBING, J.: This petition for review assails the September 29, 2003 Decision and the July 19, 2004 Resolution of the Court of Appeals in CA-G.R. CV No. 71944, which had reversed the May 28, 2001 Decision of the Regional Trial Court (RTC), Branch 19, of Naga City in Civil Case No. RTC '99-4460. The facts culled from the records are as follows. In 1999, petitioner Dolores P. Montefalcon filed a Complaint for acknowledgment and support against respondent Ronnie S. Vasquez before the RTC of Naga City. Alleging that her son Laurence is the illegitimate child of Vasquez, she prayed that Vasquez be obliged to give support to co-petitioner Laurence Montefalcon, whose certificate of live birth he signed as father. According to petitioners, Vasquez only gave a total of P19,000 as support for Laurence since Laurence was born in 1993. Vasquez allegedly also refused to give him regular school allowance despite repeated demands. Petitioner Dolores added that she and Vasquez are not legally married, and that Vasquez has his own family. A sheriff tried to serve the summons and complaint on Vasquez in Aro-aldao, Nabua, Camarines Sur. Vasquez's grandfather received them as Vasquez was in Manila. Vasquez's mother returned the documents to the clerk of court, who informed the court of the non-service of summons.
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Petitioners then filed a motion to declare Vasquez in default. The court denied it for lack of proper service of summons.
In 2000, the court issued an alias summons on Vasquez at "10 Int. President Garcia St., Zone 6, Signal Village, Taguig, Metro Manila" upon petitioners' motion. Albeit a Taguig deputy sheriff served it by substituted service on Vasquez's caretaker Raquel Bejer, the sheriff's return incorrectly stated "Lazaro" as Vasquez's surname. Another alias summons was issued, also received by Bejer. The second sheriff's return states: THIS IS TO CERTIFY THAT on the 19 day of July 2000 the undersigned sheriff caused the service of summons issued by the court in the above-entitled case together with the copy of the complaint and annexes attached thereon upon defendant RONNIE S. VASQUEZ, by substituted service, thru his caretaker, RAQUEL BEJER, a person of sufficient discretion, who acknowledged the receipt thereof at No. 10 Int. President Garcia St. Zone 6, Signal Village, Taguig, Metro Manila, as evidenced by her signature appearing at the lower portion of the original copy of summons. WHEREFORE, said summons is hereby returned to the court of origin DULY SERVED for its records and information. Taguig for Naga City, July 19, 2000 (SGD.) ERNESTO G. RAYMUNDO, JR., Deputy Sheriff MTC BR 74 Taguig, Metro Manila
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On petitioners' motion, the trial court declared Vasquez in default for failure to file an answer despite the substituted service of summons. Vasquez was furnished with court orders and notices of the proceedings at his last known address, but these were returned as he had allegedly moved to another place and left no new address.
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In 2001, the court granted petitioners' prayers, explaining that they had no ill-motive and that Dolores gave a truthful testimony. The court added that Vasquez admitted the truth of the allegations by his silence. It further explained that Laurence's certificate of live birth, being a public document, is irrefutably a prima facie evidence of illegitimate filiation. The trial court decreed: WHEREFORE, by preponderant evidence, judgment is hereby rendered in favor of the plaintiffs Dolores Montefalcon and her minor child Laurence Montefalcon and against defendant Ronnie S. Vasquez who is hereby ordered to: 1. Acknowledge plaintiff Laurence Montefalcon as his illegitimate child with Dolores Montefalcon; 2. Give support to the said minor in the amount of FIVE THOUSAND (P5,000.00) PESOS monthly commencing on June 1, 1993, the past support for eight (8) years in the amount of FOUR HUNDRED EIGHTY THOUSAND (P480,000.00) PESOS less the amount of NINETEEN THOUSAND (P19,000.00) PESOS previously given, shall be paid promptly and the monthly support of FIVE THOUSAND (P5,000.00) PESOS shall be paid not later than the end of each month beginning on July 31, 2001 and every end of the month thereafter as prayed for in the complaint; and 3. Pay the sum of TEN THOUSAND (P10,000.00) PESOS and THREE THOUSAND (P3,000.00) PESOS as attorney's and appearance fees, respectively, and litigation expenses of ONE THOUSAND (P1,000.00) PESOS. SO ORDERED.
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In the same year, Vasquez surfaced. He filed a notice of appeal to which petitioners opposed. Appeal was granted by the court. Before the appellate court, he argued that the trial court erred in trying and deciding the case as it "never" acquired jurisdiction over his person, as well as in awarding P5,000-per-month support, which was allegedly "excessive and exorbitant." The appellate court noted that the service of summons on Vasquez was "defective" as there was no explanation of impossibility of personal service and an attempt to effect personal service, and decreed as follows: WHEREFORE, based on the foregoing premises, the instant appeal is GRANTED. The appealed May 28, 2001 Decision of the Regional Trial Court of Naga City in Civil Case No. RTC '99-4460 is hereby NULLIFIED and SET ASIDE. Accordingly, let this case be REMANDED to the court a quo for further proceedings. SO ORDERED.
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Petitioners argued in their motion for reconsideration that any attempt at personal service of summons was needless as Vasquez already left for abroad. The appellate court, however, denied the motion. Hence, this petition. Petitioners assign two appellate court errors: I. THE COURT OF APPEALS ERRED IN HOLDING THAT THE RESPONDENT IN THIS CASE WAS NOT VALIDLY SERVED WITH THE SUMMONS AND COMPLAINT IN CIVIL CASE NO. RTC '99-4460; AND THAT II. THE COURT OF APPEALS ERRED IN ANNUL[L]ING AND SETTING ASIDE THE TRIAL COURT'S DECISION (ANNEX "B") FOR LACK OF JURISDICTION.
16
Petitioners justify the validity of substituted service as Vasquez had left as overseas seafarer when the sheriff served the summons on July 19, 2000 in Taguig. Noting that Vasquez's seaman's book indicated that he left the country on January 24, 2000 and came back on October 12, 2000, they criticize the appellate court for anchoring its rulings on mere technicality. Vasquez counters that because he was abroad, service of summons should have been personal or by publication as substituted service is proper only if a defendant is in the country. Vasquez also added that the sheriff's return did not state that he exerted efforts to personally serve the summons.
17
In their reply, petitioners insist that a substituted service is the normal method if one is temporarily away from the country as personal service abroad or by publication are not ordinary means of service.
18
Simply put, the issues now for resolution are: (1) whether there is a valid substituted service of summons on
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Vasquez to clothe the trial court with jurisdiction over his person; and (2) whether he is obliged to give support to co-petitioner Laurence. To acquire jurisdiction over the person of a defendant, service of summons must be personal,
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or if this is not
feasible within a reasonable time, then by substituted service. It is of judicial notice that overseas Filipino seafarers are contractual employees. They go back to the country once their contracts expire, and wait for the signing of another contract with the same or new manning agency and principal if they wish. It is therefore common knowledge that a Filipino seaman often has a temporary residence in the urban areas like Metro Manila, where majority of the manning agencies hold offices, aside from his home address in the province where he originates. In this case, respondent Vasquez hails from Camarines Sur but he has lived in Taguig City when the complaint was filed. Notice may then be taken that he has established a residence in either place. Residence is a place where the person named in the summons is living at the time when the service was made, even though he was temporarily abroad at the time. As an overseas seafarer, Vasquez was a Filipino resident temporarily out of the country. Hence, service of summons on him is governed by Rule 14, Section 16 of the Rules of Court: SEC. 16. Residents temporarily out of the Philippines. When any action is commenced against a defendant who ordinarily resides within the Philippines, but who is temporarily out of it, service may, by leave of court, be also effected out of the Philippines, as under the preceding section. (Emphasis supplied.) The preceding section referred to states: SEC. 15. Extraterritorial service. When the defendant does not reside and is not found in the Philippines, and the action affects the personal status of the plaintiff or relates to, or the subject of which is, property within the Philippines, in which the defendant has or claims a lien or interest, actual or contingent, or in which the relief demanded consists, wholly or in part, in excluding the defendant from any interest therein, or the property of the defendant has been attached within the Philippines, service may, by leave of court, be effected out of the Philippines by personal service as under section 6; or by publication in a newspaper of general circulation in such places and for such time as the court may order, in which case a copy of the summons and order of the court shall be sent by registered mail to the last known address of the defendant, or in any other manner the court may deem sufficient. Any order granting such leave shall specify a reasonable time, which shall not be less than sixty (60) days after notice, within which the defendant must answer. Because Section 16 of Rule 14 uses the words "may" and "also," it is not mandatory. Other methods of service of summons allowed under the Rules may also be availed of by the serving officer on a defendant-seaman. Ideally, Vasquez must be personally served summons. But was personal service of summons practicable? Conversely, was substituted service of summons justified? Obviously, personal service of summons was not practicable since the defendant was temporarily out of the country. To proceed with personal service of summons on a defendant-seaman who went on overseas contract work would not only be impractical and futile it would also be absurd. The impossibility of prompt personal service was shown by the fact that the Naga City-based sheriff purposely went to a barrio in Camarines Sur to serve the summons personally on Vasquez. When service of summons failed, said sheriff ascertained the whereabouts of Vasquez. Upon being informed that Vasquez was in Manila, the Naga court commissioned a Taguig City-based sheriff to serve the summons. Both the Naga and Taguig sheriffs inquired about Vasquez's whereabouts, signifying that they did not immediately resort to substituted service. There was no undue haste in effecting substituted service. The fact that the Naga court allowed a reasonable time to locate Vasquez to as far as Taguig shows that there was indeed no precipitate haste in serving the summons. In this case, we agree that the substituted service in Taguig was valid and justified because previous attempts were made by the sheriffs to serve the summons, but to no avail. Diligent efforts were evidently exerted in the conduct of the concerned sheriffs in the performance of their official duty. Also, the person who received the alias summons was of suitable age and discretion, then residing at Vasquez's dwelling. There is no quarrel that it was really Vasquez's residence, as evidenced by his employment contract, executed under the supervision and authority of the Philippine Overseas Employment Administration (POEA). Vasquez cannot deny that in his contract of employment and seafarer's information sheet, both bearing POEA's letterhead, his address in Metro Manila was what was correctly mentioned in the alias summons that Bejer received. She must have informed Vasquez one way or another of the suit upon his return in October 2000 after finishing his nine-month contract with Fathom Ship Management. Thus, it is reasonable to conclude that he had enough time to have the default order set aside. The default judgment was rendered on May 28, 2001. He also had enough time to file a motion for reconsideration. But he did nothing. The interregnum between the first but failed attempt at personal service by the RTC of Naga City in Vasquez's place in Camarines Sur to the final substituted service in Metro Manila by a Taguig RTC sheriff was almost eight months, a reasonable time long enough to conclude that personal service had failed and was futile. Montalban v. Maximo offers a rational and logical solution of the issue. We held in said case that the normal method of service of summons on one temporarily absent is by substituted service because personal service abroad and service by publication are not ordinary means of summoning defendants. Summons in a suit in personam
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against a temporarily absent resident may be by substituted service as domiciliaries of a State are always amenable to suits in personam therein.
22
"Residence" is the place where the person named in the summons is living at the time when the service is made, even though he may be temporarily out of the country at the time. A plaintiff is merely required to know the defendant's residence, office or regular business place. He need not know where a resident defendant actually is at the very moment of filing suit. He is not even duty-bound to ensure that the person upon whom service was actually made delivers the summons to the defendant or informs him about it. The law presumes that for him. It is immaterial that defendant does not receive actual notice. As well said in Montalban: . . . A man temporarily absent from this country leaves a definite place of residence, a dwelling where he lives, a local base, so to speak, to which any inquiry about him may be directed and where he is bound to return. Where one temporarily absents himself, he leaves his affairs in the hands of one who may be reasonably expected to act in his place and stead; to do all that is necessary to protect his interests; and to communicate with him from time to time any incident of importance that may affect him or his business or his affairs. It is usual for such a man to leave at his home or with his business associates information as to where he may be contacted in the event a question that affects him crops up. If he does not do what is expected of him, and a case comes up in court against him, he cannot in justice raise his voice and say that he is not subject to the processes of our courts. He cannot stop a suit from being filed against him upon a claim that he cannot be summoned at his dwelling house or residence or his office or regular place of business. Not that he cannot be reached within a reasonable time to enable him to contest a suit against him. There are now advanced facilities of communication. Long distance telephone calls and cablegrams make it easy for one he left behind to communicate with him.
23
Aside from, at present, various forms of texting and short message services by the ubiquitous cellular phones. More importantly, the letter of the law must yield to its spirit. The absence in the final sheriff's return of a statement about the impossibility of personal service does not conclusively prove that the service is invalid. Such failure should not unduly prejudice petitioners if what was undisclosed was in fact done. Proof of prior attempts at personal service may have been submitted by the plaintiff during the hearing of any incident assailing the validity of the substituted service had Vasquez surfaced when the case was heard. In fact, he was declared in default. It was only when a judgment against him was rendered by the trial court that he questioned the validity of service of summons before the appellate court. Such failure to appear, and then later to question the court's jurisdiction over his person, should not be taken against herein petitioners. Between Vasquez's self-serving assertion that he only came to know of the case when his mother told him about the trial court's decision and the sheriff's return on the substituted service which carries a presumption of regularity, the latter is undoubtedly deserving of more faith and credit. The sheriff's certificate of service of summons is prima facie evidence of the facts set out in it. Only clear and convincing evidence may overcome its presumption of regularity. Given the circumstances in the present case, we agree that the presumption of regularity in the performance of duty on the part of the sheriff stands.
25 24
On the second issue, the trial court's order must also be sustained. Co-petitioner Laurence is legally entitled to support from the respondent, and the amount of P5,000 monthly set by the trial court is neither excessive nor unreasonable. Article 175
26
of the Family Code of the Philippines mandates that illegitimate filiation may be established in the
27
same way and on the same evidence as legitimate children. Under Article 172, the filiation of legitimate children is established by any of the following: (1) through record of birth appearing in the civil register or a final order; or (2) by admission of filiation in a public document or private handwritten instrument and signed by the parent concerned; or in default of these two, by open and continuous possession of the status of a legitimate child or by any other means allowed by the Rules of Court and special laws. Laurence's record of birth is an authentic, relevant and admissible piece of evidence to prove paternity and filiation. Vasquez did not deny that Laurence is his child with Dolores. He signed as father in Laurence's certificate of live birth, a public document. He supplied the data entered in it. Thus, it is a competent evidence of filiation as he had a hand in its preparation. In fact, if the child had been recognized by any of the modes in the first paragraph of Article 172, there is no further need to file any action for acknowledgment because any of said modes is by itself a consummated act.
28
As filiation is beyond question, support follows as matter of obligation. Petitioners were able to prove that Laurence needs Vasquez's support and that Vasquez is capable of giving such support. Dolores testified that she spent around P200,000 for Laurence; she spends P8,000 a month for his schooling and their subsistence. She told the lower court Vasquez was earning US$535 monthly based on his January 10, 2000 contract of employment
29
with
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Fathom Ship Management and his seafarer information sheet. That income, if converted at the prevailing rate, would be more than sufficient to cover the monthly support for Laurence. Under Article 195 (4) of the Family Code, a parent is obliged to support his illegitimate child. The amount is variable. There is no final judgment thereof as it shall be in proportion to the resources or means of the giver and the necessities of the recipient.
32 31
30
It may be reduced or increased proportionately according to the reduction or increase

33
of the necessities of the recipient and the resources or means of the person obliged to support. Support comprises everything indispensable for sustenance, dwelling, clothing, medical attendance, education and transportation, in keeping with the financial capacity of the family. Under the premises, the award of P5,000 monthly support to Laurence is reasonable, and not excessive nor exorbitant. In sum, we rule that the Court of Appeals erred in invalidating the substituted service of summons and remanding the case. As there was valid substituted service of summons under the circumstances of this case, the lower court acquired jurisdiction over his person and correctly ordered him to pay past and present monthly support to his illegitimate child as well as attorney's fees and litigation expenses to petitioners. WHEREFORE, the petition is GRANTED. The Decision dated September 29, 2003 and Resolution dated July 19, 2004 of the Court of Appeals in CA-G.R. CV No. 71944 are REVERSED and SET ASIDE. The Decision dated May 28, 2001 of the Regional Trial Court, Branch 19, Naga City in Civil Case No. RTC '99-4460 is hereby REINSTATED. Costs against respondent. SO ORDERED. LEONARDO A. QUISUMBING Associate Justice
34
WE CONCUR: DANTE O. TINGA Associate Justice

*
**
TERESITA J. LEONARDO-DE CASTRO Associate Justice
ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. LEONARDO A. QUISUMBING Associate Justice Chairperson
CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson's Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. REYNATO S. PUNO Chief Justice
Footnotes
*
Additional member in place of Associate Justice Presbitero J. Velasco, Jr. who is on official leave. Additional member in place of Associate Justice Conchita Carpio Morales who is on official leave.
**
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Rollo, pp. 14-19. Penned by Associate Justice Elvi John S. Asuncion, with Associate Justices Mercedes Gozo-Dadole and Lucas P. Bersamin concurring.
2 3 4 5 6 7 8 9
Id. at 34. Records, pp. 37-46. Penned by Pairing Judge Marino O. Bodiao, Sr. Id. at 1-3. Id. at 32. Id. at 6-7, 14. Id. at 15-16. Id. at 18-22. Id. at 24. Id. at 25. Id. at 26-29. Id. at 45-46. Id. at 51. CA rollo, p. 68. Id. at 69-73. Rollo, pp. 8-9. CA rollo, pp. 56-59. Rollo, pp. 74-76. Rules of Court, Rule 14, Sec. 6. SEC. 6. Service in person on defendant. Whenever practicable, the summons shall be served handing a copy thereof to the defendant in person, or, if he refuses to receive and sign for it, by tendering it to him.
10 11 12 13 14 15 16 17 18 19
20
Id. at Sec. 7. SEC.7. Substituted service. If, for justifiable causes, the defendant cannot be served within a reasonable time as provided in the preceding section, service may be effected (a) by leaving copies of the summons at the defendant's residence with some person of suitable age and discretion then residing therein, or (b) by leaving the copies at defendant's office or regular place of business with some competent person in charge thereof.
21 22
No. L-22997, March 15, 1968, 22 SCRA 1070.
Id. at 1075-1078. Montalban further explained that the authority of a state over one of its citizens is not terminated by the mere fact of his absence from the state. The state which accords him privileges and affords protection to him and his property by virtue of his domicile may also exact reciprocal duties. The responsibilities of that citizenship arise out of the relationship to the state which domicile creates. That relationship is not dissolved by mere absence from the state. The attendant duties, like the rights and privileges incident to domicile, are not dependent on continuous presence in the state. One such incident of domicile is amenability to suit within the state even during sojourns without the state, where the state has provided and employed a reasonable method for apprising such an absent party of the proceedings against him. x x x The constitutional requirement of due process exacts that the service be such as may be reasonably expected to give the notice desired. Once the service provided by the rules reasonably accomplishes that end, the requirement of justice is answered; the traditional notions of fair play are satisfied; due process is served.
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23 24 25
Id. at 1079-1081. Mapa v. Court of Appeals, G.R. Nos. 79374 & 82986, October 2, 1992, 214 SCRA 417, 428. Madrigal v. Court of Appeals, G.R. No. 129955, November 26, 1999, 319 SCRA 331, 337.
Rules of Court, Rule 131, Sec. 3 (m) SEC. 3. Disputable presumptions. The following presumptions are satisfactory if uncontradicted, but may be contradicted and overcome by other evidence: xxxx (m) That official duty has been regularly performed; xxxx Article 175. Illegitimate children may establish their illegitimate filiation in the same way and on the same evidence as legitimate children. The action must be brought within the same period specified in Article 173, except when the action is based on the second paragraph of Article 172, in which case the action may be brought during the lifetime of the alleged parent.
27 26
Article 172. The filiation of legitimate children is established by any of the following: (1) The record of birth appearing in the civil register or a final judgment; or (2) An admission of legitimate filiation in a public document or a private handwritten instrument and signed by the parent concerned. In the absence of the foregoing evidence, the legitimate filiation shall be proved by: (1) The open and continuous possession of the status of a legitimate child; or (2) Any other means allowed by the Rules of Court and special laws.
E. Pineda, The Family Code of the Philippines Annotated 324 (1999 ed.), citing Divinagracia v. Bellosillo, No. L-47407, August 12, 1986,143 SCRA 356 and Gono-Javier v. Court of Appeals, G.R. No. 111994, December 29, 1994, 239 SCRA 593.
29 30 31
28
Records, p. 33. Id. at 34.
Art. 195. Subject to the provisions of the succeeding articles, the following are obliged to support each other to the whole extent set forth in the preceding article: xxxx 4) Parents and their illegitimate children and the legitimate and illegitimate children of the latter; and xxxx
32 33 34
Family Code of the Philippines, Art. 201. Id. at Art. 202. Id. at Art. 194.
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Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 163209 October 30, 2009
SPOUSES PRUDENCIO and FILOMENA LIM, Petitioners, vs. MA. CHERYL S. LIM, for herself and on behalf of her minor children LESTER EDWARD S. LIM, CANDICE GRACE S. LIM, and MARIANO S. LIM, III, Respondents. DECISION CARPIO, J.: The Case For review is the Decision of the Court of Appeals, dated 28 April 2003, ordering petitioners Prudencio and Filomena Lim (petitioners) to provide legal support to respondents Cheryl, Lester Edward, Candice Grace and Mariano III, all surnamed Lim (respondents). The Facts In 1979, respondent Cheryl S. Lim (Cheryl) married Edward Lim (Edward), son of petitioners. Cheryl bore Edward three children, respondents Lester Edward, Candice Grace and Mariano III. Cheryl, Edward and their children resided at the house of petitioners in Forbes Park, Makati City, together with Edwards ailing grandmother, Chua Giak and her husband Mariano Lim (Mariano). Edwards family business, which provided him with a monthly salary of P6,000, shouldered the family expenses. Cheryl had no steady source of income. On 14 October 1990, Cheryl abandoned the Forbes Park residence, bringing the children with her (then all minors), after a violent confrontation with Edward whom she caught with the in-house midwife of Chua Giak in what the trial court described "a very compromising situation."
3 1 2
Cheryl, for herself and her children, sued petitioners, Edward, Chua Giak and Mariano (defendants) in the Regional Trial Court of Makati City, Branch 140 (trial court) for support. The trial court ordered Edward to provide monthly support of P6,000 pendente lite.
4
The Ruling of the Trial Court On 31 January 1996, the trial court rendered judgment ordering Edward and petitioners to "jointly" provide P40,000 monthly support to respondents, with Edward shouldering P6,000 and petitioners the balance of P34,000 subject to Chua Giaks subsidiary liability.
5
The defendants sought reconsideration, questioning their liability. The trial court, while denying reconsideration, clarified that petitioners and Chua Giak were held jointly liable with Edward because of the latters "inability x x x to give sufficient support x x x."
6
Petitioners appealed to the Court of Appeals assailing, among others, their liability to support respondents. Petitioners argued that while Edwards income is insufficient, the law itself sanctions its effects by providing that legal support should be "in keeping with the financial capacity of the family" under Article 194 of the Civil Code, as amended by Executive Order No. 209 (The Family Code of the Philippines). The Ruling of the Court of Appeals In its Decision dated 28 April 2003, the Court of Appeals affirmed the trial court. On the issue material to this appeal, that is, whether there is basis to hold petitioners, as Edwards parents, liable with him to support respondents, the Court of Appeals held: The law on support under Article 195 of the Family Code is clear on this matter. Parents and their legitimate children are obliged to mutually support one another and this obligation extends down to the legitimate grandchildren and
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great grandchildren. In connection with this provision, Article 200 paragraph (3) of the Family Code clearly provides that should the person obliged to give support does not have sufficient means to satisfy all claims, the other persons enumerated in Article 199 in its order shall provide the necessary support. This is because the closer the relationship of the relatives, the stronger the tie that binds them. Thus, the obligation to support is imposed first upon the shoulders of the closer relatives and only in their default is the obligation moved to the next nearer relatives and so on.
8
Petitioners sought reconsideration but the Court of Appeals denied their motion in the Resolution dated 12 April 2004. Hence, this petition. The Issue The issue is whether petitioners are concurrently liable with Edward to provide support to respondents. The Ruling of the Court We rule in the affirmative. However, we modify the appealed judgment by limiting petitioners liability to the amount of monthly support needed by respondents Lester Edward, Candice Grace and Mariano III only. Petitioners Liable to Provide Support but only to their Grandchildren By statutory and jurisprudential mandate, the liability of ascendants to provide legal support to their descendants is beyond cavil. Petitioners themselves admit as much they limit their petition to the narrow question of when their liability is triggered, not if they are liable. Relying on provisions found in Title IX of the Civil Code, as amended, on Parental Authority, petitioners theorize that their liability is activated only upon default of parental authority, conceivably either by its termination
12 11 9 10
or suspension
13
during the childrens minority. Because at the time

14
respondents sued for support, Cheryl and Edward exercised parental authority over their children, submit that the obligation to support the latters offspring ends with them.
petitioners
Neither the text of the law nor the teaching of jurisprudence supports this severe constriction of the scope of familial obligation to give support. In the first place, the governing text are the relevant provisions in Title VIII of the Civil Code, as amended, on Support, not the provisions in Title IX on Parental Authority. While both areas share a common ground in that parental authority encompasses the obligation to provide legal support,
15
they differ in other

16
concerns including the duration of the obligation and its concurrence among relatives of differing degrees.
Thus,
17
although the obligation to provide support arising from parental authority ends upon the emancipation of the child, the same obligation arising from spousal and general familial ties ideally lasts during the obligee's lifetime.. Also, while parental authority under Title IX (and the correlative parental rights) pertains to parents, passing to ascendants only upon its termination or suspension, the obligation to provide legal support passes on to ascendants not only upon default of the parents but also for the latters inability to provide sufficient support. As we observed in another case raising the ancillary issue of an ascendants obligation to give support in light of the fathers sufficient means: Professor Pineda is of the view that grandchildren cannot demand support directly from their grandparents if they have parents (ascendants of nearest degree) who are capable of supporting them. This is so because we have to follow the order of support under Art. 199. We agree with this view. xxxx There is no showing that private respondent is without means to support his son; neither is there any evidence to prove that petitioner, as the paternal grandmother, was willing to voluntarily provide for her grandson's legal support. xxx
18
(Emphasis supplied; internal citations omitted)
Here, there is no question that Cheryl is unable to discharge her obligation to provide sufficient legal support to her children, then all school-bound. It is also undisputed that the amount of support Edward is able to give to respondents, P6,000 a month, is insufficient to meet respondents basic needs. This inability of Edward and Cheryl to sufficiently provide for their children shifts a portion of their obligation to the ascendants in the nearest degree, both in the paternal (petitioners) and maternal lines, following the ordering in Article 199. To hold otherwise, and thus subscribe to petitioners theory, is to sanction the anomalous scenario of tolerating extreme material deprivation of children because of parental inability to give adequate support even if ascendants one degree removed are more than able to fill the void.
1a v v ph 1 i
19
However, petitioners partial concurrent obligation extends only to their descendants as this word is commonly understood to refer to relatives, by blood of lower degree. As petitioners grandchildren by blood, only respondents Lester Edward, Candice Grace and Mariano III belong to this category. Indeed, Cheryls right to receive support from the Lim family extends only to her husband Edward, arising from their marital bond.
20
Unfortunately, Cheryls share
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from the amount of monthly support the trial court awarded cannot be determined from the records. Thus, we are constrained to remand the case to the trial court for this limited purpose. Petitioners Precluded from Availing of the Alternative Option Under Article 204 of the Civil Code, as Amended As an alternative proposition, petitioners wish to avail of the option in Article 204 of the Civil Code, as amended, and pray that they be allowed to fulfill their obligation by maintaining respondents at petitioners Makati residence. The option is unavailable to petitioners. The application of Article 204 which provides that The person obliged to give support shall have the option to fulfill the obligation either by paying the allowance fixed, or by receiving and maintaining in the family dwelling the person who has a right to receive support. The latter alternative cannot be availed of in case there is a moral or legal obstacle thereto. (Emphasis supplied) is subject to its exception clause. Here, the persons entitled to receive support are petitioners grandchildren and daughter-in-law. Granting petitioners the option in Article 204 will secure to the grandchildren a well-provided future; however, it will also force Cheryl to return to the house which, for her, is the scene of her husbands infidelity. While not rising to the level of a legal obstacle, as indeed, Cheryls charge against Edward for concubinage did not prosper for insufficient evidence, her steadfast insistence on its occurrence amounts to a moral impediment bringing the case within the ambit of the exception clause of Article 204, precluding its application. WHEREFORE, we DENY the petition. We AFFIRM the Decision of the Court of Appeals, dated 28 April 2003, and its Resolution dated 12 April 2004 with the MODIFICATION that petitioners Prudencio and Filomena Lim are liable to provide support only to respondents Lester Edward, Candice Grace and Mariano III, all surnamed Lim. We REMAND the case to the Regional Trial Court of Makati City, Branch 140, for further proceedings consistent with this ruling. SO ORDERED. ANTONIO T. CARPIO Associate Justice WE CONCUR: LEONARDO A. QUISUMBING Associate Justice MINITA V. CHICO NAZARIO Associate Justice ROBERTO A. ABAD Associate Justice
** * 21
DIOSDADO M. PERALTA Associate Justice
ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. ANTONIO T. CARPIO Associate Justice Chairperson CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. REYNATO S. PUNO Chief Justice
Footnotes
*
Designated additional member per Special Order No. 755.
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** 1 2
Designated additional member per Special Order No. 753. Under Rule 45 of the 1997 Rules of Civil Procedure.
Penned by Associate Justice Elvi John S. Asuncion with Associate Justices Ruben T. Reyes and Lucas P. Bersamin (now a member of this Court), concurring.
3
CA rollo, p. 99. Cheryl filed criminal charges against Edward (for concubinage, physical injuries, and grave threats) which, however, the investigating prosecutor dismissed. It appears that Edward, in turn, sued Cheryl for the declaration of nullity of their marriage (Civil Case No. 99-1852) which the Regional Trial Court of Makati City, Branch 140, granted. Cheryls appeal of the ruling awaits resolution.
4 5
In an Order dated 28 June 1991. The dispositive portion of the ruling provides (Records, pp. 1021-1022): WHEREFORE, premises considered, judgment is hereby rendered as follows: 1. Defendant/s EDWARD N. LIM and Spouses PRUDENCIO and FILOMENA NG LIM are ordered to jointly provide monthly support for the plaintiff, Ma. Cheryl S. Lim and the three (3) minor children, in the total amount of FORTY THOUSAND (P40,000.00) Pesos to be adjusted as may be needed, and to be given in the following manner: a) Six Thousand (P6,000.00) Pesos to be paid by defendant EDWARD N. LIM; b) The remaining balance of Thirty Four Thousand (P34,000.00) Pesos shall be shouldered by defendant/spouses PRUDENCIO and FILOMENA NG LIM, they, being in the remoter line pursuant to Article 199 of the Family Code. However, in the event that spouses Prudencio and Filomena Ng Lim fail to provide plaintiffs the amount they are entitled to receive, the obligation shall be borne by CHUA GIAK, being the grandmother of defendant Edward Lim; c) The payment of the aforesaid monthly support should be made within the first five (5) days of each month; 2. The custody of the three (3) minor children, namely, Lester Edward, Candice Grace and Mariano III shall be awarded to the parent with whom each one shall choose to live with, they, being over seven (7) years of age; 3. Defendants are directed to pay the plaintiffs attorneys fees in the amount of FIFTY THOUSAND (P50,000.00) PESOS, plus FIVE HUNDRED (P500.00) PESOS for each Court appearance, and the cost of the suit.
The dispositive portion of the Order provides (Id. at 1058): In the light of the foregoing, item No. 1 in the dispositive part of the Decision of this Court dated January 31, 1996, is hereby amended to read as follows: "(1.a) Defendant Edward N. Lim is ordered to continue providing the amount of SIX THOUSAND (P6,000.00) PESOS as his monthly support for the plaintiffs; (b) Considering the inability of defendant Edward N. Lim to give sufficient support, defendants/spouses Prudencio and Filomena Ng Lim being in the remoter line (Art. 199, Family Code), are ordered to give the amount of THIRTY-FOUR THOUSAND (P34,000.00) PESOS as their monthly support for the three (3) minor children. In case of default, the obligation shall be borne by defendant Chua Giak; (c) The payment of the aforesaid monthly support shall be made within the first five (5) days of each month."
This provision reads: "Support comprises everything indispensable for sustenance, dwelling, clothing, medical attendance, education and transportation, in keeping with the financial capacity of the family. The education of the person entitled to be supported referred to in the preceding paragraph shall include his schooling or training for some profession, trade or vocation, even beyond the age of majority. Transportation shall include expenses in going to and from school, or to and from place of work."
8 9
Rollo, pp. 27-28. Article 199, Civil Code, as amended, provides:
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Whenever two or more persons are obliged to give support, the liability shall devolve upon the following persons in the order herein provided: (1) The spouse; (2) The descendants in the nearest degree; (3) The ascendants in the nearest degree; and (4) The brothers and sisters
10 11 12 13 14
Patricio v. Dario III, G.R. No. 170829, 20 November 2006, 507 SCRA 438. Articles 214 and 216, Civil Code, as amended. See Articles 228(1), 229(4) and (5), and 232, Civil Code, as amended. See Articles 230 and 231, Civil Code, as amended.
Respondents Lester Edward (born on 11 June 1981), Candice Grace (born on 23 October 1985) and Mariano III (born on 31 August 1986) have since reached the age of majority, thus emancipating them from their parents authority (see Article 228(3), Civil Code, as amended).
15 16
Article 209 in relation to Article 220(4), Civil Code, as amended.
The ordering of persons obliged to provide support in Article 199 is different from the preference of right to receive it under Article 200, par. 3. Thus, the Court of Appeals, while correctly affirming the trial court's ruling, as we do, misapplied the latter provision as basis for its ruling sustaining petitioners' concurrent obligation to provide support. Article 228(3), Civil Code, as amended. Supra note 10 at 448-449.
17 18 19
Respondents no longer sought support from the childrens maternal ascendants because at the time respondents filed their complaint, they were living with, and received support from, Cheryls mother. Thus, should the ruling of the trial court in Civil Case No. 99-1852 (declaring the nullity of Cheryl and Edwards marriage) be affirmed on appeal, the mutual obligation to provide support between them ceases. See Pelayo v. Lauron, 12 Phil. 453, 457 (1908) (holding that in-laws "are strangers with respect to the obligation that revolves upon the husband to provide support" to his wife). After the trial courts determination, the Edward and petitioners liability should be reckoned from the time the trial court rendered its judgment on 31 January 1996.
20
21
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G.R. Nos. 175279-80
Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. Nos. 175279-80 SUSAN LIM-LUA, Petitioner, vs. DANILO Y. LUA, Respondent. DECISION VILLARAMA, JR., J.: In this petition for review on certiorari under Rule 45, petitioner seeks to set aside the Decision dated April 20, 2006 and Resolution dated October 26, 2006 of the Court of Appeals (CA) dismissing her petition for contempt (CA-G.R. SP No. 01154) and granting respondent's petition for certiorari (CA-G.R. SP No. 01315). The factual background is as follows: On September 3, 2003, petitioner Susan Lim-Lua filed an action for the declaration of nullity of her marriage with respondent Danilo Y. Lua, docketed as Civil Case No. CEB-29346 of the Regional Trial Court (RTC) of Cebu City, Branch 14. In her prayer for support pendente lite for herself and her two children, petitioner sought the amount of P500,000.00 as monthly support, citing respondents huge earnings from salaries and dividends in several companies and businesses here and abroad.
4 5 3 2 1
June 5, 2013
After due hearing, Judge Raphael B. Yrastorza, Sr. issued an Order dated March 31, 2004 granting support pendente lite, as follows: From the evidence already adduced by the parties, the amount of Two Hundred Fifty (P250,000.00) Thousand Pesos would be sufficient to take care of the needs of the plaintiff. This amount excludes the One hundred thirty-five (P135,000.00) Thousand Pesos for medical attendance expenses needed by plaintiff for the operation of both her eyes which is demandable upon the conduct of such operation. The amounts already extended to the two (2) children, being a commendable act of defendant, should be continued by him considering the vast financial resources at his disposal. According to Art. 203 of the Family Code, support is demandable from the time plaintiff needed the said support but is payable only from the date of judicial demand. Since the instant complaint was filed on 03 September 2003, the amount of Two Hundred Fifty (P250,000.00) Thousand should be paid by defendant to plaintiff retroactively to such date until the hearing of the support pendente lite. P250,000.00 x 7 corresponding to the seven (7) months that lapsed from September, 2003 to March 2004 would tantamount to a total of One Million Seven Hundred Fifty (P1,750,000.00) Thousand Pesos. Thereafter, starting the month of April 2004, until otherwise ordered by this Court, defendant is ordered to pay a monthly support of Two Hundred Fifty Thousand (P250,000.00) Pesos payable within the first five (5) days of each corresponding month pursuant to the third paragraph of Art. 203 of the Family Code of the Philippines. The monthly support of P250,000.00 is without prejudice to any increase or decrease thereof that this Court may grant plaintiff as the circumstances may warrant i.e. depending on the proof submitted by the parties during the proceedings for the main action for support.
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Respondent filed a motion for reconsideration, asserting that petitioner is not entitled to spousal support considering that she does not maintain for herself a separate dwelling from their children and respondent has continued to support the family for their sustenance and well-being in accordance with familys social and financial standing. As to the P250,000.00 granted by the trial court as monthly support pendente lite, as well as the P1,750,000.00 retroactive support, respondent found it unconscionable and beyond the intendment of the law for not having considered the needs of the respondent. In its May 13, 2004 Order, the trial court stated that the March 31, 2004 Order had become final and executory since respondents motion for reconsideration is treated as a mere scrap of paper for violation of the threeday notice
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period under Section 4, Rule 15 of the 1997 Rules of Civil Procedure, as amended, and therefore did not interrupt the running of the period to appeal. Respondent was given ten (10) days to show cause why he should not be held in contempt of the court for disregarding the March 31, 2004 order granting support pendente lite.
8
His second motion for reconsideration having been denied, respondent filed a petition for certiorari in the CA. On April 12, 2005, the CA rendered its Decision, finding merit in respondents contention that the trial court gravely abused its discretion in granting P250,000.00 monthly support to petitioner without evidence to prove his actual income. The said court thus decreed: WHEREFORE, foregoing premises considered, this petition is given due course. The assailed Orders dated March 31, 2004, May 13, 2004, June 4, 2004 and June 18, 2004 of the Regional Trial Court, Branch 14, Cebu City issued in Civil Case No. CEB No. 29346 entitled "Susan Lim Lua versus Danilo Y. Lua" are hereby nullified and set aside and instead a new one is entered ordering herein petitioner: a) to pay private respondent a monthly support pendente lite of P115,000.00 beginning the month of April 2005 and every month thereafter within the first five (5) days thereof; b) to pay the private respondent the amount of P115,000.00 a month multiplied by the number of months starting from September 2003 until March 2005 less than the amount supposedly given by petitioner to the private respondent as her and their two (2) children monthly support; and c) to pay the costs. SO ORDERED.
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Neither of the parties appealed this decision of the CA. In a Compliance dated June 28, 2005, respondent attached a copy of a check he issued in the amount of P162,651.90 payable to petitioner. Respondent explained that, as decreed in the CA decision, he deducted from the amount of support in arrears (September 3, 2003 to March 2005) ordered by the CA -- P2,185,000.00 -- plus P460,000.00 (April, May, June and July 2005), totaling P2,645,000.00, the advances given by him to his children and petitioner in the sum of P2,482,348.16 (with attached photocopies of receipts/billings). In her Comment to Compliance with Motion for Issuance of a Writ of Execution, petitioner asserted that none of the expenses deducted by respondent may be chargeable as part of the monthly support contemplated by the CA in CA-G.R. SP No. 84740. On September 27, 2005, the trial court issued an Order granting petitioners motion for issuance of a writ of execution as it rejected respondents interpretation of the CA decision. Respondent filed a motion for reconsideration and subsequently also filed a motion for inhibition of Judge Raphael B. Yrastorza, Sr. On November 25, 2005, Judge Yrastorza, Sr. issued an Order
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denying both motions.
WHEREFORE, in view of the foregoing premises, both motions are DENIED. Since a second motion for reconsideration is prohibited under the Rules, this denial has attained finality; let, therefore, a writ of execution be issued in favor of plaintiff as against defendant for the accumulated support in arrears pendente lite. Notify both parties of this Order. SO ORDERED.
15
Since respondent still failed and refused to pay the support in arrears pendente lite, petitioner filed in the CA a Petition for Contempt of Court with Damages, docketed as CA-G.R. SP No. 01154 ("Susan Lim Lua versus Danilo Y. Lua"). Respondent, on the other hand, filed CA-G.R. SP No. 01315, a Petition for Certiorari under Rule 65 of the Rules of Court ("Danilo Y. Lua versus Hon. Raphael B. Yrastorza, Sr., in his capacity as Presiding Judge of Regional Trial Court of Cebu, Branch 14, and Susan Lim Lua"). The two cases were consolidated. By Decision dated April 20, 2006, the CA set aside the assailed orders of the trial court, as follows: WHEREFORE, judgment is hereby rendered: a) DISMISSING, for lack of merit, the case of Petition for Contempt of Court with Damages filed by Susan Lim Lua against Danilo Y. Lua with docket no. SP. CA-GR No. 01154; b) GRANTING Danilo Y. Luas Petition for Certiorari docketed as SP. CA-GR No. 01315. Consequently, the assailed Orders dated 27 September 2005 and 25 November 2005 of the Regional Trial Court, Branch 14, Cebu City issued in Civil Case No. CEB-29346 entitled "Susan Lim Lua versus Danilo Y. Lua, are hereby NULLIFIED and SET ASIDE, and instead a new one is entered: i. ORDERING the deduction of the amount of PhP2,482,348.16 plus 946,465.64, or a total of
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PhP3,428,813.80 from the current total support in arrears of Danilo Y. Lua to his wife, Susan Lim Lua and their two (2) children; ii. ORDERING Danilo Y. Lua to resume payment of his monthly support of PhP115,000.00 pesos starting from the time payment of this amount was deferred by him subject to the deductions aforementioned. iii. DIRECTING the issuance of a permanent writ of preliminary injunction. SO ORDERED.
16
The appellate court said that the trial court should not have completely disregarded the expenses incurred by respondent consisting of the purchase and maintenance of the two cars, payment of tuition fees, travel expenses, and the credit card purchases involving groceries, dry goods and books, which certainly inured to the benefit not only of the two children, but their mother (petitioner) as well. It held that respondents act of deferring the monthly support adjudged in CA-G.R. SP No. 84740 was not contumacious as it was anchored on valid and justifiable reasons. Respondent said he just wanted the issue of whether to deduct his advances be settled first in view of the different interpretation by the trial court of the appellate courts decision in CA-G.R. SP No. 84740. It also noted the lack of contribution from the petitioner in the joint obligation of spouses to support their children. Petitioner filed a motion for reconsideration but it was denied by the CA. Hence, this petition raising the following errors allegedly committed by the CA: I. THE HONORABLE COURT ERRED IN NOT FINDING RESPONDENT GUILTY OF INDIRECT CONTEMPT. II. THE HONORABLE COURT ERRED IN ORDERING THE DEDUCTION OF THE AMOUNT OF PHP2,482,348.16 PLUS 946,465.64, OR A TOTAL OF PHP3,428,813.80 FROM THE CURRENT TOTAL SUPPORT IN ARREARS OF THE RESPONDENT TO THE PETITIONER AND THEIR CHILDREN.
17
The main issue is whether certain expenses already incurred by the respondent may be deducted from the total support in arrears owing to petitioner and her children pursuant to the Decision dated April 12, 2005 in CA-G.R. SP No. 84740. The pertinent provision of the Family Code of the Philippines provides: Article 194. Support comprises everything indispensable for sustenance, dwelling, clothing, medical attendance, education and transportation, in keeping with the financial capacity of the family. The education of the person entitled to be supported referred to in the preceding paragraph shall include his schooling or training for some profession, trade or vocation, even beyond the age of majority. Transportation shall include expenses in going to and from school, or to and from place of work. (Emphasis supplied.) Petitioner argues that it was patently erroneous for the CA to have allowed the deduction of the value of the two cars and their maintenance costs from the support in arrears, as these items are not indispensable to the sustenance of the family or in keeping them alive. She points out that in the Decision in CA-G.R. SP No. 84740, the CA already considered the said items which it deemed chargeable to respondent, while the monthly support pendente lite (P115,000.00) was fixed on the basis of the documentary evidence of respondents alleged income from various businesses and petitioners testimony that she needed P113,000.00 for the maintenance of the household and other miscellaneous expenses excluding the P135,000.00 medical attendance expenses of petitioner. Respondent, on the other hand, contends that disallowing the subject deductions would result in unjust enrichment, thus making him pay for the same obligation twice. Since petitioner and the children resided in one residence, the groceries and dry goods purchased by the children using respondents credit card, totalling P594,151.58 for the period September 2003 to June 2005 were not consumed by the children alone but shared with their mother. As to the Volkswagen Beetle and BMW 316i respondent bought for his daughter Angelli Suzanne Lua and Daniel Ryan Lua, respectively, these, too, are to be considered advances for support, in keeping with the financial capacity of the family. Respondent stressed that being children of parents belonging to the upper-class society, Angelli and Daniel Ryan had never in their entire life commuted from one place to another, nor do they eat their meals at "carinderias". Hence, the cars and their maintenance are indispensable to the childrens day-to-day living, the value of which were properly deducted from the arrearages in support pendente lite ordered by the trial and appellate courts. As a matter of law, the amount of support which those related by marriage and family relationship is generally obliged to give each other shall be in proportion to the resources or means of the giver and to the needs of the recipient. Such support comprises everything indispensable for sustenance, dwelling, clothing, medical attendance, education and transportation, in keeping with the financial capacity of the family.
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Upon receipt of a verified petition for declaration of absolute nullity of void marriage or for annulment of voidable marriage, or for legal separation, and at any time during the proceeding, the court, motu proprio or upon verified application of any of the parties, guardian or designated custodian, may temporarily grant support pendente lite prior to the rendition of judgment or final order. Because of its provisional nature, a court does not need to delve fully into the merits of the case before it can settle an application for this relief. All that a court is tasked to do is determine the kind and amount of evidence which may suffice to enable it to justly resolve the application. It is enough that the facts be established by affidavits or other documentary evidence appearing in the record.
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In this case, the amount of monthly support pendente lite for petitioner and her two children was determined after due hearing and submission of documentary evidence by the parties. Although the amount fixed by the trial court was reduced on appeal, it is clear that the monthly support pendente lite of P115,000.00 ordered by the CA was intended primarily for the sustenance of petitioner and her children, e.g., food, clothing, salaries of drivers and house helpers, and other household expenses. Petitioners testimony also mentioned the cost of regular therapy for her scoliosis and vitamins/medicines. ATTY. ZOSA: xxxx Q How much do you spend for your food and your two (2) children every month? A Presently, Sir? ATTY. ZOSA: Yes. A For the food alone, I spend not over P40,000.00 to P50,000.00 a month for the food alone. xxxx ATTY. ZOSA: Q What other expenses do you incur in living in that place? A The normal household and the normal expenses for a family to have a decent living, Sir. Q How much other expenses do you incur? WITNESS: A For other expenses, is around over a P100,000.00, Sir. Q Why do you incur that much amount? A For the clothing for the three (3) of us, for the vitamins and medicines. And also I am having a special therapy to straighten my back because I am scoliotic. I am advised by the Doctor to hire a driver, but I cannot still afford it now. Because my eyesight is not reliable for driving. And I still need another househelp to accompany me whenever I go marketing because for my age, I cannot carry anymore heavy loads. xxxx ATTY. FLORES: xxxx Q On the issue of the food for you and the two (2) children, you mentioned P40,000.00 to P50,000.00? A Yes, for the food alone. Q Okay, what other possible expenses that you would like to include in those two (2) items? You mentioned of a driver, am I correct? A Yes, I might need two (2) drivers, Sir for me and my children. Q Okay. How much would you like possibly to pay for those two (2) drivers? A I think P10,000.00 a month for one (1) driver. So I need two (2) drivers. And I need another househelp. Q You need another househelp. The househelp nowadays would charge you something between P3,000.00 to P4,000.00. Thats quite A Right now, my househelp is receiving P8,000.00. I need another which I will give a compensation of P5,000.00.
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Q Other than that, do you still have other expenses? A My clothing. COURT: How about the schooling for your children? WITNESS: A The schooling is shouldered by my husband, Your Honor. COURT: Everything? A Yes, Your Honor. xxxx ATTY. FLORES: Q Madam witness, let us talk of the present needs. x x x. What else, what specific need that you would like to add so I can tell my client, the defendant. WITNESS: A I need to have an operation both of my eyes. I also need a special therapy for my back because I am scoliotic, three (3) times a week. Q That is very reasonable. [W]ould you care to please repeat that? A Therapy for my scoliotic back and then also for the operation both of my eyes. And I am also taking some vitamins from excel that will cost P20,000.00 a month. Q Okay. Lets have piece by piece. Have you asked the Doctor how much would it cost you for the operation of that scoliotic? A Yes before because I was already due last year. Before, this eye will cost P60,000.00 and the other eyes P75,000.00. Q So for both eyes, you are talking of P60,000.00 plus P75,000.00 is P135,000.00? A Yes. xxxx Q You talk of therapy? A Yes. Q So how much is that? A Around P5,000.00 a week.
21
As to the financial capacity of the respondent, it is beyond doubt that he can solely provide for the subsistence, education, transportation, health/medical needs and recreational activities of his children, as well as those of petitioner who was then unemployed and a full-time housewife. Despite this, respondents counsel manifested during the same hearing that respondent was willing to grant the amount of only P75,000.00 as monthly support pendente lite both for the children and petitioner as spousal support. Though the receipts of expenses submitted in court unmistakably show how much respondent lavished on his children, it appears that the matter of spousal support was a different matter altogether. Rejecting petitioners prayer for P500,000.00 monthly support and finding the P75,000.00 monthly support offered by respondent as insufficient, the trial court fixed the monthly support pendente lite at P250,000.00. However, since the supposed income in millions of respondent was based merely on the allegations of petitioner in her complaint and registration documents of various corporations which respondent insisted are owned not by him but his parents and siblings, the CA reduced the amount of support pendente lite to P115,000.00, which ruling was no longer questioned by both parties. Controversy between the parties resurfaced when respondents compliance with the final CA decision indicated that he deducted from the total amount in arrears (P2,645,000.00) the sum of P2,482,348.16, representing the value of the two cars for the children, their cost of maintenance and advances given to petitioner and his children. Respondent explained that the deductions were made consistent with the fallo of the CA Decision in CA-G.R. SP No. 84740 ordering him to pay support pendente lite in arrears less the amount supposedly given by him to
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petitioner as her and their two childrens monthly support. The following is a summary of the subject deductions under Compliance dated June 28, 2005, duly supported by receipts : Car purchases for Angelli Suzanne and Daniel Ryan Car Maintenance fees of Angelli Suzanne Php1,350,000.00 613,472.86 51,232.50
22
Credit card statements of Daniel Ryan - 348,682.28 Car Maintenance fees of Daniel Ryan 118,960.52 Php2,482,348.16 After the trial court disallowed the foregoing deductions, respondent filed a motion for reconsideration further asserting that the following amounts, likewise with supporting receipts, be considered as additional advances given to petitioner and the children : Medical expenses of Susan Lim-Lua Dental Expenses of Daniel Ryan Travel expenses of Susan Lim-Lua Credit card purchases of Angelli Suzanne Salon and travel expenses of Angelli Suzanne Php 42,450.71 11,500.00 14,611.15 408,891.08 87,112.70
23
School expenses of Daniel Ryan Lua 260,900.00 Cash given to Daniel and Angelli TOTAL GRAND TOTAL 121,000.00 Php 946,465.64 Php 3,428,813.80
The CA, in ruling for the respondent said that all the foregoing expenses already incurred by the respondent should, in equity, be considered advances which may be properly deducted from the support in arrears due to the petitioner and the two children. Said court also noted the absence of petitioners contribution to the joint obligation of support for their children. We reverse in part the decision of the CA. Judicial determination of support pendente lite in cases of legal separation and petitions for declaration of nullity or annulment of marriage are guided by the following provisions of the Rule on Provisional Orders
24
Sec. 2. Spousal Support.In determining support for the spouses, the court may be guided by the following rules: (a) In the absence of adequate provisions in a written agreement between the spouses, the spouses may be supported from the properties of the absolute community or the conjugal partnership. (b) The court may award support to either spouse in such amount and for such period of time as the court may deem just and reasonable based on their standard of living during the marriage. (c) The court may likewise consider the following factors: (1) whether the spouse seeking support is the custodian of a child whose circumstances make it appropriate for that spouse not to seek outside employment; (2) the time necessary to acquire sufficient education and training to enable the spouse seeking support to find appropriate employment, and that spouses future earning capacity; (3) the duration of the marriage; (4) the comparative financial resources of the spouses, including their comparative earning abilities in the labor market; (5) the needs and obligations of each spouse; (6) the contribution of each spouse to the marriage, including services rendered in home-making, child care, education, and career building of the other spouse; (7) the age and health of the spouses; (8) the physical and emotional conditions of the spouses; (9) the ability of the supporting spouse to give support, taking into account that spouses earning capacity, earned
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and unearned income, assets, and standard of living; and (10) any other factor the court may deem just and equitable. (d) The Family Court may direct the deduction of the provisional support from the salary of the spouse. Sec. 3. Child Support.The common children of the spouses shall be supported from the properties of the absolute community or the conjugal partnership. Subject to the sound discretion of the court, either parent or both may be ordered to give an amount necessary for the support, maintenance, and education of the child. It shall be in proportion to the resources or means of the giver and to the necessities of the recipient. In determining the amount of provisional support, the court may likewise consider the following factors: (1) the financial resources of the custodial and non-custodial parent and those of the child; (2) the physical and emotional health of the child and his or her special needs and aptitudes; (3) the standard of living the child has been accustomed to; (4) the non-monetary contributions that the parents will make toward the care and well-being of the child. The Family Court may direct the deduction of the provisional support from the salary of the parent. Since the amount of monthly support pendente lite as fixed by the CA was not appealed by either party, there is no controversy as to its sufficiency and reasonableness. The dispute concerns the deductions made by respondent in settling the support in arrears. On the issue of crediting of money payments or expenses against accrued support, we find as relevant the following rulings by US courts. In Bradford v. Futrell, appellant sought review of the decision of the Circuit Court which found him in arrears with his child support payments and entered a decree in favor of appellee wife. He complained that in determining the arrearage figure, he should have been allowed full credit for all money and items of personal property given by him to the children themselves, even though he referred to them as gifts. The Court of Appeals of Maryland ruled that in the suit to determine amount of arrears due the divorced wife under decree for support of minor children, the husband (appellant) was not entitled to credit for checks which he had clearly designated as gifts, nor was he entitled to credit for an automobile given to the oldest son or a television set given to the children. Thus, if the children remain in the custody of the mother, the father is not entitled to credit for money paid directly to the children if such was paid without any relation to the decree. In the absence of some finding of consent by the mother, most courts refuse to allow a husband to dictate how he will meet the requirements for support payments when the mode of payment is fixed by a decree of court. Thus he will not be credited for payments made when he unnecessarily interposed himself as a volunteer and made payments direct to the children of his own accord. Wills v. Baker, 214 S. W. 2d 748 (Mo. 1948); Openshaw v. Openshaw, 42 P. 2d 191 (Utah 1935). In the latter case the court said in part: "The payments to the children themselves do not appear to have been made as payments upon alimony, but were rather the result of his fatherly interest in the welfare of those children. We do not believe he should be permitted to charge them to plaintiff. By so doing he would be determining for Mrs. Openshaw the manner in which she should expend her allowances. It is a very easy thing for children to say their mother will not give them money, especially as they may realize that such a plea is effective in attaining their ends. If she is not treating them right the courts are open to the father for redress."
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In Martin, Jr. v. Martin, the Supreme Court of Washington held that a father, who is required by a divorce decree to make child support payments directly to the mother, cannot claim credit for payments voluntarily made directly to the children. However, special considerations of an equitable nature may justify a court in crediting such payments on his indebtedness to the mother, when such can be done without injustice to her. The general rule is to the effect that when a father is required by a divorce decree to pay to the mother money for the support of their dependent children and the unpaid and accrued installments become judgments in her favor, he cannot, as a matter of law, claim credit on account of payments voluntarily made directly to the children. Koon v. Koon, supra; Briggs v. Briggs, supra. However, special considerations of an equitable nature may justify a court in crediting such payments on his indebtedness to the mother, when that can be done without injustice to her. Briggs v. Briggs, supra. The courts are justifiably reluctant to lay down any general rules as to when such credits may be allowed.
28
Here, the CA should not have allowed all the expenses incurred by respondent to be credited against the accrued support pendente lite. As earlier mentioned, the monthly support pendente lite granted by the trial court was intended primarily for food, household expenses such as salaries of drivers and house helpers, and also petitioners scoliosis therapy sessions. Hence, the value of two expensive cars bought by respondent for his children plus their maintenance cost, travel expenses of petitioner and Angelli, purchases through credit card of items other than groceries and dry goods (clothing) should have been disallowed, as these bear no relation to the judgment awarding support pendente lite. While it is true that the dispositive portion of the executory decision in CA-G.R. SP No. 84740
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ordered herein respondent to pay the support in arrears "less than the amount supposedly given by petitioner to the private respondent as her and their two (2) children monthly support," the deductions should be limited to those basic needs and expenses considered by the trial and appellate courts. The assailed ruling of the CA allowing huge deductions from the accrued monthly support of petitioner and her children, while correct insofar as it commends the generosity of the respondent to his children, is clearly inconsistent with the executory decision in CA-G.R. SP No. 84740. More important, it completely ignores the unfair consequences to petitioner whose sustenance and well-being, was given due regard by the trial and appellate courts. This is evident from the March 31, 2004 Order granting support pendente lite to petitioner and her children, when the trial court observed: While there is evidence to the effect that defendant is giving some forms of financial assistance to his two (2) children via their credit cards and paying for their school expenses, the same is, however, devoid of any form of spousal support to the plaintiff, for, at this point in time, while the action for nullity of marriage is still to be heard, it is incumbent upon the defendant, considering the physical and financial condition of the plaintiff and the overwhelming capacity of defendant, to extend support unto the latter. x x x
29
On appeal, while the Decision in CA-G.R. SP No. 84740 reduced the amount of monthly support fixed by the trial court, it nevertheless held that considering respondents financial resources, it is but fair and just that he give a monthly support for the sustenance and basic necessities of petitioner and his children. This would imply that any amount respondent seeks to be credited as monthly support should only cover those incurred for sustenance and household expenses.
1 av v p hi 1
In the case at bar, records clearly show and in fact has been admitted by petitioner that aside from paying the expenses of their two (2) childrens schooling, he gave his two (2) children two (2) cars and credit cards of which the expenses for various items namely: clothes, grocery items and repairs of their cars were chargeable to him which totaled an amount of more than One Hundred Thousand (P100,000.00) for each of them and considering that as testified by the private respondent that she needs the total amount of P113,000.00 for the maintenance of the household and other miscellaneous expenses and considering further that petitioner can afford to buy cars for his two (2) children, and to pay the expenses incurred by them which are chargeable to him through the credit cards he provided them in the amount of P100,000.00 each, it is but fair and just that the monthly support pendente lite for his wife, herein private respondent, be fixed as of the present in the amount of P115,000.00 which would be sufficient enough to take care of the household and other needs. This monthly support pendente lite to private respondent in the amount of P115,000.00 excludes the amount of One Hundred ThirtyFive (P135,000.00) Thousand Pesos for medical attendance expenses needed by private respondent for the operation of both her eyes which is demandable upon the conduct of such operation. Likewise, this monthly support of P115,000.00 is without prejudice to any increase or decrease thereof that the trial court may grant private respondent as the circumstances may warrant i.e. depending on the proof submitted by the parties during the proceedings for the main action for support. The amounts already extended to the two (2) children, being a commendable act of petitioner, should be continued by him considering the vast financial resources at his disposal.
30
Accordingly, only the following expenses of respondent may be allowed as deductions from the accrued support pendente lite for petitioner and her children:
1wp hi 1
Medical expenses of Susan Lim-Lua Dental Expenses of Daniel Ryan Credit card purchases of Angelli
Php 42,450.71 11,500.00 365,282.20
(Groceries and Dry Goods) 228,869.38 Credit Card purchases of Daniel Ryan TOTAL Php 648,102.29
As to the contempt charge, we sustain the CA in holding that respondent is not guilty of indirect contempt. Contempt of court is defined as a disobedience to the court by acting in opposition to its authority, justice, and dignity. It signifies not only a willful disregard or disobedience of the courts order, but such conduct which tends to bring the authority of the court and the administration of law into disrepute or, in some manner, to impede the due administration of justice. purpose.
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To constitute contempt, the act must be done willfully and for an illegitimate or improper
33
The good faith, or lack of it, of the alleged contemnor should be considered.
Respondent admittedly ceased or suspended the giving of monthly support pendente lite granted by the trial court, which is immediately executory. However, we agree with the CA that respondents act was not contumacious considering that he had not been remiss in actually providing for the needs of his children. It is a matter of record that respondent continued shouldering the full cost of their education and even beyond their basic necessities in keeping with the familys social status. Moreover, respondent believed in good faith that the trial and appellate courts, upon equitable grounds, would allow him to offset the substantial amounts he had spent or paid directly to his children.
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Respondent complains that petitioner is very much capacitated to generate income on her own because she presently maintains a boutique at the Ayala Center Mall in Cebu City and at the same time engages in the business of lending money. He also claims that the two children have finished their education and are now employed in the family business earning their own salaries. Suffice it to state that the matter of increase or reduction of support should be submitted to the trial court in which the action for declaration for nullity of marriage was filed, as this Court is not a trier of facts. The amount of support may be reduced or increased proportionately according to the reduction or increase of the necessities of the recipient and the resources or means of the person obliged to support.
34
As we held in Advincula v. Advincula
35
Judgment for support does not become final. The right to support is of such nature that its allowance is essentially provisional; for during the entire period that a needy party is entitled to support, his or her alimony may be modified or altered, in accordance with his increased or decreased needs, and with the means of the giver. It cannot be regarded as subject to final determination.
36
WHEREFORE, the petition is PARTLY GRANTED. The Decision dated April 20, 2006 of the Court of Appeals in CA-G.R. SP Nos. 01154 and 01315 is hereby MODIFIED to read as follows: "WHEREFORE, judgment is hereby rendered: a) DISMISSING, for lack of merit, the case of Petition for Contempt of Court with Damages filed by Susan Lim Lua against Danilo Y. Lua with docket no. SP. CA-G.R. No. 01154; b) GRANTING IN PART Danilo Y. Lua's Petition for Certiorari docketed as SP. CA-G.R. No. 01315. Consequently, the assailed Orders dated 27 September 2005 and 25 November 2005 of the Regional Trial Court, Branch 14, Cebu City issued in Civil Case No. CEB-29346 entitled "Susan Lim Lua versus Danilo Y. Lua, are hereby NULLIFIED and SET ASIDE, and instead a new one is entered: i. ORDERING the deduction of the amount of Php 648,102.29 from the support pendente lite in arrears of Danilo Y. Lua to his wife, Susan Lim Lua and their two (2) children; ii. ORDERING Danilo Y. Lua to resume payment of his monthly support of PhP115,000.00 pesos starting from the time payment of this amount was deferred by him subject to the deduction aforementioned. iii. DIRECTING the immediate execution of this judgment. SO ORDERED." No pronouncement as to costs. SO ORDERED. MARTIN S. VILLARAMA, JR. Associate Justice WE CONCUR: MARIA LOURDES P. A. SERENO Chief Justice Chairperson TERESITA J. LEONARDO-DE CASTRO Associate Justice BIENVENIDO L. REYES Associate Justice CERTIFICATION Pursuant to Section 13, Article V III of the 1987 Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's DIVISION MARIA LOURDES P. A. SERENO Chief Justice LUCAS P. BERSAMIN Associate Justice
Footnotes
1
Rollo, pp. 39-48. Penned by Associate Justice Enrico A. Lanzanas with Associate Justices Pampio A.
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Abarintos and Apolinario D. Bruselas, Jr. concurring.

2
Id. at 50-51. Penned by Associate Justice Pampio A. Abarintos with Associate Justices Agustin S. Dizon and Priscilla Baltazar-Padilla concurring. Records, p. 1. Id. at 16. Id. at 46-B to 50. Id. at 49. Id. at 55-59. Id. at 71.
3 4 5 6 7 8 9
Rollo, pp. 61-69. Penned by Associate Justice Mercedes Gozo-Dadole with Associate Justices Pampio A. Abarintos and Ramon M. Bato, Jr. concurring. Id. at 68-69. Id. at 70-72. Id. at 186-189. Records, pp. 265-266. Rollo, pp. 193-196. Id. at 196. Id. at 47. Id. at 18.
10 11 12 13 14 15 16 17 18
FAMILY CODE, Art. 201; Lacson v. Lacson, 531 Phil. 277, 287 (2006), citing Baltazar v. Serfino, No. L-17315, July 31, 1965, 14 SCRA 820, 821. Sec. 1, RULE ON PROVISIONAL ORDERS (A.M. No. 02-11-12-SC) which took effect on March 15, 2003); REVISED RULES OF COURT, Rule 61, Secs. 1 & 4.
20 19
Mangonon v. Court of Appeals, 526 Phil. 505, 517 (2006), citing Ramos v. Court of Appeals, 150-A Phil. 996, 1001 (1972). TSN, March 31, 2004, pp. 6-11. Rollo, pp. 74-185. Records, pp. 278-329; CA Decision dated April 20, 2006, rollo p. 44. A.M. No. 02-11-12-SC. 225 Md. 512; 171 A.2d 493; 1961 Md. LEXIS 686. Id. at 519; id. at 496-497. 59 Wn.2d 468; 368 P.2d 170; 1962 Wash. LEXIS 419. Id. at 473; id. at 172-173. Records, p. 48. Rollo, p. 68.
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31
Bank of the Philippine Islands v. Calanza, G.R. No. 180699, October 13, 2010, 633 SCRA 186, 192-193, citing Lu Ym v. Mahinay, G.R. No. 169476, June 16, 2006, 491 SCRA 253, 261-262; Lee v. Regional Trial Court of Quezon City, Br. 85, 496 Phil. 421, 433 (2005).
Lorenzo Shipping Corporation v. Distribution Management Association of the Philippines, G.R. No. 155849, August 31, 2011, 656 SCRA 331, 350.
33 34 35 36
32
Id. at 349. Montefalcon v. Vasquez, G.R. No. 165016, June 17, 2008, 554 SCRA 513, 528; FAMILY CODE, Art. 202. No. L-19065, January 31, 1964, 10 SCRA 189, 191. As cited in Lam v. Chua, 469 Phil. 852, 860-861 (2004).
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G.R. No.

Today is Wednesday, November 13, 2013

G.R. No. 125027

Urgent Motion to Discharge Attachment was deemed submitted for resolution.

G.R. No. 125027

this Court clarified the actual time when jurisdiction

G.R. No. 125027

additional forum, not as limiting venue to the specified place.

G.R. No. 125027

personality that could enable it to file a suit in court. suit in court.

In fact, there is no law authorizing sole proprietorships to file a

The law does not vest a separate

as a special and affirmative defense. Petitioner also continued to

before this Court. We thus hold that the dismissal of

G.R. No. 125027

G.R. No. 125027

Langkaan Realty Development, Inc. v. UCPB, 347 SCRA 542 (2000).

The Lawphil Project - Arellano Law Foundation

G.R. No. 139941

Today is Wednesday, November 13, 2013

G.R. No. 139941

over the L/C, citing as grounds therefor the following:

G.R. No. 139941

G.R. No. 139941

These foreign judgments constitute res

G.R. No. 139941

G.R. No. 139941

G.R. No. 139941

This recourse, however, was not availed of by petitioner, as noted by the

G.R. No. 139941

Sta. Ines Melale Forest

G.R. No. 139941

G.R. No. 156580

Today is Wednesday, November 13, 2013

G.R. No. 156580

G.R. No. 156580

(Citations omitted, italics supplied)

G.R. No. 156580

(Citations omitted, italics supplied) Second Issue: Taking in Bad Faith

On leave. Rollo, pp. 8-21.

G.R. No. 156580

The Lawphil Project - Arellano Law Foundation

G.R. No. 154106

Today is Wednesday, November 13, 2013

G.R. No. 154106

G.R. No. 154106

where we ruled that:

G.R. No. 154106

the true intent of the parties.

This was what the petitioners wanted done.

G.R. No. 154106

G.R. No. 154106

G.R. No. 166759

Today is Wednesday, November 13, 2013

dated January 18, 2005, denying petitioners motion for

G.R. No. 166759

denying the motion,

of even date, the dispositive portion of which reads:

G.R. No. 166759

but it was denied in the Order

dated March 3, 2004.

under Rule 65 of the Rules of Court, docketed as CA-G.R. SP No.