Rule 59- Receivership As a Receiver, Orendain instituted a central
security system and unified the sixty-five
G.R. No. 131683 June 19, 2000
JESUS LIM ARRANZA; LORENZO CINCO;
QUINTIN TAN; JOSE ESCOBAR; ELBERT
FRIEND; CLASSIC HOMES VILLAGE
ASSOCIATION, INC.; BF NORTHWEST
HOMEOWNERS' ASSOCIATION, INC.; and
UNITED BF HOMEOWNERS'
ASSOCIATIONS, INC., petitioners,
vs.
B.F. HOMES, INC. AND THE HONORABLE
COURT OF APPEALS, respondent.
DAVIDE, JR., C.J.:
For resolution in this petition is the issue of
whether it is the Securities and Exchange
Commission (SEC) or the Housing and Land
Use Regulatory Board (HLURB) that has
jurisdiction over a complaint filed by
subdivision homeowners against a subdivision
developer that is under receivership for
specific performance regarding basic
homeowners' needs such as water, security
and open spaces.
Respondent BF Homes, Inc. (BFHI), is a
domestic corporation engaged in developing
subdivisions and selling residential lots. One
of the subdivisions that respondent developed
was the BF Homes Parañaque Subdivision,
which now sprawls across not only a portion
of the City of Parañaque but also those of the
adjoining cities of Las Piñas and Muntinlupa.
When the Central Bank ordered the closure of
Banco Filipino, which had substantial
investments in respondent BFHI, respondent
filed with the SEC a petition for rehabilitation
and a declaration that it was in a state of
suspension of payments. On 18 March 1985,
the SEC placed respondent under a
management committee. Upon that
committee's dissolution on 2 February 1988,
the SEC appointed Atty. Florencio B.
Orendain as a Receiver, and approved a
Revised Rehabilitation Plan.
homeowners' associations into an umbrella
homeowners' association called United BF
Homeowners' Associations, Inc. (UBFHAI),
which was thereafter incorporated with the
Home Insurance and Guaranty Corporation
(HIGC).1
In 1989, respondent, through Orendain,
turned over to UBFHAI control and
administration of security in the subdivision,
the Clubhouse and the open spaces along
Concha Cruz Drive. Through the Philippine
Waterworks and Construction Corporation
(PWCC), respondent's managing company for
waterworks in the various BF Homes
subdivisions, respondent entered into an
agreement with UBFHAI for the annual
collection of community assessment fund and
for the purchase of eight new pumps to
replace the over-capacitated pumps in the old
wells.
On 7 November 1994, Orendain was relieved
by the SEC of his duties as a Receiver, and a
new Board of Receivers consisting of eleven
members of respondent's Board of Directors
was appointed for the implementation of
Phases II and III of respondent's
rehabilitation.2 The new Board, through its
Chairman, Albert C. Aguirre, revoked the
authority given by Orendain to use the open
spaces at Concha Cruz Drive and to collect
community assessment funds; deferred the
purchase of new pumps; recognized BF
Parañaque Homeowners' Association, Inc.,
(BFPHAI) as the representative of all
homeowners in the subdivision; took over the
management of the Clubhouse; and deployed
its own security guards in the subdivision.
Consequently, on 5 July 1995, herein
petitioners filed with the HLURB a class suit
"for and in behalf of the more than 7,000
homeowners in the subdivision" against
respondent BFHI, BF Citiland Corporation,
PWCC and A.C. Aguirre Management
Corporation "to enforce the rights of
purchasers of lots" in BF Homes Parañaque3 .
They alleged that:
 1. The forty (40) wells, mostly located
at different elevations in Phases 3 and
4 of the subdivision and with only
twenty-seven (27) productive, are the
sources of the inter-connected water
system in the 765-hectare subdivision;
2. There is only one drainage and
sewer system;
3. There is one network of roads;
4. There are eight (8) entry and exit
points to the subdivision and from
three (3) municipalities (now cities), a
situation obtaining in this subdivision
only and nowhere else;
5. There was no security force for the
entire subdivision until 1988;
6. There are not enough open spaces
in the subdivision in relation to the
total land area developed; and
whatever open spaces are available
have been left unkempt, undeveloped
and neglected;
7. There are no zoning guidelines
which resulted in unregulated
constructions of structures and the
proliferation of business
establishments in residential areas;
and
8. The BFPHAI became "moribund"
sometime in 1980 on account of its
failure to cope with the delivery of
basic services except for garbage
collection.
Petitioners raised "issues" on the following
basic needs of the homeowners: rights-of-
way; water; open spaces; road and perimeter
wall repairs; security; and the interlocking
corporations that allegedly made it convenient
for respondent "to compartmentalize its
obligations as general developer, even if all of
these are hooked into the water, roads,
drainage and sewer systems of the
subdivision."4 Thus, petitioner prayed that:
A. A cease-and-desist order from
selling any of the properties within the
subdivision be issued against
respondent BFHI, BF Citi, ACAMC,
and/or any and all corporations acting
as surrogates/alter-egos, sister
companies of BFHI and/or its
stockholders until the warranties,
facilities and infrastructures shall have
been complied with or put up (and) the
advances of UBFHAI reimbursed,
otherwise, to cease and desist from
rescinding valid agreements or
contracts for the benefit of
complainants, or committing acts
diminishing, duliting or otherwise
depriving complainants of their rights
under the law as homeowners;
B. After proper proceedings the bond
or deposit put up by respondent BF
Homes, Inc. be forfeited in favor of
petitioners;
C. Respondent BFHI be ordered to
immediately turnover the roads, open
spaces, and other facilities built or put
up for the benefit of lot
buyers/homeowners in the subdivision
to complainant UBFHAI as
representative of all homeowners in
BF Homes Parañaque, free from all
liens, encumbrances, and taxes in
arrears;
D. If the open spaces in the
subdivision are not sufficient as
required by law, to impose said
penalties/sanctions against BFHI or
the persons responsible therefor;
E. Order the reimbursement of
advances made by UBFHAI;
F. Turn over all amounts which may
have been collected from users' fees
of the stop of open space at Concha
Cruz Drive;
G. Order PWCC to effect and restore
24-hour water supply to all residents
by adding new wells replacing over-
 capacitated pumps and otherwise
improving water distribution facilities;
H. Order PWCC to continue collecting
the Community Development Fund
and remit all amounts collected to
UBFHAI;
I. Order BFHI to immediately withdraw
the guards at the clubhouse and the 8
entry and exit points to the
subdivision, this being an act of
usurpation and blatant display of brute
force;
J. The appropriate penalties/sanctions
be imposed against BF Citi, ACAMC
or any other interlocking corporation of
BFHI or any of its principal
stockholders in respect of the
diminution/encroaching/violation on
the rights of the residents of the
subdivision to enjoy/avail of the
facilities/services due them; and
K. Respondents be made to pay
attorney's fees and the costs of this
suit.5
In its answer, respondent claimed that (a) it
had complied with its contractual obligations
relative to the subdivision's development; (b)
respondent could not be compelled to abide
by agreements resulting from Orendain's ultra
vires acts; and (c) petitioners were precluded
from instituting the instant action on account
of Section 6(c) of P.D. No. 902-A providing for
the suspension of all actions for claims
against a corporation under receivership.
Respondent interposed counterclaims and
grayed for the dismissal of the complaint.6
Petitioners thereafter filed an urgent motion
for a cease-and-desist/status quo order.
Acting on this motion, HLURB Arbiter Charito
M. Bunagan issued a 20-day temporary
restraining order to avoid rendering nugatory
and ineffectual any judgment that could be
issued in the case;7 and subsequently, an
Order granting petitioners' prayer for
preliminary injunction was issued
enjoining and restraining respondent
BF Homes, Incorporated, its agents
and all persons acting for and in its
behalf from taking over/administering
the Concha Garden Row, from issuing
stickers to residents and non-residents
alike for free or with fees, from
preventing necessary improvements
and repairs of infrastructures within
the authority and administration of
complainant UBFHAI, and from
directly and indirectly taking over
security in the eight (8) exit points of
the subdivision or in any manner
interfering with the processing and
vehicle control in subject gates and
otherwise to remove its guards from
the gates upon posting of a bond of
One Hundred Thousand Pesos
(P100,000.00) which bond shall
answer for whatever damages
respondents may sustain by reason of
the issuance of the writ of preliminary
injunction if it turns out that
complainant is not entitled thereto.8
Respondent thus filed with the Court of
Appeals a petition for certiorari and prohibition
docketed as CA-G.R. SP No. 39685. It
contended in the main that the HLURB acted
"completely without jurisdiction" in issuing the
Order granting the writ of preliminary
injunction considering that inasmuch as
respondent is under receivership, the "subject
matter of the case is one exclusively within the
jurisdiction of the SEC."9
On 28 November 1997, the Court of Appeals
rendered a decision 10 annulling and setting
aside the writ of preliminary injunction issued
by the HLURB. It ruled that private
respondents' action may properly be regarded
as a "claim" within the contemplation of PD
No. 902-A which should be placed on equal
footing with those of petitioners' other creditor
or creditors and which should be filed with the
Committee of Receivers. In any event,
pursuant to Section 6(c) of P.D. No. 902-A
and SEC's Order of 18 March 1985,
petitioners' action against respondent, which
is under receivership, should be suspended.
Hence, petitioners filed the instant petition for
review on certiorari. On 26 January 1998, the
Court issued a temporary restraining order
(TRO) enjoining respondent, its officers,
representatives and persons acting upon its
orders from
(a) taking over/administering the
Concha Garden Row; (b) issuing
stickers to residents and non-residents
alike for free or with fees; (c)
preventing necessary improvements
and repairs of infrastructures within
the authority and administration of
complainant United BF Homeowners'
Association, Inc. (UBFHAI); (d) directly
and indirectly taking over security in
the eight (8) exit points of all of BF
Homes Parañaque Subdivision or in
any manner interfering with the
processing and vehicle control in the
subject gates; and (e) otherwise to
remove its guards from the gates. . . .
. 11
Respondent's motion to lift the TRO was
denied.
At the hearing on 1 July 1998, the primary
issue in this case was defined as "which body
has jurisdiction over petitioners' claims, the
Housing and Land Use Regulatory Board
(HLURB) or the Securities and Exchange
Commission (SEC)?" The collateral issue to
be addressed is "assuming that the HLURB
has jurisdiction, may the proceedings therein
be suspended pending the outcome of the
receivership before the SEC?"
For their part, petitioners argue that the
complaint referring to rights of way, water,
open spaces, road and perimeter wall repairs,
security and respondent's interlocking
corporations that facilitated circumvention of
its obligation involves unsound real estate
practices. The action is for specific
performance of a real estate developers'
obligations under P.D. No. 957, and the relief
sought is revocation of the subdivision
project's registration certificate and license to
sell. These issues are within the jurisdiction of
the HLURB. Even if respondent is under
receivership, its obligations as a real estate
developer under P.D. No. 957 are not
suspended. Section 6(c) of P.D. No. 902-A, as
amended by P.D. No. 957, on "suspension of
all actions for claims against corporations"
refers solely to monetary claims which are but
incidental to petitioner's complaints against
BFHI, and if filed elsewhere than the HLURB,
it would result to splitting causes of action.
Once determined in the HLURB, however, the
monetary awards should be submitted to the
SEC as established claims. Lastly, the acts
enjoined by the HLURB are not related to the
disposition of BFHI's assets as a corporation
undergoing its final phase of rehabilitation.
On the other hand, respondent asserts that
the SEC, not the HLURB, has jurisdiction over
petitioners' complaint based on the contracts
entered into by the former receiver. The SEC,
being the appointing authority, should be the
one to take cognizance of controversies
arising from the performance of the receiver's
duties. Since respondent's properties are
under the SEC's custodia legis, they are
exempt from any court process.
Jurisdiction is the authority to hear and
determine a cause — the right to act in a
case. 12 It is conferred by law and not by mere
administrative policy of any court or
tribunal. 1 It is determined by the averments of
the complaint and not by the defense
contained in the answer. 14 Hence, the
jurisdictional issue involved here shall be
determined upon an examination of the
applicable laws and the allegations of
petitioners' complaint before the HLURB.
Presidential Decree No. 957 (The Subdivision
and Condominium Buyers' Protective Decree)
was issued on 12 July 1976 in answer to the
popular call for correction of pernicious
practices of subdivision owners and/or
developers that adversely affected the
interests of subdivision lot buyers. Thus, one
of the "whereas clauses" of P.D. No. 957
states:
WHEREAS, numerous reports reveal
that many real estate subdivision
owners, developers, operators, and/or
sellers have reneged on their
representations and obligations to
 provide and maintain properly
subdivision roads, drainage,
sewerage, water systems, lighting
systems, and other similar basic
requirements, thus endangering the
health and safety of home and lot
buyers. . . .
Sec. 3 of P.D. No. 957 empowered the
National Housing Authority (NHA) with the
"exclusive jurisdiction to regulate the real
estate trade and business." On 2 April 1978,
P.D. No. 1344 was issued to expand the
jurisdiction of the NHA to include the following:
Sec. 1. In the exercise of its functions
to regulate the real estate trade and
business and in addition to its powers
provided for in Presidential Decree
No. 957, the National Housing
Authority shall have exclusive
jurisdiction to hear and decide cases
of the following nature:
A. Unsound real estate
business practices;
B. Claims involving refund and
any other claims filed by
subdivision lot or condominium
unit buyer against the project
owner, developer, dealer,
broker or salesman; and
C. Cases involving specific
performance of contractual
and statutory obligations filed
by buyers of subdivision lot or
condominium unit against the
owner, developer, dealer,
broker or salesman.
(Emphasis supplied.)
Thereafter, the regulatory and quasi-judicial
functions of the NHA were transferred to the
Human Settlements Regulatory Commission
(HSRC) by virtue of Executive Order No. 648
dated 7 February 1981. Section 8 thereof
specifies the functions of the NHA that were
transferred to the HSRC including the
authority to hear and decide "cases on
unsound real estate business practices;
claims involving refund filed against project
owners, developers, dealers, brokers or
salesmen and cases of specific performance."
Executive Order No. 90 dated 17 December
1986 renamed the HSRC as the Housing and
Land Use Regulatory Board (HLURB). 15
The boom in the real estate business all over
the country resulted in more litigation between
subdivision owners/developers and lot buyers
with the issue of the jurisdiction of the NHA or
the HLURB over such controversies as
against that of regular courts. In the
cases 16 that reached this Court, the ruling has
consistently been that the NHA or the HLURB
has jurisdiction over complaints arising from
contracts between the subdivision developer
and the lot buyer or those aimed at compelling
the subdivision developer to comply with its
contractual and statutory obligations to make
the subdivision a better place to live in.
Notably, in Antipolo Realty Corporation
v. National Housing Authority, 17 one of the
issues raised by the homeowners was the
failure of Antipolo Realty to develop the
subdivision in accordance with its
undertakings under the contract to sell. Such
undertakings include providing the subdivision
with concrete curbs and gutters, underground
drainage system, asphalt paved roads,
independent water system, electrical
installation with concrete posts, landscaping
and concrete sidewalks, developed park or
amphitheater and 24-hour security guard
service. The Court held that the complaint
filed by the homeowners was within the
jurisdiction of the NHA.
1avvphi1
Similarly, in Alcasid v. Court of Appeals, 18 the
Court ruled that the HLURB, not the RTC, has
jurisdiction over the complaint of lot buyers for
specific performance of alleged contractual
and statutory obligations of the defendants, to
wit, the execution of contracts of sale in favor
of the plaintiffs and the introduction in the
disputed property of the necessary facilities
such as asphalting and street lights.
In the case at bar, petitioners' complaint is for
specific performance to enforce their rights as
purchasers of subdivision lots as regards
rights of way, water, open spaces, road and
perimeter wall repairs, and security.
Indisputably then, the HLURB has jurisdiction
over the complaint.
The fact that respondent is under receivership
does not divest the HLURB of that
jurisdiction. A receiver is a person appointed
1aw phil
by the court, or in this instance, by a quasi-
judicial administrative agency, in behalf of all
the parties for the purpose of preserving and
conserving the property and preventing its
possible destruction or dissipation, if it were
left in the possession of any of the parties. 19 It
is the duty of the receiver to administer the
assets of the receivership estate; and in the
management and disposition of the property
committed to his possession, he acts in a
fiduciary capacity and with impartiality towards
all interested persons. 20 The appointment of a
receiver does not dissolve a corporation, nor
does it interfere with the exercise of its
corporate rights. 21 In this case where there
appears to be no restraints imposed upon
respondent as it undergoes rehabilitation
receivership, 22 respondent continues to exist
as a corporation and hence, continues or
should continue to perform its contractual and
statutory responsibilities to petitioners as
homeowners.
Receivership is aimed at the preservation of,
and at making more secure, existing rights; it
cannot be used as an instrument for the
destruction of those rights. 2
No violation of the SEC order suspending
payments to creditors would result as far as
petitioners' complaint before the HLURB is
concerned. To reiterate, what petitioners seek
to enforce are respondent's obligations as a
subdivision developer. Such claims are
basically not pecuniary in nature although it
could incidentally involve monetary
considerations. All that petitioners' claims
entail is the exercise of proper subdivision
management on the part of the SEC-
appointed Board of Receivers towards the end
that homeowners shall enjoy the ideal
community living that respondent portrayed
they would have when they bought real estate
from it.
Neither may petitioners be considered as
having "claims" against respondent within the
context of the following proviso of Section 6
(c) of P.D. No. 902-A, as amended by P.D.
Nos. 1653, 1758 and 1799, to warrant
suspension of the HLURB proceedings:
[U]pon appointment of a management
committee, rehabilitation receiver,
board or body, pursuant to this
Decree, all actions for claims against
corporations, partnerships or
associations under management or
receivership pending before any court,
tribunal, board or body shall be
suspended accordingly. (Emphasis
supplied.)
In Finasia Investments and Finance
Corporation v. Court of Appeals, 24 this Court
defined and explained the term "claim" in
Section 6 (c) of P.D. No. 902-A, as amended,
as follows:
We agree with the public respondent
that the word "claim" as used in Sec. 6
(c) of P.D. 902-A, as amended, refers
to debts or demands of a pecuniary
nature. It means "the assertion of a
right to have money paid. It is used in
special proceedings like those before
administrative court, on insolvency."
(Emphasis supplied.)
Hence, in Finansia Investments, the Court
held that a civil case to nullify a special power
of attorney because the principal's signature
was forged should not be suspended upon the
appointment of a receiver of the mortgagee to
whom a person mortgaged the property
owned by such principal. The Court ruled that
the cause of action in that civil case "does not
consist of demand for payment of debt or
enforcement of pecuniary liability." It added:
It has nothing to do with the purpose
of Section 6 (c) of P.D. 902-A, as
amended, which is to prevent a
creditor from obtaining an advantage
or preference over another with
respect to action against corporation,
partnership, association under
 management or receivership and to
protect and preserve the rights of
party litigants as well as the interest of
the investing public or creditors.
Moreover, a final verdict on the
question of whether the special power
of attorney in question is a forgery or
not will not amount to any preference
or advantage to Castro who was not
shown to be a creditor of FINASIA. 25
In this case, under the complaint for specific
performance before the HLURB, petitioners
do not aim to enforce a pecuniary demand.
Their claim for reimbursement should be
viewed in the light of respondent's alleged
failure to observe its statutory and contractual
obligations to provide petitioners a "decent
human settlement" and "ample opportunities
for improving their quality of life." 26 The
HLURB, not the SEC, is equipped with the
expertise to deal with that matter.
On the other hand, the jurisdiction of the SEC
is defined by P.D. No. 902-A, as amended, as
follows:
Sec. 5. In addition to the regulatory
and adjudicative functions of the
Securities and Exchange Commission
over corporations, partnerships and
other forms of associations registered
with it as expressly granted under
existing laws and decrees, it shall
have original and exclusive jurisdiction
to hear and decide cases involving:
a) Devices or schemes
employed by or any act of the
board of directors, business
associates, its officers or
partners, amounting to fraud
and misrepresentation which
may be detrimental to the
interest of the public and/or of
the stockholders, partners,
members of associations or
organizations registered with
the Commission;
b) Controversies arising out of
intra-corporate or partnership
relations, between and among
stockholders, members of
associates; between any or all
of them and the corporation,
partnership or association of
which they are stockholders,
members, or associates,
respectively; and between
such corporation, partnership
or association and the State
insofar as it concerns their
individual franchise or right to
exist as such entity; [and]
c) Controversies in the
election or appointments of
directors, trustees, officers, or
managers of such corporation,
partnerships or associations.
For the SEC to acquire jurisdiction over any
controversy under these provisions, two
elements must be considered: (1) the status
or relationship of the parties; and (2) the
nature of the question that is the subject of
their controversy. 27 The first element requires
that the controversy must arise "out of intra-
corporate or partnership relations between
and among stockholders, members or
associates; between any or all of them and
the corporation, partnership or association of
which they are stockholders, members or
associates, respectively; and between such
corporation, partnership or association and
the State in so far as it concerns their
individual franchises." 28 Petitioners are not
stockholders, members or associates of
respondent. They are lot buyers and now
homeowners in the subdivision developed by
the respondent.
The second element requires that the dispute
among the parties be intrinsically connected
with the regulation or the internal affairs of the
corporation, partnership or association. 29 The
controversy in this case is remotely related to
the "regulation" of respondent corporation or
to respondent's "internal affairs."
It should be stressed that the main concern in
this case is the is the issue of jurisdiction over
petitioners' complaint against respondent for
specific performance. P.D. No. 902-A, as
amended, defines the jurisdiction of the SEC;
while P.D. No. 957, as amended, delineates
that of the HLURB. These two quasi-
judicial agencies exercise functions that are
distinct from each other. The SEC has
authority over the operation of all kinds of
corporations, partnerships or associations with
the end in view of protecting the interests of
the investing public and creditors. On the
other hand, the HLURB has jurisdiction over
matters relating to observance of laws
governing corporations engaged in the
specific business of development of
subdivisions and condominiums. The HLURB
and the SEC being bestowed with distinct
powers and functions, the exercise of those
functions by one shall not abate the
performance by the other of its own functions.
As respondent puts it, "there is no
contradiction between P.D. No. 902-A and
P.D. No. 957." 30
What complicated the jurisdictional issue in
this case is the fact that petitioners are
primarily praying for the retention of
respondent's obligations under the
Memorandum of Agreement that Receiver
Orendain had entered into with them but
which the present Board of Receivers had
revoked.
In Figueroa v. SEC, 31 this Court has declared
that the power to overrule or revoke the
previous acts of the management or Board of
Directors of the entity under receivership is
within a receiver's authority, as provided for by
Section 6 (d) (2) of P.D. No. 902-A. Indeed,
when the acts of a previous receiver or
management committee prove
disadvantageous or inimical to the
rehabilitation of a distressed corporation, the
succeeding receiver or management
committee may abrogate or cast aside such
acts. However, that prerogative is not
absolute. It should be exercised upon due
consideration of all pertinent and relevant laws
when public interest and welfare are involved.
The business of developing subdivisions and
corporations being imbued with public interest
and welfare, any question arising from the
exercise of that prerogative should be brought
to the proper agency that has technical know-
how on the matter.
P.D. No. 957 was promulgated to encompass
all questions regarding subdivisions and
condominiums. It is aimed at providing for an
appropriate government agency, the HLURB,
to which all parties aggrieved in the
implementation of its provisions and the
enforcement of contractual rights with respect
to said category of real estate may take
recourse. Nonetheless, the powers of the
HLURB may not in any way be deemed as in
derogation of the SEC's authority. P.D. Nos.
902-A and 957, as far as both are concerned
with corporations, are laws in pari materia.
P.D. No. 902-A relates to all corporations,
while P.D. No. 957 pertains to corporations
engaged in the particular business of
developing subdivisions and condominiums.
Although the provisions of these decrees on
the issue of jurisdiction appear to collide when
a corporation engaged in developing
subdivisions and condominiums is under
receivership, the same decrees should be
construed as far as reasonably possible to be
in harmony with each other to attain the
purpose of an expressed national policy. 32
Hence, the HLURB should take jurisdiction
over petitioners' complaint because it pertains
to matters within the HLURB's competence
and expertise. The HLURB should view the
issue of whether the Board of Receivers
correctly revoked the agreements entered into
between the previous receiver and the
petitioners from the perspective of the
homeowners' interests, which P.D. No. 957
aims to protect. Whatever monetary awards
the HLURB may impose upon respondent are
incidental matters that should be addressed to
the sound discretion of the Board of Receivers
charged with maintaining the viability of
respondent as a corporation. Any controversy
that may arise in that regard should then be
addressed to the SEC.
It is worth noting that the parties agreed at the
1 July 1998 hearing that should the HLURB
establish and grant petitioners' claims, the
same should be referred to the SEC. Thus,
the proceedings at the HLURB should not be
suspended notwithstanding that respondent is
still under receivership. The TRO that this
Court has issued should accordingly continue
until such time as the HLURB shall have
resolved the controversy. The present
members of the Board of Receivers should be
reminded of their duties and responsibilities as
an impartial Board that should serve the
interests of both the homeowners and
respondent's creditors. Their interests,
financial or otherwise, as members of
respondent's Board of Directors should be
circumscribed by judicious and unbiased
performance of their duties and
responsibilities as members of the Board of
Receivers. Otherwise, respondent's full
rehabilitation may face a bleak future. Both
parties should never give full rein to acts that
could prove detrimental to the interests of the
homeowners and eventually jeopardize
respondent's rehabilitation.
WHEREFORE, the questioned Decision of the
Court of Appeals is hereby REVERSED and
SET ASIDE. This case is REMANDED to the
Housing and Land Use Regulatory Board for
continuation of proceedings with dispatch as
the Securities and Exchange Commission
proceeds with the rehabilitation of respondent
BF Homes, Inc., through the Board of
Receivers. Thereafter, any and all monetary
claims duly established before the HLURB
shall be referred to the Board of Receivers for
proper disposition and thereafter, to the SEC,
if necessary. No costs.
SO ORDERED.
Puno, Kapunan, Pardo and Ynares-Santiago,
JJ., concur.
SECOND DIVISION
G.R. No. 125008 June 19,
1997
COMMODITIES STORAGE &
ICE PLANT CORPORATION,
SPOUSES VICTOR &
JOHANNAH
TRINIDAD, Petitioners, v. CO
URT OF APPEALS, JUSTICE
PEDRO A.. RAMIREZ,
CHAIRMAN and FAR EAST
BANK & TRUST
COMPANY, Respondents.
PUNO, J.:
In this petition for certiorari,
petitioner seeks to annul and
set aside the decision and
resolution of the Court of
Appeals 1 in CA-G.R. SP No.
36032 dismissing the complaint
in Civil Case No. 94-72076
before the Regional Trial Court,
Branch 9, Manila.
The facts show that in 1990,
petitioner spouses Victor and
Johannah Trinidad obtained a
loan of P31,000,000.00 from
respondent Far East Bank &
Trust Company to finance the
purchase of the Sta. Maria Ice
Plant & Cold Storage in Sta.
Maria, Bulacan. The loan was
secured by a mortgage over
the ice plant and the land on
which the ice plant stands.
Petitioner spouses failed to pay
their loan. The bank
extrajudicially foreclosed the
mortgage and the ice plant was
sold by public bidding on March
22, 1993. Respondent bank
was the highest bidder. It
registered the certificate of
sale on September 22, 1993
and later took possession of
the property.
On November 22, 1993,
petitioner spouses filed Civil
Case No. 956-M-93 against
respondent bank before the
Regional Trial Court, Malolos,
Bulacan for reformation of the
loan agreement, annulment of
the foreclosure sale and
damages. 2 The trial court
dismissed the complaint for
petitioners' failure to pay the
docket fees. The dismissal was
without prejudice to refiling of
the complaint. 3
On October 28, 1994,
petitioners filed Civil Case No.
94-72076 against respondent
bank before the Regional Trial
Court, Branch 9, Manila for
damages, accounting and fixing
of redemption period. 4 As a
provisional remedy, petitioners
filed on November 16, 1994 an
"Urgent Petition for
Receivership." They alleged
that respondent bank took
possession of the ice plant
forcibly and without notice to
them; that their occupation
resulted in the destruction of
petitioners' financial and
accounting records making it
impossible for them to pay
their employees and creditors;
the bank has failed to take care
of the ice plant with due
diligence such that the plant
has started emitting ammonia
and other toxic refrigerant
chemicals into the atmosphere
and was posing a hazard to the
health of the people in the
community; the spouses'
attention had been called by
several people in the barangay
who threatened to inform the
Department of Environment
and Natural Resources should
they fail to take action.
Petitioners thus prayed for the
appointment of a receiver to
save the ice plant, conduct its
affairs and safeguard its
records during the pendency of
the case. 5
Instead of an answer,
respondent bank filed on
November 25, 1994 a "Motion
to Dismiss and Opposition to
Plaintiff's Petition for
Receivership." It alleged that
the complaint states no cause
of action and that venue had
been improperly laid. It also
alleged that petitioners failed
to pay the proper docket fees
and violated the rule on forum-
shopping. 6
In an order dated December
13, 1994, the trial court
granted the petition for
receivership and appointed
petitioners' nominee, Ricardo
Pesquera, as receiver. The
order disposed as follows:
WHEREFORE, premises
considered the Urgent Petition
for Receivership is GRANTED
and Mr. Ricardo Pesquera to
whose appointment no
opposition was raised by the
defendant and who is an ice
plant contractor, maintainer
and installer is appointed
receiver. Accordingly, upon the
filing and approval of the bond
of TWO MILLION
(P2,000,000.00) pesos which
shall answer for all damages
defendant may sustain by
reason of the receivership, said
Ricardo Pesquera is authorized
to assume the powers of a
receiver as well as the
obligation as provided for in
Rule 59 of the Rules of Court
after taking his oath as such
receiver.
SO ORDERED. 7
Respondent bank assailed this
order before the Court of
Appeals on a petition
for certiorari. On January 11,
1996, the Court of Appeals
annulled the order for
receivership and dismissed
petitioners' complaint for
improper venue and lack of
cause of action. The dispositive
portion of the decision reads:
WHEREFORE, the petition
for certiorari is GRANTED.
Accordingly, the assailed order
dated December 13, 1994
(Annex A, petition) is
ANNULLED and SET ASIDE and
respondent's complaint in Civil
Case No. 94-72076 in the
respondent court (Annexes F,
petition; 4, comment), is
DISMISSED. Costs against
respondents except the court.
SO ORDERED.
Reconsideration was denied on
May 23, 1996. 8 Hence, this
petition.
Section 1 of Rule 59 of the
Revised Rules of Court
provides that:
Sec. 1. When and by whom
receiver appointed. - One or
more receivers of the property,
real or personal, which is the
subject of the action, may be
appointed by the judge of the
Court of First Instance in which
the action is pending, or by a
Justice of the Court of Appeals
or of the Supreme Court, in the
following cases:
(a) When the corporation has
been dissolved, or is insolvent,
or is in imminent danger of
insolvency, or has forfeited its
corporate rights;
(b) When it appears from the
complaint or answer, and such
other proof as the judge may
require, that the party applying
for the appointment of receiver
has an interest in the property
or fund which is the subject of
the action, and that such
property or fund is in danger of
being lost, removed or
materially injured unless a
receiver be appointed to guard
and preserve it;
(c) When it appears in an
action by the mortgagee for
the foreclosure of a mortgage
that the property is in danger
of being wasted or materially
injured, and that its value is
probably insufficient to
discharge the mortgage debt,
or that the parties have so
stipulated in the contract of
mortgage;
(d) After judgment, to preserve
the property during the
pendency of the appeal, or to
dispose of it according to the
judgment, or to aid execution
when the execution has been
returned unsatisfied or the
judgment debtor refuses to
apply his property in
satisfaction of the judgment, or
otherwise carry the judgment
into effect;
(e) Whenever in other cases it
appears that the appointment
of a receiver is the most
convenient and feasible means
of preserving, administering, or
disposing of the property in
litigation.
A receiver of real or personal
property, which is the subject
of the action, may be
appointed by the court when it
appears from the pleadings or
such other proof as the judge
may require, that the party
applying for such appointment
has (1) an actual interest in it;
and (2) that (a) such property
is in danger of being lost,
removed or materially injured;
or (b) whenever it appears to
be the most convenient and
feasible means of preserving or
administering the property in
litigation. 9
A receiver is a person
appointed by the court in
behalf of all the parties to the
action for the purpose of
preserving and conserving the
property in litigation and
prevent its possible destruction
or dissipation, if it were left in
the possession of any of the
parties. 10 The appointment of
a receiver is not a matter of
absolute right. It depends upon
the sound discretion of the
court 11 and is based on facts
and circumstances of each
particular case. 12
Petitioners claim that the
appointment of a receiver is
justified under Section 1 (b) of
Rule 59. They argue that the
ice plant which is the subject of
the action was in danger of
being lost, removed and
materially injured because of
the following "imminent perils":
6.1 Danger to the lives, health
and peace of mind of the
inhabitants living near the Sta.
Maria Ice Plant;
6.2 Drastic action or sanctions
that could be brought against
the plaintiff by affected third
persons, including workers who
have claims against the
plaintiff but could not be paid
due to the numbing manner by
which the defendant took the
Sta. Maria Ice Plant;
6.3 The rapid reduction of the
Ice Plant into a scrap heap
because of evident
incompetence, neglect and
vandalism. 13
A petition for receivership
under Section 1 (b) of Rule 59
requires that the property or
fund which is the subject of the
action must be in danger of
loss, removal or material injury
which necessitates protection
or preservation. The guiding
principle is the prevention of
imminent danger to the
property. If an action by its
nature, does not require such
protection or reservation, said
remedy cannot be applied for
and granted. 14
In the instant case, we do not
find the necessity for the
appointment of a receiver.
Petitioners have not sufficiently
shown that the Sta. Maria Ice
Plant is in danger of
disappearing or being wasted
and reduced to a "scrap heap."
Neither have they proven that
the property has been
materially injured which
necessitates its protection and
preservation. 15 In fact, at the
hearing on respondent bank's
motion to dismiss, respondent
bank, through counsel,
manifested in open court that
the leak in the ice plant had
already been remedied and
that no other leakages had
been reported since. 16 This
statement has not been
disputed by petitioners.
At the time the trial court
issued the order for
receivership of the property,
the problem had been
remedied and there was no
imminent danger of another
leakage. Whatever danger
there was to the community
and the environment had
already been contained.
The "drastic sanctions" that
may be brought against
petitioners due to their inability
to pay their employees and
creditors as a result of "the
numbing manner by which
[respondent bank] took the ice
plant" does not concern the ice
plant itself. These claims are
the personal liabilities of
petitioners themselves. They
do not constitute "material
injury" to the ice plant.
Moreover, the receiver
appointed by the court appears
to be a representative of
petitioners. Respondent bank
alleges that it was not aware
that petitioners nominated one
Mr. Pesquera as
receiver. 17 The general rule is
that neither party to a litigation
should be appointed as
receiver without the consent of
the other because a receiver
should be a person indifferent
to the parties and should be
impartial and
disinterested. 18 The receiver is
not the representative of any
of the parties but of all of them
to the end that their interests
may be equally protected with
the least possible
inconvenience and expense. 19
The power to appoint a
receiver must be exercised
with extreme caution. There
must be a clear showing of
necessity therefor in order to
save the plaintiff from grave
and irremediable loss or
damage. 20 It is only when the
circumstances so demand,
either because there is
imminent danger that the
property sought to be placed in
the hands of a receiver be lost
or because they run the risk of
being impaired, endeavouring
to avoid that the injury thereby
caused be greater than the one
sought to be avoided. 21
The Court of Appeals correctly
found that the trial court
gravely abused its discretion in
issuing the order for
receivership. The respondent
court, however, went further
and took cognizance of
respondent bank's motion to
dismiss. And finding merit in
the motion, it dismissed the
complaint. Petitioners now
claim that the respondent court
should have refrained from
ruling on the motion to dismiss
because the motion itself was
not before it. 22
Again, we reject petitioners'
contention. The motion to
dismiss is anchored on
improper venue, lack of cause
of action and forum-shopping.
We agree with the respondent
court that the question of
venue relates to the principal
action and is prejudicial to the
ancillary issue of receivership.
Although the grounds for
dismissal were not specifically
raised before the appellate
court, the said court may
consider the same since the
petition for receivership
depends upon a determination
thereof. 23
In their complaint, petitioners
prayed for the following:
WHEREFORE, in view of the
foregoing, it is respectfully
prayed that after trial on the
merits judgment be rendered:
1. Ordering the Defendant to
pay COMMODITIES actual and
compensatory damages in the
amount of PESOS: TWO
MILLION FIVE HUNDRED
THOUSAND and 00/100
(P2,500,000.00);
2 Ordering the Defendant to
pay Plaintiffs moral damages in
the amount of PESOS: TWO
MILLION and 00/100
(P2,000,000.00) to
compensate the Plaintiffs for
the anxiety and besmirched
reputation caused by the
unjust actuations of the
Defendant;
3. Ordering the Defendant to
pay Plaintiffs nominal and
exemplary damages in the
amount of PESOS: FIVE
HUNDRED THOUSAND and
00/100 (P500,000.00) to deter
the repetition of such unjust
and malicious actuations of the
Defendant;
4. In order to restore the legal
right of the Plaintiff
COMMODITIES to redeem its
foreclosed property, a right
which COMMODITIES has been
unjustly deprived of by the
malicious and bad faith
machinations of the Defendant,
compelling the Defendant to
produce the correct, lawful,
official and honest statements
of account and application of
payment. Concomitantly,
ordering the Defendant to
accept the redemption of the
foreclosed properties pursuant
to Rule 39 of the Revised Rules
of Court in conjunction with Act
3135, within the prescribed
period for redemption, said
period to commence from the
date of receipt by the Plaintiff
COMMODITIES of the correct,
lawful, official and honest
statements of account and
application of payments;
5. Ordering the Defendant to
pay attorney's fees in the
amount of PESOS: THREE
HUNDRED THOUSAND
(P300,000.00); and costs of
litigation.
Other reliefs and remedies just
and equitable under the
circumstances are likewise
prayed for. 24
Petitioners pray for two
remedies: damages and
redemption. The prayer for
damages is based on
respondent bank's forcible
occupation of the ice plant and
its malicious failure to furnish
them their statements of
account and application of
payments which prevented
them from making a timely
redemption. 25 Petitioners also
pray that respondent bank be
compelled to furnish them said
documents, and upon receipt
thereof, allow redemption of
the property. They ultimately
seek redemption of the
mortgaged property. This is
explicit in paragraph 4 of their
prayer.
An action to redeem by the
mortgage debtor affects his
title to the foreclosed property.
If the action is seasonably
made, it seeks to erase from
the title of the judgment or
mortgage debtor the lien
created by registration of the
mortgage and sale. 26 If not
made seasonably, it may seek
to recover ownership to the
land since the purchaser's
inchoate title to the property
becomes consolidated after
expiration of the redemption
period. 27 Either way,
redemption involves the title to
the foreclosed property. It is a
real action.
Section 2 of Rule 4 of the
Revised Rules of Court
provides:
Sec. 2. Venue in Courts of First
Instance. - (a) Real actions. -
Actions affecting title to, or for
recovery of possession, or for
partition or condemnation of,
or foreclosure of mortgage on,
real property, shall be
commenced and tried in the
province where the property or
any part thereof lies. 28
Where the action affects title to
the property, it should be
instituted in the Regional Trial
Court where the property is
situated. The Sta. Maria Ice
Plant & Cold Storage is located
in Sta. Maria, Bulacan. The
venue in Civil Case No. 94-
72076 was therefore laid
improperly.
Finally, there is no merit in
petitioners' claim that the
respondent bank is no longer
the real party in interest after
selling the ice plant to a third
person during the pendency of
the case. Section 20 of Rule 3
of the Revised Rules of Court
provides that in a transfer of
interest pending litigation, the
action may be continued by or
against the original party,
unless the court, upon motion,
directs the transferee to be
substituted in the action or
joined with the original party.
The court has not ordered the
substitution of respondent
bank.
IN VIEW WHEREOF, the
decision dated January 11,
1996 and resolution dated May
23, 1996 of the Court of
Appeals in CA-G.R. SP No.
36032 are affirmed. Costs
against petitioners.
SO ORDERED.
THIRD DIVISION
February 10, 2016
G.R. No. 174462
PHILIPPINE OVERSEAS
TELECOMMUNICATIONS CORPORATION
(POTC), PHILIPPINE COMMUNICATIONS
SATELLITE CORPORATION
(PHILCOMSAT), Petitioners,
vs.
SANDIGANBAYAN (3rd Division),
REPUBLIC OF THE PHILIPPINES
represented by PRESIDENTIAL
COMMISSION ON GOOD GOVERNMENT
(PCGG), Respondents.
DECISION
PEREZ, J.:
Before this Court is a Petition
for Certiorari filed under Rule 65 of the Rules
of Court, seeking to nullify the Resolution1 of
public respondent Sandiganbayan dated 20
October 2005 in Civil Case No. 0009,
entitled "Republic of the Philippines v. Jose L.
Africa, Manuel H Nieto, Jr., Ferdinand E.
Marcos, Imelda R. Marcos, Ferdinand R.
Marcos, Jr., Roberto S. Benedicto, Juan
Ponce Enrile, Potenciano Ilusorio." The
assailed Resolution denied petitioners'
Omnibus Motion, which sought the lifting of
the sequestration order issued by the
Presidential Commission on Good
Government (PCGG) on Philippine Overseas
Telecommunications Corporation (POTC) and
Philippine Communications Satellite
Corporation (PHILCOMSAT).
The antecedent facts are as follows:
However whoever reads recent Philippine
history, the EDSA People Power Revolution in
February 1986 is a singular political
phenomenon. Unprecedented, unique,
unnatural even, the revolution was unarmed.
But it succeeded. The unnatural means
yielded results natural to a revolution. The
vanquished and its acts had to yield to the
victors and its reactions. The new President
Corazon Cojuangco Aquino, exercising
revolutionary government powers issued
Executive Order Nos. 1 and 2, creating the
PCGG to recover properties amassed by the
unseated President Ferdinand Edralin
Marcos, Sr., his immediate family, relatives,
and cronies, "by taking undue advantage of
their public office and/or using their powers,
authority, influence, connections or
relationship,"2 and to sequester and take over
such properties. The present litigation is one
of the many offsprings of the revolutionary
orders.
Pursuant to Executive Order Nos. 1 and 2, on
14 March 1986, then PCGG Commissioner
Ramon A. Diaz issued a letter3 directing
Officer-In-Charge Carlos M. Ferrales to:
a. Sequester and immediately take over
POTC and PHILCO MS AT among others,
and
b. To freeze all 'withdrawals, transfers and/or
remittances under any type of deposit
accounts, trust accounts or placements.
POTC is a private corporation, which is a main
stockholder of PHILCOMSAT, a government-
owned and controlled corporation, which was
established in 1966 and was granted a
legislative telecommunications franchise by
virtue of Republic Act No. 5514, as amended
by Republic Act No. 7949, to establish and
operate international satellite communication
in the Philippines.
On 22 July 1987, the Office of the Solicitor
General (OSG), on behalf of the Republic of
the Philippines, filed a Complaint for
Reconveyance, Reversion, Accounting and
Restitution, and Damages, docketed as Civil
Case No. 0009, against Jose L. Africa,
Manuel H. Nieto, Jr., Ferdinand E. Marcos,
Imelda R. Marcos, Ferdinand R. Marcos, Jr.,
Roberto S. Benedicto, Juan Ponce Enrile, and
Potenciano Ilusorio (collectively hereinafter
referred to as "defendants"). The Complaint
averred the following:
(a) xxx through manipulations and dubious
arrangements with officers and members of
the Board of the National Development
Corporation (NDC), xxx purchased NDC's
shareholdings in the Philippine
Communications Satellite Corporation
(PHILCOMSA T), xxx under highly
unconscionable terms and conditions
manifestly disadvantageous to Plaintiff and
the Filipino people[;]
(b) xxx
(c) illegally manipulated, under the guise of
expanding the operations of PHILCOMSAT,
the purchase of major shareholdings of Cable
and Wireless Limited, a London-based
telecommunication company, in Eastern
Telecommunications Philippines, Incorporated
(ETPI), which shareholdings Defendants
Roberto S. Benedicto, Jose L. Africa and
Manuel H. Nieto, Jr., by themselves and
through corporations namely Polygon
Investors and Managers, Inc., Aeroco[m]
Investors and Managers Inc. and Universal
Molasses Corporation organized by them,
were beneficially held for themselves and for
Defendants Ferdinand E. Marcos and Imelda
R. Marcos;
(d) illegally effected, xxx contracts involving
corporations which they owned and/or
controlled, such as: The contract between
ETPI and Polygon Investors and Managers,
Inc., thereby ensuring effective control of ETPI
and advancing Defendants' scheme to
monopolize the telecommunications industry;
(e) acted in collaboration with each other as
dummies, nominees and/or agents of
Defendants Ferdinand E. Marcos, Imelda R.
Marcos and Ferdinand R. Marcos, Jr. in
several corporations, such as, the Mid-Pasig
Land Development Corporation and
Independent Realty Corporation which,
through manipulations by said Defendants,
appropriated a substantial portion of the
shareholdings in POTC-PHILCOMSA T held
by the late Honorio Poblador, Jr., Jose Valdez
and Francisco Reyes, thereby further 14. Polygon Investors & Managers, Inc.
advancing Defendants' scheme to monopolize
the telecommunications industry; 15. Universal Molasses Corp.

(f) received improper payments such as 16. Silangan Investors and Managers, Inc.
bribes, kickbacks or commissions from an
overprice in the purchase of equipment for 17. Masters Assets Corp., Class B
DOMSAT[:]4
18. Gainful Assets Corp., Class B
As alleged in the Complaint, through clever
schemes, the wealth that should go to the
19. Aerocom Investors and Managers, Inc.
coffers of the government, which should be
deemed acquired for the benefit of the
Republic, went to the defendants in their own 20. Luzon Stevedoring Corp.
individual accounts-some, however, through
conduits or corporations. The property 21. Amalgamated Motors (Philippines), Inc.
supposedly acquired illegally was specifically
set out in a list appended to the Complaint as 22. Philippine National Construction Corp.
Annex A. For instance, Jose L. Africa, one of
the defendants, allegedly channelled the ill- 23. Consolidated Tobacco Industries of the
gotten wealth in shares of stock in twenty (20) Philippines.5
corporations, to wit:
Another defendant, Manuel H. Nieto, Jr.,
1. Security Bank and Trust Company allegedly channelled ill-gotten wealth into
shares of stock in fifteen (15) corporations,
2. SBTC Trust, Class A, Account No. 2016 namely:

3. SBTC Trust, Class A, Account No. 2017 1. Ozamis Agricultural Development, Inc.

4. SBTC Trust, Class A, Account No. 2018 2. Eastern Telecommunications Philippines,

Inc.
5. Oceanic Wireless Network, Inc.
3. Rang'ay Farms
6. Bukidnon Sugar [Milling] Co., Inc.
4. Hacienda San Martin, Inc.
7. Domestic Satellite Phils., Inc.
5. Domestic Satellite
8. Northern Lines, Inc.
6. Bukidnon Sugar Milling Co., Inc.
9. Philippine Communications Satellite
Corp. 7. Sum1yday Farms Company Inc.

10. Far East Managers and Investors, Inc. 8. Silangan Investors & Managers, Inc.

11. Traders Royal Bank 9. Phil. Communications Satellite Corp.

12. Philippine Overseas 10. Oceanic Wireless Network, Inc.

Telecommunications Corp.
11. Integral Factors Corp.
13. Eastern Telecommunications Philippines,
Inc.
 12. Phil. Overseas Telecommunication[s]
Corp.
13. Aerocom Investors and Managers, Inc.
14. Del Carmen Investments, Inc.
15. Polygon Ventures & Land Development
Corp.6
As borne by the records,7 the following are the
stockholdings in POTC of the defendants in
Civil Case No. 0009:
e of) Jose L. Africa
el·H. Nieto, Jr.
nand and Imelda Marcos
nand Marcos, Jr.
e of) Roberto Benedicto 464 (revertedand
Ponce Enrile
e of) Potenciano Ilusorio 16 (reverted to the Republic)
Pursuant to its power to sequester and to
avoid further dissipation of the sequestered
properties, the PCGG appointed a
comptroller, who controlled the disbursement
of funds of POTC and PHILCOMSAT. At the
same time, in a Memorandum11 by the PCGG
dated 24 October 2000 to the Bangko Sentral
ng Pilipinas (BSP), the PCGG informed the
BSP that in all cash withdrawals, transfer of
funds, money market placements and
disbursements of POTC and PHILCOMSAT,
the approval of the PCGG appointed
comptroller is required. The Memorandum
was to be disseminated to all commercial
banks and other non-bank financial institutions
performing quasi-banking functions.
From Civil Case No. 0009 sprung other cases:
(1) Injunction; (2) Mandamus; and (3)
Approval of the Compromise Agreement.
On 1 March 1991, POTC and PHILCOMSAT
filed separate complaints for Injunction with
the Sandiganbayan against the Republic to
nullify and lift the sequestration order issued
against them for failure to file the necessary
judicial action against them within the period
prescribed by the Constitution and to enjoin
the PCGG from interfering with their
management and operation, which the
Sandiganbayan granted on 4 December 1991
through a Resolution.12
On 23 January 1995, however, this Court,
in Republic v. Sandiganbayan (First
Division), G.R. No. 96073, 240 SCRA 376,
January 23, 1995, reversed the
Sandiganbayan Resolution and ruled that the
filing of Complaint for Reconveyance,
Reversion, Accounting and Restitution, and
Damages, docketed
1 as Civil Case No. 0009,
was filed within the required 6-month period.
107
Besides the complaint
08 for Injunction, POTC
also filed a complaint for Mandamus against
the Republic before
09 the Sandiganbayan to
compel the PCGG to return POTC's Stock
to the Republic)
Transfer Book and Stock Certificate
Booklets. The case was docketed as Civil
Case No. 0148. 010
On 13 May 1993, the Sandiganbayan granted
the Mandamus, and the Decision became final
and executory.
On 28 June 1996, Atty. Potenciano Ilusorio
(Ilusorio), one of the defendants in the Civil
Case No. 0009, entered into a Compromise
Agreement with the Republic. Out of 5,400 or
40o/o of the shares of stock of POTC in the
names of Mid-Pasig Land Development
Corporation (MLDC) and Independent Realty
Corporation (IRC), the government recovered
4, 727 shares or 34.9% of the shares of stock.
Ilusorio, on the other hand, retained 673
shares or 5% of the shares of stock.
The Compromise Agreement was approved
by the Sandiganbayan in an Order13 dated 8
June 1998.
In opposition to the Compromise Agreement,
MLDC and IRC filed a Motion to Vacate the
Compromise Agreement on 16 August and 2
October 1998, respectively, which was denied
by the Sandiganbayan in a Resolution14 dated
20 December 1999. In the same Resolution,
the Sandiganbayan directed the Corporate
Secretary of POTC to issue within ten (10)
days from receipt thereof, the corresponding
Stock Certificate of the government. Pursuant
to the Order, 4,727 or 34.9% shares of stock
of POTC were transferred in the name of the
Republic of the Philippines.
Aggrieved, the PCGG, MLDC, and IRC filed
separate petitions before this Court to nullify
the Order of the Sandiganbayan approving the
Compromise Agreement, which this Court, on
15 June 2005, declared valid in Republic of
the Phils. v. Sandiganbayan, G.R. No. 141796
and 141804.
The Decision of the Court has long become
final and executory. The dispositive portion of
the Decision reads:
Having been sealed with court approval, the
Compromise Agreement has the force of res
judicata between the parties and should be
complied with in accordance with its terms.
Pursuant thereto, Victoria C. de los Reyes,
Corporate Secretary of the POTC, transmitted
to Mr. Magdangal B. Elma, then Chief
Presidential Legal Counsel and Chairman of
PCGG, Stock Certificate No. 131 dated
January 10, 2000, issued in the name of the
Republic of the Philippines, for 4, 727 POTC
shares. Thus, the Compromise Agreement
was partly implemented.
WHEREFORE, the instant petitions are
hereby DISMISSED.
SO ORDERED. (Citations omitted)
15
By virtue of the aforesaid Decision in Republic
of the Phils. v. Sandiganbayan, POTC and
PHILCOMSAT filed an Omnibus
Motion16 dated 28 February 2005, which
sought to nullify and/or discharge the
continued sequestration of POTC and
PHILCOMSAT and to declare null and void
the PCGG Memorandum to the BSP dated 24
October 2000.
On 20 October 2005, the Sandiganbayan
denied POTC and PHILCOMSAT' s Omnibus
Motion in the assailed Resolution.17 The
Motion for Reconsideration was likewise
denied in a Resolution18 dated 2 August 2006.
Hence, the present Petition, which raises the
following assignment of errors.
ASSIGNMENT OF ERRORS
(A)
The public respondent Sandiganbayan erred,
and in fact, gravely abused its discretion
amounting to lack or excess of jurisdiction,
when it ruled that the sequestration of POTC
and PHILCOMSAT is still necessary under the
present circumstances.
(B)
The public respondent Sandiganbayan erred,
and in fact, gravely abused its discretion
amounting to lack or excess of jurisdiction,
when it ruled that the appointment of a PCGG
fiscal agent in POTC and PHILCOMSAT is
justified under the present circumstances.
(C)
The public respondent Sandiganbayan erred,
and in fact, [gravely] abused its discretion
amounting to lack or excess of jurisdiction,
when it ruled that the sequestration order
against the petitioners is valid despite clear
fatal legal infirmities thereto.19
Arguments of POTC and PHILCOMSAT
POTC and PHILCOMSAT aver that the
Sandiganbayan committed grave abuse of
discretion amounting to lack or in excess of
jurisdiction by affirming the continued
sequestration of the shares, disregarding the
final and executory Decision and Resolution of
the Sandiganbayan dated 15 June 2005 and 7
September 2005 in Republic of the Phils. v.
Sandiganbayan, which already ruled on the
ownership of the subject shares. In the
aforesaid case, the Court upheld the
Compromise Agreement between the
government and Ilusorio. As a consequence,
the government is now the undisputed owner
of 34.9% of the shares of stock of the
sequestered corporations. Pursuant to the
final and executory Decision of the Court,
there is no longer need for the continued
sequestration of POTC and PHILCOMSAT.
POTC and PHILCO MS AT cited the
pronouncement of this Court in Bataan
Shipyard and Engineering Co.,
Inc. (BASECO) v. PCGG, which held that, as
the writ of sequestration is merely a
conservatory measure, thus, provisional and
temporary in character, the final adjudication
of the Court, which finally disposed the
sequestered shares, rendered the writ
unnecessary.
The POTC and PHILCOMSAT aver that while
the PCGG has the power to sequester, such
power is merely provisional. The POTC and
PHILCOMSAT cite Executive Order No. 1,
Section 3, which grants the PCGG the power
to take over sequestered properties
provisionally, such that, after the sequestered
properties have been finally disposed of by
the proper authorities, the writ shall be lifted.
Ruling of the Sandiganbayan
On the other hand, as it held, the
Sandiganbayan posits that the sequestration
of POTC and PHILCOMSAT should not be
lifted. The Sandiganbayan ruled in this wise:
Executive Order No. 1 declares that the
sequestration of property the acquisition if
which is suspect shall last until the
transactions leading to such acquisition
can be disposed of by the appropriate
authorities.
xxx.
Also, this Court had already ruled in the
Resolution dated April 1 2003 that there
was prima facie evidence that the herein
defendants have ill-gotten wealth consisting of
funds and properties and that POTC and
PHILCOMSAT, among others, were used in
acquiring and concealing their ill-gotten
wealth.20 (Emphasis supplied)
Hence, the main issue of whether or not the
continued sequestration is necessary.
Our Ruling
We rule in favor of POTC and PHILCOMSAT.
I
First, the threshold issue of whether or not the
failure to properly implead POTC and
PHILCOMSAT as defendants in Civil Case
No. 0009 is a fatal jurisdictional error.
Section 26, Article XVIII of the Constitution
mandates that if no judicial action has been
filed within six (6) months after the ratification
of the 1987 Constitution,21 the writ of
sequestration shall automatically be lifted. In
the case at bar, there was no judicial action
filed against POTC and PHILCOMSAT. There
has never been any appropriate judicial action
for reconveyance or recovery ever instituted
by the Republic against POTC and
PHILCOMSAT.
A perusal of the instant Complaint, docketed
as Civil Case No. 0009 dated 22 July 1987,
reveals that it was filed against private
individuals, namely, Jose L. Africa, Manuel H.
Nieto, Jr., Ferdinand E. Marcos, Imelda R.
Marcos, Ferdinand R. Marcos, Jr., Roberto S.
Benedicto, Juan Ponce Enrile, Potenciano
Ilusorio.22 Nowhere was POTC and
PHILCOMSAT impleaded in the Complaint.
The facts surrounding the present case
square with those in PCGG v. Sandiganbayan
(PCGG).23In PCGG, the complaint was filed
against private individuals, Nieto and Africa,
who are shareholders in Aerocom. The Court
ruled that the failure to implead Aerocom, the
corporation, violated the fundamental principle
that a corporation's legal personality is distinct
and separate from its stockholders, and that
mere annexation to the list of corporations
does not suffice. In the same manner
as PCGG, in the case at bar, the Complaint
was filed only against POTC and
PHILCOMSAT' s stockholders, who are
private individuals. Similarly, POTC and
PHILCOMSAT were also merely annexed to
the list of corporations and were not properly
impleaded in the case. The suit was against
its individual shareholders, herein
respondents, Jose L. Africa, Manuel H. Nieto,
Jr., Ferdinand E. Marcos, Imelda R. Marcos,
Ferdinand R. Marcos, Jr., Roberto S.
Benedicto, Juan Ponce Enrile, and
Potenciano Ilusorio.
Failure to implead POTC and PHILCOMSAT
is a violation of the fundamental principle that
a corporation has a legal personality distinct
and separate from its stockholders;24 that, the
filing of a complaint against a stockholder is
not ipso facto a complaint against the
corporation. Our pronouncement
in Aerocom is apt:
There is no existing sequestration to talk
about in this case, as the writ issued against
Aerocom, to repeat, is invalid for reasons
hereinbefore stated. Ergo, the suit in Civil
Case No. 0009 against Mr. Nieto and Mr.
Africa as shareholders in Aerocom is not and
cannot ipso facto be a suit against the
unimpleaded Aerocom itself without violating
the fundamental principle that a corporation
has a legal personality distinct and separate
from its stockholders. Such is the ruling laid
down in PCGG v. Jnterco reiterated anew in a
case of more recent vintage - Republic v.
Sandiganbayan, Sipalay Trading Corp. and
Allied Banking Corp. where this. Court,
speaking through Mr. Justice Ricardo J.
Francisco, hewed to the lone dissent of Mr.
Justice Teodoro R. Padilla in the very same
Republic v. Sandiganbayan case herein
invoked by the PCGG, to wit:
xxxx. (Emphasis supplied, citations omitted)
The basic tenets of fair play and principles of
justice dictate that a corporation, as a legal
entity distinct and separate from its
stockholders, must be impleaded as
defendants, giving it the opportunity to be
heard. The failure to properly implead POTC
and PHILCOMSAT not only violates the
latters' legal personality, but is repugnant on
POTC's and PHILCOMSAT's right to due
process. "[F]ailure to implead these
corporations as defendants and merely
annexing a list of such corporations to the
complaints is a violation of their right to due
process for it would in effect be disregarding
their distinct and separate personality without
a hearing."25 As already settled, a suit against
individual stockholders is not a suit against the
corporation.
Proceeding from the foregoing, as POTC and
PHILCOMSAT were not impleaded, there is
no longer any existing sequestration on POTC
and PHILCOMSAT.26 The sequestration order
over POTC and PHILCOMSAT was
automatically lifted six (6) months after the
ratification of the 1987 Constitution on 2
February 1987 for failure to implead POTC
and PHILCOMSAT in Civil Case No. 0009
before the Sandiganbayan or before any court
for that matter.27 To recite Section 26, Article
XVIII of the Constitution, if no judicial action
has been filed within six (6) months after the
ratification of the 1987 Constitution, the writ of
sequestration shall automatically be lifted.
Note must be made of the fact that we do not
here touch our previous holding that Civil
Case No. 0009 was filed within the 6-month
period. We now say that such
notwithstanding, and as shown by the facts on
record, the POTC and PHILCOMSA T were
not impleaded in the Civil Case.
II
For one more reason should this Petition be
granted. This concerns the shares in petitioner
corporations of Potenciano Ilusorio covered by
the Compromise Agreement entered into
between Ilusorio and PCGG, which was
upheld by the Court in Republic of the Phils. v.
Sandiganbayan, the decision in which is now
final and executory.
a. Sequestration is merely provisional
To effectively recover all ill-gotten wealth
amassed by former President Marcos and his
cronies, the President granted the PCGG,
among others, power and authority to
sequester, provisionally take over or freeze
suspected ill-gotten wealth. The subject of the
present case is the extent of PCGG's power to
sequester.
Sequestration is the means to place or cause
to be placed under the PCGG's possession or
control properties, building or office, including
business enterprises and entities, for the
purpose of preventing the destruction,
concealment or dissipation of, and otherwise
conserving and preserving the same until it
can be determined through appropriate
judicial proceedings, whether the property was
in truth "ill-gotten. "28
However, the power of the PCGG to
sequester is merely provisional.29 None other
than Executive Order No. 1, Section 3(c)
expressly provides for the provisional nature
of sequestration, to wit:
c) To provisionally take over in the public
interest or to prevent its disposal or
dissipation, business enterprises and
properties taken over by the government of
the Marcos Administration or by entities or
persons close to former President Marcos,
until the transactions leading to such
acquisition by the latter can be disposed of by
the appropriate authorities.30 (Emphasis
supplied).
In the notable case of Bataan Shipyard &
Engineering Co., Inc. (BASECO)
v. PCGG,31 the Court clearly pronounced that
sequestration is provisional, that such
sequestration shall last "until the transactions
leading to such acquisition xxx can be
disposed of by the appropriate authorities."32
Sequestration is akin to the provisional
remedy of preliminary attachment, or
receivership.33 Similarly, in attachment, the
property of the defendant is seized as a
security for the satisfaction of any judgment
that may be obtained, and not disposed of, or
dissipated, or lost intentionally or otherwise,
pending litigation.34 In a receivership, the
property is placed in the possession and
control of a receiver appointed by the court,
who shall conserve the property pending final
determination of ownership or right of
possession of the parties.35 In sequestration,
the same principle holds true. The
sequestered properties are placed under the
control of the PCGG, subject to the final
determination of whether the property was in
truth ill-gotten. We reiterate the disquisition of
this Court in BASECO:
By the clear terms of the law, the power of the
PCGG to sequester property claimed to be "ill-
gotten" means to place or cause to be placed
under its possession or control said property,
or any building or office wherein any such
property and any records pertaining thereto
may be found, including "business enterprises
and entities," - for the purpose of preventing
the destruction, concealment or dissipation of,
and otherwise conserving and preserving, the
same - until it can be determined, through
appropriate judicial proceedings, whether
the property was in truth "ill-
gotten," i.e., acquired through or as a result
of improper or illegal use of or the conversion
of funds belonging to the Government or any
of its branches, instrumentalities, enterprises,
banks or financial institutions, or by taking
undue advantage of official position, authority
relationship, connection or influence, resulting
in unjust enrichment of the ostensible owner
and grave damage and prejudice to the State.
xxx.36 (Emphasis supplied, citations omitted)
Sequestration is. a conservatory writ,37 which
purpose is to preserve properties in custodia
legis, lest the dissipation and concealment of
the "ill-gotten" wealth the former President
Marcos and his allies may resort to, pending
the final disposition of the properties.38 It is to
prevent the disappearance or dissipation
pending adjudgment of whether the
acquisition thereof by the apparent owner was
attended by some vitiating anomaly or
attended by some illegal means.39 Thus by no
means is it permanent in character. Upon the
final disposition of the sequestered properties,
the sequestration is renderedfunctus officio.
b. Ownership of the sequestered properties
have already been finally adjudged
As sequestration is a provisional remedy, a
transitional state of affairs, in order to prevent
the disappearance or dissipation of the
property pending the final disposition of the
property, the ultimate purpose of
sequestration is to bring an intended
permanent effect while the PCGG investigates
in pursuit of a judicial proceeding - to dispose
of the sequestered properties. Tersely put, the
ultimate purpose of sequestration is to recover
the sequestered properties in favor of the
government in case they tum out to be ill-
gotten. This function to dispose of the property
is reserved to the Sandiganbayan. Until the
Sandiganbayan determines whether the
property was in truth and in fact "ill- gotten",
the sequestration shall subsist. In case of a
finding that the sequestered properties are ill-
gotten, the property shall be returned to the
lawful owner, to the people, through the
government; otherwise, the sequestered
property shall be returned to the previous
owner.
Clearly, the purpose of sequestration is to
take control until the property is finally
disposed of by the proper
authorities. However, when such property
1âwphi1
has already been disposed of, such that the
owner has already been adjudged by the
Court, must the sequestration still subsist?
In the case at bar, the 34.9% ownership of the
sequestered property has been finally
adjudged; the ultimate purpose of
sequestration was already accomplished
when the ownership thereof was adjudged to
the government by this Court in Republic of
the Phils. v. Sandiganbayan. Moreover, the
said shares in the ownership of the
sequestered properties have reverted to the
Government. The government now owns
4,727 shares or 34.9% of the sequestered
corporations.
As the sequestered property has already been
disposed, the ultimate purpose of
sequestration has already been attained; the
evil sought to be prevented is no longer
present. Evidently, the sequestered property
which was already returned to the government
cannot anymore be dissipated or concealed.
Otherwise stated, the sequestered properties
need no longer be subject of reversion
proceedings because they have already
reverted back to the government. Thus, as the
sequestration is rendered functus officio, it is
merely ministerial upon the Sandiganbayan to
lift the same.
In fact, on 4 November 2010, the Department
of Justice (DOJ), which has supervision over
the PCGG, acknowledged the need to lift the
writ of sequestration in the DOJ Memorandum
LML-M-4K10-368.40 The pertinent portion of
the DOJ Memorandum reads:
It bears stressing that the PCGG, which is
now under the administrative supervision of
this Department pursuant to Executive Order
No. 643 s. 2007, has lost "authority" over the
shares of the Republic in POTC. This is due to
the fact that in PCGG Resolution No. 2007-
024 dated 4 September 2007, it was resolved
that the 4,727 shares of stock of POTC, which
is under the name of the Republic of the
Philippines, be now transferred to the
Department of Finance (DOF) for disposition.
xxx. (Boldface omitted)
xxxx
In view of the foregoing, you are hereby
directed to immediately implement PCGG
Resolution No. 2007-024 by immediately
transferring to the DOF, for its proper
disposition, POTC Stock Certificate No.
131. Corollary to this is the lifting of the
sequestration orders, if any, that covers
the 4,727 shares of stock of the Republic in
POTC. xxx.41 (Emphasis supplied)
Quite telling is this Court's unequivocal
pronouncement in a rather recent case
of Palm Avenue Holding Co., Inc. v.
Sandiganbayan,42which involved very similar
factual antecedents to those pertaining to
petitioners POTC and PHILCOMSAT.
"Section 26, Article XVIII of the 1987
Constitution provides:
xxxx
A sequestration or freeze order shall be
issued only upon showing of a prima
facie case. The order and the list of the
sequestered of frozen properties shall
forthwith be registered with the proper court.
For orders issued before the ratification of this
Constitution, the corresponding judicial action
or proceeding shall be filed within six months
from its ratification. For those issued after
such ratification, the judicial action or
proceeding shall be commenced within six
months from the issuance thereof.
The sequestration or freeze order is deemed
automatically lifted if no judicial action or
proceeding is commenced as herein
provided.1âwphi1
The aforesaid provision mandates the
Republic to file the corresponding judicial
action or proceedings within a six-month
period (from its ratification on February 2,
1987) in order to maintain sequestration, non-
compliance with which would result in the
automatic lifting of the sequestration order.
The Court's ruling in Presidential Commission
on Good Government v.
Sandiganbayan, which remains good law,
reiterates the necessity of the Republic to
actually implead corporations as defendants in
the complaint, out of recognition for their
distinct and separate personalities, failure to
do so would necessarily be denying such
entities their right to due process. Here, the
writ of sequestration issued against the assets
of the Palm Companies is not valid because
the suit in Civil Case No. 0035 against
Benjamin Romualdez as shareholder in the
Palm Companies is not a suit against the
latter. The Court has held, contrary to the
assailed Sandiganbayan Resolution in G .R.
No. 173082, that failure to implead these
corporations as defendants and merely
annexing a list of such corporations to the
complaints is a violation of their right to due
process for it would be, in effect, disregarding
their distinct and separate personality without
a hearing. Here, the Palm Companies were
merely mentioned as Item Nos. 47 and 48,
Annex A of the Complaint, as among the
corporations where defendant Romualdez
owns shares of stocks. Furthermore, while the
writ of sequestration was issued on October
27, 1986, the Palm Companies were
impleaded in the case only in 1997, or already
a decade from the ratification of the
Constitution in 1987, way beyond the
prescribed period.
The argument that the beneficial owner of
these corporations was, anyway, impleaded
as party-defendant can only be interpreted as
a tacit admission of the failure to file the
corresponding judicial action against said
corporations pursuant to the constitutional
mandate. Whether or not the impleaded
defendant in Civil Case No. 0035 is indeed the
beneficial owner of the Palm Companies is a
matter which the PCGG merely assumes and
still has to prove in said case.
The sequestration order issued against the
Palm Companies is therefore deemed
automatically lifted due to the failure of the
Republic to commence the proper judicial
action or to implead them therein within
the period under the
Constitution. However, the lifting of the writ
of sequestration will not necessarily be fatal to
the main case since the same does not ipso
facto mean that the sequestered properties
are, in fact, not illgotten. The effect of the
lifting of the sequestration will merely be the
termination of the government's role as
conservator. In other words, the PCGG may
no longer exercise administrative or
housekeeping powers, and its nominees may
no longer vote the sequestered shares to
enable them to sit in the corporate board of
the subject company.43 (Emphasis supplied,
citations omitted)
The glaring similarity in the circumstances
attendant in the case involving Palm
Companies with the situation of petitioners
POTC and PHILCOMSAT compels us to rule
in this case as we did in Palm case.
On a final note, while sequestration is the
means to revert the amassed ill-gotten wealth
back to the coffers of our government, we
must still safeguard the protection of property
rights from overzealousness. Sequestration as
statutorily and constitutionally recognized is
not permanent. It must be lifted when the law
and proven facts warrant, or when the
purpose has been accomplished.
WHEREFORE, the Petition is GRANTED. The
assailed Resolution issued by the
Sandiganbayan dated 20 October 2005 and 2
August 2006 are REVERSED. The writ of
sequestration issued against petitioner POTC
and PHILCOMSA T is hereby
declared LIFTED six (6) months after the
ratification of the 1987 Constitution on 2
February 1987.

Rule 60- Replevin
SECOND DIVISION
G.R. No. 82040 August 27, 1991
BA FINANCE CORPORATION, petitioner,
vs.
HON. COURT OF APPEALS, Hon.
Presiding Judge of Regional Trial Court of
Manila, Branch 43, MANUEL CUADY and
LILIA CUADY, respondents.
Valera, Urmeneta & Associates for petitioner.
Pompeyo L. Bautista for private respondents.
PARAS, J.:
This is a petition for review on certiorari which
seeks to reverse and set aside (1) the
decision of the Court of Appeals dated July
21, 1987 in CA-G.R. No. CV-06522 entitled
"B.A. Finance Corporation, Plaintiff-Appellant,
vs. Manuel Cuady and Lilia Cuady,
Defendants-Appellees," affirming the decision
of the Regional Trial Court of Manila, Branch
43, which dismissed the complaint in Civil
Case No. 82-10478, and (2) the resolution
dated February 9, 1988 denying petitioner's
motion for reconsideration.
As gathered from the records, the facts are as
follows:
On July 15, 1977, private respondents Manuel
Cuady and Lilia Cuady obtained from
Supercars, Inc. a credit of P39,574.80, which
amount covered the cost of one unit of Ford
Escort 1300, four-door sedan. Said obligation
was evidenced by a promissory note executed
by private respondents in favor of Supercars,
Inc., obligating themselves to pay the latter or
order the sum of P39,574.80, inclusive of
interest at 14% per annum, payable on
monthly installments of P1,098.00 starting
August 16, 1977, and on the 16th day of the
next 35 months from September 16, 1977 until
full payment thereof. There was also
stipulated a penalty of P10.00 for every month
of late installment payment. To secure the
faithful and prompt compliance of the
obligation under the said promissory note, the
Cuady spouses constituted a chattel mortage
on the aforementioned motor vehicle. On July
25, 1977, Supercars, Inc. assigned the
promissory note, together with the chattel
mortgage, to B.A. Finance Corporation. The
Cuadys paid a total of P36,730.15 to the B.A.
Finance Corporation, thus leaving an unpaid
balance of P2,344.65 as of July 18, 1980. In
addition thereto, the Cuadys owe B.A.
Finance Corporation P460.00 representing
penalties or surcharges for tardy monthly
installments (Rollo, pp. 27-29).
Parenthetically, the B.A. Finance Corporation,
as the assignee of the mortgage lien obtained
the renewal of the insurance coverage over
the aforementioned motor vehicle for the year
1980 with Zenith Insurance Corporation, when
the Cuadys failed to renew said insurance
coverage themselves. Under the terms and
conditions of the said insurance coverage, any
loss under the policy shall be payable to the
B.A. Finance Corporation (Memorandum for
Private Respondents, pp. 3-4).
On April 18, 1980, the aforementioned motor
vehicle figured in an accident and was badly
damaged. The unfortunate happening was
reported to the B.A. Finance Corporation and
to the insurer, Zenith Insurance Corporation.
The Cuadys asked the B.A. Finance
Corporation to consider the same as a total
loss, and to claim from the insurer the face
value of the car insurance policy and apply the
same to the payment of their remaining
account and give them the surplus thereof, if
any. But instead of heeding the request of the
Cuadys, B.A. Finance Corporation prevailed
upon the former to just have the car repaired.
Not long thereafter, however, the car bogged
down. The Cuadys wrote B.A. Finance
Corporation requesting the latter to pursue
their prior instruction of enforcing the total loss
provision in the insurance coverage. When
B.A. Finance Corporation did not respond
favorably to their request, the Cuadys stopped
paying their monthly installments on the
promissory note (Ibid., pp. 45).
On June 29, 1982, in view of the failure of the
Cuadys to pay the remaining installments on
the note, B.A. Finance Corporation sued them
in the Regional Trial Court of Manila, Branch
43, for the recovery of the said remaining
installments (Memorandum for the Petitioner,
p. 1).
After the termination of the pre-trial
conference, the case was set for trial on the
merits on April 25, 1984. B.A. Finance
Corporation's evidence was presented on
even date and the presentation of Cuady's
evidence was set on August 15, 1984. On
August 7,1984, Atty. Noel Ebarle, counsel for
the petitioner, filed a motion for
postponement, the reason being that the
"handling" counsel, Atty. Ferdinand Macibay
was temporarily assigned in Cebu City and
would not be back until after August 15, 1984.
Said motion was, however, denied by the trial
court on August 10, 1984. On August 15,
1984, the date of hearing, the trial court
allowed private respondents to adduce
evidence ex-parte in the form of an affidavit to
be sworn to before any authorized officer. B.A.
Finance Corporation filed a motion for
reconsideration of the order of the trial court
denying its motion for postponement. Said
motion was granted in an order dated
September 26, 1984, thus:
The Court grants plaintiff's motion for
reconsideration dated August 22,
1984, in the sense that plaintiff is
allowed to adduce evidence in the
form of counter-affidavits of its
witnesses, to be sworn to before any
person authorized to administer oaths,
within ten days from notice hereof.
(Ibid., pp. 1-2).
B.A. Finance Corporation, however, never
complied with the above-mentioned order,
paving the way for the trial court to render its
decision on January 18, 1985, the dispositive
portion of which reads as follows:
IN VIEW WHEREOF, the Court
DISMISSES the complaint without
costs.
SO ORDERED. (Rollo, p. 143)
On appeal, the respondent appellate court *
affirmed the decision of the trial court. The
decretal portion of the said decision reads as
follows:
WHEREFORE, after consultation
among the undersigned members of
this Division, in compliance with the
provision of Section 13, Article VIII of
the Constitution; and finding no
reversible error in the judgment
appealed from, the same is hereby
AFFIRMED, without any
pronouncement as to costs. (Ibid., p.
33)
B.A. Finance Corporation moved for the
reconsideration of the above decision, but the
motion was denied by the respondent
appellate court in a resolution dated February
9, 1988 (Ibid., p. 38).
Hence, this present recourse.
On July 11, 1990, this Court gave due course
to the petition and required the parties to
submit their respective memoranda. The
parties having complied with the submission
of their memoranda, the case was submitted
for decision.
The real issue to be resolved in the case at
bar is whether or not B.A. Finance
Corporation has waived its right to collect the
unpaid balance of the Cuady spouses on the
promissory note for failure of the former to
enforce the total loss provision in the
insurance coverage of the motor vehicle
subject of the chattel mortgage.
It is the contention of B.A. Finance
Corporation that even if it failed to enforce the
total loss provision in the insurance policy of
the motor vehicle subject of the chattel
mortgage, said failure does not operate to
extinguish the unpaid balance on the
promissory note, considering that the
circumstances obtaining in the case at bar do
not fall under Article 1231 of the Civil Code
relative to the modes of extinguishment of
obligations (Memorandum for the Petitioner, p.
11).
On the other hand, the Cuadys insist that
owing to its failure to enforce the total loss
provision in the insurance policy, B.A. Finance
Corporation lost not only its opportunity to
collect the insurance proceeds on the
mortgaged motor vehicle in its capacity as the
assignee of the said insurance proceeds
pursuant to the memorandum in the insurance
policy which states that the "LOSS: IF ANY,
under this policy shall be payable to BA
FINANCE CORP., as their respective rights
and interest may appear" (Rollo, p. 91) but
also the remaining balance on the promissory
note (Memorandum for the Respondents, pp.
16-17).
The petition is devoid of merit.
B.A. Finance Corporation was deemed
subrogated to the rights and obligations of
Supercars, Inc. when the latter assigned the
promissory note, together with the chattel
mortgage constituted on the motor vehicle in
question in favor of the former. Consequently,
B.A. Finance Corporation is bound by the
terms and conditions of the chattel mortgage
executed between the Cuadys and Supercars,
Inc. Under the deed of chattel mortgage, B.A.
Finance Corporation was constituted attorney-
in-fact with full power and authority to file,
follow-up, prosecute, compromise or settle
insurance claims; to sign execute and deliver
the corresponding papers, receipts and
documents to the Insurance Company as may
be necessary to prove the claim, and to collect
from the latter the proceeds of insurance to
the extent of its interests, in the event that the
mortgaged car suffers any loss or damage
(Rollo, p. 89). In granting B.A. Finance
Corporation the aforementioned powers and
prerogatives, the Cuady spouses created in
the former's favor an agency. Thus, under
Article 1884 of the Civil Code of the
Philippines, B.A. Finance Corporation is
bound by its acceptance to carry out the
agency, and is liable for damages which,
through its non-performance, the Cuadys, the
principal in the case at bar, may suffer.
Unquestionably, the Cuadys suffered
pecuniary loss in the form of salvage value of
the motor vehicle in question, not to mention
the amount equivalent to the unpaid balance
on the promissory note, when B.A. Finance
Corporation steadfastly refused and refrained
from proceeding against the insurer for the
payment of a clearly valid insurance claim,
and continued to ignore the yearning of the
Cuadys to enforce the total loss provision in
the insurance policy, despite the undeniable
fact that Rea Auto Center, the auto repair
shop chosen by the insurer itself to repair the
aforementioned motor vehicle, misrepaired
and rendered it completely useless and
unserviceable (Ibid., p. 31).
Accordingly, there is no reason to depart from
the ruling set down by the respondent
appellate court. In this connection, the Court
of Appeals said:
... Under the established facts and
circumstances, it is unjust, unfair and
inequitable to require the chattel
mortgagors, appellees herein, to still
pay the unpaid balance of their
mortgage debt on the said car, the
non-payment of which account was
due to the stubborn refusal and failure
of appellant mortgagee to avail of the
insurance money which became due
and demandable after the insured
motor vehicle was badly damaged in a
vehicular accident covered by the
insurance risk. ... (Ibid.)
On the allegation that the respondent court's
findings that B.A. Finance Corporation failed
to claim for the damage to the car was not
supported by evidence, the records show that
instead of acting on the instruction of the
Cuadys to enforce the total loss provision in
the insurance policy, the petitioner insisted on
just having the motor vehicle repaired, to
which private respondents reluctantly
acceded. As heretofore mentioned, the repair
shop chosen was not able to restore the
aforementioned motor vehicle to its condition
prior to the accident. Thus, the said vehicle
bogged down shortly thereafter. The
subsequent request of the Cuadys for the B.A.
Finance Corporation to file a claim for total
loss with the insurer fell on deaf ears,
prompting the Cuadys to stop paying the
remaining balance on the promissory note
(Memorandum for the Respondents, pp. 4-5).
Moreover, B.A. Finance Corporation would
have this Court review and reverse the factual
findings of the respondent appellate court.
This, of course, the Court cannot and will not
generally do. It is axiomatic that the judgment
of the Court of Appeals is conclusive as to the
facts and may not ordinarily be reviewed by
the Supreme Court. The doctrine is, to be
sure, subject to certain specific exceptions
none of which, however, obtains in the instant
case (Luzon Brokerage Corporation v. Court
of Appeals, 176 SCRA 483 [1989]).
Finally, B.A. Finance Corporation contends
that respondent trial court committed grave
abuses of discretion in two instances: First,
when it denied the petitioner's motion for
reconsideration praying that the counsel be
allowed to cross-examine the affiant, and;
second, when it seriously considered the
evidence adduced ex-parte by the Cuadys,
and heavily relied thereon, when in truth and
in fact, the same was not formally admitted as
part of the evidence for the private
respondents (Memorandum for the Petitioner,
p. 10). This Court does not have to unduly
dwell on this issue which was only raised by
B.A. Finance Corporation for the first time on
appeal. A review of the records of the case
shows that B.A. Finance Corporation failed to
directly raise or ventilate in the trial court nor
in the respondent appellate court the validity
of the evidence adduced ex-parte by private
respondents. It was only when the petitioner
filed the instant petition with this Court that it
later raised the aforementioned issue. As
ruled by this Court in a long line of cases,
issues not raised and/or ventilated in the trial
court, let alone in the Court of Appeals, cannot
be raised for the first time on appeal as it
would be offensive to the basic rules of fair
play, justice and due process (Galicia v. Polo,
179 SCRA 375 [1989]; Ramos v. Intermediate
Appellate Court, 175 SCRA 70 [1989]; Dulos
Realty & Development Corporation v. Court of
Appeals, 157 SCRA 425 [1988]; Dihiansan, et
al. v. Court of Appeals, et al., 153 SCRA 712
[1987]; De la Santa v. Court of Appeals, et al.,
140 SCRA 44 [1985]).
PREMISES CONSIDERED, the instant
petition is DENIED, and the decision appealed
from is AFFIRMED.
SO ORDERED.
THIRD DIVISION
G.R. No. 79021 May 17, 1993
ROMEO S. CHUA, petitioner,
vs.
THE HON. COURT OF APPEALS, DENNIS
CANOY AND ALEX DE LEON, respondents.
Roberto R. Palmares for petitioner.
Josefino B. Remotigue for private
respondents.
BIDIN, J.:
This is a petition for review on certiorari under
Rule 45 of the Revised Rules of Court
assailing the decision of the Court of Appeals
dated May 7, 1987 which nullified the orders
dated April 18, 1986 and May 19, 1986 of the
Regional Trial Court of Cebu City Branch VIII.
The facts of the case are not disputed. On
April 12, 1986, Judge Lauro V. Francisco of
the Regional Trial Court of Cebu City Branch
XIII, after examining 2Lt. Dennis P. Canoy and
two (2) other witnesses, issued a search
warrant directing the immediate search of the
premises of R.R. Construction located at M.J.
Cuenco Avenue, Cebu City, and the seizure of
an Isuzu dump truck with plate number GAP-
175. At twelve noon of the same date,
respondent Canoy seized the aforesaid
vehicle and took custody thereof.
On April 14, 1986, a civil action for
Replevin/Sum of Money for the recovery of
possession of the same Isuzu dump truck was
filed by petitioner against respondent Canoy
and one "John Doe" in the Regional Trial
Court of Cebu City Branch VIII, presided by
Judge Leonardo B. Cañares and docketed
thereat as Civil Case No. CEB 4384 alleging
among other things, petitioner's lawful
ownership and possession of the subject
vehicle; that he has not sold the subject
vehicle to anyone; that he has not stolen nor
carnapped it, and that he has never been
charged of the crime of carnapping or any
other crime for that matter. Further, petitioner
questioned the validity of the search warrant
and the subsequent seizure of the subject
vehicle on the strength of the aforesaid search
warrant.
On the same date, April 14, 1986, Judge
Cañares of the Regional Trial Court of Cebu
City Branch VIII directed the issuance of a writ
of replevin upon the posting of a bond in the
amount of one hundred thousand pesos
(P100,000.00). The writ of replevin was also
issued on the same date, and the subject
vehicle was seized on 15 April 1986 by
Deputy Sheriff Galicano V. Fuentes.
On April 16, 1986, respondent Canoy filed a
motion for the dismissal of the complaint and
for the quashal of the writ of replevin. The
motion was opposed by petitioner. The motion
to dismiss and to quash the writ of replevin
was denied in an Order dated April 18, 1986.
A motion for reconsideration of the
aforementioned Order was filed and was
opposed by petitioner. In an order dated May
19, 1986, the Regional Trial Court of Cebu
Branch VIII denied the motion for
reconsideration and directed the delivery of
the subject vehicle to petitioner. Not satisfied,
herein private respondents filed with the Court
of Appeals a Petition for Certiorari and
Prohibition praying for the nullification of the
orders dated April 18, 1986 and May 19,
1986.
Meanwhile, a case for Carnapping docketed
as I.S. No. 86-185, entitled "Alex De Leon,
Complainant, vs. Romeo Chua, Respondent"
pending preliminary investigation before the
Office of the City Fiscal of Cebu City was
provisionally dismissed upon motion of
Romeo Chua with the following reservation:
"without prejudice to its reopening once the
issue of ownership is resolved", (Rollo, p. 62).
In a decision dated May 17, 1987, the Court of
Appeals reversed the Regional Trial Court of
Cebu City Branch VIII, and nullified the
questioned orders. The appellate court
ordered the dismissal of the Replevin action,
and directed that possession of the subject
vehicle be restored to Canoy. It applied the
ruling in the case of Pagkalinawan vs.
Gomez (21 SCRA 1275 [1967]) which held:
Once a Court of First Instance
has been informed that a
search warrant has been
issued by another court of first
instance, it cannot require a
sheriff or any proper officer of
the court to take the property
subject of the replevin action,
if theretofore it came into
custody of another public
officer by virtue of a search
warrant. Only the court of first
instance that issued such a
search warrant may order its
release.
Furthermore, it was also pointed out in the
same case that the validity of a search
warrant may only be questioned in the same
court that issued it.
Petitioner moved for a reconsideration of the
decision, but the respondent court denied the
same. Thus, petitioner filed this appeal
by certiorari. The parties submitted their
respective memoranda, and thereafter the
case was deemed submitted for decision.
The issue presented before the Court is
whether or not the validity of a seizure made
pursuant to a search warrant issued by a court
can be questioned in another branch of the
same court, where the criminal action filed in
connection with which the search warrant was
issued, had been dismissed provisionally.
At the outset, it must be pointed out that the
ruling made by the Office of the City Fiscal in
the complaint for carnapping was erroneous. It
held: ". . . the preliminary investigation of that
case is premature until such time that the
issue of ownership will be resolved by the
Court of Appeals, so that the instant case is
hereby dismissed provisionally without
prejudice to its reopening once the issue of
ownership is resolved in favor of
complainant." (emphasis supplied).
A criminal prosecution for carnapping need
not establish the fact that complainant therein
is the absolute owner of the motor vehicle.
What is material is the existence of evidence
which would show that respondent took the
motor vehicle belonging to another. The Anti-
Carnapping Law or Republic Act No. 6539
punishes as carnapping the taking with intent
to gain, of a motor vehicle belonging to
another person, without the latter's consent or
by means of violence or intimidation of person
or by using force upon things.
Another aspect which needs to be stressed is
the fact that since a preliminary investigation
is not part of the trial, the dismissal of a case
by the fiscal will not constitute double jeopardy
and hence there is no bar to the filing of
another complaint for the same offense
(People vs. Medted, 68 Phil. 435).
We find no merit in the main issue presented
before Us. Petitioner seeks a reversal of a
decision of the Court of Appeals which relied
on the decision in Pagkalinawan vs. Gomez
(supra).
The principle followed among courts in the
dispensation of justice is that a judge who
presides in a branch of a court cannot modify
or annul the orders issued by another branch
of the same court, since the two (2) courts are
of the same rank, and act independently but
coordinately (Montesa vs. Manila Cordage
Co., 92 Phil. 25 [1952]).
It is a basic tenet of civil procedure that
replevin will not lie for property in custodia
legis. A thing is in custodia legis when it is
shown that it has been and is subjected to the
official custody of a judicial executive officer in
pursuance of his execution of a legal writ
(Bagalihog vs. Fernandez, 198 SCRA 614
[1991]). The reason posited for this principle is
that if it was otherwise, there would be
interference with the possession before the
function of the law had been performed as to
the process under which the property was
taken. Thus, a defendant in an execution or
attachment cannot replevy goods in the
possession of an officer under a valid process,
although after the levy is discharged, an
action to recover possession will lie
(Francisco, Revised Rules of Court in the
Philippines: Provisional Remedies, p. 402
[1985]).
The Court had occasion to rule on this issue in
the case of Vlasons Enterprises Corporation
vs. Court of Appeals (155 SCRA 186 [1987]).
In the aforementioned case, two (2) propeller
pieces were seized on the strength of a
search warrant issued by the Court of First
Instance of Manila Branch XVIII. After the
seizure, criminal complaints were filed against
the alleged thieves. However, the complaints
were later on dismissed. Five (5) months later,
a civil action for the recovery of the
possession of the propellers were filed in the
Court of First Instance of Manila Branch XXIX.
The latter court granted the motion for
repossession of the propellers. On appeal this
Court held:
The proceeding for the seizure
of the property in virtue of a
search warrant does not end
with the actual taking of the
property . . . and its delivery . .
., to the court . . . . It is merely
the first step in the process to
determine the character of the
seized property. That
determination is done in the
criminal action involving the
crime or crimes in connection
with which the search warrant
was issued. Hence, such a
criminal action should be
prosecuted, or commenced if
not yet instituted, and
prosecuted. The outcome of
the criminal action will dictate
 the disposition of the seized
property. (Vlasons Enterprises
Corp. vs. Court of
Appeals, supra.)
In the Vlasons case, the Court differentiated
the case brought before it therein, from
the Pagkalinawan case. It stated that in
the Pagkalinawan case, there was a conflict in
jurisdiction. On the other hand, in the Vlasons
case, it was certain that no criminal case
would ensue subsequent to or in connection
with the search warrant, hence no conflict in
jurisdiction or in the ultimate disposition of the
property could arise. Thus, where personal
property is seized under a search warrant and
it appears that the seizure will not be followed
by the filing of any criminal action, but there
are conflicting claims asserted over the seized
property, the appropriate remedy is the
institution of an ordinary civil action by any
interested party, or of an interpleader action
by the Government itself, in the proper
competent court to which the seizing court
shall transfer custody of the articles. Another
branch of the same court, in an action to
recover said property and during the
pendency thereof, cannot order the delivery of
said personal property to therein
plaintiff pendente lite.
Construing the Pagkalinawan case together
with the Vlasons case, we rule that where
personal property is seized under a search
warrant and there is reason to believe that the
seizure will not anymore be followed by the
filing of a criminal and there are conflicting
claims over the seized property, the proper
remedy is the filing of an action for replevin, or
an interpleader filed by the Government in the
proper court, not necessarily the same one
which issued the search warrant; however,
where there is still a probability that the
seizure will be followed by the filing of a
criminal action, as in the case at bar where
the case for carnapping was "dismissed
provisionally, without prejudice to its
reopening once the issue of ownership is
resolved in favor of complainant" (emphasis
supplied), or the criminal information has
actually been commenced, or filed, and
actually prosecuted, and there are conflicting
claims over the property seized, the proper
remedy is to question the validity of the search
warrant in the same court which issued it and
not in any other branch of the said court.
Thus, the Regional Trial Court of Cebu Branch
VIII erred when it ordered the transfer of
possession of the property seized to petitioner
when the latter filed the action for replevin. It
should have dismissed the case since by
virtue of the "provisional dismissal", of the
carnapping case there is still a probability that
a criminal case would be filed, hence a conflict
in jurisdiction could still arise. The basic
principle that a judge who presides in one
court cannot annul or modify the orders issued
by another branch of the same court because
they are co-equal and independent bodies
acting coordinately, must always be
adhered to.
WHEREFORE, the petition is denied. The
decision of the Court of Appeals dated May 7,
1987 is AFFIRMED.
SO ORDERED.
Feliciano, Romero and Melo, JJ., concur.
Separate Opinions
DAVIDE, JR., J., concurring and dissenting:
I agree with the majority that Branch VIII of the
Regional Trial Court of Cebu should not have
taken cognizance of the civil case for replevin
(Civil Case No. CEB-4384).
However, I am not prepared to go along with
the restatement of the rule on the recovery of
property seized by virtue of a search warrant,
to wit:
 Construing the Pagkalinawan
case together with the Vlasons
case, we rule that where
personal property is seized
under a search warrant and
there is reason to believe that
the seizure will not anymore
be followed by the filing of a
criminal action, and there are
conflicting claims over the
seized property, the proper
remedy is the filing of an
action for replevin, or an
interpleader filed by the
Government in the proper
court, not necessarily the
same one which issued the
search warrant; however,
where there is still a probability
that the seizure will be
followed by the filing of a
criminal action, as in the case
at bar where the case for
carnapping was "dismissed
provisionally, without prejudice
to reopening once issue of
ownership resolved in favor of
complainant" (emphasis
supplied), or the criminal
information has actually been
commenced, or filed, and
actually prosecuted, and there
are conflicting claims over the
property seized, the proper
remedy is to question the
validity of the search warrant
in the same court which issued
it and not in any branch of the
said court.
I respectfully submit that regardless of the
number of claimants to the property seized,
the remedy should be obtained from the court
which issued the warrant either by a motion to
quash the search warrant or a motion to
release the property. Replevin does not lie
because regardless of the validity or invalidity
of the search warrant, the property was
effectively placed in custodia legis and,
therefore, beyond the reach of a replevin suit.
It would be entirely different if the seizure was
unlawful, in which case replevin may prosper.
The reasons why the application for the
recovery of the seized property must be made
with the court issuing the warrant are quite
obvious. It had acquired jurisdiction over
the res. The pendency of the application could
prod the Government to expedite the
investigation and prosecution of the criminal
case, if any, in connection with which the
warrant was secured. The parties, especially
the innocent parties, should not be made to
await indefinitely the outcome of the criminal
action which the prosecution arm may either
delay or not file at all for reasons only known
to itself.
# Separate Opinions
DAVIDE, JR., J., concurring and dissenting:
I agree with the majority that Branch VIII of the
Regional Trial Court of Cebu should not have
taken cognizance of the civil case for replevin
(Civil Case No. CEB-4384).
However, I am not prepared to go along with
the restatement of the rule on the recovery of
property seized by virtue of a search warrant,
to wit:
Construing the Pagkalinawan
case together with the Vlasons
case, we rule that where
personal property is seized
under a search warrant and
there is reason to believe that
the seizure will not anymore
be followed by the filing of a
criminal action, and there are
conflicting claims over the
seized property, the proper
remedy is the filing of an
action for replevin, or an
interpleader filed by the
Government in the proper
court, not necessarily the
same one which issued the
search warrant; however,
where there is still a probability
that the seizure will be
followed by the filing of a
 criminal action, as in the case
at bar where the case for
carnapping was "dismissed
provisionally, without prejudice
to reopening once issue of
ownership resolved in favor of
complainant" (emphasis
supplied), or the criminal
information has actually been
commenced, or filed, and
actually prosecuted, and there
are conflicting claims over the
property seized, the proper
remedy is to question the
validity of the search warrant
in the same court which issued
it and not in any branch of the
said court.
I respectfully submit that regardless of the
number of claimants to the property seized,
the remedy should be obtained from the court
which issued the warrant either by a motion to
quash the search warrant or a motion to
release the property. Replevin does not lie
because regardless of the validity or invalidity
of the search warrant, the property was
effectively placed in custodia legis and,
therefore, beyond the reach of a replevin suit.
It would be entirely different if the seizure was
unlawful, in which case replevin may prosper.
The reasons why the application for the
recovery of the seized property must be made
with the court issuing the warrant are quite
obvious. It had acquired jurisdiction over
the res. The pendency of the application could
prod the Government to expedite the
investigation and prosecution of the criminal
case, if any, in connection with which the
warrant was secured. The parties, especially
the innocent parties, should not be made to
await indefinitely the outcome of the criminal
action which the prosecution arm may either
delay or not file at all for reasons only known
to itself.
SECOND DIVISION
G.R. No. 86792 March 21, 1990
SPOUSES MARINO AND LINA JOEL
SAPUGAY, petitioners,
vs.
HON. COURT OF APPEALS, MOBIL
PHILIPPINES, INC. AND RICARDO
CARDENAS, respondents.
Cuesta, Bermudez & Associates for
petitioners.
Camacho & Associates for Mobil Phils., Inc.
REGALADO, J
For review in this petition is the decision 1 of respondent Court of
Appeals in CA-G.R. CV No. 07614 thereof, dated November 11,
1988, deleting the award made by the court a quo 2 for rental,
storage and guarding fees and unrealized profits, the reduction
of the other damages granted, and the exclusion and exclupation
from liability of respondent Ricardo P. Cardenas, as well as the
resolution 3 of respondent court of January 30, 1989 denying
petitioner's motion for reconsideration.
The following facts, culled from respondent
court's decision and sustained by the
evidence of record, are adopted by us in our
adjudication:
1. On September 27, 1982,
plaintiff Mobil Philippines, Inc.
filed a complaint for replevin
with damages against
defendant Lina Joel Sapugay
before the Court of First
Instance of Rizal, Seventh
Judicial District, Pasig, Metro
Manila. The complaint,which
was duly amended on October
11, 1982 alleges the following:
that upon the termination of
the Dealership Agreement
between Mobil Oil Philippines,
Inc. and Nemar Marketing
Corporation, defendant
applied to the plaintiff to
become a dealer of the latter's
products; that pending
consideration of the dealership
application, plaintiff loaned to
the defendant the properties
installed in the premises of
Nemar at Sto. Tomas,
Batangas, valued at
P1,500,000.00; that for a
period of three (3) months
from the date of application,
defendant failed to secure and
file the required surety bond,
compelling plaintiff to reject
defendant's application and
the return and redelivery of the
aforementioned properties;
that defendant refused to
return said equipments, and
demanded instead that
defendant be paid first the
sum of P15,000.00 daily as
rental and guard's fees from
June 8, 1982 up to the day of
actual pull-out. Thus, plaintiff
prays for the return of said
properties or its value
including damages, attorney's
fees and costs of suit.
2. On October 12, 1982, the
lower court issued an order for
the issuance of a writ of
replevin upon the filing of
plaintiff's bond.
3. On November 29, 1982,
defendant filed her answer
alleging as affirmative
defenses that upon
presentation of defendant's
application, plaintiff and it's
manager, R.P. Cardenas,
imposed upon them as a
condition for the approval of
their application defendant's
acquisition of the premises
where the business will be
conducted; that consequently
applicant-defendant
purchased the said land for
seven hundred thousand
(P700,000.00) pesos; that on
June 21, 1982, a preliminary
agreement was signed
constituting defendant as
plaintiff's authorized dealer,
whereupon plaintiff turned
over to the defendant the
equipment to be used therefor;
that plaintiff instructed
dependant to commence
operation whereupon the latter
made the necessary
preparations amounting to
P38,000.00; that defendant
commenced operation on
June 26, 1982, pending
execution of the formal
dealership agreement; that on
the last week of July, 1982,
they signed the formal
dealership agreement a copy
of which was withheld from
them by the plaintiff pending
its notarization; that as the
formal agreement had already
been signed, defendant and
her husband requested
plaintiff that they be allowed to
get gas even on a cash basis,
but plaintiff denied the request
claiming that they still have to
post a surety bond which was
initially fixed at P200,000.00
then later increased to
P700,000.00; that defendant
and her husband exerted their
best effort to secure a bond
but the bonding companies
required a copy of the
dealership agreement which
was continiously withheld from
them by plaintiff, that
defendant discovered that
plaintiff and its manager
intended all along, to award
said dealership to Island Air
Product Corporation; that in
furtherance of said scheme
plaintiff caused all the LP-Gas
equipment to be publicly
pulled out from defendant's
premises. As counterclaim,
defendant prayed that plaintiff
and its manager be made
liable for their pre-operation
expenses rental, storage, and
guarding fees, unrealized
profit including damages and
the return of the LP-Gas
equipment to the premises.
4. On December 9, 1982, the
writ of replevin dated October
22, 1982 issued by Honorable
Eduardo C. Abaya of the Court
of First Instance, Rizal, Branch
XXIV was duly executed.
5. On September 8, 1983, the
pre-trial conference in Branch
132, Makati, Metro Manila was
terminated without any
amicable settlement, and trial
was set for November 3, 1983.
6. On November 3, 1983, the
trial court granted plaintiff's
Motion for Leave to Amend
Complaint, alleging that
plaintiff Mobil Oil Philippines,
Inc. having been taken over by
Caltex Philippines, Inc., and
prior to dissolution, assigned
and transferred all the rights,
interest, claim and cause of
action in favor of Mobil
Philippines, Inc.
7. On August 8, 1985, the trial
court, after finding that plaintiff
and its manager, R.P.
Cardenas, have reneged on its
promise to award the
dealership to defendant
Sapugay, rendered judgment
in favor of the latter,
dismissing the complaint and
ordering plaintiff and its
manager to pay the pre-
operation expenses, rental,
storage, and guarding fees of
plaintiff's LPG equipment;
unrealized profits, moral
damages including litigation
expenses, attorney's fees and
costs of the suit.
8. On August 26, 1985,
defendant filed a motion for
application to have plaintiffs
bond posted by the Malayan
Surety Company liable for the
satisfaction of the judgment.
9. On August 29, 1985, the
plaintiff-corporation filed a
notice of appeal manifesting
that it was appealing to the
Court of Appeals from the
decision promulgated on
August 8, 1985.
10. On September 17, 1985,
the trial court issued an order
denying the defendant's
motion considering that the
lower court no longer had any
jurisdiction to act on the matter
with the perfection of plaintiffs
appeal. 4
On November 11, 1988, respondent Court of
Appeals rendered a decision, disposing as
follows:
WHEREFORE, the decision
appealed from is hereby
MODIFIED in that the awards
of rental, storage and guarding
fees and the award of
unrealized profits, are hereby
DELETED, and the award of
damages REDUCED. The
decision is AFFIRMED in all
other aspects with Mobil
Philippines, lnc. being solely
liable. 5
The motion for reconsideration filed by herein
petitioners, praying that the bond posted by
Malayan Insurance Co., Inc. in behalf of
herein private respondents be made liable for
damages suffered by petitioners, was denied
by respondent court in its resolution dated
January 30, 1989. Hence, this petition.
The issues raised by petitioners for resolution
are whether respondent court committed
serious errors of law amounting to grave
abuse of discretion and/or excess of
jurisdiction:
1. In excluding from the case and
exculpating from liability respondent
Ricardo P. Cardenas, an
indispensable party;
2. In deleting from the decision of the
court a quo the awards for guarding
fee and unrealized profits; and
3. In holding that Malayan Insurance
Co., Inc., is not liable on the bond.
In their comment, private respondents aver
that since the counterclaim of petitioners
against the former is permissive in nature and
since no docket fee was paid, the trial court
did not acquire jurisdiction over the case,
hence the awards rendered on petioners'
counterclaim should be dismissed.
Under the first assigned error, petitioners
assert that respondent Court of Appeals erred
in exculpating Cardenas from liability and in
holding that said Cardenas, who is not a party
to the original action, may not be impleaded
by petitioners in their counterclaim on the
ground that a counterclaim cannot be filed
against a person who is not an actual party to
the litigation. In effect, what respondent court
is saying is that the trial court did not acquire
jurisdiction over the person of Cardenas,
hence he cannot be held jointly liable with
Mobil Philippines, Inc. (hereafter, Mobil for
short). On the contrary, petitioners submit that
Cardenas is an indispensable party since he
was the one who negotiated with them in
transacting the dealership agreement.
A counterclaim is defined as any claim for
money or other relief which a defending party
may have against an opposing
party. 6 However, the general rule that a
defendant cannot by a counterclaim bring into
the action any claim against persons other
than the plaintiff admits of an exception under
Section 14, Rule 6 which provides that "when
the presence of parties other than those to the
original action is required for the granting of
complete relief in the determination of a
counterclaim or cross-claim, the court shall
order them to be brought in as defendants, if
jurisdiction over them can be obtained." The
inclusion, therefore, of Cardenas in petioners'
counterclaim is sanctioned by the rules.
The next question to be resolved is whether
the trial court acquired jurisdiction over the
person of Cardenas. It has been held that a
counterclaim stands on the same footing as,
and is to be tested by the same rules as if it
were, an independent action. 7 Hence, the
same rules on jurisdiction in an independent
action ordinarily apply equally to a
counterclaim.
In her answer, filed on November 29, 1982, to
the amended complaint, petitioner Lina
Sapugay impleaded Cardenas as a defendant
in her counterclaim therein, and prayed that
judgment be rendered holding specifically
Mobil and Cardenas jointly and severally liable
to herein petitioners. 8 Thereafter, petitioner
filed a "Motion to Declare Plaintiff and its
Manager, Ricardo P. Cardenas, in Default on
Defendant's Counterclaim" for failure of
private respondents to answer the
counterclaim. 9 Cardenas was furnished
copies of both the answer and the motion to
declare herein private respondents in
default. 10 Respondent Mobil filed an
opposition to the motion to declare them in
default, alleging that they, the private
respondents herein, may not be so
declared.11 The court below agreed with
private respondents' reasoning therein that a
compulsory counterclaim being involved, the
issues raised in the counterclaim are deemed
automatically joined by the allegations of the
complaint, hence the complaint itself stood as
the answer to defendant's counterclaim.
Consequently, the trial court denied the
motion to declare the herein private
respondents in default. 12
It is noteworthy that Cardenas did not file a
motion to dismiss the counterclaim against
him on the ground of lack of jurisdiction. While
it is a settled rule that the issue of jurisdiction
may be raised even for the first time on
appeal, this does not obtain in the instant
case. Although it was only Mobil which filed an
opposition to the motion to declare in default,
the fact that the trial court denied said motion,
both as to Mobil and Cardenas on the ground
that Mobil's complaint should be considered
as the answer to petioners' compulsory
counterclaim, leads us to the inescapable
conclusion that the trial court treated the
opposition as having been filed in behalf of
both Mobil and Cardenas and that the latter
had adopted as his answer the allegations
raised in the complaint of Mobil. Obviously, it
was this ratiocination which led the trial court
to deny the motion to declare Mobil and
Cardenas in default. Furthermore, Cardenas
was not unaware of said incidents and the
proceedings therein as he testified and was
present during the trial, not to speak of the
fact that as manager of Mobil he would
necessarily be interested in the case and
could readily have access to the records and
pleadings filed therein.
By adopting as his answer the allegations in
the complaint which seeks affirmative relief,
Cardenas is deemed to have recognized the
jurisdiction of the trial court over his person
and submitted thereto. He may not now be
heard to repudiate or question that
jurisdiction. 13
Mobil likewise questions the jurisdiction of the
trial court in entertaining the counterclaim
since no docket fee was paid. It avers that
since it is a permissive counterclaim,
petitioners should have paid the necessary
docket fee. On the contrary, we find and so
hold that the counterclaim of petitioners is
compulsory in nature since both the complaint
and counterclaim involve the same transaction
and arose from the same occurrence.
Besides, as earlier discussed, in Mobil's
opposition to the motion for a default order, it
categorically stated that petitioners'
counterclaim is compulsory in nature, 14 which
was likewise the view of the trial court and the
precise reason why it denied said motion.
Private respondents are now estopped from
claiming otherwise. In the recent case of Sun
Insurance Office, Ltd., et
al. vs. Hon. Asuncion, et al. 15 involving the
rule on payment of docket fees in ordinary
actions, the rule was affirmed and made to
apply specifically to permissive counterclaims
only, thereby excluding compulsory
counterclaims from its purview.
As to the second assigned error, the finding of
the Court of Appeals that no sufficient and
substantial evidence exists to warrant an
award of guarding fees and unearned profits
is conclusively binding on this Court, for failure
of private respondents to show that the
appellate court acted with grave abuse of
discretion or erred in making such finding.
Fundamental is the rule that findings of fact of
the Court of Appeals will not be disturbed
unless shown to have been rendered with
arbitrariness, nor are any of the
jurisprudentially accepted exceptions thereto
present in this case.
Anent the issue on the surety's liability upon
the replevin bond, we do not believe that
Malayan Insurance Co., Inc. should be made
liable thereon. As correctly observed by
respondent court, "the damages awarded by
the trial court were based on Articles 19 and
20 of the New Civil Code and not on the
deprivation of personal properties subject of
the replevin bond. Moreover, no judgment was
entered for the return of the properties subject
of the replevin bond to the defendant, the
latter never having raised the issue of rightful
possession to the said properties." 16
A replevin bond is simply intended to
indemnify the defendant against any loss that
he may suffer by being compelled to
surrender the possession of the disputed
property pending the trial of the action. He
cannot recover on the bond as for a
reconversion when he has failed to have the
judgment entered for the return of the
property. Nor is the surety liable for payment
of the judgment for damages rendered against
the plaintiff on a counterclaim or punitive
damages for fraudulent or wrongful acts
committed by the plaintiffs and unconnected
with the defendant's deprivation of possession
by the plaintiff. Indeed, even where the
judgment was that the defendant was entitled
to the property, but no order was made
requiring the plaintiff to return it or assessing
damages in default of a return, it was declared
that until judgment was entered that the
property should be restored, there could be no
liability on the part of the sureties.17
There is no denying the active participation of
Cardenas in the anomalous transactions had
with petitioner Lina Sapugay as found by the
Court of Appeals, to wit:
Indeed, a perusal of the letters
referred to show that plaintiff
corporation, particularly its
manager, gave cause for
defendant Sapugay to believe
that she is the authorized
supplier and refiller of Mobil
Philippines, to wit, plaintiff's
letter to defendant signed by
its Manager R.P. Cardenas
dated July 2, 1982 (Exhibit
"2"), referred to defendant "as
a major supplier of LPG and
as the authorized refiller of
Mobil Oil Philippines . . .
committed to the government
as well as to all Mobil LP-Gas
customers to uphold the
highest standard in respect to
marketing as well as safety
(Exhibit "2-b")." This belief is
further bolstered by the
Memorandum dated July 12,
1982 signed by Cardenas and
sent to defendant by
registered mail (Exhibit "5")
attaching a copy of Ministry
Order No. 82-06-08 (Exhibit
"3-b") prohibiting LPG cylinder
exchange and the refilling of
other brands of cylinder
without the brand owner's
authority.
As to the existence of a
Formal Dealership Agreement,
this Court failed to find any
other evidence other than
defendant's testimony to
substantiate the allegation that
plaintiff and defendant had
already signed a dealership
agreement in July 1982 which
the former withheld from the
latter, causing defendant's
failure to submit the requisite
bond. Moreover, this Court
notes that the blank standard
dealership agreement form
presented by plaintiff (Exhibit
"L"), shows no requirement for
the filing of a bond. Further,
Manager Cardenas himself
testified that this standard
agreement contained all the
terms and conditions of a
dealership, . . .
xxx xxx xxx
Thus, the lower court found
that the requirement of posting
a bond, initially fixed at
P200,000.00 then raised to
P700,000.00 was
a preplanned scheme of
plaintiff and/or R.. Cardenas to
put every hindrance before the
defendant so that the latter
could not get the dealership
agreement . . .
xxx xxx xxx
As found by the trial court, all
these acts of plaintiff and its
manager, R.. Cardenas, are
contrary to Articles 19 and 20
of the New Civil Code, to wit:
Art. 19. Every
person must, in
the exercise of
his rights and
in the
performance of
his duties act
with justice,
give everyone
his due and
observe
honesty and
good faith.
Art. 20. Every
person who,
contrary to law,
 wilfully or against respondent Abe C. Andres, Sheriff IV
negligently of the Regional Trial Court (RTC) of Davao
causes City, Branch 16.
damage to
another, shall The antecedent facts are as follows:
indemnify the
latter for the Complainant Hao is one of the defendants in a
same. civil case for replevin docketed as Civil Case
No. 31, 127-20052 entitled "Zenaida Silver,
for which plaintiff must be doing trade and business under the name and
made to recompense the style ZHS Commercial v. Loreto Hao, Atty.
damages the defendant Amado Cantos, Kenneth Hao and John
suffered. (Emphasis Does," pending before the RTC of Davao City,
supplied) 19 Branch 16.

We, therefore, find and so hold that private
respondent Ricardo P. Cardenas should be
held jointly and severally liable with his co-
respondent Mobil Philippines, Inc. for having
acted in bad faith by impeding and preventing
the award of the dealership to petitioners
through fraudulent means.
ACCORDINGLY, the judgment appealed from
is hereby AFFIRMED with the modification
that respondents Mobil Philipines, Inc. and
Ricardo P. Cardenas are held jointly and
severally liable to herein petitioners Marino
and Lina Joel Sapugay.
SO ORDERED.
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.:
On October 17, 2005, Judge Renato A.
Fuentes3 issued an Order of Seizure4 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.5
In his Affidavit-Complaint6 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.7
On October 21, 2005, in view of the approval
of the complainant’s counter-replevin bond,
Judge Emmanuel C. Carpio8 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.9

Before us is an administrative complaint for However, on October 24, 2005, eight of the
gross neglect of duty, grave abuse of authority nine seized motor vehicles were reported
(oppression) and violation of Republic Act No. missing. In his report,10 Andres stated that he
30191 filed by complainant Kenneth Hao 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.11 But
Andres claimed the motor vehicles were still
intact when he inspected it on October 21,
2005.
Subsequently, Hao reported that three of the
carnapped vehicles were recovered by the
police.12 He then accused Andres of
conspiring and conniving with Atty. Oswaldo
Macadangdang (Silver’s 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 Comment13 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
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.14 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.15
After the OCA recommended that the matter
be investigated, we referred the case to
Executive Judge Renato A. Fuentes for
investigation, report and recommendation.16
In his Investigation Report17 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.18
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.19
Judge Fuentes also observed that Andres
appeared to be more or less accommodating
to Silver and her counsel but hostile and
uncooperative to the complainant. He pointed
out that Andres depended solely on Silver in
the selection of the policemen who would
guard the seized motor vehicles. He added
that even the depository receipts were not
turned over to the defendants/third-party
claimants in the replevin case but were in fact
concealed from them. Andres also gave
inconsistent testimonies as to whether he has
in his possession the depository receipts.20
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.21
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 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
 applicant’s 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.22 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.23 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,24 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.…25 (Emphasis
supplied.)
In Sebastian v. Valino,26 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.…27 (Emphasis
supplied.)
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.28 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 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.29 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 14130 of the Rules of Court with regard to
payment of expenses.
Under Section 9,31 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 sheriff’s 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.32 Obviously, this
practice departed from the accepted
procedure provided in the Rules of Court.
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.…33 (Emphasis supplied.)
…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 (Emphasis supplied.)
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.35 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 He further admitted that he
took one vehicle belonging to a certain Junard
Escudero without the latter’s knowledge and
even caused the duplication of its keys in
order that it may be taken by
Andres.37 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).
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.38 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.39
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;40 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.41 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 5342 and 54,43 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.
THIRD DIVISION
G.R. No. 182963 June 3, 2013
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 Decision1 and May
19, 2008 Resolution2of the Court of Appeals in
CAG.R. CV No. 86021, which affirmed the
August 11, 2005 Decision3 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
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.6 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.7 Despite this,
the subject vehicle was not seized.8 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
court’s 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 AMRO’s
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) respondent’s remedy of resorting to
both actions of replevin and collection of sum
of money is contrary to the provision of Article
14849 of the Civil Code and the Elisco Tool
Manufacturing Corporation v. Court of
Appeals10 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.11 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.
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.12 Even assuming, for
argument’s 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 respondent’s 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 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
Further, the Court even ruled in Navarro v.
Escobido15 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.16 (Emphasis
and underscoring supplied)
The Court cannot yield to petitioners’ denial in
receiving respondent’s 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.
Petitioners cannot find succour from Ting v.
Court of Appeals18 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 Agner’s 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 possession of the document of credit, proof
of non-payment is not needed for it is
presumed.21 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 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.24 The debtor has the burden of
showing with legal certainty that the obligation
has been discharged by payment.25
Lastly, there is no violation of Article 1484 of
the Civil Code and the Court’s 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 ₱39,054.86 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 ₱39,054.86, 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 ₱60,000.00, 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.28
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 ₱576,664.04 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 ₱297,857.54 as
attorney’s 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 enrichment30 to
speak of. 1âwphi1
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.31 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.32 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
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.
SECOND DIVISION
February 1, 2017
G.R. No. 195450
DEVELOPMENT BANK OF THE
PHILIPPINES, Petitioner
vs.
HON. EMMANUEL C. CARPIO, in his
capacity as Presiding Judge, Regional
Trial Court, Branch 16, Davao City,
COUNTRY BANKERS INSURANCE
CORPORATION, DABAY ABAD, HATAB
ABAD, OMAR ABAS, HANAPI ABDULLAH,
ROJEA AB ABDULLAH, ABDULLAH
ABEDIN, ALEX ABEDIN, et al., represented
by their Attorney-in-Fact, MR. MANUEL L.
TE, Respondents
DECISION
MENDOZA, J.:
This is a petition for review
on certiorari seeking to reverse and set aside
the July 9, 2008 Decision1 and the January 21,
2011 Resolution2 of the Court of
Appeals (CA) in CA-G.R. SP No. 85719,
which dismissed the petition
for certiorari and mandamus praying for the
annulment of the May 17, 2004 and July 9,
2004 Orders3 of the Regional Trial Court,
Branch 16, Davao City (RTC), in Civil Case
No. 28,721-01.
The Antecedents
On August 21, 2001, Dabay Abad, Hatab
Abad, Omar Abas, Hanapi Abdullah, Rojea Ab
Abdullah, Abdullah Abedin, Alex Abedin, et
al.(Abad, et al.), represented by their attorney-
in-fact, Manuel L. Te, filed a complaint for
delivery of certificates of title, damages, and
attorney's fees against petitioner Development
Bank of the Philippines (DBP) and Guarantee
Fund for Small and Medium
Enterprise (GFSME) before the RTC.4
In their, Complaint,5 Abad, et al. prayed,
among others, for the issuance of a writ of
seizure, pending hearing of the case, for
delivery of their certificates of title they
claimed to be unlawfully detained by DBP and
GFSME. They alleged that their certificates of
title were submitted to DBP for safekeeping
pursuant to the loan agreement they entered
into with DBP. The same certificates of title
were turned over by DBP to GFSME because
of its call on GFSME's guarantee on their
loan, which became due and demandable,
and pursuant to the guarantee agreement
between DBP and GFSME.
As prayed for, the RTC issued the Writ of
Seizure6 on August 24, 2001. The writ was
accompanied by Plaintiffs Bond for Manual
Delivery of Personal Property7 issued by
Country Bankers Insurance
Corporation (CBIC).
On September 5, 2001, DBP filed its Omnibus
Motion to Dismiss Complaint and to Quash
Writ of Seizure8 on the ground of improper
venue, among others. Abad, et al. filed their
Opposition9 and later, their Supplemental
Opposition,10 to which they attached the
Delivery Receipt11 showing that the court
sheriff took possession of 228 certificates of
title from GFSME.
In its Order,12 dated September 25, 2001, the
RTC granted DBP's omnibus motion and
dismissed the case for improper venue.
On December 20, 2001, DBP and GFSME
filed their Joint Motion to Order Plaintiffs to
Return Titles to Defendants DBP and
GFSME.13 After Abad, et al. filed their
opposition, the RTC issued the Order,14 dated
January 27, 2003, directing Abad, et al. to
return the 228 certificates of title.
Abad, et al. filed a petition for certiorari and
prohibition with the Court praying, among
others, for the nullification and reversal of the
January 27, 2003 Order of the RTC. The
Court, however, in its June 9, 2003
Resolution,15 dismissed the petition.
On September 18, 2003, DBP filed its Motion
for Writ of Execution16 of the January 27, 2003
Order before the RTC. On December 16,
2003, the RTC issued the corresponding Writ
of Execution.17 The Sheriffs Return of
Service,18 however, indicated that Abad, et
al. failed to deliver the certificates of title.
The Subject Motion against the Bond
Due to the non-delivery of the certificates of
title by Abad, et al., DBP filed
its Motion/Application to Call on Plaintiff's
Surety Bond,19 dated February 3, 2004,
praying for the release of the bond issued by
CBIC to answer for the damages it sustained
as a result of the failure to return the 228
certificates of title.
The RTC Ruling
In its Order, dated May 17, 2004, the RTC
denied the subject motion explaining that the
resolution of the motion was no longer part of
its residual power. It pointed out that although
there was indeed an order to return the 228
certificates of title to DBP, it was not made as
a result of a trial of the case, but as a
consequence of the order of dismissal based
on improper venue.
DBP moved for reconsideration. Nevertheless,
in its July 9, 2004 Order, the RTC denied the
motion.
Aggrieved, DBP filed a petition
for certiorari and mandamus before the CA.
The CA Ruling
In its July 9, 2008 Decision, the CA dismissed
the petition for certiorari and mandamus. It
noted that DBP did not move for
reconsideration of the September 25, 2001
Order of dismissal. It considered the RTC
decision as final and executory. It added that
Section 20, Rule 57 of the Rules of Court
provided that the claim for damages against
the bond must be filed before trial or before
appeal was perfected or before the judgment
became executory.20
DBP moved for reconsideration, but its motion
was denied by the CA in its January 21, 2011
Resolution.
Hence, this petition.
ISSUE
THE COURT OF APPEALS ERRED IN ITS
BLIND ADHERENCE TO AND STRICT
APPLICATION OF SECTION 20, RULE 57
OF THE 1997 RULES OF CIVIL
PROCEDURE.21
Petitioner DBP argues that it could not have
anticipated that Abad, et al.
(respondents) would not abide by the writ of
execution; hence, prior to such failure of
execution, it would be premature to claim for
damages against the bond because DBP had
not yet suffered any consequential damages
with the implementation of the writ of seizure;
and that Section 20, Rule 57 of the Rules of
Court was not applicable as the damages
resulting from the improper issuance of the
writ of seizure occurred only after the
unjustified refusal of respondents to return the
titles despite the order from the RTC.
In its Comment,22 dated August 11, 2011,
respondent CBIC averred that Section 20,
Rule 57 of the Rules of Court specified that an
application for damages on account of
improper, irregular or excessive attachment
must be filed before the trial or before appeal
is perfected or before the judgment becomes
executory; that the motion to call on plaintiff's
surety bond was filed more than two (2) years
after the September 25, 2001 Order of the
RTC, dismissing the case, became final and
executory; that, under Section 10, Rule 60 of
the Rules of Court, the surety's liability under
the replevin bond should be included in the
final judgment; that, there being no judgment
as to who, between the plaintiffs and the
defendants, was entitled to the possession of
the certificates of title, the R TC properly
denied the motion to call on plaintiff's surety
bond; that, any claim for damages against the
bond was only proper with respect to any loss
that DBP might have suffered by being
compelled to surrender the possession of the
certificates of title pending trial of the action;
that, in this case, the motion to call on
plaintiffs surety bond was filed after the trial
was already terminated with the issuance of
the order of dismissal; and that, instead of
moving to claim for damages, DBP sought to
quash the writ of seizure, even though it might
already have some basis to claim for
damages at that time as could be gleaned
from the wordings of their motion to dismiss
the complaint, based on, among others,
improper venue and inapplicability of replevin
as proper remedy.
Respondents, on the other hand, failed to file
their comment despite several opportunities
granted to them. Thus, their right to file a
comment on the petition for review was
deemed waived.
In its Consolidated Reply,23 dated August 15,
2016, DPB asserted that Section 20, Rule 57
of the Rules of Court did not cover a situation
where there was an instantaneous dismissal
of the case due to improper venue; that the
damages resulting from the improper issuance
of the writ of seizure occurred only after the
unjustified refusal of respondents to return the
titles despite order from the RTC; and, that
DBP could not resort to the surety prior to
recovering the titles from respondents at any
time during the trial or before the judgment
became final and executory.
The Court's Ruling
The petition lacks merit.
The trial court did not reach
the residual jurisdiction stage
Residual jurisdiction refers to the authority of
the trial court to issue orders for the protection
and preservation of the rights of the parties
which do not involve any matter litigated by
the appeal; to approve compromises; to
permit appeals by indigent litigants; to order
execution pending appeal in accordance with
Section 2, Rule 39; and to allow the
withdrawal of the appeal, provided these are
done prior to the transmittal of the original
record or the record on appeal, even if the
appeal has already been perfected or despite
the approval of the record on appeal24 or in
case of a petition for review under Rule 42,
before the CA gives due course to the
petition.25
The "residual jurisdiction" of the trial court is
available at a stage in which the court is
normally deemed to have lost jurisdiction over
the case or the subject matter involved in the
appeal. This stage is reached upon the
perfection of the appeals by the parties or
upon the approval of the records on appeal,
but prior to the transmittal of the original
records or the records on appeal. In either
instance, the trial court still retains its so-
called residual jurisdiction to issue protective
orders, approve compromises, permit appeals
of indigent litigants, order execution pending
appeal, and allow the withdrawal of the
appeal.26
From the foregoing, it is clear that before the
trial court can be said to have residual
jurisdiction over a case, a trial on the merits
must have been conducted; the court
rendered judgment; and the aggrieved party
appealed therefrom.
In this case, there was no trial on the merits
as the case was dismissed due to improper
venue and respondents could not have
appealed the order of dismissal as the same
was a dismissal, without prejudice. Section 1
(h), Rule 41 of the Rules of Civil Procedure
states that no appeal may be taken from an
order dismissing an action without prejudice.
Indeed, there is no residual jurisdiction to
speak of where no appeal has even been
filed.27
In Strongworld Construction Corporation, et al.
v. Hon. Perello, et al.,28 the Court elucidated
on the difference between a dismissal with
prejudice and one without prejudice:
We distinguish a dismissal with prejudice from
a dismissal without prejudice. The former
disallows and bars the refiling of the
complaint; whereas, the same cannot be said
of a dismissal without prejudice. Likewise,
where the law permits, a dismissal with
prejudice is subject to the right of appeal.1âwphi 1
xxx
Section 1, Rule 16 of the 1997 Revised Rules
of Civil Procedure enumerates the grounds for
which a motion to dismiss may be filed, viz.:
Section 1. Grounds. Within the time for but
before filing the answer to the complaint or
pleading asserting a claim, a motion to
dismiss may be made on any of the following
grounds:
(a) That the court has no jurisdiction over the
person of the defending party;
(b) That the court has no jurisdiction over the
subject matter of the claim;
(c) That venue is improperly laid;
(d) That the plaintiff has no legal capacity to
sue;
(e) That there is another action pending
between the same parties for the same cause;
(f) That the cause of action is barred by a prior
judgment or by the statute of limitations;
(g) That the pleading asserting the claim
states no cause of action;
(h) That the claim or demand set forth in the
plaintiffs pleading has been paid, waived,
abandoned, or otherwise extinguished;
(i) That the claim on which the action is
founded is unenforceable under the provisions
of the statute of frauds; and
(j) That a condition precedent for filing the
claim has not been complied with.
Section 5 of the same Rule, recites the effect
of a dismissal under Sections 1(f), (h), and (i),
thereof, thus:
SEC. 5. Effect of dismissal. Subject to the
right of appeal, an order granting a motion to
dismiss based on paragraphs (f), (h), and (i) of
section 1 hereof shall bar the refiling of the
same action or claim.
Briefly stated, dismissals that are based on
the following grounds, to wit: (1) that the
cause of action is barred by a prior judgment
or by the statute of limitations; (2) that the
claim or demand set forth in the plaintiffs
pleading has been paid, waived, abandoned
or otherwise extinguished; and (3) that the
claim on which the action is founded is
unenforceable under the provisions of the
statute of frauds, bar the refiling of the same
action or claim. Logically, the nature of the
dismissal founded on any of the preceding
grounds is with prejudice because the
dismissal prevents the refiling of the same
action or claim. Ergo, dismissals based on the
rest of the grounds enumerated are without
prejudice because they do not preclude the
refiling of the same action.
xxx
As has been earlier quoted, Section 1(h), Rule
41 of the 1997 Revised Rules of Civil
Procedure mandates that no appeal may be
taken from an order dismissing an action
without prejudice. The same section provides
that in such an instant where the final order is
not appealable, the aggrieved party may file
an appropriate special civil action under Rule
65.29
Here, the RTC dismissed the replevin case on
the ground of improper venue. Such dismissal
is one without prejudice and does not bar the
refiling of the same action; hence, it is not
appealable. Clearly, the RTC did not reach,
and could not have reached, the residual
jurisdiction stage as the case was dismissed
due to improper venue, and such order of
dismissal could not be the subject of an
appeal. Without the perfection of an appeal,
let alone the unavailability of the remedy of
appeal, the RTC did not acquire residual
jurisdiction. Hence, it is erroneous to conclude
that the RTC may rule on DBP's application
for damages pursuant to its residual powers.
Equity cannot supersede the
Rules of Court
DBP admits that it filed the application for
damages after the order of dismissal had
become final and executory. In seeking relief
from this Court, however, it invokes equity and
argues that a strict application of Section 20,
Rule 57 of the Rules of Court would prejudice
its right to recover damages arising from the
improper attachment of the certificates of title.
DBP, however, must be reminded that equity,
"which has been aptly described as a 'justice
outside legality,' is applied only in the absence
of, and never against, statutory law or, as in
this case, judicial rules of procedure.30 The
pertinent positive rules being present here,
they should preempt and prevail over all
abstract arguments based only on equity."31 As
the Court has stated in Lim Tupas v. CA,32 "[
e]motional appeals for justice, while they may
wring the heart of the Court, cannot justify
disregard of the mandate of the law as long as
it remains in force. The applicable maxim,
which goes back to the ancient days of the
Roman jurists - and is now still reverently
observed - is 'aequetas nunquam contravenit
legis.'"33
Accordingly, the CA did not commit any
reversible error when it applied the rules of
procedure in resolving the issue at hand.
The application for damages
was belatedly filed
Section 10, Rule 60 of the Rules of Court
provides that in replevin cases, as in
receivership and injunction cases, the
damages to be awarded to either party upon
any bond filed by the other shall be claimed,
ascertained, and granted in accordance with
Section 20 of Rule 57 which reads:
SEC. 20. Claimfor damages on account of
illegal attachment. - If the judgment on the
action be in favor of the party against whom
attachment was issued, he may recover, upon
the bond given or deposit made by the
attaching creditor, any damages resulting from
the attachment. Such damages may be
awarded only upon application and after
proper hearing, and shall be included in
the final judgment. The application must be
filed before the trial or before appeal is
perfected or before the judgment becomes
executory, with due notice to the attaching
creditor and his surety or sureties, setting forth
the facts showing his right to damages and
the amount thereof.
If the judgment of the appellate court be
favorable to the party against whom the
attachment was issued, he must claim
damages sustained during the pendency
of the appeal by filing an application with
notice to the party in whose favor the
attachment was issued or his surety or
sureties, before the judgment of the appellate
court becomes executory. The appellate court
may allow the application to be heard and
decided by the trial court. [Emphases
supplied]
In other words, to recover damages on a
replevin bond (or on a bond for preliminary
attachment, injunction or receivership), it is
necessary (1) that the defendant-claimant has
secured a favorable judgment in the main
action, meaning that the plaintiff has no cause
of action and was not, therefore, entitled to the
provisional remedy of replevin; (2) that the
application for damages, showing claimant's
right thereto and the amount thereof, be filed
in the same action before trial or before
appeal is perfected or before the judgment
becomes executory; (3) that due notice be
given to the other party and his surety or
sureties, notice to the principal not being
sufficient; and (4) that there should be a
proper hearing and the award for damages
should be included in the final judgment.34
Likewise, to avoid multiplicity of suits, all
incidents arising from the same controversy
must be settled in the same court having
jurisdiction of the main action. Thus, the
application for damages must be filed in the
court which took cognizance of the case, with
due notice to the other parties.35
In this case, DBP filed the application for
damages long after the order of dismissal had
become final and executory. It explained that
this belated filing was due to its recourse to
other remedies, such as the enforcement of
the writ of execution. The Court, however,
finds this reason to be wanting in
persuasiveness. To begin with, the filing of an
application for damages does not preclude
resort to other remedies. Nowhere in the
Rules of Court is it stated that an application
for damages bars the filing of a motion for a
writ of seizure, a writ of execution or any other
applicable remedy. DBP, from the beginning,
had already perceived the attachment to be
improper; hence, it could have easily filed an
application before the judgment became
executory.
In Jao v. Royal Financing Corporation,36 the
Court precluded the defendant therein from
claiming damages against the surety bond
because it failed to file the application for
damages before the termination of the case,
thus:
xxx The dismissal of the case filed by the
plaintiffs-appellees on July 11, 1959, had
become final and executory before the
defendant-appellee corporation filed its motion
for judgment on the bond on September 7,
1959. In the order of the trial court, dismissing
the complaint, there appears no
pronouncement whatsoever against the surety
bond. The appellee-corporation failed to file
its proper application for damages prior to
the termination of the case against it. It is
barred to do so now. The prevailing party, if
such would be the proper term for the
appellee-corporation, having failed to file its
application for damages against the bond prior
to the entry of final judgment, the bondsman-
appellant is relieved of further liability
thereunder. [Emphases supplied]37
Thus, the RTC has indeed no residual
jurisdiction on DBP's claim for damages.
Remedies
The Court is not unmindful of the plight of
DBP. Its chosen remedy, however, cannot be
countenanced as it disregards the Rules of
Court and the settled jurisprudence on the
matter. Nevertheless, this is not to say that
DBP has no other available remedies in order
to recover respondents' indebtedness.
First, DBP could enforce its guarantee
agreement with GFSME. A contract of
guaranty gives rise to a subsidiary obligation
on the part of the guarantor.38 A guarantor
agrees that the creditor, after proceeding
against the principal, may proceed against the
guarantor if the principal is unable to pay.
Moreover, he contracts to pay if, by the use of
due diligence, the debt cannot be made out of
the principal debtor.39
Further, it may file an action for damages
based on Article 19 of the New Civil Code
against respondents for unlawfully taking the
certificates of title, which served as security
for their loan. In Globe Mackay Cable and
Radio Corporation v. Court of Appeals,40 the
Court held:
This article, known to contain what is
commonly referred to as the principle of
abuse of rights, sets certain standards which
must be observed not only in the exercise of
one's rights, but also in the performance of
one's duties. These standards are the
following: to act with justice; to give everyone
his due; and to observe honesty and good
faith. The law, therefore, recognizes a
primordial limitation on all rights; that in their
exercise, the norms of human conduct set
forth in Article 19 must be observed. A right,
though by itself legal because recognized or
granted by law as such, may nevertheless
become the source of some illegality. When a
right is exercised in a manner which does not
conform with the norms enshrined in Article 19
and results in damage to another, a legal
wrong is thereby committed for which the
wrongdoer must be held responsible. But
while Article 19 lays down a rule of conduct for
the government of human relations and for the
maintenance of social order, it does not
provide a remedy for its violation. Generally,
an action for damages under either Article 20
or Article 21 would be proper.41 [Emphasis
supplied]
Finally, nothing precludes DBP from instituting
an action for collection of sum of money
against respondents. Besides, if the parcels
1âwphi1
of land covered by the certificates of title,
which DBP sought to recover from
respondents, were mortgaged to the former,
then DBP, as mortgage-creditor, has the
option of either filing a personal action for
collection of sum of money or instituting a real
action to foreclose on the mortgage security.
The two remedies are alternative and each
remedy is complete by itself. If the mortgagee
opts to foreclose the real estate mortgage, he
waives the action for the collection of the debt,
and vice versa.42
WHEREFORE, the petition is DENIED. The
July 9, 2008 Decision and the January 21,
2011 Resolution of the Court of Appeals, in
CA-G.R. SP No. 85719,
are AFFIRMED in toto.
SO ORDERED.
THIRD DIVISION
G.R. No. 210950, August 15, 2018
 MILAGROS P.
ENRIQUEZ, Petitioner, v. THE
MERCANTILE INSURANCE CO.,
INC., Respondent.
DECISION
LEONEN, J.:
A surety bond remains effective until the
action or proceeding is finally decided,
resolved, or terminated, regardless of
whether the applicant fails to renew the
bond. The applicant will be liable to the
surety for any payment the surety
makes on the bond, but only up to the
amount of this bond.
This is a Petition for Review on
Certiorari1 assailing the August 13, 2013
Decision2 and January 14, 2014
Resolution3 of the Court of Appeals in
CA-G.R. CV No. 95955, which affirmed
the Regional Trial Court's finding that
Milagros P. Enriquez (Enriquez) was
liable for the full amount of the replevin
bond issued by The Mercantile
Insurance Company, Inc. (Mercantile
Insurance).
Sometime in 2003, Enriquez filed a
Complaint for Replevin4 against Wilfred
Asuten (Asuten) before the Regional
Trial Court of Angeles City, Pampanga.
This Complaint, docketed as Civil Case
No. 10846,5 was for the recovery of her
Toyota Hi-Ace van valued at
P300,000.00.6 Asuten allegedly refused
to return her van, claiming that it was
given by Enriquez's son as a
consequence of a gambling deal.7
Enriquez applied for a replevin bond
from Mercantile Insurance. On February
24, 2003, Mercantile Insurance issued
Bond No. 138 for P600,000.00,8 which
had a period of one (1) year or until
February 24, 2004. Enriquez also
executed an indemnity agreement with
Mercantile Insurance, where she agreed
to indemnify the latter "for all damages,
payments, advances, losses, costs,
taxes, penalties, charges, attorney's
fees and expenses of whatever kind and
nature"9 that it would incur as surety of
the replevin bond.10
On May 24, 2004, the Regional Trial
Court issued an Order11 dismissing the
Complaint without prejudice due to
Enriquez's continued failure to present
evidence.
The Regional Trial Court found that
Enriquez surrendered the van to the
Bank of the Philippine Islands, San
Fernando Branch but did not comply
when ordered to return it to the sheriff
within 24 hours from receipt of the
Regional Trial Court March 15, 2004
Order.12 She also did not comply with
prior court orders to prove payment of
her premiums on the replevin bond or to
post a new bond. Thus, the Regional
Trial Court declared Bond No. 138
forfeited. Mercantile Insurance was
given 10 days to produce the van or to
show cause why judgment should not be
rendered against it for the amount of
the bond.13
On July 12, 2004, the Regional Trial
Court held a hearing on the final
forfeiture of the bond where it was
found that Mercantile Insurance failed to
produce the van, and that Bond No. 138
had already expired.14 In an
Order15 issued on the same day, the
Regional Trial Court directed Mercantile
Insurance to pay Asuten the amount of
P600,000.00.
Mercantile Insurance wrote to Enriquez
requesting the remittance of
P600,000.00 to be paid on the replevin
bond.16 Due to Enriquez's failure to
remit the amount, Mercantile Insurance
paid Asuten P600,000.00 on September
3, 2004, in compliance with the
Regional Trial Court July 12, 2004
Order.17 It was also constrained to file a
collection suit against Enriquez with the
Regional Trial Court of Manila.18
In her defense, Enriquez claimed that
her daughter-in-law, Asela, filed the
Complaint for Replevin in her name and
that Asela forged her signature in the
indemnity agreement. She also argued
that she could not be held liable since
the replevin bond had already expired.19
In its July 23, 2010 Decision,20 the
Regional Trial Court ruled in favor of
Mercantile Insurance. It found that non-
payment of the premiums did not cause
the replevin bond to expire. Thus,
Enriquez was still liable for the
reimbursement made by the surety on
the bond. The Regional Trial Court
likewise pointed out that Enriquez made
"conflicting claims" of having applied for
the bond and then later claiming that
her daughter-in-law was the one who
applied for it.21 The dispositive portion
of the Regional Trial Court July 23, 2010
Decision read:
WHEREFORE, judgment is hereby
rendered in favor of plaintiff The
Mercantile Insurance Co., Inc. and
against defendant Milagros P. Enriquez,
as follows:
(i) Ordering defendant Milagros P.
Enriquez to pay plaintiff the claim of
P600,000.00 enforced under the
Indemnity Agreement plus legal interest
at the rate of 12% per annum from date
of judicial demand on October 22, 2004,
until fully paid;
(ii) Ordering defendant Milagros P.
Enriquez to pay attorney's fees fixed in
the reasonable amount of P50,000.00;
(iii) Ordering defendant Milagros P.
Enriquez to pay the costs of
SO ORDERED.22
Enriquez appealed23 with the Court of
Appeals, arguing that the replevin bond
had already expired; therefore, she
could not have been liable under the
indemnity agreement. She also averred
that even assuming that she was still
liable under the indemnity agreement,
she should not pay the full amount
considering that the value of the van
was only P300,000.00.24
On August 13, 2013, the Court of
Appeals rendered a Decision25 affirming
the Regional Trial Court's July 23, 2010
Decision.
The Court of Appeals held that under
the Guidelines on Corporate Surety
Bonds,26 the lifetime of any bond issued
in any court proceeding shall be from
court approval until the case is finally
terminated. Thus, it found that the
replevin bond and indemnity agreement
were still in force and effect when
Mercantile Insurance paid P600,000.00
to Asuten.27
The Court of Appeals likewise found that
Enriquez was "bound by the
incontestability of payments clause" in
the indemnity agreement, which stated
that she would be held liable for any
payment made by the surety under the
bond, regardless of the actual cost of
the van.28 It held that the issue of
whether Enriquez was liable for the full
amount of the replevin bond should
have been raised before the Regional
Trial Court in the Complaint for
Replevin, and not in her appeal.29
Enriquez moved for
reconsideration30 but was denied by the
Court of Appeals in its January 14, 2014
Resolution.31 Hence, this Petition32 was
filed before this Court.
Petitioner argues that when respondent
paid Asuten on September 3, 2004, the
indemnity agreement was no longer in
force and effect since the bond expired
on February 24, 2004.33 She claims that
the indemnity agreement was a contract
of adhesion, and that respondent
"intended the agreement to be so
comprehensive and all-encompassing to
the point of being ambiguous."34
Petitioner contends that even assuming
that the indemnity agreement could be
enforced, she should not have been held
liable for the full amount of the bond.
Citing Rule 60, Section 2 of the Rules of
Court, she argues that a judgment on
replevin is only "either for the delivery
of the property or for its value in case
delivery cannot be made and for such
damages as either party may prove,
with costs."35
Respondent, on the other hand,
contends that the present action has
already prescribed, considering that
Rule 60, Section 10, in relation to Rule
57, Section 20 of the Rules of Court,
mandates that any objection on the
award should be raised in the trial court
where the complaint for replevin is filed.
It argues that since petitioner only
raised the objection before the Court of
Appeals, her action should have been
barred.36
Respondent likewise points out that the
forfeiture of the bond was due to
petitioner's own negligence. It asserts
that in the proceedings before the
Regional Trial Court, Enriquez failed to
present her evidence, and it was only
when she filed an appeal that she raised
her objections.37 It argues that the
Guidelines on Corporate Surety Bonds
specify that the expiry of the bond shall
be after the court proceeding is finally
decided; hence, the bond was still in
effect when respondent paid Asuten.38
The sole issue for this Court's resolution
is whether or not petitioner Milagros P.
Enriquez should be made liable for the
full amount of the bond paid by
respondent The Mercantile Insurance
Co., Inc. as surety, in relation to a
previous case for replevin filed by
petitioner.
I
Replevin is an action for the recovery of
personal property.39 It is both a
principal remedy and a provisional
relief. When utilized as a principal
remedy, the objective is to recover
possession of personal property that
may have been wrongfully detained by
another. When sought as a provisional
relief, it allows a plaintiff to retain the
contested property during the pendency
of the action. In Tillson v. Court of
Appeals:40
The term replevin is popularly
understood as "the return to or recovery
by a person of goods or chattels claimed
to be wrongfully taken or detained upon
the person's giving security to try the
matter in court and return the goods if
defeated in the action;" "the writ by or
the common-law action in which goods
and chattels are replevied," i.e., taken
or gotten back by a writ for replevin;"
and to replevy, means to recover
possession by an action of replevin; to
take possession of goods or chattels
under a replevin order. Bouvier's Law
Dictionary defines replevin as "a form of
action which lies to regain the
possession of personal chattels which
have been taken from the plaintiff
unlawfully . . ., (or as) the writ by virtue
of which the sheriff proceeds at once to
take possession of the property therein
described and transfer it to the plaintiff
upon his giving pledges which are
satisfactory to the sheriff to prove his
title, or return the chattels taken if he
fail so to do;" the same authority states
that the term, "to replevy" means "to
re-deliver goods which have been
distrained to the original possessor of
them, on his giving pledges in an action
of replevin." The term therefore may
refer either to the action itself, for the
recovery of personality, or the
provisional remedy traditionally
associated with it, by which possession
of the property may be obtained by the
plaintiff and retained during the
pendency of the action. In this
jurisdiction, the provisional remedy is
identified in Rule 60 of the Rules of
Court as an order for delivery of
personal property.41
Similarly, in BA Finance Corporation v.
Court of Appeals:42
Replevin, broadly understood, is both a
form of principal remedy and of a
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 hold it pendente lite. The
action is primarily possessory in nature
and generally determines nothing more
than the right of possession. Replevin is
so usually described as a mixed action,
being partly in rem and partly in
personam-in rem insofar as the
recovery of specific property is
concerned, and in personam as regards
to damages involved. As an "action in
rem," the gist of the replevin action is
the right of the plaintiff to obtain
possession of specific personal property
by reason of his being the owner or of
his having a special interest therein.
Consequently, the person in possession
of the property sought to be replevied is
ordinarily the proper and only necessary
party defendant, and the plaintiff is not
required to so join as defendants other
persons claiming a right on the property
but not in possession thereof. Rule 60 of
the Rules of Court allows an application
for the immediate possession of the
property but the plaintiff must show that
he has a good legal basis, i.e., a clear
title thereto, for seeking such interim
possession.43
As a provisional remedy, a party may
apply for an order for the delivery of the
property before the commencement of
the action or at any time before an
answer is filed.44 Rule 60 of the Rules of
Court outlines the procedure for the
application of a writ of replevin. Rule 60,
Section 2 requires that the party
seeking the issuance of the writ must
first file the required affidavit and a
bond in an amount that is double the
value of the property:
Section 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, being merely ancillary to the main
executed to the adverse party in double action, becomes functus oficio. The
the value of the property as stated in parties returned to the status quo as if
the affidavit aforementioned, for the no case for replevin had been filed.
return of the property to the adverse Thus, upon the dismissal of the case, it
party if such return be adjudged, and was imperative for petitioner to return
for the payment to the adverse party of the van to Asuten. In Advent Capital
such sum as he may recover from the and Finance Corporation v. Young:50
applicant in the action.45
We agree with the Court of Appeals in
directing the trial court to return the
seized car to Young since this is the
Once the affidavit is filed and the bond
necessary consequence of the dismissal
is approved by the court, the court
of the replevin case for failure to
issues an order and a writ of seizure
prosecute without prejudice. Upon the
requiring the sheriff to take the property
dismissal of the replevin case for failure
into his or her custody.46 If there is no
to prosecute, the writ of seizure, which
further objection to the bond filed within
is merely ancillary in nature,
five (5) days from the taking of the
became functus officio and should have
property, the sheriff shall deliver it to
been lifted. There was no adjudication
the applicant.47 The contested property
on the merits, which means that there
remains in the applicant's custody until
was no determination of the issue who
the court determines, after a trial on the
has the better right to possess the
Issues, which among the parties has the
subject car. Advent ca mot therefore
right of possession.48
retain possession of the subject car
considering that it was not adjudged as
In Civil Case No. 10846, petitioner
the prevailing party entitled to the
Enriquez filed a replevin case against
remedy of replevin.
Asuten for the recovery of the Toyota
Hi-Ace van valued at
Contrary to Advent's view, Olympia
P300,000.00.49 She applied for a bond
International Inc. v. Court of
in the amount of P600,000.00 with
Appeals applies to this case. The
respondent in Asuten's favor. The
dismissal of the replevin case for failure
Regional Trial Court approved the bond
to prosecute results in the restoration of
and ordered the sheriff to recover the
the parties' status prior to litigation, as
van from Asuten and to deliver it to
if no complaint was filed at all. To let
petitioner. While the van was in
the writ of seizure stand after the
petitioner's custody, the Regional Trial
dismissal of the complaint would be
Court dismissed the case without
adjudging Advent as the prevailing
prejudice for failure to prosecute. Thus,
party, when precisely no decision on the
it ordered the sheriff to restore the van
merits had been rendered. Accordingly,
to Asuten. When petitioner failed to
the parties must be reverted to
produce the van, the Regional Trial
their status quo ante. Since Young
Court directed respondent to pay Asuten
possessed the subject car before the
the amount of the bond.
filing of the replevin case, the same
must be returned to him, as if no
There was no trial on the merits. The
complaint was filed at all.51
Regional Trial Court's dismissal for
failure to prosecute was a dismissal
without prejudice to re-filing. In this
particular instance, any writ of seizure, Petitioner argues that she should not
have been made liable for the bond
despite her failure to return the van,
considering that it was effective only
until February 24, 2004, and that she
did not renew or post another bond.
De Guia v. Alto Surety & Insurance,
Co.52 requires that any application on
the bond be made after hearing but
before the entry of judgment.
Otherwise, the surety can no longer be
made liable under the bond:
Construing and applying these
provisions of the Rules, we have held in
a long line of cases that said provisions
are mandatory and require the
application upon the bond against the
surety or bondsmen and the award
thereof to be made after hearing and
before the entry of final judgment in the
case; that if the judgment under
execution contains no directive for the
surety to pay, and the proper party fails
to make any claim for such directive
before such judgment had become final
and executory, the surety or bondsman
cannot be later made liable under the
bond. The purpose of the
aforementioned rules is to avoid
multiplicity of suits.53
For this reason, a surety bond remains
effective until the action or proceeding
is finally decided, resolved, or
terminated. This condition is deemed
incorporated in the contract between
the applicant and the surety, regardless
of whether they failed to expressly state
it. Under the Guidelines on Corporate
Surety Bonds:54
VII. LIFETIME OF BONDS IN CRIMINAL
AND CIVIL ACTIONS/SPECIAL
PROCEEDINGS
Unless and until the Supreme Court
directs otherwise,55 the lifetime or
duration of the effectivity of any bond
issued in criminal and civil
actions/special proceedings, or in any
proceeding or incident therein shall be
from its approval by the court, until the
action or proceeding is finally decided,
resolved or terminated. This condition
must be incorporated in the terms and
condition of the bonding contract and
shall bind the parties notwithstanding
their failure to expressly state the same
in the said contract or
agreement. (Emphasis supplied)
Civil Case No. 10846 is a rare instance
where the writ of seizure is dissolved
due to the dismissal without prejudice,
but the bond stands because the case
has yet to be finally terminated by the
Regional Trial Court.
The peculiar circumstances in this case
arose when petitioner failed to return
the van to Asuten, despite the dismissal
of her action. This is an instance not
covered by the Rules of Court or
jurisprudence. In its discretion, the
Regional Trial Court proceeded to rule
on the forfeiture of the bond. As a
result, respondent paid Asuten twice the
value of the van withheld by petitioner.
Respondent, thus, seeks to
recover this amount from petitioner,
despite the van only being worth half
the amount of the bond.
Of all the provisional remedies provided
in the Rules of Court, only Rule 60,
Section 256 requires that the amount of
the bond be double the value of the
property. The other provisional
remedies provide that the amount be
fixed by court or be merely equal to the
value of the property:
Provisional Remedies
Rule 57
Preliminary Attachment

....
Section 4. Condition of applicant's 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.
....
Section 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
is 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.
....
Section 14. Proceedings where property
claimed by third person. — If the
property attached is claimed by any
person other than the party against
whom attachment had been issued or
his agent, and such person makes an
affidavit of his title thereto, or right to
the possession thereof, stating the
grounds of such right or title, and
serves such affidavit upon the sheriff
while the latter has possession of the
attached property, and a copy thereof
upon the attaching party, the sheriff
shall not be bound to keep the property
under attachment, unless the attaching
party or his agent, on demand of the
sheriff, shall file a bond approved by the
court to indemnify the third-party
claimant in a sum not less than the
value of the property levied upon. In
case of disagreement as to such value,
the same shall be decided by the court
issuing the writ of attachment. No claim
for damages for the taking or keeping of
the property may be enforced against
the bond unless the action therefor is
filed within one hundred twenty (120)
days from the date of the filing of the
bond.
....
Rule 58
Preliminary Injunction
....
Section 4. Verified application and bond
for preliminary injunction or temporary
restraining order. — A preliminary
injunction or temporary restraining
order may be granted only when:
....
(b) Unless exempted by the court, the
applicant files with the court where the
action or proceeding is pending, a bond
executed to the party or person
enjoined, in an amount to be fixed by
the court, to the effect that the
applicant will pay to 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 bond, a writ of
preliminary injunction shall be issued.
....
Section 6. Grounds for objection to, or
for motion of dissolution of, injunction
or restraining order. — The application
for injunction or restraining order may
be denied, upon a showing of its
insufficiency. The injunction or
restraining order may also be denied,
or, if granted, may be dissolved, on
other grounds upon affidavits of the
party or person enjoined, which may be
opposed by the applicant also by
affidavits. It may further be denied, or,
if granted, may be dissolved, if it
appears after hearing that although the
applicant is entitled to the injunction or
restraining order, the issuance or
continuance thereof, as the case may
be, would cause irreparable damage to
the party or person enjoined while the
applicant can be fully compensated for
such damages as he may suffer, and the
former files a bond in an amount fixed
by the court conditioned that he will pay
all damages which the applicant may
suffer by the denial or the dissolution of
the injunction or restraining order. If it
appears that the extent of the
preliminary injunction or restraining
order granted is too great, it may be
modified.
....
Rule 59
Receivership
....
Section 2. Bond on appointment of
receiver. — Before issuing the order
appointing a receiver the court shall
require the applicant to file a bond
executed to the party against whom the
application is presented, in an amount
to be fixed by the court, to the effect
that the applicant will pay such party all
damages he may sustain by reason of
the appointment of such receiver in case
the applicant shall have procured such
appointment without sufficient cause;
and the court may, in its discretion, at
any time after the appointment, require
an additional bond as further security
for such damages.
Section 3. Denial of application or
discharge of receiver. — The application
may be denied, or the receiver
discharged, when the adverse party files
a bond executed to the applicant, in an
amount to be fixed by the court, to the
effect that such party will pay the
applicant all damages he may suffer by
reason of the acts, omissions, or other
matters specified in the application as
ground for such appointment. The
receiver may also be discharged if it is
shown that his appointment was
obtained without sufficient cause.
....
Rule 60
Replevin
....
Section 7. Proceedings where property
claimed by third person. — If the
property taken is claimed by any person
other than the party against whom the
writ of replevin had been issued or his
agent, and such person makes an
affidavit of his title thereto, or right to
the possession thereof, stating the
grounds therefor, and serves such
affidavit upon the sheriff while the latter
has possession of the property and a
copy thereof upon the applicant, the
sheriff shall not be bound to keep the
property under replevin or deliver it to
the applicant unless the applicant or his
agent, on demand of said sheriff, shall
file a bond approved by the court to
indemnify the third-party claimant in a
sum not less than the value of the
property under replevin as provided in
section 2 hereof. In case of
disagreement as to such value, the
court shall determine the same. No
claim for damages for the taking or
keeping of the property may be
enforced against the bond unless the
action therefor is filed within one
hundred twenty (120) days from the
date of the filing of the
bond.57 (Emphasis supplied)
However, there is a rationale to the
requirement that the bond for a writ of
seizure in a replevin be double the value
of the property. The bond functions not
only to indemnify the defendant in case
the property is lost, but also to answer
for any damages that may be awarded
by the court if the judgment is rendered
in defendant's favor. In Citibank, N.A. v.
Court of Appeals:58
It should be noted that a replevin bond
is intended to indemnify the defendant
against any loss that he may suffer by
reason of its being compelled to
surrender the possession of the disputed
property pending trial of the action. The
same may also be answerable for
damages if any when judgment is
rendered in favor of the defendant or
the party against whom a writ of
replevin was issued and such judgment
includes the return of the property to
him. Thus, the requirement that the
bond be double the actual value of the
properties litigated upon. Such is the
case because the bond will answer for
the actual loss to the plaintiff, which
corresponds to the value of the
properties sought to be recovered and
for damages, if any.59
Any application of the bond in a replevin
case, therefore, is premised on the
judgment rendered in favor of the
defendant. Thus, the Rules of Court
imply that there must be a prior
judgment on the merits before there
can be any application on the bond:
Rule 60
Replevin
....
Section 9. Judgment. — After trial of the
issues, the court shall determine who
has the right of possession to and the
value of the property and shall render
judgment in the alternative for the
delivery thereof to the party entitled to
the same, or for its value in case
delivery cannot be made, and also for
such damages as either party may
prove, with costs.
Section 10. Judgment to include
recovery against sureties. — The
amount, if any, to be awarded to any
party upon any bond filed in accordance
with the provisions of this Rule, shall be
claimed, ascertained, and granted under
the same procedure as prescribed in
section 20 of Rule 57.
The Rules of Court likewise require that
for the defendant to be granted
the full amount of the bond, he or she
must first apply to the court for
damages. These damages will be
awarded only after a proper hearing:
Rule 57
Preliminary Attachment
....
Section 20. Claim for damages on
account of improper, irregular or
excessive attachment. — An application
for damages on account of improper,
irregular or excessive attachment must
be filed before the trial or before appeal
is perfected or before the judgment
becomes executory, with due notice to
the attaching party and his surety or
sureties, setting forth the facts showing
his right to damages and the amount
thereof. Such damages may be awarded
only after proper hearing and shall be
included in the judgment on the main
case.
If the judgment on the appellate court
be favorable to the party against whom
the attachment was issued, he must
claim damages sustained during the
pendency of the appeal by filing an
application in the appellate court, with
notice to the party in whose favor the
attachment was issued or his surety or
sureties, before the judgment of the
appellate court becomes executory. The
appellate court may allow the
application to be heard and decided by
the trial court.
Nothing herein contained shall prevent
the party against whom the attachment
was issued from recovering in the same
action the damages awarded to him
from any property of the attaching party
not exempt from execution should the
bond or deposit given by the latter be
insufficient or fail to fully satisfy the
award.
Forfeiture of the replevin bond,
therefore, requires first, a judgment on
the merits in the defendant's favor,
and second, an application by the
defendant for damages. Neither
circumstance appears in this case. When
petitioner failed to produce the van,
equity demanded that Asuten be
awarded only an amount equal to the
value of the van. The Regional Trial
Court would have erred in ordering the
forfeiture of the entire bond in Asuten's
favor, considering that there was no
trial on the merits or an application by
Asuten for damages. This judgment
could have been reversed had petitioner
appealed the Regional Trial Court's May
24, 2004 Order in Civil Case No.
10846. Unfortunately, she did not.
Respondent was, thus, constrained to
follow the Regional Trial Court's
directive to pay Asuten the full amount
of the bond.
II
This is a simple case for collection of a
sum of money. Petitioner cannot
substitute this case for her lost appeal in
Civil Case No. 10846.
In applying for the replevin bond,
petitioner voluntarily undertook with
respondent an Indemnity Agreement,
which provided:
INDEMNIFICATION – to indemnify the
SURETY for all damages, payments,
advances, losses, costs, taxes,
penalties, charges, attorney's fees and
expenses of whatever kind and nature
that the SURETY may at any time
sustain or incur as a consequence of
having become a surety upon the
above-mentioned bond, and to pay,
reimburse and make good to the
SURETY, its successors and assigns, all
sums or all money which it shall pay or
become liable to pay by virtue of said
bond even if said payment/s or liability
exceeds the amount of the bond. . . .

INCONTESTABILITY OF PAYMENTS
MADE BY THE SURETY – any payment or
disbursement made by the surety on
account of the above-mentioned bond,
either in the belief that the SURETY was
obligated to make such payment or in
the belief that said payment was
necessary in order to avoid a greater
loss or obligation for which the SURETY
might be liable by virtue of the . . .
above-mentioned bond, shall be final,
and will not be contested by the
undersigned, who jointly and severally
bind themselves to indemnify the
SURETY for any of such payment or
disbursement.60
Basic is the principle that "a contract is
law between the parties"61 for as long as
it is "not contrary to law, morals, good
customs, public order, or public
policy."62 Under their Indemnity
Agreement, petitioner held herself liable
for any payment made by respondent
by virtue of the replevin bond.
Petitioner contends that the Indemnity
Agreement was a contract of adhesion
since respondent made the extent of
liability "so comprehensive and all-
encompassing to the point of being
ambiguous."63
A contract of insurance is, by default, a
contract of adhesion. It is prepared by
the insurance company and might
contain terms and conditions too vague
for a layperson to understand; hence,
they are construed liberally in favor of
the insured. In Verendia v. Court of
Appeals:64
Basically a contract of indemnity, an
insurance contract is the law between
the parties. Its terms and conditions
constitute the measure of the insurer's
liability and compliance therewith is a
condition precedent to the insured's
right to recovery from the insurer. As it
is also a contract of adhesion, an
insurance contract should be liberally
construed in favor of the insured and
strictly against the insurer company
which usually prepares it.65
Respondent, however, does not seek to
recover an amount which exceeds the
amount of the bond or any "damages,
payments, advances, losses, costs,
taxes, penalties, charges, attorney's
fees and expenses of whatever kind and
nature,"66 all of which it could have
sought under the Indemnity Agreement.
It only seeks to recover from petitioner
the amount of the bond, or
P600,000.00.
Respondent paid P600,000.00 to Asuten
pursuant to a lawful order of the
Regional Trial Court in Civil Case No.
10846. If there were any errors in the
judgment of the Regional Trial Court, as
discussed above, petitioner could have
appealed this. Petitioner, however,
chose to let Civil Case No. 10846 lapse
into finality. This case cannot now be
used as a substitute for her lost appeal.
It is clear from the antecedents that any
losses which petitioner has suffered
were due to the consequences of her
actions, or more accurately, her
inactions. Civil Case No. 10846, which
she filed, was dismissed due to her
failure to prosecute. The Regional Trial
Court forfeited the replevin bond which
she had filed because she refused to
return the property. She is now made
liable for the replevin bond because she
failed to appeal its forfeiture.
WHEREFORE, the Petition
is DENIED. The August 13, 2013
Decision and January 14, 2014
Resolution of the Court of Appeals in
CA-G.R. CV No. 95955 are AFFIRMED.

SO ORDERED
Rule 61: SUPPORT PENDENTE LITE
SECOND DIVISION
G.R. No. L-59906 October 23, 1982
BUENAVENTURA SAN JUAN, petitioner,
vs.
HON. MANUEL E. VALENZUELA, Judge of
the Court of First Instance of Rizal and
DOROTEA MEJIA, respondents.
Francisco D. Lozano for petitioner.
Manuel Valenzuela in his own behalf.
ESCOLIN, J.:
Petition for certiorari to annul and set aside
the order of respondent Judge Manuel E.
Valenzuela in Civil Case No. 8874-P of the
Court of First Instance of Rizal, Branch XXIX,
dated December 24, 1981, ordering petitioner
Buenaventura San Juan to give
support pendente lite to respondent Dorotea
Mejia and her minor children.
It appears that on September 16, 1981, the
marriage between respondent Mejia and
petitioner San Juan, solemnized on October 2,
1973, was declared null and void by the Court
of First Instance of Rizal on the ground of a
prior and subsisting marriage between
petitioner and one Isabel Bandin. On February
25, 1981, respondent Mejia instituted the
instance action against petitioner, docketed as
Civil Case No. 8874- P, seeking support for
herself and her two minor children.
After issues were joined, the respondent
judge, on motion of Mejia, entered the
challenged order granting support pendente
lite as follows:
IN VIEW OF THE
FOREGOING, pursuant to
Section 5, Rule 61 of the New
Rules of Court and after giving
due regard to the necessities
of the plaintiff Dorotea Mejia
and her children, Rachel San
Juan and Jeffrey San Juan,
the application for support
pendente lite is hereby
granted, and the same is fixed
at P2,500.00 a month
commencing from January 1,
1982 to be paid to the plaintiff
on or the 5th day of each
month until this case is finally
adjudicated. This is without
prejudice to any judgment for
support in arrears due the
plaintiff if the evidence will so
warrant after trial.
SO ORDERED.
Petitioner's motion for reconsideration of the
above order on the grounds that (1) the
amount is grossly disproportionate to
petitioner's means; (2) petitioner is not obliged
to support respondent Mejia as their marriage
is null and void; and (3) no evidence was
presented as to petitioner's present resources,
was denied.
Hence, on March 16, 1982, petitioner
instituted this petition.
It appears that pending resolution of this
petition, petitioner filed with the trial court a
manifestation, dated June 17, 1982, proposing
to settle his obligation of P15,000.00,
representing the amount of support which
accrued from January to June, 1982, and to
pay the same in three equal installments, the
first to be paid upon approval by the court of
his scheme of payment, and the balance
within a period of two (2) months thereafter.
This proposal was approved by the court. In
the same manifestation, petitioner sought the
reduction of the amount of support pendente
lite to P1,000.00 a month on the ground that
the sum of P2,500.00 previously fixed by
respondent judge is now beyond his means to
pay. According to private respondent, the
court had not yet acted on petitioner's request
for reduction of the monthly support because
the respondent judge left for abroad. 1
Unquestionably, the petitioner's willingness to
pay the amount of support pendente lite in the
mariner indicated in his manifestation, and the
approval thereof by the respondent Judge
have rendered this petition moot and
academic.
As to the factual issue of whether the amount
of P2,500.00 previously fixed by respondent
judge is now beyond the means of petitioner,
the same should be resolved by the lower
court on the basis of the evidence to be
presented at the proper hearing. The order of
December 24 fixing the amount of
support pendente lite is not final in character
in the sense that it can be the subject of
modification, depending on the changing
conditions affecting the ability of the obligor to
pay the amount fixed for support. 2
WHEREFORE, the instant petition is hereby
dismissed for being moot and academic. No
costs.
SO ORDERED.
Makasiar (Chairman), Aquino, Concepcion,
Jr., Guerrero, Abad Santos and De Castro,
JJ., concur
MISCELLANEOUS PROVISIONAL
REMEDIES
EN BANC
G.R. Nos. 184379-80 April 24, 2012
RODOLFO NOEL LOZADA, JR., VIOLETA
LOZADA and ARTURO
LOZADA, Petitioners,
vs.
PRESIDENT GLORIA MACAPAGAL
ARROYO, EDUARDO ERMITA, AVELINO
RAZON, ANGEL ATUTUBO and SPO4
ROGER VALEROSO,* Respondents.
DECISION
SERENO, J.:
What the Court decides today has nothing to
do with the substance or merits surrounding
the aborted deal of the Philippine government
with the National Broadband Network and
ZTE Corporation, or any allegation of
petitioner Rodolfo Noel "June" Lozada, Jr.,
(Lozada) regarding the same. There is only
one issue that we decide today – whether
circumstances are adequately alleged and
proven by petitioner Lozada to entitle him to
the protection of the writ of amparo. Before us
is a Petition for Review on Certiorari of the
Decision dated 12 September 2008 of the
Court of Appeals (CA), dismissing the Petition
for the Issuance of a Writ of Amparo.1
Petitioner Lozada was the former President
and Chief Executive Officer of the Philippine
Forest Corporation (PFC), a government-
owned- and -controlled corporation under the
Department of Environment and Natural
Resources (DENR).2 Petitioner Violeta Lozada
(Violeta) is his wife, while petitioner Arturo
Lozada (Arturo) is his brother.
At the time the Petition for the Writ of Amparo
was filed, respondent former President Gloria
Macapagal Arroyo (former President Arroyo)
was the incumbent President of the
Philippines. Meanwhile, Eduardo Ermita (ES
Ermita) was then the Executive Secretary;
Avelino Razon (Razon), the Director General
of the Philippine National Police (PNP); Angel
Atutubo (Atutubo), the Assistant General
Manager for Security and Emergency
Services of the Manila International Airport
Authority; and Rodolfo Valeroso (Valeroso),
an agent of the Aviation Security Group (ASG)
of the PNP.
Antecedent Facts
The instant Petition stems from the alleged
corruption scandal precipitated by a
transaction between the Philippine
government, represented by the National
Broadband Network (NBN), and ZTE
Corporation (ZTE), a Chinese manufacturer of
telecommunications equipment.3 Former
National Economic Development Authority
(NEDA) Secretary Romulo Neri (Sec. Neri)
sought the services of Lozada as an unofficial
consultant in the ZTE-NBN deal.4 The latter
avers that during the course of his
engagement, he discovered several
anomalies in the said transaction involving
certain public officials.5 These events impelled
the Senate of the Philippines Blue Ribbon
Committee (Blue Ribbon Committee) to
conduct an investigation thereon,6 for which it
issued a subpoena directing Lozada to appear
and testify on 30 January 2008.7
On that date, instead of appearing before the
Blue Ribbon Committee, Lozada left the
country for a purported official trip to London,
as announced by then DENR Secretary Lito
Atienza (Sec. Atienza).8 In the Petition, Lozada
alleged that his failure to appear at the
scheduled hearing was upon the instructions
of then Executive Assistant Undersecretary
Manuel Gaite (Usec. Gaite).9 Consequently,
the Senate issued an Order dated 30 January
2008: (a) citing Lozada for contempt; (b)
ordering his arrest and detention; and (c)
directing the Senate Sergeant-at-Arms to
implement the Order and make a return
thereon.10
While overseas, Lozada asked Sec. Atienza
whether the former could be allowed to go
back to the Philippines.11 Upon the approval of
Sec. Atienza, Lozada informed his family that
he was returning from Hong Kong on 5
February 2008 on board Cathay Pacific Flight
No. 919, bound to arrive in Manila at 4:40 p.m.
on the same day.12
In the Petition, Lozada claims that, upon
disembarking from the aircraft, several men
held his arms and took his bag. Although he
allegedly insisted on meeting with his family,
he later realized that it was wiser to just follow
them, especially when he overheard from their
handheld radio: "[H]wag kayong dumaan
diyan sir nandyan ang mga taga senado."13
Lozada asked if he could go to the comfort
room, an opportunity he used to call up his
brother, petitioner Arturo, and inform him of
his situation.14 The men thereafter led him
through the departure area of the airport and
into a car waiting for them.15 They made him sit
alone at the back of the vehicle, while a man,
whom he later discovered to be respondent
Valeroso, took the passenger seat and was
always in contact with other
individuals.16 Lozada observed that other cars
tailed their vehicle.17
Sec. Atienza then phoned Lozada, assuring
the latter that he was with people from the
government, and that the former was going to
confer with "ES and Ma’[a]m." Lozada
surmised that these individuals referred to ES
Ermita and former President Arroyo,
respectively.18 Sec. Atienza also purportedly
instructed Lozada to pacify his wife, petitioner
Violeta, who was making public statements
asking for her husband’s return.19
The vehicle traversed the South Luzon
Expressway and drove towards the direction
of Laguna.20 Along the way, the men asked
Lozada to draft an antedated letter requesting
police protection.21
Lozada requested that he be brought home to
Pasig, but the men were allegedly compelled
to deny his request on account of unidentified
security risks.22 Eventually, however, the
vehicle turned around and drove to Libis,
Quezon City. The group stopped at The
Outback restaurant to meet with certain
individuals, who turned out to be Atty. Antonio
Bautista (Atty. Bautista) and Colonel Paul
Mascarinas (Col. Mascarinas) of the Police
Special Protection Office (PSPO). At the
restaurant, Lozada claimed that he was made
to fill in the blanks of a prepared affidavit.23
After the meeting, the men informed Lozada
that they were going to billet him in a hotel for
a night, but he suggested that they take him to
La Salle Green Hills instead. The men
acquiesced.24
Upon arriving in La Salle Green Hills, Lozada
was met by Violeta and his sister, Carmen
Lozada (Carmen).25 He observed that the
perimeter was guarded by policemen,
purportedly restraining his liberty and
threatening not only his security, but also that
of his family and the De La Salle brothers.26
On 6 February 2008, at around 10:00 a.m.,
Col. Mascarinas supposedly brought Lozada
to the office of Atty. Bautista to finalize and
sign an affidavit.27
At about 1:00 p.m., Violeta filed before this
Court a Petition for Habeas Corpus, docketed
as G.R. No. 181342 (the Habeas Corpus
case).28 Arturo likewise filed before this Court a
Petition for a Writ of Amparo, docketed as
G.R. No. 181356 (the Amparo case), and
prayed for the issuance of (a) the writ of
amparo; (b) a Temporary Protection Order
(TPO); and (c) Inspection and Production
Orders as regards documents related to the
authority ordering custody over Lozada, as
well as any other document that would show
responsibility for his alleged abduction.29
At around the same time that Arturo filed the
Petition for a Writ of Amparo, Col. Mascarinas
drove Lozada back to La Salle Green
Hills.30 Lozada was then made to sign a
typewritten, antedated letter requesting police
protection.31 Thereafter, former Presidential
Spokesperson Michael Defensor (Sec.
Defensor) supposedly came and requested
Lozada to refute reports that the latter was
kidnapped and to deny knowledge of alleged
anomalies in the NBN-ZTE deal. Sec.
Defensor then purportedly gave Lozada
₱50,000 for the latter’s expenses.32
On 7 February 2008, Lozada decided to hold
a press conference and contact the Senate
Sergeant-at-Arms, who served the warrant of
arrest on him.33 Lozada claimed that after his
press conference and testimony in the
Senate, he and his family were since then
harassed, stalked and threatened.34
On the same day, this Court issued a
Resolution (a) consolidating the Habeas
Corpus case and the Amparo case; (b)
requiring respondents in the Habeas Corpus
case to comment on the Petition; (c) issuing a
Writ of Amparo; (d) ordering respondents in
the Amparo case to file their verified Return;
(e) referring the consolidated Petitions to the
CA; and (f) directing the CA to set the cases
for hearing on 14 February
2008.35 Accordingly, the court a quo set both
cases for hearing on 14 February 2008.36
On 12 February 2008, respondents filed
before the CA a Manifestation and Motion,
praying for the dismissal of the Habeas
Corpus case.37 They asserted that Lozada was
never illegally deprived of his liberty and was,
at that time, no longer in their custody. They
likewise averred that, beginning 8 February
2008, Lozada had already been under the
supervision of the Senate and, from then on,
had been testifying before it.38
In their verified Return, respondents claimed
that Sec. Atienza had arranged for the
provision of a security team to be assigned to
Lozada, who was then fearful for his
safety.39 In effect, respondents asserted that
Lozada had knowledge and control of the
events that took place on 5 February 2008,
voluntarily entrusted himself to their company,
and was never deprived of his liberty. Hence,
respondents prayed for the denial of the
interim reliefs and the dismissal of the
Petition.40
During the initial hearing on 14 February
2008, Lozada and Violeta ratified the Petition
in the Amparo case41 to comply with Section 2
of the Rule on the Writ of Amparo,42 which
imposes an order to be followed by those who
can sue for the writ.43 The CA also dismissed
the Habeas Corpus case in open court for
being moot and academic, as Lozada was
physically present and was not confined or
detained by any of the
respondents.44 Considering that petitioners
failed to question the dismissal of the Habeas
Corpus case, the said dismissal had lapsed
into finality, leaving only the Amparo case
open for disposition.
Thereafter, Lozada filed a Motion for
Temporary Protection Order and Production of
Documents,45 while Arturo filed a Motion for
Production of Documents.46 Additionally, Arturo
also filed a Motion for the Issuance of
Subpoena Ad Testificandum and Presentation
of Hostile Witnesses and Adverse Parties
Romulo Neri, Benjamin Abalos, [Sr.], Rodolfo
Valeroso, "Jaime" the Driver and Other
Respondents. Respondents opposed these
motions.47 The CA denied the Motion for the
Issuance of Subpoena on the ground that the
alleged acts and statements attributed to Sec.
Neri and Benjamin Abalos (Abalos) were
irrelevant to the Amparo case, and that to
require them to testify would only result in a
fishing expedition.48 The CA likewise denied
Arturo’s subsequent Motion for
Reconsideration.49
In its Resolution dated 5 March 2008, the CA
dropped former President Arroyo as a
respondent on the ground that at the time the
Petition in the Amparo case was filed, she
was still the incumbent President enjoying
immunity from suit.50 Arturo filed a Motion for
Reconsideration,51 which the CA denied in its
Resolution dated 25 March 2008.52
On 12 September 2008, the CA rendered its
Decision denying petitioners the privilege of
the Writ of Amparo and dismissing the
Petition.53 The CA found that petitioners were
unable to prove through substantial evidence
that respondents violated, or threatened with
violation, the right to life, liberty and security of
Lozada.
Petitioners thus filed the instant Petition,
praying for: (a) the reversal of the assailed CA
Decision; (b) the issuance of the TPO; and (c)
the accreditation of the Association of Major
Religious Superiors of the Philippines and the
De La Salle Brothers as the sanctuaries of
Lozada and his family.54 In the alternative,
petitioners pray that this Court remand the
case to the CA for further hearings and
reverse the latter’s Orders: (a) denying the
Motion to Issue a Subpoena Ad Testificandum
and (b) dropping former President Arroyo as a
respondent. Petitioners raise the following
issues:
(1) Whether the Court a [q]uo erred in
ruling to dismiss the petition for a writ
of amparo and deny Petitioners’
prayer for a Temporary Protection
Order, inter alia, because there is no
substantial evidence to prove that the
right to life, liberty or security of Jun
Lozada was violated or threatened
with violation. This rule is not in accord
with the rule on the writ of amparo and
Supreme Court jurisprudence on
substantial evidence[.]
(2) Whether the Ponencia erred and
gravely abused its discretion by
prematurely ruling that the testimony
of witnesses which Petitioners sought
to present and who are subject of the
Motion for Issuance of Subpoena ad
testificandum were irrelevant to the
Petition for a Writ of Amparo in a way
not in accord with the Rules of Court
and Supreme Court decisions.
(3) Whether the Court a quo erred in
using and considering the affidavits of
respondents in coming up with the
questioned decision when these were
not offered as evidence and were not
subjected to cross-examination. This
ruling is not in accord with the Rules of
Court and jurisprudence.
(4) Whether the Court a [q]uo erred in
dropping as respondent Pres. Gloria
Arroyo despite her failure to submit a
verified return and personally claim
presidential immunity in a way not in
accord with the Rule on the Writ of
Amparo.55
The Office of the Solicitor General (OSG)
asserts that petitioners failed to adduce
substantial evidence, as the allegations they
propounded in support of their Petition were
largely hearsay.56 The OSG also maintains that
it was proper for the CA to have dropped
former President Arroyo as respondent on
account of her presidential immunity from
suit.57
Respondent Atutubo also alleges, among
others, that: (a) Lozada voluntarily asked for
security and protection; (b) Lozada willingly
submitted himself to the company of the police
escorts; (c) Atutubo merely accompanied him
to pass through the contingency route
customarily provided to VIP passengers,
public figures, foreign dignitaries, and the like;
and (d) Atutubo only performed his job to
ensure security and maintain order at the
airport upon the arrival of Lozada.58
In the face of these assertions by
respondents, petitioners nevertheless insist
that while they have sufficiently established
that Lozada was taken against his will and
was put under restraint, respondents have
failed to discharge their own burden to prove
that they exercised extraordinary diligence as
public officials.59 Petitioners also maintain that
it was erroneous for the CA to have denied
their motion for subpoena ad testificandum for
being irrelevant, given that the relevancy of
evidence must be examined after it is offered,
and not before.60 Finally, petitioners contend
that the presidential immunity from suit cannot
be invoked in amparo actions.61
Issues
In ruling on whether the CA committed
reversible error in issuing its assailed
Decision, three issues must be discussed:
I. Whether the CA committed an error
in dropping former President Arroyo
as a respondent in the Amparo case.
II. Whether the CA committed an error
in denying petitioners’ Motion for the
Issuance of a Subpoena Ad
Testificandum.
III. Whether petitioners should be
granted the privilege of the writ of
amparo.
Discussion
The writ of amparo is an independent and
summary remedy that provides rapid judicial
relief to protect the people’s right to life, liberty
and security.62 Having been originally intended
as a response to the alarming cases of
extrajudicial killings and enforced
disappearances in the country, it serves both
preventive and curative roles to address the
said human rights violations. It is preventive in
that it breaks the expectation of impunity in
the commission of these offenses, and it is
curative in that it facilitates the subsequent
punishment of perpetrators by inevitably
leading to subsequent investigation and
action.63
As it stands, the writ of amparo is confined
only to cases of extrajudicial killings and
enforced disappearances, or to threats
thereof.64 Considering that this remedy is
aimed at addressing these serious violations
of or threats to the right to life, liberty and
security, it cannot be issued on amorphous
and uncertain grounds,65 or in cases where the
alleged threat has ceased and is no longer
imminent or continuing.66 Instead, it must be
granted judiciously so as not to dilute the
extraordinary and remedial character of the
writ, thus:
The privilege of the writ of amparo is
envisioned basically to protect and guarantee
the rights to life, liberty, and security of
persons, free from fears and threats that
vitiate the quality of this life. It is an
extraordinary writ conceptualized and adopted
in light of and in response to the prevalence of
extra-legal killings and enforced
disappearances. Accordingly, the remedy
ought to be resorted to and granted
judiciously, lest the ideal sought by the
Amparo Rule be diluted and undermined by
the indiscriminate filing of amparo petitions for
purposes less than the desire to secure
amparo reliefs and protection and/or on the
basis of unsubstantiated
allegations.67 (Emphasis supplied.)
Using this perspective as the working
framework for evaluating the assailed CA
decision and the evidence adduced by the
parties, this Court denies the Petition.
First issue: Presidential immunity from suit
It is settled in jurisprudence that the President
enjoys immunity from suit during his or her
tenure of office or actual
incumbency.68 Conversely, this presidential
privilege of immunity cannot be invoked by a
non-sitting president even for acts committed
during his or her tenure.69
In the case at bar, the events that gave rise to
the present action, as well as the filing of the
original Petition and the issuance of the CA
Decision, occurred during the incumbency of
former President Arroyo. In that respect, it
was proper for the court a quo to have
dropped her as a respondent on account of
her presidential immunity from suit.
It must be underscored, however, that since
her tenure of office has already ended, former
President Arroyo can no longer invoke the
privilege of presidential immunity as a defense
to evade judicial determination of her
responsibility or accountability for the alleged
violation or threatened violation of the right to
life, liberty and security of Lozada.
Nonetheless, examining the merits of the case
still results in the denial of the Petition on the
issue of former President Arroyo’s alleged
responsibility or accountability. A thorough
examination of the allegations postulated and
the evidence adduced by petitioners reveals
their failure to sufficiently establish any
unlawful act or omission on her part that
violated, or threatened with violation, the right
to life, liberty and security of Lozada. Except
for the bare claims that: (a) Sec. Atienza
mentioned a certain "Ma’[a]m,"70 whom Lozada
speculated to have referred to her, and (b)
Sec. Defensor told Lozada that "the President
was ‘hurting’ from all the media frenzy,"71 there
is nothing in the records that would sufficiently
establish the link of former President Arroyo to
the events that transpired on 5-6 February
2010, as well as to the subsequent threats
that Lozada and his family purportedly
received.
Second issue: Denial of the issuance of a
subpoena ad testificandum
This Court, in Roco v. Contreras,72 ruled that
for a subpoena to issue, it must first appear
that the person or documents sought to be
presented are prima facie relevant to the issue
subject of the controversy, to wit:
A subpoena is a process directed to a person
requiring him to attend and to testify at the
hearing or trial of an action or at any
investigation conducted under the laws of the
Philippines, or for the taking of his deposition.
In this jurisdiction, there are two (2) kinds of
subpoena, to wit: subpoena ad
testificandum and subpoena duces
tecum. The first is used to compel a person to
testify, while the second is used to compel the
production of books, records, things or
documents therein specified. As characterized
in H.C. Liebenow vs. The Philippine Vegetable
Oil Company:
The subpoena duces tecum is, in all respects,
like the ordinary subpoena ad
testificandum with the exception that it
concludes with an injunction that the witness
shall bring with him and produce at the
examination the books, documents, or things
described in the subpoena.
Well-settled is the rule that before a
subpoena duces tecum may issue, the court
must first be satisfied that the following
requisites are present: (1) the books,
documents or other things requested must
appear prima facie relevant to the issue
subject of the controversy (test of relevancy);
and (2) such books must be reasonably
described by the parties to be readily
identified (test of definiteness).73 (Emphasis
supplied.)
In the present case, the CA correctly denied
petitioners’ Motion for the Issuance of
Subpoena Ad Testificandum on the ground
that the testimonies of the witnesses sought to
be presented during trial were prima facie
irrelevant to the issues of the case. The court
a quo aptly ruled in this manner:
The alleged acts and statements attributed by
the petitioner to Neri and Abalos are not
relevant to the instant Amparo Petition where
the issue involved is whether or not Lozada’s
right to life, liberty and security was
threatened or continues to be threatened with
violation by the unlawful act/s of the
respondents. Evidence, to be relevant, must
have such a relation to the fact in issue as to
induce belief in its existence or nonexistence.
Further, Neri, Abalos and a certain driver
"Jaime" are not respondents in this Amparo
Petition and the vague allegations averred in
the Motion with respect to them do not pass
the test of relevancy. To Our mind, petitioner
appears to be embarking on a "fishing
expedition". Petitioner should present the
aggrieved party [Lozada], who has been
regularly attending the hearings, to prove the
allegations in the Amparo Petition, instead of
dragging the names of other people into the
picture. We have repeatedly reminded the
parties, in the course of the proceedings, that
the instant Amparo Petition does not involve
the investigation of the ZTE-[NBN] contract.
Petitioner should focus on the fact in issue
and not embroil this Court into said ZTE-NBN
contract, which is now being investigated by
the Senate Blue Ribbon Committee and the
Office of the Ombudsman.74 (Emphasis
supplied.)
All the references of petitioners to either Sec.
Neri or Abalos were solely with respect to the
ZTE-NBN deal, and not to the events that
transpired on 5-6 February 2008, or to the
ensuing threats that petitioners purportedly
received. Although the present action is
rooted from the involvement of Lozada in the
said government transaction, the testimonies
of Sec. Neri or Abalos are nevertheless not
prima facie relevant to the main issue of
whether there was an unlawful act or omission
on the part of respondents that violated the
right to life, liberty and security of Lozada.
Thus, the CA did not commit any reversible
error in denying the Motion for the Issuance of
Subpoena Ad Testificandum.
Third issue: Grant of the privilege of the writ of
amparo
A. Alleged violation of or threat to the right to
life, liberty and security of Lozada
Sections 17 and 18 of the Rule on the Writ of
Amparo requires the parties to establish their
claims by substantial evidence,75 or such
relevant evidence as a reasonable mind might
accept as adequate to support a
conclusion.76 The use of this evidentiary
threshold reveals the clear intent of the
framers of the Rule on the Writ of Amparo to
have the equivalent of an administrative
proceeding, albeit judicially conducted, in
addressing amparo situations.77
In cases where the violation of the right to life,
liberty or security has already ceased, it is
necessary for the petitioner in an amparo
action to prove the existence of a continuing
threat.78 Thus, this Court held in its Resolution
in Razon v. Tagitis:79
Manalo is different from Tagitis in terms of
their factual settings, as enforced
disappearance was no longer a problem in
that case. The enforced disappearance of the
brothers Raymond and Reynaldo Manalo
effectively ended when they escaped from
captivity and surfaced, while Tagitis is still
nowhere to be found and remains missing
more than two years after his reported
disappearance. An Amparo situation
subsisted in Manalo, however, because of the
continuing threat to the brothers’ right to
security; the brothers claimed that since the
persons responsible for their enforced
disappearance were still at large and had not
been held accountable, the former were still
under the threat of being once again
abducted, kept captive or even killed, which
threat constituted a direct violation of their
right to security of person.80 (Emphasis
supplied.)
In the present case, the totality of the
evidence adduced by petitioners failed to
meet the threshold of substantial evidence.
Sifting through all the evidence and
allegations presented, the crux of the case
boils down to assessing the veracity and
credibility of the parties’ diverging claims as to
what actually transpired on 5-6 February
2008. In this regard, this Court is in agreement
with the factual findings of the CA to the
extent that Lozada was not illegally deprived
of his liberty from the point when he
disembarked from the aircraft up to the time
he was led to the departure area of the
airport,81 as he voluntarily submitted himself to
the custody of respondents:
[Lozada] was one of the first few passengers
to get off the plane because he was instructed
by Secretary Atienza, th[r]ough a phone call
on the night of 04 February 2008, while he
was still in Hong Kong, to proceed directly to
the Bureau of Immigration so that few people
would notice him and he could be facilitated in
going out of the airport without any hassle
from the people of the Senate Sergeant-at-
Arms. Again, [Lozada] stated that he wanted
to get away from the Senate people. [Lozada]
even went to the men’s room of the airport,
after he was allegedly "grabbed", where he
made a call to his brother Arturo, using his
Globe phone, and he was not prevented from
making said call, and was simply advised by
the person who met him at the tube to (sic)
"sir, bilisan mo na". When they proceeded out
of the tube and while walking, [Lozada] heard
from the radio track down, "wag kayo dyan,
sir, nandyan yong mga taga Senado", so they
took a detour and went up to the departure
area, did not go out of the normal arrival area,
and proceeded towards the elevator near the
Duty Free Shop and then down towards the
tarmac. Since [Lozada] was avoiding the
people from the Office of the Senate
Sergeant-at-Arms, said detour appears to
explain why they did not get out at the arrival
area, where [Lozada] could have passed
through immigration so that his passport could
be properly stamped.
This Court does not find any evidence on
record that [Lozada] struggled or made an
outcry for help when he was allegedly
"grabbed" or "abducted" at the airport.
[Lozada] even testified that nobody held him,
and they were not hostile to him nor shouted
at him. With noon day clarity, this Court finds
that the reason why [Lozada] was fetched at
the airport was to help him avoid the Senate
contingent, who would arrest and detain him
at the Office of the Senate Sergeant-at-Arms,
until such time that he would appear and give
his testimony, pursuant to the Order of the
Senate on the NBN-ZTE Project. [Lozada]
clearly knew this because at that time, it was
still his decision not to testify before the
Senate. He agreed with that plan.82 (Emphases
supplied.)
The foregoing statements show that Lozada
personally sought the help of Sec. Atienza to
avoid the Senate personnel, and thus knew
that the men who met him at the airport were
there to aid him in such objective. Surely, the
actions of Lozada evinced knowledge and
voluntariness, uncharacteristic of someone
who claims to have been forcibly abducted.
However, these men’s subsequent acts of
directing Lozada to board the vehicle and
driving him around, without disclosing the
exact purpose thereof, appear to be beyond
what he had consented to and requested from
Sec. Atienza. These men neither informed him
of where he was being transported nor
provided him complete liberty to contact his
family members to assure them of his safety.
These acts demonstrated that he lacked
absolute control over the situation, as well as
an effective capacity to challenge their
instructions.
Nevertheless, it must be emphasized that if
Lozada had in fact been illegally restrained, so
much so that his right to liberty and security
had been violated, the acts that manifested
this restraint had already ceased and has
consequently rendered the grant of the
privilege of the writ of amparo moot. Whether
or not Lozada was deprived of his liberty from
the point when he was led inside the vehicle
waiting for him at the airport up to the time he
was taken to La Salle Green Hills, petitioners’
assertions that Lozada and his family continue
to suffer various threats from respondents
remain unproven. The CA correctly found as
follows:
The supposed announcement of General
Razon over the radio that [Lozada] was in the
custody of the PNP can neither be construed
as a threat to [Lozada’s] life, liberty and
security. Certainly, no person in his right mind
would make that kind of media announcement
if his intent was indeed to threaten
somebody’s life, liberty and security.
xxx xxx xxx
He claims that he is threatened by the alleged
presence of armed men riding in motorcycle
passing outside the De La Salle premises
where he and his family are staying and by
alleged threats of armed men around him at
places where he went to. Again, these alleged
threats were not proven by any evidence at
all, as having originated from any of the
respondents.
[Lozada] also considers the installation of the
surveillance camera at the De La Salle and at
St. Scholastica as indirect threat to his right to
life, liberty and security. He claims that these
are spy cameras. However, save for
[Lozada’s] self-serving claim, he simply failed
to prove that they were installed or ordered
installed by the respondents for the purpose of
threatening his right to life, liberty and
security.
[Lozada] further maintains that there is an
alleged trend, i.e., wherever he goes, there is
a bomb threat. There were bomb threats in
the places where he went to like in [the
Polytechnic University of the Philippines],
Dagupan, Cebu and Bohol. However,
[Lozada] himself testified that he did not try to
ascertain where the bomb threats emanated.
Plainly, there is no evidence on record that the
bomb threats were made by the respondents
or done upon their instigation.
Moreover, [Lozada] views the pronouncement
of the Secretary of Justice that he was put on
the watch list of the Bureau of Immigration as
a threat to his life, liberty and security. This
alleged threat is again unsupported by
evidence, as in fact, [Lozada] testified that he
did not ascertain from the Bureau of
Immigration whether his name was actually in
the official watch list of the Bureau. At any
rate, the Secretary of Justice is not one of the
respondents in the amparo petition, and there
is no showing in the record that it was the
respondents who ordered the same for the
purpose of threatening him.
[Lozada] harps on the filing of alleged
frivolous cases against him and his family as
threat to his life, liberty and security. xxx
However, [Lozada] himself testified that he
does not know whether the respondents or
any of the respondents ordered the filing of
these cases against him. In any event, said
purported cases are to be determined based
on their own merits and are clearly beyond the
realm of the instant amparo petition filed
against the respondents.83 (Emphasis
supplied.)
Finally, petitioners insist that while they were
able to sufficiently establish their case by the
required evidentiary standard, respondents
failed to discharge their burden to prove their
defenses by substantial evidence and to show
that respondents exercised extraordinary
diligence as required by the Rule on the Writ
of Amparo.84 This Court has squarely passed
upon this contention in Yano v. Sanchez,85 to
wit:
The failure to establish that the public official
observed extraordinary diligence in the
performance of duty does not result in the
automatic grant of the privilege of
the amparo writ. It does not relieve the
petitioner from establishing his or her claim by
substantial evidence.
Thus, in amparo actions, petitioners must
establish their claims by substantial evidence,
and they cannot merely rely on the supposed
failure of respondents to prove either their
defenses or their exercise of extraordinary
diligence. In this case, the totality of the
evidence presented by petitioners fails to
meet the requisite evidentiary threshold, and
the privilege of the writ of amparo has already
been rendered moot and academic by the
cessation of the restraint to Lozada’s liberty.
B. Propriety of the privilege of the writ of
amparo and its interim reliefs
As previously discussed, there is no basis to
grant Lozada the privilege of the writ of
amparo, considering that the illegal restraint
alleged in this case had already ceased and
there is no imminent or continuing restriction
on his liberty. In Castillo v. Cruz,86 this Court
held as follows:
Although respondents’ release from
confinement does not necessarily hinder
supplication for the writ of amparo, absent any
evidence or even an allegation in the petition
that there is undue and continuing restraint on
their liberty, and/or that there exists threat or
intimidation that destroys the efficacy of their
right to be secure in their persons, the
issuance of the writ cannot be justified.
(Emphasis supplied.) 1âwphi1
Further, it appears that Lozada had already
filed before the Department of Justice (DOJ) a
Complaint charging respondents with
kidnapping and attempted murder, docketed
as I.S. No. 2008-467.87 In this regard, this
Court’s ruling in Rubrico v. Arroyo88 is worth
considering:
First, a criminal complaint for kidnapping and,
alternatively, for arbitrary detention rooted in
the same acts and incidents leading to the
filing of the subject amparo petition has been
instituted with the OMB, docketed as OMB-P-
C-O7-0602-E. The usual initial steps to
determine the existence of a prima facie case
against the five (5) impleaded individuals
suspected to be actually involved in the
detention of Lourdes have been set in motion.
It must be pointed out, though, that the filing of
the OMB complaint came before the effectivity
of the Amparo Rule on October 24, 2007.
Second, Sec. 22 of the Amparo Rule
proscribes the filing of an amparo petition
should a criminal action have, in the
meanwhile, been commenced. The
succeeding Sec. 23, on the other hand,
provides that when the criminal suit is filed
subsequent to a petition for amparo, the
petition shall be consolidated with the criminal
action where the Amparo Rule shall
nonetheless govern the disposition of the
relief under the Rule. Under the terms of said
Sec. 22, the present petition ought to have
been dismissed at the outset. But as things
stand, the outright dismissal of the petition by
force of that section is no longer technically
feasible in light of the interplay of the following
factual mix: (1) the Court has, pursuant to
Sec. 6 of the Rule, already issued ex parte the
writ of amparo; (2) the CA, after a summary
hearing, has dismissed the petition, but not on
the basis of Sec. 22; and (3) the complaint in
OMB-P-C-O7-0602-E named as respondents
only those believed to be the actual abductors
of Lourdes, while the instant petition
impleaded, in addition, those tasked to
investigate the kidnapping and detention
incidents and their superiors at the top. Yet,
the acts and/or omissions subject of the
criminal complaint and the amparo petition are
so linked as to call for the consolidation of
both proceedings to obviate the mischief
inherent in a multiplicity-of-suits situation.
Given the above perspective and to fully apply
the beneficial nature of the writ of amparo as
an inexpensive and effective tool to protect
certain rights violated or threatened to be
violated, the Court hereby adjusts to a degree
the literal application of Secs. 22 and 23 of the
Amparo Rule to fittingly address the situation
obtaining under the premises. Towards this
end, two things are at once indicated: (1) the
consolidation of the probe and fact-finding
aspects of the instant petition with the
investigation of the criminal complaint before
the OMB; and (2) the incorporation in the
same criminal complaint of the allegations in
this petition bearing on the threats to the right
to security. Withal, the OMB should be
furnished copies of the investigation reports to
aid that body in its own investigation and
eventual resolution of OMB-P-C-O7-0602-E.
Then, too, the OMB shall be given easy
access to all pertinent documents and
evidence, if any, adduced before the CA.
Necessarily, Lourdes, as complainant in OMB-
P-C-O7-0602-E, should be allowed, if so
minded, to amend her basic criminal
complaint if the consolidation of cases is to be
fully effective. (Emphasis supplied.)
Thus, if the Complaint filed before the DOJ
had already progressed into a criminal case,
then the latter action can more adequately
dispose of the allegations made by petitioners.
After all, one of the ultimate objectives of the
writ of amparo as a curative remedy is to
facilitate the subsequent punishment of
perpetrators.89 On the other hand, if there is no
actual criminal case lodged before the courts,
then the denial of the Petition is without
prejudice to the filing of the appropriate
administrative, civil or criminal case, if
applicable, against those individuals whom
Lozada deems to have unduly restrained his
liberty.
Finally, with respect to the interim reliefs
sought by petitioners, this Court, in Yano v.
Sanchez,90 declined to grant the prayer for the
issuance of a TPO, as well as Inspection and
Production Orders, upon a finding that the
implicated public officials were not
accountable for the disappearance subject of
that case. Analogously, it would be
incongruous to grant herein petitioners’ prayer
for a TPO and Inspection and Production
Orders and at the same time rule that there no
longer exists any imminent or continuing
threat to Lozada’s right to life, liberty and
security. Thus, there is no basis on which a
prayer for the issuance of these interim reliefs
can be anchored.
WHEREFORE, the instant petition
is DENIED for being moot and academic. The
Court of Appeals’ denial of the privilege of the
writ of amparo is hereby AFFIRMED.
SO ORDERED.
MARIA LOURDES P. A. SERENO
Associate Justice
WE CONCUR:
EN BANC
September 19, 2017
G.R. No. 230324
LORIE MARIE TOMAS CALLO, Petitioner
vs.
COMMISSIONER JAIME H. MORENTE,
BUREAUS OF IMMIGRATION, OIC
ASSOCIATES COMMISSIONERS BUREAU
OF IMMIGRATION and BRIAN ALAS,
BUREAU OF IMMIGRATION , Respondents
DECISION
CARPIO, Acting C.J.:
The Case
This is a petition for a writ of amparo (with
Prayer to Issue Interim Reliefs of Immediate
Release of Danielle Tan Parker from
Detention) under A.M. No. 07-9-12-SC (The
Rule on the Writ of Amparo). Petitioner Lorie
Marie Tomas Callo (Callo) seeks the
immediate release of Danielle Tan Parker
from the Immigration Detention Facility, Camp
Bagong Diwa in Bicutan, Taguig City.
The Facts
Danielle Tan Parker (Parker) is a holder of
Philippine Passport No. XX5678508 issued by
the Department of Foreign Affairs (DFA) on 5
March 2010 and valid until 4 March 2015.
On 15 January 2013, Parker was charged for
deportation for being an undesirable,
undocumented, and overstaying alien, in
violation of Section 3 7 (a)(7) of the Philippine
Immigration Act of 1940, as amended, in
relation to Rule XVI, Office Memorandum No.
ADD-01-004. It was alleged that Danielle
Nopuente was a fugitive from justice in the
United States of America with an outstanding
arrest warrant issued against her.
Subsequently, on 24 January 2013, a
Summary Deportation Order (SDO) was
issued against Danielle Nopuente, also known
as Isabelita Nopuente and Danielle Tan
Parker, upon verification that she arrived in
the Philippines on 23 March 2011 under the
Balikbayan Program, with an authorized stay
of a period of one year. Parker was not in the
list of approved applications of the DFA for
dual citizenship and her American Passport
had been revoked by the United States
Department of State. Thus, she was
considered an undocumented, undesirable,
and overstaying alien, in violation of the
Philippine Immigration Act of 1940.
On 5 June 2014, pursuant to the SDO issued
by the Bureau of Immigration, Parker was
arrested in Tagaytay City on the premise that
Danielle Nopuente and Danielle Tan Parker
are one and the same person. She was then
taken to the Immigration Detention Facility in
Bicutan, Taguig City. She is still currently
detained in the Immigration Detention Facility
as the deportation was not carried out due to
the fact that Parker is charged with
falsification and use of falsified documents
before Branch 4, Municipal Trial Court in
Cities, Davao City.
On 12 September 2014, Parker, as petitioner,
filed a Petition for Habeas Corpus before
Branch 266, Regional Trial Court (RTC) of
Pasig City. The Bureau of Immigration was
able to produce the body of Parker before the
RTC. The Bureau of Immigration then alleged
that as the SDO had become final and
executory, it served as the legal authority to
detain Parker. The Bureau of Immigration also
argued that Parker cannot be released or
deported without the final disposition of her
pending criminal case in Davao City.
The RTC dismissed the petition, finding that
the detention of Parker was legal.1 Parker then
appealed the case to the Court of Appeals
(CA). The CA affirmed the RTC and found that
Parker failed to prove that she was a Filipino
citizen to warrant judicial intervention through
habeas corpus.2 The CA gave weight to the
Certification dated 20 June 2015 issued by the
Office of the Consular Affairs of the DFA that
there is "no available data" regarding any
record/information from the year 1990
onwards of Philippine Passport No.
:XX5678508. Parker no longer appealed the
denial of the issuance of the writ of habeas
corpus and the decision of the CA became
final and executory on 5 January 2016.3
On 23 March 2017, Callo filed this petition for
a writ of amparo with prayer to issue Interim
Reliefs of Immediate Release of Danielle Tan
Parker from Detention. Callo argues that
Parker is a natural-born Filipino citizen and
thus, there is no reason for her to be detained
by the Bureau of Immigration.
The Issue
The only issue in this case is whether or not
the right to life, liberty, and security of Parker
is threatened by the respondents to warrant
the issuance of the writ of amparo and
subsequently the award of the interim reliefs.
The Ruling of the Court
The petition has no merit.
Callo seeks the issuance of the writ of amparo
and the interim reliefs available under A.M.
No. 07-9-12-SC for the immediate release of
Parker. Callo alleges that Parker is a natural-
born Filipino citizen and thus should not have
been detained by the Bureau of Immigration.
Moreover, Callo alleges that the kife of Parker
is endangered in the detention center; and
thus a writ of amparo with the interim reliefs
prayed for should be issued by this Court.
We disagree.
We disagree.
The protective writ of amparo is a judicial
remedy to expeditiously provide relief to
violations of a person's constitutional right to
life, liberty, and security, and more
specifically, to address the problem of
extralegal killings and enforced
disappearances or threats thereof. Section 1
of A.M. No. 07-9-12-SC provides:
Sec. 1. Petition. - The petition for a writ of
amparo is a remedy available to any person
whose right to life, liberty and security is
violated or threatened with violation by an
unlawful act or omission of a public official or
employee, or of a private individual or entity.
The writ shall cover extralegal killings and
enforced disappearances or threats thereof.
(Emphasis
supplied)
It is clear from the above-quoted provision that
the writ of amparo covers extralegal killings
and enforced disappearances or threats
thereof4 Enforced disappearance is defmed
under Republic Act (RA) No. 9851,5 Section
3(g) of which provides:
(g) "Enforced or involuntary disappearance of
persons" means the arrest, detention, or
abduction of persons by, or with the
authorization, support or acquiescence of a
State or a political organization followed by a
refusal to acknowledge that deprivation of
freedom or to give information on the fate or
whereabouts of those persons, with the
intention of removing from the protection of
the law for a prolonged period of time.
This Court also had the opportunity to define
extralegal killings and enforced
disappearance:
Extralegal killings are killings committed
without due process of law, i.e., without legal
safeguards or judicial proceedings. On the
other hand, enforced disappearance has been
defined by the Court as the arrest, detention,
abduction or any other form of deprivation of
liberty by agents of the State or by persons or
groups of persons acting with the
authorization, support or acquiescence of the
State, followed by a refusal to acknowledge
the deprivation of liberty or by concealment of
the fate or whereabouts of the disappeared
person, which place such a person outside the
protection of the law.6
In Navia v. Pardico,7 this Court clarified that
with the enactment of RANo. 9851, the Rule
on the Writ of Amparo is now a procedural law
anchored, not only on the constitutional right
to life, liberty, and security, but also on a
concrete statutory definition of "enforced or
involuntary disappearance." Further, elements
constituting enforced disappearance as
defined under RA No. 9851 were clearly laid
down by this Court, viz:
(a) that there be an arrest, detention,
abduction or any form of deprivation of liberty;
·
(b) that it be carried out by, or with the
authorization, support or acquiescence of, the
State or a political organization;
(c) that it be followed by the State or political
organization's refusal to acknowledge or give
information on the fate or whereabouts of the
person subject of the amparo petition; and,
(d) that the intention for such refusal is to
remove subject person from the protection of
the law for a prolonged period oftime.8
It is clear that the elements of enforced
disappearance are not attendant in this case.
There is also no threat of such enforced
disappearance. While there is indeed a
1âwphi1
detention carried out by the State through the
Bureau of Immigration, the third and fourth
elements are not present. There is no refusal
to acknowledge the deprivation of freedom or
refusal to give information on the whereabouts
of Parker because as Callo admits, Parker is
detained in the Immigration Detention Facility
of the Bureau of Immigration. The Bureau of
Immigration also does not deny this. In fact,
the Bureau of Immigration had produced the
body of Parker before the RTC in the
proceedings for the writ of habeas corpus
previously initiated by Parker
herself.9 Similarly, there is no intention to
remove Parker from the protection of the law
for a prolonged period of time. As the Bureau
of Immigration explained, Parker has a
pending criminal case against her in Davao
City, which prevents the Bureau of
Immigration from deporting her from the
country.
Simply put, we see no enforced or involuntary
disappearance, or any threats thereof, that
would warrant the issuance of the writ of
amparo. For the issuance of the writ, it is not
sufficient that a person's life is endangered. It
is even not sufficient to allege and prove that
a person has disappeared. It has to be shown
by the required quantum of proof that the
disappearance was carried out by, or with the
authorization, support or acquiescence of the
government or a political organization, and
that there is a refusal to acknowledge the
same or to give information on the fate or
whereabouts of the missing persons.10 In this
case, Parker has not disappeared. Her
detention has been sufficiently justified by the
Bureau of Immigration, given that there is an
SDO and a pending criminal case against her.
Callo contends that there is no cause to detain
Parker because Parker, a natural-born Filipino
citizen, is a different person from Danielle
Nopuente, the person against whom the SDO
was issued.
We disagree.
Callo has failed to prove that Danielle Tan
Parker and Danielle Nopuente are two
different persons. In particular, we give weight
to the fact that the DFA issued a certificate
verifying that there is no available data on
Passport No. XX5678508, which was the
Philippine passport used by
Parker.11 Moreover, the Certificate of Live
Birth,12 which purportedly shows that Parker
was born in the Philippines on 21 March 1975
of Filipino parents, was only registered on 4
January 2010. There was no explanation
given as to why Parker's birth was registered
only after almost 35 years. Moreover, Callo
only alleges facts from the year 2005,
allegedly for purposes of brevity.13 We do not
see any reason why facts surrounding the
existence of Parker should only be presented
from 2005. In fact, the only period that is
thoroughly discussed about her is from 2010
to 2011. To prove that Parker and Nopuente
are two different persons, the life and
existence of Parker should have been alleged
and proven since birth. In this case, there is
no allegation nor any proof as to who Parker
was, or what she had been doing, before
2011. Taking all these circumstances into
perspective, Parker had failed to sufficiently
prove that she is a different person from
Danielle Nopuente.
Callo contends that Parker's life is
endangered in the Immigration I Detention
Facility because of the threats against her by
her co-detainees and the living conditions of
the facility which pose health problems for
Parker. Unfortunately, these allegations - even
if proven - will not support the issuance of a
writ of amparo. To repeat, the remedy of a writ
of amparo is an extraordinary remedy that is
meant to balance the government's awesome
power and to curtail human rights
abuses.14 The writ .covers extralegal killings
and enforced disappearances or threats
thereo1 f as specifically defined under RA No.
9851. The circumstances of Parker, as
alleged by Callo, do not meet the
requirements for the issuance of the kit of
amparo.
Finally, we note that the petition for the writ of
amparo was filed by Callo. However, there
was no allegation of her relationship to
Parker.15 In Boac v. Cadapan,16 we
emphasized the importance of the exclusive
and successive order of who can file a petition
for a writ of amparo. We held:
Petitioners finally point out that the parents of
Sherlyn and Karen do not have the requisite
standing to file the amparo petition on behalf
of Merino. They call attention to the fact that in
the amparo petition, the parents of Sherlyn
and Karen merely indicated that they were
"concerned with Manuel Merino" as basis for
filing the petition on his behalf.
Section 2 of the Rule on the Writ of Amparo
provides:
The petition may be filed by the aggrieved
party or by any qualified person or entity in the
following order:
(a) Any member of the immediate family,
namely: the spouse, children and parents of
the aggrieved party; (b) Any ascendant,
descendant or collateral relative of the
aggrieved party within the fourth civil degree
of consanguinity or affinity, in default of those
mentioned in the preceding paragraph; or
(c) Any concerned citizen, organization,
association or institution, if there is no known
member of the immediate family or relative of
the aggrieved party. 1âwphi 1
Indeed, the parents of Sherlyn and Karen
failed to allege that there were no known
members of the immediate family or relatives
of Merino. The exclusive and successive order
mandated by the above-quoted provision must
be followed. The order of priority is not
without reason - "to prevent the
indiscriminate and groundless filing of
petitions for amparo which may even
prejudice the right to life, liberty or
security of the aggrieved party."
The Court notes that the parents of Sherlyn
and Karen also filed the petition for habeas
corpus on Merino's behalf. No objection was
raised therein for, in a habeas
corpus proceeding, any person may apply for
the writ on behalf of the aggrieved party.
It is thus only with respect to
the amparo petition that the parents of Sherlyn
and Karen are precluded from filing the
application on Merino's behalf as they are not
authorized parties under the Rule. (Emphasis
supplied)

Thus, while "any person" may file a petition for

the writ of habeas corpus, in a petition for the
writ of amparo, the order of priority on who
can file the petition should be strictly followed.
In this case, there was no allegation nor proof
that Parker had no immediate family members
or any ascendant, descendant, or collateral
relative within the fourth civil degree of
consanguinity or affinity. In fact, no allegation
was made on any of the familial relationship of
Parker as only her whereabouts from 2011
were alleged and discussed. Therefore, based
on the order of priority, Callo had no legal
standing to file this petition.

Given that there is no basis for the issuance of

the writ of amparo, the interim reliefs sought
for are also denied. Moreover, we see no
need to address the other issues raised by
Callo in this petition, specifically, the condition
of the Immigration Detention Facility and the
treatment of Parker in said detention center. A
petition for the writ of amparo is not the proper
action to resolve such issues.

WHEREFORE, the petition is

hereby DENIED.

SO ORDERED.