G.R. No.

131683

June 19, 2000

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.

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.

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
Paraaque 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.

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.

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 Paraaque3. They alleged
that:

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 Paraaque Subdivision,
which now sprawls across not only a portion of
the City of Paraaque but also those of the
adjoining cities of Las Pias 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.

1. The forty (40) wells, mostly located at

different elevations in Phases 3 and 4 of
the subdivision and with only twentyseven (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;

As a Receiver, Orendain instituted a central

security system and unified the sixty-five
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

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;

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

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;

5. There was no security force for the

entire subdivision until 1988;

7. There are no zoning guidelines which

resulted in unregulated constructions of
structures and the proliferation of
business establishments in residential
areas; and

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 24hour water supply to all residents by
adding new wells replacing overcapacitated pumps and otherwise
improving water distribution facilities;

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:

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

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;

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

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 Paraaque, free from all liens,
encumbrances, and taxes in arrears;

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

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;

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

E. Order the reimbursement of advances

made by UBFHAI;

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

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?"

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

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 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

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.

(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 Paraaque Subdivision or
in any manner interfering with the
processing and vehicle control in the

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.

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

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. . . .

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.

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:

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

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

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.

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.)

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.1awphil A receiver is a person
appointed 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.

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:

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

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

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.

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.

Neither may petitioners be considered as

having "claims" against respondent within the
context of the followingproviso 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.)

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

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."

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:

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

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]

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.

c) Controversies in the election

or appointments of directors,
trustees, officers, or managers of
such corporation, partnerships or
associations.

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.

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 intracorporate 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.

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

The second element requires that the dispute

among the parties be intrinsically connected
with the regulation or the internal affairs of the

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. 902A 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

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.
OMMODITIES STORAGE & ICE PLANT
CORPORATION, SPOUSES VICTOR &
JOHANNAH TRINIDAD, petitioners,
vs.
COURT OF APPEALS, JUSTICE PEDRO A..
RAMIREZ, CHAIRMAN and FAR EAST BANK
& TRUST COMPANY, respondents.

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.

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.

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.

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

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. 9472076 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.

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

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:

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.

(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

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

insufficient to discharge the

mortgage debt, or that the
parties have so stipulated in the
contract of mortgage;

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;

(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;

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

(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

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.

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

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.

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;

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

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;

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

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;

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 forumshopping. 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

5. Ordering the Defendant to pay

attorney's fees in the amount of
PESOS: THREE HUNDRED
THOUSAND (P300,000.00); and
costs of litigation.

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:

Other reliefs and remedies just

and equitable under the
circumstances are likewise
prayed for. 24

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);

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

10

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.

G.R. No. L-28601 March 18, 1983

ENRIQUE ABRIGO, petitioner,
vs.
THE HON. JUDGE UNION C. KAYANAN,
COURT OF FIRST INSTANCE OF QUEZON,
NINTH JUDICIAL DISTRICT, BRANCH IV,
ANTONIA ABAS, HERMOGENES,
MERCEDES, MARIA, ARSENIA,
PURIFICACION, ESTELITA, JOSE, LUISA AND
SERGIO, ALL SURNAMED
ABRIGO, respondents.

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.

Quijano & Arroyo for petitioner.

De Mesa & De Mesa for respondents.

ABAD SANTOS, J.:

Petition to annul and set aside several orders of
the respondent judge on the ground that they
were issued with grave abuse of discretion.

Section 2 of Rule 4 of the Revised Rules of

Court provides:

In Civil Case No. 178-G (later designated as No.

07) of the defunct Court of First Instance of
Quezon, the plaintiffs sought the partition of
seven (7) parcels of land under a claim of coownership with the defendants. The plaintiffs
claimed that except for one-half of the fifth
parcel (e), two of the defendants, Leon and
Enrique Abrigo, were in possession of the lands.
The defendants put up the defense of
ownership; they claimed ownership by
hereditary title by virtue of an alleged duly
approved Amended Project of Partition in the
Testate Estate of Nazario Abrigo.

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. 9472076 was therefore laid improperly.

One of the lands sought to be partitioned is

described in the Amended Complaint as
follows:
a A parcel of coconut and
pasture land, with its
improvements. Bounded on the
NORTH, by Public land; on the
SOUTH, by the Piris River and
Public Land; and on the WEST, by
the Macalawan River; containing
an area of 802 hectares, more or
less; covered by Tax Declaration
No. 416, and assessed at
P15,450.00.

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.

As stated above, this parcel, including several

others, are said to be in the possession of Leon
and Enrique Abrigo.

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.

On October 21, 1967, the plaintiffs filed an

Urgent Motion for the appointment of a receiver
to administer parcel (a) on the ground that

11

numerous squatters had invaded the property

to the plaintiffs' great damage and prejudice.
The motion was set for hearing on November 3,
1967, but counsel for the defendants asked by
telegram that the hearing be re-set to another
date because of another court engagement.
The motion was heard as scheduled in the
absence of defendants' counsel and pursuant
thereto then Judge Union C. Kayanan issued an
Order on the same day with the following
dispositive portion:

P30.00 a day for both of actual

service. (Rollo, p, 52,)
It was only on November 15, 1967, that the
defendants filed an Opposition to the Motion for
the appointment of a receiver but by then the
two Order above-quoted had been issued.
Accordingly, the defendants filed a - Motion to
have the Orders of November 3 and 8, 1967,
reconsidered but the Motion was denied by the
respondent judge in his Order of December 15,
1967. The Order, however, provided that "to
forestall mismanagement, the Receiver is
required to put up a surety bond in the amount
of Five Thousand Pesos (P5,000.00), the
expenses of which shall be borne by
plaintiffs ..." (Rollo, p. 69.)

WHEREFORE, Atty. Pedro S.

Nantes, Acting Clerk of Court,
Branch IV, CFI, Quezon City is
hereby appointed as receiver and
before entering his duties he
must be sworn to perform them
faithfully, without the necessity
of a bond being a public officer,
who is expected to faithfully
discharge the duties of a receiver
in these actions and obey the
orders of the Court accordingly.
He is allowed compensation of
P30.00 per day of actual service
plus incidental expenses to be
charged as costs against the
losing party. Atty. Nantes shall
follow strictly his general powers
pursuant to Section 7, Rule 59 of
the New Rules of Court. (Rollo, p.
50.)

On December 19, 1967, the respondent judge

issued an Order which reads as follows:
The attention of the Court was
called by Atty. Pedro S. Nantes
and Mr. Benjamin Santiago,
Receiver and Assistant,
respectively, to the effect that
only party litigants Antonia Abas
and others represented by the
De Mesa Law Office, deposited
the sum of P200.00 to defray
their expenses during the ocular
inspection of the properties in
question from November 20 to
27, 1967, but that defendants
Crisanta Manaluan and others
represented by Atty. Manuel R.
Edao of Lucena City, and party
litigants Enrique Abrigo and
others represented by Quejano
and Arroyo Law Office, thru Atty.
Cesar Parelejo, 320 Natividad
Bldg., Escolta, Manila have not
paid their corresponding shares.
It appears that the Receiver and
his Assistant spent the actual
amount of P275.05 excluding
their compensation at P30.00 a
day for eight (8) days or a total
of P240.00. It will thus appear
that the valid claim of the
Receiver and his Assistant would
total to P515.05 so that party
litigants represented by Attys.
Edao and Parelejo are directed
to deposit the balance of
P315.05 or P157.53 each, within
ten (10) days upon receipt
hereof. The parties are requested
to study the recommendations of
the Receiver and his Assistant,
copies of which have been
furnished them accordingly, and
if they so desire they should
make representations with any

On November 8, 1967, the respondent

judge, motu propio, issued the following Order:
In order to insure the absolute
and complete protection of the
interest of party litigants, aside
from Atty. Pedro S. Nantes who
has been appointed as Receiver
herein, Mr. Benjamin M. Santiago
is hereby appointed as Assistant
to the Receiver, to stay as
general filed overseer in all the
properties in question, subject to
the control and supervision of the
Receiver, to perform all the
necessary rights and obligation
heretofore to be assigned by the
Receiver, to make periodic
reports of his activities and to do
all other acts pursuant to the
general powers of a receiver
under Section 7, Rule 59 of the
New Rules of Court. As soon as
Mr. Santiago shall have taken his
oath, he shall assume the duties
of his office with a reasonable
compensation, plus incidental
expenses at the discretion of the
receiver, but which
compensation shall not exceed

12

banking institution to mortgage

the properties in order to raise a
reasonable amount to cover the
expenses of cultivation and
improvement of the property to
the end that it will become a
going concern pending litigation.
(Rollo, pp. 70-71.)

appointment of a receiver and he can be

faulted on the following counts:
1. The instant case is similar to Paranete vs.
Tan, 87 Phil. 678 (1950) so that what was there
said can well apply to the actuations of the
respondent judge, to wit:
On January 16, 1950, Felix
Alcaras, Fructuosa Vasquez,
Maxima Vasquez and Norberta
Vasquez filed a case in the Court
of First Instance of Rizal for the
recovery of five parcels of land
against Agustina Paranete and
six other co-defendants, (Civil
Case No. 1020). On January 28,
1950, plaintiffs filed a petition for
a writ of preliminary injunction
for the purpose of ousting the
defendants from the lands in
litigation and of having
themselves placed in possession
thereof. The petition was
heard ex parte and as a result
the respondent judged issued the
writ of injunction requested. On
February 28, 1950, the
defendants moved for the
reconsideration of the order
granting the writ, to which
plaintiffs objected, and after due
hearing, at which both parties
appeared with their respective
counsel, the respondent judge
reconsidered his order, but
required the defendants to
render an accounting of the
harvest for the year 1949, as well
as all future harvests, and if the
harvest had already been sold, to
deposit the proceeds of the sale
with the clerk of court, allowing
the plaintiffs or their
representative to be present
during each harvest. This order
was issued on March 4, 1950.
Defendants again filed a motion
for the reconsideration of this
order, but it was denied, hence
the petition under consideration.

On January 9, 1968, one of the defendants who

is the petitioner herein, filed a Motion for the
reconsideration of the Order of December 15,
1967 he claimed that there was no legal basis
for the appointment of a receiver under the
facts of the case; and alternatively, he offered
to post a bond so that the receiver be
discharged. The Motion was denied in an Order
dated January 15, 1968.
On January 14, 1968, the respondent judged
issued another Order which reads in part:
Acting on the oral manifestation
of counsel for the plaintiffs to the
effect that six (6) of his witnesses
came from Quezon City and
three (3) others from Buenavista,
Quezon and that they have been
staying in Lucena City since the
other day and as a result
incurred expenses totalling
P300.00, for which he requests
that they be reimbursed of said
expenses, and finding the same
to be well-taken the defendant
Enrique Abrigo is hereby ordered
to reimburse to the plaintiffs,
thru counsel, the sum of P300.00
on or before the next hearing of
this case. (Rollo, pp. 79-80.)
Petitioner Enrique Abrigo who is one of the
defendants in the action for partition now seeks
the annulment and setting aside of the
foregoing orders on the ground that they were
issued with grave abuse of discretion.
After the private respondents had filed their
answer to the petition, the case was set for
hearing but while counsel for the petitioner
appeared there was no appearance for the
private respondents. The parties were required
to file memoranda and reply memoranda. The
petitioner filed a memorandum but the private
respondents did not despite an extension
granted to them. Hence, the case was
submitted for decision the indifference of the
private respondents notwithstanding.

The question to be determined is

whether or not the respondent
judge exceeded his jurisdiction in
issuing his order of March 4,
1950, under the terms and
conditions set forth above.
We hold that the respondent
judge has acted in excess of his
jurisdiction when he issued the
order above adverted to. That
order, in effect, made the clerk of

The petition is highly impressed with merit.

The respondent judge committed grave abuse
of discretion in connection with the

13

court a sort of a receiver charged

with the duty of receiving the
proceeds of sale and the harvest
of every year during the
pendency of the case with the
disadvantage that the clerk of
court has not filed any bond to
guarantee the faithful discharge
of his duties as depositary; and
considering that in actions
involving title to real property,
the appointment of a receiver
cannot be entertained because
its effect would be to take the
property out of the possession of
the defendant, except in extreme
cases when there is clear proof of
its necessity to save the plaintiff
from grave and irremediable loss
or damage, it is evident that the
action of the respondent judge is
unwarranted and unfair to the
defendants. (Mendoza vs.
Arellano, 36 Phil. 59; Agonoy vs,
Ruiz, 11 Phil. 204; Aquino vs.
Angeles David, 77 Phil. 1087;
Ylarde vs. Enriquez, 78 Phil. 527;
Arcega vs. Pecson, 44 Off. Gaz.,
(No. 12), 4884, 78 Phil. 743; De
la Cruz vs. Guinto, 45 Off. Gaz.,
pp. 1309, 131 1; 79 Phil. 304.).
(At pp. 680-681.)

can take direct legal action as he has the legal

right to proceed against the intruders. (Rollo p.
187.)
3. The respondent judge should at least have
accepted the bond offered by the petitioner.
Rule 59, Sec. 4 stipulates that "the receiver
(may be) discharged when the party opposing
the appointment 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." In Lacson vs. Hodges, 80 Phil.
216 (1948), this Court said:
El nombramiento, por tanto, de
depositario debe hacerse
solamente cuando ya no hay otro
medio para garantizar los
derechos del demandante; pero
ofrecida la fianza, ya deja de
tenerj justificacion el deposito,
especialmente cuando, como en
el caso presente, la
responsabilidad del demandado
ya esta determinada, aunque
sujeta desde luego a las resultas
de la apelacion
El Honorable Juez recurrido ha
abusado de su discrecion al no
permitir al demandado que
prestase fianza de con la Regla
61, articulo 4. (At p. 220.)

2. The reason for the appointment of the

receiver was the fact that the land had been
entered by numerous squatters. But a receiver
who is also burdened with his duties as Clerk of
Court cannot be in a better position than the
actual possessors in dealing with the squatters.
As the petitioner has pointed out:

Anent the order of the respondent judge that

the petitioner should reimburse to the plaintiffs
the sum of P300.00 for the reason stated in the
Order dated January 14, 1968, it suffices to
state that it was issued without notice and in
the absence of the party affected and
consequently void for lack of jurisdiction in its
issuance.

The appointed receiver does not acquire any

advantage from the owners and/or present
possessors, nor is he in a better position in
order to protect the respective interest of the
herein parties for he has to apply as are the
present possessors deprived of their
possession, for the same remedies and relief
normally afforded to an aggrieved property
owner, under our legal system. A receiver is not
endowed with extra-legal power to take the law
in his hands with a view to quell and disband
the squatters short of taking legal action; nor is
he conferred with a magic wand not possessed
by herein party-litigants as property owners. On
the contrary, the receivership placed the
parties at a disadvantage. He stands between
the squatters and owner. possessors, so much
so that any action of the owner-possessor
against the squatters will have to pass through
the receiver. Whereas, if the status quo were
left undisturbed, the owner-possessor, whose
holding over the parcel of land under litigation
is actually occupied and entered by squatters

WHEREFORE, the petition is granted; the

Orders issued by the respondent judge
mentioned above are hereby annulled and set
aside. Costs against the private respondents.
G.R. No. 102998 July 5, 1996
BA FINANCE CORPORATION, petitioner,
vs.
HON. COURT OF APPEALS and ROBERTO
M. REYES, respondents.

VITUG, J.:p

14

The case at bar is a suit for replevin and

damages. The petition for review
on certiorari assails the decision of the Court of
Appeals 1 in CA-G.R. CV No. 23605 affirming
that of the Regional Trial Court of Manila,
Branch
XX, 2 which has disposed of its Civil Case No.
87-42270 in this wise:

leverage for the collection of unpaid

installments on mortgaged chattels." 8
The service of summons upon the spouses
Manahan was caused to be served by petitioner
at No. 35 Lantana St., Cubao, Quezon City. The
original of the summons had the name and the
signature of private respondent Roberto M.
Reyes indicating that he received, on 14
October 1987, a copy of the summons and the
complaint. 9 Forthwith, petitioner, through its
Legal Assistant, Danilo E. Solano, issued a
certification to the effect that it had received
from Orson R. Santiago, the deputy sheriff of
the Regional Trial Court of Manila, Branch 20,
the Ford Cortina seized from private respondent
Roberto M. Reyes, the John Doe referred to in
the complaint, 10 in Sorsogon, Sorsogon. 11 On
20 October 1987, the lower court came out
with an order of seizure.

WHEREFORE, the case against

defendant-spouses (sic)
Reynaldo Manahan is hereby
dismissed without prejudice, for
failure to prosecute. Plaintiff
having failed to show the liability
of defendant John Doe in the
person of Roberto M. Reyes, the
case against the latter should
likewise be dismissed. Moreover,
plaintiff is hereby directed to
return the vehicle seized by
virtue of the order of seizure
issued by this Court with all its
accessories to the said Roberto
M. Reyes. 3

Alleging possession in good faith, private

respondent filed, on 26 October 1987, a motion
for an extension of time within which to file his
answer and/or a motion for intervention. The
court granted the motion.

The decisions of both the appellate court and

the court a quo are based on a like finding of
the facts hereinafter briefly narrated.

A few months later, or on 18 February 1988,

the court issued an order which, in part, stated:

The spouses Reynaldo and Florencia Manahan

executed, on 15 May 1980, a promissory
note 4 binding themselves to pay Carmasters,
Inc., the amount of P83,080.00 in thirty-six
monthly installments commencing 01 July
1980. To secure payment, the Manahan
spouses executed a deed of chattel
mortgage 5 over a motor vehicle, a Ford Cortina
1.6 GL, with motor and serial number CUBFWE801010. Carmasters later assigned 6 the
promissory note and the chattel mortgage to
petitioner BA Finance Corporation with the
conformity of the Manahans. When the latter
failed to pay the due installments, petitioner
sent demand letters. The demands not having
been heeded, petitioner, on 02 October 1987,
filed a complaint for replevin with damages
against the spouses, as well as against a John
Doe, praying for the recovery of the vehicle
with an alternative prayer for the payment of a
sum of money should the vehicle not be
returned. Upon petitioner's motion and the
filing of a bond in the amount of P169,161.00
the lower court issued a writ of replevin. The
court, however, cautioned petitioner that
should summons be not served on the
defendants within thirty (30) days from the
writ's issuance, the case would be dismissed to
failure to prosecute. 7 The warning was based
on what the court perceived to be the
deplorable practice of some mortgagees of
"freezing (the) foreclosure or replevin cases"
which they would so "conveniently utilize as a

Perusal of the record shows that

an order for the seizure of
personal property was issued on
October 20, 1987 in pursuance to
a previous order of the Court
dated October 13, 1987.
However, to date, there is no
showing that the principal
defendants were served with
summons inspite of the lapse of
four (4) months.
Considering, this is a replevin
case and to forestall the evils
that arise from this practice,
plaintiff failing to heed the Order
dated October 13, 1987,
particularly second paragraph
thereof, the above-entitled case
is hereby ordered DISMISSED for
failure to prosecute and further
ordering the plaintiff to return
the property seized with all its
accessories to defendant John
Doe in the person of Roberto M.
Reyes.
SO ORDERED.

12

On 26 February 1988, petitioner filed a notice

of dismissal of the case "without prejudice and
without pronouncement as to costs, before
service of Summons and Answer, under Section

15

1, Rule 17, of the Rules of Court." 13 It also

sought in another motion the withdrawal of the
replevin bond. In view of the earlier dismissal of
the case (for petitioner's failure to prosecute),
the court, on 02 March 1988, merely noted the
notice of dismissal and denied the motion to
withdraw the replevin bond considering that
the writ of replevin had meanwhile been
implemented. 14

petitioner to show any legal basis for said

respondent's liability. The court ratiocinated:
. . . . Roberto M. Reyes is merely
ancillary debtor in this case. The
defendant spouses Manahan
being the principal debtor(s) and
as there is no showing that the
latter has been brought before
the jurisdiction of this court, it
must necessarily follow that the
plaintiff has no cause of action
against said Roberto M. Reyes
herein before referred to as
defendant John Doe. Under the
circumstances, it is incumbent
upon the plaintiff to return the
seized vehicle unto the said
Roberto M. Reyes. 18

On 09 March 1988, private respondent filed a

motion praying that petitioner be directed to
comply with the court order requiring petitioner
to return the vehicle to him. In turn, petitioner
filed, on 14 March 1988, a motion for the
reconsideration of the orders of 18 February
1988 and 02 March 1988 contending that: (a)
the dismissal of the case was tantamount to
adjudication on the merits that thereby
deprived it with the remedy to enforce the
promissory note, the chattel mortgage and the
deed of assignment, under Section 3, Rule 117,
of the Rules of Court; (b) the order to return the
vehicle to private respondent was a departure
from jurisprudence recognizing the right of the
mortgagor to foreclose the property to respond
to the unpaid obligation secured by the chattel
mortgage, and (c) there were no legal and
factual bases for the court's view that the filing
of the replevin case was "characterized (by)
evil practices." 15

In its appeal to the Court of Appeals, petitioner

has asserted that a suit for replevin aimed at
the foreclosure of the chattel is an action quasi
in rem which does not necessitate the presence
of the principal obligors as long as the court
does not render any personal judgment against
them. This argument did not persuade the
appellate court, the latter holding that
. . . . In action quasi in rem an
individual is named as defendant
and the purpose of the
proceeding is to subject his
interest therein to the obligation
or lien burdening the property,
such as proceedings having for
their sole object the sale or
disposition of the property of the
defendant, whether by
attachment, foreclosure, or other
form of remedy (Sandejas vs.
Robles, 81 Phil. 421). In the case
at bar, the court cannot render
any judgment binding on the
defendants spouses for having
allegedly violated the terms and
conditions of the promissory note
and the contract of chattel
mortgage on the ground that the
court has no jurisdiction over
their persons no summons
having been served on them.
That judgment, it rendered, is
void for having denied the
defendants spouses due process
of law which contemplates notice
and opportunity to be heard
before judgment is rendered,
affecting one's person or
property (Macabingkil vs. Yatco,
26 SCRA 150, 157).

On 20 April 1988, the court granted petitioner's

motion for reconsideration and accordingly
recalled the order directing the return of the
vehicle to private respondent, set aside the
order dismissing the case, directed petitioner
"to cause the service of summons together with
a copy of the complaint on the principal
defendants within five (5) days from
receipt" 16 thereof at petitioner's expense, and
ordered private respondent to answer the
complaint.
A few months later, or on 02 August 1988,
petitioner filed a motion to declare private
respondent in default. The court granted the
motion on that same day and declared private
respondent "in default for his failure to file the .
. . answer within the reglementary
period." 17 The court likewise granted
petitioner's motion to set the case for the
presentation, ex parte, of evidence. Petitioner,
thereupon, submitted the promissory note, the
deed of chattel mortgage, the deed of
assignment, a statement of account in the
name of Florencia Manahan and two demand
letters.
On 27 February 1989, the trial court rendered a
decision dismissing the complaint against the
Manahans for failure of petitioner to prosecute
the case against them. It also dismissed the
case against private respondent for failure of

It is next contended by appellant

that as between appellant, as

16

mortgagee, and John Doe, whose

right to possession is dubious if
not totally non-existent, it is the
former which has the superior
right of possession.

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. 20 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. 21 Consequently, the
person in possession of the property sought to
be replevied is ordinary 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.

We cannot agree.
It is an undisputed fact that the
subject motor vehicle was taken
from the possession of said
Roberto M. Reyes, a third person
with respect to the contract of
chattel mortgage between the
appellant and the defendants
spouses Manahan.
The Civil Code expressly provides
that every possessor has a right
to be respected in his possession
(Art. 539, New Civil Code); that
good faith is always presumed,
and upon him who alleges bad
faith on the part of a possessor
rests the burden of proof (Art.
527, ibid.); and that the
possession of movable property
acquired in good faith is
equivalent to a title;
nevertheless, one who has lost
any movable or has been
unlawfully deprived thereof, may
recover it from the person in
possession of the same (Art.
559, ibid.). Thus, it has been held
that a possessor in good faith is
entitled to be respected and
protected in his possession as if
he were the true owner thereof
until a competent court rules
otherwise (Chus Hai vs. Kapunan,
104 Phil. 110; Yu, et al. vs. Hon.
Honrado, etc., et al., 99 SCRA
237). In the case at bar, the trial
court did not err in holding that
the complaint does not state any
cause of action against Roberto
M. Reyes, and in ordering the
return of the subject chattel to
him. 19

Where the right of the plaintiff to the

possession of the specific property is so
conceded or evident, the action need only be
maintained against him who so possesses the
property. In rem actio est per quam rem
nostram quae ab alio possidetur petimus, et
semper adversus eum est qui rem possidet.
In Northern Motors, Inc. vs. Herrera, 22the Court
has said:
There can be no question that
persons having a special right of
property in the goods the
recovery of which is sought; such
as a chattel mortgagee, may
maintain an action for replevin
therefor. Where the mortgage
authorizes the mortgagee to take
possession of the property on
default, he may maintain an
action to recover possession of
the mortgaged chattels from the
mortgagor or from any person in
whose hands he may find
them. 23

The appellate court, subsequently,

denied petitioner's motion for
reconsideration.
In the instant appeal, petitioner insists that a
mortgagee can maintain an action for replevin
against any possessor of the object of a chattel
mortgage even if the latter were not a party to
the mortgage.

In effect then, the mortgagee, upon the

mortgagor's default, is constituted an
attorney-in-fact of the mortgagor
enabling such mortgagee to act for and
in behalf of the owner. Accordingly, that
the defendant is not privy to the chattel
mortgage should be inconsequential. By

Replevin, broadly understood, is both a form of

principal remedy and of a provisional relief. It

17

the fact that the object of replevin is

traced to his possession, one properly
can be a defendant in an action for
replevin. It is here assumed that the
plaintiffs right to possess the thing is not
or cannot be disputed.

under a chattel mortgage may

properly be commenced only
once there is default on the part
of the mortgagor of his obligation
secured by the mortgage. The
replevin in the instant case has
been sought to pave the way for
the foreclosure of the object
covered by the chattel mortgage.
The conditions essential for that
foreclosure would be to show,
firstly, the existence of the
chattel mortgage and, secondly,
the default of the mortgagor.
These requirements must be
established since the validity of
the plaintiffs exercise of the right
of foreclosure are inevitably
dependent thereon. It would thus
seem, considering particularly an
adverse and independent claim
of ownership by private
respondent that the lower court
acted improvidently when it
granted the dismissal of the
complaint against
Dollente, albeit on petitioner's
(then plaintiff) plea, on the
ground that the "non-service of
summons upon Ernesto Dollente
(would) only delay the
determination of the merits of
the case, to the prejudice of the
parties." In Imson v. Court of
Appeals, we have explained:

In case the right of possession on the part of

the plaintiff, or his authority to claim such
possession or that of his principal, is put to
great doubt (a contending party might contest
the legal bases for plaintiffs cause of action or
an adverse and independent claim of
ownership or right of possession is raised by
that party), it could become essential to have
other persons involved and accordingly
impleaded for a complete determination and
resolution of the controversy. For instance,
in Servicewide Specialists, Inc., vs. Court of
Appeals, et al., G.R. No. 103301, 08 December
1995, this Court ruled.
While, in its present petition for
review on certiorari, Servicewide
has raised a number of points,
the crucial issue still remains,
however, to be whether or not an
action filed by the mortgagee for
replevin to effect a foreclosure of
the property covered by the
chattel mortgage would require
that the mortgagor be so
impleaded as an indispensable
party thereto.
Rule 60 of the Rules of Court
allows a plaintiff, in an action for
the recovery of possession of
personal property, to apply for a
writ of replevin if it can be shown
that he is the owner of the
property claimed . . . or
is entitled to the
possession thereof.' The plaintiff
need not be the owner so long as
he is able to specify his right to
the possession of the property
and his legal basis therefor. The
question then, insofar as the
matter finds relation to the
instant case, is whether or not
the plaintiff (herein petitioner)
who has predicated his right on
being the mortgagee of a chattel
mortgage should implead the
mortgagor in his complaint that
seeks to recover possession of
the encumbered property in
order to effect its foreclosure.

. . . . An
indispensable
party is one whose
interest will be
affected by the
court's action in
the litigation, and
without whom no
final determination
of the case can be
had. The party's
interest in the
subject matter of
the suit and in the
relief sought are so
inextricably
intertwined with
the other parties'
that his legal
presence as a
party to the
proceeding is an
absolute necessity.
In his absence
there cannot be a
resolution of the
dispute of the
parties before the

The answer has to be in the

affirmative. In a suit for replevin,
a clear right of possession must
be established. A foreclosure

18

court which is
effective,
complete, or
equitable.

The appellate court, accordingly, acted well in

arriving at its now questioned judgment.
WHEREFORE, the decision of the Court of
Appeals is AFFIRMED No costs.

Conversely, a
party is not
indispensable to
the suit if his
interest in the
controversy or
subject matter is
distinct and
divisible from the
interest of the
other parties and
will not necessarily
be prejudiced by a
judgment which
does complete
justice to the
parties in court. He
is not
indispensable if his
presence would
merely permit
complete relief
between him and
those already
parties to the
action or will
simply avoid
multiple litigation.

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.

Without the presence of

indispensable parties to a suit or
proceeding, a judgment of a
court cannot attain real finality.
(Footnotes omitted.)
A chattel mortgagee, unlike a pledgee, need
not be in, nor entitled to the possession of the
property unless and until the mortgagor
defaults and the mortgagee thereupon seeks to
foreclose thereon. Since the mortgagee's right
of possession is conditioned upon the actual
fact of default which itself may be
controverted, the inclusion of other parties like
the debtor or the mortgagor himself, may be
required in order to allow a full and conclusive
determination of the case. When the
mortgagee seeks a replevin in order to effect
the eventual foreclosure of the mortgage, it is
not only the existence of, but also the
mortgagor's default on, the chattel mortgage
that, among other things, can properly uphold
the right to replevy the property. The burden to
establish a valid justification for that action lies
with the plaintiff. An adverse possessor, who is
not the mortgagor, cannot just be deprived of
his possession, let alone be bound by the terms
of the chattel mortgage contract, simply
because the mortgagee brings up an action for
replevin.

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. Caares 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
Caares of the Regional Trial Court of Cebu City

19

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.

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.

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.

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).

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).

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 AntiCarnapping 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.

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:

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).

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.

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

Furthermore, it was also pointed out in the

same case that the validity of a search warrant

20

coordinately (Montesa vs. Manila Cordage Co.,

92 Phil. 25 [1952]).

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.

It is a basic tenet of civil procedure that

replevin will not lie for property in custodia
legis. A thing is in custodia legiswhen 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]).

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.

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.)

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 coequal and independent bodies acting
coordinately, must always be
adhered to.

In the Vlasons case, the Court differentiated the

case brought before it therein, from
the Pagkalinawan case. It stated that in

21

WHEREFORE, the petition is denied. The

decision of the Court of Appeals dated May 7,
1987 is AFFIRMED.
G.R. No. 166901

secondhand right-hand drive buses from Japan.

When the shipment arrived at the South
Harbor, Port of Manila, the District Collector of
Customs impounded the vehicles and ordered
them stored at the warehouse of the Asian
Terminals, Inc. (ATI), a customs-bonded
warehouse under the custody of the Aviation
and Cargo Regional Division. Conformably with
Section 2607 of the Tariff and Customs Code,
the District Collector of Customs issued
Warrants of Distraint3 against the shipment and
set the sale at public auction on September 10,
1998.4

October 27, 2006

ASIAN TERMINALS, INC., petitioner,

vs.
HON. HELEN BAUTISTA-RICAFORT,
Presiding Judge of RTC, Branch 260,
Paraaque City; SAMUEL ROSETE, in his
personal capacity and as attorney-in-fact
and in representation of NOEL TABUELOG,
proprietor of BEST PART ENTERPRISES;
ERNESTO DE JESUS, President of EASTERN
METROPOLITAN BUS CORP.; NORMA
PONDEVIDA, proprietress of NSP
TRANSPORTATION SERVICES; RENATO
CLAROS, President of PRINCE BUS AND
TRUCK PARTS, INC.; ERNESTO M. CHUA,
President of EMC TRANSPORTATION, INC.;
CECILIA T. SAULOG, proprietress of
MANSOUR TRANSPORT SERVICES;
JENELITA S. NAPARATE, proprietress of
SANEI SOUGYO TRADING; RODOLFO J.
MAGO, proprietor of DNS SHUTTLE
SERVICES; and AMALIA C. EDAMURA,
Proprietress of DAMLAR
TRADING, respondents.

In the meantime, on October 28, 1998, the

Secretary of Justice rendered Opinion No.
127,5 Series of 1998, stating that shipments of
right hand wheel vehicles loaded and exported
at the port of origin before February 22, 1998
were not covered by RA No. 8506 unless the
same were loaded and imported after said
date.
On November 11, 1998, the importers, through
their Attorney-in-Fact Samuel N. Rosete, filed a
complaint with the RTC of Paraaque City,
against the Secretary of Finance, Customs
Commissioner, and the Chief Executive of the
Societe Generale de Surillee, for replevin with
prayer for the issuance of a writ of preliminary
and mandatory injunction and damages.
Plaintiffs averred, inter alia, that in accordance
with the opinion of the Assistant Director of the
Customs Legal Service and the Office of the
Legal Affairs of the Department of Finance, the
importation of right-hand drive vehicles are not
prohibited under RA No. 8506 provided that
conversion kits are included in the imported
vehicles. As such, there was no factual and
legal basis for the seizure of the shipment and
the storage thereof at the ATI. The complaint
contained the following prayer:

DECISION

CALLEJO, SR., J.:

Before us is a Petition for Review
on Certiorari for the reversal of the Decision1 of
the Court of Appeals (CA) in CA-G.R. SP No.
61562, affirming the Orders2 of the Regional
Trial Court (RTC) of Paraaque City, Branch 260,
in Civil Case No. 98-0435 for replevin and
damages.

WHEREFORE, premises considered, it is

most respectfully prayed before this
Honorable Court that an Order be issued
in the following tenor:

Section 1, Republic Act (RA) No. 8506, which

took effect on February 22, 1998, provides that
"it shall be unlawful for any person to import,
cause the importation of, register, cause the
registration of, use or operate any vehicle with
its steering wheel right hand side thereof in any
highway, street or road, whether private or
public, or at the national or local x x x."

A. PRIOR TO HEARING:
1. A Writ of Replevin be issued upon the
posting of a bond of PhP12,000,000.00
(double the value of the vehicles)
executed in favor of defendants to
answer for damages, and approved by
this Court, directing the Sheriff or his
deputies to forthwith take custody of the
said vehicles which are in the
possession and custody of the
defendants or their agents at the
Bureau of Customs Holding Area,

Noel Tabuelog, Ernesto de Jesus, Norma

Pondevida, Renato Claros, Ernesto M. Chua,
Cecilia T. Saulog, Jenelita S. Naprate, Rodolfo
F. Mago, and Amalia C. Edamura are dulylicensed importers of vehicles. Sometime in
April and May 1998, they imported 72

22

located at South Harbor, Port Area,

Manila City, and retain it in its custody;

Customs which had custody of the vehicles

through ATI "had exclusive jurisdiction over said
vehicles and on the issues of the seizure and
detention thereof." The ATI filed a motion for
the court to allow the vehicles to remain in its
warehouse.14

B. AFTER HEARING:
1. To pay the sum of PhP6,000,000.00 if
the Writ of Replevin cannot be
implemented successfully plus interest
until fully paid;

On December 1, 1998, the ATI filed a ThirdParty Claim15 over the shipment, alleging that it
had a lien over the vehicles for accumulated
and unpaid storage and arrastre charges, and
wharfage dues amounting toP13,036,480.94. It
prayed that the vehicles be returned and
remain with it until payment of said dues. On
December 9, 1998, ATI filed a Motion16 seeking
to require plaintiffs (third-party defendants) to
post a bond to insure payment of its claims
against the plaintiffs, or to order the Sheriff to
return possession of the vehicles to it.

2. To pay compensatory damages of not

less than PhP840,000.00 for unrealized
profits, moral damages of not less [than]
PhP1,000,000.00, exemplary damages
of not less than PhP250,000.00,
litigation and necessary expenses of not
less than PhP500,000.00, attorneys
fees on a contingent basis, not less
thanP1,000,000.00 actual damages if
and when plaintiffs are legally obliged to
pay storage fees;

Plaintiffs opposed the Third-Party Claim of ATI

claiming that it failed to allege in its Affidavit of
Third-Party Claim any factual and legal basis for
its alleged lien and to present documentary
evidence to prove the same. ATI has no cause
of action against them for wharfage/arrastre
services because there was no contract to
cover said charges.17

3. Such other reliefs just and equitable

under the premises.6
The RTC granted the application for a writ of
replevin on a bond of P12,000,000.00.7
However, George Jeroes, the Chief of Customs
Police and four (4) customs policemen
prevented the Sheriff and the policemen
assisting him from taking custody of the
vehicles.8 He claimed that the District Collector
of Customs had jurisdiction over the vehicles.
On motion of the plaintiffs, the court issued an
Order9 on November 23, 1998, directing the
PNP Director to assist the Sheriff in
implementing the writ it issued and to arrest
anyone who would obstruct the implementation
of its order. The Sheriff served a copy of the
Order on ATI and succeeded in taking custody
of the vehicles and signed a receipt
therefor.10 The District Collector of Customs
agreed to transfer the custody of the vehicles
to the RTC, on the condition that the required
taxes, dues, and other charges be paid. The
Customs Commissioner approved the decision
of the District Collector.11 Plaintiffs paid the
requisite taxes, dues, and other charges
amounting to P7,528,635.00. They were able to
take possession of the vehicles over the
objections of ATI.12

Before the court could resolve the motions,

plaintiffs filed a "Motion/Notice to
Dismiss/Withdraw Complaint"18against the
officials of the Bureau of Customs and
Department of Finance, on the ground that said
defendants had agreed to the implementation
of the writ of replevin issued by the court on
condition that plaintiffs pay the taxes, dues,
and other charges on the importation
amounting to P7,528,635.00 to the government
and that plaintiffs had paid the said amount.
The OSG opposed the motion, alleging that:
The instant Complaint states that the
subject importation is legal. This is a
matter which cannot be admitted by
defendants simply because the law and
the Opinion of the Secretary of Justice
are crystal clear. Likewise, all the
erroneous statements of law and legal
conclusions stated therein cannot be
hypothetically admitted.
3. Hence, it is imperative that the
Omnibus Motion be resolved first prior
to any other incident for the same
delves on the very merits of the instant
case.

On November 27, 1998, the defendants,

through the Office of the Solicitor General, filed
an Omnibus Motion13, seeking the
reconsideration of the RTC Order granting
plaintiffs plea for a writ of replevin. It likewise
prayed that the writ of replevin issued by the
court be quashed on the ground that the RTC
has no jurisdiction over the vehicles subject of
seizure and detention before the Bureau of
Customs. The OSG declared that the Bureau of

4. The release of the imported righthand drive buses by the Bureau of

Customs cannot make the said
importation legal; otherwise, said act
will constitute a violation of R.A. No.

23

8506 which declares illegal the act of

importation of this type of vehicle.

Plaintiffs opposed the motion of ATI on the

following grounds: (1) ATI failed to allege and
present any contract covering the
deposit/storage of the vehicles in its
warehouse; (2) ATI has no legal interest over
the matter in litigation; and (3) the adjudication
of the rights of the parties may be delayed or
prejudiced while those of ATI may be protected
in a separate proceeding.21

5. The Bureau of Customs was

constrained to release the subject
vehicles on November 27, 1998 because
of this Courts Order dated November
23, 1998, the last paragraph of which
states:

The OSG opposed the motion of the plaintiffs

and the notice to dismiss/withdraw the
complaint, praying that the court resolve its
pending motions.22

"Chief of PNP General Roberto

Lastimoso is ordered to assist the
Sheriff in the implementation of
its order dated November 11,
1998 and to effect the arrest of
persons who would obstruct the
implementation of this courts
order."

On April 27, 1999, the court issued an Order

dismissing the complaint on the following
grounds:

The overwhelming number of PNP

personnel who accompanied the sheriff
(there were at least 20 police cars which
swarmed over the area), pitied against
only three (3) hapless Customs
policemen, plus the threat to arrest
anyone who would obstruct the
implementation of the Order dated
November 11, 1998 granting the
application for a Writ of Replevin, left
the Bureau of Customs with no choice
but to allow the release of the subject
vehicles.19

1. Plaintiffs themselves filed a Motion to

Dismiss against Secretary of Finance
and Commissioner of Customs.

On January 13, 1999, ATI filed a Motion for

Intervention and for Admission of its Complaintin-Intervention, alleging that it had a lien on the
vehicles to the extent of P13,820,150.93,
representing accumulated storage and arrastre
charges and wharfage dues. ATI prayed that its
Complaint-in-Intervention be admitted, and
that after due proceedings judgment be
rendered in its favor, thus:

In view of the foregoing, let this case be

as it is hereby ordered Dismissed.

2. This Court has no jurisdiction over the

case. "The Court of Tax Appeals
exercises exclusive appellate jurisdiction
to review the ruling of the Commissioner
in seizure and confiscation cases and
that power is to the exclusion of the
Court of First Instance which may not
interfere with the Commissioners
decisions x x x"

SO ORDERED.23
The OSG filed a motion for reconsideration of
the April 27, 1999 Order, and prayed that the
court resolve the issue as to who is entitled to
the possession of the vehicles as required by
Sections 9 and 10, Rule 60 of the Rules of
Court. For its part, ATI filed a motion for
clarification of the order, alleging that the court
failed to resolve its motion. It also pleaded for
the court to admit its Complaint-in-Intervention
and its motion seeking to require plaintiffs to
post a bond to insure payment of its claims for
wharfage/arrastre charges.24

WHEREFORE, it is respectfully prayed of

this Honorable Court that judgment be
rendered in this Complaint-inIntervention ordering plaintiffs to pay
intervenor:
a) the sum of PESOS THIRTEEN MILLION
EIGHT HUNDRED TWENTY THOUSAND
ONE HUNDRED FIFTY AND 93/100
(P13,820,150.93), plus legal interest
from the date of the filing of this
Complaint-in-Intervention.

On September 23, 1999, the RTC issued its

Order dismissing the Complaint-in-Intervention,
thus:
Before this Court are the following
Motions:

b) the sum of PESOS ONE HUNDRED

THOUSAND (P100,000.00) as and for
attorneys fees; and
c) costs of suit.

1. Motion for Clarification, and

20

2. Motion for Reconsideration

24

The Complaint-in-Intervention of
Intervenor - ATI is likewise dismissed, it
being only an accessory to the principal
case.

its third-party claim over the property for the

collection of the wharfage and arrastre
fees/charges.
On November 30, 2004, the CA rendered
judgment dismissing the petition for lack of
merit.28 The appellate court ruled that the RTC
had no jurisdiction over the complaint filed by
respondents. Under the Customs and Tarriff
Code, the Collector of Customs sitting in seizure
and forfeiture proceedings had the exclusive
jurisdiction to hear and determine all questions
relating on the seizure and forfeiture of dutiable
goods. The RTC had no review powers over
such proceedings; it is the Court of Tax Appeals
under RA No. 1125. Since the RTC had no
jurisdiction over the main case, it was also
bereft of authority to hear the third-party claim
or the complaint-in-intervention filed by ATI.
Citing Saw v. Court of Appeals,29 the appellate
court ruled that intervention was not an
independent proceeding but merely an
ancillary and supplemental one, which, in the
nature of things, is subordinate to the main
proceeding unless otherwise provided for by
statute or by the Rules of Court. The general
rule is that an intervention is limited to the field
of litigation open to the original parties. The
RTC had dismissed the main action; thus, there
was no more principal proceeding in which
petitioner ATI may intervene.

Plaintiff Samuel Rosete is hereby

ordered to return the possession of the
subject buses to Pedro Mendoza, in his
capacity as Customs Commissioner of
the Bureau of Customs.
SO ORDERED.25
ATI filed a motion for reconsideration, which the
court denied on July 31, 2000. While it
recognized the arguments of ATI, the court held
that its rights could be fully protected in a
separate proceeding. It declared that the
subject buses were under custodia legis by
virtue of the writ of replevin it had issued.
However, due to the dismissal of the plaintiffs
complaint, the subject buses have to be
returned to the person who was in custody
prior to the implementation of the writ. The
motion for reconsideration filed by ATI and the
opposition filed by plaintiffs were likewise
denied.26
ATI filed a Petition for Certiorari under Rule 65
before the CA, assailing the RTC Orders dated
April 27, 1999, September 23, 1999, and July
31, 2000. It raised the following questions:

ATI filed a motion for reconsideration, which the

CA denied through its January 28, 2005
Resolution.30

WHETHER OR NOT THE LOWER COURT

COMMITTED GRAVE ABUSE OF
DISCRETION WHEN IT OUTRIGHTLY
DISMISSED THE SUBJECT COMPLAINT
FILED BY PRIVATE RESPONDENTS.

In the present petition, ATI (now petitioner)

raises the following issues:
1. THE COURT OF APPEALS COMMITTED
SERIOUS REVERSIBLE ERROR IN
DISMISSING THE THIRD-PARTY CLAIM
WHICH WAS CONVERTED INTO A
COMPLAINT-IN-INTERVENTION BASED
ON THE GROUND THAT IT IS ANCILLARY
TO THE DISMISSED MAIN ACTION.

WHETHER OR NOT THE LOWER COURT

COMMITTED GRAVE ABUSE OF
DISCRETION WHEN IT DENIED THE
MOTION FOR RECONSIDERATION FILED
BY THE PETITIONER.
WHETHER OR NOT THE PUBLIC
RESPONDENTS COMMITTED GRAVE
ABUSE OF DISCRETION WHEN IT
OUTRIGHTLY DISMISSED THE
COMPLAINT-IN-INTERVENTION FILED BY
PETITIONER.27

2. THE COURT OF APPEALS COMMITTED

SERIOUS REVERSIBLE ERROR IN
DISMISSING THE THIRD-PARTY CLAIM
WHICH WAS CONVERTED INTO A
COMPLAINT-IN-INTERVENTION BASED
ON THE GROUND THAT THE COURT A
QUO HAS NO JURISDICTION OVER THE
PRINCIPAL ACTION.

ATI averred that it filed its Complaint-inIntervention before the RTC dismissing the
complaint of private respondents. It pointed out
that the dismissal of the main case does not
necessarily result in the dismissal of its
ancillary action because it has a legal interest
in the matter in litigation, that is, it is so
situated as to be adversely affected by the
distribution or other disposition of the property
in question. It thus behooved the court to have
ordered respondents to post a bond following

3. THE COURT OF APPEALS COMMITTED

SERIOUS REVERSIBLE ERROR IN
DISMISSING THE COMPLAINT IN
INTERVENTION ON THE BASIS OF THE
RULING IN BARANGAY MATICTIC VS.
ELBINIAS (148 SCRA 83).31

25

Citing Metropolitan Bank and Trust Company v.

The Presiding Judge, RTC, Manila Branch
39,32 petitioner maintains that the dismissal of
the original complaint filed by respondents
cannot, in any way, result in the denial of its
complaint-in-intervention. It posits that its
consent as intervenor is necessary for the
dismissal of the main action, and that the
original parties cannot "isolate" it and agree,
among themselves, to dismiss the complaint.
Petitioner asserts that, even if the original
complaint was properly dismissed, its
complaint-in-intervention survives the original
complaint and may proceed as long as the
existence of an actual controversy had been
established by the pleadings. It insists that the
intervention has to be heard regardless of the
disposition of the principal action.

Section 2301 of the TCC, the Collector of

Customs is empowered to make a seizure of
cargoes and issue a receipt for the detention
thereof:
SEC. 2301. Warrant for Detention of
Property-Cash Bond. Upon making any
seizure, the Collector shall issue a
warrant for the detention of the
property; and if the owner or
importer desires to secure the
release of the property for
legitimate use, the Collector shall,
with the approval of the
Commissioner of Customs,
surrender it upon the filing of a
cash bond, in an amount to be fixed by
him, conditioned upon the payment of
the appraised value of the article and/or
any fine, expenses and costs which may
be adjudged in the case: Provided, That
such importation shall not be released
under any bond when there is a prima
facie evidence of fraud in the
importation of the article: Provided
further, That articles the importation of
which is prohibited by law shall not be
released under any circumstance
whomsoever, Provided, finally, That
nothing in this section shall be
construed as relieving the owner or
importer from any criminal liability
which may arise from any violation of
law committed in connection with the
importation of the article. (emphasis
supplied)

Petitioner submits that even on the assumption

that the lower court has no jurisdiction over the
principal action, the third-party complaint may
still be maintained.
Petitioner further contends that the appellate
court erred in relying on Barangay Matictic v.
Elbinias33 because in that case, the third-partycomplaint was filed after the decision in the
main case had already become final, whereas,
in the present case, the third-party claim and
third-party complaint before the RTC dismissed
respondents action. Petitioner maintains that
the Metropolitan case is thus applicable, and
points out that the Court therein ruled that the
complaint-in-intervention should be preserved
regardless of the outcome of the original
complaint.

Section 2530 of the TCC enumerates the

properties subject of seizure and forfeiture:

For their part, respondents assert that the CA

decision is in accord with the Rules of Court.

Section 2530. Property Subject of

Forfeiture Under Tariff and Customs
Laws. Any vehicle, vessel or aircraft,
cargo, article and objects shall, under
the following conditions be subject to
forfeiture:

We are thus tasked to resolve the issue of

whether the CA erred in dismissing the petition
for certiorari of the petitioner.
The petition is denied for lack of merit.

xxxx

We rule that the trial court acted in accordance

with the Tariff and Customs Code (TCC) and the
rulings of this Court when it issued the assailed
Orders.

(f) Any article the importation or

exportation of which is effected or
attempted contrary to law, or any article
of prohibited importation or exportation,
and all other articles which, in the
opinion of the Collector, have been
used, are or were entered to be used as
instruments in the importation or
exportation of the former.

Section 602 of the TCC provides that the

Bureau of Customs shall exercise exclusive
jurisdiction over seized and forfeited cars. It is
tasked to enforce tariff, and supervise and
control customs law and all other laws, rules
and regulations relating to the tariff and
customs administration; and to supervise and
control all import and export cargoes, loaded or
stored in piers, terminal facilities, including
container yards and freight stations, for the
protection of government revenues. Under

As the Court ruled in Jao v. Court of

Appeals,34 Regional Trial Courts are devoid of
any competence to pass upon the validity or
regularity of seizure and forfeiture proceedings

26

conducted by the Bureau of Customs and to

enjoin or otherwise interfere with these
proceedings. It is the Collector of Customs,
sitting in seizure and forfeiture proceedings,
who has exclusive jurisdiction to hear and
determine all questions touching on the seizure
and forfeiture of dutiable goods. The Regional
Trial Courts are precluded from assuming
cognizance over such matters even through
petitions of certiorari, prohibition or mandamus.
The Court further explained:

In fine, the initial orders of the RTC granting the

issuance of the writ of replevin and its
implementation are void.37While it is true that
the District Collector of Customs allowed the
release of the vehicles and the transfer thereof
to the custody of the RTC upon the payment by
the private respondents of the required taxes,
duties and charges, he did not thereby lose
jurisdiction over the vehicles; neither did it vest
jurisdiction on the RTC to take cognizance of
and assume jurisdiction over the petition for
replevin. As very well explained by the Office of
the Solicitor General, the District Collector of
Customs agreed to transfer the vehicles to the
custody of the RTC since the latter had ordered
the arrest of those who would obstruct the
implementation of the writ. The District
Collector of Customs had yet to resolve
whether to order the vehicles forfeited in favor
of the government, in light of the opinion of the
Secretary of Justice that, under RA No. 8506,
the importation was illegal.

It is likewise well-settled that the

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

The RTC cannot be faulted for dismissing

petitioners complaint-in-intervention.
Considering that it had no jurisdiction over
respondents action and over the shipment
subject of the complaint, all proceedings before
it would be void.38 The RTC had no jurisdiction
to take cognizance of the complaint-inintervention and act thereon except to dismiss
the same. Moreover, considering that
intervention is merely ancillary and
supplemental to the existing litigation and
never an independent action,39 the dismissal of
the principal action necessarily results in the
dismissal of the complaint-in-intervention.
Likewise, a court which has no jurisdiction over
the principal action has no jurisdiction over a
complaint-in-intervention. Intervention
presupposes the pendency of a suit in a court
of competent jurisdiction.40 Jurisdiction of
intervention is governed by jurisdiction of the
main action.41

The rule that Regional Trial Courts have

no review powers over such proceedings
is anchored upon the policy of placing
no unnecessary hindrance on the
governments drive, not only to prevent
smuggling and other frauds upon
Customs, but more importantly, to
render effective and efficient the
collection of import and export duties
due the State, which enables the
government to carry out the functions it
has been instituted to perform.35
Thus, the RTC had no jurisdiction to take
cognizance of the petition for replevin by
respondents herein, issue the writ of replevin
and order its enforcement. The Collector of
Customs had already seized the vehicles and
set the sale thereof at public auction. The RTC
should have dismissed the petition for replevin
at the outset. By granting the plea of
respondents (plaintiffs below) for the seizure of
the vehicles and the transfer of custody to the
court, the RTC acted without jurisdiction over
the action and the vehicles subject matter
thereof. It bears stressing that the forfeiture of
seized goods in the Bureau of Customs is a
proceeding against the goods and not against
the owner. It is in the nature of a proceeding in
rem, i.e., directed against the res or imported
articles and entails a determination of the
legality of their importation. In this proceeding,
it is, in legal contemplation, the property itself
which commits the violation and is treated as
the offender, without reference whatsoever to
the character or conduct of the owner.36

IN LIGHT OF ALL THE FOREGOING, the

petition is DENIED. The Court of Appeals
Decision in CA-G.R. SP No. 61562
is AFFIRMED.
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.

27

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.

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.

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 applicantdefendant 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

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.

28

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.

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

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.

On November 11, 1988, respondent Court of

Appeals rendered a decision, disposing as
follows:

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.

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

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.

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.

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.

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.

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.

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.

29

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.

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.

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.

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,

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

30

the rule was affirmed and made to apply

specifically to permissive counterclaims only,
thereby excluding compulsory counterclaims
from its purview.

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. 82-0608 (Exhibit "3-b") prohibiting LPG
cylinder exchange and the
refilling of other brands of
cylinder without the brand
owner's authority.

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

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, . . .

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

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 . . .

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

xxx xxx xxx

31

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:

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

RESOLUTION
QUISUMBING, J.:

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.

Before us is an administrative complaint

for gross neglect of duty, grave abuse of
authority (oppression) and violation of Republic
Act

Kenneth Hao against

respondent

Abe

C.

The antecedent facts are as follows:

Complainant Hao is one of the defendants in a
civil case for replevin docketed as Civil Case
No.
2005

31,
[2]

127-

entitled Zenaida Silver, doing trade and

business under the name and style ZHS

Commercial v. Loreto Hao, Atty. Amado Cantos,
Kenneth Hao and John Does, pending before
the RTC of Davao City, Branch 16.

We, therefore, find and so hold that private

respondent Ricardo P. Cardenas should be held
jointly and severally liable with his corespondent Mobil Philippines, Inc. for having
acted in bad faith by impeding and preventing
the award of the dealership to petitioners
through fraudulent means.

On October
Fuentes

[3]

17,

2005,

Judge Renato A.

issued an Order of Seizure [4] 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

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.

vehicles on October 17, 2005;

on October

18,

2005,

and

another

four
three

on October 19, 2005, or a total of nine motor

vehicles.[5]

In
his
A.M. No.Andres
P-07-2384
before
Present:

ABE C. ANDRES, Sheriff IV, Regional

Trial Court, Branch 16,Davao City,
Respondent.

complainant

(RTC) of Davao City, Branch 16.

for which plaintiff must be made

to recompense the damages the
defendant suffered. (Emphasis
supplied) 19

- versus -

by

Andres, Sheriff IV of the Regional Trial Court

Art. 20. Every

person who,
contrary to law,
wilfully or
negligently causes
damage to
another, shall
indemnify the
latter for the same.

KENNETH HAO, Complainant,

3019[1] filed

No.

Affidavit-Complaint [6] against

the

Office

of

the

Court

Administrator (OCA), Hao alleged that Andres

gave undue advantage to ZenaidaSilver in the

QUISUMBING
implementation of the order and that Andres
TINGA
seized the nine motor vehicles in an oppressive
REYES,
manner.
Hao also averred that Andres was
LEONARDO-DE
CASTRO,
BRION, accompanied by unidentified armed personnel
on board a military vehicle which was excessive
Promulgated:
since
there
were
no
resistance
from
June 18,
2008
them. Hao also discovered that the compound
where the seized motor vehicles were placed is
actually owned by Silver.[7]

32

On October 21, 2005, in view of the

approval

of

the

complainants

replevin bond,

Judge

C. Carpio[8] ordered

Andres

order. He claimed that he was merely escorted

counter-

by policemen pursuant to the directive of Police

Emmanuel
to

Senior

immediately

Supt. Catalino S. Cuy,

the Davao City

Police

Chief

of

Office. Andres

also

cease and desist from further implementing the

maintained that no form of harassment or

order of seizure, and to return the seized motor

oppression

vehicles including its accessories to their lawful

implementation of the order, claiming that the

owners.

[9]

was

committed

during

the

presence of the policemen was only for the

purpose

considering

However, on October 24, 2005, eight of

missing. In his report,

preserving
there

peace

were

22

and

motor

order,
vehicles

specified in the Order of Seizure. Andres added

the nine seized motor vehicles were reported

[10]

of

that he exercised no discretion in the selection

Andres stated that he

was shocked to find that the motor vehicles

of

were already missing when he inspected it

implementation of the order, much less of those

on October

who will guard the seized motor vehicles.

22,

2005. He

narrated

that

the

policemen

who

assisted

in

the

on October 21, 2005, PO3 Rodrigo Despe, one

of the policemen guarding the subject motor

Andres

vehicles,

reported

to

him

compound

that

the

allegation

that

he

neglected his duty to safeguard the seized

and

vehicles by pointing out that he placed all the

caused the duplication of the vehicles keys.

motor vehicles under police watch. He added

[11]

that

certain Nonoy entered

the

disputed

But Andres claimed the motor vehicles were

the

policemen

had

control

of

the

still intact when he inspected it on October 21,

compound where the seized motor vehicles

2005.

were kept.

Subsequently, Hao reported

of

Andres likewise contended that after the

the carnapped vehicles were recovered by the

unauthorized duplication of the vehicles keys

police.

[12]

that

three

He then accused Andres of conspiring

and

conniving

was reported to him, he immediately advised

with

the policemen on duty to watch the motor

counsel)

vehicles closely.[14] He negated the speculations

and the policemen in the carnapping of the

that he was involved in the disappearance of

motor vehicles. Hao also accused Andres of

the seized motor vehicles as he claims to be

concealing the depository receipts from them

the one who reported the incident to the court

and pointed out that the depository receipts

and the police.

Atty.Oswaldo Macadangdang (Silvers

show that Silver and Atty. Macadangdang were

the ones who chose the policemen who will

As to the allegation of undisclosed depository

guard the motor vehicles.

receipts, Andres maintained that he never denied

the existence of the depository receipts. He said

In his Comment[13] dated March 3, 2006, Andres

the existence of the depository receipts was

vehemently denied violating Rep. Act No. 3019

immediately made known on the same day that

and committing gross neglect of duty.

the subject motor vehicles were discovered

missing. He even used the same in the filing of

Andres

denied

implementing

the

Order

thecarnapping case against Silver and her co-

of

conspirators.

Seizure in an oppressive manner. He said he

took the vehicles because they were the specific
vehicles ordered to be seized after checking

Finally, Andres insisted that the guarding of

their

numbers. Andres

properties under custodia legis by policemen is

likewise denied that he was accompanied by

not prohibited, but is even adopted by the

military personnel in the implementation of the

court. Hence, he prays that he be held not

engine

and

chassis

33

liable for the loss of the vehicles and that he be

relieved of his duty to return the vehicles.

identities of the other policemen tapped to

[15]

guard the compound were unknown to Andres;

(6) Andres also admitted that he only stayed at

After the OCA recommended that the matter be

least one hour each day from October 19-21,

investigated, we referred the case to Executive

2005 during his visits to the compound; and (7)

Judge Renato A.

even after it was reported to him that a

Fuentes

for

investigation,

certain Nonoy entered

report and recommendation. [16]

the

compound

and

duplicated the keys of the motor vehicles, he

did not exert his best effort to look for

In his Investigation Report [17] dated September

that Nonoy and to confiscate the duplicated

21, 2006, Judge Fuentes found Andres guilty of

keys.[19]

serious negligence in the custody of the nine

motor vehicles. He recommended that Andres

Judge

be suspended from office.

Fuentes

also

observed

that

Andres

appeared to be more or less accommodating to

Silver

Judge Fuentes found numerous irregularities in

counsel

but

hostile

and

out that Andres depended solely on Silver in

of seizure, to wit: (1) at the time of the

the selection of the policemen who would guard

implementation of the writ, Andres knew that

the seized motor vehicles. He added that even

the vehicles to be seized were not in the names

the depository receipts were not turned over to

of any of the parties to the case; (2) one

the

vehicle was taken without the knowledge of its

defendants/third-party

claimants

in

the replevin case but were in fact concealed

owner, a certain Junard Escudero; (3) Andres

Atty. Macadangdang to

her

uncooperative to the complainant. He pointed

the implementation of the writ of replevin/order

allowed

and

from

get

them. Andres

also

gave

inconsistent

testimonies as to whether he has in his

a keymaster to duplicate the vehicles keys in

possession the depository receipts.[20]

order to take one motor vehicle; and (4) Andres

admitted that prior to the implementation of
the writ of seizure, he consulted Silver and

The OCA disagreed with the observations of

Atty. Macadangdang regarding

the

Judge Fuentes. It recommended that Andres be

was

held liable only for simple neglect of duty and

accompanied by the latter in the course of the

be suspended for one (1) month and one (1)

implementation. Judge Fuentes observed that

day.[21]

implementation

the

motor

without

of

the

vehicles

strictly

were

writ

and

speedily

observing

seized

fairness

regularity in its implementation.

and

We

[18]

adopt

the

recommendation

of

the

investigating judge.

Anent the safekeeping of the seized motor

Being an officer of the court, Andres must be

vehicles, Judge Fuentes pointed out several

aware

instances where Andres lacked due diligence to

provided in the Rules of Court regarding the

wit: (1) the seized motor vehicles were placed

proper

in a compound surrounded by an insufficiently

ofreplevin and/or an order of seizure. The Rules,

locked see-through fence; (2) three motor

likewise, is explicit on the duty of the sheriff in

vehicles were left outside the compound; (3)

its implementation. To recapitulate what should

Andres turned over the key of the gate to the

be

policemen guarding the motor vehicles; (4)

pertinent provisions of Rule 60, of the Rules of

Andres does not even know the full name of the

Court are quoted hereunder:

owner of the compound, who was merely

known

to

him

PO3 Despe and

as

Gloria;

SPO4

(5)

except

Nelson Salcedo,

that

there

are

well-defined

implementation

common

knowledge

of

to

sheriffs,

SEC. 4. Duty of the sheriff.Upon

receiving such order, the sheriff
must serve a copy thereof on the

for
the

34

steps
writ

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.)

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

SEC. 6. Disposition of property by

sheriff.If within five (5) days
after the taking of the
property by the sheriff, the
adverse party does not object to
the sufficiency of the bond, or of
the surety or sureties thereon; or
if the adverse party so objects
and the court affirms its approval
of the applicants bond or
approves a new bond, or if the
adverse party requires the return
of the property but his bond is
objected to and found insufficient
and he does not forthwith file an
approved bond, the property shall
be delivered to the applicant. If
for any reason the property is not
delivered to the applicant, the
sheriff must return it to the
adverse
party. (Emphasis
supplied.)

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.)

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-

In Sebastian

bond. This, he failed to do.

reiterated that

35

v. Valino,[26] this

Court

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.)

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

Likewise, Andres claim that he had no

constitutes plain negligence.

knowledge that the compound is owned by

Silver fails to convince us. Regardless of who

Fourth, despite the cease and desist

actually owns the compound, the fact remains

that Andres delivered the vehicles to Silver

order,

Andres

prematurely. It violates the rule requiring him

vehicles to their lawful owners. Instead of

to safekeep the vehicles in his custody. [28] The

returning the motor vehicles immediately as

alleged lack of facility to store the seized

directed, he opted to write Silver and demand

vehicles is unacceptable considering that he

that she put up an indemnity bond to secure

should have deposited the same in a bonded

the third-party claims. Consequently, due to his

warehouse. If this was not feasible, he should

delay, the eventual loss of the motor vehicles

have sought prior authorization from the court

rendered the order to return the seized vehicles

issuing the writ before delivering the vehicles

ineffectual to the prejudice of the complaining

to Silver.

owners.
It

Second, it must be stressed that from

must

be

to

return

stressed

as

court

executed by taking possession of the property

ensure that the motor vehicles were safely kept

specified

is

and that the same were readily available upon

in custodia legis. As legal custodian, it is Andres

order of the court or demand of the parties

duty

motor

concerned. Specifically, sheriffs, being ranking

vehicles. Hence, when he passed his duty to

officers of the court and agents of the law,

safeguard the motor vehicles to Silver, he

must discharge their duties with great care and

committed a clear neglect of duty.

diligence. In serving and implementing court

to safekeep the

property
seized

Andres

that

motor

custodian,

such

was

the

the moment an order of delivery in replevin is

therein,

it

failed

responsibility

to

writs, as well as processes and orders of the

court,

Third, we are appalled that even after

they

cannot

afford

to

err

without

unauthorized

affecting adversely the proper dispensation of

duplication of the vehicles keys, Andres failed

justice. Sheriffs play an important role in the

to take extra precautionary measures to ensure

administration of justice and as agents of the

the safety of the vehicles. It is obvious that the

law,

PO3 Despe reported

the

high

standards
[29]

of

performance

are

vehicles were put at risk by the unauthorized

expected of them.

Hence, his failure to

duplication of the keys of the vehicles. Neither

return the motor vehicles at the time when its

did he immediately report the incident to the

return was still feasible constitutes another

police or to the court. The loss of the motor

instance of neglect of duty.

vehicles could have been prevented if Andres

immediately asked the court for an order to

Fifth, as found by the OCA, we agree

transfer the vehicles to another secured place

that Andres also disregarded the provisions of

as soon as he discovered the unauthorized

36

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.)

Rule 141[30] 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

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.)

court approval for such estimated expenses;

Third, the approved estimated expenses shall
be deposited by the interested party with the
Clerk of Court and ex officio sheriff; Fourth, the
Clerk of Court shall disburse the amount to the
executing sheriff; and Fifth, the executing
sheriff shall liquidate his expenses within the
same period for rendering a return on the writ.
In this case, no estimate of sheriffs

Good faith on the part of Andres, or lack

expenses was submitted to the court by

of it, in proceeding to properly execute his

Andres. Without approval of the court, he also

mandate would be of no moment, for he is

allowed Silver to pay directly to the policemen

chargeable with the knowledge that being an

the expenses for the safeguarding of the motor

officer of the court tasked therefor, it behooves

vehicles including their meals.[32] Obviously,

him to make due compliance. He is expected to

this

live up to the exacting standards of his office

practice

departed

from

the

accepted

procedure provided in the Rules of Court.

and

his

conduct

must

at

all

times

be

characterized by rectitude and forthrightness,

In view of the foregoing, there is no

and so above suspicion and mistrust as well.

doubt that Andres failed to live up to the

[35]

standards required of his position. The number

loss of properties in custodia legis ruins the

of instances that Andres strayed from the

confidence lodged by the parties to a suit or

regular

course

observed

in

the

Thus, an act of gross neglect resulting in

proper

the citizenry in our judicial process. Those

implementation of the orders of the court

responsible for such act or omission cannot

cannot be countenanced. Thus, taking into

escape the disciplinary power of this Court.

account the numerous times he was found

negligent and careless of his duties coupled

Anent the allegation of grave abuse of

with his utter disregard of legal procedures, he

authority (oppression), we likewise agree with

cannot be considered guilty merely of simple

the

negligence. His

judge. Records

acts

constitute

gross

negligence.

observations
show

of

the

that

investigating

Andres

started

enforcing the writ of replevin/order of seizure

on the same day that the order of seizure was

As we have previously ruled:

issued. He also admitted that he took the

vehicles of persons who are not parties to

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

the replevin case.[36] He further admitted that

he

took

one

vehicle

belonging

certain Junard Escudero without

the

to

latters

knowledge and even caused the duplication of

its keys in order that it may be taken by
Andres.[37] Certainly, these are indications that

37

Andres enforced the order of seizure with

dismissal. While

undue

grave

haste

and

without

giving

the

abuse

the
of

penalty

authority

imposable

for

(oppression)

is

complainant prior notice or reasonable time to

suspension for six (6) months one (1) day to

deliver the motor vehicles. Hence, Andres is

one

guilty of grave abuse of authority (oppression).

the Uniform Rules on Administrative Cases in

(1)

year.[41] Section

55,

Rule

IV,

of

the Civil Serviceprovides that if the respondent

When a writ is placed in the hands of a

is found guilty of two or more charges or

sheriff, it is his duty, in the absence of any

counts, the penalty to be imposed should be

instructions to the contrary, to proceed with

that corresponding to the most serious charge

reasonable celerity and promptness to execute

or count and the rest shall be considered as

it according to its mandate. However, the

aggravating circumstances.

prompt implementation of an order of seizure is

called for only in instances where there is no

In the instant case, the penalty for the

question regarding the right of the plaintiff to

more serious offense which is dismissal should

the property.

[38]

Where there is such a question,

be

imposed
[42]

on

Andres. However,

and 54,

[43]

following

the prudent recourse for Andres is to desist

Sections 53

Rule IV of the Uniform

from executing the order and convey the

Rules on Administrative Cases in the Civil

information to his judge and to the plaintiff.

Service, we have to consider that Andres is a

first-time offender; hence, a lighter penalty

True, sheriffs must comply with their

than dismissal from the service would suffice.

mandated ministerial duty to implement writs

Consequently, instead of imposing the penalty

promptly and expeditiously, but equally true is

of dismissal, the penalty of suspension from

the principle that sheriffs by the nature of their

office for one (1) year without pay is proper for

functions must at all times conduct themselves

gross neglect of duty, and another six (6)

with propriety and decorum and act above

months should be added for the aggravating

suspicion. There must be no room for anyone to

circumstance

conjecture that sheriffs and deputy sheriffs as

(oppression).

of

grave

abuse

of

authority

officers of the court have conspired with any of

the parties to a case to obtain a favorable

WHEREFORE, the Court finds Abe C.

judgment or immediate execution. The sheriff is

Andres, Sheriff IV, RTC of Davao City, Branch

at the front line as representative of the judiciary

16, GUILTY of gross neglect of duty and grave

and by his act he may build or destroy the

abuse

institution.[39]

is SUSPENDED for one (1) year and six (6)

months

of

authority(oppression)

without

pay. He

is

and
also

However, as to the charge of graft and

hereby WARNED that a repetition of the same

corruption, it must be stressed that the same is

or similar offenses in the future shall be dealt

criminal in nature, thus, the resolution thereof

with more severely.

cannot

ALIBSAR ADOMA, complainant, vs. ROMEO

GATCHECO, Sheriff III, and EUGENIO
TAGUBA,
Process
Server,
of
Branches 1 and 2, respectively, of
the Municipal Trial Court in Cities of
Santiago City, respondents.

be

threshed

out

in

the

instant

administrative proceeding. We also take note

that

there

is

pending

for carnapping against Andres;

criminal
[40]

case

hence, with

more reason that we cannot rule on the

allegation of graft and corruption as it may

DECISION

preempt the court in its resolution of the said

YNARES-SANTIAGO, J.:

case.

The instant administrative complaint filed

against respondents for violation of Republic
Act No. 3019 (Anti-Graft and Corrupt Practices

We come to the matter of penalties. The

imposable penalty for gross neglect of duty is

38

Act) and conduct unbecoming a court

employee, arose from the execution of a writ of
replevin in Adoma v. Spouses Edmundo Andres
and Luzviminda Andres, docketed as Civil Case
No. 1404-1-669, for recovery of possession of
motor vehicle with prayer for the issuance of a
writ of replevin before Branch 1 of the
Municipal Trial Court in Cities (MTCC) of
Santiago City, presided by Judge Ruben Plata.

As to respondent Taguba, Judge Madrid

recommended that he be reprimanded for
trying to abet the misconduct of respondent
sheriff.

Complainant Alibsar Adoma claimed that

on August 16, 2003 a writ of replevin [1] for the
recovery of an L-300 van was issued in his
favor. On the same day, respondent sheriff
Romeo Gatcheco implemented the writ. He was
accompanied by respondent Eugenio Taguba, a
process server of Branch 2 of MTCC, Santiago
City, who volunteered to assist respondent
sheriff. After the two respondents seized the
vehicle, they demanded payment of P8,000.00,
allegedly promised by complainant but the
latter was able to give only P1,000.00 and
another P1,000.00 the following day. [2]

In its Memorandum dated June 4, 2004, the

OCA affirmed the investigating Judges report. It
recommended that respondent sheriff be fined
in the amount of P5,000.00 for conduct
unbecoming a court employee and that
respondent Taguba be reprimanded for trying
to abet the misconduct of a fellow employee of
another court.

Upon receipt of the report of Judge Madrid,

the Court referred the case to the Office of the
Court Administrator (OCA) for evaluation, report
and recommendation.[6]

On July 5, 2004, the Court required the

parties to manifest whether they are willing to
submit the case for resolution based on the
pleadings filed. However, to date, the parties
have yet to file their manifestation. Hence, we
are constrained to dispense the filing of such
manifestation.

The writ of replevin stated that the vehicle

will be delivered to complainant after 5 days
from the implementation thereof. With the
vehicle still undelivered on the 7th day,
complainant
threatened
to
file
an
administrative case against respondent sheriff.
Finally, on August 29, 2003, the latter was
forced to release the vehicle to complainant.
Respondents, however, continued to demand
P6,000.00, hence complainant filed the instant
administrative case.[3]

The Court agrees with the findings of the

investigating Judge and the OCA that
respondents received the amount of P2,000.00
and that they demanded the payment of an
additional P6,000.00 from complainant. The
testimony
of
complainant
before
the
investigating Judge is worthy of belief because
the same was not only candid and direct but
also corroborated by two witnesses who
attested to the veracity of complainants
accusations. The writ of replevin has been
implemented and the vehicle is now in
complainants possession.

Respondents, on the other hand, denied

soliciting and receiving any amount from the
complainant. Respondent sheriff admitted,
however, that complainant promised to give
him P10,000.00 if the vehicle will be sold.[4]

Under Section 9, Rule 141 of the Rules of

Court, the procedure for the execution of writs
and other processes are: first, the sheriff must
make an estimate of the expenses to be
incurred by him; second, he must obtain court
approval
for
such
estimated
expenses; third, the
approved
estimated
expenses shall be deposited by the interested
party with the Clerk of Court and exoficio 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. Any amount
received by the sheriff in excess of the lawful
fees allowed by the Rules of Court is an
unlawful exaction which renders him liable for
grave misconduct and gross dishonesty.[7]

On September 10, 2003, the Court referred

the instant administrative complaint to Judge
Fe Albano Madrid, Executive Judge, Regional
Trial Court, Santiago City, Isabela, for
investigation, report and recommendation.[5]
In her investigation report, Judge Madrid
found the testimony of complainant which was
corroborated by two witnesses, to be more
credible. She refused to believe the claim of
respondent sheriff that he did not release the
vehicle to complainant after 5 days from the
implementation of the writ on August 16, 2003,
because he was awaiting instructions from
Judge Plata. However, she found that
respondent sheriff did not actually demand
money for the implementation of the writ
because it was complainant who promised to
give
money
in
exchange
for
the
implementation of the writ of replevin.
Nevertheless, she concluded that respondent
sheriff is guilty of misconduct considering that
he accepted partial payment and insisted on its
full payment.

In the instant case, respondent sheriff

totally disregarded the aforecited procedure.
He failed to make and submit estimate of the
sheriffs expenses. The amounts received and
demanded by him are therefore unauthorized
fees. His acts of accepting and soliciting said
monetary considerations make him liable not

39

only for conduct unbecoming a court employee

but also for grave misconduct and dishonesty.

fees allowed by the Rules of Court is an

unlawful exaction and renders him liable for
grave misconduct and gross dishonesty.

As correctly found by the OCA, respondent

sheriff deliberately failed to place complainant
in possession of the vehicle after five days from
the implementation of the writ because the
latter failed to give the whole amount he
promised. Since the adverse party did not
object to the complainants bond nor posted a
redelivery bond to recover possession of the
vehicle taken under the writ of replevin,
respondent sheriff is under obligation to deliver
the van to complainant. However, it took
respondent sheriff 13 days before he released
the vehicle to complainant, a clear violation of
Section 6, Rule 60 of the 1997 Revised Rules of
Civil Procedure which provides

Finally, the procedure for execution of a final

judgment is the same as that in carrying out a
writ of preliminary attachment, as set forth in
Rule 141 of the Rules of Court
Clearly, in this case, respondent not only
utterly failed to live up to the high ethical
standards required of a sheriff, but also, he
totally ignored Section 9, Rule 141 of the Rules
of Court. Respondent failed to demonstrate that
he followed the procedure laid down by Rule
141.
The OCAs recommendation that respondent be
found guilty of grave misconduct, dishonesty
and conduct grossly prejudicial to the best
interest of the service is firmly supported by
the records of this case.

SEC. 6. Disposition of property by sheriff.If

within five (5) days after the taking of the
property by the sheriff, the adverse party does
not object to the sufficiency of the bond, or of
the surety or sureties thereon; or if the adverse
party so objects and the court affirms its
approval of the applicants bond or approves a
new bond, or if the adverse party requires the
return of the property but his bond is objected
to and found insufficient and he does not
forthwith file an approved bond, the property
shall be delivered to the applicant. If for any
reason the property is not delivered to the
applicant, the sheriff must return it to the
adverse party. (6a)

Section 52, Rule IV of the Uniform Rules on

Administrative Cases in the Civil Service
(Resolution No. 991936, effective September
27, 1999), provides
Section 52. Classification of Offenses.
- Administrative offenses with corresponding
penalties are classified into grave, less grave or
light, depending on their gravity or depravity
and effects on the government service.

In Apuyan, Jr. v. Sta Isabel,[8] citing Alvarez,

Jr. v. Martin,[9] a sheriff was similarly found
guilty of grave misconduct, dishonesty and
conduct grossly prejudicial to the best interest
of the service for receiving and soliciting
money from the complainant and for
deliberately ignoring the rules for the
implementation of a writ of attachment, thus

A. The following are grave offenses with their

corresponding penalties:
1. Dishonesty
1st Offense
Dismissal
3. Grave Misconduct

1st Offense
Dismissal

Furthermore, respondents act of demanding

money and receiving P1,500.00 from the
complainant for the lunch and merienda of the
policemen who will accompany him in
executing the decision of the Court is a clear
violation of section 9, Rule 141. The Rules
require the sheriff to estimate his expenses in
the execution of the decision. The prevailing
party will then deposit the said amount to the
Clerk of Court who will disburse the amount to
the sheriff, subject to liquidation. Any unspent
amount will have to be returned to the
prevailing party. In this case, no estimate of
sheriffs expenses was submitted to the court by
respondent. In fact, the money which
respondent deputy sheriff had demanded and
received from complainant was not among
those prescribed and authorized by the Rules of
Court. This Court has ruled that any amount
received by the sheriff in excess of the lawful

20. Conduct prejudicial to the best interest of

the service
1st offense Suspension (6 mos. 1 day to 1 year)
2nd offense Dismissal
The imposable penalty for commission of
the first offense of grave misconduct and
dishonesty is dismissal. In the cases of Apuyan,
Jr. v. Sta Isabel,[10] and Albello v. Galvez,
[11]
however, the fact that the respondent
sheriffs were first time offenders was
considered a mitigating circumstance, hence
they were meted the penalty of 1 year
suspension instead of dismissal. Accordingly,
since this is respondent sheriffs first offense,
the penalty of 1 year suspension will suffice.

40

With respect to respondent Taguba, we find

the sanction of reprimand too light a penalty
for his transgression. Although it was not him
who deliberately delayed the delivery of the
vehicle to force complainant to yield to the
sheriffs demand, and that complainant did not
point to him as the one who received the
amount of P2,000.00, respondent Taguba
assisted respondent sheriff in soliciting money
from complainant. Note that respondent Taguba
is a process server of another branch of the
MTCC of Santiago City but he volunteered to
aid respondent sheriff in the implementation of
the writ. He not only demanded P8,000.00 from
complainant after the implementation of the
writ but also tagged along with respondent
sheriff when the latter tried to exact P6,000.00
from complainant before the vehicle was
released to the latter. Furthermore, respondent
Taguba had been previously suspended for 1
month in Albano-Madrid v. Apolonio,[12] for
simple misconduct in playing cards with other
court personnel inside the Judges chambers
during office hours. Indeed, reprimand is not
commensurate to his incorrigible conduct.
Under the circumstances, the penalty of 6
months suspension is appropriate.

A
RP
IO
, J.
,
C
ha
ir
pe
rs
on
,

L
E
O
N
A
R
D
OD
E
C
A
ST
R
O,

At the grassroots of our judicial machinery,

sheriffs are indispensably in close contact with
the litigants, hence, their conduct should be
geared towards maintaining the prestige and
integrity of the court, for the image of a court
of justice is necessarily mirrored in the conduct,
official or otherwise, of the men and women
who work thereat, from the judge to the least
and lowest of its personnel; hence, it becomes
the imperative sacred duty of each and
everyone in the court to maintain its good
name and standing as a temple of justice.[13]

- versus - BRION,

E
R
E
Z,
an
d

WHEREFORE, in view of all the foregoing,

respondent Romeo Gatcheco, Sheriff III,
Municipal Trial Court in Cities, Branch 1,
Santiago City is found GUILTY of Grave
Misconduct, Dishonesty and Conduct Grossly
Prejudicial to the Best Interest of the Service
and is SUSPENDED for one (1) year, without
pay. Respondent Eugenio Taguba, Process
Server, Municipal Trial Court in Cities, Branch 2,
Santiago City is found GUILTY of Conduct
Prejudicial to the Best Interest of the Service
and is SUSPENDED for six (6) months without
pay.

S
E
R
E
N
O,
JJ.

Respondents are warned that a repetition

of the same or any other act of infraction in the
future shall be dealt with most severely.

ROLAND YOUNG, Promulgated:

Respondent. August 3, 2011

ADVENT CAPITAL AND G.R. No. 183018

x----------------------------------------------------------------------------------------x

FINANCE CORPORATION,
Petitioner, Present:

41

and sureties not solidarily liable with it, is

stayed.7
DECISION

On 5 November 2001, Young filed his Comment

to the Petition for Rehabilitation, claiming,
among others, several employee benefits
allegedly due him as Advents former president
and chief executive officer.

CARPIO, J.:

On 6 November 2002, the rehabilitation court

approved the rehabilitation plan submitted by
Advent. Included in the inventory of Advents
assets was the subject car which remained in
Youngs possession at the time.

The Case

This petition for review1 assails the 28

December 2007 Decision2 and 15 May 2008
Resolution3 of the Court of Appeals in CA-G.R.
SP No. 96266. The Court of Appeals set aside
the 24 March 2006 and 5 July 2006 Orders4 of
the Regional Trial Court of Makati City, Branch
147, and directed petitioner Advent Capital and
Finance Corporation to return the seized vehicle
to respondent Roland Young. The Court of
Appeals denied the motion for reconsideration.

Youngs obstinate refusal to return the subject

car, after repeated demands, prompted Advent
to file the replevin case on 8 July 2003. The
complaint, docketed as Civil Case No. 03-776,
was raffled to the Regional Trial Court of Makati
City, Branch 147 (trial court).

After Advents posting

of P3,000,000 replevin bond, which was double
the value of the subject car at the time,
through Stronghold Insurance Company,
Incorporated (Stronghold), the trial court issued
a Writ of Seizure8 directing the Sheriff to seize
the subject car from Young. Upon receipt of the
Writ of Seizure, Young turned over the car to
Advent,9 which delivered the same to the
rehabilitation receiver.10

The Antecedents

The present controversy stemmed from

a replevin suit instituted by petitioner Advent
Capital and Finance Corporation (Advent)
against respondent Roland Young (Young) to
recover the possession of a 1996 Mercedes
Benz E230 with plate number UMN-168, which
is registered in Advents name.5

Thereafter, Young filed an Answer alleging that

as a former employee of Advent, he had the
option to purchase the subject car at book
value pursuant to the company car plan and to
offset the value of the car with the proceeds of
his retirement pay and stock option plan. Young
sought the (1) execution of a deed of sale over
the subject car; and (2) determination and
payment of the net amount due him as
retirement benefits under the stock option plan.

Prior to the replevin case, or on 16 July 2001,

Advent filed for corporate rehabilitation with
the Regional Trial Court of Makati City, Branch
142 (rehabilitation court).6

On 27 August 2001, the rehabilitation court

issued an Order (stay order) which states that
the enforcement of all claims whether for
money or otherwise, and whether such
enforcement is by court action or otherwise,
against the petitioner (Advent), its guarantors

Advent filed a Reply with a motion to dismiss

Youngs counterclaim, alleging that the
counterclaim did not arise from or has no
logical relationship with the issue of ownership
of the subject car.

42

jurisdiction, to the exclusion of this

Court. Accordingly, plaintiffs
Motion To Dismiss defendant Youngs
counterclaim is granted. 11

After issues have been joined, the parties

entered into pre-trial on 2 April 2004, which
resulted in the issuance of a pre-trial order of
even date reciting the facts and the issues to
be resolved during the trial.

On 10 June 2005, Young filed a motion for

partial reconsideration of the dismissal order
with respect to his counterclaim.
On 28 April 2005, the trial court issued an
Order dismissing the replevin case without
prejudice for Advents failure to prosecute. In
the same order, the trial court dismissed
Youngs counterclaim against Advent for lack of
jurisdiction. The order pertinently reads:

On 8 July 2005, Young filed an omnibus motion,

praying that Advent return the subject car and
pay him P1.2 million in damages (f)or the
improper and irregular seizure of the subject
car, to be charged against the replevin bond
posted by Advent through Stronghold.

It appears that as of July 28, 2003,

subject motor vehicle has been turned
over to the plaintiff, thru its authorized
representative, and adknowledged by
the parties respective counsels in
separate Manifestations filed. To date,
no action had been taken by the plaintiff
in the further prosecution of this case.
Accordingly, this case is ordered
dismissed without prejudice on the
ground of failure to prosecute.

On 24 March 2006, the trial court issued an

Order denying Youngs motion for partial
reconsideration, viz:

In the instant case, defendant, in his

counterclaim anchored her [sic] right of
possession to the subject vehicle on his
alleged right to purchase the same
under the company car plan. However,
considering that the Court has already
declared that it no longer has
jurisdiction to try defendants
counterclaim as it is now part of the
rehabilitation proceedings before the
corporate court concerned, the
assertions in the Motion for
Reconsiderations (sic) will no longer
stand.

Anent plaintiffs Motion to Dismiss

defendant Youngs counterclaim for
benefits under the retirement and stock
purchase plan, the Court rules as
follows: The only issue in this case is
who is entitled to the possession of the
subject motor vehicle. This issue may
have a connection, but not a necessary
connection with defendants rights under
the retirement plan and stock purchase
plan as to be considered a compulsory
counterclaim.

On the other hand, the plaintiff did not

file a Motion for Reconsideration of the
same Order, dismissing the complaint
for failure to prosecute, within
the reglementary period. Hence, the
same has attained finality.

xxx

Notably, defendants claim is basically

one for benefits under and by virtue of
his employment with the plaintiff, and
the subject vehicle is merely an incident
in that claim. Said claim is properly
ventilated, as it is resolvable by, the
Rehabilitation Court which has
jurisdiction and has acquired

Defendant alleged that the dismissal of

the case resulted in the dissolution of
the writ. Nonetheless, the Court deems
it proper to suspend the resolution of
the return of the subject vehicle. In this
case, the subject vehicle was turned

43

over to plaintiff by virtue of a writ

of replevin validly issued, the latter
having sufficiently shown that it is the
absolute/registered owner thereof. This
was not denied by the defendant.
Plaintiffs ownership includes its right of
possession. The case has been
dismissed without a decision on the
merits having been rendered. Thus, to
order the return of the vehicle to one
who is yet to prove his right of
possession would not be proper.

WHEREFORE, there being no new and

substantial arguments raised, the
Motion to Resolve is denied.13

Young filed a petition for certiorari and

mandamus with the Court of Appeals seeking
to annul the trial courts Orders of 24 March
2006 and 5 July 2006.

Accordingly, the Motion for Partial

Reconsideration is denied.12
The Court of Appeals Ruling

On 8 June 2006, Young filed a motion to resolve

his omnibus motion.

In his petition before the Court of Appeals,

Young argued mainly that the trial court
committed grave abuse of discretion
amounting to lack or excess of jurisdiction in
(1) not directing the return of the subject
vehicle to him; (2) refusing to hold a hearing to
determine the damages to be recovered
against the replevin bond; and (3) dismissing
his counterclaim.

In an Order dated 5 July 2006, the trial court

denied the motion to resolve, to wit:

In the instant case, the Court suspended

the resolution of the return of the
vehicle to defendant Roland Young. It
should be noted that the writ
of replevin was validly issued in favor of
the plaintiff and that it has sufficiently
established ownership over the subject
vehicle which includes its right to
possess. On the other hand, the case
(Olympia International vs. Court of
Appeals) cited by defendant finds no
application to this case, inasmuch as in
the former the Court has not rendered
judgment affirming plaintiffs (Olympia)
right of possession on the property
seized. Moreover, the Court, in the
Order dated April 28, 2005, has already
denied defendants counterclaim upon
which he based his right of possession
on the ground of lack of jurisdiction.
Accordingly, the Court reiterates its
previous ruling that to order the return
of the subject vehicle to defendant
Young, who is yet to prove his right of
possession before the Rehabilitation
Court would not be proper.

The Court of Appeals ruled in favor of Young

and annulled the assailed rulings of the trial
court. The Court of Appeals held:

It is noteworthy that the case was

dismissed by the court a quo for failure
of Advent to prosecute the same. Upon
dismissal of the case, the writ of seizure
issued as an incident of the main action
(forreplevin) became functus officio and
should have been recalled or lifted.
Since there was no adjudication on the
merits of the case, the issue of who
between Advent and petitioner has the
better right to possess the subject car
was not determined. As such, the
parties should be restored to their status
immediately before the institution of the
case.

The Supreme Courts ruling in Olympia

International, Inc. vs. Court

44

of Appeals (supra) squarely applies to

the present controversy, to wit:

same position as though no action had

been commenced at all.

Indeed, logic and equity demand that

the writ of replevin be cancelled. Being
provisional and ancillary in character, its
existence and efficacy depended on the
outcome of the case. The case having
been dismissed, so must the writs
existence and efficacy be dissolved. To
let the writ stand even after the
dismissal of the case would be
adjudging Olympia as the prevailing
party, when precisely, no decision on
the merits had been rendered. The case
having been dismissed, it is as if no case
was filed at all and the parties must
revert to their status before the
litigation.

By the same token, return of the subject

car to petitioner pending rehabilitation
of Advent does not constitute
enforcement of claims against it, much
more adjudication on the merits of
petitioners counterclaim. In other words,
an order for such return is not a
violation of the stay order, which was
issued by the rehabilitation court on
August 27, 2001. x x x

Corollarily, petitioners claim against

the replevin bond has no connection at
all with the rehabilitation proceedings.
The claim is not against the insolvent
debtor (Advent) but against bondsman,
Stronghold. Such claim is expressly
authorized by Sec. 10, Rule 60, in
relation to Sec. 20, Rule 57, id., x x x14

Indeed, as an eminent commentator on

Remedial Law expounds:

The dispositive portion of the Court of Appeals

decision reads:

The plaintiff who obtains possession of

the personal property by a writ
of replevin does not acquire absolute
title thereto, nor does the defendant
acquire such title by rebonding the
property, as they only hold the property
subject to the final judgment in the
action. (I Regalado, Remedial Law
Compendium, Eighth Revised Edition, p.
686)

WHEREFORE, premises considered, the

instant petition is PARTLY GRANTED. The
orders of the Regional Trial Court dated
March 24, 2006 and July 5, 2006 are
ANNULLED and SET ASIDE in so far as
they suspended resolution of petitioners
motion for, and/or disallowed, the return
of the subject car to petitioner.
Accordingly, respondent Advent Capital
and Finance Corporation is directed to
return the subject car to petitioner.

Reversion of the parties to the status

quo ante is the
consequence ex proprio vigore of the
dismissal of the case. Thus,
in Laureano vs. Court of Appeals (324
SCRA 414), it was held:

The Regional Trial Court of Makati City

(Branch 147) is directed to conduct a
hearing on, and determine, petitioners
claim for damages against
the replevin bond posted by Stronghold
Insurance Co.

(A)lthough the commencement of a civil

action stops the running of the statute
of prescription or limitations, its
dismissal or voluntary abandonment by
plaintiff leaves the parties in exactly the

SO ORDERED.15

45

Contrary to Advents view, Olympia

International Inc. v. Court of Appeals16 applies
to this case. The dismissal of the replevin case
for failure to prosecute results in the restoration
of the parties status prior to litigation, as if no
complaint was filed at all. To let the writ of
seizure stand after the dismissal of the
complaint would be adjudging Advent as the
prevailing party, when precisely no decision on
the merits had been rendered. Accordingly, the
parties must be reverted to their status quo
ante. Since Young possessed the subject car
before the filing of the replevin case, the same
must be returned to him, as if no complaint was
filed at all.

Advent filed a motion for reconsideration, which

was denied by the Court of Appeals in a
Resolution dated 15 May 2008.
The Issue

The main issue in this case is whether the

Court of Appeals committed reversible error in
(1) directing the return of the seized car to
Young; and (2) ordering the trial court to set a
hearing for the determination of damages
against the replevin bond.

Advents contention that returning the subject

car to Young would constitute a violation of the
stay order issued by the rehabilitation court is
untenable. As the Court of Appeals correctly
concluded, returning the seized vehicle to
Young is not an enforcement of a claim against
Advent which must be suspended by virtue of
the stay order issued by the rehabilitation court
pursuant to Section 6 of the Interim Rules on
Corporate Rehabilitation (Interim Rules).17 The
issue in the replevin case is who has better
right to possession of the car, and it was
Advent that claimed a better right in filing
the replevin case against Young. In defense,
Young claimed a better right to possession of
the car arising from Advents car plan to its
executives, which he asserts entitles him to
offset the value of the car against the proceeds
of his retirement pay and stock option plan.

The Courts Ruling

The petition is partially meritorious.

On returning the seized vehicle to Young

Young cannot collect a money claim against

Advent within the contemplation of the Interim
Rules. The term claim has been construed to
refer to debts or demands of a pecuniary
nature, or the assertion to have money paid by
the company under rehabilitation to its
creditors.18 In the replevin case, Young cannot
demand that Advent pay him money because
such payment, even if valid, has been stayed
by order of the rehabilitation court. However, in
the replevin case, Young can raise Advents car
plan, coupled with his retirement pay and stock
option plan, as giving him a better right to
possession of the car. To repeat, Young is
entitled to recover the subject car as a
necessary consequence of the dismissal of
the replevin case for failure to prosecute
without prejudice.

We agree with the Court of Appeals in directing

the trial court to return the seized car to Young
since this is the necessary consequence of the
dismissal of the replevin case for failure to
prosecute without prejudice. Upon the
dismissal of the replevin case for failure to
prosecute, the writ of seizure, which is merely
ancillary in nature, becamefunctus officio and
should have been lifted. There was no
adjudication on the merits, which means that
there was no determination of the issue who
has the better right to possess the subject car.
Advent cannot therefore retain possession of
the subject car considering that it was not
adjudged as the prevailing party entitled to the
remedy ofreplevin.

On the damages against the replevin bond

46

filed in the same case that is the main

action,21 and with the court having jurisdiction
over the case at the time of the application. 22

Section 10, Rule 60 of the Rules of

Court19 governs claims for damages on account
of improper or irregular seizure
in replevin cases. It provides that
in replevin cases, as in receivership and
injunction cases, the damages to be awarded
upon the bond shall be claimed, ascertained,
and granted in accordance with Section 20 of
Rule 57 which reads:

e remed
In this case, there was no application for
damages against Stronghold resulting from the
issuance of the writ of seizure before the
finality of the dismissal of the complaint for
failure to prosecute. It appears that Young filed
his omnibus motion claiming damages against
Stronghold after the dismissal order issued by
the trial court on 28 April 2005 had attained
finality. While Young filed a motion for partial
reconsideration on 10 June 2005, it only
concerned the dismissal of his counterclaim,
without any claim for damages against
the replevin bond. It was only on 8 July 2005
that Young filed an omnibus motion seeking
damages against the replevin bond, after the
dismissal order had already become final for
Advents non-appeal of such order. In fact, in his
omnibus motion, Young stressed the finality of
the dismissal order.23 Thus, Young is barred
from claiming damages against
the replevin bond.

Sec. 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 obligee or 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. e

In Jao v. Royal Financing Corporation,24 the

Court held that defendant therein was
precluded from claiming damages against the
surety bond since defendant failed to file the
application for damages before the termination
of the case, thus:

If the judgment of the appellate court

be favorable to the party against whom
the attachment was issued, he must
claim damages sustained during the
pendency of the appeal by filing an
application in the 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.

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.

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 obligee not exempt from
execution should the bond or deposit
given by the latter be insufficient or fail
to fully satisfy the award.

The above provision essentially allows the

application to be filed at any time before the
judgment becomes executory.20 It should be

47

Since Young is time-barred from claiming

damages against the replevin bond, the
dismissal order having attained finality after
the application for damages, the Court of
Appeals erred in ordering the trial court to set a
hearing for the determination of damages
against the replevin bond.

credit for P3,000 which he had earlier paid to

the respondents.
Petitioner subsequently appealed the decision
to this Court. While the appeal was thus
pending, it was found that petitioner's surety,
the Globe Assurance Co., had become
bankrupt. Hence, on motion of the respondents,
the trial court ordered petitioner to file a new
and sufficient counterbond and, when he failed
to file one, it issued a writ of replevin. Petitioner
challenged the authority of the trial court to
issue the writ both in the Court of Appeals and
in this Court but in both cases his petition was
dismissed. Accordingly, the trial court issued a
writ of seizure on November 10, 1958.

WHEREFORE, the Court GRANTS the

petition IN PART. The Court SETS ASIDE the
portion in the assailed decision of the Court of
Appeals in CA-G.R. SP No. 96266 ordering the
trial court to set a hearing for the
determination of damages against
the replevin bond.
G.R. No. L-19718

On January 5, 1959, the sheriff served the writ

on petitioner's assistant manager, then took
possession of the tractor and hoist as required
by law, and five days after offered to deliver
these machines to the respondents'
representative but the latter refused to accept
them on the ground that the tractor and hoist
were unserviceable while the truck could not be
produced. Indeed, as the Court of Appeals said
in the decision appealed, "with respect to the
tractor, the three most important and
indispensable parts thereof were broken and
unusable. The Jaeger hoist had also become
useless."

January 31, 1966

PASTOR D. AGO, petitioner,

vs.
THE COURT OF APPEALS, HON. MANUEL P.
BARCELONA, BENITO MACROHON,
VENANCIO CASTAEDA and NICETAS
HENSON, respondents.
J.M. Luison for the petitioner.
Quijano and Arroyo for the respondents.
REGALA, J.:

On January 22, 1959, the sheriff made a report

to the court, stating that, because of
respondents' refusal to take possession of the
machines, "there is no other recourse but to
return (them) to defendant Pastor D. Ago." The
following day, January 23, 1959, respondents
also informed the court that they "could not
receive the D-8 Caterpillar tractor or the Jaeger
Hoist with power engine because they are in a
dilapidated condition while the GMC truck could
not be produced by the defendants. These
three (3) machines were complete and in good
condition when plaintiffs turned them over to
defendants."

This is a petition for certiorari to review the

decision of the Court of Appeals. So far as
relevant, the facts as found by the appellate
court, are as follows:
In 1955, Venancio Castaeda and Nicetas
Henson, respondents in this case, brought an
action for replevin in the Manila Court of First
Instance to recover from petitioner Pastor D.
Ago, a Caterpillar tractor, a Jaeger hoist and a
cargo truck which the former had delivered to
the latter for use in their logging business in
Agusan. At the same time, respondents asked
for the immediate delivery of the machines to
them and, for this purpose, posted a bond. The
trial court approved the bond and ordered the
seizure of the property, but petitioner filed a
counterbond for P60,000 for which reason he
was allowed to retain possession of the
machinery.

Meanwhile this Court affirmed the decision of

the lower court in Ago vs. Castaeda, G.R. No.
L-14066, June 30, 1961 and thereafter
remanded the case to the court of origin. On
August 25, 1961, a writ of execution for
P172,923.87 was issued. However, petitioner
asked for a stay of execution on the ground
that since January 5, 1959, there had been a
change in the situation of the parties" which
made it inequitable to enforce the decision as
affirmed by this Court. According to petitioner,
after their seizure by the sheriff, the tractor and
the hoist were never returned to him.
Therefore, he should not be made to pay
damages which he estimated to be P99,877.09
for their detention after January 5, 1959. With
respect to the cargo truck, petitioner

On May 30, 1957, the court rendered judgment

for respondents ordering petitioner to return
the machinery or, in the alternative, to pay the
sum of P30,000 and to pay to respondents the
sums of P1,750 for the period August 3 to
September 3, 1954; P1,312.50 a month from
September 4, 1954 until the machines were
returned or their value paid and P2,000 for
attorney's fee. However, petitioner was given

48

contended that no rental value could be

assigned to it because on January 5, 1959 it
was already a junk.1wph1.t

he must also have the same right when, asking

for the delivery pendente lite of the same
property, he afterwards finds them in a
substantially depredated condition. Here, the
Court of Appeals found "beyond dispute" that
the tractor and the hoist had so deteriorated
that they had become unserviceable. This right
to reject is assured in the first instance by the
provision that the judgment in a suit for
replevin must be in the alternative so as to
afford a measure of relief where the property
cannot be returned (Rule 60, sec. 9); in the
second case it is implied from the requirement
that "if for any reason the property is not
delivered to the plaintiff, the officer must return
it to the defendant." (Rule 60, sec. 6.) It then
becomes the defendant's obligation to take
them back upon tender of the sheriff.

In its order of October 13, 1961, the court

denied petitioner's motion on the ground that
the matter should have been raised before the
decision became final. As a result, petitioner's
house and lots in Quezon City were levied upon
by the sheriff and advertised for sale on
October 25, 1961. Petitioner tried to prevent
enforcement of the writ of execution by filing a
motion to stop the sale but this, was denied on
October 14, 1961. His motion for
reconsideration was likewise denied on October
18. He, therefore, filed a petition
for certiorari in the Court of Appeals to annul
the orders of October 13, 14 and 18, 1961, but
after due consideration, the petition was
dismissed. Hence, this appeal.

Now, did the sheriff return the machinery to the

petitioner, as defendant in the replevin suit?
Despite the affirmative finding of the Court of
Appeals, petitioner denies that they were ever
returned to him. For this purpose, he relies on
the affidavits of P.C. Villanueva, Felimon Pacot
and Narciso Lansang affidavits which he
presented to the trial court in support of his
motion to stay execution. Villanueva was the
same sheriff who, in his report dated January
22, 1959, stated that, in view of respondents'
refusal to accept the machines, "there is no
other recourse but to return [them] to the
defendant Pastor D. Ago," but who now in his
affidavit executed on September 27, 1961, or
two years and eight months after making the
report, states that he was not able to return the
machines because petitioner refused to take
them back. Lansang was petitioner's assistant
manager on whom the writ of seizure was
served on January 5, 1959, while Pacot was
petitioner's guard to whom the machines were
entrusted for safekeeping for five days as
required by law, who now in their affidavits of
September 27, 1961, state that the machines
remained in the custody of Pacot because
petitioner did not take them back when the
sheriff offered to return them.

On November 23, 1962, we granted injunction

in this case upon the filing of a bond in the sum
of P110,000 to restrain execution of the
judgment so far as P99,877.08 was concerned
"without prejudice to the enforcement of the
judgment with respect to the undisputed
balance of P73,046.28 as of August 25, 1961."
But as no bond was filed by petitioner and no
writ of injunction was issued, respondent sheriff
proceeded with the sale of petitioner's house
and lot. In the public auction held on March 8,
1963, respondents won as highest bidders for
P141,750.
It was then that petitioner, without informing us
of the sale, filed a bond and secured from us on
March 9, 1964, a writ of preliminary injunction.
When our attention was therefore called to this
fact, we cancelled the injunction. However, on
motion of the petitioner and upon his posting of
a new bond in the amount of P50,000, we
issued an injunction restraining execution of
the judgment for the deficiency of P48,918.61.
Petitioner makes seven assignments of error all
of which can be reduced to the following
propositions: (1) whether the respondents had
a right to reject the machinery and the
petitioner a corresponding obligation to take
them back; 2) whether the sheriff actually
returned the machinery after respondents
refused to take them; and (3) whether
execution should have been suspended.

But if, as explained, it was petitioner's

obligation to accept redelivery of the machines
after their rejection by respondents, then it is
clear that whether he took them back or not,
he was liable for their detention. An action, for
replevin has for its object the recovery of some
personal property; it is obvious that if the
plaintiff in that action refuses to take delivery
of the very property he sought to recover, it
must be for very good reasons which defeat his
object. Not so in the case of the defendant in
such an action as to whom this presumption
cannot be applied.

To begin with, where judgment is rendered for

the articles or their value and they cannot be
returned in substantially the same condition, it
is settled that the prevailing party may refuse
to take them and instead sue on the redelivery
bond or, as in this case, execute on the
judgment for value. (Kunz v. Nelson, 76 P2d
577 [1938].) If the prevailing party has this
right after judgment, it is at once obvious that

Then, too, is both the trial and the appellate

courts observed, petitioner did not contest

49

respondents' manifestation made the day after

the sheriff reported to the court that he was
going to return the machines to petitioner. In
that manifestation, respondents averred:

the case was pending. The reason is that there

is then no excuse for not bringing the matter to
the attention of the court the fact or
circumstance that affects the outcome of the
case. Such was the supposed change in the
situation of the parties in this case when, so it
is claimed, the petitioner lost possession of the
machines for the detention of which he was
ordered by final judgment to pay damages.

8. In view of the dilapidated state of the

machineries which are no longer in a
serviceable, usable, or working
condition and the important and
indispensable parts thereon missing or
scattered while the GMC truck could not
even be located, plaintiffs'
representative could not receive the
machineries from the Sheriff of Agusan
who in turn returned the remaining
machines and whatever parts that still
remained, to defendant Pastor D. Ago,
thru his representative.

Finally, with respect to the cargo truck which

petitioner says was already a junk on January 5,
1959 when the sheriff served the writ of seizure
and for which reason he should not be made to
pay rental, suffice it to say that the finding of
the Court of Appeals is that it was missing and
could not be produced and not that it was a
junk. We take this finding to be final, especially
considering that it was based on the official
report of the sheriff.

Why petitioner did not dispute this assertion

shortly after it was made has not been
explained. On the other hand, his tardy denial
of it when the judgment for recovery was to be
executed fosters in the mind a conviction that
the affidavits were secured merely to frustrate
efforts at execution.

Wherefore, the decision appealed from is

affirmed, with costs against petitioner.

But there is an even more fundamental reason

why we think the lower court correctly ordered
execution to proceed. As Moran aptly states:
[A] court cannot refuse to issue a writ of
execution upon a final and executory
judgment, or quash it, or order its stay,
for, as a general rule, the parties will not
be allowed, after final judgment, to
object to the execution by raising new
issues of fact or of law, nor can it refuse
and the reason is more compellingto
issue such writ, or quash it or order its
stay, when the judgment had been
reviewed and affirmed by an appellate
court, for it cannot review or interfere
with any matter decided on appeal, or
give other or further relief, or assume
supervisory jurisdiction to interpret or
reverse the judgment of the higher
court. (2 Comments on the Rules of
Court 257 [1963])
Chua A. H. Lee vs. Mapa, 51 Phil. 624 (1928)
and other cases, which are cited by petitioner
in support of his contention that even after a
judgment has become final the court may stay
or even quash the execution, refer to
circumstances that have "arisen subsequent to
the remanding of the record from the Supreme
Court to the trial court" (at 628) and those
cases are justified by the primordial necessity
of doing justice in each case. But those cases,
as Amor vs. Jugo, 77 Phil. 703 (1946)
subsequently explained, cannot be invoked
when the supposed change in the
circumstances of the parties took place while

50