REM2 R62 Interpleader Cases Dela Pena

Today is Wednesday, November 13, 2013
Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 73794 September 19, 1988
ETERNAL GARDENS MEMORIAL PARKS CORPORATION, petitioner,
vs.
FIRST SPECIAL CASES DIVISION INTERMEDIATE APPELLATE COURT and NORTH PHILIPPINE UNION
MISSION OF THE SEVENTH-DAY ADVENTISTS, respondents.

PARAS, J.:
This is a special civil action for certiorari, prohibition and mandamus seeking to set aside the two resolutions of
public respondent First Special Cases Division of the then Intermediate Appellate Court in AC-G.R. No. 04869
entitled "North Philippine Union Mission of the Seventh Day Adventists versus Hon. Antonia Corpus-Macandog,
Presiding J udge, Branch CXX, Regional Trial Court, Caloocan City and Eternal Gardens Memorial Park Corporation,
(a) dated September 5, 1985 (Rollo, pp. 21-25) reconsidering its Decision
1
of February 27, 1985 (Rollo, pp. 38-48)
and ordering petitioner to deposit whatever amounts due from it under the Land Development Agreement, and (b)
dated February 13, 1986 (Rollo, p. 27) denying for lack of merit petitioner's motion for reconsideration.
Petitioner Eternal Gardens Memorial Parks Corporation and private respondent North Philippine Union Mission
Corporation of the Seventh Day Adventists (MISSION for short) are corporations duly organized and existing under
and by virtue of the laws of the Republic of the Philippines.
They executed a Land Development Agreement (Rollo, pp. 179-182) on October 6, 1976 whereby the former
undertook to introduce and construct at its own expense and responsibility necessary improvements on the property
owned by private respondent into a memorial park to be subdivided into and sold as memorial plot lots, at a
stipulated area and price per lot. Out of the proceeds from the sale, private respondent is entitled to receive 40% of
the net gross collection from the project to be remitted monthly by petitioner to private respondent through a
designated depositary trustee bank. On the same date private respondent executed in petitioner's favor a Deed of
Absolute Sale with Mortgage (Rollo, pp. 183-186) on the lots with titles involved in the land development project.
The deed was supplemented by a Sale of Real Property with Mortgage and Special Conditions dated October 28,
1978 (Rollo, pp. 189-194 The amounts totalling about P984,110.82 paid by petitioner were to be considered as part
of the 40% due private respondent under the Land Development Agreement. All went well until Maysilo Estate
asserted its claim of ownership over the parcel of land in question. Confronted with such conflicting claims, petitioner
as plaintiff filed a complaint for interpleader (Rollo, pp. 169-179) against private respondent MISSION and Maysilo
Estate, docketed as Special Court Case No. C-9556 of the then CFI of Rizal, Branch XII, Caloocan, alleging among
others, that in view of the conflicting claims of ownership of the defendants (herein private respondent and Maysilo
Estate) over the properties subject matter of the contracts, over which plaintiff corporation (herein petitioner) has no
claim of ownership except as a purchaser thereof, and to protect the interests of plaintiff corporation which has no
interest in the subject matter of the dispute and is willing to pay whoever is entitled or declared to be the owners of
said properties, the defendants should be required to interplead and litigate their several claims between themselves
(Rollo, p. 177).
An order was issued by the presiding judge
2
requiring defendants to interplead on October 22, 1981. MISSION filed
a motion to dismiss dated November 10, 1981 for lack of cause of action but also presented an answer dated
November 12, 1981. The motion to dismiss was denied in an Order dated J anuary 12, 1982. The heirs of Maysilo
Estate filed their own answer dated November 11, 1981 and an amended answer dated October 20, 1983 thru the
estate's special receiver. The heirs of Pedro Banon filed an "Answer in Intervention with Special and Affirmative
Defenses" dated October 24, 1983, while Lilia B. Sevilla and husband J ose Seelin filed their "Answer in Cross-
claim" dated October 31, 1983 (Rollo, p. 30). The heirs of Sofia O'Farrel y Patino, et al. filed their Answer in
Intervention dated November 10, 1983.
However, earlier on November 21, 1982, private respondent presented a motion for the placing on judicial deposit
the amounts due and unpaid from petitioner. Acting on such motion, the trial court
3
denied judicial deposit in its
order dated February 13, 1984, the decretal portion of which reads:
G.R. No. 73794 http://www.lawphil.net/judjuris/juri1988/sep1988/gr_73794_1988.html
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PREMISES CONSIDERED, all or the full amount the plaintiff, Eternal Gardens Memorial Parks
Corporation have already paid the North Philippine Union Mission Corporation of the Seventh Day
Adventist is hereby ordered to deposit the same to this Court within thirty (30) days from receipt of this
order considering that real or true owner of the subject properties in question, due hearing of this court
has yet to be undergone in order to decide as to who is the true owner which is a prejudicial question.
Hence the motion dated November 21, 1983 of the NPUM for the Eternal Gardens Corporation to
deposit the balance due and unpaid is hereby ordered denied and the opposition thereto dated
December 19, 1983 is hereby ordered granted.
The contract between the Eternal Gardens Corporation and the North Philippine Union Mission dated
October 16, 1976 is ordered and declared ineffective as of today, February 13, 1984 because the
subject matter of the sale is not existing between the contracting parties until after the question of
ownership is resolved by this court. The court will order the revival of the contract if the North Philippine
Union Mission will win.
If not, the declared winner among the intervenors will be the party to enter into a contract of sale with
the plaintiff as aforementioned. (Rollo, p. 66).
Another order dated October 26, 1984 was issued amending the February 13, 1984 order and setting aside the
order for private respondent's deposit of the amounts it had previously received from petitioner, thus:
WHEREFORE IN VIEW OF ALL THE FOREGOING CONSIDERATIONS the order of February 13,
1984, is hereby ordered amended, reconsidered and modified by this same Court as follows:
(a) The order directing the NORTH PHILIPPINE UNION MISSION CORPORATION OF
SEVENTH-DAY ADVENTISTS to deposit the amounts it received under the implementation of the
LAND DEVELOPMENT AGREEMENT which is not questioned by the plaintiff, Eternal Gardens, is
hereby ordered set aside for the reason that the titles to ownership, the North Philippine Union Mission
Corporation of Seventh Day Adventists on the lots subject matter of the aforesaid agreement is not
established invalid, and the alleged titles of intervenors are not proven yet by competent evidence;
(b) The motion to require Eternal Gardens to deposit the balance under the Land Development
Agreement is likewise hereby ordered denied considering the fact the aforesaid plaintiff had not denied
its obligations under the aforesaid contract; and
(c) The trial or hearing is hereby ordered as scheduled to proceed on November 29, 1984 and on
December 6, 1984 at 8:30 in the morning per order of this Court dated October 4, 1984 in order to
determine the alleged claims of ownership by the intervenors and all claims and allegations of each
party to the instant" case will be considered and decided carefully by this court on just and meritorious
grounds. (Rollo, p. 39)
Said Orders were assailed twice in the Intermediate Appellate Court (Court of Appeals) and in the Supreme Court
as follows:
In G.R. No. 73569 it appeared that on J anuary 11, 1985, MISSION filed a motion to dismiss the Interpleader and the
claims of the Maysilo Estate and the Intervenors and to order the Eternal Gardens to comply with its Land
Management with MISSION.
On J anuary 28, 1985, the trial court passed a resolution, the dispositive portion of which reads:
WHEREFORE, premises considered, this Court, after a lengthy, careful judicious study and perusal of
all the stand of each and everyone of all the parties participating in this case, hereby orders the
dismissal of the interpleader, and the interventions filed by the intervenors, heirs of Pedro Banon, heirs
of O'Farrel, heirs of Rivera, heirs of Maria del Concepcion Vidal, consolidated with the Maysilo Estate
as represented by receiver Arturo Salientes the heirs of Vicente Singson Encarnacion, and Lilia Sevilla
Seeling
This Court likewise orders the plaintiff, Eternal Gardens Memorial Parks Corporation to comply with the
Land Development Agreement dated October 6, 1978, it entered into with the North Philippine Union
Mission Corporation of the Seventh-Day Adventists. (Rollo. p. 68)
The heirs of the Maysilo Estate moved for reconsideration of the aforementioned order of dismissal, the hearing of
which was requested to be set on February, 28, 1985. However, the trial judge, on February 14, 1985 issued the
following orders:
Considering Motions for Reconsideration filed, the Court resolves that the same be GRANTED and
instead of a hearing of the said motions on February 20, 1985, at 8:30 a.m., a hearing on the merits
shall be held. (Rollo, p. 68)
In spite of the February 14, 1985 order, MISSION filed on March 6, 1985 a motion for Writ of Execution of the
resolution of J anuary 28, 1985. This was denied on J une 25, 1985. The said court further set the case for pre-trial
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and trial on J uly 18, 1985.
It was elevated on certiorari and mandamus to the Intermediate Appellate Court (Court of Appeals), docketed as
AC-G.R. Sp No. 06696 "North Philippine Union Mission of the Seventh Day Adventists, vs. Hon. Antonia Corpus-
Macandog Presiding J udge, Branch CXX, Regional Trial Court, Caloocan City, Eternal Gardens Memorial Parks
Corporation, and Heirs of Vicente Singson Encarnacion It was raffled to the Second Special Division. MISSION
assailed the February 14, 1985 and J une 25, 1985 orders as violative of due process and attended by grave abuse
of discretion amounting to lack of jurisdiction. The petition was however dismissed in the decision of said Appellate
Court, promulgated on December 4, 1985, the dispositive portion of which reads:
WHEREFORE, for want of merit the petition for certiorari and mandamus under consideration cannot
be given due course and is accordingly, DISMISSED, without any pronouncement, as to costs. The
restraining order embodied in Our Resolution of J uly 31, 1985, is hereby lifted. (Rollo, G.R. No. 73569
p. 232)
The private respondent challenged the above decision in the Supreme Court in G.R. No. 73569. In its resolution
dated J une 11, 1986, the Supreme Court denied the petition for review on certiorari for lack of merit, as follows:
G.R. No. 73569 (North Philippine Union Mission Corporation of the Seventh Day Adventists vs.
Intermediate Appellate Court, et al.) considering the allegations, issues, and arguments adduced in the
petition for review on certiorari, the Court Resolved to DENY the same for lack of merit. (Ibid p. 263)
Said resolution has become final and executory on J uly 16, 1986. (Ibid p. 269)
Earlier in 1983, the heirs of the late spouses Vicente Singson Encarnacion and Lucila Conde filed Civil Case No.
C-11836 for quieting of title with Branch CXXII, Regional Trial Court, Caloocan City, where petitioner and private
respondent were named as defendants.
Said case is still pending in the lower Court.
In the case at bar, G.R. No. 73794, MISSION, herein private respondent filed a petition for certiorari with the then
Intermediate Appellate Court docketed as AC-G.R. No. 04869 praying that the aforementioned Orders of February
13, 1984 and October 26, 1984 of the Regional Trial Court be set aside and that an order be issued to deposit in
court or in a depositor trustee bank of any and all payments, plus interest thereon, due the private respondent
MISSION under the Land Development Agreement, said amounts deposited to be paid to whomever may be found
later to be entitled thereto, with costs. (Rollo, G.R. No. 73794 p. 38)
The Intermediate Appelate Court, acting through its First Special Cases Division
4
dismissed the petition in its
decision on February 27, 1985 (Rollo, pp. 38-48). In its Resolution
5
promulgated on September 5, 1985, the Court
however, reversed its decision, thus:
WHEREFORE, the Court reconsiders its decision of February 27, 1986, and sets aside the questioned
portions of the respondent Court's orders of February 13 and October 26, 1984. The private respondent
is hereby ordered to deposit whatever amounts are due from it under the Land Development
Agreement of October 6, 1976 with a reputable bank to be designated by the respondent court to be
the depository trustee of the said amounts to be paid to whoever shall be found entitled thereto. No
costs. (Rollo, p. 25)
Eternal Gardens moved for a reconsideration of the above decision but it was denied for lack of merit in a resolution
promulgated on February 13, 1986, which states:
The private respondent Eternal Gardens Memorial Park Corporation's Motion for Reconsideration of
the Court's resolution promulgated September 5, 1985 requiring it "to deposit whatever amounts are
due from it under the Land Development Agreement of October 6, 1976 ...," which was strongly
opposed by the petitioner North Philippine Union Mission of the Seventh Day Adventists, is hereby
denied for lack of merit, reiterating as it does, the very same issues and arguments that were passed
upon and considered by the Court in the very same resolution sought to be reconsidered. (Rollo, p. 27)
Hence, this petition. On J uly 8,1987, the Third Division of this Court issued the following resolution:
... the court RESOLVED to give due course to this petition and require the parties to file memoranda.
In the meantime, to avoid possible wastage of funds, the Court RESOLVED to require the private respondent
6
to DEPOSIT its accruing installments within ten (10) days from notice with a reputable commercial bank in a
savings deposit account, in the name of the Supreme Court of the Philippines, with the details to be reported or
manifested to this Court within ten (10) days from the time the deposit/deposits are made, such deposits not to
be withdrawn without authority from this Court. (Rollo, p. 162)
Petitioner's Memorandum With Prayer for the Deferment of Time to Make Deposit (Rollo, p. 218-236) was filed on
J uly 14, 1987. Its prayer was granted for a period of ten (10) days for the purpose, in the resolution of J uly 29, 1987
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(Rollo, p. 238). Private respondent filed its Opposition to Deferment of Time to Make Deposit (Rollo, pp. 239-253) on
J uly 24, 1987 to which petitioner filed its Reply to Opposition on August 4, 1987 (Rollo, pp. 256-267). Both were
noted by the Court in its resolution dated September 7, 1987 (Rollo, p. 270). On August 25, 1987, private
respondent filed its Rejoinder to Petitioner's Reply to Opposition (Rollo, pp. 271-292).
Petitioner filed its Supplemental Memorandum with Reply to Opposition (To Deferment of time to Make Deposit) on
August 31, 1987 (Rollo, pp. 294-313) and a Sur-rejoinder on September 1, 1987 (Rollo, pp. 304-315).
The main issues in this case are:
I
Whether or not respondent Court of Appeals abused its discretion amounting to lack of jurisdiction in
reconsidering its resolution of February 27, 1985 and in requiring instead in the resolution of
September 5, 1985, that petitioner Eternal Gardens deposit whatever amounts are due from it under
the Land Development Agreement with a reputable bank to be designated by the respondent court.
II
Whether or not the dismissal of AC-G.R. SP No. 06696 (North Philippine Union Mission of the Seventh
Day Adventists vs. Hon. Macandog, et al.) by the Second Special Cases Division of the IAC which was
affirmed by the Supreme Court in G.R. No. 73569 constitutes a basis for the dismissal of the case at
bar on the ground of res adjudicata.
I
There is no question that courts have inherent power to amend their judgments, to make them conformable to the
law applicable provided that said judgments have not yet attained finality (Villanueva v. Court of First Instance of
Oriental Mindoro, Pinamalayan Branch II, 119 SCRA 288 [1982]). In fact, motions for reconsideration are allowed to
convince the courts that their rulings are erroneous and improper Siy v. Court of Appeals, 138 SCRA 543-544
[1985]; Guerra Enterprises Co., Inc. v. CFI of Lanao del Sur (32 SCRA 317 [1970]) and in so doing, said courts are
given sufficient opportunity to correct their errors.
In the case at bar, a careful analysis of the records will show that petitioner admitted among others in its complaint in
Interpleader that it is still obligated to pay certain amounts to private respondent; that it claims no interest in such
amounts due and is willing to pay whoever is declared entitled to said amounts. Such admissions in the complaint
were reaffirmed in open court before the Court of Appeals as stated in the latter court's resolution dated September
5, 1985 in A.C. G.R. No. 04869 which states:
The private respondent (MEMORIAL) then reaffirms before the Court its original position that it is a
disinterested party with respect to the property now the subject of the interpleader case ...
In the light of the willingness, expressly made before the court, affirming the complaint filed below, that
the private respondent (MEMORIAL) will pay whatever is due on the Land Development Agreement to
the rightful owner/owners, there is no reason why the amount due on subject agreement has not been
placed in the custody of the Court. (Rollo, p. 227).
Under the circumstances, there appears to be no plausible reason for petitioner's objections to the deposit of the
amounts in litigation after having asked for the assistance of the lower court by filing a complaint for interpleader
where the deposit of aforesaid amounts is not only required by the nature of the action but is a contractual obligation
of the petitioner under the Land Development Program (Rollo, p. 252).
As correctly observed by the Court of Appeals, the essence of an interpleader, aside from the disavowal of interest
in the property in litigation on the part of the petitioner, is the deposit of the property or funds in controversy with the
court. it is a rule founded on justice and equity: "that the plaintiff may not continue to benefit from the property or
funds in litigation during the pendency of the suit at the expense of whoever will ultimately be decided as entitled
thereto." (Rollo, p. 24).
The case at bar was elevated to the Court of Appeals on certiorari with prohibitory and mandatory injunction. Said
appellate court found that more than twenty million pesos are involved; so that on interest alone for savings or time
deposit would be considerable, now accruing in favor of the Eternal Gardens. Finding that such is violative of the
very essence of the complaint for interpleader as it clearly runs against the interest of justice in this case, the Court
of Appeals cannot be faulted for finding that the lower court committed a grave abuse of discretion which requires
correction by the requirement that a deposit of said amounts should be made to a bank approved by the Court.
(Rollo, p.-25)
Petitioner would now compound the issue by its obvious turn-about, presently claiming in its memorandum that
there is a novation of contract so that the amounts due under the Land Development Agreement were allegedly
extinguished, and the requirement to make a deposit of said amounts in a depositary bank should be held in
abeyance until after the conflicting claims of ownership now on trial before Branch CXXII RTC-Caloocan City, has
finally been resolved.
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All these notwithstanding, the need for the deposit in question has been established, riot only in the lower courts and
in the Court of Appeals but also in the Supreme Court where such deposit was required in "the resolution of J uly 8,
1987 to avoid wastage of funds.
II
The claim that this case should be barred by res judicata is even more untenable.
The requisite of res judicata are: (1) the presence of a final former judgment; (2) the former judgment was rendered
by a court having jurisdiction over the subject matter and the parties; (3) the former judgment is a judgment on the
merits; and (4) there is between the first and the second action identity of parties, of subject matter, and of causes of
action Arguson v. Miclat 135 SCRA 678 [1985]; Carandang v. Venturanza, 133 SCRA 344 [1984]).
There is no argument against the rule that parties should not be permitted to litigate the same issue more than once
and when a right or fact has been judicially tried and determined by a court of competent jurisdiction, so long as it
remains unreversed, it should be conclusive upon the parties and those in privity with them in law or estate (Sy Kao
v. Court of Appeals, 132 SCRA 302 [1984]).
But a careful review of the records shows that there is no judgment on the merits in G.R. No. 73569 and in the case
at bar, G.R. No. 73794; both of which deal on mere incidents arising therefrom.
In G.R. No 73569, the issue raised is the propriety of the grant of the motion for reconsideration without a hearing
thereon and the denial of the motion for execution, while in the case at bar, what is assailed is the propriety of the
order of respondent appellant court that petitioner Eternal Gardens should deposit whatever amounts are due from it
under the Land Development Agreement with a reputable bank to be designated by the Court. In fact, there is a
pending trial on the merits in the trial court which the petitioner insists is a prejudicial question which should first be
resolved. Moreover, while there may be Identity of parties and of subject matter, the Land Development Contract,
there is no Identity of issues as clearly shown by the petitions filed.
PREMISES CONSIDERED, (a) the petition is DISMISSED for lack of merit; (b) this case (together with all the claims
of the intervenors on the merits) is REMANDED to the lower court for further proceedings; and (c) the resolution of
the Third Division of this Court of J uly 8, 1987 requiring the deposit by the petitioner (see footnote No. 6) of the
amounts contested in a depositary bank STANDS (the Motion for Reconsideration thereof being hereby DENIED for
reasons already discussed) until after the decision on the merits shall have become final and executory.
SO ORDERED.
Melencio-Herrera (Chairperson), Padilla, Sarmiento and Regalado, JJ., concur.

Footnotes
1 Penned by J ustice Nathaniel P. De Pano, J r. concluded in by J ustices Isidro C. Borromeo and
Carolina C. Grio-Aquino.
2 J udge Fernando A. Cruz.
3 Regional Trial Court, Caloocan City, Branch CXX, presided over by J udge Antonia Corpus-
Macandog.
4 J ustice de Pano, J r. penned the Decision which was concurred in by J ustices Borromeo and Grio-
Aquino.
5 Penned by J ustice Nathaniel P. de Pano, J r. and concurred in by J ustices Isidro C. Borromeo, Luis A.
J avellana.
6 Should be "Petitioner," see Petitioner's Memorandum, dated J uly 13, 1987, Rollo p. 218.
The Lawphil Project - Arellano Law Foundation
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SUPREME COURT
Manila
EN BANC
G.R. No. L-23851 March 26, 1976
WACK WACK GOLF & COUNTRY CLUB, INC., plaintiff-appellant,
vs.
LEE E. WON alias RAMON LEE and BIENVENIDO A. TAN, defendants-appellees.
Leonardo Abola for appellant.
Alfonso V. Agcaoli & Ramon A. Barcelona for appellee Lee E. Won.
Bienvenido A. Tan in his own behalf.

CASTRO, C.J.:
This is an appeal from the order of the Court of First Instance of Rizal, in civil case 7656, dismissing the plaintiff-
appellant's complaint of interpleader upon the grounds of failure to state a cause of action and res judicata.
In its amended and supplemental complaint of October 23, 1963, the Wack Wack Golf & Country Club, Inc., a
non-stock, civic and athletic corporation duly organized under the laws of the Philippines, with principal office in
Mandaluyong, Rizal (hereinafter referred to as the Corporation), alleged, for its first cause of action, that the
defendant Lee E. Won claims ownership of its membership fee certificate 201, by virtue of the decision rendered in
civil case 26044 of the CFI of Manila, entitled "Lee E. Won alias Ramon Lee vs. Wack Wack Golf & Country Club,
Inc." and also by virtue of membership fee certificate 201-serial no. 1478 issued on October 17, 1963 by Ponciano
B. J acinto, deputy clerk of court of the said CFI of Manila, for and in behalf of the president and the secretary of the
Corporation and of the People's Bank & Trust Company as transfer agent of the said Corporation, pursuant to the
order of September 23, 1963 in the said case; that the defendant Bienvenido A. Tan, on the other hand, claims to be
lawful owner of its aforesaid membership fee certificate 201 by virtue of membership fee certificate 201-serial no.
1199 issued to him on J uly 24, 1950 pursuant to an assignment made in his favor by "Swan, Culbertson and Fritz,"
the original owner and holder of membership fee certificate 201; that under its articles of incorporation and by-laws
the Corporation is authorized to issue a maximum of 400 membership fee certificates to persons duly elected or
admitted to proprietary membership, all of which have been issued as early as December 1939; that it claims no
interest whatsoever in the said membership fee certificate 201; that it has no means of determining who of the two
defendants is the lawful owner thereof; that it is without power to issue two separate certificates for the same
membership fee certificate 201, or to issue another membership fee certificate to the defendant Lee, without
violating its articles of incorporation and by-laws; and that the membership fee certificate 201-serial no. 1199 held by
the defendant Tan and the membership fee certificate 201-serial No. 1478 issued to the defendant Lee proceed from
the same membership fee certificate 201, originally issued in the name of "Swan, Culbertson and Fritz".
For its second cause of action. it alleged that the membership fee certificate 201-serial no. 1478 issued by the
deputy clerk of court of court of the CFI of Manila in behalf of the Corporation is null and void because issued in
violation of its by-laws, which require the surrender and cancellation of the outstanding membership fee certificate
201 before issuance may be made to the transferee of a new certificate duly signed by its president and secretary,
aside from the fact that the decision of the CFI of Manila in civil case 26044 is not binding upon the defendant Tan,
holder of membership fee certificate 201-serial no. 1199; that Tan is made a party because of his refusal to join it in
this action or bring a separate action to protect his rights despite the fact that he has a legal and beneficial interest in
the subject matter of this litigation; and that he is made a part so that complete relief may be accorded herein.
The Corporation prayed that (a) an order be issued requiring Lee and Tan to interplead and litigate their conflicting
claims; and (b) judgment. be rendered, after hearing, declaring who of the two is the lawful owner of membership
fee certificate 201, and ordering the surrender and cancellation of membership fee certificate 201-serial no. 1478
issued in the name of Lee.
In separate motions the defendants moved to dismiss the complaint upon the grounds of res judicata, failure of the
complaint to state a cause of action, and bar by prescription.
1
These motions were duly opposed by the
Corporation. Finding the grounds of bar by prior judgment and failure to state a cause of action well taken, the trial
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court dismissed the complaint, with costs against the Corporation.
In this appeal, the Corporation contends that the court a quo erred (1) in finding that the allegations in its amended
and supplemental complaint do not constitute a valid ground for an action of interpleader, and in holding that "the
principal motive for the present action is to reopen the Manila Case and collaterally attack the decision of the said
Court"; (2) in finding that the decision in civil case 26044 of the CFI of Manila constitutes res judicata and bars its
present action; and (3) in dismissing its action instead of compelling the appellees to interplead and litigate between
themselves their respective claims.
The Corporations position may be stated elsewise as follows: The trial court erred in dismissing the complaint,
instead of compelling the appellees to interplead because there actually are conflicting claims between the latter
with respect to the ownership of membership fee certificate 201, and, as there is not Identity of parties, of subject-
matter, and of cause of action, between civil case 26044 of the CFI of Manila and the present action, the complaint
should not have been dismissed upon the ground of res judicata.
On the other hand, the appellees argue that the trial court properly dismissed the complaint, because, having the
effect of reopening civil case 26044, the present action is barred by res judicata.
Although res judicata or bar by a prior judgment was the principal ground availed of by the appellees in moving for
the dismissal of the complaint and upon which the trial court actually dismissed the complaint, the determinative
issue, as can be gleaned from the pleadings of the parties, relates to the propriety and timeliness of the remedy of
interpleader.
The action of interpleader, under section 120 of the Code of Civil Procedure,
2
is a remedy whereby a person who
has personal property in his possession, or an obligation to render wholly or partially, without claiming any right to
either, comes to court and asks that the persons who claim the said personal property or who consider themselves
entitled to demand compliance with the obligation, be required to litigate among themselves in order to determine
finally who is entitled to tone or the one thing. The remedy is afforded to protect a person not against double liability
but against double vexation in respect of one liability.
3
The procedure under the Rules of Court
4
is the same as
that under the Code of Civil Procedure,
5
except that under the former the remedy of interpleader is available
regardless of the nature of the subject-matter of the controversy, whereas under the latter an interpleader suit is
proper only if the subject-matter of the controversy is personal property or relates to the performance of an
obligation.
There is no question that the subject matter of the present controversy, i.e., the membership fee certificate 201, is
proper for an interpleader suit. What is here disputed is the propriety and timeliness of the remedy in the light of the
facts and circumstances obtaining.
A stakeholder
6
should use reasonable diligence to hale the contending claimants to court.
7
He need not await
actual institution of independent suits against him before filing a bill of interpleader.
8
He should file an action of
interpleader within a reasonable time after a dispute has arisen without waiting to be sued by either of the
contending claimants.
9
Otherwise, he may be barred by laches
10
or undue delay.
11
But where he acts with
reasonable diligence in view of the environmental circumstances, the remedy is not barred.
12
Has the Corporation in this case acted with diligence, in view of all the circumstances, such that it may properly
invoke the remedy of interpleader? We do not think so. It was aware of the conflicting claims of the appellees with
respect to the membership fee certificate 201 long before it filed the present interpleader suit. It had been
recognizing Tan as the lawful owner thereof. It was sued by Lee who also claimed the same membership fee
certificate. Yet it did not interplead Tan. It preferred to proceed with the litigation (civil case 26044) and to defend
itself therein. As a matter of fact, final judgment was rendered against it and said judgment has already been
executed. It is not therefore too late for it to invoke the remedy of interpleader.
It has been held that a stakeholder's action of interpleader is too late when filed after judgment has been rendered
against him in favor of one of the contending claimants,
13
especially where he had notice of the conflicting claims
prior to the rendition of the judgment and neglected the opportunity to implead the adverse claimants in the suit
where judgment was entered. This must be so, because once judgment is obtained against him by one claimant he
becomes liable to the latter.
14
In once case,
15
it was declared:
The record here discloses that long before the rendition of the judgment in favor of relators against the
Hanover Fire Insurance Company the latter had notice of the adverse claim of South to the proceeds of
the policy. No reason is shown why the Insurance Company did not implead South in the former suit
and have the conflicting claims there determined. The Insurance Company elected not to do so and
that suit proceeded to a final judgment in favor of relators. The Company thereby became
independently liable to relators. It was then too late for such company to invoke the remedy of
interpleader
The Corporation has not shown any justifiable reason why it did not file an application for interpleader in civil case
2 of 5 11/13/2013 2:23 AM
26044 to compel the appellees herein to litigate between themselves their conflicting claims of ownership. It was
only after adverse final judgment was rendered against it that the remedy of interpleader was invoked by it. By then
it was too late, because to he entitled to this remedy the applicant must be able to show that lie has not been made
independently liable to any of the claimants. And since the Corporation is already liable to Lee under a final
judgment, the present interpleader suit is clearly improper and unavailing.
It is the general rule that before a person will be deemed to be in a position to ask for an order of
intrepleader, he must be prepared to show, among other prerequisites, that he has not become
independently liable to any of the claimants. 25 Tex. J ur. p. 52, Sec. 3; 30 Am. J ur. p. 218, Section 8.
It is also the general rule that a bill of interpleader comes too late when it is filed after judgment has been
rendered in favor of one of the claimants of the fund, this being especially true when the holder of the funds
had notice of the conflicting claims prior to the rendition of the judgment and had an opportunity to implead the
adverse claimants in the suit in which the judgment was rendered. United Procedures Pipe Line Co. v. Britton,
Tex. Civ. App. 264 S.W. 176; Nash v. McCullum, Tex. Civ. 74 S.W. 2d 1046; 30 Am. J ur. p. 223, Sec. 11; 25
Tex. J ur. p. 56, Sec. 5; 108 A.L.R., note 5, p. 275.
16
Indeed, if a stakeholder defends a suit filed by one of the adverse claimants and allows said suit to proceed to final
judgment against him, he cannot later on have that part of the litigation repeated in an interpleader suit. In the case
at hand, the Corporation allowed civil case 26044 to proceed to final judgment. And it offered no satisfactory
explanation for its failure to implead Tan in the same litigation. In this factual situation, it is clear that this interpleader
suit cannot prosper because it was filed much too late.
If a stakeholder defends a suit by one claimant and allows it to proceed so far as a judgment against him
without filing a bill of interpleader, it then becomes too late for him to do so. Union Bank v. Kerr, 2 Md. Ch. 460;
Home Life Ins. Co. v. Gaulk, 86 Md. 385, 390, 38 A. 901; Gonia v. O'Brien, 223 Mass. 177, 111 N.E. 787. It is
one o the main offices of a bill of interpleader to restrain a separate proceeding at law by claimant so as to
avoid the resulting partial judgment; and if the stakeholder acquiesces in one claimant's trying out his claim and
establishing it at law, he cannot then have that part of the litigation repeated in an interpleader suit. 4
Pomeroy's Eq. J uris. No. 162; Mitfor's Eq. Pleading (Tyler's Ed.) 147 and 236; Langdell's Summary of Eq.
Pleading, No. 162' De Zouche v. Garrizon, 140 Pa. 430, 21 A/450.
17
It is the general rule that a bill of interpleader comes too late when application therefore is delayed until
after judgment has been rendered in favor of one of the claimants of the fund, and that this is especially
true where the holder of the fund had notice of the conflicting claims prior to the rendition of such
judgment and an opportunity to implead the adverse claimants in the suit in which such judgment was
rendered. (See notes and cases cited 36 Am. Dec. 703, Am. St. Rep. 598, also 5 Pomeroy's Eq. J uris.
Sec. 41.)
The evidence in the opinion of the majority shows beyond dispute that the appellant permitted the Parker
county suit to proceed to judgment in favor of Britton with full notice of the adverse claims of the defendants in
the present suit other than the assignees of the judgment (the bank and Mrs. Pabb) and no excuse is shown
why he did not implead them in the suit.
18
To now permit the Corporation to bring Lee to court after the latter's successful establishment of his rights in civil
case 26044 to the membership fee certificate 201, is to increase instead of to diminish the number of suits, which is
one of the purposes of an action of interpleader, with the possibility that the latter would lose the benefits of the
favorable judgment. This cannot be done because having elected to take its chances of success in said civil case
26044, with full knowledge of all the fact, the Corporation must submit to the consequences of defeat.
The act providing for the proceeding has nothing to say touching the right of one, after contesting a
claim of one of the claimants to final judgment unsuccessfully, to involve the successful litigant in
litigation anew by bringing an interpleader action. The question seems to be one of first impression
here, but, in other jurisdictions, from which the substance of the act was apparently taken, the rule
prevails that the action cannot be resorted to after an unsuccessful trial against one of the claimants.
It is well settled, both by reasons and authority, that one who asks the interposition of a court of equity
to compel others, claiming property in his hands, to interplead, must do so before putting them to the
test of trials at law. Yarborough v. Thompson, 3 Smedes & M. 291 (41 Am. Dec. 626); Gornish v.
Tanner, 1 You. & J er. 333; Haseltine v. Brickery, 16 Grat. (Va.) 116. The remedy by interpleader is
afforded to protect the party from the annoyance and hazard of two or more actions touching the same
property or demand; but one who, with knowledge of all the facts, neglects to avail himself of the relief,
or elects to take the chances for success in the actions at law, ought to submit to the consequences of
defeat. To permit an unsuccessful defendant to compel the successful plaintiffs to interplead, is to
increase instead of to diminish the number of suits; to put upon the shoulders of others the burden
which he asks may be taken from his own. ....'
It is urged, however, that the American Surety Company of New York was not in position to file an interpleader
until it had tested the claim of relatrix to final judgment, and that, failing to meet with success, it promptly filed
the interpleader. The reason why, it urges, it was not in such position until then is that had it succeeded before
3 of 5 11/13/2013 2:23 AM
this court in sustaining its construction of the bond and the law governing the bond, it would not have been
called upon to file an interpleader, since there would have been sufficient funds in its hands to have satisfied all
lawful claimants. It may be observed, however, that the surety company was acquainted with all of the facts,
and hence that it simply took its chances of meeting with success by its own construction of the bond and the
law. Having failed to sustain it, it cannot now force relatrix into litigation anew with others, involving most likely a
repetition of what has been decided, or force her to accept a pro rata part of a fund, which is far from benefits
of the judgment.
19
Besides, a successful litigant cannot later be impleaded by his defeated adversary in an interpleader suit and
compelled to prove his claim anew against other adverse claimants, as that would in effect be a collateral attack
upon the judgment.
The jurisprudence of this state and the common law states is well-settled that a claimant who has been
put to test of a trial by a surety, and has establish his claim, may not be impleaded later by the surety in
an interpleader suit, and compelled to prove his claim again with other adverse claimants. American
Surety Company of New York v. Brim, 175 La. 959, 144 So. 727; American Surety Company of New
York v. Brim (In Re Lyong Lumber Company), 176 La. 867, 147 So. 18; Dugas v. N.Y. Casualty Co.,
181 La. 322, 159 So. 572; 15 Ruling Case Law, 228; 33 Corpus J uris, 477; 4 Pomeroy's J urisprudence,
1023; Royal Neighbors of America v. Lowary (D.C.) 46 F2d 565; Brackett v. Graves, 30 App. Div. 162,
51 N.Y.S. 895; De Zouche v. Garrison, 140 Pa. 430, 21 A. 450, 451; Manufacturer's Finance Co. v. W.I.
Jones Co. 141 Ga., 519, 81 S.E. 1033; Hancock Mutual Life Ins. Co. v. Lawder, 22 R.I. 416, 84 A. 383.
There can be no doubt that relator's claim has been finally and definitely established, because that matter was
passed upon by three courts in definitive judgments. The only remaining item is the value of the use of the land
during the time that relator occupied it. The case was remanded solely and only for the purpose of determining
the amount of that credit. In all other aspects the judgment is final.
20
It is generally held by the cases it is the office of interpleader to protect a party, not against double
liability, but against double vexation on account of one liability. Gonia v. O'Brien, 223 Mass. 177, 111
N.E. 787. And so it is said that it is too late for the remedy of interpleader if the party seeking this relef
has contested the claim of one of the parties and suffered judgment to be taken.
In United P.P.I. Co. v. Britton (Tex. Civ. App.) 264 S.W. 576. 578, it was said: 'It is the general rule that a
bill of interpleader comes too late when application therefor is delayed until after judgment has been
rendered in favor of one of the claimants of the fund, and this is especially true where the holder of the
fund had notice of the conflicting claims prior to the rendition of such judgment and an opportunity to
implead the adverse claimants in the suit in which such judgment was rendered. See notes and cases
cited 35 Am. Dec. 703; 91 An. St. Rep. 598; also 5 Pomeroy's Equity J urisprudence No. 41.'
The principle thus stated has been recognized in many cases in other jurisdictions, among which may
be cited American Surety Co. v. O'Brien, 223 Mass. 177, 111 N.E. 787; Phillips v. Taylor, 148 Md. 157,
129 A. 18; Moore v. Hill, 59 Ga. 760, 761; Yearborough v. Thompson, 3 Smedes & M. (11 Miss.) 291,
41 Am. Dec. 626. See, also, 33 C.J . p. 447, No. 30; Nash v. McCullum, (Tex. Civ. App.) 74 S.W. 2d
1042, 1047.
It would seem that this rule should logically follow since, after the recovery of judgment, the interpleading of the
judgment creditor is in effect a collateral attack upon the judgment.
21
In fine, the instant interpleader suit cannot prosper because the Corporation had already been made independently
liable in civil case 26044 and, therefore, its present application for interpleader would in effect be a collateral attack
upon the final judgment in the said civil case; the appellee Lee had already established his rights to membership fee
certificate 201 in the aforesaid civil case and, therefore, this interpleader suit would compel him to establish his
rights anew, and thereby increase instead of diminish litigations, which is one of the purposes of an interpleader suit,
with the possiblity that the benefits of the final judgment in the said civil case might eventually be taken away from
him; and because the Corporation allowed itself to be sued to final judgment in the said case, its action of
interpleader was filed inexcusably late, for which reason it is barred by laches or unreasonable delay.
ACCORDINGLY, the order of May 28, 1964, dismissing the complaint, is affirmed, at appellant's cost.
Teehankee, Makasiar, Antonio, Esguerra, Muoz Palma, Aquino and Concepcion, Jr., JJ., concur.
Barredo and Martin, JJ., took no part.
Fernando, J., is on leave.

Footnotes
1 Only Tan interposed the ground of prescription.
4 of 5 11/13/2013 2:23 AM
2 Now Section 1, Rule 63, and formerly Sec. 1, Rule 14, of the Rules of Court.
3 Alvarez, et al. v. Commonwealth of the Philippines, 65 Phil. 202, 311-312.
4 Section 1 of Rule 63 of the Revised Rules of Court provides:
"Interpleader when proper. Whenever conflicting claims upon the same subject-matter are or may be
made against a person, who claims no interest whatsoever in the subject-matter, or an interest which in
whole or in part is not disputed by the claimants, he may bring an action against the conflicting
claimants to compel them to interplead and litigate their several claims among themselves."
5 Section 120 of the Code of Civil Procedure reads:
Interpleading. Whenever conflicting claims are or may be made upon a person for or relating to
personal property, or the performance of an obligation or any portion thereof, so that he may be made
subject to several actions by different persons, unless the court intervenes, such person may bring an
action against the conflicting claimants, disclaiming personal interest in the controversy, to compel
them to interplead with one another and thereupon proceed to determine the rights of the several
parties to the interpleading to the personal property or the performance of the obligation in controversy
and shall determine the rights of all parties in interest."
6 As here used the term "stakeholder" means a person entrusted with the custody of property or money
that is subject of litigation or of contention between rival claimants in which the holder claims no right or
property interest.
7 Royal Neighbors of America v. Lowary, 46 F. 2d 565.
8 State of Texas v. State of Florida, 59 S. Ct. 563, 306 U.S. 389, 83 L.ed. 817, 121 A.L.R. 1179.
9 Dennis v. Equitable Life Assurance Soc., 88 S.W. 2nd 76.
10 U.S. Land & Investment Co. v. Buessey, 7 N.Y.S. 495.
11 Milton Warehouse Co. v. Basche Sage Hardware Co., 34 P 2d 338.
12 Connecticut General Life Ins. Co. v. Yaw, 53 F.2d 684.
13 Troy v. Troy, 16 P. 2d 290.
14 Yarborough v. Thompson, 41 Am. Dec. 626.
15 Nash, et al. v. McCullum, etc., et al., 74 S.W. 2d 1046, 1047.
16 Farmers State Bank of Meridian v. National Fire Ins. Co. of Hartford, Connecticut, et al., 169 S.W. 2d
545, 549.
17 Phillips, et al. v. Taylor, et al., 129 A. 18, 20.
18 United Producer's Pipe Line Company v. Britton, et al., 264 S.W. 576, 578.
19 American Surety Co. of New York v. Brim, 144 So. 727, 729-730.
20 Victor v. Lewis, et al., 161 So. 597, 598.
21 Benjamin v. Ernst, 83 Wash. 59, 79.
5 of 5 11/13/2013 2:23 AM

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 136409 March 14, 2008
SUBHASH C. PASRICHA and JOSEPHINE A. PASRICHA, Petitioners,
vs.
DON LUIS DISON REALTY, INC., Respondent.
D E C I S I O N
NACHURA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking the reversal of the Decision
1
of
the Court of Appeals (CA) dated May 26, 1998 and its Resolution
2
dated December 10, 1998 in CA-G.R. SP No.
37739 dismissing the petition filed by petitioners J osephine and Subhash Pasricha.
The facts of the case, as culled from the records, are as follows:
Respondent Don Luis Dison Realty, Inc. and petitioners executed two Contracts of Lease
3
whereby the former, as
lessor, agreed to lease to the latter Units 22, 24, 32, 33, 34, 35, 36, 37 and 38 of the San Luis Building, located at
1006 M.Y. Orosa cor. T.M. Kalaw Streets, Ermita, Manila. Petitioners, in turn, agreed to pay monthly rentals, as
follows:
For Rooms 32/35:
From March 1, 1991 to August 31, 1991 P5,000.00/P10,000.00
From September 1, 1991 to February 29, 1992 P5,500.00/P11,000.00
From March 1, 1992 to February 28, 1993 P6,050.00/P12,100.00
4
For Rooms 22 and 24:
Effective J uly 1, 1992 P10,000.00 with an increment of 10% every two years.
5
For Rooms 33 and 34:
Effective April 1, 1992 P5,000.00 with an increment of 10% every two years.
6
For Rooms 36, 37 and 38:
Effective when tenants vacate said premises P10,000.00 with an increment of 10% every two years.
7
Petitioners were, likewise, required to pay for the cost of electric consumption, water bills and the use of telephone
cables.
8
G.R. No. 136409 http://www.lawphil.net/judjuris/juri2008/mar2008/gr_136409_2008.html
1 of 9 11/13/2013 2:24 AM
The lease of Rooms 36, 37 and 38 did not materialize leaving only Rooms 22, 24, 32, 33, 34 and 35 as subjects of
the lease contracts.
9
While the contracts were in effect, petitioners dealt with Francis Pacheco (Pacheco), then
General Manager of private respondent. Thereafter, Pacheco was replaced by Roswinda Bautista (Ms. Bautista).
10
Petitioners religiously paid the monthly rentals until May 1992.
11
After that, however, despite repeated demands,
petitioners continuously refused to pay the stipulated rent. Consequently, respondent was constrained to refer the
matter to its lawyer who, in turn, made a final demand on petitioners for the payment of the accrued rentals
amounting to P916,585.58.
12
Because petitioners still refused to comply, a complaint for ejectment was filed by
private respondent through its representative, Ms. Bautista, before the Metropolitan Trial Court (MeTC) of Manila.
13
The case was raffled to Branch XIX and was docketed as Civil Case No. 143058-CV.
Petitioners admitted their failure to pay the stipulated rent for the leased premises starting J uly until November 1992,
but claimed that such refusal was justified because of the internal squabble in respondent company as to the person
authorized to receive payment.
14
To further justify their non-payment of rent, petitioners alleged that they were
prevented from using the units (rooms) subject matter of the lease contract, except Room 35. Petitioners eventually
paid their monthly rent for December 1992 in the amount of P30,000.00, and claimed that respondent waived its
right to collect the rents for the months of J uly to November 1992 since petitioners were prevented from using
Rooms 22, 24, 32, 33, and 34.
15
However, they again withheld payment of rents starting J anuary 1993 because of
respondents refusal to turn over Rooms 36, 37 and 38.
16
To show good faith and willingness to pay the rents,
petitioners alleged that they prepared the check vouchers for their monthly rentals from J anuary 1993 to J anuary
1994.
17
Petitioners further averred in their Amended Answer
18
that the complaint for ejectment was prematurely
filed, as the controversy was not referred to the barangay for conciliation.
For failure of the parties to reach an amicable settlement, the pre-trial conference was terminated. Thereafter, they
submitted their respective position papers.
On November 24, 1994, the MeTC rendered a Decision dismissing the complaint for ejectment.
19
It considered
petitioners non-payment of rentals as unjustified. The court held that mere willingness to pay the rent did not
amount to payment of the obligation; petitioners should have deposited their payment in the name of respondent
company. On the matter of possession of the subject premises, the court did not give credence to petitioners claim
that private respondent failed to turn over possession of the premises. The court, however, dismissed the complaint
because of Ms. Bautistas alleged lack of authority to sue on behalf of the corporation.
Deciding the case on appeal, the Regional Trial Court (RTC) of Manila, Branch 1, in Civil Case No. 94-72515,
reversed and set aside the MeTC Decision in this wise:
WHEREFORE, the appealed decision is hereby reversed and set aside and another one is rendered ordering
defendants-appellees and all persons claiming rights under them, as follows:
(1) to vacate the leased premised (sic) and restore possession thereof to plaintiff-appellant;
(2) to pay plaintiff-appellant the sum of P967,915.80 representing the accrued rents in arrears as of
November 1993, and the rents on the leased premises for the succeeding months in the amounts stated in
paragraph 5 of the complaint until fully paid; and
(3) to pay an additional sum equivalent to 25% of the rent accounts as and for attorneys fees plus the costs
of this suit.
SO ORDERED.
20
The court adopted the MeTCs finding on petitioners unjustified refusal to pay the rent, which is a valid ground for
ejectment. It, however, faulted the MeTC in dismissing the case on the ground of lack of capacity to sue. Instead, it
upheld Ms. Bautistas authority to represent respondent notwithstanding the absence of a board resolution to that
effect, since her authority was implied from her power as a general manager/treasurer of the company.
21
Aggrieved, petitioners elevated the matter to the Court of Appeals in a petition for review on certiorari.
22
On March
18, 1998, petitioners filed an Omnibus Motion
23
to cite Ms. Bautista for contempt; to strike down the MeTC and RTC
Decisions as legal nullities; and to conduct hearings and ocular inspections or delegate the reception of evidence.
Without resolving the aforesaid motion, on May 26, 1998, the CA affirmed
24
the RTC Decision but deleted the award
of attorneys fees.
25
Petitioners moved for the reconsideration of the aforesaid decision.
26
Thereafter, they filed several motions asking
the Honorable J ustice Ruben T. Reyes to inhibit from further proceeding with the case allegedly because of his close
association with Ms. Bautistas uncle-in-law.
27
In a Resolution
28
dated December 10, 1998, the CA denied the motions for lack of merit. The appellate court
2 of 9 11/13/2013 2:24 AM
considered said motions as repetitive of their previous arguments, irrelevant and obviously dilatory.
29
As to the
motion for inhibition of the Honorable J ustice Reyes, the same was denied, as the appellate court justice stressed
that the decision and the resolution were not affected by extraneous matters.
30
Lastly, the appellate court granted
respondents motion for execution and directed the RTC to issue a new writ of execution of its decision, with the
exception of the award of attorneys fees which the CA deleted.
31
Petitioners now come before this Court in this petition for review on certiorari raising the following issues:
I.
Whether this ejectment suit should be dismissed and whether petitioners are entitled to damages for the
unauthorized and malicious filing by Rosario (sic) Bautista of this ejectment case, it being clear that
[Roswinda] whether as general manager or by virtue of her subsequent designation by the Board of
Directors as the corporations attorney-in-fact had no legal capacity to institute the ejectment suit,
independently of whether Director Pacanas Order setting aside the SEC revocation Order is a mere scrap of
paper.
II.
Whether the RTCs and the Honorable Court of Appeals failure and refusal to resolve the most fundamental
factual issues in the instant ejectment case render said decisions void on their face by reason of the complete
abdication by the RTC and the Honorable J ustice Ruben Reyes of their constitutional duty not only to clearly
and distinctly state the facts and the law on which a decision is based but also to resolve the decisive factual
issues in any given case.
III.
Whether the (1) failure and refusal of Honorable J ustice Ruben Reyes to inhibit himself, despite his admission
by reason of his silence of petitioners accusation that the said J ustice enjoyed a $7,000.00 scholarship
grant courtesy of the uncle-in-law of respondent "corporations" purported general manager and (2), worse,
his act of ruling against the petitioners and in favor of the respondent "corporation" constitute an
unconstitutional deprivation of petitioners property without due process of law.
32
In addition to Ms. Bautistas lack of capacity to sue, petitioners insist that respondent company has no standing to
sue as a juridical person in view of the suspension and eventual revocation of its certificate of registration.
33
They
likewise question the factual findings of the court on the bases of their ejectment from the subject premises.
Specifically, they fault the appellate court for not finding that: 1) their non-payment of rentals was justified; 2) they
were deprived of possession of all the units subject of the lease contract except Room 35; and 3) respondent
violated the terms of the contract by its continued refusal to turn over possession of Rooms 36, 37 and 38.
Petitioners further prayed that a Temporary Restraining Order (TRO) be issued enjoining the CA from enforcing its
Resolution directing the issuance of a Writ of Execution. Thus, in a Resolution
34
dated J anuary 18, 1999, this Court
directed the parties to maintain the status quo effective immediately until further orders.
The petition lacks merit.
We uphold the capacity of respondent company to institute the ejectment case. Although the Securities and
Exchange Commission (SEC) suspended and eventually revoked respondents certificate of registration on
February 16, 1995, records show that it instituted the action for ejectment on December 15, 1993. Accordingly, when
the case was commenced, its registration was not yet revoked.
35
Besides, as correctly held by the appellate court,
the SEC later set aside its earlier orders of suspension and revocation of respondents certificate, rendering the
issue moot and academic.
36
We likewise affirm Ms. Bautistas capacity to sue on behalf of the company despite lack of proof of authority to so
represent it. A corporation has no powers except those expressly conferred on it by the Corporation Code and those
that are implied from or are incidental to its existence. In turn, a corporation exercises said powers through its board
of directors and/or its duly authorized officers and agents. Physical acts, like the signing of documents, can be
performed only by natural persons duly authorized for the purpose by corporate by-laws or by a specific act of the
board of directors.
37
Thus, any person suing on behalf of the corporation should present proof of such authority.
Although Ms. Bautista initially failed to show that she had the capacity to sign the verification and institute the
ejectment case on behalf of the company, when confronted with such question, she immediately presented the
Secretarys Certificate
38
confirming her authority to represent the company.
There is ample jurisprudence holding that subsequent and substantial compliance may call for the relaxation of the
rules of procedure in the interest of justice.
39
In Novelty Phils., Inc. v. Court of Appeals,
40
the Court faulted the
appellate court for dismissing a petition solely on petitioners failure to timely submit proof of authority to sue on
behalf of the corporation. In Pfizer, Inc. v. Galan,
41
we upheld the sufficiency of a petition verified by an employment
3 of 9 11/13/2013 2:24 AM
specialist despite the total absence of a board resolution authorizing her to act for and on behalf of the corporation.
Lastly, in China Banking Corporation v. Mondragon International Philippines, Inc,
42
we relaxed the rules of
procedure because the corporation ratified the managers status as an authorized signatory. In all of the above
cases, we brushed aside technicalities in the interest of justice. This is not to say that we disregard the requirement
of prior authority to act in the name of a corporation. The relaxation of the rules applies only to highly meritorious
cases, and when there is substantial compliance. While it is true that rules of procedure are intended to promote
rather than frustrate the ends of justice, and while the swift unclogging of court dockets is a laudable objective, we
should not insist on strict adherence to the rules at the expense of substantial justice.
43
Technical and procedural
rules are intended to help secure, not suppress, the cause of justice; and a deviation from the rigid enforcement of
the rules may be allowed to attain that prime objective, for, after all, the dispensation of justice is the core reason for
the existence of courts.
44
As to the denial of the motion to inhibit J ustice Reyes, we find the same to be in order. First, the motion to inhibit
came after the appellate court rendered the assailed decision, that is, after J ustice Reyes had already rendered his
opinion on the merits of the case. It is settled that a motion to inhibit shall be denied if filed after a member of the
court had already given an opinion on the merits of the case, the rationale being that "a litigant cannot be permitted
to speculate on the action of the court x x x (only to) raise an objection of this sort after the decision has been
rendered."
45
Second, it is settled that mere suspicion that a judge is partial to one of the parties is not enough; there
should be evidence to substantiate the suspicion. Bias and prejudice cannot be presumed, especially when weighed
against a judges sacred pledge under his oath of office to administer justice without regard for any person and to do
right equally to the poor and the rich. There must be a showing of bias and prejudice stemming from an extrajudicial
source, resulting in an opinion on the merits based on something other than what the judge learned from his
participation in the case.
46
We would like to reiterate, at this point, the policy of the Court not to tolerate acts of
litigants who, for just about any conceivable reason, seek to disqualify a judge (or justice) for their own purpose,
under a plea of bias, hostility, prejudice or prejudgment.
47
We now come to the more substantive issue of whether or not the petitioners may be validly ejected from the leased
premises.
Unlawful detainer cases are summary in nature. In such cases, the elements to be proved and resolved are the fact
of lease and the expiration or violation of its terms.
48
Specifically, the essential requisites of unlawful detainer are: 1)
the fact of lease by virtue of a contract, express or implied; 2) the expiration or termination of the possessors right to
hold possession; 3) withholding by the lessee of possession of the land or building after the expiration or termination
of the right to possess; 4) letter of demand upon lessee to pay the rental or comply with the terms of the lease and
vacate the premises; and 5) the filing of the action within one year from the date of the last demand received by the
defendant.
49
It is undisputed that petitioners and respondent entered into two separate contracts of lease involving nine (9) rooms
of the San Luis Building. Records, likewise, show that respondent repeatedly demanded that petitioners vacate the
premises, but the latter refused to heed the demand; thus, they remained in possession of the premises. The only
contentious issue is whether there was indeed a violation of the terms of the contract: on the part of petitioners,
whether they failed to pay the stipulated rent without justifiable cause; while on the part of respondent, whether it
prevented petitioners from occupying the leased premises except Room 35.
This issue involves questions of fact, the resolution of which requires the evaluation of the evidence presented. The
MeTC, the RTC and the CA all found that petitioners failed to perform their obligation to pay the stipulated rent. It is
settled doctrine that in a civil case, the conclusions of fact of the trial court, especially when affirmed by the Court of
Appeals, are final and conclusive, and cannot be reviewed on appeal by the Supreme Court.
50
Albeit the rule admits
of exceptions, not one of them obtains in this case.
51
To settle this issue once and for all, we deem it proper to assess the array of factual findings supporting the courts
conclusion.
The evidence of petitioners non-payment of the stipulated rent is overwhelming. Petitioners, however, claim that
such non-payment is justified by the following: 1) the refusal of respondent to allow petitioners to use the leased
properties, except room 35; 2) respondents refusal to turn over Rooms 36, 37 and 38; and 3) respondents refusal
to accept payment tendered by petitioners.
Petitioners justifications are belied by the evidence on record. As correctly held by the CA, petitioners
communications to respondent prior to the filing of the complaint never mentioned their alleged inability to use the
rooms.
52
What they pointed out in their letters is that they did not know to whom payment should be made, whether
to Ms. Bautista or to Pacheco.
53
In their J uly 26 and October 30, 1993 letters, petitioners only questioned the
method of computing their electric billings without, however, raising a complaint about their failure to use the
rooms.
54
Although petitioners stated in their December 30, 1993 letter that respondent failed to fulfill its part of the
contract,
55
nowhere did they specifically refer to their inability to use the leased rooms. Besides, at that time, they
4 of 9 11/13/2013 2:24 AM
were already in default on their rentals for more than a year.
If it were true that they were allowed to use only one of the nine (9) rooms subject of the contract of lease, and
considering that the rooms were intended for a business purpose, we cannot understand why they did not
specifically assert their right. If we believe petitioners contention that they had been prevented from using the rooms
for more than a year before the complaint for ejectment was filed, they should have demanded specific performance
from the lessor and commenced an action in court. With the execution of the contract, petitioners were already in a
position to exercise their right to the use and enjoyment of the property according to the terms of the lease
contract.
56
As borne out by the records, the fact is that respondent turned over to petitioners the keys to the leased
premises and petitioners, in fact, renovated the rooms. Thus, they were placed in possession of the premises and
they had the right to the use and enjoyment of the same. They, likewise, had the right to resist any act of intrusion
into their peaceful possession of the property, even as against the lessor itself. Yet, they did not lift a finger to protect
their right if, indeed, there was a violation of the contract by the lessor.
What was, instead, clearly established by the evidence was petitioners non-payment of rentals because ostensibly
they did not know to whom payment should be made. However, this did not justify their failure to pay, because if
such were the case, they were not without any remedy. They should have availed of the provisions of the Civil Code
of the Philippines on the consignation of payment and of the Rules of Court on interpleader.
Article 1256 of the Civil Code provides:
Article 1256. If the creditor to whom tender of payment has been made refuses without just cause to accept it, the
debtor shall be released from responsibility by the consignation of the thing or sum due.
Consignation alone shall produce the same effect in the following cases:
x x x x
(4) When two or more persons claim the same right to collect;
x x x x.
Consignation shall be made by depositing the things due at the disposal of a judicial authority, before whom the
tender of payment shall be proved in a proper case, and the announcement of the consignation in other cases.
57
In the instant case, consignation alone would have produced the effect of payment of the rentals. The rationale for
consignation is to avoid the performance of an obligation becoming more onerous to the debtor by reason of causes
not imputable to him.
58
Petitioners claim that they made a written tender of payment and actually prepared vouchers
for their monthly rentals. But that was insufficient to constitute a valid tender of payment. Even assuming that it was
valid tender, still, it would not constitute payment for want of consignation of the amount. Well-settled is the rule that
tender of payment must be accompanied by consignation in order that the effects of payment may be produced.
59
Moreover, Section 1, Rule 62 of the Rules of Court provides:
Section 1. When interpleader proper. Whenever conflicting claims upon the same subject matter are or may be
made against a person who claims no interest whatever in the subject matter, or an interest which in whole or in part
is not disputed by the claimants, he may bring an action against the conflicting claimants to compel them to
interplead and litigate their several claims among themselves.
Otherwise stated, an action for interpleader is proper when the lessee does not know to whom payment of rentals
should be made due to conflicting claims on the property (or on the right to collect).
60
The remedy is afforded not to
protect a person against double liability but to protect him against double vexation in respect of one liability.
61
Notably, instead of availing of the above remedies, petitioners opted to refrain from making payments.
Neither can petitioners validly invoke the non-delivery of Rooms 36, 37 and 38 as a justification for non-payment of
rentals. Although the two contracts embraced the lease of nine (9) rooms, the terms of the contracts - with their
particular reference to specific rooms and the monthly rental for each - easily raise the inference that the parties
intended the lease of each room separate from that of the others.l avvph i l There is nothing in the contract which would lead
to the conclusion that the lease of one or more rooms was to be made dependent upon the lease of all the nine (9)
rooms. Accordingly, the use of each room by the lessee gave rise to the corresponding obligation to pay the monthly
rental for the same. Notably, respondent demanded payment of rentals only for the rooms actually delivered to, and
used by, petitioners.
It may also be mentioned that the contract specifically provides that the lease of Rooms 36, 37 and 38 was to take
effect only when the tenants thereof would vacate the premises. Absent a clear showing that the previous tenants
had vacated the premises, respondent had no obligation to deliver possession of the subject rooms to petitioners.
Thus, petitioners cannot use the non-delivery of Rooms 36, 37 and 38 as an excuse for their failure to pay the
rentals due on the other rooms they occupied.1av vphi l
5 of 9 11/13/2013 2:24 AM
In light of the foregoing disquisition, respondent has every right to exercise his right to eject the erring lessees. The
parties contracts of lease contain identical provisions, to wit:
In case of default by the LESSEE in the payment of rental on the fifth (5th) day of each month, the amount owing
shall as penalty bear interest at the rate of FOUR percent (4%) per month, to be paid, without prejudice to the right
of the LESSOR to terminate his contract, enter the premises, and/or eject the LESSEE as hereinafter set forth;
62
Moreover, Article 1673
63
of the Civil Code gives the lessor the right to judicially eject the lessees in case of
non-payment of the monthly rentals. A contract of lease is a consensual, bilateral, onerous and commutative
contract by which the owner temporarily grants the use of his property to another, who undertakes to pay the rent
therefor.
64
For failure to pay the rent, petitioners have no right to remain in the leased premises.
WHEREFORE, premises considered, the petition is DENIED and the Status Quo Order dated J anuary 18, 1999 is
hereby LIFTED. The Decision of the Court of Appeals dated May 26, 1998 and its Resolution dated December 10,
1998 in CA-G.R. SP No. 37739 are AFFIRMED.
SO ORDERED.
ANTONIO EDUARDO B. NACHURA
Associate J ustice
WE CONCUR:
CONSUELO YNARES-SANTIAGO
Associate J ustice
Chairperson
LEONARDO A. QUISUMBING
*
Associate J ustice
MA. ALICIA AUSTRIA-MARTINEZ
Associate J ustice
MINITA V. CHICO-NAZARIO
Associate J ustice
A T T E S T A T I O N
I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the
writer of the opinion of the Courts Division.
CONSUELO YNARES-SANTIAGO
Associate J ustice
Chairperson, Third Division
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, I certify that the
conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the
opinion of the Courts Division.
REYNATO S. PUNO
Chief J ustice
Footnotes
*
Additional member in lieu of J ustice Reyes, who took no part.
1
Penned by Associate J ustice Ruben T. Reyes, with Associate J ustices Quirino D. Abad Santos, J r. and Eloy
R. Bello, J r., concurring; rollo, pp. 44-62.
2
Rollo, pp. 63-72.
3
The first Contract of Lease covers Rooms 32 and 35, id. at 1034-1042; the second Contract of Lease covers
Rooms 22, 24, 33, 34, 36, 37 and 38, id. at 1043-1050.
4
Rollo, pp. 1034-1036.
5
Id. at 1043-1044.
6 of 9 11/13/2013 2:24 AM
6
Id.
7
Id.
8
Id. at 1037 and 1045.
9
Records, p. 8.
10
Rollo, p. 901.
11
Records, p. 3.
12
Demand letter dated November 2, 1993, through private respondents counsel Feria, Feria, Lugtu and Lao;
records, p. 36.
13
Records, pp. 2-5.
14
Id. at 10.
15
Id. at 11.
16
Id. at 14.
17
Id. at 13.
18
Id. at 110-117.
19
Penned by J udge Ernesto A. Reyes; records, pp. 261-266.
20
Rollo, pp. 302-303.
21
Record, p. 367.
22
The petitioners adopted a wrong mode of appeal. Notwithstanding the procedural defect, the CA still took
cognizance of the case and decided the same on the merits; CA rollo, pp. 1-42.
23
Rollo, pp. 346-376.
24
The fallo reads:
WHEREFORE, the appealed decision is hereby AFFIRMED with the modification that the award of
attorneys fees is deleted.
SO ORDERED (Rollo, pp. 61-62).
25
Supra note 1.
26
Rollo, pp. 73-116
27
Id. at 377-386.
28
Id. at 63-72. The fallo reads:
ACCORDINGLY, petitioners motion for reconsideration, omnibus motions, motion to inhibit, motion for
contempt and related motions are hereby DENIED for utter lack of merit.
Private respondents motion for execution is GRANTED. In the interest of justice, the Regional Trial
Court, Branch I, Manila is directed to issue a new writ of execution of its judgment which we affirmed,
except as to attorneys fees which we deleted. For this purpose, the original records elevated to Us are
ordered remanded to the RTC.
SO ORDERED.
29
Rollo, p. 71.
30
Id. at 70-71.
7 of 9 11/13/2013 2:24 AM
31
Id. at 72.
32
Id. at 19-20.
33
Id. at 978.
34
Id. at 520-521.
35
Id. at 1358.
36
Id. at 69.
37
BA Savings Bank v. Sia, 391 Phil. 370, 377 (2000).
38
Records, p. 100.
39
Wack Wack Golf and Country Club v. National Labor Relations Commission, G.R. No. 149793, April 15,
2005, 456 SCRA 280, 294.
40
458 Phil. 36 (2003).
41
410 Phil. 483 (2001).
42
G.R. No. 164798, November 17, 2005, 475 SCRA 332.
43
Wack Wack Golf and Country Club v. National Labor Relations Commission, supra note 39, at 294.
44
General Milling Corp. v. National Labor Relations Commission, 442 Phil. 425, 428 (2002).
45
Chavez v. Public Estates Authority, 451 Phil. 1, 41 (2003); Limpin, J r. v. Intermediate Appellate Court, No.
L-70987, May 5, 1988, 161 SCRA 83, 97-98.
46
Soriano v. J udge Angeles, 393 Phil. 769, 779 (2000); People v. Court of Appeals, 369 Phil. 150, 157
(1999).
47
People v. Serrano, G.R. No. 44712, October 28, 1991, 203 SCRA 171, 186.
48
Ocampo v. Tirona, G.R. No. 147812, April 6, 2005, 455 SCRA 62, 72; Manuel v. Court of Appeals, G.R.
No. 95469, J uly 25, 1991, 199 SCRA 603, 608.
49
Dela Cruz v. Court of Appeals, G.R. No. 139442, December 6, 2006, 510 SCRA 103, 115-116.
50
Vda. de Gualberto v. Go, G.R. No. 139843, J uly 21, 2005, 463 SCRA 671, 682; Ocampo v. Ocampo, G.R.
No. 150707, April 14, 2004, 427 SCRA 545, 563; Alvarez v. Court of Appeals, 455 Phil. 864, 875 (2003).
51
Vda. De Gualberto v. Go, supra, at 682.
52
Rollo, p. 54.
53
Id. at 1051.
54
Id. at 1053-1056.
55
Id. at 1058.
56
Aguilar v. Court of Appeals, 390 Phil. 621, 641 (2000).
57
Civil Code, Art. 1258.
58
Eternal Gardens Memorial Park Corp. v. Court of Appeals, 347 Phil. 232, 264 (1997).
59
State Investment House, Inc. v. Court of Appeals, G.R. No. 90676, J une 19, 1991, 198 SCRA 390, 399.
60
Ocampo v. Tirona, supra note 48, at 76.
8 of 9 11/13/2013 2:24 AM
61
Id.
62
Rollo, pp. 1036 and 1044.
63
The lessor may judicially eject the lessee for any of the following causes:
(1) When the period agreed upon, or that which is fixed for the duration of leases under articles 1682
and 1687, has expired;
(2) Lack of payment of the price stipulated;
(3) Violation of any of the conditions agreed upon in the contract;
(4) When the lessee devotes the thing leased to any use or service not stipulated which causes the
deterioration thereof; or if he does not observe the requirement in No. 2 of Article 1657, as regards the
use thereof.
The ejectment of tenants of agricultural lands is governed by special laws.
64
Aguilar v. Court of Appeals, supra note 56, at 640.
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