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Provisional Remedies:
A. Preliminary Attachment [Rule 57]
1. SOL - Wee vs. Tankiansee, GR 171124, 13 February 2008
[nature; construction; requisites]
Synopsis:
Petitioner made money placement with Wincorp. Wincorp
extended loan to Power Marge. In an action (separate case) filed by Wincorp
against Hottick Holdings, due to non-payment of loan, said parties reached a
settlement wherein Virata, Hottick's president, assumed the obligation of the
surety. Petitioner found out that through the false representations of Wincorp
and its officers and directors, petitioner was enticed to roll over his
placements so that Wincorp could loan the same to Power Merge. Virata
purportedly used Power Merge to connived with Wincorp to fraudulently
obtain for his benefit without any intention of paying the said placements.
Petitioner filed an action for damages wherein a writ of preliminary
attachment was issued. Respondents moved to discharged, on the grounds
of improper issuance and insufficient bond, which was denied and orders of
denial of the same were assailed and reached Supreme Court but failed.
Virata moved to discharged before the RTC raising the same grounds and
added that he was not present during Wincorps meeting approving the
questioned transaction and that he was also a victim. The same was denied
by RTC however reversed by CA. Hence, this petition. The affidavit, being
the foundation of the writ, must contain such particulars as to how
the fraud imputed to respondent was committed for the court to
decide whether or not to issue the writ. Petitioner has not shown
any specific act or deed to support the allegation that respondent is
guilty of fraud.
Facts: Wee, the petitioner and valued client of Westmont Bank (now United
Overseas Bank), made money placements totaling P210,595,991.62
Westmont Investment Corporation (Wincorp), the banks affiliate and
domestic entity engaged in the business of an investment house with the
authority and license to extend credit.
In an action (separate case) filed by Wincorp against Hottick Holdings, due to
non-payment of loan, said parties reached a settlement wherein Virata,
Hottick's president, assumed the obligation of the surety. Under the scheme
agreed upon by Wincorp and Hottick's president, petitioner's money
placements were transferred without his knowledge and consent to the loan
account of Power Merge through an agreement that virtually freed the latter
of any liability. Allegedly, through the false representations of Wincorp and its
officers and directors, petitioner was enticed to roll over his placements so
that Wincorp could loan the same to Virata/Power Merge.
Petitioner instituted a case for damages with RTC alleging that Virata
purportedly used Power Merge as a conduit and connived with Wincorp's
officers and directors to fraudulently obtain for his benefit without any
intention of paying the said placements. One of the defendants impleaded in
the complaint is herein respondent Manuel Tankiansee, Vice-Chairman and
Director of Wincorp.

A writ of preliminary attachment was issued and defendants moved to


discharge on the grounds that it was improperly issued and that the bond
furnished was grossly insufficient. The same, as well as defendants MR, was
denied. Virata ssailed the same via certiorari under Rule 65 before the CA
and then after before the SC wherein both affirmed RTCs orders.
Respondent moved to discharged before the RTC raising the same grounds
and added that (1) that he was not present in Wincorp's board meetings
approving the questionable transactions; and (2) that he could not have
connived with Wincorp as his side filed cases against the company as they
were also victimized by its fraudulent schemes. RTC denied the same and
held that grounds raised were already passed upon by it in the previous
orders affirmed by the CA and this Court, and that the additional grounds
were respondent's affirmative defenses that properly pertained to the merits
of the case. It was denied but reversed by CA. Hence, this petition.
Issue: Whether CA erred in lifting the preliminary attachment?
Ruling: No.
The petitioner's affidavit is bereft of any factual statement that respondent
committed a fraud. The affidavit narrated only the alleged fraudulent
transaction between Wincorp and Virata and/or Power Merge, which, by the
way, explains why this Court, in G.R. No. 162928, affirmed the writ of
attachment issued against the latter. As to the participation of respondent in
the said transaction, the affidavit merely states that respondent, an officer
and director of Wincorp, connived with the other defendants in the civil case
to defraud petitioner of his money placements. No other factual averment or
circumstance details how respondent committed a fraud or how he connived
with the other defendants to commit a fraud in the transaction sued upon. In
other words, petitioner has not shown any specific act or deed to
support the allegation that respondent is guilty of fraud.
The affidavit, being the foundation of the writ, must contain such
particulars as to how the fraud imputed to respondent was
committed for the court to decide whether or not to issue the
writ. Absent any statement of other factual circumstances to show that
respondent, at the time of contracting the obligation, had a preconceived
plan or intention not to pay, or without any showing of how respondent
committed the alleged fraud, the general averment in the affidavit that
respondent is an officer and director of Wincorp who allegedly connived with
the other defendants to commit a fraud, is insufficient to support the
issuance of a writ of preliminary attachment. In the application for the writ
under the said ground, compelling is the need to give a hint about what
constituted the fraud and how it was perpetrated because established is the
rule that fraud is never presumed.
Let it be stressed that the provisional remedy of preliminary attachment is
harsh and rigorous for it exposes the debtor to humiliation and annoyance.
The rules governing its issuance are, therefore, strictly construed
against the applicant, such that if the requisites for its grant are not
shown to be all present, the court shall refrain from issuing it, for, otherwise,
the court which issues it acts in excess of its jurisdiction.
Dispositive: Appealed resolution affirmed. Petition denied.

2. SOL Ma. Teresa Chaves Biaco vs. Countryside Rural


bank, 515 SCRA 106 [nature of proceeding]
[G.R. NO. 161417 : February 8, 2007]
Facts: Ernesto Biaco, husband of Teresa Biaco, acquired several loans from
Philippine Countryside Rural Bank (PCRB) from 1996 to 1998. He mortgaged
certain property in favor of the bank which was signed by the spouses. He
defaulted in loans obtained in 1998 which amounted to more than a million
pesos which resulted to institution of foreclosure proceedings. The Sherriff
served the summons to Ernesto at the latters office. No summons was
served to Teresa. He failed to file an answer hencethe spouses Biaco were
declared in default. Eventually, the mortgaged property was auctioned for
Php 150,000.xx, which was not sufficient to cover the one million pesos debt.
Upon motion by PCRB, a notice of levy was issued against the personal
properties of Teresa to satisfy the deficiency. It was only at this point that
Teresa learned of the previous ex parte proceedings. She then sought to
have the judgment annulled as she now claims that she was deprived of due
process when she did not receive summons and that there was extrinsic
fraud because her husband deliberately hid the fact of the foreclosure
proceeding. PRCB argued that the foreclosure proceeding is an action quasi
in rem, hence Teresas participation is not required so long as the court
acquires jurisdiction over the res which is what happened in the case at bar
and that Teresa cannot invoke extrinsic fraud because such situation cannot
occur in her case because she is a co-defendant of Ernesto. CA denied her
petition, as well as her MR. Hence, this petition.
Issue: Whether Teresa was denied of due process?
Ruling: Yes.
The Court explained, citing El Banco Espaol-Filipino v. Palanca, that
foreclosure and attachment proceedings are both actions quasi in
rem. As such, jurisdiction over the person of the (non-resident) defendant is
not essential. Service of summons on a non-resident defendant who is
not found in the country is required, not for purposes of physically
acquiring jurisdiction over his person but simply in pursuance of the
requirements of fair play, so that he may be informed of the pendency of
the action against him and the possibility that property belonging to him or
in which he has an interest may be subjected to a judgment in favor of a
resident, and that he may thereby be accorded an opportunity to defend in
the action, should he be so minded.
Significantly, the Court went on to rule, citing De Midgely v. Ferandos, et.
al. and Perkins v. Dizon, et al. that in a proceeding in rem or quasi in rem, the
only relief that may be granted by the court against a defendant over whose
person it has not acquired jurisdiction either by valid service of summons or
by voluntary submission to its jurisdiction, is limited to the res.
Similarly, in this case, while the trial court acquired jurisdiction over
the res, its jurisdiction is limited to a rendition of judgment on
the res. It cannot extend its jurisdiction beyond the res and issue a
judgment enforcing petitioner's personal liability. In doing so
without first having acquired jurisdiction over the person of

petitioner, as it did, the trial court violated her constitutional right


to due process, warranting the annulment of the judgment rendered
in the case.
Dispositive: Petition granted. CAs resolution and RTCs resolution set aside.
3. SOL - Binan Steel Corporation vs. CA, 391 SCRA 90, 15
October 2002 [nature of attachment]
[G.R. No. 142013. October 15, 2002.]
Synopsis: On July 1998, Property of Spouses Ng was levied, pursuant to the
writ of preliminary attachment issued by RTC where a collection of sum of
money was pending instituted by BSC against Joenas Metal Corporation and
Spouses Ng. Spouses Ng sold the property to of Mylene and Myla Garcia by
means of a deed of sale dated June 29, 1998 which was registered only on
August 12, 1998, after the mortgagee FEBTC gave its approval to the sale.
TCT was issued in the names of Garcias. The trial court rendered judgment
by default in favor of BSC. RTC QC, where petition for cancellation of notice of
levy was pending instituted by the Garcias alleging they were the registered
owners, issued a TRO which was disregarded by the RTC Manila. In thw
petition for issuance of a writ of preliminary injunction by Garcias, CA denied
BSCs motion to intervene and dismissed the petition for violating the rules
on forum-shopping. Hence, these consolidated petitions. It turned out that
the Garcias registered it only on August 12, 1998, after FEBTC (now
BPI) approved the sale. It was too late by then because, on July 27,
1998, the levy in favor of BSC, pursuant to the preliminary
attachment ordered by the Manila RTC, had already been annotated
on the original title on file with the Registry of Deeds. This
registration of levy (or notice, in laymans language) now became
binding on the whole world, including the Garcias.
Facts: On July 1998, Bian Steel Corporation (BSC) filed with RTC Manila a
complaint against Joenas Metal Corporation and spouses Ng Ley Huat and
Leticia Dy Ng for collection of a sum of money with damages wherein in the
RTC issued a writ of Preliminary Attachment. Sheriff Viloria levied on the
property registered in the names of the spouses Ng covered by a TCT of the
Registry of Deeds of Quezon City. The said property was mortgaged
mortgaged to the Far East Bank and Trust Company (FEBTC), now Bank of the
Philippine Islands (BPI). Summons was not served upon the defendant
spouses Ng because they could not be located. BSC caused the filing of a
motion to serve the summons by publication which was granted. Summons
by publication thereafter ensued.
Meanwhile, Spouses Ng sold (sale with assumption of mortgage) the property
to of Mylene and Myla Garcia by means of a deed of sale dated June 29, 1998
which was registered only on August 12, 1998, after the mortgagee FEBTC
gave its approval to the sale. TCT was issued in the names of Garcias.
Motion to intervene by the Garcias was denied and the trial court rendered
judgment by default in favor of BSC.
Garcias filed a separate action for cancellation of the notice of levy with RTC
Q.C. and claimed that they were the registered owners of the property in

dispute. They were able to secure a TRO which was disregarded by the RTC
Manila.
RTC Manila, upon ex parte manifestation by BSC, directed to proceed with
the public action of the attached property.
Garcias filed another case with the CA for the issuance of a writ of
preliminary injunction with prayer for TRO to enjoin the RTC Manila Judge and
Sheriff. BSC was not impleaded. CA issued TRO and denied BSC to intervene
on the ground that its rights could be protected in the cancellation case filed
by the Garcias before the RTC Q.C. Its MR was denied hence BSC filed this
special civil action for certrioari and mandamus. CA also dismissed the
petition of the Garcias, as well as its MR, for violating the rules on forumshopping. The Garcias thus filed with this Court a petition for review
on certiorari.
Hence these consolidated petitions. As no TRO issued by this court, public
auction proceeded. When TRO was issued, it was too late. This court ordered
to maintain status quo to prevent consolidation of title and possession to
BSC.
Issue: Whether BSC or Garcias has a better right to the disputed property?
Ruling:
This Court has always held that attachment is a proceeding in rem. It
is against the particular property, enforceable against the whole world. The
attaching creditor acquires a specific lien on the attached property which
ripens into a judgment against the res when the order of sale is made. Such
a proceeding in effect means that the property attached is an
indebted thing and a virtual condemnation of it to pay the owners
debt.
Insofar as third persons are concerned, what validly transfers or
conveys a persons interest in real property is the registration of
the deed. In sales with assumption of mortgage, the assumption of
mortgage is a condition precedent to the sellers consent and therefore,
without approval of the mortgagee, the sale is not perfected.chanrob1es
virtua1 1aw 1ibrary
When the Garcias bought the property on June 29, 1998, it was, at that point,
no more than a private transaction between them and the Ngs. It needed to
be registered before it could become binding on all third parties, including
BSC. It turned out that the Garcias registered it only on August 12,
1998, after FEBTC (now BPI) approved the sale. It was too late by
then because, on July 27, 1998, the levy in favor of BSC, pursuant to
the preliminary attachment ordered by the Manila RTC, had already
been annotated on the original title on file with the Registry of
Deeds. This registration of levy (or notice, in laymans language)
now became binding on the whole world, including the Garcias.
It is doctrinal that a levy on attachment, duly registered, has
preference over a prior unregistered sale and, even if the prior
unregistered sale is subsequently registered before the sale on

execution but after the levy is made, the validity of the execution
sale should be upheld because it retroacts to the date of levy.
When a conveyance has been properly recorded, such record is
constructive notice of its contents and all interests, legal and
equitable, included therein.
Because of the principle of constructive notice to the whole world,
one who deals with registered property which is the subject of an
annotated levy on attachment cannot invoke the rights of a
purchaser in good faith.
The purchaser of a property subject to an attachment legally and
validly levied thereon is merely subrogated to the rights of the
vendor and acquires the property subject to the rights of the
attachment creditor.
Dispositive: Petitions denied. RD ordered to cancel TCT in the names of
GARCIAS and issue a new title in favor of BSC.
4. SOL - Mindanao Savings and Loan Association (formerly
Davao Savings & Loan Association) & Francisco Villamor vs. CA &
Juan Mercado, 172 SCRA 480 [ex parte proceedings]
[G.R. No. 84481. April 18, 1989.]
Facts: Private respondents filed a complaint against D.S. Homes, Inc. and its
directors, including Francisco D. Villamor, and subsequently amended the
same impleading Davao Savings & Loan Association, Inc. (later renamed
Mindanao Savings & Loan Association, Inc. or "MSLA") and its president,
Francisco Villamor, with RTC Davao City for "Rescission of Contract and
Damages" with a prayer for the issuance of a writ of preliminary attachment.
Judge Dinopol issued ex parte an amended order of attachment against all
the defendants named in the second amended complaint. Defendants filed a
separate motions to quash the writ of attachment which were later on
denied. D.S. Homes, Inc., Et. Al. offered a counterbond and RTC accepted the
same and lifted the writ of preliminary attachment. MSLA and Villamor filed
with CA a petition for certiorari to annul the order of attachment and denial
of their motion to quash the same alleging that the trial court acted in excess
of its jurisdiction in issuing the ex parte orders of preliminary attachment and
in denying their motion to quash the writ of attachment, D.S. Homes, Inc., Et.
Al. did not join them. CA dismissed the petition hence petitioners appealed to
SC.
Issue: Whether CA erred in dismissing the petition on the ground that
objections against the writ may no longer be invoked once a counterbond is
filed for its lifting or dissolution?
Ruling: No.
The only requisites for the issuance of a writ of preliminary
attachment under Section 3, Rule 57 of the Rules of Court are the
affidavit and bond of the applicant. No notice to the adverse party

or hearing of the application required. As a matter of fact a hearing


would defeat the purpose of this provisional remedy. The time which such a
hearing would take, could be enough to enable the defendant to abscond or
dispose of his property before a writ of attachment issues.
While no hearing is required by the Rules of Court for the issuance of an
attachment ,a motion to quash the writ may not be granted without
"reasonable notice to the applicant" and only "after hearing.
After the defendant has obtained the discharge of the writ of
attachment by filing a counterbond under Section 12, Rule 57 of the
Rules of Court, he may not file another motion under Section 13,
Rule 57 to quash the writ for impropriety or irregularity in issuing it.
The reason is simple. The writ had already been quashed by filing a
counterbond, hence, another motion to quash it would be pointless.
Moreover, as the Court of Appeals correctly observed, when the ground for
the issuance of the writ is also the core of the complaint, the question of
whether the plaintiff was entitled to the writ can only be determined after,
not before, a full-blown trial on the merits of the case. This accords with our
ruling in G.B., Inc. v. Sanchez, 98 Phil. 886 that: "The merits of a main action
are not triable in a motion to discharge an attachment, otherwise an
applicant for the dissolution could force a trial on the merits of the case on
this motion.
May the defendant, after procuring the dissolution of the attachment by filing
a counterbond, ask for the cancellation of the counterbond on the ground
that the order of attachment was improperly issued?
The obligors in the bond are absolutely liable for the amount of any
judgment that the plaintiff may recover in the action without reference to the
question of whether the attachment was rightfully or wrongfully issued. The
liability of the surety on the counterbond subsists until the Court shall have
finally absolved the defendant from the plaintiffs claims. Only then may the
counterbond be released. The same rule applies to the plaintiffs attachment
bond. The liability of the surety on the bond subsists because the final
reckoning is when the Court shall finally adjudge that the attaching creditor
was not entitled to the issuance of the attachment writ.
Dispositive: Petition denied for lack of merit.
5. SOL - Philippine Commercial International Bank
Alejandro, GR 175587, 21 Sept. 2007 [purposes of PA]

vs.

Synopsis: In action for sum of money with prayer for the issuance of a writ
of preliminary attachment instituted by PCIB against Alejandro, pursuant to
failure of latter to add security to the promissory note in view of the
fluctuations in foreign exchanges, Petitioner alleged that respondent
fraudulently withdrew his unassigned deposits and that respondent is not a
resident of the Philippines. The trial court issued the writ ex parte wherein
respondent, by voluntary submission, moved to quash the same on the
grounds that withdrawal of his unassigned deposits was not fraudulent as it
was approved by petitioner and he is a resident of the Philippines
maintaining a permanent residence and a law firm in the Philippines. The writ
was quashed on the ground that respondent did not intend to defraud and

petitioner misrepresented and suppressed the facts regarding respondent's


residence. The same was affirmed by CA and SC. Respondent sought to claim
damages against the applicants bond on the ground that his check payable
to his counsel as attorney's fees, was dishonored by reason of the
garnishment of his deposits but opposed by petitioner contending that
Nepomuceno, PCIB Assistant Vice President, she acted in good faith in
alleging that respondent is a resident of Hong Kong. Trial Court granted the
same and the CA affirmed it but modified the award of damages. Hence, this
petition. It is clear from the foregoing that even on the allegation
that respondent is a resident temporarily out of the Philippines,
petitioner is still not entitled to a writ of attachment because the
trial court could acquire jurisdiction over the case by substituted
service instead of attaching the property of the defendant
Facts: PCIB filed against respondent a complaint for sum of money with
prayer for the issuance of a writ of preliminary attachment alleging that
respondent executed in favor of petitioner a promissory note obligating
himself to pay P249,828,588.90 plus interest. In view of the fluctuations in
the foreign exchange rates which resulted in the insufficiency of the deposits
assigned by respondent as security for the loan, petitioner requested the
latter to put up additional security for the loan. Respondent, however,
sought a reconsideration of said request pointing out petitioner's alleged
mishandling of his account due to its failure to carry out his instruction to
close his account as early as April 1997, when the prevailing rate of
exchange of the US Dollar to Japanese yen was US$1.00:JPY127.50. Petitioner
alleged that (1) respondent fraudulently withdrew his unassigned deposits
notwithstanding his verbal promise to PCIB Assistant Vice President Corazon
B. Nepomuceno not to withdraw the same prior to their assignment as
security for the loan; and (2) that respondent is not a resident of the
Philippines. Bond was issued by Prudential Guarantee & Assurance Inc. The
trial court granted the application and issued the writ ex parte.
Respondent, through counsel, filed a manifestation informing the court that
he is voluntarily submitting to its jurisdiction. Respondent filed a motion to
quash the writ contending that the withdrawal of his unassigned deposits
was not fraudulent as it was approved by petitioner. He also alleged that
petitioner knew that he maintains a permanent residence at Calle Victoria,
Ciudad Regina, Batasan Hills, Quezon City, and an office address in Makati
City at the Law Firm Romulo Mabanta Buenaventura Sayoc & De los
Angeles, where he is a partner. In both addresses, petitioner regularly
communicated with him through its representatives. Respondent added that
he is the managing partner of the Hong Kong branch of said Law Firm; that
his stay in Hong Kong is only temporary; and that he frequently travels back
to the Philippines.
The trial court issued an order quashing the writ and holding that the
withdrawal of respondent's unassigned deposits was not intended to defraud
petitioner and concluded that petitioner misrepresented and suppressed the
facts regarding respondent's residence considering that it has personal and
official knowledge that for purposes of service of summons, respondent's
residence and office addresses are located in the Philippines. CA and SC
affirmed trial courts decision.
Meanwhile, respondent filed a claim for damages in the amount of P25
Million on the attachment on account of the wrongful garnishment of his

deposits. He presented evidence showing that his P150,000.00 RCBC check


payable to his counsel as attorney's fees, was dishonored by reason of the
garnishment of his deposits. Petitioner claimed that she acted in good faith in
alleging that respondent is a resident of Hong Kong.
On August 30, 2000, the trial court awarded damages to respondent in the
amount of P25 Million. CA affirmed the same but modified the amount of
damages. MRs of both parties were denied. Hence, petitioner filed this
petition.
Issue: Whether petitioner bank is liable for damages for the improper
issuance of the writ of attachment against respondent?
Ruling: Yes.
The purposes of preliminary attachment are: (1) to seize the
property of the debtor in advance of final judgment and to hold it
for purposes of satisfying said judgment, as in the grounds stated in
paragraphs (a) to (e) of Section 1, Rule 57 of the Rules of Court; or
(2) to acquire jurisdiction over the action by actual or constructive
seizure of the property in those instances where personal or
substituted service of summons on the defendant cannot be
effected, as in paragraph (f) of the same provision.
Corollarily, in actions in personam, such as the instant case for collection of
sum of money, summons must be served by personal or substituted service,
otherwise the court will not acquire jurisdiction over the defendant. In case
the defendant does not reside and is not found in the Philippines (and hence
personal and substituted service cannot be effected), the remedy of the
plaintiff in order for the court to acquire jurisdiction to try the case is to
convert the action into a proceeding in rem or quasi in rem by attaching the
property of the defendant. Thus, in order to acquire jurisdiction in
actions in personam where defendant resides out of and is not
found in the Philippines, it becomes a matter of course for the court
to convert the action into a proceeding in rem or quasi in rem by
attaching the defendant's property. The service of summons in this case
(which may be by publication coupled with the sending by registered mail of
the copy of the summons and the court order to the last known address of
the defendant), is no longer for the purpose of acquiring jurisdiction but for
compliance with the requirements of due process.
However, where the defendant is a resident who is temporarily out of
the Philippines, attachment of his/her property in an action in
personam, is not always necessary in order for the court to acquire
jurisdiction to hear the case.
The Court held that substituted service of summons (under the
present Section 7, Rule 14 of the Rules of Court) is the normal mode
of service of summons that will confer jurisdiction on the court over
the person of residents temporarily out of the Philippines. Meaning,
service of summons may be effected by (a) leaving copies of the summons
at the defendant's residence with some person of suitable discretion residing
therein, or (b) by leaving copies at the defendant's office or regular place of
business with some competent person in charge thereof. Hence, the court
may acquire jurisdiction over an action in personam by mere substituted
service without need of attaching the property of the defendant.
Rationale of substituted service of summons: A man temporarily
absent from this country leaves a definite place of residence, a dwelling
where he lives, a local base, so to speak, to which any inquiry about him may
be directed and where he is bound to return. Where one temporarily absents

himself, he leaves his affairs in the hands of one who may be reasonably
expected to act in his place and stead; to do all that is necessary to protect
his interests; and to communicate with him from time to time any incident of
importance that may affect him or his business or his affairs. It is usual for
such a man to leave at his home or with his business associates information
as to where he may be contacted in the event a question that affects him
crops up.
It is clear from the foregoing that even on the allegation that
respondent is a resident temporarily out of the Philippines,
petitioner is still not entitled to a writ of attachment because the
trial court could acquire jurisdiction over the case by substituted
service instead of attaching the property of the defendant. The
misrepresentation of petitioner that respondent does not reside in the
Philippines and its omission of his local addresses was thus a deliberate
move to ensure that the application for the writ will be granted.
In light of the foregoing, the Court of Appeals properly sustained the finding
of the trial court that petitioner is liable for damages for the wrongful
issuance of a writ of attachment against respondent.
Dispositive: CAs decision affirmed and Damages modified.
6. CAVS - City of Caloocan vs. Allarde GR 107271, 10
September 2003 (exemption on non-attachment of govt funds)
FACTS: In 1972, Mayor Marcial Samson of Caloocan abolished the position of
Assistant City Administrator and 17 other positions via Ordinance No. 1749.
The affected employees assailed the legality of the abolition. The CFI in 1973
declared abolition illegal and ordered the reinstatement of all the dismissed
employees and the payment of their back-wages and other emoluments. The
City Government appealed the decision but such was dismissed.
In 1986 the City paid Santiago P75,083.37 as partial payment of her backwages. The others were paid in full.
In 1987 the City appropriated funds for her unpaid back salaries but the City
refused to release the money to Santiago. The City of Caloocan argued that
Santiago was not entitled to back wages. On July 27, 1992 Sheriff Castillo
levied and sold at public auction one of the motor vehicles of the City
Government for P100,000. The amount was given to Santiago. The City
Government questioned the validity of the motor vehicle; properties of the
municipality were exempt from execution. Judge Allarde denied the motion
and directed the sheriff to levy and schedule at public auction 3 more
vehicles. On October 5, 1993 the City Council of Caloocan passed Ordinance
No. 0134 which included the amount of P439,377.14 claimed by Santiago as
back-wages, plus interest. Judge Allarde issued an order to the City Treasurer
to release the check butthe City Treasurer cant do so because the Mayor
refuses to sign the check. On May 7, 1993. Judge Allarde ordered the Sheriff
to immediately garnish the funds of the City Government of Caloocan
corresponding to the claim of Santiago. Notice of garnishment was forwarded
to the PNB but the City Treasurer sent an advice letter to PNB that the
garnishment was illegal and that it would hold PNB liable for any damages
which may be caused by the withholding the funds of the city.

10

ISSUE: Whether or not the funds of City of Caloocan, in PNB, may be


garnished and the vehicles may be levied to satisfy Santiagos claim?
RULING: YES.
Garnishment is considered a specie of attachment by means of which the
plaintiff seeks to subject to his claim property of the defendant in the hands
of a third person, or money owed by such third person or garnishee to the
defendant. The rule is and has always been that all government funds
deposited in the PNB or any other official depositary of the Philippine
Government by any of its agencies or instrumentalities, whether by general
or special deposit, remain government funds and may not be subject to
garnishment or levy, in the absence of a corresponding appropriation as
required by law. Even though the rule as to immunity of a state from suit is
relaxed, the power of the courts ends when the judgment is rendered.
Although the liability of the state has been judicially ascertained, the state is
at liberty to determine for itself whether to pay the judgment or not, and
execution cannot issue on a judgment against the state. Such statutes do not
authorize a seizure of state property to satisfy judgments recovered, and
only convey an implication that the legislature will recognize such judgment
as final and make provision for the satisfaction thereof. However, the rule is
not absolute and admits of a well-defined exception, that is, when there is a
corresponding appropriation as required by law.
In such a case, the monetary judgment may be legally enforced by judicial
processes. Herein, the City Council of Caloocan already approved and passed
Ordinance No. 0134, Series of 1992, allocating the amount of P439,377.14
for Santiagos back-wages plus interest. This case, thus, fell squarely within
the exception.
We now come to the issue of the legality of the levy on the three motor
vehicles belonging to the City of Caloocan which petitioners claimed to be
exempt from execution, and which levy was based on an alias writ that had
purportedly expired. It is thus unnecessary for us to discuss a moot issue.
Hence, petitioners cannot now be heard to impugn the validity of the auction
sale.
7. CAVS - San Miguel Bulacan vs. Hon. Oscar Fernandez, GR
L-61744, 25 June 1984 [Dissolution of writ; non-levy of govt
funds]
FACTS: Petitioner municipality is liable to private respondents.
1. ordering the partial revocation of the Deed of Donation signed
by the deceased Carlos Imperio in favor of the Municipality of
San Miguel Bulacan, dated October 27, 1947 insofar as Lots Nos.
1, 2, 3, 4 and 5, Block 11 of Subdivision Plan Psd-20831 are
concerned, in the name of the Municipal Government of San
Miguel Bulacan,
2. ordering the defendant to execute the corresponding Deed of
Reconveyance over the aforementioned five lots in favor of the

11

plaintiffs in the proportion of the undivided one-half () share in


the name of plaintiffs Margarita D. Vda. de Imperio, Adoracion,
Rodolfo, Conrado, Ernesto, Alfredo, Carlos, Jr. and Juan, all
surnamed Imperio, and the remaining undivided one-half ()
share in favor of plaintiffs uses Marcelo E. Pineda and Lucila
Pongco;
3. ordering the defendant municipality to pay to the plaintiffs in
the proportion mentioned in the immediately preceding
paragraph the sum of P64,440.00 corresponding to the rentals it
has collected from the occupants for their use and occupation of
the premises plus interest.
4. ordering the restoration of ownership and possession over the
five lots in question in favor of the plaintiffs in the same
proportion aforementioned.
Petitioner, on July 30, 1982, filed a Motion to Quash the writ of execution on
the ground that the municipality's property or funds are all public funds
exempt from execution. The said motion to quash was, however, denied by
the respondent judge in an order dated August 23, 1982 and the alias writ of
execution stands in full force and effect.
ISSUE: Whether the said funds are exempted from garnishment?
RULING: NO
Well settled is the rule that public funds are not subject to levy and
execution. The reason for this was explained in the case of Municipality of
Paoay vs. Manaois, 86 Phil. 629 "that they are held in trust for the people,
intended and used for the accomplishment of the purposes for which
municipal corporations are created, and that to subject said properties and
public funds to execution would materially impede, even defeat and in some
instances destroy said purpose." And, in Tantoco vs. Municipal Council of
Iloilo, 49 Phil. 52, it was held that "it is the settled doctrine of the law that not
only the public property but also the taxes and public revenues of such
corporations Cannot be seized under execution against them, either in the
treasury or when in transit to it. Judgments rendered for taxes, and the
proceeds of such judgments in the hands of officers of the law, are not
subject to execution unless so declared by statute." Thus, it is clear that all
the funds of petitioner municipality in the possession of the Municipal
Treasurer of San Miguel, as well as those in the possession of the Provincial
Treasurer of Bulacan, are also public funds and as such they are exempt from
execution.
Besides, Presidential Decree No. 477, known as "The Decree on Local Fiscal
Administration", Section 2 (a), provides:
SEC. 2. Fundamental Principles. Local government financial
affairs, transactions, and operations shall be governed by the
fundamental principles set forth hereunder:
(a) No money shall be paid out of the treasury except in
pursuance of a lawful appropriation or other specific statutory
authority.
xxx xxx xxx
Otherwise stated, there must be a corresponding appropriation in
the form of an ordinance duly passed by the Sangguniang Bayan
before any money of the municipality may be paid out. In the case
at bar, it has not been shown that the Sangguniang Bayan has
passed an ordinance to this effect.

12

Furthermore, Section 15, Rule 39 of the New Rules of Court, outlines the
procedure for the enforcement of money judgment:
(a) By levying on all the property of the debtor, whether real or
personal, not otherwise exempt from execution, or only on such
part of the property as is sufficient to satisfy the judgment and
accruing cost, if he has more than sufficient property for the
purpose;
(b) By selling the property levied upon;
(c) By paying the judgment-creditor so much of the proceeds as
will satisfy the judgment and accruing costs; and
(d) By delivering to the judgment-debtor the excess, if any,
unless otherwise, directed by judgment or order of the court.
The foregoing has not been followed in the case at bar. Respondents
are hereby enjoined from implementing the writ of execution.
8. CAVS - City of Caloocan vs. Allarde and San Miguel
Bulacan, GR L-61744, 25 June 1984 [Dissolution of writ] (TYPO.
SAME TITLE SA NO. 6 AND SAME CITATION SA NO. 7)
9. CAVS - Chuidian vs. Sandiganbayan, GR 139941, 19
February 2001 [motion for dissolution/ to quash the writ]
FACTS: In September 1980, Chuidian allegedly a dummy of Ferdinand and
Imelda Marcos, was able to obtain, allegedly under false pretenses, a loan
guarantee from Philguarantee Corp., the BOI and the Central Bank, in favor
of the Asian Reliability Co. Inc. (ARCI). ARCI, 98% of which was allegedly
owned by Chuidian, was granted a loan guarantee of US $25M for the
establishment of 5 inter-related projects in the country.
However, Chuidian used the same in investing in corporations operating
in the US. ARCI then defaulted in the payments of the loan, compelling
Philguarantee to undertake payments for the same. Philguarantee sued
Chuidian before a Californian court, charging him of violating the terms of
the loan, defaulting in payments and misusing the proceeds for his personal
benefit. Chuidian claimed that he himself was a victim of the systematic
plunder perpetrated by the Marcoses.
On November 1985, Philguarantee entered into a compromise agreement
with Chuidian whereby Chuidian shall assign and surrender title to all his
companies in favor of the Phil. Govt. In return, Philguarantee shall absolve
Chuidian from all civil and criminal liability concerning the payments
Philguarantee had made on Chuidians defaulted loans. It was further
stipulated that the Phil. government shall pay Chuidian the amount of US
$5.3M. Chuidian received the 1st two installments of the payment. The
remaining balance of US $4.6M was to be paid through an irrevocable Letter
of Credit (L/C) from which Chuidian would draw US $100k monthly.
With the advent of the Aquino administration, the newly-established
PCGG exerted earnest efforts to search and recover properties and assets
suspected as having been illegally acquired by the Marcoses, their relatives
and cronies. Chuidian was among those whose assets were sequestered by
the PCGG. The PNB was directed to place the letters of credit under its
custody, in behalf of the PCGG.

13

In the meantime, Philguarantee filed a motion before the Superior Court


of California, seeking to vacate the stipulated judgment containing the
settlement between Philguarantee and Chuidian on the grounds that: (a)
Philguarantee was compelled by the Marcos administration to agree to the
terms of the settlement; (b) Chuidian blackmailed Marcos into pursuing the
settlement agreement by threatening to expose the fact that the Marcoses
made investments in Chuidians American enterprises; and (c) the Aquino
administration had ordered Philguarantee not to make further payments on
the L/C to Chuidian. However, the Californian court concluded that
Philguarantee was not able to sufficiently show that the settlement should be
set aside. On appeal, the CA of the State of California affirmed the judgment
of the Superior Court denying Philguarantees motion.
Chuidian filed before the California Central District Court, an action
against PNB seeking to compel the latter to pay the proceeds of the L/C.
Philguarantee intervened in said action, raising the same issues and
arguments it had earlier raised in the action before the Santa Clara Superior
Court, alleging that PNB was excused from making payments on the L/C
since the settlement was void due to illegality, duress and fraud.
The Federal Court rendered judgment ruling: (1) in favor of PNB excusing
the said bank from making payment on the L/C; and (2) in Chuidians favor
by denying intervenor Philguarantees action to set aside the settlement
agreement.
Meanwhile a Deed of Transfer was executed between then Sec. of Finance
and then PNB President Edgardo Espiritu, to facilitate the rehabilitation of
PNB. Thus, the govt assumed all liabilities of PNB including the L/C listed in
favor of Chuidian in the amount of US $4.4M
On July 1987, the govt filed before the Sandiganbayan a civil case
against the Marcos spouses, several govt officials, and a number of
individuals known to be cronies of the Marcoses, including Chuidian, seeking
the reconveyance, accounting and restitution of all forms of wealth allegedly
procured illegally by the defendants.
On July 1993, the Sandiganbayan ordered the issuance of a writ of
attachment against the L/C as security for the satisfaction of judgment. The
Sandiganbayan ruled:
1) Although there was no separate was attached to the motion, the
motion itself contained all the requisites of an affidavit, and the verification
thereof is deemed a substantial compliance of Rule 57, Section 3.
2) Fiduciary relationship exists between Chuidian and ARCI but not with
the Republic. Hence, the Republic cannot invoke Sec. 1(b) of Rule 57.
3) There was a prima facie case of fraud committed by Chuidian,
justifying the issuance of the writ of attachment.
4) The Sandiganbayan also adopted the Republics position that since it
was compelled to pay, through Philguarantee, the bank loans taken out by
Chuidian, the proceeds of which were fraudulently diverted, it is entitled to
the issuance of the writ of attachment to protect its rights as creditor.
5) Chuidians absence from the country was considered by the
Sandiganbayan to be the most compelling ground for the issuance of the
writ.
Almost four (4) years after the issuance of the order of attachment,
Chuidian filed a motion to lift the attachment based on the following
grounds:

14

1) He had returned to the Philippines, and considering that his absence


was the most compelling ground for the issuance of the writ, the latter
should be lifted.
2) There was no evidence at all of initial fraud or subsequent
concealment
ISSUE:
WON the writ of preliminary attachment should be lifted as a result of
petitioners return to the country and his averments that there was no fraud
in incurring the obligation
RULING: NO.
Preliminary attachment issued upon a ground which is at the same
time the applicants cause of action. When the preliminary attachment
is issued upon a ground which is at the same time the applicants cause of
action, the defendant is not allowed to file a motion to dissolve the
attachment under Section 13 of Rule 57 by offering to show the falsity of the
factual averments in the plaintiffs application and affidavits on which the
writ was based and consequently that the writ based thereon had been
improperly or irregularly issued the reason being that the hearing on such a
motion for dissolution of the writ would be tantamount to a trial of the merits
of the action. In other words, the merits of the action would be ventilated at
a mere hearing of a motion, instead of at the regular trial.
The merits of the action in which a writ of preliminary attachment has been
issued are not triable on a motion for dissolution of the attachment;
otherwise an applicant for the lifting of the writ could force a trial of the
merits of the case on a mere motion.
There are only two ways of quashing a writ of attachment: (a) by
filing a counterbound immediately; or (b) by moving to quash on the ground
of improper and irregular issuance. These grounds for the dissolution of an
attachment are fixed in Rule 57 of the Rules of Court and the power of the
Court to dissolve an attachment is circumscribed by the grounds specified
therein. Petitioners motion to lift attachment failed to demonstrate any
infirmity or defect in the issuance of the writ of attachment; neither did he
file a counterbond.
10.
CAVS - Spouses Gregorio and Josefa Yu vs. Ngo Yet,
GR 155868, 6 Feb 2007 [Wrongful attachment]
FACTS: Spouses Gregorio and Josefa Yu (Spouses Yu) purchased from Ngo
Yet Te (Te) bars of detergent soap worth P594,240.00, and issued to the latter
three postdated checks 4 as payment of the purchase price. When Te
presented the checks at maturity for encashment, said checks were returned
dishonored and stamped "ACCOUNT CLOSED".5 Te demanded6 payment from
Spouses Yu but the latter did not heed her demands. Acting through her son
and attorney-in-fact, Charry Sy (Sy), Te filed with the Regional Trial Court
(RTC), for Collection of Sum of Money and Damages with Prayer for
Preliminary Attachment.
Upon Tes posting of an attachment bond, 9 the RTC issued an Order of
Attachment/Levy10 dated March 29, 1993 on the basis of which Sheriff
Constancio Alimurung (Sheriff Alimurung) of RTC, Branch 19, Cebu City levied

15

and attached Spouses Yus properties in Cebu City consisting of one parcel of
land (known as Lot No. 11)11 and four units of motor vehicle, specifically, a
Toyota Ford Fierra, a jeep, a Canter delivery van, and a passenger bus.12
On April 21, 1993, Spouses Yu filed an Answer 13 with counterclaim for
damages arising from the wrongful attachment of their properties,
specifically. On the same date, Spouses Yu filed an Urgent Motion to Dissolve
Writ of Preliminary Attachment.15 They also filed a Claim Against Surety
Bond16 in which they demanded payment from Visayan Surety and Insurance
Corporation (Visayan Surety), the surety which issued the attachment bond,
of the sum of P594,240.00, representing the damages they allegedly
sustained as a consequence of the wrongful attachment of their properties.
While the RTC did not resolve the Claim Against Surety Bond, it issued an
Order17 dated May 3, 1993, discharging from attachment the Toyota Ford
Fierra, jeep, and Canter delivery van on humanitarian grounds, but
maintaining custody of Lot No. 11 and the passenger bus. Spouses Yu filed a
Motion for Reconsideration18 which the RTC denied.
ISSUE: Whether or not the decision of the RTC valid?
RULING: YES
That is a rather limited understanding of Javellana. The counterclaim
disputed therein was not for moral damages and therefore, there was no
need to prove malice. As early as in Lazatin v. Twao, 55 we laid down the rule
that where there is wrongful attachment, the attachment defendant may
recover actual damages even without proof that the attachment plaintiff
acted in bad faith in obtaining the attachment. However, if it is alleged and
established that the attachment was not merely wrongful but also malicious,
the attachment defendant may recover moral damages and exemplary
damages as well. 56 Either way, the wrongfulness of the attachment does not
warrant the automatic award of damages to the attachment defendant; the
latter must first discharge the burden of proving the nature and extent of the
loss or injury incurred by reason of the wrongful attachment.57
In fine, the CA finding that the attachment of the properties of Spouses Yu
was wrongful did not relieve Spouses Yu of the burden of proving the factual
basis of their counterclaim for damages.
To merit an award of actual damages arising from a wrongful attachment, the
attachment defendant must prove, with the best evidence obtainable, the
fact of loss or injury suffered and the amount thereof.58 Such loss or injury
must be of the kind which is not only capable of proof but must actually be
proved with a reasonable degree of certainty. As to its amount, the same
must be measurable based on specific facts, and not on guesswork or
speculation. 59 In particular, if the claim for actual damages covers unrealized
profits, the amount of unrealized profits must be estalished and supported by
independent evidence of the mean income of the business undertaking
interrupted by the illegal seizure. 60
Spouses Yu insist that the evidence they presented met the foregoing
standards. They point to the lists of their daily net income from the operation
of said passenger bus based on used ticket stubs 61 issued to their
passengers. They also cite unused ticket stubs as proof of income foregone
when the bus was wrongfully seized. 62 They further cite the unrebutted
testimony of Josefa Yu that, in the day-to-day operation of their passenger
bus, they use up at least three ticket stubs and earn a minimum daily income
of P1,500.00.63
In ruling that Spouses Yu failed to adduce sufficient evidence to support their
counterclaim for actual damages

16

Spouses Yus claim for unrealized income of P1,500.00 per day was based on
their computation of their average daily income for the year 1992. Said
computation in turn is based on the value of three ticket stubs sold over only
five separate days in 1992.67 By no stretch of the imagination can we
consider ticket sales for five days sufficient evidence of the average daily
income of the passenger bus, much less its mean income. Not even the
unrebutted testimony of Josefa Yu can add credence to such evidence for the
testimony itself lacks corroboration.68
Besides, based on the August 29, 1994 Manifestation 69 filed by Sheriff
Alimurung, it would appear that long before the passenger bus was placed
under preliminary attachment in Civil Case No. 4061-V-93, the same had
been previously attached by the Sheriff of Mandaue City in connection with
another case and that it was placed in the Cebu Bonded Warehousing
Corporation, Cebu City. Thus, Spouses Yu cannot complain that they were
unreasonably deprived of the use of the passenger bus by reason of the
subsequent wrongful attachment issued in Civil Case No. 4061-V-93. Nor can
they also attribute to the wrongful attachment their failure to earn income or
profit from the operation of the passenger bus.
Moreover, petitioners did not present evidence as to the damages they
suffered by reason of the wrongful attachment of Lot No. 11.
Based on the foregoing testimony, it is not difficult to understand why Te
concluded that Spouses Yu never intended to pay their obligation for they
had available funds in their bank but chose to transfer said funds instead of
cover the checks they issued. Thus, we cannot attribute malice nor bad faith
to Te in applying for the attachment writ. We cannot hold her liable for moral
and exemplary damages.
In sum, we affirm the dismissal of the counterclaim of petitioners Spouses Yu
for actual, moral, and exemplary damages. However, we grant them
temperate damages and attorneys fees.
11.
ACE - Pablo Pua vs. Lourdes, GR 173336, 26
November 2012 [Attachment bond]
Facts: Pua is engaged in the business of wholesale rice trading. One of his
client was Ang. Pua delivered rice to Ang, co-owners of the JD Grains, and
paid him two post dated chekcs. Pua tried to encash them but the same were
dishonored. Pua demanded payment to Ang, but the latter refused. Pua filed
a complaint for collection of sum of money with preliminary attachment
against Deyto as co-owners of JD Grains. The trial court issued an order for
the issuance of a writ of preliminary attachment. Since Ang cannot be
located, and no properties available to satisfy the obligation, the properties
of Deyto were levied. The summons for Ang was published through Manila
Standard. Later, more than 6 months, the case was sent to archive for
inactivity, and the trial court dismissed the case for the plaintiff's lack of
interest to prosecute the case. Pua contended that he renewed the
attachment bond which shows an intention on his part to prosecute the
same.
Issue:Whether the contention of Pua is correct?
Held: NO. The payment of an attachment bond is not an appropriate
procedure to settle a legal dispute in court; it could not be considered as a
substitute for the submission of the necessary pleading or motions that
would to prompt action on the case.

17

12.
ACE - Mangila vs. CA, GR 125027, 12 August 2002
[issuance of writ; req. of acquiring jurisdiction]
Facts: Petitioner is an exporter of sea foods. Private respondent, the President
and General Manager of Air Swift International, is engaged in the freight
forwarding business. Petitioner contracted with private respondent for
shipment of the petitioner's goods. Petitioner agreed to pay private
respondent cash on delivery. However, petitioner failed to pay private
respondent for three shipments. Private respondent filed a case against
petitioner before the RTC of Pasay for the collection of sum of money.
Unfortunately, it was found out that petitioner left the Philippines with intent
to defraud her creditors. Private respondent filed a Motion for Preliminary
Attachment against the petitioner. The trial court set the date for pre-trial
several times, but the petitioner failed to appear. The trial court terminated
the pre-trail and allowed the private respondent to present evidence exparte. The petitioner filed an Ominubus Motion stating that the presentation
of evidence ex-parte should be suspended because there was no declaration
of petitioner as in default party and it did not acquire jurisdiction over her
because she did not submit herself to the jurisdiction of the trial court. The
court issued the writ of preliminary attachment and tasked its Sheriff
implement the said writ, but the petitioner questioned the issuance and
implementation of the said writ, that it was issued erroneously.
Issue:Whether the action of the court is correct?
Held: NO. the grant of provisional remedy of attachment involves three
stages- (1) the issuance by the court of the order granting the application,
(2) the issuance of the writ of attachment pursuant to the order, and (3) the
implementation of the writ. For the initial two stages, it is not necessary that
jurisdiction over the person of the defendant be first obtained but once the
implementation of the writ commences, the court must have acquired the
jurisdiction over the defendant.
If the defendant's whereabouts could not be ascertained after the
sheriff had served the summons, the plaintiff should ask the court for service
of summons by publication on the defendant.
The belatedly service of summon on the petitioner cannot be deemed
to have cured the fatal defect in the enforcement of the writ.
The writ of preliminary attachment must be served after or
simultaneously with the service of summons on the defendant whether
personal, substituted or by publication.
13.
ACE - Fort Bonifacio Development Corp vs. Yllas
Lending, GR 158997, 6 October 2008 [3rd party claim; indemnity
bond]
Facts: Petitioner and Tirreno entered into a lease agreement over a unit of the
petitioner to be used as a restaurant. Respondent lent a total of Php 1.5M to
Tirreno which was secured by a Deed of Chattel Mortgage. Later, Tirreno
defaulted in its payment, and forcing the petitioner to their lease agreement.
Respondent caused the sheriff of the trial court serve an alias writ of seizure
against petitioner, for Tirreno had failed to settle his obligations with them.
Petitioner found out that the filed a complaint for Foreclosure of Chattel
Mortgage. The sheriff delivered the seized properties to respondent.

18

Petitioner questioned the actions of the sheriff on the ground that there was
no indemnity bond filed before the trial court.
Issue:Whether the actions of the sheriff is correct?
Held: NO. Section 14 of Rule 57 the Rules of Court, the sheriff is not obligated
to turnover to respondent the properties subject of this case for failure to file
a bond. The bond in section 14 of Rule 57 (proceedings where the property is
claimed by third person) is different from the bond in section 3 of Rule 57,
the purpose of which is to indemnify the sheriff against any claim by the
intervenor to the property seized or for damages arising from such seizure.
Section 3, Rule 57 refers to the attachment bond to assure the return
of the defendant's personal property or the payment of damages to the
defendant if the plaintiff's action to recover possession of the same property
fails, in order to protect the plaintiff's right of possession of said property.
14.
ACE - Spouses Santiago vs. ABC, GR 16450, 25
November 2008 [liability for damages]
Facts: For value received, Cebu Foremost Const., through its Chairman
Tanchan, executed and delivered 7 US$ promissory notes to respondent, and
also a Real Estate Mortgage. For failure to pay, respondent instituted to
foreclose the Real Estate Mortgage to satisfy its claim. Again, respondent
filed with the RTC a complaint for collection of sum of money with preliminary
attachment. Armed with Writ of Preliminary Attachment, the sheriff levied
several parcels of land registered in the name of petitioner.
Petitioner contended that he could not have defrauded respondent
because he did not directly contracted the loan but acted merely as sureties.
Thus, the issuance of the Writ of Preliminary Attachment is arbitrary.
Petitioner claimed for damages that brought upon them social humiliation.
Issue:Whether the petitioner is entitled for damages?
Held: NO. A wrongful attachment may give rise to liability for moral damages
but the evidence must be adduced not only of the torment and humiliation
brought upon the defendant by attaching party but also of the latter's
badfaith and malice causing the wrongful attachment.
In the case, the petitioner failed to adduce evidence that shows that
the respondent acted with malice in causing the wrongful issuance of the
writ.
15.
ACE - China Banking Corp vs. Asian Development
Corporation, GR 158271, 8 April 2008
[Sale of property
attached; exceptions]
Facts: petitioner granted respondent a credit line in the amount of 90M.
Alleging that the respondent failed to pay the said credit line, petitioner filed
a complaint for recovery of sum of money with prayer for the issuance of
Writ of Preliminary Attachment before the RTC of Makati. The trial court
issued an order of the prayed Writ. As shown in the Sheriff's report, the Writ
was implemented levying personal properties such as vans, dump truck and
etc. petitioner filed a motion for grant of authority to sell the attached

19

property, but the trial court denied because of the absence of a final and
executory judgment against respondent.
Issue:Whether the action of the trial court is correct?
Held: YES. The attached property may be sold after levy on attachment and
before entry of judgment whenever it shall be made to appear to the court in
which the action is pending, upon hearing with notice to both parties, that
the property is perishable, or that the interest of all parties to thew action
will be subserved by the sale of the attached property.
16.
MAVEL - Oate vs. Abrogar, GR 107303, 23 February
1995 [improper enforcement does not affect the validity of the writ]
Facts: Sun Life filed a complaint for sum of money with a prayer for the
issuance of a writ of preliminary attachment against Onate, et. al. The prayer
for the writ was granted by the Court. The Sheriff attempted to serve
summons to Onate, et. al. but he was unsuccessful. Despite of this, the
sheriff started to serve notices of garnishment upon banks, and notices of
attachment upon other properties of Onate. The Sheriff was able to serve
summons after the notice of garnishment. Records show that before the
summons and the complaint were served on petitioners Oate and Econ
Holdings Corporation (Econ) on January 9, 1992, Deputy Sheriff Arturo C.
Flores had already served on January 3, 1992 notices of garnishment on the
PNB Head Office and on all its Metro Manila branches and on A.B. Capital. In
addition he made other levies before the service of summons on petitioners.
Onate argues that the attachment is improper because the RTC has not yet
acquired jurisdiction over their persons. The SC said that whatever defects
attended the attachment, these were cured when the sheriff was finally able
to serve them the summons later on. Onate filed an MR.
Issue: WON the attachment is valid?
Held: No.
We hold that the attachment of petitioners properties prior to the acquisition
of jurisdiction by the respondent court is void and that the subsequent
service of summons on petitioners did not cure the invalidity of such
attachment. In cites the following portion of the decision in Davao Light and
Power, written by Justice, now Chief Justice, Narvasa: It goes without saying
that whatever be the acts done by the Court prior to the acquisition of
jurisdiction over the person of the defendant, as above indicated issuance
of summons, order of attachment and writ of attachment (and/or
appointment of guardian ad litem, or grant of authority to the plaintiff to
prosecute the suit as a pauper litigant, or amendment of the complaint by
the plaintiff as a matter of right without leave of court and however valid
and proper they might otherwise be, these do not and cannot bind and affect
the defendant until and unless jurisdiction over his person is eventually
obtained by the court, either by service on him of summons or other coercive
process or his voluntary submission to the courts authority. Hence, when the
sheriff or other proper officer commences implementation of the writ of
attachment, it is essential that he serve on the defendant not only a copy of
the applicants affidavit and attachment bond, and of the order of
attachment, as explicitly required by Section 5 of Rule 57, but also the
summons addressed to said defendant as well as a copy of the complaint
and order for appointment of guardian ad litem, of any, as also explicitly
directed by Section 3, Rule 14 of the Rules of Court. It is clear from the above

20

excerpt, however, that while the petition for a writ of preliminary attachment
may be granted and the writ itself issued before the defendant is summoned,
the writ of attachment cannot be implemented until jurisdiction over the
person of the defendant is obtained. As this Court explained, "levy on
property pursuant to the writ thus issued may not be validly effected unless
preceded, or contemporaneously accompanied, by service on the defendant
of summons, a copy of the complaint (and of the appointment of guardian ad
litem, if any), the application for attachment (if not incorporated in but
submitted separately form the complaint), the order of attachment, and the
plaintiffs attachment bond."
Further clarification was made in Cuartero v. Court of Appeals, (212 SCRA
260, 266 [1992]) in which it was held: It must be emphasized that the grant
of the provisional remedy of attachment practically involves three stages;
first, the court issues the order granting the application; second, the writ of
attachment issues pursuant to the order granting the writ; and third, the writ
is implemented. For the initial two stages, it is not necessary that jurisdiction
over the person of the defendant should first be obtained. However, once the
implementation commences, it is required that the court must have acquired
jurisdiction over the defendant for without such jurisdiction, the court has no
power and authority to act in any manner against the defendant. Any order
issuing from the Court will not bind the defendant. Private respondent argues
that the case of Cuartero itself provides for an exception as shown in the
statement that "the court [in issuing the writ of preliminary attachment]
cannot bind and affect the defendant until jurisdiction is eventually obtained"
and that since petitioners were subsequently served with summons, no
question can be raised against the validity of the attachment of petitioners
properties before such service. The statement in question has been taken
out of context. The full statement reads: It is clear from our pronouncements
that a writ of preliminary attachment may issue even before summons is
served upon the defendant. However, we have likewise ruled that the writ
cannot bind and affect the defendant until jurisdiction over his person is
eventually obtained. Therefore, it is required that when the proper officer
commences implementation of the writ of attachment, service of summons
should be simultaneously made. Indeed, as this Court through its First
Division has ruled on facts similar to those in these cases, the attachment of
properties before the service of summons on the defendant is invalid, even
though the court later acquires jurisdiction over the defendant. At the very
least, then, the writ of attachment must be served simultaneously with the
service of summons before the writ may be enforced. As the properties of
the petitioners were attached by the sheriff before he had served the
summons on them, the levies made must be considered void.
17.
MAVEL - Pepperel vs. Taylor, 5 Phil 536 [attachment
allowed if the mortgagee abandons security]
Fact: This is an ordinary action on a promissory note to recover the sum of
$1,150, United States currency, with interest thereon at the rate of 25 per
cent annum from September 14, 1903, the date of the note, until its
payment. Plaintiff procured an attachment of the property of the defendant
under the provisions of section 424 and following sections of the Code of
Civil Procedure.
The affidavit for attachment stated that the defendant had disposed of his
property or is about to dispose of his property with intent to defraud his
creditors. By virtue of the writ of attachment the sheriff levied upon the
launch Scotia, the property of the defendant. The defendant moved in the

21

court below to dissolve the attachment, which motion was denied, and to the
order denying it he took an exception. The case was tried in the court below,
and judgment entered for the plaintiff for the face of the note with interest at
the rate of 25 per cent annum from the 14th day of September, 1903, until
the debt was paid. The defendant has brought the case here by bill of
exceptions.
Issue: Whether the affidavit is sufficient upon which the attachment was
granted.
Held: We do not find it necessary to pass upon the validity of this instrument
(affidavit). The object of the statute was to prevent the creditor, who already
had security on certain goods, from attaching other goods to secure the
same debt. It was not, in our opinion, intended to apply to a case where the
plaintiff caused his attachment to be levied upon the very article upon which
the security existed, and in an action to recover the debt which was so
secured. In fact, under the Spanish law of civil procedure, in an action to
recover a debt thus secured the property first to be attached is that upon
which the security rested. What the effect of this attachment upon the
security is we do not decide. We simply hold that section 426 does not
prevent an attachment of the article upon which the security rests for the
debt this secured.
18.
MAVEL - Delos Reyes vs. RTC Batangas, 55 Phil 408
[attachment allowed if the mortgage security is insufficient]
Fact: This is an original petition for the writ of certiorari filed in this court by
Benito de los Reyes and wife, for the purpose of quashing an order of the
Court of First Instance of Batangas granting an attachment of property
belonging to the plaintiffs, in an action instituted in the Court of First
Instance of the Province of Batangas, wherein the respondents Chua Pua
Hermanos are plaintiffs and the petitioners defendants.
Issue: Whether in a proceeding to foreclose a mortgage upon land, the court
entertaining such proceeding can issue an attachment against other property
of the defendants than such as is included in the mortgage, upon a showing,
by affidavit, that the mortgaged property is insufficient to pay the mortgage
debt and that the defendants are attempting to alienate their unmortgaged
property to other persons with intent to defraud the plaintiff.
Held: In a mortgage foreclosure proceeding the court has jurisdiction to grant
an attachment against the property of the debtor, to be levied upon property
not covered by the mortgage, upon proper showing by affidavit that the
value of the mortgaged property is insufficient to cover the debt and that the
debtor has disposed, or is about to dispose, of his other property with intent
to defraud the creditor.
The affidavit accompanying the application for attachment shows, in
conformity with the requirement of section 426 of the Code of Civil
Procedure, that the value of the mortgaged property is not sufficient to
satisfy the debt. In addition to this it is alleged in the affidavit that the
defendants are attempting to dispose of their other property, meaning
property not mortgaged to the plaintiff, with intent to defraud the plaintiff.
This is in conformity with the requirement of subsection 5 of section 412 of
the Code of Civil Procedure.
19.
MAVEL - Cuartero vs. CA, GR 102448, 5 August 1992
[Ground for discharge shld not be ground to dismiss the main case
on the merits]

22

Facts: On August 20, 1990, petitioner Ricardo Cuartero filed a complaint


before the Regional Trial Court of Quezon City against the private
respondents, Evangelista spouses, for a sum of money plus damages with a
prayer for the issuance of a writ of preliminary attachment. The lower court
issued an order granting ex-parte the petitioners prayer for the issuance of a
writ of preliminary attachment, the writ of preliminary attachment was
issued and the summons for the spouses Evangelista was likewise prepared.
The summons and the complaint were all simultaneously served upon the
private respondents at their residence. Immediately thereafter, Deputy
Sheriff Ernesto L. Sula levied, attached and pulled out the properties in
compliance with the courts directive to attach all the properties of private
respondents not exempt from execution, or so much thereof as may be
sufficient to satisfy the petitioners principal claim in the amount of
P2,171,794.91. Evangelista filed a motion to set aside the order and
discharge the writ of preliminary attachment for having been irregularly and
improperly issued. The lower court denied such motion. Private respondent
the filed a special civil action for certiorari with the CA questioning the order.
The CA granted the petition.
Hence, the present recourse to this Court.
Issue: Whether the CA acted with grave abuse of discretion when it held that
the RTC could not validly issue the writ of preliminary attachment?
Held: Yes. Valid service of summons and a copy of the complaint vest
jurisdiction in the court over the defendant both for the purpose of the main
case and for purposes of the ancillary remedy of attachment and a court
which has not acquired jurisdiction over the person of defendant, cannot bind
the defendant whether in the main case or in any ancillary proceeding such
as attachment proceedings (Sievert v. Court of Appeals, 168 SCRA 692)."
A writ of preliminary attachment is defined as a provisional remedy issued
upon order of the court where an action is pending to be levied upon the
property or properties of the defendant therein, the same to be held
thereafter by the sheriff as security for the satisfaction of whatever judgment
might be secured in said action by the attaching creditor against the
defendant (Adlawan v. Tomol, 184 SCRA 31 [1990] citing Virata v. Aquino, 53
SCRA 30-31 [1973]).
It must be emphasized that the grant of the provisional remedy of
attachment practically involves three stages: first, the court issues the order
granting the application; second, the writ of attachment issues pursuant to
the order granting the writ; and third, the writ is implemented. For the initial
two stages, it is not necessary that jurisdiction over the person of the
defendant should first be obtained. However, once the implementation
commences, it is required that the court must have acquired jurisdiction over
the defendant for without such jurisdiction, the court has no power and
authority to act in any manner against the defendant. Any order issuing from
the Court will not bind the defendant.
It is clear from our pronouncements that a writ of preliminary attachment
may issue even before summons is served upon the defendant. However, we
have likewise ruled that the writ cannot bind and affect the defendant until
jurisdiction over his person is eventually obtained. Therefore, it is required
that when the proper officer commences implementation of the writ of
attachment, service of summons should be simultaneously made.
In the present case, one of the allegations in petitioners complaint below is
that the defendant spouses induced the plaintiff to grant the loan by issuing
postdated checks to cover the installment payments and a separate set of

23

postdated checks for payment of the stipulated interest (Annex "B"). The
issue of fraud, then , is clearly within the competence of the lower court in
the
main
action.
WHEREFORE, premises considered, the Court hereby GRANTS the petition.
B. Preliminary Injunction [Rule 58]
1. MAVEL - Philippine Economic Zone Authority vs. Joseph
Carates, GR 181274, 23 June 2010 [preliminary injunction;
requisites]
Facts: Respondents Joseph Jude Carantes, Rose Carantes and the heirs of
Maximino Carantes are in possession of a 30,368-square meter parcel of land
located in Loakan Road, Baguio City. They obtained Certificate of Ancestral
Land Claim (CALC) No. CAR-CALC-022[4] over the land from the Department of
Environment and Natural Resources (DENR). On the strength of said CALC,
respondents secured a building permit [5] and a fencing permit[6] from the
Building Official of Baguio City, Teodoro G. Barrozo. Before long, they fenced
the premises and began constructing a residential building thereon.
Soon, respondents received a letter[7] dated February 9, 1999 from Digna D.
Torres, the Zone Administrator of the Philippine Economic Zone Authority
(PEZA), informing them that the house they built had overlapped PEZA's
territorial boundary. Torres advised respondents to demolish the same within
sixty (60) days from notice. Otherwise, PEZA would undertake its demolition
at
respondents'
expense.
Without answering PEZA's letter, respondents filed a petition for injunction,
with prayer for the issuance of a temporary restraining order (TRO) and writ
of preliminary injunction before the RTC of Baguio City. By Order[8] dated
April 8, 1999, the RTC of Baguio City issued a TRO, which enjoined PEZA to
cease and desist from threatening respondents with the demolition of their
house before respondents' prayer for a writ of preliminary injunction can be
heard. On September 19, 2001, the RTC likewise issued an Order, [9] which
directed the parties to maintain the status quo pending resolution of the
case. The RTC then granted the respondents' petition and ordered the
issuance of a writ of injunction against PEZA. On appeal, the CA affirmed the
RTC ruling.
Issue: Whether or not Injunction is Proper
Held: No. Injunction is a judicial writ, process or proceeding whereby a party
is directed either to do a particular act, in which case it is called a mandatory
injunction or to refrain from doing a particular act, in which case it is called a
prohibitory injunction. As a main action, injunction seeks to permanently
enjoin the defendant through a final injunction issued by the court and
contained in the judgment. Section 9, Rule 58 of the 1997 Rules of Civil
Procedure, as amended, provides,
SEC. 9. When final injunction granted. - If after the trial of the action it
appears that the applicant is entitled to have the act or acts complained of
permanently enjoined, the court shall grant a final injunction perpetually
restraining the party or person enjoined from the commission or continuance
of the act or acts or confirming the preliminary mandatory injunction.
Two (2) requisites must concur for injunction to issue: (1) there must be a
right to be protected and (2) the acts against which the injunction is to be
directed are violative of said right.[23] Particularly, in actions involving realty,
preliminary injunction will lie only after the plaintiff has fully established his

24

title or right thereto by a proper action for the purpose. To authorize a


temporary injunction, the complainant must make out at least a prima facie
showing of a right to the final relief. Preliminary injunction will not issue to
protect a right not in esse.[24] These principles are equally relevant to actions
seeking permanent injunction.
At the onset, we must stress that petitioner does not pose an adverse claim
over the subject land. Neither does petitioner dispute that respondents hold
building and fencing permits over the lots. For petitioner, the question that
must be answered is whether respondents may build structures within the
Baguio City Economic Zone on the basis of their CAR-CALC-022, and the
building and fencing permits issued by the City Building Official.
As holders of a CALC, respondents possess no greater rights than those
enumerated in Par. 1, Section 2, Article VII of DENR Department
Administrative Order (DAO) No. 02, Series of 1993:
SECTION 2. Rights and Responsibilities of Ancestral Land Claimants 1. Rights
1. The right to peacefully occupy and cultivate the land, and utilize the
natural resources therein, subject to existing laws, rules and
regulations applicable thereto;
2. The right of the heirs to succeed to the claims subject to existing rules
and regulations;
3. The right to exclude from the claim any other person who does not
belong to the family or clan; and
4. The right to utilize trees and other forest products inside the ancestral
land subject to these rules as well as customary laws. (Emphasis
supplied.)
Respondents being holders of a mere CALC, their right to possess the subject
land is limited to occupation in relation to cultivation. Unlike No. 1,[26] Par. 1,
Section 1, Article VII of the same DENR DAO, which expressly allows
ancestral domain claimants to reside peacefully within the domain, nothing
in Section 2 grants ancestral land claimants a similar right, much less the
right to build permanent structures on ancestral lands - an act of ownership
that pertains to one (1) who has a recognized right by virtue of a Certificate
of Ancestral Land Title. On this score alone, respondents' action for
injunction must fail.
2. AVA - Roman Catholic Archbishop of San Fernando
Pampanga vs. Eduardo Soriano, Jr, GR 153829, 17 August
2011 [Important requisites for issuance of writ]
FACTS: This is a Petition for Injunction under Rule 58, filed by Benjamin
Guinto, Jr. seeking to enjoin the implementation of the Writ of
Execution issued by the Municipal Circuit Trial Court (MCTC) of MacabebeMasantol, Pampanga in Civil Case No. 2000(23).
The RCA of San Fernando, Pampanga, represented by Most Rev. Paciano B.
Aniceto, D.D., claimed that it is the owner of a vast tract of land located near
the Catholic Church at Poblacion, Macabebe, Pampanga and covered by OCT.
The RCA alleged that several individuals unlawfully occupied the subject land
and refused to vacate despite repeated demands. Having no other recourse,
the RCA filed an ejectment case against the alleged intruders. On the other

25

hand, defendants countered that the RCA has no cause of action against
them because its title is spurious. They contended that the subject land
belonged to the State, but they have already acquired the same by
acquisitive prescription.
The decision ejecting the defendants from the premises became final. Thus,
a Writ of Execution was issued. Seeking to enjoin the implementation of the
same and the notice to vacate, Guinto filed the instant Petition for Injunction
with Prayer for Issuance of a Temporary Restraining Order (TRO).
Meanwhile, during the pendency of the ejectment case, some of the
defendant therein filed Civil for Quieting of Title and Declaration of Nullity of
Title before the RTC against RCA. RTC rendered decision in favor of the
plaintiffs (defendants in the first case). Aggrieved, RCA filed the with the CA
a petition for certiorari with prayer for preliminary injunction, to which the
latter dismissed. Hence, this petition.
ISSUE:
WON there is a need to enjoin the sheriff from enforcing the writ
of execution as it would cause grave and irreparable damage to Guinto, while
the RCA would not suffer any damage if it would later be proved that indeed
its title is genuine.
RULING: No. In this case, the defendants in the ejectment case possess no
such legal rights that merit the protection of the courts through the writ of
preliminary injunction. The MCTC has already rendered a decision in favor of
the RCA and ordered the defendants therein to vacate the premises. Their
appeal to the RTC was dismissed and the decision has become
final. Evidently, their right to possess the property in question has already
been declared inferior or inexistent in relation to the right of the RCA in the
MCTC decision which has already become final and executory.
To be entitled to the injunctive writ, the applicant must show that there exists
a right to be protected which is directly threatened by an act sought to be
enjoined. Furthermore, there must be a showing that the invasion of the right
is material and substantial and that there is an urgent and paramount
necessity for the writ to prevent serious damage. The applicants right must
be clear and unmistakable. In the absence of a clear legal right, the issuance
of the writ constitutes grave abuse of discretion. Where the applicants right
or title is doubtful or disputed, injunction is not proper. The possibility of
irreparable damage without proof of an actual existing right is not a ground
for injunction.
3. AVA - CBC vs. Spouses Ciriaco, GR 170038, 11 July 2012
[strong arm of equity]
FACTS: Respondents spouses obtained a P1,500,000.00 loan from the
petitioner, secured by a real estate mortgage. When the respondents
defaulted in the payment of their loan, the petitioner extrajudicially
foreclosed the mortgaged property and sold it at public auction where the
petitioner emerged as the highest bidder.
A day before the expiration of the redemption period, the respondents filed a
complaint with the Regional Trial Court (RTC) of La Trinidad, Benguet for

26

Injunction to enjoin the consolidation of title in the petitioners favor,


assailing the redemption price of the foreclosed property.
The respondents sought to amend the complaint to allege further that fraud
attended the consolidation of title in the petitioners favor and to include a
prayer for the issuance of a writ of preliminary injunction and/or TRO to
enjoin the petitioner from disposing of the foreclosed property or taking
possession thereof.
RTC granted the respondents application for the issuance of a writ of
preliminary injunction and/or TRO, since the respondents were entitled to
prove their claim of fraud, and their claim that the interests and penalty
charges imposed by the bank had no factual basis. This was affirmed by the
ca. Hence, this petition.
ISSUE: whether the CA erred in finding that the RTC did not commit any
grave abuse of discretion in granting the respondents application for the
issuance of a writ of preliminary injunction and/or TRO.
RULING: Yes. A preliminary injunction is an order granted at any stage of an
action prior to the judgment or final order requiring a party or a court,
agency or a person to refrain from a particular act or acts. It is the "strong
arm of equity," an extraordinary peremptory remedy that must be used with
extreme caution, affecting as it does the respective rights of the parties.
the RTC abbreviated the proceedings and precipitately granted the
respondents application for injunctive relief. The RTC did not conduct a
hearing for reception of a "sampling" of the parties respective evidence to
give it an idea of the justification for its issuance pending the decision of the
case on the merits.35 It failed to make any factual finding to support the
issuance of the writ of preliminary injunction since it did not conduct any
hearing on the application for the issuance of the writ of preliminary
injunction or TRO. The RTC conducted the March 22, 2000 and April 24, 2000
hearings on the respondents omnibus motion only whether to admit the
amended complaint and whether to hold a hearing on the respondents
application for a writ of preliminary injunction.1wphi1
In fact, a perusal of the August 1, 2000 order shows that the RTC granted the
respondents application for a writ of preliminary injunction based only on
the respondents unsubstantiated allegations.
Clearly, the respondents right to injunctive relief has not been clearly and
unmistakably demonstrated. The respondents have not presented evidence,
testimonial or documentary, other than the bare allegations contained in
their pleadings, to support their claim of fraud that brings about the
irreparable injury sought to be avoided by their application for injunctive
relief. Thus, the RTCs grant of the writ of preliminary injunction in favor of
the respondents, despite the lack of any evidence of a clear and
unmistakable right on their part, constitutes grave abuse of discretion
amounting to lack of jurisdiction.
4. AVA - Dolmar Real Estate Development, GR 172990, 27
February 2008 [Status quo ante]

27

FACTS: spouses Young, respondents, filed with the Regional Trial Court a
complaint for specific performance and damages against petitioners with
TRO and a preliminary injunction ordering petitioners to: (a) cease and desist
from further violating the provisions of the Memorandum of Agreement
(MOA) and the Shareholders' Agreement executed by the parties; (b) comply
with their obligations and duties stipulated in the said agreements by
restoring to respondents-spouses Young their authority to manage the
corporation; (c) abide by the quorum and consensus rules established in the
said agreements governing the exercise of corporate acts and powers; and
(d) desist from holding the meeting of the Board of Directors of the
corporation.
The trial court issued a 72-hour restraining Order preventing the holding of
the Board of Directors' meeting on June 3, 2005.
On October 14, 2005, the trial court issued an Order directing inter alia that:
(1) the status quo ante, meaning the situation of the contending parties prior
to December 13, 2004, must be maintained; (2) there is a need to observe
the four-director quorum and consensus rules; (3) it is necessary to observe
the rule on counter-signature by spouses Young on the checks issued by
Festive Foods International, Inc. and in banking transactions of the
corporation; and (4) the parties shall mutually comply with their respective
duties and responsibilities under the MOA and Shareholders' Agreement.
Petitioners then filed with the Court of Appeals a petition for certiorari under
Rule 65 of the 1997 Rules of Civil Procedure, as amended, assailing
the status quo ante Order for having been issued with grave abuse of
discretion amounting to lack or excess of jurisdiction. The same was denied,
hence, this petition.
ISSUE: WON the issuance of status quo ante was proper
RULING: YES. The sole object of a writ of preliminary injunction, whether
prohibitory or mandatory, is to preserve the status quoand prevent further
injury on the applicant until the merits of the main case can be heard.
The status quo is the last actual peaceable uncontested status which
preceded the controversy. The injunctive writ may only be resorted to by a
litigant for the preservation and protection of his rights or interests during
the pendency of the principal action. The grant or denial of an application for
a writ of preliminary injunction rests upon the sound discretion of the issuing
court.12
For grave abuse of discretion to exist as a valid ground for the nullification of
the grant or denial of the injunctive writ, as contemplated by Rule 65 of the
1997 Rules of Civil Procedure, as amended, there must be capricious and
whimsical exercise of judgment as is equivalent to lack or excess of
jurisdiction, or where the power is exercised in an arbitrary manner by
reason of passion, prejudice or personal hostility, and it must be so
patent and gross as to amount to an evasion of a positive duty or a virtual
refusal to perform a duty enjoined by law.13
Here, the appellate court upheld the trial court's exercise of sound discretion
in issuing the status quo ante Order because it found "no compelling reason
to interfere with the prevailing state of affairs as ordered by the trial court."
It further ruled that petitioners failed to establish the existence of any of the
grounds mentioned in Section 3 of Rule 58 to justify the issuance of the
injunctive writ, namely, that they have a clear and unmistakable right to be

28

entitled to the relief demanded, and that the acts sought to be enjoined
would probably work injustice to them during the pendency of the case.
In fine, the Court of Appeals, in issuing the assailed Resolutions, did not act
with grave abuse of discretion.
5. AVA - Hernandez vs. Napocor, GR 145328, 23 March 2006
[Injunction against government infrastructure project]
FACTS: NAPOCOR began the construction of 29 decagon-shaped steel poles
or towers with a height of 53.4 meters to support overhead high tension
cables in connection with its 230 Kilovolt Sucat-Araneta-Balintawak Power
Transmission Project. Said transmission line passes through the Sergio
Osmea, Sr. Highway (South Superhighway), the perimeter of Fort Bonifacio,
and Dasmarias Village proximate to Tamarind Road, where petitioners
homes are.
Alarmed by the sight of the towering steel towers, petitioners scoured the
internet on the possible adverse effects that such a structure could cause to
their health and well-being. Petitioners got hold of published articles and
studies linking the incidence of a fecund of illnesses to exposure to
electromagnetic fields. These illnesses range from cancer to leukemia.
Thus, petitioners, on 9 March 2000 filed a Complaint for Damages with
Prayer for the Issuance of a Temporary Restraining Order and/or a Writ of
Preliminary Injunction against NAPOCOR.
By order, the trial court extended the restraining order for 18 more days.
Thus, NAPOCOR filed petition assailing said Order on the ground PD 1818
Prohibiting Courts from Issuing Restraining Orders or Preliminary Injunctions
in Cases Involving Infrastructure and Natural Resource Development Projects
of, and Public Utilities Operated by, the Government.
ISSUE: whether the issuance of injunction was proper
RULING: YES. While its sole provision (PD 1818) would appear to encompass
all cases involving the implementation of projects and contracts on
infrastructure, natural resource development and public utilities, this rule,
however, is not absolute as there are actually instances when Presidential
Decree No. 1818 should not find application.
In a spate of cases, this Court declared that although Presidential Decree No.
1818 prohibits any court from issuing injunctions in cases involving
infrastructure projects, the prohibition extends only to the issuance of
injunctions or restraining orders against administrative acts in controversies
involving facts or the exercise of discretion in technical cases. On issues
clearly outside this dimension and involving questions of law, this Court
declared that courts could not be prevented from exercising their power to
restrain or prohibit administrative acts.
In the case at bar, petitioners sought the issuance of a preliminary injunction
on the ground that the NAPOCOR Project impinged on their right to health as
enshrined in Article II, Section 15 of the 1987 Constitution.
Moreover, the issuance by the trial court of a preliminary injunction finds
legal support in Section 3 of Rule 58 of the Rules of Court. Here, there is
adequate evidence on record to justify the conclusion that the project of
NAPOCOR probably imperils the health and safety of the petitioners so as to
justify the issuance by the trial court of a writ of preliminary injunction
6. AVA - Hernandez vs. Albano, et al, GR L-19272, 25 January
1967 [Injunction on CC to afford protection of constitutional rights]

29

HERNANDEZ v. ALBANO ( Injunction on CC to afford protection of


constitutional rights)
FACTS: This case has its roots in a complaint lodged with the Office of the
City Fiscal of Manila, by respondent Delfin Albano, quondam Congressman
for the lone district of Isabela, against petitioner Jaime Hernandez, then the
Secretary of Finance and Presiding Officer of the Monetary Board of the
Central Bank for violation of Article 216 of the Revised Penal Code,
Commonwealth Act 6261 or Republic Act 265.2 The complaint revolves around
petitioner's alleged shareholdings in the University of the East, Bicol Electric
Co., Rural Bank of Nueva Caceres, DMG inc., and University of Nueva Caceres
and the claim that said corporations obtained dollar allocations from the
Central Bank, through the Monetary Board, during petitioner's incumbency
as presiding officer thereof.
To restrain the respondent Fiscals from continuing the investigation,
petitioner went to the Court of First Instance of Manila on certiorari and
prohibition with a prayer for preliminary injunction.
ISSUE: whether the prosecuting arm of the City of Manila should be
restrained from proceeding with the investigation of the charges levelled
against petitioner.
RULING: By statute, the prosecuting officer of the City of Manila and his
assistants are empowered to investigate crimes committed within the city's
territorial jurisdiction. Not a mere privilege, it is the sworn duty of a Fiscal to
conduct an investigation of a criminal charge filed with his office. The power
to investigate postulates the other obligation on the part of the Fiscal to
investigate promptly and file the case of as speedily. Public interest the
protection of society so demands. Agreeably to the foregoing, a rule
now of long standing and frequent application was formulated that
ordinarily criminal prosecution may not be blocked by court prohibition or
injunction
The rule is not an invariable one. Extreme cases may, and actually do, exist
where relief in equity may be availed of to stop a purported enforcement of a
criminal law where it is necessary (a) for the orderly administration of justice;
(b) to prevent the use of the strong arm of the law in an oppressive and
vindictive manner; (c) to avoid multiplicity of actions; 6 (d) to afford adequate
protection to constitutional rights; 7 and (e) in proper cases, because the
statute relied upon is unconstitutional, or was "held invalid."
In the case at bar, the charges are not directed against the corporations. Not
mere ownership of or title to shares is involved. Possession of prohibited
interests is but one of the essential components of the offense. As necessary
an ingredient thereof is the fact that petitioner was head of a department
Secretary of Finance. So also, the fact that while head of department and
chairman of the Monetary Board he allegedly was financially interested in the
corporations aforesaid which so the dollar allocations, and that he had to act
officially, in his dual capacity, not in Camarines Sur, but in Manila where he
held his office.
The respondent Fiscals, indeed justifiably relied or Section 34 in pursuing
their investigation for a violation Section 13.
7. DA - Fortun vs. Labang, et.al. GR L-38383, 27 May 1981,
104 SCRA 607 [Injunction on CC to avoid oppression, multiplicity of
suits and for orderly administration of justice]

30

FACTS
Petitioner Judge was accused by a member of the bar and a former
employee in a letter complaint of a possible irregularity in his claim for
gasoline allowance, originally considered by them sufficing to hold him liable
administratively. 5 of the 9 members of the Board of Diectors of the
provincial chapter of the Integrated Bar endorsed such administrative charge
to the Board of Governors of the IBP.
Such letter-complaint with the affidavit was endorsed to the City Fiscal,
respondent Rufino Labang. The Judge alleged that the City Fiscal failed to
comply with the Rules of Court, which require that complaints against CFI
judges should be filed with the Supreme Court, giving due course to said
complaint by immediately issuing a subpoena. When petitioner was about to
ascend the rostrum, said subpoena was served upon him in a jampacked
courtroom. The Judge contested the legality of the issuance of said subpoena
and asked for the dismissal of the complaint, but he was unsuccessful.
Hence, this petition. The City Fiscal filed a comment without denying certain
allegations indicative of the hostility manifested towards petitioner Judge.
ISSUE
WON the Judges petition for prohibition in a criminal case is meritorious.
RULING
The remedy of prohibition is somewhat sui generis and is one more or less of
legal discretion, and is intended to prevent the oppressive exercise of legal
authority. Such categorical enunciation of one of the most highly valued
principles of equity ought to have cautioned respondent City Fiscal against
acting with "unseemly haste". This is one occasion then that calls for the
exercise of the equitable powers of this Court to repudiate what was clearly
an "oppressive exercise of legal authority". The sad and lamentable
spectacle that this case presents, a judge being subjected to harassment and
humiliation, fortunarely is not typical. At times it has been said, and with
reason, that the rights of an accused person could be emasculated even
rendered nugatory, if a judge and the prosecuting fiscal are on the most
amicable terms. Respondent City Fiscal in this case erred on the other
extreme. He was the first to lend himself to a scheme that could have no
other purpose than to place petitioner-judge in contempt and disrepute. Such
conduct calls for vigorous condemnation.
8. DA - De Leon vs. Mabanag, 70 Phil 202 [Injunction on CC
when there is pre-judicial question which is sub-judice] (Spanish
Text.Hindi Mahanap)
9. DA - Planas vs. Gil, 67 Phil 62 [Injunction on CC when the acts
of the officer are without or in excess of jurisdiction]
FACTS

31

Carmen Planas, member of the municipal board of the City of Manila,


criticized the acts of certain government officials in connection with the
general election for Assemblymen. Jose Vargas, Secretary to the President,
sent a letter ordering her to appear before the Commissioner of Civil Service
for an investigation. The petitioner voiced objection to the authority the CSC
to conduct the investigation. The respondent Commissioner did not desist
from proceeding with the investigation, but announced before adjourning the
hearing that he would decide the question raised as to his jurisdiction. It was
at this state of the investigation that the petitioner filed her original petition
for prohibition with preliminary injunction. The issuance of a writ of
preliminary injunction was denied. The respondent ruled that he had
jurisdiction to proceed with the investigation. Petitioner filed her amended
petition for prohibition. The Solicitor General raised the question of
jurisdiction of the Supreme Court over the acts of the Chief Executive
contending that the court has no jurisdiction to review the orders of the Chief
Executive which are of purely administrative character.
ISSUE
WON the Court has jurisdiction to act on the petition for prohibition filed by
Planas.
RULING
Generally, prohibition as an extraordinary legal writ will not issue to restrain
or control the performance of other than judicial or quasi-judicial functions,
its issuance and enforcement are regulated by statute and in this jurisdiction
it may issue to any inferior tribunal, corporation, board, or person, whether
exercising functions judicial or ministerial, whose acts are without or in
excess of jurisdiction. The terms "judicial" and "ministerial" used with
reference to "functions" in the statute are undoubtedly comprehensive and
include the challenged investigation by the respondent Commissioner of Civil
Service, which investigation if unauthorized and is violated of the
Constitution as contended is a fortiori without or in excess of jurisdiction. The
statutory rule in this jurisdiction is that the writ of prohibition is not confined
exclusively to courts or tribunals to keep them within the limits of their own
jurisdiction and to prevent them from encroaching upon the jurisdiction of
other tribunals, but will issue, in appropriate cases, to an officer or person
whose acts are without or in excess of his authority. Not infrequently, "the
writ is granted, where it is necessary for the orderly administration of justice,
or to prevent the use of the strong arm of the law in an oppressive or
vindictive manner, or a municipality of actions." (Dimayuga and Fajardo vs.
Fernandez [1922], 43 Phil., 304, 307; Aglipay vs. Ruiz [1937], 35 Off. Gaz.,
2164.) This court has jurisdiction over the instant proceedings and will
accordingly proceed to determine the merits of the present controversy.

But in the end...

32

In the present case, however, the petitioner is not denied the right (freedom
of speech), nor is she being investigated because she had exercised that
right. She has a perfect right to criticize the Government, its administration,
its policies and officials, but she may not, on the plea of freedom of speech
and of the press, impute violations of law and the commission of frauds and
thereafter fold her arms and decline to face an investigation conducted to
elicit the truth or falsity of the charges formulated by her. Otherwise, the
guarantee which, in the language of Wendell Phillips, is "at once the
instrument, and the guarantee, and the bright consummate flower of all
liberty" would degenerate into an unbridled license, and render the
Government powerless to act.
The petition is hereby dismissed, with costs against the petitioner.
10.
DA - YU Cong Eng vs. Trinidad, 47 Phil 385, 389
[Injunction on cc when prosecution is by reason of invalid law]
FACTS: On 1921, Act No. 2972 or the Chinese Bookkeeping Law was passed,
regulating that the account books should not be in any other language exc.
English, Spanish or any dialect, otherwise a penalty of fine of not more than
10K or imprisonment for not more than 2 years will be imposed
Fiscal measure intended to facilitate the work of the government agents and
to prevent fraud in the returns of merchants, in conformity with the sales tax
and the income tax. On March 1923, BIR inspected the books of account of
Yu Cong Eng where it was found out that it is not in accordance with Act
2972. A criminal case was filed against Yu Cong Eng before the CFI Manila for
keeping his books of account in Chinese
Yus defense:
Yu Cong Eng et al are Chinese merchants, claiming that
they represent the other 12K filed a petition for prohibition and injunction
against the CIR, questioning the constitutionality of Act No. 2972 or the
Chinese Bookkeeping Law

ISSUE
WON the petition for prohibition is meritorious.

RULLING
As before held by this court, and by the Federal courts, equity has power, to
be exercised in power cases, to restrain criminal prosecutions under
unconstitutional statutes, and to grant preliminary injunctions where
the constitutionality of a given penal law is doubtful and fairly
debatable, and permanent injunctions where the laws are held invalid. The
remedy by injunction to restrain the enforcement of unconstitutional statutes
or abuse of authority under a valid statute, seems to be limited to cases

33

where property rights are threatened with irreparable injury or where


persons would be subjected to a multiplicity of suits
11.
DA - Sangalang vs. People and Avenida, 109 Phil 140
[Injunction on cc in cases of double jeopardy]
An information was filed with the CFA Manila for charging Magdalena
Sangalang, et al, with qualified theft. After the prosecution had rested its
case, all of the accused filed their respective motions for dismissal based on
insufficiency of evidence to establish their guilt. Sustaining the motion filed
by the petitioner Magdalena Sangalang and Bayani de la Cruz, the Hon.
Francisco E. Jose, Judge of the Court of First Instance of Manila, issued an
order dismissing the case as against them with costs de oficio.
More than four years later, the same assistant city fiscal for Manila, who filed
the information in Criminal Case No. 18659 for qualified theft. She asked the
permission of the court to withdraw her plea of "not guilty" for the purpose of
enabling her to file a motion to quash the information filed against her. The
request having been granted, petitioner filed in due from a motion to quash
the information on the ground of double jeopardy. Sustaining the motion to
quash, the court dismissed the case as against her, with one-half of the costs
de oficio. This order was not appealed and has therefore become final and
conclusive.
A third information against herein petitioner was filed in the Court of First
Instance of Manila, spite of the order of dismissal therein which had long
become final and conclusive. Again invoking double jeopardy, the petitioner,
thru counsel, filed a motion to quash the information. The respondent Judge,
however, denied the motion and ordered petitioner's arraignment. Motion for
reconsideration having been also denied, petitioner brought the case to this
Court through the present petition for prohibition.
ISSUE
Whether petition for prohibition is proper in this case.
RULING
Yes. This Court fails to see any plausible reason for the filing of the
information in the present case, considering that the defense of double
jeopardy is patently clear from the facts appearing on record. The law makes
it a legal duty for prosecuting officers to file the charges against whomsoever
the evidence may show to be responsible for an offense, but in the
performance of their functions, they are equally duty bound to exercise a
high degree of prudence and discrimination to the end that no one shall be
twice put in jeopardy for the same offense. In this way, the danger,
annoyance and vexation suffered by the accused after going thru the process
being arrested, subjected to a preliminary investigation, arraigned and
required to plead and stand trial may be avoided.

34

Wherefore, the writ of prohibition is granted and the preliminary injunction


heretofore issued made permanent, with costs de oficio.

12.
SOL -Lopez vs. City Judge, GR L-25795, 29 October
1966, 18 SCRA 616 [Injunction on cc when court has no
jurisdiction]
Synopsis: Lazatin and Terra filed a complaint with Fiscals Office of City of
Angles charging Petitioners, Roy Villasor, as administrator of the intestate
estate, Angelina Lopez and Aurora Villasor with the crime of falsification of a
private document as they made it appear in the contract mentioned
heretofore that Aurora M. Villasor was the "guardian" of the minor George L.
Mejia and that Angelina M. Lopez was similarly the "guardian" of the minor
Alexander L. Mejia, when in truth and in fact they knew that they were not
the guardians of said minors on the date of the execution of the document.
Where the act of falsification the signing of the document and the
coetaneous intent to cause damage was committed and consummated
outside the territorial jurisdiction of the City of Angeles, the City Court of
Angeles has no jurisdiction over the offense charged. Certiorari and
prohibition will issue to restrain a court from further proceeding in a
criminal case where it appears that the offense charged in the
information is not within its jurisdiction.
Facts: Petitioner Roy P. Villasor, as administrator of the intestate estate of
the spouses Manuel M. Mejia and Gloria Lazatin, together with his copetitioners Angelina Mejia Lopez and Aurora Mejia Villasor and other heirs of
said spouses, entered into a contract with respondent Trinidad T. Lazatin for
the development and subdivision of three parcels of land belonging to said
intestate estate. Lazatin transferred his rights under the contract to the Terra
Development Corporation (Terra). An information was filed before the City
Court. Fiscals office continued to act on the motion to dismiss and Cuty
Court denied the motion to quash by the parties charged wherein they
alleged lack of jurisdiction. Hence this present action for certiorari and
prohibition.
Petitioners and other co-heirs filed an action in the CFI Q.C. for the rescission
of said contract for alleged gross and willful violation of its terms.
Lazatin and Terra filed with the Fiscals Office of the City of Angeles a
complaint against petitioners for an alleged violation of the provisions of
Article 172 in relation to those of Article 171, paragraph 4, of the Revised
Penal Code. An information was filed charging petitioners with the crime of
falsification of a private document as they made it appear in the contract
mentioned heretofore that Aurora M. Villasor was the "guardian" of the minor
George L. Mejia and that Angelina M. Lopez was similarly the "guardian" of
the minor Alexander L. Mejia, when in truth and in fact they knew that they
were not the guardians of said minors on the date of the execution of the
document.
Upon conclusion of the reinvestigation by the City Fiscal of Angeles, parties
charged moved for the dismissal of the case mainly on the ground that the
City Court of Angeles had no jurisdiction over the offense because the

35

private document that contained the alleged false statement of fact was
signed by them outside the territorial limits of said city.
in view of the City Fiscals continued failure to act on the motion to dismiss
the case, petitioners filed with the City Court a motion to quash upon the
ground that said court had no jurisdiction over the offense charged. It was
denied and arraignment was reset. Hence this present action
for certiorari and prohibition.
Issue: (1) Whether the City Court of Angeles City has jurisdiction to try and
decide Criminal Case for alleged falsification of a private document by the
parties named in the information? (2) Whether prohibition will issue to
restrain a court from further proceeding in a criminal case?
Ruling:
(1) None.
The crime of falsification of a private document defined and penalized by
Article 304 of the Penal Code (now paragraph 2, Article 172 of the Revised
Penal Code) is consummated when such document is actually falsified with
the intent to prejudice a third person, whether such falsified document is or
is not thereafter put to the illegal use for which it was intended.
It is settled law that the place where the criminal offense was committed not
only determined the venue of the action but is an essential element of
jurisdiction.
Where the act of falsification the signing of the document and the
coetaneous intent to cause damage was committed and
consummated outside the territorial jurisdiction of the City of
Angeles, the City Court of Angeles has no jurisdiction over the
offense charged.
(2) Yes.
As a general rule, a court of equity will not issue a writ of certiorari to annul
an order of a lower court denying a motion to quash, nor issue a writ of
prohibition to prevent said court from proceeding with the case after such
denial, it being the rule that upon such denial the defendant should enter his
plea of not guilty and go to trial and, if convicted, raise on appeal the same
legal questions covered by his motion to quash. In this as well as in other
jurisdictions, however, this is no longer the hard and fast rule.
The writs of certiorari and prohibition, as extraordinary legal remedies, are,
in the ultimate analysis, intended to annul void proceedings; to prevent the
unlawful and oppressive exercise of legal authority and to provide for a fair
and orderly administration of justice. Certiorari and prohibition will issue
to restrain a court from further proceeding in a criminal case where
it appears that the offense charged in the information is not within
its jurisdiction.
Dispositive: The City Court of Angeles City restrained and prohibited from
further proceedings.

36

13.
SOL -Rustia vs. Ocampo, CA-GR 4760, 25 March 1960
[Injunction on cc in cases of persecution; no prosecution] (CA CASE.
HINDI KO MAHANAP)
14.
SOL -Cf. Guingona et.al. vs. City Fiscal GR L-60033, 4
April 1984, 128 SCRA 577 [Injunction on cc when the charge is
manifestly false and motivated by the lust for vengeance]
Facts: From March 1979 to March 1981, Clement David made several
investments withthe National Savings and Loan Association. On March 21,
1981, the bank was placed under receivership by the Bangko Sentral. Upon
Davids request, petitioners Guingona and Martin issued a joint promissory
note, absorbing the obligations of the bank. On July 17, 1981, they divided
the indebtedness. David filed a complaint for estafa and violation of Central
Bank Circular No. 364 and related regulations regarding foreign exchange
transactions before the Office of the City Fiscal of Manila. At the inception of
the preliminary investigation before respondent Lota, petitioners moved to
dismiss the charges against them for lack of jurisdiction because Davids
claims allegedly comprised a purely civil obligation which was itself novated.
Fiscal Lota denied the motion to dismiss. But, after the presentation of
Davids principal witness, Petitioners filed the herein petition for
prohibitionand injunction with a prayer for immediate issuance of restraining
order and/or writ of preliminary injunction to enjoin the public respondents to
proceed with the preliminary investigation on the ground that the petitioners
obligation is civil in nature.
Issue: (1) Whether public respondents acted without jurisdiction when they
investigated the charges? (2) Whether writ of injunction can restrain the
proceedings in Criminal Case?
Ruling:
(1) None.
It must be pointed out that when private respondent David invested his
money on time and savings deposits with the aforesaid bank, the contract
that was perfected was a contract of simple loan or mutuum and not a
contract of deposit. While the Bank has the obligation to return the amount
deposited, it has, however, no obligation to return or deliver the same money
that was deposited. And, the failure of the Bank to return the amount
deposited will not constitute estafa through misappropriation
punishable under Article 315, par. 1(b) of the Revised Penal Code,
but it will only give rise to civil liability over which the public
respondents have no jurisdiction
Even granting that the failure of the bank to pay the time and savings
deposits of private respondent David would constitute estafa, nevertheless
any incipient criminal liability was deemed avoided, because when the
aforesaid bank was placed under receivership by the Central Bank,
petitioners Guingona and Martin assumed the obligation of the bank to
private respondent David, thereby resulting in the novation of the original
contractual obligation arising from deposit into a contract of loan and

37

converting the original trust relation between the bank and private
respondent David into an ordinary debtor-creditor relation between the
petitioners and private Respondent. Consequently, the failure of the bank or
petitioners Guingona and Martin to pay the deposits of private respondent
would not constitute a breach of trust but would merely be a failure to pay
the obligation as a debtor. Moreover, while it is true that novation does not
extinguish criminal liability, it may however, prevent the rise of criminal
liability as long as it occurs prior to the filing of the criminal information in
court. Petitioners contention that they did not engage in prohibited dollar
transaction is meritorious as Davids dollar draft was first converted to pesos
before the money was accepted as bank deposit. It is safe to assume that
the U.S. dollars were converted first into Philippine pesos before
they were accepted and deposited in Nation Savings and Loan
Association, because the bank is presumed to have followed the
ordinary course of the business which is to accept deposits in
Philippine currency only.
(2) Yes.
The general rule is that ordinarily, criminal prosecution may not be
blocked by court prohibition or injunction. Exceptions, however, are
allowed in the following instances:
1. for the orderly administration of justice;
2. to prevent the use of the strong arm of the law in an oppressive
and vindictive manner;
3. to avoid multiplicity of actions;
4. to afford adequate protection to constitutional rights;
5. in proper cases, because the statute relied upon is
unconstitutional or was held invalid
The writs of certiorari and prohibition, as extraordinary legal remedies, are in
the ultimate analysis, intended to annul void proceedings; to prevent the
unlawful and oppressive exercise of legal authority and to provide for a fair
and orderly administration of justice. Thus, We took cognizance of a petition
for certiorari and prohibition although the accused in the case could have
appealed in due time from the order complained of, our action in the
premises being based on the public welfare and the advancement of
public policy. We also admitted a petition to restrain the prosecution of
certain chiropractors although, if convicted, they could have appealed. We
gave due course to their petition for the orderly administration of justice and
to avoid possible oppression by the strong arm of the law. The petition
for certiorari challenging the trial courts action admitting an amended
information was sustained despite the availability of appeal at the proper
time
Dispositive: Petition granted. TRO made permanent.
15.
SOL -Salonga vs. Pano et.al., GR L-59524, 18
February 1985, 134 SCRA 438 [Injunction in cc when there is
clearly no prima facie case and the Motion to quash was denied]
(patawad. Mahaba talaga)

38

Synopsis: The petitioner invokes the constitutionally protected right to


life and liberty guaranteed by the due process clause, alleging that no prima
facie case has been established to warrant the filing of an information for
subversion against him. Petitioner asks this Court to prohibit and prevent the
respondents from using the iron arm of the law to harass, oppress, and
persecute him, a member of the democratic opposition in the Philippines.
Jovito Salonga was charged with the violation of the Revised Anti-Subversion
Act after he was implicated, along with other 39 accused, by Victor Lovely in
the series of bombings in Metro Manila. He was tagged by Lovely in his
testimony as the leader of subversive organizations for two reasons (1)
because his house was used as a contact point; and (2) because of his
remarks during the party of Raul Daza in Los Angeles. He allegedly opined
about the likelihood of a violent struggle in the Philippines if reforms are
not instituted immediately by then President Marcos. When arrested, he
was not informed of the nature of the charges against him. Neither was
counsel allowed to talk to him until this Court intervened through the
issuance of an order directing that his lawyers be permitted to visit him. Only
after four months of detention was the petitioner informed for the first time
of the nature of the charges against him. After the preliminary investigation,
the petitioner moved to dismiss the complaint but the same was denied.
Subsequently, the respondent judge issued a resolution ordering the filing of
an information after finding that a prima facie case had been established
against the forty persons accused .Hence, this petition questioning the
resolution of the judge. The denial of a motion to quash or to dismiss, being
interlocutory in character, cannot be questioned by certiorari. Under
certain situations, recourse to the extraordinary legal remedies
of certiorari, prohibition or mandamus to question the denial of a
motion to quash is considered proper in the interest of more
enlightened and substantial justice. However petition was dismissed as
they have taken the initiative of dropping the charges against the petitioner.
Facts: The petitioner invokes the constitutionally protected right to life and
liberty guaranteed by the due process clause, alleging that no prima facie
case has been established to warrant the filing of an information for
subversion against him. Petitioner asks the Court to prohibit and prevent the
respondents from using the iron arm of the law to harass, oppress, and
persecute him, a member of the democratic opposition in the Philippines.
The case roots backs to the rash of bombings which occurred in the Metro
Manila area in the months of August, September and October of 1980. Victor
Burns Lovely, Jr, one of the victims of the bombing, implicated petitioner
Salonga as one of those responsible.
A rash of bombings occurred in the Metro Manila area in the months of
August, September and October of 1980. On September 1980, one Victor
Burns Lovely, Jr., a Philippine-born American citizen from Los Angeles,
California, almost killed himself and injured his younger brother, Romeo, as a
result of the explosion of a small bomb inside his room at the YMCA building
in Manila. Found in Lovely's possession by police and military authorities
were several pictures taken sometime in May 1980 at the birthday party of
former Congressman Raul Daza held at the latter's residence in a Los
Angeles suburb. Jovito R. Salonga and his wife were among those whose
likenesses appeared in the group pictures together with other guests,
including Lovely. As a result of the serious injuries he suffered, Lovely was

39

brought by military and police authorities to the AFP Medical Center (V. Luna
Hospital)where he was place in the custody and detention of Col. Roman P.
Madella, under the over-all direction of General Fabian Ver, head of the
National Intelligence and Security Authority (NISA). Shortly afterwards, Mr.
Lovely and his two brothers, Romeo and Baltazar Lovely where charged with
subversion, illegal possession of explosives, and damage to property. Bombs
once again exploded in Metro Manila including one which resulted in the
death of an American lady who was shopping at Rustan's Supermarket in
Makati and others which caused injuries to a number of persons. The
President's anniversary television radio press conference was broadcast. The
younger brother of Victor Lovely, Romeo, was presented during the
conference. The next day, newspapers came out with almost identical
headlines stating in effect that Salonga had been linked to the various
bombings in Metro Manila. Meanwhile, Lovely was taken out of the hospital's
intensive care unit and transferred to the office of Col. Madella where he was
held incommunicado for some time. More bombs were reported to have
exploded at 3 big hotels in Metro Manila. The bombs injured 9 people. A
meeting of the General Military Council was called for 6 October 1980.
Minutes after the President had finished delivering his speech before the
International Conference of the American Society of Travel Agents at the
Philippine International Convention Center, as mall bomb exploded. Within
the next 24 hours, arrest, search, and seizure orders (ASSOs) were issued
against persons, including Salonga, who were apparently implicated by Victor
Lovely in the series of bombings in Metro Manila. Elements of the military
went to the hospital room of Salonga at the Manila Medical Center where he
was confined due to his recurrent and chronic ailment of bronchial asthma
and placed him under arrest. The arresting officer showed Salonga the ASSO
form which however did not specify the charge or charges against him.
On December 10, 1980, the Judge Advocate General sent the petitioner a
Notice of Preliminary Investigation in People v. Benigno Aquino, Jr., et al .
(which included petitioner as a co-accused), stating that the preliminary
investigation of the above-entitled case has been set at 2:30 oclock p.m. on
December 12, 1980 and that petitioner was given ten (10) days from receipt
of the charge sheet and the supporting evidence within which to file his
counter-evidence. The petitioner states that up to the time martial law was
lifted on January 17, 1981, and despite assurance to the contrary, he has not
received any copies of the charges against him nor any copies of the socalled supporting evidence.
The counsel for Salonga was furnished a copy of an amended complaint
signed by Gen. Prospero Olivas, dated 12 March 1981, charging Salonga,
along with 39 other accused with the violation of RA 1700, as amended by
PD 885, BP 31 and PD 1736. On 15 October 1981, the counsel for Salonga
filed a motion to dismiss the charges against Salonga for failure of the
prosecution to establish a prima facie case against him. On 2 December
1981, Judge Ernani Cruz Pano (Presiding Judge of the Court of First Instance
of Rizal, Branch XVIII, Quezon City) denied the motion. On 4 January 1982, he
(Pano) issued a resolution ordering the filing of an information for violation of
the Revised Anti-Subversion Act, as amended, against 40 people, including
Salonga. The resolutions of the said judge dated 2 December 1981 and 4
January 1982 are the subject of the present petition for certiorari. It is the
contention of Salonga that no prima facie case has been established by the

40

prosecution to justify the filing of an information against him. He states that


to sanction his further prosecution despite the lack of evidence against him
would be to admit that no rule of law exists in the Philippines today.
Issue: Whether the denial of a motion to quash or to dismiss, being
interlocutory in character, cannot be questioned by certiorari?
Ruling: Yes. An order denying a motion to quash or to dismiss, while
interlocutory can be the subject of a petition for certiorari in the interest of
substantial justice.
The respondents call for adherence to the consistent rule that the denial of a
motion to quash or to dismiss, being interlocutory in character, cannot be
questioned by certiorari; that since the question of dismissal will again be
considered by the court when it decides the case, the movant has a plain,
speedy and adequate remedy in the ordinary course of law; and that public
interest dictates that criminal prosecutions should not be enjoined.
The general rule is correctly stated. However, the respondents fail to
appreciate or take into account certain exceptions when a petition
for certiorari is clearly warranted. The case at bar is one such exception.
Respondents advert to the rule that when a motion to quash filed by an
accused in a criminal case shall be denied, the remedy of the accusedmovant is not to file a petition for certiorari or mandamus or prohibition, the
proper recourse being to go to trial, without prejudice to his right to reiterate
the grounds invoked in his motion to quash if an adverse judgment is
rendered against him, in the appeal that he may take therefrom in the
manner authorized by law.
There is no disputing the validity and wisdom of the rule invoked by
the respondents. However, it is also recognized that, under certain
situations,
recourse
to
the
extraordinary
legal
remedies
of certiorari, prohibition or mandamus to question the denial of a
motion to quash is considered proper in the interest of more
enlightened and substantial justice.
Infinitely more important than conventional adherence to general rules of
criminal procedure is respect for the citizens right to be free not only from
arbitrary arrest and punishment but also from unwarranted and vexatious
prosecution. The integrity of a democratic society is corrupted if a person is
carelessly included in the trial of around forty persons when on the very face
of the record no evidence linking him to the alleged conspiracy exists.
In this case, the respondents agree with our earlier finding that the
prosecution evidence miserably fails to establish a prima facie case against
the petitioner, either as a co-conspirator of a destabilization plan to
overthrow the government or as an officer or leader of any subversive
organization. They have taken the initiative of dropping the charges against
the petitioner. We reiterate the rule, however, that this Court will not validate
the filing of an information based on the kind of evidence against the
petitioner found in the records.

41

Dispositive: Petition dismissed for being moot and academic.


16.
SOL -People vs. Joseph Grey, GR 180109, 26 July
2010 [ Injunction by SC to prevent unlawful arrest of petitioner]
Facts: An information for Murder was filed against respondent, his son
respondent Francis Grey; and two others for the death of Rolando Diocton, an
employee of the San Jorge municipal government, before the RTC of
Gandara, Samar. It was accompanied by other supporting documents and a
motion for the issuance of a warrant of arrest. Meanwhile, Presiding Judge
Rosario Bandal denied the motion for the issuance of a warrant of arrest. She
found the prosecutions evidence to be insufficient to link respondents to the
crime charged. She directed the prosecution to present, within five days,
additional evidence. Later, the judge inhibited. Thereafter, the venue was
changed and Judge Navidad continued the proceedings of the case.
Respondents filed a petition for certiorari seeking TRO and preliminary
injunction alleging that the filing of the murder charge are based on perjured
statements since Joseph Grey announced his candidacy for the Congressional
election. The CA held that Judge Navidad failed to abide with the
constitutional mandate of personally examining the existence of probable
cause. Thus this petition.
Issue: Whether injunction will not lie to enjoin a criminal prosecution?
Ruling: The CA likewise overlooked a fundamental rule we follow in this
jurisdiction. It is an established doctrine that injunction will not lie to enjoin a
criminal prosecution because public interest requires that criminal acts be
immediately investigated and prosecuted for the protection of society.
However, it is also true that various decisions of this Court have laid down
exceptions
to
this
rule,
among
which
are:
a. To afford adequate protection to the constitutional rights of the accused;
b. When necessary for the orderly administration of justice or to avoid
oppression or multiplicity of actions;
c. When there is a pre-judicial question which is subjudice;
d. When the acts of the officer are without or in excess of authority;
e. Where the prosecution is under an invalid law, ordinance or regulation;
f. When double jeopardy is clearly apparent;
g. Where the court has no jurisdiction over the offense;
h. Where there is a case of persecution rather than prosecution;
i. Where the charges are manifestly false and motivated by the lust for
vengeance;
j. When there is clearly no prima facie case against the accused and a
motion to quash on that ground has been denied;
[k.] Preliminary injunction has been issued by the Supreme Court to prevent
the threatened unlawful arrest of petitioners;
Respondents insisted that political persecution by their political rivals was
the underlying reason for the filing of criminal charges against them, and
used this as basis for asking the appellate court to stop the proceedings in
the
trial
court.
Indeed, this Court has recognized that, in certain instances, political

42

persecution or political motives may have impelled the filing of criminal


charges against certain political rivals. But this Court has also ruled that
any allegation that the filing of the charges is politically motivated
cannot justify the prohibition of a criminal prosecution if there is
otherwise evidence to support the charges.
To establish political harassment, respondents must prove that the public
prosecutor, not just the private complainant, acted in bad faith in
prosecuting the case or has lent himself to a scheme that could have no
other purpose than to place respondents in contempt and disrepute. It must
be shown that the complainant possesses the power and the influence to
control the prosecution of cases.
Likewise, the allegation that the filing of the complaint was politically
motivated does not serve to justify the nullification of the informations where
the existence of such motive has not been sufficiently established nor
substantial evidence presented in support thereof.
Other than their own self-serving claims, respondents have adduced
absolutely no proof of the perceived political persecution being waged by
their rivals.
Dispositive: CAs decision reversed and set aside. Permanent Injunction
dissolved. RTCs order reinstated and directed RTC to proceed with the
hearing and decide the Criminal Case.
17.
CAVS - Cereno vs. Dictado, GR L-81550, 15 April
1998 [No injunction against assumption of duty of duly proclaimed
elected mayor]
FACTS: Petitioner Cesar A. Cereno and private respondent Ramon B. Asis
were mayoralty candidates for the municipality of Vinzons, Camarines Norte
in the local election of January 18, 1988, who were voted for the said office.
On January 20, 1988, petitioner was proclaimed by the Municipal Board of
Canvassers as the duly elected mayor of said town. He took his oath of office
on January 22, 1988 before the Second Assistant Provincial Fiscal of
Camarines Norte.
Meanwhile, on January 20, 1988, respondent Asis filed an election protest but
was dismissed.
On January 25, 1988, another election protest was filed by respondent Asis
before the same court but was assigned to Branch 39 thereof presided by
respondent Hon. Judge Luis D. Dictado, docketed as Civil Case No. 5551,
seeking a judicial recount of the votes cast in two precints. On January 28,
1988, respondent judge issued an order that petitioner desist or refrain from
taking his oath of office on February 2, 1988 or any date thereafter until
further orders of the court. Petitioner filed a manifestation on January 29,
1988 informing the court that he had already taken his oath of office on
January 22, 1988 so that the restraining order has become moot and
academic. Due to the absence of the respondent judge and considering the
urgency of the matter, the pairing judge Hon. Sancho Dames II was
requested by petitioner to act on his manifestation, and thus, on February 1,
1988, he issued an order that the restraining order of the court has become
moot and academic as petitioner had already taken his oath of office.

43

On February 2, 1988, as petitioner took steps to assume the office of Mayor


of Vinzons, Camarines Norte, he was served a copy of the supplemental
order of the respondent judge of February 2, 1988 ordering him to refrain
from assuming office or if he has already assumed office to stop,
desist and refrain from continuing to act as Mayor of Vinzons,
Camarines Norte until further orders from the court. Petitioner filed
his ex-parte urgent motion to set aside the supplemental order but the
respondent judge has not acted on the same date. Hence this petition.
ISSUE: Whether or not the decision was valid?
RULING: NO.
Section 5 of Republic Act No. 6636 provides as follows:
Section 5. Term. Local officials duly elected shall assume office
at noon on the second day of February 1988 and shall serve until
noon of June 30, 1992.
If no candidate has been elected and qualified to assume office
on the aforementioned date and time, the officer-in-charge shall
continue to hold office until the duly elected officer has qualified.
This provision of the law clearly states that the duly elected local officials
shall assume office on February 2, 1988. Petitioner was proclaimed as the
duly elected mayor of Vinzons, Camarines Norte on January 20, 1988 and
took his oath of office on January 22, 1988 before the filing of the election
protest on January 25, 1988 by private respondent Ramon B. Asis. As he
appears to be the duly elected mayor of the aforesaid town, the law
mandates that he assume office on February 2, 1988. The respondent judge
committed a grave abuse of discretion, and acted in excess of his jurisdiction
in ordering petitioner to desist and refrain from assuming office on the said
date against the clear provisions of Section 5 of Rep. Act No. 6636.

The pendency of the election protest filed by


respondent Asis is not sufficient basis to
enjoin petitioner from assuming office as
required of him by law. The efficiency of
public administration should not be impaired.
1
Until and unless the election protest is
decided against the petitioner, he has a
lawful right to assume and perform the
duties of Mayor of Vinzons, Camarines Norte.
18.
CAVS - Spouses Democrito and Oliva Lago vs. Judeg
Godfredo Abul, Jr, AM No. RTJ-10-2255, 8 February 2012 [72
hour TRO]

FACTS: Complainants were the defendants in


a civil action for Preliminary Injunction,
Easement of Road Right of Way, and
Attorneys Fees, with prayer for a Temporary
Restraining Order (TRO), filed on July 2, 2009
by Christina M. Obico (Obico) before the RTC,

44

Gingoog City, Misamis Oriental, and docketed


as Civil Case No. 2009-905. The action was
spawned
by
the
alleged
threats
of
complainants to close the access road
leading to Obicos property, where the latters
milkfish (bangus) farm is located. Obico
claimed that, if the access road leading to
her property was closed, she would be
prevented from harvesting her milkfish,
causing massive fish kills, and leading to
heavy
financial
losses
on
her
part.
Complainants assert that the civil complaint
was never raffled, and that no notice of raffle
was ever served upon them, yet the case
went
directly
to
Branch
43,
where
respondent judge is the acting presiding
judge. He is also the acting executive judge
of RTC, Gingoog City. Complainants claim that
this is violative of Section 4(c), Rule 58 of the
Rules of Court.
On July 7, 2009, respondent judge issued an
Order directing the issuance of a TRO
effective seventy two (72) hours from date of
issue, without requiring Obico to put up a
bond. Complainants allege that at that time,
they were not yet in receipt of the summons
and copy of the complaint, as well as Obicos
affidavit and bond. Complainants claim that
this is violative of Section 4(c) and (d) of Rule
58 of the Rules of Court.On July 14, 2009,
respondent judge issued an Order extending
the 72-hour TRO, which had already expired,
for another period provided that the total
period should not exceed twenty days. Again,
respondent judge failed to require Obico to
put up a bond even as complainants assert
45

that it is already of judicial notice that a TRO


under the amended new rules has been
elevated to the level of an injunction.
In his Resolution dated August 11, 2009,
respondent judge ordered, among others, the
issuance of the writ of preliminary injunction
conditioned upon the application of a bond
by Obico in the amount of P100,000.00.
Complainants argue, however, that said
directive was violative of Section 5, Rule 58
of the Rules of Court since they were not
required to show cause, at a specific time
and place, why the injunction should not be
granted.Due to these acts of respondent
judge, complainants filed a motion for
inhibition from further hearing the case,
since they perceive that respondent judge
was bereft of the cold neutrality of an
impartial judge. The motion was denied by
respondent judge in his Resolutiondated
October
28,
2009.
Complainants
thus
consider respondent judges non-inhibition as
violative of the Code of Judicial Conduct, as it
denied
them
due
process
and
equal
protection of the law.
ISSUE: Whether or not the acts of the Judge
was valid?
RULING: NO.
Culled
from
the
foregoing
provisions,
particularly with respect to the second
paragraph of Section 5, Rule 58 of the Rules
of Court, as amended, it is clear that, on the
matter of the issuance of an ex parte 72-hour
TRO, an executive judge of a multiple-sala
court (applicable to respondent judge), or the

46

presiding judge of a single-sala court, is


empowered to issue the same in matters of
extreme emergency, in order to prevent
grave injustice and irreparable injury to the
applicant. However, it is also an unequivocal
provision that, after the issuance of the 72hour TRO, the executive judge of a multiplesala court is bound to comply with Section
4(c) of the same rule with respect to the
service of summons and the documents to be
served therewith.
The records of this case clearly show that
respondent judge failed to cause the raffle of
Civil Case No. 2009-905, since RTC, Gingoog
City, is a multiple-sala court, or to cause the
notification and service of summons to
complainants after he issued the 72-hour
TRO. Respondent judges July 7, 2009 Order
was explicit when the civil case was set for
summary
hearing
on
July
14,
2009,
purportedly to determine whether or not the
TRO issued could be extended for another
period. Thus, it is manifest that respondent
judge had directly assumed jurisdiction over
the civil action and all together disregarded
the mandatory requirements of Section 4(c),
Rule 58, relative to the raffle in the presence
of the parties, and service of summons. This
is gross error. Even assuming that there was
a valid raffle to RTC, Branch 43, Gingoog City,
where respondent judge acts as the presiding
magistrate, the supposed extreme urgency of
the issuance of the 72-hour TRO was belied
by his setting of the required summary
hearing for the determination of the
necessity of extending the 72-hour TRO to 20
47

days, one week after the issuance thereof.


Indeed, Section 5, Rule 58 is explicit that
such summary hearing must be conducted
within
the
said
72-hour
period.
Notwithstanding
the
explanation
of
respondent judge that he could not set the
required
summary
hearing
except
on
Tuesdays and Wednesdays, it should be
noted that July 7, 2009, the date of the
issuance of the 72-hour TRO, was a Tuesday,
yet respondent judge could have set the
summary hearing on July 8, 2009, a
Wednesday. He failed to do so on the
mistaken notion that, aside from his alleged
hectic schedule, he could, at any time,
extend the 72-hour TRO for another period as
long as the total period did not exceed 20
days.
What is more appalling is that respondent
judge extended the 72-hour TRO, which had
already and obviously expired, into a full 20day TRO. An already expired TRO can no
longer be extended. Respondent judge
should have known that the TRO he issued in
his capacity as an acting executive judge was
valid for only 72 hours. Beyond such time,
the TRO automatically expires, unless, before
the expiration of the said period, he,
supposedly in his capacity as presiding judge
to whom the case was raffled, conducted the
required summary hearing in order to extend
the TROs lifetime. Indubitably, a 72-hour
TRO, issued by an executive judge, is a
separate and distinct TRO which can stand on
its own, regardless of whether it is
eventually extended or not. It is not, as
48

respondent judge attempts to impress upon


us, a mere part of the 20-day TRO issued by a
presiding judge to whom the case is raffled.
Moreover,
respondent
judge
committed
another blunder when he ordered the
issuance of a writ of preliminary injunction
without the required hearing and without
prior notice to the defendants, herein
complainants. The records plainly disclose
that the only hearing conducted prior to the
August 11, 2009 Resolution granting the
preliminary injunction was the July 14, 2009
summary hearing for the extension of the 72hour TRO. This could be gathered from the
August
11,
2009
Resolution,
wherein
respondent judge declared
Again, Rule 58, as amended, mandates a full
and
comprehensive
hearing
for
the
determination of the propriety of the
issuance of a writ of preliminary injunction,
separate from the summary hearing for the
extension
of
the
72-hour
TRO.
The
preliminary injunction prayed for by the
applicant can only be heard after the trial
court has ordered the issuance of the usual
20-day TRO. Within that period of 20 days,
the court shall order the party sought to be
enjoined to show cause at a specified time
and place why the injunction should not be
granted. During that same period, the court
shall also determine the propriety of granting
the preliminary injunction and then issue the
corresponding order to that effect. In the
case of respondent judge, he gravely failed
to comply with what the rule requires, i.e., to

49

give
complainants
the
opportunity
to
comment or object, through a full-blown
hearing, to the writ of injunction prayed for.
Instead, respondent judge railroaded the
entire process by treating the summary
hearing for the extension of the TRO as the
very same hearing required for the issuance
of the writ of preliminary injunction.
Verily, the absence of the hearing required by
the Rules of Court is downright reprehensible
and, thus, should not be countenanced. The
requirement of a hearing is so fundamental
that failure to comply with it not only
amounts to gross ignorance of rules and
procedure, but also to an outright denial of
due process to the party denied such a
hearing. Undoubtedly, the acts and omissions
of respondent judge warrant sanction from
this Court. In the absence of fraud,
dishonesty, or corruption, the acts of a judge
in his judicial capacity are not subject to
disciplinary action. However, the assailed
judicial acts must not be in gross violation of
clearly established law or procedure, which
every judge must be familiar with. Every
magistrate presiding over a court of law must
have the basic rules at the palm of his hands
and maintain professional competence at all
times.
C. Receivership [Rule 59]
1. CAVS - Teal Motor Company vs. RTC Manila, 51 Phil 563
[Receiver; not representative or agent of a party]
FACTS:
The original complaint in which the receiver was appointed alleges that the
Teal Motor Company, Inc., is a domestic corporation, 8,000 shares have been
issued 3,999 of which are in the name of Bachrach and one in his nominee,
and 3,998 in the name of Teal and two in the name of his nominees.

50

That since that date the corporation has been under the control of Teal, who
has "so managed and conducted the business of the corporation, as to
dissipate and misapply its assets and otherwise has neglected the
management of its business and affairs, that said defendant corporation, Teal
Motor Co., Inc., is in imminent danger of insolvency, and the dissipation and
loss of its assets and business."
That by virtue of the agreement, the promissory notes transferred to the
defendant Teal Motor Co., Inc., by the defendant Teal, amounting to
P168,870.81 in part of his original subscription to the capital stock, were
thereafter discounted by the company to the plaintiff, and that from and out
of the amount of said notes, at least P45,000 was not paid by the original
makers at their maturity, by reason of which Bachrach made a demand upon
the defendant Teal and the company as endorsers, and that Teal, taking
advantage of his authority as President of the company, caused
checks to be drawn on the account of the company and payments
thereof to be made to Bachrach, who in turn delivered the notes to
the company "where most of them still remain unpaid and
uncollected."
That Bachrach made a demand upon the defendant Teal to make good to
the defendant company the amount of the notes, for he was personally liable
to the company. That notwithstanding such repeated demands "the
defendant Teal has failed and refused and still fails and refuses to make good
said notes, or any part thereof, to the defendant Teal Motor Co., Inc., to the
injury and prejudice of the latter, and, without the relief hereinafter prayed
for, it will be impossible for the Teal Motor Co., Inc., to enforce against E. H.
Teal its rights in the premises, to the injury, damage and prejudice of said
company and of its stockholders."
That as a result of an inventory of the assets of the corporation made as July
31, 1927, it appears that the original inventory was groossly and fraudulently
made by false inventory values, so that there was a resulting loss during that
period of P248,394.03.
Further allegations are also made as to the sale of two motor-buses
amounting to P16,918.60. It is then alleged "that the defendant, E. H. Teal,
taking advantage of his position as the president of the defendant, Teal
Motor Co., Inc., has secretly and fraudulently, as aforesaid, otherwise
conducted the business of the defendant, Teal Motor Co., Inc., to his own
benefit and to the great damage and prejudice of this plaintiff as a
stockholder and creditor thereof, and the remaining property and funds of
the defendant, Teal Motor Co., Inc., is in danger of being lost or materially
injured unless a receiver shall be appointed to guard and preserve the same
until this can be finally disposed of; and that in any case the appointment of
a receiver is the most convenient and feasible means of preserving and
administering the property of said defendant, Teal Motor Co., Inc., during the
pendency thereof." "For the above reasons, plaintiff respectfully alleges that
in order to obtain an application of the property and interests in property of
the defendant, Teal Motor Co., Inc., to and upon the claims of this plaintiff
and other creditors of said defendant corporation, and in order to prevent the
depreciation of said property and the loss and destruction of the value
thereof as a going concern, it is necessary that this court shall appoint a
receiver for the purpose of taking possession of and conducting the business
of the defendant, Teal Motor Co., Inc., and to sell said property and business,
or so much thereof as may be necessary to satisfy the debts and claims
against the same, and that under the said circumstances the appointment of

51

such a receiver by this court, for the protection of the value of said property
and of the interests of all concern, is an imperative necessity.
Wherefore it is prayed
(1) That a receiver be appointed, etc.
FOR FACTS PURPOSES SUMRY : (((It will be noted that the original suit in
which the receiver was appointed was not brought to dissolve the
corporation or to terminate its existence. It is there specifically alleged that
to obtain an application of the property and interests of the defendant
corporation to and upon the claims of the plaintiff and other creditors, and to
prevent the depreciation of its property "and the loss and destruction of the
value thereof as a going concern" it is necessary that a receiver be
appointed to sell its property and business, or so much thereof as may be
necessary to satisfy the debts and claims against the same, and that the
appointment of a receiver "for the protection of the value of said property
and of the interests of all concerned, is an imperative necessity." In other
words, the plaintiff prays for the appointment of a receiver pendente lite to
protect and preserve the assets of the corporation pending the litigation, and
in the end to have them applied to the satisfaction of plaintiff's claim and
those of other creditors, and it was upon such grounds and for such
purposes, that the plaintiff asked the lower court to appoint a receiver. )))
Hirap e
ISSUE: Whether or not a receiver must be appointed by the court?
RULING: NO.
High on Receivers is recognized as standard authority in the United States, in
particular, and in the fourth edition, on page 12, paragraph 7, author says:
Discretionary character of the jurisdiction; discretion defined . The
appointment of a receiver pendente lite, like the granting of an
interlocutory injunction, is to a considerable extent a matter resting in
the discretion of the court to which the application is made, to be
governed by a consideration of the entire circumstances of the case.
And since the appointment of a receiver is thus a discretionary
measure, the action of the lower court in appointing or denying a
receiver pendente lite will not be disturbed upon appeals unless there
been a clear abuse. But the discretion thus vested in the chancellor in
the matter of appointing receivers pendente lite is not an absolute or
arbitrary one but it is a sound judicial discretion in view of all the
circumstances of the case, to be exercised for the promotion of justice
where no other adequate remedy exists.
In view of the allegations made in the original suit and of the hearing that
was had in this court on the first petition for a writ of certiorari, was cannot
say, as a matter of law, that the lower court abused its discretion in the
appointment of a receiver.
Section 174 of the Code of Civil Procedure provides that a receiver may be
appointed:
1. When a corporation has been dissolved or is insolvent, or is in
imminent danger of insolvency, or has forfeited its corporate rights;
2. Where it is made to appear by the complaint or answer, and by such
other proof as the judge may require, that the party making the
application for the appointment of receiver has an interest in the
property of fund which is the subject of the action and it is shown that
the property or fund is in danger of being lost, removed, or materially
injured unless a receiver shall be appointed to guard and preserve it.

52

The original complaint in this case specifically alleges that the defendant
corporation "is insolvent, or is in imminent danger of insolvency," and that
Bachrach "has an interest in the property or fund, which is the subject of the
action, and it is shown that the property or fund is in danger of being lost,
removed or materially injured, unless a receiver shall be appointed to guard
and preserve it." Hence, under such allegations, it must follow that the court
had jurisdiction to appoint a receiver, which was a matter largely in its
discretion, and in the absence of an abuse of discretion, the order must be
sustained. But the question of the illegal, improper and excessive powers
vested in the receiver is another and a very different question.
As stated, the authority for the appointment is found in section 174 of the
Code of Civil Procedure.
Section 175 says:
General Powers of a Receiver. The receiver shall have, under the
control of the court in which the action is pending, power to bring and
defend actions in his own name, as receiver; to take and keep
possession of the property in controversy; to receive rent, to collect
debts due to himself as receiver, or to the fund, property, estate,
person, or corporation of which he is receiver; to compound for and
compromise the same; to make transfers; and generally to do such
acts respecting the property as the court may authorize.
The sole purpose and intent of having a receiver appointed was to protect
and preserve the property pending the litigation arising of the original suit,
and to prevent its alleged fraudulent disposal, so that in the end the assets
of the corporation would be kept intact and applied to the payment of the
amount of any judgment which the plaintiff might recover and to the claims
of any other creditors of the corporation. It was never the purpose or intent
that the receiver should be vested with all of the powers and duties of a
permanent receiver, or that he should have any other powers and duties that
those specified and defined in section 175 of the Code of Civil Procedure. The
appointment of a receiver did not dissolve the corporation, and it does not in
the least interfere with the exercise of its corporate rights. There is no legal
principle by which the receiver in the original suit, in which he was
appointed, could claim or assert the right to appear and legally represent
either litigant. Suffice it to say that the lower court eventually denied that
the right to the receiver.
High on Receivers, page 2, section 1, says:
A receiver defined, distinguished from the trustee . A receiver is an
indifferent person between the parties to a cause, appointed by the
court to receive and preserve the property or fund in litigation
pendente lite, when it does not seem reasonable to the court that
either party should hold it. He is not the agent or representative of
either party to the action, but is uniformly regarded as an officer of the
court, exercising his functions in the interest of neither plaintiff nor
defendant, but for the common benefit of all parties in interest. He
should be a person wholly impartial and indifferent to all parties in
interest. Being an officer of the court, the fund or property intrusted to
his care is regarded as being in custodial legis for the benefit of
whoever may finally establish title thereto, the court itself having the
care of the property by its receiver, who is merely its creature or
officer, having no powers other than those conferred upon him by the
order of his appointment, or such as are derived from the established
practice of courts of equity.

53

That is the law and is the rule which every receiver should follow.
It further appears that since his appointment and on his own motion, the
receiver made application to, and obtained an order from, the court to pay a
number of claims against the corporation which did not have any legal
preference, amounting to P30,000 or P40,000, among which is the claim of
Haskins & Sells, the legality of which as such was denied and bitterly
contested by the corporation, and, as to that particular claim, that the
receiver was not only instrumental in having it presented, allowed and
ordered paid, but that he actively aided and assisted in having it allowed,
over and against the vigorous protest and objection of the corporation.
Nothing said in this opinion should be construed as having passed upon
decided the merits of the claim of Haskins & Sells against the corporation.
That is a matter on which we do not now have or express an opinion. But we
do say that, upon the record before us, it was the duty of the receiver on
behalf of the corporation, to contest rather than to aid and facilitate the
allowance of the claim, and, in particular, its payment at this time, together
with all other similar claims.
As one of the grounds for the appointment of a receiver, the complaint in the
original suit alleges that the corporation is in imminent danger of insolvency,
and that it is necessary to have a receiver appointed to protect and preserve
the assets of the corporation pending the suit, for the use and benefit of the
plaintiff and the creditors of the corporation. There is no claim or pretense
that the claim of Haskins & Sells has any legal preference over any other
unsecured claim, and yet without even a claim of preference unsecured
debts against the corporation have been allowed and ordered paid in full,
amounting to P30,000 or P40,000 the legal effect of which is to nullify and
overthrow the very purpose for which the receiver was appointed, and to pay
in full certain specified unsecured claims against a corporation which is in
imminent danger of insolvency, in a case where a receiver was appointed to
protect and preserve the assets of the corporation pending the original suit.
Upon that question High Receivers, section 428, says:
But it is error, in such a case, to direct the receiver to pay the creditors
of defendants out of collections and sales made by him, before it is
finally determined whether they are entitled to priority of payment out
of the funds; since, even if they are entitled to priority, it is premature
to direct the payment before their claims have been ascertained and
allowed by the court. And before such direction is given, an account
should be taken and an opportunity afforded to prove the claims of
creditors upon the one hand, and to contest them upon the other.
And in section 439b, the same author says:
No preference allowed as between creditors of the same class .
Where a court of equity has appointed a receiver over the estate of an
insolvent debtor and the receiver has taken possession of his property,
no creditor will be allowed, by obtaining judgment against the insolvent
after the receiver has taken possession, to obtain a preference over
other creditors of the same class, and this is true even though the
action in which the judgment was recovered was instituted before the
receiver actually took possession of the property.
Hence, it must follow that unsecured claims which do not have a preference
ought not to be paid pending the receivership until a final order of
distribution has been made among all of the creditors of the corporation
whose claims have been presented and allowed.

54

As to the question of impairing the obligation of a contract, in section 273d,


High says:
Cannot impair contract liability of original party . While, as has
already been shown, a receiver is in no way bound by the contracts or
covenants of the person over whose estate he is appointed, it is
equally true that where a valid and subsisting contract has been
entered into by his principal and a third person, receiver who is
afterward appointed can do no act which will in any way impair the
obligations of such contract, and the obligee may therefore maintain
an action the insolvent to recover damages resulting from a violation of
the agreement, and to such action the receiver is neither a necessary
nor a proper party. . . . But it is to be observed, in such case, that any
judgment which may be rendered should run against the obligor only
and not against his receiver.
That is in harmony with the decision of this court in International Banking
Corporation vs. Corrales (14 Phil., 360).
The authority of the receiver is limited to the allowance of claims which are
recoverable against the corporation.
Section 335, High on Receivers, says:
* * * And they have no authority to allow a demand, which is not a
proper charge upon the fund in their hands, without the consent of all
persons interested in having claim rejected, the receivers in this
respect being considered as guardians of the rights of all persons in
interest. And when receivers have disallowed demands against the
corporation, and the matter has been referred to referees for
judgment, it is the duty of the receivers to resist the allowance of the
demands before the referees, and to continue their defense so long as
it may, in their opinion, be rendered effectual.
When his powers are derived wholly from statute, the same author, in
section 322, says:
When receivers over corporations are appointed under a statute which
regulates their functions and prescribes their powers and duties, it is
held that they derive their powers wholly from the statute under which
they are appointed, and have no authority other than such as is thus
conferred. But to warrant them in the exercise of a power, it need not
be expressly conferred, and if it can be fairly implied, either from the
general scope and purpose of the statute, or as an incident to a power
expressly given, there is sufficient warrant for its excercise.
As to the functions of a receiver, the author, in section 175, says:
* * * And it is necessary to a proper understanding of the functions of a
receiver, and of the real nature of his office, to bear in mind that he is
not appointed for the benefit merely of the plaintiff on whose
application the appointment is made, but for the equal benefit of all
persons who may establish rights in the cause, and that he is to the
plaintiff's agent, but is equally the representative of all parties in his
capacity as an officer of the court.
It should be borne in mind that a receiver in a pending suit should be neutral,
fair and impartial between the litigant parties, and that should be knowingly
or wilfully become a partisan or favor either party at the expense of the
other, upon a proper showing, it would be ground for his removal. Legally
speaking, the court assumes that the plaintiff has made out a prima facie
case at the time the receiver was appointed; otherwise, the receiver ought
not to be appointed. Be that as it may, no final decision is made on the

55

actual merits of the case until both parties have been heard on their
respective contentions, at which time a final decision is then made, and
during that period, through the receiver, the property is in custodia legis
pending the final decision for either the plaintiff or the defendant in the
original suit, and it is for such reason that the law makes it the imperative
duty of a receiver to be neutral, fair and impartial between the litigants.
In the absence of something exceptional and of some special reason, the
powers and duties of the receiver in the instant case should be confined and
limited to those specified and defined in section 175 of the Code of Civil
Procedure, together with those which are germane to such powers and
duties.
With these admonitions, restrictions and limitations on powers and duties,
the appointment of the receiver by the lower court is sustained and the writ
denied, without costs to either party. So ordered.
(LAAAHAT IMPORTANT BASAHIN E ) SORRY ANG HABA..
2. CAVS - Alcantara vs. Abbas, GR L-14890, 30 September 1963
[receiver shld be neutral and impartial]
FACTS: Petitioner seeks to annul the order of the respondent judge removing
him as receiver, and appointing Martin T. Bacaron in his place. In March,
1957, Alcantara sued Bacaron partly to foreclose the chattel mortgage
executed by the latter on a caterpillar tractor with its accessories (Civil Case
No. 2282 of Davao). Pursuant to a clause in the mortgage contract, the
Davao court designated Alcantara as receiver of the tractor; and he duly
qualified as such. Thereafter, with the court's approval, he leased the
machine to Serapio Sablada. Upon the expiration of the lease, and after
Sablada's failure to return the machine, said court at the instance of
Alcantara,1 declared Sablada to be in contempt of court and fined him in the
amount of P100.00 on October 6, 1958.
Meanwhile, on October 2, 1958, alleging that Alcantara had neglected his
duties as receiver, because he did not get the tractor, Bacaron petitioned the
court to relieve such receiver, and to appoint him (Bacaron) as the receiver
instead. However, despite the above representations, the respondent dent
judge of the Davao court, in an order dated December 10, 1958, relieved
Alcantara and appointed Bacaron as receiver of the tractor, without bond,
with authority to receive the sum of P2,000.00 in Alcantara's hands as
rentals of the tractor, and to the end the same for repairs if necessary.
ISSUE: Whether or not Bacaron's appointment valid?
RULING:NO.
It is not clear what steps the court had in mind when it declared that
"plaintiff-receiver failed to take steps to take possession of the tractor leased
to Sablada". It could have meant that Alcantara failed to take the tractor
directly from the hands of Sablada from the place where it was, without
resorting to official help. If the court meant as it must have meant that
Alcantara failed to exhaust judicial remedies to compel Sablada to comply
with the order to place the tractor at the "junction" previously mentioned,
then it fell into error, because Alcantara had in effect, suggested that
Sablada be held in "continuous contempt" (Annex J) i.e., imprisoned until he
placed the tractor at the "junction"; and the court instead of acting
accordingly under Rule 64, sec. 74 held Alcantara to be negligent, and
removed him.
If it was error to remove Alcantara, a clearer error occurred when Bacaron
the defendant was appointed, as receiver without bond, over the objection
of Alcantara the plaintiff. The general rule is that neither to a litigation

56

should be appointed receiver without the other's consent 5 because "a


receiver ought to be an indifferent person between the parties" 6 and "should
be impartial and disinterested"7. Note that Bacaron was the defendant, and
his personal interest would conflict with his duties to the court and the
plaintiff.8 Furthermore, under the Rules of Court, the receiver must file a
bond; and yet Bacaron was exempted from such obligation. The effect of the
whole proceeding was to discharge the receiver ship at the request of the
defendant, without so much a bond contrary to sec. 4, Rule 61, of the
Rules of Court. Such mistakes causing prejudice to petitioner, call for
interference with that discretion which usually vests in trial courts in the
matter of receivership Consequently, the order of December 10, 1958,
should be, and is hereby annulled. Costs against respondent Bacaron. So
ordered.
3. CAVS - Vivares and Ignaling vs. Reyes, GR 155408, 13
February 2008 [must be with sufficient justification]
FACTS: The kernel dispute in this petition under Rule 45 is the legality of the
May 22, 2001 Resolution of the Camiguin Regional Trial Court (RTC), Branch
28 in Civil Case No. 517, which placed the estate of Severino Reyes under
receivership.
Severino Reyes was the father of respondent Jose Reyes and Torcuato
Reyes. Upon the death of Severino, respondent and Torcuato came upon
their inheritance consisting of several properties. They had an oral partition
of the properties and separately appropriated to themselves said properties.
On May 12, 1992, Torcuato died with a last will and testament executed
on January 3, 1992. Petitioner Vivares was the designated executor of
Torcuatos last will and testament, while petitioner Ignaling was declared a
lawful heir of Torcuato.
Believing that Torcuato did not receive his full share in the estate of
Severino, petitioners instituted an action for Partition and Recovery of Real
Estate before the Camiguin RTC, Branch 28 entitled Julio A. Vivares, as
executor of the estate of Torcuato J. Reyes and Mila R. Ignaling, as heir v.
Engr. Jose J. Reyes and docketed as Civil Case No. 517. With the approval of
the trial court, the parties agreed that properties from the estate of Severino,
which were already transferred in the names of respondent and Torcuato
prior to the latters death on May 12, 1992, shall be excluded from litigation.
In short, what was being contested were the properties that were still in the
name of Severino.
On March 15, 2000, petitioners filed a Motion to Place Properties in
Litigation under Receivership before the trial court alleging that to their
prejudice respondent had, without prior court approval and without
petitioners knowledge, sold to third parties and transferred in his own name
several common properties. Petitioners also averred that respondent
fraudulently antedated, prior to May 12, 1992, some conveyances and
transfers to make it appear that these were no longer part of the estate of
Severino under litigation. They further claimed that respondent was and is in
possession of the common properties in the estate of Severino, and
exclusively enjoying the fruits and income of said properties and without
rendering an accounting on them and turning over the share pertaining to
Torcuato. Thus, petitioners prayed to place the entire disputed estate of
Severino under receivership. They nominated a certain Lope Salantin to be
appointed as receiver.
ISSUE: Whether or not the receivership was justified?

57

RULING: NO. In granting the petition for appointment of a receiver, there


was no sufficient cause or reason to justify placing the disputed properties
under receivership. It was without sufficient justification nor strong basis.
Petitioners miserably failed to adduce clear, convincing, and hard
evidence to show the alleged fraud in the transfers and the antedating of
said transfers. The fact that the transfers were dated prior to the demise of
Torcuato on May 12, 1992 does not necessarily mean the transfers were
attended by fraud. He who alleges fraud has the burden to prove it.
Moreover, respondent has adduced documentary proof that Torcuato
himself similarly conveyed several lots in the estate of Severino based on the
oral partition between the siblings. To lend credence to the transfers
executed by Torcuato but distrust to those made by respondent would be
highly inequitable as correctly opined by the court a quo.
Indeed, receivership is a harsh remedy to be granted only in extreme
situations. As early as 1914, the Court already enunciated the doctrinal
pronouncement in Velasco & Co. v. Gochuico & Co. that courts must use
utmost circumspection in allowing receivership, thus:
The power to appoint a receiver is a delicate one and
should be exercised with extreme caution and only under
circumstances requiring summary relief or where the court is
satisfied that there is imminent danger of loss, lest the injury
thereby caused be far greater than the injury sought to be
averted. The court should consider the consequences to all of the
parties and the power should not be exercised when it is likely to
produce irreparable injustice or injury to private rights or the
facts demonstrate that the appointment will injure the interests
of others whose rights are entitled to as much consideration from
the court as those of the complainant.
Petitioners cannot now impugn the oral partition entered into by
Torcuato and respondent and hence cannot also assail the transfers made by
respondent of the lots which were subject of said agreement, considering
that Torcuato also sold properties based on said verbal arrangement. Indeed,
the parties agreed that the civil action does not encompass the properties
covered by the oral partition. In this factual setting, petitioners cannot
convince the Court that the alleged fraudulent transfers of the lots made by
respondent, which purportedly form part of his share in Severinos estate
based on the partition, can provide a strong basis to grant the receivership.

Second, petitioner is willing to post a counterbond in the amount to be


fixed by the court based on Sec. 3, Rule 59 of the 1997 Rules of Civil
Procedure, which reads:
Sec. 3. Denial of application or discharge of receiver .The
application may be denied, or the receiver discharged, when the
adverse party files a bond executed to the applicant, in an
amount to be fixed by the court, to the effect that such party will

58

pay the applicant all damages he may suffer by reason of the


acts, omissions, or other matter specified in the application as
ground for such appointment. The receiver may also be
discharged if it is shown that his appointment was obtained
without sufficient cause.

Petitioners advance the issue that the receivership should not be


recalled simply because the adverse party offers to post a counterbond. At
the outset, we find that this issue was not raised before the CA and therefore
proscribed by the doctrine that an issue raised for the first time on appeal
and not timely raised in the proceedings in the lower court is barred by
estoppel. Even if we entertain the issue, the contention is nevertheless
devoid of merit. The assailed CA decision supported the discharge of the
receiver with several reasons including the posting of the counterbond. While
the CA made a statement that the trial court should have discharged the
appointed receiver on the basis of the proposed counterbond, such opinion
does not jibe with the import of Sec. 3, Rule 59. The rule states that the
application may be denied or the receiver discharged. In statutory
construction, the word may has always been construed as permissive. If the
intent is to make it mandatory or ministerial for the trial court to order the
recall of the receiver upon the offer to post a counterbond, then the court
should have used the word shall. Thus, the trial court has to consider the
posting of the counterbond in addition to other reasons presented by the
offeror why the receivership has to be set aside
4. ACE - Abrigo vs. Kayanan, GR L-28601, 18 March 1983, 121
SCRA 20 [Clerk of Court shld not be appointed]
Facts: Plaintiff sought the partition of the seven parcels of land under a claim
of co-ownership with the defendant. On the other hand, the defendant put up
the defense of ownership by hereditary title. The plaintiff filed an Urgent
Motion for the appointment of a receiver to administer the said parcels of
land on the ground that numerous squatters had invaded the property. The
trial court issued an Order appointing Atty. Nantes, the acting clerk of court,
as receiver and he must be sworn to perform them faithfully, without
necessity of a bond being a public officer. Petitioner seeks the annulment
and setting aside the order on the ground that it was issued with grave
abuse of discretion.
Issue:Whether the action of the judge is correct?
Held: NO. The respondent judge committed grave abuse of discretion in
connection with the appointment of a receiver, the acting clerk of court. That
order, in effect, made the clerk of 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.
5. ACE - Pacific Basin Securities vs. Oriental petroleum and
Minerals Corp., GR 143972; 144631, 31 August 2007
[Sequestration akin to receivership on powers of administration]

59

Facts: petitioner, through its stock brokerage firm, purchased class A shares
of the respondent. The respondent's shares turned out to be owned by
Peidras Petroleum, a sequestered company controlled by the Presidential
Commission on Good Governance (PCGG). The PCGG sent a letter to
Equitable Bank confirming the sale of the respondent's shares in the Piedras
Petroleum in favor of the petitioner and to record such sale, but it was
unheeded. Petitioner filed a Mandamus with prayer for a Writ of Preliminary
Mandatory Injunction against the Equitable Bank that refused to record its
acquisition of the shares and to issue the corresponding certificates of shares
of stocks which is ministerial duty. Equitable Bank posited that the sale must
be in public bidding. Petitioner contended that there was an order from the
PCGG to record the sale.
Issue:Whether the action of the PCGG is correct?
Held: NO. A sequestratrion order is similar to the provisional remedy of
receivership under Rule 59 of the Rules of Court. The PCGG may exercise
only the powers of administration over the property sequestered or
provisionally taken over so as to bring and defend actions in its own name;
receive rents and other things which may be necessary to fulfill its mission as
conservator and administrator.
The PCGG, as a mere conservator, does not automatically become the
owner of the sequestered property in behalf of the government.
6. ACE - Phil Trust vs. Santamaria, 53 Phil 463 [appointment of
receiver in cases of disposal or concealment of property]
Facts: Petitioner obtained a favorable decision against Yaptico and Company.
It also appears that the petitioner asked for an execution of the judgments
pending the appeal to this court, which was denied, and that after the cases
were affirmed by this court, it again asked for an execution of those
judgments. The petitioner applied to the CFI of Ilo-Ilo for the appointment of
a receiver upon the grounds that Yaptico was fraudulently putting its
properties beyond the reach of its creditors and the petitioner, in particular.
After a hearing, that motion was denied, and trial court suspended the
execution of the judgments. Petitioner contended that it is the duty of the
court to enforce according to its terms. Respondent judge contended that he
retains a certain amount of control over a Writ of Execution after it leaves his
hand. e do not know anything about the whys and wherefores, but suffice it
to say that such proceedings bring the courts into disrepute and subject
them to severe criticism.
Issue:Whether the action of the judge is correct?
Held: NO. The respondent judge exceeded his jurisdiction in recalling the Writ
of Execution in question. It is the duty of the court to enforce it, and no court
ought to suspend an execution issued on a final judgment, except as to
matters and things which have arisen after the final judgment was rendered,
and
which
would
be
a
valid
defense
to
the
judgment.

60

It was the duty of the court to appoint a receiver to protect and to


preserve its property and assets for the use and benefits of its creditors and
in particular, the petitioner.
7. ACE - Pacific Merchandising vs. Consolacion Insurance and
Surety, 73 SCRA 564 [receiver cannot enter into contract without
court order]
Facts: On October 1962, a writ of execution was issued by the CRFI of Manila
in favor of the Pacific and against Leo Enterprises. In the said case, Pajarillo
was appointed as receiver of all assets and properties of Paris Theatre owned
by Leo Enterprises. To guarantee Pacific the payment of obligation in its favor
by Leo Enterprises, Pajarillo approached Consolacion and applied for a surety
bond to be posted in favor of Pacific. To secure Consolacion against damages
and injuries, Pajarillo executed indemnity bond in favor of Consolacion.
Pajarillo paid Pacific only half of its claim. Pacific demanded payment for the
unpaid obligation, but Pajarillo contended that he was no longer bound to
pay because he had ceased to be the receiver of Paris Theatre.
Issue:Whether Pajarillo is liable to pay?
Held: YES. A receiver is not an agent or representative of any party, but an
officer of the court for the common benefit of all the parties in interest.
In order to bind the property or fund in his hands as receiver, he should
have applied for and obtained from the court authority to enter into a
contract. Unauthorized contracts of a receiver do not bind the court in charge
of receivership. They are receivers own contracts and are not recognized by
the court as contracts of the receivership. The aforesaid agreement and
undertaking entered into by Pajarillo not having been approved by the court
should be considered as his personal undertaking.
8. ACE - Dolar vs. Sundiam, GR L- 27631, 30 April 1971, 38
SCRA 616 [Receivership of property in custodia legis]
Facts: When the father of Luis Tupas died testate, the latter became judicial
administrator of his fathers estate. Luis sold two parcels of land to
Lumampao. Later, a complaint for recovery of the lands previously sold by
Luis in favor of Lumampao on the ground of force and intimidation. Again,
Luis the same land which was previously sold to Lumampao. It will be noted
that the validity of the sale to Lumampao by Luis was still pending
adjudication (in custody of law). While pending for decision, Lumampao filed
for the appointment of the receiver over the two parcels of land. Respondent
judge granted the same. Petitioner filed a petition to set aside the order of
receivership.
Issue:Whether the action of the respondent judge is correct?
Held: YES. Ordinarily, a receiver cannot be put on property which is already
in the custody of the law under process from another court of competent

61

jurisdiction and there cannot be more than one receiver over the same
property. A receiver will not be appointed to take asstes from the custody of
an executo or administrator unless there is mainifest danger of loss or
destruction of, material injury to, the assets and a receivership, clearly
necessary to protect and preserve the property.
9. MAVEL -Philippine Veterans Bank vs. NLRC, GR 130439, 26
October 1999, 317 SCRA 510 [Bank are bounds by the act of the
receiver]
Facts: In 1983, petitioner Philippine Veterans Bank was placed under
receivership by the Central Bank (now Bangko Sentral) by virtue of
Resolution No. 334 issued by the Monetary Board. Petitioner was
subsequently placed under liquidation on 15 June 1985. Consequently, its
employees, including private respondent Dr. Jose Teodorico V. Molina
(MOLINA), were terminated from work and given their respective separation
pay and other benefits. To assist in the liquidation, some of petitioners
former employees were rehired, among them MOLINA, whose re-employment
commenced on 15 June 1985.
On 11 May 1991, MOLINA filed a complaint 4 against , members of the
liquidation team. MOLINA claimed that his salary should have been adjusted
in compliance with the wage orders. In their position paper, the liquidation
team countered that MOLINA was not entitled to any salary increase because
he was already receiving a monthly salary above the wage limit.
In his decision, 7 Labor Arbiter Potenciano S. Caizares, Jr. rejected the 26.16
factor used by the liquidators in computing the daily wage of MOLINA,
adopting instead the factor of "365 days." Consequently, they were ordered
to pay MOLINA P4,136.64 and P2,190 representing the wage differentials due
him under W.O. 1 and W.O. 2. They were also required to pay him P100,000
in moral damages and attorneys fees. On appeal, the NLRC sustained the
labor arbiters ruling.
As MOLINA moved for the execution of the NLRC resolution, Petitioner, in
turn, moved for its reconsideration. In its order of 27 June 1997, the NLRC
denied petitioners motion, prompting the latter to file the instant petition
with a prayer for the issuance of a temporary restraining order and writ of
preliminary
injunction.
Issue: Who is liable to pay Molinas claim?
Held: The payment of MOLINAs claims devolves upon petitioner, not the
liquidation team. When a bank is declared insolvent and placed under
receivership, the Monetary Board of the Central Bank determines whether to
proceed with the liquidation or reorganization of the financially distressed
bank. 19 A receiver takes control and possession of the assets of the bank for
the benefit of its creditors 20 and concurrently represents the bank. 21 On
the other hand, a liquidator assumes the role of the receiver upon the
determination by the Monetary Board that the bank can no longer resume
business. His task is to dispose of all the assets of the bank and effect partial
payments of its obligations in accordance with their legal priority. 22 In both
receivership and liquidation proceedings, the bank retains its juridical
personality notwithstanding the closure of its business; in fact, the bank may
even be sued. 23 Its corporate existence is assumed by the receiver or
liquidator. The latter, however, acts not only for the benefit of the bank, but

62

for

the

banks

creditors

as

well.

24

In the instant case, petitioner was initially closed and put under receivership
and liquidation. Subsequently, its rehabilitation was effected by virtue of
Republic Act No. 7169 25 and Monetary Board Resolution No. 348 dated 10
April 1992. Rehabilitation contemplates a continuance of corporate life and
activities in an effort to restore and reinstate the corporation to its former
position of successful operation and solvency. 26 Upon its rehabilitation,
petitioner assumed the rights and obligations of the receiver and liquidator.
This includes MOLINAs claim for unpaid wages. It must be borne in mind that
all the acts of the receiver and liquidator pertain to petitioner, both having
assumed petitioners corporate existence. Petitioner cannot disclaim liability
by arguing that the non-payment of MOLINAs just wages was committed by
the liquidators during the liquidation period.
10. MAVEL -Spouses Larrobis vs Philippine Veterans Bank, GR
135706, 12 October 2004 [liability for negligence of receiver]
Facts: On March 3, 1980, petitioner spouses contracted a monetary loan with
respondent Philippine Veterans Bank in the amount of P135,000.00,
evidenced by a promissory note, due and demandable on February 27, 1981,
and secured by a Real Estate Mortgage executed on their lot together with
the improvements thereon.
On March 23, 1985, the respondent bank went bankrupt and was placed
under receivership/liquidation by the Central Bank from April 25, 1985 until
August 1992.3
On August 23, 1985, the bank, through Francisco Go, sent the spouses a
demand letter for "accounts receivable in the total amount of P6,345.00 as of
August 15, 1984,"4 which pertains to the insurance premiums advanced by
respondent bank over the mortgaged property of petitioners.5
On August 23, 1995, more than fourteen years from the time the loan
became due and demandable, respondent bank filed a petition for
extrajudicial foreclosure of mortgage of petitioners' property. 6 On October 18,
1995, the property was sold in a public auction by Sheriff Arthur Cabigon
with Philippine Veterans Bank as the lone bidder.
On April 26, 1996, petitioners filed a complaint with the RTC, Cebu City, to
declare the extra-judicial foreclosure and the subsequent sale thereof to
respondent bank null and void.7
In the pre-trial conference, the parties agreed to limit the issue to whether or
not the period within which the bank was placed under receivership and
liquidation was a fortuitous event which suspended the running of the tenyear prescriptive period in bringing actions.
Petitioners filed a motion for reconsideration which the RTC denied
Issue: WHETHER OR NOT THE PERIOD WITHIN WHICH RESPONDENT BANK
WAS PUT UNDER RECEIVERSHIP AND LIQUIDATION WAS A FORTUITOUS
EVENT THAT INTERRUPTED THE RUNNING OF THE PRESCRIPTIVE PERIOD.
Held: When a bank is declared insolvent and placed under receivership, the
Central Bank, through the Monetary Board, determines whether to proceed
with the liquidation or reorganization of the financially distressed bank. A
receiver, who concurrently represents the bank, then takes control and
possession of its assets for the benefit of the bank's creditors. A liquidator
meanwhile assumes the role of the receiver upon the determination by the
Monetary Board that the bank can no longer resume business. His task is to
dispose of all the assets of the bank and effect partial payments of the
bank's obligations in accordance with legal priority. In both receivership and

63

liquidation proceedings, the bank retains its juridical personality


notwithstanding the closure of its business and may even be sued as its
corporate existence is assumed by the receiver or liquidator. The receiver or
liquidator meanwhile acts not only for the benefit of the bank, but for its
creditors as well.
In Provident Savings Bank v. Court of Appeals,28 we further stated that:
When a bank is prohibited from continuing to do business by the Central
Bank and a receiver is appointed for such bank, that bank would not be able
to do new business, i.e., to grant new loans or to accept new deposits.
However, the receiver of the bank is in fact obliged to collect debts
owing to the bank, which debts form part of the assets of the bank.
The receiver must assemble the assets and pay the obligation of the
bank under receivership, and take steps to prevent dissipation of
such assets. Accordingly, the receiver of the bank is obliged to
collect pre-existing debts due to the bank, and in connection
therewith, to foreclose mortgages securing such debts.
In this case, it is not disputed that Philippine Veterans Bank was placed under
receivership by the Monetary Board of the Central Bank by virtue of
Resolution No. 364 on April 25, 1985, pursuant to Section 29 of the Central
Bank Act on insolvency of banks.33
In this case, it is not disputed that Philippine Veterans Bank was placed under
receivership by the Monetary Board of the Central Bank by virtue of
Resolution No. 364 on April 25, 1985, pursuant to Section 29 of the Central
Bank Act on insolvency of banks.33
Unlike Provident Savings Bank, there was no legal prohibition imposed upon
herein respondent to deter its receiver and liquidator from performing their
obligations under the law. Thus, the ruling laid down in the Provident case
cannot apply in the case at bar.
There is also no truth to respondent's claim that it could not continue doing
business from the period of April 1985 to August 1992, the time it was under
receivership. As correctly pointed out by petitioner, respondent was even
able to send petitioners a demand letter, through Francisco Go, on August
23, 1985 for "accounts receivable in the total amount of P6,345.00 as of
August 15, 1984" for the insurance premiums advanced by respondent bank
over the mortgaged property of petitioners. How it could send a demand
letter on unpaid insurance premiums and not foreclose the mortgage during
the time it was "prohibited from doing business" was not adequately
explained by respondent.
Settled is the principle that a bank is bound by the acts, or failure to act of its
receiver.34 As we held in Philippine Veterans Bank v. NLRC,35 a labor case
which also involved respondent bank,
'all the acts of the receiver and liquidator pertain to petitioner, both having
assumed petitioner's corporate existence. Petitioner cannot disclaim liability
by arguing that the non-payment of MOLINA's just wages was committed by
the liquidators during the liquidation period.36
However, the bank may go after the receiver who is liable to it for any
culpable or negligent failure to collect the assets of such bank and to
safeguard its assets.
Having reached the conclusion that the period within which respondent bank
was placed under receivership and liquidation proceedings does not
constitute a fortuitous event which interrupted the prescriptive period in
bringing actions, we now turn to the second issue on whether or not the
extra-judicial demand made by respondent bank, through Francisco Go, on

64

August 23, 1985 for the amount of P6,345.00, which pertained to the
insurance premiums advanced by the bank over the mortgaged property,
constitutes a valid extra-judicial demand which interrupted the running of
the prescriptive period. Again, we answer this question in the negative.
D. Replevin [Rule 60]
1. MAVEL -Smart Communication vs. Regina M. Astorga, GR
148132, 28 January 2008 [Definition; nature]
Facts: Regina M. Astorga (Astorga) was employed by respondent Smart
Communications, Incorporated (SMART) on May 8, 1997 as District Sales
Manager of the Corporate Sales Marketing Group/ Fixed Services Division
(CSMG/FSD). In February 1998, SMART launched an organizational
realignment to achieve more efficient operations. This was made known to
the employees on February 27, 1998. 6 Part of the reorganization was the
outsourcing of the marketing and sales force. Thus, SMART entered into a
joint venture agreement with NTT of Japan, and formed SMART-NTT
Multimedia, Incorporated (SNMI). Since SNMI was formed to do the sales and
marketing work, SMART abolished the CSMG/FSD, Astorga's division.
Despite the abolition of the CSMG/FSD, Astorga continued reporting for work.
But on March 3, 1998, SMART issued a memorandum advising Astorga of the
termination of her employment on ground of redundancy, effective April 3,
1998. Astorga received it on March 16, 1998.
The termination of her employment prompted Astorga to file a Complaint 8 for
illegal dismissal, non-payment of salaries and other benefits with prayer for
moral and exemplary damages against SMART and Ann Margaret V. Santiago
(Santiago). SMART responded that there was valid termination.
SMART to file a suit for replevin with the Regional Trial Court of Makati for
failure of Astorga to pay the current market value of the Honda Civic Sedan
which was given to her under the company's car plan program, or to
surrender the same to the company for proper disposition.
Astorga moved to dismiss the complaint on grounds of (i) lack of jurisdiction;
(ii) failure to state a cause of action; (iii) litis pendentia; and (iv) forumshopping. Astorga posited that the regular courts have no jurisdiction over
the complaint because the subject thereof pertains to a benefit arising from
an employment contract; hence, jurisdiction over the same is vested in the
labor tribunal and not in regular courts. RTC issued an Order 16 denying
Astorga's motion to dismiss the replevin case.
Astorga filed a motion for reconsideration, but the RTC denied it. Astorga
elevated the denial of her motion via certiorari to the CA, which, in its
February 28, 2000 Decision,19 reversed the RTC ruling. Granting the petition
and, consequently, dismissing the replevin case, the CA held that the case is
intertwined with Astorga's complaint for illegal dismissal; thus, it is the labor
tribunal that has rightful jurisdiction over the complaint. SMART's motion for
reconsideration having been denied
Hence, this petition.
Issue:Whether the CA failed to appreciate that the subject of the replevin
case is not the enforcement of car plan privilege but simply the recovery of a
company car.
Held: Yes. Replevin is an action whereby the owner or person entitled to
repossession of goods or chattels may recover those goods or chattels from
one who has wrongfully distrained or taken, or who wrongfully detains such
goods or chattels. It is designed to permit one having right to possession to
recover property in specie from one who has wrongfully taken or detained

65

the property.30 The term may refer either to the action itself, for the recovery
of personalty, or to the provisional remedy traditionally associated with it, by
which possession of the property may be obtained by the plaintiff and
retained during the pendency of the action.
We do not agree. Contrary to the CA's ratiocination, the RTC rightfully
assumed jurisdiction over the suit and acted well within its discretion in
denying Astorga's motion to dismiss. SMART's demand for payment of the
market value of the car or, in the alternative, the surrender of the car, is not
a labor, but a civil, dispute. It involves the relationship of debtor and creditor
rather than employee-employer relations.33 As such, the dispute falls within
the jurisdiction of the regular courts.
Replevin is a possessory action, the gist of which is the right of possession in
the plaintiff. The primary relief sought therein is the return of the property in
specie wrongfully detained by another person. It is an ordinary statutory
proceeding to adjudicate rights to the title or possession of personal
property. The question of whether or not a party has the right of possession
over the property involved and if so, whether or not the adverse party has
wrongfully taken and detained said property as to require its return to
plaintiff, is outside the pale of competence of a labor tribunal and beyond the
field of specialization of Labor Arbiters.
2. MAVEL -Tillson vs. CA, GR 89870, 28 May 1991, 197 SCRA
587 [origin of remedy]
Facts: Upon these factual averments, Tillson prayed that both defendants be
ordered (a) to complete construction of "Creala 40," removing from "Creala
36" all parts placed therein originally intended for "Creala 40," and using and
placing them in the latter; and (b) jointly and severally, to pay to Tillson such
damages as might be adjudged proper and attorneys fees.
Summonses were duly served on both defendants. Only Seacraft filed
answer, denying Tillsons claims to the vessels and asserting that there was
no privity between it and Tillson relative to the construction of the "Creala
40." La Pierre failed to answer within the reglementary period and was
consequently declared in default. The Court rendered judgment by default
against La Pierre. The judgment became final and executory, no appeal
having been taken by La Pierre. The action however continued as regards his
co-defendant, Seacraft International Corporatio. Seacraft filed a third-party
claim in respect of both vessels in accordance with Section 17, Rule 39 of the
Rules of Court, contending that the yachts belonged to it, and not to La
Pierre. Tillson thereupon posted a bond to indemnify the Sheriff against such
third-party claim insofar as it was asserted against "Creala 40."
On October 10, 1988, the "Creala 36" was somehow delivered by the Sheriff
to Tillsons counsel, Atty. Alberto Guevara, Jr. It was thereafter moved by
Tillson to the Manila Yacht Club. But a claim for that same vessel ("Creala
36") was being put forth by a certain John M. Cooney, grounded on a
compromise agreement between him and La Pierre. Indeed, there was then
pending in another branch of the same Regional Trial Court an action which
had been commenced by Cooney against La Pierre. The court issued orders
directing the sheriff to take immediate possession of "Creala 36" and deliver
it to Cooney after the expiration of five days. Tillson promptly instituted a
certiorari action in the Court of Appeals, praying for nullification of that order.
The Court of Appeals dismissed Tillsons action It found that no valid levy on
attachment had been effected of the "Creala 36". The Appellate Court
consequently upheld the order for the seizure and retaking from Tillson of the

66

"Creala 36," but prohibited release thereof to Cooney "pending the final
disposition of his case.
Issue: Whether Rule 60 is inapplicable.
Held: No. The term replevin is popularly understood as "the return to or
recovery by a person of goods or chattels claimed to be wrongfully taken or
detained upon the persons giving security to try the matter in court and
return the goods if defeated in the action;" "the writ by or the common-law
action in which goods and chattels are replevied," i.e., taken or gotten back
by a writ for replevin;" 6 and to replevy, means to recover possession by an
action of replevin; to take possession of goods or chattels under a replevin
order. 7 Bouviers Law Dictionary defines replevin as "a form of action which
lies to regain the possession of personal chattels which have been taken
from the plaintiff unlawfully . . ., (or as) the writ by virtue of which the sheriff
proceeds at once to take possession of the property therein described and
transfer it to the plaintiff upon his giving pledges which are satisfactory to
the sheriff to prove his title, or return the chattels taken if he fail so to do;
the same authority states that the term, "to replevy" means "to re-deliver
goods which have been distrained to the original possessor of them, on his
giving pledges in an action of replevin." 8 The term therefore may refer
either to the action itself, for the recovery of personalty, or the provisional
remedy traditionally associated with it, by which possession of the property
may be obtained by the plaintiff and retained during the pendency of the
action. In this jurisdiction, the provisional remedy is identified in Rule 60 of
the Rules of Court as an order for delivery of personal property.
That the action commenced by Cooney against Tillson, Et. Al. on April 12,
1989, in the Manila Regional Trial Court of Manila was one for replevin and
the provisional remedy therein applied for, the writ or order of delivery just
described hardly admits of doubt. The facts set out in his complaint and
the affidavit accompanying it, as well as his filing of a bond in double the
value of the property sought to be recovered, show that Cooney filed the
action precisely with Rule 60 in mind. This is evident from a perusal of
Sections
1
and
2
of
the
Rule.
9
"SECTION 1. Application. Whenever the complaint in an action prays for
the recovery of possession of personal property, the plaintiff may, at the
commencement of the action or at any time before answer, apply for an
order for the delivery of such property to him, in the manner hereinafter
provided.
"SEC. 2. Affidavit and bond. Upon applying for such order the plaintiff must
show by his own affidavit or that of some other person who personally knows
the
facts:chanrob1es
virtual
1aw
library
(a) That the plaintiff is the owner of the property claimed, particularly
describing
it,
or
is
entitled
to
the
possession
thereof;
(b) That the property is wrongfully detained by the defendant, alleging the
cause of detention thereof according to his best knowledge, information and
belief;
(c) That it has not been taken for a tax assessment or fine pursuant to law, or
seized under an execution, or an attachment against the property of the

67

plaintiff, or, if so seized, that it is exempt from such seizure; and


(d)

The

actual

value

of

the

property.

The plaintiff must also give a bond, executed to the defendant in double the
value of the property as stated in the affidavit aforementioned, for the return
of the property to the defendant if the return thereof be adjudged, and for
the payment to the defendant of such sum as he may recover from the
plaintiff
in
the
action."cralaw
virtua1aw
library
As will be noted, Cooneys complaint incorporates the factual allegations
necessary to bring his cause within the operation of Rule 60 of the Rules of
Court. In his complaint he asserts that he is the owner of the "Creala 40" in
virtue of a deed of sale executed in his favor on December 5, 1988 by
Seacraft; that he was being deprived of possession thereof by Tillson, who
was acting in conspiracy with the Sheriff and other persons; that as owner,
he was entitled to a "preliminary order for the immediate delivery "upon "a
bond in a reasonable amount" and, "after trial of the issues," to have his
ownership vindicated and recover damages from the defendants. Annexed to
his complaint were (1) his affidavit stating inter alia that "the boat would be
probably valued conservatively at P300,000.00" and "has not been taken for
tax assessment or fine pursuant to law, or seized under execution, or an
attachment against the property of herein plaintiff ," and (2) a bond in the
amount of P800,000.00 entitled "Plaintiffss Bond for Manual Delivery of
Personal
Property
(Replevin
Bond)."cralaw
virtua1aw
library
And that it was so understood by the Regional Trial Court can scarcely be
doubted, too. In her Order of April 17, 1989, Judge Jaguros directed the
issuance of "the corresponding Writ of Replevin of Personal Property."
Moreover, a writ denominated "writ of replevin" issued on the same day,
pursuant to which and to another order dated April 20, 1989, supra the
sheriff took possession of the "Creala 40" on April 20, 1989.
The case is not removed from the operation of Rule 60 by the fact that after
the property was taken from the defendant it was not turned over to the
plaintiff (Cooney) but to the Coast Guard, on instructions of the Trial Court.
That circumstance is totally inconsequential.chanrobles.com : virtual law
library
For one thing, it does not alter the reality of the defendants loss of
possession; it is unreasonable to approve of the taking of the boat from his
possession pursuant to Rule 60, and then deny him the remedies prescribed
by that selfsame rule; and if the seizure was not effected in accordance with
Rule
60,
then
the
seizure
was
unjustified.
For another, property seized under a writ of delivery or replevin is not
supposed to be turned over to the plaintiff until after the lapse of five (5)
days, a proposition that is made plain by Section 6 of Rule
60:jgc:chanrobles.com.ph
"SEC. 6. Disposition of property by officer. If within five (5) days after
taking of the property by the officer, the defendant does not object to
sufficiency of the bond, or of the surety or sureties thereon, or require
return of the property as provided in the last preceding section; or if

the
the
the
the

68

defendant so objects, and the plaintiffs first or new bond is approved; or if


the defendant so requires, and his bond is objected to and found insufficient
and he does not forthwith file an approved bond, the property shall be
delivered to the plaintiff. If for any reason the property is not delivered to the
plaintiff, the officer must return it to the defendant."cralaw virtua1aw library
Hence, whether the property remained with the sheriff, or was given over to
another officer designated by the Court is of no significance, and certainly
should not be taken as disabling the defendant from moving for the return of
the property to him by either of the modes set out in Section 5 of Rule 60: (1)
by objecting to the sufficiency of the plaintiffs replevin bond, or (2) if he
does not so object, by filing a counter-bond "in double the value of the
property as stated in the plaintiff s affidavit."cralaw virtua1aw library
There is, therefore, no reason whatsoever to refuse to apply Rule 60 to the
case
at
bar.
The next issue is whether or not Tillson, as defendant in the replevin action,
had properly complied with the requisites of Rule 60 for the return to him of
the seized vessel. The provision of the Rules upon which the issue turns is
Section
5,
Rule
60.
It
reads
as
follows:jgc:chanrobles.com.ph
"SEC. 5. Return of property. If the defendant objects to the sufficiency of
the plaintiffs bond, or of the surety or sureties thereon, he cannot require the
return of the property as in this section provided; but if he does not so
object, he may, at any time before the delivery of the property to the
plaintiff, require the return thereof, by filing with the clerk or judge of the
court a bond executed to the plaintiff, in double the value of the property as
stated in the plaintiffs affidavit, for the delivery of the property to the
plaintiff, if such delivery be adjudged, and for the payment of such sum to
him as may be recovered against the defendant, and by serving a copy of
such bond on the plaintiff or his attorney."
3. MAVEL -Yu vs. Honrado, GR 50025, 21 August 1980, 99 SCRA
273, 277 [Nature and purpose]
Facts: The record shows that on June 27, 1978, Detective Carlos C. Nuestro of
the police department of Makati, Metro Manila filed with the Court of First
Instance of Rizal, Pasig Branch XXV an application for a search warrant,
entitled "People v. Alfonso Yu, Proprietor, Soledad Junk Shop, 171-173 Maria
Clara Street, Corner 8th Avenue, Grace Park, Caloocan, Metro Manila."
In that application, Nuestro alleged that he "has been informed and verily
believes that Alfonso Yu" was in possession of "about 55 metric tons of
unstripped assorted cast iron engine blocks embezzled" and that he "has
verified the report and found (it) to be a fact"
In his testimony before respondent Judge, Nuestro declared that he had
personal knowledge that Alfonso Yu kept the said engine blocks, which were
"embezzled" ; that the said goods were purchased by Carlito Refuerzo on
June 10, 1978 from Marcelo Steel Corporation; that Refuerzo paid for the
goods with a check in the sum of P61,808.25, which check was dishonored
for insufficient funds; that Refuerzo sold the engine blocks on June 12, 1978
to the Soledad Junk Shop and that Refuerzo was later apprehended and
detained in the municipal jail of Makati. Nuestro and four policemen
implemented the search warrant. They seized from the Soledad Junk Shop
42.8 metric tons of engine blocks, which were loaded in six trucks and

69

brought for safekeeping to the premises of Marcelo Steel Corporation, Punta,


Sta. Ana, Manila with the understanding that they were in custodia legis.
On July 12, 1978, the spouses Alfonso Yu and Soledad Yu filed with
respondent Judge a motion t

o set aside the search warrant and for the return of the engine blocks.
Marcelo
Steel
Corporation
opposed
the
motion.
After hearing, respondent Judge denied the motion in his order of November
9, 1978. The Yus motion for the reconsideration of that order was also
denied. On March 1, 1979, they filed in this Court the instant petition.
Issue: Whether or not the property subject in litigation can be seized without
prior judgement.
Held: No. Considering the present situation of the parties and the absence of
any final judgment in the estafa case as to the civil liability of the accused to
make restitution, we hold that the Yu spouses are entitled to retain
possession of the scrap engine blocks.
"the possession of movable property acquired in good faith is equivalent to a
title" and "every possessor has a right to be respected in his possession"
(Arts. 539 and 559, Civil Code).
The instant case is similar to the Chua Hai case. The Yu spouses bought the
scrap engine blocks in good faith for P44,000 from the alleged swindler
without any notice that the same were obtained under false pretenses or by
means of a bouncing check. The purchase by the Yu spouses of the scrap
engine blocks from Refuerzo, doing business under the tradename C. C.
Varried Corporation, was covered by a sales invoice and seemed to have
been made in the ordinary course of business
Marcelo Steel Corporation contends, that it recovered the scrap engine
blocks by means of a valid warrant. The Yu spouses counter that the search
warrant was void because it was issued without probable cause on the basis
of
Nuestros
hearsay
testimony.
We hold that the search warrant was lawfully issued. Respondent Judge
complied with the requirements for its issuance as prescribed in section 3,
Article IV of the Constitution and in sections 3 and 4, Rule 126 of the Rules of
Court.chanrobles.com:cralaw:red
While Nuestros knowledge of the alleged estafa was initially hearsay, yet his
comprehensive investigation of the case enabled him to have direct
knowledge of the sale made by Pablo Tiangco of Marcelo Steel Corporation to
Refuerzo and the sale made by Refuerzo and his confederates to the Yu
spouses.
Nuestros testimony was a sufficient justification for an examining magistrate
to conclude that the scrap engine blocks were the subject of estafa. That
conclusion was confirmed by the filing of the information for estafa.

70

But from the fact that the search warrant was validly issued, it does not
follow that Marcelo Steel Corporation is entitled to retain the same. There is
as yet no decree of restitution in the criminal case entitling Marcelo Steel
Corporation to recover the scrap iron from the third person who bought it in
good faith and for value.
Hence, in the absence of any adjudication as to the civil liability, there is no
legal basis for allowing Marcelo Steel Corporation to recover possession of
the scrap engine blocks. Indeed, there is cogency in the view of Justice Felix
in his concurring opinion in the Chua Hai case that restitution should not be
required in a case where the offended party voluntarily delivered the thing to
the offender-purchaser in the expectation of being paid the price and where,
thereafter, the offender sold the thing to an innocent third party. That
situation should be distinguished from the cases of theft and robbery where
the offended party was involuntarily deprived of his property.
4. AVA - Makati Leasing and Finance Corp. vs. Wearever Textile
Mills, GR 58469, 16 May 1983 [property subject of replevin]
FACTS: To obtain financial accommodations from Makati Leasing, Wearever
Textile discounted and assigned several receivables under a Receivable
Purchase Agreement with Makati Leasing. To secure the collection of
receivables, it executed a chattel mortgage over several raw materials and a
machinery Artos Aero Dryer Stentering Range (Dryer).
Wearever defaulted thus the properties mortgaged were extrajudicially
foreclosed. The sheriff, after the restraining order was lifted, was able to
enter the premises of Wearever and removed the drive motor of the Dryer.
The CA reversed the order of the CFI, ordering the return of the drive motor
since it cannot be the subject of a replevin suit being an immovable bolted to
the ground. Thus the case at bar.
ISSUE: WON the dryer can be the subject of replevin
RULING: Yes. By destination, it is a real property but by virtue of the intention
of the parties stipulated in their chattel mortgage contract, the machinery
was intended to be a personal property. The Court made reference to its
ruling inTumalad v. Vicencio and Standard Oil Co. of New York v.
Jaramillo where it held that a real property may be considered as a personal
property for purposes of executing a chattel mortgage thereon as long as the
parties to the contract so agree and no innocent third party will be
prejudiced thereby, and once the parties so agreed, they are already stopped
from claiming otherwise. Private respondent contended that its
characterization of the subject machinery as chattel in their agreement
should not be appreciated against it because it had never represented nor
agreed in such as it was merely required and dictated on by the petitioner to
sign a chattel mortgage in blank form. The Court was not persuaded by its
contention as the said issue was not duly raised in the lower and appellate
courts nor will the said signing in blank by the respondent make the contract
void but merely voidable by a proper action in court. Furthermore as it was
undeniable that it benefited from the chattel mortgage, it cannot be allowed
to impugn its efficacy for equity reasons.
5. AVA - Fernandez vs. International Corporate Bank, 7 October
1999 [jurisdiction over cases of replevin]

71

FACTS: petitioners purchased a Nissan Sentra Sedan through a financing


scheme of the private respondent, the International Corporate Bank, now
Union Bank of the Philippines, and the chattel mortgage was executed in
favor of the financing institution.
A complaint for a sum of money with replevin (Case No. 983-96) before the
Metropolitan Trial Court, Branch 44, Pasay City was then filed. Considering
that the principal amount involved was P553,944.00, petitioners filed an
Answer mentioning in the special and affirmative defenses a Motion to
Dismiss, for lack of jurisdiction. Aside from that, petitioners contested the
venue considering that the principal office of the respondent bank [was] in
Makati, while their residence [was] in Quezon City.
ISSUE: May the Writ of Replevin issued by the MTC of Pasay City be enforced
outside the city?
RULING: A writ of replevin issued by the Metropolitan Trial Court of Pasay City
may be served and enforced anywhere in the Philippines. Moreover, the
jurisdiction of a court is determined by the amount of the claim alleged in the
complaint, not by the value of the chattel seized in ancillary proceedings.
Under the Resolution of the Supreme Court en banc, dated January 11,
1983, providing for the interim rules and guidelines relative to the
implementation of BP 129, a writ of replevin like the one issued in the
present case may be served anywhere in the Philippines. Specifically, the
said Resolution states: 3. Writs and processes. - (a) Writs
of certiorari, prohibition,mandamus, quo warranto, habeas corpus and
injunction issued by a regional trial court may be enforced in any part of the
region. (b) All other processes, whether issued by a regional trial court or a
metropolitan trial court, municipal trial court or municipal circuit trial court
may be served anywhere in the Philippines, and, in the last three cases,
without a certification by the judge of the regional trial court.
Thus, the Writ of Replevin issued by Judge Paas, which obviously does not fall
under item a of the above-cited Rule, may be validly enforced anywhere in
the Philippines. Petitioners confused the jurisdiction of a court to hear and
decide a case on the one hand with, on the other, its power to issue writs
and processes pursuant to and in the exercise of said jurisdiction. Applying
the said Rule, Malaloan v. Court of Appeals reiterated the foregoing
distinction between the jurisdiction of the trial court and the administrative
area in which it could enforce its orders and processes pursuant to the
jurisdiction conferred on it: We feel that the foregoing provision is too clear to
be further belabored or enmeshed in unwarranted polemics. The rule
enumerates the writs and processes which, even if issued by a regional trial
court, are enforceable only within its judicial region. In contrast, it
unqualifiedly provides that all other writs and processes, regardless of which
court issued the same, shall be enforceable anywhere in the Philippines. No
legal provision, statutory or reglementary, expressly or impliedly provides a
jurisdictional or territorial limit [to] its area of enforceability. On the contrary,
the above-quoted provision of the interim Rules expressly authorizes its
enforcement anywhere in the country, since it is not among the processes
specified in paragraph (a) and there is no distinction or exception made
regarding the processes contemplated in paragraph (b).
6. AVA - Vda. De Denao vs. Ginete, 395 SCRA 542, 21 January
2003 [requirement for application]

72

FACTS: Merlita Dapadap Vda. de Danao charged Judge Manuel V. Ginete with
gross ignorance of the law, grave abuse of authority, delay in rendering
judgments and serious misconduct.
According to complainant, respondent the presiding judge of the Municipal
Trial Court (MTC) of Masbate, Masbate issued a Writ of Seizure dated
August 12, 1998, ordering the sheriff of the Regional Trial Court (RTC) of
Masbate to take immediate possession of a 6 x 6 truck and to hold it in
possession for five (5) days. The judge supposedly did so despite being
informed by "C/Insp. Tomas Semeniano, et al." that the truck was in custodia
legis, as it was "part of the exhibits formally offered in evidence by the
prosecution under Criminal Case No. 7427 pending before the RTC, Branch
44, Masbate."
ISSUE: WON the judge erroneously issued the writ
RULING: YES. In the present case, contrary to the elementary rules on
replevin, respondent improperly ordered the seizure of a vehicle under
custodia legis in another court, a higher one at that. Section 2 of Rule 60 of
the Rules of Court clearly requires that certain facts must be alleged in the
application for replevin, as follows:
"SEC. 2. Affidavit and bond. The applicant must show by his own
affidavit or that of some other person who personally knows the facts:
xxx
xxx
xxx
"(c) That the property has not been distrained or taken for a tax
assessment or a fine pursuant to law, or seized under a writ of
execution
or
preliminary
attachment,
or
otherwise
placed
under custodia legis, or if so seized, that it is exempt from such seizure
or custody;"
Under the foregoing provision, the plaintiff must show, by affidavit, that the
subject property has not been (1) distrained, (2) taken for a tax assessment
or a fine pursuant to law, (3) seized under a writ of execution or preliminary
attachment, or (4) placed under custodia legis.
The records reveal that Fermin Asilum, the plaintiff in the replevin case,
concealed from the MTC the fact that he was involved in a pending suit
(Criminal Case No. 7427 at the RTC of Masbate, Masbate, Branch 44), and
that the property he wanted to recover had been seized by authorities earlier
in relation to that criminal case. This circumstance was, however, disclosed
by the defendants in their Answer. Notwithstanding the disclosure,
respondent issued the Writ of Seizure a manifest and gross error on his
part.Respondent should have taken into account the information given by
herein complainant that the property was already under custodia legis by the
RTC of Masbate. As correctly observed by the OCA, the fact that the subject
property was under legal custody was easily verifiable.
7. AVA - Yang vs. Valdez, GR 73317, 31 August 1989 177 SCRA
141 [Proper party-applicant]
FACTS: On 4 January 1985, respondent spouses Ricardo and Milagros
Morante brought an action in the Regional Trial Court of General Santos City
against petitioner Thomas Yang and Manuel Yaphockun, to recover
possession of two (2) Isuzu-cargo trucks. In their complaint, the Morante
spouses alleged that they had actual use and possession of the two (2) cargo
trucks, having acquired them during the period from 1982 to 1984. The
trucks were, however, registered in the name of petitioner Thomas Yang who
was the Treasurer in the Morante spouses' business of buying and selling

73

corn. The Morante spouses further alleged that they were deprived of
possession of the vehicles in the morning of 3 January 1985, when petitioner
Yang had the vehicles taken from where they were parked in front of the
Coca-Cola Plant in General Santos City, to the warehouse of Manuel
Yaphockun and there they were thereafter held. Despite repeated demands,
the complaint alleged, petitioner Yang refused to release the trucks to
respondent spouses.
To obtain immediate possession of the Isuzu trucks, respondent spouses
applied for a writ of replevin and put up a replevin bond of P560,000.00
executed by respondent Milagros Morante and Atty. Bayani Calonzo (counsel
for respondent spouses).lwph1.t
The respondents submitted an opposition to Yaphockun's counter-bond,
contending that since Manuel Yaphockun was merely a nominal defendant,
he had no standing to demand the return of the cargo trucks.
ISSUE: WON respondent judge had committed a grave abuse of discretion
amounting to lack or excess of jurisdiction in approving the replevin bond of
respondent spouses
RULING: No. The provisional remedy of replevin is in the nature of a
possessory action and the applicant who seeks immediate possession of the
property involved need not be holder of the legal title to the property. It
suffices, if at the time he applies for a writ of replevin, he is, in the words of
Section 2, Rule 60, "entitled to the possession thereof."
. A person in actual or constructive possession of the goods sought to be
replevied, should of course be made a party-defendant. At the same time,
however, the respondent spouses, as complainants in the suit for replevin,
were entitled, for their own convenience and at their own peril, to exclude or
strike out the name of a party previously impleaded from the complaint. In
excluding Manuel Yaphockun as party-defendant from the complaint, the
respondent spouses were well within their rights; no leave of court was
needed, no responsive pleading having been previously filed. 8
8. AVA - Pagkalinawan vs. Gomez, GR L-22585, 16 December
1967, 21 SCRA [not applicable to property in custodia legis]
FACTS: Respondent Judge, the Hon. Amador E. Gomez acting on a complaint
for replevin filed by the other respondent Norberto L. Dayrit directed
petitioner, Nicanor B. Pagkalinawan, a supervising agent of the National
Bureau of Investigation to turn over to the Sheriff of Cebu City an automobile
which was seized under a search warrant issued by the Court of First
Instance of Manila, the Hon. Guillermo Santos presiding, as a subject of the
offense of theft or as stolen property.
ISSUE: whether a court of first instance of one district in a replevin
proceeding may ignore a search warrant issued by another court of first
instance.
RULING: Petitioner is entitled to the remedy prayed for; the writ must be
granted. It would be to ignore a principle to which this Court has been firmly
committed if under the circumstances disclosed, respondent Judge would be
sustained. The moment a court of first instance has been informed through
the filing of an appropriate pleading that a search warrant has been issued
by another court of first instance, it cannot, even if the literal language of the
Rules of Court7 yield a contrary impression which in this case demonstrated
the good faith of respondent Judge for acting as he did, require a sheriff or

74

any proper officer of the Court to take the property subject of the replevin
action if theretofore it came into the 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. itc-alf Any other view would be
subversive of a doctrine that has been steadfastly adhered to, the main
purpose of which is to assure stability and consistency in judicial actuations
and to avoid confusion that may otherwise ensue if courts of coordinate
jurisdiction are permitted to interfere with each other's lawful orders
9. DA -Chua vs. CA, GR 79021, 17 May 1993 [replevin not proper
remedy if there are conflicting claims]
FACTS
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.
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 , 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.
Judge Caares of the Regional Trial Court of Cebu City Branch VIII directed
the issuance of a writ of replevin upon the posting of a bond in the amount of
one hundred thousand pesos (P100,000.00). The writ of replevin was also
issued on the same date, and the subject vehicle was seized.
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 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. 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.
ISSUE

75

WONthe 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.
RULING
It is a basic tenet of civil procedure that replevin will not lie for property in
custodia legis. A thing is in custodia legis when it is shown that it has been
and is subjected to the official custody of a judicial executive officer in
pursuance of his execution of a legal writ (Bagalihog vs. Fernandez, 198
SCRA 614 [1991]). The reason posited for this principle is that if it was
otherwise, there would be interference with the possession before the
function of the law had been performed as to the process under which the
property was taken. Thus, a defendant in an execution or attachment cannot
replevy goods in the possession of an officer under a valid process, although
after the levy is discharged, an action to recover possession will lie.
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.
Thus, the Regional Trial Court of Cebu Branch VIII erred when it ordered the
transfer of possession of the property seized to petitioner when the latter
filed the action for replevin. It should have dismissed the case since by virtue
of the "provisional dismissal", of the carnapping case there is still a
probability that a criminal case would be filed, hence a conflict in jurisdiction
could still arise. The basic principle that a judge who presides in one court
cannot annul or modify the orders issued by another branch of the same
court because they are co-equal and independent bodies acting coordinately,
must always be adhered to.
10. DA -Asian Terminals vs. Bautista-Ricafort, GR 166901, 27
October 2006 [Replevin not applicable to goods seized by the
Bureau of Customs]
FACTS
Respondents were duly-licensed importers of vehicles. Sometime in April and
May 1998, they imported 72 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

76

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 sal
eat public auction on September 10, 1998.
The vehicles were seized by virtue of Section 1, Republic Act (RA) No. 8506,
which took effect on February 22, 1998, which 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
On November 11, 1998, the importers 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. They contend that the importation ofright-hand drive vehicles is
not prohibited under RA No. 8506 provided that conversion kits are included
in the imported vehicles.
RTC granted writ of replevin.
Meanwhile, Petitioner ATI filed a third party claim against respondent
importers for unpaid warehouse dues. As the Bureau of Customs
file
a
Motion/Notice
to Dismiss/Withdraw Complaint, the trial court
dismissed the complaint along with the Third Party Claim/Motion for
Intervention as the latter is only it being only an accessory to the principal
case. ATI moved to reconsider and was denied.
ATI then appealed to the CA which ruled that the RTC had no jurisdiction
over the complaint filed by respondents. Under the Customs and Tariff 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. Since it was bereft of jurisdiction in
the principal case, it also had no jurisdiction over the third party
claim/complaint in intervention as such is only ancillary and supplemental
ISSUE
Whether replevin was properly issued.
RULING
No.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 he court, the RTC acted
without jurisdiction over the action and the vehicles subject matter thereof.

77

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.
In fine, the initial orders of the RTC granting the issuance of the writ of
replevin and its implementation are void. While 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.
11. DA -Terlyngrace Rivera vs. Florencio Vargas, GR 165895, 5
June 2009 [Effect of improper service of writ]
FACTS
Florencio Vargas (Vargas) filed a complaint against petitioner and several
John Does before Branch 02 of the Regional Trial Court (RTC) in Tuguegarao
City, Cagayan, for the recovery of a 150 T/H rock crushing plant located in
Sariaya, Quezon. The complaint was accompanied by a prayer for the
issuance of a writ of replevin and the necessary bond amounting to
P2,400,000.00.
Summons was served upon petitioner through her personal secretary.
Interestingly, however, the writ of replevin was served upon and signed by a
certain Joseph Rejumo, the security guard on duty in petitioners crushing
plant in Sariaya, Quezon contrary to the sheriffs return stating that the writ
was served upon Rivera.
Rivera filed her answer, manifestation, and motion for the acceptance of
petitioners redelivery bond. RTC issued an Order disapproving petitioners
redelivery bond application for failure to comply with the requirements under
Sections 5 and 6 of Rule 60 of the Rules of Court. Without directly saying so,
the RTC faulted petitioner for her failure to file the application for redelivery
bond within five (5) days from the date of seizure as provided in the Rules of
Court. Petitioner moved for reconsideration, but the same was also denied.
The petitioner appealed in the CA but it was also denied. Hence, this petition.
ISSUE

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WON RTC committed grave abuse of discretion in denying her counterbond


on the ground that it was filed out of time. She contends that the mandatory
five-day period did not even begin to run in this case due to the improper
service of the writ of replevin, contrary to Section 4 of Rule 60.
RULING
Replevin is one of the most ancient actions known to law, taking its name
from the object of its process.
It originated in common law as a remedy against the wrongful exercise of the
right of distress for rent[23] and, according to some authorities, could only
be maintained in such a case.[24] But by the weight of authority, the remedy
is not and never was restricted to cases of wrongful distress in the absence
of any statutes relating to the subject, but is a proper remedy for any
unlawful taking.[25] Replevied, used in its technical sense, means delivered
to the owner,[26] while the words to replevy means to recover possession by
an action of replevin.[27]
Broadly understood in this jurisdiction, replevin is both a form of principal
remedy and of provisional relief. It may refer either to the action itself, i.e., to
regain the possession of personal chattels being wrongfully detained from
the plaintiff by another, or to the provisional remedy that would allow the
plaintiff to retain the thing during the pendency of the action and to hold it
pendente lite.[28] The action is primarily possessory in nature and generally
determines nothing more than the right of possession.[29]
The law presumes that every possessor is a possessor in good faith.[30] He
is entitled to be respected and protected in his possession[31] as if he were
the true owner thereof until a competent court rules otherwise.[32] Before a
final judgment, property cannot be seized unless by virtue of some provision
of law.[33] The Rules of Court, under Rule 60, authorizes such seizure in
cases of replevin. However, a person seeking a remedy in an action for
replevin must follow the course laid down in the statute, since the remedy is
penal in nature.[34] When no attempt is made to comply with the provisions
of the law relating to seizure in this kind of action, the writ or order allowing
the seizure is erroneous and may be set aside on motion[35] by the adverse
party. Be it noted, however, that a motion to quash the writ of replevin goes
to the technical regularity of procedure, and not to the merits of the case[36]
in the principal action.Service of the writ upon the adverse party is
mandatory in line with the constitutional guaranty on procedural due process
and as safeguard against unreasonable searches and seizures.[38] If the writ
was not served upon the adverse party but was instead merely handed to a
person who is neither an agent of the adverse party nor a person authorized
to receive court processes on his behalf, the service thereof is erroneous and
is, therefore, invalid, running afoul of the statutory and constitutional
requirements. The service is likewise invalid if the writ of replevin was served
without the required documents. Under these circumstances, no right to
seize and to detain the property shall pass, the act of the sheriff being both
unlawful and unconstitutional.

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E. Support Pendente Lite [Rule 61]


1. DA -Antonio Perla vs. Mirasol Baring, GR 172471, 12
November 2012 [Paternity and Filiation need to be established by
clear and convincing evidence]
FACTS
Respondent Mirasol Baring (Mirasol) and petitioner Antonio Perla (Antonio)
were allegedly neighbors. Eventually, they became sweethearts. When
Mirasol became pregnant, Antonio allegedly assured her that he would
support her. However, Antonio started to evade her.
Mirasol and her then minor son, Randy Perla (Randy), filed before the RTC a
Complaint for support against Antonio. Mirasol and Randy thus prayed that
Antonio be ordered to support Randy. During the trial, Mirasol presented
Randys Certificate of Live Birth and Baptismal Certificate indicating her and
Antonio as parents of the child. Mirasol testified that she and Antonio
supplied the information in the said certificates. The RTC rendered a decision
ordering Antonio to support Randy, which was affirmed by CA.
ISSUE
Whether or not Randy is entitled for support from Antonio.
RULING
Mirasol and Randys Complaint for support is based on Randys alleged
illegitimate filiation to Antonio. Hence, for Randy to be entitled for support,
his filiation must be established with sufficient certainty. The Court has ruled
that a high standard of proof is required to establish paternity and filiation.
An order for x xx support may create an unwholesome situation or may be
an irritant to the family or the lives of the parties so that it must be issued
only if paternity or filiation is established by clear and convincing evidence.
In the case at bar, Mirasol and Randy failed to establish Randys illegitimate
filiation to Antonio. The Certificate of Live Birth and baptismal certificate of
Randy have no probative value to establish Randys filiation to Antonio since
the latter had not signed the same. A certificate of live birth purportedly
identifying the putative father is not competent evidence of paternity when
there is no showing that the putative father had a hand in the preparation of
said certificate. Also, while a baptismal certificate may be considered a
public document, it can only serve as evidence of the administration of the
sacrament on the date specified but not the veracity of the entries with
respect to the childs paternity. Thus, x xx baptismal certificates are per se
inadmissible in evidence as proof of filiation and they cannot be admitted
indirectly as circumstantial evidence to prove the same.

Special Civil Actions:

80

A. Interpleader [Rule 62]


1. DA -Mesina vs. IAC, GR L-70145, 13 November 1986, 145
SCRA 497 [proper remedy against conflicting claims]
FACTS
Jose Go purchased from Associated Bank a cashier's check for P800,000.00.
Unfortunately, he left said check on the top of the desk of the bank manager
when he left the bank. The bank manager entrusted the check for
safekeeping to a bank official, a certain Albert Uy. While Uy went to the
men's room, the check was stolen by his visitor in the person of Alexander
Lim. Upon discovering that the check was lost, Jose Go accomplished a
"STOP PAYMENT" order. Two days later, Associated Bank received the lost
check for clearing from Prudential Bank. After dishonoring the same check
twice, Associated Bank received summons and copy of a complaint for
damages of Marcelo Mesina who was in possession of the lost check and is
demanding payment. Petitioner claims that a cashier's check cannot be
countermanded in the hands of a holder in due course.
An information for theft (Annex J) was instituted against Alexander Lim and
the corresponding warrant for his arrest was issued (Annex 6-A) which up to
the date of the filing of this instant petition remains unserved because of
Alexander Lim's successful evation thereof.
Meanwhile, Jose Go filed his answer in the Interpleader Case and moved to
participate as intervenor in the complain for damages. Albert Uy filed a
motion of intervention and answer in the complaint for Interpleader. On the
Scheduled date of pretrial conference in the interpleader case, it was
disclosed that the "John Doe" impleaded as one of the defendants is actually
petitioner Marcelo A. Mesina. Petitioner instead of filing his answer to the
complaint in the interpleader an Omnibus Motion to Dismiss Ex Abudante
Cautela alleging lack of jurisdiction in view of the absence of an order to
litigate, failure to state a cause of action and lack of personality to sue.
The trial court in the interpleader case issued an order dated July 13, 1984,
denying the motion to dismiss of petitioner Mesina and ruling that
respondent bank's complaint sufficiently pleaded a cause of action for
interpleader. Petitioner Mesina filed a petition for certioari with preliminary
injunction with IAC. The latter rendered its decision dimissing the petition for
certiorari.
ISSUE
WON interpleader is the proper remedy in this case.
RULING

81

Considering the aforementioned facts and circumstances, respondent bank


merely took the necessary precaution not to make a mistake as to whom to
pay and therefore interpleader was its proper remedy. It has been shown that
the interpleader suit was filed by respondent bank because petitioner and
Jose Go were both laying their claims on the check, petitioner asking
payment thereon and Jose Go as the purchaser or owner. The allegation of
petitioner that respondent bank had effectively relieved itself of its primary
liability under the check by simply filing a complaint for interpleader is belied
by the willingness of respondent bank to issue a certificate of time deposit in
the amount of P800,000 representing the cashier's check in question in the
name of the Clerk of Court of Manila to be awarded to whoever wig be found
by the court as validly entitled to it. Said validity will depend on the strength
of the parties' respective rights and titles thereto. Bank filed the interpleader
suit not because petitioner sued it but because petitioner is laying claim to
the same check that Go is claiming. On the very day that the bank instituted
the case in interpleader, it was not aware of any suit for damages filed by
petitioner against it as supported by the fact that the interpleader case was
first entitled Associated Bank vs. Jose Go and John Doe, but later on changed
to Marcelo A. Mesina for John Doe when his name became known to
respondent bank.
Petitioner assails the then respondent IAC in upholding the trial court's order
declaring petitioner in default when there was no proper order for him to
plead in the interpleader case. Again, such contention is untenable. The trial
court issued an order, compelling petitioner and respondent Jose Go to file
their Answers setting forth their respective claims. Subsequently, a Pre-Trial
Conference was set with notice to parties to submit position papers.
Petitioner argues in his memorandum that this order requiring petitioner to
file his answer was issued without jurisdiction alleging that since he is
presumably a holder in due course and for value, how can he be compelled
to litigate against Jose Go who is not even a party to the check? Such
argument is trite and ridiculous if we have to consider that neither his name
or Jose Go's name appears on the check. Following such line of argument,
petitioner is not a party to the check either and therefore has no valid claim
to the Check. Furthermore, the Order of the trial court requiring the parties to
file their answers is to all intents and purposes an order to interplead,
substantially and essentially and therefore in compliance with the provisions
of Rule 63 of the Rules of Court.
2. ROY- Arreza vs. Diaz, Jr, GR 133113, 30 August 2001
[interpleading parties may file counter-claim, cross-claims or third
party complaint for complete adjudication of the case]
Facts:
Bliss Development Corporation is the owner of a housing unit located at Lot
27. Block 30 New Capitol Estates I, Barangay Matandang Balara, Quezon City.
In the course of a case involving a conflict of ownership between petitioner

82

Edgar H. Arreza and respondent Montano M. Diaz, Jr., 4 docketed as Civil


Case No. 94-2086 before the Regional Trial Court of Makati, Branch 146, Bliss
Development Corporation filed a complaint for interpleader.

Trial court resolved the conflict in favor of defendant Edgar H. Arreza, and
plaintiff Bliss Development is granted cognizance of the May 6, 1991 transfer
of rights by Emiliano and Leonila Melgazo thru Manuel Melgazo, to said
defendant Edgar Arreza. The case is dismissed as against defendant
Montano M. Diaz, Jr.

Thereafter respondent Diaz filed a complaint against Bliss Development


Corporation, Edgar H. Arreza, and Domingo Tapay in the Regional Trial Court
of Makati, Branch 59, docketed as Civil Case No. 96-1372. He sought to hold
Bliss Development Corporation and petitioner Arreza liable for
reimbursement to him of P1,706,915;58 representing the cost of his
acquisition and improvements on the subject property with interest at 8%
per annum.

Arreza filed a Motion to Dismiss on the ground of res adjudicata or


conclusiveness of the judgment in the interpleader case as well as lack of
cause of action. But to no avail petition is DISMISSED in Court of Appeals.

Issue: Whether private respondents can still file a separate complaint against
the petitioners on the ground different from the ground of interpleader?

Ruling: NO, aside from relying solely on the deed of sale with a right to
repurchase and failure on the part of the vendors to purchase it within the
period stipulated therein, the defendant had set up an alternative though
inconsistent defense that he had inherited the parcel of land from his late
maternal grandfather and presented evidence in support of both defenses,
the overruling of the first would not bar the determination by the court of the
second. The defendant having failed to set up such alternative defenses and
chosen or elected to rely on one only, the overruling thereof was a complete
determination of the controversy between the parties which bars a
subsequent action based upon an unpleaded defense, or any other cause of
action, except that of Failure of the complaint to state a cause of action and
of lack of jurisdiction of the Court. The determination of the issue joined by
the parties constitutes res judicata. (Italics supplied)

83

Although the alternative defense of being builders in good faith is only


permissive, the counterclaim for reimbursement of the value of the
improvements is in the nature of a compulsory counterclaim. Thus, the
failure by the private respondents to set it up bars their right to raise it in a
subsequent litigation (Rule 9, Section 4 of the Rules of Court). While We
realize the plight of the private respondents, the rule on compulsory
counterclaim is designed to enable the disposition of the whole controversy
at one time and in one action. The philosophy of the rule is to discourage
multiplicity of suits. (Italics supplied)

Having failed to set up his claim for reimbursement, said claim of respondent
Diaz being in the nature of a compulsory counterclaim is now barred.
B. Declaratory Relief [Rule 63]
1. ROY- Eufemia Almeda vs. Bathala marketing Industries, GR
150806, 28 January 2008 [Defintion; Requisites]
Facts: In May 1997, respondent Bathala Marketing Industries, Inc. (lessee)
entered into a contract of lease with petitioners (lessors). Provisions of the
contract of lease include:

6th - Lessee shall pay an increased rent if there is any new tax imposed on
the property

7th - In case of supervening extraordinary inflation or devaluation of the PHP,


the value of PHP at the time of the establishment of the obligation shall be
the basis of payment

Petitioners later demanded payment of VAT and 73% adjusted rentals


pursuant to the foregoing provisions. Respondent refused and filed an action
for declaratory relief. Petitioners filed an action for ejectment.

Issue: Whether or not declaratory relief is proper.

Held: YES. Petitioners insist that respondent was already in breach of the
contract when the petition was filed, thus, respondent is barred from filing an
action for declaratory relief. However, after petitioners demanded payment
of adjusted rentals and in the months that followed, respondent complied
with the terms and conditions set forth in their contract of lease by paying

84

the rentals stipulated therein. Respondent religiously fulfilled its obligations


to petitioners even during the pendency of the present suit. There is no
showing that respondent committed an act constituting a breach of the
subject contract of lease. Thus, respondent is not barred from instituting
before the trial court the petition for declaratory relief.

Petitioners further claim that the instant petition is not proper because a
separate action for rescission, ejectment and damages had been
commenced before another court; thus, the construction of the subject
contractual provisions should be ventilated in the same forum.

As a rule, the petition for declaratory relief should be dismissed in view of the
pendency of a separate action for unlawful detainer. In this case, however,
the trial court had not yet resolved the rescission/ejectment case during the
pendency of the declaratory relief petition. In fact, the trial court, where the
rescission case was on appeal, initiated the suspension of the proceedings
pending the resolution of the action for declaratory relief.
2. ROY- Malana vs. Tappa, GR 181303, 17 September 2009
[Proper party, three remedies similar to declaratory relief,
reformation, quieting of title and consolidation; jurisdiction]
Facts: Petitioners filed before the RTC their Complaint for Reivindicacion,
Quieting of Title, and Damages against respondents. Petitioners alleged in
their Complaint that they are the owners of a parcel of land covered by
Transfer Certificate of Title (TCT) No. T-1279373 situated in Tuguegarao City,
Cagayan. Petitioners inherited the subject property from Anastacio Danao,
who died intestate. During the lifetime of Anastacio, he had allowed
Consuelo Pauig, who was married to Joaquin Boncad, to build on and occupy
the southern portion of the subject property. Anastacio and Consuelo agreed
that the latter would vacate the said land at any time that Anastacio and his
heirs might need it.

Consuelos family members, continued to occupy the subject property even


after her death, already building their residences thereon using permanent
materials. Petitioners also learned that respondents were claiming ownership
over the subject property. Averring that they already needed it, petitioners
demanded that respondents vacate the same. Respondents, however,
refused to heed petitioners demand.

During the conciliation proceedings, respondents asserted that they owned


the subject property and presented documents ostensibly supporting their

85

claim of ownership. According to petitioners, respondents documents were


highly dubious, falsified, and incapable of proving the latters claim of
ownership over the subject property; nevertheless, they created a cloud
upon petitioners title to the property. Thus, petitioners were compelled to
file before the RTC a Complaint to remove such cloud from their title.

Before respondents could file their answer, the RTC issued an Order
dismissing petitioners Complaint on the ground of lack of jurisdiction. it
being a real action involving a real property with assessed value less than
P20,000.00 and hereby dismisses the same without prejudice. Petitioners
filed a Motion for Reconsideration of the aforementioned RTC Order
dismissing their Complaint. They argued that their principal cause of action
was for quieting of title; the accion reivindicacion was included merely to
enable them to seek complete relief from respondents.

Issue: Whether respondent judge committed grave abuse of discretion in


dismissing the complaint of the petitioners motu proprio?

Ruling: An action for declaratory relief presupposes that there has been no
actual breach of the instruments involved or of rights arising thereunder.
Since the purpose of an action for declaratory relief is to secure an
authoritative statement of the rights and obligations of the parties under a
statute, deed, or contract for their guidance in the enforcement thereof, or
compliance therewith, and not to settle issues arising from an alleged breach
thereof, it may be entertained only before the breach or violation of the
statute, deed, or contract to which it refers. A petition for declaratory relief
gives a practical remedy for ending controversies that have not reached the
state where another relief is immediately available; and supplies the need for
a form of action that will set controversies at rest before they lead to a
repudiation of obligations, an invasion of rights, and a commission of wrongs.

Where the law or contract has already been contravened prior to the filing of
an action for declaratory relief, the courts can no longer assume jurisdiction
over the action. In other words, a court has no more jurisdiction over an
action for declaratory relief if its subject has already been infringed or
transgressed before the institution of the action.
3. ROY- Ombudsman vs. Ibay, GR 137538, 3 September 2001
[relief incapable of pecuniary estimation; jurisdiction]
Facts:

86

Petitioner conducted an investigation on the alleged "scam" on the Public


Estates Authority-Amari Coastal Bay Development Corporation. Initial result
of the investigation revealed that the alleged anomaly was committed
through the issuance of checks which were subsequently deposited in
several financial institutions. petitioner issued an Order directing private
respondent Lourdes Marquez, branch manager of Union Bank of the
Philippines branch at Julia Vargas Avenue, Pasig City, to produce several bank
documents for inspection relative to Account Nos. 011-37270-5, 240-020718,
245-30317-3 and 245-303318-1, reportedly maintained in the said branch.

Private respondent failed to comply with petitioner's order. She explained


that the subject accounts pertain to International Corporate Bank (Interbank)
which merged with Union Bank in 1994. She added that despite diligent
efforts, the bank could not identify these accounts since the checks were
issued in cash or bearer forms. She informed petitioner that she had to first
verify from the Interbank records in its archives the whereabouts of said
accounts.

private respondent filed a petition for declaratory relief with an application


for temporary restraining order and/or preliminary injunction before the
Regional Trial Court of Makati City, Branch 135, presided by respondent Judge
Francisco Ibay. private respondent averred that under Sections 2 and 3 of
R.A. 1405 (Law on Secrecy of Bank Deposits), she had the legal obligation
not to divulge any information relative to all deposits of whatever nature with
banks in the Philippines. But petitioner's Order cited Section 15 (8) of R.A.
6770 stating that the Ombudsman had the power to examine and have
access to bank accounts and records.

Issue: Whether public respondent acted without jurisdiction and/or with


grave abuse of discretion in entertaining the cited petition for declaratory
relief?

Ruling: The requisites of an action for declaratory relief are: (1) there must
be a justiciable controversy must be between persons whose interests are
adverse; (3) that the party seeking the relief has a legal interest in the
controversy; and (4) that the issue is ripe for judicial determination.7 In this
case, the controversy concerns the extent of the power of petitioner to
examine bank accounts under Section 15 (8) of R.A. 6770 vis--vis the duty
of banks under Republic Act 1405 not to divulge any information relative to
deposits of whatever nature. The interests of the parties are adverse
considering the antagonistic assertion of a legal right on one hand, that is
the power of Ombudsman to examine bank deposits, and on the other, the

87

denial thereof apparently by private respondent who refused to allow


petitioner to inspect in camera certain bank accounts. The party seeking
relief, private respondent herein, asserts a legal interest in the controversy.
The issue invoked is ripe for judicial determination as litigation is inevitable.
Note that petitioner has threatened private respondent with "indirect
contempt" and "obstruction" charges should the latter not comply with its
order.
4. ROY- Commisioner of Customs vs. Hyper Mix Feeds Corp., GR
179579, 1 February 2012 [necessary facts for an action for
declaratory relief]
Facts: Commissioner of Customs issued CMO 27-2003. Under the
Memorandum, for tariff purposes, wheat was classified according to the
following: (1) importer or consignee; (2) country of origin; and (3) port of
discharge. CMO 27-2003 further provided for the proper procedure for
protest or Valuation and Classification Review Committee (VCRC) cases.
Under this procedure, the release of the articles that were the subject of
protest required the importer to post a cash bond to cover the tariff
differential.

A month after the issuance, respondent filed a Petition for Declaratory Relief7
with the Regional Trial Court (RTC) of Las Pias City. It anticipated the
implementation of the regulation on its imported and perishable Chinese
milling wheat in transit from China.8 Respondent contended that CMO 272003 was issued without following the mandate of the Revised
Administrative Code on public participation, prior notice, and publication or
registration with the University of the Philippines Law Center.

Subsequently, RTC issued a Temporary Restraining Order (TRO) effective for


twenty (20) days from notice. Petitioners thereafter filed a Motion to Dismiss.
Trial court ruled in favor of respondent.

Issue: Whether declaratory relief is the right remedy given the circumstances
of the case?

Ruling: The requirements of an action for declaratory relief are as follows: (1)
there must be a justiciable controversy; (2) the controversy must be between
persons whose interests are adverse; (3) the party seeking declaratory relief
must have a legal interest in the controversy; and (4) the issue involved
must be ripe for judicial determination.15 We find that the Petition filed by
respondent before the lower court meets these requirements.

88

When an administrative rule is merely interpretative in nature, its


applicability needs nothing further than its bare issuance, for it gives no real
consequence more than what the law itself has already prescribed. When, on
the other hand, the administrative rule goes beyond merely providing for the
means that can facilitate or render least cumbersome the implementation of
the law but substantially increases the burden of those governed, it
behooves the agency to accord at least to those directly affected a chance to
be heard, and thereafter to be duly informed, before that new issuance is
given the force and effect of law.
5. IVY - Macasiano vs. NHA, GR 107921, 1 July 1993 [treating
declaratory relief as one for prohibition]
FACTS:
Petitioner seeks to have the Court declare as unconstitutional Sections 28
and 44 of Republic Act No. 7279, otherwise known as the Urban
Development and Housing Act of 1992. He predicates his locus standi on his
being a consultant of the Department of Public Works and Highways (DPWH)
pursuant to a Contract of Consultancy on Operation for Removal of
Obstructions and Encroachments on Properties of Public Domain and his
being a taxpayer. As to the first, he alleges that said Sections 28 and 44
"contain the seeds of a ripening controversy that serve as drawback" to his
"tasks and duties regarding demolition of illegal structures"; because of the
said sections, he "is unable to continue the demolition of illegal structures
which he assiduously and faithfully carried out in the past." As a taxpayer, he
alleges that "he has a direct interest in seeing to it that public funds are
properly and lawfully disbursed."
Petitioner maintains that the said provisions are unconstitutional because: (a)
They deprive the government, and more so, private property owners of their
property without due process of law and without compensation; (b) They
reward, instead of punish, what this Honorable Court has categorically
declared as unlawful acts; (c) They violate the prohibition against legislation
that" takes away one's property to be given to plain interlopers; (d) They
sweep overbroadly over legitimate concerns of the police power of the State;
and (e) They encroach upon the judicial power to its valid judgments and
orders.
The Solicitor General on the other hand maintains that the instant petition is
devoid of merit for non-compliance with the essential requisites for the
exercise of judicial review in cases involving the constitutionality of a law. He
contends that there is no actual case or controversy with litigants asserting
adverse legal rights or interests, that the petitioner merely asks for an
advisory opinion, that the petitioner is not the proper party to question the
Act as he does not state that he has property "being squatted upon" and that
there is no showing that the question of constitutionality is the very lis
mota presented. He argues that Sections 28 and 44 of the Act are not
constitutionality infirm.
ISSUE:
Whether the petition must prosper.
HELD:

89

NO.
It is a rule firmly entrenched in our jurisprudence that the
constitutionality of an act of the legislature will not be determined by the
courts unless that, question is properly raised and presented in appropriate
cases and is necessary to a determination of the case, i.e., the issue of
constitutionality must be very lis mota presented. To reiterate, the essential
requisites for a successful judicial inquiry into the constitutionality of a law
are: (a) the existence of an actual case or controversy involving a conflict of
legal rights susceptible of judicial determination, (b) the constitutional
question must be raised by a proper property, (c) the constitutional question
must be raised at the opportunity, and (d) the resolution of the constitutional
question must be necessary to the decision of the case. A proper party is one
who has sustained or is in danger of sustaining an immediate injury as a
result of the acts or measures complained of.
It is easily discernible in the instant case that the first two (2) fundamental
requisites are absent. There is no actual controversy. Moreover, petitioner
does not claim that, in either or both of the capacities in which he is filing the
petition, he has been actually prevented from performing his duties as a
consultant and exercising his rights as a property owner because of the
assertion by other parties of any benefit under the challenged sections of the
said Act. Judicial review cannot be exercised in vacuo. Judicial power is the
"right to determine actual controversies arising between adverse litigants."
In reality, his petition is one for declaratory relief as he prays therein that,
"his rights as well as those of private landowners be clearly defined and his
duties under the Constitution and the pertinent laws be dearly stated with
respect to the demolition of illegal structures on public and private lands."
Even so, it is still not viable since among the essential requisites of a petition
for declaratory relief are controversy, (a) there must be a justiciable
controversy,(b)the controversy must be between persons whose interests are
adverse and (c) the party seeking declaratory relief must have a legal
interest in the controversy. Furthermore, an action for declaratory relief does
not fall within the original jurisdiction of the Supreme Court even if only
questions of law are involved. True, we have said that such a petition may be
treated as one for prohibition or mandamus if it has far reaching implications
and raises questions that need to be resolved; but the exercise of such
discretion presupposes, at the outset, that the petition is otherwise viable or
meritorious.
The petitioner is not likewise a "proper party." As a consultant of the DPWH
under the "Contract for Consultancy . . .," he is not vested with any authority
to demolish obstructions and encroachments on properties of the public
domain, much less on private lands. The consultancy contract limits his
duties to the following: "(a) to organize and train selected DPWH personnel
for the different Engineering Districts in the NCR in the techniques and
methods of removing/demolishing illegal structures/stalls, etc. as well as in
crowd control, self-defense and security procedures . . .; (b) to provide advice
to the Secretary and other DPWH officials regarding prioritization of areas to
be cleared of obstructions and encroachments; (c) to conduct field inspection
from time to time of areas recommend for clearing; (d) to provide advice in
developing appropriate standards and techniques in cost effective
implementation of the removal and demolition of obstructions and
encroachments . . .; and (e) to develop operational procedures that will
institutionalize demolition processes." Moreover, the consultancy contract
expired on 31 December 1992 and the petitioner has not manifested that he
obtained a renewal or extension thereof.

90

6. IVY - Wilson Gamboa vs. Finance Secretary, GR 176579, 28


June 2011 [treating declaratory relief as one for mandamus if it has
far reaching implications]
FACTS:
This is an original petition for prohibition, injunction, declaratory relief and
declaration of nullity of
the sale of shares of stock of Philippine
Telecommunications Investment Corporation (PTIC) by the government of the
Republic of the Philippines, acting through the Inter-Agency Privatization
Council (IPC), to Metro Pacific Assets Holdings, Inc. (MPAH), an affiliate of First
Pacific Company Limited (First Pacific), a Hong Kong-based investment
management and holding company and a shareholder of the Philippine Long
Distance Telephone Company (PLDT).
The petitioner questioned the sale on the ground that it also involved an
indirect sale of 12 million shares (or about 6.3 percent of the outstanding
common shares) of PLDT owned by PTIC to First Pacific. With the this sale,
First Pacifics common shareholdings in PLDT increased from 30.7 percent to
37 percent, thereby increasing the total common shareholdings of foreigners
in PLDT to about 81.47%. This, according to the petitioner, violates Section
11, Article XII of the 1987 Philippine Constitution which limits foreign
ownership of the capital of a public utility to not more than 40%.
ISSUE:
Whether the petition for declaratory relief as filed is a proper remedy.
HELD:
YES. At the outset, petitioner is faced with a procedural barrier. Among the
remedies petitioner seeks, only the petition for prohibition is within the
original jurisdiction of the court, which however is not exclusive but is
concurrent with the Regional Trial Court and the Court of Appeals. The
actions for declaratory relief, injunction, and annulment of sale are not
embraced within the original jurisdiction of the Supreme Court. On this
ground alone, the petition could have been dismissed outright.
While direct resort to SC may be justified in a petition for prohibition, the
Court shall nevertheless refrain from discussing the grounds in support of the
petition for prohibition since on 28 February 2007, the questioned sale was
consummated when MPAH paid IPC P25,217,556,000 and the government
delivered the certificates for the 111,415 PTIC shares. However, since the
threshold and purely legal issue on the definition of the term "capital" in
Section 11, Article XII of the Constitution has far-reaching implications to the
national economy, the Court treats the petition for declaratory relief as one
for mandamus.
It is well-settled that the Court may treat a petition for declaratory relief as
one for mandamus if the issue involved has far-reaching implications. The
Court has no original and exclusive jurisdiction over a petition for declaratory
relief. However, exceptions to this rule have been recognized. Thus,
where the petition has far-reaching implications and raises
questions that should be resolved, it may be treated as one for
mandamus.
In the present case, petitioner seeks primarily the interpretation of the term
"capital" in Section 11, Article XII of the Constitution. He prays that this Court
declare that the term "capital" refers to common shares only, and that such
shares constitute "the sole basis in determining foreign equity in a public
utility." Petitioner further asks this Court to declare any ruling inconsistent
with such interpretation unconstitutional.

91

The interpretation of the term "capital" in Section 11, Article XII of the
Constitution has far-reaching implications to the national economy. In fact, a
resolution of this issue will determine whether Filipinos are masters, or
second class citizens, in their own country. What is at stake here is whether
Filipinos or foreigners will have effective control of the national economy.
Indeed, if ever there is a legal issue that has far-reaching implications to the
entire nation, and to future generations of Filipinos, it is the threshhold legal
issue presented in this case.
The instant petition therefore presents the Court with another opportunity to
finally settle this purely legal issue which is of transcendental importance
to the national economy and a fundamental requirement to a faithful
adherence to our Constitution. The Court must forthwith seize such
opportunity, not only for the benefit of the litigants, but more significantly for
the benefit of the entire Filipino people, to ensure, in the words of the
Constitution, "a self-reliant and independent national economy effectively
controlled by Filipinos." Besides, in the light of vague and confusing
positions taken by government agencies on this purely legal issue, present
and future foreign investors in this country deserve, as a matter of basic
fairness, a categorical ruling from this Court on the extent of their
participation in the capital of public utilities and other nationalized
businesses.
7. IVY - Customs vs. Cloribel, GR L-21036, 30 June 1977 [third
party complaint is not proper when the main case is declaratory
relief]
FACTS:
There was pending before respondent court a special civil action for
declaratory relief, wherein Ofilada, as the Second Receiver of the World War
II Veterans Enterprises, Inc. (Warvets) in Civil Case No. 34998, likewise
pending in another Branch of the Court of First Instance of Manila, sought a
judicial declaration as to whether, under the allocation granted to said
Warvets to purchase reparations goods, the conversion into pesos of the
dollar prices of said goods should be at the rate of two pesos to one dollar or
at the prevailing market rate at the time for payment, which would be much
higher. Civil Case No. 34998 was a minority suit filed by certain stockholders
of Warvets alleging irregularities in the management and disposition of the
goods being purchased by the corporation by virtue of the aforementioned
allocation, hence the need for receivers, of which there were two, the first
being one Ramon E. Saura and the second, Ofilada. In the same Civil Case
No. 34998, an order had been issued on October 9, 1962 ordering Ofilada to
deliver to the Cochingyans the second shipment of goods under Warvets'
allocation. (The Cochingyans had a contract with Warvets regarding said
goods.) It appears, however, that a motion for the reconsideration of the just
mentioned order of October 9, 1962 had been filed and was still unresolved
when on Judge Francisco Arca (now deceased) issued an order stating that
Resolutions on all pending incidents, such as the motion for reconsideration
of the order authorizing the release of the second shipment , and the motions
for the release of the third, fourth and fifth shipments, are held in
abeyance until such time that the Court knows the result of the pending
settlement being negotiated among the parties.
It was shortly after the issuance of this order which in effect freezed the
order of release of October 9, 1962, that the incidents subject of the instant
petition took place. On February 13, 1963, the Cochingyans filed in Civil Case
No. 52318 then already tried although not yet decided by Judge Gaudencio

92

Cloribel (now also deceased) who on February 9, 1963 had written the
Secretary of Justice asking for permission to go on leave for a week starting
February 12, 1973 but who later changed the starting date to February 13,
1973- an ex-parte motion asking permission to file a third party complaint
which was forthwith granted. On the same day, another motion was filed
asking for immediate admission of the third party complaint, which likewise,
was forthwith granted.
ISSUE:
Whether or not respondent court gravely abused its discretion in allowing the
filing of and in admitting the third-party complaint of the Cochingyans.
HELD:
YES. It was highly irregular and totally unwarranted for respondent court to
have allowed said third-party complaint. The circumstances surrounding the
allowance and admission thereof indicate that respondent court's action was
hasty, baseless and arbitrary. As already stated, Civil Case No. 52318 was a
special civil action for declaratory relief under Rule 66 of the Rules of 1940
which were in force when it was filed. The only purpose thereof was to secure
from the court the proper interpretation or construction of the reparations
contract between the Reparations Commission and Warvets in regard to the
rate of conversion of the dollar to the peso of the purchase price Warvets
had to pay No positive or affirmative, much less any material relief, was
'using sought therein. Indeed, it is in the very nature of a 'declaratory relief
special civil action that "the Relief is confined to a case of actual controversy
within the Court's jurisdiction, without the need of injunction, execution or
other relief beyond the adjudication of the legal rights which are the subject
of controversy between the parties." In other words, the plaintiff Ofilada in
said case did not, as he could not pray for anything to be award or granted to
him. a third-party complaint is inconceivable when the main case is one for
nothing more' than a declaratory relief. In a third-party complaint, the
defendant or third-party plaintiff is supposed to seek contribution, indemnity,
subrogation or any other relief from the third-party defendant is respect to
the claim of the plaintiff against him. In the case at bar, what possible relief
could the Cochingyans, as defendants in Civil Case No. 52318, for
declaratory relief, have asked for by way of contribution, indemnity,
subrogation or any other relief from those they have named third-party
defendants, the Collector of Customs, Commissioner of Customs, Reparations
Commission, their co-defendant and Macario Ofilada, the very plaintiff, in
respect to the construction or interpretation that Ofilada was asking the
court to make? In the present case, it is a fact that the motions of the
Cochingyans for leave to file their third-party complaint and for the
admission thereof were granted ex parte notwithstanding that the trial of the
case had already been terminated. All the orders herein complained of are
hereby declared null and void.
8. IVY - Baguio Citizens Action Inc., et.al. vs. City Council of
Baguio, GR L-27247, 20 April 1983 [non-joinder of parties of
interest who may be affected by declaratory judgment is not a
jurisdictional defect]
FACTS:
In this petition for declaratory relief originally filed in the Court of First
Instance of Baguio, Branch II, what is involved is the validity of Ordinance
386 passed by the City Council of Baguio City entitled: AN ORDINANCE

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CONSIDERING ALL SQUATTERS OF PUBLIC LAND, OTHER THAN THOSE


EARMARKED FOR PUBLIC USE IN THE CITY OF BAGUIO WHO ARE DULY
REGISTERED AS SUCH AT THE TIME OF THE PROMULGATION OF THIS
ORDINANCE AS BONAFIDE OCCUPANTS OF THEIR RESPECTIVE LOTS AND
WHICH SHALL HEREAFTER BE EMBRACED AS A CITY GOVERNMENT HOUSING
PROJECT AND PROVIDING FOR OTHER PURPOSES.
The petition for declaratory relief filed with the Court of First Instance of
Baguio, Branch II, prays for a judgment declaring the Ordinance as invalid
and illegal ab initio. The respondents-appellees, the City Council and the City
Mayor, filed motions to dismiss the petition which were denied. Nonetheless,
in the decision thereafter rendered, the petition was dismissed on the
grounds that: 1) another court, the Court of First Instance of Baguio, Branch
I, had declared the Ordinance valid in a criminal case filed against the
squatters for illegal construction, and the Branch II of the same court cannot,
in a declaratory proceeding, review and determine the validity of said
judgment pursuant to the policy of judicial respect and stability; 2) those who
come within the protection of the ordinance have not been made parties to
the suit in accordance with Section 2 of Rule 64 and it has been held that the
non-joinder of such parties is a jurisdictional defect; and 3) the court is
clothed with discretion to refuse to make any declaration where the
declaration is not necessary and proper at the time under all circumstances,
e.g. where the declaration would be of no practical help in ending the
controversy or would not stabilize the disputed legal relation.
ISSUE:
Whether non-joinder of such parties who may be affected is a jurisdictional
defect.
HELD:
NO. The non-inclusion of the squatters mentioned in the Ordinance in
question as party defendants in this case cannot defeat the jurisdiction of the
Court of First Instance of Baguio. There is nothing in Section 2 of Rule 64 of
the Rules of Court which says that the non-joinder of persons who have or
claim any interest which would be affected by the declaration is a
jurisdictional defect. Said section merely states that "All persons shall be
made parties who have or claim any interest which would be affected by the
declaration; and no declaration shall, except or otherwise provided in these
rules, prejudice the rights of persons not parties to the action." This section
contemplates a situation where there are other persons who would be
affected by the declaration, but were not impleaded as necessary parties, in
which case the declaration shall not prejudice them. If at all, the case may be
dismissed not on the ground of lack of jurisdiction but for the reason stated
in Section 5 of the same Rule stating that "the Court may refuse to exercise
the power to declare rights and to construe instruments in any case where a
decision would not terminate the uncertainty or controversy which gave rise
to the action, or any case where the declaration or construction is not
necessary and proper at the time under all circumstances."
It must be noted that the reason for the law requiring the joinder of all
necessary parties is that failure to do so would deprive the declaration of the
final and pacifying function the action for declaratory relief is calculated to
subserve, as they would not be bound by the declaration and may raise the
Identical issue. In the case at bar, although it is true that any declaration by

94

the court would affect the squatters, the latter are not necessary parties
because the question involved is the power of the Municipal Council to enact
the Ordinances in question. Whether or not they are impleaded, any
determination of the controversy would be binding upon the squatters.
A declaration on the nullity of the ordinance, would give the squatters no
right which they are entitled to protect. The party most interested to sustain
and defend the legality of the Ordinance is the body that passed it, the City
Council, and together with the City Mayor, is already a party in these
proceedings.
C. Review of Judgments and Final Orders or Resolution of the COMELEC
and COA [Rule 64]
1. IVY - Brenda Nazareth vs. Hon. Villar, GR 188635, 29 January
2013 [Certiorari under rule 64; requirement for petition; ground]
FACTS:
Being assailed by petition for certiorari on the ground of its being issued with
grave abuse of discretion amounting to lack or excess of jurisdiction is the
decision rendered on June 4, 2009 by the Commission on Audit (COA) in COA
Case No. 2009-045 entitled Petition of Ms. Brenda L. Nazareth, Regional
Director, Department of Science and Technology, Regional Office No. IX,
Zamboanga City, for review of Legal and Adjudication Office (LAO)-National
Decision No. 2005-308 dated September 15, 2005 and LAO-National
Resolution No. 2006-308A dated May 12, 2006 on disallowances of
subsistence, laundry, hazard and other benefits in the total amount of
P3,591,130.36, affirming the issuance of notices of disallowance (NDs) by the
Audit Team Leader of COA Regional Office No. IX in Zamboanga City against
the payment of benefits to covered officials and employees of the
Department of Science and Technology (DOST) for calendar year (CY) 2001
out of the savings of the DOST.
The petitioner DOST Regional Director hereby seeks to declare the decision
dated June 4, 2009 "null and void," and prays for the lifting of the
disallowance of the payment of the benefits for CY2001 for being within the
ambit of Republic Act No. 8439 (R.A. No. 8439), otherwise known as the
Magna Carta for Scientists, Engineers, Researchers, and other Science and
Technology Personnel in the Government (Magna Carta, for short), and on the
strength of the Memorandum of Executive Secretary Ronaldo B. Zamora
dated April 12, 2000 authorizing the use of the savings for the purpose.
ISSUE:
Whether the COA commited grave abuse of discretion in issuing the assailed
decisions.
HELD:
NO. The COA is endowed with sufficient latitude to determine, prevent, and
disallow
the
irregular,
unnecessary,
excessive,
extravagant,
or
unconscionable expenditures of government funds. It has the power to
ascertain whether public funds were utilized for the purposes for which they
had been intended by law. The "Constitution has made the COA the guardian
of public funds, vesting it with broad powers over all accounts pertaining to
government revenue and expenditures and the uses of public funds and
property, including the exclusive authority to define the scope of its audit
and examination, to establish the techniques and methods for such review,
and to promulgate accounting and auditing rules and regulations".

95

Thus, the COA is generally accorded complete discretion in the exercise of its
constitutional duty and responsibility to examine and audit expenditures of
public funds, particularly those which are perceptibly beyond what is
sanctioned by law. Verily, the Court has sustained the decisions of
administrative authorities like the COA as a matter of general policy, not only
on the basis of the doctrine of separation of powers but also upon the
recognition that such administrative authorities held the expertise as to the
laws they are entrusted to enforce. The Court has accorded not only respect
but also finality to their findings especially when their decisions are not
tainted with unfairness or arbitrariness that would amount to grave abuse of
discretion.
Only when the COA has acted without or in excess of jurisdiction, or
with grave abuse of discretion amounting to lack or excess of
jurisdiction, may the Court entertain and grant a petition for
certiorari brought to assail its actions. Section 1 of Rule 65, Rules of
Court, demands that the petitioner must show that, one, the tribunal, board
or officer exercising judicial or quasi-judicial functions acted without or in
excess of jurisdiction or with grave abuse of discretion amounting to lack or
excess of jurisdiction, and, two, there is neither an appeal nor any plain,
speedy and adequate remedy in the ordinary course of law for the purpose of
amending or nullifying the proceeding. Inasmuch as the sole office of the writ
of certiorari is the correction of errors of jurisdiction, which includes the
commission of grave abuse of discretion amounting to lack of jurisdiction,
the petitioner should establish that the COA gravely abused its discretion.
The abuse of discretion must be grave, which means either that the judicial
or quasi-judicial power was exercised in an arbitrary or despotic manner by
reason of passion or personal hostility, or that the respondent judge, tribunal
or board evaded a positive duty, or virtually refused to perform the duty
enjoined or to act in contemplation of law, such as when such judge, tribunal
or board exercising judicial or quasi-judicial powers acted in a capricious or
whimsical manner as to be equivalent to lack of jurisdiction. Mere abuse of
discretion is not enough to warrant the issuance of the writ.
The petitioner dismally failed to discharge her burden. We conclude and
declare, therefore, that the COAs assailed decision was issued in steadfast
compliance of its duty under the Constitution and in the judicious exercise of
its general audit power conferred to it by the Constitution.
2. ROY- Sanchez vs. COA, Gr 127545, 23 April 2008, 552 SCRA
471, 489 [Findings accorded respect and finality if supported]
Facts: In 1991, Congress passed Republic Act No. 7180 (R.A. 7180) otherwise
known as the General Appropriations Act of 1992. This law provided an
appropriation for the DILG under Title XIII and set aside the amount of
P75,000,000.00 for the DILG's Capability Building Program. On 11 November
1991, Atty. Hiram C. Mendoza (Atty. Mendoza), Project Director of the Ad Hoc
Task Force for Inter-Agency Coordination to Implement Local Autonomy,
informed then Deputy Executive Secretary Dionisio de la Serna of the
proposal to constitute and implement a "shamrock" type task force to
implement local autonomy institutionalized under the Local Government
Code of 1991. The proposal was accepted by the Deputy Executive Secretary
and attested by then DILG Secretary Cesar N. Sarino, one of the petitioners
herein, who consequently issued a memorandum for the transfer and

96

remittance to the Office of the President of the sum of P300,000.00 for the
operational expenses of the task force. An additional cash advance of
P300,000.00 was requested. Upon post-audit conducted by Department
auditor Iluminada M.V. Fabroa, however, the amounts were disallowed.

Issue: Whether the questioned disallowance by the Commission on Audit is


valid?

Ruling: The COA is endowed with enough latitude to determine, prevent and
disallow irregular, unnecessary, excessive, extravagant or unconscionable
expenditures of government funds.[23] It has the power to ascertain whether
public funds were utilized for the purpose for which they had been intended.

The Court had therefore previously upheld the authority of the COA to
disapprove payments which it finds excessive and disadvantageous to the
Government; to determine the meaning of public bidding and when there is
failure in the bidding; to disallow expenditures which it finds unnecessary
according to its rules even if disallowance will mean discontinuance of
foreign aid; to
disallow a contract even after it has been executed and goods have been
delivered.[24] Likewise, we sustained the findings of the COA disallowing the
disbursements of the National Home Mortgage Finance Corporation for
failure to submit certain documentary requirements and for being irregular
and excessive.

We have also ruled that the final determination of the Department of Finance
and the BIR as to a persons entitlement to an informers reward is conclusive
only upon the executive agencies concerned and not on the COA, the latter
being an independent constitutional commission. The COA is traditionally
given free rein in the exercise of its constitutional duty to examine and audit
expenditures of public funds especially those which are palpably beyond
what is allowed by law.

Verily, it is the general policy of the Court to sustain the decisions of


administrative authorities, especially one which is constitutionally-created,
not only on the basis of the doctrine of separation of powers but also for their
presumed expertise in the laws they are entrusted to enforce. It is, in fact, an
oft-repeated rule that findings of administrative agencies are accorded not
only respect but also finality when the decision and order are not tainted

97

with unfairness or arbitrariness that would amount to grave abuse of


discretion.

It is only when the COA has acted without or in excess of jurisdiction, or with
grave abuse of discretion amounting to lack or excess of jurisdiction, that
this Court entertains a petition questioning its rulings.
3. ROY- Candelario Versoza vs. Guillermo Carague, GR 157838,
7 February 2012 [absent grave abuse of discretion findings of
quasi-judicial agencies area accorded respect and finality]
Facts:
Petitioner herein is seeking a reconsideration of this Courts Decision
promulgated on 8 March 2011. He maintains that public respondents failed
to present any evidence supporting the allegation that the bidding for the
computer equipment was rigged, or that he had any part in such
manipulation if indeed there was any. He also claims that the dispositive
portion of the Decision wrongly made him solely liable for the disallowed
amount. The OSG noted that there is no finding of fact in the Decision dated
March 8, 2011 which supports this serious finding or determination that the
late Petitioner acted in bad faith so as to make him personally liable for the
said amount disallowed. Reviewing the case at hand, this Courts dependence
on unsupported allegations is alarming. Even more alarming is the fact that
its findings are contrary to what the evidence actually proves.

Issue: Whether COA acted in grave abuse of discretion?

Ruling: Yes, following and applying the majoritys theory, the branded pieces
of computer equipment that this Court itself uses in issuing its decisions may
also be found to be excessively overpriced by respondent when these are
compared to generic non-branded computer equipment. There is no need to
conduct an actual canvass; present the canvass sheets; require a
comparison of at least three (3) suppliers; compare the items with the same
brands or specifications; or even with those that did not qualify for the
bidding or have no known specifications at all. Thereafter, the determination
of the overpriced amount would be based on the price of the cheapest
generic brand having more or less similar but not necessarily identical
specifications. Finally, all those who have approved the purchases would be
held solidarily liable for the excess amount based on the prices of the
cheapest equipment of different specifications and brands available in the
market.

98

Equally important, the Decision also allows allegations to be belatedly raised


despite the absence of any extraordinary reason to do so and thus,
contradicts the basic tenets of due process. The ponente has not even
provided any legal basis why we should consider and allow these belatedly
raised allegations that clearly prejudice the rights of petitioner.

Lastly, the majority should categorically state in the dispositive portion that
petitioner cannot be solely liable for the disallowed price. The majority, while
affirming the findings of the COA, actually aggravated the latters baseless
ruling when it apparently ordered petitioner singly to reimburse the full
amount of disallowance in its original Decision, without mentioning the
liability of his co-respondents in the original COA case. The difference
between sole liability and solidary liability cannot be emphasized enough.
Solidary obligations assume that the debt can be divided into as many equal
shares as there are debtors. In addition, while the creditor may only demand
payment from one debtor, that debtor nevertheless has the right of
reimbursement from the other debtors. In the present case, there are eight
(8) debtors.
4. ROY- Luciano Veloso et.al. vs. COA, GR 193677, 6 September
2011 [COA,s audit jurisdiction; power to audit]
City Council of Manila enacted Ordinance No. 8040 entitled An Ordinance
Authorizing the Conferment of Exemplary Public Service Award to Elective
Local Officials of Manila Who Have Been Elected for Three (3) Consecutive
Terms in the Same Position. Director, Legal and Adjudication Office (LAO)Local of the COA issued Notice of Disallowance. former councilors Jocelyn
Dawis-Asuncion (Dawis-Asuncion), Luciano M. Veloso (Veloso), Abraham C.
Cabochan (Cabochan), Marlon M. Lacson (Lacson), Julio E. Logarta, Jr., and
Monina U. Silva, City Accountant Gloria C. Quilantang, City Budget Officer
Alicia Moscaya and then Vice Mayor and Presiding Officer Danilo B. Lacuna
filed a Motion to Lift the Notice of Disallowance.

The COA opined that the monetary reward under the EPSA is covered by the
term compensation. Though it recognizes the local autonomy of LGUs, it
emphasized the limitations thereof set forth in the Salary Standardization
Law (SSL). It explained that the SSL does not authorize the grant of such
monetary reward or gratuity. Aggrieved, petitioners Veloso, Cabochan,
Dawis-Asuncion and Lacson come before the Court in this special civil action
for certiorari alleging grave abuse of discretion on the part of the COA.

Issue: whether the COA has jurisdiction over the matter.

99

Ruling: Under the first paragraph of the above provision, the COA's audit
jurisdiction extends to the government, or any of its subdivisions, agencies,
or instrumentalities, including government-owned or controlled corporations
with original charters. Its jurisdiction likewise covers, albeit on a post-audit
basis, the constitutional bodies, commissions and offices that have been
granted fiscal autonomy, autonomous state colleges and universities, other
government-owned or controlled corporations and their subsidiaries, and
such non-governmental entities receiving subsidy or equity from or through
the government. The power of the COA to examine and audit government
agencies cannot be taken away from it as Section 3, Article IX-D of the
Constitution mandates that no law shall be passed exempting any entity of
the Government or its subsidiary in any guise whatever, or any investment of
public funds, from the jurisdiction of the [COA].
5. ROY- Esteves vs. Sarmiento, GR 182374, 11 November 2008
[MR to COMELEC en Banc is necessary before invoking review by
the SC]
Facts:
petitioner and private respondent both ran for the position of municipal
mayor of the Municipality of Casiguran, Aurora. Municipal Board of
Canvassers proclaimed private respondent as the duly-elected Mayor of
Casiguran on the basis of the results of the canvassing, which showed him
having garnered 3,342 votes or with a margin of 48 votes over petitioner,
who obtained 3,294 votes. petitioner filed an election protest before the
Regional Trial Court of Baler, Aurora. RTC denied the motion for
reconsideration of the dismissal of private respondent's counter-protest on
the ground of non-payment of filing fee. private respondent filed before the
COMELEC a petition for certiorari and prohibition with application for
temporary restraining order (TRO) and/or writ of preliminary injunction. The
petition sought to nullify the RTC Order dated 8 September 2007 denying
private respondent's motion to dismiss. It also prayed that the election
protest filed by petitioner be dismissed and the proceedings thereon
enjoined on the ground that the election protest failed to comply with the
requirements of Section 11(f), Rule 210 of A.M. No. 07-4-15-SC. Petitioner
filed an answer on 5 December 2007.

Issue: Whether the COMELEC (Second Division) has no jurisdiction to


entertain special relief cases like petitions for certiorari, prohibition or
mandamus?

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Ruling: Yes, All election cases, including pre-proclamation controversies, shall


be decided by the COMELEC in division, and the motion for reconsideration
shall be decided by the COMELEC en banc.17 As held in Ambil v. Commission
on Elections,18 the power of review of the Supreme Court of the rulings of
the COMELEC is limited only to the final decision or resolution of the
COMELEC en banc and not the final resolution of its Division. The Supreme
Court has no power to review, via certiorari, an interlocutory order or even a
final resolution of a Division of the Commission on Elections.

Moreover, pursuant to Section 5 (c), Rule 319 of the COMELEC Rules of


Procedure, a resolution issued by a Division of the COMELEC must first be
elevated to the COMELEC en banc by filing a motion for reconsideration.
D. Certiorari, Prohibition, and Mandamus [Rule 65]
Certiorari
1. ROY- Marino B. Icdang vs. Sandiganbayan, GR 185960, 25
January 2012 [nature and definition of grave abuse of discretion]
Facts:
Marino B. Icdang, was the Regional Director of the Office for Southern
Cultural Communities (OSCC) Region XII in Cotabato City. Special Audit Team
was formed by the Commission on Audit (COA) Regional Office XII, Cotabato
City pursuant to COA Regional Office Order No. 98-103 to conduct
comprehensive audit on the 1996 funds for livelihood projects of the OSCCRegion XII. Hadji Rashid A. Mudag was designated as team leader, with Jose
Mercado, Myrla Fermin and Evelyn Macala as members. audit team noted
that petitioner was granted cash advances which remained unliquidated.
Petitioner never denied that he received a total of P196,000.00 evidenced by
disbursement vouchers and checks payable to him, Consequently, a demand
letter was sent by the COA for petitioner to immediately produce the missing
funds. However, the one-week period lapsed without compliance having
been made by petitioner. Office of the Ombudsman found probable cause
against petitioner and Ms. Somorostro for violation of Art. 217 of the Revised
Penal Code, as amended, and Section 3(e) of Republic Act No. 3019 (AntiGraft and Corrupt Practices Act). the SBs Second Division rendered its
decision convicting petitioner of malversation and acquitting him from
violation of Section 3(e) of R.A. No. 3019. Petitioner filed a motion for
reconsideration requesting that he be given another chance to present his
evidence, stating that his inability to attend the trial were due to financial
constraints such that even when some of the scheduled hearings were
sometimes held in Davao City and Cebu City, he still failed to attend the
same.

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Issue: Whether the Sandiganbayan commits grave abuse of discretion?

Ruling: There is grave abuse of discretion where the public respondent acts
in a capricious, whimsical, arbitrary or despotic manner in the exercise of its
judgment as to be equivalent to lack of jurisdiction. The abuse of discretion
must be so patent and gross as to amount to an evasion of a positive duty or
a virtual refusal to perform a duty enjoined by law, or to act at all in
contemplation of law as where the power is exercised in an arbitrary and
despotic manner by reason of passion or hostility.51 Under the facts on
record, we find no grave abuse of discretion on the part of the SB when it
submitted the case for decision and rendered the judgment of conviction on
the basis of the prosecution evidence after the defense failed to present its
evidence despite ample opportunity to do so.
2. IVY - Spouses Marcelo vs LBC Bank, GR 183575, 11 April
2011 [Under rule 65 CA can receive new evidence]
FACTS:
Spouses Marcelo defaulted in the payment of their loans from LBC Bank.
Consequently, LBC Bank sought the extra-judicial foreclosure of the real
estate mortgage over a parcel of land located in Baliuag, Bulacan and
covered by Transfer Certificate of Title (TCT) No. N-64135 in the name of
Spouses Marcelo. After the posting and publication of the Notice of Sale, the
mortgaged property was sold at a public auction. LBC Bank, being the
highest bidder, was issued a Certificate of Sale, which was eventually
registered with the Bulacan Registry of Deeds. As the spouses failed to
redeem the property within the prescribed period, the title was eventually
transferred to LBC. LBC Bank filed with the RTC a petition for the issuance of
a writ of possession over the foreclosed property which was granted.
Spouses Marcelo moved for reconsideration, contending that LBC Banks
consolidation of title was invalid. Spouses Marcelo further argued that the
petition for the issuance of a writ of possession was insufficient in form for
being verified by one Rosario B. Aotriz who lacked authority to perform such
act. The trial court denied the motion for reconsideration. Spouses Marcelo
filed a petition for certiorari with the Court of Appeals claiming that the trial
court gravely abused its discretion in directing the issuance of a writ of
possession in favor of LBC Bank. The Court of Appeals initially granted
Spouses Marcelo certiorari petition. LBC Bank filed a motion for
reconsideration. The Court of Appeals rendered an Amended Decision
granting the motion for reconsideration "in the interest of substantial
justice," considering the documents submitted by LBC Bank, namely, the
Affidavit of its Chief Finance Officer and the Secretarys Certificate, "showing
that LBC Bank ratified the questioned consolidation of the subject property."
ISSUE:
Whether the Court of Appeals can admit new evidence in a special civil
action for certiorari.

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HELD:
YES. As stated, the Court of Appeals initially ruled in favor of Spouses
Marcelo. However, upon submission by LBC Bank of documents expressly
and unequivocally confirming and ratifying Milans authority to consolidate
the title over the foreclosed property, the Court of Appeals amended its
original decision. Spouses Marcelo fault the Court of Appeals for admitting
and considering the Affidavit of Ma. Tara O. Aznar, dated 10 July 2006, and
the Secretarys Certificates dated 27 June 2006 and 1 July 2005 in resolving
LBC Banks motion for reconsideration of the Court of Appeals 16 June 2006
Decision. Spouses Marcelo contend that in a special civil action for certiorari,
the Court of Appeals cannot admit new evidence. Spouses Marcelo further
submit that the sole office of the writ of certiorari is the correction of errors
of jurisdiction, and thus, the Court of Appeals erred in admitting the
"additional evidence."
[I]t is already settled that under Section 9 of Batas Pambansa Blg. 129, as
amended by Republic Act No. 7902 (An Act Expanding the Jurisdiction of the
Court of Appeals, amending for the purpose of Section Nine of Batas
Pambansa Blg. 129 as amended, known as the Judiciary Reorganization Act
of 1980), the Court of Appeals pursuant to the exercise of its original
jurisdiction over Petitions for Certiorari is specifically given the power to
pass upon the evidence, if and when necessary, to resolve factual issues.
Section 9 of Batas Pambansa Blg. 129, as amended, states that, "The Court
of Appeals shall have the power to try cases and conduct hearings, receive
evidence and perform any and all acts necessary to resolve factual issues
raised in cases falling within its original and appellate jurisdiction, including
the power to grant and conduct new trials or further proceedings."
Clearly, the Court of Appeals did not err in admitting the evidence showing
LBC Banks express ratification of Milans consolidation of the title over the
subject property. Further, the Court of Appeals did not err in admitting such
evidence in resolving LBC Banks motion for reconsideration in a special civil
action for certiorari. To rule otherwise will certainly defeat the ends of
substantial justice.
3. IVY - Churchille Mari and People vs. Hon. Gonzales, GR
187728, 12 September 2011 [Rules 65 does not enjoin
proceedings in the main case; TRO necessary]
FACTS:
AAA filed a complaint alleging that she was raped. A warrant of arrest was
issued against private respondent, so he voluntarily surrendered to the Chief
of Police of Sogod and was then incarcerated at the Sogod Municipal Jail.
Private respondent filed a Motion for Bail. Hearings on the motion
commenced but petitioner failed to appear. Only private respondent
presented evidence. Thus, private respondent was allowed to post bail set
at P200,000.00. After posting a surety bond, private respondent was released
from confinement.
Pursuant to the issuance of A.M. No. 05-8-26, divesting first-level courts of
authority to conduct preliminary investigation of criminal complaints
cognizable by Regional Trial Courts, records of the subject case were
transmitted to the Provincial Prosecutor's Office of Southern Leyte. The

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Prosecutor's Office issued a Resolution finding probable cause against private


respondent and, accordingly, an Information for Rape was filed. A warrant of
arrest was immediately issued against private respondent.
On June 27, 2008, private respondent was committed to detention and, on
June 30, 2008, the RTC issued an Order stating that accused had voluntarily
surrendered to the Office of the Clerk of Court and arraignment was set for
July 31, 2008. In the meantime, on July 3, 2008, private respondent filed a
Motion to Admit Cash Bond in Lieu of Surety Bond; thus, in an Order dated
July 10, 2008, the RTC cancelled the July 31, 2008 schedule for arraignment
and reset the arraignment and hearing on said motion for August 20, 2008.
At said scheduled date for arraignment and hearing on the motion, nobody
appeared for the prosecution. Hence, the RTC issued the Order dated August
20, 2008 resetting the arraignment. The initial hearing for trial on the merits
for December 12, 2008 was scheduled. On December 12, 2008, no one
appeared for the prosecution, prompting counsel for accused private
respondent to move for dismissal of the case on the ground of failure to
prosecute. Private respondent's motion to dismiss was denied. On a
rescheduled date, nobody appeared for the prosecution again. Hence, the
case was dismissed on the ground of failure to prosecute.
Petitioners filed a motion for reconsideration, but the RTC denied the same.
Hence, the present petition for certiorari, alleging that public respondent
acted with grave abuse of discretion amounting to lack or excess of
jurisdiction in rashly and precipitately dismissing the rape case against
private respondent. Respondents counter that there was no grave abuse
committed by the trial court and setting aside the dismissal of the rape case
would put private respondent in double jeopardy.
ISSUE:
Whether the court acted with grave abuse of discretion in dismissing the
case.
HELD:
NO. Petitioners insist that the RTC dismissed the criminal case against
private respondent too hurriedly, despite the provision in Section 10 of the
Speedy Trial Act of 1998 (Republic Act No. 8493), now incorporated in Section
3, Rule 119 of the Rules of Court. However, only delays that may be excluded
from the time limit within which trial must commence are those resulting
from proceedings concerning the accused. The time involved in the
proceedings in a petition for transfer of venue can only be excluded from
said time limit if it was the accused who instituted the same. Hence, in this
case, the time during which the petition for transfer of venue filed by the
private complainant is pending, cannot be excluded from the time limit of
thirty (30) days from receipt of the pre-trial order imposed in Section 1, Rule
119 of the Rules of Court.
The records reveal that the 30-day time limit set by Section 1, Rule 119 of
the Rules of Court had, in fact, already been breached. The private
prosecutor received the Pre-trial Order dated November 24, 2008 on
December 3, 2008, while the Provincial Prosecutor received the same on
December 2, 2008. This means that at the latest, trial should have
commenced by January 2, 2009, or if said date was a Sunday or holiday, then
on the very next business day. Yet, because of the prosecution's failure to
appear at the December 12, 2008 hearing for the initial presentation of the
prosecution's evidence, the RTC was constrained to reset the hearing to

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January 16, 2009, which is already beyond the 30-day time limit.
Nevertheless, the prosecution again failed to appear at the January 16, 2009
hearing. Indeed, as aptly observed by the RTC, petitioners showed
recalcitrant behavior by obstinately refusing to comply with the RTC's
directives to commence presentation of their evidence. Petitioners did not
even show proper courtesy to the court, by filing motions for cancellation of
the hearings on the very day of the hearing and not even bothering to
appear on the date they set for hearing on their motion. As set forth in the
narration of facts above, the prosecution appeared to be intentionally
delaying and trifling with court processes.
Petitioners are likewise mistaken in their notion that mere pendency of their
petition for transfer of venue should interrupt proceedings before the trial
court. Such situation is akin to having a pending petition for certiorari with
the higher courts. In People v. Hernandez, the Court held that "delay
resulting from extraordinary remedies against interlocutory orders" must be
read in harmony with Section 7, Rule 65 of the Rules of Court which provides
that the "[p]etition [under Rule 65] shall not interrupt the course of the
principal case unless a temporary restraining order or a writ of
preliminary injunction has been issued against the public
respondent from further proceeding in the case." The trial court was
then correct and acting well within its discretion when it refused to grant
petitioners' motions for postponement mainly because of the pendency of
their petition for transfer of venue.
4. IVY - Baetriz Siok Ping vs. Subic Bay Distribution Inc., GR
162575 15 December 2010 [MR necessary before filing petition]
FACTS:
Respondent Subic Bay Distribution, Inc. (SBDI) entered in two Distributorship
Agreements with petitioner and Able Transport. Under the Agreements,
respondent, as seller, will sell, deliver or procure to be delivered petroleum
products, and petitioner, as distributor, will purchase, receive and pay for its
purchases from respondent. By virtue of the provisions of the distribution
agreement, petitioner applied for and was granted a credit line by the United
Coconut Planters Bank (UCPB), International Exchange Bank (IEBank),
Security Bank Corporation (SBC) and Asia United Bank (AUB) in favor of
respondent. All these banks separately executed several undertakings
setting the terms and conditions governing the drawing of money by
respondent. Petitioner allegedly failed to pay her obligations to respondent
despite demand, thus, respondent tried to withdraw from these bank
undertakings.
Petitioner then filed with the RTC separate petitions against the banks for
declaration of nullity of the several bank undertakings and domestic letter of
credit which they issued with the application for the issuance of a temporary
restraining order (TRO) and writ of preliminary injunction. Petitioner alleged
that said contracts are oppressive, unreasonable and unconscionable on the
ground, among others, that the prevailing market rate with which petitioner
will be charged off as interests and penalties is exorbitant rendering it
against public morals and policy.
The court then issued an Order granting the TRO and requiring petitioner to
implead respondent as an indispensable party. Respondent filed with the CA
a petition for certiorari with prayer for the issuance of a TRO and writ of

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preliminary injunction against respondent Judge Pizarro and petitioner. The


CA issued a Resolution lifting the TRO issued by the RTC. Petitioner claims
that the CA decision is void for want of authority of the CA to act on the
petition as the banks should have been impleaded for being
indispensable parties, since they are the original party respondents in the
RTC.
As to petitioner's claim of respondent's non-filing of a motion for
reconsideration before resorting to a petition for certiorari, the CA said that it
is not a rigid rule, as jurisprudence had said, that when a definite question
has been properly raised, argued and submitted in the RTC and the latter had
decided the question, a motion for reconsideration is no longer necessary
before filing a petition for certiorari. The court found that both parties had
fully presented their sides on the issuance of the writ of preliminary
injunction and that the RTC had squarely resolved the issues presented by
both parties. Thus, respondent could not be faulted for not filing a motion for
reconsideration.
ISSUE:
Whether the failure of the respondent to file MR before filing a petition for
certiorari is a fatal infirmity.
HELD:
NO. Concededly, the settled rule is that a motion for reconsideration is a
condition sine qua non for the filing of a petition for certiorari. Its purpose is
to grant an opportunity for the court to correct any actual or perceived error
attributed to it by the re-examination of the legal and factual circumstances
of the case. The rule is, however, circumscribed by well-defined exceptions,
such as (a) where the order is a patent nullity, as where the court a quo had
no jurisdiction; (b) where the questions raised in the certiorari proceeding
have been duly raised and passed upon by the lower court, or are the same
as those raised and passed upon in the lower court; (c) where there is an
urgent necessity for the resolution of the question and any further delay
would prejudice the interests of the Government or of the petitioner or the
subject matter of the action is perishable; (d) where, under the
circumstances, a motion for reconsideration would be useless; (e) where
petitioner was deprived of due process and there is extreme urgency for
relief; (f) where, in a criminal case, relief from an order of arrest is urgent and
the granting of such relief by the trial court is improbable; (g) where the
proceedings in the lower court are a nullity for lack of due process; (h) where
the proceedings were ex parte, or in which the petitioner had no opportunity
to object; and (i) where the issue raised is one purely of law or where public
interest is involved.
Respondent explained their omission of filing a motion for reconsideration
before resorting to a petition for certiorari based on exceptions (b), (c) and (i).
The CA brushed aside the filing of the motion for reconsideration based on
the ground that the questions raised in the certiorari proceedings have been
duly raised and passed upon by the lower court, or are the same as those
raised and passed upon in the lower court. We agree.
Respondent had filed its position paper in the RTC stating the reasons why
the injunction prayed for by petitioner should not be granted. However, the
RTC granted the injunction. Respondent filed a petition for certiorari with the
CA and presented the same arguments which were already passed upon by
the RTC. The RTC already had the opportunity to consider and rule on the

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question of the propriety or impropriety of the issuance of the injunction. We


found no reversible error committed by the CA for relaxing the rule since
respondent's case falls within the exceptions.
5. Gen. rule: Certiorari not substitute remedy for lost appeal if appeal is
available; exceptions to the gen rule
5. IVY - First Women Credit Corp. vs. Baybay, GR 166888, 31
January 2007, 513 SCRA 637 [Gen. rule: Certiorari not substitute
remedy for lost appeal if appeal is available; exceptions to the gen
rule]
FACTS:
First Womens Credit Corp. (the corporation), represented by stockholder and
director Shig Katayama (Katayama), filed on November 12, 1997 a petition
before the Securities and Exchange Commission (SEC) against the
corporations officers Jacinto, Colayco, Concepcion T. Sangil (Sangil) and
Asuncion Cruz (Cruz), for alleged mismanagement of the corporation. The
SEC created an Interim Management Committee (IMC) for the corporation.
The IMC thereupon issued directives to the corporations president Antonio
Tayao (Tayao) and corporate secretary and treasurer Glicerio Perez (Perez)
toward the preservation of assets and records of the corporation. Allegedly in
conspiracy with Jacinto and Colayco, Tayao and Perez defied the
implementation of the SEC November 17, 1999 Order when IMC attempted to
enter the main office of the corporation in Makati on December 3, 1999,
December 29, 1999 and January 28, 2000. On April 6, 2000, Tayao filed a
request with the Bureau of Immigration and Deportation (BID) to include
Katayama in its watch list.
The IMC, on April 14, 2000, later preventively suspended Tayao and Perez.
Despite their preventive suspension, however, the two, allegedly in
conspiracy
with
Jacinto
and
Colayco,
still
issued
various
directives/memoranda to the employees of the corporation to disobey the
IMC. On May 9, 2000, the IMC dismissed Tayao and Perez. In two follow-up
letters to the BID both dated August 1, 2000, Tayao represented himself as
president of the corporation.
Hence, the filing before the Makati City Prosecutors Office (CPO) on
December 27, 2000 of criminal complaints against Jacinto, Colayco, Tayao
and Perez by the corporation, represented by Katayama. Jacinto, Colayco,
Tayao and Perez (hereafter respondents) denied the charges. They claimed
that the SEC Order creating the IMC was pending appeal at the Court of
Appeals; that there was no danger that the assets of the corporation would
be dissipated or lost at the time the alleged criminal acts were committed;
and that Katayama had no authority to institute the criminal charges in
behalf of the corporation as he was merely a minority stockholder, aside
from his lack of personal knowledge of the circumstances giving rise to the
filing of the charges. The Investigating Prosecutor, by Resolution of August
28, 2001, found probable cause to hale respondents into court for
falsification of private documents under Article 172(2), and three
informations for grave coercion against private respondent Tayao and three
unnamed security guards. The City Prosecutor approved the Investigating
Prosecutors resolution.
Respondents appealed the CPO resolution to the Department of Justice (DOJ)
via Petition for Review. The DOJ reversed the Resolution of the CPO which

107

was directed to move for the withdrawal of the information for falsification of
private document against private respondents and the informations for grave
coercion against respondent Tayao and the three John Does. Petitioners
thereupon assailed the DOJ Resolutions before the Court of Appeals via
petition for certiorari.
In the meantime, respondents filed a "Motion to Withdraw Informations and
to Dismiss the Cases." Acting Presiding Judge Rommel Baybay found
respondents motion to be well-taken and accordingly dismissed the criminal
cases. Petitioners Motion for Reconsideration was denied. Petitioners
assailed the trial courts orders via certiorari but was denied holding that the
grounds relied upon by petitioners were mere errors of judgment, not
necessarily of jurisdiction, and there being other legal remedies to question
the assailed orders, e.g., the filing of a Notice of Appeal, petitioners petition
for certiorari would not lie.
ISSUE:
Whether the filing of petition for certiorari is a proper remedy.
HELD:
NO. As to what mode of review petitioners may avail of after a court grants
an accuseds motion to withdraw information and/or to dismiss the case,
Section 1 of Rule 122 of the 2000 Revised Rules of Criminal Procedure
instructs: "Any party may appeal from a judgment or final order, unless the
accused will be placed in double jeopardy."
In availing of the remedy of certiorari before the RTC, petitioners claim that
they had no plain, adequate and speedy remedy to question the MeTCs
grant of the motion.
The records of the cases show, however, that the motion was granted by the
MeTC before respondents were arraigned. Thus, the prohibition against
appeal in case a criminal case is dismissed as the accused would be placed
in double jeopardy does not apply.
Petitioners not having availed of the proper remedy to assail the dismissal of
the cases, the dismissal had become final and executory. On this score alone,
the present petition must fail.
6. Gen. rule: Certiorari not substitute remedy for lost appeal if appeal is
available; except when the order amounts to oppressive exercise of judicial
authority
6. IVY - Leyte Electric cooperative vs. LEYECO IV Employees
Union, GR 157775, 19 October 2007 [Gen. rule: Certiorari not
substitute remedy for lost appeal if appeal is available; except when
the order amounts to oppressive exercise of judicial authority]
FACTS:
Leyte IV Electric Cooperative, Inc. and Leyeco IV Employees Union-ALU
entered into a Collective Bargaining Agreement (CBA) covering petitioner
rank-and-file employees, for a period of five (5) years. On June 7, 2000,
respondent sent a letter to petitioner demanding holiday pay for all
employees, as provided for in the CBA. Petitioner sent a reply explaining that
after perusing all available pay slips, it found that it had paid all employees
all the holiday pays enumerated in the CBA. After exhausting the procedures
of the grievance machinery, the parties agreed to submit the issues of the
interpretation and implementation of Section 2, Article VIII of the CBA on the

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payment of holiday pay, for arbitration of the National Conciliation and


Mediation Board (NCMB). Voluntary Arbitrator Antonio C. Lopez, Jr. rendered a
Decision in favor of respondent, holding petitioner liable for payment of
unpaid holidays from 1998 to 2000 in the sum of P1,054,393.07. Petitioner
filed a Motion for Reconsideration but it was denied by the Voluntary
Arbitrator. Thirty days later petitioner filed a Petition for Certiorari in the CA,
ascribing grave abuse of discretion amounting to lack of jurisdiction to the
Voluntary Arbitrator: (a) for ignoring that in said company the divisor for
computing the applicable daily rate of rank-and-file employees is 360 days
which already includes payment of 13 un-worked regular holidays under
Section 2, Article VIII of the CBA; and (b) for holding the petitioner liable for
the unpaid holidays just because the payroll slips submitted as evidence did
not show any payment for the regular holidays. The CA dismissed outright
petitioner's Petition for Certiorari for adopting a wrong mode of appeal.
ISSUE:
Whether the dismissal of the petition for certiorari as filed under Rule 65
assailing the decision of VA is proper.
HELD:
NO. It has long been settled that a voluntary arbitrator, whether acting solely
or in a panel, enjoys in law the status of a quasi-judicial agency; hence, his
decisions and awards are appealable to the CA. This is so because the
awards of voluntary arbitrators become final and executory upon the lapse of
the period to appeal; and since their awards determine the rights of parties,
their decisions have the same effect as judgments of a court. Therefore, the
proper remedy from an award of a voluntary arbitrator is a petition for review
to the CA, following Revised Administrative Circular No. 1-95, which provided
for a uniform procedure for appellate review of all adjudications of quasijudicial entities, which is now embodied in Section 1, Rule 43 of the 1997
Rules of Civil Procedure A fortiori, the decision or award of the voluntary
arbitrator or panel of arbitrators should likewise be appealable to the Court
of Appeals, in line with the procedure outlined in Revised Administrative
Circular No. 1-95, just like those of the quasi-judicial agencies, boards and
commissions enumerated therein.
This would be in furtherance of, and consistent with, the original purpose of
Circular No. 1-91 to provide a uniform procedure for the appellate review of
adjudications of all quasi-judicial entities not expressly excepted from the
coverage of Sec. 9 of B.P. 129 by either the Constitution or another statute.
Nor will it run counter to the legislative intendment that decisions of the
NLRC be reviewable directly by the Supreme Court since, precisely, the cases
within the adjudicative competence of the voluntary arbitrator are excluded
from the jurisdiction of the NLRC or the labor arbiter. the general rule is that
the proper remedy from decisions of voluntary arbitrators is a petition for
review under Rule 43 of the Rules of Court.
Nonetheless, a special civil action for certiorari under Rule 65 of the Rules of
Court is the proper remedy for one who complains that the tribunal, board or
officer exercising judicial or quasi-judicial functions acted in total
disregard of evidence material to or decisive of the controversy.
while the settled rule is that an independent action for certiorari may be
availed of only when there is no appeal or any plain, speedy and adequate
remedy in the ordinary course of law and certiorari is not a substitute for the
lapsed remedy of appeal, there are a few significant exceptions when the
extraordinary remedy of certiorari may be resorted to despite the availability

109

of an appeal, namely: (a) when public welfare and the advancement of public
policy dictate; (b) when the broader interests of justice so require; (c)
when the writs issued are null; and (d) when the questioned order amounts
to an oppressive exercise of judicial authority.
In this case, while the petition was filed on July 27, 2002, 15 days after July
12, 2002, the expiration of the 15-day reglementary period for filing an
appeal under Rule 43, the broader interests of justice warrant relaxation of
the rules on procedure. Besides, petitioner alleges that the Voluntary
Arbitrators conclusions have no basis in fact and in law; hence, the petition
should not be dismissed on procedural grounds.
The Voluntary Arbitrator gravely abused its discretion in giving a strict or
literal interpretation of the CBA provisions that the holiday pay be reflected
in the payroll slips. Such literal interpretation ignores the admission of
respondent in its Position Paper that the employees were paid all the
days of the month even if not worked. In light of such admission,
petitioner's submission of its 360 divisor in the computation of employees
salaries gains significance.

110